<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 6, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
PHYSICIAN SALES & SERVICE, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 5047 59-2280364
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation)
DIAGNOSTIC IMAGING, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 5047 59-1608817
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation)
PSS DELAWARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 5047 51-0370961
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation)
PSS HOLDING, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 5047 59-3475761
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation)
PSS PHYSICIAN SERVICES, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 5047 59-2280364
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation)
PSS RHODE ISLAND, INC.
(Exact name of registrant as specified in its charter)
RHODE ISLAND 5047 05-0475209
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation)
PSS SERVICE, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 5047 59-3448733
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation)
<PAGE>
PSS TEXAS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 5047 59-3085754
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation)
PHYSICIAN SALES & SERVICE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
FLORIDA 5047 59-3475763
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation)
STANDARD/CRESCENT CITY SURGICAL SUPPLIES, INC.
(Exact name of registrant as specified in its charter)
LOUISIANA 5047 72-0869631
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation)
S&W X-RAY, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 5047 16-1010210
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation)
4345 SOUTHPOINT BOULEVARD
JACKSONVILLE, FLORIDA 32216
(904) 332-3000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
PATRICK C. KELLY
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
PHYSICIAN SALES & SERVICE, INC.
4345 SOUTHPOINT BOULEVARD
JACKSONVILLE, FLORIDA 32216
(904) 332-3000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
J. VAUGHAN CURTIS, ESQ. FRED ELEFANT, ESQ.
KIMBERLY A. KNIGHT, ESQ. GENERAL COUNSEL
ALSTON & BIRD LLP PHYSICIAN SALES & SERVICE, INC.
ONE ATLANTIC CENTER 1650 PRUDENTIAL DRIVE
1201 WEST PEACHTREE STREET SUITE 105
ATLANTA, GEORGIA 30309-3424 JACKSONVILLE, FLORIDA 32207
(404) 881-7000 (904) 398-2277
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
<PAGE>
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed
Title of each class maximum Proposed maximum
of securities Amount to be offering price aggregate offering Amount of
to be registered registered per note(1) price(1) registration fee(1)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
8 1/2% Senior
Subordinated Notes due
2007 of Physician Sales
& Service, Inc. $125,000,000 100% $125,000,000 $37,879
- --------------------------------------------------------------------------------------------
Guarantees of Diagnostic
Imaging, Inc. None(2)
- --------------------------------------------------------------------------------------------
Guarantees of PSS
Delaware, Inc. None(2)
- --------------------------------------------------------------------------------------------
Guarantees of PSS
Holding, Inc. None(2)
- --------------------------------------------------------------------------------------------
Guarantees of PSS
Physician Services,
Inc. None(2)
- --------------------------------------------------------------------------------------------
Guarantees of PSS Rhode
Island, Inc. None(2)
- --------------------------------------------------------------------------------------------
Guarantees of PSS
Service, Inc. None(2)
- --------------------------------------------------------------------------------------------
Guarantees of PSS Texas,
Inc. None(2)
- --------------------------------------------------------------------------------------------
Guarantees of Physician
Sales & Service Limited
Partnership None(2)
- --------------------------------------------------------------------------------------------
Guarantees of
Standard/Crescent City
Surgical Supplies,
Inc. None(2)
- --------------------------------------------------------------------------------------------
Guarantees of S&W X-Ray,
Inc. None(2)
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f) on the basis of the value of the senior
subordinated notes to be received by the registrant pursuant to the
Exchange Offer described herein on the estimated date of exchange, ,
1997.
(2)No further fee is payable pursuant to Rule 457(n).
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OF SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED NOVEMBER , 1997
PROSPECTUS
OFFER FOR ANY AND ALL OUTSTANDING
8 1/2% SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR 8 1/2% SENIOR SUBORDINATED NOTES DUE 2007,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
PHYSICIAN SALES & SERVICE, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , UNLESS EXTENDED.
Physician Sales & Service, Inc., a Florida corporation (the "Company"), is
hereby offering, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal (the "Letter of
Transmittal," which together with this Prospectus constitutes the "Exchange
Offer"), to issue $125,000,000 aggregate principal amount of its 8 1/2% Senior
Subordinated Notes due 2007 (the "Exchange Notes"), in exchange for a like
principal amount of the issued and outstanding 8 1/2% Senior Subordinated Notes
due 2007 of the Company (the "Private Notes," and together with the Exchange
Notes, the "Notes").
The Private Notes were sold by the Company on October 7, 1997 to BT Alex.
