<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 13, 1998.
REGISTRATION NO. 333-61021
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
U.S. OFFICE PRODUCTS COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 5112 52-1906050
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
------------------------
1025 THOMAS JEFFERSON PLACE, N.W., SUITE 600E
WASHINGTON, D.C. 20007
(202) 339-6700
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------------
THOMAS MORGAN
CHIEF EXECUTIVE OFFICER
U.S. OFFICE PRODUCTS COMPANY
1025 THOMAS JEFFERSON PLACE, N.W., SUITE 600E
WASHINGTON, D.C. 20007
(202) 339-6700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
WITH A COPY TO:
<TABLE>
<S> <C>
GEORGE P. STAMAS, ESQ. MARK D. DIRECTOR, ESQ.
THOMAS W. WHITE, ESQ. Executive Vice President--Administration
Wilmer, Cutler & General Counsel and Secretary
Pickering U.S. Office Products Company
2445 M Street, N.W. 1025 Thomas Jefferson Street, N.W., Suite
Washington, D.C. 20037 600E
(202) 663-6000 Washington, D.C. 20007
(202) 339-6700
</TABLE>
------------------------
SEE TABLE OF ADDITIONAL REGISTRANTS
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If 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, check the following box. /X/
(CALCULATION OF REGISTRATION FEE ON NEXT PAGE)
------------------------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
PRIMARY ADDRESS, INCLUDING ZIP
EXACT NAME OF STATE OR OTHER STANDARD CODE, AND TELEPHONE
REGISTRANT AS JURISDICTION OF INDUSTRIAL I.R.S. EMPLOYER NUMBER, INCLUDING AREA
SPECIFIED IN ITS INCORPORATION OR CLASSIFICATION IDENTIFICATION CODE, OR REGISTRANT'S
CHARTER ORGANIZATION CODE NUMBER NUMBER PRINCIPAL EXECUTIVE OFFICES
<S> <C> <C> <C> <C>
Action Wholesale Michigan 5112 38-1948793 4120 Brockton Drive SE
Service, Inc. Grand Rapids, MI 49512
616-698-1851
Affordable Interior Massachusetts 5021 04-3117869 4 Bonazzoli Avenue
Systems, Inc. Hudson, MA 01749
978-562-7500
American Loose Missouri 5112 43-0976837 4015 Papin Street
Leaf/Business St. Louis, MO 63110
Products, Inc. 314-535-1414
Andrews Office Washington DC 5112 52-0852962 8400 Ardwick Ardmore Road
Supply & Landover, MD 20785
Equipment Co. 800-394-1500
Bindery Systems, Oregon 5112 93-0976940 7737 Southwest Nimbus Ave.
Inc. Beavertown, OR 97008
503-646-8237
Bob Brines Office Michigan 5112 38-2134579 420 Cambridge Street
Supply Co. Midland, MI 48642
517-631-9771
Carithers-Wallace- Delaware 5021 52-1906050 4343 Northeast Expwy.
Courtenay, LLC Atlanta, GA 30340
770-493-8200
Carolina Office North Carolina 5112 56-0745125 2521 North Church Street
Equipment Rocky Mount, NC 27804
Company 919-977-1121
Central Texas Texas 5112 74-2367790 5310 Burnett Road
Office Products, Austin, TX 78756
Inc. 512-453-7345
Copenhaver Delaware 5112 52-1906050 9600 Parksouth Court
Holdings, LLC Orlando, FL 32837
407-857-7191
Courtland-Cain, Georgia 6719 58-0907647 4343 Northeast Expwy.
Inc. Atlanta, GA 30340
770-493-8200
Dameron-Pierson Louisiana 5021 72-0165110 5307 Toler Street
Company, Limited Harahan, LA 70123
504-736-0505
Dulworth Office Kentucky 5021 61-0853132 204-206 East Market Street
Furniture Company Louisville, KY 40202
502-587-6656
Expert Office Maryland 5112 52-1984574 8400 Ardwick Ardmore Road
Services, Inc. Landover, MD 20785
800-394-1500
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
PRIMARY ADDRESS, INCLUDING ZIP
EXACT NAME OF STATE OR OTHER STANDARD CODE, AND TELEPHONE
REGISTRANT AS JURISDICTION OF INDUSTRIAL I.R.S. EMPLOYER NUMBER, INCLUDING AREA
SPECIFIED IN ITS INCORPORATION OR CLASSIFICATION IDENTIFICATION CODE, OR REGISTRANT'S
CHARTER ORGANIZATION CODE NUMBER NUMBER PRINCIPAL EXECUTIVE OFFICES
<S> <C> <C> <C> <C>
Fort Smith Office Arkansas 5112 71-0329537 812 Garrison Avenue
Supply, Inc. Ft. Smith, AR 72901
501-782-0311
Forty-Fifteen Papin Missouri 5112 43-1888884 4015 Papin Street
Redevelopment St. Louis, MO 63110
Corporation 314-535-1414
General Office Minnesota 5112 41-0871157 2050 Old Highway 8
Products Company New Brighton, MN 55112
612-639-4700
Global Mailbox Florida 6794 65-0708096 6060 Cornerstone Court West
Express, LLC San Diego, CA 92121
619-455-8800
J.H. Whitley Co., Virginia 5112 54-1335623 11861 Canon Blvd.
Inc. Newport News, VA 23606
757-599-0000
Kentwood Office Michigan 5012 38-2935228 212 Grandville Ave. SW
Furniture, Inc. Grand Rapids, MI 49503
616-454-5572
Landmark Industries Delaware 5021 13-3910749 330 Madison Avenue
Inc. New York, NY 10017
212-687-5885
Lanier Acquisition Delaware 6719 52-1997747 c/o U.S. Office Products
Corp. Company
1025 Thomas Jefferson Place,
N.W., Suite 600E
Washington, D.C. 20007
202-339-6700
Mail Boxes, Etc. California 6794 33-0010260 6060 Cornerstone Court West
San Diego, CA 92121
619-455-8800
Mail Boxes, Etc., California 6794 95-3581095 6060 Cornerstone Court West
USA, Inc. San Diego, CA 92121
619-455-8800
McWhorter's, Inc. California 5112 94-2623280 621 Tully Road
San Jose, CA 95111
408-494-1200
Mile High Office Delaware 5112 52-1906050 60 Tejon Street
Supply, LLC Denver, CO 80223
303-744-6467
Mills Morris Tennessee 5112 62-1307529 3770 South Perkins Rd.
Business Products, Memphis, TN 38118
Inc. 901-362-8620
Modern Foods Indiana 5962 35-1452471 3910 Industrial Blvd.
Systems, Inc. Indianapolis, IN 46254
317-298-7000
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
PRIMARY ADDRESS, INCLUDING ZIP
EXACT NAME OF STATE OR OTHER STANDARD CODE, AND TELEPHONE
REGISTRANT AS JURISDICTION OF INDUSTRIAL I.R.S. EMPLOYER NUMBER, INCLUDING AREA
SPECIFIED IN ITS INCORPORATION OR CLASSIFICATION IDENTIFICATION CODE, OR REGISTRANT'S
CHARTER ORGANIZATION CODE NUMBER NUMBER PRINCIPAL EXECUTIVE OFFICES
<S> <C> <C> <C> <C>
Modern Vending, Indiana 5962 35-1281612 3910 Industrial Blvd.
Inc. Indianapolis, IN 46254
317-298-7000
Morris Office Mississippi 5112 64-0392096 325 Howard Street
Machines, Inc. Greenwood, MS 38935
601-453-7254
National Office Ohio 5112 34-0419960 183 West Market Street
Supply, Inc. Akron, OH 44303
330-376-8156
New Mexico Office New Mexico 5112 85-0348156 524-A Cordova Rd.
Solutions, Inc. Santa Fe, NM 87501
505-982-8811
Pear Commercial Colorado 5021 84-1075514 3655 Frontier Avenue
Interiors, Inc. Boulder, CO 80301
303-824-2000
Price Modern, Inc. Maryland 5021 52-0450440 2604 Sisson Street
Baltimore, MD 21211
510-366-5500
Radar Business Tennessee 5112 62-1112418 240 Great Circle Road
Systems, Inc. Nashville, TN 37228
615-244-4400
Rainen Business Missouri 5021 43-1004433 1330 Burlington North
Interiors, Inc. Kansas City, MO 64116
816-221-1355
Sagot Office New Jersey 5021 22-3251708 30 Twosome Drive
Interiors, Inc. Moorestown, NJ 08057
609-778-8833
Sletten Vending Wisconsin 5962 39-1245889 2605 S. Stoughton Rd.
Service, Inc. Madison, WI 53716
608-222-7080
Sturgis Acquisition Delaware 5112 74-2763962 1116 East Yandell Dr.
Corp. El Paso, TX 79902
915-533-8483
Sweitzer's Offset Indiana 5112 35-1278789 101 North 10th Street
Services, Inc. Noblesville, IN 46060
317-773-8454
Businessworks, Inc. Delaware 5112 64-0866621 4155 Industrial Drive
Jackson, MS 39209
601-948-2521
The H.H. West Delaware 5112 39-0698480 505 North 22nd Street
Company Milwaukee, WI 53233
414-344-1000
The J. Thayer Delaware 5112 52-1906050 12220 S.W. First Street
Company, LLC Beaverton, OR 97075
503-646-9191
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
PRIMARY ADDRESS, INCLUDING ZIP
EXACT NAME OF STATE OR OTHER STANDARD CODE, AND TELEPHONE
REGISTRANT AS JURISDICTION OF INDUSTRIAL I.R.S. EMPLOYER NUMBER, INCLUDING AREA
SPECIFIED IN ITS INCORPORATION OR CLASSIFICATION IDENTIFICATION CODE, OR REGISTRANT'S
CHARTER ORGANIZATION CODE NUMBER NUMBER PRINCIPAL EXECUTIVE OFFICES
<S> <C> <C> <C> <C>
The Office Furniture Ohio 5021 31-1084588 2920 East Kemper Road
Store, Inc. Cincinnati, OH 45241
513-771-3800
The Office Works, Pennsylvania 5112 23-2051543 601 Gibson Boulevard
Inc. Harrisburg, PA 17104
717-939-1381
The Systems House, Illinois 7371 36-3128937 O'Hare Lake Office Park
Inc. Des Plaines, IL 60018
847-390-6300
USOP Merchandising Delaware 6719 52-1997750 2050 Old Highway 8
Company New Brighton, MN 55112
612-638-5760
U.S. Office Delaware 5021 52-2034226 c/o U.S. Office Products Company
Furniture, Inc. 3550 Patterson Avenue
Grand Rapids, MI 54912
616-957-2251
U.S. Office Delaware 5021 52-1997772 c/o U.S. Office Products Company
Furniture Rentals, 3550 Patterson Avenue
Inc. Grand Rapids, MI 54912
616-957-2251
U.S. Office Delaware 5112 38-0840050 2900 Dixie
Products Grandville, MI 49418
- --Great Lakes, Inc. 616-538-4009
U.S. Office Delaware 5112 52-1906050 800 East Irving Park Road
Products--Midwest, Bemsenville, IL 60106
LLC 630-860-0660
U.S. Office Delaware 5112 39-1844097 5225 Joerns Drive
Products of Stevens Point, WI 54481
Northern 715-345-2000
Wisconsin, Inc.
U.S. Office California 5112 95-3246958 19315 East San Jose Avenue
Products Southern City of Industry, CA 91748
California 626-965-8896
Vend-Rite Service Pennsylvania 5962 23-2014419 4060 Blanche Road
Corporation Bensalem, PA 19020
215-638-8800
</TABLE>
vi
<PAGE>
P R O S P E C T U S
OFFER FOR ALL OUTSTANDING
9 3/4% SENIOR SUBORDINATED NOTES DUE 2008
IN EXCHANGE FOR
9 3/4% SENIOR SUBORDINATED NOTES DUE 2008
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OF
[LOGO]
The Exchange Offer and Withdrawal Rights will
expire at 5:00 p.m., New York City time,
on , 1998 unless extended.
------------------------
U.S. Office Products Company (the "Company" or "USOP") hereby offers to
exchange up to $400,000,000 aggregate principal amount of the Company's 9 3/4%
Senior Subordinated Notes due 2008 (the "New Notes") for a like aggregate
principal amount of the Company's outstanding 9 3/4% Senior Subordinated Notes
due 2008 (the "Old Notes" and, with the New Notes, the "Notes"), of which
$400,000,000 in principal amount is outstanding. The terms of the New Notes will
be identical in all material respects to the respective terms of the Old Notes,
except that (i) the New Notes will have been registered under the Securities Act
of 1933 (the "Securities Act") and therefore will not be subject to certain
restrictions on transfer applicable to the Old Notes and (ii) the New Notes will
not be subject to an increase in interest payments thereon as a consequence of a
failure to take certain actions in connection with their registration under the
Securities Act. The offer is made upon the terms and subject to the conditions
set forth in this Prospectus (such Prospectus, as it may be amended or
supplemented from time to time, the "Prospectus") and in the accompanying Letter
of Transmittal (which together constitute the "Exchange Offer").
The New Notes will be general unsecured obligations of the Company and will
be subordinate and junior in right of payment to all existing and future Senior
Indebtedness (as defined herein) of the Company. The Company's obligations under
the Notes are fully and unconditionally guaranteed on an unsecured, senior
subordinated basis by (i) the Company's existing Domestic Subsidiaries (as
defined herein) which upon issuance of the Old Notes guaranteed the Company's
borrowings under the Credit Facility (as defined herein) and (ii) any future
Material Domestic Subsidiaries (as defined herein) that guarantee such
borrowings (the "Note Guarantors"). The Note Guarantees will be subordinated to
all existing and future Guarantor Senior Indebtedness (as defined herein),
including the Note Guarantors' obligations under the Credit Facility.
Interest on the New Notes will be payable semiannually in cash on June 15
and December 15 of each year. The Notes are redeemable at the option of the
Company, in whole or in part, at any time on and after June 15, 2003, at the
redemption prices set forth herein plus accrued interest. In addition, at any
time prior to June 15, 2001, the Company at its option may redeem up to 35% of
the original aggregate principal amount of the Notes with the proceeds of one or
more Equity Offerings (as defined herein), at a redemption price of 109.750% of
their principal amount plus accrued interest; provided that after any such
redemption at least 65% of the original aggregate principal amount of Notes
remains outstanding.
(CONTINUED ON NEXT PAGE)
SEE "RISK FACTORS" BEGINNING ON PAGE 17 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY HOLDERS WHO TENDER OLD NOTES IN THE EXCHANGE OFFER.
-------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND 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.
The Date of this Prospectus is , 1998.
<PAGE>
(CONTINUED FROM COVER PAGE)
The New Notes are being offered for exchange in order to satisfy certain
obligations of the Company under the Registration Rights Agreement dated June 5,
1998 ("Registration Rights Agreement") among the Company, Morgan Stanley & Co.
Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BT Alex. Brown
Incorporated and Chase Securities Inc. (the "Placement Agents"). In the event
the Exchange Offer is consummated, any Old Notes which remain outstanding after
consummation of the Exchange Offer and the New Notes issued in the Exchange
Offer will vote together as a single class for purposes of determining whether
holders of the requisite percentage of outstanding principal amount thereof have
taken certain actions or exercised certain rights under the Indenture (as
defined herein) governing the Notes.
The Company is making the Exchange Offer with respect to the New Notes in
reliance on the position of the staff of the Division of Corporation Finance
(the "Staff") of the Securities and Exchange Commission (the "Commission") as
set forth in certain interpretive letters addressed to parties in other
transactions. However, the Company has not sought its own interpretive letter
and there can be no assurance that the Staff would make a similar determination
with respect to the Exchange Offer as it has in such interpretive letters to
third parties. Based on these interpretations by the Staff, and subject to the
two immediately following sentences, the Company believes that New Notes issued
pursuant to this Exchange Offer in exchange for Old Notes may be offered for
resale, resold and otherwise transferred by a holder of such New Notes (other
than a holder who is a broker-dealer) without further compliance with the
registration and prospectus delivery requirements of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
holder's business and that such holder is not participating, and has no
arrangement or understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of such New Notes. However, any
holder of Old Notes who is an "affiliate" of the Company or who intends to
participate in the Exchange Offer for the purpose of distributing New Notes or
any broker-dealer who purchased Old Notes from the Company to resell pursuant to
Rule 144A under the Securities Act ("Rule 144A") or any other available
exemption under the Securities Act, (a) will not be able to rely on the
interpretations of the Staff set forth in the above-mentioned interpretive
letters, (b) will not be permitted or entitled to tender such Old Notes in the
Exchange Offer and (c) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or other transfer
of such Old Notes unless such sale is made pursuant to an exemption from such
requirements. In addition, as described below, if any broker-dealer holds Old
Notes acquired for its own account as a result of market-making or other trading
activities and exchanges such Old Notes for New Notes, then such broker-dealer
must deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of such New Notes or any other New Notes received in
respect thereof.
Each holder of Old Notes who wishes to exchange Old Notes for New Notes in
the Exchange Offer will be required to represent that at the time of the
consummation of the Exchange Offer (i) it is not an "affiliate" of the Company
within the meaning of Rule 405 under the 1933 Act, (ii) any New Notes to be
received by it are being acquired in the ordinary course of its business, and
(iii) it has no arrangement or understanding with any person to participate in a
distribution (within the meaning of the Securities Act) of such New Notes. If
such holder is a broker-dealer that will receive New Notes for its own account
in exchange for Old Notes that were acquired by such broker-dealer as a result
of market-making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
Based on the positions taken by the Staff in the interpretive letters
referred to above, the Company believes that broker-dealers who acquired Old
Notes for their own accounts, as a result of market-making activities or other
trading activities ("Participating Broker-Dealers") may fulfill their prospectus
delivery requirements with respect to the New Notes received upon exchange of
the Old Notes (other than Old
2
<PAGE>
Notes which represent an unsold allotment from the original sale of the Old
Notes ) with a prospectus meeting the requirements of the Securities Act, which
may be the prospectus prepared for an exchange offer so long as it contains a
description of the plan of distribution with respect to the resale of such New
Notes. Accordingly, this Prospectus, as it may be amended or supplemented from
time to time, may be used by a Participating Broker-Dealer during the period
referred to below in connection with resales of New Notes received in exchange
for Old Notes where such Old Notes were acquired by such Participating
Broker-Dealer for its own account as a result of market-making or other trading
activities. Subject to certain provisions set forth in the Registration Rights
Agreement, the Company has agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer in
connection with resales of such New Notes for a period ending 90 days after the
last date of acceptance for the Exchange Offer. See "Plan of Distribution."
In that regard, each Participating Broker-Dealer who surrenders Old Notes
for its account pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal, that, upon receipt of notice from the
Company of the occurrence of any event or the discovery of any fact which makes
any statement contained or incorporated by reference in this Prospectus untrue
in any material respect or which causes this Prospectus to omit to state a
material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which they
were made, not misleading or of the occurrence of certain other events specified
in the Registration Rights Agreement, such Participating Broker-Dealer will
suspend the sale of New Notes pursuant to this Prospectus until the Company has
amended or supplemented this Prospectus to correct such misstatement or omission
and has furnished copies of the amended or supplemented Prospectus to such
Participating Broker-Dealer or the Company has given notice that the sale of the
New Notes may be resumed, as the case may be.
Any Old Notes not tendered and accepted in the Exchange Offer will remain
outstanding and will be entitled to all the same rights and will be subject to
the same limitations applicable thereto under the Indenture (except for those
rights that terminate upon consummation of the Exchange Offer). Following
consummation of the Exchange Offer, the holders of Old Notes will continue to be
subject to all of the existing restrictions upon transfer thereof and the
Company will not have any further obligation to such holders pursuant to the
Registration Rights Agreement to provide for registration under the Securities
Act of the Old Notes held by them. To the extent that Old Notes are tendered and
accepted in the Exchange Offer, a holder's ability to sell untendered Old Notes
could be adversely affected. See "Risk Factors-- Consequences of a Failure to
Exchange Old Notes."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD NOTES ARE URGED TO READ THIS PROSPECTUS AND THE
RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR
OLD NOTES PURSUANT TO THE EXCHANGE OFFER.
Old Notes may be tendered for exchange on or prior to 5:00 p.m., New York
City time, on , 1998 (such time on such date being hereinafter called
the "Expiration Date"), unless the Exchange Offer is extended by the Company (in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended). Tenders of Old Notes may be withdrawn at
any time on or prior to the Expiration Date. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes being tendered for
exchange. However, the Exchange Offer is subject to certain terms and provisions
of the Registration Rights Agreement. The Company has agreed to pay certain
expenses of the Exchange Offer. See "The Exchange Offer--Fees and Expenses."
This Prospectus, together with the Letter of Transmittal and Notice of
Guaranteed Delivery, is being sent to all registered holders of Old Notes as of
, 1998.
3
<PAGE>
The Company will not receive any cash proceeds from the issuance of the New
Notes offered hereby. No dealer-manager is being used in connection with this
Exchange Offer. See "Use of Proceeds" and "Plan of Distribution."
The New Notes will be represented by a global certificate registered in the
name of a nominee of The Depository Trust Company ("DTC"). See "Description of
New Notes--Book Entry; Delivery and Form and The Depository Trust Company."
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES
OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF.
------------------------
4
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following regional offices of the Commission: 5 Park Place, Room 1228, New York,
New York 10007 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60621.
Copies of such material may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. at prescribed rates. Such
reports and other information can also be reviewed through the Commission's
Electronic Data Gathering, Analysis, and Retrieval System ("EDGAR") which is
publicly available though the Commission's World Wide Web site (http://
www.sec.gov). In addition, the Company's Common Stock is listed on the Nasdaq
Stock Market's National Market System, and materials filed by the Company can be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.
This Prospectus constitutes a part of a registration statement on Form S-4
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act. As permitted by the rules and regulations of the Commission,
this Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission, and reference is hereby made to the
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the New Notes. Any statements
contained herein concerning the provisions of any document are not necessarily
complete, and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by USOP pursuant to the
Exchange Act are incorporated by reference in this Prospectus:
1. USOP's Annual Report on Form 10-K for the year ended April 25, 1998,
filed with the Commission on July 23, 1998; and
2. USOP's Current Reports on Form 8-K, filed with the Commission on
April 22, 1998, May 26, 1998, June 17, 1998 and June 25, 1998.
All documents filed by the Company pursuant to Sections 13(a) and (c), 14,
or 15(d) of the Exchange Act after the date hereof and prior to the termination
of the offering of the securities offered hereby shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such documents. Any statement contained 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 other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
including the documents or portions thereof incorporated or deemed to be
incorporated herein by reference, as the same may be amended, supplemented or
otherwise modified from time to time. Statements contained in this Prospectus as
to the contents of any contract or other document referred to herein do not
purport to be complete, and where reference is made to the particular provisions
of such contract or other document, such provisions are qualified in all
respects by reference to all of the provisions of such contract or other
document.
5
<PAGE>
This prospectus incorporates documents by reference which are not presented
herein or delivered herewith. These documents (excluding exhibits to the
information that is incorporated by reference unless such exhibits are
specifically incorporated by reference into the information that the prospectus
incorporates) are available without charge on request from
U.S. Office Products Company
1025 Thomas Jefferson Place, N.W., Suite 600E
Washington, D.C. 20007
Attn: Mark D. Director, Esq.
Kathleen M. Delaney, Esq.
Phone: (202) 339-6700
In order to ensure timely delivery of the documents, any request should be
made no later than five (5) business days prior to the Expiration Date.
6
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND THE FINANCIAL STATEMENTS AND
RELATED NOTES THERETO APPEARING ELSEWHERE IN, OR INCORPORATED BY REFERENCE INTO,
THIS PROSPECTUS. UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERMS "U.S. OFFICE
PRODUCTS" OR THE "COMPANY" REFER TO U.S. OFFICE PRODUCTS COMPANY, A DELAWARE
CORPORATION, AND ITS SUBSIDIARIES AFTER GIVING EFFECT TO THE CONSUMMATION OF THE
COMPANY'S STRATEGIC RESTRUCTURING PLAN.
THIS PROSPECTUS (INCLUDING THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE)
CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. WHEN
USED HEREIN, THE WORDS "ANTICIPATE," "BELIEVE," "ESTIMATE," "INTEND," "MAY,"
"WILL" AND "EXPECT" AND SIMILAR EXPRESSIONS AS THEY RELATE TO THE COMPANY OR ITS
MANAGEMENT ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THE
COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS COULD DIFFER MATERIALLY
FROM THE RESULTS EXPRESSED IN, OR IMPLIED BY, THESE FORWARD-LOOKING STATEMENTS.
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE
DISCUSSED IN "RISK FACTORS" BELOW AND IN "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" IN THE COMPANY'S ANNUAL REPORT
ON FORM 10-K. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE THESE
FORWARD-LOOKING STATEMENTS TO REFLECT ANY FUTURE EVENTS OR CIRCUMSTANCES.
THE COMPANY
The Company is one of the world's leading suppliers of a broad range of
office products and business services to corporate customers. Through its North
American Office Products Group ("NAOPG"), the Company provides office supplies,
office furniture and office coffee, beverage and vending services primarily to
middle-market companies (25 to 500 employees). Based on current revenues, NAOPG
is one of the largest contract stationers in the United States. Outside North
America, the Company's Blue Star Group Limited ("Blue Star") is a leading
supplier of office products and services in New Zealand and Australia, and the
Company owns a 49% interest in Dudley Stationery Limited ("Dudley"), the second
largest contract stationer in the United Kingdom. With its November 1997
acquisition of Mail Boxes Etc. ("MBE"), the Company has expanded into the high
growth small office and home office ("SOHO") market. MBE is the world's largest
franchisor of local postal, packaging, business and communications service
centers with approximately 3,600 outlets worldwide. The Company had pro forma
revenues and EBITDA (including the Company's interest in the net income of
Dudley) of approximately $2.8 billion and $198.2 million, respectively, for the
fiscal year ended April 25, 1998.
Since its founding in October 1994, the Company has grown primarily through
an aggressive acquisition program, which has included the purchase of more than
230 businesses in the United States and internationally. The Company has focused
on acquiring successful, established companies with experienced management and
sales presence in specific geographic, product or service markets. It adheres to
a rigorous due diligence and financial review process in acquiring target
companies.
In addition, in June 1998, the Company completed a comprehensive
restructuring plan (the "Strategic Restructuring Plan") which consisted of a
number of elements including a self-tender offer (the "Equity Tender") by the
Company for its common stock, $.001 par value per share (the "Common Stock"),
distributions (the "Distributions") by the Company to its stockholders of shares
of common stock of four separate companies created to conduct the Company's
former technology solutions, print management, educational supplies and
corporate travel services businesses ("Spin-Off Companies"), and an equity
investment in the Company (the "Equity Investment") by an affiliate ("Investor")
of an investment fund managed by Clayton, Dubilier & Rice, Inc. In connection
with the Strategic Restructuring Plan, the Company also entered into several
financing transactions, including a new $1.225 billion senior credit facility
(the "Credit Facility") and the sale of $400.0 million in 9 3/4% Senior
Subordinated Notes (collectively, the "Financing Transactions").
The Company is now transitioning into a new stage of development, less
reliant on acquisitions and more focused on operational efficiencies, organic
growth and improved profit margins. To execute this new
7
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strategy, the Company is implementing new product, sales and marketing programs
to leverage its extensive sales force and existing distribution channels. The
Company continues to pursue strategic alliances with well-known companies to
enable the Company to increase revenues by offering a broader selection of
services and products, such as its arrangement to distribute
Starbucks-Registered Trademark-coffee in the North American office market. In
addition, the Company is centralizing a number of common business functions,
such as purchasing, distribution, inventory management and information systems.
Furthermore, the Company is systematically consolidating the operations of
businesses located within the same geographic areas into large,
centrally-located regional warehouses known as district fulfillment centers
("DFCs"). Through DFCs, the Company believes it can achieve greater regional
efficiencies and economies of scale in purchasing, distribution and asset
utilization. At the same time, the Company continues to encourage
entrepreneurial innovation and management of customer relationships at the local
level. The Company believes that its organizational structure combines the best
elements of both centralized and decentralized management for its business.
The Company is a Delaware corporation. Its executive offices are located at
1025 Thomas Jefferson Place, N.W., Suite 600 East, Washington, D.C. 20007, and
its telephone number is 202-339-6700.
THE EXCHANGE OFFER
<TABLE>
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GENERAL......................... The Old Notes were issued by the Company on June 10, 1998
to Morgan Stanley & Co. Incorporated, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, BT Alex. Brown
Incorporated and Chase Securities Inc. (the "Placement
Agents"). The Placement Agents subsequently resold the Old
Notes in the United States to qualified institutional
buyers in reliance upon Rule 144A and, outside the United
States, to persons other than U.S. Persons. Up to
$400,000,000 aggregate principal amount of New Notes are
being offered in exchange for a like aggregate principal
amount of Old Notes. The Company will issue, promptly
after the Expiration Date, $1,000 principal amount of New
Notes in exchange for each $1,000 principal amount of
outstanding Old Notes tendered and accepted in connection
with the Exchange Offer. The Company is making the
Exchange Offer in order to satisfy obligations under the
Registration Rights Agreement. For a description of the
procedures for tendering Old Notes, see "The Exchange
Offer-- Procedures for Tendering Old Notes."
EXPIRATION DATE................. 5:00 p.m., New York City time, on , 1998 (such
time on such date being hereinafter called the "Expiration
Date") unless the Exchange Offer is extended by the
Company (in which case the term "Expiration Date" shall
mean the latest date and time to which the Exchange Offer
is extended). See "The Exchange Offer--Expiration Date;
Extensions; Amendments."
CONDITIONS TO THE
EXCHANGE OFFER................ The Exchange Offer is not subject to any conditions other
than that the Exchange Offer does not violate applicable
law or any applicable interpretation of the Staff and is
not conditioned upon any minimum principal amount of the
Old Notes being tendered. See "The Exchange
Offer--Conditions to the Exchange Offer." The Company
reserves the right in its sole and absolute discretion,
subject to applicable law, at any time and from time to
time, (i) to
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
delay the acceptance of the Old Notes for exchange, (ii)
to terminate the Exchange Offer (iii) to extend the
Expiration Date of the Exchange Offer and retain all Old
Notes tendered pursuant to the Exchange Offer, subject,
however, to the right of holders of Old Notes to withdraw
their tendered Old Notes, or (iv) to waive any condition
or otherwise amend the terms of the Exchange Offer in any
respect. See "The Exchange Offer--Expiration Date;
Extensions; Amendments."
WITHDRAWAL RIGHTS............... Tenders of Old Notes may be withdrawn at any time on or
prior to the Expiration Date by delivering a written
notice of such withdrawal to State Street Bank and Trust
Company (the "Exchange Agent") in conformity with certain
procedures set forth below under "The Exchange
Offer--Withdrawal Rights."
PROCEDURES FOR TENDERING OLD
NOTES......................... Tendering holders of Old Notes must complete and sign a
Letter of Transmittal in accordance with the instructions
contained therein and forward the same by mail, facsimile
or hand delivery, together with any other required
documents, to the Exchange Agent, together with the Old
Notes to be tendered or in compliance with the specified
procedures for guaranteed delivery of Old Notes. Certain
brokers, dealers, commercial banks, trust companies and
other nominees may also effect tenders by book-entry
transfer. Holders of Old Notes registered in the name of a
broker, dealer, commercial bank, trust company or other
nominee are urged to contact such person promptly if they
wish to tender Old Notes pursuant to the Exchange Offer.
See "The Exchange Offer-- Procedures for Tendering Old
Notes." Letters of Transmittal and certificates
representing Old Notes should not be sent to the Company.
Such documents should only be sent to the Exchange Agent.
Questions regarding how to tender and requests for
information should be directed to the Exchange Agent. See
"The Exchange Offer--Exchange Agent."
RESALES OF NEW NOTES............ The Company is making the Exchange Offer in reliance on
the position of the Staff as set forth in certain
interpretive letters addressed to parties in other
transactions. However, the Company has not sought its own
interpretive letter and there can be no assurance that the
Staff would make a similar determination with respect to
the Exchange Offer as it has in such interpretive letters
to third parties. Based on these interpretations by the
Staff, and subject to the two immediately following
sentences, the Company believes that New Notes issued
pursuant to this Exchange Offer in exchange for Old Notes
may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who
is a broker-dealer) without further compliance with the
registration and prospectus delivery requirements of the
Securities Act, provided that such New Notes are acquired
in the ordinary course of such holder's business and that
such holder is not participating, and has no arrangement
or understanding with any person to participate, in a
distribution (within the meaning of the Securities
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
Act) of such New Notes. However, any holder of Old Notes
who is an "affiliate" of the Company or who intends to
participate in the Exchange Offer for the purpose of
distributing the New Notes, or any broker-dealer who
purchased the Old Notes from the Company to resell
pursuant to Rule 144A or any other available exemption
under the Securities Act, (a) will not be able to rely on
the interpretations of the Staff set forth in the
above-mentioned interpretive letters, (b) will not be
permitted or entitled to tender such Old Notes in the
Exchange Offer and (c) must comply with the registration
and prospectus delivery requirements of the Securities Act
in connection with any sale or other transfer of such Old
Notes unless such sale is made pursuant to an exemption
from such requirements. In addition, as described below,
if any broker-dealer holds Old Notes acquired for its own
account as a result of market-making or other trading
activities and exchanges such Old Notes for New Notes,
then such broker-dealer must deliver a prospectus meeting
the requirements of the Securities Act in connection with
any resales of such New Notes.
Each holder of Old Notes who wishes to exchange Old Notes
for New Notes in the Exchange Offer will be required to
represent that at the time of the consummation of the
Exchange Offer (i) it is not an "affiliate" of the Company
within the meaning of Rule 405 under the 1933 Act, (ii)
any New Notes to be received by it are being acquired in
the ordinary course of its business, and (iii) it has no
arrangement or understanding with any person to
participate in a distribution (within the meaning of the
Securities Act) of such New Notes.
Each broker-dealer that receives New Notes for its own
account pursuant to the Exchange Offer must acknowledge
that it acquired the Old Notes for its own account as a
result of market-making activities or other trading
activities and must agree that it will deliver a
prospectus meeting the requirements of the Securities Act
in connection with any resale of such New Notes. The
Letter of Transmittal states that by so acknowledging and
by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the position taken
by the Staff in the interpretive letters referred to
above, the Company believes that broker-dealers who
acquired Old Notes for their own accounts as a result of
market-making activities or other trading activities
("Participating Broker-Dealers") may fulfill their
prospectus delivery requirements with respect to the New
Notes received upon exchange of such Old Notes (other than
Old Notes which represent an unsold allotment from the
original sale of the Old Notes) with a prospectus meeting
the requirements of the Securities Act, which may be the
prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with
respect to the resale of such New Notes. Accordingly, this
Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer in
connection with resales of New
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
Notes received in exchange for Old Notes where such Old
Notes were acquired by such Participating Broker-Dealer
for its own account as a result of market-making or other
trading activities. Subject to certain provisions set
forth in the Registration Rights Agreement and to the
limitations described below under "The Exchange
Offer--Resale of New Notes," the Company has agreed that
this Prospectus, as it may be amended or supplemented from
time to time, may be used by a Participating Broker-Dealer
in connection with resales of such New Notes for a period
ending 90 days after the Registration Statement of which
this Prospectus constitutes a part is declared effective.
See "Plan of Distribution."
INTEREST........................ Holders of Old Notes whose Old Notes are accepted for
exchange will receive, in cash, accrued interest thereon
to, but not including, the date of issuance of the New
Notes. Such interest will be paid with the first interest
payments on the New Notes.
EXCHANGE AGENT.................. The Exchange Agent with respect to the Exchange Offer is
State Street Bank and Trust Company. The addresses, and
telephone and facsimile numbers of the Exchange Agent are
set forth in "The Exchange Offer--Exchange Agent" and in
the Letter of Transmittal.
USE OF PROCEEDS................. The Company will not receive any cash proceeds from the
issuance of the New Notes offered hereby. The net proceeds
from the placement of the Old Notes, which were
approximately $385.7 million, were used, together with the
proceeds of borrowings under the Credit Facility and the
proceeds of the Equity Investment, to refinance existing
debt, to pay the purchase price of the Equity Tender Offer
and to pay other fees and expenses incurred in connection
with the Strategic Restructuring Plan and the Financing
Transactions. See "Use of Proceeds."
CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES....... Holders of Old Notes should review the information set
forth under "Certain United States Federal Income Tax
Consequences" prior to tendering Old Notes in the Exchange
Offer.
</TABLE>
11
<PAGE>
THE NEW NOTES
<TABLE>
<S> <C>
Issuer.......................... U.S. Office Products Company
Notes Offered................... The terms of the New Notes will be identical in all
material respects to the Old Notes, except that the New
Notes will not contain terms with respect to transfer
restrictions and will not provide for increased interest
for certain future periods.
Maturity........................ June 15, 2008.
Interest........................ Payable semi-annually in cash, on June 15 and December 15
of each year, commencing December 15, 1998. For a
description of the requirement to exchange the Notes or
cause resales of the Notes to be registered under the
Securities Act and the possible effect on the interest
rate, see "Description of the Old Notes-- Registration
Rights."
Optional Redemption............. The Notes are redeemable, at the Company's option, in
whole or in part, at any time on or after June 15, 2003,
initially at 104.875% of their principal amount, plus
accrued interest, if any, to the redemption date,
declining ratably to 100% of their principal amount, plus
accrued interest, if any, to the redemption date, on or
after June 15, 2006. In addition, at any time prior to
June 15, 2001, the Company at its option may redeem up to
35% of the original principal amount of the Notes with the
proceeds from one or more Equity Offerings at a redemption
price of 109.750% of the principal amount of the Notes
plus accrued interest, if any, to the redemption date
provided that after any such redemption at least 65% of
the original aggregate principal amount of Notes remains
outstanding. See "Description of the New Notes--Optional
Redemption."
Change of Control............... Upon the occurrence of a Change of Control Triggering
Event (as defined herein), each holder of Notes will have
the right, subject to certain exceptions, to require the
Company to repurchase such holder's Notes at a purchase
price in cash equal to 101% of the principal amount
thereof, plus accrued interest, if any, to the date of
repurchase. At any time on or prior to June 15, 2003, the
Notes may also be redeemed in whole but not in part, at
the Company's option, upon the occurrence of a Change of
Control (as defined herein), at a price equal to 100% of
the principal amount thereof plus the Applicable Premium
(as defined herein) as of, and accrued interest, if any,
to, the date of redemption or purchase. There can be no
assurance that the Company will have sufficient funds
available when necessary to make any required repurchase.
