<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
OXFORD HEALTH PLANS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 6324 06-1118515
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
-------------------------
800 CONNECTICUT AVENUE
NORWALK, CONNECTICUT 06854
(203) 852-1442
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JEFFERY H. BOYD, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
OXFORD HEALTH PLANS, INC.
800 CONNECTICUT AVENUE
NORWALK, CONNECTICUT 06854
(203) 852-1442
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPY TO:
DANIEL DUNSON, ESQ.
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
-------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED OFFER 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 this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
-------------------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
PROPOSED
MAXIMUM PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED UNIT(1) OFFERING PRICE REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------
11% Senior Notes due 2005.... $200,000,000 100% $200,000,000 $55,600
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f).
-------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
SUBJECT TO COMPLETION, DATED APRIL 30, 1999
[OXFORD HEALTH PLANS, INC. LOGO]
Exchange Offer for
11% Senior Notes due 2005
This is an offer to exchange the outstanding, unregistered Oxford 11%
Senior Notes due 2005 that you now hold for new, substantially identical 11%
Senior Notes due 2005 that will be free of the transfer restrictions that apply
to the old notes. THIS OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
- --, 1999, UNLESS WE EXTEND IT. You must tender your old, unregistered notes by
the deadline to obtain new, registered notes and the liquidity benefits they
offer.
We agreed with the initial purchasers of the old notes to make this offer
and to register the issuance of the new notes following the initial sale. This
offer applies to any and all old notes tendered by the deadline.
The new notes will not trade on any established exchange. The new notes
have the same financial terms and covenants as the old notes, and are subject to
the same business and financial risks.
SEE "RISK FACTORS," BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN
FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER AND AN
EXCHANGE OF OLD NOTES FOR THE NEW NOTES.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is --, 1999
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary......................... 1
Risk Factors.................... 10
Forward-Looking Statements...... 18
Ratio of Earnings to Fixed
Charges....................... 19
Use of Proceeds................. 19
Capitalization.................. 20
Business........................ 21
The Exchange Offer.............. 21
Description of the New Notes.... 35
Book-Entry; Delivery and Form... 69
Description of Term Loan
Agreement..................... 70
Description of Preferred Stock
and Warrants.................. 71
Plan of Distribution............ 73
Validity of the New Notes....... 75
Experts......................... 75
Where You Can Find More
Information................... 75
</TABLE>
i
<PAGE> 4
REFERENCES TO ADDITIONAL INFORMATION
This prospectus incorporates important business and financial information
about Oxford from documents that are not included in or delivered with this
document. You can obtain documents incorporated by reference in this prospectus
(other than certain exhibits to those documents) by requesting them in writing
or by telephone from us at the following address:
Oxford Health Plans, Inc.
800 Connecticut Avenue
Norwalk, Connecticut 06854
Attention: Investor Relations
Telephone: (203) 852-1442
YOU WILL NOT BE CHARGED FOR ANY OF THE DOCUMENTS THAT YOU REQUEST. IF YOU
WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY --, 1999 IN ORDER TO RECEIVE
THEM BEFORE THE EXCHANGE OFFER EXPIRES ON --, 1999.
Financial and other information relating to Oxford is contained in this
prospectus, including "Summary Historical Consolidated Financial and Operating
Data" on page 8.
See "Where You Can Find More Information" on page 75.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL WE ACCEPT SURRENDERS FOR
EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH THE EXCHANGE
OFFER WOULD CONTRAVENE SECURITIES OR BLUE SKY LAWS.
ii
<PAGE> 5
SUMMARY
This brief summary highlights selected information from this prospectus and
documents we have incorporated in this prospectus by reference. It does not
contain all of the information that is important to you. We urge you to read
carefully the entire prospectus, the documents incorporated in this prospectus
by reference and the other documents to which this prospectus refers, including
our consolidated financial statements and the notes to such financial statements
which are incorporated in this prospectus by reference.
OXFORD HEALTH PLANS, INC.
Oxford Health Plans, Inc. was incorporated under the laws of the State of
Delaware on September 17, 1984. We are a health care company currently providing
health benefit plans primarily in New York, New Jersey and Connecticut. Our
product line includes point-of-service plans, the Freedom Plan and the Liberty
Plan, traditional health maintenance organizations, preferred provider
organizations, Medicare plans, health care benefit plans for individuals and
third-party administration of self-funded health plans.
We offer our products primarily through our health maintenance organization
subsidiaries, Oxford Health Plans (NY), Inc., Oxford Health Plans (NJ), Inc.,
and Oxford Health Plans (CT), Inc. and through Oxford Health Insurance, Inc.,
our health insurance subsidiary.
Our principal executive offices are located at 800 Connecticut Avenue,
Norwalk, Connecticut 06854, and our main telephone number is (203) 852-1442.
THE EXCHANGE OFFER
The Exchange Offer.............. We are offering to exchange $1,000
principal amount of our 11% Senior Notes
due 2005 which have been registered under
the Securities Act of 1933, which we refer
to as "new notes," for each $1,000
principal amount of our outstanding 11%
Senior Notes due 2005 which were issued on
May 13, 1998 in a private offering, which
we refer to as "old notes." In order to be
exchanged, an old note must be tendered and
accepted properly. We will exchange all
notes validly tendered and not validly
withdrawn. As of the date of this
prospectus, there is $200 million aggregate
principal amount of old notes outstanding.
Expiration and Exchange Dates... This offer will expire at 5:00 p.m., New
York City time, on --, 1999, unless we
extend it. We will
1
<PAGE> 6
consummate the exchange and issue the new
notes as soon as possible after that date.
Registration Rights............. You have the right to exchange the old
notes that you now hold for new notes with
substantially identical terms. This
exchange offer is intended to satisfy these
rights. After the exchange offer is
complete, you will no longer be entitled to
any exchange or registration rights with
respect to your notes.
Conditions...................... This offer is conditioned only upon
compliance with the securities laws. The
offer applies to any and all notes validly
tendered by the deadline.
Resale without Further
Registration.................... We believe that the new notes may be
offered for resale, resold and otherwise
transferred by you without compliance with
the registration and prospectus delivery
provisions of the Securities Act so long as
the following statements are true:
(1) you acquire the new notes issued in
the exchange offer in the ordinary
course of your business;
(2) you are not an "affiliate," as
defined under Rule 405 of the
Securities Act, of Oxford;
(3) you are not participating, and do not
intend to participate, and have no
arrangement or understanding with any
person to participate, in the
distribution of the new notes issued
to you in the exchange offer.
By signing the letter of transmittal and
tendering your notes as described below,
you will be making representations to this
effect.
If you are a broker-dealer that acquired
old notes as a result of market-making or
other trading activities, you are required
to deliver a prospectus in connection with
any resale of the new notes as described in
this Summary under "Restrictions on Sale by
Broker-Dealers" on page 3.
Our belief is based on interpretations by
the staff of the Securities and Exchange
Commission in no-action letters issued to
other issuers in exchange offers like ours.
We cannot guarantee that the SEC would make
a similar decision about this exchange
offer. If our belief is wrong you could
incur liability under the Securities Act.
We are not indemnifying you for any such
liability.
2
<PAGE> 7
Liability under the Securities
Act............................. You may also incur liability under the
Securities Act if:
(1) any of the representations listed
above are not true; and
(2) you transfer any new note issued to
you in the exchange offer without:
- delivering a prospectus meeting
the requirements of the Securities
Act; or
- an exemption from the requirements
under the Securities Act to
register your new notes.
We do not assume or indemnify you against
such liability.
Restrictions on Sale by Broker-
Dealers....................... Each broker-dealer that has received new
notes for its own account in exchange for
old notes that were acquired as a result of
market-making or other trading activities
must acknowledge in a letter of transmittal
that it will deliver a prospectus meeting
the requirements of the Securities Act in
connection with any resale of the new
notes. A broker-dealer may use this
prospectus for a period of one year from
the date of this prospectus for an offer to
resell, a resale or other retransfer of the
new notes issued to it in the exchange
offer.
Procedures for Tendering Old
Notes........................... Each holder of old notes who wishes to
accept the exchange offer must either:
- complete, sign and date the
accompanying letter of transmittal, or
a facsimile thereof, have the
signatures thereon guaranteed if
required and deliver the letter of
transmittal together with old notes and
any other required documents to the
exchange agent; or
- arrange for The Depository Trust
Company to transmit certain required
information to the exchange agent in
connection with a book-entry transfer.
You must mail or otherwise deliver such
documentation to The Chase Manhattan Bank,
as exchange agent, at the address set forth
in "The Exchange Offer -- Exchange Agent"
on page 32.
3
<PAGE> 8
Special Procedures for
Beneficial Owners............... If you beneficially own old notes
registered in the name of a broker, dealer,
commercial bank, trust company or other
nominee and you wish to tender your old
notes in the exchange offer, you should
contact such registered holder promptly and
instruct it to tender on your behalf. If
you wish to tender on your own behalf, you
must, before completing and executing the
letter of transmittal for the exchange
offer and delivering your old notes, either
arrange to have your old notes registered
in your name or obtain a properly completed
bond power from the registered holder. The
transfer of registered ownership may take
considerable time.
Failure to Exchange Will Affect
You Adversely................... If you are eligible to participate in the
exchange offer and you do not tender your
old notes, you will not have any further
registration or exchange rights and your
old notes will continue to be subject to
restrictions on transfer. As a result of
such restrictions and the availability of
new notes, the liquidity of the old notes
could be adversely affected.
Guaranteed Delivery
Procedures...................... If you wish to tender your old notes and:
- time will not permit your required
documents to reach the exchange agent
by the expiration date of the exchange
offer;
- you cannot complete the procedure for
book-entry transfer on time; or
- your old notes are not immediately
available,
then you must comply with the procedures
described in this prospectus under "The
Exchange Offer -- Guaranteed Delivery
Procedures" on page 30.
Withdrawal Rights............... You may withdraw your tender of old notes
at any time before the offer expires.
Federal Income Tax
Consequences.................... The exchange will not be a taxable event for
United States federal income tax purposes.
You will not recognize any taxable gain or
loss or any interest income as a result of
such exchange.
Exchange Agent.................. The Chase Manhattan Bank is serving as the
exchange agent in connection with the
exchange
4
<PAGE> 9
offer. The Chase Manhattan Bank also serves
as trustee under the indenture governing
the notes.
Absence of Appraisal Rights..... As a holder of old notes, neither the
General Corporation Law of the State of
Delaware nor the indenture governing the
old notes or that will govern the new
notes, gives you appraisal or dissenters'
rights or any other right to seek monetary
damages in court.
THE NEW NOTES
The new notes have the same financial terms and covenants as the old notes.
We sometimes refer to the old notes and new notes together as the "notes." The
terms of the new notes are as follows:
Issuer.......................... Oxford Health Plans, Inc.
Securities Offered.............. $200,000,000 principal amount of 11% Senior
Notes due 2005.
Maturity........................ May 15, 2005.
Interest Rate................... 11% per year.
Interest Payment Dates.......... Interest on the old notes began accruing on
May 13, 1998, when we issued the old notes.
Interest is payable on the old notes and
will be payable on the new notes
semi-annually in arrears on each May 15 and
November 15. The last interest payment date
prior to the date of this prospectus was --.
Interest on the new notes began accruing on
-- and the first interest payment date for
the new notes will be --.
Ranking......................... The new notes will be senior unsecured
indebtedness of Oxford. The new notes:
- will rank senior to all our subordinated
indebtedness;
- will rank equally with all existing and
future senior indebtedness, including
borrowings under the term loan agreement,
described in this prospectus under
"Description of Term Loan Agreement," on
page 70; and
- will be effectively subordinated to all
our existing and future secured
indebtedness, including indebtedness
pursuant to term loan agreement, to the
extent of the value of the assets securing
such indebtedness and will be structurally
subordinated to indebtedness and other
liabilities of our subsidiaries. As of
April 30, 1999, we had
5
<PAGE> 10
approximately $350 million of senior
indebtedness, including the old notes.
Indebtedness under the term loan
agreement is secured by substantially all
of our assets.
Optional Redemption............. On or after May 15, 2002, we will have the
right to redeem any or all of the new notes
at the following redemption prices plus
accrued and unpaid interest and liquidated
damages, if any, thereon to the date of
redemption:
<TABLE>
<CAPTION>
% OF
PRINCIPAL
YEAR AMOUNT
---- ------------
<S> <C>
2002...................... 105.500%
2003...................... 102.750
2004 and afterwards....... 100.000
</TABLE>
For more information on optional redemption,
see "Description of the New
Notes -- Optional Redemption" on page 36.
Optional Redemption After Equity
Offerings..................... On or before May 15, 2001, we have the right
to use the net cash proceeds of one or more
equity offerings to redeem up to 33 1/3% of
the aggregate principal amount of notes
originally outstanding at 111% of the
principal amount, plus accrued and unpaid
interest and liquidated damages, if any, to
the redemption date. However, at least
66 2/3% of the original aggregate principal
amount of notes must remain outstanding
immediately after such redemption and the
redemption must occur within 60 days of the
closing of the equity offering. For more
information on redemption after equity
offerings, see "Description of the New
Notes -- Optional Redemption" on page 36.
Change of Control Offer......... If an event treated as a change of control
of Oxford occurs, each holder of new notes
will have the right to require us to make an
offer to purchase from them all or any part
of the new notes it holds then outstanding
at a purchase price in cash equal to 101% of
their aggregate principal amount, plus
accrued and unpaid interest and liquidated
damages, if any, thereon to the date of
purchase.
Our ability to repurchase new notes pursuant
to a change of control offer may be limited
by a number of factors. The term loan
agreement provides that certain change of
control events with respect to Oxford would
require us to prepay
6
<PAGE> 11
mandatorily amounts outstanding thereunder
at 101% of the aggregate principal amount
thereof plus accrued and unpaid interest. We
may not, however, have sufficient resources
to repay indebtedness under the term loan
agreement, and we may not have sufficient
resources to repurchase new notes tendered
in a change of control offer. Furthermore,
any future credit agreements or other
agreements relating to senior indebtedness
to which we become a party may contain
similar restrictions and provisions. For
more information about a change of control
offer please see "Description of the New
Notes -- Repurchase at the Option of
Holders -- Change of Control" on page 37.
Covenants....................... The indenture under which the old notes have
been issued, and under which the new notes
will be issued, contains covenants for your
benefit which, among other things, and
subject to important exceptions, restrict
our ability and the ability of our
subsidiaries to:
- pay any dividend or make any payment or
distribution;
- incur additional indebtedness;
- incur liens;
- sell, transfer, convey or otherwise
dispose of certain assets or any capital
stock of a principal subsidiary;
- create or cause any restriction on the
ability of any restricted subsidiary to
pay dividends;
- enter into transactions with affiliates;
and
- merge or consolidate.
See "Description of the New
Notes -- Covenants" on page 41 for more
information about the covenants.
RISK FACTORS
See "Risk Factors" immediately following this Summary for a discussion of
risks relating to the new notes, all of which apply to the old notes as well.
7
<PAGE> 12
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA
We have summarized below our historical consolidated statement of
operations data for the fiscal years ended December 31, 1998, 1997, 1996, 1995
and 1994. This information is derived from and qualified by reference to our
audited Consolidated Financial Statements included in our Annual Report on Form
10-K/A for the fiscal year ended December 31, 1998, which is incorporated in
this prospectus by reference. All of the data should be read in conjunction with
and are qualified by reference to "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in our 1998 Form 10-K/A.
<TABLE>
<CAPTION>
1998 1997 1996 1995(3) 1994(3)
----------- ----------- ----------- ---------- ----------
(In thousands, except per share amounts and operating statistics)
<S> <C> <C> <C> <C> <C>
REVENUES AND EARNINGS:
Operating revenues...... $ 4,630,166 $ 4,179,816 $ 3,032,569 $1,745,975 $ 752,832
Investment and other
income, net........ 89,245 71,448 42,620 19,711 7,479
Net earnings (loss)... (596,792) (291,288) 99,623 52,398 28,231
Net earnings (loss)
attributable to
common shares...... (624,460) (291,288) 99,623 52,398 28,231
FINANCIAL POSITION:
Working capital....... 209,443 85,790 451,957 103,448 71,731
Total assets.......... 1,637,750 1,390,101 1,356,397 611,149 331,084
Long-term debt........ 350,000 -- -- -- --
Redeemable preferred
stock.............. 298,816 -- -- -- --
Common shareholders'
equity (deficit)... (181,105) 349,216 598,170 220,033 132,394
NET EARNINGS (LOSS) PER
COMMON SHARE(1):
Basic................. $ (7.79) (3.70) $ 1.34 $ .78 $ .43
Diluted............... $ (7.79) (3.70) $ 1.25 $ .71 $ .40
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING(1):
Basic................. 80,120 78,635 74,285 67,450 65,410
Diluted............... 80,120 78,635 79,662 73,344 70,554
OPERATING STATISTICS:
Enrollment............ 1,881,400 2,008,100 1,535,500 1,007,700 513,000
Fully insured member
months............. 23,081,900 21,584,700 15,604,400 9,338,610 4,101,863
Self-funded member
months............. 765,500 602,900 474,200 514,200 524,000
Medical loss
ratio(2)........... 93.7% 94.0% 80.1% 77.5% 74.1%
</TABLE>
- -------------------------
(1) Per share amounts and weighted-average number of common share amounts have
been restated to reflect the two-for-one stock splits in 1996 and 1995.
(2) Defined as health care services expense as a percentage of premiums earned.
(3) In July 1995, we completed a merger with OakTree Health Plan, Inc. whereby
OakTree was merged into one of our subsidiaries. The merger was accounted
for as a pooling of interests and, accordingly, all prior period
consolidated financial statements have been restated as if the merger took
place at the beginning of such periods.
8
<PAGE> 13
RISK FACTORS
An investment in the new notes involves a number of risks, some or all of
which could be substantial and are inherent in our business. We urge you to
consider carefully the following information about these risks, together with
the other information in this prospectus before participating in the exchange.
The new notes, like the old notes, entail the following risks:
RISKS SPECIFICALLY RELATED TO OXFORD
WE INCURRED NET LOSSES, INCLUDING LOSSES IN CONNECTION WITH RESTRUCTURING AND
UNUSUAL CHARGES.
We incurred net losses attributable to common stock of $291 million in 1997
and $624 million in 1998 and may incur additional losses in 1999, the extent of
which we cannot predict at this time. As a result of losses at some of our HMO
and insurance subsidiaries in 1997 and 1998, we have had to make capital
contributions to these subsidiaries, and we expect that we will be required to
make additional capital contributions in 1999. We have also made significant
additions to our reserves for medical claims, and we have experienced
significant levels of retroactive member and group terminations as well as
difficulties with collection of premium receivables.
A significant portion of the loss incurred in 1998 was associated with
restructuring and unusual charges relating to our "Turnaround Plan."
The Turnaround Plan includes:
- focusing on our core commercial and Medicare markets in the New York
tri-state area;
- disposing of or restructuring noncore businesses;
- reducing administrative costs;
- reducing payments to physicians and other providers;
- completing and operationalizing risk transfer agreements and other
provider agreements;
- reducing unnecessary utilization of hospital and other services;
- strengthening commercial underwriting;
- increasing commercial group premiums; and
- improving service levels and strengthening operations.
These restructuring and unusual charges are based on estimates of our
anticipated costs of taking the actions contemplated by the Turnaround Plan,
including disposition of certain businesses and assets. We cannot assure that
these estimates correctly reflect the ultimate costs that we will incur in
implementing the Turnaround Plan.
Our ability to control net losses depends, to a large extent, on the
success of our Turnaround Plan. We cannot assure that the Turnaround Plan will
be implemented in the manner described herein, or that it will be successful or
that our other efforts to control net losses will be successful. Furthermore,
despite our efforts to the contrary, implementation of the Turnaround Plan could
adversely affect members and employer groups, or
10
<PAGE> 14
physicians, hospitals and other health care providers and ultimately sales and
renewals of our health plans. Moreover, we cannot predict the impact of adverse
publicity, legal and regulatory proceedings or other future events on our
membership, operations and financial results, including ongoing financial
losses.
WE ARE INVOLVED IN SIGNIFICANT LITIGATION AND GOVERNMENTAL PROCEEDINGS THAT MAY
ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION, INCLUDING
OUR ABILITY TO PAY THE NEW NOTES.
We are a defendant in a large number of purported securities class action
lawsuits and shareholder derivative lawsuits which were filed after the
substantial decline in the price of our common stock in October 1997. The costs
incurred as a result of, and management's time commitments involved in, the
defense of these lawsuits, as well as the ultimate result of these lawsuits, may
adversely affect our results of operations and financial condition, including
our ability to pay the new notes. We are also the subject of examinations,
investigations and inquiries by several governmental agencies including the New
York State Insurance Department, the federal Health Care Financing
Administration, other state departments of insurance and health, the New York
State Attorney General and the Securities and Exchange Commission. The results
of these governmental inquiries could adversely affect our results of
operations, financial condition, membership growth and ability to retain members
through the imposition of sanctions, required changes in operations and
potential limitations on enrollment. In addition, evidence obtained in
governmental proceedings could be used adversely against us in civil
proceedings. We cannot predict the outcomes of these lawsuits, governmental
examinations, investigations and inquiries.
OUR INABILITY TO CONTROL, AND THE UNPREDICTABILITY OF, HEALTH CARE COSTS MAY
ADVERSELY AFFECT FUTURE RESULTS OF OPERATIONS.
We use a large portion of our revenue to pay the costs of health care
services and supplies delivered to our members. Our total health care costs are
affected by the number of individual services rendered and the cost of each
service. Much of our premium revenue is priced before services are delivered and
the related costs are incurred, usually on a prospective annual basis. Although
we try to calculate the premiums that we charge based, in part, on our estimate
of future health care costs over the fixed premium period, factors such as
competition, regulations and other circumstances may limit our ability to base
our calculation of premiums on estimated costs.
In addition, many factors may and often do cause actual health care costs
to exceed what we estimated and reflected in premiums. These factors include:
new technologies and health care practices, hospital costs, changes in
demographics and trends, selection biases, increases in unit costs paid to
providers, major epidemics, catastrophes, inability to establish acceptable
compensation arrangements with providers, operational and regulatory issues
which could delay, prevent or impede those arrangements and higher utilization
of medical services, including higher out-of-network utilization under point of
service plans. We cannot assure that we will be successful in mitigating the
effect of any or all of the above-listed or other factors.
The results of operations that we report for any particular quarter include
reserves for estimates of the cost incurred for covered services received by our
enrollees during that period for which claims have not been received or
processed. These estimates are based on historical data, patterns of claim
payment and receipt, expected medical cost inflation,
11
<PAGE> 15
seasonality patterns and changes in membership. However, our ability to rely on
historical data is affected by our prior rapid growth, delays in paying claims,
erroneous payment or denial of claims, and the changing speed of payment of
claims. Because these reserves are based on estimates, our results of operations
may be adjusted in a later period to reflect actual costs. Any adjustments to
such estimates made in the later period could significantly change our results
of operations for that period.
HIGH ADMINISTRATIVE COSTS MAY HAVE AN ADVERSE EFFECT ON OUR RESULTS.
In 1999, we expect that results will continue to be adversely affected by
high administrative costs associated with our efforts to strengthen our
operations and service levels and address systems issues, including those
related to Year 2000 readiness. Although a key element of our Turnaround Plan is
a reduction in administrative expenses, we cannot assure that we will not
continue to experience significant service and systems infrastructure problems
in 1999 and beyond which could have a significant impact on administrative
costs. Further, we have been adversely affected by high administrative costs in
connection with increased levels of employee attrition over the last several
quarters, and we may continue to experience such attrition in 1999.
CHANGES IN LAWS AND REGULATIONS COULD ADVERSELY AFFECT OUR OPERATIONS, FINANCIAL
CONDITION AND PROSPECTS.
Our business is heavily regulated on federal, state and local levels. The
laws and rules governing our business and interpretations of those laws and
rules are subject to frequent change. The agencies administering those
regulations have broad latitude to enforce them. Such regulations relate to,
among other things, cash reserves, minimum net worth, licensing requirements,
approval of policy language and benefits, mandatory products and benefits,
provider compensation arrangements, member disclosure, premium rates and
periodic examinations by state and federal agencies. Existing or future laws and
rules could force us to change how we do business, restrict revenue and
enrollment growth, increase our health care and administrative costs and capital
requirements, and increase our liability for medical malpractice or other
actions.
We must obtain and maintain regulatory approvals to market many of our
products. In addition, state and federal regulations limit our ability to adjust
rates for and benefits provided under our products. Delays in obtaining or
failures to obtain or maintain these approvals and the effect of state and
federal regulations could adversely affect our revenue, number of members and
costs.
We also must obtain regulatory approvals if we or any of our HMO or
insurance subsidiaries undergo a change in control. The applicable regulatory
authorities approved the purchase of preferred stock and warrants by TPG
Partners II, L.P. and its affiliates pursuant to the Investment Agreement, dated
as of February 23, 1998, by and between us and TPG Partners II, L.P. That
approval process included a review by the regulators of the terms of the
preferred stock, the warrants, the old notes, the new notes and the term loan
agreement. The term loan agreement is described later in this prospectus under
the title "Description of Term Loan Agreement," and the preferred stock and
warrants are described later in this prospectus under the title "Description of
Preferred Stock and Warrants."
A significant portion of our revenues relate to the federal Medicare
program. The laws regulating this program generally are subject to frequent
change, including changes that may reduce the number of persons enrolled or
eligible, reduce the amount of
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<PAGE> 16
reimbursement or payment levels, or reduce or increase our administrative or
health care costs under this program. Such changes have adversely affected our
results and willingness to participate in this program in the past and may also
do so in the future.
We are also subject to various governmental reviews, audits and
investigations. Such oversight could result in the loss of licensure or of the
right to participate in certain programs, or in the imposition of fines,
penalties and other sanctions. In addition, disclosure of any adverse
investigation or audit results or sanctions could damage our reputation and make
it more difficult for us to sell our products and services.
OUR RAPID GROWTH HAS CAUSED SERVICE AND SYSTEMS INFRASTRUCTURE PROBLEMS.