Brown Incorporated, Salomon Brothers Inc. and NationsBanc Montgomery
Securities, Inc. (the "Initial Purchasers") in a transaction not registered
under the Securities Act of 1933, as amended (the "Securities Act"), in
reliance upon an exemption under the Securities Act (the "Initial Offering").
The Initial Purchasers subsequently placed the Private Notes (i) with Qualified
Institutional Buyers, within the United States, in reliance upon Rule 144A
under the Securities Act and (ii) to a limited number of institutional
"accredited investors," within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act, that agreed in writing to comply with certain
transfer restrictions and other conditions. Accordingly, the Private Notes may
not be reoffered or otherwise transferred in the United States or to U.S.
Persons (as defined in Regulation S under the Securities Act) unless registered
under the Securities Act or unless an applicable exemption from the
registration requirements of the Securities Act is available. The Private Notes
are designated for trading in the Private Offering, Resales and Trading through
Automated Linkages ("PORTAL") Market of the National Association of Securities
Dealers, Inc. and are eligible for resale pursuant to Rule 144A under the
Securities Act. After the Exchange Offer, the Private Notes that remain
outstanding will continue to be subject to the restrictions on transfer
contained in the legend thereon and may not be offered or sold except pursuant
to an exemption from, or in a transaction not subject to the registration
requirements of, the Securities Act.
There is no established trading market for the Exchange Notes. The Initial
Purchasers have advised the Company that they presently intend to make a market
in the Exchange Notes as permitted by applicable laws and regulations. The
Initial Purchasers are not obligated, however, to make a market in the Exchange
Notes and any market-making may be discontinued at any time in the sole
discretion of the Initial Purchasers. The Company does not presently intend to
list the Exchange Notes on any securities exchange or to seek approval for
quotation through any automated quotation system. Accordingly, no assurance can
be given as to the liquidity of, or trading markets for, the Exchange Notes or
that a market for the Exchange Notes will develop. See "Risk Factors-- Absence
of Established Trading Market." To the extent that a market for the Exchange
Notes does develop, the market value of the Exchange Notes will depend on
market conditions (such as yields on alternative investments, general economic
conditions, the Company's financial condition and other conditions). Such
conditions might cause the Exchange Notes, to the extent that they are actively
traded, to trade at a significant discount from face value.
The terms of the Exchange Notes are identical in all material respects to the
Private Notes, except that (i) the Exchange Notes will bear a different CUSIP
Number from the Private Notes, (ii) the issuance of the Exchange Notes will
have been registered under the Securities Act and, therefore, the Exchange
Notes will not bear legends restricting the transfer thereof, and (iii) holders
of the Exchange Notes will not be entitled to certain rights of holders of
Private Notes under the Registration Rights Agreement. The Exchange Notes will
evidence the same debt as the Private Notes (which they replace) and will be
issued under and be entitled to the benefits
<PAGE>
of the Indenture (the "Indenture"), dated as of October 7, 1997, by and among
the Company, the Subsidiary Guarantors named therein and SunTrust Bank,
Central Florida, National Association, as Trustee (the "Trustee" or the
"Exchange Agent"). See "The Exchange Offer" and "Description of Exchange
Notes."
Interest on the Exchange Notes will accrue from the date of original
issuance, i.e. October 7, 1997 (the "Issue Date") thereof, payable semi-
annually on each of April 1 and October 1 of each year, commencing April 1,
1998 at the rate of 8 1/2% per annum. Holders whose Private Notes are accepted
for exchange will be deemed to have waived the right to receive any interest
accrued on the Private Notes.
The Exchange Notes will be redeemable, in whole or in part, at the option of
the Company, on or after October 1, 2002, at the redemption prices set forth
herein plus accrued and unpaid interest, if any, to the date of redemption. In
addition, at any time, or from time to time, on or prior to October 1, 2000,
the Company, at its option, may redeem, up to 40% of the aggregate principal
amount of the Notes originally issued, with the net cash proceeds received
from one or more Public Equity Offerings (as defined) by the Company at a
redemption price equal to 108.500% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of redemption; provided that
at least 60% of the original aggregate principal amount of the Notes
originally issued remains outstanding after any such redemption. Upon a Change
of Control (as defined), each holder of the Exchange Notes will have the right
to require the Company to repurchase such holder's Exchange Notes at a price
equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of repurchase. In addition, the Company will be
obligated to offer to repurchase the Exchange Notes at 100% of the principal
amount thereof plus accrued and unpaid interest to the date of repurchase in
the event of certain Asset Sales (as defined). See "Description of Exchange
Notes."
