As filed with the Securities and Exchange Commission on February 16, 1999
Registration No. 333-71317
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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FISHER SCIENTIFIC INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 5049 02-0451017
(State or other jurisdiction (Primary standard industrial (I.R.S. employer identification number)
of incorporation or organization) classification code number)
</TABLE>
Liberty Lane
Hampton, NH 03842
(603) 926-5911
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Todd M. DuChene, Esq.
Fisher Scientific International Inc.
Liberty Lane
Hampton, NH 03842
(603) 926-5911
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Gregory A. Fernicola, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
(212) 735-3000
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
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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 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. [ ]-----------
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
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PROSPECTUS
Offer to Exchange All 9% Senior Subordinated Notes due 2008
for 9% Senior Subordinated Notes due 2008, Which Have Been Registered
Under the Securities Act of 1933, As Amended, of
[GRAPHIC LOGO of Fisher Scientific International Inc.]
The Exchange Offer will expire at 5:00 P.M.,
New York City time, on March 17, 1999, unless extended.
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Terms of the Exchange Offer:
o We will exchange all outstanding Old Notes that are validly tendered
and not withdrawn prior to the expiration of the Exchange Offer.
o You may withdraw tenders of Old Notes at any time prior to the
expiration of the Exchange Offer.
o We believe that the exchange of Old Notes will not be a taxable
exchange for U.S. federal income tax purposes but you should see
"Certain Federal Income Tax Considerations" on page 83 for more
information.
o We will not receive any proceeds from the Exchange Offer.
o The terms of the New Notes are substantially identical to the
outstanding Old Notes, except that the New Notes are registered under
the Securities Act and the transfer restrictions and registration
rights relating to the Old Notes do not apply to the New Notes.
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A discussion of risks that should be considered by holders prior to
tendering their Old Notes is set forth under "Risk Factors" on page 13.
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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.
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The date of this prospectus is February 16, 1999.
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FORWARD-LOOKING STATEMENTS
Certain statements contained or incorporated by reference into this
prospectus constitute "forward-looking statements" as that term is defined
under the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause our actual results, performance or achievements, or industry
results, to be materially different from those contemplated or projected,
forecast, estimated or budgeted in or expressed or implied by such
forward-looking statements. Such factors include, among others, the risk and
other factors set forth under "Risk Factors" as well as the following:
o general economic and business conditions;
o industry trends;
o overseas expansion;
o the loss of major customers or suppliers;
o the timing of orders received from customers;
o cost and availability of raw materials;
o changes in business strategy or development plans;
o availability and quality of management;
o the availability, timing and terms of future acquisitions;
o the impact of the "Year 2000" issue;
o the impact of the conversion to the Euro by the European Economic and
Monetary Union; and
o availability, terms and deployment of capital.
You should pay special attention to such forward-looking statements
including, but not limited to, statements relating to (1) our ability to
execute our business strategy, (2) our ability to obtain sufficient resources
to finance our working capital and capital expenditure needs and provide for
our known obligations, (3) industry sales growth and our ability to make
acquisitions and (4) the impact of environmental regulation on our operations.
AVAILABLE INFORMATION
We have filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 (together with all
amendments and exhibits, the "Registration Statement") under the Securities
Act, with respect to our offering of the New Notes. This prospectus does not
contain all of the information in the Registration Statement. You will find
additional information about us and the New Notes in the Registration
Statement. Any statements made in this prospectus concerning the provisions of
legal documents are not necessarily complete and you should read the documents
that are filed as exhibits to the Registration Statement.
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and file periodic
reports, registration statements, proxy statements and other information with
the Commission. You may inspect and copy the Registration Statement, including
exhibits, and our periodic reports, registration statements, proxy statements
and other information we file with the Commission at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 or at its regional offices located
at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World
Trade Center, Suite 1300, New York, New York 10048. You can obtain copies of
such material from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
maintains an Internet "website" that contains our reports, registration proxy
and information statements and other information that we file electronically
with the Commission at http://www.sec.gov.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We incorporate by reference into this prospectus documents which we
previously filed with the Commission. You may request copies of any of these
documents, other than exhibits to such documents, except for exhibits
specifically incorporated by reference in such documents, without charge, upon
written or oral request, from Fisher Scientific International Inc., Liberty
Lane, Hampton, New Hampshire 03842, Attention: Todd M. DuChene, Esq., Vice
President, General Counsel and Secretary, telephone (603) 926-5911.
The following documents we previously filed (File No. 1-10920) with the
Commission are incorporated into this prospectus by reference:
o Annual Report on Form 10-K for the year ended December 31, 1997, as
amended by Form 10-K/A, dated April 17, 1998;
o Proxy Statement, dated April 17, 1998, which was mailed to our
stockholders in connection with the Annual Meeting of Stockholders held
on May 12, 1998;
o Quarterly Report on Form 10-Q for the quarter ended March 31, 1998;
o Quarterly Report on Form 10-Q for the quarter ended June 30, 1998;
o Quarterly Report on Form 10-Q for the quarter ended September 30, 1998;
and
o Current Reports on Form 8-K dated January 21, 1998 and December 4, 1998.
All reports and other documents we subsequently file pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act shall be deemed to be
incorporated by reference into this prospectus and to be part of this
prospectus from the date we subsequently file such reports and documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference into this prospectus are deemed to be modified or
superseded for purposes of this prospectus to the extent modified or superseded
by another statement contained in any subsequently filed document also
incorporated by reference in this prospectus. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute part of this prospectus.
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SUMMARY
The following summary highlights selected information from this prospectus
and may not contain all of the information that is important to you. You should
read this summary along with the more detailed information and financial
statements, including the notes to such financial statements, appearing
elsewhere or incorporated by reference into this prospectus. Unless otherwise
indicated, the words "we," "our," "ours" and "us" refer to Fisher Scientific
International Inc., a Delaware corporation, and its subsidiaries. "Fisher"
refers to Fisher Scientific International Inc. All references to "fiscal 1997"
refer to the year ended December 31, 1997 and prior years are referred to in a
corresponding manner. Unless otherwise indicated, industry data contained in
this prospectus is derived from publicly available industry trade journals,
reports and other publicly available sources, which we have not independently
verified, or from estimates we have made which we believe are reasonable but
which we have not independently verified. FOR IMPORTANT FACTORS YOU SHOULD
CONSIDER, PLEASE REFER TO "RISK FACTORS" BEGINNING ON PAGE 13.
Fisher Scientific International Inc.
We are a world leader in serving science, providing more than 245,000
products and services to research, healthcare, industrial, educational and
government customers in 145 countries. We serve as a one-stop source for the
scientific and laboratory needs of our customers, supplying a broad product
offering of leading brands of instruments, research chemicals, clinical
consumables, diagnostics, laboratory workstations and other laboratory
supplies. For the nine months ended September 30, 1998, our total sales and
EBITDA (as defined below) were $1,716.6 million and $130.1 million,
respectively.
The mailing address of our principal executive offices is Liberty Lane,
Hampton, New Hampshire 03842, and our telephone number is (603) 926-5911.
Our Strengths
Market Leadership. We are a leading global provider of high-quality
scientific instruments, equipment, supplies, chemicals and services to the
scientific research, healthcare, industrial, educational and governmental
markets. Based on industry data, management believes that we are a leading
distributor of laboratory products to the U.S. scientific research market and
the number two distributor of clinical laboratory products to the U.S.
healthcare market.
Global Brand. For over 95 years we have been serving science and have
established Fisher Scientific as a global brand name. As a result of our
international presence and publication of The Fisher Catalog, our name and
family of products and services are well-known and respected in each of our
markets. Management believes that The Fisher Catalog is considered one of the
industry's most comprehensive sources for laboratory supplies and equipment. In
addition, we publish the CMS/Fisher Healthcare Catalog, the Fisher Chemical
Catalog, the Fisher Safety Catalog, the Fisher Science Education Catalog and
over a dozen international catalogs. More than one million copies of our
various catalogs are produced and distributed biannually, with supplements
tailored to specific market segments such as biotechnology, research chemicals,
educational materials and occupational health and safety. Our international
catalogs support our worldwide presence.
Diverse Customer Base. Our customer base includes some of the world's
leading pharmaceutical and scientific research companies, representing
approximately 4,200 national reference and independent laboratories, 8,650
hospitals and 146,000 physicians offices. In addition to serving customers in
the traditional scientific-related industries, we have developed relationships
with emerging biotechnology and entrepreneurial businesses. No one customer
accounted for more than 5% of total sales in fiscal 1997. Our top ten research
customers have on average been doing business with us for over 15 years. We
expect to benefit from this diverse and long-standing customer base as these
customers continue to consolidate the number of suppliers they utilize.
Extensive Sourcing and Manufacturing Capabilities. Management believes
that our global sourcing and manufacturing capabilities enhance our ability to
offer our customers the broadest product offering and the best price/quality
relationship. We have sourcing relationships with over 3,200 suppliers
worldwide as well as our own manufacturing plants in the United States and
Europe. Proprietary products, which consist of self-manufactured products and
products sold through exclusive distribution arrangements, represented 40% of
our
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total sales in fiscal 1997. Proprietary products provide us with increased
sourcing flexibility and our customers with a complete range of laboratory
supplies. We generated approximately 16% of our total sales in fiscal 1997
through the sale of self-manufactured products such as chemicals, laboratory
equipment and laboratory workstations.
Worldwide Logistics Network. We have developed highly automated and
efficient logistics capabilities, one of the critical links between supplier
and customer. Our U.S. logistics facilities, monitored and coordinated by a
command center in Pittsburgh, Pennsylvania, supply products throughout the U.S.
in an efficient and timely manner. Our 24 U.S. distribution facilities are
complemented by our international locations, including distribution centers in
Canada, Germany, France, England, Belgium, Switzerland, the Netherlands, the
Czech Republic, Japan, Singapore, Korea, Malaysia, Mexico and Australia. In
addition, we use affiliated dealers and distributors to supply products in more
remote international locations. Through our worldwide distribution network, we
distribute an average of 20,000 items every business day, with products
accounting for more than 90% of total sales in fiscal 1997 shipped to customers
within 24 hours of being ordered. Our management believes that this combination
of global logistics, distribution and sourcing capabilities distinguishes us
from other distributors serving the scientific community.
Growing, Recurring and Diversified Revenue Stream. Our management believes
that demand for our products and services is driven primarily by applicable
research and development expenditures. According to data published by the U.S.
National Science Foundation (the "National Science Foundation"), applicable
research and development expenditures have grown at a 4.4% compounded rate over
the last ten years. We benefit from the stable historical growth rates in our
core markets. We also benefit from revenue diversity across different end-user
markets with approximately 49% of total sales in fiscal 1997 derived from sales
to the U.S. research sector, approximately 26% to the U.S. healthcare sector
and approximately 21% to our international customers. Our revenue stream is
also diversified, with no stock keeping unit (SKU) representing more than 1.5%
of total sales in fiscal 1997. The sale of consumable laboratory supplies and
specialty chemicals, which represented approximately 75% of our total sales in
fiscal 1997, provides a stable base of recurring revenues.
Proven and Committed Senior Management Team. Paul M. Montrone, Chairman of
the Board and Chief Executive Officer of Fisher, and Paul M. Meister, Vice
Chairman of the Board, Executive Vice President and Chief Financial Officer of
Fisher, have a demonstrated track record of successfully developing significant
international businesses, including Wheelabrator-Frye Inc., AlliedSignal Inc.,
Henley Manufacturing Corporation, Wheelabrator Technologies Inc., The General
Chemical Group Inc. and Prestolite Wire Corporation. Currently certain members
of our management, including Messrs. Montrone and Meister, own approximately
12% of Fisher's outstanding common stock.
Successful Implementation of Profit Improvement Programs. We are
implementing profit improvement and restructuring programs. Since January 1998,
we have consolidated 8 warehouse facilities and 5 customer service centers.
Management believes that these and other management actions have contributed to
an improvement in EBITDA (as defined below) margins from 7.3% for the nine
months ended September 30, 1997 to 7.6% for the nine months ended September 30,
1998. Our management intends to continue profit improvement initiatives,
including consolidation of additional warehouse and customer service centers
over the next few years. While we have achieved certain improvements in
profitability as a result of these programs, we cannot guarantee that these
improvements will continue, or that we will be able to close additional
warehouses, or that the our current restructuring plan will continue to be
successful.
The Industry
Our market consists of five principal sectors:
(1)scientific research and development activities conducted by
biotechnology, pharmaceutical, chemical, environmental and other
entities;
(2)hospitals' and physicians' offices that perform diagnostic tests on
patients;
(3)commercial and national reference laboratories;
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(4)occupational health and safety products used in production and other
activities; and
(5)educational activities in research institutions, medical schools,
universities, colleges, elementary and secondary schools.
Our largest market is the scientific research supply market. According to
a recent study conducted by the Laboratory Products Association, sales to the
scientific research supply market were approximately $5 billion during 1997.
The scientific research market is primarily impacted by the level of spending
on applicable scientific and technology related research and development
("R&D") in the U.S. The National Science Foundation estimates that non-defense
related R&D expenditures increased from $44 billion in 1980 to over $130
billion in 1995, representing a compound annual growth rate of approximately
7.5%. In addition to this growth, non-defense-related R&D expenditures have not
experienced a year-over-year decline since 1960, the year when the National
Science Foundation began publishing such data.
Our second-largest market is the U.S. clinical laboratory testing market.
A recent study by MarketData Enterprises Inc. estimated that sales in the U.S.
clinical laboratory testing market totaled approximately $30 billion in 1997,
up from approximately $27 billion in 1993. Based on these figures, our
management estimates that sales in the clinical testing equipment and supply
market, in which we conduct our clinical business, totaled approximately $6
billion. We estimate that our third-largest market, safety supply, is
approximately $7 billion market.
The markets in which we compete are typically characterized by high
transaction volume (units) with relatively small average order prices. As a
result, customers in these markets incur relatively high average procurement
costs per order. We believe that as end users consolidate their vendor base
and/or outsource their procurement functions to reduce costs, manufacturer use
of distribution and demand for our distribution services, will increase. By
leveraging our distribution and technological capabilities as well as our
national sales force, manufacturers and end users can reduce the cost of
procurement for an expanding list of products.
Over the last few years, the trend toward fewer suppliers has resulted in
consolidation of the fragmented scientific and healthcare distribution markets.
Consolidation benefits larger distributors by presenting them with the
opportunity to leverage large distribution infrastructures over higher sales
volume and more customers. Our merger with Curtin Matheson Scientific ("CMS"),
the merger of VWR Scientific Products Corporation with Baxter Industrial, and
the proposed merger of Allegiance Healthcare Corporation with Cardinal Health,
Inc. are illustrative of this trend. These same trends exist in most
international markets. We are actively seeking acquisition opportunities both
in the U.S. and abroad. See "--Recent Developments."
Products and Services
We currently have over 245,000 products available for delivery from our
electronic and other order-entry systems and are continuously expanding and
refining our product offerings to provide our customers with a complete array
of laboratory and clinical testing supplies. In addition to supplying leading
brands of instruments, supplies and equipment, we manufacture and sell research
chemicals, clinical consumables, instruments, diagnostics, and laboratory
workstations.
Our Products. Our product portfolio is comprised of proprietary products
as well as sourced products. Proprietary offerings consist of self-manufactured
products and products sold through exclusive distribution agreements. Our
management estimates that proprietary products accounted for approximately 40%
of total sales in fiscal 1997. Consumable products, such as laboratory supplies
and specialty chemicals, represented approximately 75% of our total sales in
fiscal 1997.
Sales and Customer Service Professionals. In order to reduce the
complexity of today's scientific research and clinical testing product
offerings, we provide customer support through a worldwide sales and customer
service network. Our direct sales force consists of over 1,000 account
representatives and product/
systems sales specialists worldwide. Most of the members of the our direct
sales force have scientific or medical backgrounds, which enable them to
provide technical assistance to the end users of our products. In addition to
performing traditional selling functions, these representatives provide the
basis for a market-driven development program for new products and services by
identifying customer needs and utilizing our
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accumulated technical expertise to translate those needs into new services or
products, which may be manufactured by either us or our suppliers. In addition,
our customer service organization includes over 1,000 representatives
worldwide. These customer service representatives, supported by a scientific
and technical staff, respond to end-user product or application questions and
assist our customers with efficient order entry and order expediting.
Fisher Catalog. We have published The Fisher Catalog for over 90 years and
it is a standard reference for the scientific community worldwide. In addition,
we publish the CMS/Fisher Healthcare Catalog, the Fisher Chemical Catalog, the
Fisher Safety Catalog, the Fisher Science Education catalog, as well as several
international catalogs in nine different languages. In 1995, we established an
Internet site (Fishersci.com), which currently features The Fisher Catalog, the
Fisher Chemical Catalog, the Fisher Safety Catalog, the Acros Organics Catalog
of Fine Chemicals and the CMS/Fisher Healthcare Catalog, as well as other
product, safety and general information, all in electronic form for quick and
easy access. Through Fishersci.com, one can browse more than 100,000 items and
over 25,000 images representing 6,000 catalog pages. We continuously add new
products, making our suite of catalogs a dynamic library, one of the most
complete and up-to-date sources of laboratory and safety products available.
Our customers have the ability to place their orders electronically through an
intuitive, integrated and easy-to-use process. We also continue to publish over
a dozen international catalogs to support our growing worldwide presence. We
produce more than one million copies of our various catalogs biannually, with
supplements tailored to specific market segments such as biotechnology,
research chemicals, educational materials and occupational health and safety.
Distribution
Our distribution network comprises 24 locations in the U.S., including a
national distribution center in Somerville, New Jersey, four regional centers
(New Jersey, California, Illinois and Georgia) and 19 local facilities
throughout the United States. We also have two distribution centers in Canada
and France and one each in Germany, England, Belgium, Switzerland, the
Netherlands, the Czech Republic, Japan, Singapore, Korea, Malaysia, Mexico and
Australia. Through our worldwide distribution networks, we distribute an
average of 20,000 items every business day, with products accounting for more
than 90% of total sales in fiscal 1997 shipped to customers within 24 hours of
being ordered.
Manufacturing
We operate principal manufacturing facilities in Fair Lawn, Somerville and
Swedesboro, New Jersey; Two Rivers, Wisconsin; Indiana and Pittsburgh,
Pennsylvania; Huntersville, North Carolina; Loughborough, United Kingdom; Geel,
Belgium; Rochester and Conklin, New York; and Mountain Home, Arkansas. Products
manufactured include research, bulk and organic chemical, laboratory equipment,
laboratory fumehoods, wood, plastic and metal laboratory workstations and
furniture, computer local area network "LAN" cabinets and command bridges,
scientific glassware and plastic labware, and diagnostic and educational
materials. More than one-half of these products are sold directly to end users,
other dealers and distributors, and the balance is sold through our
distribution network.
Our manufacturing customers range from small start-up operations to large
national corporations and government agencies. We are not dependent on any
single customer and are operated on a "stand alone" basis to complement our
distribution organization by providing our sales representatives with a full
range of value added service and product offerings and to position us as a
one-stop source for all of the customer's scientific research and laboratory
needs.
Suppliers
We distribute laboratory instruments, supplies and equipment obtained from
over 3,200 vendors. Vendors generally offer these products to distributors on
substantially similar terms. Although certain products are available from only
a limited number of vendors, we do not anticipate that we will be unable to
purchase any of the products it distributes. Our largest supplier represented
approximately 11% of total sales in fiscal 1997.
Competition
We operate in a highly competitive market. We compete primarily with a
wide range of suppliers and manufacturers that sell their own products directly
to end users. We also compete with other distributors, such as VWR Scientific
Products Corporation in the scientific research market and Allegiance
Healthcare
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Corporation in the clinical market. The principal means of competition in the
markets we serve are systems capabilities, breadth and exclusivity of product
offerings, price and service. We believe that we compete effectively in each of
these areas.
Trademarks and Patents
We own or license a number of patents and patent applications that are
important to our businesses. We have more than 200 registered and unregistered
service marks and trademarks for our products and services. Some of our more
significant marks include Accumet, Acros, Biochemical Sciences, Chemalert,
Chemguard, CMS, Curtin Matheson Scientific, Enviroware, Fisher, Fisherbiotech,
Fisherbrand, Fisher Diagnostics, Fisher Healthcare, Fisher Safety, Fisher
Scientific, Gastrak, Hamilton, Histoprep, Isotemp, Marathon, Microprobe,
Optima, Pacific Hemostasis, and Valutrak. Registered trademarks generally can
have perpetual life, provided they are renewed on a timely basis and continue
to be used properly as trademarks, subject to the rights of third parties to
seek cancellation of the marks.
Customers, Seasonality and Backlog
Our sales are not materially dependent upon any single customer or any few
customers. No single customer of ours represented more than 5% of 1997 sales.
Our customers range in size from start-up companies, hospital purchasing
consortiums, and government agencies to nationally and internationally
recognized scientific research, medical and educational institutions. Our sales
are generally related to applicable R&D spending and to clinical testing
practices and are therefore not seasonal to any significant extent. In
addition, no material portion of our business is subject to renegotiation of
profits or termination at the election of the United States Government. Because
our products are, in most cases, sold for immediate shipment, there are no
significant backlogs.
The Recapitalization
Pursuant to the Second Amended and Restated Agreement and Plan of Merger
dated November 17, 1997 (as amended, the "Merger Agreement") between Fisher and
FSI Merger Corp. ("FSI"), a Delaware corporation formed by Thomas H. Lee
Company ("THL Co."), which provided for the merger of FSI with and into Fisher
(the "Merger") and the recapitalization of Fisher (the Merger, the financing of
the Merger and the related transactions are collectively referred to as the
"Recapitalization"), on January 21, 1998, approximately 87% of the fully
diluted shares of Fisher's common stock were converted into the right to
receive $9.65 per share in cash, or approximately $955.0 million in the
aggregate, pursuant to an election process that provided stockholders the right
to elect for each share of Fisher's common stock held, subject to proration,
either $9.65 in cash or to retain one share of common stock, $0.01 par value,
in the recapitalized company.
In connection with the Recapitalization, Fisher entered into and, along
with certain material foreign subsidiaries, are the obligor pursuant to, a new
senior bank credit facility consisting of (1) a $294.2 million term loan
facility (the "Term Facility") and (2) a $175.0 million revolving credit
facility (the "Revolving Credit Facility" and, together with the Term Facility,
the "New Credit Facility"). We financed the Recapitalization with:
o $387.5 million from the issuance of $400.0 million aggregate principal
amount of Fisher's 9% Senior Subordinated Notes due 2008 (the "Existing
Notes");
o $294.2 million of term loan borrowings under the New Credit Facility;
o $150.0 million of proceeds pursuant to a securitization of accounts
receivable (the "Receivables Securitization Facility"); and
o $303.0 million from the sale of Fisher's common stock (the "Equity
Contribution") to THL Co. (through Thomas H. Lee Equity Fund III, L.P.
(the "THL Fund III") and other affiliates of THL Fund III (collectively,
"THL")), DLJ Merchant Banking Partners II, L.P. and affiliates ("DLJMB"),
Chase Equity Associates, L.P. ("Chase Equity") and Merrill Lynch & Co.
("Merrill Lynch" and, together with THL, DLJMB and Chase Equity, the
"Equity Investors"). The proceeds from such bank borrowings, the sale of
the Existing Notes, the Receivables Securitization Facility and the
Equity Contribution were used principally to finance the conversion into
cash of the shares of Fisher's common stock then outstanding which were
not retained by existing stockholders and eligible employees, to
refinance certain of our outstanding indebtedness and to pay related fees
and expenses of the Recapitalization.
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Recent Developments
Recent Acquisitions; Possible Transactions; Use of Proceeds
During 1998, we acquired 5 companies for a total cash consideration of
$203 million, including the acquisition in December 1998 of approximately 90%
of Bioblock Scientific S.A. ("Bioblock"), a leading distributor of scientific
and laboratory instrumentation in France, for $134 million (the "Bioblock
Acquisition"). In addition, we acquired additional Bioblock shares in January
1999 for cash consideration of $14 million, bringing our ownership position to
99.4% of the outstanding shares. We are currently in the process of acquiring
the remaining shares in accordance with French law. In January 1999, we also
acquired Columbia Diagnostics Inc., a Virginia-based provider of laboratory
products and supplies to the healthcare industry ("Columbia"), and Structured
Computer Systems, a Connecticut-based provider of procurement and materials
management solutions to businesses ("SCS"), for total cash consideration of
approximately $25 million. We are actively seeking additional strategic
acquisitions. Our acquisition strategy is focused on improving penetration in
select markets across the world in order to expand our global distribution
network. In addition, we seek to expand our proprietary product offering mix of
internally manufactured products to improve our operating margin. As a result,
we are, from time to time, actively involved in discussions with a number of
potential acquisition targets. We cannot guarantee that any potential
acquisition will be consummated or that, despite actively seeking additional
acquisitions, we will be successful or that we will be able to consummate any
acquisition or that it will be successfully integrated into Fisher.
On November 20, 1998, our subsidiary, Fisher Scientific Company, L.L.C.,
entered into a loan agreement (the "Loan Agreement") with LaSalle National
Bank, as lender, pursuant to which we borrowed $8.8 million, funded on the
basis of the Illinois State Treasurer's Economic Program. We will use the
amounts borrowed under the Loan Agreement to finance part of the consolidation
of our Midwestern distribution centers into a facility located in Hanover Park,
Illinois. The Loan Agreement provides for an interest rate of 2.25% plus (1)
until November 20, 2000, the rate for U.S. Treasury Bonds maturing over a two
year period and (2) the rate for U.S. Treasury Bonds maturing over a three year
period thereafter.
We are currently in the process of reviewing strategic alternatives for
our businesses relating to computer software development, electronic commerce,
materials procurement and military maintenance, repair and operations supply,
excluding the business of our Procurement Services Inc. subsidiary. Although it
is currently anticipated that the majority of these businesses will be spun-off
during the first or second quarter of 1999, and the remainder will be sold, we
cannot guarantee that such transactions will occur. None of these businesses
are material individually or in the aggregate to our business or operations.
We used the proceeds from the offering of our 9% Senior Subordinated Notes
due 2008 (the "Old Notes") which closed on November 20, 1998 (the "Offering")
to temporarily pay down debt outstanding under the Revolving Credit Facility
and to fund working capital needs which would have been historically funded
through the Receivables Securitization Facility. Should we reach an agreement
with respect to any of the acquisitions presently being discussed or any other
acquisitions, we intend to reborrow additional amounts under the Revolving
Credit Facility and to sell additional receivables under the Receivables
Securitization Facility to make such acquisitions and for working capital and
other general corporate purposes. If we were to consummate one or more such
acquisitions funded directly or indirectly by borrowings under the Revolving
Credit Facility and/or the Receivables Securitization Facility, our leverage
could substantially increase. At September 30, 1998, after giving effect to the
Offering and the application of the net proceeds therefrom, we would have had
approximately $309 million in aggregate availability under the Revolving Credit
Facility and the Receivables Securitization Facility.
6
<PAGE>
Summary of the Exchange Offer
Securities Offered...... We are offering up to $200,000,000 aggregate
principal amount of new 9% Senior Subordinated Notes
due 2008 which have been registered under the
Securities Act (the "New Notes"). The form and terms
of the New Notes are identical in all material
respects to those of the Old Notes. The New Notes,
however, will not contain certain transfer
restrictions, registration rights and liquidated
damages provisions relating to the Old Notes. The Old
Notes may be exchanged for New Notes under the
Exchange Offer described in this prospectus under the
headings "The Exchange Offer" and "Exchange Offer;
Registration Rights." If the Exchange Offer is not
completed by June 18, 1999, the interest rate on the
Old Notes will increase by $0.192 per week per $1,000
amount of the Old Notes until the Exchange Offer is
completed.
The Exchange Offer...... We are offering to exchange up to $200,000,000
aggregate principal amount of the New Notes for up to
$200,000,000 aggregate principal amount of Old Notes.
The Old Notes were not registered with the
Commission. We are offering to issue the New Notes to
satisfy our obligations contained in the registration
agreement entered into when the Old Notes were sold
in transactions pursuant to Rule 144A and Regulation
S under the Securities Act. Old Notes may be
exchanged only in integral multiples of $1,000. You
may tender your Old Notes by following the procedures
under the heading "The Exchange Offer."
Tenders; Expiration Date;
Withdrawal of Tender... The Exchange Offer will expire at 5:00 p.m., New
York City time, on March 17, 1999, unless we extend
it. If you decide to exchange your Old Notes for New
Notes, you must acknowledge that you are not engaging
in, and do not intend to engage in, a distribution of
the New Notes. The tender of Old Notes pursuant to
the Exchange Offer may be withdrawn at any time prior
to 5:00 p.m., New York City time, on March 17, 1999.
If we decide not to accept any Old Notes for
exchange, they will be returned without expense to
the tendering holder promptly after the expiration or
termination of the Exchange Offer. See "The Exchange
Offer--Terms of the Exchange Offer; Period for
Tendering Old Notes" and "The Exchange
Offer--Withdrawal Rights."
Certain Conditions to the
Exchange Offer......... The Exchange Offer is subject to customary
conditions, which we may waive. Please read the
section "The Exchange Offer--Certain Conditions to
the Exchange Offer" of this prospectus for more
information regarding conditions to the Exchange
Offer.
Certain Federal Tax
Considerations......... Your exchange of Old Notes for New Notes pursuant
to the Exchange Offer will not result in any gain or
loss to you for federal income tax purposes. See
"Certain Federal Income Tax Considerations" in this
prospectus.
Use of Proceeds......... We will receive no proceeds from the Exchange
Offer.
Exchange Agent.......... State Street Bank and Trust Company is the Exchange
Agent. The address and telephone number of the
Exchange Agent are set forth in "The Exchange
Offer--Exchange Agent" in this prospectus.
7
<PAGE>
Consequences of Not Exchanging Old Notes
If you do not exchange your Old Notes in the Exchange Offer, your Old
Notes will continue to be subject to the restrictions on transfer set forth in
the legend on the certificate for your Old Notes. In general, you may offer or
sell your Old Notes only if they are registered under, offered or sold pursuant
to an exemption from, or offered or sold in a transaction not subject to, the
Securities Act and applicable state securities laws. We do not currently intend
to register the Old Notes under the Securities Act. Under certain
circumstances, however, certain holders of Old Notes, including holders who are
not permitted to participate in the Exchange Offer or who may not freely resell
New Notes received in the Exchange Offer, may require us to file and cause to
become effective, a shelf registration statement which would cover resales of
Old Notes by such holders. See "The Exchange Offer--Consequences of Exchanging
or Failing to Exchange Old Notes" and "Exchange Offer; Registration Rights."
Summary Description of the New Notes
The terms of the New Notes and the Old Notes are identical in all material
respects, except that certain transfer restrictions and registration rights
relating to the Old Notes do not apply to the New Notes, and that if the
Exchange Offer is not completed by June 18, 1999, the interest rate on the Old
Notes will increase by $0.192 per week per $1,000 amount of the Old Notes until
the Exchange Offer is completed. Where we refer to "Notes" in this document, we
are referring to both Old Notes and New Notes.
Notes Offered........... We are offering up to $200,000,000 principal amount
of 9% Senior Subordinated Notes due 2008, which have
been registered under the Securities Act.
Maturity Date........... February 1, 2008.
Interest Payment Dates... February 1 and August 1 of each year, beginning
February 1, 1999.
Optional Redemption..... The Notes will be redeemable at our option, in
whole or in part, at any time on or after February 1,
2003 at the redemption prices set forth herein,
together with accrued and unpaid interest, if any, on
such Notes to the date of redemption. In addition, at
any time before February 1, 2001, we may redeem in
the aggregate up to 40% of the original principal
amount of the Notes at a redemption price equal to
109% of the principal amount of such Notes, plus
accrued and unpaid interest, if any, on such Notes to
the date of redemption, with the net cash proceeds of
one or more public equity offerings. However, at
least 60% of the aggregate principal amount of Notes
originally issued remain outstanding immediately
after giving effect to such redemption. See
"Description of the Notes--Redemption--Optional
Redemption."
Ranking................. The Old Notes are, and the New Notes will be,
unsecured senior subordinated obligations of ours and
will be subordinated in right of payment to all of
our existing and future Senior Indebtedness (as
defined in this prospectus) including borrowings
under the New Credit Facility and outstanding under
the 71/8% Notes due 2005. The Old Notes rank, and the
New Notes will rank, equally in right of payment with
all other existing and future senior subordinated
indebtedness of ours including the Existing Notes (as
defined in this prospectus). As of September 30,
1998, after giving pro forma effect to the Offering
and the application of the net proceeds from the
Offering, we would have had approximately $440.6
million of Senior Indebtedness outstanding. See
"Description of the Notes--Ranking of Notes."
Change of Control....... Upon the occurrence of a Change of Control
Triggering Event (as defined in this prospectus),
each holder of Notes will have the right to
8
<PAGE>
require us to purchase such holder's Notes at a
purchase price equal to 101% of their principal
amount, together with accrued and unpaid interest,
if any, on such Notes to the date of purchase. In
addition, at any time on or prior to February 1,
2003, upon the occurrence of a Change of Control, we
may redeem all but not less than all of the Notes,
at a redemption price equal to the sum of:
o 100% of the outstanding principal amount of
such Notes plus
o the Applicable Premium (as defined in this
prospectus) plus
o accrued and unpaid interest and Liquidated
Damages (as defined in this prospectus), if
any, on such New Notes to the date of
redemption. See "Description of the
Notes--Change of Control."
Covenants............... The Indenture contains certain covenants that,
among other things, limit our ability and the ability
of any of our Restricted Subsidiaries (as defined in
this prospectus) to:
o incur additional indebtedness;
o pay dividends or make other distributions in
respect of our capital stock;
o repurchase equity interests or subordinated
indebtedness;
o create certain liens;
o enter into certain transactions with affiliates;
o consummate certain asset sales; and
o merge or consolidate.
See "Description of the Notes--Certain Covenants."
Risk Factors
You should carefully consider all of the information set forth or
incorporated by reference into this prospectus and, in particular, the
information under "Risk Factors," beginning on page 13, before deciding to
tender your Old Notes in the Exchange Offer.