We experienced rapid growth in our business and in our staff in the period
from 1986, when we began operations, through 1997. We have been affected, and
will continue to be affected, by our ability to manage such growth effectively,
including our ability to continue to develop processes and systems to support
our operations. In September 1996, we converted a significant part of our
business operations to a new computer operating system. Unanticipated software
and hardware problems that arose in connection with the conversion resulted in
significant delays in our claims payments and group and individual billing and
adversely affected claims payment and billing. We do not intend to promote
significant membership or revenue growth in 1999 because our priority in 1999
will continue to be to attempt to strengthen our service and systems
infrastructure, reduce medical and administrative spending and increase premium
rates. In 1999 and beyond, we may continue to experience significant service and
systems infrastructure problems, high levels of medical and administrative
spending and difficulties in obtaining premium rate increases. In addition, we
have experienced attrition of our Medicare and commercial business in 1998, and
we cannot assure that we will be successful in the future in promoting
membership growth or that we will not continue to experience membership
attrition.
A DISRUPTION IN OUR HEALTH CARE PROVIDER NETWORK COULD HAVE AN ADVERSE EFFECT ON
OUR ABILITY TO MARKET OUR PRODUCTS AND SERVICE OUR MEMBERSHIP.
We are subject to the risk of disruption in our health care provider
network. The network physicians, hospitals and other health care providers could
terminate their contracts with us, demand higher payments or take other actions
which could have a material adverse effect on our ability to market our products
and service our membership. Furthermore, the effect of mergers and
consolidations of health care providers in our service areas could enhance the
combined entity's bargaining power with respect to demands for higher
reimbursement levels and changes to our utilization review and administrative
procedures.
ABILITY TO MANAGE PROBLEMS IN INFORMATION SYSTEMS MAY AFFECT OUR OPERATIONS.
We cannot assure that we will be successful in mitigating the existing
system problems that have resulted in payment delays and claims processing
errors, in developing processes and systems to support our operations and in
improving our service levels. Moreover, operating and other issues can lead to
data problems that affect performance of important functions, including, but not
limited to, claims payment and group and individual billing. In the future, the
process of improving existing systems, developing processes and systems to
support our operations and improving service levels may be delayed and
additional systems issues may arise.
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<PAGE> 17
YEAR 2000 PROBLEMS MAY DISRUPT OUR OPERATIONS.
Year 2000 issues involve the inability of certain computerized systems and
technologies to recognize and/or correctly process certain dates, including
January 1, 2000. A failure to timely resolve our own Year 2000 issues or the
failure of our external vendors to resolve their Year 2000 issues could have a
material adverse effect on our results of operations, liquidity or financial
condition. Further, our estimates for the future costs and timely and successful
completion of our Year 2000 program are subject to uncertainties that could
cause actual results to differ from those currently projected by us. Our plan to
identify and address Year 2000 issues is described in our Annual Report on Form
10-K/A for the fiscal year ended December 31, 1998.
RECENT EVENTS AND RELATED PUBLICITY MAY ADVERSELY AFFECT OUR PROVIDER NETWORK,
EMPLOYER RENEWAL PROCESS OR FUTURE ENROLLMENT.
Events at Oxford over the course of the last two years have resulted in
adverse publicity. Such events and related publicity may adversely affect our
provider network, the employer renewal process and future enrollment in our
health benefit plans.
In addition, the managed care industry, in general, receives significant
negative publicity. This publicity has led to increased legislation, regulation
and review of industry practices. These factors may adversely affect our ability
to market our products or services or require us to change our products and
services and may increase the regulatory burdens under which we operate, further
increasing the costs of doing business and adversely affecting our results of
operations.
COLLECTIBILITY OF ADVANCES MAY AFFECT ADVERSELY THE CAPITAL OF OUR REGULATED
SUBSIDIARIES.
As part of our attempts to reduce delays in processing claims for payment
in 1997, we advanced approximately $276 million to providers pending our
disposition of claims for payment. As of December 31, 1998, approximately $139.5
million, net of allowances, remained outstanding. The New York State Insurance
Department is requiring us to obtain written acknowledgments of such advances
from recipients of advances, and the New Jersey Department of Banking and
Insurance is requiring us to provide collateral for repayment of the advances by
setting aside in trust at the parent company funds equal to the admitted
portions of the advances on the New Jersey subsidiary's statutory financial
statements. If we are unable to receive written acknowledgments or we fail to
provide such collateral, we cannot assure that the insurance regulators will
continue to recognize such advances as admissible assets for regulatory
purposes. If the insurance regulators do not recognize such advances as
admissible assets, the capital of some of our regulated subsidiaries could be
impaired. We may be required to make additional capital contributions to
compensate for any impairment. Although we believe that the advances will be
repaid, we cannot assure that this will occur.
CONCENTRATION OF BUSINESS IN CERTAIN STATES MAY HAVE AN ADVERSE EFFECT ON US.
Our commercial and Medicare business is concentrated in New York, New
Jersey and Connecticut, with more than 80% of our tri-state premium revenues
received from our New York business. As a result, changes in regulatory, market
or health care provider conditions in any of these states, particularly New
York, could have a material adverse effect on our business, financial condition
or results of operations. In addition, our revenue
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<PAGE> 18
under our Medicare contracts with the Health Care Financing Administration
represented 21.9% of our premium revenue earned during 1998.
HIGH LEVEL OF COMPETITION MAY ADVERSELY AFFECT OUR ABILITY TO OBTAIN AND RETAIN
EMPLOYER GROUPS.
HMOs and health insurance companies operate in a highly competitive
environment. We have numerous competitors, including for-profit and
not-for-profit HMOs, preferred provider organizations and indemnity insurance
carriers, some of which have substantially larger enrollments and greater
financial resources than we do. We also compete with HMOs and managed care plans
sponsored by large health insurance companies. Additional competitors may enter
our markets in the future. The cost of providing benefits is in many instances
the controlling factor in obtaining and retaining employer groups, and some of
our competitors have set premium rates at levels below our rates for comparable
products. We anticipate that premium pricing will continue to be highly
competitive.
RISKS RELATED TO THE NEW NOTES
WE HAVE SUBSTANTIAL INDEBTEDNESS, AND WE ARE HIGHLY LEVERAGED AS A RESULT.
As of March 31, 1999, we have aggregate outstanding indebtedness of
approximately $350 million. See "Capitalization" on page 20 for more
information.
The indenture under which the old notes have been issued and under which
the new notes will be issued permits us to incur additional indebtedness,
subject to certain limitations. We believe that cash flow from the operations of
our subsidiaries, together with other available sources of liquidity, will be
adequate to permit us to make required payments of principal and interest on our
indebtedness and to fund the working capital requirements of our subsidiaries,
although there can be no assurance that this will be the case. In addition,
various insurance and health regulations may restrict the ability of our
subsidiaries to pay dividends to us. To the extent that cash flow from
operations and parent company cash balances are insufficient to satisfy our cash
requirements, we may seek to obtain funds from additional borrowings, sell
additional equity capital or acquire other businesses that would provide cash
flow, in all such cases to the extent permitted by the indenture and the term
loan agreement. We cannot assure that such actions would be permitted under the
indenture and the term loan agreement, or that they could be effected on
satisfactory terms, in a timely manner or at all, or that they would enable us
to make any payments due on the new notes.
The degree to which we are leveraged could have adverse consequences to
holders of the new notes, including the following:
- our ability to obtain additional financing in the future for working
capital, acquisitions or other purposes may be impaired;
- our flexibility in planning for or reacting to changes in market
conditions may be limited;
- we may be more vulnerable in the event of a downturn in our business; and
- the market price of the new notes may be adversely affected by a default
on the new notes.
Our ability to satisfy our obligations will be dependent upon our future
performance, including implementation of the Turnaround Plan, which will be
subject to prevailing
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<PAGE> 19
economic conditions and to financial, business and other factors, including
factors beyond our control.
BECAUSE THE NOTES THAT YOU HOLD ARE UNSECURED, YOU MAY NOT BE FULLY REPAID IF WE
BECOME INSOLVENT.
The new notes will not be secured by any of our assets or the assets of our
subsidiaries. Therefore, you may not be fully repaid if we become insolvent. The
term loan agreement is secured by a first priority security interest in
substantially all of our assets and the assets of our subsidiaries, other than
regulated subsidiaries, which are prohibited from providing security interests.
If we became insolvent, the holders of the secured debt would receive payments
from the assets used as security before the holders of the new notes receive
payments.
BECAUSE THE NEW NOTES ARE STRUCTURALLY SUBORDINATED TO THE OBLIGATIONS OF OUR
SUBSIDIARIES, YOU MAY NOT BE FULLY REPAID IF WE BECOME INSOLVENT.
Our operations are conducted primarily through our subsidiaries. Therefore,
our ability to make required principal and interest payments with respect to
indebtedness, including the new notes, depends on the earnings of our
subsidiaries and on our ability to receive funds from such subsidiaries through
dividends or other payments. Because the new notes are obligations of Oxford
only, our subsidiaries are not obligated to pay any amounts due pursuant to the
new notes or to make funds available therefor in the form of dividends or
advances to us. The ability of such subsidiaries to pay dividends to us is
restricted by various insurance and health regulations applicable to such
subsidiaries. If operating losses are incurred in 1999 we may be required to
make additional capital contributions to certain of our subsidiaries in order to
comply with applicable statutory capital requirements. To the extent of any such
requirements, such funds would not be available to us for payment of principal
and interest with respect to our indebtedness, including the new notes.
Furthermore, the new notes effectively will be subordinated to all
outstanding indebtedness and other liabilities and commitments (including
accounts payable and other accrued liabilities) of our subsidiaries. Any right
we have to receive assets of any of our subsidiaries upon its liquidation or
reorganization, and the consequent right of holders of the new notes to
participate in those assets, effectively will be subordinated to the claims of
that subsidiary's creditors, except to the extent that we are recognized as a
creditor of such subsidiary, in which case our claims would still be subordinate
to any security interest in the assets of such subsidiary and any indebtedness
of such subsidiary senior to that held by us. As of December 31, 1998, the
aggregate liabilities of our subsidiaries were approximately $947,678,000,
consisting primarily of medical costs payable.
AGREEMENTS GOVERNING OUR INDEBTEDNESS IMPOSE SUBSTANTIAL RESTRICTIONS AND
LIMITATIONS ON US.
The term loan agreement and the indenture that governs the old notes and
that will govern the new notes contain a number of covenants that, among other
things, limit or restrict our ability to
- dispose of our assets;
- incur additional indebtedness;
- repay other indebtedness;
- pay dividends;
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<PAGE> 20
- enter into certain investments or acquisitions;
- repurchase or redeem capital stock;
- engage in mergers or consolidations; or
- engage in certain transactions with subsidiaries and affiliates and
certain other corporate activities.
These limitations and restrictions may adversely affect our ability to
finance our future operations or capital needs or engage in other business
activities that may be in our interest.
In the event of any default under the term loan agreement, the lenders
under the term loan agreement could elect to declare all borrowings outstanding
under the term loan agreement, together with accrued interest and other fees, to
be due and payable, to require us to apply all of our available cash to repay
such borrowings or to prevent us from making debt service payments on the new
notes. If the indebtedness under the term loan agreement or the new notes were
to be accelerated, we cannot assure that our assets would be sufficient to repay
such indebtedness in full.
THE TERM LOAN AGREEMENT BEARS FLOATING INTEREST RATES THAT COULD RISE AND AFFECT
THE AMOUNTS AVAILABLE FOR INTEREST PAYMENTS.
The $150 million that we borrowed under the term loan agreement bears
interest at floating rates. Increases in interest rates on indebtedness under
the term loan agreement would reduce the amounts available for the payment of
interest on the new notes.
AGREEMENTS RELATING TO INDEBTEDNESS MAY PROHIBIT US FROM REPURCHASING THE NOTES
UPON A CHANGE IN CONTROL.
The term loan agreement prohibits us from purchasing any of the new notes
and also provides that certain change of control events with respect to Oxford
would constitute a default under the term loan agreement. Any future credit
agreements or other agreements relating to indebtedness to which we become a
party may contain similar restrictions and provisions. In the event a change of
control occurs at a time when we are prohibited from purchasing the new notes,
we could seek the consent of our lenders to the purchase of the new notes or
could attempt to refinance the borrowings that contain such prohibition. If we
do not obtain such a consent or repay such borrowings, we will remain prohibited
from purchasing the new notes. In this case, our failure to purchase the
tendered new notes would constitute an event of default under the indenture
which would, in turn, constitute a default under the term loan agreement and/or
other indebtedness. Furthermore, we cannot assure that we will have sufficient
resources to satisfy our repurchase obligation with respect to the new notes
following a change of control.
THERE IS NO PUBLIC MARKET FOR THE NEW NOTES, SO YOU MAY BE UNABLE TO SELL NEW
NOTES.
The new notes are new securities for which there is currently no market.
Consequently, the new notes will be relatively illiquid, and you may be unable
to sell your new notes. We do not intend to apply for listing of the new notes
on any securities exchange or for the inclusion of the new notes in any
automated quotation system. Accordingly, we cannot assure you that a liquid
market for the new notes will develop.
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<PAGE> 21
FORWARD-LOOKING STATEMENTS
Some statements and information contained in this prospectus are not
historical facts, but are "forward-looking statements," as such term is defined
in the Private Securities Litigation Reform Act of 1995. We wish to caution you
that these forward-looking statements are only predictions, and actual events or
results may differ materially as a result of risks that we face, including those
set forth herein under "Risk Factors." These forward-looking statements can be
identified by the use of forward-looking terminology such as "believes,"
"expects," "plans," "may," "will," "would," "could," "should," or "anticipates"
or the negative of these words or other variations of these words or other
comparable words, or by discussions of strategy that involve risks and
uncertainties. Such forward-looking statements include, but are not limited to
statements concerning:
- future results of operations or financial position;
- future liquidity at the parent company;
- future health care and administrative costs;
- future premium rates for commercial and Medicare business;
- future growth of membership and membership composition;
- future health care benefits;
- future provider network;
- future provider utilization rates;
- future medical loss ratio levels;
- future claims payment, service performance and other systems and
operations matters;
- our readiness for Year 2000;
- proposed efforts to control health care and administrative costs;
- future dispositions of certain businesses and assets;
- future provider payment and risk-sharing agreements with health care
providers;
- the Turnaround Plan;
- future enrollment levels;
- future government regulation and relations;
- the future of the health care industry; and
- the impact on Oxford of recent events, legal proceedings and regulatory
investigations and examinations, and other statements contained herein
regarding matters that are not historical facts.
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<PAGE> 22
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods indicated is
as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges............. * * 25.6 19.3 17.6
</TABLE>
- -------------------------
* Earnings were insufficient to cover fixed charges by $615.2 million for 1998
and $431.6 million for 1997.
For purposes of computing these ratios, our earnings before income taxes,
as reported in our most recent Annual Report on Form 10-K/A, have been increased
by the fixed charges. The amount of earnings was then divided by the amount of
fixed charges, the result being the ratio of earnings to fixed charges. Fixed
charges represent interest expense (no interest has been capitalized) plus the
estimated interest factor in rental expense.
For current information on these ratios, please see our most recent Annual
Report on Form 10-K/A. See "Where You Can Find More Information" for a
description of how to obtain this document.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new notes as
described in this prospectus. We will receive in exchange old notes in like
principal amount. The old notes surrendered in exchange for the new notes will
be retired and canceled and cannot be reissued. Accordingly, the issuance of the
new notes will not result in any change in our indebtedness.
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<PAGE> 23
CAPITALIZATION
The following table sets forth our capitalization as of December 31, 1998,
as adjusted to give effect to the exchange offer. The issuance of the new notes
will not affect our capitalization.
<TABLE>
<CAPTION>
DECEMBER 31, 1998
----------------------
AS
ACTUAL ADJUSTED
--------- ---------
(Dollars in thousands)
<S> <C> <C>
Long-term debt:
11% Senior Notes -- due May 2005..................... $ 200,000 $ --
11% Senior Notes -- due May 2005..................... -- 200,000
Term loan due May 2003............................... 150,000 150,000
Obligations under capital leases....................... 18,850 18,850
Redeemable preferred stock:............................
Series A............................................. 208,888 208,888
Series B............................................. 89,928 89,928
Total............................................. 298,816 298,816
Shareholders' equity (deficit):
Common stock, $.01 par value, authorized 400,000,000
shares; issued and outstanding 80,515,872
shares............................................ 805 805
Additional paid-in capital........................... 506,243 506,243
Accumulated deficit.................................. (692,290) (692,290)
Accumulated other comprehensive earnings............. 4,137 4,137
--------- ---------
Total shareholders' equity (deficit).............. (181,105) (181,105)
--------- ---------
Total capitalization.............................. $ 486,561 $ 486,561
========= =========
</TABLE>
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<PAGE> 24
BUSINESS
We provide health care benefit plans through our HMO and insurance
subsidiaries primarily in New York, New Jersey and Connecticut. Our product line
includes our point-of-service plans, the Freedom Plan and the Liberty Plan,
traditional health maintenance organizations, preferred provider organizations,
Medicare plans, health care benefit plans for individuals and third-party
administration of self-funded health plans.
We distribute our products through several different internal channels,
including direct sales representatives, business representatives, inbound
telemarketing representatives and executive account representatives as well as
through external insurance agents, brokers and consultants.
On the date of this prospectus, we had a network of more than 47,000
providers under contract with us. The majority of the primary care physicians,
specialists and hospitals in our network have contracted directly with us. We
also have contracts with groups of providers such as physician hospital
organizations, individual practice associations and other physician groups. We
have entered into risk transfer agreements for the provision of health benefits
to some of our Medicare beneficiaries as well as for pharmacy benefits
management and laboratory and radiology services.
For a full description of our business refer to our most recently filed
Annual Report on Form 10-K/A, which is incorporated into this prospectus by
reference. For a description of the risks involved in our business, refer to the
section of this prospectus entitled "Risk Factors."
THE EXCHANGE OFFER
BACKGROUND
We originally sold the outstanding 11% Senior Notes due 2005 on May 13,
1998, in a transaction exempt from the registration requirements of the
Securities Act. Donaldson, Lufkin & Jenrette Securities Corporation, as the
initial purchaser, subsequently resold the notes to qualified institutional
buyers in reliance on Rule 144A and to persons in offshore transactions in
reliance on Regulation S under the Securities Act. As of the date of this
prospectus, $200 million aggregate principal amount of old notes is outstanding.
As a condition to the initial sale of the old notes, we entered into a
registration rights agreement with Donaldson, Lufkin & Jenrette under which we
agreed that we would, at our own cost:
(1) file an exchange offer registration statement under the Securities Act
with the SEC; and
(2) use our best efforts:
(a) to have the exchange offer registration statement declared
effective under the Securities Act at the earliest possible time;
(b) to cause the exchange offer registration statement to be effective
continuously;
(c) to keep the exchange offer open for no less than 20 business days;
and
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<PAGE> 25
(d) to cause the exchange offer to be consummated no later than the
30th business day after the exchange offer registration statement
is declared effective by the SEC.
We agreed to issue and exchange the new notes for all old notes tendered
and not withdrawn before the expiration of the exchange offer. A copy of the
registration rights agreement has been filed as an exhibit to the registration
statement which includes this prospectus. The summary in this prospectus of
provisions of the registration rights agreement does not purport to be complete
and is subject to, and is qualified in its entirety by, all the provisions of
the registration rights agreement. The registration statement is intended to
satisfy some of our obligations under the registration rights agreement.
TERMS OF THE EXCHANGE OFFER
We will offer the new notes in exchange for surrender of the old notes. We
will keep the exchange offer open for at least 20 business days, or longer if
required by applicable law, after the date notice of the exchange offer is
mailed to the holders of the old notes.
Upon the terms and subject to the conditions contained in this prospectus
and in the letter of transmittal which accompanies this prospectus, we will
accept any and all old notes validly tendered and not withdrawn before 5:00
p.m., New York City time, on the expiration date of the exchange offer. We will
issue $1,000 principal amount of new notes in exchange for each $1,000 principal
amount of outstanding old notes accepted in the exchange offer. Holders may
tender some or all of their old notes under the exchange offer. However, old
notes may be tendered only in integral multiples of $1,000.
The form and terms of the new notes will be the same as the form and terms
of the old notes except that:
(1) the new notes will bear a different CUSIP number from the old notes;
(2) the new notes will be registered under the Securities Act and,
therefore, will not bear legends restricting their transfer;
(3) the new notes will not contain certain terms providing for payment of
liquidated damages under circumstances relating to the timing of the
exchange offer, which are described in the registration rights
agreement; and
(4) holders of the new notes will not be entitled to any of the
registration rights under the registration rights agreement, which will
terminate upon consummation of the exchange offer.
The new notes will evidence the same debt as the old notes and will be issued
under, and be entitled to the benefits of, the indenture governing the old
notes. As a result, both series of notes will be treated as a single class of
debt securities under the indenture.
As of the date of this prospectus, $200,000,000 in aggregate principal
amount of the old notes is outstanding. All of it is registered in the name of
Cede & Co., as nominee for The Depository Trust Company. Solely for reasons of
administration, we have fixed the close of business on --, 1999 as the record
date for the exchange offer for purposes of determining the persons to whom this
prospectus and the letter of transmittal will be mailed initially. There will be
no fixed record date for determining holders of the old notes entitled to
participate in this exchange offer.
In connection with the exchange offer, holders of old notes do not have any
appraisal or dissenters' rights under the General Corporation Law of the State
of Delaware or the
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<PAGE> 26
indenture governing the old notes. We intend to conduct the exchange offer in
accordance with the registration rights agreement and the applicable
requirements of the Securities Exchange Act of 1934 and the rules and
regulations of the SEC related to such offers.
We will be deemed to have accepted validly tendered old notes when, as and
if we have given oral notice of acceptance, confirmed in writing, or written
notice of acceptance to The Chase Manhattan Bank, exchange agent for the
exchange offer. The exchange agent will act as agent for the tendering holders
for the purpose of receiving the new notes from us.
If any tendered old notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events specified in this
prospectus or if old notes are submitted for a greater principal amount than the
holder desires to exchange, the certificates for the unaccepted old notes will
be returned without expense to the tendering holder. If old notes were tendered
by book-entry transfer in the exchange agent account at The Depository Trust
Company in accordance with the book-entry transfer procedures described below,
any non-exchanged old notes will be credited to an account maintained with The
Depositary Trust Company as promptly as practicable after the expiration date of
the exchange offer.
We will pay all charges and expenses, other than transfer taxes in certain
circumstances, in connection with the exchange offer. See "-- Fees and
Expenses." Holders who tender old notes in the exchange offer will therefore not
need to pay brokerage commissions or fees or, subject to the instructions in the
letter of transmittal, transfer taxes with respect to the exchange of old notes
in the exchange offer.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The expiration date of the exchange offer is 5:00 p.m., New York City time,
on --, 1999, unless we extend the exchange offer, in which case the expiration
date is the latest date and time to which we extend the exchange offer.
In order to extend the exchange offer, we:
- will notify the exchange agent of any extension by oral notice confirmed
in writing, or written notice; and
- will issue a press release or other public announcement of the extension,
which will include disclosure of the approximate number of old notes
deposited to date, before 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date.
We reserve the right:
- to delay accepting any old notes, to extend the exchange offer, or to
terminate the exchange offer if any of the conditions described below
under "-- Conditions" have not been satisfied, by giving oral notice
confirmed in writing, or written notice of the delay, extension or
termination to the exchange agent; or
- to amend the terms of the exchange offer in any manner.
We will promptly announce any such event by making a timely release to Dow
Jones News Service, and we may or we may not do so by other means as well.
If the exchange offer is amended in a manner determined by us to constitute
a material change, we will promptly disclose that amendment in a manner
reasonably calculated to inform holders of the old notes of such amendments.
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<PAGE> 27
We will have no obligation to publish, advertise, or otherwise communicate
any public announcement of any delay, extension, amendment or termination that
we may choose to make, other than by making a timely release to Dow Jones News
Service.
INTEREST ON THE NEW NOTES
Interest on the old notes began accruing on May 13, 1998 when we issued the
old notes. Interest is payable on the old notes and will be payable on the new
notes semi-annually in arrears on each May 15 and November 15. The new notes
will accrue cash interest on the same terms as the old notes, i.e., at the rate
of 11% per year from May 13, 1998, payable. The last interest payment date prior
to the date of this prospectus was May 15, 1999. Interest on the new notes began
accruing on May 15, 1999 and the first interest payment date for the new notes
will be November 15, 1999.
RESALE OF THE NEW NOTES
We believe that you will be allowed to resell the new notes to the public
without registration under the Securities Act, and without delivering a
prospectus that satisfies the requirements of Section 10 of the Securities Act,
if you can make the representations set forth in the letter of transmittal,
described in "-- Procedures for Tendering -- Representations upon Tendering Old
Notes." However, if you intend to participate in a distribution of the new
notes, you must comply with the registration requirements of the Securities Act
and deliver a prospectus, unless an exemption from registration is otherwise
available. In addition, you cannot be an "affiliate" of Oxford as defined in
Rule 405 under the Securities Act. You have to represent to us in the letter of
transmittal accompanying this prospectus that you meet these conditions
exempting you from the registration requirements.
We base our view on interpretations by the staff of the SEC in no-action
letters issued to other issuers in exchange offers like ours. However, we have
not asked the SEC to consider this particular exchange offer in the context of a
no-action letter. Therefore, you cannot be sure that the SEC will treat it in
the same way it has treated other exchange offers in the past. If our belief is
wrong you could incur liability under the Securities Act. We are not
indemnifying you for any such liability.
A broker-dealer that has bought old notes for market-making or other
trading activities has to deliver a prospectus in order to resell any new notes
it has received for its own account in the exchange. This prospectus may be used
by a broker-dealer to resell any of its new notes. We have agreed in the
registration rights agreement to send this prospectus to any broker-dealer that
requests copies for a period of up to one year after the registration statement
relating to this exchange offer is declared effective. See "Plan of
Distribution" for more information regarding broker-dealers.
SHELF REGISTRATION STATEMENT
If :
(1) the exchange offer is not permitted by applicable law or SEC policy; or
(2) any holder of Transfer Restricted Securities, as defined below,
notifies us prior to the 20th business day following the consummation
of the exchange offer that:
(a) it is prohibited by law or SEC policy from participating in the
exchange offer, or
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(b) it may not resell the new notes acquired by it in the exchange
offer to the public without delivering a prospectus, and this
prospectus is not appropriate or available for such resales by it,
or
(c) it is a broker-dealer and holds old notes acquired directly from us
or one of our affiliates,
then we will file with the SEC a shelf registration statement to register for
public resale the Transfer Restricted Securities held by any such holder who
provides us with certain information for inclusion in the shelf registration
statement.