See "Description of the New Notes--Certain
Covenants--Change of Control" and "--Optional Redemption."
Subsidiary Guarantees........... The Company's obligations under the Notes are fully and
unconditionally guaranteed on an unsecured, senior
subordinated basis by (i) the Company's existing Domestic
Subsidiaries (as defined herein) that upon issuance of the
Old Notes guaranteed the Company's borrowings under the
Credit Facility (as defined
</TABLE>
12
<PAGE>
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<S> <C>
herein) and (ii) any future Material Domestic Subsidiaries
(as defined herein) that guarantee such borrowings (the
"Note Guarantors"). See "Description of the New
Notes--Certain Covenants--Future Note Guarantors." The
Note Guarantees will be subordinated to all existing and
future Guarantor Senior Indebtedness (as defined herein),
including the Note Guarantors' obligations under the
Credit Facility.
Ranking......................... The Notes are unsecured, general obligations of the
Company, subordinated in right of payment to all existing
and future Senior Indebtedness of the Company. The Notes
rank PARI PASSU in right of payment with all other
existing and future Senior Subordinated Indebtedness (as
defined herein) of the Company, and will be senior in
right of payment to all future Subordinated Obligations
(as defined herein) of the Company. The Notes also will be
effectively subordinated to all secured indebtedness of
the Company to the extent of the value of the assets
securing such indebtedness. The Notes will be effectively
subordinated to all existing and future creditors
(including trade creditors) of the Company's subsidiaries
other than the Note Guarantors. As of April 25, 1998, on a
pro forma basis, giving effect to the Strategic
Restructuring Plan and the Financing Transactions, the
aggregate amount of Senior Indebtedness was $732.2
million, all of which constituted Guarantor Senior
Indebtedness. In addition, at April 25, 1998, on the same
pro forma basis, the Note Guarantors had approximately
$6.9 million of additional Guarantor Senior Indebtedness
and the Company's Subsidiaries other than the Note
Guarantors had approximately $4.7 million of indebtedness
outstanding. See "Risk Factors--Substantial Indebtedness
of the Company; Ability to Service Debt," "--Subordination
of Notes and Note Guarantees," "--Structural
Subordination" and "Description of the New
Notes--Ranking."
Certain Covenants............... The Indenture will contain certain covenants, including,
but not limited to, covenants with respect to: (i)
limitation on indebtedness; (ii) limitation on restricted
payments; (iii) limitation on dividends and other payment
restrictions affecting restricted subsidiaries; (iv)
limitation on asset dispositions; (v) limitation on
transactions with affiliates; (vi) limitation on liens;
and (vii) restrictions on mergers, consolidations and the
transfer of all or substantially all of the assets of the
Company to another person. However, these limitations will
be subject to a significant number of important
qualifications and exceptions. See "Description of the New
Notes--Certain Covenants."
Listing......................... The Notes have been designated eligible for trading on the
PORTAL Market. Application has been made to list the Notes
on the Luxembourg Stock Exchange.
Book-Entry; Delivery and Form... New Notes exchanged for Old Notes will be represented by
one or more permanent global New Notes in definitive,
fully registered form, deposited with a custodian for, and
registered in the name of a nominee of, The Depository
Trust Company ("DTC"). Beneficial
</TABLE>
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interests in such permanent global New Notes will be shown
on, and transfers thereof will be effected through,
records maintained by DTC and its participants.
Governing Law................... The Indenture and the Notes will be governed by the laws
of the State of New York.
Trustee and Registrar........... State Street Bank and Trust Company
Principal Paying Agent.......... State Street Bank and Trust Company
Paying Agent and Transfer Agent
in Luxembourg................. State Street Bank Luxembourg, S.A.
Listing Agent in Luxembourg..... Kredietbank, S.A. Luxembourgeoise
</TABLE>
RISK FACTORS
SEE "RISK FACTORS" IMMEDIATELY FOLLOWING THIS SUMMARY, FOR A DISCUSSION OF
CERTAIN FACTORS RELATING TO THE COMPANY, ITS BUSINESS AND AN INVESTMENT IN THE
NOTES.
14
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table sets forth selected financial data of the Company for
the five years ended April 25, 1998. The selected statement of income data and
selected statement of cash flows data for the fiscal years ended April 25, 1998,
April 26, 1997, and April 30, 1996 and the selected balance sheet data as of
April 25, 1998 and April 26, 1997 have been derived from the Company's
consolidated financial statements that have been audited by
PricewaterhouseCoopers LLP and that appear in the Company's Annual Report on
Form 10-K. The PricewaterhouseCoopers LLP report on the financial statements is
based in part on the reports of other independent accountants, which appear in
the Company's Annual Report on Form 10-K. The selected statement of income data
and selected statement of cash flows data for the fiscal year ended April 30,
1995 and the selected balance sheet data as of April 30, 1996 have been derived
from the Company's consolidated financial statements that have been audited by
PricewaterhouseCoopers LLP not included or incorporated elsewhere in this
Prospectus. The selected statement of income data for the fiscal year ended
April 30, 1994 and the selected balance sheet data as of April 30, 1995 and 1994
have been derived from unaudited combined financial statements of the Company
not included or incorporated elsewhere in this Prospectus.
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA(1)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
APRIL 25, APRIL 26, APRIL 30, APRIL 30, APRIL 30,
1998 1997 1996 1995 1994
------------ ------------ ------------ ---------- ----------
STATEMENT OF INCOME DATA:
Revenues....................................... $ 2,611,740 $ 2,115,954 $ 1,061,528 $ 658,494 $ 523,755
Cost of revenues............................... 1,884,892 1,518,287 789,436 485,955 377,494
------------ ------------ ------------ ---------- ----------
Gross profit................................. 726,848 597,667 272,092 172,539 146,261
Selling, general, and administrative
expenses..................................... 591,463 488,215 231,569 152,176 132,320
Amortization expense........................... 19,938 12,416 2,711 801 733
Non-recurring acquisition costs................ 8,001 8,057
Restructuring costs............................ 6,187 4,201 682
------------ ------------ ------------ ---------- ----------
Operating income............................. 109,260 84,834 29,073 19,562 13,208
Interest expense............................... 37,837 36,047 8,132 3,401 2,519
Interest income................................ (1,853) (6,857) (3,506) (675) (411)
Other income................................... (7,146) (4,233) (684) (1,456) (1,315)
------------ ------------ ------------ ---------- ----------
Income from continuing operations before
provision for income taxes and extraordinary
items........................................ 80,422 59,877 25,131 18,292 12,415
Provision for income taxes..................... 36,946 27,939 6,032 2,800 1,727
------------ ------------ ------------ ---------- ----------
Income from continuing operations before
extraordinary items.......................... 43,476 31,938 19,099 15,492 10,688
Income from discontinued operations, net of
income taxes (2)............................. 23,712 26,800 15,778 15,675 10,953
------------ ------------ ------------ ---------- ----------
Income before extraordinary items.............. 67,188 58,738 34,877 31,167 21,641
Extraordinary items--losses on early
terminations of credit facilities, net of
income taxes................................. 1,450 701
------------ ------------ ------------ ---------- ----------
Net income..................................... $ 67,188 $ 57,288 $ 34,176 $ 31,167 $ 21,641
------------ ------------ ------------ ---------- ----------
------------ ------------ ------------ ---------- ----------
</TABLE>
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<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
APRIL 25, APRIL 26, APRIL 30, APRIL 30, APRIL 30,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
Per share amounts(3):
Basic:
Income from continuing operations before extraordinary
items.................................................. $ 1.45 $ 1.42 $ 1.13 $ 1.36 $ 0.97
Income from discontinued operations...................... 0.80 1.19 0.93 1.38 0.99
Extraordinary items...................................... (0.06) (0.04)
----------- ----------- ----------- ----------- -----------
New income............................................... $ 2.25 $ 2.55 $ 2.02 $ 2.74 $ 1.96
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Diluted:
Income from continuing operations before extraordinary
items.................................................. $ 1.43 $ 1.39 $ 1.12 $ 1.36 $ 0.97
Income from discontinued operations...................... 0.77 1.17 0.92 1.37 0.99
Extraordinary items.......................................... (0.06) (0.04)
----------- ----------- ----------- ----------- -----------
Net income................................................... $ 2.20 $ 2.50 $ 2.00 $ 2.73 $ 1.96
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
APRIL 25, APRIL 26, APRIL 30, APRIL 30, APRIL 30,
1998 1997 1996 1995 1994 (4)
----------- ----------- ----------- ---------- -----------
STATEMENT OF CASH FLOWS DATA:
EBITDA (5)........................................ $ 172,614 $ 133,138 $ 48,811 $ 26,083
Net cash provided by operating activities......... 83,562 15,812 19,246 7,741
Net cash used in investing activities............. (150,389) (423,955) (120,061) (26,175)
Net cash provided by financing activities......... 76,418 277,420 257,766 22,255
Net increase (decrease) in cash and cash
equivalents..................................... 7,995 (139,457) 158,537 7,190
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
OTHER INFORMATION:
Ratio of earnings to fixed charges (6)............ 2.3x 2.0x 1.9x 2.5x 2.3x
</TABLE>
<TABLE>
<CAPTION>
APRIL 25, APRIL 26, APRIL 30, APRIL 30, APRIL 30,
1998 1997 1996 1995 1994
------------ ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.................................. $ 53,000 $ 233,986 $ 274,124 $ 70,153 $ 51,344
Total assets..................................... 2,541,427 1,711,873 805,978 259,904 172,656
Long-term debt, less current portion............. 382,174 380,209 176,230 18,841 15,112
Stockholders' equity............................. 1,486,131 921,148 394,746 128,512 77,735
------------ ------------ ---------- ---------- ----------
------------ ------------ ---------- ---------- ----------
</TABLE>
- ------------------------
(1) As a result of the completion of the Strategic Restructuring Plan in June
1998, the Company expects that future results will differ significantly from
historical results. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Introduction" that appears in the
Company's Annual Report on Form 10-K.
(2) The results of the Spin-Off Companies are reflected as discontinued
operations for all periods presented in the Company's consolidated statement
of income.
(3) The per share amounts give effect to the one-for-four reverse stock split
completed by the Company in June 1998 in conjunction with the Strategic
Restructuring Plan.
(4) No statement of cash flows data has been provided for the fiscal year ended
April 30, 1994.
(5) EBITDA represents earnings before interest, income taxes, depreciation,
amortization, non-recurring acquisition costs, restructuring costs and
extraordinary items. EBITDA is provided because it is a measure commonly
used by analysts and investors to determine a company's ability to incur and
service its debt. EBITDA is not a measurement of performance under generally
accepted accounting principles ("GAAP") and should not be considered an
alternative to net income as a measure of performance or to cash flow as a
measure of liquidity. EBITDA is not necessarily comparable with similarly
titled measures for other companies.
(6) In computing the ratio of earnings to fixed charges: (i) earnings are based
on income from continuing operations before provision for income taxes and
extraordinary items and fixed charges; and (ii) fixed charges consist of
interest expense from continuing and discontinued operations, amortization
of deferred financing costs and the estimated interest component of rent
expense.
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RISK FACTORS
IN ADDITION TO REVIEWING THE OTHER INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, HOLDERS OF THE OLD NOTES SHOULD REVIEW CAREFULLY
THE FOLLOWING RISKS CONCERNING THE NEW NOTES AND THE COMPANY BEFORE TENDERING
OLD NOTES FOR EXCHANGE.
SUBSTANTIAL INDEBTEDNESS OF THE COMPANY; ABILITY TO SERVICE DEBT
The Company incurred substantial indebtedness in connection with the
Strategic Restructuring Plan and related financing transactions and is highly
leveraged. As a result, the Company's total indebtedness at June 24, 1998 was
approximately $1,205.0 million. In addition, the Company has significant minimum
lease payments due in future years. The Credit Facility and the Indenture
governing the Notes each will permit the Company to incur additional
indebtedness subject to certain limitations.
The Company's high leverage could have material consequences to the Company,
including, but not limited to, the following: (i) the Company's ability to
obtain additional financing in the future for acquisitions, working capital,
capital expenditures, general corporate or other purposes may be impaired or any
such financing may not be available on terms favorable to the Company; (ii) a
substantial portion of the Company's cash flow will be required for debt service
and, as a result, will not be available for its operations and other purposes;
(iii) a substantial decrease in net operating cash flows or an increase in
expenses could make it difficult for the Company to meet its debt service
requirements or force it to modify its operations or sell assets; (iv) the
Company's ability to withstand competitive pressures may be limited; and (v) the
Company's level of indebtedness could make it more vulnerable to economic
downturns, and reduce its flexibility in responding to changing business and
economic conditions. In addition, the Company's borrowings under the Credit
Facility are and will continue to be at variable rates of interest, which
exposes the Company to the risk of increased interest rates. The Company's debt
under the Credit Facility and any of the Convertible Subordinated Notes that
remain outstanding and that have not been exchanged for Common Stock or
purchased, will mature prior to the maturity date of the Notes. If the Company
is unable to service its indebtedness, it may be forced to pursue one or more
alternative strategies, such as selling assets, restructuring or refinancing its
indebtedness, or seeking additional equity capital. The Company's management
does not have experience to date operating a business with a substantial amount
of leverage.
Historically, the Company has funded its capital requirements by debt
financings and the sale of Common Stock. Future sales of Common Stock may be
subject to limitations on the number of shares the Company can issue without
jeopardizing the tax-free treatment of the Distributions. See "--Potential
Limitations on Stock Issuances." In addition, the agreements relating to the
Credit Facility and the Indenture governing the Notes are expected to contain
restrictions on the incurrence of additional indebtedness. See "--Restrictions
Imposed by Terms of the Credit Facility" and "--Potential Liability for Taxes
Related to the Distributions." The Company anticipates making capital
expenditures of approximately $40.0 million in both fiscal 1999 and fiscal 2000,
primarily to support the Company's DFC program, computer system upgrades, and
maintenance of the Company's existing infrastructure.For the fiscal year ended
April 25, 1998, on a pro forma basis, the Company's EBITDA (including the
Company's interest in the net income of Dudley) and interest expense would have
been $198.2 million and $107.0 million, respectively. The Company believes that
borrowings under the Credit Facility and cash flow from operations will be
sufficient to fund the Company's planned capital expenditures and working
capital and debt service requirements. The Company may require additional
financing for future acquisitions and for further expansion of its operations.
See "Business--Business Strategies." No assurance can be given that, in the
event the Company were to require additional financing, such additional
financing would be available on terms permitted by agreements relating to then
existing indebtedness or otherwise satisfactory to the Company. Failure to
obtain such financing could result in delays or abandonment of some or all of
the Company's plans, which could limit the ability of the Company to meet its
debt service obligations (including obligations with respect to the Notes) and
could have a material adverse effect on its business.
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The ability of the Company to meet its debt service and other obligations
(including compliance with financial covenants) will be dependent upon the
future performance of the Company and its cash flow from operations, which will
be subject to prevailing economic conditions and financial, business and other
factors, certain of which are beyond the Company's control. These factors could
include general economic conditions, operating difficulties, increased operating
costs, product pricing pressures, potential revenue instability arising from
cost savings initiatives or otherwise, labor relations, the response of
competitors or customers to the Company's business strategy or projects and
delays in implementation of the Company's business strategy.
SUBORDINATION OF NOTES AND NOTE GUARANTEES
The Notes will be unsecured, senior subordinated obligations of the Company.
The Notes will be subordinated in right of payment to all existing and future
Senior Indebtedness of the Company, including all indebtedness under the Credit
Facility. The Notes will rank PARI PASSU with all Senior Subordinated
Indebtedness of the Company, if any (including ranking equally, as to
indebtedness under the Credit Facility, with any Convertible Subordinated Notes
that are not exchanged or purchased), and will rank senior to all Subordinated
Obligations (as defined herein) of the Company, if any. The Notes also will be
effectively subordinated to all secured indebtedness of the Company to the
extent of the value of the assets securing such indebtedness. By reason of such
subordination, in the event of the insolvency, liquidation or other
reorganization of the Company, the Senior Indebtedness must be paid in full
before the principal of, premium, if any, or interest on the Notes may be paid.
In addition, the obligations of the Company under the Credit Facility will be
secured by substantially all of the assets of the Company and its domestic
subsidiaries, including the capital stock of the domestic subsidiaries of the
Company. If the Company becomes insolvent or is liquidated or if payment under
the Credit Facility is accelerated, the lenders under the Credit Facility would
be entitled to exercise the remedies available to a secured lender under
applicable law and pursuant to instruments governing such indebtedness.
Accordingly, such lenders will have a prior claim on the Company's assets. In
any such event, because the Notes will not be secured by any of the Company's
assets, it is possible that there would be no assets remaining from which claims
of the holders of such Notes could be satisfied, or, if any assets remained,
such assets might be insufficient to satisfy such claims fully.
In the event of a default in the payment of any Senior Indebtedness, the
Company may not pay the principal of, premium, if any, or interest on the Notes
unless and until such default has been cured or waived. In the event of any
other default permitting the acceleration of Designated Senior Indebtedness (as
defined herein), including indebtedness under the Credit Facility, where notice
of such default has been given to the Company, the Company may not make any
payment with respect to the Notes for 179 days or, if earlier, unless and until
such default has been cured or waived. Upon any payment or distribution of
assets of the Company upon a total or partial liquidation, dissolution,
reorganization or similar proceeding, the holders of Senior Indebtedness will be
entitled to receive payment in full before the holders of the Notes or other
Senior Subordinated Indebtedness are entitled to receive any payment. See
"Description of the New Notes--Ranking." The Company will also be permitted to
issue additional Senior Indebtedness and Senior Subordinated Indebtedness under
the Indenture.
Each Note Guarantee (as defined herein) will be an unsecured, senior
subordinated obligation of the relevant Note Guarantor. The obligations of each
Note Guarantor under its Note Guarantee will be (i) subordinated in right of
payment to all existing and future Guarantor Senior Indebtedness of such Note
Guarantor, including the Note Guarantor's obligations under or relating to the
Credit Facility, (ii) PARI PASSU in right of payment with all Guarantor Senior
Subordinated Indebtedness (as defined herein) of such Note Guarantor, if any,
and (iii) senior in right of payment to all Guarantor Subordinated Obligations
(as defined herein), if any, of such Note Guarantor. The Note Guarantee of each
Note Guarantor will also be effectively subordinated to all secured indebtedness
of such Note Guarantor to the extent of the value of the assets securing such
indebtedness. The terms on which each Note Guarantee will be subordinated to
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the prior payment in full of Guarantor Senior Indebtedness will be substantially
identical to those described herein governing the subordination of the Notes to
the prior payment in full of Senior Indebtedness.
As of April 25, 1998, on a pro forma basis, after giving effect to the
Strategic Restructuring Plan and the Financing Transactions, the aggregate
amount of Senior Indebtedness was $732.2 million, all of which constituted
Guarantor Senior Indebtedness. In addition, at April 25, 1998, on the same pro
forma basis, the Note Guarantors had approximately $6.9 million of additional
Guarantor Senior Indebtedness and the Company's Subsidiaries other than the Note
Guarantors had approximately $4.7 million of indebtedness outstanding.
STRUCTURAL SUBORDINATION
The Company conducts substantially all of its operations through various
direct and indirect subsidiaries and therefore may be dependent in part on
dividends or other distributions of funds from its subsidiaries to meet its debt
service and other obligations, including obligations under the Credit Facility
and the Notes. The rights of holders of the Notes to participate in the
distribution of the assets of any subsidiary (other than a Note Guarantor) upon
such subsidiary's liquidation or reorganization will be subject to the prior
claims of such subsidiary's creditors, including trade creditors.
RESTRICTIONS IMPOSED BY TERMS OF THE CREDIT FACILITY
The Credit Facility will impose significant operating and financial
restrictions on the Company. Such restrictions will affect, and in many respects
significantly limit or prohibit, among other things, the ability of the Company
to incur additional indebtedness and certain types of indebtedness, create
liens, engage in transactions with stockholders and affiliates, sell assets,
issue capital stock of subsidiaries or engage in mergers or acquisitions. In
addition, the Credit Facility requires that the Company maintain certain
financial ratios. These restrictions could also limit the ability of the Company
to effect future financings, make needed capital expenditures, withstand a
future downturn in the Company's business or the economy in general, or
otherwise conduct necessary corporate activities.
The Company's ability to comply with the covenants and restrictions
contained in the Credit Facility may be affected by events beyond its control,
including prevailing economic, financial and industry conditions. There can be
no assurance that the Company will be able to comply with such covenants or
restrictions in the future. Failure by the Company or its subsidiaries to comply
with these restrictions could lead to a default under the terms of such
indebtedness, notwithstanding the ability of the Company to meet its payment
obligations, and could lead to termination of the commitments of the lenders to
make further extensions of revolving credit under the Credit Facility. In the
event of a default, the holders of such indebtedness could elect to declare all
such indebtedness to be due and payable, together with accrued and unpaid
interest. In such event, a significant portion of the Company's other
indebtedness (including the Notes) may become immediately due and payable and
there can be no assurance that the Company would be able to make such payments
or borrow sufficient funds from alternative sources to make any such payment.
Even if additional financing could be obtained, there can be no assurance that
it would be on terms that are acceptable to the Company. In addition, the pledge
of substantially all of the Company's assets as collateral under the Credit
Facility could impair the Company's ability to obtain financing on terms
favorable to the Company. If the Company were unable to repay its indebtedness
to the lenders under the Credit Facility, such lenders could proceed against the
collateral securing such indebtedness, including substantially all of the
Company's assets, and the Company could be prohibited from making any payments
on the Notes. The Indenture will also contain a number of restrictive covenants
relating to the Company. See "Description of the New Notes."
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RISKS RELATED TO CHANGE IN STRATEGIC FOCUS AND BUSINESS AND GROWTH STRATEGIES
The Company was founded in October 1994 and conducted no operations prior to
the acquisition of its founding companies in February 1995. Since that time, the
Company has grown primarily through an aggressive acquisition strategy. The
Company is now transitioning into a new stage of development, less reliant on
acquisitions and more focused on operational efficiencies, organic growth and
improved profit margins. The Company's ability to achieve these objectives will
depend on a number of factors, including its generation of increased revenues
and margins in existing businesses through, among other things, expansion into
new markets and additional "cross selling" activities; ability to continue to
integrate existing operations and new acquisitions without substantial delays or
other problems; and achievement of operating improvements and cost reductions,
such as volume purchasing arrangements, consolidation of general and
administrative functions and elimination of redundant facilities, and
improvement of technology and operating and distribution systems. In particular,
the Company's ability to achieve operating improvements will depend on
successful implementation of its plans to establish DFCs in the United States.
There can be no assurance that these efforts to achieve operating improvements
will be successful or will result in anticipated levels of cost savings and
efficiencies or growth in revenues and margins.
CHALLENGES OF BUSINESS INTEGRATION; RISKS RELATED TO ACQUISITIONS
Historically, the Company has grown substantially through acquisitions. The
Company's aggressive acquisition program has produced a significant increase in
revenues, employees, facilities and distribution systems. While the Company's
decentralized management strategy, together with operating efficiencies
resulting from the elimination of duplicative functions and economies of scale,
may present opportunities to reduce costs, such strategies may initially require
additional costs and expenditures to expand operational and financial systems
and corporate management administration. Because of the various costs and
possible cost-savings strategies, historical operating results may not be
indicative of future performance. There also can be no assurance that the pace
of the Company's acquisitions will not adversely affect efforts to implement
cost-savings and integration strategies and to manage operations and
acquisitions profitably. Additionally, attempts to achieve economies of scale
through cost cutting and lay-offs of existing personnel may, at least in the
short term, have an adverse impact upon the Company. Delays in implementing
planned integration and consolidation strategies, or the failure of such
strategies to achieve anticipated cost savings, also could adversely affect the
Company's results of operations and financial condition. In addition, there can
be no assurance that the Company's management and financial controls, personnel,
computer systems and other corporate support systems will be adequate to manage
the increasing size and scope of its operations and its continuing acquisition
activity.
The Company intends to pursue selected acquisition opportunities; however,
no assurance can be given that the Company will identify, finance and complete
additional suitable acquisitions on acceptable terms, or that future
acquisitions, if completed, will be successful. The Company will likely incur
additional debt to finance any additional acquisitions. In addition, acquired
companies may not achieve future revenues and profitability levels that justify
the prices that the Company paid to acquire them. Acquisitions also may involve
a number of risks that could have a material adverse effect on future operations
and financial performance, including diversion of management's attention;
unanticipated declines in revenues or profitability following acquisitions;
difficulties with the retention, hiring and training of key personnel; risks
associated with unanticipated business problems or legal liabilities; and the
amortization of acquired intangible assets, such as goodwill.
HIGHLY COMPETITIVE MARKETS
The Company operates in a highly competitive environment. It generally
competes with a large number of smaller, independent companies, many of which
are well-established in their markets. In addition, in the United States, the
NAOPG competes with five large office products companies, each of which may have
greater financial resources than the Company. Several of the Company's large
competitors
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operate in many of its geographic and product markets, and other competitors may
choose to enter its geographic and product markets in the future. In addition,
as a result of this competition, the Company may lose customers or have
difficulty acquiring new customers. As a result of competitive pressures in the
pricing of products, the Company's revenues or margins may decline. The highly
leveraged nature of the Company after the transactions related to the Strategic
Restructuring Plan and the Financing Transactions could limit the Company's
ability to continue to make necessary or desirable investments or capital
expenditures to compete effectively and to respond to market conditions.
The Company faces significant competition to acquire additional businesses
as the office products industry undergoes continuing consolidation. Competition
is expected to increase in the domestic and international markets that the
Company serves or is planning to enter as consolidation occurs (or accelerates)
in those markets. A number of the Company's major competitors are actively
pursuing acquisitions on a global basis.
FOREIGN OPERATIONS; EXCHANGE RATE FLUCTUATIONS
Management intends to continue to focus significant attention and resources
on international operations and expects foreign revenues to continue to
represent a significant portion of the Company's total revenues. The factors
described in this "Risk Factors" section that apply to the Company's domestic
operations generally may also affect the Company's foreign operations. In
addition, the Company's foreign operations are subject to a number of other
risks, including fluctuations in currency exchange rates; new and different
legal and regulatory requirements in local jurisdictions; tariffs and trade
barriers; potential difficulties in staffing and managing local operations;
credit risk of local customers and distributors; potential difficulties in
protecting intellectual property; potential imposition of restrictions on
investments; potentially adverse tax consequences, including imposition or
increase of withholding and other taxes on remittances and other payments by
subsidiaries; and local economic, political and social conditions, including the
possibility of hyper-inflationary conditions, in certain countries. There can be
no assurance that one or a combination of these factors will not have a material
adverse impact on the Company's ability to maintain or increase its foreign
revenues or on its business, financial condition or results of operations.
Over 33% of consolidated revenues for the fiscal year ended April 25, 1998
were generated from the Company's international operations and are denominated
in currencies other than United States dollars. The Company's results of
operations have been and may continue to be impacted by the translation of the
international operations' functional currencies into United States dollars.
Devaluation has adversely affected the return on the Company's investment in its
New Zealand and Australian operations. If exchange rates stabilize at current
rates or continue to decline, the Company's return on assets and equity from its
New Zealand and Australian operations will continue to be depressed. The Company
expects that it will incur additional costs with respect to accessing cash flows
from international operations, including such items as New Zealand and
Australian withholding taxes and other taxes and foreign currency hedging costs.
In addition, the Company's results of operations could be further impacted by
fluctuations in the New Zealand and Australian exchange rates as a result of the
structure of certain financing alternatives currently being evaluated by the
Company.
Substantially all of the Company's indebtedness is denominated in U.S.
dollars. As a result, declines in the value of the currencies in which the
Company's revenues from international operations are generated relative to the
value of the U.S. dollar may materially adversely affect the Company's business,
financial condition and results of operations and the ability of the Company to
meet its obligations under the Notes.
RISKS RELATING TO DEPENDENCE OF MAIL BOXES ETC. ON BUSINESS OF UPS AND FRANCHISE
RELATIONSHIPS
Various factors may affect MBE's business. The United Parcel Service ("UPS")
is a key vendor for MBE. The Company estimates that a significant percentage of
the gross revenues of a typical MBE retail center in the United States is
attributable to services provided by UPS. If UPS were to raise its prices to
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MBE or otherwise materially adversely change the terms on which it provides
shipping services for MBE retail centers or if UPS cannot provide service or
provides limited services as it did during a 1997 strike by its employees, the
revenues of MBE could be materially and adversely affected. MBE conducts its
business principally through franchisees or licensees, with the result that MBE
has limited control over franchisee operations and is subject to significant
government regulation of its legal relationships with franchisees that limits
the control that MBE has over its franchisees. MBE also faces growing
competition from the United States Postal Service as it establishes postal
service centers located in shopping centers and other locations to compete
against MBE and other similar retail service centers.
RELIANCE ON KEY PERSONNEL
The Company's operations will depend on the continued efforts of its senior
executive officers, including Thomas Morgan, President and Chief Executive
Officer, and the senior management of certain of its subsidiaries. If any of
these individuals becomes unable to continue in his or her present role, or if
the Company is unable to attract and retain other skilled employees, its
business could be adversely affected. The Company intends to obtain key person
life insurance covering Thomas Morgan, but does not intend to obtain key person
life insurance covering any other members of senior management.
INTANGIBLE ASSETS
As of April 25, 1998, approximately $923.0 million, or 45.7% of the
Company's total assets on a pro forma basis, represented intangible assets, the
substantial majority of which was goodwill. As a result, a substantial portion
of the value of the Company's assets may not be available to repay creditors in
the event of a bankruptcy or dissolution of the Company. As a result of the
Equity Tender Offer and the Distributions, the Company will be precluded from
completing business combinations under the pooling-of-interests accounting
method for a period of up to nine months. Any business combinations that the
Company completes during this period will have to be accounted for under the
purchase method. As a result, the amount of goodwill reflected on the Company's
balance sheet will increase to the extent that the Company acquires additional
companies under the purchase method of accounting.
ABILITY OF INVESTOR TO INFLUENCE MANAGEMENT
As part of the Strategic Restructuring Plan, Investor acquired shares
amounting to 24.9% of the outstanding shares of the Common Stock after giving
effect to the Equity Tender Offer and to the issuance of such shares. Investor
also acquired various warrants that give it the right to acquire additional
shares of Common Stock in the future that in certain circumstances could
increase its ownership to as much as 39.9% of the Common Stock (if no currently
outstanding stock options are exercised). Investor has, among other things, the
right (subject to certain conditions) to nominate three of the nine members of
the Company's Board of Directors (the "Board"), including the Chairman of the
Board. Investor will retain this right until Investor's level of ownership of
Common Stock declines by more than one-third. In addition, certain Board
decisions are subject to super-majority voting provisions that, in certain
circumstances, may require the concurrence of at least one director nominated by
Investor. The super-majority voting provisions require the affirmative vote of
three-fourths of the Board for certain decisions such as the sale of certain
equity securities; any merger, tender offer involving the Company's equity
securities or sale, lease or disposition of all or substantially all of the
Company's assets or other business combination involving the Company; any
dissolution or partial liquidation of the Company; and certain changes to the
Company's charter and by-laws. These super-majority Board voting requirements
may give Investor the ability to block the approval of certain actions requiring
the super-majority vote of the Board. In addition, Investor's significant
ownership of the Common Stock may permit Investor to influence significantly
matters requiring the approval of the Company's stockholders.
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POTENTIAL LIABILITY FOR CERTAIN LIABILITIES OF THE SPIN-OFF COMPANIES
As part of the Strategic Restructuring Plan, the Spin-Off Companies agreed
to indemnify the Company for certain liabilities that the Company could incur
relating to the Distributions, the operations of the Spin-Off Companies and
other matters. There can be no assurance that the Spin-Off Companies will be
able to satisfy any such indemnities, and the Company may therefore incur such
liability even if it arose out of the activities of the Spin-Off Companies. If
in the future the Spin-Off Companies are unable to satisfy these obligations,
the Company and its ability to meet its obligations on the Notes could be
adversely affected. In addition, the Company will indemnify Investor and its
affiliates against losses resulting from any of the Spin-Off Companies failing
to satisfy their obligations to the Company.
POTENTIAL LIABILITY FOR TAXES RELATED TO THE DISTRIBUTIONS
Wilmer, Cutler & Pickering delivered an opinion (the "Spin-Off Opinion")
stating that for U.S. federal income tax purposes, the Distributions qualify as
tax-free spin-offs under Section 355 of the Internal Revenue Code of 1986, as
amended (the "Code"), and are not taxable under Section 355(e) of the Code. The
Spin-Off Opinion is based on the accuracy as of the time of the Distributions of
factual representations made by the Company, the Spin-Off Companies and
Investor, and certain other information, data, documentation and other materials
that Wilmer, Cutler & Pickering deemed necessary.
The Spin-Off Opinion represents Wilmer, Cutler & Pickering's best judgment
of how a court would rule. However, the Spin-Off Opinion is not binding upon
either the Internal Revenue Service ("IRS") or any court. A ruling has not been,
and will not be, sought from the IRS with respect to the U.S. federal income tax
consequences of the Distributions. Accordingly, the IRS and/or a court could
reach a conclusion that differs from the conclusions in the Spin-Off Opinion.
If a Distribution failed to qualify as a tax-free spin-off under Section 355
or were taxable under Section 355(e), the Company would recognize gain equal to
the difference between the fair market value of the Spin-Off Company's common
stock on the effective date of the Distribution (the "Distribution Date") and
the Company's adjusted tax basis in the Spin-Off Company's common stock on the
Distribution Date. If the Company were to recognize gain on one or more
Distributions, such gain would likely be substantial.
POTENTIAL LIMITATIONS ON STOCK ISSUANCES
Certain limitations under Section 355 of the Code may restrict the Company's
ability to issue capital stock after the Distributions. These limitations will
generally prevent the Company from issuing capital stock to the extent the
issuance is part of a plan or series of related transactions that includes one
or more of the Distributions and pursuant to which one or more persons acquire
capital stock of the Company that represents 50% or more of the voting power or
50% or more of the value of the Company's capital stock. These limitations may
restrict the Company's ability to undertake transactions involving issuances of
capital stock of the Company that management otherwise believes would be
beneficial.
FRAUDULENT TRANSFER CONSIDERATIONS
The incurrence of indebtedness by the Company and the Note Guarantors, such
as the Notes and the Note Guarantees, may be subject to review under federal or
state fraudulent transfer laws in the event that the Company or any Note
Guarantor is the subject of a bankruptcy filing or lawsuit commenced by or on
behalf of unpaid creditors of the Company or such Note Guarantor. Under such
laws, if a court in a lawsuit by a creditor or a representative of creditors of
the Company or any Note Guarantor, such as a trustee in bankruptcy, were to find
that, at the time the Company or such Note Guarantor incurred indebtedness,
including indebtedness under the Notes or the relevant Note Guarantee, the
Company or such Note Guarantor (i) was insolvent or rendered insolvent thereby,
(ii) was engaged in a business or transaction for which its remaining assets
constituted an unreasonably small amount of capital, (iii) intended to incur, or
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believed that it would incur, debts beyond its ability to pay as they matured,
or (iv) intended to hinder, delay or defraud current or future creditors and, in
the case of clauses (i), (ii) and (iii), that the Company or such Note Guarantor
did not receive reasonably equivalent value or fair consideration for incurring
such indebtedness, such court could avoid or subordinate the amounts owing under
the Notes or the relevant Note Guarantee to presently existing and future
indebtedness of the Company or such Note Guarantor and take other actions
detrimental to the Holders of the Notes.
If a court were to find that the Company or such Note Guarantor came within
any of clauses (i) through (iv) above, the Company or such Note Guarantor, or
its creditors or the trustee in bankruptcy, could seek to avoid the grant of
security interests to the lenders under the Credit Facility. This would result
in an event of default with respect to indebtedness incurred under the Credit
Facility which, under the terms of such indebtedness (subject to applicable
law), would allow the lenders to terminate their obligations thereunder and to
accelerate payment of such indebtedness.
The measure of insolvency for purposes of the foregoing will vary depending
upon the law of the jurisdiction which is being applied. Generally, however, a
company would be considered insolvent for purposes of the foregoing if, at the
time it incurred the indebtedness, (i) the sum of such company's debts including
contingent liabilities is greater than all such company's property at a fair
valuation, (ii) the present fair saleable value of such company's assets is less
than the amount that will be required to pay its probable liability on its
existing debts and liabilities (including contingent liabilities) as they become
absolute and matured or (iii) the company incurred obligations beyond its
ability to pay as such obligations become due. There can be no assurance as to
what standards a court would use to determine whether the Company or a Note
Guarantor was solvent at the relevant time, or whether, whatever standards were
to be used, the Notes or the Note Guarantees would not be avoided or further
subordinated on another of the grounds set forth above. In rendering their
opinions in connection with the initial borrowing under the Credit Facility,
counsel for the Company and the Note Guarantors and counsel for the lenders will
not express any opinion as to the applicability of federal or state fraudulent
transfer and conveyance laws. Moreover, any solvency analysis conducted in
connection with the Strategic Restructuring Plan would not be binding on a court
and there can be no assurance that a court would not determine that the Company
or a Note Guarantor was insolvent at the time of or after giving effect to the
Strategic Restructuring Plan.
The Company believes that at the time the indebtedness constituting the
Notes and the Note Guarantees will be incurred initially by the Company and the
Note Guarantors, each of the Company and the Note Guarantors (i) will be (a)
neither insolvent nor rendered insolvent thereby, (b) in possession of
sufficient capital to run its respective business effectively and (c) incurring
debts within its respective ability to pay as the same mature or become due and
(ii) will have sufficient assets to satisfy any probable money judgment against
it in any pending action. In reaching the foregoing conclusions, the Company has
relied upon its analyses of internal cash flow projections and estimated values
of assets and liabilities of the Company and the Note Guarantors. There can be
no assurance, however, that a court passing on such questions would reach the
same conclusions.
CHANGE OF CONTROL
The Indenture provides that, under certain conditions upon the occurrence of
a Change of Control Triggering Event, the Company will be required to make an
offer to purchase all or any part of the Notes at a price in cash equal to 101%
of the aggregate principal amount thereof plus accrued and unpaid interest, if
any, to the date of purchase. The Credit Facility will generally prohibit the
Company from so repurchasing any Notes and will also provide that certain change
of control events with respect to the Company will constitute a default
thereunder. Any future agreements or other agreement relating to Senior
Indebtedness to which the Company becomes a party may contain similar
provisions. If the Company does not repay or refinance borrowings having such
provisions or otherwise obtain consent to purchase the Notes under such
agreements, any resulting failure to offer to purchase or to purchase Notes
would constitute an Event of Default (as defined herein) under the Indenture.