The Exchange Notes will be, and the Private Notes are, (i) general unsecured
obligations of the Company, (ii) subordinated in right of payment to all
existing and future Senior Indebtedness (as defined) and (iii) structurally
subordinated to all existing and future indebtedness of the Company's
subsidiaries that are not Subsidiary Guarantors (as defined). The Exchange
Notes will, and the Private Notes do, rank pari passu in right of payment with
any future senior subordinated indebtedness of the Company and rank senior in
right of payment to all other subordinated obligations of the Company. The
Exchange Notes will, and the Private Notes are, unconditionally guaranteed
(the "Guarantees") on a senior subordinated basis by the Company's domestic
subsidiaries ( the "Subsidiary Guarantors"). The Guarantees are and will be
general unsecured obligations of the Subsidiary Guarantors and are and will be
subordinated in right of payment to all existing and future Guarantor Senior
Indebtedness (as defined). The Guarantees will and do rank pari passu in right
of payment with all future senior subordinated indebtedness of the Subsidiary
Guarantors and will and do rank senior in right of payment to all other
subordinated obligations of the Subsidiary Guarantors. As of June 30, 1997,
the Company and its subsidiaries has an aggregate of $3.4 million of Senior
Indebtedness (including guarantees of $2.8 million of indebtedness of Foreign
Subsidiaries (as defined), but excluding unused commitments of $60.0 million
available under the Credit Facility (as defined)) which would rank senior to
the Notes.
----------------
SEE "RISK FACTORS" BEGINNING ON PAGE 15 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS PRIOR TO TENDERING THEIR PRIVATE NOTES.
----------------
The current offer and sale of the Exchange Notes are being registered under
the Registration Statement of which this Prospectus forms a part in order to
satisfy certain obligations of the Company contained in the Registration
Rights Agreement (the "Registration Rights Agreement"), dated as of October 7,
1997, between the Company and the Initial Purchasers, on behalf of the
original purchasers and subsequent transferees of the Private Notes. Based on
interpretations by the staff of the Securities and Exchange Commission (the
"Commission") set forth in certain "no-action" letters issued to third parties
and unrelated to the Company and the Exchange Offer, the Company believes that
Exchange Notes issued pursuant to the Exchange Offer in exchange for Private
Notes may be offered for resale, resold or otherwise transferred by holders
thereof (other than any such holder which is an "affiliate" of the Company
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 Exchange Notes are acquired in the ordinary course of
such holders' business and such holders have
ii
<PAGE>
no arrangement or understanding with any person to participate in the
distribution of such Exchange Notes in violation of the provisions of the
Securities Act. See "The Exchange Offer--Resale of the Exchange Notes."
Holders of Private Notes wishing to accept the Exchange Offer must represent
to the Company, as required by the Registration Rights Agreement, that such
conditions have been met. A broker-dealer holding Private Notes may
participate in the Exchange Offer provided that it acquired the Private Notes
for its own account as a result of market-making or other trading activities.
Each broker-dealer (a "Participating Broker-Dealer") that receives Exchange
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 Exchange
Notes. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection with resales
of Exchange Notes received in exchange for Private Notes where such Private
Notes were acquired by such Participating Broker-Dealer as a result of market-
making or other trading activities. The Company and the Subsidiary Guarantors
have agreed to make available, during the period required by the Securities
Act, a prospectus meeting the requirements of the Securities Act for use by
any Participating Broker-Dealer and other persons, if any, with similar
prospectus delivery requirements for use in connection with any such resale of
the Exchange Notes. See "The Exchange Offer--Purpose and Effect of the
Exchange Offer" and "Plan of Distribution."
The Company will accept for exchange Private Notes validly tendered prior to
5:00 p.m., New York City time, on , 1997, unless extended by the Company in
its sole discretion (the "Expiration Date"). Tenders of Private Notes may be
withdrawn at any time prior to the Expiration Date. The Exchange Offer is
subject to certain customary conditions, but is not conditioned upon any
minimum aggregate principal amount of Private Notes being tendered for
exchange. See "The Exchange Offer--Certain Conditions to Exchange Offer."
The Company will not receive any proceeds from the Exchange Offer. Pursuant
to the Registration Rights Agreement, the Company will pay all the expenses
incident to the Exchange Offer (other than any underwriting discounts or
commissions). In the event the Company terminates the Exchange Offer and does
not accept for exchange any Private Notes, the Company will promptly return
the Private Notes to the holders thereof. The "Exchange Offer."