9
<PAGE>
Selected Historical and Pro Forma Financial Data
(Dollars in millions)
The selected financial data for each of the fiscal years in the five year
period ended December 31, 1997 have been derived from our audited financial
statements. Such information is contained in and should be read in conjunction
with the financial statements and accompanying notes included or incorporated
by reference in our Annual Reports on Form 10-K for such years. The selected
financial data for the nine months ended September 30, 1997 and 1998 have been
derived from our unaudited interim financial statements, which in the opinion
of our management include all adjustments, consisting only of normal recurring
adjustments, which we consider necessary for a fair presentation of our
financial position and results of operations for these periods. Operating
results for the nine months ended September 30, 1998 are not necessarily
indicative of the results that may be expected for the full year ended December
31, 1998. The nine month data should be read in conjunction with our Quarterly
Reports on Form 10-Q, as amended, for such periods. The selected unaudited pro
forma and as adjusted financial data give effect to the Offering and the
application of the net proceeds from the Offering.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------
1993 1994 1995(a) 1996 1997
----------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Sales ....................... $ 978.4 $ 1,126.7 $ 1,435.8 $ 2,144.4 $ 2,175.3
Cost of sales ............... 685.7 807.8 1,048.9 1,565.9 1,583.6
--------- ----------- ----------- ----------- ----------
Gross profit ................ 292.7 318.9 386.9 578.5 591.7
Selling, general and
administrative expense 232.0 255.0 334.4 483.9 518.8
Restructuring charge(b) ..... -- -- 34.3 -- 51.8
Recapitalization-related
costs(c) ................... -- -- -- -- --
--------- ----------- ----------- ----------- ----------
Income from operations ...... 60.7 63.9 18.2 94.6 21.1
Interest expense ............ 7.9 9.0 15.0 27.1 23.0
Other (income) expense, net (5.0) (7.8) (1.1) (0.1) 3.2
--------- ----------- ----------- ----------- ----------
Income (loss) before
income taxes ............... 57.8 62.7 4.3 67.6 (5.1)
Provision (benefit) for
income taxes ............... 25.2 27.0 1.1 30.8 25.4
--------- ----------- ----------- ----------- ----------
Net income (loss) ........... $ 32.6 $ 35.7 $ 3.2 $ 36.8 $ (30.5)
========= =========== =========== =========== ==========
Other Financial Data:
Ratio of earnings (loss)
to fixed charges(e) ........ 6.3x 6.1x 1.2x 3.1x 0.8x
EBITDA, As Defined(f) ....... $ 85.7 $ 91.1 $ 98.4 $ 157.2 $ 137.2
Depreciation and
amortization(g) ............ 20.0 19.4 28.9 44.6 47.0
Capital expenditures ........ 12.9 17.7 24.6 40.7 59.2
Cash flows provided by
(used in)
Operating activities ....... 56.5 0.2 54.9 49.0 46.1
Investing activities ....... (83.5) (29.8) (332.8) (42.0) (50.7)
Financing activities ....... 79.2 (0.1) 304.7 (46.0) (1.9)
<CAPTION>
Twelve
Months
Nine Months Ended Ended
September 30, Dec. 31,
------------------------------------------------------- -------------
Historical Pro Forma(d) Pro Forma
--------------------------- --------------------------- -------------
1997 1998 1997 1998 1997
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Sales ....................... $ 1,624.1 $ 1,716.6 $ 1,624.1 $ 1,716.6 $ 2,175.3
Cost of sales ............... 1,176.3 1,240.2 1,176.3 1,240.2 1,583.6
----------- ---------- ----------- ---------- ----------
Gross profit ................ 447.8 476.4 447.8 476.4 591.7
Selling, general and
administrative expense 382.6 386.0 382.6 386.0 518.8
Restructuring charge(b) ..... -- -- -- -- 51.8
Recapitalization-related
costs(c) ................... -- 71.0 -- 71.0 --
----------- ---------- ----------- ---------- ----------
Income from operations ...... 65.2 19.4 65.2 19.4 21.1
Interest expense ............ 17.6 67.3 22.2 73.9 29.0
Other (income) expense, net 0.1 (3.0) 0.1 (3.0) 3.2
----------- ---------- ----------- ---------- ----------
Income (loss) before
income taxes ............... 47.5 (44.9) 42.9 (51.5) (11.1)
Provision (benefit) for
income taxes ............... 23.0 (12.1) 21.2 (14.7) 23.0
----------- ---------- ----------- ---------- ----------
Net income (loss) ........... $ 24.5 $ (32.8) $ 21.7 $ (36.8) $ (34.1)
=========== ========== =========== ========== ==========
Other Financial Data:
Ratio of earnings (loss)
to fixed charges(e) ........ 3.1x 0.4x 2.6x 0.3x 0.7x
EBITDA, As Defined(f) ....... $ 118.9 $ 130.1 $ 118.9 $ 130.1 137.2
Depreciation and
amortization(g) ............ 34.2 36.7 34.2 36.7 47.0
Capital expenditures ........ 49.3 43.7 49.3 43.7 59.2
Cash flows provided by
(used in)
Operating activities ....... 40.2 89.0 40.4 88.0 50.0
Investing activities ....... (45.6) (110.8) (45.6) (110.8) (50.7)
Financing activities ....... 10.8 25.8 10.8 25.8 (1.9)
</TABLE>
<TABLE>
<CAPTION>
As of September 30, 1998
---------------------------
Historical As Adjusted
------------ ------------
Balance Sheet Data:
<S> <C> <C>
Working capital .................. $ 19.6 $ 19.6
Total assets ..................... 1,163.5 1,163.5
Total indebtedness(h) ............ 865.6 1,033.6
Stockholders' deficiency ......... (308.5) (308.5)
</TABLE>
(See footnotes on following page)
10
<PAGE>
(a) On October 17, 1995, we acquired CMS and Fisons Scientific
Equipment ("FSE") from Fisons. The operations of CMS and FSE have
been included in our consolidated financial statements from the
date of acquisition.
(b) During the third quarter of 1995, we recorded a $34.3 million
($20.3 million, net of tax) restructuring charge. The charge is
primarily related to the elimination and in some cases relocation
of certain administrative functions, a sales force reorganization,
and the global consolidation of certain domestic, Canadian and
international logistics and customer service facilities and
systems.
During the fourth quarter of 1997, we recorded $51.8 million
($47.0 million, net of tax) of restructuring and other charges.
These charges related to the closure of additional logistics and
customer-service centers and related asset write-offs in the
United States, personnel reductions in the United States and
internationally, and the write-off of goodwill related to certain
international operations.
(c) In connection with the Recapitalization, we recorded $71.0
million ($43.3 million after tax) of expenses consisting primarily
of non-cash compensation expenses relating to the conversion of
employee stock options, the implementation of certain executive
severance agreements and the grant of options to certain
executives in accordance with the terms of the Recapitalization.
(d) The pro forma financial data gives effect to the Offering and the
application of the net proceeds therefrom as if the Offering
occurred on January 1, 1997. Interest expense has been calculated
in accordance with the use of proceeds (see page 19) and the
associated income tax benefit reflects a 40% tax rate.
(e) For purposes of computing this ratio, earnings (loss) consist of
income (loss) before income taxes plus fixed charges. Fixed
charges consist of interest expense, and one-third of the rent
expense from operating leases, which our management believes is a
reasonable approximation of an interest factor.
(f) "EBITDA, As Defined" is defined in accordance with the Existing
Indenture as net income plus income taxes, interest expense,
depreciation and amortization and excludes unusual and
non-recurring items, as described below. EBITDA, As Defined is
used here because we believe it is an indicator of our ability to
service existing and future indebtedness. However, EBITDA, As
Defined should not be considered as an alternative to net income
as a measure of operating results or to cash flows as a measure of
liquidity in accordance with generally accepted accounting
principles. Our computation of EBITDA, As Defined may not be
comparable to similarly titled measures of other companies.
EBITDA, As Defined is calculated as follows (in millions):
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------
1993 1994 1995 1996 1997
---------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net income (loss) ............................ $ 32.6 $ 35.7 $ 3.2 $ 36.8 $ (30.5)
Income tax provision (benefit) ............... 25.2 27.0 1.1 30.8 25.4
Interest expense ............................. 7.9 9.0 15.0 27.1 23.0
Depreciation and amortization ................ 20.0 19.4 28.9 44.6 47.0
------- ------- ------ ------- --------
Sub-total--EBITDA ........................... 85.7 91.1 48.2 139.3 64.9
Restructuring and other charges
(see note (b) above) ........................ -- -- 34.3 -- 51.8
Recapitalization-related
compensation charges(1) ..................... -- -- -- -- --
Nonrecurring charges in selling, general
and administrative expense(2) ............... -- -- 14.5 18.2 29.8
Nonrecurring charges in cost of sales(2) -- -- 1.2 1.2 6.7
Other items in other (income) expense(3) ..... -- -- 0.2 (1.5) 3.7
Adjustments to restructuring and
nonrecurring(4) ............................. -- -- -- -- (19.7)
Management compensation(5) ................... -- -- -- -- --
EBITDA, As Defined ........................... $ 85.7 $ 91.1 $ 98.4 $ 157.2 $ 137.2
======= ======= ====== ======= ========
<CAPTION>
Twelve
Months
Nine Months Ended Ended
September 30, Dec. 31,
--------------------------------------------- ----------
Historical Pro Forma Pro Forma
---------------------- ---------------------- ----------
1997 1998 1997 1998 1997
---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net income (loss) ............................ $ 24.5 $ (32.8) $ 21.7 $ (36.8) (34.1)
Income tax provision (benefit) ............... 23.0 (12.1) 21.2 (14.7) 23.0
Interest expense ............................. 17.6 67.3 22.2 73.9 29.0
Depreciation and amortization ................ 34.2 36.7 34.2 36.7 47.0
------- -------- ------- -------- ------
Sub-total--EBITDA ........................... 99.3 59.1 99.3 59.1 64.9
Restructuring and other charges
(see note (b) above) ........................ -- -- -- -- 51.8
Recapitalization-related
compensation charges(1) ..................... -- 71.0 -- 71.0 --
Nonrecurring charges in selling, general
and administrative expense(2) ............... 18.5 5.8 18.5 5.8 29.8
Nonrecurring charges in cost of sales(2) -- -- -- -- 6.7
Other items in other (income) expense(3) ..... 1.1 0.9 1.1 0.9 3.7
Adjustments to restructuring and
nonrecurring(4) ............................. -- (10.5) -- (10.5) (19.7)
Management compensation(5) ................... -- 3.8 -- 3.8 --
EBITDA, As Defined ........................... $ 118.9 $ 130.1 $ 118.9 $ 130.1 $ 137.2
======= ======== ======= ======== =======
</TABLE>
(See footnotes on following page)
11
<PAGE>
(1) One-time primarily non-cash compensation charges resulting from the
Recapitalization, including those arising from the conversion of
existing stock options.
(2) Selling, general and administrative expense and cost of sales include
nonrecurring and redundant costs associated with the implementation of
the 1995 and 1997 Restructuring Plans discussed in (b) above, our
integration with CMS and, in 1997, actions taken to improve operating
efficiencies, software write-offs and other information system-related
charges associated with our implementation of new global computer
systems and an increase in costs attributable to the UPS strike. In
addition, management believes that the strike had a material impact on
revenues which adversely impacted operating profits. See "Risk
Factors--Reliance on Third Party Package Delivery Services Could
Adversely Affect Us If There Is a Disruption in Service."
(3) Includes certain gains on the sale of property, plant and equipment
primarily related to the restructuring and integration plans recorded
in 1996 and 1998, gains and losses due to fluctuations in currency
values, certain costs incurred in 1997 related to the Board's review of
strategic alternatives, and certain gains recognized in 1997 related to
the sale of non-core assets.
(4) The Existing Notes Indenture (defined below) limits the amount of
nonrecurring and restructuring charges which can be excluded from
EBITDA, As Defined. This amount represents the excess of these charges
over the limit.
(5) The Existing Notes Indenture calls for the add-back of certain senior
management compensation paid in the first quarter of 1998.
(g) Excludes amortization of financing costs which is included in
interest expense.
(h) Consists of long-term debt and short-term debt and excludes
amounts outstanding under the Receivables Securitization Facility
of approximately $168 million at September 30, 1998 and
approximately $5 million upon completion of the Offering.
12
<PAGE>
RISK FACTORS
You should carefully consider the following factors before deciding to
tender your Old Notes in the Exchange Offer. The risk factors set forth below,
other than "--Consequences of Failure to Exchange Old Notes for New Notes and
Requirements for Transfer of New Notes," generally apply to the Old Notes as
well as the New Notes.
Consequences of Failure to Exchange Old Notes for New Notes and Requirements
for Transfer of New Notes
If you do not exchange your Old Notes for the New Notes pursuant to the
Exchange Offer, you will continue to be subject to the restrictions on transfer
of your Old Notes described in the legend on your Old Notes. The restrictions
on transfer of your Old Notes arise because we issued the Old Notes pursuant to
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, you may only offer or sell the Old Notes if they are registered under
the Securities Act and applicable state securities laws, or offered and sold
pursuant to an exemption from such requirements. We do not intend to register
the Old Notes under the Securities Act. In addition, if you exchange your Old
Notes in the Exchange Offer for the purpose of participating in a distribution
of the New Notes, you may be deemed to have received restricted securities and,
if so, will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
To the extent Old Notes are tendered and accepted in the Exchange Offer, the
trading market, if any, for the Old Notes would be adversely affected. See "The
Exchange Offer--Consequences of Exchanging or Failing to Exchange Old Notes."
Substantial Level of Indebtedness Could Adversely Affect Our Operations
We have a substantial amount of outstanding indebtedness. After giving pro
forma effect to the Offering and the application of the net proceeds therefrom,
as of September 30, 1998, our aggregate outstanding indebtedness would have
been $1,033.6 million and our stockholders' equity would have been a deficit of
$308.5 million. The New Credit Facility, the Receivables Securitization
Facility, the indenture governing the Existing Notes (the "Existing Notes
Indenture") and the Indenture permit us to incur or guarantee certain
additional indebtedness, subject to certain limitations. See "Description of
Other Indebtedness."
Our substantial indebtedness could have important consequences to you. For
example, it could:
o limit our ability to pay principal and interest on the New Notes and the
Old Notes and make payments on our other debt obligations;
o limit our ability to fund future working capital, capital expenditures,
acquisitions, and other general corporate purposes;
o require us to dedicate an substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the
availability of our cash flow for other general corporate purposes,
including research and development and capital spending;
o place us at a competitive disadvantage if we are more leveraged than its
competitors;
o limit our flexibility in responding to changes in our business and the
industry in which we operate; and
o make us more vulnerable to a downturn in general economic conditions or
our business or changing market conditions and regulations.
Your Right to Receive Payments on These Notes Is Junior to All Our Senior
Indebtedness and Effectively Junior to All Indebtedness of Our Subsidiaries
The Notes are our unsecured, senior subordinated obligations, and as such,
will be subordinated in right of payment to all of our existing and future
Senior Indebtedness, including our indebtedness under the New Credit Facility,
if any, and our 71/8% Notes due 2005. The Notes rank equally with all of our
senior subordinated indebtedness, including the Existing Notes, and rank senior
to all of our subordinated indebtedness, if any. The Notes are also effectively
subordinated to all of our secured indebtedness to the
13
<PAGE>
extent of the value of the assets securing such indebtedness, and to all
existing and future obligations and liabilities of our subsidiaries. This
includes that portion of the New Credit Facility for which our material
subsidiaries are obligors.
Our obligations and those of our subsidiary borrowers under the New Credit
Facility are secured by
o substantially all of our assets and those of our material domestic
subsidiaries;
o a pledge of the stock of each such subsidiary; and
o a pledge of 65% of the stock of our material foreign subsidiaries which
are our direct subsidiaries or direct subsidiaries of one of our
material domestic subsidiaries. Obligations of a foreign subsidiary
borrower are secured by a pledge of 100% of the shares and assets of
such borrower. Our obligations and those of our subsidiary borrowers are
further guaranteed by us and each of our material domestic subsidiaries.
As of September 30, 1998, after giving pro forma effect to the Offering
and the application of the net proceeds therefrom, the aggregate amount
of our Senior Indebtedness would have been approximately $440.6 million.
In the event of our bankruptcy, liquidation, dissolution, reorganization
or any similar proceeding, or any default in payment or acceleration of any
related debt, our assets will be available to pay obligations on the Notes only
after our Senior Indebtedness has been paid in full. There may not be
sufficient assets remaining to pay amounts due on all or any of the Notes. See
"Description of the Notes--Ranking of Notes."
Restrictions and Covenants in Our Debt Agreements Limit Our Ability to Take
Certain Actions and Failure to Comply with Such Covenants Could Adversely
Affect Our Ability to Repay Our Debt
The New Credit Facility contains a number of covenants that significantly
restrict our operations. In addition, under the New Credit Facility and the
Receivables Securitization Facility, we are required to comply with specified
financial ratios and tests, including maximum leverage ratios and minimum
EBITDA to cash interest expense ratios, and certain of these ratios and tests
may be more restrictive in future years. We cannot guarantee that we will be
able to comply with such covenants or restrictions in the future. Our ability
to comply with such covenants and other restrictions may be affected by events
beyond our control, including prevailing economic, financial and industry
conditions. A breach of any such covenants or restrictions could result in a
default under the New Credit Facility or a termination event under the
Receivables Securitization Facility that would permit the lenders under such
facilities to declare all amounts outstanding under such facilities to be
immediately due and payable, together with accrued and unpaid interest, and
would permit the lenders to terminate their commitments to make further
extensions of credit. A default under the New Credit Facility could prohibit us
from making any payments on the Notes. The Existing Notes Indenture and the
Indenture also each contain a number of restrictive covenants. See "Description
of the Notes" and "Description of Other Indebtedness."
Indebtedness Under the New Notes Could Be Invalidated if It Is Determined Such
Indebtedness Is a Fraudulent Conveyance
Our incurrence of the indebtedness represented by the Notes may be subject
to review under relevant federal and state fraudulent conveyance statutes in a
bankruptcy, reorganization or rehabilitation case or similar proceeding or in a
lawsuit by or on behalf of our unpaid creditors. We used a portion of the net
proceeds of the Offering to repay all amounts outstanding under the Revolving
Credit Facility. We originally incurred amounts outstanding under the Revolving
Credit Facility to pay our stockholders the cash consideration in the Merger.
Under these fraudulent conveyance statutes, if a court were to find that, at
the time of the Recapitalization or at the time of issuance of the Notes, we:
o incurred the indebtedness and paid the cash consideration in the Merger
in order to hinder, delay or defraud current or future creditors or
o (a) received less than reasonably equivalent value or fair
consideration in connection with the Recapitalization and (b) (1) were
insolvent or were rendered insolvent because of the Recapitalization,
including the incurrence of the indebtedness related thereto, (2) were
engaged in a business or transaction for which our assets constituted
unreasonably small capital, (3) intended to incur, or believed that we
would incur obligations beyond our ability to pay as such obligations
matured, as the
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above terms are defined in or interpreted under the fraudulent conveyance
statutes, or (4) were a defendant in an action for money damages, or had a
judgment for money damages docketed against us, if, in either case, after
final judgment the judgment is unsatisfied,
such court could determine to invalidate such indebtedness, in whole or in
part, as a fraudulent conveyance or subordinate such indebtedness to our
existing or future creditors.
Difficulty in Executing Business Strategy
Our business strategy is based on our current and historical operations
and the operations of other companies in the scientific services industries.
Our current business strategy is based, in part, on our ability to capitalize
on benefits expected to result from various acquisitions and investments we
have made over the last few fiscal years, including the acquisitions of CMS,
FSE and Columbia, and investments to expand our international operations,
including the Bioblock Acquisition. Although partially completed, we cannot
guarantee that we will be able to successfully complete the integration of CMS
or any other acquired company into our operations, or that such integration,
when complete, will generate expected efficiencies and cost savings. In
addition, certain of our consolidated international operations incurred net
losses in fiscal 1997 and certain of these are currently operating at a loss.
If we are unable to improve the sales and profitability of our international
business, our financial condition and results of operations may be materially
adversely affected. Our management may decide to alter or discontinue certain
parts of the business strategy described in this prospectus and may adopt
alternative or additional strategies. In addition, we cannot guarantee that
such a strategy, if implemented, will be successful or will improve operating
results. Moreover, we cannot guarantee that the successful implementation of
such a strategy will result in improved operating results. Further, other
conditions may exist, such as increased competition, or an economic downturn,
which may offset any improved operating results that are attributable to such a
strategy.
Dependence on Information Systems; Systems Conversion; Year 2000 Issue
Our business is dependent in large part on its information systems. These
systems play an integral role in:
o tracking product offerings (including pricing and availability);
o processing and shipping more than 20,000 items per day;
o warehouse operations;
o purchasing from more than 3,000 vendors;
o inventory management;
o financial reporting; and
o other operational functions.
Year 2000 issues exist when dates in computer systems are recorded using
two digits (rather than four) and are then used for arithmetic operations,
comparisons or sorting. A two-digit date recording may recognize a date using
"00" as 1900 rather than 2000, which could cause our computer systems to
perform inaccurate computations. Our Year 2000 issues relate not only to our
own systems but also to those of our customers and suppliers.
Based upon assessments of each of our business units and the information
systems supporting those operations, we have begun implementing a program
having the following major elements and a target completion date no later than
December 31, 1999.
o First, the applications and other software supporting each business unit
has been inventoried and analyzed and then planned for either: (1)
confirmation as Year 2000 compliant, (2) upgrade to a Year 2000
compliant version, (3) remediation to become Year 2000 compliant or (4)
replacement by other software which provides Year 2000 compliance and
other benefits.
o Second, we have initiated programs to assure Year 2000 compliance for
the equipment and software licenses that we currently market to
customers and to obtain and transmit to customers information about the
equipment and software licenses which customers may have purchased in
the past.
o Third, we have (1) initiated programs to identify those suppliers whose
own systems could lead to delays or interruptions in supply, either
because of Year 2000 non-compliance or because of systems
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<PAGE>
upgrades or replacements to avoid Year 2000 issues and (2) begun
developing contingency plans during the fourth quarter of 1998 and
first quarter of 1999, including adjustments in inventory levels and
order lead times for products provided by vendors who have not
provided adequate assurances, to ameliorate any resultant delays or
interruptions and to prevent or reduce any adverse effect on fill
rates to our customers.
o Fourth, with particular regard to Electronic Data Interchange ("EDI"),
we have developed plans to work with trading partners, including both
suppliers and customers, to either work around the requirement for six
digit date fields in the prior EDI standards or to migrate, with the
trading partner, to ANSI version 4010, which employs eight digit date
fields. By mid-1999, we will be in a position to accept either six or
eight digit date fields in our EDI dealings with customers, suppliers
and other EDI trading partners.
o Fifth, we are implementing a project involving testing with available
test software personal computers and associated software at various
locations, followed by upgrade or replacement where appropriate, and are
implementing projects which include inventory, identification,
assessment (through vendor contacts, testing or both) planning,
implementation (replacement, repair or upgrade), and testing of
manufacturing equipment, environmental control equipment, elevators,
security systems, telecommunications software and equipment and similar
purchased equipment, software and systems. While this portion of the
overall program is targeted for completion by June 30, 1999, it is
currently anticipated that a limited amount of this activity would
remain incomplete until later in 1999.
With regard to financial cost, implementation of the program has resulted
in and will continue to result in significant expenditure by our personnel and
outside software and equipment providers and expenditures for equipment and
software upgrades and replacements. Because many of these efforts have been
designed to achieve other functional or systems improvements, in addition to
Year 2000 compliance, and are being carried out by operational personnel within
each business unit, it is difficult to allocate particular funding levels
solely to the Year 2000 compliance activities. In general, however, we have
spent $2.2 million in operating expenses and $23.0 million in capital
expenditures on Year 2000 activities to date. We estimate that we would incur
an additional $4.5 million in operating expenses and $14.5 million in capital
expenditures to complete our Year 2000 programs.
Although we believe that our present remediation and replacement programs
will adequately address the Year 2000 issues with respect to our internal
systems, we cannot guarantee that our belief is correct or that our present
assessment is in fact accurate. We cannot guarantee that the remediation and
replacement programs will be completed prior to the Year 2000 or that if
completed prior to the Year 2000 that disruption will not occur. In addition,
we cannot guarantee that our vendors, suppliers and the myriad of other
financial, transportation, utility and other service providers will
successfully resolve their own Year 2000 issues in a manner which avoids
significant impact to us. We have received written assurances from many of our
suppliers and other providers acknowledging the Year 2000 issues and stating
their present intention to be compliant. We have not received assurances from
all of our suppliers and other providers and there is no guarantee that one or
more key suppliers and other providers will not fail to become compliant in
time to avoid a disruption to our business which, in spite of our contingency
plans, would have a significant adverse impact on us. Because of the complexity
of our systems, the number of transactions processed and the number of third
parties with whom we interact, certain failures by us or our suppliers, vendors
and other service providers to completely overcome the Year 2000 issue could
result in substantial and material impact on our business, operations and
financial results.
Our forecasted costs and timing for completion of its Year 2000 programs
are based on our best estimates, which in turn are based on numerous
assumptions of future events, including the continued availability and cost of
necessary personnel and other resources, third party modification plans, and
other factors. However, we cannot be certain that these estimates will be
achieved and actual results could differ materially from these estimates.
Our Results of Operations Are Dependent on the Level of Corporate Research and
Development Spending
Our customers include corporations active in scientific or technological
research, healthcare, industrial, safety and other markets, both in the U.S.
and internationally. The research and development budgets and activities of
these companies have a significant effect on the demand for products
manufactured and/or
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<PAGE>
distributed by us. Such policies are based on a variety of factors, including
the need to develop new products, competition and availability of resources.
Although scientific and technology-related research and development spending in
the U.S. historically has not been subject to cyclical swings, no assurance can
be made that this trend will continue. In addition, as we continue to expand our
international operations, the research and development spending levels in other
global markets will become increasingly important. A decrease in research and
development spending by our customers could have a material adverse effect on
our results of operations.
Healthcare Reform and Cost Containment Initiatives in the Healthcare Industry
May Adversely Affect Our Results of Operations
Our sales to the U.S. clinical laboratory market have historically been
significant. The trend towards managed care, together with efforts to reform
the healthcare delivery system in the U.S., has resulted in increased pressure
on healthcare providers and other participants in the healthcare industry to
reduce costs. To the extent that our customers in the healthcare industry seek
to address the need to contain costs by limiting the number of clinical tests
being performed, our results of operations could be materially and adversely
affected.
A Few Equity Investors Have Significant Control Over Us
As a result of the Recapitalization, the Equity Investors own 78.3% of our
issued and outstanding common stock. THL owns 50.1% of such outstanding stock.
Accordingly, the Equity Investors have significant control over us and have the
power to (1) elect a majority of our directors, (2) appoint new management and
(3) approve any action requiring the approval of the holders of our
recapitalized common stock, including adopting amendments to our certificate of
incorporation and approving mergers or sales of substantially all of our
assets. In connection with the Recapitalization, the Equity Investors and
certain members of our management entered into an Investors' Agreement dated
January 21, 1998 (the "Investors' Agreement"). The Investors' Agreement
provides that our Board of Directors will comprise at least 10, but not more
than 11 directors, seven of whom will be appointed by THL, one of whom will be
appointed by DLJMB, one of whom will be Mr. Paul M. Montrone and one of whom
will be Mr. Paul M. Meister. Currently nine persons comprise our Board of
Directors, none of whom has been appointed by DLJMB. The directors elected
pursuant to the Investors' Agreement will have the authority to make decisions
affecting our capital structure, including the issuance of additional capital
stock, the implementation of stock repurchase programs and the declaration of
dividends. We cannot guarantee that the interests of the Equity Investors will
not conflict with the interests of the other shareholders.
We Operate in a Highly Competitive Market
We operate in a highly competitive market. We compete with a wide range of
distributors, suppliers and manufacturers that sell their own products directly
to end users. We also compete with other distributors, such as VWR Scientific
Products Corporation in the scientific research market and Allegiance
Healthcare Corporation in the clinical market. Some of these competitors are
larger and may have greater resources than us. There has been a recent trend
toward consolidation in the industry which could result in our competitors that
provide distribution services becoming larger. In addition, potential
competitors in the future could include suppliers and manufacturers that
currently rely on one or more third party distributors to distribute their
products. We cannot guarantee that competitive factors in our markets, both
international and domestic, will not have a material adverse effect on our
financial condition and results of operations.
Our Reliance on Third Party Package Delivery Services Could Adversely Affect Us
If There Is a Disruption in Service
Almost all of our products are shipped to customers by independent package
delivery companies. We do not own or maintain a fleet of transportation
vehicles dedicated to the delivery of our products. The principal independent
delivery service we use is UPS, which shipped products accounting for over
sixty percent of our
U.S. shipments in fiscal 1997. Other carriers we use include national and
regional trucking firms, overnight courier services and the United States
Postal Service. In August 1997, UPS employees who were members of the
International Brotherhood of Teamsters went on strike for more than two weeks,
causing disruption to our shipments. The UPS strike significantly reduced sales
for the third and fourth quarters of 1997 and increased operating costs. A
future major work stoppage or other series of events that would make such
carriers unavailable to us could have a significant adverse effect upon our
ability to conduct our business.
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We Cannot Guarantee that Our Sales Will Continue to Grow at Historical Rates
Our ability to implement our business strategy will depend on numerous
factors, many of which are beyond our control. Much of our recent sales growth
prior to 1997 was the result of acquisitions, including the acquisitions of CMS
and FSE in October 1995. Future growth will be largely dependent on growth in
the overall market for instruments, supplies and equipment, and environmental
testing, life sciences, worker safety and emerging testing techniques and our
ability to make acquisitions. We cannot guarantee that such growth will occur
or that suitable acquisition candidates will be available or that any
acquisition will be successful.
Some of Our Operations are Subject to Environmental Regulation
Some of our operations involve and have involved the handling, manufacture
or use of many substances that are classified as toxic or hazardous substances
within the meaning of applicable environmental and other laws. Some risk of
environmental and other damage or hazard is inherent in particular operations
and products we manufacture, sell or distribute. We cannot guarantee that
damage, hazard or loss will not occur. To a large extent, such damage is
uninsured. We continually monitor and review our procedures and policies for
compliance with existing law and the cost of compliance with existing
environmental laws is not expected to have a material adverse effect on our
earnings, liquidity or competitive position. However, future events, including
changes in existing laws and regulations may give rise to additional costs
which are currently unintended and unforeseen and which could have a material
adverse effect on our financial condition.
Dependence on Key Personnel
We depend heavily on the services of our senior management, including Paul
M. Montrone, Chairman of the Board and Chief Executive Officer of Fisher, and
Paul M. Meister, Vice Chairman of the Board, Executive Vice President and Chief
Financial Officer of Fisher. The loss of any member of our senior management,
including Mr. Montrone or Mr. Meister, could have a material adverse effect on
us.
Political and Economic Risks Affecting Our International Operations
We conduct international operations through a variety of wholly owned
subsidiaries, majority-owned subsidiaries, joint ventures, equity interests and
agents located in North and South America, Europe, the Far East, the Middle
East and Africa. We are also exploring the possibility of expansion into other
international markets as well. We anticipate that our operations in Europe will
expand as a result of the Bioblock Acquisition. We cannot guarantee that we
will maintain significant operations internationally or that any such
operations will be successful. Any international operations we establish will
be subject to risks similar to those affecting its North American operations in
addition to a number of other risks, including (1) lack of complete operating
control, (2) lack of local business experience, (3) foreign currency
fluctuations, (4) difficulty in enforcing intellectual property rights, (5)
language and other cultural barriers and (6) political and economic
instability.
We conduct business in many of the countries which are participating in
Stage III of the European Economic and Monetary Union. These participating
countries adopted the Euro as their national currency on January 1, 1999. It is
currently anticipated that on and after January 1, 2002, the national
currencies of the participating countries will cease to exist and the sole
legal tender in such countries will be the Euro. We may also expand our
operations to other countries which are participating in the European Monetary
Union. Conversely, other countries where we do business currently may become
participants in the European Monetary Union. We are currently incorporating the
necessary changes which allow us to conduct business in Euros and the national
currencies of the participating countries during the transition period and
entirely in Euros thereafter. We cannot accurately estimate the costs relating
to conversion to the Euro and, although we do not currently anticipate that
such costs will be material, due to numerous uncertainties, we cannot estimate
the effects a common currency will have on pricing within the European Union
and the resulting impact on our financial condition or results of operations.
Effects of Exchange Rate Fluctuations on Our International Operations
The majority of our revenues and expenses are denominated in U.S. dollars,
although we own properties and conduct operations in non-U.S. facilities
including Canada, France, Mexico, Belgium, Germany, the Netherlands, Singapore,
Malaysia, Switzerland and the United Kingdom. We anticipate that our revenues
and expenses denominated in European currencies and Euros will increase as a
result of the Bioblock Acquisition. Accordingly, fluctuations in the exchange
rate between the U.S. dollar and the respective currencies of the
aforementioned countries or Euros could have an adverse effect on us.
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Change of Control
Upon the occurrence of a Change of Control Triggering Event (as defined in
the Indenture and the Existing Notes Indenture), we will be required to make an
offer to purchase all of the outstanding Notes and Existing Notes at a price
equal to 101% of the principal amount of such notes at the date of purchase
plus accrued and unpaid interest, if any, on such notes, to the date of
purchase. In addition, at any time on or prior to February 1, 2003, upon the
occurrence of a Change of Control (as defined in the Indenture and the Existing
Notes Indenture), we may redeem all but not less than all of the Notes and
Existing Notes, at a redemption price equal to the sum of (1) 100% of the
outstanding principal amount of such notes plus (2) the Applicable Premium (as
defined in the Indenture and the Existing Notes Indenture) plus (3) accrued and
unpaid interest and Liquidated Damages (as defined in the Indenture and the
Existing Notes Indenture), if any, on such notes, to the date of redemption.
The occurrence of certain of the events that would constitute a Change of
Control would constitute a default under the New Credit Facility and might
constitute a default under our other indebtedness. In addition, the New Credit
Facility prohibits the purchase of the Notes and Existing Notes by us in the
event of a Change of Control, unless and until such time as the indebtedness
under the New Credit Facility is repaid in full. Our failure to purchase the
Notes and Existing Notes in such instance would result in a default under each
of the Indenture, the Existing Notes Indenture and the New Credit Facility. The
inability to repay the indebtedness under the New Credit Facility, if
accelerated, could have material adverse consequences to us and to the holders
of the Notes. Our future indebtedness may also contain prohibitions of certain
events or transactions that could constitute a Change of Control or require
such indebtedness to be repurchased upon a Change of Control. In the event of a
Change of Control, we cannot guarantee that we would have sufficient assets to
satisfy all of our obligations under the New Credit Facility, the Existing
Notes and the Notes. See "Description of the Notes--Change of Control."
You Cannot Be Sure That an Active Trading Market Will Develop for the New Notes
The New Notes are being offered to the holders of the Old Notes. The Old
Notes were issued on November 20, 1998 to a small number of institutional
investors and overseas investors and are eligible for trading in the Private
Offering, Resale and Trading through Automated Linkages (PORTAL) Market, the
National Association of Securities Dealers' screenbased, automated market for
trading of securities eligible for resale under Rule 144A. To the extent that
Old Notes are tendered and accepted in the Exchange Offer, the trading market
for the remaining untendered Old Notes could be adversely affected. There is no
existing trading market for the New Notes. We do not intend to apply for
listing or quotation of the New Notes on any exchange. Therefore, we do not
know the extent to which investor interest will lead to the development of a
trading market or how liquid that market might be, nor can we make any
assurances regarding the ability of New Note holders to sell their New Notes or
the price at which the New Notes might be sold. Although the Initial Purchasers
have informed us that they currently intend to make a market in the New Notes,
they are not obligated to do so, and any such market-making may be discontinued
at any time without notice. As a result, the market price of the New Notes
could be adversely affected. Historically, the market for non-investment grade
debt, such as the New Notes, has been subject to disruptions that have caused
substantial volatility in the prices of such securities. Any such disruptions
may have an adverse effect on holders of the New Notes.
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USE OF PROCEEDS
We will not receive any proceeds from the Exchange Offer. The net proceeds
from the Offering of $188 million were used to temporarily repay amounts
outstanding under the Revolving Credit Facility of approximately $30 million, to
fund working capital needs which would have been historically funded through the
Receivables Securitization Facility and to pay related fees and expenses. As
discussed above under "Summary--Recent Developments," we also intend to
reborrow amounts under the Revolving Credit Facility and to sell receivables
under the Receivables Securitization Facility to finance one or more future
acquisitions or to fund additional working capital. At September 30, 1998,
borrowings under the Revolving Credit Facility bore interest at a weighted
average interest rate of 7.875% per annum and receivables sold under the
Receivables Securitization Facility bore interest at a weighted average interest
rate of 5.6% per annum. On a pro forma basis after giving effect to the Offering
and the application of the net proceeds therefrom, we would have had
approximately $309 million in aggregate availability under the Revolving Credit
Facility and the Receivables Securitization Facility.
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CAPITALIZATION
The following table shows our capitalization as of September 30, 1998 on a
historical basis, and on a pro forma basis, after giving effect to the Offering
and the application of the net proceeds from the Offering. This table should be
read in conjunction with "Use of Proceeds," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our consolidated
financial statements and the notes to such financial statements incorporated by
reference in this prospectus.