"Transfer Restricted Securities" means each old note or new note until the
earliest of the date on which:
- such old note is exchanged in the exchange offer by a person other than a
broker-dealer and the related new note is entitled to be resold to the
public by the holder thereof without complying with the prospectus
delivery requirements of the Securities Act;
- following the exchange by a broker-dealer in the exchange offer, such new
note is sold to a purchaser who receives a copy of this prospectus from
such broker-dealer on or prior to the date of such sale;
- such old note or new note has been registered under the Securities Act
and has been disposed of in accordance with the shelf registration
statement; or
- such old note or new note is distributed to the public pursuant to Rule
144 under the Securities Act.
We will then use our best efforts to cause the shelf registration statement
to become effective on or prior to the 90th day after the date on which we
become obligated to file the shelf registration statement. We will also use our
best efforts to keep effective the shelf registration statement for a period of
at least two years following the date on which such shelf registration statement
first becomes effective under the Securities Act.
LIQUIDATED DAMAGES
If:
(1) we fail to file an exchange offer registration statement with the SEC
on or prior to the filing deadline under the registration rights
agreement;
(2) the exchange offer registration statement is not declared effective by
the SEC on or prior to the later of the 360th day after May 13, 1998 or
the 90th day after the filing of the exchange offer registration
statement with the SEC on or prior to the filing deadline;
(3) the exchange offer is not consummated on or before the 30th business
day after the exchange offer registration statement is declared
effective;
(4) we are obligated to file the shelf registration statement and we fail
to file the shelf registration statement with the SEC on or prior to
the 30th day after such filing obligation arises;
(5) we are obligated to file a shelf registration statement and the shelf
registration statement is not declared effective on or prior to the
90th day after the filing thereof; or
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(6) the exchange offer registration statement or the shelf registration
statement, as the case may be, is declared effective but thereafter
ceases to be effective or usable in connection with resales of the
transfer restricted securities, for such time of non-effectiveness or
non-usability,
then we agree to pay to each holder of Transfer Restricted Securities affected
by the above liquidated damages in an amount equal to U.S.$0.05 per week per
U.S.$1,000 in principal amount of Transfer Restricted Securities held by such
holder for each week or portion thereof that such circumstance listed in (1)
through (6) above continues for the first 90-day period immediately following
the occurrence of such circumstances. The amount of the liquidated damages will
increase by an additional U.S.$0.05 per week per U.S.$1,000 in principal amount
of Transfer Restricted Securities with respect to each subsequent 90-day period
until all such circumstances listed in (1) through (6) above, have been cured,
up to a maximum amount of liquidated damages of U.S.$0.50 per week per
U.S.$1,000 in principal amount of Transfer Restricted Securities. We will not be
required to pay liquidated damages for more than one circumstance at any given
time. Following the cure of all such circumstances, the accrual of liquidated
damages will cease.
We will pay all accrued liquidated damages to holders entitled thereto by
wire transfer to the accounts specified by them or by mailing checks to their
registered address if no such accounts have been specified.
PROCEDURES FOR TENDERING
GENERAL
You may tender your own old notes in the exchange offer. To tender in the
exchange offer, a holder must do the following:
(1) properly complete, sign and date the letter of transmittal, or a
facsimile of the letter of transmittal;
(2) have the signatures thereon guaranteed if required by the letter of
transmittal; and
(3) except as discussed in "-- Guaranteed Delivery Procedures," mail or
otherwise deliver the letter of transmittal, or facsimile, together
with the old notes and any other required documents, to the exchange
agent at the address listed below under "-- Exchange Agent" prior to
5:00 p.m., New York City time, on the expiration date of the exchange
offer.
The exchange agent must receive the old notes, a completed letter of
transmittal and all other required documents at the address listed below under
"-- Exchange Agent" before 5:00 p.m., New York City time, on the expiration date
for the tender to be effective. You may deliver your old notes by using the
book-entry transfer procedures described below, as long as the exchange agent
receives confirmation of the book-entry transfer before the expiration date.
The DTC has authorized its participants that hold old notes on behalf of
beneficial owners of old notes through DTC to tender their old notes as if they
were holders. To effect a tender of old notes, DTC participants should either:
(1) complete and sign the letter of transmittal (or a manually signed
facsimile of the letter), have the signature thereon guaranteed if
required by the instructions to the letter of transmittal, and mail or
deliver the letter of transmittal (or the
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manually signed facsimile) to the exchange agent according to the procedure
described in "-- Procedures for Tendering" or
(2) transmit their acceptance to DTC through its automated tender offer
program for which the transaction will be eligible and follow the
procedure for book-entry transfer described in "-- Procedures for
Tendering -- Book-Entry Transfer."
By tendering, each holder will make the representations described under the
heading "-- Representations upon Tendering Old Notes." Each participating
broker-dealer must acknowledge that it will deliver a prospectus in connection
with any resale of such new notes. See "Plan of Distribution."
The tender by a holder and the acceptance of the tender by us will
constitute the agreement between the holder and us set forth in this prospectus
and in the letter of transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK
OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO
CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES,
HOLDERS SHOULD ALLOW SUFFICIENT TIME TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL, OLD NOTES OR BOOK-ENTRY
CONFIRMATION SHOULD BE SENT TO US. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS,
DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE
TRANSACTIONS ON THEIR BEHALF.
BENEFICIAL OWNERS
If you are a beneficial owner of old notes and your old notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee and you wish to tender your old notes, you should contact the
registered holder promptly and instruct it to tender on your behalf. See
"Instructions to Registered Holder and/or Book-Entry Transfer Facility
Participant from Beneficial Owner" included with the letter of transmittal.
If you are a beneficial owner and you want to tender on your own behalf,
you must, prior to completing and executing the letter of transmittal and
delivering your old notes, either make appropriate arrangements to register
ownership of the old notes in your name or obtain a properly completed bond
power from the registered holder. The transfer of registered ownership may take
considerable time.
SIGNATURES ON LETTER OF TRANSMITTAL
Signatures on a letter of transmittal or a notice of withdrawal generally
must be guaranteed by an eligible guarantor institution, unless the old notes
are tendered:
- by a registered holder who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the letter
of transmittal; or
- for the account of an eligible guarantor institution.
An "eligible guarantor institution" is:
- a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc.;
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- a commercial bank or trust company having an office or correspondent in
the United States; or
- an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act which is a member of one of the recognized
signature guarantee programs identified in the letter of transmittal.
If a letter of transmittal is signed by a person other than the registered
holder of any old notes listed in the letter of transmittal, the old notes must
be endorsed or accompanied by a properly completed bond power signed by the
registered holder as the registered holder's name appears on the old notes.
If a letter of transmittal or any old notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by us, submit with
the letter of transmittal evidence satisfactory to us of their authority to so
act.
BOOK-ENTRY TRANSFER
Within two business days after the date of this prospectus the exchange
agent will establish a new account or utilize an existing account with respect
to the old notes at the book-entry transfer facility, The Depository Trust
Company, for the purpose of facilitating the exchange offer. Subject to the
establishment of the accounts, any financial institution that is a participant
in DTC's system may make book-entry delivery of old notes by causing DTC to
transfer the old notes into the exchange agent's account with respect to the old
notes in accordance with DTC's procedures. Although delivery of the old notes
may be effected through book-entry transfer into the exchange agent's account at
DTC, an appropriate letter of transmittal properly completed and duly executed
or an agent's message with any required signature guarantee and all other
required documents is received by the exchange agent at its address listed below
under "-- Exchange Agent" on or before the expiration date of the exchange
offer, or, if the guaranteed delivery procedures described below are complied
with, within the time period provided under such procedures.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
The term "agent's message" means a message transmitted by DTC to, and
received by, the exchange agent, which states that DTC has received an express
acknowledgment from the participant in DTC tendering the old notes stating:
- the aggregate principal amount of old notes which have been tendered by
such participant;
- that such participant has received and agrees to be bound by the terms of
the letter of transmittal; and
- that we may enforce such agreement against the participant.
Delivery of an agent's message will also constitute an acknowledgement from
the tendering DTC participant that the representations contained in the
appropriate letter of transmittal and described on page 29 of this prospectus
are true and correct.
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ACCEPTANCE OF TENDERED NOTES
All questions as to the validity, form, acceptance, withdrawal and
eligibility, including time of receipt, of tendered old notes will be determined
by us in our sole discretion, which determination will be final and binding. We
reserve the absolute right:
(1) to reject any and all old notes not properly tendered;
(2) to reject any old notes if our acceptance of such notes would, in the
opinion of our counsel, be unlawful; and
(3) to waive any defects, irregularities or conditions of tender as to
particular old notes.
Our interpretation of the terms and conditions of the exchange offer, including
the instructions in the letter of transmittal, will be final and binding on all
parties.
Unless waived, you must cure any defects or irregularities in connection
with tenders of old notes within a period of time that we will determine.
Neither we, nor the exchange agent nor any other person will be liable for
failure to give notice of any defect or irregularity with respect to any tender
of old notes. Tenders of old notes will not be deemed to have been made until
such defects or irregularities mentioned above have been cured or waived.
Any old notes received by the exchange agent that are not properly tendered
and as to which the defects or irregularities have not been cured or waived will
be returned by the exchange agent to the tendering holders, unless otherwise
provided in the letter of transmittal, as soon as practicable following the
expiration date of the exchange offer.
REPRESENTATIONS UPON TENDERING OLD NOTES
By surrendering old notes pursuant to the exchange offer, you will be
telling us that, among other things:
(1) you are acquiring the new notes issued in the exchange offer in the
ordinary course of your business;
(2) you are not an "affiliate," as defined in Rule 405 under the Securities
Act, of Oxford;
(3) you are not participating, and do not intend to participate, and have
no arrangement or understanding with any person to participate, in the
distribution of the new notes issued to you in the exchange offer;
(4) you have full power and authority to tender, sell, assign and transfer
the old notes tendered;
(5) we will acquire good, marketable and unencumbered title to the old
notes being tendered, free and clear of all security interests, liens,
restrictions, charges, encumbrances, conditional sale agreements or
other obligations relating to their sale or transfer, and not subject
to any adverse claim when the old notes are accepted by us; and
(6) you acknowledge and agree that if you are a broker-dealer registered
under the Exchange Act or you are participating in the exchange offer
for the purposes of distributing the new notes, you must comply with
the registration and prospectus delivery requirements of the Securities
Act in connection with a secondary resale
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of the new notes, and you cannot rely on the position of the SEC's staff in
their no-action letters.
If you are a broker-dealer and you will receive new notes for your own account
in exchange for old notes that were acquired as a result of market-making
activities or other trading activities, you will be required to acknowledge in
the letter of transmittal that you will deliver a prospectus in connection with
any resale of the new notes.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your old notes and:
- you cannot deliver your old notes, the letter of transmittal or any other
required documents to the exchange agent prior to the expiration date;
- you cannot complete the procedure for book-entry transfer, before the
expiration date; or
- your old notes are not immediately available in order for you to meet the
expiration date deadline,
then you may participate in the exchange offer if:
(1) the tender is made through an eligible guarantor institution;
(2) prior to the expiration date, the exchange agent receives from the
eligible guarantor institution a properly completed and duly executed
notice of guaranteed delivery, substantially in the form provided by
us, by facsimile transmission, mail or hand delivery, containing:
(a) the name and address of the holder, the certificate number(s) of the
old notes, if applicable, and the principal amount of old notes
tendered;
(b) a statement that the tender is being made thereby; and
(c) a guarantee that, within three business days after the expiration
date, the letter of transmittal (or facsimiles thereof) together
with the certificate(s) representing the old notes in proper form
for transfer or an agent's message and a confirmation of book-entry
transfer of the old notes into the exchange agent's account at DTC,
and any other documents required by the letter of transmittal will
be deposited by the eligible guarantor institution with the exchange
agent; and
(3) the exchange agent receives, within three business days after the
expiration date
(a) a properly completed and executed letter of transmittal or facsimile
or an agent's message in the case of a book-entry transfer;
(b) the certificate(s) representing all tendered old notes in proper
form for transfer or a confirmation of book-entry transfer of such
old notes into the exchange agent's account at the book-entry
transfer facility; and
(c) all other documents required by the letter of transmittal.
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WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw your
tender of old notes at any time prior to 5:00 p.m., New York City time, on the
expiration date of the exchange offer.
To withdraw a tender of old notes in the exchange offer, the exchange agent
must receive a letter or facsimile transmission notice of withdrawal at its
address set forth below under "-- Exchange Agent" prior to 5:00 p.m., New York
City time, on the expiration date. Any notice of withdrawal must:
(1) specify the name of the person having deposited the old notes to be
withdrawn;
(2) identify the old notes to be withdrawn including the certificate
number(s), if applicable, and aggregate principal amount of old notes
to be withdrawn or, in the case of old notes transferred by book-entry
transfer, the name and number of the account at DTC to be credited and
otherwise comply with the procedures of the transfer agent;
(3) be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the old notes were tendered,
including any required signature guarantees, or be accompanied by
documents of transfer sufficient to have the trustee under the
indenture governing the old notes register the transfer of the old
notes into the name of the person withdrawing the tender; and
(4) specify the name in which any such old notes are to be registered, if
different from that of the person who deposited the notes.
All questions as to the validity, form and eligibility, including time of
receipt, of such notices will be determined by us, in our sole discretion, and
our determination will be final and binding on all parties. Any old notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
exchange offer, and no new notes will be issued, unless the old notes so
withdrawn are validly retendered. Any old notes that have been tendered but that
are not accepted for exchange will be returned to the holder of the notes
without cost to the holder as soon as practicable after withdrawal, rejection of
tender or termination of the exchange offer. Properly withdrawn old notes may be
retendered by following one of the procedures described above under
"-- Procedures for Tendering" at any time before the expiration date.
CONDITIONS
Despite any other term of the exchange offer, we will not be required to
accept for exchange, or exchange new notes for, any old notes and may terminate
the exchange offer as provided in this prospectus before the acceptance of the
old notes, if:
(1) any action or proceeding is instituted or threatened in any court or by
or before any governmental agency with respect to the exchange offer
which, in our reasonable judgment, might materially impair our ability
to proceed with the exchange offer or materially impair the
contemplated benefits of the exchange offer to us, or any material
adverse development has occurred in any existing action or proceeding
with respect to us or any of our subsidiaries;
(2) any law, statute, rule or regulation is proposed, adopted or enacted,
or any existing law, statute, rule or regulation is interpreted by the
staff of the SEC in a manner, which, in our reasonable judgment, might
materially impair our ability to
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proceed with the exchange offer or materially impair the contemplated benefits
of the exchange offer to us; or
(3) any governmental approval has not been obtained, which approval we
will, in our reasonable discretion, deem necessary for the consummation
of the exchange offer as contemplated by this prospectus.
The conditions listed above are for our sole benefit and may be asserted by
us regardless of the circumstances giving rise to any of these conditions. We
may waive these conditions in our reasonable discretion in whole or in part at
any time and from time to time. The failure by us at any time to exercise any of
the above rights will not be deemed a waiver of such right, and such right will
be deemed an ongoing right which may be asserted at any time and from time to
time.
If we determine in our reasonable discretion that any of the conditions are
not satisfied, we may:
(1) refuse to accept any old notes and return all tendered old notes to the
tendering holders;
(2) extend the exchange offer and retain all old notes tendered before the
expiration of the exchange offer, subject, however, to the rights of
holders to withdraw these old notes; or
(3) waive unsatisfied conditions with respect to the exchange offer and
accept all properly tendered old notes that have not been withdrawn. If
this waiver constitutes a material change to the exchange offer, we
will disclose the by means of a prospectus supplement that will be
distributed to the registered holders.
EXCHANGE AGENT
The Chase Manhattan Bank has been appointed as exchange agent for the
exchange offer. Questions and requests for assistance and requests for
additional copies of this prospectus or of the letter of transmittal should be
directed to The Chase Manhattan Bank addressed as follows:
BY MAIL, HAND OR OVERNIGHT COURIER:
55 Water Street
Room 234, North Building
New York, NY 10041
Attn: Carlos Esteves
BY FACSIMILE (FOR ELIGIBLE INSTITUTIONS ONLY):
(212) 638-7380 or (212) 638-7381
CONFIRM BY TELEPHONE:
(212) 638-0828
The Chase Manhattan Bank also acts as trustee under the indenture governing
the notes.
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FEES AND EXPENSES
We will pay the expenses of this exchange offer. The principal solicitation
is being made by mail. However, additional solicitation may be made by
telegraph, facsimile transmission, e-mail, telephone or in person by our
officers and regular employees. We have not retained any dealer-manager in
connection with the exchange offer and will not make any payments to brokers,
dealers or others soliciting acceptances of the exchange offer. We will,
however, pay the exchange agent reasonable and customary fees for its services
and will reimburse it for its reasonable out-of-pocket expenses in connection
with providing the services.
We will pay any transfer taxes applicable to the exchange of old notes. If,
however, a transfer tax is imposed for any reason other than the exchange, then
the amount of any transfer taxes will be payable by the person surrendering the
notes. If you do not submit satisfactory evidence of payment of taxes or of an
exemption with the letter of transmittal, the amount of those transfer taxes
will be billed directly to you.
ACCOUNTING TREATMENT
The new notes will be recorded at the same carrying value as the old notes
as reflected in our accounting records on the date of exchange. Accordingly, no
gain or loss for accounting purposes will be recognized by us. The expenses of
the exchange offer and the unamortized expenses related to the issuance of the
old notes will be amortized over the term of the notes.
VOLUNTARY PARTICIPATION
Participation in the exchange offer is voluntary and holders of old notes
should carefully consider whether to accept the terms and condition of this
offer. Holders of the old notes are urged to consult their financial and tax
advisors in making their own decisions on what action to take with respect to
the exchange offer.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of old notes who are eligible to participate in the exchange offer
but who do not tender their old notes will not have any further registration
rights, and their old notes will continue to be subject to restrictions on
transfer. Accordingly, such old notes may be resold only:
- to us, upon redemption thereof or otherwise;
- so long as the old notes are eligible for resale pursuant to Rule 144A
under the Securities Act, to a person whom the seller reasonably believes
is a "qualified institutional buyer" within the meaning of Rule 144A
purchasing for its own account or for the account of a qualified
institutional buyer in a transaction meeting the requirements of Rule
144A;
- in accordance with Rule 144 under the Securities Act or another exemption
from the registration requirements of the Securities Act;
- outside the United States to a foreign person in accordance with the
requirements of Regulation S under the Securities Act; or
- pursuant to an effective registration statement under the Securities Act,
in each case in accordance with all other applicable securities laws.
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REGULATORY APPROVALS
There are no federal or state regulatory requirements that must be complied
with or approvals that must be obtained in connection with the exchange offer.
However, the applicable state regulatory authorities that regulate our business
have requested copies of all documentation relating to our indebtedness,
including the new notes. We intend to provide these regulators with copies of
the material documents related to the exchange offer, including this
registration statement.
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DESCRIPTION OF THE NEW NOTES
GENERAL
The old notes were issued, and the new notes will be issued, under the
Indenture, dated as of May 13, 1998 between us and The Chase Manhattan Bank, as
trustee. The following description of the material provisions of the indenture
is a summary only. More specific terms as well as the definitions of relevant
terms can be found in the indenture and the Trust Indenture Act of 1939, which
is applicable to the indenture. Capitalized terms used in this prospectus and
not otherwise defined will have the meanings given to them in the indenture. For
definitions of some terms used in the indenture and referred to in the following
summary. See "-- Definitions" below. References in this section to the "notes"
are references to both old notes and new notes.
The old notes and the new notes will be considered collectively to be a
single class for all purposes under the indenture, including waivers,
amendments, redemptions and offers to purchase.
The old notes are and the new notes will be senior unsecured obligations of
Oxford and:
- will rank senior in right of payment to all our subordinated
Indebtedness;
- will rank equally in right of payment with all existing and future senior
Indebtedness, including borrowings under the term loan agreement, dated
as of May 13, 1998, by and among us, the financial institutions listed
therein as lenders, DLJ Capital Funding, Inc. as syndication agent and
IBJ Schroder Bank & Trust Company, as facility manager; and
- will be effectively subordinated to all our existing and future secured
Indebtedness, including Indebtedness pursuant to the term loan agreement,
to the extent of the value of the assets securing such Indebtedness, and
the notes will be structurally subordinated to Indebtedness and other
liabilities of our Subsidiaries, including any guarantees of our
Subsidiaries of Indebtedness under the term loan agreement.
As of April 30, 1999, we had approximately $350.0 million of senior
Indebtedness, including the old notes.
Restrictions in the indenture on our ability and the ability of our
Restricted Subsidiaries to incur additional Indebtedness, to make certain asset
sales, to enter into transactions with Affiliates and to enter into mergers,
consolidations or sales of all or substantially all of our assets or the assets
of our Restricted Subsidiaries, may make more difficult or discourage a takeover
of us, whether favored or opposed by our management. The indenture may not
afford holders of notes protection in all circumstances from the adverse aspects
of a leveraged transaction, reorganization, restructuring, merger or similar
transaction.
As of the date of this prospectus, all of our Subsidiaries constitute
Restricted Subsidiaries for the purposes of the indenture. Under certain
circumstances, we will be able to designate future Subsidiaries as Unrestricted
Subsidiaries. Unrestricted Subsidiaries will not be subject to many of the
restrictive covenants set forth in the indenture.
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PRINCIPAL, MATURITY AND INTEREST
The new notes will be limited in aggregate principal amount to $200 million
and will mature on May 15, 2005. In this prospectus we offer new notes in
aggregate principal amount of $200 million in exchange for the old notes.
Interest on the new notes will accrue at the rate of 11% per annum and will be
payable semi-annually in arrears on May 15 and November 15, commencing on
November 15, 1999, to holders of record on the immediately preceding May 1 and
November 1. Interest on the new notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
original issuance. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. The new notes will be issued in fully
registered form without coupons in denominations of $1,000 and integral
multiples thereof.
Principal, premium, if any, liquidated damages, if any, and interest on the
new notes will be payable, and the new notes may be presented for registration
of transfer or exchange, at the corporate trust office of the trustee or another
office or agency of Oxford as determined by us. We may change the office or
agency without prior notice to holders of the new notes, and any of our
Subsidiaries may act as paying agent or registrar.
At our option, payment of liquidated damages, if any, or interest may be
made by check mailed to the holders of the new notes at their respective
addresses set forth in the register of holders of new notes. However, all
payments with respect to new notes and certificated securities, the holders of
whom have given wire transfer instructions to the trustee by the record date,
will be required to be made by wire transfer of immediately available funds to
the accounts specified by the holders thereof.
OPTIONAL REDEMPTION
We cannot redeem new notes prior to May 15, 2002, unless we redeem them out
of the net proceeds of certain issuances of our equity interests or in the case
of a change of control. We have the option to redeem the new notes after May 15,
2002, in whole or in part, upon not less than 30 nor more than 60 days' notice
to each holder of new notes to be redeemed, at the following redemption prices
expressed as percentages of principal amount thereof, plus accrued and unpaid
interest and liquidated damages, if any, to the redemption date, if redeemed
during the 12-month period beginning on May 15 of the years indicated in the
table below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2002...................................................... 105.500%
2003...................................................... 102.750
2004 and afterwards....................................... 100.000
</TABLE>
At any time on or before May 15, 2001, we may redeem for cash up to 33 1/3%
of the original aggregate principal amount of the notes issued under the
indenture with the net proceeds from public issuances of our equity interests
other than Disqualified Stock at a redemption price of 111% of principal amount,
plus any accrued and unpaid interest and liquidated damages, if any, to the
redemption date. However, at least 66 2/3% of the original aggregate principal
amount of the notes issued under the indenture must remain outstanding
immediately after each such redemption. Any such redemption must occur within 60
days of the date of the closing of the public offering of equity interests.
Equity interest means capital stock, warrants, options or other rights to
acquire capital stock but excluding any debt security that is convertible into,
or exchangeable for, capital stock.
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If we do not redeem all of the new notes, the trustee will select new notes
or portions of the notes for redemption on a pro rata basis, by lot or by the
method it deems fair and appropriate. New notes may be redeemed in part in
multiples of $1,000 principal amount only. Notices of redemption will be sent by
first class mail at least 30 but not more than 60 days before the redemption
date to each holder of new notes to be redeemed at its registered address.
If we redeem any new note in part only, the notice of redemption that
relates to such new note will state the portion of the principal amount thereof
to be redeemed. A new note in principal amount equal to the unredeemed portion
of the note will be issued in the name of its holder upon cancellation of the
original new note. On and after the redemption date, interest will cease to
accrue on new notes or portions of them called for redemption unless we default
in the payment thereof.
MANDATORY REDEMPTION
Except as set forth below under "-- Repurchase at the Option of Holders,"
we are not required to make any mandatory redemption, purchase or sinking fund
payments with respect to the new notes prior to the maturity date.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
The indenture provides that when a "Change of Control" occurs, each holder
of notes will have the right to require us to repurchase all or any part equal
to $1,000 or an integral multiple thereof of such holder's notes pursuant to an
offer, referred to below as a "Change of Control Offer". The offer price will be
in cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and liquidated damages, if any, to the date of purchase. This
amount is referred to as the "Change of Control Payment." Within 30 days
following any Change of Control, we will mail a notice to each holder describing
the transaction or transactions that constitute the Change of Control and
offering to repurchase the notes pursuant to the procedures required by the
indenture and described in such notice. We will comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the new notes as a result of a Change of Control. The
definition of Change of Control is provided under "-- Definitions."
The Change of Control Offer will remain open for a period of 20 business
days following its commencement and no longer, except to the extent that a
longer period is required by applicable law. No later than five business days
after the termination of the offer period, we will purchase all notes validly
tendered and not properly withdrawn pursuant to the Change of Control Offer.
Payment for any notes so purchased will be made in the same manner as interest
payments are made on the notes.