If, as a result thereof, a
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<PAGE>
default occurs with respect to any Senior Indebtedness, the subordination
provisions in the Indenture would likely restrict payments to the holders of the
Notes. Moreover, the exercise by the Holders of their right to require the
Company to repurchase the Notes could cause a default under such agreements,
even if the Change of Control Triggering Event itself does not, due to the
financial effect of such repurchase on the Company. Finally, the Company's
ability to pay cash to the Holders upon a repurchase may be limited by the
Company's then existing financial resources. There can be no assurance that
sufficient funds will be available when necessary to make any required
repurchases. See "Description of the New Notes--Change of Control," "--Ranking."
YEAR 2000 COMPLIANCE
The Company is currently reviewing the year 2000 compliance of software that
it uses in its business. The Company's Trinity system, which it is currently
installing throughout its NAOPG operations as the core operations system, is
year 2000 compliant. However, the Company's operating subsidiaries are, in some
cases, using billing or other software that is not yet year 2000 compliant.
Based upon information that the Company has collected from its operating
subsidiaries, it expects to be able to achieve year 2000 compliance in 1999 and
does not expect that the cost of making necessary adaptations will be material
to the Company. If the Company cannot make the necessary adaptations on a timely
basis, or if the costs are greater than expected, the Company's business could
be adversely affected.
ABSENCE OF PUBLIC TRADING MARKET FOR THE NEW NOTES
There is no public market for the New Notes. Application has been made to
list the New Notes on the Luxembourg Stock Exchange and the Company does not
intend to apply for listing of the Notes on any other national securities
exchange or for quotation of the New Notes through the Nasdaq Stock Market. The
Company has been advised by the Placement Agents that the Placement Agents
intend to make a market in the New Notes; however, they are under no obligation
to do so and may discontinue any market-making activities at any time without
notice. No assurance can be given as to the liquidity of the trading market for
the New Notes or that an active public market will develop. If an active public
market does not develop or is not maintained, the market price and liquidity of
the New Notes may be adversely affected.
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD NOTES
The Old Notes have not been registered under the Securities Act or any state
securities laws and therefore may not be offered, sold or otherwise transferred
except in compliance with the registration requirements of the Securities Act
and any other applicable securities laws, or pursuant to an exemption therefrom
or in a transaction not subject thereto, and in each case in compliance with
certain other conditions and restrictions. Old Notes which remain outstanding
after consummation of the Exchange Offer will continue to bear a legend
reflecting such restrictions on transfer. In addition, upon consummation of the
Exchange Offer, holders of Old Notes that remain outstanding will not be
entitled to any rights to have such Old Notes registered under the Securities
Act or to any similar rights under the Registration Rights Agreement and will
not be entitled to an increased interest rate. See "Description of the Old
Notes--Registration Rights." The Company does not intend to register under the
Securities Act any Old Notes that remain outstanding after consummation of the
Exchange Offer.
To the extent that Old Notes are tendered and accepted in the Exchange
Offer, a holder's ability to sell untendered Old Notes could be adversely
affected. In addition, although the Old Notes have been designated for trading
in the Private Offerings, to the extent that Old Notes are tendered and accepted
in connection with the Exchange Offer, any trading market for Old Notes that
remain outstanding after the Exchange Offer could be adversely affected.
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<PAGE>
Notes not tendered in the Exchange Offer shall bear interest at the rate of
9 3/4% and be subject to all of the terms and conditions specified in the
Indenture and to the transfer restrictions described in "Description of the Old
Notes--Transfer Restrictions."
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the New
Notes offered hereby. The New Notes will be exchanged for Old Notes of like
principal amount. Old Notes that are exchanged will be retired and canceled. The
net proceeds from the placement of the Old Notes, which were approximately
$385.7 million, were used, together with the proceeds of borrowings under the
Credit Facility and the proceeds of the Equity Investment, to refinance existing
debt, to pay the purchase price of the Equity Tender Offer and to pay other fees
and expenses incurred in connection with the Strategic Restructuring Plan and
the Financing Transactions.
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<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company at April
25, 1998: (i) on an actual basis; and (ii) on a pro forma basis to reflect (a)
the Equity Tender, (b) the Distributions, (c) the Equity Investment, and (d) the
Financing Transactions as if all such transactions had occurred on April 25,
1998. This table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" that appears in the
Company's Annual Report on Form 10-K, the historical consolidated financial
statements and the related notes thereto that are incorporated by reference into
this Prospectus, and the unaudited pro forma combined financial statements of
the Company and the related notes thereto that appear elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
AS OF APRIL 25, 1998
--------------------------
<S> <C> <C>
ACTUAL PRO FORMA
------------ ------------
<CAPTION>
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Former Credit Facility................................................................ $ 365,000 $ --
Credit Facility....................................................................... -- 732,244
2001 Notes............................................................................ 143,750 12,761
2003 Notes............................................................................ 230,000 7,785
The Notes............................................................................. -- 398,152
Other debt(1)......................................................................... 11,651 11,651
------------ ------------
Total debt.......................................................................... 750,401 1,162,593
------------ ------------
Stockholders' equity:
Preferred stock, $0.001 par value, 500,000 shares authorized; none outstanding...... -- --
Common stock, $0.001 par value, 500,000,000 shares authorized, 33,460,864, and
36,681,394 (unaudited) shares issued, 33,460,864, and 36,514,159 (unaudited)
shares outstanding, none, and 167,235 (unaudited) shares held in treasury,
respectively(2)................................................................... 33 37
Additional paid-in capital.......................................................... 1,472,125 704,388
Cumulative translation adjustment................................................... (112,803) (112,803)
Retained earnings................................................................... 126,776 (15,989)
------------ ------------
Total stockholders' equity........................................................ 1,486,131 575,633
------------ ------------
Total capitalization............................................................ $ 2,236,532 $ 1,738,226
------------ ------------
------------ ------------
</TABLE>
- ------------------------
(1) Other debt includes $6,942 of Guarantor Senior Indebtedness and $4,709 of
indebtedness of the Company's other subsidiaries.
(2) Gives effect to the one-for-four reverse stock split that was approved by
the stockholders of the Company on May 22, 1998 and took effect on June 9,
1998.
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<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT
In connection with the sale of the Old Notes, the Company entered into the
Registration Rights Agreement with the Placement Agents, pursuant to which the
Company agreed, among other things, to use its best efforts to file under the
Securities Act a registration statement relating to an offer to exchange the Old
Notes for New Notes with terms identical in all material respects (except as
described below) and to have such Registration Statement remain effective until
the closing of the Exchange Offer. A copy of the Registration Rights Agreement
is incorporated in the Registration Statement of which this Prospectus is a
part. The Exchange Offer is being made to satisfy the contractual obligations of
the Company under the Registration Rights Agreement. The approval of Federal or
State authorities is not required for consummation of the Exchange Offer.
The Old Notes provide, among other things, that in the event the Exchange
Offer is not consummated and a Shelf Registration Statement is not declared
effective on or prior to December 10, 1998 the annual interest rate of the Old
Notes shall increase by (a) prior to the 91st day after December 10, 1998, .25%
per annum and (b) thereafter, .50% per annum until the Exchange Offer is
consummated or the Shelf Registration Statement is declared effective. See
"Description of the Old Notes--Registration Rights." The form and terms of the
New Notes are identical in all material respects to the form and terms of the
Old Notes except that the New Notes have been registered under the Securities
Act and therefore will not contain terms with respect to transfer restrictions
and will not provide for an increase in interest payments or other distributions
thereon as a consequence of a failure to take certain actions in connection with
their registration under the Securities Act.
The Exchange Offer is not being made to, nor will the Company accept tenders
for exchange from, holders of Old Notes in any jurisdiction in which the
Exchange Offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to the
Exchange Offer means any person in whose name the Old Notes are registered on
the books of the Company or any other person who has obtained a properly
completed bond power from the registered holder, or any person whose Old Notes
are held of record by The Depository Trust Company who desires to deliver such
Old Notes by book-entry transfer at The Depository Trust Company.
TERMS OF THE EXCHANGE
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $400,000,000 aggregate principal amount of New Notes for a like
aggregate principal amount of Old Notes properly tendered on or prior to the
Expiration Date (as defined below) and not properly withdrawn in accordance with
the procedures described below. The Company will issue, promptly after the
Expiration Date, an aggregate principal amount of up to $400,000,000 of New
Notes in exchange for a like principal amount of outstanding Old Notes tendered
and accepted in connection with the Exchange Offer. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes being tendered. As of
the date of this Prospectus $400,000,000 aggregate principal amount of the Old
Notes is outstanding.
Holders of Old Notes do not have any appraisal or dissenters' rights in
connection with the Exchange Offer. Old Notes that are not tendered for, or are
tendered but not accepted in connection with the Exchange Offer, will remain
outstanding and be entitled to the benefits of the Indenture, but will not be
entitled to any further registration rights under the Registration Rights
Agreement. See "Risk Factors-- Consequences of a Failure to Exchange Old Notes"
and "Description of the Old Notes--Registration Rights." If any tendered Old
Notes are not accepted for exchange because of an invalid tender, the occurrence
of certain other events set forth herein or otherwise, certificates for such
unaccepted Old Notes
28
<PAGE>
will be returned, without expense, to the tendering holder thereof promptly
after the Expiration Date, or, if such unaccepted Old Notes are uncertificated,
such securities will be returned, without expense to the tendering holder
thereof promptly after the Expiration Date via book entry transfer.
Each Holder who tenders Old Notes pursuant to the Exchange Offer will be
required to pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Old Notes. The Company will
generally pay all other fees and expenses in connection with the registration
statement for the Exchange Offer. See "--Fees and Expenses."
THE BOARD OF DIRECTORS OF THE COMPANY DOES NOT MAKE ANY RECOMMENDATION TO
HOLDERS OF OLD NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR
ANY PORTION OF THEIR OLD NOTES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO
ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD NOTES
MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER
AND, IF SO, THE AGGREGATE AMOUNT OF OLD NOTES TO TENDER AFTER READING THIS
PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISERS, IF
ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on
, 1998 unless the Exchange Offer is extended by the Company (in which case the
term "Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended). The Company expressly reserves the right in its sole and
absolute discretion, subject to applicable law, at any time and from time to
time, (i) to delay the acceptance of the Old Notes for exchange, (ii) to
terminate the Exchange Offer (iii) to extend the Expiration Date of the Exchange
Offer and retain all Old Notes tendered pursuant to the Exchange Offer, subject,
however, to the right of holders of Old Notes to withdraw their tendered Old
Notes as described under "--Withdrawal Rights," and (iv) to waive any condition
or otherwise amend the terms of the Exchange Offer in any respect. If the
Exchange Offer is amended in a manner determined by the Company to constitute a
material change, or if the Company waives a material condition of the Exchange
Offer, the Company will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered holders of the
Old Notes, and the Company will extend the Exchange Offer to the extent required
by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Company may choose to make any public announcement and
subject to applicable law, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to an appropriate news agency.
ACCEPTANCE OR EXCHANGE AND ISSUANCE OF NEW NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will exchange, and will issue to the Exchange Agent, New Notes for Old
Notes validly tendered and not withdrawn (pursuant to the withdrawal rights
described under "--Withdrawal Rights") promptly after the Expiration Date. In
all cases, delivery of New Notes in exchange for Old Notes tendered and accepted
for exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of (i) Old Notes or a book-entry confirmation of a
book-entry transfer of Old Notes into the Exchange Agent's account at The
Depository Trust Company ("DTC"), (ii) the Letter of Transmittal (or facsimile
thereof), properly
29
<PAGE>
completed and duly executed, with any required signature guarantees, and (iii)
any other documents required by the Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Notes into the Exchange Agent's account at DTC.
Subject to the terms and conditions of the Exchange Offer, the Company will
be deemed to have accepted for exchange, and thereby exchanged, Old Notes
validly tendered and not withdrawn as, if and when the Company gives oral or
written notice to the Exchange Agent of the Company's acceptance of such Old
Notes for exchange pursuant to the Exchange Offer. The Exchange Agent will act
as agent for the Company for the purpose of receiving tenders of Old Notes,
Letters of Transmittal and related documents, and as agent for tendering holders
for the purpose of receiving Old Notes, Letters of Transmittal and related
documents and transmitting New Notes to validly tendering holders. Such exchange
will be made promptly after the Expiration Date. If for any reason whatsoever,
acceptance for exchange or the exchange of any Old Notes tendered pursuant to
the Exchange Offer is delayed (whether before or after the Company's acceptance
for exchange of Old Notes) or the Company extends the Exchange Offer or is
unable to accept for exchange or exchange Old Notes tendered pursuant to the
Exchange Offer, then, without prejudice to the Company's rights set forth
herein, the Exchange Agent may, nevertheless, on behalf of the Company and
subject to Rule 14e-1(c) under the Exchange Act, retain tendered Old Notes and
such Old Notes may not be withdrawn except to the extent tendering holders are
entitled to withdrawal rights as described under "--Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of Old Notes will warrant
and agree in the Letter of Transmittal that it has full power and authority to
tender, exchange, sell, assign and transfer Old Notes, that the Company will
acquire good, marketable and unencumbered title to the tendered Old Notes, free
and clear of all liens, restrictions, charges and encumbrances, and that the Old
Notes tendered for exchange are not subject to any adverse claims or proxies.
The holder also will warrant and agree that it will, upon request, execute and
deliver any additional documents deemed by the Company or the Exchange Agent to
be necessary or desirable to complete the exchange, sale, assignment, and
transfer of the Old Notes tendered pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING OLD NOTES
VALID TENDER. Except as set forth below, in order for Old Notes to be
validly tendered pursuant to the Exchange Offer, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, must be received by the
Exchange Agent at its address set forth under "--Exchange Agent," and either (i)
tendered Old Notes must be received by the Exchange Agent, or (ii) such Old
Notes must be tendered pursuant to the procedures for book-entry transfer set
forth below and a book-entry confirmation must be received by the Exchange
Agent, in each case on or prior to the Expiration Date, or (iii) the guaranteed
delivery procedures set forth below must be complied with.
If less than all of the Old Notes delivered are tendered for exchange, a
tendering holder should fill in the amount of Old Notes being tendered in the
appropriate box on the Letter of Transmittal. The entire amount of Old Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
30
<PAGE>
BOOK ENTRY TRANSFER. The Exchange Agent will establish an account with
respect to the Old Notes at DTC for purposes of the Exchange Offer within two
business days after the date of this Prospectus. Any financial institution that
is a participant in DTC's book-entry transfer facility system may make a book-
entry delivery of the Old Notes by causing DTC to transfer such Old Notes into
the Exchange Agent's account at DTC in accordance with DTC's procedures for
transfers. However, although delivery of Old Notes may be effected through
book-entry transfer into the Exchange Agent's account at DTC, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other required documents, must in any
case be transmitted to and received by the Exchange Agent at its address set
forth under "--Exchange Agent" on or prior to the Expiration Date, or the
guaranteed delivery procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The Exchange Agent and DTC have confirmed that any financial institution
that is a participant in DTC's book-entry transfer facility may utilize the
book-entry transfer facility Automated Tender Offer Program ("ATOP") procedures
to tender Old Notes.
Any participant in DTC's book-entry transfer facility may make book-entry
delivery of Old Notes by causing the book-entry transfer facility to transfer
such Old Notes into the Exchange Agent's account in accordance with the DTC
book-entry transfer facility's ATOP procedures for transfer. However, the
exchange for Old Notes so tendered will only be made after a book-entry
confirmation of such book-entry transfer of Old Notes into the Exchange Agent's
account, and timely receipt by the Exchange Agent of an Agent's Message (as such
term is defined in the next sentence) and any other documents required by the
Letter of Transmittal. The term "Agent's Message" means a message, transmitted
by DTC's book-entry transfer facility and received by the Exchange Agent and
forming part of a book-entry confirmation, which states that DTC's book-entry
transfer facility has received an express acknowledgment from a participant
tendering Old Notes that are the subject of such book-entry confirmation that
such participant has received and agrees to be bound by the terms of the Letter
of Transmittal, and that the Company may enforce such agreement against such
Participant.
SIGNATURE GUARANTEES. Certificates for the Old Notes need not be endorsed
and signature guarantees on the Letter of Transmittal are unnecessary unless (a)
a certificate for the Old Notes is registered in a name other than that of the
person surrendering the certificate or (b) such registered holder completes the
box entitled "Special Issuance Instructions" or "Special Delivery Instructions"
in the Letter of Transmittal. In the case of (a) or (b) above, such certificates
for Old Notes must be duly endorsed or accompanied by a properly executed bond
power, with the endorsement or signature on the bond power and on the Letter of
Transmittal guaranteed by a firm or other entity identified in Rule 17Ad-15
under the Exchange Act as an "eligible guarantor institution," including (as
such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal
securities broker or dealer or government securities broker or dealer; (iii) a
credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association (an "Eligible Institution"),
unless surrendered on behalf of such Eligible Institution. See Instruction 1 to
the Letter of Transmittal.
GUARANTEED DELIVERY. If a holder desires to tender Old Notes pursuant to
the Exchange Offer and the certificates for such Old Notes are not immediately
available or time will not permit all required documents to reach the Exchange
Agent on or before the Expiration Date, or the procedures for book-entry
transfer cannot be completed on a timely basis, such Old Notes may nevertheless
be tendered, provided that all of the following guaranteed delivery procedures
are complied with:
(i) such tenders are made by or through an Eligible Institution;
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<PAGE>
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
is received by the Exchange Agent, as provided below, on or prior to
Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Notes, in proper form for transfer, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
with any required signature guarantees and any other documents required by
the Letter of Transmittal, are received by the Exchange Agent within three
Nasdaq Stock Market trading days after the date of execution of such Notice
of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Notes in
exchange for Old Notes tendered and accepted for exchange pursuant to the
Exchange Offer will in all cases be made only after timely receipt by the
Exchange Agent of Old Notes, or of a book-entry confirmation with respect to
such Old Notes, and a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees and any
other documents required by the Letter of Transmittal. Accordingly, the delivery
of New Notes might not be made to all tendering holders at the same time, and
will depend upon when Old Notes, book-entry confirmations with respect to Old
Notes and other required documents are received by the Exchange Agent.
The acceptance by the Company for exchange of Old Notes tendered pursuant to
any of the procedures described above will constitute a binding agreement
between the tendering holder and the Company upon the terms and subject to the
conditions of the Exchange Offer.
DETERMINATION OF VALIDITY. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Notes will be determined by the Company, in its sole
discretion, whose determination shall be final and binding on all parties. The
Company reserves the absolute right, in its sole and absolute discretion, to
reject any and all tenders determined by them not to be in proper form or the
acceptance of which, or exchange for, may, in the view of counsel to the
Company, be unlawful. The Company also reserves the absolute right, subject to
applicable law, to waive any of the conditions of the Exchange Offer as set
forth under "--Conditions to the Exchange Offer" or any condition or
irregularity in any tender of Old Notes of any particular holder whether or not
similar conditions or irregularities are waived in the case of other holders.
The Company's interpretation of the terms and conditions of the Exchange
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding. No tender of Old Notes will be deemed to have been validly
made until all irregularities with respect to such tender have been cured or
waived. None of the Company, any affiliates or assigns of the Company, the
Exchange Agent or any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for failure
to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney, or
any other document required by the Letter of Transmittal is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, such person
should so indicate when signing, and unless waived by the Company, proper
evidence satisfactory to the Company, in its sole discretion, of such person's
authority to so act must be submitted.
A beneficial owner of Old Notes that are held by or registered in the name
of a broker, dealer, commercial bank, trust company or other nominee or
custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
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<PAGE>
RESALES OF NEW NOTES
The Company is making the Exchange Offer for the Old Notes in reliance on
the position of the staff of the Division of Corporation Finance of the
Commission (the "Staff") as set forth in certain interpretive letters addressed
to third parties in other transactions. However, the Company has not sought its
own interpretive letter and there can be no assurance that the Staff would make
a similar determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
Staff, and subject to the two immediately following sentences, the Company
believes that New Notes issued pursuant to this Exchange Offer in exchange for
Old Notes may be offered for resale, resold and otherwise transferred by a
holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holder's business and that such holder is not participating, and has no
arrangement or understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of such New Securities. However, any
holder of Old Notes who is an "affiliate" of the Company or who intends to
participate in the Exchange Offer for the purpose of distributing New Notes, or
any broker-dealer who purchased Old Notes from the Company to resell pursuant to
Rule 144A or any other available exemption under the Securities Act, (a) will
not be able to rely on the interpretations of the Staff set out in the
above-mentioned interpretive letters, (b) will not be permitted or entitled to
tender such Old Notes in the Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Notes unless such sale is
made pursuant to an exemption from such requirements. In addition, as described
below, if any broker-dealer holds Old Notes acquired for its own account as a
result of market-making or other trading activities and exchanges such Old Notes
for New Notes, then such broker-dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of such New
Notes.
Each holder of Old Notes who wishes to exchange Old Notes for New Notes in
the Exchange Offer will be required to represent that at the time of the
consummation of the Exchange Offer (i) it is not an "affiliate" of the Company
within the meaning of Rule 405 under the 1933 Act, (ii) any New Notes to be
received by it are being acquired in the ordinary course of its business, (iii)
it has no arrangement or understanding with any person to participate in a
distribution (within the meaning of the Securities Act) of such New Notes. Each
broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it acquired the Old Notes for its own
account as the result of market-making activities or other trading activities
and must agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the position taken by the Staff in the
interpretive letters referred to above, the Company believes that broker-dealers
who acquired Old Notes for their own accounts as a result of market-making
activities or other trading activities ("Participating Broker-Dealers") may
fulfill their prospectus delivery requirements with respect to the New Notes
received upon exchange of such Old Notes (other than Old Notes which represent
an unsold allotment from the original sale of the Old Notes) with a prospectus
meeting the requirements of the Securities Act, which may be the prospectus
prepared for an exchange offer so long as it contains a description of the plan
of distribution with respect to the resale of such New Notes. Accordingly, this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer during the period referred to below in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights Agreement, the Company
has agreed that this Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer in connection with resales
of such New Notes for a period ending 90 days after the Expiration Date or, if
earlier, when all such New Notes have been disposed of by such Participating
Broker-Dealer. See "Plan of
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<PAGE>
Distribution." Any Participating Broker-Dealer who is an "affiliate" of the
Company may not rely on such interpretive letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
In that regard, each Participating Broker-Dealer who surrenders Old Notes
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that, upon receipt of notice from the Company of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in this Prospectus untrue in any material
respect or which causes this Prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
herein, in light of the circumstances under which they were made, not misleading
or of the occurrence of certain other events specified in the Registration
Rights Agreement, such Participating Broker-Dealer will suspend the sale of New
Notes pursuant to this Prospectus until the Company has amended or supplemented
this Prospectus to correct such misstatement or omission and has furnished
copies of the amended or supplemented Prospectus to such Participating
Broker-Dealer or the Company has given notice that the sale of the New Notes may
be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at its addresses set forth under "-- Exchange Agent" on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Notes to be withdrawn, the aggregate
principal amount of Old Notes to be withdrawn, and (if certificates for such Old
Notes have been tendered) the name of the registered holder of the Old Notes as
set forth on the Old Notes, if different from that of the person who tendered
such Old Notes. If Old Notes have been delivered or otherwise identified to the
Exchange Agent, then prior to the physical release of such Old Notes, the
tendering holder must submit the serial numbers shown on the particular Old
Notes to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution, except in the case of Old Notes tendered
for the account of an Eligible Institution. If Old Notes have been tendered
pursuant to the procedures for book-entry transfer set forth in "--Procedures
for Tendering Old Notes," the notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawal of Old Notes, in
which case a notice of withdrawal will be effective if delivered to the Exchange
Agent by written, telegraphic, telex or facsimile transmission. Withdrawals of
tenders of Old Notes may not be rescinded. Old Notes properly withdrawn will not
be deemed validly tendered for purposes of the Exchange Offer, but may be
retendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described above under "--Procedures for
Tendering Old Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
None of the Company, any affiliates or assigns of the Company, the Exchange
Agent or any other person shall be under any duty to give any notification of
any irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification. Any Old Notes which have been tendered
but which are withdrawn will be returned to the holder thereof promptly after
withdrawal.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any extension
of the Exchange Offer, the Company will not be required to accept for exchange,
or to exchange, any Old Notes for any New Notes, and may terminate the Exchange
Offer (whether or not any Old Notes have theretofore been accepted for exchange)
or may waive any conditions to or amend the Exchange Offer, if, the Company
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<PAGE>
determines that the consummation of the Exchange Offer or any portion thereof
would violate any applicable law or any applicable interpretation of the
Commission or its staff. In such event, if the Company determines to amend the
Exchange Offer and such amendment constitutes a material change to the Exchange
Offer, the Company will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered holders of the
Old Notes, and the Company will extend the Exchange Offer to the extent required
by Rule 14e-1 under the Exchange Act. Holders of Old Notes are entitled to
certain rights under the Registration Rights Agreement in the event the Company
is unable to consummate the Exchange Offer. See "Description of the Old Notes."
EXCHANGE AGENT
State Street Bank and Trust Company has been appointed as Exchange Agent for
the Exchange Offer. Delivery of the Letter of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:
State Street Bank and Trust Company
Corporate Trust Department
2 International Place, 4th Floor
Boston, MA 02110
Attention: Kellie Mullen
phone: (617) 664-5587
facsimile: (617) 664-5290
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company will also pay brokerage houses and
other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus and related documents
to the beneficial owners of Old Notes, and in handling or tendering for their
customers.
Each Holder who tenders Old Notes pursuant to the Exchange Offer will be
required to pay all underwriting discounts and commissions, if any, relating to
the sale or disposition of the Old Notes. If New Notes are to be delivered to,
or are to be issued in the name of, any person other than the registered holder
of the Old Notes tendered, or if a transfer tax is imposed for any reason other
than the exchange of Old Notes in connection with the Exchange Offer, then the
amount of any such transfer taxes (whether imposed on the registered holder or
any other persons) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
the Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
The Company will generally pay all fees and expenses in connection with the
registration statement for the Exchange Offer. The Company will not make any
payment to brokers, dealers or others soliciting acceptances of the Exchange
Offer.
ACCOUNTING TREATMENT
The New Notes will be recorded on the date of the exchange at the same
carrying value as the Old Notes, which is face value. Accordingly, no gain or
loss for accounting purposes will be recognized by the Company. The expense
related to the issuance of the New Notes and of the Exchange Offer will be
amortized over the term of the New Notes.
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DESCRIPTION OF THE NEW NOTES
GENERAL
The New Notes are to be issued under an Indenture, dated June 10, 1998 (the
"Indenture"), between the Company and State Street Bank and Trust Company, as
Trustee (the "Trustee"). The following is a summary of certain provisions of the
Indenture and the Notes. It does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, all the provisions of the
Indenture, including the definitions of certain terms therein and those terms to
be made a part thereof by the Trust Indenture Act of 1939, as amended ("TIA").
The term "Company" and the other capitalized terms defined in "--Certain
Definitions" below are used in this "Description of the New Notes" as so
defined. Reference to the "Notes" in this "Description of the New Notes" are to
the New Notes. The Indenture is filed as an Exhibit to the Registration
Statement of which this Prospectus forms a part.
Principal of, and premium, if any, and interest on, the Notes will be
payable, and the Notes may be exchanged or transferred, at the office or agency
of the Company in the Borough of Manhattan, The City of New York (which
initially shall be the corporate trust office of the Trustee at 61 Broadway,
15th Floor, New York, New York 10006) and at the office of the Luxembourg Paying
Agent, except that, at the option of the Company, payment of interest may be
made by check mailed to the address of the registered holders of the Notes as
such address appears in the Note Register.
The Notes will be unsecured obligations of the Company, ranking subordinate
in right of payment to all Senior Indebtedness of the Company.
The Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple of $1,000. No service charge
will be made for any registration of transfer or exchange of Notes, but the
Company may require payment of a sum sufficient to cover any transfer tax or
other similar governmental charge payable in connection therewith.
The Notes have been designated eligible for trading in the PORTAL market.
Application has been made to list the Notes on the Luxembourg Stock Exchange.
TERMS OF THE NOTES
The Notes will mature on June 15, 2008. Each Note will bear interest at a
rate per annum shown on the cover page of this Prospectus from the date of
issuance, or from the most recent date to which interest has been paid or
provided for, payable semiannually in cash to Holders of record at the close of
business on the June 1 or December 1 immediately preceding the interest payment
date on June 15 and December 15 of each year, commencing December 15, 1998.
Interest will be paid on the basis of a 360-day year consisting of twelve 30-day
months.
The Notes will be issued initially in an aggregate principal amount of
$400.0 million. Additional securities may be issued under the Indenture in one
or more series from time to time ("Additional Notes"), subject to the
limitations set forth under "--Certain Covenants--Limitation on Indebtedness,"
not to exceed $200.0 million. Any Additional Notes subsequently issued may vote
as a class with the Notes and may otherwise be treated as Notes for purposes of
the Indenture.
The Company has agreed to file a registration statement relating to the
Exchange Offer with the Commission, as described under "Description of the Old
Notes--Registration Rights." The terms of the New Notes will be identical in all
material respects to the Old Notes, except for certain transfer restrictions and
other rights relating to the Exchange Offer, and New Notes will otherwise be
treated as Notes for purposes of the Indenture.
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OPTIONAL REDEMPTION
The Notes will be redeemable, at the Company's option, in whole or in part,
and from time to time on and after June 15, 2003 and prior to maturity. Such
redemption may be made upon notice mailed by first-class mail to each Holder's
registered address and upon publication in Luxembourg in accordance with
"--Notices," not less than 30 nor more than 60 days prior to the relevant
redemption date. Any such redemption and notice may, in the Company's
discretion, be subject to the satisfaction of one or more conditions precedent.
The Notes will be so redeemable at the following redemption prices (expressed as
a percentage of principal amount), plus accrued interest, if any, to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the 12-month period commencing on June 15 of the years set forth
below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- --------------------------------------------------------------------------------- -----------
<S> <C>
2003............................................................................. 104.875%
2004............................................................................. 103.250%
2005............................................................................. 101.625%
2006 and thereafter.............................................................. 100.000%
</TABLE>
In addition, at any time and from time to time prior to June 15, 2001, the
Company at its option may redeem Notes in an aggregate principal amount equal to
up to 35% of the original aggregate principal amount of the Notes (including the
principal amount of any Additional Notes), with funds in an aggregate amount
(the "Redemption Amount") not exceeding the aggregate proceeds of one or more
Equity Offerings (as defined below), at a redemption price (expressed as a
percentage of principal amount thereof) of 109.750% plus accrued interest, if
any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date); PROVIDED, HOWEVER, that an aggregate principal amount of Notes equal to
at least 65% of the original aggregate principal amount of the Notes (including
the principal amount of any Additional Notes), must remain outstanding after
each such redemption. "Equity Offering" means a sale of Capital Stock (other
than Disqualified Stock) (x) that is a sale of Capital Stock of the Company, or
(y) proceeds of which in an amount equal to or exceeding the Redemption Amount
are contributed to the Company or any of its Restricted Subsidiaries. The
Company may make such redemption upon notice mailed by first-class mail to each
Holder's registered address and upon publication in Luxembourg in accordance
with "--Notices", not less than 30 nor more than 60 days prior to the redemption
date (but in no event more than 90 days after the completion of the related
Equity Offering). Any such notice may be given prior to the completion of the
related Equity Offering, and any such redemption or notice may, at the Company's
discretion, be subject to the satisfaction of one or more conditions precedent,
including but not limited to the completion of the related Equity Offering.
At any time on or prior to June 15, 2003, the Notes may also be redeemed or
purchased (by the Company or any other Person) in whole but not in part, at the
Company's option, upon the occurrence of a Change of Control, at a price (the
"Redemption Price") equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued but unpaid interest, if any, to, the date
of redemption or purchase (the "Redemption Date") (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date). Such redemption or purchase may be made upon
notice mailed by first-class mail to each Holder's registered address and upon
publication in Luxembourg in accordance with "--Notices," not less than 30 nor
more than 60 days prior to the redemption date (but in no event more than 180
days after the occurrence of such Change of Control). The Company may provide in
such notice that payment of the Redemption Price and performance of the
Company's obligations with respect to such redemption or purchase may be
performed by another Person. Any such notice may be given prior to the
occurrence of the related Change of Control, and any such
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redemption, purchase or notice may, at the Company's discretion, be subject to
the satisfaction of one or more conditions precedent, including but not limited
to the occurrence of the related Change of Control.
"Applicable Premium" means, with respect to a Note at any Redemption Date,
the greater of (I) 1.0% of the principal amount of such Note and (II) the excess
of (A) the present value at such Redemption Date of (1) the redemption price of
such Note on June 15, 2003 (such redemption price being that described in the
first paragraph of this "Optional Redemption" section) plus (2) all required
remaining scheduled interest payments due on such Note through June 15, 2003,
computed using a discount rate equal to the Treasury Rate plus 50 basis points,
over (B) the principal amount of such Note on such Redemption Date. Calculation
of the Applicable Premium will be made by the Company or on behalf of the
Company by such Person as the Company shall designate, provided that such
calculation shall not be a duty or obligation of the Trustee.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) that
has become publicly available at least two Business Days prior to the Redemption
Date (or, if such Statistical Release is no longer published, any publicly
available source or similar market data)) most nearly equal to the period from
the Redemption Date to June 15, 2003; PROVIDED, HOWEVER, that if the period from
the Redemption Date to June 15, 2003 is not equal to the constant maturity of
the United States Treasury security for which a weekly average yield is given,
the Treasury Rate shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
securities for which such yields are given, except that if the period from the
Redemption Date to June 15, 2003 is less than one year, the weekly average yield
on actually traded United States Treasury securities adjusted to a constant
maturity of one year shall be used.
In addition, as more fully described under "--Change of Control," each
Holder will have the right to require the Company to repurchase all or any part
of such Holder's Notes following a Change of Control Trigger Event at a purchase
price in cash equal to 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of repurchase.
SELECTION
In the case of any partial redemption, selection of the Notes for redemption
will be made by the Trustee on a PRO RATA basis, by lot or by such other method
as the Trustee in its sole discretion shall deem to be fair and appropriate,
although no Note of $1,000 in original principal amount or less will be redeemed
in part. If any Note is to be redeemed in part only, the notice of redemption
relating to such Note shall state the portion of the principal amount thereof to
be redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note.
NOTE GUARANTEES
Each Domestic Subsidiary that on the Issue Date guaranteed payment by the
Company of Bank Indebtedness of the Company has guaranteed payment of the Notes.
In addition, after the Issue Date, the Company will cause each Material Domestic
Subsidiary that guarantees payment by the Company of Bank Indebtedness to
execute and deliver to the Trustee a supplemental indenture or other instrument
pursuant to which such Subsidiary will guarantee payment of the Notes, whereupon
such Subsidiary will become a Note Guarantor for all purposes under the
Indenture. The Company will also have the right to cause any other Subsidiary so
to guarantee payment of the Notes. Note Guarantees will be subject to release
and discharge under certain circumstances prior to payment in full of the Notes.
See "--Certain Covenants-- Future Note Guarantors."
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RANKING
The indebtedness evidenced by the Notes will be unsecured Senior
Subordinated Indebtedness of the Company, will be subordinated in right of
payment, as set forth in the Indenture, to the payment when due of all existing
and future Senior Indebtedness of the Company, including the Company's
obligations under the Senior Credit Facility, will rank PARI PASSU in right of
payment with all existing and future Senior Subordinated Indebtedness of the
Company and will be senior in right of payment to all future Subordinated
Obligations of the Company. The Notes will also be effectively subordinated to
any Secured Indebtedness of the Company to the extent of the value of the assets
securing such Indebtedness. However, payment from the money or the proceeds of
U.S. Government Obligations held in any defeasance trust described under
"--Defeasance" below is not subordinated to any Senior Indebtedness or subject
to the restrictions described herein.
At April 25, 1998, on a pro forma basis after giving effect to the Strategic
Restructuring Transactions, the Company would have had (I) approximately $732.2
million of outstanding Senior Indebtedness, all of which would have constituted
Guarantor Senior Indebtedness, (II) additional availability of $492.8 million
for borrowings under the Senior Credit Facility, all of which would have been
Secured Indebtedness, (III) no Senior Subordinated Indebtedness (other than the
indebtedness represented by the Notes and the Convertible Subordinated Notes),
and (IV) no Subordinated Obligations. Although the Indenture contains
limitations on the amount of additional Indebtedness that the Company may Incur,
under certain circumstances the amount of such Indebtedness could be substantial
and, in any case, such Indebtedness may be Senior Indebtedness or Secured
Indebtedness. See "--Certain Covenants--Limitation on Indebtedness" below.
The obligations of each Note Guarantor under the Note Guarantee to which it
is a party will be unsecured Guarantor Senior Subordinated Indebtedness of such
Note Guarantor, will be subordinated in right of payment, as set forth in the
Indenture, to the payment when due of all existing and future Guarantor Senior
Indebtedness of such Note Guarantor, including the Note Guarantor's obligations
under or relating to the Senior Credit Facility, will rank PARI PASSU in right
of payment with all Guarantor Senior Subordinated Indebtedness of such Note
Guarantor and will be senior in right of payment to all Guarantor Subordinated
Obligations of such Note Guarantor. The Note Guarantee of each Note Guarantor
will also be effectively subordinated to any Secured Indebtedness of such Note
Guarantor to the extent of the value of the assets securing such Indebtedness.
The terms on which each Note Guarantee will be subordinated to the prior payment
in full of Guarantor Senior Indebtedness will be substantially identical to
those described below governing the subordination of the Notes to the prior
payment in full of Senior Indebtedness.
Substantially all of the operations of the Company are conducted through its
Subsidiaries. Claims of creditors of such Subsidiaries, including trade
creditors, and claims of preferred shareholders (if any) of such Subsidiaries
will have priority with respect to the assets and earnings of such Subsidiaries
over the claims of creditors of the Company, including (in the case of any
Subsidiary that is not a Note Guarantor) holders of the Notes. The Notes,
therefore, will be effectively subordinated to creditors (including trade
creditors) and preferred shareholders (if any) of Subsidiaries of the Company
that are not Note Guarantors. Certain of the operations of a Note Guarantor may
be conducted through Subsidiaries thereof that are not also Note Guarantors.