<TABLE>
<CAPTION>
As of September 30, 1998
---------------------------
Historical As Adjusted
------------ ------------
(In millions)
<S> <C> <C>
Cash and cash equivalents ................. $ 22.2 $ 22.2
======== =========
Debt(a):
Revolving Credit Facility(b) ............. $ 25.0 $ --
Term Facility ............................ 254.7 254.7
7-1/8% Notes due 2005 ..................... 149.0 149.0
Existing Notes ........................... 400.0 400.0
Notes offered hereby(c) .................. -- 193.0
Other .................................... 36.9 36.9
-------- ---------
Total debt ............................ $ 865.6 $ 1,033.6
-------- ---------
Stockholders' equity (deficit):
Preferred Stock .......................... $ -- $ --
Common Stock ............................. 0.4 0.4
Capital in excess of par value ........... 313.3 313.3
Retained (deficit) ....................... (601.5) (601.5)
Other .................................... (20.7) (20.7)
-------- ---------
Total stockholders' (deficit) ......... (308.5) (308.5)
-------- ---------
Total capitalization .................. $ 557.1 $ 725.1
======== =========
</TABLE>
------------
(a) Excludes $168.2 million of funds received from the sale of accounts
receivable through the Receivables Securitization Facility which was
entered into concurrently with the Recapitalization and which was
reflected as a reduction in receivables. After giving effect to the
Offering, as of September 30, 1998, $5.2 million would have been
outstanding under the Receivables Securitization Facility. Upon
completion of the Offering, we have approximately $160 million
available under the Receivables Securitization Facility. We intend to
sell receivables under the Receivables Securitization Facility to fund
working capital needs and to fund potential acquisitions. See
"Summary--Recent Developments."
(b) Upon completion of the Offering, we have approximately $149 million
available under the $175 million Revolving Credit Facility for working
capital and general corporate purposes, including potential
acquisitions, after taking into account approximately $26 million of
letters of credit.
(c) Excludes $7.0 million of original issue discount which will be
amortized over the life of the Notes.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Fisher was formed in September 1991. Our operations are conducted by
wholly owned and majority-owned subsidiaries, joint ventures, equity interests
and agents, located in North and South America, Europe, the Far East, the
Middle East and Africa. Our activities relate principally to one business
segment--scientific and clinical products. This includes operations engaged in
the supply, marketing, service and manufacture of scientific, clinical,
educational and occupational health and safety products.
Pursuant to the Recapitalization, which was consummated on January 21,
1998, approximately 87% of the fully diluted common stock of Fisher was
converted into the right to receive $9.65 per share in cash (approximately
$955.0 million in the aggregate) pursuant to an election process that provided
stockholders the ability to elect for each share of Fisher common stock held,
subject to proration, either $9.65 in cash or to retain one share of stock in
the recapitalized company. Pursuant to the Merger Agreement, vesting of all
outstanding options accelerated. See Note 2 to the December 31, 1997 Financial
Statements incorporated by reference herein.
On October 17, 1995, Fisher acquired the principal businesses of the
laboratory supplies division of Fisons in a transaction accounted for as a
purchase. We purchased the outstanding stock of CMS, headquartered in Houston,
Texas, and substantially all of the net assets of FSE, a division of Fisons
with headquarters in Loughborough, United Kingdom. CMS is a supplier of
diagnostic test kits, equipment and laboratory supplies to integrated health
care organizations, managed care organizations, national and independent
reference laboratories, and physicians' office laboratories where human
specimens are tested for subsequent diagnosis, as well as a supplier to the
scientific research community. FSE is a leading supplier of laboratory products
in the United Kingdom and also serves markets throughout Europe, Africa, the
Middle East and the Far East. We intend to use these businesses to expand its
operations in the clinical laboratory market, enhance its position in the North
American scientific research laboratory market and complement its international
growth strategy. During 1998, 1997, 1996 and 1995, Fisher made certain smaller
acquisitions of laboratory products distributors and other businesses. All
acquisitions have been accounted for as purchases; operations of the companies
and businesses acquired have been included in Fisher's consolidated financial
statements from their respective dates of acquisition. See Notes to the
December 31, 1997 Financial Statements incorporated by reference in this
prospectus.
Results of Operations
September 30, 1998 as Compared to September 30, 1997
Sales
Sales for the three and nine months ended September 30, 1998 increased
6.8% and 5.7% to $592.8 million and $1,716.6 million, respectively, from $554.8
million and $1,624.1 million for the comparable periods in 1997, primarily due
to growth in domestic operations and lower sales in 1997 attributable to the
August 1997 UPS strike.
Gross Profit
Our gross profit for the three and nine month periods ended September 30,
1998 increased 9.3% and 6.4% to $167.2 million and $476.4 million,
respectively, from $153.0 million and $447.8 million for the comparable periods
in 1997, primarily as a result of increased volume. Gross profit as a percent
of sales increased to 28.2% for the three months ended September 30, 1998, from
27.6% for the same period in 1997 and increased by 0.2% to 27.8% for the nine
months ended September 30, 1998 as compared to the same period in the prior
year. The increase in gross profit for the three and nine month periods ended
September 30, 1998 largely reflects improvements in gross margins of our
domestic operations.
Selling, General and Administrative Expense
Selling, general and administrative expense for the three month period
ended September 30, 1998 decreased 2.6% to $130.2 million from $133.7 million
for the comparable period in 1997, a decrease in nonrecurring cost due to the
UPS strike in 1997 and system-related changes in 1997. Selling, general and
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administrative expense for the nine month period ended September 30, 1998
increased 0.9% to $386.0 million from $382.6 million for the comparable period
in 1997 primarily as a result of increased sales volume partially offset by the
aforementioned decrease in nonrecurring costs. Selling, general and
administrative expense in both periods includes nonrecurring costs associated
with the implementation of the restructuring plan that began in the third
quarter of 1995 as well as costs to integrate CMS, acquired in October 1995,
into our company. The periods ended September 30, 1997 also include information
system-related charges associated with our implementation of new global
computer systems and direct costs resulting from the UPS strike. Additionally,
the periods ended September 30, 1998 include nonrecurring costs associated with
the implementation of our 1997 restructuring plan (the "1997 Restructuring
Plan"). Certain costs resulting from the temporary duplication of operations,
relocation of inventories and employees, hiring and training new employees, and
other one-time and redundant costs, which will be eliminated as the
restructuring plans are completed, are recognized as incurred. For the three
and nine month periods ended September 30, 1998, $1.7 million and $5.8 million
of such costs were included in selling, general and administrative expense,
compared with $10.2 million and $18.5 million for the corresponding periods in
1997. Excluding such costs, selling, general and administrative expense as a
percentage of sales was 21.7% and 22.1% for the three and nine months ended
September 30, 1998 compared with 22.3% and 22.4% for the same periods in 1997.
Operations outside of the United States have higher selling, general and
administrative expense as a percentage of sales as compared with that of our
domestic operations. These higher costs are being incurred as part of a plan to
develop an integrated worldwide supply capability. As a result of increased
revenues and restructuring actions taken to date, selling, general and
administrative expense as a percent of sales for operations outside the United
States has improved.
Recapitalization-Related Costs
In connection with the Recapitalization, we recorded $71.0 million of
expenses consisting primarily of non-cash compensation expense relating to the
conversion of employee stock options, the implementation of certain executive
severance agreements and the grant of options to certain executives in
accordance with the terms of the Recapitalization.
Income From Operations
Income from operations for the three months ended September 30, 1998
increased to $37.0 million from $19.3 million for the corresponding period in
1997. Income from operations decreased to $19.4 million for the nine months
ended September 30, 1998, compared with $65.2 million for the corresponding
period in 1997. Income from operations, excluding Recapitalization-related
costs and the aforementioned nonrecurring costs, as a percent of sales was 5.6%
and 5.2% for the nine months ended September 30, 1998 and September 30, 1997,
respectively.
Interest Expense
Interest expense increased to $20.8 million and $67.3 million for the
three and nine month periods ended September 30, 1998 from $5.4 million and
$17.6 million for the comparable periods in 1997. The increase is the result of
additional indebtedness resulting from the Recapitalization as well as $6.9
million of charges, incurred during the first quarter of 1998, related to the
consummation of the Recapitalization, including one-time bank commitment fees,
the write-off of unamortized financing costs related to long-term debt
refinanced and the loss on the sale of accounts receivable (discussed below).
Other (Income) Expense, Net
Other (income) expense, net for the three and nine month periods ended
September 30, 1998 decreased to $0.2 million of expense and increased to $3.0
million of income, respectively, from $4.6 million and $0.1 million of expense
for the comparable periods in 1997. The decrease in expense for the quarter was
primarily due to $3.6 million of fees and expenses related to the Board of
Directors' review of strategic alternatives in 1997, which did not recur in
1998. The increase in income for the nine month period is due to increased
interest income resulting from the timing of cash received from the
Recapitalization.
Income Tax (Benefit) Provision
The income tax provision for the three months ended September 30, 1998 was
$9.3 million compared to $5.4 million for the corresponding period in 1997. The
effective tax rate for the nine months ended September 30, 1998 was a 26.9% tax
benefit compared with a 48.4% tax charge for the corresponding period in 1997.
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Excluding the $71.0 million of Recapitalization-related costs, the effective
income tax rate for the nine months ended September 30, 1998 was 59.6%. The
increase in the effective tax rate from the prior year is primarily related to
the reduction in domestic pretax income due to the additional interest expense
incurred as a result of the Recapitalization and foreign losses for which no
tax benefit is recorded.
Net Income (Loss)
Net income (loss) for the three and nine months ended September 30, 1998
increased to income of $6.7 million and decreased to a loss of $32.8 million,
respectively, from income of $3.9 million and $24.5 million for the comparable
periods in 1997, as a result of the factors discussed above
Year Ended December 31, 1997 as Compared to Year Ended December 31, 1996
Sales
Sales for the year ended December 31, 1997 increased 1.4% to $2,175.3
million from $2,144.4 million for the comparable period in 1996. Sales growth
in our historical North American operations and the inclusion of sales of
operations acquired in the fourth quarter of 1996 (UniKix Technologies and a
laboratory products distributor in Mexico) were partially offset by a decrease
in sales to the U.S. clinical laboratory market and the impact of the strike by
employees of UPS who are members of the International Brotherhood of Teamsters
(the "UPS strike"), which occurred in August of 1997.
As a national distributor, we utilize the service of UPS for a significant
portion of its domestic shipments. We are one of UPS's largest customers in
terms of annual revenue to the shipper. The UPS strike significantly reduced
sales for the third and fourth quarters of 1997 and increased operating costs.
Gross Profit
Our gross profit for the year ended December 31, 1997 increased 2.3% to
$591.7 million from $578.5 million for the comparable period in 1996, primarily
as a result of volume. Gross profit as a percent of sales increased to 27.2%
for the year ended December 31, 1997 from 27.0% for the comparable period in
1996. Gross profit in 1997 was negatively affected by $6.7 million of costs
related to adjustments to certain inventory reserves due to changes in
estimates, direct costs resulting from the UPS strike and the integration of
CMS into our company. Gross profit in 1996 includes $1.2 million of costs
associated with the revaluation of CMS and FSE acquired inventory.
Selling, General and Administrative Expense
Selling, general and administrative expense for the year ended December
31, 1997 increased 7.2% to $518.8 million from $483.9 million for the
comparable period in 1996. Selling, general and administrative expense in both
periods includes nonrecurring and redundant costs associated with the
implementation of the 1995 Restructuring Plan (defined below), the integration
of CMS into our company, and, in 1997, software write-offs and other
information system-related charges associated with our implementation of new
global computer systems, direct costs resulting from the UPS strike, and
management retention payments related primarily to the Recapitalization.
Nonrecurring integration and restructuring-related costs include costs
resulting from the temporary duplication of operations, relocation of
inventories and employees, hiring and training new employees, and other
one-time and redundant costs, which will be eliminated as the integration and
restructuring plans are completed. These costs are recognized as incurred. For
the year ended December 31, 1997, approximately $29.8 million of such
nonrecurring costs were included in selling, general and administrative expense
compared with $18.2 million for the corresponding periods in 1996.
Excluding nonrecurring costs, selling, general and administrative expense
as a percentage of sales was 22.5% for 1997 compared with 21.7% for 1996. This
increase is primarily due to lower than expected sales volume without a
corresponding decrease in expense. We have taken and continue to take actions
to improve efficiencies and reduce this expense as a percent of sales.
Operations outside the United States continue to have significantly higher
selling, general and administrative expense as a percentage of sales as
compared with that of our domestic operations. These higher costs are being
incurred as part of a plan to develop an integrated worldwide supply
capability, the benefit of which has not been fully realized.
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Restructuring and Other Charges
Following the execution of the Merger Agreement, during the fourth quarter
of 1997 in conjunction with the annual business planning process, we evaluated
our business strategy for both our domestic and international operations and,
as a result, adopted the 1997 Restructuring Plan and recorded restructuring and
other charges of $51.8 million. The charges include costs associated with the
closure of additional logistics and customer-service centers and related asset
write-offs in the United States and internationally, the write-off of goodwill
related to certain international operations and the write-off of
systems-related assets. Implementation of the 1997 Restructuring Plan is
expected to be completed and the related accruals substantially expended by the
end of 1999.
Income from Operations
Income from operations for the year ended December 31, 1997 decreased to
$21.1 million from $94.6 million for the comparable period in 1996 primarily
due to the 1997 restructuring and other nonrecurring charges and the increased
selling, general and administrative expense discussed above. Income from
operations as a percent of sales decreased to 1.0% for the year ended December
31, 1997, compared with 4.4% for the same period in 1996.
Interest Expense
Interest expense for the year ended December 31, 1997 decreased to $23.0
million from $27.1 million for the comparable period in 1996. The decrease
principally reflects a reduction in interest expense as a result of the June
1996 conversion and redemption of the Fisher's $125 million step-up convertible
notes. See "Liquidity and Capital Resources" below.
Other (Income) Expense, net
Other (income) expense, net for the year ended December 31, 1997 decreased
to $3.2 million of expense from $0.1 million of income for the comparable
period in 1996. The increase in expense for the year was primarily due to
foreign exchange losses, $5.0 million of fees and expenses related to the Board
of Directors' review of strategic alternatives and a loss on the sale of a
non-strategic business, offset by $2.8 million of gains on sales of non-core
assets.
Income Tax Provision
The income tax provision was $25.4 million for the year ended December 31,
1997 compared with $30.8 million for the comparable period in 1996. The
effective income tax rate for 1997 increased significantly compared with 45.5%
for the corresponding period in 1996. The increased rate is a result of foreign
losses for which no tax benefits are currently being provided, write-off of
previously recognized foreign tax benefits and nondeductible fees and expenses
incurred in connection with the Board's review of strategic alternatives.
Net Income (Loss)
Net income (loss) for the year ended December 31, 1997 decreased to $30.5
million of loss from $36.8 million of income for the comparable period in 1996.
These changes are due to the factors discussed above.
Year Ended December 31, 1996 as Compared to Year Ended December 31, 1995
Sales
Sales for the year ended December 31, 1996 increased 49% to $2,144.4
million from $1,435.8 million for the comparable period in 1995. The sales
increase primarily reflects sales of CMS and FSE, acquired in October 1995, as
well as growth in North American distribution.
Gross Profit
Our gross profit for the year ended December 31, 1996 increased 50% to
$578.5 million from $386.9 million for the comparable period in 1995. The
increase in gross profit is attributable primarily to the aforementioned sales
growth.
Gross profit as a percent of sales was 27.0% for the year ended December
31, 1996 and remained consistent with that of the same period in 1995. Lower
gross margins associated with recently acquired
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businesses were offset by improvements in gross margins of our historical North
American operations. Both 1996 and 1995 include $1.2 million of costs
associated with the revaluation of CMS and FSE acquired inventory.
Selling, General and Administrative Expense
Selling, general and administrative expense for the year ended December
31, 1996 increased 45% to $483.9 million from $334.4 million for the comparable
period in 1995. The increase reflects the inclusion of selling, general and
administrative expenses of recently acquired businesses, growth in base North
American distribution operations, nonrecurring costs to integrate CMS into our
company and nonrecurring costs associated with the implementation of the 1995
Restructuring Plan that began in the third quarter of 1995. See
"--Restructuring Charge."
Operations outside of the United States continue to have significantly
higher selling, general and administrative expense as a percentage of sales as
compared with that of our domestic operations. These higher costs are being
incurred as part of a plan to develop an integrated worldwide supply
capability, the benefit of which has not been fully realized.
Restructuring Charge
In the third quarter of 1995, we recorded a pretax restructuring charge of
$34.3 million. The 1995 restructuring plan (the "1995 Restructuring Plan"),
which anticipated the integration of the former Fisons businesses, including
CMS, with our company, included the elimination and in some cases relocation of
certain administrative functions, reorganization of the research sales force,
and the consolidation and relocation of certain logistics and customer service
systems and locations throughout the world.
Certain costs resulting from the temporary duplication of operations,
relocation of inventories, relocation of employees, hiring and training new
employees, other start-up costs and redundant costs, which will be eliminated
as the 1995 Restructuring Plan is implemented, were not included in the
restructuring charge and are recognized as incurred. Approximately $18.2
million and $14.5 million of such charges have been recorded in 1996 and 1995,
respectively, and are included in selling, general and administrative expense.
Income from Operations
Income from operations for the year ended December 31, 1996 increased to
$94.6 million, compared with $18.2 million for the corresponding period in
1995. The increase reflects the effect of the restructuring charge of $34.3
million recorded in 1995 as well as the factors discussed above. Our operations
outside of North America were not profitable, primarily as a result of costs
associated with the continued development of our worldwide supply capability
and up-front infrastructure costs as discussed above in "Selling, General and
Administrative Expense."
Interest Expense
Interest expense of $27.1 million in 1996 increased by $12.1 million from
the 1995 level. The increase principally reflects interest related to
borrowings used to finance the acquisition of CMS and FSE in the fourth quarter
of 1995, partially offset by the June 1996 conversion and redemption of our
$125 million step-up convertible notes.
Net Income
Net income for the year ended December 31, 1996 increased to $36.8 million
from $3.2 million for the comparable period in 1995 as a result of the factors
discussed above.
Liquidity and Capital Resources
During the nine months ended September 30, 1998, our operations generated
$89.0 million of cash compared with $40.2 million for the same period in 1997.
This increase in cash provided by operating activities primarily reflects an
increase in cash flows from changes in working capital and other assets and
liabilities. The increase in cash flows from changes in working capital is due
primarily to an increase in cash provided by payables, accruals and other
current liabilities partially offset by a decrease in cash provided by
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receivables. The payables and accruals change is primarily due to the timing of
accounts payable payments, reduced payments of accrued compensation amounts and
increased accrued interest as a result of the Recapitalization. Other assets
and liabilities reduced operating cash flows by $6.4 million in 1998 compared
with $21.8 million in 1997 primarily due to an unusually high balance at
September 30, 1997, attributable to the increased effect of foreign currency
translation in 1997 and increased payments to software service vendors related
to the implementation of new global computer systems in 1997.
Our operating working capital, which is defined as receivables plus
inventories less accounts payable and accrued liabilities, decreased to ($19.7)
million at September 30, 1998 from $185.7 million at December 31, 1997. The
decrease is due principally to decreases in accounts receivable and inventories
and increases in accounts payable and accrued liabilities. The decrease in
accounts receivable is primarily the result of the sale of receivables under a
receivables securitization, as discussed below. Inventory decreased principally
due to the ongoing consolidation of logistical facilities. The increases in
accounts payable and accrued liabilities are principally attributable to the
timing of payments and accrued interest associated with the new debt resulting
from the Recapitalization.
Currently, we are evaluating a number of potential acquisitions in the
United States and Europe and implementing the planned consolidation and
relocation of our logistical facilities in North America. While there is no
guarantee that any of these potential acquisitions will be consummated or that
our consolidation and relocation activities will occur, one or more
acquisitions and implementation of our relocation activities could have a
material impact on our working capital requirements throughout the remainder of
1998. The net proceeds from the Offering were used to temporarily repay all
amounts presently outstanding under the Revolving Credit Facility of
approximately $30 million, and the remaining balance was used to fund working
capital needs which would have been historically funded through the Receivables
Securitization Facility. We intend to reborrow amounts under the Revolving
Credit Facility and to sell receivables under the Receivables Securitization
Facility to finance one or more future acquisitions, if they occur.
During the nine months ended September 30, 1998, we used $110.8 million of
cash for investing activities compared with $45.6 million for the same period
in 1997. The increase in cash used for investing activities is primarily due to
increases in acquisition spending offset by decreases in capital expenditures.
During the nine months ended September 30, 1998, we completed four acquisitions
for an aggregate purchase price of $68.7 million. Acquisitions were funded with
cash flow from operations and through borrowings of $25 million under our $175
million Revolving Credit Facility. For the nine months ended September 30, 1998
and 1997, we have capital expenditures of $43.7 million and $49.3 million,
respectively. This decrease in capital expenditures is primarily due to timing.
We anticipate our 1998 annual capital expenditures will exceed total 1997
expenditures as we continue our consolidation and relocation of logistics
facilities in North America and our project to upgrade global computer systems.
On November 20, 1998, we obtained $8.8 million of long term debt financing
relating to our new distribution facility in Hanover Park, Illinois.
During the nine months ended September 30, 1998, our financing activities
provided $25.8 million compared with $10.8 million for the same period in 1997.
This change is primarily due to an increase of $737.3 million in net long-term
debt proceeds, including proceeds from the Receivables Securitization Facility,
attributable to the Recapitalization. In connection with the Recapitalization,
we entered into the New Credit Facility, the Receivables Securitization
Facility and issued the Existing Notes. The full proceeds of the Existing
Notes, together with a portion of the proceeds of the New Credit Facility, were
used to finance the conversion into cash of the shares of Fisher common stock
then outstanding that were not retained by existing stockholders and employees,
to refinance $107.8 million of indebtedness of ours outstanding on the date of
the Recapitalization and to pay related fees and expenses of the
Recapitalization. In addition, the New Credit Facility will be used to provide
for our working capital requirements and future acquisitions, if any. The
interest rates and maturity dates of the New Credit Facility, the Receivables
Securitization Facility and the Existing Notes are described under "Description
of Other Indebtedness" and in Note 6 to our Financial Statements which are
incorporated by reference in this prospectus.
On January 21, 1998, we executed two interest rate swap agreements,
exchanging our floating-rate obligation on $120 million notional principal
amount for a fixed-rate payment obligation of 5.6425% per annum through January
23, 2001 and $250 million notional principal amount for a fixed-rate payment
obligation of 5.7375% per annum through January 23, 2003. The fair value of
these interest-rate swap agreements as of September 30, 1998, based upon quoted
market prices, was ($10.9) million.
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The New Credit Facility contains covenants by us and the subsidiary
borrowers, including, without limitation, restrictions on:
o indebtedness;
o the sale of assets;
o mergers, acquisitions and other business combinations;
o minority investments;
o the payment of cash dividends to shareholders; and
o various financial covenants.
The financial covenants include requirements to maintain certain levels of
interest coverage, debt to earnings before interest, taxes, depreciation and
amortization ("EBITDA") and minimum EBITDA and limitations on capital
expenditures. In addition to the mandatory repayment schedule discussed in Note
6 to Financial Statements incorporated by reference in this prospectus, loans
under the Term Facility are required to be prepaid with 50% of excess cash
flow, as defined in the New Credit Facility and subject to certain limits as
specified in such New Credit Facility, and certain of our equity issuances, and
100% of net-cash proceeds of certain asset sales, certain insurance and
condemnation proceeds and certain of our debt issuances. We obtained the
consent of the lenders under the New Credit Facility to consummate the
Offering.
The Receivables Securitization Facility relates to the sale, on a
revolving basis, of certain of the accounts receivables of Fisher Scientific
Company L.L.C., a Delaware limited liability corporation ("FSC"), to a
bankruptcy remote subsidiary of FSC that entered into an agreement to transfer,
on a revolving basis, an undivided percentage ownership interest in a
designated pool of accounts receivable, up to a maximum amount based on a
defined calculated percentage of the outstanding accounts receivable balance.
As of September 30, 1998, we had sold the maximum amount of eligible
receivables, or $168.2 million, under the Receivables Securitization Facility.
The Existing Notes will mature on February 1, 2008 with interest payable
semiannually in arrears on February 1 and August 1 of each year. The Existing
Notes are our unsecured senior subordinated obligations, subordinated in right
of payment to all existing and future senior indebtedness and rank equally in
right of payment with all of our other existing and future senior subordinated
indebtedness, including the Notes.
The Existing Notes are redeemable at our option at any time after February
1, 2003 at an initial redemption price of 104.5%, declining ratably to par on
or after February 1, 2006. In addition, on or prior to February 1, 2001, we may
redeem up to 40% of the original principal amount of the Existing Notes at a
redemption price of 109% of the principal amount, plus accrued and unpaid
interest, if any, to the date of redemption with the net cash proceeds of one
or more public equity offerings, provided that at least 60% of the aggregate
principal amount of the Existing Notes originally issued remains outstanding
immediately after the occurrence of such redemption. Upon a Change of Control
Triggering Event, as defined in the Existing Notes Indenture, we will be
required to make an offer to purchase all outstanding Existing Notes at 101% of
the principal amount, together with accrued and unpaid interest, if any, to the
date of purchase.
The Existing Notes Indenture contains covenants that restrict, among other
things, our ability to:
o incur additional indebtedness;
o pay dividends or make certain other restricted payments;
o merge or consolidate with any other person; and
o make minority investments.
The Existing Notes Indenture also contains other various covenants which are
customary for transactions of this type.
We expect that cash flows from operations, together with cash and cash
equivalents on hand and funds available under existing credit facilities, will
be sufficient to meet ongoing operating and capital expenditure requirements.
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European Economic and Monetary Union
We conduct business in many of the countries which are participating in
the European Economic and Monetary Union. These participating countries adopted
the Euro as their national currency on January 1, 1999. It is currently
anticipated that on and after January 1, 2002, the national currencies of the
participating countries will cease to exist and the sole legal tender in such
countries will be the Euro. Business enterprises have the option of switching
to the single currency at any time prior to January 1, 2002. In connection with
the upgrade of our management information systems, we are incorporating the
necessary changes which allow us to conduct business in Euros and the national
currencies during the transition period and entirely in Euros thereafter. We
are not able to accurately estimate or segregate the costs relating to the
conversion to the Euro, but management does not believe that such costs are
material. We do not anticipate that the conversion to the Euro will have a
material impact on our future results of operation.
Dependence on Information Systems; Systems Conversion; Year 2000 Issue
Our business is dependent in large part on our information systems. These
systems play an integral role in:
o tracking product offerings, including pricing and availability;
o processing and shipping more than 20,000 items per day;
o warehouse operations;
o purchasing from more than 3,000 vendors;
o inventory management;
o financial reporting; and
o other operational functions.
Year 2000 issues exist when dates in computer systems are recorded using
two digits (rather than four) and are then used for arithmetic operations,
comparisons or sorting. A two-digit date recording may recognize a date using
"00" as 1900 rather than 2000, which could cause our computer systems to
perform inaccurate computations. Our Year 2000 issues relate not only to our
computer systems but also to the systems of our customers and suppliers.
Based upon assessments of each of our business units and the information
systems supporting those operations, we have begun implementing a program
having the following major elements and a target completion date no later than
December 31, 1999.
o First, the applications and other software supporting each business
unit has been inventoried and analyzed and then planned for either:
(1) confirmation as Year 2000 compliant, (2) upgrade to a Year 2000
compliant version, (3) remediation to become Year 2000 compliant or
(4) replacement by other software which provides Year 2000 compliance
and other benefits. For example, certain of the financial applications
supporting the U.S. distribution business have been (or by December
31, 1999 will be) replaced by Oracle software; most of the remaining
software supporting the U.S. distribution businesses has been
remediated.
The primary methods of assuring Year 2000 compliance for core business
systems are:
o remediation for the U.S., Canadian and U.K. distribution systems;
o replacement by new Year 2000 and Euro compliant software for the other
European businesses;
o upgrade to Year 2000 versions for certain manufacturing businesses; and
o replacement by new Year 2000 software for the remaining manufacturing
businesses and overseas distribution businesses.
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o Second, we have initiated programs to assure Year 2000 compliance for the
equipment and software licenses that we currently market to our customers
and to obtain and transmit to customers information about the equipment
and software licenses which customers may have purchased in the past.
Some of our various units are also assisting customers in developing
plans to replace or upgrade any non-compliant equipment or software,
especially in laboratories, whether or not the products were acquired
from us.
o Third, we have (1) initiated programs to identify those suppliers whose
own systems could lead to delays or interruptions in supply, either
because of Year 2000 non-compliance or because of systems upgrades or
replacements to avoid Year 2000 issues and (2) begun developing
contingency plans during the fourth quarter of 1998 and first quarter of
1999, including adjustments in inventory levels and order lead times for
products provided by vendors who have not provided adequate assurances,
to ameliorate any resultant delays or interruptions and to prevent or
reduce any adverse effect on fill rates to our customers.
o Fourth, with particular regard to Electronic Data Interchange ("EDI"), we
have developed plans to work with trading partners, including both
suppliers and customers, to either work around the requirement for six
digit date fields in the prior EDI standards or to migrate, with the
trading partner, to ANSI version 4010, which employs eight digit date
fields. By mid-1999, we will be in a position to accept either six or
eight digit date fields in its EDI dealings with customers, suppliers and
other EDI trading partners.
o Fifth, we are implementing a project involving testing with available
test software personal computers and associated software at our various
locations, followed by upgrade or replacement where appropriate. In
addition, we are implementing projects which include inventory,
identification, assessment (through vendor contacts, testing or both),
planning, implementation (replacement, repair or upgrade), and testing of
manufacturing equipment, environmental control equipment, elevators,
security systems, telecommunications software and equipment and similar
purchased equipment, software and systems. While this portion of the
overall program is targeted for completion by June 30, 1999, it is
currently anticipated that a limited amount of this activity would remain
incomplete until later in 1999.
With regard to financial cost, implementation of the program has resulted,
and will continue to result in, significant time expenditure by our personnel
and outside software and equipment providers and some expenditures for
equipment and software upgrades and replacements. Because many of these efforts
have been designed to achieve other functional or systems improvements, in
addition to Year 2000 compliance, and are being carried out by operational
personnel within each business unit, it is difficult to allocate particular
funding levels solely to the Year 2000 compliance activities. In general,
however, we have spent $2.2 million in operating expenses and $23.0 million in
capital expenditures on Year 2000 activities to date. We estimate we would
incur an additional $4.5 million in operating expenses and $14.5 million in
capital expenditures to complete our Year 2000 programs.
Although we believe that our present remediation and replacement programs
will adequately address the Year 2000 issues with respect to our internal
systems, there can be no assurance that our belief is correct or that our
present assessment is in fact accurate. There can be no assurance that the
remediation and replacement programs will be completed prior to the Year 2000
or that if completed prior to the Year 2000 that disruption will not occur. In
addition, there can be no assurance that our vendors, suppliers and the myriad
of other financial, transportation, utility and other service providers will
successfully resolve their own Year 2000 issues in a manner which avoids
significant impact to us. We have received written assurances from many of our
suppliers and other providers acknowledging the Year 2000 issues and stating
their present intention to be compliant. We have not received assurances from
all of our suppliers and other providers and
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there is no guarantee that one or more key suppliers and other providers will
not fail to become compliant in time to avoid a disruption to our business
which, in spite of our contingency plans, would have a significant adverse
impact on us. Because of the complexity of our systems, the number of
transactions processed and the number of third parties with whom we interact,
certain failures by us or our suppliers, vendors and other service providers to
completely overcome the Year 2000 issue could result in substantial and material
impact on our business, operations and financial results.
Our forecasted costs and timing for completion of our Year 2000 programs
are based on best estimates, which in turn are based on numerous assumptions of
future events, including the continued availability and cost of necessary
personnel and other resources, third party modification plans, and other
factors. However, we cannot be certain that these estimates will be achieved and
actual results could differ materially from these estimates.
Environmental Matters
Some of our operations involve and have involved the handling, manufacture
or use of substances that are classified as toxic or hazardous substances
within the meaning of applicable environmental laws. Consequently, some risk of
environmental and other damage is inherent in our particular operations and
products, as it is with other companies engaged in similar businesses. There
can be no assurance that material damage will not occur or be discovered to
have occurred or be determined to be material in the future. We are currently
involved in various stages of investigation and remediation relative to
environmental protection matters.
Our Fair Lawn and Somerville, New Jersey facilities are the subject of
administrative consent orders, issued pursuant to New Jersey's Environmental
Clean-Up and Responsibility Act ("ECRA")--now called the Industrial Site
Recovery Act ("ISRA")--in connection with prior transfers of a controlling
interest in our company, which require the undertaking of certain remediation
and other activities at these sites. The Fair Lawn facility is also part of a
site listed on the "Superfund" National Priority List under the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"). We have also been notified that we are among the
potentially responsible parties under CERCLA or similar state laws for the
costs of investigating and/or remediating contamination caused by hazardous
materials at certain other sites. Our non-Superfund liabilities for
environmental matters are principally related to compliance with ECRA/ISRA
administrative consent orders and other environmental regulatory requirements
such as the Clean Air Act, the Clean Water Act and other generally applicable
requirements.
The potential costs related to environmental matters and the possible
impact on future operations are difficult to predict given the uncertainties
regarding the
o extent of the required cleanup;
o complexity and interpretation of applicable laws and regulations;
o varying costs of alternative cleanup methods; and
o extent of our responsibility.
However, such costs could be material. Accruals for environmental
liabilities are recorded, based on current interpretations of environmental
laws and regulations, when it is probable that a liability has been incurred
and the amount of such liability can be reasonably estimated. Estimates are
established based upon reports prepared by environmental specialists,
management's knowledge to date and its experience with the foregoing
environmental matters. These estimates include potential costs for
investigation, remediation, operation and maintenance of cleanup sites and
related capital expenditures. Accrued liabilities for environmental matters
were $35.1 million and $37.6 million at December 31, 1997 and 1996,
respectively. Although these amounts do not include third-party recoveries,
certain sites may be subject to indemnification. We have accounted for
environmental liabilities in accordance with Accounting Standards Statement of
Position 96-1, "Environmental Remediation Liabilities," which addresses
accounting and reporting for environmental remediation liabilities. Management
believes this accrual is adequate for the environmental liabilities expected to
be incurred and, as a result, believes that the ultimate liability incurred
with respect to environmental matters will not have a material adverse effect
on our financial statements or results of operations. However, future events,
such as changes in existing laws and regulations, changes in agency
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direction or enforcement policies, or changes in the conduct of our operations,
may give rise to additional compliance costs which could have a material adverse
effect on our financial statements.
Financial Instruments
Our financial instruments consist primarily of cash in banks, investments
in marketable securities, accounts receivable and debt. In addition, we have
forward currency contracts that hedge certain firm commitments and
interest-rate swap agreements to hedge certain interest payments on debt. See
Notes 3 and 6 to the December 31, 1997 Financial Statements and Note 6 to the
September 30, 1998 financial statements, both incorporated by reference in this
prospectus for additional information.
Dividends
We paid a quarterly cash dividend of $.02 per share for the first three
quarterly periods of fiscal 1997 and each of the quarterly periods of 1996. On
January 21, 1998, in connection with the Recapitalization, we and certain of
our subsidiaries entered into a New Credit Facility, which restricts our
ability to pay future dividends. Accordingly, Fisher does not anticipate paying
cash dividends on its common stock at any time in the future.
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THE EXCHANGE OFFER
Terms of the Exchange Offer; Period for Tendering Old Notes
Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying Letter of Transmittal, which together constitute the
Exchange Offer, we will accept for exchange Old Notes which are properly
tendered on or prior to the Expiration Date and not withdrawn as permitted
below. As used in this prospectus, the term "Expiration Date" means 5:00 p.m.,
New York City time, on March 17, 1999. However, if we, in our sole discretion,
have extended the period of time for which the Exchange Offer is open, the term
"Expiration Date" means the latest time and date to which we extend the
Exchange Offer.
As of the date of this prospectus, $200 million aggregate principal amount
of the Old Notes is outstanding. This prospectus, together with the Letter of
Transmittal, is first being sent on or about February 16, 1999, to all holders
of Old Notes known to us. Our obligation to accept Old Notes for exchange
pursuant to the Exchange Offer is subject to certain conditions as set forth
under "--Certain Conditions to the Exchange Offer" below.
We expressly reserve the right, at any time or from time to time, to
extend the period of time during which the Exchange Offer is open, and thereby
delay acceptance for exchange of any Old Notes, by giving oral or written
notice of such extension to the holders of Old Notes as described below. During
any such extension, all Old Notes previously tendered will remain subject to
the Exchange Offer and may be accepted for exchange by us. Any Old Notes not
accepted for exchange for any reason will be returned without expense to the
tendering holder as promptly as practicable after the expiration or termination
of the Exchange Offer.