If the date on which we purchase notes pursuant to a Change of Control is
on or after an interest record date and on or before the related interest
payment date, any accrued and unpaid interest and liquidated damages, if any,
will be paid to the person in whose name a new note is registered at the close
of business on such record date. No additional interest will be payable to
holders who tender notes pursuant to the Change of Control Offer.
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<PAGE> 41
On such purchase date, we will, to the extent lawful:
(1) accept for payment all notes or portions thereof properly tendered
pursuant to the Change of Control Offer;
(2) deposit with the paying agent an amount equal to the Change of Control
Payment in respect of all notes or portions thereof so tendered; and
(3) deliver or cause to be delivered to the trustee the new notes so
accepted together with an officers' certificate stating the aggregate
principal amount of notes or portions thereof being purchased by us.
The paying agent will promptly mail to each holder of notes tendered the Change
of Control Payment for the notes and the trustee will promptly authenticate and
mail, or cause to be transferred by book entry, to each holder a note equal in
principal amount to any unpurchased portion of the notes surrendered, if any.
Each such note must be in a principal amount of $1,000 or an integral multiple
thereof. We will promptly return any notes not accepted pursuant to the Change
of Control Offer. We will publicly announce the results of the Change of Control
Offer on the date on which we purchase notes pursuant to a Change of Control.
Except as described above, the indenture does not contain provisions that
permit the holders of notes to require us to redeem the notes in the event of a
takeover, recapitalization or similar restructuring, including an issuer
recapitalization or similar transaction with management. In addition, the
existence of the holder's right to require us to repurchase such holder's notes
upon the occurrence of a Change of Control may or may not deter a third party
from seeking to acquire us in a transaction that would constitute a Change of
Control.
Our ability to repurchase notes pursuant to a Change of Control Offer may
be limited by a number of factors. The term loan agreement provides that certain
change of control events with respect to Oxford would require us to prepay
mandatorily amounts outstanding thereunder at 101% of the aggregate principal
amount thereof plus accrued and unpaid interest, subject to the right of each
lender to waive its entitlement to prepayment. In addition, certain events that
may obligate us to prepay outstanding obligations under the term loan agreement
do not constitute a Change of Control under the indenture. We may not have
sufficient resources to repay Indebtedness under the term loan agreement, and we
may not have sufficient resources to repurchase tendered notes. Furthermore, any
future credit agreements or other agreements relating to senior Indebtedness to
which we become a party may contain similar restrictions and provisions. In the
event a Change of Control occurs at a time when we are directly or indirectly
prohibited from purchasing notes, we could seek the consent of our lenders to
the purchase of notes or could attempt to refinance the borrowings that contain
such prohibition. If we do not obtain such a consent or repay such borrowings,
the purchase of notes will remain prohibited. Our failure to purchase tendered
notes may constitute a breach of the indenture which would, in turn, constitute
a default under the term loan agreement and could lead to the acceleration of
the Indebtedness thereunder. In any such event, the security granted in respect
of the term loan agreement could result in the holders of the notes receiving
less ratably than our other creditors.
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ASSET SALES
The indenture provides that we will not, and will not permit any of our
Restricted Subsidiaries to, engage in an Asset Sale, as defined in
"-- Definitions," unless:
(1) we, or our Restricted Subsidiary, as the case may be, receive
consideration at the time of such Asset Sale at least equal to the fair
market value of the assets or equity interests sold or otherwise
disposed of and, in the case of a lease of assets, a lease providing
for rent and other conditions which are no less favorable to us, or our
Restricted Subsidiary, as the case may be, in any material respect than
the then prevailing market conditions, evidenced in each case by a
resolution of the Board of Directors of such entity set forth in an
Officers' Certificate delivered to the trustee; and
(2) at least 75%, 100% in the case of lease payments, of the consideration
therefor received by us or our Restricted Subsidiary is in the form of
cash or Cash Equivalents. The amount of any liabilities of us or any
Restricted Subsidiary, as shown on our most recent balance sheet or the
most recent balance sheet of our Restricted Subsidiary, other than
contingent liabilities and liabilities that are by their terms
subordinated to the notes, that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases us
or our Restricted Subsidiary from further liability will be deemed to
be cash for the purposes of this clause (2).
Within 364 days after the receipt of any Net Proceeds, as defined in
"-- Definitions," from an Asset Sale, we, or the Restricted Subsidiary, as
applicable, either:
(1) may apply the Net Proceeds:
(a) to make an investment in, to make a capital expenditure relating
to, or to acquire other tangible assets in, the commercial group
health benefit business in New York, New Jersey or Connecticut;
(b) to the reduction of Indebtedness under the term loan agreement or
the permanent reduction of any of our other indebtedness that ranks
equally with and without preference to the notes or the permanent
reduction of any long-term Indebtedness of a Restricted Subsidiary;
or
(c) to make capital contributions to regulated Restricted Subsidiaries
covering commercial lives operating in New York, New Jersey or
Connecticut which contributions are required by law or requested in
writing to be made by the appropriate state regulatory authorities;
or
(2) with respect to Net Proceeds received from an Asset Sale by a regulated
Restricted Subsidiary which are not permitted by appropriate state
regulatory authorities to be distributed or otherwise transferred,
retain such Net Proceeds as capital of such regulated Restricted
Subsidiary.
Any Net Proceeds from Asset Sales that are not applied or invested or
committed to be applied or invested, as provided above will be deemed to
constitute "Excess Proceeds." If the aggregate amount of Excess Proceeds exceeds
$20 million, then on the earlier of:
(1) the 365th day after an Asset Sale; or
(2) such date as our Board of Directors or the Restricted Subsidiary
determines not to apply the Net Proceeds relating to such Asset Sale in
the manner set forth above,
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<PAGE> 43
we will be required to make an offer to all holders of notes, an "Asset Sale
Offer," to purchase the maximum principal amount of notes that may be purchased
out of the Excess Proceeds, at an offer price in cash in an amount equal to 100%
of the principal amount thereof plus accrued and unpaid interest and liquidated
damages, if any, on the notes to the date of purchase, in accordance with the
procedures set forth in the indenture. To the extent that the aggregate amount
of notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, we may use any remaining Excess Proceeds for general corporate
purposes. If the aggregate principal amount of notes surrendered by holders
thereof exceeds the amount of Excess Proceeds, the trustee will select the notes
to be purchased on a pro rata basis, by lot or by another method as the trustee
deems fair and appropriate. The notes will only be purchased in increments of
$1,000. Upon completion of such Asset Sale Offer, the amount of Excess Proceeds
will be reset at zero.
The Asset Sale Offer will remain open for a period of 20 business days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law. No later than five business days after the
termination of the Asset Sale Offer period, we will purchase the principal
amount of notes required to be purchased pursuant to this covenant or, if less
than such required amount has been tendered, all notes tendered in response to
the Asset Sale Offer. Payment for any notes so purchased will be made in the
same manner as interest payments are made on the notes.
If the date that we purchase notes pursuant to an Asset Sale Offer is on or
after an interest record date and on or before the related interest payment
date, then any accrued and unpaid interest and liquidated damages, if any, will
be paid to the person in whose name a note is registered at the close of
business on such record date, and no additional interest will be payable to
holders who tender notes pursuant to the Asset Sale Offer.
On or before the date that we purchase notes pursuant to an Asset Sale
Offer, we will, to the extent lawful, accept for payment, on a pro rata basis to
the extent necessary, the principal amount of notes or portions thereof required
to be purchased pursuant to this covenant tendered pursuant to the Asset Sale
Offer, or if less than such amount has been tendered, all notes tendered, and
will deliver to the trustee an Officers' Certificate stating that such notes or
portions of notes were accepted for payment by us in accordance with the terms
of this covenant. We, the Depositary or the paying agent, as the case may be,
will promptly, but in any case not later than five days after the date that we
purchase new notes pursuant to an Asset Sale Offer, mail or deliver to each
tendering holder an amount equal to the purchase price of the notes tendered by
such holder and accepted by us for purchase, and we will promptly issue a note,
and the trustee, upon delivery of an Officers' Certificate from us, will
authenticate and mail or deliver such note to such holder, in a principal amount
equal to any unpurchased portion of the note surrendered. Any note not so
accepted will be promptly mailed or delivered by us to the holder thereof. We
will publicly announce the results of the Asset Sale Offer on the date that we
purchase the notes pursuant to an Asset Sale Offer.
We will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of the notes
pursuant to any Asset Sale Offer.
The indenture also provides that:
(1) a sale of the stock or assets of FPA Medical Management, Inc. will be
for cash only;
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(2) at least 50% of the consideration received by us or a Restricted
Subsidiary from the sale of stock or assets of Oxford Specialty
Holdings, Inc., Oxford Specialty Management, Inc., Specialty Management
Company (NY) IPA, Inc., Specialty Management Company (PA) IPA, Inc.,
Specialty Management Company (NJ) IPA, Inc. and Specialty Management
Company (CT) IPA, Inc. and Oxford Health Plans (NH), Inc. will be cash
or Marketable Securities;
(3) there will be no restrictions on the consideration received by us and
our Restricted Subsidiaries from the sale of the stock or assets of or
indebtedness issued by a Minority Investment or the New York, New
Jersey, Florida or Pennsylvania Medicaid business, Oxford Health Plans
(IL), Inc. or Oxford Health Plans (FL), Inc.; and
(4) the consideration received by us and our Restricted Subsidiaries from
all other Excluded Asset Sales will be cash.
We and our Restricted Subsidiaries will sell all such Marketable Securities
for cash no later than the earlier of 60 days from receipt and the termination
or expiration of any governmental limitation of such sale.
We have agreed to cause our Restricted Subsidiaries to transfer to us all
consideration received by the Restricted Subsidiaries from Asset Sales and
Excluded Asset Sales as promptly as practicable, except in the case of Asset
Sales to the extent the proceeds thereof are applied as set forth in clause
(1)(c) or (2) of the second paragraph of this section.
COVENANTS
RESTRICTED PAYMENTS
We will not, and will not permit any of our Restricted Subsidiaries to,
directly or indirectly:
(1) declare or pay any dividend or make any payment or distribution on
account of our or any of our Restricted Subsidiaries' equity interests,
including, without limitation, any payment in connection with any
merger or consolidation involving us other than:
(a) dividends or distributions payable in equity interests other than
our Disqualified Stock;
(b) dividends or distributions payable to us or any of our Wholly Owned
Subsidiaries; or
(c) dividends payable in preferred stock in accordance with the
investment agreement, dated as of February 28, 1998, by and between
us and TPG Partners II, L.P.;
(2) make any payment, other than in equity interests other than
Disqualified Stock, in connection with any settlement or resolution of
any claims, investigations, proceedings and ligation arising out of or
relating to federal or state law relating to the purchase or sale of
securities, including, without limitation, stockholders' derivative
actions involving us or any of our Restricted Subsidiaries (excluding
Qualified Insurance Payments);
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(3) purchase, redeem or otherwise acquire or retire for value any of our
equity interests or any of our restricted subsidiaries, other than any
such equity interests owned by us or any of our Restricted
Subsidiaries;
(4) prepay, purchase, redeem, defease or otherwise acquire or retire for
value prior to its stated maturity any Indebtedness that is
subordinated to the new notes; or
(5) make any Restricted Investment.
The payments and other actions set forth above in clauses (1) through (5) are
referred to as "Restricted Payments." We may make, and may permit our Restricted
Subsidiaries to make, Restricted Payments if at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default under the indenture has occurred and is
continuing or would occur as a consequence thereof;
(b) at the time of the Restricted Payment and after giving pro forma effect
thereto as if such Restricted Payment had been made at the beginning of
the applicable four quarter period, the Fixed Charge Coverage Ratio for
our most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on
which the Restricted Payment is made is at least 2.25 to 1; and
(c) such Restricted Payment when taken together with all other Restricted
Payments relating to such period does not exceed 50% of our
Consolidated Net Income for the most recently ended four fiscal
quarters for which internal financial statements are available
immediately preceding the date on which the Restricted Payment is made.
The foregoing provisions will not prohibit the following transactions, as
long as, in the case of transactions described in clauses (2) through (6) below,
no Default or Event of Default will occur and be continuing after the
transaction:
(1) the payment of any dividend within 60 days after the date of its
declaration, if at the date of declaration the payment would have
complied with the provisions of the indenture;
(2) the making of any Restricted Payment, other than the payment, of a
dividend either in exchange for or out of the proceeds of the
substantially concurrent sale, other than to a Subsidiary of, or from
substantially concurrent additional capital contributions in respect
of, our equity interests, other than Disqualified Stock;
(3) the redemption, repurchase, retirement or other acquisition of any of
our equity interests either in exchange for or out of the proceeds of,
the substantially concurrent sale, other than to a Subsidiary of, or
from substantially concurrent additional capital contributions in
respect of, our other equity interests, other than any Disqualified
Stock;
(4) the defeasance, redemption or repurchase of subordinated Indebtedness
with the net cash proceeds from:
(a) an incurrence of Permitted Refinancing Indebtedness; or
(b) the substantially concurrent sale, other than to a Subsidiary of,
or from substantially concurrent additional capital contributions
in respect of, our equity interests, other than Disqualified Stock;
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(5) an exchange of Disqualified Stock for Disqualified Stock that
constitutes Permitted Refinancing Indebtedness; and
(6) any dividend or other distribution made by any of our Wholly Owned
Subsidiaries to another of our Wholly Owned Subsidiary or to us.
As of April 30, 1999, all of our Subsidiaries were Restricted Subsidiaries.
The Board of Directors may designate any Subsidiary to be an Unrestricted
Subsidiary if such designation would not cause a Default or Event of Default.
For purposes of making such determination, all outstanding Investments after May
13, 1998 by us and our Restricted Subsidiaries, except to the extent repaid in
cash, in the Subsidiary that will be designated an Unrestricted Subsidiary will
be deemed to be Restricted Payments at the time of such designation and will
reduce the amount available for Restricted Payments under the first paragraph of
this covenant. The designation as an Unrestricted Subsidiary will only be
permitted if such Restricted Payment would be permitted at the time of
designation and if such Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary.
The amount of all Restricted Payments other than cash will be the fair
market value on the date of the Restricted Payment of the assets proposed to be
transferred by us or the applicable Restricted Subsidiary, as the case may be,
pursuant to the Restricted Payment. The fair market value of the assets will be
evidenced by a resolution of the Board of Directors set forth in an Officers'
Certificate delivered to the trustee. Not later than the date of making any
Restricted Payment, we will deliver to the trustee an Officers' Certificate
stating that such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by this covenant were computed. These
calculations may be based upon our latest available financial statements.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
We will not, and will not permit any of our Restricted Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
any Indebtedness, including Acquired Indebtedness. In addition, we will not
issue any Disqualified Stock and will not permit any of our Restricted
Subsidiaries to issue any shares of preferred stock.
However, we may incur Indebtedness, including Acquired Indebtedness, or
issue shares of Disqualified Stock if:
(1) the Fixed Charge Coverage Ratio for our most recently ended four full
fiscal quarters for which internal financial statements are available
immediately prior to the date on which the additional Indebtedness is
incurred or such Disqualified Stock is issued would have been at least
2 to 1, determined on a pro forma basis, including a pro forma
application of the net proceeds therefrom, as if the additional
Indebtedness had been created, incurred, issued, assumed or guaranteed
or the Disqualified Stock had been issued, as the case may be, at the
beginning of the four-quarter period; and
(2) no Default or Event of Default occurred and is continuing or would
occur as a consequence thereof.
The foregoing provisions will not apply to:
(a) the incurrence of Indebtedness under the term loan agreement, and
any guarantees by our Subsidiaries with respect thereto, as long
as the aggregate
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principal amount of all Indebtedness outstanding under the term
loan agreement does not at any time exceed $150 million;
(b) the incurrence of Indebtedness represented by the new notes;
(c) all Existing Indebtedness;
(d) the incurrence by us or our Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, Purchase
Money Obligations or similar financing transactions relating to
our properties, assets and rights acquired after May 13, 1998, as
long as the aggregate principal amount of such Indebtedness under
this clause (d) does not exceed 100% of the cost of such
properties, assets and rights;
(e) the incurrence by us or any Restricted Subsidiary of Permitted
Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or
refund, Indebtedness of such entity that was permitted by the
indenture to be incurred;
(f) the incurrence by us or any Restricted Subsidiaries of
intercompany Indebtedness between or among us and any Wholly Owned
Subsidiaries or between or among any Wholly Owned Subsidiaries;
provided, however, that:
(1) any subsequent issuance or transfer of equity interests that
results in any such Indebtedness being held by a person other
than a Wholly Owned Subsidiary; and
(2) any sale or other transfer of any such Indebtedness to a
person that is neither Oxford nor a Wholly Owned Subsidiary
will be deemed, in each case, to constitute an incurrence of
such Indebtedness by us or such Restricted Subsidiary, as the
case may be;
(g) the incurrence, assumption or creation of Hedging Obligations of
us or one of our Restricted Subsidiaries pursuant to interest rate
protection obligations, but only to the extent that the stated
aggregate notional amounts of such obligations do not exceed 100%
of the aggregate principal amount of the Indebtedness covered by
such interest rate protection obligations;
(h) the incurrence by us or any Restricted Subsidiaries of
Indebtedness constituting reimbursement obligations with respect
to letters of credit issued in the ordinary course of business,
including, without limitation, letters of credit in respect of
workers' compensation claims or self-insurance, or other
Indebtedness with respect to reimbursement-type obligations
regarding workers' compensation claims;
(i) the incurrence by us or any Restricted Subsidiaries of obligations
in respect of performance and surety bonds and completion
guarantees provided by us or any Restricted Subsidiaries in the
ordinary course of business;
(j) the incurrence or assumption by us or any of our Restricted
Subsidiaries of Indebtedness arising from our agreements or the
agreements of Restricted Subsidiary providing for indemnification,
adjustment of purchase price or similar obligations, in each case,
incurred or assumed by us or a Restricted Subsidiary in connection
with the disposition of any business, assets or a Subsidiary,
other than Guarantees of Indebtedness incurred by any person
acquiring all or any portion of such business, assets or a
Subsidiary for the
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purpose of financing such acquisition or otherwise, as long as the
maximum assumable liability in respect of all such Indebtedness
does not exceed the gross proceeds actually received by us and our
Restricted Subsidiaries in connection with such disposition; and
(k) the incurrence by us and our Restricted Subsidiaries of
Indebtedness in an aggregate principal amount of up to $50 million
which will be in addition to amounts which may be incurred
pursuant to clauses (a) through (j) above.
Notwithstanding any other provision of this covenant, a guarantee of
Indebtedness permitted by the terms of the indenture at the time such
Indebtedness was incurred will not constitute a separate incurrence of
Indebtedness.
In the event that Indebtedness falls within more than one category of
permitted Indebtedness under the indenture, we will determine the applicable
category and such Indebtedness will only be counted once. If Indebtedness is
issued at less than the principal amount thereof, the amount of such
Indebtedness for purposes of the above limitations will equal the amount of the
liability as determined in accordance with GAAP. 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
for purposes of this covenant.
SALE AND LEASEBACK TRANSACTIONS
We will not, and will not permit any of our Restricted Subsidiaries to,
enter into any sale and leaseback transaction unless:
(1) we could have incurred:
(a) Indebtedness in an amount equal to the Attributable Debt relating
to such sale and leaseback transaction pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the
covenant "-- Incurrence of Indebtedness and Issuance of Preferred
Stock;" and
(b) a Lien to secure such Indebtedness pursuant to the covenant
"-- Liens;"
(2) the net cash proceeds of such sale and leaseback transaction are at
least equal to the fair market value, as determined in good faith by
the Board of Directors and set forth in an Officers' Certificate
delivered to the trustee, of the property that is the subject of such
sale and leaseback transaction; and
(3) the transfer of assets in such sale and leaseback transaction is
permitted by, and the proceeds of such transaction are applied in
compliance with, the covenant under "-- Repurchase at the Option of
Holders -- Asset Sales."
LIENS
We will not, and will not permit any of our Restricted Subsidiaries to:
(1) create, incur, assume or otherwise cause or suffer to exist or become
effective any Lien securing Indebtedness of any kind, other than
Permitted Liens, upon any of our current or future property or assets,
or upon any income or profits therefrom; or
(2) assign or convey any right to receive income from any of our current or
future property or assets
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unless contemporaneously therewith, effective provision is made to secure the
Indebtedness under the indenture and the notes on an equal and ratable basis
with, or prior to in the case of Liens with respect to obligations subordinated
to the notes, the Indebtedness so secured for so long as such Indebtedness is
secured by such Lien.
LIMITATION ON SALE OF STOCK OR ASSETS OF PRINCIPAL SUBSIDIARIES
Except for a transaction subject to the provisions of the indenture
described below under "-- Merger, Consolidation or Sale of Assets," or a
transaction described under the definition of "Excluded Asset Sales," we:
(1) will not, and will not permit any Subsidiary to, directly or
indirectly, sell, transfer, convey or otherwise dispose of, other than
to us or one of our Wholly Owned Restricted Subsidiary, any Capital
Stock of a Principal Subsidiary or any securities convertible into or
warrants, rights or options to subscribe for Capital Stock of any
Principal Subsidiary; and
(2) will not permit any Principal Subsidiary to issue, sell, transfer,
convey or otherwise dispose of, other than to us or one of our Wholly
Owned Restricted Subsidiary, any of its Capital Stock or securities
convertible into, or rights, warrants or options to subscribe for, its
Capital Stock or sell, transfer, convey or otherwise dispose of any of
its group contracts or subscriber contracts relating to commercial
group health benefit plans.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
We will not, and will not permit any of our Restricted Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions to us or any of our
Restricted Subsidiaries on our Capital Stock or with respect to any
other interest or participation in, or measured by, its profits;
(2) pay any indebtedness owed to us or any of our Restricted Subsidiaries;
(3) make loans or advances to us or any of our Restricted Subsidiaries; or
(4) transfer any of our properties or assets or those of our Restricted
Subsidiaries to us or any of our Restricted Subsidiaries.
The foregoing provisions will not prohibit encumbrances or restrictions
existing under or by reason of:
(a) Existing Indebtedness as in effect on the date of the indenture;
(b) the term loan agreement as in effect as of May 13, 1998, and any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, as
long as such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings
are no more restrictive with respect to such dividend and other
payment restrictions than those contained in the term loan
agreement as in effect on May 13, 1998;
(c) the indenture and the notes;
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(d) any instrument governing Acquired Indebtedness or Capital Stock of
a person acquired by us or any of our Restricted Subsidiaries as in
effect at the time of such acquisition, except to the extent such
Acquired Indebtedness was incurred in connection with or in
contemplation of such acquisition, which encumbrance or restriction
is not applicable to any person, or the properties or assets of any
person, other than the person, or the property or assets of the
person, so acquired;
(e) Purchase Money Obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described
in clause (4) above on the property so acquired;
(f) customary non-assignment provisions in licenses, leases and
agreements relating to intellectual property entered into in the
ordinary course of business and consistent with past practices;
(g) agreements relating to the financing of the acquisition of real or
tangible personal property acquired after the date of the
indenture, as long as the encumbrance or restriction relates only
to the property which is acquired and in the case of any
encumbrance or restriction that constitutes a Lien, such Lien
constitutes a Purchase Money Lien;
(h) any law or any governmental regulation or order or pursuant to any
agreement or understanding with any regulatory body or agency; as
long as, if such order would prevent us from making a payment under
the indenture, we have used our reasonable efforts to have any such
order diminished or removed by any regulator authorized to do so
and to obtain any exemptive orders from the relevant regulator with
respect to such encumbrance or restriction to the extent such
exemptive orders are reasonably practicable under applicable laws
and regulations; or
(i) contracts for the sale of assets, including, without limitation,
customary restrictions with respect to a Subsidiary pursuant to an
agreement that has been entered into for the sale or disposition of
all or substantially all of the Capital Stock or assets of such
Subsidiary.
TRANSACTIONS WITH AFFILIATES
We will not, and will not permit any of our Restricted Subsidiaries to,
sell, lease, transfer or otherwise dispose of any of our or their properties or
assets to any Affiliate, or purchase any property or assets from any Affiliate,
or enter into or make any contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate, each of the foregoing, an
"Affiliate Transaction," unless:
(1) such Affiliate Transaction is in the ordinary course of business;
(2) the terms of such Affiliate Transaction are fair and reasonable to us
or such Restricted Subsidiary, as the case may be, and are at least as
favorable as the terms which could be obtained by us or such Restricted
Subsidiary, as the case may be, in a comparable transaction made on an
arm's length basis between unaffiliated parties; and
(3) we deliver to the Trustee:
(a) with respect to any Affiliate Transaction entered into after the
date of the indenture involving aggregate consideration in excess
of $1 million, a
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resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies
with clause (1) above and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of
Directors; and
(b) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $5 million, an opinion as to the
fairness to us or such Restricted Subsidiary of such Affiliate
Transaction from a financial point of view issued by an investment
banking firm or appraisal firm of national standing.
The following will not be deemed to be Affiliate Transactions:
- the transactions contemplated by the investment agreement with TPG
Partners and the preferred stock and warrants or any exchange of
Disqualified Stock under paragraph (e) of the section entitled
"-- Incurrence of Indebtedness and Issuance of Preferred Stock" or
amendment to the certificates of designations that govern the preferred
stock in lieu of any such exchange;
- reasonable fees and compensation paid to, and indemnity provided on
behalf of, our officers and directors or the officers and directors of
any Restricted Subsidiary as determined in good faith by the appropriate
Board of Directors or senior management;
- transactions with customers, clients, suppliers, joint venture partners
or purchasers or sellers of goods or services, in each case in the
ordinary course of business, including, without limitation, pursuant to
joint venture agreements and otherwise in compliance with the terms of
the indenture and which comply with the terms of clause (2) above;
- transactions constituting Permitted Investments;
- any employment agreement entered into by us or any of our Restricted
Subsidiaries in the ordinary course of business and consistent with the
past practice of us or such Restricted Subsidiary, including, without
limitation, any such employment agreements entered into prior to the date
of the indenture, and
- transactions between or among us and/or our Restricted Subsidiaries.