Claims of creditors of such Subsidiaries, including trade creditors, and claims
of preferred shareholders (if any) of such Subsidiaries will have priority with
respect to the assets and earnings of such Subsidiaries over the claims of
creditors of such Note Guarantor, including claims under the Note Guarantee of
such Note Guarantor. Such Note Guarantee, if any, therefore, will be effectively
subordinated to creditors (including trade creditors) and preferred shareholders
(if any) of such Subsidiaries. Although the Indenture limits the incurrence of
Indebtedness (including preferred stock) by certain of the Company's
Subsidiaries, such limitation is subject to a number of significant
qualifications. At April 25, 1998, on a pro forma basis after giving effect to
the Strategic Restructuring Plan and the
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<PAGE>
Financing Transactions, the Note Guarantors would have had $6.9 million of
Guarantor Senior Indebtedness in addition to the $732.2 million of Guarantor
Senior Indebtedness described above and the Company's Subsidiaries other than
the Note Guarantors would have had approximately $4.7 million of indebtedness
outstanding. No preferred stock of such Subsidiaries was outstanding at such
date. See "-- Certain Covenants--Limitation on Indebtedness" below.
"Senior Indebtedness" means, with respect to the Company, the following
obligations, whether outstanding on the date of the Indenture or thereafter
issued, without duplication: (I) all Bank Indebtedness, (II) all obligations in
respect of any Receivables Financing, and (III) all obligations consisting of
the principal of and premium, if any, and accrued and unpaid interest (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company regardless of whether post-filing
interest is allowed in such proceeding) on, and fees and other amounts owing in
respect of, all other Indebtedness of the Company, unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding, it
is expressly provided that the obligations in respect of such Indebtedness are
not senior in right of payment to the Notes; PROVIDED, HOWEVER, that Senior
Indebtedness shall not include (1) any obligation of the Company to any
Subsidiary, (2) any liability for Federal, state, foreign, local or other taxes
owed or owing by the Company, (3) any accounts payable or other liability to
trade creditors arising in the ordinary course of business (including Guarantees
thereof or instruments evidencing such liabilities), (4) any Indebtedness of the
Company (or Guarantee by the Company of any Indebtedness) that is expressly
subordinated in right of payment to any other Indebtedness of the Company (or
Guarantee by the Company of any Indebtedness), (5) the Convertible Notes, (6)
any Capital Stock of the Company or (7) that portion of any Indebtedness of the
Company that is Incurred by the Company in violation of the covenant described
under "--Certain Covenants--Limitation on Indebtedness" (but no such violation
shall be deemed to exist for purposes of this clause (7) if any holder of such
Indebtedness or such holder's representative shall have received an Officer's
Certificate of the Company to the effect that such Incurrence of such
Indebtedness does not (or that the Incurrence by the Company of the entire
committed amount thereof at the date on which the initial borrowing thereunder
is made would not) violate such covenant). If any Senior Indebtedness is
disallowed, avoided or subordinated pursuant to the provisions of Section 548 of
Title 11 of the United States Code or any applicable state fraudulent conveyance
law, such Senior Indebtedness nevertheless will constitute Senior Indebtedness.
Only Indebtedness of the Company that is Senior Indebtedness will rank
senior to the Notes in accordance with the provisions of the Indenture. The
Notes will in all respects rank PARI PASSU with all other Senior Subordinated
Indebtedness of the Company. Only Indebtedness of a Note Guarantor that is
Guarantor Senior Indebtedness will rank senior to the Note Guarantee of such
Note Guarantor in accordance with the provisions of the Indenture. Such Note
Guarantee will in all respects rank PARI PASSU with all other Guarantor Senior
Subordinated Indebtedness of such Note Guarantor. The Company has agreed in the
Indenture that it will not Incur, directly or indirectly, any Indebtedness that
is expressly subordinated in right of payment to Senior Indebtedness of the
Company unless such Indebtedness is PARI PASSU with, or subordinated in right of
payment to, the Notes. Each Note Guarantor, if any, will agree that it will not
Incur, directly or indirectly, any Indebtedness that is expressly subordinated
in right of payment to Guarantor Senior Indebtedness of such Note Guarantor
unless such Indebtedness is PARI PASSU with, or subordinated in right of payment
to, the Note Guarantee of such Note Guarantor. Unsecured Indebtedness is not
deemed to be subordinate or junior to Secured Indebtedness merely because it is
unsecured, and Indebtedness that is not guaranteed by a particular Person is not
deemed to be subordinate or junior to Indebtedness that is so guaranteed merely
because it is not so guaranteed.
The Company may not pay principal of, or premium (if any) or interest on,
the Notes or make any deposit pursuant to the provisions described under
"--Defeasance" below and may not otherwise purchase, redeem or otherwise retire
any Notes (collectively, "pay the Notes") if (I) any Senior Indebtedness is not
paid when due in cash or Cash Equivalents or (II) any other default on Senior
Indebtedness occurs and the maturity of such Senior Indebtedness is accelerated
in accordance with its terms (either
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such event, a "Payment Default") unless, in either case, (X) the Payment Default
has been cured or waived and any such acceleration has been rescinded in writing
or (Y) such Senior Indebtedness has been paid in full in cash or Cash
Equivalents. However, the Company may pay the Notes without regard to the
foregoing if the Company and the Trustee receive written notice approving such
payment from the Representative for the Designated Senior Indebtedness with
respect to which the Payment Default has occurred and is continuing.
In addition, during the continuance of any default (other than a Payment
Default) with respect to any Designated Senior Indebtedness pursuant to which
the maturity thereof may be accelerated immediately without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace period (a "Non-payment Default"), the Company
may not pay the Notes for the period specified as follows (a "Payment Blockage
Period"). A Payment Blockage Period shall commence upon the receipt by the
Trustee (with a copy to the Company) of written notice (a "Blockage Notice") of
such Non-payment Default from the Representative for such Designated Senior
Indebtedness specifying an election to effect a Payment Blockage Period and
shall end on the earliest to occur of the following events: (I) 179 days shall
have elapsed since such receipt of such Blockage Notice, (II) the Non-payment
Default giving rise to such Blockage Notice is no longer continuing (and no
other Payment Default or Non-payment Default is then continuing), (III) such
Designated Senior Indebtedness shall have been discharged or repaid in full in
cash or Cash Equivalents or (IV) such Payment Blockage Period shall have been
terminated by written notice to the Trustee and the Company from the Person or
Persons who gave such Blockage Notice. The Company shall promptly resume
payments on the Notes, including any missed payments, after such Payment
Blockage Period ends, unless the holders of such Designated Senior Indebtedness
or the Representative of such holders have accelerated the maturity of such
Designated Senior Indebtedness, or any Payment Default otherwise exists. Not
more than one Blockage Notice may be given in any 360 consecutive day period,
irrespective of the number of defaults with respect to Designated Senior
Indebtedness during such period, except that if any Blockage Notice within such
360-day period is given by or on behalf of any holders of Designated Senior
Indebtedness other than Bank Indebtedness, a Representative of holders of Bank
Indebtedness may give another Blockage Notice within such period. In no event
may the total number of days during which any Payment Blockage Period is in
effect extend beyond 179 days from the date of receipt by the Trustee of the
relevant Blockage Notice, and there must be a 181 consecutive day period during
any 360 consecutive day period during which no Payment Blockage Period is in
effect.
Upon any payment or distribution of the assets of the Company upon a total
or partial liquidation or dissolution or reorganization of or similar proceeding
relating to the Company or its property, or in a bankruptcy, insolvency,
receivership or similar proceeding relating to the Company or its property, the
holders of Senior Indebtedness will be entitled to receive payment in full of
the Senior Indebtedness before the Noteholders are entitled to receive any
payment and until the Senior Indebtedness is paid in full, any payment or
distribution to which Noteholders would be entitled but for the subordination
provisions of the Indenture will be made to holders of the Senior Indebtedness
as their interests may appear. If a distribution is made to Noteholders that due
to the subordination provisions should not have been made to them, such
Noteholders are required to hold it in trust for the holders of Senior
Indebtedness and pay it over to them as their interests may appear.
If the Company fails to make any payment on the Notes when due or within any
applicable grace period, whether or not on account of the payment blockage
provisions referred to above, such failure would constitute an Event of Default
under the Indenture and would enable the holders of the Notes to accelerate the
maturity thereof. See "--Defaults." If payment of the Notes is accelerated
because of an Event of Default, the Company or the Trustee shall promptly notify
the holders of the Designated Senior Indebtedness or the Representative of such
holders of the acceleration. Such acceleration will not be effective, and the
Company may not pay the Notes, until five Business Days after such holders or
the
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Representative of each Designated Senior Indebtedness receive notice of such
acceleration and, thereafter, the Company may pay the Notes only if the
subordination provisions of the Indenture otherwise permit payment at that time.
By reason of such subordination provisions contained in the Indenture, in
the event of liquidation, receivership, reorganization or insolvency, (I)
creditors of the Company that are holders of Senior Indebtedness may recover
more, ratably, than the Noteholders, (II) trade creditors of the Company that
are not holders of Senior Indebtedness or of Senior Subordinated Indebtedness
(including the Notes) may recover less, ratably, than holders of Senior
Indebtedness and may recover more, ratably, than the holders of Senior
Subordinated Indebtedness, and (III) the Company may be unable to meet its
obligations on the Notes. In addition, as described above, the Notes will be
effectively subordinated, with respect to the Company's Subsidiaries (other than
the Note Guarantors), to the claims of creditors of those Subsidiaries.
CHANGE OF CONTROL
Upon the occurrence after the Issue Date of a Change of Control (as defined
below) and the failure of the Notes to have, on the 30th day after such Change
of Control, a rating of at least BBB- (or equivalent successor rating) by S&P
and a rating of at least Baa3 (or equivalent successor rating) by Moody's (a
"Change of Control Triggering Event"), each Holder will have the right to
require the Company to repurchase all or any part of such Holder's Notes at a
purchase price in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of repurchase (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date); PROVIDED, HOWEVER, that the Company
shall not be obligated to repurchase Notes pursuant to this covenant in the
event that it has exercised its right to redeem all of the Notes as described
under "--Optional Redemption."
The term "Change of Control" means:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders, is or becomes
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of more than 50% of the total voting
power of the Voting Stock of the Company, PROVIDED that so long as the
Company is a Subsidiary of a Parent, no Person shall be deemed to be or
become a "beneficial owner" of more than 50% of the total voting power of
the Voting Stock of the Company unless such Person shall be or become a
"beneficial owner" of more than 50% of the total voting power of the Voting
Stock of such Parent;
(ii) the Company merges or consolidates with or into, or sells or
transfers (in one or a series of related transactions) all or substantially
all of the assets of the Company and its Restricted Subsidiaries to, another
Person (other than one or more Permitted Holders) and any "person" (as
defined in clause (i) above), other than one or more Permitted Holders, is
or becomes the "beneficial owner" (as so defined), directly or indirectly,
of more than 50% of the total voting power of the Voting Stock of the
surviving Person in such merger or consolidation, or the transferee Person
in such sale or transfer of assets, as the case may be, PROVIDED that so
long as such surviving or transferee Person is a Subsidiary of a parent
Person, no Person shall be deemed to be or become a "beneficial owner" of
more than 50% of the total voting power of the Voting Stock of such
surviving or transferee Person unless such Person shall be or become a
"beneficial owner" of more than 50% of the total voting power of the Voting
Stock of such parent Person; or
(iii) during any period of two consecutive years (during which period
the Company has been a party to the Indenture), individuals who at the
beginning of such period were members of the board of directors of the
Company (together with any new members thereof whose election by such board
of directors or whose nomination for election by holders of Capital Stock of
the Company was approved by one or more Permitted Holders or by a vote of a
majority of the members of such board of
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directors then still in office who were either members thereof at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of
such board of directors then in office.
In the event that, at the time of such Change of Control Triggering Event,
the terms of the Bank Indebtedness restrict or prohibit the repurchase of Notes
pursuant to this covenant, then prior to the mailing of the notice to Holders
provided for in the immediately following paragraph but in any event not later
than 30 days following the date the Company obtains actual knowledge of any
Change of Control Triggering Event (unless the Company has exercised its right
to redeem all the Notes as described under "--Optional Redemption"), the Company
shall (i) repay in full all Bank Indebtedness or offer to repay in full all Bank
Indebtedness and repay the Bank Indebtedness of each lender who has accepted
such offer or (ii) obtain the requisite consent under the agreements governing
the Bank Indebtedness to permit the repurchase of the Notes as provided for in
the immediately following paragraph. The Company shall first comply with the
provisions of the immediately preceding sentence before it shall be required to
repurchase Notes pursuant to the provisions described below. The Company's
failure to comply with such provisions or the provisions of the immediately
following paragraph shall constitute an Event of Default described in clause
(iv) and not in clause (ii) under "--Defaults" below.
Unless the Company has exercised its right to redeem all the Notes as
described under "--Optional Redemption," the Company shall, not later than 30
days following the date the Company obtains actual knowledge of any Change of
Control Triggering Event having occurred, mail a notice to each Holder with a
copy to the Trustee (and publish notice of the offer to purchase the Notes
described below in Luxembourg in accordance with "--Notices") stating: (1) that
a Change of Control Triggering Event has occurred or may occur and that such
Holder has, or upon such occurrence will have, the right to require the Company
to purchase such Holder's Notes at a purchase price in cash equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of Holders of record on a record date to
receive interest on the relevant interest payment date); (2) the circumstances
and relevant facts and financial information regarding such Change of Control;
(3) the repurchase date (which shall be no earlier than 30 days nor later than
60 days from the date such notice is mailed); (4) the instructions determined by
the Company, consistent with this covenant, that a Holder must follow in order
to have its Notes purchased; and (5) if such notice is mailed prior to the
occurrence of a Change of Control or Change of Control Triggering Event, that
such offer is conditioned on the occurrence of such Change of Control Triggering
Event.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this covenant, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under this covenant by virtue thereof.
The Change of Control Triggering Event purchase feature is a result of
negotiations between the Company and the Placement Agents. The Company has no
present plans to engage in a transaction involving a Change of Control, although
it is possible that the Company would decide to do so in the future. Subject to
the limitations discussed below, the Company could, in the future, enter into
certain transactions, including acquisitions, refinancings or recapitalizations,
that would not constitute a Change of Control under the Indenture, but that
could increase the amount of indebtedness outstanding at such time or otherwise
affect the Company's capital structure or credit ratings.
The occurrence of a Change of Control would constitute a default under the
Senior Credit Agreement. Agreements governing future Senior Indebtedness of the
Company may contain prohibitions of certain events that would constitute a
Change of Control or require such Senior Indebtedness to be repurchased or
repaid upon a Change of Control. Moreover, the exercise by the Holders of their
right to require the Company to repurchase the Notes could cause a default under
such agreements, even if the
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Change of Control itself does not, due to the financial effect of such
repurchase on the Company. Finally, the Company's ability to pay cash to the
Holders upon a repurchase may be limited by the Company's then existing
financial resources. There can be no assurance that sufficient funds will be
available when necessary to make any required repurchases. As described above
under "--Optional Redemption," the Company also has the right to redeem the
Notes at specified prices, in whole or in part, upon a Change of Control.
The definition of Change of Control includes a phrase relating to the sale
or other transfer of "all or substantially all" of the Company's assets, as such
phrase is used in the Revised Model Business Corporation Act. Although there is
a developing body of case law interpreting the phrase "substantially all," there
is no precise definition of the phrase under applicable law. Accordingly, in
certain circumstances there may be a degree of uncertainty in ascertaining
whether a particular transaction would involve a disposition of "all or
substantially all" of the assets of the Company, and therefore it may be unclear
as to whether a Change of Control has occurred and whether the holders of the
Notes have the right to require the Company to repurchase such Notes.
CERTAIN COVENANTS
The Indenture contains covenants including, among others, the following:
LIMITATION ON INDEBTEDNESS. (a) The Company will not, and will not permit
any Restricted Subsidiary to, Incur any Indebtedness; PROVIDED, HOWEVER, that
the Company or any Note Guarantor may Incur Indebtedness if on the date of the
Incurrence of such Indebtedness, after giving effect to the Incurrence thereof,
the Consolidated Coverage Ratio would be greater than 1.75:1.00 if such
Indebtedness is Incurred prior to June 15, 2001 or 2.00:1.00 if such
Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness Incurred pursuant to the Senior Credit Facility
(including but not limited to Indebtedness in respect of letters of credit
or bankers' acceptances issued or created thereunder) and Indebtedness of
any Foreign Subsidiary Incurred other than under the Senior Credit Facility,
and (without limiting the foregoing), in each case, any Refinancing
Indebtedness in respect thereof, in a maximum principal amount at any time
outstanding not exceeding in the aggregate the amount equal to (A) $1,350.0
million, PLUS (B) the amount, if any, by which the Borrowing Base exceeds
$400.0 million, PLUS (C) in the case of any refinancing of the Senior Credit
Facility or any portion thereof, the aggregate amount of fees, underwriting
discounts, premiums and other costs and expenses incurred in connection with
such refinancing;
(ii) Indebtedness (A) of any Restricted Subsidiary to the Company or (B)
of the Company or any Restricted Subsidiary to any Restricted Subsidiary;
PROVIDED that any subsequent issuance or transfer of any Capital Stock of
such Restricted Subsidiary to which such Indebtedness is owed, or other
event, that results in such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any other subsequent transfer of such Indebtedness (except to
the Company or a Restricted Subsidiary) will be deemed, in each case, an
Incurrence of such Indebtedness by the issuer thereof;
(iii) Indebtedness represented by the Notes (other than any Additional
Notes), any Indebtedness (other than the Indebtedness described in clauses
(i) or (ii) above) outstanding on the Issue Date and any Refinancing
Indebtedness Incurred in respect of any Indebtedness described in this
clause (iii) or paragraph (a) above;
(iv) Purchase Money Obligations and Capitalized Lease Obligations, and
any Refinancing Indebtedness with respect thereto, in an aggregate principal
amount at any time outstanding not exceeding an amount equal to 3.5% of
Consolidated Total Assets at any time outstanding;
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(v) Indebtedness of any Foreign Subsidiary Incurred for working capital
purposes;
(vi)(A) Guarantees by the Company or any Restricted Subsidiary of
Indebtedness or any other obligation or liability of the Company or any
Restricted Subsidiary (other than any Indebtedness Incurred by the Company
or such Restricted Subsidiary, as the case may be, in violation of the
covenant described under "--Limitation on Indebtedness"), or (B) without
limiting the covenant described under "--Limitation on Liens," Indebtedness
of the Company or any Restricted Subsidiary arising by reason of any Lien
granted by or applicable to such Person securing Indebtedness of the Company
or any Restricted Subsidiary (other than any Indebtedness Incurred by the
Company or such Restricted Subsidiary, as the case may be, in violation of
the covenant described under "-- Limitation on Indebtedness");
(vii) Indebtedness of the Company or any Restricted Subsidiary (A)
arising from the honoring of a check, draft or similar instrument of such
Person drawn against insufficient funds, provided that such Indebtedness is
extinguished within five Business Days of its incurrence, or (B) consisting
of guarantees, indemnities, obligations in respect of earnouts or other
purchase price adjustments, or similar obligations, Incurred in connection
with the acquisition or disposition of any business, assets or Person
(including pursuant to the Strategic Restructuring);
(viii) Indebtedness of the Company or any Restricted Subsidiary in
respect of (A) letters of credit, bankers' acceptances or other similar
instruments or obligations issued, or relating to liabilities or obligations
incurred, in the ordinary course of business (including those issued to
governmental entities in connection with self-insurance under applicable
workers' compensation statutes), or (B) completion guarantees, surety,
judgment, appeal or performance bonds, or other similar bonds, instruments
or obligations, provided, or relating to liabilities or obligations
incurred, in the ordinary course of business, or (C) Hedging Obligations
entered into for bona fide hedging purposes in the ordinary course of
business, or (D) Management Guarantees or (E) the financing of insurance
premiums in the ordinary course of business;
(ix) Indebtedness of a Receivables Subsidiary secured by a Lien on all
or part of the assets disposed of in, or otherwise incurred in connection
with, a Financing Disposition;
(x) Indebtedness of any Person that is assumed by the Company or any
Restricted Subsidiary in connection with its acquisition of assets from such
Person or any Affiliate thereof or is issued and outstanding on or prior to
the date on which such Person was acquired by the Company or any Restricted
Subsidiary or merged or consolidated with or into any Restricted Subsidiary
(other than Indebtedness Incurred to finance, or otherwise in connection
with, such acquisition), PROVIDED that on the date of such acquisition,
merger or consolidation, after giving effect thereto, (X) with respect to
any such Indebtedness of the Company, any Foreign Subsidiary or any Note
Guarantor, (A) the Company could Incur at least $1.00 of additional
Indebtedness pursuant to paragraph (a) above or (B) the Consolidated
Coverage Ratio is greater than it was on such date immediately prior to
giving effect to such acquisition and (Y) with respect to any such
Indebtedness of any Domestic Subsidiary that is not a Note Guarantor, the
Company could Incur at least $1.00 of additional Indebtedness pursuant to
paragraph (a) above; and any Refinancing Indebtedness with respect to any
such Indebtedness;
(xi) Indebtedness of any Restricted Subsidiary in an aggregate principal
amount at any time outstanding for all such Indebtedness not exceeding (A)
an amount equal to 5% of Consolidated Total Assets, provided that either on
the date of Incurrence of such Indebtedness after giving effect thereto, the
Company could Incur at least $1.00 of additional Indebtedness pursuant to
paragraph (a) above, or such Indebtedness is Refinancing Indebtedness in
respect of any such Indebtedness initially so Incurred, or (B) otherwise, an
amount equal to 2.5% of Consolidated Total Assets;
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(xii) Indebtedness of the Company or any Restricted Subsidiary in an
amount at any time outstanding not exceeding twice the amount of Excluded
Contributions made after the Issue Date, PROVIDED that the proceeds of such
Indebtedness and the related amount of such Excluded Contributions are used
to finance the acquisition of assets of any Person in a Related Business or
the merger or consolidation of such a Person into or with the Company or any
Restricted Subsidiary (including but not limited to payment of any related
fees and expenses), or to refinance any such acquisition, merger or
consolidation with such Indebtedness being Incurred for such refinancing
within nine months of the closing of such acquisition, merger or
consolidation; and any Refinancing Indebtedness with respect to any such
Indebtedness; and
(xiii) Indebtedness of the Company or any Restricted Subsidiary in an
aggregate principal amount at any time outstanding not exceeding an amount
equal to 5% of Consolidated Total Assets.
(c) For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness Incurred pursuant to and in
compliance with, this covenant, (I) any other obligation of the obligor on such
Indebtedness (or of any other Person who could have Incurred such Indebtedness
under this covenant) arising under any Guarantee, Lien or letter of credit,
bankers' acceptance or other similar instrument or obligation supporting such
Indebtedness shall be disregarded to the extent that such Guarantee, Lien or
letter of credit, bankers' acceptance or other similar instrument or obligation
secures the principal amount of such Indebtedness; (II) in the event that
Indebtedness meets the criteria of more than one of the types of Indebtedness
described in paragraph (b) above, the Company, in its sole discretion, shall
classify such item of Indebtedness and only be required to include the amount
and type of such Indebtedness in one of such clauses; and (III) the amount of
Indebtedness issued at a price that is less than the principal amount thereof
shall be equal to the amount of the liability in respect thereof determined in
accordance with GAAP.
(d) For purposes of determining compliance with any Dollar-denominated
restriction on the Incurrence of Indebtedness denominated in a foreign currency,
the Dollar-equivalent principal amount of such Indebtedness Incurred pursuant
thereto shall be calculated based on the relevant currency exchange rate in
effect on the date that such Indebtedness was Incurred, in the case of term
Indebtedness, or first committed, in the case of revolving credit Indebtedness,
PROVIDED that (X) the Dollar-equivalent principal amount of any such
Indebtedness outstanding on the Issue Date shall be calculated based on the
relevant currency exchange rate in effect on the Issue Date, (Y) if such
Indebtedness is Incurred to refinance other Indebtedness denominated in a
foreign currency, and such refinancing would cause the applicable Dollar-
denominated restriction to be exceeded if calculated at the relevant currency
exchange rate in effect on the date of such refinancing, such Dollar-denominated
restriction shall be deemed not to have been exceeded so long as the principal
amount of such refinancing Indebtedness does not exceed the principal amount of
such Indebtedness being refinanced and (Z) the Dollar-equivalent principal
amount of Indebtedness denominated in a foreign currency and Incurred pursuant
to the Senior Credit Facility shall be calculated based on the relevant currency
exchange rate in effect on, at the Company's option, (i) the Issue Date, (ii)
any date on which any of the respective commitments under the Senior Credit
Facility shall be reallocated between or among facilities or subfacilities
thereunder, or on which such rate is otherwise calculated for any purpose
thereunder, or (iii) the date of such Incurrence. The principal amount of any
Indebtedness Incurred to refinance other Indebtedness, if Incurred in a
different currency from the Indebtedness being refinanced, shall be calculated
based on the currency exchange rate applicable to the currencies in which such
respective Indebtedness is denominated that is in effect on the date of such
refinancing.
LIMITATION ON LAYERING. The Company shall not Incur any Indebtedness that
is expressly subordinated in right of payment to any Senior Indebtedness of the
Company, unless such Indebtedness so Incurred ranks PARI PASSU in right of
payment with the Notes, or is subordinated in right of payment to the Notes. No
Note Guarantor shall Incur any Indebtedness that is expressly subordinated in
right of payment
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to any Guarantor Senior Indebtedness of such Note Guarantor, unless such
Indebtedness so Incurred ranks PARI PASSU in right of payment with such Note
Guarantor's Note Guarantee, or is subordinated in right of payment to such Note
Guarantor's Note Guarantee. Unsecured Indebtedness is not deemed to be
subordinate or junior to secured Indebtedness merely because it is unsecured,
and Indebtedness that is not guaranteed by a particular Person is not deemed to
be subordinate or junior to Indebtedness that is so guaranteed merely because it
is not so guaranteed.
LIMITATION ON RESTRICTED PAYMENTS. (a) The Company shall not, and shall not
permit any Restricted Subsidiary, directly or indirectly, to (I) declare or pay
any dividend or make any distribution on or in respect of its Capital Stock
(including any such payment in connection with any merger or consolidation to
which the Company is a party) except (X) dividends or distributions payable
solely in its Capital Stock (other than Disqualified Stock) and (Y) dividends or
distributions payable to the Company or any Restricted Subsidiary (and, in the
case of any such Restricted Subsidiary making such dividend or distribution, to
other holders of its Capital Stock on no more than a PRO RATA basis, measured by
value), (II) purchase, redeem, retire or otherwise acquire for value any Capital
Stock of the Company held by Persons other than the Company or a Restricted
Subsidiary, (III) purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to scheduled maturity, scheduled repayment or scheduled
sinking fund payment, any Subordinated Obligations (other than a purchase,
redemption, defeasance or other acquisition or retirement for value in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of such acquisition
or retirement) or (IV) make any Investment (other than a Permitted Investment)
in any Person (any such dividend, distribution, purchase, redemption,
repurchase, defeasance, other acquisition or retirement or Investment being
herein referred to as a "Restricted Payment"), if at the time the Company or
such Restricted Subsidiary makes such Restricted Payment and after giving effect
thereto:
(1) a Default shall have occurred and be continuing (or would result
therefrom);
(2) the Company could not incur at least an additional $1.00 of
Indebtedness pursuant to paragraph (a) of the covenant described under
"--Limitation on Indebtedness"; or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments (the amount so expended, if other than in cash, to be as
determined in good faith by the Board of Directors, whose determination
shall be conclusive) declared or made subsequent to the Issue Date and then
outstanding would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from April 25, 1998 to the end of the
most recent fiscal quarter ending prior to the date of such Restricted
Payment for which consolidated financial statements of the Company are
available (or, in case such Consolidated Net Income shall be a negative
number, 100% of such negative number);
(B) the aggregate Net Cash Proceeds, and fair value (as determined in
good faith by the Board of Directors) of property or assets, received (X)
by the Company as capital contributions to the Company after the Issue
Date or from the issuance or sale (other than to a Restricted Subsidiary)
of its Capital Stock (other than Disqualified Stock) after the Issue Date
(other than Excluded Contributions) or (Y) by the Company or any
Restricted Subsidiary from the issuance and sale by the Company or any
Restricted Subsidiary after the Issue Date of Indebtedness that shall
have been converted into or exchanged for Capital Stock of the Company
(other than Disqualified Stock), PLUS the amount of cash, property or
assets (determined as provided above) received by the Company or any
Restricted Subsidiary upon such conversion or exchange;
(C) the aggregate amount equal to the net reduction in Investments in
Unrestricted Subsidiaries resulting from (I) dividends, distributions,
interest payments, return of capital, repayments of Investments or other
transfers of assets to the Company or any Restricted
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Subsidiary from any Unrestricted Subsidiary, or (II) the redesignation of
any Unrestricted Subsidiary as a Restricted Subsidiary (valued in each
case as provided in the definition of "Investment"), not to exceed in the
case of any such Unrestricted Subsidiary the aggregate amount of
Investments (other than Permitted Investments) made by the Company or any
Restricted Subsidiary in such Unrestricted Subsidiary after the Issue
Date;
(D) in the case of any disposition or repayment of any Investment
constituting a Restricted Payment (without duplication of any amount
deducted in calculating the amount of Investments at any time outstanding
included in the amount of Restricted Payments), an amount in the
aggregate equal to the lesser of the return of capital, repayment or
other proceeds with respect to all such Investments and the initial
amount of all such Investments; and
(E) the aggregate exercise price of all options attributable to
shares of Capital Stock purchased in the Equity Tender Offer.
(b) The provisions of the foregoing paragraph (a) will not prohibit any of
the following (each, a "Permitted Payment"):
(i) any purchase, redemption, repurchase, defeasance or other
acquisition or retirement of Capital Stock of the Company or Subordinated
Obligations made by exchange (including any such exchange pursuant to the
exercise of a conversion right or privilege in connection with which cash is
paid in lieu of the issuance of fractional shares) for, or out of the
proceeds of the substantially concurrent issuance or sale of, Capital Stock
of the Company (other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary) or a substantially concurrent capital
contribution to the Company; PROVIDED, that the Net Cash Proceeds from such
issuance, sale or capital contribution shall be excluded in subsequent
calculations under clause (3)(B) of the preceding paragraph (a) and shall
not constitute an Excluded Contribution;
(ii) any purchase, redemption, repurchase, defeasance or other
acquisition or retirement of Subordinated Obligations (X) made by exchange
for, or out of the proceeds of the substantially concurrent issuance or sale
of, Indebtedness of the Company or Refinancing Indebtedness Incurred in
compliance with the covenant described under "--Limitation on Indebtedness,"
(Y) from Net Available Cash to the extent permitted by the covenant
described under "--Limitation on Sales of Assets and Subsidiary Stock" or
(Z) to the extent required by the agreement governing such Subordinated
Obligations, following the occurrence of a Change of Control (or other
similar event described therein as a "change of control"), but only if the
Company shall have complied with the covenant described under "--Change of
Control" and, if required, purchased all Notes tendered pursuant to the
offer to repurchase all the Notes required thereby, prior to purchasing or
repaying such Subordinated Obligations;
(iii) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with the preceding paragraph (a);
(iv) Investments in an aggregate amount outstanding at any time not to
exceed the amount of Excluded Contributions (excluding the amount of
Excluded Contributions used to Incur Indebtedness pursuant to clause (xii)
of paragraph (b) of the covenant described under "--Limitation on
Indebtedness");
(v) payments by the Company to repurchase or otherwise acquire Capital
Stock (including any options, warrants or other rights in respect thereof)
from Management Investors (including loans, advances, dividends or
distributions by the Company to a Parent to permit such Parent to make any
such repurchase or other acquisition), such payments, loans, advances,
dividends or distributions not to exceed an amount (net of repayments of any
such loans or advances) equal to (1) $25.0 million, PLUS (2) $3.0 million
multiplied by the number of calendar years that have commenced since the
Issue Date
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(not to exceed $9.0 million in the aggregate), PLUS (3) the Net Cash
Proceeds received by the Company since the Issue Date from, or as a capital
contribution from, the issuance or sale to Management Investors of Capital
Stock (including any options, warrants or other rights in respect thereof),
to the extent such Net Cash Proceeds are not included in any calculation
under clause (3)(B)(x) of the preceding paragraph (a) and do not constitute
an Excluded Contribution;
(vi) the payment by the Company of (or loans, advances, dividends or
distributions by the Company to a Parent to pay) dividends on the common
stock or equity of the Company (or such Parent) following a public offering
of such common stock or equity, in an amount not to exceed in any fiscal
year 6% of the aggregate gross proceeds received by the Company in or from
such public offering;
(vii) Restricted Payments (including loans or advances) in an aggregate
amount outstanding at any time not to exceed $20.0 million (net of
repayments of any such loans or advances);
(viii) payments by the Company or any Restricted Subsidiary to satisfy
obligations under the CDR Agreements; and Permitted Parent Payments;
(ix) payments by the Company, or loans, advances, dividends or
distributions by the Company to a Parent to make payments, to holders of
Capital Stock of the Company or such Parent in lieu of issuance of
fractional shares of such Capital Stock, not to exceed $100,000 in the
aggregate outstanding at any time;
(x) dividends or other distributions of Capital Stock, Indebtedness or
other securities of Unrestricted Subsidiaries;
(xi) the Transactions; and
(xii) any purchase, redemption, retirement or other acquisition of
Capital Stock (X) that is used as consideration in making any Investment
that involves an acquisition of a Person, business or assets and that is
permitted as a Restricted Payment Transaction or (Y) deemed to occur upon
the exercise of options if such Capital Stock represents a portion of the
exercise price thereof;
PROVIDED, that (A) in the case of clauses (iii), (vi), (vii) and (ix), the net
amount of any such Permitted Payment shall be included in subsequent
calculations of the amount of Restricted Payments, (B) in the case of clause
(v), at the time of any calculation of the amount of Restricted Payments, the
net amount of Permitted Payments that have then actually been made under clause
(v) that is in excess of 50% of the total amount of Permitted Payments then
permitted under clause (v) shall be included in such calculation of the amount
of Restricted Payments, (C) in all cases other than pursuant to clauses (A) and
(B) immediately above, the net amount of any such Permitted Payment shall be
excluded in subsequent calculations of the amount of Restricted Payments and (D)
solely with respect to clause (vii), no Default or Event of Default shall have
occurred or be continuing at the time of such Permitted Payment after giving
effect thereto.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED
SUBSIDIARIES. The Company will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (I) pay dividends or make any other distributions on its Capital
Stock or pay any Indebtedness or other obligations owed to the Company, (II)
make any loans or advances to the Company or (III) transfer any of its property
or assets to the Company, except any encumbrance or restriction:
(1) pursuant to an agreement or instrument in effect at or entered into
on the Issue Date (including, without limitation, the Senior Credit
Facility), the Indenture or the Notes;
(2) pursuant to any agreement or instrument of a Person, or relating to
Indebtedness or Capital Stock of a Person, which Person is acquired by or
merged or consolidated with or into the Company or
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any Restricted Subsidiary, or which agreement or instrument is assumed by
the Company or any Restricted Subsidiary in connection with an acquisition
of assets from such Person, as in effect at the time of such acquisition,
merger or consolidation (except to the extent that such Indebtedness was
incurred to finance, or otherwise in connection with, such acquisition,
merger or consolidation), PROVIDED that for purposes of this clause (2), if
another Person is the Successor Company, any Subsidiary thereof or agreement
or instrument of such Person or any such Subsidiary shall be deemed acquired
or assumed, as the case may be, by the Company or a Restricted Subsidiary,
as the case may be, when such Person becomes the Successor Company;
(3) pursuant to an agreement or instrument (a "Refinancing Agreement")
effecting a refinancing of Indebtedness Incurred pursuant to, or that
otherwise extends, renews, refunds, refinances or replaces, an agreement or
instrument referred to in clause (1) or (2) of this covenant or this clause
(3) (an "Initial Agreement") or contained in any amendment, supplement or
other modification to an Initial Agreement (an "Amendment"); PROVIDED,
HOWEVER, that the encumbrances and restrictions contained in any such
Refinancing Agreement or Amendment are not materially less favorable to the
Holders of the Notes taken as a whole than encumbrances and restrictions
contained in the Initial Agreement or Initial Agreements to which such
Refinancing Agreement or Amendment relates (as determined in good faith by
the Company);
(4) (A) that restricts in a customary manner the subletting, assignment
or transfer of any property or asset that is subject to a lease, license or
similar contract, or the assignment or transfer of any lease, license or
other contract, (B) by virtue of any transfer of, agreement to transfer,
option or right with respect to, or Lien on, any property or assets of the
Company or any Restricted Subsidiary not otherwise prohibited by the
Indenture, (C) contained in mortgages, pledges or other security agreements
securing Indebtedness of a Restricted Subsidiary to the extent restricting
the transfer of the property or assets subject thereto, (D) pursuant to
customary provisions restricting dispositions of real property interests set
forth in any reciprocal easement agreements of the Company or any Restricted
Subsidiary, (E) pursuant to Purchase Money Obligations that impose
encumbrances or restrictions on the property or assets so acquired, (F) on
cash or other deposits or net worth imposed by customers under agreements
entered into in the ordinary course of business, (G) pursuant to customary
provisions contained in agreements and instruments entered into in the
ordinary course of business (including but not limited to leases and joint
venture and other similar agreements entered into in the ordinary course of
business), or (H) that arises or is agreed to in the ordinary course of
business and does not detract from the value of property or assets of the
Company or any Restricted Subsidiary in any manner material to the Company
or such Restricted Subsidiary;
(5) with respect to a Restricted Subsidiary (or any of its property or
assets) imposed pursuant to an agreement entered into for the direct or
indirect sale or disposition of all or substantially all the Capital Stock
or assets of such Restricted Subsidiary (or the property or assets that are
subject to such restriction) pending the closing of such sale or
disposition;
(6) required by any applicable law, rule, regulation or order or by any
regulatory authority having jurisdiction over the Company or any Restricted
Subsidiary or any of their businesses; or
(7) pursuant to an agreement or instrument (A) relating to any
Indebtedness permitted to be Incurred subsequent to the Issue Date pursuant
to the provisions of the covenant described under "--Limitation on
Indebtedness," if the Company determines that such encumbrance or
restriction will not cause the Company not to have the funds necessary to
pay the principal of or interest on the Notes, (B) relating to any sale of
receivables by a Foreign Subsidiary or (C) relating to Indebtedness of or a
Financing Disposition to or by any Receivables Entity.
LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK. (a) The Company will
not, and will not permit any Restricted Subsidiary to, make any Asset
Disposition unless
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(i) the Company or such Restricted Subsidiary receives consideration
(including by way of relief from, or by any other Person assuming
responsibility for, any liabilities, contingent or otherwise) at the time of
such Asset Disposition at least equal to the fair market value of the shares
and assets subject to such Asset Disposition, as such fair market value may
be determined (and shall be determined, to the extent such Asset Disposition
involves aggregate consideration in excess of $10.0 million) in good faith
by the Board of Directors, whose determination shall be conclusive
(including as to the value of all noncash consideration),
(ii) in the case of any Asset Disposition having a fair market value of
$10.0 million or more, at least 75% of the consideration therefor
(excluding, in the case of an Asset Disposition of assets, any consideration
by way of relief from, or by any other Person assuming responsibility for,
any liabilities, contingent or otherwise, that are not Indebtedness)
received by the Company or such Restricted Subsidiary is in the form of
cash, and PROVIDED that this clause (ii) shall not apply to any Asset
Disposition involving assets that accounted for less than two percent of
Consolidated EBITDA during the period of the most recent four consecutive
fiscal quarters ending prior to the date of such Asset Disposition for which
consolidated financial statements of the Company are available, and
(iii) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or any Restricted Subsidiary, as the
case may be) as follows:
(A) FIRST, either (X) to the extent the Company elects (or is
required by the terms of any Senior Indebtedness or Indebtedness of a
Restricted Subsidiary), to prepay, repay or purchase Senior Indebtedness
or such Indebtedness of a Restricted Subsidiary (in each case other than
Indebtedness owed to the Company or a Restricted Subsidiary) within 365
days after the date of such Asset Disposition, or (Y) to the extent the
Company or such Restricted Subsidiary elects, to reinvest in Additional
Assets (including by means of an investment in Additional Assets by a
Restricted Subsidiary with Net Available Cash received by the Company or
another Restricted Subsidiary) within 365 days from the date of such
Asset Disposition, or, if such reinvestment in Additional Assets is a
project authorized by the Board of Directors that will take longer than
such 365 days to complete, the period of time necessary to complete such
project;
(B) SECOND, to the extent of the balance of such Net Available Cash
after application in accordance with clause (A) above (such balance, the
"Excess Proceeds"), to make an offer to purchase Notes and (to the extent
the Company or such Restricted Subsidiary elects, or is required by the
terms thereof) to purchase, redeem or repay any other Senior Subordinated
Indebtedness or Guarantor Senior Subordinated Indebtedness, pursuant and
subject to the conditions of the Indenture and the agreements governing
such other Indebtedness; and
(C) THIRD, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (A) and (B) above, to fund
(to the extent consistent with any other applicable provision of the
Indenture) any general corporate purpose (including but not limited to
the repurchase, repayment or other acquisition or retirement of any
Subordinated Obligations);
PROVIDED, HOWEVER, that in connection with any prepayment, repayment or purchase
of Indebtedness pursuant to clause (A)(x) or (B) above, the Company or such
Restricted Subsidiary will retire such Indebtedness and will cause the related
loan commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this covenant, the Company and
the Restricted Subsidiaries shall not be required to apply any Net Available
Cash in accordance with this covenant except to the extent that the aggregate
Net Available Cash from all Asset Dispositions that is not applied in accordance
with this covenant exceeds $15.0 million. If the aggregate principal amount of
Notes, Senior Subordinated Indebtedness and Guarantor Senior Subordinated
Indebtedness validly tendered and not withdrawn (or
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otherwise subject to purchase, redemption or repayment) in connection with an
offer pursuant to clause (B) above exceeds the Excess Proceeds, the Excess
Proceeds will be apportioned between the Notes and such Senior Subordinated
Indebtedness and Guarantor Senior Subordinated Indebtedness, with the portion of
the Excess Proceeds payable in respect of the Notes to equal the lesser of (X)
the Excess Proceeds amount multiplied by a fraction, the numerator of which is
the outstanding principal amount of the Notes and the denominator of which is
the sum of the outstanding principal amount of the Notes and the outstanding
principal amount of the relevant Senior Subordinated Indebtedness and Guarantor
Senior Subordinated Indebtedness, and (Y) the aggregate principal amount of
Notes validly tendered and not withdrawn.
For the purposes of clause (ii) of paragraph (a) above, the following are
deemed to be cash: (1) Temporary Cash Investments and Cash Equivalents, (2) the
assumption of Indebtedness of the Company (other than Disqualified Stock of the
Company) or any Restricted Subsidiary and the release of the Company or such
Restricted Subsidiary from all liability on payment of such Indebtedness in
connection with such Asset Disposition, (3) Indebtedness of any Restricted
Subsidiary that is no longer a Restricted Subsidiary as a result of such Asset
Disposition, to the extent that the Company and each other Restricted Subsidiary
is released from any Guarantee of payment of such Indebtedness in connection
with such Asset Disposition, (4) securities received by the Company or any
Restricted Subsidiary from the transferee that are converted by the Company or
such Restricted Subsidiary into cash and (5) consideration consisting of
Indebtedness of the Company or any Restricted Subsidiary.
(b) In the event of an Asset Disposition that requires the purchase of Notes
pursuant to clause (iii)(B) of paragraph (a) above, the Company will be required
to purchase Notes tendered pursuant to an offer by the Company for the Notes
(the "Offer") at a purchase price of 100% of their principal amount plus accrued
and unpaid interest to the purchase date in accordance with the procedures
(including prorating in the event of oversubscription) set forth in the
Indenture. If the aggregate purchase price of the Notes tendered pursuant to the
Offer is less than the Net Available Cash allotted to the purchase of Notes, the
remaining Net Available Cash will be available to the Company for use in
accordance with clause (iii)(B) of paragraph (a) above (to repay Senior
Subordinated Indebtedness or Guarantor Senior Subordinated Indebtedness) or
clause (iii)(C) of paragraph (a) above. The Company shall not be required to
make an Offer for Notes pursuant to this covenant if the Net Available Cash
available therefor (after application of the proceeds as provided in clause
(iii)(A) of paragraph (a) above) is less than $15.0 million for any particular
Asset Disposition (which lesser amounts shall be carried forward for purposes of
determining whether an Offer is required with respect to the Net Available Cash
from any subsequent Asset Disposition).
(c) The Company will comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this covenant by virtue thereof.
LIMITATION ON TRANSACTIONS WITH AFFILIATES. (a) The Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, enter into
or conduct any transaction or series of related transactions (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of the Company (an "Affiliate Transaction") unless
(I) the terms of such Affiliate Transaction are not materially less favorable to
the Company or such Restricted Subsidiary, as the case may be, than those that
could be obtained at the time in a transaction with a Person who is not such an
Affiliate and (II) if such Affiliate Transaction involves aggregate
consideration in excess of $10.0 million, the terms of such Affiliate
Transaction have been approved by a majority of the Disinterested Directors. For
purposes of this paragraph, any Affiliate Transaction shall be deemed to have
satisfied the requirements set forth in this paragraph if (X) such Affiliate
Transaction is approved by a majority of the
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Disinterested Directors or (Y) in the event there are no Disinterested
Directors, a fairness opinion is provided by a nationally recognized appraisal
or investment banking firm with respect to such Affiliate Transaction.
(b) The provisions of the preceding paragraph (a) will not apply to:
(i) any Restricted Payment Transaction,
(ii) (1) the entering into, maintaining or performance of any employment
contract, collective bargaining agreement, benefit plan, program or
arrangement, related trust agreement or any other similar arrangement for or
with any employee, officer or director heretofore or hereafter entered into
in the ordinary course of business, including vacation, health, insurance,
deferred compensation, severance, retirement, savings or other similar
plans, programs or arrangements, (2) the payment of compensation,
performance of indemnification or contribution obligations, or any issuance,
grant or award of stock, options, other equity-related interests or other
securities, to employees, officers or directors in the ordinary course of
business, (3) the payment of fees to directors of the Company or any of its
Subsidiaries, (4) any transaction with an officer or director in the
ordinary course of business not involving more than $250,000 in any one
case, or (5) Management Advances and payments in respect thereof,
(iii) any transaction with the Company, any Restricted Subsidiary, or
any Receivables Entity,
(iv) any transaction arising out of agreements or instruments in
existence on the Issue Date, and any payments made pursuant thereto,
(v) execution, delivery and performance of the CDR Agreements, including
(1) payment to CDR or any Affiliate of CDR of a fee of $15.0 million plus
out-of-pocket expenses in connection with the Transactions, and (2) payment
to CDR or any Affiliate of CDR of fees of up to $1.0 million in any fiscal
year plus all out-of-pocket expenses incurred by CDR or any such Affiliate
in connection with its performance of management consulting, monitoring,
financial advisory or other services with respect to the Company and its
Restricted Subsidiaries,
(vi) the Transactions, all transactions in connection therewith
(including but not limited to the financing thereof), and all fees or
expenses paid or payable in connection with the Transactions,
(vii)any transaction in the ordinary course of business on terms not
materially less favorable to the Company or the relevant Restricted
Subsidiary than those that could be obtained at the time in a transaction
with a Person who is not an Affiliate of the Company, and
(viii) any transaction in the ordinary course of business, or approved by a
majority of the Board of Directors, between the Company or any Restricted
Subsidiary and any Affiliate of the Company controlled by the Company that
is a joint venture or similar entity.
LIMITATION ON LIENS. The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, create or permit to exist any
Lien (other than Permitted Liens) on any of its property or assets (including
Capital Stock of any other Person), whether owned on the Issue Date or
thereafter acquired, securing any Indebtedness of the Company or any Note
Guarantor that by its terms is expressly subordinated in right of payment to or
ranks PARI PASSU in right of payment with the Notes or such Note Guarantor's
Note Guarantee (the "Initial Lien"), unless contemporaneously therewith
effective provision is made to secure the Indebtedness due under the Indenture
and the Notes or, in respect of Liens on any Restricted Subsidiary's property or
assets, any Note Guarantee of such Restricted Subsidiary, equally and ratably
with such obligation for so long as such obligation is so secured by such
Initial Lien. Any such Lien thereby created in favor of the Notes or any such
Note Guarantee will be automatically and unconditionally released and discharged
upon (I) the release and discharge of the Initial Lien to which it relates, or
(II) any sale, exchange or transfer to any Person (other than a Restricted
Subsidiary or the Company) of the property or assets secured by such Initial
Lien, or of all of the Capital Stock held by the Company or any Restricted
Subsidiary in, or all or substantially all the assets of, any Restricted
Subsidiary creating such Lien.
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FUTURE NOTE GUARANTORS. On the Issue Date, the Company will cause each
Domestic Subsidiary that then guarantees payment by the Company of Bank
Indebtedness of the Company to guarantee payment of the Notes. In addition,
after the Issue Date, the Company will cause each Material Domestic Subsidiary
that guarantees payment by the Company of Bank Indebtedness to execute and
deliver to the Trustee a supplemental indenture or other instrument pursuant to
which such Subsidiary will guarantee payment of the Notes, whereupon such
Subsidiary will become a Note Guarantor for all purposes under the Indenture. In
addition, the Company may cause any Subsidiary that is not a Note Guarantor so
to guarantee payment of the Notes and become a Note Guarantor (any such Note
Guarantor being herein called a "Voluntary Note Guarantor").
Each Note Guarantor, as primary obligor and not merely as surety, will
jointly and severally, irrevocably and fully and unconditionally Guarantee, on a
senior subordinated basis, the punctual payment when due, whether at Stated
Maturity, by acceleration or otherwise, of all monetary obligations of the
Company under the Indenture and the Notes, whether for principal of or interest
on the Notes, expenses, indemnification or otherwise (all such obligations
guaranteed by such Note Guarantors being herein called the "Guaranteed
Obligations"). Such Note Guarantor will agree to pay, in addition to the amount
stated above, any and all reasonable out-of-pocket expenses (including
reasonable counsel fees and expenses) incurred by the Trustee or the Holders in
enforcing any rights under its Note Guarantee.
The obligations of each Note Guarantor will be limited to the maximum
amount, as will, after giving effect to all other contingent and fixed
liabilities of such Note Guarantor, result in the obligations of such Note
Guarantor under the Note Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under applicable law, or being void or unenforceable under
applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.
Each such Note Guarantee shall be a continuing Guarantee and shall (I)
remain in full force and effect until payment in full of the principal amount of
all outstanding Notes (whether by payment at maturity, purchase, redemption,
defeasance, retirement or other acquisition) and all other Guaranteed
Obligations then due and owing, unless earlier terminated as described below,
(II) be binding upon such Note Guarantor and (III) inure to the benefit of and
be enforceable by the Trustee, the Holders and their permitted successors,
transferees and assigns.
Notwithstanding the preceding paragraph, any Note Guarantor will
automatically and unconditionally be released from all obligations under its
Note Guarantee, and such Note Guarantee shall thereupon terminate and be
discharged and of no further force or effect, (I) concurrently with any sale or
disposition (by merger or otherwise) of any Note Guarantor or any interest
therein in accordance with the terms of the Indenture (including the covenant
described under "--Certain Covenants--Limitation on Sales of Assets and
Subsidiary Stock") by the Company or a Restricted Subsidiary, following which
such Note Guarantor is no longer a Restricted Subsidiary of the Company, (II)
pursuant to the terms of its Note Guarantee (in the case of any Voluntary Note
Guarantor), (III) at any time that such Note Guarantor is released from all of
its obligations under all of its Guarantees of payment by the Company of Bank
Indebtedness of the Company, (IV) upon the merger or consolidation of any Note
Guarantor with and into the Company or another Note Guarantor that is the
surviving Person in such merger or consolidation, (V) upon legal or covenant
defeasance of the Company's obligations, or satisfaction and discharge of the
Indenture, and (VI) subject to customary contingent reinstatement provisions,
upon payment in full of the aggregate principal amount of all Notes then
outstanding and all other Guaranteed Obligations then due and owing. In
addition, the Company will have the right, upon 30 days' notice to the Trustee,
to cause any Voluntary Note Guarantor to be unconditionally released from all
obligations under its Note Guarantee, and such Note Guarantee shall thereupon
terminate and be discharged and of no further force or effect. Upon any such
occurrence specified in this paragraph, the Trustee shall execute any documents
reasonably required in order to evidence such release, discharge and termination
in respect of such Note Guarantee.
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Neither the Company nor any such Note Guarantor shall be required to make a
notation on the Notes to reflect any such Guarantee or any such release,
termination or discharge.
SEC REPORTS. Notwithstanding that the Company may not be required to be or
remain subject to the reporting requirements of Section 13(a) or 15(d) of the
Exchange Act, the Company will file with the SEC (unless such filing is not
permitted under the Exchange Act or by the SEC), so long as Notes are
outstanding, the quarterly and annual reports, information, documents and other
reports that the Company is required to file with the Commission pursuant to
such Section 13(a) or 15(d) or would be so required to file if the Company were
so subject. The Company will also, within 15 days after the date on which the
Company was so required to file or would be so required to file if the Company
were so subject, transmit by mail to all Holders, as their names and addresses
appear in the Note Register, and to the Trustee copies of any such information,
documents and reports (without exhibits) so required to be filed. The Company
will be deemed to have satisfied such requirements if a Parent files and
provides reports, documents and information of the types otherwise so required,
in each case within the applicable time periods, and the Company is not required
to file such reports, documents and information separately under the applicable
rules and regulations of the SEC (after giving effect to any exemptive relief)
because of the filings by such Parent. The Company also will comply with the
other provisions of TIA Section 314(a). All such reports sent to Holders will be
available at the office of the Luxembourg Paying Agent.
MERGER AND CONSOLIDATION
The Company will not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any Person, unless:
(I) the resulting, surviving or transferee Person (the "Successor Company") will
be a Person organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and the Successor Company
(if not the Company) will expressly assume all the obligations of the Company
under the Notes and the Indenture by executing and delivering to the Trustee a
supplemental indenture or one or more other documents or instruments in form
reasonably satisfactory to the Trustee; (II) immediately after giving effect to
such transaction (and treating any Indebtedness that becomes an obligation of
the Successor Company or any Restricted Subsidiary as a result of such
transaction as having been Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no Default will have occurred and
be continuing; (III) immediately after giving effect to such transaction, either
(A) the Successor Company could Incur at least $1.00 of additional Indebtedness
pursuant to paragraph (a) of the covenant described under "--Certain
Covenants--Limitation on Indebtedness," or (B) the Consolidated Coverage Ratio
of the Successor Company would equal or exceed the Consolidated Coverage Ratio
of the Company immediately prior to giving effect to such transaction; (IV) each
Note Guarantor (other than any party to any such consolidation or merger) shall
have delivered a supplemental indenture or other document or instrument in form
reasonably satisfactory to the Trustee, confirming its Note Guarantee; and (V)
the Company will have delivered to the Trustee an Officer's Certificate and an
Opinion of Counsel, each to the effect that such consolidation, merger or
transfer complies with the provisions described in this paragraph, PROVIDED that
(X) in giving such opinion such counsel may rely on an Officer's Certificate as
to compliance with the foregoing clauses (ii) and (iii) and as to any matters of
fact, and (Y) no Opinion of Counsel will be required for a consolidation, merger
or transfer described in the last paragraph of this covenant. Any Indebtedness
that becomes an obligation of the Company or any Restricted Subsidiary (or that
is deemed to be Incurred by any Restricted Subsidiary that becomes a Restricted
Subsidiary) as a result of any such transaction undertaken in compliance with
this covenant, and any Refinancing Indebtedness with respect thereto, shall be
deemed to have been Incurred in compliance with the covenant described under
"--Certain Covenants--Limitation on Indebtedness."
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture, and
thereafter the predecessor Company shall be relieved of all obligations and
covenants under this Agreement.
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Clauses (ii) and (iii) of the first paragraph of this "Merger and
Consolidation" section will not apply to any transaction in which (1) any
Restricted Subsidiary consolidates with, merges into or transfers all or part of
its assets to the Company or (2) the Company consolidates or merges with or into
or transfers all or substantially all its assets to (X) an Affiliate
incorporated or organized for the purpose of reincorporating or reorganizing the
Company in another jurisdiction or changing its legal structure to an entity
other than a corporation (or, if the Company is then not a corporation, to a
corporation) or (Y) a Restricted Subsidiary of the Company so long as all assets
of the Company and the Restricted Subsidiaries immediately prior to such
transaction (other than Capital Stock of such Restricted Subsidiary) are owned
by such Restricted Subsidiary and its Restricted Subsidiaries immediately after
the consummation thereof.
DEFAULTS
An Event of Default is defined in the Indenture as (I) a default in any
payment of interest on any Note when due, continued for 30 days, whether or not
such payment is prohibited by the provisions described under "--Ranking" above,
(II) a default in the payment of principal of any Note when due, whether at its
Stated Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise, whether or not such payment is prohibited by the
provisions described under "--Ranking" above, (III) the failure by the Company
to comply for 30 days after notice with its obligations under the covenant
described under "--Merger and Consolidation" above, (IV) the failure by the
Company to comply for 30 days after notice with any of its obligations under the
covenant described under "--Change of Control" above (other than a failure to
purchase Notes), (V) the failure by the Company to comply for 60 days after
notice with its other agreements contained in the Notes or the Indenture, (VI)
the failure by the Company or any Significant Subsidiary to pay any issue or
issues of Indebtedness within any applicable grace period after final maturity
or the acceleration of any such Indebtedness by the holders thereof because of a
default, if the total amount of such Indebtedness so unpaid or accelerated
exceeds $25.0 million or its foreign currency equivalent (the "cross
acceleration provision"), (VII) certain events of bankruptcy, insolvency or
reorganization of the Company or a Significant Subsidiary (the "bankruptcy
provisions"), (VIII) the rendering of any judgment or decree for the payment of
money in an amount (net of any insurance or indemnity payments actually received
in respect thereof prior to or within 90 days from the entry thereof, or to be
received in respect thereof in the event any appeal thereof shall be
unsuccessful) in excess of $25.0 million or its foreign currency equivalent
against the Company or a Significant Subsidiary that is not discharged, or
bonded or insured by a third Person, if such judgment or decree remains
outstanding for a period of 90 days following such judgment or decree and is not
discharged, waived or stayed (the "judgment default provision") or (IX) the
failure of any Note Guarantee by a Note Guarantor that is a Significant
Subsidiary to be in full force and effect (except as contemplated by the terms
thereof or of the Indenture) or the denial or disaffirmation in writing by any
Note Guarantor that is a Significant Subsidiary of its obligations under the
Indenture or any Note Guarantee, if such Default continues for 10 days.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.
However, a Default under clause (iii), (iv) or (v) will not constitute an
Event of Default until the Trustee or the Holders of at least 25% in principal
amount of the outstanding Notes notify the Company of the Default and the
Company does not cure such Default within the time specified in such clause
after receipt of such notice.
If an Event of Default (other than a Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least a
majority in principal amount of the outstanding Notes by notice to the Company
and the Trustee, may declare the principal of and accrued but unpaid interest on
all the Notes to be due and
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payable, PROVIDED that so long as any Designated Senior Indebtedness shall be
outstanding, such acceleration shall not be effective until the earlier to occur
of (X) five Business Days following delivery of a written notice of such
acceleration of the Notes to the Company and the holders of all Designated
Senior Indebtedness or each Representative thereof and (Y) the acceleration of
any Designated Senior Indebtedness. Upon the effectiveness of such a
declaration, such principal and interest will be due and payable immediately.
Notwithstanding the foregoing, if an Event of Default relating to certain events
of bankruptcy, insolvency or reorganization of the Company occurs and is
continuing, the principal of and accrued interest on all the Notes will become
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holders. Under certain circumstances, the Holders of a
majority in principal amount of the outstanding Notes may rescind any such
acceleration with respect to the Notes and its consequences.
Notwithstanding the foregoing, in the event of a declaration of acceleration
in respect of the Notes because an Event of Default specified in clause (vi)
above shall have occurred and be continuing, such declaration of acceleration of
the Notes and such Event of Default and all consequences thereof (including
without limitation any acceleration or resulting payment default) shall be
annulled, waived and rescinded, automatically and without any action by the
Trustee or the Holders, and be of no further effect, if within 60 days after
such Event of Default arose (X) the Indebtedness that is the basis for such
Event of Default has been discharged, or (Y) the holders thereof have rescinded
or waived the acceleration, notice or action (as the case may be) giving rise to
such Event of Default, or (Z) the default in respect of such Indebtedness that
is the basis for such Event of Default has been cured.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Notes unless (I) such Holder has
previously given the Trustee written notice that an Event of Default is
continuing, (II) Holders of at least 25% in principal amount of the outstanding
Notes have requested the Trustee in writing to pursue the remedy, (III) such
Holders have offered the Trustee reasonable security or indemnity against any
loss, liability or expense, (IV) the Trustee has not complied with such request
within 60 days after the receipt of the request and the offer of security or
indemnity and (V) the Holders of a majority in principal amount of the
outstanding Notes have not given the Trustee a direction inconsistent with such
request within such 60-day period. Subject to certain restrictions, the Holders
of a majority in principal amount of the outstanding Notes are given the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee. The Trustee, however, may refuse to follow any direction that conflicts
with law or the Indenture or that the Trustee determines is unduly prejudicial
to the rights of any other Holder or that would involve the Trustee in personal
liability. Prior to taking any action under the Indenture, the Trustee will be
entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each Holder notice of the Default
within 90 days after it occurs. Except in the case of a Default in the payment
of principal of, or premium (if any) or interest on, any Note, the Trustee may
withhold notice if and so long as a committee of its Trust Officers in good
faith determines that withholding notice is in the interests of the Noteholders.
In addition, the Company is required to deliver to the Trustee, within 120 days
after the end of each fiscal year, a certificate indicating whether the signers
thereof know of any Default that occurred during the previous year. The Company
also is required to deliver to the Trustee, within 30 days after the occurrence
thereof, written notice of any event that would constitute certain Defaults,
their status and what action the Company is taking or proposes to take in
respect thereof.
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AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the consent
of the Holders of a majority in principal amount of the Notes then outstanding
and any past default or compliance with any provisions may be waived with the
consent of the Holders of a majority in principal amount of the Notes then
outstanding (including in each case, consents obtained in connection with a
tender offer or exchange offer for Notes). However, without the consent of each
Holder of an outstanding Note affected, no amendment or waiver may (I) reduce
the principal amount of Notes whose Holders must consent to an amendment or
waiver, (II) reduce the rate of or extend the time for payment of interest on
any Note, (III) reduce the principal of or extend the Stated Maturity of any
Note, (IV) reduce the premium payable upon the redemption of any Note or change
the date on which any Note may be redeemed as described under "--Optional
Redemption" above, (V) make any Note payable in money other than that stated in
the Note, (VI) make any change to the subordination provisions of the Indenture
that adversely affects the rights of any Holder in any material respect, (VII)
impair the right of any Holder to receive payment of principal of and interest
on such Holder's Notes on or after the due dates therefor or to institute suit
for the enforcement of any payment on or with respect to such Holder's Notes or
(VIII) make any change in the amendment or waiver provisions described in this
sentence.
Without the consent of any Holder, the Company, the Trustee and (as
applicable) any Note Guarantor may amend the Indenture to cure any ambiguity,
omission, defect or inconsistency, to provide for the assumption by a successor
of the obligations of the Company under the Indenture, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to add
Guarantees with respect to the Notes, to secure the Notes, to confirm and
evidence the release, termination or discharge of any Guarantee or Lien with
respect to or securing the Notes when such release, termination or discharge is
provided for under the Indenture, to add to the covenants of the Company for the
benefit of the Noteholders or to surrender any right or power conferred upon the
Company, to provide that any Indebtedness that becomes or will become an
obligation of the Successor Company or a Note Guarantor pursuant to a
transaction governed by the provisions described under "--Merger and
Consolidation" (and that is not a Subordinated Obligation) is Senior
Subordinated Indebtedness or Guarantor Senior Subordinated Indebtedness for
purposes of this Indenture, to provide for or confirm the issuance of Additional
Notes, to make any change that does not adversely affect the rights of any
Holder, or to comply with any requirement of the SEC in connection with the
qualification of the Indenture under the TIA or otherwise. However, no amendment
may be made to the subordination provisions of the Indenture that adversely
affects the rights of any holder of Senior Indebtedness then outstanding (which
Senior Indebtedness has been previously designated in writing by the Company to
the Trustee for this purpose) unless the holders of such Senior Indebtedness (or
any group or representative thereof authorized to give a consent) consent to
such change.
The consent of the Noteholders is not necessary under the Indenture to
approve the particular form of any proposed amendment or waiver. It is
sufficient if such consent approves the substance of the proposed amendment or
waiver. Until an amendment or waiver becomes effective, a consent to it by a
Noteholder is a continuing consent by such Noteholder and every subsequent
Holder of all or part of the related Note. Any such Noteholder or subsequent
holder may revoke such consent as to its Note by written notice to the Trustee
or the Company, received thereby before the date on which the Company certifies
to the Trustee that the Holders of the requisite principal amount of Notes have
consented to such amendment or waiver. After an amendment or waiver under the
Indenture becomes effective, the Company is required to mail to Noteholders a
notice briefly describing such amendment or waiver. However, the failure to give
such notice to all Noteholders, or any defect therein, will not impair or affect
the validity of the amendment or waiver.
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DEFEASANCE
The Company at any time may terminate all its obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those relating to the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. The Company at any time may terminate its obligations under certain
covenants under the Indenture, including the covenants described under
"--Certain Covenants" and "--Change of Control," the operation of the default
provisions relating to such covenants described under "--Defaults" above, the
operation of the cross acceleration provision, the bankruptcy provisions with
respect to Subsidiaries and the judgment default provision described under
"--Defaults" above, and the limitations contained in clauses (iii), (iv) and (v)
under "--Merger and Consolidation" above ("covenant defeasance"). If the Company
exercises its legal defeasance option or its covenant defeasance option, each
Note Guarantor will be released from all of its obligations with respect to its
Note Guarantee.
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (iv), (v) (as it relates to the covenants
described under "--Certain Covenants" above), (vi), (vii) (but only with respect
to events of bankruptcy, insolvency or reorganization of a Significant
Subsidiary), (viii) or (ix) under "Defaults" above or because of the failure of
the Company to comply with clause (iii), (iv) or (v) under "--Merger and
Consolidation" above.
Either defeasance option may be exercised to any redemption date or to the
maturity date for the Notes. In order to exercise either defeasance option, the
Company must irrevocably deposit in trust (the "defeasance trust") with the
Trustee money or U.S. Government Obligations, or a combination thereof, for the
payment of principal of, and premium (if any) and interest on, the Notes to
redemption or maturity, as the case may be, and must comply with certain other
conditions, including delivery to the Trustee of an Opinion of Counsel to the
effect that holders of the Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and defeasance 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 and defeasance had
not occurred (and, in the case of legal defeasance only, such Opinion of Counsel
must be based on a ruling of the Internal Revenue Service or other change in
applicable Federal income tax law since the Issue Date).
SATISFACTION AND DISCHARGE
The Indenture will be discharged and cease to be of further effect (except
as to surviving rights of registration of transfer or exchange of the Notes, as
expressly provided for in the Indenture) as to all outstanding Notes when (I)
either (A) all the Notes previously authenticated and delivered (other than
certain lost, stolen or destroyed Notes, and certain Notes for which provision
for payment was previously made and thereafter the funds have been released to
the Company) have been delivered to the Trustee for cancellation or (B) all
Notes not previously delivered to the Trustee for cancellation (X) have become
due and payable, (Y) will become due and payable at their Stated Maturity within
one year or (Z) are to be called for redemption within one year under
arrangements reasonably satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company, (II)
the Company has irrevocably deposited or caused to be deposited with the Trustee
money, U.S. Government Obligations, or a combination thereof, sufficient to pay
and discharge the entire indebtedness on the Notes not previously delivered to
the Trustee for cancellation, for principal, premium, if any, and interest to
the date of deposit; (III) the Company has paid or caused to be paid all other
sums payable under the Indenture by the Company; and (IV) the Company has
delivered to the Trustee an Officer's Certificate and
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an Opinion of Counsel each to the effect that all conditions precedent under the
"Satisfaction and Discharge" section of the Indenture relating to the
satisfaction and discharge of the Indenture have been complied with, PROVIDED
that any such counsel may rely on any Officer's Certificate as to matters of
fact (including as to compliance with the foregoing clauses (i), (ii) and
(iii)).
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATORS AND
STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company,
any Note Guarantor or any Subsidiary of any thereof shall have any liability for
any obligation of the Company or any Note Guarantor under the Indenture, the
Notes or any Note Guarantee, or for any claim based on, in respect of, or by
reason of, any such obligation or its creation. Each Noteholder, by accepting
the Notes, waives and releases all such liability. The waiver and release are
part of the consideration for issuance of the Notes.
CONCERNING THE TRUSTEE
State Street Bank and Trust Company is to be the Trustee under the Indenture
and has been appointed by the Company as Registrar and Paying Agent with regard
to the Notes.
The Indenture will provide that, except during the continuance of an Event
of Default, the Trustee will perform only such duties as are set forth
specifically in the Indenture. During the existence of an Event of Default, the
Trustee will exercise such of the rights and powers vested in it under the
Indenture and use the same degree of care and skill in its exercise as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs.
The Indenture and the TIA will impose certain limitations on the rights of
the Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The Trustee is permitted
to engage in other transactions; PROVIDED, that if it acquires any conflicting
interest as described in the TIA, it must eliminate such conflict, apply to the
SEC for permission to continue as Trustee with such conflict, or resign.
GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York, without giving
effect to any principles of conflict of laws to the extent that the application
of the law of another jurisdiction would be required thereby.
NOTICES
All notices shall be deemed to have been given (i) upon the mailing by first
class mail, postage prepaid, of such notices to Holders of Notes at their
registered addresses as recorded in the Note Register and (ii) for so long as
the Notes are listed on the Luxembourg Stock Exchange, upon publication in a
leading newspaper of general circulation in Luxembourg, in each case, not later
than the latest date, and not earlier than the earliest date, prescribed in the
Indenture for the giving of such notice.
CERTAIN DEFINITIONS
"Additional Assets" means (i) any property or assets that replace the
property or assets that are the subject of an Asset Disposition; (ii) any
property or assets (other than Indebtedness and Capital Stock) to be used by the
Company or a Restricted Subsidiary in a Related Business; (iii) the Capital
Stock of a Person that is engaged in a Related Business and becomes a Restricted
Subsidiary as a result of the acquisition of such Capital Stock by the Company
or another Restricted Subsidiary; or (iv) Capital Stock of any Person that at
such time is a Restricted Subsidiary, acquired from a third party.
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"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"all or substantially all" has the meaning given to such phrase in the
Revised Model Business Corporation Act and commentary thereto.
"Asset Disposition" means any sale, lease, transfer or other disposition of
shares of Capital Stock of a Restricted Subsidiary (other than directors'
qualifying shares, or (in the case of a Foreign Subsidiary) to the extent
required by applicable law), property or other assets (each referred to for the
purposes of this definition as a "disposition") by the Company or any of its
Restricted Subsidiaries (including any disposition by means of a merger,
consolidation or similar transaction), other than (i) a disposition to the
Company or a Restricted Subsidiary, (ii) a disposition in the ordinary course of
business, (iii) any disposition or series of related dispositions for aggregate
consideration of less than $5.0 million, (iv) the sale or discount (with or
without recourse, and on customary or commercially reasonable terms) of accounts
receivable or notes receivable arising in the ordinary course of business, or
the conversion or exchange of accounts receivable for notes receivable, (v) a
Restricted Payment Transaction, (vi) a disposition that is governed by the
provisions described under "--Merger and Consolidation", (vii) any Financing
Disposition, (viii) any "fee in lieu" or other disposition of assets to any
governmental authority or agency that continue in use by the Company or any
Restricted Subsidiary, so long as the Company or any Restricted Subsidiary may
obtain title to such assets upon reasonable notice by paying a nominal fee, (ix)
any exchange of like property pursuant to Section 1031 (or any successor
section) of the Code, (x) any financing transaction with respect to property
built or acquired by the Company or any Restricted Subsidiary after the Issue
Date, including without limitation any sale/leaseback transaction or asset
securitization, (xi) any disposition arising from foreclosure, condemnation or
similar action with respect to any property or other assets, (xii) any
disposition of Capital Stock, Indebtedness or other securities of an
Unrestricted Subsidiary, (xiii) a disposition of Capital Stock of a Restricted
Subsidiary pursuant to an agreement or other obligation with or to a Person
(other than the Company or a Restricted Subsidiary) from whom such Restricted
Subsidiary was acquired, or from whom such Restricted Subsidiary acquired its
business and assets (having been newly formed in connection with such
acquisition), entered into in connection with such acquisition, or (xiv) a
disposition of not more than 5% of the outstanding Capital Stock of a Foreign
Subsidiary that has been approved by the Board of Directors.
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts, whether outstanding on the
Issue Date or thereafter incurred, payable under or in respect of the Senior
Credit Facility, including without limitation principal, premium (if any),
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company or any Restricted
Subsidiary whether or not a claim for post-filing interest is allowed in such
proceedings), fees, charges, expenses, reimbursement obligations, guarantees,
other monetary obligations of any nature and all other amounts payable
thereunder or in respect thereof.
"Board of Directors" means the board of directors or other governing body of
the Company or, if the Company is owned or managed by a single entity, the board
of directors or other governing body of such entity, or, in either case, any
committee thereof duly authorized to act on behalf of such board or
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governing body (or, for purposes of clause (i) of paragraph (a) of the covenant
described under "--Certain Covenants--Limitation on Sales of Assets and
Subsidiary Stock," a committee of Officers of the Company designated by such
board or governing body).
"Borrowing Base" means the sum (determined as of the end of the most
recently ended fiscal quarter for which consolidated financial statements of the
Company are available) of (1) 60% of Inventory of the Company and its Restricted
Subsidiaries and (2) 80% of Receivables of the Company and its Restricted
Subsidiaries.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banking institutions are authorized or required by law to close
in New York City.
"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) equity of such Person, including any Preferred Stock,
but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligation" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP. The Stated Maturity of any Capitalized Lease
Obligation shall be the date of the last payment of rent or any other amount due
under the related lease.
"Cash Equivalents" means any of the following: (a) securities issued or
fully guaranteed or insured by the United States Government or any agency or
instrumentality thereof, (b) time deposits, certificates of deposit or bankers'
acceptances of (i) any lender under the Senior Credit Agreement or (ii) any
commercial bank having capital and surplus in excess of $500,000,000 and the
commercial paper of the holding company of which is rated at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's
(or if at such time neither is issuing ratings, then a comparable rating of
another nationally recognized rating agency), (c) commercial paper rated at
least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent
thereof by Moody's (or if at such time neither is issuing ratings, then a
comparable rating of another nationally recognized rating agency) and (d)
investments in money market funds complying with the risk limiting conditions of
Rule 2a-7 or any successor rule of the SEC under the Investment Company Act of
1940, as amended.
"CDR" means Clayton, Dubilier & Rice, Inc.
"CDR Agreements" means, collectively, (i) the Investment Agreement, dated
January 12, 1998, as amended, between the Company and the Investor, (ii) the
Registration Rights Agreement, dated as of June 10, 1998, between the Company
and the Investor, and (iii) the Consulting Agreement and the Indemnification
Agreement, each dated as of June 10, 1998, each between the Company and CDR (and
its permitted successors and assigns thereunder); as each such CDR Agreement may
be amended, supplemented, waived or otherwise modified from time to time in
accordance with the terms thereof and of the Indenture.
"CDR Fund V" means Clayton, Dubilier & Rice V Limited Partnership, a Cayman
Islands exempted limited partnership, and any successor in interest thereto.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means U.S. Office Products Company, a Delaware corporation, and
any successor in interest thereto.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated EBITDA of the Company and its
Restricted Subsidiaries for the period of the most recent four consecutive
fiscal quarters ending prior to the date of such determination for which
consolidated financial statements of the Company are available to (ii)
Consolidated Interest Expense for such four fiscal quarters (in each case,
determined, for each fiscal quarter (or portion thereof) of the four
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fiscal quarters ending prior to the Issue Date, on a pro forma basis to give
effect to the Strategic Restructuring as if it had occurred at the beginning of
such four-quarter period); PROVIDED that
(1) if since the beginning of such period the Company or any Restricted
Subsidiary has Incurred any Indebtedness that remains outstanding on such
date of determination or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness,
Consolidated EBITDA and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to such Indebtedness
as if such Indebtedness had been Incurred on the first day of such period
(except that in making such computation, the amount of Indebtedness under
any revolving credit facility outstanding on the date of such calculation
shall be computed based on (A) the average daily balance of such
Indebtedness during such four fiscal quarters or such shorter period for
which such facility was outstanding or (B) if such facility was created
after the end of such four fiscal quarters, the average daily balance of
such Indebtedness during the period from the date of creation of such
facility to the date of such calculation),
(2) if since the beginning of such period the Company or any Restricted
Subsidiary has repaid, repurchased, redeemed, defeased or otherwise
acquired, retired or discharged any Indebtedness (each, a "Discharge") or if
the transaction giving rise to the need to calculate the Consolidated
Coverage Ratio involves a Discharge of Indebtedness (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid), Consolidated EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Discharge of such Indebtedness,
including with the proceeds of such new Indebtedness, as if such Discharge
had occurred on the first day of such period.