Old Notes tendered in the Exchange Offer must be in denominations of
principal amount of $1,000 and any integral multiple of $1,000.
We expressly reserve the right to amend or terminate the Exchange Offer,
and not to accept for exchange any Old Notes not previously accepted for
exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified below under "--Certain Conditions to the Exchange Offer." We will
give oral or written notice of any (1) extension, (2) amendment, (3)
non-acceptance or (4) termination to the holders of the Old Notes as promptly
as practicable on the next business day after the previously scheduled
Expiration Date. Such notice in the case of any extension is to be issued by
means of a press release or other public announcement no later than 9:00 a.m.,
New York City time on such date.
Procedures for Tendering Old Notes
The tender to us of Old Notes by a holder of Old Notes as set forth below
and acceptance of such tender by us will constitute a binding agreement between
the tendering holder and us upon the terms and subject to the conditions set
forth in this prospectus and in the accompanying Letter of Transmittal. Except
as set forth below, a holder who wishes to tender Old Notes for exchange
pursuant to the Exchange Offer must transmit a properly completed and duly
executed Letter of Transmittal, including all other documents required by such
Letter of Transmittal, to State Street Bank and Trust Company (the "Exchange
Agent") at the address set forth below under "--Exchange Agent" on or prior to
the Expiration Date. In addition, the Exchange Agent must receive:
o certificates for such Old Notes along with the Letter of Transmittal;
or
o prior to the Expiration Date, a timely confirmation of book-entry
transfer (a "Book-Entry Confirmation") of such Old Notes, if such
procedure is available, into the Exchange Agent's account at The
Depository Trust Company (the "Book-Entry Transfer Facility"), pursuant
to the procedure for book-entry transfer described below; or
o the holder must comply with the guaranteed delivery procedures
described below.
The method of delivery of Old Notes, Letters of Transmittal and all other
required documents is at your election and risk. If such delivery is by mail,
we recommend that you use registered mail, properly insured, with return
receipt requested. In all cases, you should allow sufficient time to assure
timely delivery. You shoud not send Letters of Transmittal or Old Notes to us.
33
<PAGE>
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee, and who wishes
to tender, should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering such
owner's Old Notes, either (1) make appropriate arrangements to register
ownership of the Old Notes in such owner's name or (2) obtain a properly
completed bond power from the registered holder. The transfer of registered
ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
are tendered:
o by a registered holder of the Old Notes who has not completed the box
entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal or
o for the account of an Eligible Institution (as defined below).
In the event that signatures on a Letter of Transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, such guarantees
must be by a firm which is a financial institution--including most banks,
savings and loan associations and brokerage houses--that is a participant in
the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchanges Medallion Program
(collectively, "Eligible Institutions"). If Old Notes are registered in the
name of a person other than a signer of the Letter of Transmittal, the Old
Notes surrendered for exchange must be endorsed by, or be accompanied by a
written instrument or instruments of transfer or exchange, in satisfactory form
as determined by us in our sole discretion, duly executed by the registered
holder with the signature on such Old Notes guaranteed by an Eligible
Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined
by us in our sole discretion. This determination shall be final and binding. We
reserve the absolute right to reject any and all tenders of any particular Old
Notes not properly tendered or to not accept any particular Old Note which
acceptance might, in our judgment or our counsel's judgment, be unlawful. We
also reserve the absolute right to waive any defects or irregularities or
conditions of the Exchange Offer as to any particular Old Notes either before
or after the Expiration Date, including the right to waive the ineligibility of
any holder who seeks to tender Old Notes in the Exchange Offer. The
interpretation of the terms and conditions of the Exchange Offer as to any
particular Old Notes either before or after the Expiration Date, including the
Letter of Transmittal and the instructions to such Letter of Transmittal, by us
shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes for exchange must be
cured within such reasonable period of time as we shall determine. Neither we,
the Exchange Agent nor any other person shall be under any duty to give
notification of any defect or irregularity with respect to any tender of Old
Notes for exchange, nor shall any of them incur any liability for failure to
give such notification.
If the Letter of Transmittal is signed by a person or persons other than
the registered holder or holders of Old Notes, such Old Notes must be endorsed
or accompanied by appropriate powers of attorney. In either case, such Old
Notes must be signed exactly as the name or names of the registered holder or
holders appear on the Old Notes.
If the Letter of Transmittal or any Old Notes or powers of attorney 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, proper evidence satisfactory to us of their authority to so act must be
submitted.
By tendering, each holder will represent to us that, among other things,
(1) the New Notes acquired pursuant to the Exchange Offer are being obtained in
the ordinary course of business of the person receiving such New Notes, (2)
whether or not such person is the holder, and (3) that neither the holder nor
such other person has any arrangement or understanding with any person to
participate in the distribution of the New Notes. In the case of a holder that
is not a broker-dealer, each such holder, by tendering, will also represent to
us that such holder is not engaged in and does not intend to engage in a
distribution of the New Notes. If any holder or any such other person is an
"affiliate," as defined under Rule 405 of the Securities Act, of ours, or is
34
<PAGE>
engaged in, or intends to engage in, or has an arrangement or understanding
with any person to participate in, a distribution of such New Notes to be
acquired pursuant to the Exchange Offer, such holder or any such other person
(1) could not rely on the applicable interpretations of the staff of the
Commission and (2) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes, where such Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus that meets the requirements of
the Securities Act in connection with any resale of such New Notes. The Letter
of Transmittal states that by so acknowledging and by delivering such a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. See "Plan of
Distribution."
Acceptance of Old Notes for Exchange; Delivery of New Notes
Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, we will accept, promptly after the Expiration Date, all Old Notes
properly tendered, and will issue the New Notes promptly after acceptance of
the Old Notes. See "--Certain Conditions to the Exchange Offer" below. For
purposes of the Exchange Offer, we shall be deemed to have accepted properly
tendered Old Notes for exchange when, as and if we have given oral or written
notice to the Exchange Agent, with written confirmation of any oral notice to
be given promptly after giving such notice.
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. The New Notes will bear interest from the most recent date to which
interest has been paid on the Old Notes or, if no interest has been paid on the
Old Notes, from November 20, 1998. Accordingly, registered holders of New Notes
on the relevant record date for the first interest payment date following the
consummation of the Exchange Offer will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid,
from November 20, 1998. Old Notes accepted for exchange will cease to accrue
interest from and after the date of consummation of the Exchange Offer. Holders
of Old Notes whose Old Notes are accepted for exchange will not receive any
payment in respect of accrued interest on such Old Notes otherwise payable on
any interest payment date the record date for which occurs on or after
consummation of the Exchange Offer.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of (1) certificates for such Old Notes, or a timely
Book-Entry Confirmation of such Old Notes, into the Exchange Agent's account at
the Book-Entry Transfer Facility, (2) a properly completed and duly executed
Letter of Transmittal and (3) all other required documents.
If any tendered Old Notes are not accepted for any reason set forth in the
terms and conditions of the Exchange Offer, or if Old Notes are submitted for a
greater principal amount than the holder desires to exchange, such unaccepted
or non-exchanged Old Notes will be returned without expense to the tendering
holder of such Old Notes, or, in the case of Old Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry procedures described below, such non-exchanged Old
Notes will be credited to an account maintained with such Book-Entry Transfer
Facility, as promptly as practicable after the expiration or termination of the
Exchange Offer.
Book-Entry Transfer
The Exchange Agent will make a request to establish an account with
respect to the Old Notes at the Book-Entry Transfer Facility for purposes of
the Exchange Offer within two business days after the date of this prospectus.
Any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or a facsimile of such
Letter of Transmittal, with any required signature guarantees and any other
required documents, must, in any case, be transmitted to, and received by, the
Exchange Agent at the address set forth below under "--Exchange Agent" on or
prior to the Expiration Date or there has been compliance with the guaranteed
delivery procedures described below.
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<PAGE>
Guaranteed Delivery Procedures
If a registered holder of the Old Notes desires to tender such Old Notes
and (1) the Old Notes are not immediately available, or time will not permit
such holder's Old Notes, or (2) other required documents to reach the Exchange
Agent before the Expiration Date, or (3) the procedure for book-entry transfer
cannot be completed on a timely basis, a tender may be effected if:
o the tender is made through an Eligible Institution;
o prior to the Expiration Date, the Exchange Agent received from such
Eligible Institution a properly completed and duly executed Letter of
Transmittal, or a facsimile of such Letter of Transmittal, and Notice of
Guaranteed Delivery, substantially in the form provided by us, by
facsimile transmission, mail or hand delivery, (a) setting forth the
name and address of the holder of Old Notes and the amount of Old Notes
tendered, (b) stating that the tender is being made thereby, and (c)
guaranteeing that within three New York Stock Exchange ("NYSE") trading
days after the Expiration Date, the certificates for all physically
tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and any other documents required by
the Letter of Transmittal will be deposited by the Eligible Institution
with the Exchange Agent; and
o the certificates for all physically tendered Old Notes, in proper form
for transfer, or a Book-Entry Confirmation, as the case may be, and all
other documents required by the Letter of Transmittal, are received by
the Exchange Agent within three NYSE trading days after the Expiration
Date.
Withdrawal Rights
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the address or, in the case of Eligible
Institutions, at the facsimile number, set forth below under "--Exchange Agent"
prior to 5:00 p.m., New York City time, on the Expiration Date. Any such notice
of withdrawal must:
o specify the name of the person having tendered the Old Notes to be
withdrawn (the "Depositor");
o identify the Notes to be withdrawn, including the certificate number or
numbers and principal amount of such Old Notes;
o contain a statement that such holder is withdrawing his election to have
such Old Notes exchanged;
o be signed by the holder in the same manner as the original signature on
the Letter of Transmittal by which such Old Notes were tendered,
including any required signature guarantees, or be accompanied by
documents of transfer to have the Trustee with respect to the Old Notes
register the transfer of such Old Notes in the name of the person
withdrawing the tender; and
o specify the name in which such Old Notes are registered, if different
from that of the Depositor.
If Old Notes have been tendered pursuant to the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Old Notes and otherwise comply with the procedures of such
facility. All questions as to the validity, form and eligibility, including
time of receipt, of such notices will be determined by us, whose determination
shall be final and binding on all parties. Any Old Notes so withdrawn will be
deemed not to have been validly tendered for exchange for purposes of the
Exchange Offer. No New Notes will be issued with respect to the Exchange Offer
unless the Old Notes so withdrawn are validly retendered. Any Old Notes that
have been tendered for exchange, but which are not exchanged for any reason,
will be returned to the holder of such Old Notes without cost to such holder,
or, in the case of Old Notes tendered by book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry
transfer procedures described above, such Old Notes will be credited to an
account maintained with the Book-Entry Transfer Facility for the Old Notes, as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following
36
<PAGE>
the procedures described under "--Procedures for Tendering Old Notes" above at
any time on or prior to 5:00 p.m., New York City time, on the Expiration Date.
Certain Conditions to the Exchange Offer
Notwithstanding any other provision of the Exchange Offer, we shall not be
required to accept for exchange, or to issue New Notes in exchange for, any Old
Notes and may terminate or amend the Exchange Offer, if at any time before the
acceptance of such Old Notes for exchange or the exchange of the New Notes for
such Old Notes, any of the following events shall occur:
o there shall be threatened, instituted or pending any action or proceeding
before, or any injunction, order or decree shall have been issued by, any
court or governmental agency or other governmental regulatory or
administrative agency or commission (1) seeking to restrain or prohibit
the making or consummation of the Exchange Offer or any other transaction
contemplated by the Exchange Offer, or assessing or seeking any damages as
a result of such transaction, or (2) resulting in a material delay in our
ability to accept for exchange or exchange some or all of the Old Notes
pursuant to the Exchange Offer; or any statute, rule, regulation, order or
injunction shall be sought, proposed, introduced, enacted, promulgated or
deemed applicable to the Exchange Offer or any of the transactions
contemplated by the Exchange Offer by any government or governmental
authority, domestic or foreign, or any action shall have been taken,
proposed or threatened, by any government, governmental authority, agency
or court, domestic or foreign, that in our sole judgment might directly or
indirectly result in any of the consequences referred to in clauses (1) or
(2) above or, in our sole judgment, might result in the holders of New
Notes having obligations with respect to resales and transfers of New
Notes which are greater than those described in the interpretation of the
Commission referred to above, or would otherwise make it inadvisable to
proceed with the Exchange Offer; or
o there shall have occurred:
(1) any general suspension of or general limitation on prices for, or
trading in, securities on any national securities exchange or in the
over-the-counter market;
(2) any limitation by a governmental agency or authority which may
adversely affect our ability to complete the transactions contemplated
by the Exchange Offer;
(3) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or any limitation by any
governmental agency or authority which adversely affects the extension
of credit; or
(4) a commencement of a war, armed hostilities or other similar
international calamity directly or indirectly involving the United
States, or, in the case of any of the foregoing existing at the time of
the commencement of the Exchange Offer, a material acceleration or
worsening of such calamities; or
o any change, or any development involving a prospective change, shall have
occurred or be threatened in our business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects and those of our subsidiaries taken as a whole that, in our sole
judgment, is or may be adverse to us, or we shall have become aware of
facts that, in our sole judgment, have or may have adverse significance
with respect to the value of the Old Notes or the New Notes; which in our
sole judgment in any case, and regardless of the circumstances, including
any action by us, giving rise to any such condition, makes it inadvisable
to proceed with the Exchange Offer and/or with such acceptance for
exchange or with such exchange.
The foregoing conditions are for our sole benefit and may be asserted by
us regardless of the circumstances giving rise to any such condition, or may be
waived by us in whole or in part at any time and from time to time in its sole
discretion. Our failure at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to
time.
In addition, we will not accept for exchange any Old Notes tendered, and
no New Notes will be issued in exchange for any such Old Notes, if at such time
any stop order shall be threatened or in effect with respect
37
<PAGE>
to the Registration Statement of which this prospectus constitutes a part or
the qualification of the Indenture under the Trust Indenture Act of 1939.
Exchange Agent
State Street Bank and Trust Company has been appointed as the Exchange
Agent for the Exchange Offer. All executed Letters of Transmittal should be
directed to the Exchange Agent at the address set forth below. Questions and
requests for assistance, requests for additional copies of this prospectus or
of the Letter of Transmittal and requests for Notices of Guaranteed Delivery
should be directed to the Exchange Agent addressed as follows:
State Street Bank and Trust Company, Exchange Agent
<TABLE>
<S> <C>
By Mail: By Overnight Courier:
State Street Bank and Trust Company State Street Bank and Trust Company
P.O. Box 778 Two International Place
Boston, Massachusetts 02102 Boston, Massachusetts 02110
Attention: Corporate Trust Department Attention: Corporate Trust Department
Kellie Mullen Kellie Mullen
By Hand: in New York (as Drop Agent) By Hand: in Boston
State Street Bank and Trust Company, N.A. State Street Bank and Trust Company
61 Broadway, 15th Floor Two International Place
Corporate Trust Window Fourth Floor, Corporate Trust
New York, New York 10006 Boston, Massachusetts 02110
</TABLE>
For Information Call:
(617) 664-5587
By Facsimile Transmission
(for Eligible Institutions only):
(617) 664-5314
Attention: Corporate Trust Department
Confirm by Telephone:
(617) 664-5314
If you deliver the Letter of Transmittal to an address other than as set
forth above or transmission of instructions via facsimile other than as set
forth above, then such delivery or transmission does not constitute a valid
delivery of such Letter of Transmittal.
Fees and Expenses
We will not make any payment to brokers, dealers, or others soliciting
acceptances of the Exchange Offer. The estimated cash expenses to be incurred
in connection with the Exchange Offer will be paid by us. We estimate these
expenses in the aggregate to be approximately $500,000.
Transfer Taxes
Holders who tender their Old Notes for exchange will not be obligated to
pay any related transfer taxes, except that holders who instruct us to register
New Notes in the name of, or request that Old Notes not tendered or not
accepted in the Exchange Offer be returned to, a person other than the
registered tendering holder will be responsible for the payment of any
applicable transfer taxes.
Consequences of Exchanging or Failing to Exchange Old Notes
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions in
the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend on such
Notes as a consequence of the issuance of the Old Notes pursuant to exemptions
from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Old Notes may not be
38
<PAGE>
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. As discussed below in "Exchange Offer;
Registration Rights," we do not currently anticipate that we will register Old
Notes under the Securities Act.
Based on interpretations by the staff of the Commission, as set forth in
no-action letters issued to third parties, we believe that New Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be offered for
resale, resold or otherwise transferred by holders of such Old Notes, other
than any such holder which is an "affiliate" of ours within the meaning of Rule
405 under the Securities Act, without compliance with the registration and
prospectus delivery 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 or understanding with any person to participate in
the distribution of such New Notes. However, the Commission has not considered
the Exchange Offer in the context of a no-action letter. There can be no
assurance that the staff of the Commission would make a similar determination
with respect to the Exchange Offer as in such other circumstances. Each holder,
other than a broker-dealer, must acknowledge that it is not engaged in, and
does not intend to engage in, a distribution of New Notes and has no
arrangement or understanding to participate in a distribution of New Notes. If
any holder is an affiliate of ours, is engaged in or intends to engage in or
has any arrangement or understanding with respect to the distribution of the
New Notes to be acquired pursuant to the Exchange Offer, such holder (1) could
not rely on the applicable interpretations of the staff of the Commission and
(2) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. Each
broker-dealer that receives New Notes for its own account in exchange for Old
Notes must acknowledge that such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities and that it
will deliver a prospectus in connection with any resale of such New Notes. In
addition, to comply with the securities laws of certain jurisdictions, if
applicable, the New Notes may not be offered or sold unless they have been
registered or qualified for sale in such jurisdiction or an exemption from
registration or qualification, with which there has been compliance, is
available. See "Plan of Distribution."
39
<PAGE>
MANAGEMENT
Executive Officers and Directors
The following table provides information concerning Fisher's executive
officers and directors. All directors will hold office until the next annual
meeting of stockholders of Fisher and until their successors have been duly
elected and qualified. All officers will serve at the discretion of the Board
of Directors.
<TABLE>
<CAPTION>
Name Age Position
--- --- --------
<S> <C>
Paul M. Montrone 57 Chairman of the Board, Chief Executive Officer and Director
of Fisher
Paul M. Meister 46 Vice Chairman of the Board, Executive Vice President, Chief
Financial Officer and Director of Fisher
David T. Della Penta 51 President and Chief Operating Officer of Fisher
Denis N. Maiorani 50 President of Fisher Scientific Worldwide Inc.
Kevin P. Clark 36 Vice President and Controller of Fisher
Todd M. DuChene 35 Vice President, General Counsel and Secretary of Fisher
Robert J. Gagalis 44 Vice President and Treasurer of Fisher
Mitchell J. Blutt 41 Director
Robert A. Day 55 Director
Michael D. Dingman 67 Director
Anthony J. DiNovi 36 Director
David V. Harkins 57 Director
Scott M. Sperling 41 Director
Kent R. Weldon 31 Director
</TABLE>
Paul M. Montrone has been Chairman of the Board of Fisher since March 1998
and a member of the Board of Directors since 1991. Mr. Montrone has been Chief
Executive Officer of Fisher since 1991 and was President from 1991 to 1998.
Prior to that time, he was President of The General Chemical Group Inc. (a
manufacturer of inorganic chemicals) ("General Chemical") from prior to 1992 to
1994 and has been Chairman of the Board of General Chemical since 1994. Mr.
Montrone served as Vice Chairman of the Board of Directors of Abex Inc.
("Abex") (aerospace products and services), from 1992 to 1995. Mr. Montrone is
a member of the Board of Directors of USA Waste Management, Inc.
Paul M. Meister has been Vice Chairman of the Board and Executive Vice
President of Fisher since March 1998 and Chief Financial Officer since 1991.
Mr. Meister was Senior Vice President of Fisher from 1991 to 1998. Prior to
that time, he was Senior Vice President of Abex from 1992 to 1995. Mr. Meister
is a member of the Board of Directors of M&F Worldwide Corp., General Chemical
(Vice Chairman) and Minerals Technologies, Inc.
40
<PAGE>
David T. Della Penta has been President and Chief Operating Officer of
Fisher since April 1998. From prior to 1992 until April 1998, Mr. Della Penta
served as President of the Nalge Nunc International subsidiary of Sybron
International Corporation (medical laboratory device manufacturer).
Denis N. Maiorani has been President of Fisher Scientific Worldwide Inc.,
a subsidiary of Fisher, since 1996. Mr. Maiorani was President of Fisher
Scientific Europe Limited from January 1996 to July 1996, and a consultant to
Fisher from 1995 to 1996. From prior to 1992 to January 1995, Mr. Maiorani was
President of Robertson-Ceco Corporation (building components manufacturing).
Kevin P. Clark has been Vice President and Controller of Fisher since
April 1998. Prior to that time, Mr. Clark served as Vice President and
Treasurer of Fisher from September 1997 to June 1998, and served as Assistant
Treasurer of Fisher from 1995 to 1997. Mr. Clark served as Treasurer of
Federal-Mogul Corporation (automotive components) from 1994 to 1995, and held
various financial executive positions at Chrysler Corporation from prior to
1992 to 1993, the most current being Manager of Corporate Finance of Chrysler
Financial Corp. (financial services).
Todd M. DuChene has been Vice President, General Counsel and Secretary of
Fisher since November 1996. Mr. DuChene served as Senior Vice President,
Secretary and General Counsel of OfficeMax, Inc. (retailer) from March 1995 to
November 1996 and Vice President, General Counsel and Assistant Secretary from
January 1994 to March 1995. He was an Associate with Baker & Hostetler (law
firm) from prior to 1992 to January 1994.
Robert J. Gagalis has been Vice President and Treasurer of Fisher since
May 1998. From 1997 to May 1998, he was Vice President, Chief Financial Officer
and Treasurer of Wheelabrator Technologies Inc. ("WTI") (environmental
services), and Vice President, Corporate Development of WTI from 1993 to 1996.
Mitchell J. Blutt, M.D. has been a director of Fisher since January 1998.
Dr. Blutt has been an Executive Partner of Chase Capital Partners since prior
to 1994, has been an Adjunct Assistant Professor of Medicine at the New York
Hospital/Cornell Medical Center since prior to 1994 and is a Board Certified
Internist. Dr. Blutt also serves as a director of Hanger Orthopedic Group and
Landec Corp.
Robert A. Day has been a director of Fisher since 1991. Mr. Day has been
Chairman of the Board and Chief Executive Officer of Trust Company of the West
(investments) since prior to 1993 and Chairman and President of W. M. Keck
Foundation since 1996. Mr. Day is also a director of Freeport-McMoran Inc.
Michael D. Dingman has been a director of Fisher since 1991. Mr. Dingman
was Chairman of the Board of Fisher from prior to 1994 until January 1998. He
has been President of Shipston Group Ltd. (international investments) since
1994. Mr. Dingman was Chairman of the Board and Chief Executive Officer of Abex
from prior to 1993 until June 1995. From prior to 1993 until August 1994, he
was Chairman of the Board and Chief Executive Officer of General Chemical. Mr.
Dingman is also a director of Ford Motor Company and Teekay Shipping Ltd.
Anthony J. DiNovi has been a director of Fisher since January 1998. Mr.
DiNovi has been employed by THL Co., a private equity investment firm, since
1988 and currently serves as a Managing Director. Mr. DiNovi is also Vice
President and Trustee of THL Equity Trust III, the general partner of the THL
Equity Advisors III Limited Partnership, which is the general partner of the
Thomas H. Lee Equity Fund III, L.P. and Vice President of Thomas H. Lee
Advisors I and T.H. Lee Mezzanine II, affiliates of ML-Lee Acquisition Fund,
L.P., ML-Lee Acquisition Fund II, L.P. and ML-Lee Acquisition Fund II
(Retirement Accounts), L.P., respectively. Mr. DiNovi also serves as a director
of Eye Care Centers of America, Inc., Safelite Glass Corp., The Learning
Company, Inc. and several private corporations.
David V. Harkins has been a director of Fisher since January 1998. Mr.
Harkins has been employed by THL Co. since 1986 and currently serves as a
Senior Managing Director. Mr. Harkins is also the President and Trustee of THL
Equity Trust III, the General Partner of THL Equity Advisers III Limited
Partnership, which is the General Partner of Thomas H. Lee Equity Fund III,
L.P. and Chairman of National Dentex Corporation since 1983. Mr. Harkins is a
director of Stanley Furniture Company, Inc., Syratech Corporation, Freedom
Securities Corp., Cott Corporation and several private corporations.
Scott M. Sperling has been a director of Fisher since January 1998. Since
July 1994, Mr. Sperling has served as a Managing Director of THL Co. Mr.
Sperling is also Vice President and Trustee of THL Equity
41
<PAGE>
Trust III, the general partner of Equity Advisors III Limited Partnership,
which is the general partner of Thomas H. Lee Equity Fund III L.P. Mr. Sperling
also serves as a director of The Learning Company, Livent, Inc., General
Chemical, Safelite Glass Corp. and several private corporations.
Kent R. Weldon has been a director of Fisher since January 1998. Mr.
Weldon worked at THL Co. from 1991 to 1993 and rejoined in 1995 and currently
serves as a Vice President of THL Co. From 1989 to 1991, Mr. Weldon worked in
the Mergers & Acquisitions Department of Morgan Stanley & Co., Incorporated.
From 1993 to 1995, Mr. Weldon attended the Harvard Graduate School of Business
Administration. Mr. Weldon is a Vice President of THL Equity Trust III, the
General Partner of THL Equity Advisers III Limited Partnership, which is the
General Partner of Thomas H. Lee Equity Fund III, L.P. Mr. Weldon also serves
as a director of Syratech Corporation and other private corporations.
42
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 12, 1999 certain information
concerning each person believed to be a beneficial owner of more than 5% of
common stock and beneficial ownership of common stock by each nominee,
director, named executive officer and all directors and executive officers as a
group.
<TABLE>
<CAPTION>
Shares of Percent of
Name of Beneficial Owner Common Stock Class (1)
- ----------------------------------------------------------- ------------------------------- -----------
<S> <C> <C>
Thomas H. Lee Equity Fund III, L.P. .................... 21,749,345(2)(3)(4) 57.7%
DLJ Merchant Banking Partners II, L.P., et al. ......... 6,551,005(3)(5)(6) 17.9%
Chase Equity Associates, L.P. .......................... 4,367,335(7) 10.8%
Paul M. Montrone ....................................... 2,551,760(3)(8) 6.6%
Paul M. Meister ........................................ 1,453,807(3)(9) 3.9%
David V. Harkins ....................................... 108,210(3)(10) *
Denis N. Maiorani ...................................... 76,085(2)(3)(11) *
Scott M. Sperling ...................................... 54,105(3)(12) *
Anthony J. DiNovi ...................................... 54,105(3)(13) *
David T. Della Penta ................................... 50,000(14) *
Todd M. DuChene ........................................ 48,320(3)(15) *
Kent R. Weldon ......................................... 8,115(3)(16) *
Mitchell J. Blutt ...................................... 0(7) *
Michael D. Dingman ..................................... 0 *
Robert A. Day .......................................... 0 *
All directors and executive officers as a
group (14 individuals) ................................ 4,490,823(3)(17) 11.1%
</TABLE>
- ----------------
* less than 1%.
(1) Calculated after giving effect to the exercise of warrants to purchase
common stock described below.
(2) The address of Thomas H. Lee Equity Fund III, L.P. is c/o Thomas H Lee
Company, 75 State Street, Boston, Massachusetts. The information is based
on a Schedule 13D dated January 21, 1998 filed with the Commission by the
THL Entities, Thomas H. Lee Equity Advisors III Limited Partnership
("Advisors III"), THL Equity Trust III ("Trust III") and THL Investment
Management Corp. ("THL Investment"). Each of the THL Entities, Advisors
III, Trust III and THL Investment expressly disclaims beneficial ownership
of shares of common stock held by others.
(3) By virtue of the Investors' Agreement, the THL Entities, the ML Entities,
and DLJ Entities and the Management Investors may constitute a "group"
under the Securities Exchange Act of 1934, as amended. Each of the parties
to the Investors' Agreement expressly disclaims beneficial ownership of
shares of common stock held by others.
(4) Includes 12,047,625 outstanding shares and 991,340 shares issuable upon
the exercise of warrants to purchase shares owned by Equity Fund III;
6,052,935 outstanding shares and 498,070 shares issuable upon the exercise
of warrants to purchase shares owned by THL FSI; 745,470 outstanding
shares and 61,340 shares issuable upon the exercise of warrants owned by
Foreign Fund III; 741,960 outstanding shares and 61,045 shares issuable
upon the exercise of warrants to purchase shares owned by THL-CCI; 99,980
outstanding shares and 8,230 shares issuable upon exercise of warrants to
purchase shares owned by Mr. Harkins or a trust as to which Mr. Harkins'
wife is a trustee (see footnote 10); 49,990 outstanding shares and 4,115
shares issuable upon exercise of warrants to purchase shares owned by Mr.
Sperling or a limited partnership of which Mr. Sperling is a general
partner (see footnote 12); 49,990 outstanding shares and 4,115 shares
issuable upon exercise of warrants to purchase shares owned by Mr. DiNovi;
7,500 outstanding and 615 shares issuable upon exercise of warrants to
purchase shares owned by Mr. Weldon; and 300,310 outstanding shares and
24,715 shares issuable upon exercise of warrants to purchase shares
attributable to the Additional THL Persons.
(5) The address of DLJ Merchant Banking Partners II, L.P. is 277 Park Avenue,
New York, New York 10172. The information is based on a Schedule 13D dated
January 21, 1998 filed with the SEC by the
43
<PAGE>
DLJ Entities and DLJ Merchant Banking II, LLC, DLJ Merchant Banking II,
Inc., DLJ Diversified Associates, L.P., DLJ Diversified Partners, Inc.,
DLJ LBO Plans Management Corporation, DLJ Capital Investors, Inc., UK
Investment Plan 1997, Inc., Donaldson, Lufkin & Jenrette, Inc., The
Equitable Companies Incorporated, AXA-UAP, Finaxa, AXA Assurances I.A.R.D.
Mutuelle, AXA Assurances Vie Mutuelle, AXA Courtage Assurance Mutuelle,
Alpha Assurances Vie Mutuelle, and Claude Bebear, Patrice Garnier and
Henri de Clermont-Tonnerre, trustees pursuant to a Voting Trust dated as
of May 12, 1992, as amended (collectively, the "Additional DLJ Persons").
Each of the DLJ Entities and the Additional DLJ Persons expressly
disclaims beneficial ownership of shares held by others.
(6) Includes 3,812,895 outstanding shares and 313,745 shares issuable upon the
exercise of warrants to purchase shares owned by DLJ Partners II; 676,965
outstanding shares and 55,700 shares issuable upon the exercise of
warrants to purchase shares owned by DLJ Funding II; 719,015 outstanding
shares and 59,165 shares issuable upon the exercise of warrants to
purchase shares owned by DLJ ESC II; and 844,060 outstanding shares and
69,460 shares issuable upon the exercise of warrants to purchase shares
owned by the remaining DLJ Entities.
(7) The address of Chase Equity Associates, L.P. is 270 Park Avenue, New York,
New York 10172. CEA is the owner of 4,035,290 outstanding shares of
non-voting common stock of Fisher and warrants to purchase 332,045 shares
of non-voting common stock of Fisher, which stock is convertible on a one-
on-one basis into shares of Common Stock, as provided by the Company's
Amended and Restated Certificate of Incorporation, as amended. Mitchell J.
Blutt, M.D. serves as a director of the Company and is a general partner
of Chase Capital Partners, the sole general partner of CEA. Dr. Blutt
expressly disclaims beneficial ownership of shares held by CEA.
(8) Includes 707,875 shares issuable upon exercise of options, 275,000
outstanding shares owned directly by Mr. Montrone, 362,500 shares which
are held in the Fisher Scientific International Inc. Executive Retirement
and Savings Program Trust (the "Savings Trust") and 1,206,385 shares which
are held in a rabbi trust established under agreement dated January 21,
1998 (the "Rabbi Trust").
(9) Includes 270,767 shares issuable upon exercise of options, 175,000
outstanding shares owned directly by Mr. Meister, 271,500 shares which are
held in the Savings Trust and 736,540 shares which are held in the Rabbi
Trust.
(10) Includes 89,980 outstanding shares and warrants to purchase 7,405 shares
owned by Mr. Harkins directly, and 10,000 shares and warrants to purchase
825 shares owned by the 1995 Harkins Gift Trust as to which shares and
warrants Mr. Harkins expressly disclaims any beneficial interest.
(11) Includes 15,294 shares issuable upon exercise of options and 60,790
outstanding shares held in the Rabbi Trust for Mr. Maiorani.
(12) Includes 29,995 outstanding shares and warrants to purchase 2,470 shares
owned by Mr. Sperling directly, and 19,995 shares and warrants to purchase
1,645 shares owned by the Sperling Family Limited Partnership as to which
shares and warrants Mr. Sperling expressly disclaims beneficial interest.
(13) Includes 49,990 outstanding shares and warrants to purchase 4,115 shares
owned by Mr. DiNovi directly.
(14) Shares owned directly by Mr. Della Penta and subject to the Investors'
Agreement.
(15) Includes 12,320 shares issuable upon exercise of options, and 36,000
shares held in the Rabbi Trust for Mr. DuChene.
(16) Includes 7,500 outstanding shares and warrants to purchase 615 shares
owned by Mr. Weldon directly.
(17) Includes 1,071,256 shares issuable upon exercise of options, 677,465
outstanding shares held directly, 663,995 shares held indirectly, warrants
to purchase 17,075 and 2,039,715 shares deferred into the Rabbi Trust.
44
<PAGE>
DESCRIPTION OF OTHER INDEBTEDNESS
The New Credit Facility. The New Credit Facility consists of (1) the Term
Facility consisting of (a) a $125 million tranche A term loan ("Tranche A"),
(b) a $100 million tranche B term loan ("Tranche B") and (c) a $69.2 million
tranche C term loan ("Tranche C"); and (2) the $175.0 million Revolving Credit
Facility. Fisher has borrowed a portion of Tranche A in U.S. dollars. A
subsidiary of Fisher that is incorporated and domiciled in the United Kingdom
has borrowed another portion of Tranche A in pounds sterling. The remaining
portion of Tranche A has been borrowed in Canadian dollars by a subsidiary of
Fisher that is incorporated and domiciled in Canada. The Chase Manhattan Bank
is the administrative agent for the syndicate of lenders providing the New
Credit Facility, Merrill Lynch Capital Corporation is the syndication agent for
the New Credit Facility and DLJ Capital Funding, Inc. is the documentation
agent. The Revolving Credit Facility includes a sub-limit for the issuance of
letters of credit. The New Credit Facility permits foreign subsidiaries of
Fisher to borrow negotiated loans denominated in their local currencies from
individual lenders thereunder, which bear interest at negotiated rates. Such
negotiated loans will reduce the availability of the Revolving Credit Facility.
Borrowings made under the Revolving Credit Facility bear interest at a
rate equal to, at Fisher's option, LIBOR plus 225 basis points, or the Prime
Rate plus 125 basis points. The "Prime Rate" is a fluctuating interest rate
equal to the higher of (1) the rate of interest announced publicly by a
reference bank as its prime rate and (2) a rate equal to 1/2 of 1% per annum
above the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers.
Dollar borrowings under Tranche A of the Term Facility bear interest at a
rate equal to, at Fisher's option, LIBOR plus 225 basis points or the Prime
Rate plus 125 basis points. Pound sterling borrowings under Tranche A bear
interest at LIBOR for sterling deposits plus 225 basis points. Canadian dollar
borrowings under Tranche A bear interest at the borrower's option at the
Canadian prime rate plus 125 basis points or at a B/A rate determined in
accordance with the provisions of the New Credit Facility. Tranche B of the
Term Facility bears interest at a rate equal to, at Fisher's option, LIBOR plus
250 basis points or the Prime Rate plus 150 basis points. Tranche C of the Term
Facility bears interest at a rate equal to, at Fisher's option, LIBOR plus 275
basis points or the Prime Rate plus 175 basis points.