LIMITATION AS TO UNRESTRICTED SUBSIDIARIES
We will not permit any Unrestricted Subsidiary to create, assume, incur,
guarantee or otherwise become liable in respect of any Indebtedness except
Non-Recourse Debt. If any such Indebtedness ceases to be Non-Recourse Debt, such
event will be deemed to constitute an incurrence of Indebtedness by us or a
Restricted Subsidiary. We and our Restricted Subsidiaries will not designate,
create or purchase any Unrestricted Subsidiary, unless our Board of Directors
has made a determination that the designation, creation and operation of the
Unrestricted Subsidiary is not reasonably expected to materially and adversely
affect the financial condition, business or operations of Oxford and its
Restricted Subsidiaries taken together as a whole. Our Board of Directors will
set forth such determination in the resolution approving such designation,
creation or purchase, which will be conclusive evidence of compliance with this
covenant.
LIMITATIONS ON ISSUANCE OF GUARANTEES
We will not permit any Restricted Subsidiary, directly or indirectly, to
guarantee or secure any Indebtedness that ranks equally with, and without
preference to the notes, other
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than the term loan agreement, or any Subordinated Indebtedness unless such
Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture to the trustee providing for the guarantee of the payment of the notes
by such Restricted Subsidiary. In addition, in the case of any Subordinated
Indebtedness, the guarantee of the notes must be senior to any guarantee of such
Subordinated Indebtedness. Any such guarantee by a Restricted Subsidiary of the
notes will provide by its terms that it will be automatically and
unconditionally released and discharged upon either:
(1) the release or discharge of such guarantee of payment of Indebtedness
that ranks equally with, and without preference to the notes, or any
Subordinated Indebtedness, as applicable; or
(2) any sale, exchange or transfer, to any person not our Affiliate, of all
of our stock in, or all or substantially all the assets of, such
Restricted Subsidiary, which sale, exchange or transfer is made in
compliance with the applicable provisions of the indenture, including,
without limitation, the provisions set forth under the section entitled
"-- Merger, Consolidation or Sale of Assets."
LIMITATION ON BUSINESS ACTIVITIES
We will not, and will not permit any of our Restricted Subsidiaries to,
engage in any business other than:
(1) a business, the majority of whose revenues are derived from providing,
or arranging to provide, or administering, managing or monitoring
healthcare services of any business or activity that is reasonably
similar thereto or reasonable extension, development or expansion
thereof or ancillary thereto, including, without limitation, issuance
of health insurance, and such business activities incidental or related
thereto; and
(2) acting as a holding company for companies engaged in the businesses
specified in (1) above.
PAYMENTS FOR CONSENTS
Neither we nor any of our Subsidiaries will, directly or indirectly, pay or
cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any holder of any notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the indenture or the
notes unless such consideration is offered to be paid or is paid to all holders
of the notes that consent, waive or agree to amend in the time frame set forth
in the solicitation documents relating to such consent, waiver or agreement.
REPORTS
So long as any new notes are outstanding, we will furnish to the holders of
new notes all financial information that would be required to be contained in a
filing with the SEC on Form 10-K, 10-Q or 8-K if we were required to file such
forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations," and, with respect to the annual financial statements
only, a report thereon by our independent public accountants. In addition, we
will file a copy of all such information and reports with the SEC for public
availability unless the SEC will not accept such a filing, and make such
information available to securities analysts and prospective investors upon
request. We also have agreed that, for so long as any notes remain outstanding,
we will furnish to the holders and to securities analysts and prospective
investors, upon their
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request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act during any period in which we are not subject to
Section 13 or 15(d) of the Exchange Act.
MERGER, CONSOLIDATION OR SALE OF ASSETS
We will not, in a single transaction or series of related transactions:
(1) consolidate or merge with or into another corporation, person or
entity; or
(2) directly and/or indirectly through our Restricted Subsidiaries sell,
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of our properties or assets determined on a
consolidated basis for us and our Restricted Subsidiaries taken as a
whole in one or more related transactions, to another corporation,
person or entity,
unless:
(a) we are the surviving corporation, or the entity or the person
formed by or surviving any such consolidation or merger or to which
such sale, assignment, transfer, lease, conveyance or other
disposition is a corporation organized or existing under the laws
of one of the states of the United States or the District of
Columbia;
(b) the entity or person formed by or surviving any such consolidation
or merger or the entity or person to which such sale, assignment,
transfer, lease, conveyance or other disposition is made, assumes
all our obligations under the notes and the indenture pursuant to a
supplemental indenture in a form reasonably satisfactory to the
trustee;
(c) immediately after such transaction no Default or Event of Default
will occur and be continuing or result as a consequence thereof;
(d) except in the case of a merger of us with or into one of our Wholly
Owned Restricted Subsidiaries, we or the entity or person formed by
or surviving any such consolidation or merger, or to which such
sale, assignment, transfer, lease, conveyance or other disposition
is made:
(1) will have Consolidated Net Worth immediately after the
transaction equal to or greater than our Consolidated Net
Worth immediately preceding the transaction; and
(2) will be permitted to incur, at the time of such transaction
and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable
four-quarter period, at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test
set forth in the first paragraph of the covenant described
above under the caption "-- Incurrence of Indebtedness and
Issuance of Preferred Stock;"
(e) if any of our property or assets would thereupon become subject to
any Lien, the outstanding notes are secured equally and ratably
with, or prior to, the obligation or liability secured by such
Lien, unless we could create such Lien without equally and ratably
securing the new notes; and
(f) we deliver to the trustee an Officers' Certificate and an Opinion
of Counsel addressed to the trustee with respect to the foregoing
matters.
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EVENTS OF DEFAULT AND REMEDIES
Each of the following constitutes an Event of Default under the indenture:
(1) default for 30 days in the payment when due of interest on, or
liquidated damages with respect to, the notes;
(2) default in payment when due of the principal of or premium, if any, on
the notes;
(3) our failure to comply with the provisions described under
"-- Repurchase at the Option of Holders -- Change of Control,"
"-- Repurchase at the Option of Holders -- Asset Sales,"
"-- Covenants -- Restricted Payments," or "-- Covenants -- Merger,
Consolidation or Sale of Assets;"
(4) our failure for 30 days after notice to comply with any of our other
agreements in the indenture or the notes is given to us by the trustee
or to us and the trustee by the holders of at least 25% in principal
amount of the outstanding notes;
(5) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by us or any of our Restricted
Subsidiaries, or the payment of which is guaranteed by us or any of our
Restricted Subsidiaries, other than Indebtedness owed to us or one of
our Wholly Owned Subsidiaries, whether such Indebtedness or guarantee
now exists or is created after the date of the indenture, if either:
(a) the default is caused by a failure to pay when due, after giving
effect to any grace period related thereto, any principal of or
premium, if any, or interest on such Indebtedness; or
(b) the default results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of
any such Indebtedness, together with the principal amount of any
other such Indebtedness under which there has been a payment
default as described in clause (a) above or the maturity of which
has been so accelerated, aggregates $10 million or more;
(6) our failure or the failure by any of our Restricted Subsidiaries to pay
final judgments aggregating in excess of $10 million, net of any
amounts with respect to which a reputable and creditworthy insurance
company has acknowledged liability in writing, which judgments are not
paid or discharged or stayed for a period of 60 days; and
(7) specified events of bankruptcy or insolvency with respect to us or any
of our Significant Subsidiaries or group of Restricted Subsidiaries
that, together taken, as of the latest audited consolidated financial
statements for us and our Subsidiaries, would constitute a Significant
Subsidiary.
If any Event of Default occurs and is continuing, the trustee or the
holders of at least 25% in principal amount of the then outstanding notes may
declare all the new notes to be due and payable immediately. If an Event of
Default arising from certain events of bankruptcy or insolvency occurs with
respect to us, any Significant Subsidiary or any group of Restricted
Subsidiaries that, taken together, as of the latest audited consolidated
financial statements for us and our Subsidiaries, would constitute a Significant
Subsidiary, all outstanding notes will become due and payable without further
action or notice.
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Holders of the notes may not enforce the indenture or the notes except as
provided in the indenture. Subject to certain limitations, holders of a majority
in principal amount of the then outstanding new notes may direct the trustee in
its exercise of any trust or power. The trustee may withhold from holders of the
notes notice of any continuing Default or Event of Default, except a Default or
Event of Default relating to the payment of principal or interest, if it
determines that withholding notice is in their interest.
In the event the new notes are accelerated because an Event of Default has
occurred and is continuing as a result of the acceleration of any Indebtedness
described in clause (5) above, the declaration of acceleration of the new notes
will be automatically annulled if the holders of any Indebtedness described in
clause (5) above have rescinded the declaration of acceleration in respect of
such Indebtedness within 30 days of the date of such declaration and if:
(1) the annulment of the acceleration of notes would not conflict with any
judgment or decree of a court of competent jurisdiction; and
(2) all existing Events of Default, except nonpayment of principal or
interest on the notes that became due solely because of the
acceleration of the notes, have been cured or waived.
The holders of a majority in aggregate principal amount of the notes then
outstanding by notice to the trustee may waive, on behalf of the holders of all
of the notes, any existing Default or Event of Default and its consequences
under the indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, premium and liquidated damages, if
any, on the notes.
We are required to deliver to the trustee annually a statement regarding
compliance with the indenture, and we are required upon becoming aware of any
Default or Event of Default to deliver to the trustee a statement specifying
such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
None of our directors, officers, employees, incorporators or stockholders,
as such, will have any liability for any of our obligations under the notes, the
indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each holder of notes by accepting a note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
SEC that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
We may, at our option and at any time, elect to have all of our obligations
discharged with respect to the outstanding notes. This is referred to as "legal
defeasance." Legal defeasance means that we are deemed to have paid and
discharged the entire indebtedness represented by the outstanding notes, except
for:
- the rights of holders of outstanding notes to receive payments in respect
of the principal of, premium, if any, and interest and liquidated damages
on such new notes when such payments are due from the trust referred to
below;
- our obligations with respect to the notes concerning issuing temporary
notes, registration of notes, mutilated, destroyed, lost or stolen notes
and the maintenance of an office or agency for payment and money for
security payments held in trust;
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- the rights, powers, trusts, duties and immunities of the trustee, and our
obligations in connection therewith; and
- the legal defeasance provisions of the indenture.
In addition, we may, at our option and at any time, elect to have our
obligations released with respect to certain covenants that are described in the
indenture. This is referred to as "covenant defeasance." After that, any
omission to comply with such obligations will not constitute a Default or Event
of Default with respect to the notes. In the event covenant defeasance occurs,
certain events, but not including nonpayment, bankruptcy, receivership,
rehabilitation and insolvency events, described under "Events of Default and
Remedies" will no longer constitute an Event of Default with respect to the
notes.
In order to exercise either legal defeasance or covenant defeasance:
(1) we must irrevocably deposit with the trustee, in trust, for the benefit
of the holders of the notes, cash in U.S. dollars, noncallable U.S.
government obligations, or a combination of the two, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if
any, and interest and liquidated damages on the outstanding notes on
the stated maturity or on the applicable redemption date, as the case
may be, and we must specify whether the notes are being defeased to
maturity or to a particular redemption date;
(2) in the case of legal defeasance, we must deliver to the trustee an
opinion of counsel in the United States reasonably acceptable to the
trustee confirming that:
(a) we have received from, or there has been published by, the Internal
Revenue Service a ruling or
(b) since the date of the indenture, there has been a change in the
applicable U.S. federal income tax law,
in either case to the effect that, and based on such ruling or change,
the opinion of counsel will confirm that, the holders of the outstanding
notes will not recognize income, gain or loss for federal income tax
purposes as a result of such legal defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if the legal defeasance had not
occurred;
(3) in the case of covenant defeasance, we must deliver to the trustee an
opinion of counsel in the United States reasonably acceptable to the
trustee confirming that the holders of the outstanding notes will not
recognize income, gain or loss for federal income tax purposes as a
result of the covenant defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as
would have been the case if such covenant defeasance had not occurred;
(4) no Default or Event of Default has occurred and is continuing on the
date of such deposit, other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit, or
insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the
date of deposit;
(5) such legal defeasance or covenant defeasance will not result in a
breach or violation of, or constitute a default under, any material
agreement or instrument,
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other than the indenture, to which we or any of our Subsidiaries is a
party or by which we or any of our Subsidiaries is bound;
(6) we must deliver to the trustee an opinion of counsel to the effect that
on the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(7) we must deliver to the trustee an Officers' Certificate stating that
the deposit was not made by us with the intent of preferring the
holders of notes over our other creditors with the intent of defeating,
hindering, delaying or defrauding our creditors or others; and
(8) we must deliver to the trustee an Officers' Certificate and an opinion
of counsel, each stating that all conditions precedent provided for
relating to the legal defeasance or the covenant defeasance have been
complied with.
TRANSFER AND EXCHANGE
A holder may transfer or exchange notes in accordance with the indenture.
The registrar and the trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents, together with all other
transfer documentation required by the indenture. We may require a holder to pay
any taxes and fees required by law or permitted by the indenture. We are not
required to transfer or exchange any note selected for redemption. Also, we are
not required to transfer or exchange any note for a period of 15 days before a
selection of notes to be redeemed. For more specific information, see
"Book-Entry; Delivery and Form."
The registered holder of a note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
The indenture or the notes may be amended or supplemented with the consent
of the holders of at least a majority in principal amount of the notes then
outstanding, including consents obtained in connection with a tender offer or
exchange offer for notes, and any existing default or compliance with any
provision of the indenture or the notes may be waived with the consent of the
holders of a majority in principal amount of the then outstanding notes,
including consents obtained in connection with a tender offer or exchange offer
for notes.
However, an amendment or waiver may not, without the consent of each holder
affected, with respect to any notes held by a non-consenting holder:
(1) reduce the principal amount of notes whose holders must consent to an
amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any note or
alter the provisions with respect to the redemption of the notes, other
than provisions relating to the covenants described above under the
caption "-- Repurchase at the Option of Holders;"
(3) reduce the rate of or change the time for payment of interest on or
liquidated damages, if any, with respect to the note;
(4) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on or liquidated damages, if any, with
respect to the notes, except
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a rescission of acceleration of the new notes by the holders of at
least a majority in aggregate principal amount of the notes and a
waiver of the payment default that resulted from such acceleration;
(5) make any note payable in money other than that stated in the notes;
(6) make any change in the provisions of the indenture relating to waivers
of past Defaults or the rights of holders of notes to receive payments
of principal of or premium or liquidated damages, if any, or interest
on the notes;
(7) waive a redemption payment with respect to any note; or
(8) make any change in the foregoing amendment and waiver provisions.
We and the trustee, however, may amend or supplement the indenture or the
notes WITHOUT THE CONSENT of any holder of notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or in place of
certificated notes;
(3) to provide for the assumption of our obligations to holders of notes in
the case of a merger, consolidation or sale of assets;
(4) to make any change that would provide any additional rights or benefits
to the holders of notes or that does not adversely affect the legal
rights under the indenture of any such holder; or
(5) to comply with requirements of the SEC in order to effect or maintain
the qualification of the indenture under the Trust Indenture Act or to
provide for the succession of a successor trustee.
CONCERNING THE TRUSTEE
The indenture contains some limitations on the rights of the trustee,
should it become our creditor, to obtain payment of claims in some cases, or to
realize on some property received in respect of any such claim as security or
otherwise. The trustee will be permitted to engage in other transactions.
However, if it acquires any conflicting interest, it must eliminate such
conflict within 90 days, apply to the SEC for permission to continue or resign.
The holders of a majority in principal amount of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that in case an Event of Default will
occur, which will not be cured, the trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to these provisions, the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
holder of notes, unless such holder will have offered to the trustee security
and indemnity satisfactory to it against any loss, liability or expense.
DEFINITIONS
Set forth below are certain defined terms used in the indenture and the
summary of the terms of the new notes. Reference is made to the indenture for
the full definition of all such terms, as well as any other capitalized terms
used herein for which no definition is provided.
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"ACQUIRED INDEBTEDNESS" means, with respect to any specified person:
(1) Indebtedness of any other person existing at the time such other person
is merged with or into or became a Restricted Subsidiary or is
designated a Restricted Subsidiary of such specified person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other person merging with or into or becoming a
Subsidiary or Restricted Subsidiary of such specified person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified person.
"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 purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a person shall
be deemed to be control.
"ASSET SALE" means:
(1) the sale, lease (other than an operating lease), conveyance or other
disposition of any assets (including, without limitation, by way of a
sale and leaseback, including any disposition by means of a merger,
consolidation or similar transaction and including the issuance, sale
or other transfer of any of the capital stock of any Restricted
Subsidiary of such person) other than to us or to any of our Wholly
Owned Subsidiaries (including the receipt of proceeds of insurance paid
on account of the loss of or damage to any asset and awards of
compensation for any asset taken by condemnation, eminent domain or
similar proceeding) that have a fair market value (as determined in
good faith by the Board of Directors of such person) in excess of $2
million or for net cash proceeds in excess of $2 million); and
(2) the issuance of equity interests in any Restricted Subsidiaries or the
sale of any equity interests in any Restricted Subsidiaries, in each
case, in one or a series of related transactions,
provided, that notwithstanding the foregoing, the term "Asset Sale" shall not
include:
(a) the sale, lease, conveyance, disposition or other transfer of all or
substantially all of our assets, as permitted pursuant to the covenant
described under "-- Covenants -- Merger, Consolidation or Sale of
Assets;"
(b) the sale or lease of equipment, inventory, accounts receivable or other
assets in the ordinary course of business and consistent with past
practice, including, without limitation, the sale of any investments
constituting a portion of an investment portfolio in the ordinary
course of business and consistent with past practice;
(c) a transfer of assets by Oxford to a Restricted Subsidiary or by a
Restricted Subsidiary to Oxford or to another Restricted Subsidiary;
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(d) an issuance of Equity Interests by a Restricted Subsidiary to Oxford or
to another Restricted Subsidiary;
(e) Permitted Investments;
(f) any cash dividend, distribution, Investment or payment made pursuant to
the first or second paragraph of the "Restricted Payments" covenant;
(g) the sale or transfer of surplus or obsolete equipment in the ordinary
course of business;
(h) a pledge of all or any part of the Capital Stock of any Restricted
Subsidiary or a Lien on any other property or asset of a Restricted
Subsidiary permitted by the indenture; or
(i) Excluded Asset Sales.
"ATTRIBUTABLE DEBT," in respect of a sale and leaseback transaction, means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended, to the extent the lease payments during such extension
period are required to be capitalized on a balance sheet as a liability in
accordance with GAAP).
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would, at such time, be required to be capitalized on a balance sheet in
accordance with GAAP.
"CAPITAL STOCK" means
(1) in the case of a corporation, corporate stock;
(2) in the case of a limited liability company or similar entity, any
membership or similar interests therein;
(3) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock;
(4) in the case of a partnership, partnership interests (whether general or
limited); and
(5) any other interest or participation that confers on a person the right
to receive a share of the profits and losses of, or distributions of
assets of, the issuing person.
"CHANGE OF CONTROL" means such time as:
(1) we become aware that a "person" or "group," within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange Act, other than TPG
Partners II, L.P. and its Affiliates, has become, directly or
indirectly, the "beneficial owner," by way of merger, consolidation or
otherwise, of 51% or more of the voting power of our voting stock on a
fully-diluted basis after giving effect to the conversion and exercise
of all our outstanding warrants, options and other securities whether
or not such securities are then currently convertible or exercisable;
(2) the sale, lease or transfer of all or substantially all of our assets
to any person or group, other than TPG Partners II, L.P. and its
Affiliates; or
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(3) during any period of two consecutive calendar years, individuals who at
the beginning of such period constituted our Board of Directors
(together with any new directors whose election by our Board of
Directors or whose nomination for election by our shareholders was
approved by a vote of a majority of the directors then still in office
who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved or was
approved by TPG Partners II, L.P. and its Affiliates) cease for any
reason to constitute a majority of our directors then in office.
The definition of "Change of Control" includes a phrase relating to the
sale, lease or transfer of "all or substantially all" of our assets and our
Restricted Subsidiaries, taken as a whole to a person or group other than TPG
Partners II, L.P. and its Affiliates. With respect to the disposition of
property or assets, the phrase "all or substantially all" as used in the
indenture has no clearly established meaning under New York law, which is the
choice of law under the indenture, but instead is subject to judicial
interpretation and may vary according to the facts and circumstances of the
subject transaction. Accordingly, in certain circumstances, the ability of a
holder of new notes to require us to repurchase such new notes as a result of a
sale, lease or transfer of less than all of our assets and our Restricted
Subsidiaries taken as a whole to another person or group may be uncertain.
"CONSOLIDATED CASHFLOW" means, with respect to Oxford and its Restricted
Subsidiaries for any period, the sum of, without duplication:
(1) the Consolidated Net Income for such period, plus
(2) to the extent deducted from Consolidated Net Income for such period,
(x) the Fixed Charges for such period, plus (y) non-cash dividends on
Oxford's preferred stock, plus
(3) Consolidated Income Taxes for such period, plus
(4) consolidated depreciation, amortization (including amortization of
goodwill and other intangibles), depletion and other non-cash charges
of Oxford and its Restricted Subsidiaries required to be reflected as
expenses on the books and records of Oxford, minus
(5) cash payments with respect to any nonrecurring, non-cash charges
previously added back pursuant to clause (4).
Notwithstanding the foregoing, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash charges
of, a Restricted Subsidiary of a person shall be added to Consolidated Net
Income to compute Consolidated Cashflow only to the extent that the Net Income
of such Restricted Subsidiary was included in calculating the Consolidated Net
Income of such person.
"CONSOLIDATED INCOME TAXES" means, with respect to any person for any
period, taxes imposed upon such person or other payments required to be made by
such person by any governmental authority which taxes or other payments are
calculated by reference to the income or profits of such person or such person
and its Subsidiaries (to the extent such income or profits were included in
computing Consolidated Net Income for such period), regardless of whether such
taxes or payments are required to be remitted to any governmental authority.
"CONSOLIDATED NET INCOME" means, with respect to any person for any period,
the aggregate of the net income of such person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that
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(1) the Net Income (but not loss) of any person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent person or a Restricted
Subsidiary thereof;
(2) the Net Income of, or any dividends or other distributions from, any
Unrestricted Subsidiary, to the extent otherwise included, shall be
excluded, whether or not distributed to Oxford or one of its Restricted
Subsidiaries;
(3) without duplication:
(a) losses of any Restricted Subsidiary shall be excluded with respect
to the calculation under the covenant entitled "Incurrence of
Indebtedness and Issuance of Preferred Stock;"
(b) Net Income of any Restricted Subsidiary shall be excluded with
respect to the calculation under such covenant to the extent that
such Net Income has not been dividended or distributed in cash to
Oxford; and
(c) intercompany payments by the Restricted Subsidiaries to Oxford
shall be included in net income of Oxford, and intercompany
payments by Oxford to the Restricted Subsidiaries shall be deducted
from net income with respect to the calculation under such
covenant;
(4) the net income of any person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall
be excluded;
(5) the cumulative effect of a change in accounting principles shall be
excluded; and
(6) income or loss attributable to discontinued operations shall be
excluded.
"CONSOLIDATED NET WORTH" of a person at any date means the amount by which
the assets of such person and its consolidated Restricted Subsidiaries (less any
revaluation or other write-up subsequent to the date of the indenture in any
such assets (other than write-ups of tangible assets of a going concern business
made within twelve months after the acquisition of such business)) exceed the
sum of:
(1) the total liabilities of such person and its consolidated Subsidiaries,
plus
(2) any Disqualified Stock of such person or any consolidated Restricted
Subsidiaries of such person issued to any person other than such person
or a wholly owned Restricted Subsidiary of such person, in each case
determined in accordance with GAAP.
"DEPOSITARY" means, with respect to the new notes issuable or issued in
whole or in part in global form, the person specified in the indenture as the
Depositary with respect to the new notes, until a successor shall have been
appointed and become such Depositary pursuant to the applicable provision of the
indenture, and, thereafter, "Depositary" shall mean or include such successor.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, is convertible
or exchangeable for Indebtedness or Disqualified Stock or redeemable at the
option of the holder thereof, in whole or in part, on or prior to the date which
is 91 days after the date that the new notes mature.
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"EXCLUDED ASSET SALES" means the sale of the capital stock or assets of
American Psych Systems, Inc., Ralin Medical, Inc., Opticare Eye Health Centers,
Inc., Oxford Health Plans (IL), Inc., Oxford Health Plan (FL), Inc., St.
Augustine Health Care, Inc. (Florida), the Medicaid businesses of Subsidiaries
of Oxford in New Hampshire, New Jersey, New York, Florida and Pennsylvania,
Oxford Specialty Holdings, Inc., Oxford Specialty Management, Inc., Specialty
Management Company (NY) IPA, Inc., Specialty Management Company (PA) IPA, Inc.,
Specialty Management Company (NJ) IPA, Inc. and Specialty Management Company
(CT) IPA, Inc., Direct Script, Inc., Oxford On-Call, Inc., Oxford Health
Centers, Inc., Oxford's dental business and Collegiate Healthcare, Inc. in an
aggregate amount of consideration not to exceed $55 million. To the extent
Oxford makes a Permitted Investment as described in clause (8) of the definition
thereof, cash and Marketable Securities from Excluded Asset Sales in an amount
equal to such Investment shall be deemed proceeds from Asset Sales and subject
to the covenant described under "-- Repurchase at the Option of Holders -- Asset
Sales." To the extent the aggregate amount of consideration from Excluded Asset
Sales received by Oxford and its Restricted Subsidiaries equals or exceeds $55
million, such excess shall be deemed proceeds from Asset Sales and subject to
the "Asset Sale" covenant.
"EXISTING INDEBTEDNESS" means the Indebtedness of Oxford and its Restricted
Subsidiaries (other than Indebtedness under the term loan agreement) in
existence on the date of the indenture, until such amounts are repaid.
"FAIR MARKET VALUE" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing
buyer.
"FIXED CHARGES" means, with respect to any person for any period, the sum,
without duplication, of:
(1) the consolidated interest expense of such person and its Restricted
Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of original issue discount, non-cash
interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with
Capital Lease Obligations, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations);
(2) the consolidated interest expense of such person and its Restricted
Subsidiaries that was capitalized during such period;
(3) any interest expense on indebtedness of another person that is
guaranteed by such person or one of its Restricted Subsidiaries or
secured by a Lien on assets of such person or one of its Restricted
Subsidiaries (whether or not such guarantee or Lien is called upon);
and
(4) all dividend payments, whether or not in cash, on any series of
preferred stock of any such person payable to a party other than Oxford
or a Wholly Owned Subsidiary, other than dividend payments on Equity
Interest payable solely in Equity Interests of Oxford.