(3) if since the beginning of such period the Company or any Restricted
Subsidiary shall have disposed of any company, any business or any group of
assets constituting an operating unit of a business (any such disposition, a
"Sale"), the Consolidated EBITDA for such period shall be reduced by an
amount equal to the Consolidated EBITDA (if positive) attributable to the
assets that are the subject of such Sale for such period or increased by an
amount equal to the Consolidated EBITDA (if negative) attributable thereto
for such period and Consolidated Interest Expense for such period shall be
reduced by an amount equal to (A) the Consolidated Interest Expense
attributable to any Indebtedness of the Company or any Restricted Subsidiary
repaid, repurchased, redeemed, defeased or otherwise acquired, retired or
discharged with respect to the Company and its continuing Restricted
Subsidiaries in connection with such Sale for such period (including but not
limited to through the assumption of such Indebtedness by another Person)
plus (B) if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period attributable to the
Indebtedness of such Restricted Subsidiary to the extent the Company and its
continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such Sale,
(4) if since the beginning of such period the Company or any Restricted
Subsidiary (by merger, consolidation or otherwise) shall have made an
Investment in any Person that thereby becomes a Restricted Subsidiary, or
otherwise acquired any company, any business or any group of assets
constituting an operating unit of a business, including any such Investment
or acquisition occurring in connection with a transaction causing a
calculation to be made hereunder (any such Investment or acquisition, a
"Purchase"), Consolidated EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto (including
the Incurrence of any related Indebtedness) as if such Purchase occurred on
the first day of such period, and
(5) if since the beginning of such period any Person became a Restricted
Subsidiary or was merged or consolidated with or into the Company or any
Restricted Subsidiary, and since the beginning of such period such Person
shall have Discharged any Indebtedness or made any Sale or Purchase that
would have required an adjustment pursuant to clause (2), (3) or (4) above
if made by the Company or a Restricted Subsidiary during such period,
Consolidated EBITDA and Consolidated
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Interest Expense for such period shall be calculated after giving pro forma
effect thereto as if such Discharge, Sale or Purchase occurred on the first
day of such period.
For purposes of this definition, whenever pro forma effect is to be given to
any Sale, Purchase or other transaction, or the amount of income or earnings
relating thereto and the amount of Consolidated Interest Expense associated with
any Indebtedness Incurred or repaid, repurchased, redeemed, defeased or
otherwise acquired, retired or discharged in connection therewith, the pro forma
calculations in respect thereof (including without limitation in respect of
anticipated cost savings or synergies relating to any such Sale, Purchase or
other transaction) shall be as determined in good faith by a responsible
financial or accounting Officer of the Company. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest
expense on such Indebtedness shall be calculated as if the rate in effect on the
date of determination had been the applicable rate for the entire period (taking
into account any Interest Rate Agreement applicable to such Indebtedness to the
extent of the remaining term of such Interest Rate Agreement). If any
Indebtedness bears, at the option of the Company or a Restricted Subsidiary, a
rate of interest based on a prime or similar rate, a eurocurrency interbank
offered rate or other fixed or floating rate, and such Indebtedness is being
given pro forma effect, the interest expense on such Indebtedness shall be
calculated by applying such optional rate as the Company or such Restricted
Subsidiary may designate. If any Indebtedness that is being given pro forma
effect was Incurred under a revolving credit facility, the interest expense on
such Indebtedness shall be computed based upon the average daily balance of such
Indebtedness during the applicable period. Interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate determined in good
faith by a responsible financial or accounting officer of the Company to be the
rate of interest implicit in such Capitalized Lease Obligation in accordance
with GAAP.
"Consolidated EBITDA" means, for any period, the Consolidated Net Income for
such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) provision for all taxes (whether or not paid,
estimated or accrued) based on income, profits or capital, (ii) Consolidated
Interest Expense and any Receivables Fees, (iii) depreciation, amortization
(including but not limited to amortization of goodwill and intangibles and
amortization and write-off of financing costs) and all other non-cash charges or
non-cash losses, (iv) any expenses or charges related to any Equity Offering,
Investment or Indebtedness permitted by the Indenture (whether or not
consummated or incurred) and (v) the amount of any minority interest expense.
"Consolidated Interest Expense" means, for any period, (i) the total
interest expense of the Company and its Restricted Subsidiaries to the extent
deducted in calculating Consolidated Net Income, net of any interest income of
the Company and its Restricted Subsidiaries, including without limitation any
such interest expense consisting of (a) interest expense attributable to
Capitalized Lease Obligations, (b) amortization of debt discount, (c) the
interest portion of any deferred payment obligation, and (d) commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing, plus (ii) Preferred Stock dividends paid in cash
in respect of Disqualified Stock of the Company held by Persons other than the
Company or a Restricted Subsidiary and minus (iii) to the extent otherwise
included in such interest expense, Receivables Fees and amortization or
write-off of financing costs, in each case under clauses (i) through (iii) as
determined on a Consolidated basis in accordance with GAAP; PROVIDED that gross
interest expense shall be determined after giving effect to any net payments
made or received by the Company and its Restricted Subsidiaries with respect to
Interest Rate Agreements.
"Consolidated Net Income" means, for any period, the net income (loss) of
the Company and its Restricted Subsidiaries, determined on a consolidated basis
in accordance with GAAP and before any reduction in respect of Preferred Stock
dividends; PROVIDED that there shall not be included in such Consolidated Net
Income:
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(i) any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that (A) subject to the limitations contained
in clause (iv) below, the Company's equity in the net income of any such
Person for such period shall be included in such Consolidated Net Income up
to the aggregate amount actually distributed by such Person during such
period to the Company or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution to a
Restricted Subsidiary, to the limitations contained in clause (iii) below)
and (B) the Company's equity in the net loss of such Person shall be
included to the extent of the aggregate Investment of the Company or any of
its Restricted Subsidiaries in such Person,
(ii) any net income (loss) of any Person acquired by the Company or a
Restricted Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition,
(iii) any net income (loss) of any Restricted Subsidiary that is not a
Note Guarantor if such Restricted Subsidiary is subject to restrictions,
directly or indirectly, on the payment of dividends or the making of similar
distributions by such Restricted Subsidiary, directly or indirectly, to the
Company by operation of the terms of such Restricted Subsidiary's charter or
any agreement, instrument, judgment, decree, order, statute or governmental
rule or regulation applicable to such Restricted Subsidiary or its
stockholders (other than (x) restrictions that have been waived or otherwise
released, (y) restrictions pursuant to the Notes or the Indenture and (z)
restrictions in effect on the Issue Date with respect to a Restricted
Subsidiary and other restrictions with respect to such Restricted Subsidiary
that taken as a whole are not materially less favorable to the Noteholders
than such restrictions in effect on the Issue Date), except that (A) subject
to the limitations contained in clause (iv) below, the Company's equity in
the net income of any such Restricted Subsidiary for such period shall be
included in such Consolidated Net Income up to the aggregate amount of any
dividend or distribution that was or that could have been made by such
Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary (subject, in the case of a dividend that could have
been made to another Restricted Subsidiary, to the limitation contained in
this clause) and (B) the net loss of such Restricted Subsidiary shall be
included to the extent of the aggregate Investment of the Company or any of
its other Restricted Subsidiaries in such Restricted Subsidiary,
(iv) any gain or loss realized upon the sale or other disposition of any
asset of the Company or any Restricted Subsidiary (including pursuant to any
sale/leaseback transaction) that is not sold or otherwise disposed of in the
ordinary course of business (as determined in good faith by the Board of
Directors),
(v) any item classified as an extraordinary, unusual or nonrecurring
gain, loss or charge (including without limitation (a) any compensation
expense for stock options that will be cashed out, converted, exchanged or
otherwise retired in connection with the Strategic Restructuring, (b) any
charge or expense incurred for employee bonuses in connection with the
Strategic Restructuring, and (c) fees, expenses and charges associated with
the Strategic Restructuring or any acquisition, merger or consolidation
after the Issue Date),
(vi) the cumulative effect of a change in accounting principles,
(vii) all deferred financing costs written off and premiums paid in
connection with any early extinguishment of Indebtedness,
(viii) any unrealized gains or losses in respect of Currency Agreements,
(ix) any unrealized foreign currency transaction gains or losses in
respect of Indebtedness of any Person denominated in a currency other than
the functional currency of such Person, and
(x) any non-cash compensation charge arising from any grant of stock,
stock options or other equity-based awards.
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In the case of any unusual or nonrecurring gain, loss or charge not included
in Consolidated Net Income pursuant to clause (v) above in any determination
thereof, the Company will deliver an Officer's Certificate to the Trustee
promptly after the date on which Consolidated Net Income is so determined,
setting forth the nature and amount of such unusual or nonrecurring gain, loss
or charge.
"Consolidated Total Assets" means, as of any date of determination, the
total assets shown on the consolidated balance sheet of the Company and its
Restricted Subsidiaries as of the most recent date for which such a balance
sheet is available, determined on a consolidated basis in accordance with GAAP
(and, in the case of any determination relating to any Incurrence of
Indebtedness or any Investment, on a pro forma basis including any property or
assets being acquired in connection therewith), PROVIDED that for purposes of
paragraph (b) of the covenant described in "--Certain Covenants--Limitation on
Indebtedness" and the definition of "Permitted Investments," Consolidated Total
Assets shall not be less than $2,006 million. At April 25, 1998, on a pro forma
basis giving effect to the Transactions, Consolidated Total Assets was $2,020
million. See "Pro Forma Combined Financial Data."
"Consolidation" means the consolidation of the accounts of each of the
Restricted Subsidiaries with those of the Company in accordance with GAAP;
PROVIDED that "Consolidation" will not include consolidation of the accounts of
any Unrestricted Subsidiary, but the interest of the Company or any Restricted
Subsidiary in any Unrestricted Subsidiary will be accounted for as an
investment. The term "Consolidated" has a correlative meaning.
"Convertible Notes" means, collectively, the Company's 5 1/2% Convertible
Subordinated Notes due 2001 and its 5 1/2% Convertible Subordinated Notes due
2003.
"Currency Agreement" means, in respect of a Person, any foreign exchange
contract, currency swap agreement or other similar agreement or arrangements
(including derivative agreements or arrangements), as to which such Person is a
party or a beneficiary.
"Default" means any event or condition that is, or after notice or passage
of time or both would be, an Event of Default.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness and (ii)
any other Senior Indebtedness that, at the date of determination, has an
aggregate principal amount equal to or under which, at the date of
determination, the holders thereof are committed to lend up to, at least $25.0
million and is specifically designated by the Company in an agreement or
instrument evidencing or governing such Senior Indebtedness as "Designated
Senior Indebtedness" for purposes of the Indenture.
"Disinterested Director" means, with respect to any Affiliate Transaction, a
member of the Board of Directors having no material direct or indirect financial
interest in or with respect to such Affiliate Transaction. A member of the Board
of Directors shall not be deemed to have such a financial interest by reason of
such member's holding Capital Stock of the Company or a Parent or any options,
warrants or other rights in respect of such Capital Stock.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
(other than Management Stock) that by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable or exercisable) or
upon the happening of any event (other than following the occurrence of a Change
of Control or other similar event described under such terms as a "change of
control," or an Asset Disposition) (i) matures or is mandatorily redeemable
pursuant to a sinking fund obligation or otherwise, (ii) is convertible or
exchangeable for Indebtedness or Disqualified Stock or (iii) is redeemable at
the option of the holder thereof (other than following the occurrence of a
Change of Control or other similar event described under such terms as a "change
of control," or an Asset Disposition), in whole or in part, in each case on or
prior to the final Stated Maturity of the Notes.
"Domestic Subsidiary" means any Restricted Subsidiary of the Company other
than a Foreign Subsidiary.
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"Equity Tender Offer" means the self-tender offer by the Company to purchase
shares of its common stock (or options therefor) as part of the Strategic
Restructuring.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Contribution" means Net Cash Proceeds, or the fair value, as
determined in good faith by the Board of Directors, of property or assets,
received by the Company as capital contributions to the Company after the Issue
Date or from the issuance or sale (other than to a Restricted Subsidiary) of
Capital Stock (other than Disqualified Stock) of the Company, in each case to
the extent designated as an Excluded Contribution pursuant to an Officer's
Certificate of the Company and not previously included in the calculation set
forth in subparagraph (a)(3)(B)(x) of the covenant described under "--Certain
Covenants--Limitation on Restricted Payments" for purposes of determining
whether a Restricted Payment may be made.
"Financing Disposition" means any sale, transfer, conveyance or other
disposition of property or assets by the Company or any Subsidiary thereof to
any Receivables Entity, or by any Receivables Subsidiary, in each case in
connection with the Incurrence by a Receivables Entity of Indebtedness, or
obligations to make payments to the obligor on Indebtedness, which may be
secured by a Lien in respect of such property or assets.
"Foreign Subsidiary" means (a) any Restricted Subsidiary of the Company that
is not organized under the laws of the United States of America or any state
thereof or the District of Columbia and (b) any Restricted Subsidiary of the
Company that has no material assets other than securities of one or more Foreign
Subsidiaries, and other assets relating to an ownership interest in any such
securities or Subsidiaries.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect on the Issue Date (for purposes of the definitions of
the terms "Consolidated Coverage Ratio," "Consolidated EBITDA," "Consolidated
Interest Expense," "Consolidated Net Income" and "Consolidated Total Assets,"
all defined terms in the Indenture to the extent used in or relating to any of
the foregoing definitions, and all ratios and computations based on any of the
foregoing definitions) and as in effect from time to time (for all other
purposes of the Indenture), including those set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
approved by a significant segment of the accounting profession. All ratios and
computations based on GAAP contained in the Indenture shall be computed in
conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person; 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.
"Guarantor Senior Indebtedness" means, with respect to any Note Guarantor,
the following obligations, whether outstanding on the date of the Indenture or
thereafter issued, without duplication: (i) any Guarantee of Bank Indebtedness
by such Note Guarantor and all other Guarantees by such Note Guarantor of Senior
Indebtedness of the Company or Guarantor Senior Indebtedness of any other Note
Guarantor; (ii) all obligations in respect of any Receivables Financing; and
(iii) all obligations consisting of the principal of and premium, if any, and
accrued and unpaid interest (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to the Note
Guarantor regardless of whether post-filing interest is allowed in such
proceeding) on, and fees and other amounts owing in respect of, all other
Indebtedness of the Note Guarantor, unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
expressly provided that the obligations in respect of such Indebtedness are not
senior in right of payment to the obligations of such
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Note Guarantor under its Note Guarantee; PROVIDED, HOWEVER, that Guarantor
Senior Indebtedness shall not include (1) any obligations of such Note Guarantor
to the Company or any other Subsidiary of the Company, (2) any liability for
Federal, state, local, foreign or other taxes owed or owing by such Note
Guarantor, (3) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including Guarantees thereof or
instruments evidencing such liabilities), (4) any Indebtedness of such Note
Guarantor (or Guarantee by such Note Guarantor of Indebtedness) that is
expressly subordinated in right of payment to any other Indebtedness of such
Note Guarantor (or Guarantee by such Note Guarantor of Indebtedness), (5) any
Capital Stock of such Note Guarantor or (6) that portion of any Indebtedness of
such Note Guarantor that is Incurred by such Note Guarantor in violation of the
covenant described under "--Certain Covenants--Limitation on Indebtedness" (but
no such violation shall be deemed to exist for purposes of this clause (6) if
any holder of such Indebtedness or such holder's representative shall have
received an Officer's Certificate to the effect that such Incurrence of such
Indebtedness does not (or that the Incurrence by such Note Guarantor of the
entire committed amount thereof at the date on which the initial borrowing
thereunder is made would not) violate such covenant). If any Guarantor Senior
Indebtedness is disallowed, avoided or subordinated pursuant to the provisions
of Section 548 of Title 11 of the United States Code or any applicable state
fraudulent conveyance law, such Guarantor Senior Indebtedness nevertheless will
constitute Guarantor Senior Indebtedness.
"Guarantor Senior Subordinated Indebtedness" means, with respect to a Note
Guarantor, (i) the obligations of such Note Guarantor under its Note Guarantee
and (ii) any other Indebtedness of such Note Guarantor that ranks PARI PASSU in
right of payment with the obligations of such Note Guarantor under its Note
Guarantee.
"Guarantor Subordinated Obligations" means, with respect to a Note
Guarantor, any Indebtedness of such Note Guarantor (whether outstanding on the
Issue Date or thereafter Incurred) that is expressly subordinated in right of
payment to the obligations of such Note Guarantor under the Note Guarantee
pursuant to a written agreement.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note is registered
in the Note Register.
"Holding Company Expenses" means (i) costs (including all professional fees
and expenses) incurred by a Parent to comply with its reporting obligations
under federal or state laws or under the Indenture, including any reports filed
with respect to the Securities Act, Exchange Act or the respective rules and
regulations promulgated thereunder, (ii) indemnification obligations of a Parent
owing to directors, officers, employees or other Persons under its charter or
by-laws or pursuant to written agreements with any such Person, (iii) fees and
expenses payable by a Parent in connection with the Transactions, (iv) other
operational expenses of a Parent incurred in the ordinary course of business not
to exceed $1.0 million in any fiscal year, and (v) expenses incurred by a Parent
in connection with any public offering of Capital Stock or Indebtedness (x)
where the net proceeds of such offering are intended to be received by or
contributed or loaned to the Company or a Restricted Subsidiary, or (y) in a
prorated amount of such expenses in proportion to the amount of such net
proceeds intended to be so received, contributed or loaned, or (z) otherwise on
an interim basis prior to completion of such offering so long as a Parent shall
cause the amount of such expenses to be repaid to the Company or the relevant
Restricted Subsidiary out of the proceeds of such offering promptly if
completed.
"Incur" means issue, assume, enter into any Guarantee of, incur or otherwise
become liable for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred
by such Subsidiary at the time it becomes a Subsidiary. Accrual of interest, the
accretion of accreted value and the payment of interest in the form of
additional Indebtedness will not be deemed to be an Incurrence of Indebtedness.
Any Indebtedness issued at a discount (including Indebtedness on which interest
is payable through the issuance of additional Indebtedness) shall be deemed
Incurred at the time of original issuance of the Indebtedness at the initial
accreted amount thereof.
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"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(i) the principal of indebtedness of such Person for borrowed money,
(ii) the principal of obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments,
(iii) all reimbursement obligations of such Person in respect of letters
of credit or other similar instruments (the amount of such obligations being
equal at any time to the aggregate then undrawn and unexpired amount of such
letters of credit or other instruments plus the aggregate amount of drawings
thereunder that have not then been reimbursed),
(iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property (except Trade Payables), which purchase price is
due more than one year after the date of placing such property in final
service or taking final delivery and title thereto,
(v) all Capitalized Lease Obligations of such Person,
(vi) the redemption, repayment or other repurchase amount of such Person
with respect to any Disqualified Stock of such Person or (if such Person is
a Subsidiary of the Company other than a Note Guarantor) any Preferred Stock
of such Subsidiary, but excluding, in each case, any accrued dividends (the
amount of such obligation to be equal at any time to the maximum fixed
involuntary redemption, repayment or repurchase price for such Capital
Stock, or if less (or if such Capital Stock has no such fixed price), to the
involuntary redemption, repayment or repurchase price therefor calculated in
accordance with the terms thereof as if then redeemed, repaid or
repurchased, and if such price is based upon or measured by the fair market
value of such Capital Stock, such fair market value shall be as determined
in good faith by the Board of Directors or the board of directors or other
governing body of the issuer of such Capital Stock),
(vii) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person;
PROVIDED that the amount of Indebtedness of such Person shall be the lesser
of (A) the fair market value of such asset at such date of determination (as
determined in good faith by the Company) and (B) the amount of such
Indebtedness of such other Persons,
(viii) all Indebtedness of other Persons to the extent Guaranteed by such
Person, and
(ix) to the extent not otherwise included in this definition, net
Hedging Obligations of such Person (the amount of any such obligation to be
equal at any time to the termination value of such agreement or arrangement
giving rise to such Hedging Obligation that would be payable by such Person
at such time).
The amount of Indebtedness of any Person at any date shall be determined as
set forth above or otherwise provided in the Indenture, or otherwise shall equal
the amount thereof that would appear on a balance sheet of such Person
(excluding any notes thereto) prepared in accordance with GAAP.
"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 (including derivative agreements or arrangements), as to which
such Person is party or a beneficiary.
"Inventory" means goods held for sale or lease by a Person in the ordinary
course of business, net of any reserve for goods that have been segregated by
such Person to be returned to the applicable vendor for credit, as determined in
accordance with GAAP.
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"Investment" in any Person by any other Person means any direct or indirect
advance, loan or other extension of credit (other than to customers, suppliers,
directors, officers or employees of any Person in the ordinary course of
business) or capital contribution (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others) to, or any purchase or acquisition of Capital Stock, Indebtedness
or other similar instruments issued by, such Person. For purposes of the
definition of "Unrestricted Subsidiary" and the covenant described under
"--Certain Covenants--Limitation on Restricted Payments," (i) "Investment" shall
include the portion (proportionate to the Company's equity interest in such
Subsidiary) of the fair market value of the net assets of any Subsidiary of the
Company at the time that such Subsidiary is designated an Unrestricted
Subsidiary, PROVIDED that upon a redesignation of such Subsidiary as a
Restricted Subsidiary, the Company shall be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive)
equal to (x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation, (ii) any property transferred to
or from an Unrestricted Subsidiary shall be valued at its fair market value at
the time of such transfer, and (iii) in each case under clause (i) or (ii)
above, fair market value shall be as determined in good faith by the Board of
Directors. Guarantees shall not be deemed to be Investments. The amount of any
Investment outstanding at any time shall be the original cost of such
Investment, reduced (at the Company's option) by any dividend, distribution,
interest payment, return of capital, repayment or other amount or value received
in respect of such Investment; PROVIDED, that to the extent that the amount of
Restricted Payments outstanding at any time is so reduced by any portion of any
such amount or value that would otherwise be included in the calculation of
Consolidated Net Income, such portion of such amount or value shall not be so
included for purposes of calculating the amount of Restricted Payments that may
be made pursuant to paragraph (a) of the covenant described under "--Certain
Covenants--Limitation on Restricted Payments."
"Investor" means CDR-PC Acquisition L.L.C., a Delaware limited liability
company, and its successors and assigns.
"Issue Date" means the date on which the Old Notes were issued.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Management Advances" means (1) loans or advances made to directors,
officers or employees of a Parent, the Company or any Restricted Subsidiary (x)
in respect of travel, entertainment or moving-related expenses incurred in the
ordinary course of business, (y) in respect of moving-related expenses incurred
in connection with any closing or consolidation of any facility, or (z) in the
ordinary course of business and (in the case of this clause (z)) not exceeding
$5.0 million in the aggregate outstanding at any time, (2) promissory notes of
Management Investors acquired in connection with the issuance of Management
Stock to such Management Investors, (3) loans to Management Investors of funds
applied to purchase Management Stock, (4) Management Guarantees, or (5) other
Guarantees of borrowings by Management Investors in connection with the purchase
of Management Stock, which Guarantees are permitted under the covenant described
under "--Certain Covenants--Limitation on Indebtedness."
"Management Guarantees" means guarantees (x) of up to an aggregate principal
amount of $25.0 million of borrowings by Management Investors in connection with
their purchase of Management Stock or (y) made on behalf of, or in respect of
loans or advances made to, directors, officers or employees of a Parent, the
Company or any Restricted Subsidiary (1) in respect of travel, entertainment and
moving-related expenses incurred in the ordinary course of business, or (2) in
the ordinary course of business and (in the case of this clause (2)) not
exceeding $5.0 million in the aggregate outstanding at any time.
"Management Investors" means the officers, directors, employees and other
members of the management of a Parent, the Company or any of their respective
Subsidiaries, or family members or relatives
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thereof, or trusts or partnerships for the benefit of any of the foregoing, or
any of their heirs, executors, successors and legal representatives, who at any
date beneficially own or have the right to acquire, directly or indirectly,
Capital Stock of the Company or a Parent.
"Management Stock" means Capital Stock of the Company or a Parent (including
any options, warrants or other rights in respect thereof) held by any of the
Management Investors.
"Material Domestic Subsidiary" means a Domestic Subsidiary of the Company
that, as of the end of any fiscal quarter of the Company ending after the Issue
Date, has tangible assets of more than $3.0 million as reflected in the
consolidated balance sheet of the Company as of such date.
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other non-cash form) therefrom, in each case net of (i) all
legal, title and recording tax expenses, commissions and other fees and expenses
incurred, and all Federal, state, provincial, foreign and local taxes required
to be paid or accrued as a liability under GAAP, as a consequence of such Asset
Disposition (including as a consequence of any transfer of funds in connection
with the application thereof in accordance with the covenant described under
"--Certain Covenants--Limitation on Sales of Assets and Subsidiary Stock"), (ii)
all payments made, and all installment payments required to be made, on any
Indebtedness that is secured by any assets subject to such Asset Disposition, in
accordance with the terms of any Lien upon such assets, or that must by its
terms, or in order to obtain a necessary consent to such Asset Disposition, or
by applicable law, be repaid out of the proceeds from such Asset Disposition,
(iii) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition, or to any other Person (other than the Company or a Restricted
Subsidiary) owning a beneficial interest in the assets disposed of in such Asset
Disposition and (iv) any liabilities or obligations associated with the assets
disposed of in such Asset Disposition and retained by the Company or any
Restricted Subsidiary after such Asset Disposition, including without limitation
pension and other post-employment benefit liabilities, liabilities related to
environmental matters, and liabilities relating to any indemnification
obligations associated with such Asset Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of any securities
of the Company or any Subsidiary by the Company or any Subsidiary, or any
capital contribution, means the cash proceeds of such issuance, sale or
contribution net of attorneys' fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees actually incurred in connection with such issuance, sale or
contribution and net of taxes paid or payable as a result thereof.
"Note Guarantee" means any of (i) the guarantee of the Notes by the Domestic
Subsidiaries to be entered into on the Issue Date as described under "--Note
Guarantees," and (ii) any guarantee that may from time to time be entered into
by a Restricted Subsidiary of the Company pursuant to the covenant described
under "--Certain Covenants--Future Note Guarantors."
"Note Guarantor" means any Restricted Subsidiary of the Company that enters
into a Note Guarantee.
"Officer" means, with respect to the Company or any other obligor upon the
Notes, the Chairman of the Board, the President, the Chief Executive Officer,
the Chief Financial Officer, any Vice President, the Controller, the Treasurer
or the Secretary (a) of such Person or (b) if such Person is owned or managed by
a single entity, of such entity.
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"Officer's Certificate" means, with respect to the Company or any other
obligor upon the Notes, a certificate signed by one Officer of such Person.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Parent" means any Person of which the Company at any time is or becomes a
Subsidiary after the Issue Date.
"Permitted Holder" means any of the following: (i) any of the Investor,
Management Investors, CDR, CDR Fund V and their respective Affiliates; (ii) any
investment fund or vehicle managed, sponsored or advised by CDR; (iii) any
limited or general partners of, or other investors in, any of the Investors and
their respective Affiliates, or any such investment fund or vehicle; and (iv)
any Person acting in the capacity of an underwriter in connection with a public
or private offering of Capital Stock of a Parent or the Company.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in, or consisting of, any of the following:
(i) a Restricted Subsidiary, the Company, or a Person that will, upon
the making of such Investment, become a Restricted Subsidiary;
(ii) another Person if as a result of such Investment such other Person
is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, or is liquidated into, the Company or a
Restricted Subsidiary;
(iii) Temporary Cash Investments or Cash Equivalents;
(iv) receivables owing to the Company or any Restricted Subsidiary, if
created or acquired in the ordinary course of business;
(v) any securities or other Investments received as consideration in, or
retained in connection with, sales or other dispositions of property or
assets, including Asset Dispositions made in compliance with the covenant
described under "--Certain Covenants--Limitation on Sales of Assets and
Subsidiary Stock;"
(vi) securities or other Investments received in settlement of debts
created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary, or as a result of foreclosure, perfection or
enforcement of any Lien, or in satisfaction of judgments, including in
connection with any bankruptcy proceeding or other reorganization of another
Person;
(vii) Investments in existence or made pursuant to legally binding
written commitments in existence on the Issue Date;
(viii) Currency Agreements, Interest Rate Agreements and related Hedging
Obligations, which obligations are Incurred in compliance with the covenant
described under "--Certain Covenants-- Limitation on Indebtedness;"
(ix) pledges or deposits (x) with respect to leases or utilities
provided to third parties in the ordinary course of business or (y)
otherwise described in the definition of "Permitted Liens" or made in
connection with Liens permitted under the covenant described under
"--Certain Covenants-- Limitations on Liens;"
(x) Notes;
(xi) any Investment to the extent made using Capital Stock of the
Company (other than Disqualified Stock), or Capital Stock of a Parent, as
consideration;
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(xii) any Investment in a joint venture or similar entity that is not a
Restricted Subsidiary, or in any Related Business, in an aggregate amount
outstanding at any time not to exceed 5% of Consolidated Total Assets;
(xiii) (1) Investments in any Receivables Subsidiary, or in connection
with a Financing Disposition by or to any Receivables Entity, including
Investments of funds held in accounts permitted or required by the
arrangements governing such Financing Disposition or any related
Indebtedness, or (2) any promissory note issued by the Company or a Parent,
PROVIDED that if such Parent receives cash from the relevant Receivables
Entity in exchange for such note, an equal cash amount is contributed by
such Parent to the Company;
(xiv) bonds secured by assets leased to and operated by the Company or
any Restricted Subsidiary that were issued in connection with the financing
of such assets so long as the Company or any Restricted Subsidiary may
obtain title to such assets at any time by paying a nominal fee, canceling
such bonds and terminating the transaction;
(xv) Management Advances; and
(xvi) other Investments in an aggregate amount outstanding at any time
not to exceed 2.5% of Consolidated Total Assets.
"Permitted Liens" means:
(a) Liens for taxes, assessments or other governmental charges not yet
delinquent or the nonpayment of which in the aggregate would not reasonably
be expected to have a material adverse effect on the Company and its
Restricted Subsidiaries, or that are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Company or a Subsidiary thereof, as the case
may be, in accordance with GAAP;
(b) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
in respect of obligations that are not overdue for a period of more than 60
days, or that are bonded or that are being contested in good faith and by
appropriate proceedings;
(c) pledges, deposits or Liens in connection with workers' compensation,
unemployment insurance and other social security and other similar
legislation or other insurance-related obligations (including, without
limitation, pledges or deposits securing liability to insurance carriers
under insurance or self-insurance arrangements);
(d) pledges, deposits or Liens to secure the performance of bids,
tenders, trade, government or other contracts (other than for borrowed
money), obligations for utilities, leases, licenses, statutory obligations,
completion guarantees, surety, judgment, appeal or performance bonds, other
similar bonds, instruments or obligations, and other obligations of a like
nature incurred in the ordinary course of business;
(e) easements (including reciprocal easement agreements), rights-of-way,
building, zoning and similar restrictions, utility agreements, covenants,
reservations, restrictions, encroachments, changes, and other similar
encumbrances or title defects incurred, or leases or subleases granted to
others, in the ordinary course of business, which do not in the aggregate
materially interfere with the ordinary conduct of the business of the
Company and its Subsidiaries, taken as a whole;
(f) Liens existing on, or provided for under written arrangements
existing on, the Issue Date, or (in the case of any such Liens securing
Indebtedness of the Company or any of its Subsidiaries existing or arising
under written arrangements existing on the Issue Date) securing any
Refinancing Indebtedness in respect of such Indebtedness so long as the Lien
securing such Refinancing Indebtedness is limited to all or part of the same
property or assets (plus improvements, accessions, proceeds or
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dividends or distributions in respect thereof) that secured (or under such
written arrangements could secure) the original Indebtedness;
(g) (i) mortgages, liens, security interests, restrictions, encumbrances
or any other matters of record that have been placed by any developer,
landlord or other third party on property over which the Company or any
Restricted Subsidiary of the Company has easement rights or on any leased
property and subordination or similar agreements relating thereto and (ii)
any condemnation or eminent domain proceedings affecting any real property;
(h) Liens securing Hedging Obligations, Purchase Money Obligations or
Capitalized Lease Obligations Incurred in compliance with the covenant
described under "--Certain Covenants-- Limitation on Indebtedness;"
(i) Liens arising out of judgments, decrees, orders or awards in respect
of which the Company shall in good faith be prosecuting an appeal or
proceedings for review, which appeal or proceedings shall not have been
finally terminated, or if the period within which such appeal or proceedings
may be initiated shall not have expired;
(j) leases, subleases, licenses or sublicenses to third parties;
(k) Liens securing (1) Indebtedness Incurred in compliance with clause
(b)(i), (b)(iv), (b)(v), (b)(vii), (b)(viii)(E) or (b)(x) of the covenant
described under "--Certain Covenants--Limitation on Indebtedness," or clause
(b)(iii) thereof (other than Refinancing Indebtedness Incurred in respect of
Indebtedness described in paragraph (a) thereof), (2) Bank Indebtedness, (3)
commercial bank Indebtedness, (4) Indebtedness of any Restricted Subsidiary
that is not a Note Guarantor, (5) the Notes, or (6) Indebtedness or other
obligations of any Receivables Entity;
(l) Liens existing on property or assets of a Person at the time such
Person becomes a Subsidiary of the Company (or at the time the Company or a
Restricted Subsidiary acquires such property or assets); PROVIDED, HOWEVER,
that such Liens are not created in connection with, or in contemplation of,
such other Person becoming such a Subsidiary (or such acquisition of such
property or assets), and that such Liens are limited to all or part of the
same property or assets (plus improvements, accessions, proceeds or
dividends or distributions in respect thereof) that secured (or, under the
written arrangements under which such Liens arose, could secure) the
obligations to which such Liens relate;
(m) Liens on Capital Stock or other securities of an Unrestricted
Subsidiary that secure Indebtedness or other obligations of such
Unrestricted Subsidiary;
(n) any encumbrance or restriction (including, but not limited to, put
and call agreements) with respect to Capital Stock of any joint venture or
similar arrangement pursuant to any joint venture or similar agreement; and
(o) Liens securing Refinancing Indebtedness Incurred in respect of any
Indebtedness secured by, or securing any refinancing, refunding, extension,
renewal or replacement (in whole or in part) of any other obligation secured
by, any other Permitted Liens, PROVIDED that any such new Lien is limited to
all or part of the same property or assets (plus improvements, accessions,
proceeds or dividends or distributions in respect thereof) that secured (or,
under the written arrangements under which the original Lien arose, could
secure) the obligations to which such Liens relate.
"Permitted Parent Payments" means loans, advances, dividends or
distributions to a Parent or other payments by the Company or any Restricted
Subsidiary (A) to permit such Parent to satisfy obligations under the CDR
Agreements or (B) to pay or permit such Parent to pay any Holding Company
Expenses or any Related Taxes.
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"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock" as applied to the Capital Stock of any corporation means
Capital Stock of any class or classes (however designated) that by its terms is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Purchase Money Obligations" means any Indebtedness Incurred to finance or
refinance the acquisition, leasing, construction or improvement of property
(real or personal) or assets, and whether acquired through the direct
acquisition of such property or assets or the acquisition of the Capital Stock
of any Person owning such property or assets, or otherwise.
"Receivable" means a right to receive payment arising from a sale or lease
of goods or services by a Person pursuant to an arrangement with another Person
pursuant to which such other Person is obligated to pay for goods or services
under terms that permit the purchase of such goods and services on credit, as
determined in accordance with GAAP.
"Receivables Entity" means (x) any Receivables Subsidiary or (y) any other
Person that is engaged in the business of acquiring, selling, collecting,
financing or refinancing Receivables, accounts (as defined in the Uniform
Commercial Code as in effect in any jurisdiction from time to time), other
accounts and/or other receivables, and/or related assets.
"Receivables Fees" means distributions or payments made directly or by means
of discounts with respect to any participation interest issued or sold in
connection with, and other fees paid to a Person that is not a Restricted
Subsidiary in connection with, any Receivables Financing.
"Receivables Financing" means any financing of Receivables of the Company or
any Restricted Subsidiary that have been transferred to a Receivables Entity in
a Financing Disposition.
"Receivables Subsidiary" means a Subsidiary of the Company that (a) is
engaged solely in the business of acquiring, selling, collecting, financing or
refinancing Receivables, accounts (as defined in the Uniform Commercial Code as
in effect in any jurisdiction from time to time) and other accounts and
receivables (including any thereof constituting or evidenced by chattel paper,
instruments or general intangibles), all proceeds thereof and all rights
(contractual and other), collateral and other assets relating thereto, and any
business or activities incidental or related to such business, and (b) is
designated as a "Receivables Subsidiary" by the Board of Directors.
"refinance" means refinance, refund, replace, renew, repay, modify, restate,
defer, substitute, supplement, reissue, resell or extend (including pursuant to
any defeasance or discharge mechanism); and the terms "refinances," "refinanced"
and "refinancing" as used for any purpose in the Indenture shall have a
correlative meaning.
"Refinancing Indebtedness" means Indebtedness that is Incurred to refinance
any Indebtedness existing on the Issue Date or Incurred in compliance with the
Indenture (including Indebtedness of the Company that refinances Indebtedness of
any Restricted Subsidiary (to the extent permitted in the Indenture) and
Indebtedness of any Restricted Subsidiary that refinances Indebtedness of
another Restricted Subsidiary) including Indebtedness that refinances
Refinancing Indebtedness; PROVIDED, that (1) if the Indebtedness being
refinanced is Subordinated Obligations or Guarantor Subordinated Obligations,
the Refinancing Indebtedness has an Average Life at the time such Refinancing
Indebtedness is Incurred that is equal to or greater than the Average Life of
the Indebtedness being refinanced, (2) such Refinancing Indebtedness is Incurred
in an aggregate principal amount (or if issued with original issue discount, an
aggregate issue price) that is equal to or less than the sum of (x) the
aggregate principal amount (or if issued with original issue discount, the
aggregate accreted value) then outstanding of the
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Indebtedness being refinanced, plus (y) fees, underwriting discounts, premiums
and other costs and expenses incurred in connection with such Refinancing
Indebtedness, and (3) Refinancing Indebtedness shall not include (x)
Indebtedness of a Restricted Subsidiary that is not a Note Guarantor that
refinances Indebtedness of the Company that was incurred by the Company pursuant
to paragraph (a) of the covenant described under "--Certain
Covenants--Limitation on Indebtedness" or (y) Indebtedness of the Company or a
Restricted Subsidiary that refinances Indebtedness of an Unrestricted
Subsidiary.