The LIBOR and Prime Rate margins are subject to reductions, based on
various tests of our financial performance. Prime Rate interest is payable
quarterly in arrears. LIBOR interest is payable in arrears at the earlier of
(1) the end of the applicable interest period and (2) quarterly LIBOR
borrowings are available in 1-, 2-, 3- or 6-month interest periods.
The Revolving Credit Facility expires on January 21, 2004. The Tranche A,
B and C facilities will amortize semi-annually and mature 6, 7 and 7.75 years,
respectively, after January 21, 1998, the closing date of the New Credit
Facility.
The obligations of Fisher and the subsidiary borrowers under the New
Credit Facility are secured by substantially all of our assets and those of our
material domestic subsidiaries, a pledge of the stock of all domestic
subsidiaries, and a pledge of 65% of the stock of material foreign subsidiaries
which are direct subsidiaries of Fisher or one of its material domestic
subsidiaries. Obligations of each foreign subsidiary borrower are secured by a
pledge of 100% of the shares and assets of such borrower. Fisher and each of
its material domestic subsidiaries further guarantee the obligations of Fisher
and the subsidiary borrowers.
The New Credit Facility agreement contains our customary covenants,
including, without limitation, restrictions on:
o indebtedness;
o the sale of assets;
o mergers, acquisitions and other business combinations;
o voluntary prepayment of certain debt of ours;
o transactions with affiliates;
o capital expenditures; and
45
<PAGE>
o loans and investments.
It also contains prohibitions on the payment of cash dividends to, or the
repurchase of redemption of stock from, shareholders, and various financial
covenants.
Pursuant to the terms of the New Credit Facility, and subject to
applicable grace periods, in certain circumstances, Fisher will be in default
upon the non-payment of principal or interest when due under such agreement or,
upon the non-fulfillment of the covenants described above, certain changes in
control of the ownership of Fisher or various other defaults described in the
New Credit Facility. If such a default occurs, the lenders under the New Credit
Facility will be entitled to take all actions permitted to be taken by a
secured creditor under the Uniform Commercial Code and to accelerate the
amounts due under the New Credit Facility and may require all such amounts to
be immediately paid in full. Loans under the Term Facility are required to be
prepaid with 50% of excess cash flow, as defined in the New Credit Facility and
subject to certain limits as specified in the New Credit Facility, and certain
equity issuances of Fisher, and 100% of net-cash proceeds of certain asset
sales, certain insurance and condemnation proceeds and certain debt issuances
of Fisher. We obtained the consent of the lenders under the New Credit Facility
to consummate the Offering.
7-1/8% Notes due 2005. Interest on the 7-1/8% Notes is payable semiannually
on June 15 and December 15. The 7-1/8% Notes mature on December 15, 2005. The
7-1/8% Notes are not entitled to any sinking fund and are redeemable, in whole
or in part, at the option of the Fisher at any time, at a redemption price
equal to the greater of (1) 100% of the principal amount of such notes and (2)
the sum of the present values as of the date of redemption of all remaining
scheduled payments of principal and interest on such notes due on or after the
date of redemption, discounted on a semiannual basis at the relevant Treasury
rate plus 25 basis points. The 7-1/8% Notes constitute Senior Indebtedness under
the Indenture. Upon consummation of the Recapitalization, the 7-1/8% Notes were
equally and ratably secured with certain other Senior Indebtedness with respect
to certain collateral.
Existing 9% Senior Subordinated Notes due 2008. As of the date of this
prospectus, we have outstanding $400,000,000 principal amount of Existing
Notes. The Existing Notes mature on February 1, 2008. Cash interest on the
Existing Notes is payable semiannually in arrears on February 1 and August 1 of
each year. The Existing Notes are our unsecured senior subordinated
obligations, subordinated in right of payment to all existing and future senior
indebtedness and rank equally in right of payment with all of our other
existing and future senior subordinated indebtedness, including the Notes.
The Existing Notes are redeemable at our option at any time after February
1, 2003 at an initial redemption price of 104.5%, declining ratably to par on
or after February 1, 2006. In addition, on or prior to February 1, 2001, we may
redeem up to 40% of the original principal amount of the Existing Notes at a
redemption price of 109% of the principal amount of the Existing Notes, plus
accrued and unpaid interest, if any, to the date of redemption with the net
cash proceeds of one or more public equity offerings; provided, that at least
60% of the aggregate principal amount of the Existing Notes originally issued
remains outstanding immediately after the occurrence of such redemption. Upon a
Change of Control Triggering Event, as defined in the Existing Notes Indenture,
we will be required to make an offer to purchase all outstanding Existing Notes
at 101% of the principal amount of the Existing Notes, together with accrued
and unpaid interest, if any, to the date of purchase.
The Existing Notes Indenture contains covenants that are essentially
identical to those contained in the Indenture governing the Notes offered by
this prospectus and that restrict, among other things, our ability to:
o incur additional indebtedness;
o pay dividends or make certain other restricted payments;
o merge or consolidate with any other person; and
o make minority investments.
The Existing Indenture also contains other various covenants that are
customary for transactions of this type. The Existing Notes Indenture also
provides for customary events of default which are identical to those relating
to the Notes.
This description is intended as a summary and is qualified in its entirety
by reference to the Existing Notes Indenture, a copy of which is available from
us upon request.
46
<PAGE>
Receivables Securitization Facility. In connection with the
Recapitalization, Fisher entered into a five year Receivables Securitization
Facility pursuant to which a subsidiary of Fisher sold approximately $220
million of accounts receivable to a newly formed wholly-owned bankruptcy remote
special purpose subsidiary which in turn initially transferred $150 million of
the receivables to PARCO, a special purpose corporation formed by The Chase
Manhattan Bank solely for the purpose of issuing commercial paper rated A-1/P-1
or higher. The Receivables Securitization Facility was increased to $170
million in March 1998. The Chase Manhattan Bank acts as funding agent and with
other commercial banks acceptable to PARCO provides liquidity funding to PARCO
for the purchase of the receivables from our receivables subsidiary. The
proceeds from the Receivables Securitization Facility were used to finance a
portion of the conversion into cash of shares of Fisher common stock and
related fees and expenses associated with the Recapitalization. The Receivables
Securitization Facility carries an effective interest rate of LIBOR plus 50
basis points. As of September 30, 1998, Fisher had sold $168.2 million of
accounts receivable to PARCO.
Loan Agreement. On November 20, 1998, our subsidiary Fisher Scientific
Company, L.L.C. entered into a Loan Agreement with LaSalle National Bank, as
lender, pursuant to which we borrowed $8.8 million. We will use the amounts
borrowed under the Loan Agreement to finance part of the consolidation of our
Midwestern distribution centers into a facility located in Hanover Park,
Illinois. The Loan Agreement provides for an interest rate of 2.25% plus (1)
until November 20, 2000, the rate for U.S. Treasury Bonds maturing over a two
year period and (2) the rate for U.S. Treasury Bonds maturing over a three year
period thereafter. However, if we do not comply with the requirements of the
State Treasurer's Economic Program, the amounts borrowed will carry an interest
rate equal to the corporate base or prime lending rate of LaSalle National
Bank.
47
<PAGE>
DESCRIPTION OF THE NOTES
The New Notes will be issued under an indenture (the "Indenture"), dated
as of November 20, 1998, by and among our company and State Street Bank and
Trust Company, as Trustee (the "Trustee"). References to the Notes include the
New Notes unless the context otherwise requires. Upon the issuance of the New
Notes, if any, or the effectiveness of a Shelf Registration Statement, the
Indenture will be subject to the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). The following summary of the material provisions of the
Indenture (a copy of which may be obtained upon request from us or the Initial
Purchasers and which is filed as an exhibit to the Registration Statement to
which this prospectus forms a part) does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the Trust
Indenture Act, and to all of the provisions of the Indenture, including the
definitions of certain terms therein and those terms made a part of the
Indenture by reference to the Trust Indenture Act, as in effect on the date of
the Indenture. The definitions of certain capitalized terms used in the
following summary are set forth below under "Certain Definitions." For purposes
of this section, references to "we," "us" and "our" include only Fisher
Scientific International Inc. and not its subsidiaries.
The New Notes will be our unsecured obligations, ranking subordinate in
right of payment to all our Senior Indebtedness to the extent set forth in the
Indenture.
The Trustee will authenticate and deliver New Notes for original issue
only in exchange for a like principal amount of Old Notes.
The New Notes will be issued in fully registered form only, without
coupons, in denominations of $1,000 and integral multiples of $1,000.
Initially, the Trustee will act as Paying Agent and Registrar for the New
Notes. The New Notes may be presented for registration of transfer and exchange
at the offices of the Registrar, which initially will be the Trustee's
corporate trust office. We may change any Paying Agent and Registrar without
notice to holders of the New Notes (the "holders"). We will pay principal (and
premium, if any) on the New Notes at the Trustee's corporate office in New
York, New York. At our option, interest may be paid at the Trustee's corporate
trust office or by check mailed to the registered address of holders.
No service charge will be made for any transfer, exchange or redemption of
New Notes, except in certain circumstances for any fax or other governmental
charge that may be imposed in connection therewith.
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Notes.
Any Notes that remain outstanding after the completion of the Exchange
Offer, together with the Exchange Notes issued in connection with the Exchange
Offer, will be treated as a single class of securities under the Indenture.
Principal, Maturity and Interest
The New Notes are limited in aggregate principal amount to $200 million
and will mature on February 1, 2008. Interest on the New Notes will accrue at
the rate of 9% per annum and will be payable semiannually in cash on each
February 1 and August 1, commencing on February 1, 1999, to the Persons who are
registered holders at the close of business on the January 15 and July 15
immediately preceding the applicable interest payment date. 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 November 20, 1998. Old Notes accepted for
exchange will cease to accrue interest from and after the date of consummation
of the Exchange Offer. Holders of the Old Notes whose Old Notes are accepted
for exchange will not receive any payment in respect of interest on such Old
Notes otherwise payable on any interest payment date and record date which
occurs on or after the consummation of the Exchange Offer. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
The Notes will not be entitled to the benefit of any mandatory sinking
fund.
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<PAGE>
Redemption
Optional Redemption. The Notes will be redeemable, at our option, in whole
at any time or in part from time to time, on and after February 1, 2003, upon
not less than 30 nor more than 60 days' notice, at the following redemption
prices (expressed as percentages of the principal amount thereof) if redeemed
during the twelve-month period commencing on February 1 of the year set forth
below, plus, in each case, accrued interest to the date of redemption:
<TABLE>
<CAPTION>
Redemption
Year Price
- --------------------------------- -----------
<S> <C>
2003 ......................... 104.50%
2004 ......................... 103.00%
2005 ......................... 101.50%
2006 and thereafter .......... 100.00%
</TABLE>
Optional Redemption upon Equity Offerings. At any time, or from time to
time, on or prior to February 1, 2001, we may, at our option, use the net cash
proceeds of one or more Equity Offerings (as defined below) to redeem up to 40%
of the aggregate principal amount of Notes originally issued at a redemption
price equal to 109% of the principal amount thereof plus accrued interest to
the date of redemption; provided that at least 60% of the original principal
amount of Notes remains outstanding immediately after any such redemption
(excluding any Notes owned by us). In order to effect the foregoing redemption
with the proceeds of any Equity Offering, we must mail a notice of redemption
no later than 60 days after the related Equity Offering and must consummate
such redemption within 90 days of the closing of the Equity Offering. "Equity
Offering" means a sale of our Qualified Capital Stock.
Optional Redemption upon Change of Control. At any time on or prior to
February 1, 2003, upon the occurrence of a Change of Control, we may, at its
option, redeem all but not less than all of the Notes, at a redemption price
equal to the sum of:
o 100% of the outstanding principal amount thereof; plus
o the Applicable Premium; plus
o accrued and unpaid interest and Liquidated Damages, if any, to the date
of redemption.
Notice of redemption of the Notes pursuant to this paragraph shall be
mailed to holders of the Notes not more than 60 days and not less than 30 days
following the occurrence of a Change of Control.
Selection and Notice
In case of a partial redemption, selection of the Notes or portions
thereof for redemption shall be made by the Trustee by lot, ratably or in such
manner as it shall deem appropriate and fair and in such manner as complies
with any applicable legal requirements; provided, however, that if a partial
redemption is made with the proceeds of an Equity Offering, selection of the
Notes or portion thereof for redemption shall be made by the Trustee only on a
ratable basis, unless such method is otherwise prohibited. Notes may be
redeemed in part in multiples of $1,000 principal amount only. Notice of
redemption will be sent, by first class mail, postage prepaid, at least 30 days
and not more than 60 days prior to the date fixed for redemption to each holder
whose Notes are to be redeemed at the last address for such holder then shown
on the registry books. If any Note is to be redeemed in part only, the notice
of redemption that relates to such Note shall state the portion of the
principal amount thereof to be redeemed. A new Note in principal amount equal
to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation of the original Note. On and after any redemption
date, interest will cease to accrue on the Notes or part thereof called for
redemption as long as we have deposited with the Paying Agent funds in
satisfaction of the redemption price pursuant to the Indenture.
Ranking of Notes
The indebtedness evidenced by the Notes will be our unsecured Senior
Subordinated Indebtedness, will be subordinated in right of payment, as set
forth in the Indenture, to all our existing and future Senior Indebtedness,
will rank equal in right of payment with all our existing and future Senior
Subordinated Indebtedness, including the Existing Notes, and will be senior in
right of payment to all our existing and
49
<PAGE>
future Subordinated Obligations. The Notes will also be effectively
subordinated to any of our Secured Indebtedness to the extent of the value of
the assets securing such Indebtedness, and to all existing and future
obligations and liabilities of our Subsidiaries. See "Risk
Factors--Subordination of Notes; Asset Encumbrances." However, payment from the
money or the proceeds of U.S. government obligations held in any defeasance
trust described under "--Legal Defeasance and Covenant Defeasance" below is not
subordinated to any Senior Indebtedness or subject to the restrictions
described above if the deposit to such trust which is used to fund such payment
was permitted at the time of such deposit.
As of September 30 , 1998, on a pro forma basis, after giving effect to
the Offering and the application of the net proceeds therefrom, we would have
had approximately $440.6 million of Senior Indebtedness outstanding (excluding
unused commitments), all of which would have been Secured Indebtedness.
Although the Indenture contains limitations on the amount of additional
Indebtedness which we and our Restricted Subsidiaries may incur, under certain
circumstances the amount of such Indebtedness could be substantial and, in any
case, such Indebtedness may be Senior Indebtedness or Secured Indebtedness. See
"--Certain Covenants--Limitation on Incurrence of Additional Indebtedness"
below.
Only our Indebtedness that is Senior Indebtedness will rank senior in
right of payment to the Notes in accordance with the provisions of the
Indenture. We have agreed in the Indenture that we will not incur, directly or
indirectly, any Indebtedness which is expressly subordinate in right of payment
to Senior Indebtedness unless such Indebtedness is Senior Subordinated
Indebtedness or is expressly subordinated in right of payment to Senior
Subordinated Indebtedness. Without limiting the foregoing, unsecured
Indebtedness is not deemed to be subordinate or junior to Secured Indebtedness
merely because it is unsecured.
We may not pay principal of, premium (if any) or interest on, or any other
amount in respect of, the Notes or make any deposit pursuant to the provisions
described under "--Legal Defeasance and Covenant Defeasance" below and may not
otherwise purchase, redeem or otherwise retire any Notes (collectively, "pay
the Notes") if any amount due in respect of any Senior Indebtedness (including,
without limitation, any amount due as a result of acceleration of the maturity
thereof by reason of default or otherwise) has not been paid in full in cash or
Cash Equivalents unless the default has been cured or waived and any such
acceleration has been rescinded or such Senior Indebtedness has been paid in
full in cash or Cash Equivalents. However, we may pay the Notes without regard
to the foregoing if we and the Trustee receive written notice approving such
payment from the Representative of the holders of the Designated Senior
Indebtedness with respect to which the events set forth in the immediately
preceding sentence have occurred and are continuing.
In addition, during the continuance of any default (other than a payment
default described in the first sentence of the immediately preceding paragraph)
with respect to any Designated Senior Indebtedness pursuant to which the
maturity thereof may be accelerated immediately without further notice (except
such notice as may be required to effect such acceleration) or the expiration
of any applicable grace periods, we may not pay the Notes for a period (a
"Payment Blockage Period") commencing upon the receipt by the Trustee (with a
copy to us) of written notice (a "Blockage Notice") of such default from the
Representative of the holders of such Designated Senior Indebtedness specifying
an election to effect a Payment Blockage Period and ending 179 days thereafter
(or earlier if such Payment Blockage Period is terminated:
o by written notice to the Trustee and us from the Person or Persons who
gave such Blockage Notice;
o because the default giving rise to such Blockage Notice and all other
defaults with respect to such Designated Senior Indebtedness shall have
been cured or shall have ceased to exist; or
o because such Designated Senior Indebtedness has been repaid in full in
cash or Cash Equivalents).
Notwithstanding the provisions described in the immediately preceding
paragraph, unless any payment default described in the first sentence of the
second immediately preceding paragraph has occurred and is then continuing, we
may resume payments on the Notes after the end of such Payment Blockage Period,
including any missed payments. Not more than one Blockage Notice may be given
in any consecutive 360-day period, irrespective of the number of defaults with
respect to Designated Senior Indebtedness during such period. However, if any
Blockage Notice within such 360-day period is given by or on behalf of any
holders of Designated Senior Indebtedness other than the Bank Indebtedness, a
Representative of holders of Bank Indebtedness may give another Blockage Notice
within such period. In no event, however, may the total
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number of days during which any Payment Blockage Period or Periods is in effect
exceed 179 days in the aggregate during any 360 consecutive day period.
Upon any payment or distribution of our assets or securities to creditors
upon a total or partial liquidation or dissolution or reorganization or winding
up of or similar proceeding relating to us or our property or in a bankruptcy,
insolvency, receivership or similar proceeding relating to us or our property,
or in an assignment for the benefit of creditors or any marshalling of our
assets and liabilities, whether voluntary or involuntary, the holders of Senior
Indebtedness will be entitled to receive payment in full in cash or Cash
Equivalents of the Senior Indebtedness before the holders of the Notes are
entitled to receive any payment or distribution of any character and, until the
Senior Indebtedness is paid in full in cash or Cash Equivalents, any payment or
distribution to which holders of the Notes would be entitled but for the
subordination provisions of the Indenture will be made to holders of the Senior
Indebtedness as their interests may appear. If a payment or distribution is
made to holders of the Notes that due to the subordination provisions should
not have been made to them, such holders of the Notes are required to hold it
in trust for the holders of Senior Indebtedness and pay it over to them as
their interests may appear.
If we fail to make any payment on the Notes when due or within any
applicable grace period, whether or not on account of the payment blockage
provisions referred to above, such failure would constitute an Event of Default
under the Indenture and would enable the holders of the Notes to accelerate the
maturity thereof. See "--Events of Default" below.
If payment of the Notes is accelerated because of an Event of Default, we
or the Trustee shall promptly notify the holders of the Designated Senior
Indebtedness or the Representative of such holders of the acceleration. We may
not pay the Notes until the earlier of five business days after such holders or
the Representative of the holders of Designated Senior Indebtedness receive
notice of such acceleration or the date of acceleration of such Designated
Senior Debt and, thereafter, may pay the Notes only if the subordination
provisions of the Indenture otherwise permit payment at that time.
By reason of such subordination provisions contained in the Indenture, in
the event of insolvency, our creditors who are holders of Senior Indebtedness
may recover more, ratably, than the holders of the Notes, and our creditors who
are not holders of Senior Indebtedness or of Senior Subordinated Indebtedness
(including the Notes) may recover less, ratably, than holders of Senior
Indebtedness and may recover more than the holders of Senior Subordinated
Indebtedness.
Change of Control
The Indenture will provide that upon the occurrence of a Change of Control
Triggering Event, each holder will have the right to require that we purchase
for cash all or a portion of such holder's Notes pursuant to the offer
described below (the "Change of Control Offer"), at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued interest to the date
of purchase.
The Indenture will provide that, prior to the mailing of the notice
referred to below, but in any event within 30 days following the date we obtain
actual knowledge of any Change of Control Triggering Event, we covenant to (1)
repay in full and terminate all commitments under the Bank Indebtedness or
offer to repay in full and terminate all commitments under all Bank
Indebtedness and to repay the Bank Indebtedness owed to each holder of Bank
Indebtedness which has accepted such offer or (2) obtain the requisite consents
under the New Credit Facility to permit the repurchase of the Notes as provided
below. We shall first comply with the covenant in the immediately preceding
sentence before we shall be required to repurchase Notes pursuant to the
provisions described below. Our failure to comply with this covenant shall
constitute an Event of Default described in clause (4) and not in clause (2)
under "--Events of Default" below.
Within 30 days following the date upon which we obtain actual knowledge
that a Change of Control Triggering Event has occurred, we must send, by first
class mail, a notice to each holder, with a copy to the Trustee, which notice
shall govern the terms of the Change of Control Offer. Such notice shall state,
among other things, the purchase date, which must be no earlier than 30 days
nor later than 45 days from the date such notice is mailed, other than as may
be required by law (the "Change of Control Payment Date"). Holders electing to
have a Note purchased pursuant to a Change of Control Offer will be required to
surrender the Note, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Note completed, to
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the Paying Agent at the address specified in the notice prior to the close of
business on the third business day prior to the Change of Control Payment Date.
If a Change of Control Offer is made, there can be no assurance that we
will have available funds sufficient to pay the Change of Control purchase
price for all the Notes that might be delivered by holders seeking to accept
the Change of Control Offer. In the event we are required to purchase
outstanding Notes pursuant to a Change of Control Offer, we expect that we
would seek third party financing to the extent we do not have available funds
to meet our purchase obligations. However, there can be no assurance that we
would be able to obtain such financing.
The definition of Change of Control includes a phrase relating to the
sale, lease, exchange or other transfer of "all or substantially all" of our
assets as such phrase is defined in the Revised Model Business Corporation Act.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise definition of the phrase under
applicable law. Accordingly, in certain circumstances there may be a degree of
uncertainty in ascertaining whether a particular transaction would involve a
disposition of "all or substantially all" of our assets, and therefore it may
be unclear as to whether a Change of Control has occurred and whether the
holders have the right to require us to repurchase such Notes.
Neither the Board of Directors of the Company nor the Trustee may waive
the covenant relating to a Holder's right to redemption upon a Change of
Control Triggering Event. Restrictions in the Indenture described herein on our
ability and the ability of our Restricted Subsidiaries to incur additional
Indebtedness, to grant Liens on their properties, to make Restricted Payments
and to make Asset Sales may also make more difficult or discourage a takeover
of our company, whether favored or opposed by our management. Consummation of
any such transaction in certain circumstances may require redemption or
repurchase of the Notes, and there can be no assurance that we or the acquiring
party will have sufficient financial resources to effect such redemption or
repurchase. Such restrictions and the restrictions on transactions with
Affiliates may, in certain circumstances, make more difficult or discourage any
leveraged buyout of our company or any of our Subsidiaries by our management.
While such restrictions cover a wide variety of arrangements which have
traditionally been used to effect highly leveraged transactions, the Indenture
may not afford the holders of Notes protection in all circumstances from the
adverse aspects of a highly leveraged transaction, reorganization,
restructuring, merger or similar transaction.
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 Notes
pursuant to a Change of Control Offer. To the extent that the provisions of any
securities laws or regulations conflict with the "Change of Control" provisions
of the Indenture, we shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under the
"Change of Control" provisions of the Indenture by virtue thereof.
Certain Covenants
The Indenture contains, among others, the following covenants:
Limitation on Restricted Payments. We will not, and will not cause or
permit any of our Restricted Subsidiaries to, directly or indirectly,
(a) declare or pay any dividend or make any distribution (other than
dividends or distributions payable in Qualified Capital Stock) on or in
respect of our shares of our Capital Stock to holders of such Capital
Stock,
(b) purchase, redeem or otherwise acquire or retire for value any of our
Capital Stock or any warrants, rights or options to purchase or acquire
shares of any class of such Capital Stock, other than the exchange of
such Capital Stock for Qualified Capital Stock, or
(c) make any Investment (other than Permitted Investments) in any other
Person (each of the foregoing actions set forth in clauses (a), (b) and
(c) (other than the exceptions thereto) being referred to as a
"Restricted Payment"), if at the time of such Restricted Payment or
immediately after giving effect thereto,
(i) a Default or an Event of Default shall have occurred and be
continuing,
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(ii) we are not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance
with the "Limitation on Incurrence of Additional Indebtedness"
covenant or
(iii) the aggregate amount of Restricted Payments made subsequent to
the Issue Date shall exceed the sum of:
(w) 50% of our cumulative Consolidated Net Income (or if
cumulative Consolidated Net Income shall be a loss, minus
100% of such loss) earned subsequent to January 1, 1998 and
on or prior to the date the Restricted Payment occurs (the
"Reference Date") (treating such period as a single
accounting period); plus
(x) 100% of the aggregate net cash proceeds received by us
from any Person (other than our Subsidiary) from the
issuance and sale subsequent to January 21, 1998 and on or
prior to the Reference Date of our Qualified Capital Stock
(including Capital Stock issued upon the conversion of
convertible Indebtedness or in exchange for outstanding
Indebtedness but excluding net cash proceeds from the sale
of Capital Stock to the extent used to repurchase or
acquire shares of our Capital Stock pursuant to clause
(2)(ii) of the next succeeding paragraph); plus
(y) without duplication of any amounts included in clause
(iii) (x) above, 100% of the aggregate net cash proceeds
of any equity contribution received by us from a holder of
our Capital Stock; plus
(z) to the extent that any Investment (other than a Permitted
Investment) that was made after January 21, 1998 is sold
for cash or otherwise liquidated or repaid for cash, the
lesser of (A) the cash received with respect to such sale,
liquidation or repayment of such Investment (less the cost
of such sale, liquidation or repayment, if any) and (B)
the initial amount of such Investment, but only to the
extent not included in the calculation of Consolidated Net
Income.
Any net cash proceeds included in the foregoing clauses (iii)(x) or
(iii)(y) shall not be included in clause (10)(i) or clause (10)(ii) of the
definition of "Permitted Investments" to the extent actually utilized to make a
Restricted Payment under this paragraph.
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph do not prohibit:
(1) the payment of any dividend or the consummation of any irrevocable
redemption within 60 days after the date of declaration of such dividend
or notice of such redemption if the dividend or payment of the
redemption price, as the case may be, would have been permitted on the
date of declaration or notice;
(2) if no Event of Default shall have occurred and be continuing as a
consequence thereof, the acquisition of any of our shares of Capital
Stock, either
(i) solely in exchange for shares of our Qualified Capital Stock, or
(ii) through the application of net proceeds of a substantially
concurrent sale (other than to our Subsidiary) of shares of our
Qualified Capital Stock;
(3) payments for the purpose of and in an amount equal to the amount
required to permit us to redeem or repurchase shares of its Capital
Stock or options in respect thereof, in each case in connection with the
repurchase provisions under employee stock option or stock purchase
agreements or other agreements to compensate management employees;
provided that such redemptions or repurchases pursuant to this clause
(3) shall not exceed $15 million in the aggregate after January 21, 1998
(which amount shall be increased by the amount of any cash proceeds to
us from (x) sales of its Capital Stock to management employees
subsequent to January 21, 1998 and (y) any "key-man" life insurance
policies which are used to make such redemptions or repurchases);
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(4) the payment of fees and compensation as permitted under clause (i) of
paragraph (b) of the "Limitation on Transactions with Affiliates"
covenant;
(5) so long as no Default or Event of Default shall have occurred and be
continuing, payments not to exceed $100,000 in the aggregate, to enable
us to make payments to holders of our Capital Stock in lieu of issuance
of fractional shares of its Capital Stock;
(6) repurchases of Capital Stock deemed to occur upon the exercise of stock
options if such Capital Stock represents a portion of the exercise price
thereof;
(7) Restricted Payments made pursuant to the Merger Agreement;
(8) us or any Restricted Subsidiary from making payments in respect of any
redemption, repurchase, acquisition, cancellation or other retirement
for value of shares of our Capital Stock or options, stock appreciation
or similar securities, in each case held by then current or former
officers, directors or employees or any of our Subsidiaries (or their
estates or beneficiaries under their estates) or by an employee benefit
plan, upon death, disability, retirement or termination of employment,
not to exceed $10 million in the aggregate after January 21, 1998;
(9) repurchases of payment-in-kind preferred stock; provided that
(i) such repurchases do not exceed $15,000,000 in the aggregate
over the life of the Notes and
(ii) such preferred stock repurchased shall have been issued on or
prior to the Issue Date; and
(10) us or any of our Restricted Subsidiaries from purchasing all (but not
less then all), excluding directors' qualifying shares, of the Capital
Stock or other ownership interests in our Subsidiary which Capital Stock
or other ownership interests were not theretofore owned by us or our
Subsidiary, such that after giving effect to such purchase such
Subsidiary becomes our Restricted Subsidiary.
In determining the aggregate amount of Restricted Payments made subsequent to
the Issue Date in accordance with clause (iii) of the first paragraph of this
covenant, (a) amounts expended (to the extent such expenditure is in the form
of cash or other property other than Qualified Capital Stock) pursuant to
clauses (1), (3), (8) and (9) of this paragraph shall be included in such
calculation, provided that such expenditures pursuant to clause (3) shall not
be included to the extent of cash proceeds received by us from any "key man"
life insurance policies, and (b) amounts expended pursuant to clauses (2), (4),
(5), (6), (7) and (10) shall be excluded from such calculation.
Limitation on Incurrence of Additional Indebtedness. We will not, and will
not permit any of our Restricted Subsidiaries to, directly or indirectly,
create, incur, assume, guarantee, acquire, become liable, contingently or
otherwise, with respect to, or otherwise become responsible for payment of
(collectively, "incur") any Indebtedness (other than Permitted Indebtedness);
provided, however, that if no Default or Event of Default shall have occurred
and be continuing at the time or as a consequence of the incurrence of any such
Indebtedness, (i) we may incur Indebtedness if on the date of the incurrence of
such Indebtedness, after giving effect to the incurrence thereof, our
Consolidated Fixed Charge Coverage Ratio is greater than 2.0 to 1.0 and (ii)
any of our Restricted Subsidiaries may incur Indebtedness if on the date of the
incurrence of such Indebtedness, after giving effect to the incurrence thereof,
our Consolidated Fixed Charge Coverage Ratio is greater than 3.0 to 1.0.
Limitation on Transactions with Affiliates. (a) We will not, and will not
permit any of our Restricted Subsidiaries to, directly or indirectly, enter
into or permit to exist any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with, or for the benefit of, any of
our Affiliates (an "Affiliate Transaction"), other than (x) Affiliate
Transactions permitted under paragraph (b) below and (y) Affiliate Transactions
entered into on terms that are fair and reasonable to, and in our best
interests or those of such Restricted Subsidiary, as the case may be, as
determined in good faith by our Board of Directors; provided, however, that for
a transaction or series of related transactions with an aggregate value of $5
million or more, at our option (i) such determination shall be made in good
faith by a majority of the disinterested members of our Board of the Directors
or (ii) our Board of Directors or that of any such Restricted Subsidiary party
to such Affiliate
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Transaction shall have received a favorable opinion from a nationally
recognized investment banking firm that such Affiliate Transaction is fair from
a financial point of view to us or such Restricted Subsidiary; provided,
further, that for a transaction or series of related transactions with an
aggregate value of $15 million or more, our Board of Directors shall have
received a favorable opinion from a nationally recognized investment banking
firm that such Affiliate Transaction is fair from a financial point of view to
us or to such Restricted Subsidiary.
(b) The foregoing restrictions shall not apply to:
(1) reasonable fees and compensation paid to, and indemnity provided on
behalf of, our officers, directors, employees or consultants or
those of our Subsidiaries as determined in good faith by our Board
of Directors;
(2) transactions exclusively between or among us and any of our
Restricted Subsidiaries or exclusively between or among such
Restricted Subsidiaries, provided such transactions are not
otherwise prohibited by the Indenture;
(3) transactions effected as part of a Qualified Receivables
Transaction;
(4) any agreement as in effect as of the Issue Date or any amendment
thereto or any transaction contemplated thereby (including pursuant
to any amendment thereto) in any replacement agreement thereto so
long as any such amendment or replacement agreement is not more
disadvantageous to the holders in any material respect than the
original agreement as in effect on the Issue Date;
(5) Restricted Payments permitted by the Indenture;
(6) any Permitted Investment;
(7) transactions permitted by, and complying with, the provisions of
the covenant described under "Merger, Consolidation and Sale of
Assets";
(8) any payment, issuance of securities or other payments, awards or
grants, in cash or otherwise, pursuant to, or the funding of,
employment arrangements and Plans approved by our Board of
Directors;
(9) the grant of stock options or similar rights to our employees and
directors and our Subsidiaries pursuant to Plans and employment
contracts approved by our Board of Directors;
(10) loans or advances to our officers, directors or employees or those
of our Restricted Subsidiaries not in excess of $5 million at any
one time outstanding;
(11) the granting or performance of registration rights under a written
registration rights agreement approved by our Board of Directors;
(12) transactions with Persons solely in their capacity as holders of our
Indebtedness or Capital Stock, or the Indebtness of our Restricted
Subsidiaries where such Persons are treated no more favorably than
holders of our Indebtedness or Capital Stock generally;
(13) any agreement to do any of the foregoing;
(14) the payment, on a quarterly basis, of management fees to THL Co.
and/or any Affiliate of THL Co. in accordance with the management
arrangements entered into in January 1998 between THL Co. and/or any
Affiliate of THL Co. and Fisher in an aggregate amount (for all such
Persons taken together) not to exceed $250,000 in any of our fiscal
quarters;
(15) reimbursement of THL Co. and/or any Affiliate of THL Co. for their
reasonable out-of-pocket expenses incurred by them in connection
with performing management services for us and our Subsidiaries; and
(16) the payment of one time fees to THL Co. and/or Affiliates of THL Co.
in connection with each acquisition of a company or a line of
business by us or our Subsidiaries, such fees to be payable
at the time of each such acquisition and not to exceed 1% of the
aggregate consideration paid by us and our Subsidiaries for any such
acquisition.
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Limitation on Liens. We will not, and will not permit any of our Restricted
Subsidiaries to, create, incur, assume or suffer to exist any Liens (other than
Permitted Liens) of any kind against or upon any of our or their respective
property or assets, or any proceeds, income or profit therefrom which secure
Senior Subordinated Indebtedness or Subordinated Obligations, unless
(i) in the case of Liens securing Subordinated Obligations, the Notes are
secured by a Lien on such property, assets, proceeds, income or profit
that is senior in priority to such Liens and
(ii) in the case of Liens securing Senior Subordinated Indebtedness, the
Notes are equally and ratably secured by a Lien on such property,
assets, proceeds, income or profit.
Prohibition on Incurrence of Senior Subordinated Debt. Neither we nor any
Subsidiary Guarantor will incur or suffer to exist Indebtedness that is senior
in right of payment to the Notes or such Subsidiary Guarantor's Guarantee and
subordinate in right of payment to any other of our or such Subsidiary
Guarantor's Indebtedness, as the case may be.
Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. We will not, and will not permit any of our Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to
(a) pay dividends or make any other distributions on or in respect
of our Capital Stock;
(b) make loans or advances or to pay any Indebtedness or other
obligation owed to us or any of our other Restricted
Subsidiaries; or
(c) transfer any of its property or assets to us or any of our
other Restricted Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of:
(1) applicable law;
(2) the Indenture;
(3) non-assignment provisions of any contract or any lease entered
into in the ordinary course of business;
(4) any instrument governing Acquired Indebtedness, which
encumbrance or restriction is not applicable to us or any of
our Restricted Subsidiaries, or the properties or assets of any
such Person, other than the Person or the properties or assets
of the Person so acquired; provided, however, that such
Acquired Indebtedness was not incurred in connection with, or
in anticipation or contemplation of an acquisition by us or any
of our Restricted Subsidiaries;
(5) agreements existing on the Issue Date (including, without
limitation, the New Credit Facility and the Merger Agreement);
(6) restrictions on the transfer of assets subject to any Lien
permitted under the Indenture imposed by the holder of such
Lien;
(7) restrictions imposed by any agreement to sell assets permitted
under the Indenture to any Person pending the closing of such
sale;
(8) any agreement or instrument governing Capital Stock of any
Person that is acquired after the Issue Date;
(9) Indebtedness or other contractual requirements of a Receivables
Entity in connection with a Qualified Receivables Transaction;
provided that such restrictions apply only to such Receivables
Entity and such Restricted Subsidiary is engaged in the
Qualified Receivables Transaction; or
(10) an agreement effecting a refinancing, replacement or
substitution of Indebtedness issued, assumed or incurred
pursuant to an agreement referred to in clause (2), (4) or (5)
above; provided, however, that the provisions relating to such
encumbrance or restriction contained in any such refinancing,
replacement or substitution agreement are no less favorable to
us or
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the holders in any material respect as determined by our Board of
Directors than the provisions relating to such encumbrance or
restriction contained in agreements referred to in such clause
(2), (4) or (5).