"FIXED CHARGE COVERAGE RATIO" means with respect to any person for any
period, the ratio of the Consolidated Cashflow of such person and its Restricted
Subsidiaries for such period to the Fixed Charges of such person and its
Restricted Subsidiaries for such period.
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In the event that Oxford or any of its Restricted Subsidiaries incurs, assumes,
guarantees or repays any indebtedness (other than the incurrence or repayment of
revolving credit borrowings used for working capital, except to the extent that
a repayment is accompanied by a permanent reduction in revolving credit
commitments) or issues preferred stock subsequent to the commencement of the
four-quarter reference period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the date on which the event for which the calculation of
the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee or redemption of indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. For purposes of
making the computation referred to above:
(1) acquisitions that have been made by Oxford or any of its Restricted
Subsidiaries, including through mergers or consolidations and including
any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the
Calculation Date shall be deemed to have occurred on the first day of
the four-quarter reference period and shall give pro forma effect to
the Consolidated Cashflow and Indebtedness of the person which is the
subject of any such acquisition (as well as any pro forma expense and
cost reductions attributable thereto);
(2) the Consolidated Cashflow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, and
Consolidated Cashflow shall reflect any pro forma expense and cost
reductions relating to such discontinuance; and
(3) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, but only
to the extent that the obligations giving rise to such Fixed Charges
will not be obligations of the referent person or any of its Restricted
Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles in the United States
which are in effect on the date of the indenture.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any person, the obligations of
such person under
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such person
against fluctuations in interest rates.
"HOLDER" means a person in whose name a new note is registered on the
Registrar's books.
"INDEBTEDNESS" means, with respect to any person, any indebtedness of such
person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in
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respect thereof) or banker's acceptances or representing Capital Lease
Obligations or the balance deferred and unpaid of the purchase price of any
property or representing any Hedging Obligations, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing indebtedness (other than letters of credit and Hedging Obligations)
would appear as a liability upon a balance sheet of such person prepared in
accordance with GAAP, as well as all indebtedness of others secured by a Lien on
any asset of such person (whether or not such indebtedness is assumed by such
person), the maximum fixed repurchase price of Disqualified Stock issued by such
person in each case, if held by any person other than Oxford or a Wholly Owned
Subsidiary of Oxford, and, to the extent not otherwise included, the guarantee
by such person of any indebtedness of any other person. For the purposes of this
definition, the "maximum fixed repurchase price" of Disqualified Stock which
does not have a fixed repurchase price shall be calculated in accordance with
the terms of such Disqualified Stock as if such Disqualified Stock were
purchased on any date on which Indebtedness shall be required to be determined
pursuant to the indenture, and if such price is based upon, or measured by, the
Fair Market Value of such Disqualified Stock, such Fair Market Value shall be
determined in good faith by the board of directors of the issuer of such
Disqualified Stock.
"INVESTMENTS" means, with respect to any person, all investments by such
person in other persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel, relocation and
similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that an acquisition of assets, Equity Interests or other securities by
Oxford for consideration consisting of common equity securities of Oxford shall
not be deemed to be an Investment.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"MARKETABLE SECURITIES" means debt or equity securities that are registered
and, in the case of debt securities, are rated in one of the four highest
ratings by one or more nationally recognized rating agencies.
"MINORITY INVESTMENT" means an Investment in an Equity Interest in a person
which Investment is held by Oxford or a Restricted Subsidiary such that Oxford
and its Restricted Subsidiaries do not have more than 50% of the voting control
over all outstanding Equity Interests in such person.
"NAIC" means the National Association of Insurance Commissioners and its
successors.
"NET INCOME" means, with respect to any person, the net income (loss) of
such person, determined in accordance with GAAP, and, for purposes of clause
(b)(i) under the covenant entitled "Restricted Payments" and, for purposes of
the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred
Stock," before reduction for non-cash preferred stock dividends and for purposes
of clause (b)(ii) under the covenant
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entitled "Restricted Payments," before reduction for preferred stock dividends,
excluding in each case, however:
(1) any gain (but not loss), together with any related provision for taxes
on such gain (but not loss), realized in connection with (a) any Asset
Sale (including, without limitation, dispositions pursuant to sale and
leaseback transactions) or (b) the disposition of any securities by
such person or any of its Restricted Subsidiaries or the extinguishment
of any Indebtedness of such person or any of its Restricted
Subsidiaries;
(2) any extraordinary or nonrecurring gain (but not loss), together with
any related provision for taxes on such extraordinary or nonrecurring
gain (but not loss); and
(3) for purposes of the covenant entitled "Incurrence of Indebtedness and
Issuance of Preferred Stock," any capital contributions made or
required to be made by Oxford.
"NET PROCEEDS" means the aggregate cash proceeds received by Oxford or any
of its Restricted Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale (including, without limitation, legal, accounting and investment
banking fees, and sales commissions), any relocation expenses incurred as a
result thereof, taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), any reserve for adjustment in respect of the sale price of such
asset or assets established in accordance with GAAP and net of any Purchase
Money Obligations relating to the assets comprising such Asset Sale.
"NON-RECOURSE DEBT" means Indebtedness:
(1) as to which neither Oxford nor any of its Restricted Subsidiaries:
(a) provides any guarantee or credit support of any kind (including any
undertaking, guarantee, indemnity, keepwell, makewell, agreement or
instrument that would constitute Indebtedness), or
(b) is directly or indirectly liable (as a guarantor or otherwise);
(2) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness of Oxford or any of its Restricted
Subsidiaries to declare a default under such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its
stated maturity; and
(3) as to which the lenders have been notified in writing that they will
not have any recourse against any of the assets of Oxford or its
Restricted Subsidiaries.
"NOTE CUSTODIAN" means the trustee, as custodian with respect to the global
new notes, or any successor entity thereto.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFICER" means, with respect to any person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer,
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the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Vice President of such person.
"PARI PASSU INDEBTEDNESS" means any Indebtedness of Oxford that is pari
passu in right of payment to the new notes. Pari passu means equal to, and
without preference, each to the other.
"PERMITTED INVESTMENTS" means
(1) any Investments in Oxford or in any of its Restricted Subsidiaries;
(2) any Investment in any person that becomes a Restricted Subsidiary as a
result of such Investment provided that Oxford, after giving pro forma
effect to such Investment, would be permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of the covenant described under
"-- Incurrence of Indebtedness and Issuance of Preferred Stock";
(3) Investments in existence, or made pursuant to legally binding written
commitments in existence, on May 15, 1998;
(4) Investments in cash, Cash Equivalents and Investment Grade Securities;
(5) loans or advances to employees made in the ordinary course of
business;
(6) receivables owing to Oxford or any Restricted Subsidiary in the
ordinary course of business;
(7) repurchase agreements and reverse repurchase agreements entered into
by a Restricted Subsidiary with any lender or any primary dealer of
United States government securities relating to Investment Grade
Securities maturing within one year from the date of acquisition
thereof; provided that the terms of any such agreement comply with the
guidelines set forth in the Federal Financial Institutions Examination
Council Supervisory Policy-Repurchase Agreements of Depository
Institutions with Securities Dealers and Others, as adopted by the
Comptroller of the Currency on October 31, 1985 and, in the case of a
repurchase agreement with a primary dealer, a Restricted Subsidiary of
Oxford or its duly authorized custodian shall take possession of the
obligations subject to such agreement;
(8) Investments in Hedging Obligations and other similar agreements or
arrangements designed to protect Oxford or any of its Restricted
Subsidiaries against fluctuations in the value of Investments of
Oxford and its Restricted Subsidiaries, in each case to the extent
permitted under the indenture;
(9) accounts receivable created or acquired, and prepaid expenses arising,
in the ordinary course of business;
(10) the endorsements of negotiable instruments for collection or deposit
in the ordinary course of business;
(11) Investments made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with
the covenant described under "-- Repurchase at the Option of
Holders -- Asset Sales;"
(12) Investments in securities of trade creditors or customers received in
settlement of obligations or pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of such trade
creditors or customers;
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(13) Investments in St. Augustine Health Care, Inc. made after May 13, 1998
in an amount not to exceed $6,000,000; and
(14) Investments in an aggregate amount not to exceed $2.5 million at any
one time outstanding which shall be in addition to Investments which
may be made pursuant to clauses (1) through (13) above.
"PERMITTED LIENS" means:
(1) Liens securing Indebtedness incurred pursuant to any credit agreement
or credit facility that is permitted by the terms of the indenture to
be outstanding, including, without limitation, Liens securing
Indebtedness incurred under the Term Loan Agreement;
(2) Liens in favor of Oxford or any Restricted Subsidiary;
(3) Liens on property of a person existing at the time such person is
merged into or consolidated with Oxford or any Restricted Subsidiary
of Oxford; provided that such Liens were not incurred in connection
with, or in contemplation of, such merger or consolidation and such
Liens do not extend to any assets of Oxford or any of its Restricted
Subsidiaries other than the assets of the person so merged into or
consolidated with Oxford or such Restricted Subsidiary;
(4) Liens on property existing at the time of acquisition thereof by
Oxford or any of its Restricted Subsidiary; provided that such Liens
were not incurred in connection with, or in contemplation of, such
acquisition and do not extend to any assets of Oxford or any of its
Restricted Subsidiaries other than the property so acquired;
(5) Liens to secure the performance of statutory obligations, surety or
appeal bonds or performance bonds, or landlords', carriers',
warehousemen's, mechanics', suppliers', materialmen's or other like
Liens, in any case incurred in the ordinary course of business and
with respect to amounts not yet delinquent or being contested in good
faith by appropriate process of law, if a reserve or other appropriate
provision, if any, as is required by GAAP, shall have been made
therefor;
(6) Liens existing on the date of the indenture;
(7) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded;
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(8) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse
Indebtedness (to the extent permitted under the indenture) of
Unrestricted Subsidiaries;
(9) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the business of Oxford or any
of its Restricted Subsidiaries;
(10) statutory Liens of landlords or of mortgagees of landlords arising by
operation of law, provided that the rental payments secured thereby
are not yet due and payable;
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(11) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and
other types of social security;
(12) Purchase Money Liens (including extensions and renewals thereof);
(13) interests of lessors in capital or operating leases;
(14) Liens on deposits made in connection with hedging arrangements;
(15) Liens encumbering deposits made to secure obligations arising from
statutory or regulatory requirements of Oxford or any of its
Restricted Subsidiaries, including rights of offset and setoff;
(16) prejudgment Liens and judgment Liens not giving rise to a Default or
Event of Default so long as any appropriate legal proceeding that may
have been duly initiated for the review of such judgment shall not
have been finally terminated, or so long as the period within which
such proceeding may be initiated shall not have expired; and
(17) Liens incurred in the ordinary course of business of Oxford or any
Subsidiary of Oxford with respect to obligations permitted under the
indenture that do not exceed $1 million in principal amount in the
aggregate at any one time outstanding.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of Oxford or
any of its Restricted Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund, other
Indebtedness (including the issuance of Disqualified Stock in exchange for
Disqualified Stock) of Oxford or any of its Restricted Subsidiaries (other than
Indebtedness under the Term Loan Agreement); provided that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the outstanding
principal amount (or then current accreted value, if applicable) and
redemption premium of, plus accrued and unpaid interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of reasonable expenses incurred in connection
therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date at
least as late as the final maturity date of, and has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the new
notes, such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and is subordinated in
right of payment to, the new notes on terms at least as favorable to
the holders of new notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by Oxford or by the Restricted
Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
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"PRINCIPAL SUBSIDIARY" means Oxford Health Plans (NY), Inc., Oxford Health
Plans (NJ), Inc., Oxford Health Plans (CT), Inc. and Oxford Health Insurance,
Inc.
"PURCHASE MONEY LIEN" means a Lien granted on an asset or property to
secure a Purchase Money Obligation permitted to be incurred under the indenture
and incurred solely to finance the purchase, or the cost of construction or
improvement, of such asset or property; provided, however, that such Lien
encumbers only such asset or property and is granted within 180 days of such
acquisition.
"PURCHASE MONEY OBLIGATIONS" of any person means any obligations of such
person to any seller or any other person incurred or assumed to finance the
purchase, or the cost of construction or improvement, of real or personal
property to be used in the business of such person or any of its Restricted
Subsidiaries in an amount that is not more than 100% of the cost, or fair market
value, as appropriate, of such property, and incurred within 90 days after the
date of such acquisition (excluding accounts payable to trade creditors incurred
in the ordinary course of business).
"QUALIFIED INSURANCE PAYMENTS" means payments made by third party insurers
to Oxford and the Restricted Subsidiaries in respect of claims, investigations,
proceedings and litigation arising out of or relating to federal or state law
relating to the purchase or sale of securities, including, without limitation,
stockholders' derivative actions, less reimbursement payments required from
Oxford or its Restricted Subsidiaries in connection with such payments.
"REPRESENTATIVE" means the indenture trustee or other trustee, client or
representative for any senior Indebtedness.
"RESPONSIBLE OFFICER" when used with respect to the trustee, means any
officer within the Corporate Trust Administration of the trustee (or any
successor group of the trustee) or any other officer of the trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" of a person means any Subsidiary of the referent
person that is not an Unrestricted Subsidiary.
"SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Exchange Act, as such Regulation is in effect on the
date hereof.
"SUBSIDIARY" means, with respect to any person:
(1) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock 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 such person or one or
more of the other Subsidiaries of that person (or a combination
thereof); and
(2) any partnership:
(a) the sole general partner or the managing general partner of which
is such person or a Subsidiary of such person, or
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(b) the only general partners of which are such person or one or more
Subsidiaries of such person, or any combination thereof.
"UNRESTRICTED SUBSIDIARY" means
(1) any Subsidiary that is designated by the Board of Directors as an
Unrestricted Subsidiary pursuant to a Board Resolution; but only to the
extent that such Subsidiary:
(a) has no Indebtedness other than Non-Recourse Debt;
(b) is not party to any agreement, contract, arrangement or
understanding with Oxford or any Restricted Subsidiary of Oxford
unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to Oxford or such Restricted
Subsidiary than those that might be obtained at the time from
persons who are not Affiliates of Oxford;
(c) is a person with respect to which neither Oxford nor any of its
Restricted Subsidiaries has any direct or indirect obligation (1) to
subscribe for additional equity interests or (2) to maintain or
preserve such person's financial condition or to cause such person
to achieve or maintain any specified levels of profitability; and
(d) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of Oxford or any of its
Restricted Subsidiaries.
Any such designation by the Board of Directors of Oxford shall be evidenced
to the trustee by filing with the trustee a resolution of the Board of Directors
of Oxford giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions. If, at
any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of
Oxford as of such date. The Board of Directors of Oxford may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of Oxford of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under the covenant described under the caption
"-- Incurrence of Indebtedness and Issuance of Preferred Stock" and (ii) no
Default or Event of Default would be in existence following such designation.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing
(1) the sum of the products obtained by multiplying (a) the amount of each
then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment, by
(2) the then outstanding principal amount of such Indebtedness.
"WHOLLY OWNED SUBSIDIARY" of any person means a Restricted Subsidiary of
such person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares or shares required by applicable
law to be held by third parties) shall at the time be owned by such person or by
one or more Wholly Owned
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Subsidiaries of such person. Unrestricted Subsidiaries shall not be included in
the definition of Wholly Owned Subsidiary for any purposes of the Indenture.
BOOK-ENTRY; DELIVERY AND FORM
The new notes initially will be represented by one or more permanent global
certificates in definitive, fully registered form. This global note will be
deposited upon issuance with The Depository Trust Company, New York, New York,
which we refer to as DTC, and registered in the name of a nominee of DTC.
THE GLOBAL NOTE
We expect that pursuant to procedures established by DTC:
(1) upon the issuance of the global note, DTC or its custodian will credit,
on its internal system, the principal amount of the individual
beneficial interests represented by the global note to the respective
accounts of persons who have accounts with such depositary, and
(2) ownership of beneficial interests in the global note will be shown on,
and the transfer of 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.
Ownership of beneficial interests in the global notes will be limited to persons
who have accounts with DTC or persons who hold interests through participants.
So long as DTC or its nominee is the registered owner or holder of the new
notes, DTC or such nominee will be considered the sole owner or holder of the
new notes represented by the global note for all purposes under the indenture.
No beneficial owner of an interest in the global note will be able to transfer
that interest except in accordance with DTC's procedures.
Payments of interest, principal and other amounts due on the global note
will be made to DTC or its nominee as the registered owner. None of Oxford, the
trustee or any paying agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the global note or for maintaining, supervising or
reviewing any records relating to this beneficial ownership interest.
We expect that DTC or its nominee, upon receipt of any payment of interest,
principal or other amounts due on the global note, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the global note as shown on the records of DTC or its nominee. We
also expect that payments by participants to owners of beneficial interests in
the global note held through such participants will be governed by standing
instructions and customary practice, as is now the case with securities held for
the accounts of customers registered in the names of nominees for those
customers. These payments will be the responsibility of the participants.
Transfers between participants in DTC will be effected in the ordinary way
through DTC's settlement system in accordance with DTC rules and will be settled
in same day funds.
DTC has advised us that it will take any action permitted to be taken by a
holder of new notes, including the presentation of new notes for exchange as
described below, only
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at the direction of one or more participants to whose account the DTC interests
in the global note are credited. Further, DTC will take action only as to such
portion of the notes as to which the participant or participants has given such
direction. However, if there is an Event of Default under the indenture, DTC
will exchange the global note for certificated notes, which it will distribute
to its participants.
DTC has advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, 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 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. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the global note among participants of DTC, it is under
no obligation to perform those procedures, and those procedures may be
discontinued at any time. Neither we nor the trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
CERTIFICATED SECURITIES
If DTC is at any time unwilling or unable to continue as a depositary for
the global note and we do not appoint a successor depositary within 90 days,
certificated notes will be issued in exchange for the global note.
DESCRIPTION OF TERM LOAN AGREEMENT
The following is a summary description of the principal terms and
conditions of the term loan agreement. The description set forth below does not
purport to be complete and is qualified in its entirety by reference to certain
agreements setting forth the principal terms and conditions of the term loan
agreement.
The term loan agreement provides for a $150 million senior secured term
loan with a final maturity on May 13, 2003, at which time all outstanding
amounts will be due and payable. Prior to the final maturity of the term loan,
there are no scheduled principal payments. The term loan agreement provides for
mandatory prepayments of:
(1) all net proceeds from the sale of assets, subject to certain exceptions
and to the receipt of any required regulatory approvals;
(2) all net proceeds from the issuance of debt securities;
(3) 50% of the net proceeds from certain equity issuances; and
(4) the entire aggregate principal amount plus a premium equal to 1.00% of
the aggregate principal amount of the loan prepaid upon a "change of
control."
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We may utilize borrowings under the term loan agreement to fund current and
future regulatory reserve requirements, for capital expenditures and other
general corporate purposes.
The term loan bears interest at a rate per annum equal to the
administrative agent's reserve-adjusted LIBO rate plus 4.25%.
The term loan agreement contains a number of covenants, similar to those
specified in the indenture, that, among other things, restrict our ability and
the ability of our subsidiaries to:
- incur additional indebtedness;
- pay dividends;
- make investments, loans or advances;
- make acquisitions;
- create liens on assets;
- enter into sale and leaseback transactions;
- engage in mergers or consolidations;
- change the business conducted by us or our subsidiaries; or
- engage in certain transactions with affiliates and otherwise restrict
certain corporate activities.
The term loan agreement provides that certain events will constitute events
of default under the term loan agreement, which events include, but are not
limited to:
- our failure to pay amounts owed under the term loan agreement;
- a default by us or any of our Restricted Subsidiaries under the term loan
agreement or any other indebtedness;
- our failure to observe or perform the covenants set forth in the term
loan agreement;
- the inaccuracy of the representations and warranties set forth in the
term loan agreement;
- the imposition of certain judgments against us or our Restricted
Subsidiaries;
- the occurrence of certain bankruptcy or insolvency proceedings or events
with respect to us or our Restricted Subsidiaries;
- our failure to maintain certain governmental authorizations related to
our business; and
- the invalidity or unenforceability of any lien or security interest
securing our obligations under the term loan agreement.
DESCRIPTION OF PREFERRED STOCK AND WARRANTS
Pursuant to the investment agreement, dated as of February 23, 1998,
between Oxford and TPG Partners II, L.P. on May 13, 1998, certain investors
purchased $350,000,000 in redeemable preferred stock issued with warrants to
acquire up to 22,530,000 shares of common stock. The preferred stock and
warrants were issued without registration under the Securities Act in reliance
on Section 4(2) of the Securities Act, which provides for an exemption for
transactions not involving any public offering. Dividends on the preferred stock
may be paid in kind for the first two years. The warrants have an exercise price
of
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$17.75, which represents a 5% premium over the average trading price of our
shares for the 30 trading days ended February 20, 1998.
The preferred stock was originally issued as 245,000 shares of Series A
Cumulative Preferred Stock, which we refer to as "Series A preferred stock," and
105,000 shares of Series B Cumulative Preferred Stock, which we refer to as
"Series B preferred stock." On February 13, 1999, we entered into a share
exchange agreement with TPG Partners II, its affiliates and other investors to
make an adjustment of the dividends payable among the shares of Series A
preferred stock and Series B preferred stock. Under the share exchange
agreement, the 245,000 shares of Series A preferred stock were exchanged for an
aggregate amount of 260,146.909 shares of Series D Cumulative Preferred Stock,
which we refer to as "Series D preferred stock," and the 105,000 shares of
Series B preferred stock were exchanged for an aggregate amount of 111,820.831
shares of Series E Cumulative Preferred Stock, which we refer to as "Series E
preferred stock." The additional amount is attributable to dividends accrued on
the preferred stock through February 13, 1999. As a result of the exchange, the
holders hold only Series D preferred stock and Series E preferred stock, and
following the exchange all shares of the Series A preferred stock and Series B
preferred stock were cancelled. The terms of the Series D preferred stock are
substantially similar to the terms of the Series A preferred stock and the terms
of the Series E preferred stock are substantially similar to the terms of the
Series B preferred stock, except in each case with respect to the applicable
dividend rates. The exchange was effected for a number of reasons, including to
facilitate the potential sale of the offered preferred stock by the holders.
Prior to May 13, 2000, the Series D preferred stock accumulates dividends
at the rate of 5.319521% per annum, payable annually in cash or additional
shares of Series D preferred stock, at our option. On and after May 13, 2000,
the Series D preferred stock accumulates cash dividends at the rate of 5.129810%
per annum, payable quarterly. In addition, prior to May 13, 2000, the holders of
the Series D preferred stock may use the Series D preferred stock to pay the
exercise price of the warrants, but only in an amount equal to a percentage of
the total amount of Series D preferred stock issued on February 13, 1999 that
does not exceed the percentage of the total number of shares of Series E
preferred stock issued on February 13, 1999 that have been redeemed, repurchased
or returned by us, or used as consideration for the warrants by the holders.
Prior to May 13, 2000, the Series E preferred stock accumulates dividends
at the rate of 14.589214% per annum, payable annually in cash or additional
shares of Series E preferred stock, at our option. On and after May 13, 2000,
the Series E preferred stock accumulates cash dividends at the rate of 14% per
annum, payable quarterly.
The Series D preferred stock and the Series E preferred stock rank equally
with each other with respect to dividend rights and the right to receive
payments upon the liquidation, dissolution or winding up of Oxford. On and after
May 13, 2003, subject to certain conditions, the Series D preferred stock and
Series E preferred stock are each redeemable at our option at a redemption price
of $1,000 per share, plus accrued and unpaid dividends. The Series D preferred
stock and Series E preferred stock are subject to mandatory redemption at the
same price on May 13, 2008.
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There are outstanding Series A warrants to purchase up to 15,800,000 shares
of common stock, and Series B warrants to purchase up to 6,730,000 shares of
common stock. The Series A warrants expire on the earlier of May 13, 2008 or the
redemption of the Series D preferred stock, and the Series B warrants expire on
the earlier of May 13, 2008 or the redemption of the Series E preferred stock.
Pursuant to a registration rights agreement dated as of February 23, 1998,
between us and TPG Partners II, we have agreed to use our reasonable best
efforts to keep effective a shelf registration statement with respect to the
preferred stock, the warrants and the common stock issuable upon exercise of the
warrants, which together we refer to as "registrable securities," until:
- 10 years after the date it is declared effective; or
- such earlier date that all registrable securities have been disposed of
or on which TPG Partners II and its assigns are no longer entitled to
board representation under the investment agreement and are permitted to
sell their registrable securities under Rule 144(k) under the Securities
Act.
The shelf registration statement generally is intended to permit the
holders of the preferred stock, the warrants and the common stock issuable upon
exercise of the warrants to resell from time to time the registrable securities
that they purchased in transactions which were exempted from the registration
requirements of the Securities Act. We have filed a shelf registration statement
with the SEC in order to meet obligations under the registration rights
agreement.
PLAN OF DISTRIBUTION
Each holder desiring to participate in the exchange offer will be required
to represent, among other things, that:
(1) it is acquiring the new notes issued in the exchange offer in the
ordinary course of its business;
(2) it is not an "affiliate," as defined in Rule 405 under the Securities
Act, of Oxford; and
(3) it is not participating, and does not intend to participate, and has no
arrangement or understanding with any person to participate, in a
distribution of the new notes issued in the exchange offer.
A holder unable to make the above representations is referred to as a restricted
holder. A restricted holder will not be able to participate in the exchange
offer, and may only sell its old notes pursuant to a registration statement
containing the selling securityholder information required by Item 507 of
Regulation S-K of the Securities Act, or pursuant to an exemption from the
registration requirement of the Securities Act.
Any broker-dealer who holds old notes that are Transfer Restricted Securities
and that were acquired for its own account as a result of market-marking
activities or other trading activities, other than Transfer Restricted
Securities acquired directly from us, may exchange such old notes pursuant to
the exchange offer. Such broker-dealer may be deemed to be an "underwriter"
within the meaning of the Securities Act, and, consequently, must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales of the new notes received by such broker-dealer in the exchange offer.