"Related Business" means those businesses in which the Company or any of its
Subsidiaries is engaged on the date of the Indenture, or that are related,
complementary, incidental or ancillary thereto or extensions, developments or
expansions thereof.
"Related Taxes" means (x) any taxes, charges or assessments, including but
not limited to sales, use, transfer, rental, ad valorem, value-added, stamp,
property, consumption, franchise, license, capital, net worth, gross receipts,
excise, occupancy, intangibles or similar taxes, charges or assessments (other
than federal, state or local taxes measured by income and federal, state or
local withholding imposed on payments made by a Parent), required to be paid by
such Parent by virtue of its being incorporated or having Capital Stock
outstanding (but not by virtue of owning stock or other equity interests of any
corporation or other entity other than the Company or any of its Subsidiaries),
or being a holding company parent of the Company or having received Capital
Stock of the Company as a capital contribution, or receiving dividends from or
other distributions in respect of the Capital Stock of the Company, or having
guaranteed any obligations of the Company or any Subsidiary thereof, or having
made any payment in respect of any of the items for which the Company is
permitted to make payments to such Parent pursuant to the covenant described
under "--Certain Covenants--Limitation on Restricted Payments," or (y) any other
federal, state, foreign, provincial or local taxes measured by income for which
such Parent is liable up to an amount not to exceed with respect to such federal
taxes the amount of any such taxes that the Company would have been required to
pay on a separate company basis or on a consolidated basis if the Company had
filed a consolidated return on behalf of an affiliated group (as defined in
Section 1504 of the Code, or an analogous provision of state, local or foreign
law) of which it were the common parent, or with respect to state and local
taxes, on a combined basis if the Company had filed a combined return on behalf
of an affiliated group consisting only of the Company and its Subsidiaries.
"Representative" means the trustee, agent or representative (if any) for an
issue of Senior Indebtedness.
"Restricted Payment Transaction" means any Restricted Payment permitted
pursuant to the covenant described under "--Certain Covenants--Limitation on
Restricted Payments," any Permitted Payment, any Permitted Investment, or any
transaction specifically excluded from the definition of the term "Restricted
Payment."
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary. For purposes of clause (i) of the definition of the
term "Consolidated Net Income," Dudley Stationery Limited, a company organized
under the laws of England and Wales, and any successor thereto, shall be deemed
to be a Restricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien.
"Senior Credit Agreement" means the credit agreement dated as of June 9,
1998, among the Company, the lenders named therein, The Chase Manhattan Bank, as
administrative agent, Bankers Trust Company, as syndication agent, and Merrill
Lynch Capital Corporation, as documentation agent, as such agreement may be
assumed by any successor in interest, and as such agreement may be amended,
supplemented, waived or otherwise modified from time to time, or refunded,
refinanced, restructured, replaced, renewed, repaid, increased or extended from
time to time (whether in whole or in part, whether
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with the original agent and lenders or other agents and lenders or otherwise,
and whether provided under the original Senior Credit Agreement or otherwise).
"Senior Credit Facility" means the collective reference to the Senior Credit
Agreement, any Credit Documents (as defined therein), any notes and letters of
credit issued pursuant thereto and any guarantee and collateral agreement,
patent and trademark security agreement, mortgages, letter of credit
applications and other security agreements and collateral documents, and other
instruments and documents, executed and delivered pursuant to or in connection
with any of the foregoing, in each case as the same may be amended,
supplemented, waived or otherwise modified from time to time, or refunded,
refinanced, restructured, replaced, renewed, repaid, increased or extended from
time to time (whether in whole or in part, whether with the original agent and
lenders or other agents and lenders or otherwise, and whether provided under the
original Senior Credit Agreement or one or more other credit agreements,
indentures (including the Indenture) or financing agreements or otherwise).
Without limiting the generality of the foregoing, the term "Senior Credit
Facility" shall include any agreement (i) changing the maturity of any
Indebtedness incurred thereunder or contemplated thereby, (ii) adding
Subsidiaries of the Company as additional borrowers or guarantors thereunder,
(iii) increasing the amount of Indebtedness incurred thereunder or available to
be borrowed thereunder or (iv) otherwise altering the terms and conditions
thereof.
"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of the Company that ranks PARI PASSU with the Notes.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"significant subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC, as in effect on the Issue Date.
"S&P" means Standard & Poor's Ratings Service, a division of The McGraw-Hill
Companies, Inc., and its successors.
"Spin-off Distributions" means the formation and distribution by the Company
to its stockholders of Capital Stock of four separate companies that will hold
certain technology solutions, print management, education supplies and corporate
travel services businesses previously operated by the Company.
"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency).
"Strategic Restructuring" means the comprehensive restructuring of the
Company, involving the Equity Tender Offer, the Spin-off Distributions, the
equity investment by the Investor, and related financing and other transactions.
"Subordinated Obligations" means any Indebtedness of the Company (whether
outstanding on the date of the Indenture or thereafter Incurred) that is
expressly subordinated in right of payment to the Notes pursuant to a written
agreement. Indebtedness in respect of the Convertible Notes shall not be deemed
to be Subordinated Obligations.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other equity interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person or (ii) one or
more Subsidiaries of such Person.
"Successor Company" shall have the meaning assigned thereto in clause (i)
under "--Merger and Consolidation."
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"Temporary Cash Investments" means any of the following: (i) any investment
in (x) direct obligations of the United States of America or any agency or
instrumentality thereof or obligations Guaranteed by the United States of
America or any agency or instrumentality thereof or (y) direct obligations of
any foreign country recognized by the United States of America rated at least
"A" by S&P or "A-1" by Moody's (or, in either case, the equivalent of such
rating by such organization or, if no rating of S&P or Moody's then exists, the
equivalent of such rating by any nationally recognized rating organization),
(ii) overnight bank deposits, and investments in time deposit accounts,
certificates of deposit, bankers' acceptances and money market deposits (or,
with respect to foreign banks, similar instruments) maturing not more than one
year after the date of acquisition thereof issued by (x) any lender under the
Senior Credit Agreement or (y) a bank or trust company that is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America having capital and surplus
aggregating in excess of $250 million (or the foreign currency equivalent
thereof), (iii) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (i) or (ii) above entered
into with a bank meeting the qualifications described in clause (ii) above, (iv)
Investments in commercial paper, maturing not more than one year after the date
of acquisition, with a rating at the time as of which any Investment therein is
made of "P-2" (or higher) according to Moody's or "A-2" (or higher) according to
S&P (or, in either case, the equivalent of such rating by such organization or,
if no rating of S&P or Moody's then exists, the equivalent of such rating by any
nationally recognized rating organization), (v) Investments in securities
maturing not more than one year after the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least "A" by S&P or "A" by Moody's (or, in either case, the equivalent of
such rating by such organization or, if no rating of S&P or Moody's then exists,
the equivalent of such rating by any nationally recognized rating organization),
(vi) investment funds investing 95% of their assets in securities of the type
described in clauses (i)-(v) above (which funds may also hold reasonable amounts
of cash pending investment and/or distribution), (vii) any money market deposit
accounts issued or offered by a domestic commercial bank or a commercial bank
organized and located in a country recognized by the United States of America,
in each case, having capital and surplus in excess of $250 million (or the
foreign currency equivalent thereof), or investments in money market funds
complying with the risk limiting conditions of Rule 2a-7 (or any successor rule)
of the SEC under the Investment Company Act of 1940, as amended, and (viii)
similar short-term investments approved by the Board of Directors in the
ordinary course of business.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. SectionSection
77aaa-77bbbb) as in effect on the date of the Indenture.
"Trade Payables" means, with respect to any Person, any accounts payable or
any indebtedness or monetary obligation to trade creditors created, assumed or
guaranteed by such Person arising in the ordinary course of business in
connection with the acquisition of goods or services.
"Transactions" means, collectively, the Strategic Restructuring, the initial
equity investment by the Investor, the offering and issuance of the Notes, the
initial borrowings under the Senior Credit Facility, the Equity Tender Offer,
the Spin-off Distributions, the 2003 Note Tender Offer, the 2001 Note Exchange
Offer, and all other transactions relating to the Strategic Restructuring or the
financing thereof.
"Trust Officer" means the Chairman of the Board, the President or any other
officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Trustee" means the party named as such in the Indenture until a successor
replaces it and, thereafter, means the successor.
"2001 Note Exchange Offer" means the offer by the Company to exchange shares
of its common stock for its outstanding 5 1/2% Convertible Subordinated Notes
due 2001.
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"2003 Note Tender Offer" means the offer by the Company to purchase any and
all of its outstanding 5 1/2% Convertible Subordinated Notes due 2003.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination is an Unrestricted Subsidiary, as designated by the
Board of Directors in the manner provided below, and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its
Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, the Company or any other Restricted Subsidiary of the
Company that is not a Subsidiary of the Subsidiary to be so designated;
PROVIDED, that either (A) the Subsidiary to be so designated has total
consolidated assets of $1,000 or less or (B) if such Subsidiary has consolidated
assets greater than $1,000, then such designation would be permitted under the
covenant described under "--Certain Covenants--Limitation on Restricted
Payments." The Board of Directors may designate any Unrestricted Subsidiary to
be a Restricted Subsidiary; PROVIDED, that immediately after giving effect to
such designation (x) the Company could incur at least $1.00 of additional
Indebtedness under paragraph (a) in the covenant described under "--Certain
Covenants--Limitation on Indebtedness" or (y) the Consolidated Coverage Ratio
would be greater than it was immediately prior to giving effect to such
designation. Any such designation by the Board of Directors shall be evidenced
to the Trustee by promptly filing with the Trustee a copy of the resolution of
the Company's Board of Directors giving effect to such designation and an
Officer's Certificate certifying that such designation complied with the
foregoing provisions.
"Voting Stock" of an entity means all classes of Capital Stock of such
entity then outstanding and normally entitled to vote in the election of
directors or all interests in such entity with the ability to control the
management or actions of such entity.
LISTING
Application has been made to list the Notes on the Luxembourg Stock
Exchange. The Certificate of Incorporation of the Company and the legal notice
relating to the issue of the Notes and the Certificate of Incorporation of the
Company will be registered prior to the listing with the Registrar of the
District Court in Luxembourg (GREFFIER EN CHEF DUE TRIBUNAL D' ARRONDISSEMENT A
LUXEMBOURG) where such documents are available for inspection and where copies
thereof can be obtained upon request. As long as the New Notes are listed on the
Luxembourg Stock Exchange, an agent for making payments on, and transfer of,
Notes will be maintained in Luxembourg. The Company expects to initially
designate State Street Bank Luxembourg S.A. as its agent for such purposes.
BOOK-ENTRY; DELIVERY AND FORM
Except as set forth below, the New Notes will be issued in the form of one
or more global notes (the "Global Notes"). The Global Notes will be deposited
with, or on behalf of, DTC, and registered in its name or in the name of Cede &
Co., as its nominee.
Old Notes transferred to institutional "accredited investors," as defined in
Rule 501(a)(1), (2), (3) and (7) under the Securities Act, who are not qualified
institutional buyers or to any other persons who are not qualified institutional
buyers (collectively referred to herein as "Non-Global Purchasers") were issued
in registered form without interest coupons as "Certificated Notes." Upon the
transfer to a qualified institutional buyer of such Certificated Notes initially
issued to a Non-Global Purchaser, such Certificated Notes will, unless the
transferee requests otherwise or the Global Note has previously been exchanged
in whole for Certificated Securities, be exchanged for an interest in the Global
Note representing the principal amount of Notes being transferred.
Ownership of beneficial interests in a Global Note will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests
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in a Global Note 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
interests of persons other than participants). Qualified institutional buyers
may hold their interests in Global Notes 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 Global Notes directly through
Cedel Bank or Euroclear, if they are participants in such systems, or indirectly
through organizations that are participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the New Notes represented by such Global Note for all
purposes under the Indenture and the New Notes. No beneficial owner of an
interest in a Global Note will be able to transfer that interest except in
accordance with DTC's applicable procedures, in addition to those provided for
under the Indenture and, if applicable, those of Euroclear and Cedel Bank.
Payments of the principal of, and interest on, a Global Note will be made to
DTC or its nominee, as the case may be, as the registered owner thereof. Neither
the Company, the Trustee nor 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 a Global Note 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 a Global Note, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Note as shown on the records of
DTC or its nominee. The Company also expects that payments by participants to
owners of beneficial interests in such Global Note 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 names 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. Transfers
between participants in Euroclear and Cedel Bank will be effected in the
ordinary way in accordance with their respective rules and operating procedures.
The Company expects that DTC will take any action permitted to be taken by a
holder of New Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more participants to whose
account the DTC interests in a Global Note is credited and only in respect of
such portion of the aggregate principal amount of New Notes as to which such
participant or participants has or have given such direction. However, if there
is an Event of Default under the Notes, DTC will exchange the applicable Global
Note for Certificated Notes, which it will distribute to its participants and
which may be legended as set forth under the heading "Transfer Restrictions."
DEPOSITORY TRUST COMPANY
The Company understands that DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "Clearing Agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities for its participants
("Direct Participants") and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates and certain other organizations. Indirect
access to the DTC system is available to others such as banks, brokers,
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dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("Indirect
Participants").
Although DTC, Euroclear and Cedel Bank are expected to follow the foregoing
procedures in order to facilitate transfers of interests in a Global Note among
participants of DTC, Euroclear and Cedel Bank, 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 Trustee will have any
responsibility for the performance by DTC, Euroclear or Cedel Bank or their
respective participants or indirect participants of their respective obligations
under the rules and procedures governing their operations.
If DTC is at any time unwilling or unable to continue as a depositary for
the Global Notes and a successor depositary is not appointed by the Company
within 90 days, the Company will issue Certificated Notes, which may bear the
legend referred to under "Transfer Restrictions," in exchange for the Global
Notes. Holders of an interest in a Global Note may receive Certificated Notes,
which may bear the legend referred to under "Transfer Restrictions," in
accordance with the DTC's rules and procedures in addition to those provided for
under the Indenture.
REGISTRAR AND TRANSFER AGENT
The Trustee will act as registrar and transfer agent for the New Notes (the
"Notes Registrar").
As described under "-- Book-Entry Securities; The Depository Trust Company;
Delivery and Form," so long as the New Notes are in book-entry form,
registration of transfers and exchanges of New Notes will be made through Direct
Participants and Indirect Participants in DTC. If physical certificates
representing the New Notes are issued, registration of transfers and exchanges
of New Notes will be effected without charge by or on behalf of the Company,
but, in the case of a transfer, upon payment (with the giving of such indemnity
as the Company may require) in respect of any tax or other governmental charges
which may be imposed in relation to it.
The Company will not be required to register or cause to be registered any
transfer of New Notes during a period beginning 15 days prior to the mailing of
notice of redemption of New Notes and ending on the day of such mailing.
DESCRIPTION OF THE OLD NOTES
The terms of the Old Notes are identical in all material respects to those
of the New Notes, except that the Old Notes (i) have not been registered under
the Securities Act, and, accordingly, contain terms with respect to transfer
restrictions, (ii) are entitled to certain registration rights under the
Registration Rights Agreement (which rights will terminate upon consummation of
the Exchange Offer, and (iii) are entitled under the Registration Rights
Agreement to an increase in the rate of interest payments thereon in the event
that the Company fails to comply with certain terms of the Registration Rights
Agreement. Certain relevant terms of the Registration Rights Agreement are
described more fully below.
REGISTRATION RIGHTS
The Company agreed with the Placement Agents, for the benefit of the holders
of the Old Notes, that the Company will use its reasonable best efforts, at its
cost, to file and cause to become effective a registration statement with
respect to a registered offer (the "Exchange Offer") to exchange the Old Notes
for an issue of senior subordinated notes of the Company (the "New Notes") with
terms identical to the Old Notes (except that the New Notes will not bear
legends restricting the transfer thereof or include provisions for additional
interest). Upon such registration statement being declared effective, the
Company shall offer the New Notes in return for surrender of the Old Notes. Such
offer shall remain open for not less than 20 business days after the date notice
of the Exchange Offer is mailed to holders. For each Old Note surrendered to the
Company under the Exchange Offer, the holder will receive a New Note of
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equal principal amount. Interest on each New Note shall accrue from the last
Interest Payment Date on which interest was paid on the Old Notes so
surrendered. In the event that applicable interpretations of the staff of the
Securities and Exchange Commission (the "Commission") do not permit the Company
to effect the Exchange Offer, or under certain other circumstances, the Company
shall, at its cost, use its best efforts to cause to become effective a shelf
registration statement (the "Shelf Registration Statement") with respect to
resales of the Notes and to keep such Shelf Registration Statement continuously
effective until the second anniversary of the Closing Date, or such shorter
period that will terminate when all Notes covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement. The
Company shall, in the event of such a shelf registration, provide to each holder
copies of the prospectus, notify each holder when the Shelf Registration
Statement for the Notes has become effective and take certain other actions as
are required to permit resales of the Notes. A holder that sells its Notes
pursuant to the Shelf Registration Statement generally will be required to be
named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement that are applicable
to such a holder (including certain indemnification obligations).
In the event that the Exchange Offer is not consummated and a Shelf
Registration Statement is not declared effective on or prior to December 10,
1998, the annual interest rate borne by the Notes will be increased by (a) prior
to the 91st day after December 10, 1998, .25% per annum and (b) thereafter, .50%
per annum until the Exchange Offer is consummated or the Shelf Registration
Statement is declared effective.
If the Company effects the Exchange Offer, the Company will be entitled to
close the Exchange Offer 20 business days after the commencement thereof,
PROVIDED that it has accepted all Old Notes theretofore validly surrendered in
accordance with the terms of the Exchange Offer. Old Notes not tendered in the
Exchange Offer shall continue to accrue interest and to be subject to all of the
terms and conditions specified in the Indenture and to the transfer restrictions
described in "Transfer Restrictions," but will not retain any rights under the
Registration Rights Agreement.
This summary of certain provisions of the Registration Rights Agreement does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of the Registration Rights Agreement, a copy
of which is available from the Company upon request.
TRANSFER RESTRICTIONS
The Old Notes have not been registered under the Securities Act and may not
be offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act.
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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following summary describes certain United States federal income tax
consequences of the acquisition, ownership and disposition of the New Notes. The
summary is based on the Internal Revenue Code of 1986, as amended (the "Code"),
and regulations, rulings and judicial decisions as of the date hereof, all of
which may be repealed, revoked or modified so as to result in federal income tax
consequences different from those described below. Such changes could be applied
retroactively in a manner that could adversely affect holders of the Notes. In
addition, the authorities on which this summary is based are subject to various
interpretations. It is therefore possible that the consequences of the
acquisition, ownership and disposition of the Notes may differ from the
treatment described below.
The tax treatment of a holder of the New Notes may vary depending upon the
particular situation of the holder. This summary is limited to investors who
will hold the New Notes as capital assets within the meaning of Section 1221 of
the Code and does not deal with holders that may be subject to special tax rules
(including, but not limited to, insurance companies, tax-exempt organizations,
financial institutions, dealers in securities or currencies, holders whose
functional currency is not the U.S. dollar or holders who will hold the New
Notes as a hedge against currency risks or as part of a straddle, synthetic
security, conversion transaction or other integrated investment comprised of the
New Notes and one or more other investments). The discussion is limited to
holders of New Notes exchanged for Old Notes of which such holders were the
original purchasers and does not address the tax consequences to subsequent
holders of the New Notes.
This summary is for general information only and does not constitute, nor
should it be considered as, legal or tax advice to prospective holders of the
New Notes. Moreover, the summary does not address all aspects of federal income
taxation that may be relevant to holders of the New Notes in light of their
particular circumstances, and it does not address any tax consequences arising
under the laws of any state, local or foreign taxing jurisdiction. Prospective
holders should consult their own tax advisors as to the particular tax
consequences to them of acquiring, holding or disposing of the New Notes.
As used herein, a "United States Holder" of a Note means an individual that
is a citizen or resident of the United States (including certain former citizens
and former longtime residents), a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, an estate the income of which is subject to United States
federal income taxation regardless of its source, or a trust if either (a) the
trust elects to be classified as a domestic trust or (b) a U.S. court is able to
exercise primary supervision over the administration of the trust and one or
more U.S. persons have the authority to control all substantial decisions of the
trust. A "Non-United States Holder" is a holder that is not a United States
Holder.
CONSEQUENCES OF THE EXCHANGE OFFER
An exchange of Old Notes for New Notes pursuant to the Exchange Offer should
not be treated as an "exchange" for federal income tax purposes because the New
Notes should not be considered to differ materially in kind or extent from the
Old Notes. Rather, the New Notes received by a holder should be treated as a
continuation of the Old Notes in the hands of that holder. As a result, there
should be no federal income tax consequences for holders who exchange Old Notes
for New Notes. Such holders will have the same tax basis and holding period in
the New Notes as the Old Notes exchanged therefor. For purposes of the following
discussion, it is assumed that the New Notes and the Old Notes exchanged
therefor will be treated as the same instruments for U.S. federal income tax
purposes, and accordingly references to a "Note" (or with correlative meaning
"Notes") include both a New Note and the Old Note for which that New Note is
exchanged.
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STATED INTEREST ON NOTES
Except as set forth below, interest on a Note will generally be taxable to a
United States Holder as ordinary income from domestic sources at the time it is
paid or accrued in accordance with the United States Holder's method of
accounting for tax purposes.
MARKET DISCOUNT
If a United States Holder purchases a Note for an amount that is less than
its principal amount, the amount of the difference will be treated as "market
discount" for U.S. federal income tax purposes, unless such difference is less
than a specified de minimis amount. Under the market discount rules, a United
States Holder will be required to treat any partial principal payment on, or any
gain on the sale, exchange, retirement or other disposition of, a Note as
ordinary income to the extent of the market discount which has not previously
been included in income and is treated as having accrued on such Note during the
period each holder held the Note. In addition, the United States Holder may be
required to defer, until the maturity of the Note or its earlier disposition in
a taxable transaction, the deduction of all or a portion of the interest expense
on any indebtedness incurred or continued to purchase or carry such Note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Note, unless the United
States Holder elects to accrue on a constant yield method. A United States
Holder may elect to include market discount in income currently as it accrues
(on either a ratable or constant interest method), in which case the rule
described above regarding deferral of interest deductions will not apply. This
election to include market discount in income currently, once made, applies to
all market discount obligations acquired on or after the first taxable year to
which the election applies and may not be revoked without the consent of the
Internal Revenue Service (the "IRS").
AMORTIZABLE BOND PREMIUM
A United States Holder that purchases a Note for an amount in excess of the
principal amount will be considered to have purchased the Note at a "premium." A
United States Holder generally may elect to amortize the premium over the
remaining term of the Note on a constant yield method. However, if the Note is
purchased at a time when the Note may be optionally redeemed for an amount that
is in excess of its principal amount, special rules would apply that could
result in a deferral of the amortization of bond premium until later in the term
of the Note. The amount amortized in any year will be treated as a reduction of
the United States Holder's interest income from the Note. Bond premium on a Note
held by a United States Holder that does not make such an election will decrease
the gain or increase the loss otherwise recognized on disposition of the Note.
The election to amortize premium on a constant yield method, once made, applies
to all debt obligations held or subsequently acquired by the electing United
States Holder on or after the first day of the first taxable year to which the
election applies and may not be revoked without the consent of the IRS.
SALE, EXCHANGE AND RETIREMENT OF NOTES
Upon the sale, exchange, redemption, retirement or other disposition of a
Note, a United States Holder generally will recognize gain or loss equal to the
difference between the amount realized upon the sale, exchange, redemption,
retirement or other disposition (except to the extent attributable to accrued
and unpaid interest which will be taxable as such) and such holder's adjusted
tax basis of the Note. A United States Holder's adjusted tax basis in a Note
will, in general, be the United States Holder's cost therefor, increased by
market discount previously included in income by the United States Holder and
reduced by any amortized premium previously deducted from income by the United
States Holder. Except as described above with respect to market discount or
except to the extent the gain or loss is attributable to accrued but unpaid
stated interest, such gain or loss will be capital gain or loss. For certain
noncorporate
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taxpayers (including individuals), the rate of taxation of capital gains will
depend upon (i) the taxpayer's holding period in the capital asset and (ii) the
taxpayer's marginal tax rate for ordinary income. The deductibility of capital
losses is subject to limitations.
NON-UNITED STATES HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) no United States federal withholding tax will be imposed with
respect to the payment by the Company or its paying agent of principal,
premium, if any, or interest on a Note owned by a Non-United States Holder
under an exemption for certain portfolio interest (the "Portfolio Interest
Exception"), provided (i) that such Non-United States Holder does not
actually or constructively own 10% or more of the total combined voting
power of all classes of stock of the Company entitled to vote within the
meaning of section 871(h)(3) of the Code and the regulations thereunder,
(ii) such Non-United States Holder is not a controlled foreign corporation
that is related, directly or constructively, to the Company through stock
ownership, (iii) such Non-United States Holder is not a bank whose receipt
of interest on a Note is described in section 881(c)(3)(A) of the Code and
(iv) such Non-United States Holder satisfies the certification requirements
(described generally below);
(b) no United States federal withholding tax will be imposed generally
with respect to any gain realized by a Non-United States Holder upon the
sale, exchange, redemption, retirement or other disposition of a Note; and
(c) a Note beneficially owned by an individual who at the time of death
is a Non-United States Holder will not be subject to United States federal
estate tax, provided that such individual does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote within the meaning of
section 871(h)(3) of the Code and provided that the interest payments with
respect to such Note would not have been, if received at the time of such
individuals death, effectively connected with the conduct of a United States
trade or business by such individual.
To satisfy the requirement referred to in (a)(iv) above, the beneficial
owner of such Note, or a financial institution holding the Note on behalf of
such owner, must provide, in accordance with specified procedures, the Company
or a paying agent of the Company, with a statement to the effect that the
beneficial owner is not a United States Holder. Pursuant to current Treasury
regulations, this statement will satisfy the certification requirements if (1)
the beneficial owner provides his name and address, and certifies, under
penalties of perjury, that he is not a United States Holder (which certification
may be made on an IRS Form W-8 (or substitute form)) or (2) a financial
institution holding the Note on behalf of the beneficial owner in the ordinary
course of its trade or business certifies, under penalties of perjury, that such
statement has been received by it and furnishes a paying agent with a copy
thereof.
If a Non-United States Holder cannot satisfy the requirements of the
Portfolio Interest Exception described in (a) above, payments on a Note made to
such Non-United States Holder will be subject to a 30% withholding tax unless
the beneficial owner of the Note provides the Company or its paying agent, as
the case may be, with a properly executed (1) IRS Form 1001 (or substitute form)
claiming an exemption from or reduction of withholding under the benefit of a
tax treaty or (2) IRS Form 4224 (or substitute form) stating that interest paid
on the Note is not subject to withholding tax because it is effectively
connected with the beneficial owner's conduct of a trade or business in the
United States.
Treasury regulations, which will become generally effective January 1, 2000,
modify certain of the certification requirements described above. It is possible
that the Company and other withholding agents may request new withholding
exemption forms from holders in order to qualify for continued exemption from
withholding under the Treasury regulations when they become effective.
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If a Non-United States Holder is engaged in a trade or business in the
United States and income in respect of a Note is effectively connected with the
conduct of such trade or business, the Non-United States Holder, although exempt
from United States federal withholding tax as discussed above, will be subject
to United States federal income tax on such income on a net income basis in the
same manner as if it were a United States Holder. In addition, if such Holder is
a foreign corporation, it may be subject to a branch profits tax equal to 30%
(unless reduced or eliminated by an applicable income tax treaty) of its
effectively connected earnings and profits for the taxable year, subject to
adjustments.
Any gain or income realized upon the sale, exchange, retirement or other
disposition of a Note generally will not be subject to United States federal
income tax unless (i) such gain or income is effectively connected with the
conduct of a trade or business in the United States by the Non-United States
Holder or (ii) in the case of a Non-United States Holder who is an individual,
such individual is present in the United States for 183 days or more in the
taxable year of such sale, exchange, retirement or other disposition, and
certain other conditions are met.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to payments on a
Note and to the proceeds of the sale of a Note made to United States Holders
other than certain exempt recipients (such as corporations). A 31% backup
withholding tax will apply to such payments if the United States Holder fails to
provide a taxpayer identification number or certification of foreign or other
exempt status or fails to report in full dividend and interest income.
Under current regulations, no information reporting or backup withholding
will be required with respect to payments made by the Company or any paying
agent to Non-United States Holders if a statement described in (a)(iv) under
"--Non-United States Holders" has been received and the payor does not have
actual knowledge that the beneficial owner is a United States person.
In addition, backup withholding and information reporting will not apply if
payments on a Note are paid or collected by a foreign office of a custodian,
nominee or other foreign agent on behalf of the beneficial owner of such Note,
or if a foreign office of a broker (as defined in applicable U.S. Treasury
regulations) pays the proceeds of the sale of a Note to the owner thereof. If,
however, such nominee, custodian, agent or broker is, for United States federal
income tax purposes, a United States person, a controlled foreign corporation or
a foreign person that derives 50% or more of its gross income for certain
periods from the conduct of a trade or business in the United States, such
payments will be subject to information reporting (but not backup withholding),
unless (1) such custodian, nominee, agent or broker has documentary evidence in
its records that the beneficial owner is not a United States person and certain
other conditions are met or (2) the beneficial owner otherwise establishes an
exemption. Treasury regulations which will become generally effective January 1,
2000, modify certain of the certification requirements for backup withholding.
It is possible that the Company and other withholding agents may request a new
withholding exemption form from holders in order to qualify for continued
exemption from backup withholding under Treasury regulations when they become
effective.
Payments on a Note paid to the beneficial owner of a Note by a United States
office of a custodian, nominee or agent, or the payment by the United States
office of a broker of the proceeds of sale of a Note, will be subject to both
backup withholding and information reporting unless the beneficial owner
provides the statement referred to in (a)(iv) above and the payor does not have
actual knowledge that the beneficial owner is a United States person or
otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be credited
toward such Holder's United States federal income tax liability, if any. To the
extent that the amounts withheld exceed the Holder's tax liability, the excess
may be refunded to the Holder provided the required information is furnished to
the IRS. In addition to providing the necessary information, the Holder must
file a United States tax return in order to obtain a refund of the excess
withholding.
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THE FEDERAL INCOME TAX SUMMARY SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. PROSPECTIVE AND CURRENT UNITED STATES HOLDERS AND NON-UNITED STATES
HOLDERS OF THE NOTES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF
THE NOTES, INCLUDING THE TAX CONSEQUENCES UNDER UNITED STATES FEDERAL, STATE,
LOCAL, FOREIGN AND OTHER TAX LAWS AND THE EFFECTS OF CHANGES IN SUCH LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account in connection
with the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by Participating
Broker-Dealers during the period referred to below in connection with resales of
New Notes received in exchange for Old Notes if such Old Notes were acquired by
such Participating Broker-Dealers for their own accounts as a result of
market-making activities or other trading activities. The Company has agreed
that this Prospectus, as it may be amended or supplemented from time to time,
may be used by a Participating Broker-Dealer in connection with resales of such
New Notes for a period ending 180 days after the last date of acceptance for the
Exchange Offer. See "The Exchange Offer -- Resales of New Notes."
New Notes received by broker-dealers for their own accounts in connection
with the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account in
connection with the Exchange Offer and any broker or dealer that participates in
a distribution of such New Notes may be deemed to be an "underwriter" within the
meaning of the Securities Act, and any profit on any such resale of New Notes
and any commissions or concessions received by any such persons may be deemed to
be underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The Company shall not be liable for any delay by the Depository or any
Participant or Indirect Participant in identifying the beneficial owners of the
related New Notes and each such person may conclusively rely on, and shall be
protected in relying on, instructions from the Depository for all purposes
(including with respect to the registration and delivery, and the respective
principal amounts, of the New Notes to be issued).
LEGAL MATTERS
The validity of the New Notes being offered hereby and certain other legal
matters regarding the Notes will be passed upon for the Company by Wilmer,
Cutler & Pickering, Washington, D.C.
EXPERTS
The historical financial statements incorporated in this Registration
Statement on Form S-4 by reference to the Company's Annual Report on Form 10-K
for the year ended April 25, 1998 and the Company's Current Reports on Form 8-K
filed April 22, 1998 and May 26, 1998 have been audited by
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various independent accountants. The companies and periods covered by these
audits are indicated in the individual accountants' reports. Such financial
statements have been so incorporated in reliance on the reports of the various
independent accountants given on the authority of such firms as experts in
auditing and accounting.
GENERAL LISTING INFORMATION
LISTING
Application has been made to list the Notes on the Luxembourg Stock
Exchange. The Certificate of Incorporation of the Company and the legal notice
relating to the issue of the Notes will be deposited prior to the listing with
the Registrar of the District Court in Luxembourg (GREFFIER EN CHEF DU TRIBUNAL
D' ARRONDISSEMENT A LUXEMBOURG), where such documents are available for
inspection and where copies thereof can be obtained upon request. As long as the
Notes are listed on the Luxembourg Stock Exchange, an Agent for making payments
on, and transfers of, Notes will be maintained in Luxembourg.
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PRO FORMA COMBINED FINANCIAL DATA
(UNAUDITED)
The unaudited pro forma financial statements give effect to (i) the Equity
Tender, (ii) the Distributions, (iii) the Equity Investment, (iv) the exchange
of the Company's 5 1/2% convertible subordinated notes due 2001 for common stock
at an exchange rate of 15.461 shares per $1,000 principal amount, (the "2001
Note Exchange Offer") (v) the repurchase of the 5 1/2% convertible subordinated
notes due 2003 for a purchase price of 94.5% of the principal amount, plus
accrued interest (the "2003 Note Tender") and (vi) the Financing Transactions.
The unaudited pro forma combined financial statements do not give effect to the
allocation of corporate overhead to the Spin-Off Companies.
The pro forma combined balance sheet gives effect to (i) the Equity Tender,
(ii) the Distributions, (iii) the Equity Investment, (iv) the 2001 Note Offer,
(v) the 2003 Note Tender and (vi) the Financing Transactions, as if all such
transactions had occurred as of the Company's most recent balance sheet date,
April 25, 1998.
The pro forma combined statement of income for the fiscal year ended April
25, 1998 gives effect to (i) the Equity Tender, (ii) the Distributions, (iii)
the Equity Investment, (iv) the 2001 Note Offer, (v) the 2003 Note Tender, (vi)
the Financing Transactions and (vii) the business combinations accounted for
under the purchase method during Fiscal Year 1998 (the "Fiscal 1998 Purchase
Acquisitions"), as if all such transactions had occurred on April 27, 1997. The
pro forma combined statement of income for the fiscal year ended April 25, 1998
includes (i) the audited financial information of the Company for the fiscal
year ended April 25, 1998 and (ii) the unaudited financial information of the
Fiscal 1998 Purchase Acquisitions for the period from April 27, 1997 through
their respective acquisition dates.
The unaudited pro forma combined financial date presented herein does not
purport to represent the results that the Company would have obtained had the
transactions which are the subject of pro forma adjustments occurred at the
beginning of the applicable periods, as assumed, or the future results of the
company. The results of the companies included in the Spin-Off Companies have
been reflected as discontinued operations in the Company's historical statement
of income. The pro forma combined financial statements should be read in
conjunction with the Company's audited consolidated financial statements that
are incorporated by reference into this Prospectus.
F-1
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U.S. OFFICE PRODUCTS COMPANY
PRO FORMA COMBINED BALANCE SHEET
APRIL 25, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
U.S. OFFICE 2001 NOTE
PRODUCTS EQUITY EQUITY EXCHANGE 2003 NOTE PRO FORMA
COMPANY TENDER DISTRIBUTIONS INVESTMENT OFFER TENDER COMBINED
----------- --------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents............. $ 52,021 $ 882,548(a) $ 270,000(d) $ 209,993(g) $
65,431(a) (270,000)(d) (209,993)(g)
(1,000,000)(a)
Accounts receivable,
net..................... 310,527 $ 310,527
Inventory, net............ 228,671 228,671
Prepaid and other current
assets.................. 117,150 (1,452 (a) 115,698
----------- --------- ------------ ----------- ----------- ----------- -----------
Total current assets.... 708,369 (53,473) 654,896
Property and equipment,
net....................... 228,715 228,715
Intangible assets, net...... 923,024 923,024
Other assets................ 194,701 (3,389 (a) 30,000(e) (3,002)(f) (5,260)(g) 213,050
Net assets of discontinued
operations:
Amounts to become
receivable upon the
Distributions........... 132,145 (132,145)(b)
All other net assets...... 354,473 (354,473)(c)
----------- --------- ------------ ----------- ----------- ----------- -----------
Total assets............ $2,541,427 $ (56,862) $ (486,618) $ 30,000 $ (3,002) $ (5,260) $2,019,685
----------- --------- ------------ ----------- ----------- ----------- -----------
----------- --------- ------------ ----------- ----------- ----------- -----------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Short term debt........... $ 368,227 $ (132,145)(b) $(236,082)(d)
Accounts payable.......... 162,718 $ 162,718
Accrued compensation...... 43,013 43,013
Other accrued
liabilities............. 81,411 $ (1,936 (a) $ (1,201)(f) $ 2,785(g) 57,975
(23,084 (a)
----------- --------- ------------ ----------- ----------- ----------- -----------
Total current
liabilities........... 655,369 (25,020) (132,145) (236,082) (1,201) 2,785 263,706
Long-term debt.............. 382,174 882,548(a) (33,918)(d) (130,989)(f) (222,215)(g) 1,162,593
75,000(e) 209,993(g)
Other long-term liabilities
and minority interests.... 17,753 17,753
----------- --------- ------------ ----------- ----------- ----------- -----------
Total liabilities..... 1,055,296 857,528 (132,145) (195,000) (132,190) (9,437) 1,444,052
Stockholders' equity:
Common stock.............. 33 (9 (a) 9(d) 3(f) 37
1(a)
Paid-in capital........... 1,472,125 65,430(a) (297,299)(c) 269,991(d) 151,423(f) 704,388
(999,991 (a) (15,000)(e)
57,709(a)
Cumulative translation
adjustment.............. (112,803) (112,803)
Retained earnings......... 126,776 (2,905 (a) (57,174)(c) (30,000)(e) (20,437)(f) 7,333(g) (15,989)
(34,625 (a) (1,801)(f) (3,156)(g)
----------- --------- ------------ ----------- ----------- ----------- -----------
Total stockholders'
equity................ 1,486,131 (914,390) (354,473) 225,000 129,188 4,177 575,633
----------- --------- ------------ ----------- ----------- ----------- -----------
Total liabilities and
stockholders'
equity................ $2,541,427 $ (56,862) $ (486,616) $ 30,000 $ (3,002) $ (5,260) $2,019,685
----------- --------- ------------ ----------- ----------- ----------- -----------
----------- --------- ------------ ----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to pro forma combined financial statements.