Limitation on Preferred Stock of Subsidiaries. We will not permit any of
our Restricted Subsidiaries to issue any Preferred Stock (other than to us or
to a Restricted Subsidiary) or permit any Person (other than us or a Restricted
Subsidiary) to own any Preferred Stock of any Restricted Subsidiaries.
Merger, Consolidation and Sale of Assets. We will not, in a single
transaction or a series of related transactions, consolidate with or merge with
or into, or sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of our assets to, another Person or Persons unless
(1) either
(i) we shall be the survivor of such merger or consolidation or
(ii) the surviving Person is a corporation existing under the laws
of the United States, any state thereof or the District of
Columbia and such surviving Person shall expressly assume all
of our obligations under the Notes and the Indenture;
(2) immediately after giving effect to such transaction (on a pro forma
basis, including any Indebtedness incurred or anticipated to be incurred
in connection with such transaction and the other adjustments referred
to in the definition of "Consolidated Fixed Charge Coverage Ratio"), we
are or the surviving Person is able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in
compliance with the "Limitation on Incurrence of Additional
Indebtedness" covenant;
(3) immediately before and immediately after giving effect to such
transaction (including any Indebtedness incurred or anticipated to be
incurred in connection with the transaction), no Default or Event of
Default shall have occurred and be continuing; and
(4) we have delivered to the Trustee an officers' certificate and opinion
of counsel, each stating that such consolidation, merger or transfer
complies with the Indenture, that the surviving Person agrees to be
bound thereby and by the Notes and the Registration Rights Agreement,
and that all conditions precedent in the Indenture relating to such
transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties and assets of one or more of our
Subsidiaries, the Capital Stock of which constitutes all or substantially all
of our properties and assets, shall be deemed to be the transfer of all or
substantially all of our properties and assets. Notwithstanding the foregoing
clauses (2) and (3) of the preceding paragraph, (a) any of our Restricted
Subsidiaries may consolidate with, merge into or transfer all or part of its
properties and assets to us and (b) we may merge with an Affiliate that is (x)
a corporation that has no material assets or liabilities and which was
incorporated solely for the purpose of reincorporating us in another
jurisdiction or (y) our Restricted Subsidiary so long as all our assets and
those of our Restricted Subsidiaries immediately prior to such transaction are
owned by such Restricted Subsidiary and its Restricted Subsidiaries immediately
after the consummation thereof.
The Indenture will provide that upon any consolidation, combination or
merger or any transfer of all or substantially all of our assets in accordance
with the foregoing, the surviving entity shall succeed to, and be substituted
for, and may exercise every right and power of, our company under the Indenture
and the Notes with the same effect as if such surviving entity had been named
as such.
Limitation on Asset Sales. We will not, and will not permit any of our
Restricted Subsidiaries to, consummate an Asset Sale unless
(1) we or the applicable 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 sold or otherwise disposed of (as determined
in good faith by our Board of Directors);
(2) at least 75% of the consideration received by us or such Restricted
Subsidiary, as the case may be, from such Asset Sale shall be cash or
Cash Equivalents and is received at the time of such disposition;
provided that the amount of (x) any of our or such Restricted
Subsidiary's liabilities (as
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shown on our or such Restricted Subsidiary's most recent balance sheet or
in the notes thereto) (other than liabilities that are by their terms
subordinated to the Notes) that are assumed by the transferee of any such
assets and from which we and a Restricted Subsidiary are unconditionally
released and (y) any notes or other obligations received by us or such
Restricted Subsidiary from such transferee that are promptly, but in no
event more than 60 days after receipt, converted by us or such Restricted
Subsidiary into cash or Cash Equivalents (to the extent of the cash or
Cash Equivalents received) shall be deemed to be cash for purposes of this
provision; and
(3) upon the consummation of an Asset Sale, we shall apply, or cause such
Restricted Subsidiary to apply, the Net Cash Proceeds relating to such
Asset Sale within 365 days of receipt thereof either
(i) to prepay Senior Indebtedness and, in the case of any Senior
Indebtedness under any revolving credit facility, effect a permanent
reduction in the availability under such revolving credit facility,
(ii) to reinvest in Productive Assets, or
(iii) a combination of prepayment and investment permitted by the foregoing
clauses (3)(i) and (3)(ii).
On the 366th day after an Asset Sale or such earlier date, if any, as our
or such restricted Subsidiary's Board of Directors determines not to apply the
Net Cash Proceeds relating to such Asset Sale as set forth in clauses (3)(i),
(3)(ii) and (3)(iii) of the immediately preceding sentence (each, a "Net
Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which
have not been applied on or before such Net Proceeds Offer Trigger Date as
permitted in clauses (3)(i), (3)(ii) and (3)(iii) of the immediately preceding
sentence (each a "Net Proceeds Offer Amount") shall be applied by us or such
Restricted Subsidiary to make an offer to purchase for cash (the "Net Proceeds
Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor
more than 45 days following the applicable Net Proceeds Offer Trigger Date,
from all holders on a pro rata basis at least that amount of Notes equal to the
Note Offer Amount at a price in cash equal to 100% of the principal amount of
the Notes to be purchased, plus accrued and unpaid interest thereon, if any, to
the date of purchase; provided, however, that if at any time any non-cash
consideration received by us or any of our Restricted Subsidiaries, as the case
may be, in connection with any Asset Sale is converted into or sold or
otherwise disposed of for cash (other than interest received with respect to
any such non-cash consideration), then such conversion or disposition shall be
deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof
shall be applied in accordance with this covenant. Any offer to purchase with
respect to Other Debt shall be made and consummated concurrently with any Net
Proceeds Offer.
"Other Debt" shall mean our other Indebtedness that ranks pari passu with
the Notes and requires that an offer to purchase such Other Debt be made upon
consummation of an Asset Sale.
"Note Offer Amount" means
(i) if an offer to purchase Other Debt is not being made, the
amount of the Net Proceeds Offer Amount and
(ii) if an offer to purchase Other Debt is being made, an amount
equal to the product of (x) the Net Proceeds Offer Amount and
(y) a fraction the numerator of which is the aggregate amount
of Notes tendered pursuant to such offer to purchase and the
denominator of which is the aggregate amount of Notes and
Other Debt tendered pursuant to such offer to purchase.
Notwithstanding the foregoing, if a Net Proceeds Offer Amount is less than
$10 million, the application of the Net Cash Proceeds constituting such Net
Proceeds Offer Amount to a Net Proceeds Offer may be deferred until such time
as such Net Proceeds Offer Amount plus the aggregate amount of all Net Proceeds
Offer Amounts arising subsequent to the Net Proceeds Offer Trigger Date
relating to such initial Net Proceeds Offer Amount from all Asset Sales by us
and our Restricted Subsidiaries aggregates at least $10 million, at which time
we or such Restricted Subsidiary shall apply all Net Cash Proceeds constituting
all Net Proceeds Offer Amounts that have been so deferred to make a Net
Proceeds Offer (the first date the aggregate of all such deferred Net Proceeds
Offer Amounts is equal to $10 million or more shall be deemed to be a "Net
Proceeds Offer Trigger Date").
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Notwithstanding the immediately preceding paragraphs of this covenant, we
and our Restricted Subsidiaries will be permitted to consummate an Asset Sale
without complying with such paragraphs to the extent (i) at least 75% of the
consideration for such Asset Sale constitutes Productive Assets and (ii) such
Asset Sale is for at least fair market value (as determined in good faith by
our Board of Directors); provided that any consideration not constituting
Productive Assets received by us or any of our Restricted Subsidiaries in
connection with any Asset Sale permitted to be consummated under this paragraph
shall constitute Net Cash Proceeds and shall be subject to the provisions of
the two preceding paragraphs; provided, that at the time of entering into such
transaction or immediately after giving effect thereto, no Default or Event of
Default shall have occurred or be continuing or would occur as a consequence
thereof.
Each Net Proceeds Offer will be mailed to the record holders as shown on
the register of holders within 25 days following the Net Proceeds Offer Trigger
Date, with a copy to the Trustee, and shall comply with the procedures set
forth in the Indenture. Upon receiving notice of the Net Proceeds Offer,
holders may elect to tender their Notes in whole or in part in integral
multiples of $1,000 in exchange for cash. To the extent holders properly tender
Notes in an amount exceeding the Net Proceeds Offer Amount, Notes of tendering
holders will be purchased on a pro rata basis (based on amounts tendered). A
Net Proceeds Offer shall remain open for a period of 20 business days or such
longer period as may be required by law. To the extent that the aggregate
amount of Notes tendered pursuant to a Net Proceeds Offer is less than the Net
Proceeds Offer Amount, we may use any remaining Net Proceeds Offer Amount for
general corporate purposes. Upon completion of any such Net Proceeds Offer, the
Net Proceeds Offer Amount shall be reset at zero.
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 Notes
pursuant to a Net Proceeds Offer. To the extent that the provisions of any
securities laws or regulations conflict with the "Asset Sale" provisions of the
Indenture, we shall comply with the applicable securities laws and regulations
and shall not be deemed to have breached its obligations under the "Asset Sale"
provisions of the Indenture by virtue thereof.
Limitation on Guarantees by Restricted Subsidiaries. We will not permit
any of our Restricted Subsidiaries, directly or indirectly, to guarantee the
payment of any of our Indebtedness, other than guarantees incurred pursuant to
clause (z) of the definition of "Permitted Indebtedness," unless we, such
Restricted Subsidiary, and the Trustee execute and deliver a supplemental
indenture evidencing such Restricted Subsidiary's guarantee of the Notes (a
"Guarantee"), such Guarantee to be a senior subordinated unsecured obligation
of such Restricted Subsidiary; provided that if any Subsidiary Guarantor is
released from its guarantee with respect to Indebtedness outstanding under the
New Credit Facility, such Subsidiary Guarantor shall automatically be released
from its obligations as a Subsidiary Guarantor. Neither we nor any such
Subsidiary Guarantor shall be required to make a notation on the Notes to
reflect any such Guarantee. Nothing in this covenant shall be construed to
permit any of our Restricted Subsidiaries to incur Indebtedness otherwise
prohibited by the "Limitation on Incurrence of Additional Indebtedness"
covenant.
Conduct of Business. We and our Restricted Subsidiaries will not engage in
any businesses which are not the same, similar, related or ancillary to the
businesses in which we and our Restricted Subsidiaries are engaged on the Issue
Date.
Events of Default
The following events are defined in the Indenture as "Events of Default":
(1) the failure to pay interest (including liquidated damages, if any,
under the Registration Rights Agreement) on any Notes when the same
becomes due and payable and the default continues for a period of 30
days (whether or not such payment shall be prohibited by the
subordination provisions of the Indenture);
(2) the failure to pay the principal on any Notes, when such principal
becomes due and payable, at maturity, upon redemption or otherwise
(including the failure to make a payment to purchase Notes tendered
pursuant to a Change of Control Offer or a Net Proceeds Offer) (whether
or not such payment shall be prohibited by the subordination provisions
of the Indenture);
(3) a default in the observance or performance of the covenant set forth
under "--Certain Covenants-- Merger, Consolidation and Sale of Assets"
above;
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(4) a default in the observance or performance of any other covenant or
agreement contained in the Indenture which default continues for a
period of 30 days after we receive written notice specifying the
default (and demanding that such default be remedied) from the Trustee
or the holders of at least 25% of the outstanding principal amount of
the Notes;
(5) the failure to pay at final maturity (giving effect to any applicable
grace periods and any extensions thereof) the principal amount of any
of our or any of our Restricted Subsidiaries' Indebtedness (other than
a Receivables Entity), or the acceleration of the final stated
maturity of any such Indebtedness if the aggregate principal amount of
such Indebtedness, together with the principal amount of any other
such Indebtedness in default for failure to pay principal at final
maturity or which has been accelerated, aggregates $15 million or more
at any time;
(6) one or more judgments in an aggregate amount in excess of $15 million
shall have been rendered against us or any of our Significant
Subsidiaries and such judgments remain undischarged, unpaid and
unstayed for a period of 60 days after such judgment or judgments
become final and non-appealable, and in the event such judgment is
covered by insurance, an enforcement proceeding has been commenced by
any creditor upon such judgment, which is not promptly stayed; and
(7) certain events of bankruptcy affecting us or any of our Significant
Subsidiaries.
Upon the happening of any Event of Default specified in the Indenture, the
Trustee or the holders of at least 25% in principal amount of outstanding Notes
may declare the principal of and accrued interest on all the Notes to be due
and payable by notice in writing to us and the Trustee specifying the
respective Event of Default and that it is a "notice of acceleration," and the
same shall become immediately due and payable. If an Event of Default with
respect to our bankruptcy proceedings occurs and is continuing, then such
amount shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holder of Notes.
The Indenture will provide that, at any time after a declaration of
acceleration with respect to the Notes as described in the preceding paragraph,
the holders of a majority in principal amount of the Notes may rescind and
cancel such declaration and its consequences (1) if the rescission would not
conflict with any judgment or decree, (2) if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of the acceleration, (3) to the extent the payment of
such interest is lawful, interest on overdue installments of interest and
overdue principal, which has become due otherwise than by such declaration of
acceleration, has been paid, (4) if we have paid the Trustee its reasonable
compensation and reimbursed the Trustee for its expenses, disbursements and
advances and (5) in the event of the cure or waiver of an Event of Default of
the type described in clause (6) or (7) of the description above of Events of
Default, the Trustee shall have received an officers' certificate and an
opinion of counsel that such Event of Default has been cured or waived. The
holders of a majority in principal amount of the Notes may waive any existing
Default or Event of Default under the Indenture, and its consequences, except a
default in the payment of the principal of or interest on any Notes.
No Personal Liability of Directors, Officers, Employees and Stockholders
None of our directors, officers, employees, incorporators or stockholders
shall have any liability for any of our obligations under the Notes or 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
Commission 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 our obligations
discharged with respect to the outstanding Notes ("Legal Defeasance"). Such
Legal Defeasance means that we shall be deemed to have paid and discharged the
entire indebtedness represented by the outstanding Notes, except for:
(1) the rights of holders of the Notes to receive payments in respect of
the principal of, premium, if any, and interest on the Notes when such
payments are due;
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(2) 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 payments;
(3) the rights, powers, trust, duties and immunities of the Trustee and our
obligations in connection therewith; and
(4) 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 ("Covenant Defeasance") and thereafter any omission to comply
with such obligations shall not constitute a Default or Event of Default with
respect to the Notes. In the event Covenant Defeasance occurs, certain events
(not including non-payment, bankruptcy, receivership, reorganization and
insolvency events) described under "Events of Default" 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, non-callable U.S.
government obligations, or a combination thereof, 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 on the Notes on the stated date for payment thereof
or on the applicable redemption date, as the case may be;
(2) in the case of Legal Defeasance, we shall have delivered to the Trustee
an opinion of counsel in the United States reasonably acceptable to the
Trustee confirming that (i) we have received from, or there has been
published by, the Internal Revenue Service a ruling or (ii) since the
date of the Indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the holders of the
Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;
(3) in the case of Covenant Defeasance, we shall have delivered to the
Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the holders of the Notes will
not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case it such Covenant Defeasance had not
occurred;
(4) no Default or Event of Default shall have occurred and be continuing on
the date of such deposit (other than a Default or Event of Default with
respect to the Indenture resulting from the incurrence of Indebtedness,
all or a portion of which will be used to defease the Notes
concurrently with such incurrence);
(5) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, the Indenture or
any other material agreement or instrument to which we or any of our
Subsidiaries are a party or by which we or any of our Subsidiaries are
bound;
(6) we shall have delivered to the Trustee an officers' certificate stating
that the deposit was not made by us with the intent of preferring the
holders of the Notes over any of our other creditors or with the intent
of defeating, hindering, delaying or defrauding any of our other
creditors or others;
(7) we shall have delivered to the Trustee an officers' certificate
and an opinion of counsel, each stating that all conditions precedent
provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with;
(8) we shall have delivered to the Trustee an opinion of counsel to the
effect that (i) the trust funds will not be subject to any rights of
holders of our Indebtedness other than the Notes and (ii) assuming we
have no intervening bankruptcy between the date of deposit and the 91st
day following the deposit and that no Holder of the Notes is our
insider, after the 91st day following the deposit, the trust
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funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; and
(9) certain other customary conditions precedent are satisfied.
Satisfaction and Discharge
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when
o either (1) all the Notes theretofore authenticated and delivered (except
lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by us and thereafter repaid to us or
discharged from such trust) have been delivered to the Trustee for
cancellation or (2) all Notes not theretofore delivered to the Trustee
for cancellation have become due and payable and we have irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit
together with irrevocable instructions from us directing the Trustee to
apply such funds to the payment thereof at maturity or redemption, as the
case may be;
o we have paid all other sums payable under the Indenture by us; and
o we have delivered to the Trustee an officers' certificate and an
opinion of counsel stating that all conditions precedent under the
Indenture relating to the satisfaction and discharge of the Indenture
have been complied with.
Modification of the Indenture
From time to time, we and the Trustee, without the consent of the holders
of the Notes, may amend the Indenture for certain specified purposes, including
curing ambiguities, defects or inconsistencies, so long as such change does
not, in the opinion of the Trustee, adversely affect the rights of any of the
holders in any material respect. In formulating its opinion on such matters,
the Trustee will be entitled to rely on such evidence as it deems appropriate,
including, without limitation, solely on an opinion of counsel. Other
modifications and amendments of the Indenture may be made with the consent of
the holders of a majority in principal amount of the then outstanding Notes
issued under the Indenture, except that, without the consent of each holder of
the Notes affected thereby, no amendment may:
o reduce the amount of Notes whose holders must consent to an amendment;
o reduce the rate of or change or have the effect of changing the time
for payment of interest, including defaulted interest, on any Notes;
o reduce the principal of or change or have the effect of changing the
fixed maturity of any Notes, or change the date on which any Notes may
be subject to redemption or repurchase, or reduce the redemption or
repurchase price therefor;
o make any Notes payable in money other than that stated in the Notes;
o make any change in provisions of the Indenture protecting the right of
each holder of a Note to receive payment of principal of and interest on
such Note on or after the due date thereof or to bring suit to enforce
such payment, or permitting holders of a majority in principal amount of
the Notes to waive Defaults or Events of Default (other than Defaults or
Events of Default with respect to the payment of principal of or
interest on the Notes);
o amend, change or modify in any material respect our obligation to make
and consummate a Change of Control Offer or make and consummate a Net
Proceeds Offer with respect to any Asset Sale that has been consummated
or modify any of the provisions or definitions with respect thereto; or
o modify the subordination provisions (including the related definitions)
of the Indenture to adversely affect the holders of Notes in any
material respect. Any amendment or modification of the
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subordination provisions of the Indenture that is adverse to any Senior
Indebtedness outstanding at the time shall not be effective as to the
holders of such Senior Indebtedness without the written consent of
such holders.
Additional Information
The Indenture provides that we will deliver to the Trustee within 15 days
after the filing of the same with the Commission, copies of the quarterly and
annual reports and of the information, documents and other reports, if any,
which we are required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act. The Indenture further provides that, notwithstanding
that we may not be subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act, we will file with the Commission, to the extent permitted,
and provide the Trustee and holders with such annual reports and such
information, documents and other reports specified in Sections 13 and 15(d) of
the Exchange Act. We will also comply with the other provisions of the Trust
Indenture Act [sec] 314(a).
Certain Definitions
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the definition of other terms
used herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness
(1) of a Person or any of its Subsidiaries existing at the time such Person
becomes our Restricted Subsidiary or
(2) assumed in connection with the acquisition of assets from such Person,
in each case whether or not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming our Restricted
Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to have
been incurred, with respect to clause (1) of the preceding sentence, on the
date such Person becomes our Restricted Subsidiary and, with respect to clause
(2) of the preceding sentence, on the date of consummation of such acquisition
of assets.
"Affiliate" means a Person who directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
us. The term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise. Notwithstanding the foregoing, no Person (other than the Company or
any Subsidiary of the Company) in whom a Receivables Entity makes an Investment
in connection with a Qualified Receivables Transaction shall be deemed to be
our or any of our Subsidiaries' Affiliate solely by reason of such Investment.
"all or substantially all" shall have the meaning given such phrase in the
Revised Model Business Corporation Act.
"Applicable Premium" means, with respect to a Note, the greater of (1)
1.0% of the then outstanding principal amount of such Note or (2) the excess of
(i) the present value of the required interest and principal payments due on
such Note, computed using a discount rate equal to the Treasury Rate plus 50
basis points, over (ii) the then outstanding principal amount of such Note;
provided that in no event will the Applicable Premium exceed the amount of the
applicable redemption price upon an optional redemption less 100%, at any time
on or after February 1, 2003.
"Asset Acquisition" means
(a) an Investment by us or any of our Restricted Subsidiaries in any other
Person pursuant to which such Person shall become our Restricted Subsidiary or
a Restricted Subsidiary of any of our Restricted Subsidiaries, or shall be
merged with or into our company or any of our Restricted Subsidiaries, or
(b) the acquisition by us or any of our Restricted Subsidiaries of the
assets of any Person which constitute all or substantially all of the assets of
such Person, any division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary course of
business.
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"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary
course of business), assignment or other transfer for value by us or any of our
Restricted Subsidiaries (including any Sale and Leaseback Transaction) to any
Person other than us or our Restricted Subsidiary of
(a) any Capital Stock of any of our Restricted Subsidiaries; or
(b) any other property or assets of us or any of our Restricted
Subsidiaries other than in the ordinary course of business; provided, however,
that Asset Sales shall not include:
(1) any transaction or series of related transactions for which we
or our Restricted Subsidiaries receive aggregate consideration
of less than $5 million,
(2) the sale, lease, conveyance, disposition or other transfer of
all or substantially all of our assets as permitted under
"Merger, Consolidation and Sale of Assets,"
(3) the sale or discount, in each case without recourse, of
accounts receivable arising in the ordinary course of business,
but only in connection with the compromise or collection
thereof,
(4) the factoring of accounts receivable arising in the ordinary
course of business pursuant to arrangements customary in the
industry,
(5) the licensing of intellectual property,
(6) disposals or replacements of obsolete equipment in the ordinary
course of business,
(7) the sale, lease, conveyance, disposition or other transfer by
us or any Restricted Subsidiary of assets or property in
transactions constituting Investments that are not prohibited
under the "Limitation on Restricted Payments" covenant,
(8) sales of accounts receivable and related assets of the type
specified in the definition of "Qualified Receivables
Transaction" to a Receivables Entity,
(9) transfers of accounts receivable and related assets of the type
specified in the definition of "Qualified Receivables
Transaction" (or a fractional undivided interest therein) by a
Receivables Entity in a Qualified Receivables Transaction,
(10) leases or subleases to third persons not interfering in any
material respect with our business or the business of any of our
Restricted Subsidiaries and
(11) the sale, issuance or transfer of Capital Stock representing up
to 30% of the fully-diluted equity ownership of one or more of
(i) Fisher Technology Group, (ii) UniKix Technologies, (iii)
Electronic Commerce Division and (iv) SPS to one or more of
their respective officers, directors or employees in connection
with the compensation of such employees.
For the purposes of clause (8), Purchase Money Notes shall be deemed to be
cash.
"Bank Indebtedness" means any and all amounts, whether outstanding on the
Issue Date or thereafter incurred, payable under or in respect of the New
Credit Facility and any related notes, collateral documents, letters of credit
and guarantees, including principal, premium (if any), interest (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to us or any of our Restricted Subsidiaries whether or
not a claim for post-filing interest is allowed in such proceedings), fees,
charges, expenses, indemnities, reimbursement obligations, guarantees and all
other amounts payable thereunder or in respect thereof.
"Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.
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"Capital Stock" means
(1) with respect to any Person that is a corporation, any and all shares,
interests, participations or other equivalents (however designated) of
corporate stock, including each class of common stock and preferred
stock of such Person and
(2) with respect to any Person that is not a corporation, any and all
partnership or other equity interests of such Person.
"Cash Equivalents" means
(1) marketable direct obligations issued by, or unconditionally guaranteed
by, the United States Government or issued by any agency thereof and
backed by the full faith and credit of the United States, in each case
maturing within one year from the date of acquisition thereof;
(2) marketable direct obligations issued by any state of the United States
of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the
two highest ratings obtainable from either S&P or Moody's;
(3) commercial paper maturing no more than one year from the date of
creation thereof and, at the time of acquisition, having a rating of at
least A-1 from S&P or at least P-1 from Moody's;
(4) certificates of deposit or bankers' acceptances (or, with respect to
foreign banks, similar instruments) maturing within one year from the
date of acquisition thereof issued by any bank organized under the laws
of the United States of America or any state thereof or the District of
Columbia or any U.S. branch of a foreign bank having at the date of
acquisition thereof combined capital and surplus of not less than $200
million;
(5) certificates of deposit or bankers' acceptances or similar instruments
maturing within one year from the date of acquisition thereof issued by
any foreign bank that is a lender under the New Credit Facility having
at the date of acquisition thereof combined capital and surplus of not
less than $500 million;
(6) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (1) above entered
into with any bank meeting the qualifications specified in clause (4) or
clause (5) above; and
(7) investments in money market funds which invest substantially all their
assets in securities of the types described in clauses (1) through (6)
above.
"Change of Control" means the occurrence of one or more of the following
events:
(1) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of our
assets to any Person or group of related Persons (other than one or more
Permitted Holders) for purposes of Section 13(d) of the Exchange Act (a
"Group"), together with any Affiliates thereof (whether or not otherwise
in compliance with the provisions of the Indenture);
(2) the approval by the holders of our Capital Stock of any plan or
proposal for the liquidation or dissolution of our company (whether or
not otherwise in compliance with the provisions of the Indenture);
(3) any Person or Group (other than one or more Permitted Holders) shall
become the owner, directly or indirectly, beneficially or of record, of
shares representing 50% or more of the aggregate ordinary voting power
represented by our issued and outstanding Capital Stock; or
(4) the first day on which a majority of the members of our Board of
Directors are not Continuing Directors.
"Change of Control Triggering Event" means the occurrence of a Change of
Control and the failure of the Notes to have a Minimum Rating on the 30th day
after the occurrence of such Change of Control.
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"Consolidated EBITDA" means, with respect to any Person, for any period,
the sum (without duplication) of
(1) Consolidated Net Income and
(2) to the extent Consolidated Net Income has been reduced thereby,
(i) all income taxes of such Person and its Restricted
Subsidiaries paid or accrued in accordance with GAAP for such
period,
(ii) Consolidated Interest Expense,
(iii) Consolidated Non-cash Charges,
(iv) cash charges attributable to the exercise of employee options
that vested upon the consummation of the Recapitalization and
(v) for any four quarter period that includes one or more fiscal
quarters of fiscal 1997 or 1998, cash restructuring or
nonrecurring charges, in an aggregate amount not to exceed $20
million.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
such Person for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to
(1) the incurrence of any Indebtedness of such Person or any of its
Restricted Subsidiaries (and the application of the proceeds thereof)
giving rise to the need to make such calculation and any incurrence or
repayment of other Indebtedness (and the application of the proceeds
thereof) occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to
the Transaction Date, as if such incurrence or repayment, as the case
may be (and the application of the proceeds thereof), occurred on the
first day of the Four Quarter Period,
(2) any Asset Sales or Asset Acquisitions (including, without limitation,
any Asset Acquisition giving rise to the need to make such calculation
as a result of such Person or one of its Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result of
the Asset Acquisition) incurring, assuming or otherwise being liable for
Acquired Indebtedness and also including any Consolidated EBITDA
(including pro forma adjustments for cost savings ("Cost Savings
Adjustments") that the Company reasonably believes in good faith could
have been achieved during the Four Quarter Period as a result of such
acquisition or disposition (provided that both (i) such cost savings
were identified and quantified in an Officers' Certificate delivered to
the Trustee at the time of the consummation of the acquisition or
disposition and (ii) with respect to each acquisition or disposition
completed prior to the 90th day preceding such date of determination,
actions were commenced or initiated by us within 90 days of such
acquisition or disposition to effect such cost savings identified in
such Officers' Certificate and with respect to any other acquisition or
disposition, such Officers' Certificate sets forth the specific steps to
be taken within the 90 days after such acquisition or disposition to
accomplish such cost savings) attributable to the assets which are the
subject of the Asset Acquisition or Asset Sale during the Four Quarter
Period) occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to
the Transaction Date, as if such Asset Sale or Asset Acquisition
(including the incurrence, assumption or liability for any such
Indebtedness or Acquired Indebtedness) occurred on the first day of the
Four Quarter Period,
(3) with respect to any such Four Quarter Period commencing prior to the
Recapitalization, the Recapitalization (including any Cost Savings
Adjustments), which shall be deemed to have taken place on the first day
of such Four Quarter Period, and
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(4) any Asset Sales or Asset Acquisitions (including any Consolidated
EBITDA (including any Cost Savings Adjustments) attributable to the
assets which are the subject of the Asset Acquisition or Asset Sale
during the Four Quarter Period) that have been made by any Person that
has become our Restricted Subsidiary or has been merged with or into our
company or any of our Restricted Subsidiaries during the Four Quarter
Period or at any time subsequent to the last day of the Four Quarter
Period and on or prior to the Transaction Date that would have
constituted Asset Sales or Asset Acquisitions had such transactions
occurred when such Person was our Restricted Subsidiary or subsequent to
such Person's merger into our company, as if such Asset Sale or Asset
Acquisition (including the incurrence, assumption or liability for any
Indebtedness or Acquired Indebtedness in connection therewith) occurred
on the first day of the Four Quarter Period;
provided that to the extent that clause (2) or (4) of this sentence requires
that pro forma effect be given to an Asset Sale or Asset Acquisition, such pro
forma calculation shall be based upon the four full fiscal quarters immediately
preceding the Transaction Date of the Person, or division or line of business of
the Person, that is acquired or disposed of for which financial information is
available. If such Person or any of its Restricted Subsidiaries directly or
indirectly guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed Indebtedness as if such
Person or any Restricted Subsidiary of such Person had directly incurred or
otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (A)
interest on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter shall be
deemed to have accrued at a fixed rate per annum equal to the rate of interest
on such Indebtedness in effect on the Transaction Date; (B) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the
Four Quarter Period; and (C) notwithstanding clause (A) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall be deemed to
accrue at the rate per annum resulting after giving effect to the operation of
such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of
(1) Consolidated Interest Expense (excluding amortization or write-off of
debt issuance costs relating to the Recapitalization and the financing
therefor or relating to retired or existing Indebtedness and
amortization or write-off of customary debt issuance costs relating to
future Indebtedness incurred in the ordinary course of business) plus
(2) the product of
(x) the amount of all dividend payments on any series of Preferred
Stock of such Person (other than dividends paid in Qualified
Capital Stock) times
(y) a fraction, the numerator of which is one and the denominator
of which is one minus the then current effective consolidated
Federal, state and local tax rate of such Person expressed as
a decimal.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of, without duplication,
(1) the aggregate of all cash and non-cash interest expense with respect to
all outstanding Indebtedness of such Person and its Restricted
Subsidiaries, including the net costs associated with Interest Swap
Obligations, for such period determined on a consolidated basis in
conformity with GAAP, and
(2) the interest component of Capitalized Lease Obligations paid, accrued
and/or scheduled to be paid or accrued by such Person and its Restricted
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" of ours means, for any period, the aggregate net
income (or loss) of and our Restricted Subsidiaries for such period on a
consolidated basis, determined in accordance with GAAP; provided that there
shall be excluded therefrom:
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(a) gains and losses from Asset Sales (without regard to the $5
million limitation set forth in the definition thereof) or
abandonments or reserves relating thereto and the related tax
effects according to GAAP,
(b) gains and losses due solely to fluctuations in currency values
and the related tax effects according to GAAP,
(c) items classified as extraordinary, unusual or nonrecurring
gains and losses, and the related tax effects according to
GAAP,
(d) the net income (or loss) of any Person acquired in a pooling
of interests transaction accrued prior to the date it becomes
our Restricted Subsidiary or is merged or consolidated with us
or any of our Restricted Subsidiaries,
(e) the net income of any Restricted Subsidiary to the extent that
the declaration of dividends or similar distributions by that
Restricted Subsidiary of that income is restricted by
contract, operation of law or otherwise,
(f) the net loss of any Person other than our Restricted
Subsidiary,
(g) the net income of any Person, other than a Restricted
Subsidiary, except to the extent of cash dividends or
distributions paid to us or our Restricted Subsidiary by such
Person unless, in the case of any of our Restricted Subsidiaries that
receives such dividends or distributions, such Restricted Subsidiary
is subject to clause (e) above,
(h) one time non-cash compensation charges, including any arising
from existing stock options resulting from any merger or
recapitalization transaction, and
(i) bonus payments to be paid to our senior management following
the Recapitalization in an aggregate amount not to exceed $10
million.
"Consolidated Non-cash Charges" means, with respect to any Person for any
period, the aggregate depreciation, amortization and other non-cash expenses of
such Person and its Restricted Subsidiaries reducing Consolidated Net Income of
such Person and its Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges which
require an accrual of or a reserve for cash charges for any future period).
"Continuing Directors" means, as of any date of determination, any member
of our Board of Directors who
(1) was a member of such Board of Directors on the Issue Date,
(2) was nominated for election or elected to such Board of Directors with,
or whose election to such Board of Directors was approved by, the
affirmative vote of a majority of the Continuing Directors who were
members of such Board of Directors at the time of such nomination or
election or
(3) is any designee of a Permitted Holder or was nominated by a Permitted
Holder or any designees of a Permitted Holder on the Board of Directors.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect us or
any of our Restricted Subsidiaries against fluctuations in currency values.
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of
Default.
"Designated Senior Indebtedness" means
(1) the Bank Indebtedness and
(2) any other Senior Indebtedness which, at the date of determination, has
an aggregate principal amount outstanding of, or under which, at the
date of determination, the holders thereof, are committed to lend up to,
at least $25 million and is specifically designated by us in the
instrument evidencing or
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governing such Senior Indebtedness or another writing as "Designated
Senior Indebtedness" for purposes of the Indenture.
"Disqualified Capital Stock" means that portion of any Capital Stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event (other than an event which would constitute a Change of Control
Triggering Event), matures (excluding any maturity as the result of an optional
redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the sole option of
the holder thereof (except, in each case, upon the occurrence of a Change of
Control Triggering Event) on or prior to the final maturity date of the Notes.
"Existing Notes" means our existing 9% Senior Subordinated Notes due 2008.
"fair market value" means, unless otherwise specified, with respect to any
asset or property, the price which could be negotiated in an arm's-length, free
market transaction, for cash, between a willing seller and a willing and able
buyer, neither of whom is under undue pressure or compulsion to complete the
transaction. Fair market value shall be determined by our Board of Directors
acting reasonably and in good faith and shall be evidenced by a resolution of
our Board of Directors delivered to the Trustee.
"fiscal 1998" means the year ended December 31, 1998.
"Foreign Subsidiary" means any of our Restricted Subsidiaries (1) that is
organized in a jurisdiction other than the United States of America or a state
thereof or the District of Columbia and (2) with respect to which at least 90%
of its sales (as determined in accordance with GAAP) are generated by
operations located in jurisdictions outside the United States of America.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect on the Issue Date, including, without limitation, those
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession.