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Each participating broker-dealer is required to acknowledge in the letter
of transmittal that it acquired the old notes as a result of market-making
activities or other trading activities and that it will deliver a prospectus in
connection with the resale of such new notes. We have agreed that, for a period
of up to one year after the registration statement relating to the exchange
offer is declared effective, we will use our best efforts to keep the exchange
offer registration statement continuously effective, supplemented and amended as
required by the registration rights agreement to the extent necessary to ensure
that it is available for resale of old notes acquired by broker-dealers for
their own accounts as a result of market-making activities or other trading
activities, and to ensure that such exchange offer registration statement
conforms with the requirements of the registration rights agreement, the
Securities Act and the policies, rules and regulations of the SEC as announced
from time to time and will make this prospectus available to participating
broker-dealers for use in connection with any such resale. During such period of
time, delivery of this prospectus, as it may be amended or supplemented, will
satisfy the prospectus delivery requirements of a participating broker-dealer
engaged in market making or other trading activities.
Based on interpretations by the staff of the SEC, we believe that new notes
issued pursuant to the exchange offer may be offered for resale, resold and
otherwise transferred by their holder, other than a participating broker-dealer,
without compliance with the registration and prospectus delivery requirements of
the Securities Act.
We will not receive any proceeds from any sale of new notes by
broker-dealers. New notes received by participating broker-dealers for their own
account pursuant to 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
participating broker-dealer and/or the purchasers of any such new notes. Any
participating broker-dealer that resells new notes that were received by it for
its own account pursuant to 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 participating broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
We have agreed to pay all expenses incidental to the exchange offer other
than commissions and concessions of any brokers or dealers and will indemnify
holders of the notes, including any broker-dealers, against certain liabilities,
including liabilities under the Securities Act, as set forth in the registration
rights agreement.
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VALIDITY OF THE NEW NOTES
The validity of the new notes will be passed upon for us by Sullivan &
Cromwell, New York, New York.
EXPERTS
The consolidated financial statements of Oxford Health Plans, Inc. at
December 31, 1998, and for the year then ended, included in Oxford Health Plans,
Inc.'s Annual Report on Form 10-K/A for the fiscal year ended December 31, 1998,
which is incorporated herein by reference, have been audited by Ernst & Young
LLP, independent auditors, and at December 31, 1997, and for each of the years
in the two-year period ended December 31, 1997, by KPMG LLP, independent
auditors, as set forth in their respective reports thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such reports given on the
authority of such firms as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. We have also filed with the SEC a registration
statement on Form S-4 to register this exchange offer. This prospectus, which
forms part of the registration statement, does not contain all of the
information included in that registration statement. For further information
about Oxford\ and the new notes offered in this prospectus, you should refer to
the registration statement and its exhibits.
You may read and copy any document we file with the SEC at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of the Public
Reference Room. We file our SEC materials electronically with the SEC, so you
can also review our filings by accessing the web site maintained by the SEC at
http://www.sec.gov. This site contains reports, proxy and information statements
and other information regarding issuers that file electronically with the SEC.
Our principal executive offices are located at 800 Connecticut Avenue,
Norwalk, Connecticut 06854, and our main telephone number is (203) 852-1442.
The SEC allows us to "incorporate by reference" the information we file
with them, which means we can disclose important information to you by referring
you to those documents. The information included in the following documents is
incorporated by reference and is considered to be a part of this prospectus. The
most recent information that we file with the SEC automatically updates and
supersedes more dated information. We have previously filed the following
documents with the SEC and are incorporating them by reference into this
prospectus:
- Our Annual Report on Form 10-K/A for the fiscal year ended December 31,
1998, initially filed on March 19, 1999 and amended on March 26, 1999;
and
- Our Current Reports on Form 8-K filed on January 8, 1999, January 29,
1999, February 25, 1999, March 19, 1999 and April 29, 1999.
We also are incorporating into this prospectus all documents subsequently
filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934.
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We will provide without charge to each person, including any person having
a control relationship with that person, to whom a prospectus is delivered, a
copy of any or all of the information that has been incorporated by reference in
this prospectus but not delivered with this prospectus. If you would like to
obtain this information from us, please direct your request, either in writing
or by telephone, to:
Investor Relations
Oxford Health Plans, Inc.
800 Connecticut Avenue
Norwalk, Connecticut 06854
(203) 852-1442
In order to insure timely delivery of the documents, any request should be
made five days before --, which is when the exchange offer expires.
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- ------------------------------------------------------
- ------------------------------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR
THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. NEITHER THE MAKING OF THE EXCHANGE OFFER PURSUANT
TO THIS PROSPECTUS NOR THE ACCEPTANCE OF OLD NOTES FOR TENDER FOR EXCHANGE
PURSUANT THERETO SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF OXFORD HEALTH PLANS, INC. SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
EACH BROKER-DEALER WHO HOLDS OLD NOTES ACQUIRED FOR ITS OWN ACCOUNT AS A
RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES AND WHO RECEIVES NEW NOTES
FOR ITS OWN ACCOUNT IN EXCHANGE FOR SUCH OLD NOTES PURSUANT TO THE EXCHANGE
OFFER MUST DELIVER A COPY OF THIS PROSPECTUS IN CONNECTION WITH ANY RESALE OF
SUCH NEW NOTES.
-------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Summary............................. 1
Risk Factors........................ 10
Forward-Looking Statements.......... 18
Ratio of Earnings to Fixed
Charges........................... 19
Use of Proceeds..................... 19
Capitalization...................... 20
Business............................ 21
The Exchange Offer.................. 21
Description of the New Notes........ 35
Book-Entry; Delivery and Form....... 69
Description of Term Loan
Agreement......................... 70
Description of Preferred Stock and
Warrants.......................... 71
Plan of Distribution................ 73
Validity of the New Notes........... 75
Experts............................. 75
Where You Can Find More
Information....................... 75
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
[OXFORD HEALTH PLANS LOGO]
Offer to Exchange
$200,000,000
11% Senior Notes due 2005
for all outstanding unregistered
11% Senior Notes due 2005
-- , 1999
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 81
PART II
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits indemnification
against expenses, fines, judgments and settlements incurred by any director,
officer or employee of Oxford in the event of pending or threatened civil,
criminal, administrative or investigative proceedings, if such person was, or
was threatened to be made, a party by reason of the fact that he is or was a
director, officer or employee of Oxford. Section 145 also provides that the
indemnification provided for therein shall not be deemed exclusive of any other
rights to which those seeking indemnification may otherwise be entitled.
Article Eighth of the Second Amended and Restated Certificate of
Incorporation, as amended, of Oxford provides that Oxford shall indemnify its
officers and directors to the fullest extent permitted by law. Article Ninth of
the Second Amended and Restated Certification of Incorporation, as amended, of
Oxford provides that, to the fullest extent permitted by the Delaware General
Corporation Law as the same exists or may hereafter be amended, a director of
Oxford shall not be liable to Oxford or its stockholders for monetary damages
for breach of fiduciary duty as a director.
Section 6.4 of the Amended and Restated By-laws of Oxford states:
Section 6.4. Indemnification of Directors, Officers and Employees. The
Corporation shall indemnify to the fullest extent permitted by law any person
made or threatened to be made a party to any action, suit or proceeding, whether
criminal, civil, administrative or investigative, including any action
instituted by or on behalf of the Corporation, by reason of the fact that such
person or such person's testator or intestate is or was a director or officer of
the Corporation or serves or served at the request of the Corporation any other
enterprise as a director or officer. Expenses incurred by any such person in
defending any such actions, suit or proceeding shall be paid or reimbursed by
the Corporation promptly upon receipt by it of an undertaking of such person to
repay such expense if it shall ultimately be determined that such person is not
entitled to be indemnified by the Corporation. The rights provided to any person
by this by-law shall be enforceable against the Corporation by such person who
shall be presumed to have relied upon it in serving or continuing to serve as a
director or officer as provided above. No amendment of this by-law shall impair
the rights of any person arising at any time with respect to events occurring
prior to such amendment. To the extent permitted by Delaware law, the Board may
cause the Corporation to indemnify and reimburse other employees of the
Corporation as it deems appropriate. For purposes of this by-law, the term
"Corporation" shall include any predecessor of the Corporation and any
constituent corporation (including any constituent of a constituent) absorbed by
the Corporation in a consolidation or merger; the term "other enterprise" shall
include any corporation, partnership, joint venture, trust or employee benefit
plan; service "at the request of the Corporation" shall include service as a
director or officer of the Corporation, which imposes duties on, or involves
services by, such director or officer with respect to any other enterprise or
any employee benefit plan, its participants or beneficiaries; any excise taxes
assessed on a person with respect to an employee benefit plan shall be deemed to
be indemnifiable expenses; and action by a person with respect to any employee
benefit plan which such person reasonably believes to be in the interest of the
participants and beneficiaries of such plan shall be deemed to be action not
opposed to the best interests of the Corporation.
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Section 145 of the Delaware General Corporation Law permits the
indemnification provided for by the above by-law provision. The statute further
permits Oxford to insure itself for such indemnification.
Oxford maintains insurance coverage for its directors and officers with
respect to certain liabilities incurred in their capacities as such and for
Oxford with respect to any payments which it becomes obligated to make to such
persons under the foregoing by-law and statutory provisions.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS:
<TABLE>
<C> <S>
1 Purchase Agreement, dated May 7, 1998, between Oxford Health
Plans, Inc. and Donaldson, Lufkin & Jenrette Securities
Corporation, incorporated by reference to Exhibit 10(a) of
Oxford's Form 10-Q for the quarterly period ended March 31,
1998 (File No. 0-19442)
3.1 Second Amended and Restated Certificate of Incorporation, as
amended, of Oxford Health Plans, Inc., incorporated by
reference to Exhibit 3(a) of Oxford's Annual Report on Form
10-K/A for the period ended December 31, 1998 (File No.
0-19442)
3.2 Amended and Restated By-laws of Oxford Health Plans, Inc.,
incorporated by reference to Exhibit 3(b) of Oxford's Annual
Report on Form 10-K/A for the period ended December 31, 1998
(File No. 0-19442)
4.1 Form of New Note (included in exhibit 4.2)
4.2 Indenture, dated May 13, 1998, between Oxford Health Plans,
Inc. and the Chase Manhattan Bank, as Trustee, relating to
the 11% Senior Notes due 2005, incorporated by reference to
Exhibit 10(c) of Oxford's Form 10-Q for the quarterly period
ended March 31, 1998 (File No. 0-19442)
4.3 Registration Rights Agreement, dated May 13, 1998, between
Oxford Health Plans, Inc. and Donaldson, Lufkin & Jenrette
Securities Corporation, incorporated by reference to Exhibit
10(b) of Oxford's Form 10-Q for the quarterly period ended
March 31, 1998 (File No. 0-19442)
4.4 Term Loan Agreement, dated May 13, 1998, among Oxford,
Lenders listed therein, DLJ Capital Funding, Inc. and IBJ
Schroder Bank & Trust Company, including exhibits,
incorporated by reference to Exhibit 10(d) of Oxford's Form
10-Q for the quarterly period ended March 31, 1998 (File No.
0-19442)
5 Opinion of Sullivan & Cromwell re Legality*
12 Computation of Ratios of Earnings to Fixed Charges**
16 Letter from KPMG LLP regarding change in certifying
accountant of Oxford Health Plans, Inc., incorporated by
reference to Exhibit 16 of Oxford's Form 8-K dated June 2,
1998 (File No. 0-19442)
23.1 Consent of Ernst & Young LLP**
23.2 Consent of KPMG LLP**
23.3 Consent of Sullivan & Cromwell (included in their opinion
filed as Exhibit 5.1)
25 Statement of Eligibility of The Chase Manhattan Bank, as
trustee*
99.1 Form of Letter of Transmittal**
</TABLE>
II-2
<PAGE> 83
<TABLE>
<C> <S>
99.2 Form of Notice of Guaranteed Delivery**
99.3 Form of Exchange Agent Agreement*
</TABLE>
- -------------------------
* To be filed by amendment
** Filed herewith
(b) FINANCIAL STATEMENT SCHEDULES:
None.
ITEM 22. UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
a. To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement 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;
b. 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;
c. 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.
2. 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 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.
3. Insofar as indemnifications for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 20
above, or otherwise, the registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
4. The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This
II-3
<PAGE> 84
includes information contained in documents filed subsequent to the effective
date of this Registration Statement through the date of responding to the
request.
5. The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and Oxford
being acquired involved therein, that was not the subject of and included in
this Registration Statement when it became effective.
II-4
<PAGE> 85
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Norwalk, State of
Connecticut, on April 30, 1999.
Oxford Health Plans, Inc.
By: /s/ NORMAN C. PAYSON, M.D.
------------------------------------------
Norman C. Payson, M.D.
Chief Executive Officer
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 TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ NORMAN C. PAYSON, M.D. Principal Executive Officer, April 30, 1999
- --------------------------------------------------- and Director
Norman C. Payson, M.D.
/s/ YON Y. JORDEN Principal Financial Officer April 30, 1999
- ---------------------------------------------------
Yon Y. Jorden
/s/ KURT B. THOMPSON Principal Accounting Officer April 30, 1999
- ---------------------------------------------------
Kurt B. Thompson
/s/ FRED F. NAZEM Chairman of the Board April 30, 1999
- ---------------------------------------------------
Fred F. Nazem
/s/ DAVID BONDERMAN Director April 30, 1999
- ---------------------------------------------------
David Bonderman
Director
- ---------------------------------------------------
Jonathan J. Coslet
/s/ JAMES G. COULTER Director April 30, 1999
- ---------------------------------------------------
James G. Coulter
/s/ ROBERT B. MILLIGAN, JR. Director April 30, 1999
- ---------------------------------------------------
Robert B. Milligan, Jr.
/s/ MARCIA J. RADOSEVICH, PH.D. Director April 30, 1999
- ---------------------------------------------------
Marcia J. Radosevich, Ph.D.
/s/ BENJAMIN H. SAFIRSTEIN, M.D. Director April 30, 1999
- ---------------------------------------------------
Benjamin H. Safirstein, M.D.
Director
- ---------------------------------------------------
Thomas A. Scully
/s/ KENT J. THIRY Director April 30, 1999
- ---------------------------------------------------
Kent J. Thiry
/s/ STEPHEN F. WIGGINS Director April 30, 1999
- ---------------------------------------------------
Stephen F. Wiggins
</TABLE>
II-5
<PAGE> 86
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
5 Opinion of Sullivan & Cromwell re Legality*
12 Computation of Ratios of Earnings to Fixed Charges**
23.1 Consent of Ernst & Young LLP**
23.2 Consent of KPMG LLP**
25 Statement on Form T-1 of Eligibility of Trustee*
99.1 Form of Letter of Transmittal**
99.2 Form of Notice of Guaranteed Delivery**
99.3 Form of Exchange Agent Agreement*
</TABLE>
- -------------------------
* To be filed by amendment.
** Filed herewith.
<PAGE> 1
EXHIBIT 12
OXFORD HEALTH PLANS, INC. & SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Earnings (loss) before income
taxes......................... $(615,229) $(431,611) $172,049 $91,501 $49,926
Add back fixed charges.......... 59,030 8,000 7,000 5,000 3,000
--------- --------- -------- ------- -------
Total earnings (loss)........... $(556,199) $(423,611) $179,049 $96,501 $52,926
Fixed charges:
Interest (none capitalized)... $ 43,030 $ -- $ -- $ -- $ --
Interest component of rental
payments................... 16,000 8,000 7,000 5,000 3,000
--------- --------- -------- ------- -------
Total fixed charges... $ 59,030 $ 8,000 $ 7,000 $ 5,000 $ 3,000
========= ========= ======== ======= =======
Ratio of earnings to fixed
charges....................... * * 25.6 19.3 17.6
========= ========= ======== ======= =======
</TABLE>
- -------------------------
* Earnings were insufficient to cover fixed charges by $615.2 million for 1998
and $431.6 million for 1997.
For purposes of computing these ratios, our earnings before income taxes,
as reported in our most recent Annual Report on Form 10-K/A, have been increased
by the fixed charges. The amount of earnings was then divided by the amount of
fixed charges, the result being the ratio of earnings to fixed charges. Fixed
charges represent interest expense (no interest has been capitalized) plus the
estimated interest factor in rental expense.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 and related Prospectus of Oxford
Health Plans, Inc. for the registration of $200,000,000 of 11% Senior Notes due
2005 and to the incorporation by reference therein of our report dated March 9,
1999, with respect to the consolidated financial statements and schedules of
Oxford Health Plans, Inc. included in its Annual Report on Form 10-K/A for the
year ended December 31, 1998, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Stamford, Connecticut
April 30, 1999
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Oxford Health Plans, Inc.:
We consent to incorporation by reference in the Registration Statement on
Form S-4 of Oxford Health Plans, Inc. of our reports dated February 23, 1998,
relating to the consolidated balance sheet of Oxford Health Plans, Inc. and
subsidiaries as of December 31, 1997, and the related statements of operations,
shareholders' equity (deficit) and comprehensive earnings (loss), and cash
flows for each of the years in the two-year period ended December 31, 1997, and
the related consolidated financial statement schedules, which reports appear in
the December 31, 1998 annual report on Form 10-K/A of Oxford Health Plans, Inc.
and subsidiaries.
We also consent to the reference to our firm under the heading "Experts" in the
prospectus.
/s/ KPMG LLP
Stamford, Connecticut
April 30, 1999
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
FOR
11% SENIOR NOTES DUE 2005
OF
OXFORD HEALTH PLANS, INC.
PURSUANT TO THE
EXCHANGE OFFER
IN RESPECT OF
ALL OF ITS OUTSTANDING 11% SENIOR NOTES DUE 2005
FOR
ALL OF ITS OUTSTANDING 11% SENIOR NOTES DUE 2005
-------------------------
PURSUANT TO THE PROSPECTUS DATED --, 1999
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON --, 1999
UNLESS THE EXCHANGE OFFER IS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF OLD
NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
TO: THE CHASE MANHATTAN BANK, EXCHANGE AGENT
<TABLE>
<S> <C>
By Mail, Hand or Overnight Courier: By Facsimile (For Eligible Institutions Only):
55 Water Street (212) 638-7380 or (212) 638-7381
Room 234, North Building
New York, NY 10041 Confirm by Telephone:
Attn: Carlos Esteves (212) 638-0828
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION VIA
TELEGRAM, TELEX OR FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE
A VALID DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY
BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE NEW NOTES FOR THEIR OLD NOTES
PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR OLD
NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
By execution hereof, the undersigned acknowledges receipt of the Prospectus
(the "Prospectus"), dated --, 1999, of Oxford Health Plans, Inc., a Delaware
corporation (the "Company"), and this Letter of Transmittal and the instructions
hereto (the "Letter of Transmittal").
The Company reserves the right, at any time or from time to time, to extend
the Exchange Offer at its sole discretion, in which event the term "Expiration
Date" shall mean the latest time and date to which the Exchange Offer is
extended. The Company shall notify the holders of the Old Notes of any extension
by means
<PAGE> 2
of a press release or other public announcement prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date.
This Letter of Transmittal is to be completed by a holder of Old Notes
either (a) if certificates are to be forwarded herewith or (b) if a tender of
certificates for Old Notes, if available, is to be made by book-entry transfer
to the account maintained by the Exchange Agent at The Depository Trust Company
("DTC" or the "Book-Entry Transfer Facility") pursuant to the procedures set
forth in "The Exchange Offer -- Book-Entry Transfer" section of the Prospectus
and instructions are not being transmitted through the DTC Automated Tender
Offer Program ("ATOP"). In the case of certificated securities, delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent. Holders of Old Notes whose certificates are not immediately
available, or who are unable to deliver their certificates or confirmation of
the book-entry tender of their Old Notes into the Exchange Agent's account at
the Book-Entry Transfer Facility (a "Book-Entry Confirmation") and all other
documents required by this Letter of Transmittal to the Exchange Agent on or
prior to the Expiration Date, must tender their Old Notes according to the
guaranteed delivery procedures set forth in "The Exchange Offer -- Guaranteed
Delivery Procedures" section of the Prospectus. See Instruction 1.
Holders of Old Notes that are tendering by book-entry transfer to the
Exchange Agent's account at DTC can execute the tender through ATOP for which
the transaction will be eligible. DTC participants that are accepting the
Exchange Offer should transmit their acceptance to DTC, which will credit and
verify the acceptance and execute a book-entry delivery to the Exchange Anent's
account at DTC. DTC will then send an Agent's Message to the Exchange Agent for
its acceptance. Delivery of the Agent's Message by DTC will satisfy the terms of
the Exchange Offer as to execution and delivery of a Letter of Transmittal by
the participant identified in the Agent's Message. Delivery of an Agent's
Message will also constitute an acknowledgement from the rendering DTC
participant that the representations contained in the appropriate Letter of
Transmittal and described on page -- of the prospectus are true and correct. DTC
participants may also accept the Exchange Offer by submitting a Notice of
Guaranteed Delivery through ATOP.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Old Notes must complete
this letter in its entirety.
A Holder having Old Notes registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if they desire to accept
the Exchange Offer with respect to the Old Notes so registered.
THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS OF OLD NOTES BE
ACCEPTED FROM OR ON BEHALF OF) HOLDERS IN ANY JURISDICTION IN WHICH THE MAKING
OR ACCEPTANCE OF THE EXCHANGE OFFER WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF
SUCH JURISDICTION.
All capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Prospectus.
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR OLD NOTES
MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
List below the Old Notes to which this Letter of Transmittal relates. If
the space provided below is inadequate, list the certificate numbers and
principal amounts on a separately executed schedule and affix the schedule to
this Letter of Transmittal. Tenders of Old Notes will be accepted only in
principal amounts equal to $1,000 or integral multiples thereof.
2
<PAGE> 3
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
- --------------------------------------------------------------------------------------------------------------
AGGREGATE
CERTIFICATE PRINCIPAL
NUMBER(S)* AMOUNT
NAME(S) AND ADDRESS(ES) OF HOLDER(S) (ATTACH SIGNED TENDERED (IF LESS
(PLEASE FILL IN, IF BLANK) LIST IF NECESSARY) THAN ALL)**
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
TOTAL PRINCIPAL AMOUNT OF OLD NOTES TENDERED
- --------------------------------------------------------------------------------------------------------------
* Need not be completed by holders tendering by book-entry transfer.
** Need not be completed by holders who wish to tender with respect to all Old Notes listed. See Instruction
2.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 4
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY DTC TO THE EXCHANGE
AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
DTC Book-Entry Account No.:
Transaction Code No.:
If holders desire to tender Old Notes pursuant to the Exchange Offer and
(i) certificates representing such Old Notes are not lost but are not
immediately available, (ii) time will not permit this Letter of
Transmittal, certificates representing such Old Notes or other required
documents to reach the Exchange Agent prior to the Expiration Date or (iii)
the procedures for book-entry transfer cannot be completed prior to the
Expiration Date, such holders may effect a tender of such Old Notes in
accordance with the guaranteed delivery procedures set forth in the
Prospectus under "The Exchange Offer -- Guaranteed Delivery Procedures."
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Holder(s) of Old Notes:
Window Ticket No. (if any):
Date of Execution of
Notice of Guaranteed Delivery:
Name of Eligible Institution that Guaranteed Delivery:
If Delivered by Book-Entry Transfer:
Name of Tendering Institution:
DTC Book-Entry Account No.:
Transaction Code No.:
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO HOLDS OLD NOTES ACQUIRED FOR YOUR
OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES AND
WISH TO RECEIVE COPIES OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO FOR USE IN CONNECTION WITH RESALES OF NEW NOTES
RECEIVED FOR YOUR OWN ACCOUNT IN EXCHANGE FOR SUCH OLD NOTES.
Name:
Address:
Aggregate Principal Amount of Old Notes so held: $
4
<PAGE> 5
Ladies and Gentlemen:
The undersigned hereby tenders to Oxford Health Plans, Inc., a Delaware
corporation (the "Company") the aggregate principal amount of Old Notes
indicated in this Letter of Transmittal, upon the terms and subject to the
conditions set forth in the Company's Prospectus dated --, 1999 (the
"Prospectus"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal, which together constitute the Company's offer (the "Exchange
Offer") to exchange $1,000 principal amount of its 11% Senior Notes due 2005
(the "New Notes"), which have been registered under the Securities Act of 1933,
as amended, for each $1,000 principal amount of its issued and outstanding 11%
Senior Notes due 2005 (the "Old Notes" and together with the New Notes, the
"Notes"), of which $200,000,000 aggregate principal amount was outstanding on
the date of the Prospectus. The capitalized terms not defined herein are used
herein as defined in the Prospectus.