F-2
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED APRIL 25, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
U.S. OFFICE FISCAL 1998
PRODUCTS PURCHASE PRO FORMA PRO FORMA
COMPANY ACQUISITIONS ADJUSTMENTS COMBINED
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues.................................................. $ 2,611,740 $ 164,732 $ $ 2,776,472
Cost of revenues........................................ 1,884,892 106,861 1,991,753
------------ ----------- ----------- ------------
Gross profit............................................ 726,848 57,871 784,719
Selling, general and administrative expenses.............. 591,463 40,272 (2,373)(h) 629,362
Amortization expense...................................... 19,938 80 4,842(i) 24,860
Restructuring costs....................................... 6,188 6,188
------------ ----------- ----------- ------------
Operating income........................................ 109,259 17,519 (2,469) 124,309
Other (income) expense:
Interest expense........................................ 37,836 623 68,500(j) 106,959
Interest income......................................... (1,853) (190) 2,043(j)
Other................................................... (7,146) (224) (7,370)
------------ ----------- ----------- ------------
Income from continuing operations before provision for
income taxes............................................ 80,422 17,310 (73,012) 24,720
Provision for income taxes................................ 36,946 2,378 (20,536)(k) 18,788
------------ ----------- ----------- ------------
Income from continuing operations......................... $ 43,476 $ 14,932 $ (52,476) $ 5,932
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
Weighted average shares outstanding:
Basic................................................... 29,889 36,514(l)
Diluted................................................. 30,480 37,105(l)
Income per share from continuing operations:
Basic................................................... $ 1.45 $ 0.16
Diluted................................................. $ 1.43 $ 0.16
</TABLE>
See accompanying notes to pro forma combined financial statements.
F-3
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
1. UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS
(a) Adjustment to reflect the Equity Tender, including repurchase of 37,037
shares of common stock (including shares underlying employee stock options)
by the Company for $1,000,000 and reduced by the proceeds from the exercise
of employee stock options related to shares participating in the Equity
Tender of $65,431. The funds to finance the net $934,569 cost of the Equity
Tender were obtained from new borrowings and cash on hand of $52,021. As a
result of the new borrowings, the adjustment also reflects the write-off of
$4,841 in short-term and long-term capitalized debt issue costs related to
the Company's existing credit facility and corresponding adjustments to
other accrued liabilities and retained earnings. As a result of the Company
allowing for the conditional exercise of employee stock options tendered
pursuant to the Equity Tender, such tendered stock options take on the
characteristics of a combination plan during the Equity Tender period (the
"Deemed Combination Plan"). Combination plans are those that provide stock
appreciation rights ("SARs") in combination with typical stock options. To
the extent that the optionholder exercised the SAR provisions, the companion
stock options were canceled. Compensation expense is recorded for cash
payments made upon exercise of the deemed SARs. Upon completion of the
Equity Tender, stock options not accepted pursuant to the Equity Tender
revert to fixed option awards with terms identical to those prior to
commencement of the Equity Tender. The terms of the Equity Tender, including
the number of shares to be repurchased in relation to the total number of
shares and options outstanding and the stated tender price in relation to
the current market price of the Company's common stock, provide persuasive
evidence that only a portion of the Deemed Combination Plan awards will be
extinguished via payment under the deemed SAR provisions. The compensation
expense related to the option shares purchased in the Equity Tender was
$57,709 with 23.2% of the total number of shares (including shares
underlying options) tendered. For purposes of the pro forma combined balance
sheet, the Company has reflected the after-tax compensation expense of
$34,625 ($57,709 before benefit from income taxes) as a reduction to
retained earnings. Additionally, other accrued liabilities has been
decreased by $23,084 to reflect the expected income tax benefit and
additional paid-in capital has been increased by $57,709. The Company has
not included this compensation expense in the unaudited pro forma combined
statements of income because it is of a non-recurring nature and is directly
related to the Strategic Restructuring Plan.
(b) Adjustment to reflect the collection of $132,145 of receivables from the
Spin-Off Companies at the date of the Distributions.
(c) Adjustment to remove the remaining net assets of the Spin-Off Companies.
(d) Adjustment to reflect the issuance of 8,421 shares of Common Stock in
conjunction with the Equity Investment of $270,000. The Company has made
certain preliminary calculations in relation to the allocation of the
proceeds to be received from Investor to the related Common Stock, the
Warrants and the Special Warrants. These calculations cannot be finalized
until the trading value of the Common Stock immediately following the
Distributions is available. The Company intends to reflect any amounts
allocated to the Warrants and the Special Warrants in additional paid-in
capital. The
F-4
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
(UNAUDITED)
1. UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS (CONTINUED)
preliminary assessment of the fair value of the Warrants at the future grant
date was determined using the Black-Scholes option pricing model with the
following weighted average assumptions:
<TABLE>
<CAPTION>
WARRANTS
-----------
<S> <C>
Expected life..................................................................................... 9 years
Risk free interest rate........................................................................... 5.6%
Expected volatility of Company Common Stock....................................................... 40%
Dividend rate..................................................................................... 0%
</TABLE>
Based on the above assumptions, the Company's preliminary calculations
indicate that approximately $203,700 of the proceeds from the Equity
Investment will be allocated to the shares of Common Stock issued to
Investor, approximately $65,900 will be allocated to the Warrants and
approximately $400 will be allocated to the Special Warrants. No value was
assigned to the Special Warrants for other potential events which could give
rise to the exercise of the Special Warrants as they are considered by the
Company to be contingent in nature. In arriving at these values, no discount
was applied to the value of the Warrants to reflect the illiquidity of the
Warrants pursuant to SFAS No. 123 issued by FASB.
(e) Adjustment to reflect the estimated transaction fees and expenses (including
financing costs) associated with the Equity Tender, the Distributions, the
Equity Investment and the New Borrowings of $75,000. Of this amount, $30,000
of debt issue costs will be capitalized. These fees and expenses have not
been reflected in the unaudited pro forma combined statements of income
because they are either capitalizable or are a non-recurring nature and are
directly related to the Strategic Restructuring Plan.
(f) Adjustment to reflect the issuance of 2,696 shares of Common Stock in
conjunction with the 2001 Note Exchange Offer, consisting of 2,025 shares of
Common Stock issued in exchange for 2001 Notes and 671 shares of common
stock issued to Investor. As a result of the 2001 Note Exchange Offer, the
Company will issue 302 shares of Common Stock over the contractual amount
with a market value of $20,437 to induce conversion of the 2001 Notes. The
$20,437 has been reflected as a reduction in retained earnings as the market
value of inducement is required to be recorded as an expense. In addition,
the adjustment reflects the write-off of $3,002 in capitalized debt issue
costs related to the 2001 Notes and corresponding adjustment to other
accrued liabilities and retained earnings. These expenses have not been
reflected in the unaudited pro forma combined statements of income because
they are of a non-recurring nature and are directly related to the Strategic
Restructuring Plan. As a result of the Strategic Restructuring Plan on a pro
forma basis at April 25, 1998, the Company would have 36,681 shares issued,
36,514 shares outstanding and 167 shares held in treasury.
(g) Adjustment to reflect the early extinguishment of approximately $222,215 of
the 2003 Notes, $230,000 principal amount, in exchange for $209,993 in cash
in the 2003 Note Tender. The Company retired approximately $222,215 of the
2003 Notes at a price of 94.5% of par value, or $209,993, resulting in an
extraordinary gain of $7,333, net of income taxes of $3,156. In addition,
the adjustment reflects the write-off of $5,260 in capitalized debt issue
costs related to the 2003 Notes. Both the extraordinary gain and debt issue
costs have corresponding adjustments to other accrued liabilities and
retained earnings. The gain and write-off have not been reflected in the
unaudited pro forma combined
F-5
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
(UNAUDITED)
1. UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS (CONTINUED)
statements of income because they are extraordinary items and are directly
related to the Strategic Restructuring Plan.
2. UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME ADJUSTMENTS
(h) Adjustment to reflect reductions in executive compensation as a result of
the elimination of certain executive positions and the renegotiations of
executive compensation agreements resulting from certain acquisitions. The
Company believes that these reductions are expected to remain in place for
the forseeable future and are not reasonably likely to affect operating
performance.
(i) Adjustment to reflect the increase in amortization expense relating to
goodwill recorded in purchase accounting related to the Fiscal 1998 Purchase
Acquisitions for the periods prior to the respective dates of acquisition.
The Company has recorded goodwill amortization in the historical financial
statements from the respective dates of acquisition forward. The goodwill is
being amortized over an estimated life of 40 years.
(j) Adjustment to reflect the increase in net interest expense, at a weighted
average rate of 9.2%, resulting from the increase in debt outstanding to
$1,162,593 as a result of the Equity Tender, partially offset by the
proceeds from the Equity Investment, the effects of the 2001 Note Exchange
Offer and the 2003 Note Tender and repayment of the Company's existing
credit facility. The weighted average interest rate of 9.2% was determined
based upon $742,047 outstanding under the terms of the Company's $1,225
million credit facility (the "Credit Facility") and the Company's other
indebtedness primarily at annual interest rates of LIBOR plus margins
ranging from 2.25% to 2.5% (approximately 5.5% to 8.15%) and the issuance of
the Notes at an annual interest rate of approximately 9.75%, plus commitment
fees on unused balances and amortization of the related debt issue costs.
Pro forma interest expense under the Credit Facility will fluctuate $3,750
on an annual basis for each .5% change in LIBOR. Depending on market
conditions when funds are borrowed under the Credit Facility, the interest
rates may vary from that indicated herein.
(k) Adjustment to calculate the provision for income taxes on the combined pro
forma results at an effective income tax rate of approximately 76% for the
fiscal year ended April 25, 1998. The difference between the effective tax
rate of 76% and the statutory tax rate of 35% relates primarily to state
income taxes and non-deductible goodwill amortization expense. This
adjustment assumes that all companies were taxed at the effective tax rates
regardless of how they were taxed prior to being acquired by the Company,
including those companies that previously paid no taxes under Subchapter S.
(l) Basic pro forma earnings per share is calculated based upon 36,514 weighted
average shares outstanding. The amount is comprised of 33,516 shares
outstanding, 9,259 shares repurchased as a result of the Equity Tender, the
issuance of 9,092 shares as a result of the Equity Investment, the issuance
of 1,140 shares related to employee stock options participating in the
Equity Tender and the issuance of 2,025 shares as a result of the 2001 Note
Exchange Offer. The weighted average shares outstanding used to calculate
diluted pro forma earnings per share is based upon the basic weighted
average share outstanding plus 591 common stock equivalents considered to be
outstanding related to stock options.
F-6
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFER MADE HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE
NEW NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Summary......................................... 7
Risk Factors.................................... 17
Use of Proceeds................................. 26
Capitalization.................................. 27
The Exchange Offer.............................. 28
Description of the New Notes.................... 36
Description of the Old Notes.................... 81
Certain United States Federal Tax
Considerations................................ 83
Plan of Distribution............................ 87
Legal Matters................................... 87
Experts......................................... 87
Pro Forma Combined Financial Data............... F-1
</TABLE>
OFFER FOR ALL OUTSTANDING
9 3/4% SENIOR SUBORDINATED NOTES
DUE 2008
IN EXCHANGE FOR
9 3/4% SENIOR SUBORDINATED NOTES
DUE 2008
THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
OF
[LOGO]
---------------------
PROSPECTUS
, 1998
---------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section of the USOP Amended and Restated Certificate of Incorporation
provides for indemnification of the directors, officers, employees and agents of
USOP to the full extent currently permitted by law.
Section 145 of the Delaware General Corporation Law ("DGCL") empowers a
Delaware corporation to indemnify any person who was or is, or is threatened to
be made, a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation) by reason of the fact that
such person is or was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided that such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, such person had no reasonable cause to believe his conduct was
unlawful. A Delaware corporation may indemnify such persons against expenses
(including attorneys' fees) in actions brought by or in the right of the
corporation to procure a judgment in its favor under the same conditions, except
that no indemnification is permitted in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the corporation
unless and to the extent the Court of Chancery of the State of Delaware or the
court in which such action or suit was brought shall determine upon application
that, in view of all circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the Court of Chancery or
other such court shall deem proper. To the extent such person has been
successful on the merits or otherwise in defense of any action referred to
above, or in defense of any claim, issue or matter therein, the corporation must
indemnify such person against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith. The indemnification
and advancement of expenses provided for in, or granted pursuant to, Section 145
is not exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 145 also provides that a corporation may maintain insurance against
liabilities for which indemnification is not expressly provided by the statute.
In addition, the USOP Amended and Restated Certificate of Incorporation, as
permitted by Section 102(b) of the DGCL, limits directors' liability to USOP and
its stockholders by eliminating liability in damages for breach of fiduciary
duty. Section 5.5 of the USOP Amended and Restated Certificate of Incorporation
provides that neither USOP nor its stockholders may recover damages from USOP
directors for breach of their fiduciary duties in the performance of their
duties as directors of USOP. As limited by Section 102(b), this provision
cannot, however, have the effect of indemnifying any director of USOP in the
case of liability (i) for a breach of the director's duty of loyalty, (ii) for
acts of omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for unlawful payments of dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of the DGCL or (iv)
for any transactions for which the director derived an improper personal
benefit.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) See Exhibit Index for list of exhibits.
(b) Not applicable.
(c) Not applicable.
II-1
<PAGE>
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) 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.
The undersigned registrant also hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The registrant undertakes that every prospectus (i) that is filed pursuant
to the immediately preceding paragraph, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrants of expenses incurred
or paid by a director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by them is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes: (1) To file, during any period
in which offers or sales are being made, a post-effective amendment to this
registration statement: (i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933; (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
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed
II-2
<PAGE>
that which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) (Section 230.424(b) of this
chapter) if, in the aggregate, the changes in volume and price represent no more
than 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective 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; (2) That, for
the purpose of determining any liability under the Securities Act of 1933, 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>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrants have
duly caused Amendment No. 1 this registration statement to be signed on their
behalf by the undersigned, thereunto duly authorized, in the City of Washington,
District of Columbia, on August 12, 1998.
<TABLE>
<S> <C> <C>
U.S. OFFICE PRODUCTS COMPANY
By: /s/ MARK D. DIRECTOR
-----------------------------------------
Name: Mark D. Director
Title: Executive Vice President
GUARANTORS
By: /s/ DONALD H. PLATT
-----------------------------------------
Name: Donald H. Platt
Title: Authorized Signatory for each
Additional Registrant listed on this
Registration Statement
</TABLE>
II-4
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby appoints Thomas Morgan and
Mark D. Director, and both of them, either of whom may act without the joinder
of the other, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities to sign any and all amendments (including
post-effective amendments) to this Registration Statement and all registration
statements for the same offering filed pursuant to Rule 462 under the Securities
Act of 1933, and to file the same, with all exhibits thereto and all other
documents in connection therewith, with the Commission, granting unto said
attorneys-in-fact and agents full power and authority to perform each and every
act and thing appropriate or necessary to be done, as full and for all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or their substitute or substitutes
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------ --------------------------- ---------------------------
<S> <C> <C>
* President, Chief Executive August 12, 1998
- ------------------------------ Officer and Director of
Thomas Morgan U.S. Office Products
Company (Principal
Executive Officer),
Director of Mail Boxes
Etc., and Director of Mail
Boxes, Etc., USA, Inc.
/s/ JOSEPH T. DOYLE Executive Vice August 12, 1998
- ------------------------------ President--Financial, Chief
Joseph T. Doyle Financial Officer and
Treasurer of U.S. Office
Products Company (Principal
Financial & Accounting
Officer) and Principal
Financial & Accounting
Officer for each Additional
Registrant listed on this
Registration Statement.
* Chairman of the Board of August 12, 1998
- ------------------------------ U.S. Office Products
Charles P. Pieper Company
* Director of U.S. Office August 12, 1998
- ------------------------------ Products Company
Kevin J. Conway
* Director of U.S. Office August 12, 1998
- ------------------------------ Products Company
Frank P. Doyle
* Director of U.S. Office August 12, 1998
- ------------------------------ Products Company
Brian D. Finn
* Director of U.S. Office August 12, 1998
- ------------------------------ Products Company
L. Dennis Kozlowski
* Director of U.S. Office August 12, 1998
- ------------------------------ Products Company
Milton H. Kuyers
* Director of U.S. Office August 12, 1998
- ------------------------------ Products Company
Edward J. Mathias
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------ --------------------------- ---------------------------
<S> <C> <C>
* Director of U.S. Office August 12, 1998
- ------------------------------ Products Company
Allon H. Lefever
* Director of the Corporate August 12, 1998
- ------------------------------ Guarantors listed below,
Mark D. Director and Director of Expert
Office Services, Inc.
* Director of the Corporate August 12, 1998
- ------------------------------ Guarantors listed below
Donald H. Platt
LLC GUARANTORS:
By: U.S. Office Products
Company, as Sole Member of the
LLC Guarantors listed below
* Executive Vice President-- August 12, 1998
- ------------------------------ Administration, of U.S.
Mark D. Director Office Products Company
GLOBAL MAILBOX EXPRESS, LLC
By: Mail Boxes, Etc., USA,
Inc., Its Managing Member
* Vice President of Mail August 12, 1998
- ------------------------------ Boxes, Etc., USA, Inc.
Mark D. Director
* Director of Dameron-Pierson August 12, 1998
- ------------------------------ Company, Limited
Robert C. Schroeder
* Director of Expert Office August 12, 1998
- ------------------------------ Services, Inc.
Jay L. Mutschler
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Robert A. Knoll Action Wholesale Service,
Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Arthur Maxwell Affordable Interior
Systems, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Jerry Holschen American Loose
Leaf/Business Products,
Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
J. Daniel Mahoney Andrews Office Supply &
Equipment Co.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Stuart N. Johnson Bindery Systems, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of Bob
Robert Brines Brines Office Supply Co.
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------ --------------------------- ---------------------------
<S> <C> <C>
* Pesident (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Arnold V. Malm Carithers-Wallace-Courtneay,
LLC
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
William G. Robbins, II Carolina Office Equipment
Company
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Warren B. Terry, Jr. Central Texas Office
Products, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
John M. Frisk Copenhaver Holdings, LLC
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Arnold V. Malm Courtland-Cain, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
John Ridell Dameron-Pierson Company,
Limited
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Jack B. Dulworth Dulworth Office Furniture
Company
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Jay L. Mutschler Expert Office Services,
Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of Fort
Patrick T. Cullen Smith Office Supply, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Michael J. Barnell Forty-Fifteen Papin
Redevelopment Corporation
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Thomas Reaser General Office Products
Company
GLOBAL MAILBOX EXPRESS, LLC
By: Mailboxes, Etc., USA,
Inc., Its Managing Member
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
James H. Amos, Jr. Mailboxes, Etc., USA, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of J.H.
John H. Whitley Whitley., Co.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Arthur A. Hasse Kentwood Office Furniture,
Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Leonard R. Ganz Landmark Industries, Inc.
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------ --------------------------- ---------------------------
<S> <C> <C>
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Mark D. Director Lanier Acquisition Corp.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of Mail
James H. Amos, Jr. Boxes, Etc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of Mail
James H. Amos, Jr. Boxes, Etc., USA, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Stephen D. Flax McWhorter's, Inc.
- ------------------------------ President (Principal August , 1998
Vassilios Sirpolaidis Executive Officer) of Mile
High Office Supply, LLC
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of Mills
Donald Nickleson Morris Business Products
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Elliott Nelson Modern Foods Systems, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Elliott Nelson Modern Vending, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Larry Crawford Morris Office Machines,
Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
William J. Costigan, Jr. National Office Supply,
Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of New
Sandford A. Grodin Mexico Office Solutions,
Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of Pear
Kathey Pear Commercial Interiors, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of Price
Milford H. Marchant Modern, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of Radar
Earlis Johnson Business Systems, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Michael J. Rainen Rainen Business Interiors,
Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of Sagot
Robert S. Sagot Office Interiors, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Steven J. Sletten Sletten Vending Service,
Inc.
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------ --------------------------- ---------------------------
<S> <C> <C>
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Sandford A. Grodin Sturgis Acquisition Corp.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Michael S. Sweitzer Sweitzer's Offset Services,
Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Jack Huguley Businessworks, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of The
Craig A. Cooper H.H. West Company
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of The
John A. Thayer J. Thayer Company, LLC
- ------------------------------ President (Principal August , 1998
John M. Perin Executive Officer) of The
Office Furniture Store,
Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of The
Carlton L. Miller Office Works, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of The
Anne T. Smyth Systems House, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of USOP
Kevin J. Thimjon Merchandising Company
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of U.S.
Roger Choquette Office Furniture, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of U.S.
Roger Choquette Office Furniture Rentals,
Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of U.S.
David C. Gezon Office Products -Great
Lakes, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of U.S.
Craig A. Cooper Office Products -Midwest,
LLC
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of U.S.
Roger Kane Office Products of Northern
Wisconsin, Inc.
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of U.S.
Richard D. Corwin Office Products Southern
California
* President (Principal August 12, 1998
- ------------------------------ Executive Officer) of
Peter R. Wechsler Vend-Rite Service
Corporation
*By: /s/ MARK D. DIRECTOR
- ------------------------------
Mark D. Director
Attorney-in-fact
</TABLE>
II-9
<PAGE>
CORPORATE GUARANTORS
Action Wholesale Service, Inc.
Affordable Interior Systems, Inc.
American Loose Leaf/Business Products, Inc.
Andrews Office Supply & Equipment Co.
Bindery Systems, Inc.
Bob Brines Office Supply Co.
Carolina Office Equipment Company
Central Texas Office Products, Inc.
Courtland-Cain, Inc.
Dameron-Pierson Company, Limited
Dulworth Office Furniture Company
Fort Smith Office Supply, Inc.
Forty-Fifteen Papin Redevelopment Corporation
General Office Products Company
J.H. Whitley Co., Inc.
Kentwood Office Furniture, Inc.
Landmark Industries Inc.
Lanier Acquisition Corp.
Mail Boxes, Etc., USA, Inc.
McWhorter's, Inc.
Mills Morris Business Products, Inc.
Modern Foods Systems, Inc.
Modern Vending, Inc.
Morris Office Machines, Inc.
National Office Supply, Inc.
New Mexico Office Solutions, Inc.
Pear Commercial Interiors, Inc.
Price Modern, Inc.
Radar Business Systems, Inc.
Rainen Business Interiors, Inc.
Sagot Office Interiors, Inc.
Sletten Vending Service, Inc.
Sturgis Acquisition Corp.
Sweitzer's Offset Services, Inc.
Businessworks, Inc.
The H.H. West Company
The Office Furniture Store, Inc.
The Office Works, Inc.
The Systems House, Inc.
USOP Merchandising Company
U.S. Office Furniture, Inc.
U.S. Office Furniture Rentals, Inc.
U.S. Office Products--Great Lakes, Inc.
U.S. Office Products of Northern Wisconsin, Inc.
U.S. Office Products Southern California
Vend-Rite Service Corporation
II-10
<PAGE>
LLC GUARANTORS
Carithers-Wallace-Courtenay, LLC
Copenhaver Holdings, LLC
Mile High Office Supply, LLC
The J. Thayer Company, LLC
U.S. Office Products--Midwest, LLC
II-11
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of U.S. Office Products Company (1)
3.2 Amended and Restated Bylaws of U.S. Office Products Company, as amended through November 4, 1997 (1)
3.3 Articles of Incorporation and all amendments of Action Wholesale Service, Inc.++
3.4 Bylaws of Action Wholesale Service, Inc.++
3.5 Articles of Organization and all amendments of Affordable Interior Systems, Inc.++
3.6 Bylaws of Affordable Interior Systems, Inc.++
3.7 Certificate of Incorporation and all amendments of American Loose Leaf/Business Products, Inc.++
3.8 Bylaws of American Loose Leaf/Business Products, Inc.++
3.9 Articles of Incorporation and all amendments of Andrews Office Supply & Equipment Company++
3.10 Bylaws of Andrews Office Supply & Equipment Company++
3.11 Articles of Incorporation and all amendments of Bindery Systems, Inc.++
3.12 Bylaws of Bindery Systems, Inc.++
3.13 Articles of Incorporation and all amendments of Bob Brines Office Supply Co.++
3.14 Bylaws of Bob Brines Office Supply Co.++
3.15 Certificate of Incorporation and all amendments of The Businessworks, Inc.++
3.16 Bylaws of The Businessworks, Inc.++
3.17 Certificate of Formation and all amendments of Carithers-Wallace Courtenay, LLC++
3.18 Operating Agreement of Carithers-Wallace Courtenay, LLC++
3.19 Articles of Incorporation and all amendments of Carolina Office Equipment Company++
3.20 Bylaws of Carolina Office Equipment Company++
3.21 Articles of Incorporation and all amendments of Central Texas Office Products, Inc.++
3.22 Bylaws of Central Texas Office Products, Inc.++
3.23 Certificate of Formation and all amendments of Copenhaver Holdings, LLC++
3.24 Operating Agreement of Copenhaver Holdings, LLC++
3.25 Articles of Incorporation and all amendments of Courtland-Cain, Inc.++
3.26 Bylaws of Courtland-Cain, Inc.++
3.27 Articles of Incorporation and all amendments of Dameron-Pierson Company, Limited++
3.28 Bylaws of Dameron-Pierson Company, Limited++
3.29 Articles of Incorporation and all amendments of Dulworth Office Furniture Company++
3.30 Bylaws of Dulworth Office Furniture Company++
3.31 Articles of Incorporation and all amendments of Expert Office Services, Inc.++
3.32 Bylaws of Expert Office Services, Inc.++
3.33 Articles of Incorporation and all amendments of Fort Smith Office Supply, Inc.++
3.34 Bylaws of Fort Smith Office Supply, Inc.++
3.35 Articles of Incorporation and all amendments of Forty-Fifteen Papin Redevelopment Corporation++
3.36 Bylaws of Forty-Fifteen Papin Redevelopment Corporation++
3.37 Articles of Incorporation and all amendments of General Office Products Company++
3.38 Bylaws of General Office Products Company++
3.39 Articles of Organization and all amendments of Global Mailbox Express, LLC++
3.40 Operating Agreement of Global Mailbox Express, LLC++
3.41 Certificate of Incorporation and all amendments of The H.H. West Company++
3.42 Bylaws of The H.H. West Company++
3.43 Articles of Incorporation and all amendments of J.H. Whitley Co., Inc.++
3.44 Bylaws of J.H. Whitley Co., Inc.++
3.45 Certificate of Incorporation and all amendments of The J. Thayer Company, LLC++
3.46 Bylaws of The J. Thayer Company, LLC++
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<S> <C>
3.47 Articles of Incorporation and all amendments of Kentwood Office Furniture, Inc.++
3.48 Bylaws of Kentwood Office Furniture, Inc.++
3.49 Certificate of Incorporation and all amendments of Landmark Industries, Inc.++
3.50 Bylaws of Landmark Industries, Inc.++
3.51 Certificate of Incorporation and all amendments of Lanier Acquisition Corp.++
3.52 Bylaws of Lanier Acquisition Corp.++
3.53 Articles of Incorporation and all amendments of Mailboxes, Etc.++
3.54 Bylaws of Mailboxes, Etc++
3.55 Articles of Incorporation and all amendments of Mail Boxes Etc. USA, Inc.++
3.56 Bylaws of Mail Boxes Etc. USA, Inc.++
3.57 Articles of Incorporation and all amendments of McWhorter's, Inc.++
3.58 Bylaws of McWhorter's, Inc.++
3.59 Certificate of Formation and all amendments of Mile High Office Supply, LLC++
3.60 Operating Agreement of Mile High Office Supply, LLC++
3.61 Articles of Incorporation and all amendments of Mills Morris Business Products, Inc.++
3.62 Bylaws of Mills Morris Business Products, Inc.++
3.63 Articles of Incorporation and all amendments of Modern Food Systems, Inc.++
3.64 Bylaws of Modern Food Systems, Inc.++
3.65 Articles of Incorporation and all amendments of Modern Vending, Inc.++
3.66 Bylaws of Modern Vending, Inc.++
3.67 Articles of Incorporation and all amendments of Morris Office Machines, Inc.++
3.68 Bylaws of Morris Office Machines, Inc.++
3.69 Articles of Incorporation and all amendments of National Office Supply, Inc.++
3.70 Bylaws of National Office Supply, Inc.++
3.71 Articles of Incorporation and all amendments of New Mexico Office Solutions, Inc.++
3.72 Bylaws of New Mexico Office Solutions, Inc.++
3.73 Articles of Incorporation and all amendments of The Office Furniture Store, Inc.++
3.74 Bylaws of The Office Furniture Store, Inc.++
3.75 Articles of Incorporation and all amendments of The Office Works, Inc.++
3.76 Bylaws of The Office Works, Inc.++
3.77 Articles of Incorporation of Pear Commercial Interiors, Inc.++
3.78 Bylaws of Pear Commercial Interiors, Inc.++
3.79 Articles of Incorporation and all amendments of Price-Modern, Inc.++
3.80 Bylaws of Price-Modern, Inc.++
3.81 Articles of Incorporation and all amendments of Radar Business Systems, Inc.++
3.82 Bylaws of Radar Business Systems, Inc.++
3.83 Articles of Incorporation and all amendments of Rainen Business Interiors, Inc.++
3.84 Bylaws of Rainen Business Interiors, Inc.++
3.85 Certificate of Incorporation and all amendments of Sagot Office Interiors, Inc.++
3.86 Bylaws of Sagot Office Interiors, Inc.++
3.87 Articles of Incorporation and all amendments of Sletten Vending Service, Inc.++
3.88 Bylaws of Sletten Vending Service, Inc.++
3.89 Certificate of Incorporation and all amendments of Sturgis Acquisition Corp++
3.90 Bylaws of Sturgis Acquisition Corp.++
3.91 Articles of Incorporation and all amendments of Sweitzer's Offset Services, Inc.++
3.92 Bylaws of Sweitzer's Offset Services, Inc.++
3.93 Articles of Incorporation and all amendments of The Systems House, Inc.++
3.94 Bylaws of The Systems House, Inc.++
3.95 Certificate of Incorporation and all amendments of U.S. Office Furniture, Inc.++
3.96 Bylaws of U.S. Office Furniture, Inc.++
3.97 Certificate of Incorporation and all amendments of U.S. Office Furniture Rentals, inc.++
3.98 Bylaws of U.S. Office Furniture Rentals, Inc.++
3.99 Certificate of Incorporation and all amendments of U.S. Office Products-Great Lakes, Inc.++
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<S> <C>
3.100 Bylaws of U.S. Office Products-Great Lakes, Inc.++
3.101 Certificate of Incorporation and all amendments of USOP Merchandising Company++
3.102 Bylaws of USOP Merchandising Company++
3.103 Certificate of Formation of U.S. Office Products-Midwest, LLC++
3.104 Operating Agreement of U.S. Office Products-Midwest, LLC++
3.105 Certificate of Incorporation and all amendments of U.S. Office Products of Northern Wisconsin, Inc.++
3.106 Bylaws of U.S. Office Products of Northern Wisconsin, Inc.++
3.107 Articles of Incorporation of U.S. Office Products Southern California++
3.108 Bylaws of U.S. Office Products Southern California++
3.109 Articles of Incorporation of Vend-Rite Service Corporation++
3.110 Bylaws of Vend-Rite Service Corporation++
4.1 Indenture dated as of June 10, 1998 between U.S. Office Products Company and State Street Bank and
Trust Company (2)
5.1 Opinion of Wilmer, Cutler & Pickering regarding legality of the Notes++
8.1 Opinion of Wilmer, Cutler & Pickering regarding certain tax matters++
10.1 Registration Rights Agreement dated as of June 10, 1998 between U.S. Office Products Company and
Morgan Stanley & Co., Incorporated, Merril Lynch, Pierce, Fenner & Smith Incorporated, BT Alex Brown
Incorporated and Chase Securities, Inc. (2)
21.1 Subsidiaries of U.S. Office Products Company (1)
23.1 Consent of Wilmer, Cutler & Pickering (included in Exhibits 5.1 and 8.1)
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of BDO Seidman, LLP
23.4 Consent of KPMG Peat Marwick LLP
23.5 Consent of Rubin, Koehmstedt & Nadler, PLC
23.6 Consent of Deloitte & Touche LLP
23.7 Consent of Hertz, Herson & Company LLP
23.8 Consent of Ernst & Young LLP
23.9 Consent of Ernst & Young LLP
24.1 Power of Attorney (included on signature page of this Registration Statement)
25.1 Statement of Eligibility of Trustee on Form T-1*
27.1 Financial Data Schedule (1)
99.1 Form of Letter of Transmittal*
</TABLE>
- ------------------------
(1) Incorporated by reference to U.S. Office Products Company's Annual Report on
Form 10-K filed with the Commission on July 23, 1998.
(2) Incorporated by reference to U.S. Office Products Company's Current Report
on Form 8-K filed with the Commission on June, 25, 1998.
++ to be filed by amendment.
* Previously filed
<PAGE>
EXHIBIT 23.2
Consent of Independent Accountants
-----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of U.S. Office
Products Company of our reports as of the dates and the related financial
statements which appear in U.S. Office Products Company's Annual Report
on Form 10-K for the year ended April 25, 1998 or U.S. Office Products
Company's Current Report on Form 8-K filed May 26, 1998. We also consent to
the references to us under the heading "Experts" in such Prospectus.
<TABLE>
<CAPTION>
Company Date
------- ----
<S> <C>
U.S. Office Products Company June 24, 1998
Sax Arts and Crafts, Inc. February 3, 1998
Evans Travel Group, Inc. and Evans Consulting February 3, 1998
Services, Inc.
Travel Consultants, Inc. and Envisions Vacations, Inc. January 23, 1998
Compel Corporation January 30, 1998
Astrid Offset Corporation February 6, 1998
</TABLE>
/s/ PricewaterhouseCoopers LLP
- -------------------------------
PRICEWATERHOUSECOOPERS LLP
Minneapolis, Minnesota
August 12, 1998
<PAGE>
EXHIBIT 23.3
Consent of Independent Accountants
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of U.S. Office
Products Company of our report dated February 8, 1996 appearing in U.S. Office
Product's Annual Report on Form 10-K for the year ended April 25, 1998. We
also consent to the references to us under the heading "Experts" in such
Prospectus.
/s/ BDO Seidman LLP
- --------------------
BDO SEIDMAN LLP
Atlanta, Georgia
August 11, 1998
<PAGE>
EXHIBIT 23.4
Independent Auditor's Consent
-----------------------------
We consent to the incorporation by reference in the registration statement
(No. 333 - 61021 on Form S-4 of U.S. Office Products Company of our report
dated August 28, 1996 with respect to the balance sheet of Hano Document
Printers, Inc. as of December 31, 1995 and the related statements of income,
stockholder's equity and cash flows for the year then ended which report appears
in the April 25, 1998 annual report on Form 10-K of U.S. Office Products Company
and to the reference to our firm under the heading "Experts" in the Prospectus.
/s/ KPMG Peat Marwick LLP
- --------------------------
KPMG PEAT MARWICK LLP
Norfolk, Virginia
August 11, 1998
<PAGE>
EXHIBIT 23.5
Consent of Independent Accountants
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of U.S. Office
Products Company of our report dated June 7, 1996, except for Note 9, as to
which the date is October 24, 1996, relating to the financial statements of
Fortran Corp., appearing in U.S. Office Product's Annual Report on Form 10-K for
the year ended April 25, 1998. We also consent to the references to us under
the heading "Experts" in such Prospectus.
/s/ Rubin, Koehmstedt & Nadler, PLC
- ------------------------------------
RUBIN, KOEHMSTEDT & NADLER, PLC
Springfield, Virginia
August 11, 1998
<PAGE>
EXHIBIT 23.6
Independent Auditor's Consent
-----------------------------
We consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of U.S. Office
Products Company of our report dated September 23, 1996 relating to the
financial statements of MTA, Inc. as of December 31, 1995 and for the period
from January 25, 1995 (date of incorporation) to December 31, 1995, appearing
in U.S. Office Products Company's Annual Report on Form 10-K for the year
ended April 25, 1998. We also consent to the references to us under the
headings "Experts" in such Prospectus.
/s/ Deloitte & Touche LLP
- --------------------------
DELOITTE & TOUCHE LLP
Seattle, Washington
August 10, 1998
<PAGE>
EXHIBIT 23.7
Consent of Independent Auditors
-------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of U.S. Office
Products Company of our reports, dated March 4, 1996, relating to the
financial statements of Huxley Envelope Corporation, and March 6, 1996,
relating to the financial statements of United Envelope Co., Inc. and its
affiliate, Rex Envelope Co., Inc., appearing in U.S. Office Products
Company's Annual Report on Form 10-K for the year ended April 25, 1998. We
also consent to the references to us under the heading "Experts" in such
Prospectus.
/s/ Hertz, Herson & Company LLP
- -------------------------------
HERTZ, HERSON & COMPANY LLP
New York, New York
August 10, 1998
<PAGE>
EXHIBIT 23.8
Consent of Independent Auditors
-------------------------------
We consent to the incorporation by reference in the Prospectus constituting
part of this Registration Statement on Form S-4 of U.S. Office Products Company
of our report dated February 2, 1996 with respect to the financial statements of
School Specialty, Inc. for the years ended December 31, 1995 and 1994 appearing
in U.S. Office Products Company's Annual Report on Form 10-K for the year ended
April 25, 1998. We also consent to the references to us under the headings
"Experts" in such Prospectus.
/s/ Ernst & Young LLP
- ----------------------
ERNST & YOUNG LLP
Milwaukee, Wisconsin
August 11, 1998
<PAGE>
Exhibit 23.9
Consent of Ernst & Young LLP, Independent Auditors
We consent to incorporation by reference in the Prospectus constituting part
of this Registration Statement on Form S-4 of U.S. Office Products Company of
our report dated June 6, 1997 with respect to the consolidated financial
statements of Mail Boxes Etc. included in the Current Report on Form 8-K
filed on April 22, 1998 of U.S. Office Products Company. We also consent to
the references to us under the headings "Experts" in such Prospectus.
/s/Ernst & Young LLP
- ---------------------
ERNST & YOUNG LLP
San Diego, California
August 12, 1998