"Indebtedness" means with respect to any Person, without duplication,
(1) all obligations of such Person for borrowed money,
(2) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments,
(3) all Capitalized Lease Obligations of such Person,
(4) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations and all
obligations under any title retention agreement (but excluding trade
accounts payable arising in the ordinary course of business),
(5) all obligations for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction,
(6) guarantees and other contingent obligations in respect of Indebtedness
referred to in clauses (1) through (5) above and clause (8) below,
(7) all obligations of any other Person of the type referred to in clauses
(1) through (6) which are secured by any lien on any property or asset
of such Person but which obligations are not assumed by such Person, the
amount of such obligation being deemed to be the lesser of the fair
market value of such property or asset or the amount of the obligation
so secured,
(8) all obligations under currency swap agreements and interest swap
agreements of such Person and
(9) all Disqualified Capital Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal
to the greater of its voluntary or involuntary liquidation preference
and its maximum fixed repurchase price, but excluding accrued dividends,
if any.
For purposes hereof, (x) the "maximum fixed repurchase price" of any
Disqualified Capital
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Stock which does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital 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
Capital Stock, such fair market value shall be determined reasonably and in good
faith by the Board of Directors of the issuer of such Disqualified Capital Stock
and (y) any transfer of accounts receivable or other assets which constitute a
sale for purposes of GAAP shall not constitute Indebtedness hereunder.
"Interest Swap Obligations" means the obligations of any Person, pursuant
to any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount.
"Investment" by any Person in any other Person means, with respect to any
Person, any direct or indirect loan or other extension of credit (including,
without limitation, a guarantee) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition by
such Person of any Capital Stock, bonds, notes, debentures or other securities
or evidences of Indebtedness issued by, such other Person. "Investment" shall
exclude extensions of trade credit by us and our Restricted Subsidiaries on
commercially reasonable terms in accordance with our normal trade practices or
those of such Restricted Subsidiary, as the case may be. For the purposes of the
"Limitation on Restricted Payments" covenant,
(1) we shall be deemed to have made an "Investment" equal to the fair
market value of the net assets of any Restricted Subsidiary at the time
that such Restricted Subsidiary is designated an Unrestricted Subsidiary
and the aggregate amount of Investments made on the Issue Date shall
exclude (to the extent the designation as an Unrestricted Subsidiary was
included as a Restricted Payment) the fair market value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary, not to exceed the
amount of the Investment deemed made at the date of designation thereof
as an Unrestricted Subsidiary, and
(2) the amount of any Investment shall be the original cost of such
Investment plus the cost of all additional Investments by the Company or
any of its Restricted Subsidiaries, without any adjustments for
increases or decreases in value, or write-ups, writedowns or write-offs
with respect to such Investment, reduced by the payment of dividends or
distributions (including tax sharing payments) in connection with such
Investment or any other amounts received in respect of such Investment;
provided that no such payment of dividends or distributions or receipt
of any such other amounts shall reduce the amount of any Investment if
such payment of dividends or distributions or receipt of any such
amounts would be included in Consolidated Net Income. If we or any of
our Restricted Subsidiaries sells or otherwise disposes of any Common
Stock of any of our direct or indirect Restricted Subsidiaries such
that, after giving effect to any such sale or disposition, we no longer
own, directly or indirectly, 50% of the outstanding Common Stock of such
Restricted Subsidiary, we shall be deemed to have made an Investment on
the date of any such sale or disposition equal to the fair market value
of the Common Stock of such Restricted Subsidiary not sold or disposed
of.
"Investors" means one or more of
(1) Merrill Lynch Kecalp L.P. 1997,
(2) Kecalp Inc.,
(3) ML IBK Positions, Inc.,
(4) Chase Equity Associates, L.P.,
(5) DLJ Merchant Banking Partners II, L.P., DLJ Offshore Partners II, C.V.,
DLJ Diversified Partners, L.P., DLJMB Funding II, Inc., DLJ Merchant
Banking Partners II-A, L.P., DLJ Diversified Partners-A, L.P., DLJ
Millennium Partners, L.P., DLJ Millennium Partners-A, L.P., UK Investment
Plan 1997 Partners, DLJ EAB Partners, L.P. and DLJ First ESC, LLC,
(6) members of our management and
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(7) any Affiliate of any of the foregoing.
"Issue Date" means November 20, 1998, the date of original issuance of the
Old Notes.
"Joint Venture" means a corporation, partnership or other business entity,
other than our Subsidiaries, engaged or proposed to be engaged in our line of
business or a similar line of business that we own, directly or indirectly, not
less than 30% of the total voting power of shares of Capital Stock or other
interests (including partnership interests) entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
and trustees thereof, with the balance of the ownership interests being held by
one or more investors.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof and any agreement to
give any security interest).
"Merger Agreement" means the Second Amended and Restated Plan of Merger
dated as of November 14, 1997 by and between FSI Merger Corp. and us.
"Minimum Rating" means
(i) a rating of at least BBB- (or equivalent successor rating) by S&P and
(ii) a rating of at least Baa3 (or equivalent successor rating) by Moody's.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents
(other than the portion of any such deferred payment constituting interest)
received by us or any of our Subsidiaries from such Asset Sale net of
(a) out-of-pocket expenses and fees relating to such Asset Sale (including,
without limitation, legal, accounting and investment banking fees and
sales commissions),
(b) taxes paid or payable after taking into account any reduction in
consolidated tax liability due to available tax credits or deductions
and any tax sharing arrangements,
(c) repayment of Senior Indebtedness that is required to be repaid in
connection with such Asset Sale,
(d) any portion of cash proceeds which we determine in good faith should be
reserved for post-closing adjustments, it being understood and agreed
that on the day that all such post-closing adjustments have been
determined, the amount (if any) by which the reserved amount in respect
of such Asset Sale exceeds the actual post-closing adjustments payable
by us or any of our Subsidiaries shall constitute Net Cash Proceeds on
such date;
provided that, in the case of the sale by us of an asset constituting an
Investment made after the Issue Date (other than a Permitted Investment), the
"Net Cash Proceeds" in respect of such Asset Sale shall not include the lesser
of (x) the cash received with respect to such Asset Sale and (y) the initial
amount of such Investment, less, in the case of clause (y), all amounts (up to
an amount not to exceed the initial amount of such Investment) received by us
with respect to such Investment, whether by dividend, sale, liquidation or
repayment, in each case prior to the date of such Asset Sale.
"New Credit Facility" means the credit agreement dated as of January 21,
1998, among our company, the other borrowers thereto from time to time, if any,
the lenders party thereto from time to time and The Chase Manhattan Bank, as
administrative agent, Merrill Lynch Capital Corporation, as syndication agent
and DLJ Capital Funding, Inc. as documentation agent, together with the related
documents thereto (including, without limitation, any guarantee agreements,
promissory notes and collateral documents), in each case as such agreements may
be amended, supplemented or otherwise modified from time to time, or refunded,
refinanced, restructured, replaced, renewed, repaid or extended from time to
time (whether with the original agents and lenders or other agents and lenders
or otherwise, and whether provided under the original New Credit Facility or
one or more other credit agreements or otherwise) including, without
limitation, to increase
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the amount of available borrowings thereunder or to add Restricted Subsidiaries
as additional borrowers or guarantors or otherwise.
"Permitted Holder" means and includes
(1) the Principal or any of its Affiliates,
(2) the Investors or any of their Affiliates,
(3) any corporation the outstanding voting power of the capital stock of
which is beneficially owned, directly or indirectly, by our stockholders
in substantially the same proportions as their ownership of the voting
power of our capital stock,
(4) any Plan,
(5) any underwriter during the period engaged in a firm commitment
underwriting on our behalf with respect to the shares of capital stock
being underwritten or
(6) us or any of our Subsidiaries.
"Permitted Indebtedness" means, without duplication,
(1) the Notes,
(2) the Existing Notes,
(3) Indebtedness incurred pursuant to the New Credit Facility in an
aggregate principal amount at any time outstanding not to exceed $469.2
million less (A) the amount of all mandatory principal payments actually
made by us in respect of term loans thereunder (excluding any such
payments to the extent refinanced at the time of payment under a New
Credit Facility) and (B) in the case of a revolving facility, reduced by
any required permanent repayments actually made (which are accompanied
by a corresponding permanent commitment reduction) thereunder (excluding
any such repayments and commitment reductions to the extent refinanced
and replaced at the time under a New Credit Facility),
(4) Indebtedness of Foreign Subsidiaries incurred solely for working
capital purposes of such Foreign Subsidiaries,
(5) our other Indebtedness and that of our Restricted Subsidiaries
outstanding on the Issue Date reduced by the amount of any scheduled
amortization payments or mandatory prepayments when actually paid or
permanent reductions thereon,
(6) our Interest Swap Obligations or that of any of our Restricted
Subsidiaries covering our Indebtedness or any of our Restricted
Subsidiaries; provided that any Indebtedness to which any such Interest
Swap Obligations correspond is otherwise permitted to be incurred under
the Indenture; provided, further, that such Interest Swap Obligations
are entered into, in our judgment, to protect us and our Restricted
Subsidiaries from fluctuation in interest rates on their respective
outstanding Indebtedness,
(7) our Indebtedness or any of our Restricted Subsidiaries under Currency
Agreements entered into, in our judgment, to protect us or such
Restricted Subsidiary from foreign currency exchange rates,
(8) intercompany Indebtedness owed by any of our Restricted Subsidiaries to
us or any of our Restricted Subsidiaries or by us to any Restricted
Subsidiary,
(9) our or any or our Restricted Subsidiaries' Acquired Indebtedness to the
extent we could have incurred such Indebtedness in accordance with the
"Limitation on Incurrence of Additional Indebtedness" covenant on the
date such Indebtedness became Acquired Indebtedness; provided that, in
the case of Acquired Indebtedness of our Restricted Subsidiary, such
Acquired Indebtedness was not incurred in connection with, or in
anticipation or contemplation of, such Person becoming our Restricted
Subsidiary,
(10) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or other similar instrument inadvertently
drawn against insufficient funds in the ordinary course of business;
provided that such Indebtedness is extinguished within five business
days of its incurrence,
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(11) any refinancing, modification, replacement, renewal, restatement,
refunding, deferral, extension, substitution, supplement, reissuance or
resale of existing or future Indebtedness, including any additional
Indebtedness incurred to pay interest or premiums required by the
instruments governing such existing or future Indebtedness as in effect
at the time of issuance thereof ("Required Premiums") and fees in
connection therewith; provided that any such event shall not (A) result
in an increase in the aggregate principal amount of our and our
Restricted Subsidiaries' Permitted Indebtedness (except to the extent
such increase is a result of a simultaneous incurrence of additional
Indebtedness (i) to pay Required Premiums and related fees or (ii)
otherwise permitted to be incurred under the Indenture) and (B) create
Indebtedness with a Weighted Average Life to Maturity at the time such
Indebtedness is incurred that is less than the Weighted Average Life to
Maturity at such time of the Indebtedness being refinanced, modified,
replaced, renewed, restated, refunded, deferred, extended, substituted,
supplemented, reissued or resold (except that this subclause (B) will
not apply in the event the Indebtedness being refinanced, modified,
replaced, renewed, restated, refunded, deferred, extended, substituted,
supplemented, reissued or resold was originally incurred in reliance
upon clause (8) or (17) of this definition); provided that none of our
Restricted Subsidiaries may refinance any Indebtedness pursuant to this
clause (11) other than its own Indebtedness,
(12) Indebtedness (including Capitalized Lease Obligations) incurred by us
or any Restricted Subsidiary to finance the purchase, lease or
improvement of property (real or personal) or equipment (whether through
the direct purchase of assets or the Capital Stock of any Person owning
such assets) in an aggregate principal amount outstanding not to exceed
$30 million at the time of any incurrence thereof (which amount shall be
deemed not to include any such Indebtedness incurred in whole or in part
under the New Credit Facility to the extent permitted by clause (3)
above),
(13) the incurrence by a Receivables Entity of Indebtedness in a Qualified
Receivables Transaction that is not recourse to us or any of our
Restricted Subsidiaries (except for Standard Securitization
Undertakings),
(14) Indebtedness incurred by us or any of our Restricted Subsidiaries
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,
(15) Indebtedness arising from our or a Restricted Subsidiary's agreements
providing for indemnification, adjustment of purchase price, earn out or
other similar obligations, in each case, incurred or assumed in
connection with the disposition of any business, assets or our
Restricted Subsidiary, other than guarantees of Indebtedness incurred by
any Person acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such acquisition,
provided that the maximum assumable liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds actually
received by us and our Restricted Subsidiaries in connection with such
disposition,
(16) obligations in respect of performance and surety bonds and completion
guarantees provided by us or any of our Restricted Subsidiaries in the
ordinary course of business,
(17) Indebtedness consisting of guarantees (x) by us of Indebtedness,
leases and any other obligation or liability permitted to be incurred
under the Indenture by our Restricted Subsidiaries, and (y) subject to
"Limitation on Guarantees by Restricted Subsidiaries," by our Restricted
Subsidiaries of Indebtedness, leases and any other obligation or
liability permitted to be incurred under the Indenture by us or our
other Restricted Subsidiaries, and
(18) our or any Restricted Subsidiary's additional Indebtedness in an
aggregate principal amount not to exceed $20 million at any one time
outstanding (which amount should not be deemed to include any such
Indebtedness incurred in whole or in part under the New Credit Facility
to the extent permitted by clause (3) above).
"Permitted Investments" means
(1) Investments by us or any of our Restricted Subsidiaries in any of our
Restricted Subsidiaries (whether existing on the Issue Date or created
thereafter) and Investments in us by any of our Restricted Subsidiaries;
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(2) cash and Cash Equivalents;
(3) Investments existing on the Issue Date;
(4) loans and advances to our and our Restricted Subsidiaries' employees,
officers and directors not in excess of $1 million at any one time
outstanding;
(5) accounts receivable owing to us or any Restricted Subsidiary created or
acquired in the ordinary course of business and payable or dischargeable
in accordance with customary trade terms; provided however, that such
trade terms may include such concessionary trade terms as we or such
Restricted Subsidiary deem reasonable under the circumstances;
(6) Currency Agreements and Interest Swap Obligations entered into by us or
any of our Restricted Subsidiaries for bona fide business reasons and
not for speculative purposes, and otherwise in compliance with the
Indenture;
(7) Investments in securities of trade creditors or customers received
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers;
(8) guarantees by us or any of our Restricted Subsidiaries of Indebtedness
otherwise permitted to be incurred by us or any of our Restricted
Subsidiaries under the Indenture;
(9) Investments by us or any of our Restricted Subsidiaries in a Person, if
as a result of such Investment
(i) such Person becomes our Restricted Subsidiary or
(ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys all or substantially all of its
assets to, or is liquidated into, our company or our
Restricted Subsidiary;
(10) additional Investments having an aggregate fair market value, taken
together with all other Investments made pursuant to this clause (10)
that are at the time outstanding, not exceeding $5 million at the time
of such Investment (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent
changes in value), plus an amount equal to (i) 100% of the aggregate net
cash proceeds received by us from any Person (other than our Subsidiary)
from the issuance and sale subsequent to the Issue Date of our Qualified
Capital Stock (including Qualified Capital Stock issued upon the
conversion of convertible Indebtedness or in exchange for outstanding
Indebtedness or as capital contributions to us (other than from a
Subsidiary) ) and (ii) without duplication of any amounts included in
clause (10) (i) above, 100% of the aggregate net cash proceeds of any
equity contribution received by us from a holder of our Capital Stock,
that in the case of amounts described in clause (10) (i) or (10) (ii)
are applied by us within 180 days after receipt, to make additional
Permitted Investments under this clause (10) (such additional Permitted
Investments being referred to collectively as "Stock Permitted
Investments");
(11) any Investment by us or our Restricted Subsidiary in a Receivables
Entity or any Investment by a Receivables Entity in any other Person in
connection with a Qualified Receivables Transaction, including
investments of funds held in accounts permitted or required by the
arrangements governing such Qualified Receivables Transaction or any
related Indebtedness; provided that any Investment in a Receivables
Entity is in the form of a Purchase Money Note, contribution of
additional Receivables or an equity interest;
(12) Investments received by us or our Restricted Subsidiaries as
consideration for asset sales, including Asset Sales; provided in the
case of an Asset Sale,
(i) such Investment does not exceed 25% of the consideration
received for such Asset Sale and
(ii) such Asset Sale is otherwise effected in compliance with the
"Limitation on Asset Sales" covenant;
(13) Investments by us or our Restricted Subsidiaries in Joint Ventures in
an aggregate amount not in excess of $25 million; and
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(14) that portion of any Investment where the consideration provided by us
is our Capital Stock (other than Disqualified Capital Stock). Any net
cash proceeds that are used by us or any of our Restricted Subsidiaries
to make Stock Permitted Investments pursuant to clause (10) of this
definition shall not be included in subclauses (x) and (y) of clause (3)
of the first paragraph of the "Limitation on Restricted Payments"
covenant.
"Permitted Liens" means the following types of Liens:
(1) Liens securing the Notes;
(2) Liens securing Acquired Indebtedness incurred in reliance on clause (8)
of the definition of Permitted Indebtedness; provided that such Liens do
not extend to or cover any of our or any of our Restricted Subsidiaries'
property or assets other than the property or assets that secured the
Acquired Indebtedness prior to the time such Indebtedness became our or
our Restricted Subsidiary's Acquired Indebtedness;
(3) Liens existing on the Issue Date, together with any Liens securing
Indebtedness incurred in reliance on clause (11) of the definition of
Permitted Indebtedness in order to refinance the Indebtedness secured by
Liens existing on the Issue Date; provided that the Liens securing the
refinancing Indebtedness shall not extend to property other than that
pledged under the Liens securing the Indebtedness being refinanced;
(4) Liens in favor of us on the property or assets, or any proceeds, income
or profit therefrom, of any Restricted Subsidiary; and
(5) other Liens securing Senior Subordinated Indebtedness, provided that
the maximum aggregate amount of outstanding obligations secured thereby
shall not at any time exceed $5 million.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof or any other entity.
"Plan" means any employee benefit plan, retirement plan, deferred
compensation plan, restricted stock plan, health, life, disability or other
insurance plan or program, employee stock purchase plan, employee stock
ownership plan, pension plan, stock option plan or similar plan or arrangement
of us or any of our Subsidiaries, or other successor plan thereof, and "Plans"
shall have a correlative meaning.
"Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"Principal" means Thomas H. Lee Company and its Affiliates.
"Productive Assets" means assets (including Capital Stock of a Person that
directly or indirectly owns assets) of a kind used or usable in our and our
Restricted Subsidiaries' businesses as, or related to such business, conducted
on the date of the relevant Asset Sale.
"Purchase Money Note" means a promissory note of a Receivables Entity
evidencing a line of credit, which may be irrevocable, from us or any of our
Subsidiaries in connection with a Qualified Receivables Transaction to a
Receivables Entity, which note (a) shall be repaid from cash available to the
Receivables Entity, other than
(1) amounts required to be established as reserves pursuant to agreements,
(2) amounts paid to investors in respect of interest,
(3) principal and other amounts owing to such investors and amounts owing
to such investors and
(4) amounts paid in connection with the purchase of newly generated
receivables, and
(b) may be subordinated to the payments described in (a).
"Qualified Capital Stock" means any stock that is not Disqualified Capital
Stock.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by us or any of our Subsidiaries pursuant
to which we or any or our Subsidiaries may sell, convey or
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otherwise transfer to (a) a Receivables Entity (in the case of a transfer by us
or any of our Subsidiaries) and (b) any other Person (in the case of a transfer
by a Receivables Entity), or may grant a security interest in, any of our or any
of our Subsidiaries' accounts receivable (whether now existing or arising in the
future), and any assets related thereto including, without limitation, all
collateral securing such accounts receivable, all contracts and all guarantees
or other obligations in respect of such accounts receivable, proceeds of such
accounts receivable and other assets which are customarily transferred or in
respect of which security interests are customarily granted in connection with
asset securitization transactions involving accounts receivable. The grant of a
security interest in any of our or any of our Restricted Subsidiaries' accounts
receivable to secure Bank Indebtedness shall not be deemed a Qualified
Receivables Transaction.
"Recapitalization" means the transactions contemplated by the Merger
Agreement, together with the financings therefor.
"Receivables Entity" means any Wholly Owned Subsidiary (or another Person
in which we or any of our Subsidiaries make an Investment and to which we or any
of our Subsidiaries transfer accounts receivable and related assets) that
engages in no activities other than in connection with the financing of accounts
receivable, all proceeds thereof and all rights (contractual or other),
collateral and other assets relating thereto, and any business or activities
incidental or related to such business, and which is designated by our Board of
Directors (as provided below) as a Receivables Entity
(a) no portion of the Indebtedness or any other Obligations (contingent or
otherwise) of which
(i) is guaranteed by us or any of our Subsidiaries (excluding
guarantees of Obligations (other than the principal of, and
interest on, Indebtedness) pursuant to Standard Securitization
Undertakings),
(ii) is recourse to or obligates us or any of our Subsidiaries in
any way other than pursuant to Standard Securitization
Undertakings or
(iii) subjects any of our or any of our Subsidiaries' property or
asset, directly or indirectly, contingently or otherwise, to
the satisfaction thereof, other than pursuant to Standard
Securitization Undertakings,
(b) with which neither we nor any of our Subsidiaries have any material
contract, agreement, arrangement or understanding other than on terms
which the Company reasonably believes to be no less favorable to us or
such Subsidiary than those that might be obtained at the time from
Persons that are not our Affiliates, other than fees payable in the
ordinary course of business in connection with servicing accounts
receivable, and
(c) to which neither we nor any of our Subsidiaries have any obligation to
maintain or preserve such entity's financial condition or cause such
entity to achieve certain levels of operating results other than through
the contribution of additional Receivables, related security and
collections thereto and proceeds of the foregoing.
Any such designation by our Board of Directors shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the resolution of our
Board of Directors giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions.
"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Indebtedness; provided that
if, and for so long as, any Designated Senior Indebtedness lacks such a
representative, then the Representative for such Designated Senior Indebtedness
shall at all times constitute the holders of a majority in outstanding
principal amount of such Designated Senior Indebtedness in respect of any
Designated Senior Indebtedness.
"Restricted Subsidiary" of any Person means any Subsidiary of such Person
which at the time of determination is not an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Service, a division of The
McGraw-Hill Companies, Inc., and its successors.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to us or a Restricted Subsidiary of any property, whether
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owned by us or any Restricted Subsidiary at the Issue Date or later acquired,
which has been or is to be sold or transferred by us or such Restricted
Subsidiary to such Person or to any other Person from whom funds have been or
are to be advanced by such Person on the security of such Property.
"Secured Indebtedness" means any of our Indebtedness secured by a Lien.
"Senior Indebtedness" means (i) the Bank Indebtedness and (ii) all of our
Indebtedness, including interest thereon (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating
to us or any of our Restricted Subsidiaries whether or not a claim for
post-filing interest is allowed in such proceedings), whether outstanding on
the Issue Date or thereafter incurred, unless in the instrument creating or
evidencing the same or pursuant to which the same is outstanding it is
expressly provided that such obligations are not superior in right of payment
to the Notes; provided, however, that Senior Indebtedness shall not include
(1) any of our obligations to any of our Subsidiaries,
(2) any liability for Federal, state, local or other taxes owed or owing by
us,
(3) any accounts payable or other liability to trade creditors arising in
the ordinary course of business (including guarantees thereof or
instruments evidencing such liabilities),
(4) any of our Indebtedness that is expressly subordinate in right of
payment to any other of our Indebtedness, including any Senior
Subordinated Indebtedness and any Subordinated Obligations,
(5) any obligations with respect to any Capital Stock or
(6) that portion of any Indebtedness incurred in violation of the Indenture
provisions set forth under "Limitation on Incurrence of Additional
Indebtedness" (but, as to any such obligation, no such violation shall
be deemed to exist for purposes of this clause (6) if the holder(s) of
such obligation or their representative and the Trustee shall have
received from us an Officers' Certificate to the effect that the
incurrence of such Indebtedness does not (or, in the case of revolving
credit Indebtedness, that the incurrence of the entire committed amount
thereof at the date on which the initial borrowing thereunder is made
would not) violate such provisions of the Indenture).
"Senior Subordinated Indebtedness" means the Notes, the Existing Notes and
any of our other Indebtedness that specifically provides that such Indebtedness
is to rank pari passu with the Notes and is not by its express terms
subordinate in right of payment to any of our Indebtedness that is not Senior
Indebtedness.
"Significant Subsidiary" means, as of any date of determination, for any
Person, each Restricted Subsidiary of such Person which
(i) for the most recent fiscal year of such Person accounted for more than
10% of consolidated revenues or consolidated net income of such Person or
(ii) as at the end of such fiscal year, was the owner of more than 10% of
the consolidated assets of such Person.
"Standard Securitization Undertakings" means representations, warranties,
covenants and indemnities entered into by us or any of our Subsidiaries which
we reasonably believe to be customary in an accounts receivable transaction.
"Subordinated Obligation" means any of our Indebtedness (whether
outstanding on the Issue Date or thereafter incurred) that is expressly
subordinate in right of payment to the Notes pursuant to a written agreement.
"Subsidiary" means, with respect to any Person,
(i) any corporation of which the outstanding Capital Stock having at least
a majority of the votes entitled to be cast in the election of directors
under ordinary circumstances shall at the time be owned, directly or
indirectly, by such Person or
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(ii) any other Person of which at least a majority of the voting interest
under ordinary circumstances is at the time, directly or indirectly,
owned by such Person.
"Subsidiary Guarantor" means any Restricted Subsidiary that executes and
delivers a supplemental Indenture pursuant to the "Limitation on Guarantees by
Restricted Subsidiaries" covenant.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519)
which has become publicly available at least two business days prior to the
date fixed for prepayment (or, if such Statistical Release is no longer
published, any publicly available source of similar market data)) most nearly
equal to the then remaining term to February 1, 2003; provided, however, that
if the then remaining term to February 1, 2003 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average
yields of United States Treasury securities for which such yields are given,
except that if the then remaining term to February 1, 2003 is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be sued.
"Unrestricted Subsidiary" of any Person means
(i) any Subsidiary of such Person that at the time of determination shall
be or continue to be designated an Unrestricted Subsidiary by the Board
of Directors of such Person in the manner provided below and
(ii) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary owns any of our Capital Stock, or owns or holds any Lien on any
of our property or the property of any of our other Subsidiaries that is not a
Subsidiary of the Subsidiary to be so designated; provided that (x) we certify
to the Trustee that such designation complies with the "Limitation on
Restricted Payments" covenant and (y) each Subsidiary to be so designated and
each of its Subsidiaries has not at the time of designation, and does not
thereafter, create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable with respect to any Indebtedness pursuant to
which the lender has recourse to any of our assets or assets of any of our
Restricted Subsidiaries. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary only if (x) immediately after giving
effect to such designation and treating all Indebtedness of such Unrestricted
Subsidiary as being incurred on such date, we are able to incur at least $1.00
of additional Indebtedness (other than Permitted Indebtedness) in compliance
with the "Limitation on Incurrence of Additional Indebtedness" covenant and (y)
immediately before and immediately after giving effect to such designation, no
Default or Event of Default shall have occurred and be continuing. Any such
designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution giving effect to such
designation and an officers' certificate certifying that such designation
complied with the foregoing provisions.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing
(a) the then outstanding aggregate principal amount of such Indebtedness
into
(b) the sum of the total of the products obtained by multiplying
(i) the amount of each then remaining installment, sinking fund, serial
maturity or other required payment of principal, including payment at final
maturity, in respect thereof, by
(ii) the number of years (calculated to the nearest one-twelfth) which
will elapse between such date and the making of such payment.
"Wholly Owned Subsidiary" means any of our Restricted Subsidiaries all the
outstanding voting securities of which (other than directors' qualifying shares
or an immaterial amount of shares required to be owned by other Persons
pursuant to applicable law) are owned, directly or indirectly, by us.
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BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the New Notes will be issued in fully
registered form. Except as described below, the New Notes initially will be
represented by a single, global Note, in definitive, fully registered form
without interest coupons (the "Global Note") and will be deposited with the
Trustee as custodian for DTC and registered in the name of Cede & Co. or such
other nominee as DTC may designate.
DTC has advised the Company as follows.
o DTC is a limited purpose trust company organized under the laws of the
State of New York, a "banking organization" within the meaning of the
New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the Uniform Commercial Code
and a "clearing agency" registered pursuant to the provision of Section
17A of the Exchange Act.
o DTC was created to hold securities for its participants and to
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 ("indirect participants").
o Upon the issuance of the Global Note, DTC or its custodian will credit,
on its internal system, the respective principal amounts of the New
Notes represented by such Global Note to the accounts of persons who
have accounts with DTC. Ownership of beneficial interests in the Global
Note will be limited to persons who have accounts with DTC
("participants") or persons who hold interests through participants.
Ownership of beneficial interests in the Global Note will be shown on,
and the transfer of that ownership will be effected only through,
records maintained by DTC or its nominee, with respect to interests of
participants, and the records of participants, with respect to interests
of persons other than participants.
So long as DTC or its nominee is the registered owner or holder of the
Global Note, DTC or such nominee, as the case may be, will be considered the
sole record owner or holder of the New Notes represented by such Global Note
for all purposes under the Indenture and the New Notes. No beneficial owners of
an interest in the Global Note will be able to transfer that interest except in
accordance with DTC's applicable procedures, in addition to those provided for
under the Indenture. Owners of beneficial interests in the Global Note will not
(1) be entitled to have the New Notes represented by such Global Note
registered in their names, (2) receive or be entitled to receive physical
delivery of certificated Notes in definitive form and (3) be considered to be
the owners or holders of any New Notes under the Global Note. Accordingly, each
person owning a beneficial interest in the Global Note must rely on the
procedures of DTC and, if such person is not a participant, on the procedures
of the participant through which such person owns its interests, to exercise
any right of a holder of New Notes under the Global Note. We understand that
under existing industry practice, in the event an owner of a beneficial
interest in the Global Note desires to take any action that DTC, as the holder
of the Global Note, is entitled to take, DTC would authorize the participants
to take such action, and that the participants would authorize beneficial
owners owning through such participants to take such action or would otherwise
act upon the instructions of beneficial owners owning through them.
Payments of the principal of, premium, if any, and interest on the New
Notes represented by the Global Note will be made to DTC or its nominee, as the
case may be, as the registered owner of the Global Note. Neither we, the
Trustee, nor any paying agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Note or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
We expect that DTC or its nominee, upon receipt of any payment of
principal of, premium, if any, or interest in respect of the Global Note will
credit participants' accounts with payments in amounts proportionate to their
respective beneficial ownership interests in the principal amount of such
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 such Global Note
held through such participants will be governed by standing
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instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such participants.
Transfer between participants in DTC will be effected in the ordinary way
in accordance with DTC rules. If a holder requires physical delivery of Notes
in certificated form ("Certificated Notes") for any reason, including to sell
Notes to persons in states which require such delivery of such Notes or to
pledge such Notes, such holder must transfer its interest in the Global Note,
in accordance with the normal procedures of DTC and the procedures set forth in
the Indenture.
Unless and until they are exchanged in whole or in part for certificated
New Notes in definitive form, the Global Note may not be transferred except as
a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another
nominee of DTC.
Beneficial owners of New Notes registered in the name of DTC or its
nominee will be entitled to be issued, upon request, New Notes in definitive
certificated form.
DTC has advised us that DTC will take any action permitted to be taken by
a holder of Notes--including the presentation of Notes for exchange as
described below--only at the direction of one or more participants to whose
account the DTC interests in the Global Note are credited, and only in respect
of such portion of the aggregate principal amount of Notes as to which such
participant or participants has or have given such direction.
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 such procedures, and such 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.
Subject to certain conditions, any person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial
interest for New Notes in the form of Certificated Notes. Upon any such
issuance, the Trustee is required to register such Certificated Notes in the
name of, and cause the same to be delivered to, such person or persons, or the
nominee of any such persons. In addition, if DTC is at any time unwilling or
unable to continue as a depositary for the Global Note, and a successor
depositary is not appointed by us within 90 days, we will issue Certificated
Notes in exchange for the Global Note.
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EXCHANGE OFFER; REGISTRATION RIGHTS
We entered into a registration rights agreement with the Initial
Purchasers pursuant to which we agreed, for the benefit of the holders of the
Old Notes, at our cost, to use our best efforts:
o to file with the Commission the Exchange Offer Registration Statement
with respect to the Exchange Offer for the New Notes by February 18,
1999;
o to cause the Exchange Offer Registration Statement to be declared
effective under the Securities Act by May 19, 1999;
o to keep the Exchange Offer Registration Statement effective until the
closing of the Exchange Offer; and
o to cause the Exchange Offer to be consummated by June 18, 1999.
Promptly after the Exchange Offer Registration Statement has been declared
effective, we will offer the New Notes in exchange for surrender of the Old
Notes. We will keep the Exchange Offer open for not less than 30 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. For each Old Note validly
tendered to us pursuant to the Exchange Offer and not withdrawn by the holder
of such Old Note, such holder will receive a New Note having a principal amount
equal to that of the tendered Old Note. Interest on each New Note will accrue
from the last interest payment date on which interest was paid on the tendered
Old Note in exchange for a New Note or, if no interest has been paid on such
Old Note, from the date of the original issue of the Old Note.
Based on an interpretation of the Securities Act by the staff of the
Commission set forth in several no-action letters to third parties, and subject
to the immediately following sentence, we believe that the New Notes issued
pursuant to the Exchange Offer may be offered for resale, resold and otherwise
transferred by holders of such New Notes without further compliance with the
registration and prospectus delivery provisions of the Securities Act. However,
any purchaser of Old Notes who is an "affiliate" of ours or who intends to
participate in the Exchange Offer for the purpose of distributing the New Notes
(1) will not be able to rely on the interpretation by the staff of the
Commission set forth in the above referenced no-action letters, (2) will not be
able to tender Old Notes in the Exchange Offer and (3) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or transfer of the Notes, unless such sale or transfer
is made pursuant to an exemption from such requirements.
Each holder of the Old Notes who wishes to exchange Old Notes for New
Notes in the Exchange Offer will be required to make certain representations,
including that
o it is neither our affiliate nor a broker-dealer tendering Notes acquired
directly from us for its own account;
o any New Notes to be received by it were acquired in the ordinary course
of its business; and
o at the time of commencement of the Exchange Offer, it has no
arrangement with any person to participate in the distribution (within
the meaning of the Securities Act) of the New Notes.
In addition, in connection with any resales of New Notes, any
participating broker-dealer who acquired the New Notes for its own account as a
result of market-making activities or other trading activities must deliver a
prospectus meeting the requirements of the Securities Act. The Commission has
taken the position that participating broker-dealers may fulfill their
prospectus delivery requirements with respect to the New Notes, other than a
resale of an unsold allotment from the original sale of the Old Notes, with the
prospectus contained in the Exchange Offer Registration Statement. Under the
Registration Rights Agreement, we are required to allow participating
broker-dealers and other persons, if any, subject to similar prospectus
delivery requirements to use the prospectus contained in the Exchange Offer
Registration Statement in connection with the resale of such New Notes.
In the event that (1) any changes in law or the applicable interpretations
of the
staff of the Commission do not permit us to effect the Exchange Offer,
or (2) if for any other reason the Exchange Offer registration statement is not
declared effective by May 19, 1999, or (3) the Exchange Offer is not
consummated by
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June 18, 1999, or (4) upon the request of any of the Initial Purchasers, or (5)
if a holder of the Old Notes is not permitted by applicable law to participate
in the Exchange Offer or elects to participate in the Exchange Offer but does
not receive fully tradable New Notes pursuant to the Exchange Offer, we will, in
lieu of effecting the registration of the New Notes pursuant to the Exchange
Offer Registration Statement and at our cost:
(a) as promptly as practicable, file with the Commission the Shelf
Registration Statement covering resales of the Transfer Restricted Notes (as
defined in this prospectus),
(b) use our best efforts to cause the Shelf Registration Statement to be
declared effective under the Securities Act by May 19, 1999, or within 30 days
of the request by any Initial Purchaser, and
(c) use our best efforts to keep effective the Shelf Registration
Statement for a period of two years after its effective date, or for such
shorter period that will terminate when all of the Notes covered by the Shelf
Registration Statement have been sold pursuant thereto or cease to be
outstanding.