Subject to, and effective upon, the acceptance for exchange of the Old
Notes tendered hereby, the undersigned hereby sells, assigns and transfers to,
or upon the order of, the Company all right, title and interest in and to such
Old Notes as are being tendered hereby and hereby irrevocably constitutes and
appoints the Exchange Agent as attorney-in-fact (with full knowledge that the
Exchange Agent also acts as the agent of the Company and as trustee and
registrar under the Indenture, dated as of May 13, 1998, between the Company and
The Chase Manhattan Bank, as trustee, pursuant to which the Old Notes are
issued, and pursuant to which the New Notes will be issued) of the undersigned
with respect to such Old Notes, with full power of substitution (such power of
attorney being an irrevocable power coupled with an interest), to:
(a) deliver such Old Notes in registered certificated form, or
transfer ownership of such Old Notes through book-entry transfer at the
Book-Entry Transfer Facility, to or upon the order of the Company, upon
receipt by the Exchange Agent, as the undersigned's agent, of the same
aggregate principal amount of New Notes; and
(b) receive, for the account of the Company, all benefits and
otherwise exercise, for the account of the Company, all rights of
beneficial ownership of the Old Notes tendered hereby in accordance with
the terms of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that the Company will acquire good, marketable and
unencumbered title thereto, free and clear of all security interests, liens,
restrictions, charges, encumbrances, conditional sale agreements or other
obligations relating to their sale or transfer, and not subject to any adverse
claim when the same are accepted by the Company. The undersigned hereby further
represents that any New Notes acquired in exchange for Old Notes tendered hereby
will have been acquired in the ordinary course of business of the person
receiving such New Notes, whether or not such person is the undersigned, that
neither the holder of such Old Notes nor any such other person is participating,
intends to participate or has an arrangement or understanding with any person to
participate in the distribution of such New Notes and that neither the holder of
such Old Notes nor any such other person is an "affiliate," as defined in Rule
405 under the Securities Act of 1933, as amended (the "Securities Act"), of the
Company. The undersigned has read and agrees to all of the terms of the Exchange
Offer.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the New Notes issued in exchange for the Old Notes pursuant to the
Exchange Offer may be offered for resale, resold and otherwise transferred by
holders thereof (other than any such holder that is an "affiliate" of the
Company within the meaning of Rule 405 under the provisions of the Securities
Act), provided that such New Notes are acquired in the ordinary course of such
holders' business and such holders have no arrangement with any person to
participate in the distribution of such New Notes. However, the Company does not
intend to request the SEC to consider, and the SEC has not considered, the
Exchange Offer in the context of a no-action letter, and there can be no
assurance that the staff of the SEC would make a similar determination with
respect to the Exchange Offer as in other circumstances. If the undersigned is
not a broker-dealer, the undersigned represents that it is not engaged in, and
does not intend to engage in, a distribution of
5
<PAGE> 6
New Notes and has no arrangement or understanding to participate in a
distribution of New Notes. If any holder is an affiliate of the Company, is
participating in or intends to participate in or has any arrangement or
understanding with any person to participate in the distribution of the New
Notes to be acquired pursuant to the Exchange Offer, such holder (i) could not
rely on the applicable interpretations of the staff of the SEC and (ii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. If the undersigned is
a broker-dealer that will receive New Notes for its own account in exchange for
Old Notes acquired as a result of market-making or other trading activities (a
"Participating Broker-Dealer"), it represents that the Old Notes to be exchanged
for the New Notes were acquired by it as a result of market-making or other
trading activities and acknowledges that it will deliver a prospectus in
connection with any resale of such New Notes; however, by so acknowledging and
by delivering a prospectus, such Participating Broker-Dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
The Company has agreed that, subject to the provisions of the Registration
Rights Agreement, the 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 Notes received in exchange for Old Notes which were acquired by such
Participating Broker-Dealer for its own account as a result of market-making or
other trading activities, for a period of up to one year after the registration
statement relating to the Exchange Offer is declared effective by the SEC. In
that regard, each Participating Broker-Dealer, by tendering such Old Notes and
executing this Letter of Transmittal, or in the case book-entry transfer, by
delivery of an "Agent's Message," agrees that, upon receipt of notice from the
Company of the existence of any fact or the happening of any event that makes
any statement of a material fact made in the Prospectus, any amendment or
supplement thereto or any document incorporated by reference therein untrue, or
that requires the making of any additions to or changes in the Prospectus in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, such Participating Broker-Dealer will
discontinue the disposition of New Notes pursuant to the Prospectus until the
Company has amended or supplemented the Prospectus or any document incorporated
therein by reference or file any other document so that, as thereafter delivered
to purchasers of New Notes, the Prospectus will not contain any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and the Participating Broker-Dealer has received copies of the
amended or supplemented Prospectus or the Company has advised the Participating
Broker-Dealer in writing that the use of the Prospectus may be resumed, as the
case may be. If so directed by the Company, each Participating Broker-Dealer
will deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Participating Broker-Dealer's possession, of
the Prospectus covering the New Notes that was current at the time of receipt of
such notice. If the Company gives such notice to discontinue the disposition of
the New Notes, it shall extend the one-year period referred to above during
which Participating Broker-Dealers are entitled to use the Prospectus in
connection with the resale of New Notes by the number of days during the period
from and including the date of the giving of such notice to and including the
date when Participating Broker-Dealers shall have received copies of the
supplemented or amended Prospectus necessary to permit resales of the New Notes
or to and including the date on which the Company has advised in writing that
the sale of New Notes may be resumed, as the case may be.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter of Transmittal and every
obligation of the undersigned hereunder shall be binding upon the successors,
assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and shall not be affected by, and shall
survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer -- Withdrawal of Tenders" section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not
6
<PAGE> 7
exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Old Notes, please credit the account indicated above maintained at
the Book-Entry Transfer Facility. Similarly, unless otherwise indicated under
the box entitled "Special Delivery Instructions" below, please send the New
Notes (and, if applicable, substitute certificates representing Old Notes for
any Old Notes not exchanged) to the undersigned at the address shown above in
the box entitled "Description of Old Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO HAVE TENDERED
THE OLD NOTES AS SET FORTH IN SUCH BOX ABOVE.
7
<PAGE> 8
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF
OLD NOTES REGARDLESS OF WHETHER OLD NOTES ARE BEING PHYSICALLY
DELIVERED HEREWITH)
If a holder is tendering any Old Notes, this Letter of Transmittal must be
signed by the holder(s) as the name(s) appear(s) on the certificate(s) for the
Old Notes or on a securities position listing or by any person(s) authorized to
become (a) holder(s) by endorsements and documents transmitted herewith. If
signature is by a trustee, executor, administrator, guardian, officer or other
person acting in a fiduciary or representative capacity, please set forth full
title. See Instruction 3.
<TABLE>
<S> <C> <C>
x Date:
- -------------------------------------------------------- ---------------------------------------------------
x Date:
- -------------------------------------------------------- ---------------------------------------------------
Signature(s) of Owner
Name(s): Address:
----------------------------------------------- ---------------------------------------------------
----------------------------------------------- ---------------------------------------------------
(PLEASE PRINT) (INCLUDING ZIP CODE)
Capacity: Area Code and
----------------------------------------------- Telephone No.: ------------------------------------
Social Security No.:
------------------------------------
</TABLE>
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
SIGNATURE GUARANTEE (SEE INSTRUCTION 3 HEREIN)
Certain Signatures Must Be Guaranteed by an Eligible Institution
- --------------------------------------------------------------------------------
(Name of Eligible Institution Guaranteeing Signatures)
- --------------------------------------------------------------------------------
(Address (including zip code) and Telephone Number (including area code) of
Firm)
- --------------------------------------------------------------------------------
(Authorized Signature)
- --------------------------------------------------------------------------------
(Printed Name)
- --------------------------------------------------------------------------------
(Title)
Date:
- ---------------------------------------------
8
<PAGE> 9
------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes not exchanged
and/or New Notes are to be issued in the name of and sent to someone other
than the person or persons whose signature(s) appear(s) above on this
Letter of Transmittal, or if Old Notes delivered by book-entry transfer
which are not accepted for exchange are to be returned by credit to an
account maintained at the Book-Entry Transfer Facility other than the
account indicated above.
Issue: New Notes and/or Old Notes to:
Name(s):
------------------------------------------------
(PLEASE TYPE OR PRINT)
------------------------------------------------
(PLEASE TYPE OR PRINT)
Address:
------------------------------------------------
(PLEASE TYPE OR PRINT)
------------------------------------------------
ZIP CODE
Credit unexchanged Old Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
------------------------------------------------------------
(Book Entry Transfer Facility
Account Number, if applicable)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes not exchanged
and/or New Notes are to be sent to someone other than the person or
persons whose signature(s) appear(s) above on this Letter of Transmittal
or to such person or persons at an address other than shown above in the
box entitled "Description of Old Notes" on this Letter of Transmittal.
Mail: New Notes and/or Old Notes to:
Name(s):
------------------------------------------------
(PLEASE TYPE OR PRINT)
------------------------------------------------
(PLEASE TYPE OR PRINT)
Address:
------------------------------------------------
(PLEASE TYPE OR PRINT)
------------------------------------------------
ZIP CODE
------------------------------------------------
9
<PAGE> 10
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER OF OXFORD HEALTH
PLANS, INC. TO EXCHANGE ALL OF ITS OUTSTANDING 11% SENIOR NOTES DUE 2005 FOR ALL
OF ITS OUTSTANDING 11% SENIOR NOTES DUE 2005
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND NOTES OR BOOK-ENTRY
CONFIRMATIONS; GUARANTEED DELIVERY PROCEDURES.
This Letter of Transmittal is to be completed by holders of Old Notes
either if certificates are to be forwarded herewith or if tenders are to be made
pursuant to the procedures for delivery by book-entry transfer set forth in "The
Exchange Offer -- Procedures for Tendering -- Book-Entry Transfer" section of
the Prospectus. This Letter of Transmittal will be deemed to have been delivered
upon timely receipt by the Exchange Agent of an agent's Message.
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Exchange Agent, which states that DTC has received an express
acknowledgement from the participant in DTC tendering the Old Notes stating:
- the aggregate principal amount of Old Notes which have been tendered by
such participant;
- that such participant has received and agrees to be bound by the terms of
this Letter of Transmittal; and
- that we may enforce such agreement against the participant.
Delivery of an Agent's Message will also constitute an acknowledgement from
the tendering DTC participant that the representations contained in the
appropriate Letter of Transmittal and described on page 29 of the Prospectus are
true and correct. Certificates for all physically tendered Old Notes, or
Book-Entry Confirmation, as the case may be, as well as a properly completed and
duly executed Letter of Transmittal (or manually signed facsimile hereof), or in
the case of a book-entry transfer, an Agent's Message, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at the address set forth herein on or prior to the Expiration Date, or the
tendering holder must comply with the guaranteed delivery procedures set forth
below. Old Notes tendered hereby must be in denominations of principal amount of
$1,000 and any integral multiple thereof.
Holders of Old Notes whose certificates for Old Notes are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Old Notes pursuant to the guaranteed delivery procedures set forth
in "The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through an
Eligible Institution (as defined below), (ii) prior to the Expiration Date, the
Exchange Agent must receive from such Eligible Institution a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form
provided by the Company (by facsimile transmission, mail or hand delivery),
setting forth the name and address of the holder of Old Notes, the certificate
numbers of the Old Notes, if applicable, and the principal amount of Old Notes
tendered, stating that the tender is being made thereby and guaranteeing that
within three business days after the Expiration Date, the Letter of Transmittal
(or facsimile thereof), or, in the case of a book-entry transfer, an Agent's
Message, together with the certificates for all physically tendered Old Notes,
or a Book-Entry Confirmation, and any other documents required by this Letter of
Transmittal will be deposited by the Eligible Institution with the Exchange
Agent, and (iii) a properly executed Letter of Transmittal (or facsimile
thereof), as well as the certificates for all physically tendered Old Notes in
proper form for transfer or Book-Entry Confirmation, as the case may be, and all
other documents required by this Letter of Transmittal, must be received by the
Exchange Agent within three business days after the Expiration Date.
10
<PAGE> 11
The Exchange Agent will send a Notice of Guaranteed Delivery upon request
to any holder of Old Notes who wishes to surrender the Old Notes according to
the Guaranteed Delivery Procedures set forth above.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OLD NOTES AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT, INCLUDING DELIVERY THROUGH DTC
AND ANY ACCEPTANCE OF AN AGENT'S MESSAGE TRANSMITTED THROUGH ATOP, IS AT THE
ELECTION AND SOLE RISK OF THE TENDERING HOLDERS, AND THE DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. INSTEAD OF
DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND
DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE. DO NOT SEND THIS LETTER OF TRANSMITTAL OR ANY
OLD NOTES TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
ON THEIR BEHALF.
See "The Exchange Offer" section of the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS OF OLD NOTES WHO TENDER BY
BOOK-ENTRY TRANSFER); WITHDRAWAL RIGHTS
Tenders of Old Notes will be accepted only in the principal amount of
$1,000 and integral multiples thereof. If less than all of the Old Notes
evidenced by a submitted certificate are to be tendered, the tendering holder(s)
should fill in the aggregate principal amount of Old Notes to be tendered in the
box above entitled "Description of Old Notes -- Aggregate Principal Amount
Tendered." A reissued certificate representing the balance of nontendered Old
Notes will be sent to such tendering holder, unless otherwise provided in the
appropriate box on this Letter of Transmittal, promptly after the Expiration
Date. ALL OF THE OLD NOTES DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO
HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED.
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to the Expiration Date. In order for a withdrawal to be
effective prior to that time, a letter or facsimile transmission notice of
withdrawal must be timely received by the Exchange Agent at one of its addresses
set forth above prior to the Expiration Date. Any such notice of withdrawal must
specify the name of the person having deposited the Old Notes to be withdrawn,
identify the Old Notes to be withdrawn by certificate number, if applicable, the
aggregate principal amount of Old Notes to be withdrawn and the name of the
registered holder of the Old Notes as set forth on the certificate for the Old
Notes, if different from that of the person who tendered such Old Note and
otherwise comply with the procedures of the Exchange Agent. The notice of
withdrawal must be signed by the Holder in the same manner as the original
signature on the Letter of Transmittal by which the Old Notes were tendered,
including any required signature guarantees, or be accompanied by documents of
transfer sufficient to have the trustee under the Indenture governing the Old
Notes register the transfer of the Old Notes into the name of the person
withdrawing the tender. 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 "The Exchange
Offer -- Book-Entry Transfer" section of the Prospectus, the notice of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility 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 or facsimile transmission prior to the Expiration Date. Withdrawals of
tenders of Old Notes may not be rescinded. Old Notes properly withdrawn will not
be deemed to have been validly tendered for purposes of the Exchange Offer, and
no New Notes will be issued with respect thereto unless the Old Notes so
withdrawn are validly retendered. Properly withdrawn Old Notes may be retendered
at any
11
<PAGE> 12
subsequent time on or prior to the Expiration Date by following the procedures
described in the Prospectus under "The Exchange Offer -- Procedures for
Tendering."
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.
Neither the Company, any employees, agents, affiliates or assigns of the
Company, the Exchange Agent nor 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 such notification. Any Old Notes which have been
tendered but which are withdrawn will be returned to the holder thereof without
cost to such holder as promptly as practicable after withdrawal.
3. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES.
This Letter of Transmittal must be signed by the registered holder of the
Old Notes tendered hereby and, the signature must correspond exactly with the
name as written on the face of the certificates or on a securities position
listing without any change whatsoever.
If this Letter of Transmittal is signed by a participant in one of the
Book-Entry Transfer Facilities whose name is shown as the owner of the Old Notes
tendered hereby, the signature must correspond with the name shown on the
security position listing as the owner of the Old Notes.
If any tendered Old Notes are owned of record by two or more joint owners,
all of such owners must sign this Letter of Transmittal.
If any tendered Old Notes are registered in different names on several
certificates or securities positions listings, it will be necessary to complete,
sign and submit as many separate copies of this Letter of Transmittal as there
are different registrations.
When this Letter of Transmittal is signed by the registered holder or
holders of the Old Notes specified herein and tendered hereby, no endorsements
of certificates or separate bond powers are required. If, however, the New Notes
are to be issued, or any nontendered Old Notes are to be reissued, to a person
other than the holder, then endorsements of any certificates transmitted hereby
or separate bond powers are required. Signatures on such certificate(s) must be
guaranteed by an Eligible Institution.
In connection with any tender of Old Notes in definitive certificated form,
if this Letter of Transmittal is signed by a person other than the registered
holder or holders of any certificate(s) specified herein, such certificate(s)
must be endorsed or accompanied by appropriate bond powers, in either case
signed exactly as the name or names of the registered holder or holders
appear(s) on the certificate(s), and the signatures on such certificate(s) must
be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted.
ENDORSEMENTS ON CERTIFICATES FOR OLD NOTES OR SIGNATURES ON BOND POWERS
REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FIRM WHICH IS A MEMBER OF
A REGISTERED NATIONAL SECURITIES EXCHANGE OR A MEMBER OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC., OR BY A COMMERCIAL BANK OR TRUST
COMPANY HAVING AN OFFICE OR CORRESPONDENT IN THE UNITED STATES, OR BY AN
"ELIGIBLE GUARANTOR INSTITUTION" WITHIN THE MEANING OF RULE 17Ad-15 UNDER THE
EXCHANGE ACT WHICH IS A MEMBER OF ONE OF THE RECOGNIZED SIGNATURE GUARANTEE
PROGRAMS IDENTIFIED IN THE LETTER OF TRANSMITTAL (EACH AN "ELIGIBLE
INSTITUTION").
12
<PAGE> 13
SIGNATURES ON THIS LETTER OF TRANSMITTAL NEED NOT BE GUARANTEED BY AN
ELIGIBLE INSTITUTION, PROVIDED THE OLD NOTES ARE TENDERED: (I) BY A REGISTERED
HOLDER OF OLD NOTES (WHICH TERM, FOR PURPOSES OF THE EXCHANGE OFFER, INCLUDES
ANY PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY SYSTEM WHOSE NAME APPEARS ON
A SECURITY POSITION LISTING AS THE HOLDER OF SUCH OLD NOTES) WHO HAS NOT
COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" OR "SPECIAL DELIVERY
INSTRUCTIONS" ON THIS LETTER OR (II) FOR THE ACCOUNT OF AN ELIGIBLE INSTITUTION.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Old Notes should indicate in the applicable box the
name and address to which New Notes issued pursuant to the Exchange Offer and/or
substitute certificates evidencing Old Notes not exchanged are to be issued or
sent, if different from the name or address of the person signing this Letter of
Transmittal. In the case of issuance in a different name, the employer
identification or social security number of the person named must also be
indicated. A holder of Old Notes tendering Old Notes by book-entry transfer may
request that Old Notes not exchanged be credited to such account maintained at
the Book-Entry Transfer Facility as such holder may designate hereon. If no such
instructions are given, such Old Notes not exchanged will be returned to the
name or address of the person signing this Letter of Transmittal or credited to
the account listed beneath the box entitled "Description of Old Notes," as the
case may be.
5. TAX IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose Old
Notes are accepted for exchange must provide the Company (as payor) with such
holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9
below, which, in the case of a tendering holder who is an individual, is his or
her Social Security Number. If the Company is not provided with the current TIN
or an adequate basis for an exemption, such tendering holder may be subject to a
$50 penalty imposed by the Internal Revenue Service. In addition, delivery to
such tendering holder of New Notes may be subject to backup withholding in an
amount equal to 31% of all reportable payments made after the exchange. If
withholding results in an overpayment of taxes, a refund may be obtained.
Exempt holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, (ii) the holder
has not been notified by the Internal Revenue Service that such holder is
subject to backup withholding as a result of a failure to report all interest or
dividends or (iii) the Internal Revenue Service has notified the holder that
such holder is no longer subject to backup withholding. If the tendering holder
of Old Notes is a nonresident alien or foreign entity not subject to backup
withholding, such holder must give the Company a completed Form W-8, Certificate
of Foreign Status. These forms may be obtained from the Exchange Agent. If the
Old Notes are in more than one name or are not in the name of the actual owner,
such holder should consult the W-9 Guidelines for information on which TIN to
report. If such holder does not have a TIN, such holder should consult the W-9
Guidelines for instructions on applying for a TIN, check the box in Part 3 of
the Substitute Form W-9 and write "applied for" in lieu of its TIN. Note:
Checking this box and writing "applied for" on the form means that such holder
has already applied for a TIN or that such holder intends to apply for one in
the near future. If such holder does not provide its TIN to the Company within
60 days, backup withholding will begin and continue until such holder furnishes
its TIN to the Company.
13
<PAGE> 14
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Old Notes to it or its order pursuant to the Exchange Offer. If, however, New
Notes and/or substitute Old Notes not exchanged are to be delivered to, or are
to be registered or issued in the name of, any person other than the holder of
the Old Notes tendered hereby, or if tendered Old Notes are registered in the
name of any person other than the person signing this Letter of Transmittal, or
if a transfer tax is imposed for any reason other than the transfer of Old Notes
to the Company or its order pursuant to the Exchange Offer, the amount of any
such transfer taxes (whether imposed on the 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 herewith, the amount of such
transfer taxes will be billed directly to such tendering holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE OLD NOTES SPECIFIED IN THIS LETTER OF
TRANSMITTAL.
7. DETERMINATION OF VALIDITY.
The Company will determine, in its sole discretion, all questions as to the
form of documents, validity, eligibility (including time of receipt) and
acceptance for exchange of any tender of Old Notes, which determination shall be
final and binding on all parties. The Company reserves the absolute right to
reject any and all tenders determined by it not to be in proper form or the
acceptance of which, or exchange for which, 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 set forth
in the Prospectus under the caption "The Exchange Offer" or any defects,
irregularities or conditions 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 this Letter of Transmittal and the instructions hereto) 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. Although the Company intends to notify holders of defects or
irregularities with respect to tenders of Old Notes, neither the Company, any
employees, agents, affiliates or assigns of the Company, the Exchange Agent, nor
any other person shall be under any duty to give notification of any
irregularities in tenders or incur any liability for failure to give such
notification.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Notes, by execution of this Letter of
Transmittal or by delivery to the Exchange Agent of an Agent's Message shall
waive any right to receive notice of the acceptance of their Old Notes for
exchange.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES.
Any holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent, at the address and telephone number indicated
above.
14
<PAGE> 15
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYOR'S NAME: THE CHASE MANHATTAN BANK
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
----------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE Social Security Number
FORM W-9 BOX AT RIGHT AND CERTIFY BY SIGNING OR
AND DATING BELOW ------------------------------
Employer Identification Number
---------------------------------------------------------------------------------------------
Department of the Treasury PART 2--Certification--Under Penalties of Perjury. I certify that: PART 3--
Internal Revenue Service (1) The number shown on this form is my correct Taxpayer Awaiting TIN [ ]
Identification Number (or I am waiting for a number to be
issued to me) and
Payer's Request for Taxpayer (2) I am not subject to backup withholding because; (a) I am exempt
Identification Number (TIN) from backup withholding, (b) I have not been notified by the
Internal Revenue Service ("IRS") that I am subject to backup
withholding as a result of failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
---------------------------------------------------------------------------------------------
Certificate instructions - You must cross out item (2) in Part 2 above if you have been
notified by the IRS that you are subject to backup withholding because of under-reporting
interest or dividends on your tax return. However, if after being notified by the IRS that
you were subject to backup withholding you received another notification from the IRS stating
that you are no longer subject to backup withholding, do not cross out item (2).
SIGNATURE ____________________________________ DATE _______________________
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO HOLDERS OF NEW NOTES PURSUANT TO THE EXCHANGE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
16
<PAGE> 16
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within 60 days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a
number.
- ---------------------------------------------------------
---------------------------------------------------------
Signature Date
16
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
11% SENIOR NOTES DUE 2005
OF
OXFORD HEALTH PLANS, INC.
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Oxford Health Plans, Inc., a Delaware corporation (the
"Company"), made pursuant to the Prospectus, dated -- (the "Prospectus"), if
certificates for the outstanding 11% Senior Notes due 2005 of the Company (the
"Old Notes") are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach The Chase Manhattan Bank (the "Exchange Agent") on
or prior to 5:00 p.m., New York City time, on the Expiration Date of the
Exchange Offer. This Notice of Guaranteed Delivery may be delivered or
transmitted by telegram, telex, facsimile transmission, mail or hand delivery to
the Exchange Agent as set forth below. See "The Exchange Offer -- Procedures for
Tendering" in the Prospectus. Capitalized terms used herein but not defined
herein have the respective meanings given to them in the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON --, 1999
UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF OLD NOTES MAY
BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
The Exchange Agent:
THE CHASE MANHATTAN BANK
<TABLE>
<S> <C>
By Mail, Hand or Overnight Courier: By Facsimile (For Eligible Institutions Only):
55 Water Street (212) 638-7380 or (212) 638-7381
Room 234, North Building Confirm by Telephone:
New York, NY 10041 (212) 638-0828
Attn: Carlos Esteves
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION VIA TELEGRAM,
TELEX OR FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
This form is not to be used to guarantee signatures. If a signature on the
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the aggregate principal
amount of Old Notes set forth below pursuant to the guaranteed delivery
procedures set forth in the Prospectus.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
<PAGE> 2
PLEASE SIGN AND COMPLETE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Signature(s) of Owner(s) or Authorized Signatory: Name(s) of Holder(s):
- -------------------------------------------------------- --------------------------------------------------------
- -------------------------------------------------------- --------------------------------------------------------
--------------------------------------------------------
*Principal Amount of Old Notes Tendered: Address:
- -------------------------------------------------------- ------------------------------------------------
- -------------------------------------------------------- --------------------------------------------------------
Certificate No(s). of Old Notes (if available): Area Code and Telephone No.: -----------------------
- --------------------------------------------------------
- -------------------------------------------------------- If Old Notes will be delivered by book-entry transfer at
- -------------------------------------------------------- The Depository Trust Company, insert Depository Account
No.:
Date: --------------------------------------------------------
- ---------------------------------------------------
</TABLE>
This Notice of Guaranteed Delivery must be signed by the holder(s) of Old Notes
exactly as its (their) name(s) appear on certificates for Old Notes or on a
security position listing as the owner of Old Notes, or by person(s) authorized
to become holder(s) by endorsements and documents transmitted with this Notice
of Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Do not send Old Notes with this form. Notes should be sent to the Exchange
Agent together with a properly completed and duly executed Letter of
Transmittal.
- -------------------------
* Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc. or a commercial bank
or trust company having an office or a correspondent in the United States,
hereby (a) represents that each holder of Old Notes on whose behalf this tender
is being made "own(s)" the Old Notes covered hereby within the meaning of Rule
14e-4 under the Securities Exchange Act of 1934, as amended, (b) represents that
such tender of Old Notes complies with such Rule 14e-4, and (c) guarantees that,
within three business days after the Expiration Date, a properly completed and
duly executed Letter of Transmittal (or a facsimile thereof), together with
certificates representing the Old Notes covered hereby in proper form for
transfer (or confirmation of the book-entry transfer of such Old Notes into the
Exchange Agent's account at The Depository Trust Company, pursuant to the
procedure for book-entry transfer set forth in the Prospectus) and required
documents will be deposited by the undersigned with the Exchange Agent.
The undersigned acknowledges that it must deliver the Letter of Transmittal
and Old Notes tendered hereby to the Exchange Agent within the time period set
forth above and that failure to do so could result in financial loss to the
undersigned.
<TABLE>
<S> <C>
Name of Firm: ----------------------------------------- --------------------------------------------------------
Address: AUTHORIZED SIGNATURE
- ------------------------------------------------
- -------------------------------------------------------- Name: --------------------------------------------------
Area Code and Title:
Telephone Number: ------------------------------------ ----------------------------------------------------
Date:
----------------------------------------------------
</TABLE>
3