We will, in the event of the filing of a Shelf Registration Statement, (1)
provide to each holder of the Notes copies of the prospectus which is a part of
the Shelf Registration Statement, (2) notify each such holder when the Shelf
Registration Statement for the Notes has become effective and (3) take certain
other actions as are required to permit unrestricted resales of the Notes. A
holder of Notes who sells such Notes pursuant to the Shelf Registration
Statement generally will be (1) required to be named as a selling
securityholder in the related prospectus, (2) required to deliver the
prospectus to purchasers, (3) subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and (4) bound
by the provisions of the Registration Rights Agreement which are applicable to
such a holder, including certain indemnification obligations.
For purposes of the foregoing, "Transfer Restricted Notes" means each Old
Note until (1) the date on which such Note has been exchanged for a freely
transferable New Note in the Exchange Offer, (2) the date on which such Note
has been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (3) the date on which such
Note is distributed to the public pursuant to Rule 144 under the Securities Act
or is saleable pursuant to Rule 144(k).
In the event that (1) the Exchange Offer Registration Statement is not
filed with the Commission on or prior to February 18, 1999, (2) the Exchange
Offer Registration Statement is not declared effective on or prior to May 19,
1999 or (3) the Exchange Offer is not consummated on or prior to June 18, 1999
or a Shelf Registration Statement is not declared effective on or prior to May
19, 1999 (or, if a Shelf Registration Statement is required to be filed because
of the request by any Initial Purchaser, 30 days following the request by any
such Initial Purchaser that we file the Shelf Registration Statement) (each
such event referred to in clauses (1) through (3) above, a "Registration
Default"), we will generally be obligated to pay liquidated damages to each
holder of Transfer Restricted Securities, during the period of such
Registration Default, in an amount equal to $0.192 per week per $1,000 amount
of the Old Notes constituting Transfer Restricted Securities held by such
holder until (a) the applicable registration statement is filed or declared
effective, (b) the Exchange Offer is consummated or (c) the Shelf Registration
Statement becomes effective, as the case may be. All accrued liquidated damages
shall be paid to holders in the same manner as interest payments on the Old
Notes on semi-annual payment dates which correspond to interest payment dates
for the Old Notes. Following the cure of all Registration Defaults, the accrual
of liquidated damages will cease.
Interest on each New Note will accrue from November 20, 1998 or from the
most recent interest payment date to which interest was paid on the Old Note
surrendered in exchange for the New Note or on the New Note, as the case may
be. The New Notes will bear interest at 9% per annum, except that, if any
interest accrues on the New Notes in respect of any period prior to their
issuance, such interest will accrue at the rate or rates borne by the Notes
from time to time during such period.
The summary in this prospectus of certain provisions of the Registration
Rights Agreement does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the
Registration Rights Agreement, which is filed as an exhibit to the Registration
Statement to which this prospectus forms a part.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain United States federal
income tax consequences of the exchange of Old Notes for New Notes pursuant to
the Exchange Offer and the ownership and disposition of the New Notes. This
summary applies only to a beneficial owner of an Old Note who acquired such Old
Note at the initial offering for the original offering price thereof and who
acquires a New Note pursuant to the Exchange Offer. This discussion is based on
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury regulations promulgated thereunder, and administrative and judicial
interpretations thereof, all as in effect on the date hereof and all of which
are subject to change, possibly with retroactive effect. This discussion does
not address the tax consequences to subsequent purchasers of New Notes and is
limited to holders who will hold the New Notes as capital assets. Furthermore,
this discussion does not address all aspects of United States federal income
taxation that may be applicable to holders in light of their particular
circumstances, or to holders subject to special treatment under United States
federal income tax law (including, without limitation, certain financial
institutions, insurance companies, tax-exempt entities, dealers in securities,
persons who hold Old Notes or will hold New Notes as part of a straddle, hedge,
conversion transaction or other integrated investment or persons whose
functional currency is not the United States dollar).
Each holder should consult its tax advisor as to the particular tax
consequences to such holder of the exchange of Old Notes for New Notes pursuant
to the Exchange Offer and the ownership and disposition of the New Notes,
including the applicability of any federal, state, local or foreign tax laws,
any changes in applicable tax laws and any pending or proposed legislation or
regulations.
United States Taxation of United States Holders
As used herein, (A) the term "United States Holder" means, with respect to
an Old Note or a New Note, a beneficial owner of such Note that is, for United
States federal income tax purposes, (1) a citizen or resident of the United
States, (2) a corporation or partnership created or organized in or under the
laws of the United States or of any political subdivision thereof, (3) an
estate the income of which is subject to United States federal income taxation
regardless of its source and (4) a trust if a United States court is able to
exercise primary supervision over the administration of such trust and one or
more United States persons have the authority to control all substantial
decisions of such trust and (B) the term "Non-U.S. Holder" means a beneficial
owner of an Old Note or a New Note that is not a United States Holder.
Exchange Offer
The exchange of an Old Note for a New Note pursuant to the Exchange Offer
will not constitute a "significant modification" of the Old Note for United
States federal income tax purposes and, accordingly, the New Note received will
be treated as a continuation of the Old Note in the hands of such holder. As a
result, there will be no United States federal income tax consequences to a
United States Holder who exchanges an Old Note for a New Note pursuant to the
Exchange Offer and any such holder will have the same adjusted tax basis and
holding period in the New Note as it had in the Old Note immediately before the
exchange.
Payments of Interest
Stated interest payable on the New Notes generally will be included in the
gross income of a United States Holder as ordinary interest income at the time
accrued or received, in accordance with such United States Holder's method of
accounting for United States federal income tax purposes.
Original Issue Discount
For United States federal income tax purposes, the New Notes will be
issued with original issue discount. Accordingly, a United States Holder
(regardless of whether such holder is a cash or accrual basis taxpayer) will be
required to include original issue discount in gross income as it accrues, in
accordance with a constant yield method over the period the New Note is held
(in addition to the inclusion of stated interest, as discussed above).
The amount of original issue discount that will accrue in the aggregate
with respect to a New Note will be the excess of the stated redemption price at
maturity of such New Note over its issue price. The stated
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redemption price at maturity of a New Note generally will equal the sum of the
principal amount of such New Note and all payments required to be made
thereunder, other than payments of "qualified stated interest" (defined
generally as stated interest that is unconditionally payable at least annually
at a single fixed rate that appropriately takes into account the length of
intervals between payments). Stated interest payable on the New Notes will
constitute qualified stated interest. The issue price of a New Note generally
will equal $965 (per U.S. $1,000 principal amount).
A United States Holder's adjusted tax basis in a New Note will be
increased by the amount of any original issue discount included in such
holder's gross income.
Liquidated Damages
The Company intends to take the position that the payment of any
liquidated damages is an "incidental contingency" within the meaning of
Treasury regulations applicable to debt instruments that provide for one or
more contingent payments and, accordingly, a United States Holder generally
should include a payment of liquidated damages in income as ordinary income
when such payment is received. Such position is binding on a United States
Holder unless such holder discloses to the Internal Revenue Service (the "IRS")
that it is taking a contrary position.
Disposition of the New Notes
Upon the sale, exchange, retirement at maturity or other taxable
disposition of a New Note (collectively, a "disposition"), a United States
Holder generally will recognize capital gain or loss equal to the difference
between the amount realized by such holder (except to the extent such amount is
attributable to accrued interest, which will be treated as ordinary interest
income) and such holder's adjusted tax basis in the New Note. Such capital gain
or loss will be long-term capital gain or loss if such United States Holder's
holding period for the New Note exceeds one year at the time of the
disposition.
United States Taxation of Non-U.S. Holders
Payments of Interest
In general, payments of interest (including any original issue discount)
received or accrued by a Non-U.S. Holder will not be subject to United States
federal income or withholding tax, provided that (1)(a) the Non-U.S. Holder
does not actually or constructively own 10% or more of the total combined
voting power of all classes of stock of the Company entitled to vote, (b) the
Non-U.S. Holder is not a controlled foreign corporation that is related to the
Company actually or constructively through stock ownership, and (c) the
beneficial owner of the New Note, under penalty of perjury, either directly or
through a financial institution which holds the New Note on behalf of the
Non-U.S. Holder and holds customers' securities in the ordinary course of its
trade or business, provides the Company or its agent with the beneficial
owner's name and address and certifies, under penalty of perjury, that it is
not a United States Holder, (2) the interest received on the New Note is
effectively connected with the conduct by the Non-U.S. Holder of a trade or
business within the United States and the Non-U.S. Holder complies with certain
reporting requirements; or (3) the Non-U.S. Holder is entitled to the benefits
of an income tax treaty under which the interest is exempt from United States
withholding tax and the Non-U.S. Holder complies with certain reporting
requirements. Payments of interest not exempt from United States federal
withholding tax as described above will be subject to such withholding tax at
the rate of 30% (subject to reduction under an applicable income tax treaty).
Disposition of the New Notes
A Non-U.S. Holder generally will not be subject to United States federal
income tax (and generally no tax will be withheld) with respect to gain
realized on the disposition of a New Note, unless (1) the gain is effectively
connected with a United States trade or business conducted by the Non-U.S.
Holder or (2) the Non-U.S. Holder is an individual who is present in the United
States for 183 or more days during the taxable year of the disposition and
certain other requirements are satisfied. In addition, an exchange of an Old
Note for a New Note pursuant to the Exchange Offer will not constitute a
taxable exchange of the Old Note for Non-U.S. Holders. See "--United States
Taxation of United States Holders--Exchange Offer."
Effectively Connected Income
If interest and other payments received by a Non-U.S. Holder with respect
to the New Notes (including proceeds from the disposition of the New Notes) are
effectively connected with the conduct by the Non-U.S. Holder of a trade or
business within the United States (or the Non-U.S. Holder is otherwise subject
to United
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States federal income taxation on a net basis with respect to such holder's
ownership of the New Notes), such Non-U.S. Holder will generally be subject to
the rules described above under "United States Taxation of United States
Holders" (subject to any modification provided under an applicable income tax
treaty). Such Non-U.S. Holder may also be subject to the "branch profits tax"
if such holder is a corporation.
Backup Withholding and Information Reporting
Certain non-corporate United States Holders may be subject to backup
withholding at a rate of 31% on payments of principal, premium and interest on,
and the proceeds of the disposition of, the New Notes. In general, backup
withholding will be imposed only if the United States Holder (1) fails to
furnish its taxpayer identification number ("TIN"), which, for an individual,
would be his or her Social Security number, (2) furnishes an incorrect TIN, (3)
is notified by the IRS that it has failed to report payments of interest or
dividends or (4) under certain circumstances, fails to certify, under penalty
of perjury, that it has furnished a correct TIN and has been notified by the
IRS that it is subject to backup withholding tax for failure to report interest
or dividend payments. In addition, such payments of principal and interest to
United States Holders will generally be subject to information reporting.
United States Holders should consult their tax advisors regarding their
qualification for exemption from backup withholding and the procedure for
obtaining such an exemption, if applicable.
Backup withholding generally will not apply to payments made to a Non-U.S.
Holder of a New Note who provides the certification described under "United
States Taxation of Non-U.S. Holders--Payments of Interest" or otherwise
establishes an exemption from backup withholding. Payments by a United States
office of a broker of the proceeds of a disposition of the New Notes generally
will be subject to backup withholding at a rate of 31% unless the Non-U.S.
Holder certifies it is a Non-U.S. Holder under penalty of perjury or otherwise
establishes an exemption.
The amount of any backup withholding imposed on a payment to a holder of a
New Note will be allowed as a credit against such holder's United States
federal income tax liability and may entitle such holder to a refund, provided
that the required information is furnished to the IRS.
New Treasury Regulations
New final Treasury regulations governing information reporting and the
certification procedures regarding withholding and backup withholding on
certain amounts paid to Non-U.S. Holders after December 31, 1999, generally
would not alter the treatment of Non-U.S. Holders described above. The new
Treasury regulations would alter the procedures for claiming the benefits of an
income tax treaty and may change the certification procedures relating to the
receipt by intermediaries of payments on behalf of a beneficial owner of a New
Note. Holders should consult their tax advisors concerning the effect, if any,
of such new Treasury regulations on an investment in the New Notes.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. For a period of 180 days after the Expiration Date, we will
make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. In addition, until
May 16, 1999--90 days from the date of this prospectus--all dealers effecting
transactions in the New Notes may be required to deliver a prospectus.
We will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions (1) in the over-the-counter market, (2) in negotiated
transactions, (3) through the writing of options on the New Notes or (4) a
combination of such methods of resale, (a) at market prices prevailing at the
time of resale, (b) at prices related to such prevailing market prices or (c)
negotiated prices. Any such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such broker-dealer or the purchasers of any
such New Notes. Any 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. Any profit on any such
resale of New Notes and any commission or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that, by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests such documents in the Letter of
Transmittal. We have agreed to pay all expenses incident to the Exchange Offer,
including the expenses of one counsel for the holders of the Notes, other than
commissions or concessions of any brokers or dealers. We also will indemnify
the holders of the Notes, including any broker-dealers, against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Notes offered by this prospectus will be passed
upon for us by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference from Fisher's Annual Report on Form 10-K for the year ended December
31, 1997 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
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We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must not
rely on unauthorized information. This prospectus does not offer to sell or buy
any shares in any jurisdiction where it is unlawful. The information in this
prospectus is current as of February 16, 1999. However, you should realize that
our affairs may have changed since the date of this prospectus.
------------------------------
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
Forward-Looking Statements ......................... i
Available Information .............................. i
Incorporation of Certain Documents by
Reference ....................................... ii
Summary ............................................ 1
Risk Factors ....................................... 13
Use of Proceeds .................................... 20
Capitalization ..................................... 21
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ...................................... 22
The Exchange Offer ................................. 33
Management ......................................... 40
Security Ownership of Certain Beneficial
Owners and Management ........................... 43
Description of Other Indebtedness .................. 45
Description of the Notes ........................... 48
Book-Entry; Delivery and Form ...................... 79
Exchange Offer; Registration Rights ................ 81
Certain Federal Income Tax Considerations .......... 83
Plan of Distribution ............................... 86
Legal Matters ...................................... 86
Experts ............................................ 86
</TABLE>
$200,000,000
<GRAPHIC OMITTED>
9% Senior Subordinated
Notes due 2008
-------------------------------------------------
PROSPECTUS
-------------------------------------------------
February 16, 1999
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law authorizes and
empowers the Registrant to indemnify the directors, officers, employees and
agents of the Registrant against liabilities incurred in connection with, and
related expenses resulting from, any claim, action or suit brought against any
such person as a result of his relationship with the Registrant, provided that
such persons acted in good faith and in a manner such person reasonably
believed to be in, and not opposed to, the best interests of the Registrant in
connection with the acts or events on which such claim, action or suit is
based. The finding of either civil or criminal liability on the part of such
persons in connection with such acts or events is not necessarily determinative
of the question of whether such persons have met the required standard of
conduct and are, accordingly, entitled to be indemnified. The foregoing
statements are subject to the detailed provisions of Section 145 of the General
Corporation Law of the State of Delaware.
The Registrant's Restated Certificate of Incorporation provides that each
person who at any time is or shall have been a director or officer of the
Registrant, or is or shall have been serving another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise in any capacity
at the request of the Registrant, and his heirs, executors and administrators,
shall be indemnified by the Company in accordance with and to the full extent
permitted by the General Corporation Law of the State of Delaware. Section 15
of the Registrant's Restated Certificate of Incorporation facilitates
enforcement of indemnification rights by establishing the indemnification right
as a contract right pursuant to which the person entitled thereto may bring
suit as if the indemnification provisions of the Restated Certificate of
Incorporation were set forth in a separate written contract between the
Registrant and the director or officer.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits. The following is a list of Exhibits to this Registration
Statement:
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
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<S> <C>
3.1 -- Certificate of Designation of Series A Junior Participating Preferred Stock, dated
June 9, 1997. (1)
3.2 -- Restated Certificate of Incorporation of the Company. (2)
3.3 -- Bylaws of the Company. (3)
4.1 -- Indenture dated as of November 20, 1998 between Fisher Scientific International Inc. and State
Street Bank and Trust Company N.A.+
4.2 -- Senior Debt Securities Indenture dated as of December 18, 1995 between the Company and
Mellon Bank, N.A., as Trustee. (2)
4.3 -- Certificate of Designation of Series A Junior Participating Preferred Stock, dated June 9, 1997
(see Exhibit 3.1).
4.4 -- Rights Agreement dated as of June 9, 1997, between the Company and ChaseMellon
Shareholder Services L.L.P., as Rights Agent, which includes the form of Right Certificate as
Exhibit A and the Summary of Rights to Purchase Common Shares as Exhibit B. (4)
4.5 -- First Amendment to Rights Agreement, dated as of August 7, 1997, between the Company and
ChaseMellon Shareholder Services, L.L.C. (5)
4.6 -- Commitment Letters in connection with the Recapitalization. (6)
4.7 -- Specimen Certificate of Common Stock, $.01 par value per share, of the Company. (7)
5.1 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding legality of securities being
registered.+
10.1 -- Registration Rights Agreement dated as of November 20, 1998 among the Company and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Chase Securities Inc. and Donaldson,
Lufkin & Jenrette Securities Corporation.+
</TABLE>
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<TABLE>
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10.2 -- Second Amended and Restated Agreement and Plan of Merger, dated as of November 14, 1997,
by and between the Company and FSI Merger Corp. (6)
10.3 -- Investors' Agreement dated January 21, 1998 among (i) Thomas H. Lee Equity Fund III, L.P.,
certain individuals associated with THL, THL-CCI Limited Partnership, THL Foreign Fund III,
L.P., and THL FSI Equity Investors, L.P. (collectively, the "THL Entities"), (ii) DLJ Merchant
Banking Partners II, L.P., DLJ Offshore Partners II, C.V., DLJ Diversified Partners, L.P.,
DLJMB Funding II, Inc., DLJ Merchant Banking Partners II-A, L.P., DLJ Diversified Partners-
A, L.P., DLJ Millenium Partners, L.P., DLJ Millenium Partners, A, L.P., UK Investment Plan
1997 Partners DLJ EAB Partners, L.P., DLJESC II, L.P. and DLJ First ESC, L.P. (collectively,
the "DLJ Entities"), (iii) Chase Equity Associates, L.P. ("Chase Equity") and (iv) Merrill Lynch
KECALP L.P. 1997, KECALP Inc., and ML IBK Positions, Inc. (1)
10.4 -- Credit Agreement dated as of January 21, 1998 among the Company, certain subsidiaries of the
Company, various lending institutions, The Chase Manhattan Bank, as Administrative Agent,
The Chase Manhattan Bank of Canada, as Canadian Administrative Agent, Chase Manhattan
International Limited, as U.K. Administrative Agent, Merrill Lynch Capital Corporation, as
Syndication Agent, and DLJ Capital Funding, Inc., as Documentation Agent. (8)
10.5 -- Amended and Restated Employment Agreement, dated January 21, 1998 between the Company
and Paul M. Meister. (9)
10.6 -- Amended and Restated Employment Agreement, dated January 21, 1998 between the Company
and Paul M. Montrone. (9)
10.7 -- Rights Agreement dated as of June 9, 1997, between the Company and ChaseMellon
Shareholder Services L.L.P., as Rights Agent, which includes the form of Right Certificate as
Exhibit A and the Summary of Rights to Purchase Common Shares as Exhibit B (see Exhibit 4.4).
10.8 -- First Amendment to Rights Agreement, dated as of August 7, 1997, between the Company and
ChaseMellon Shareholder Services, L.L.C. (see Exhibit 4.4).
10.9 -- Second Amended and Restated Agreement and Plan of Merger, dated as of November 14, 1997,
by and between the Company and FSI Merger Corp. (see Exhibit 10.1).
10.10 -- Commitment Letters in connection with the Transaction. (6)
10.11 -- Restated Environmental Matters Agreement, dated as of February 26, 1986, as amended and
restated as of July 28, 1989, among Allied-Signal Inc., The Henley Group, Inc., The
Wheelabrator Group Inc., New Hampshire Oak, Inc. and Fisher Scientific Group Inc. (7)
10.12 -- Amended and Restated Credit Agreement dated as of February 12, 1996, amending and
restating the Term Loan and Revolving Credit Agreement, dated as of October 16, 1995 among
Fisher Scientific International Inc., Certain Commercial Lending Institutions and Toronto
Dominion (Texas), Inc. (10)
10.13 -- Amendment No. 1 dated February 12, 1996 to the Term Loan Agreement, dated October 16,
1995 among Fisher Scientific International Inc., Fisher Scientific U.K. Limited, Certain
Commercial Lending Institutions and The Toronto Dominion Bank. (10)
10.14 -- 1991 Stock Plan for Executive Employees of Fisher Scientific International Inc. and its
Subsidiaries. (11)
10.15 -- Fisher Scientific International Inc. Retirement Plan. (3)
10.16 -- Fisher Scientific International Inc. Savings and Profit Sharing Plan. (3)
10.17 -- Fisher Scientific International Inc. Incentive Compensation Plan. (10)
10.18 -- Fisher Scientific International Inc. Deferred Compensation Plan for Non-Employee
Directors. (3)
10.19 -- Retirement Plan for Non-Employee Directors of Fisher Scientific International Inc. (3)
10.20 -- Fisher Scientific International Inc. Long-Term Incentive Plan. (11)
</TABLE>
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<TABLE>
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10.21 -- Fisher Scientific International Inc. 1998 Equity and Incentive Plan. (1)
10.22 -- Stock Purchase Agreement, dated November 9, 1998, among Fisher Scientific International Inc.,
Fisher Scientific Holdings France S.A., and Capiac, Sapaca 97, Sapcar 97, Sappi 97, Sappef 97,
Pierre Block, Anne-Catherine Block-Derriey, Pierre-Francois Block, Caroline Block and Marthe
Block.+
10.23 -- Letter Agreement, dated December 2, 1998, between Fisher Scientific International Inc. and
Pierre Block, on behalf of the sellers and sellers' guarantors named in the Stock Purchase
Agreement listed above as Exhibit 10.22, amending the Stock Purchase Agreement.+
12.1 -- Statements re: Computation of Ratios.+
21.1 -- List of Subsidiaries of the Company. (12)
23.1 -- Consent of Deloitte & Touche LLP.*
23.2 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP.--(included in Exhibit 5.1).
24.1 -- Powers of attorney (included on signature page to registration statement).+
25.1 -- Statement of Eligibility under the Trust Indenture Act of 1939 of State Street Bank and Trust
Company on Form T-1.+
99.1 -- Form of Letter of Transmittal.+
99.2 -- Form of Notice of Guaranteed Delivery.+
99.3 -- Form of Letter to Clients.+
99.4 -- Form of Letter to Brokers, Dealers, Trust Companies and Other Nominees.+
</TABLE>
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* Filed herewith
+ Filed previously as an exhibit to this Registration Statement.
(1) Included as an exhibit to the Company's Registration Statement on Form S-4
(Registration No. 333-42777) filed with the Securities and Exchange
Commission on December 19, 1997 and amended on February 2, 1998.
(2) Included as an exhibit to the Company's Registration Statement on Form S-3
(Registration No. 3-99884) filed with the Securities and Exchange
Commission on November 30, 1995 and incorporated herein by reference.
(3) Included in an exhibit to the Company's Form 10-K for the year ended
December 31, 1992, filed with the Securities and Exchange Commission on
March 24, 1993 and incorporated herein by reference.
(4) Included as an exhibit to the Company's Registration Statement on Form 8-A
filed with the Securities and Exchange Commission on June 9, 1997 and
incorporated herein by reference.
(5) Included as an exhibit to the Company's Current Report on Form 8-K dated
August 7, 1997, filed with the Securities and Exchange Commission on
August 8, 1997 and incorporated herein by reference.
(6) Included as an Annex to the proxy statement/prospectus included in the
Company's Registration Statement on Form S-4 (Registration No. 333-42777)
filed with the Securities and Exchange Commission on December 19, 1997 and
amended on February 2, 1998.
(7) Included as an exhibit to the Company's Registration Statement on Form S-1
(Registration No. 33-43505) filed with the Securities and Exchange
Commission on October 23, 1991 and incorporated herein by reference.
(8) Included as an exhibit to the Company's Current Report on Form 8-K
(Registration No. 001-10920) filed with the Securities and Exchange
Commission on February 5, 1998.
(9) Included as an exhibit to the Company's Form 10-K/A for the year ended
December 31, 1997, filed with the Securities and Exchange Commission on
April 17, 1998 and incorporated herein by reference.
(10) Included in an exhibit to the Company's Form 10-K for the year ended
December 31, 1995, filed with the Securities and Exchange Commission on
March 21, 1996 and incorporated herein by reference.
(11) Included in an exhibit to the Company's Form 10-K for the year ended
December 31, 1994, filed with the Securities and Exchange Commission on
March 24, 1995 and incorporated herein by reference.
(12) Included as an exhibit to the Company's Form 10-K for the year ended
December 31, 1996, filed with the Securities and Exchange Commission on
March 27, 1997 and incorporated herein by reference.
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Item 22. Undertakings.
The undersigned Registrant hereby undertakes as follows:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) For purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) Insofar as indemnification 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 referred to in Item 20 of
this registration statement, 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 Act and is, therefore, unen-
forceable. 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 of whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(6) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to the
request.
(7) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it
became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Hampton,
State of New Hampshire on the 16th day of February, 1999.
Fisher Scientific International Inc.
By: /s/ Robert J. Gagalis
-------------------------------------
Robert J. Gagalis
Vice President and Treasurer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on its behalf by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------- ------------------------------------- ------------------
<S> <C> <C>
* Chairman of the Board, February 16, 1999
- ----------------------------- Chief Executive Officer and Director
Paul M. Montrone (principal executive officer)
* Vice Chairman of the Board, February 16, 1999
- ----------------------------- Executive Vice President,
Paul M. Meister Chief Financial Officer
and Director (principal financial
and accounting officer)
* Director February 16, 1999
- -----------------------------
Mitchell J. Blutt
* Director February 16, 1999
- -----------------------------
Robert A. Day
* Director February 16, 1999
- -----------------------------
Michael D. Dingman
* Director February 16, 1999
- -----------------------------
Anthony J. DiNovi
* Director February 16, 1999
- -----------------------------
David V. Harkins
* Director February 16, 1999
- -----------------------------
Scott M. Sperling
* Director February 16, 1999
- -----------------------------
Kent R. Weldon
*By: /s/ Robert J. Gagalis Attorney-in-fact February 16, 1999
-------------------------
Robert J. Gagalis
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------
<S> <C>
3.1 -- Certificate of Designation of Series A Junior Participating Preferred Stock, dated
June 9, 1997. (1)
3.2 -- Restated Certificate of Incorporation of the Company. (2)
3.3 -- Bylaws of the Company. (3)
4.1 -- Indenture dated as of November 20, 1998 between Fisher Scientific International Inc. and State
Street Bank and Trust Company N.A.+
4.2 -- Senior Debt Securities Indenture dated as of December 18, 1995 between the Company and
Mellon Bank, N.A., as Trustee. (2)
4.3 -- Certificate of Designation of Series A Junior Participating Preferred Stock, dated June 9, 1997
(see Exhibit 3.1).
4.4 -- Rights Agreement dated as of June 9, 1997, between the Company and ChaseMellon
Shareholder Services L.L.P., as Rights Agent, which includes the form of Right Certificate as
Exhibit A and the Summary of Rights to Purchase Common Shares as Exhibit B. (4)
4.5 -- First Amendment to Rights Agreement, dated as of August 7, 1997, between the Company and
ChaseMellon Shareholder Services, L.L.C. (5)
4.6 -- Commitment Letters in connection with the Recapitalization. (6)
4.7 -- Specimen Certificate of Common Stock, $.01 par value per share, of the Company. (7)
5.1 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding legality of securities being
registered.+
10.1 -- Registration Rights Agreement dated as of November 20, 1998 among the Company and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Chase Securities Inc. and Donaldson,
Lufkin & Jenrette Securities Corporation.+
10.2 -- Second Amended and Restated Agreement and Plan of Merger, dated as of November 14, 1997,
by and between the Company and FSI Merger Corp. (6)
10.3 -- Investors' Agreement dated January 21, 1998 among (i) Thomas H. Lee Equity Fund III, L.P.,
certain individuals associated with THL, THL-CCI Limited Partnership, THL Foreign Fund III,
L.P., and THL FSI Equity Investors, L.P. (collectively, the "THL Entities"), (ii) DLJ Merchant
Banking Partners II, L.P., DLJ Offshore Partners II, C.V., DLJ Diversified Partners, L.P.,
DLJMB Funding II, Inc., DLJ Merchant Banking Partners II-A, L.P., DLJ Diversified Partners-
A, L.P., DLJ Millenium Partners, L.P., DLJ Millenium Partners, A, L.P., UK Investment Plan
1997 Partners DLJ EAB Partners, L.P., DLJESC II, L.P. and DLJ First ESC, L.P. (collectively,
the "DLJ Entities"), (iii) Chase Equity Associates, L.P. ("Chase Equity") and (iv) Merrill Lynch
KECALP L.P. 1997, KECALP Inc., and ML IBK Positions, Inc. (1)
10.4 -- Credit Agreement dated as of January 21, 1998 among the Company, certain subsidiaries of the
Company, various lending institutions, The Chase Manhattan Bank, as Administrative Agent,
The Chase Manhattan Bank of Canada, as Canadian Administrative Agent, Chase Manhattan
International Limited, as U.K. Administrative Agent, Merrill Lynch Capital Corporation, as
Syndication Agent, and DLJ Capital Funding, Inc., as Documentation Agent. (8)
10.5 -- Amended and Restated Employment Agreement, dated January 21, 1998 between the Company
and Paul M. Meister. (9)
10.6 -- Amended and Restated Employment Agreement, dated January 21, 1998 between the Company
and Paul M. Montrone. (9)
10.7 -- Rights Agreement dated as of June 9, 1997, between the Company and ChaseMellon
Shareholder Services L.L.P., as Rights Agent, which includes the form of Right Certificate as
Exhibit A and the Summary of Rights to Purchase Common Shares as Exhibit B (see Exhibit 4.4).
</TABLE>
II-6
<PAGE>
<TABLE>
<S> <C>
10.8 -- First Amendment to Rights Agreement, dated as of August 7, 1997, between the Company and
ChaseMellon Shareholder Services, L.L.C. (see Exhibit 4.4).
10.9 -- Second Amended and Restated Agreement and Plan of Merger, dated as of November 14, 1997,
by and between the Company and FSI Merger Corp. (see Exhibit 10.1).
10.10 -- Commitment Letters in connection with the Transaction. (6)
10.11 -- Restated Environmental Matters Agreement, dated as of February 26, 1986, as amended and
restated as of July 28, 1989, among Allied-Signal Inc., The Henley Group, Inc., The
Wheelabrator Group Inc., New Hampshire Oak, Inc. and Fisher Scientific Group Inc. (7)
10.12 -- Amended and Restated Credit Agreement dated as of February 12, 1996, amending and
restating the Term Loan and Revolving Credit Agreement, dated as of October 16, 1995 among
Fisher Scientific International Inc., Certain Commercial Lending Institutions and Toronto
Dominion (Texas), Inc. (10)
10.13 -- Amendment No. 1 dated February 12, 1996 to the Term Loan Agreement, dated October 16,
1995 among Fisher Scientific International Inc., Fisher Scientific U.K. Limited, Certain
Commercial Lending Institutions and The Toronto Dominion Bank. (10)
10.14 -- 1991 Stock Plan for Executive Employees of Fisher Scientific International Inc. and its
Subsidiaries. (11)
10.15 -- Fisher Scientific International Inc. Retirement Plan. (3)
10.16 -- Fisher Scientific International Inc. Savings and Profit Sharing Plan. (3)
10.17 -- Fisher Scientific International Inc. Incentive Compensation Plan. (10)
10.18 -- Fisher Scientific International Inc. Deferred Compensation Plan for Non-Employee
Directors. (3)
10.19 -- Retirement Plan for Non-Employee Directors of Fisher Scientific International Inc. (3)
10.20 -- Fisher Scientific International Inc. Long-Term Incentive Plan. (11)
10.21 -- Fisher Scientific International Inc. 1998 Equity and Incentive Plan. (1)
10.22 -- Stock Purchase Agreement, dated November 9, 1998, among Fisher Scientific International Inc.,
Fisher Scientific Holdings France S.A., and Capiac, Sapaca 97, Sapcar 97, Sappi 97, Sappef 97,
Pierre Block, Anne-Catherine Block-Derriey, Pierre-Francois Block, Caroline Block and Marthe
Block.+
10.23 -- Letter Agreement, dated December 2, 1998, between Fisher Scientific International Inc. and
Pierre Block, on behalf of the sellers and sellers' guarantors named in the Stock Purchase
Agreement listed above as Exhibit 10.22, amending the Stock Purchase Agreement.+
12.1 -- Statements re: Computation of Ratios.+
21.1 -- List of Subsidiaries of the Company. (12)
23.1 -- Consent of Deloitte & Touche LLP.*
23.2 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP.--(included in Exhibit 5.1).
24.1 -- Powers of attorney (included on signature page to registration statement).+
25.1 -- Statement of Eligibility under the Trust Indenture Act of 1939 of State Street Bank and Trust
Company on Form T-1.+
99.1 -- Form of Letter of Transmittal.+
99.2 -- Form of Notice of Guaranteed Delivery.+
99.3 -- Form of Letter to Clients.+
99.4 -- Form of Letter to Brokers, Dealers, Trust Companies and Other Nominees.+
</TABLE>
- ------------
* Filed herewith
+ Filed previously as an exhibit to this Registration Statement.
(1) Included as an exhibit to the Company's Registration Statement on Form S-4
(Registration No. 333-42777) filed with the Securities and Exchange
Commission on December 19, 1997 and amended on February 2, 1998.
(2) Included as an exhibit to the Company's Registration Statement on Form S-3
(Registration No. 3-99884) filed with the Securities and Exchange
Commission on November 30, 1995 and incorporated herein by reference.
(3) Included in an exhibit to the Company's Form 10-K for the year ended
December 31, 1992, filed with the Securities and Exchange Commission on
March 24, 1993 and incorporated herein by reference.
(4) Included as an exhibit to the Company's Registration Statement on Form 8-A
filed with the Securities and Exchange Commission on June 9, 1997 and
incorporated herein by reference.
(5) Included as an exhibit to the Company's Current Report on Form 8-K dated
August 7, 1997, filed with the Securities and Exchange Commission on
August 8, 1997 and incorporated herein by reference.
II-7
<PAGE>
(6) Included as an Annex to the proxy statement/prospectus included in the
Company's Registration Statement on Form S-4 (Registration No. 333-42777)
filed with the Securities and Exchange Commission on December 19, 1997 and
amended on February 2, 1998.
(7) Included as an exhibit to the Company's Registration Statement on Form S-1
(Registration No. 33-43505) filed with the Securities and Exchange
Commission on October 23, 1991 and incorporated herein by reference.
(8) Included as an exhibit to the Company's Current Report on Form 8-K
(Registration No. 001-10920) filed with the Securities and Exchange
Commission on February 5, 1998.
(9) Included as an exhibit to the Company's Form 10-K/A for the year ended
December 31, 1997, filed with the Securities and Exchange Commission on
April 17, 1998 and incorporated herein by reference.
(10) Included in an exhibit to the Company's Form 10-K for the year ended
December 31, 1995, filed with the Securities and Exchange Commission on
March 21, 1996 and incorporated herein by reference.
(11) Included in an exhibit to the Company's Form 10-K for the year ended
December 31, 1994, filed with the Securities and Exchange Commission on
March 24, 1995 and incorporated herein by reference.
(12) Included as an exhibit to the Company's Form 10-K for the year ended
December 31, 1996, filed with the Securities and Exchange Commission on
March 27, 1997 and incorporated herein by reference.
II-8
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-71317 of Fisher Scientific International Inc. on
Form S-4 of our report dated February 18, 1998 (March 9, 1998 as to Note 2),
appearing in the Annual Report on Form 10-K of Fisher Scientific International
Inc. for the year ended December 31, 1997 and to the reference to us under the
heading "Experts" in the Prospectus, which is part of such Registration
Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
New York, New York
February 16, 1999