----------------
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF PRIVATE NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE SUBSIDIARY GUARANTORS. NEITHER THE DELIVERY
OF THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, NOR ANY EXCHANGE
MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS TO ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
UNTIL , 1997 ( DAYS AFTER COMMENCEMENT OF THE EXCHANGE OFFER), ALL
DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT
PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A
iii
<PAGE>
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
PROSPECTIVE INVESTORS IN THE EXCHANGE NOTES ARE NOT TO CONSTRUE THE CONTENTS
OF THIS PROSPECTUS AS INVESTMENT, LEGAL OR TAX ADVICE. EACH INVESTOR SHOULD
CONSULT ITS OWN COUNSEL, ACCOUNTANT AND OTHER ADVISORS AS TO LEGAL, TAX,
BUSINESS, FINANCIAL AND RELATED ASPECTS OF THE EXCHANGE NOTES. NEITHER THE
COMPANY NOR ANY OF THE SUBSIDIARY GUARANTORS IS MAKING ANY REPRESENTATION TO
ANY PROSPECTIVE INVESTOR IN THE EXCHANGE NOTES REGARDING THE LEGALITY OF AN
INVESTMENT THEREIN BY SUCH PERSON UNDER APPROPRIATE LEGAL INVESTMENT OR
SIMILAR LAWS.
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE UNIFORM
SECURITIES ACT WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF THE STATE THAT ANY DOCUMENT
FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH
FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY
OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON
THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY
PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE,
TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION
INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
The date of this Prospectus is , 1997
iv
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. The reports, proxy statements and other information filed by the
Company with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and should be available at the
Commission's Regional Offices at 7 World Trade Center, 13th Floor, New York,
New York 10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois
60621 and at the offices of the Nasdaq National Market, 1735 K Street, N.W.,
Washington, D.C. 20006. Copies of such material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, the Commission
maintains a Web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.
Each purchaser of Notes from the Initial Purchasers will be furnished with a
copy of this Prospectus and any related amendments or supplements thereto.
Each person receiving this Prospectus acknowledges that (i) such person has
been afforded an opportunity to request from the Company, and to review and
has received, all additional information considered by it to be reasonably
necessary to verify the accuracy and completeness of the information herein
and which the Company possesses or can acquire without unreasonable effort or
expense, (ii) such person has not relied on the Initial Purchasers or any
person affiliated with the Initial Purchasers in connection with its
investigation of the accuracy of such information or its investment decision
and (iii) except as provided pursuant to clause (i) of this paragraph, no
person has been authorized to give any information or to make any
representation concerning the Notes offered hereby other than those contained
herein and, if given or made, such other information or representation should
not be relied upon as having been authorized by the Company or the Initial
Purchasers. While any Notes remain outstanding, the Company will make
available, upon request, to any holder and any prospective purchaser of Notes
the information required pursuant to Rule 144A(d)(4) under the Securities Act
during any period in which the Company is not subject to Section 13 or 15(d)
of the Exchange Act. Any such request should be directed to the Company at
4345 Southpoint Boulevard, Jacksonville, Florida, 32216 (904) 332-3000.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission are hereby
incorporated by reference in this Prospectus and made a part hereof:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
March 29, 1997 (including those portions of the Company's definitive proxy
statement for the Annual Meeting of Shareholders held on July 22, 1997
incorporated by reference therein, but specifically excluding Items 6, 7
and 8 thereof);
(b) the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1997; and
(c) the Company's Current Report on Form 8-K filed with the Commission on
November 6, 1997.
All reports and other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of this Exchange Offer shall be deemed
to be incorporated by reference herein and to be a part hereof from the date
of filing of such reports and documents. Any statement contained herein or
incorporated or deemed to be incorporated herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus. Neither the Company nor the Initial Purchasers will update this
Prospectus for events occurring subsequent to the date of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN EXHIBITS THERETO)
ARE AVAILABLE UPON REQUEST FROM DAVID A. SMITH, EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER, PHYSICIAN SALES & SERVICE, INC., 4345 SOUTHPOINT
BOULEVARD, JACKSONVILLE, FLORIDA 32216, (904) 332-3000. IN ORDER TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BEFORE ,
1997.
v
<PAGE>
SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial data including
the consolidated financial statements of the Company and its subsidiaries, and
the notes thereto, appearing elsewhere in this Prospectus. As used in this
Prospectus, unless the context otherwise requires, all references to "PSS" or
the "Company" include Physician Sales & Service, Inc. and its subsidiaries.
Certain statements in this Prospectus constitute forward-looking statements.
See "Cautionary Notice Regarding Forward-Looking Statements."
THE COMPANY
Physician Sales & Service, Inc. ("PSS" or the "Company") is a specialty
marketer and distributor of medical products to physicians, other alternate-
site providers and hospitals. PSS is the leading distributor of medical
supplies, equipment and pharmaceuticals to office-based physicians in the
United States based on revenues, serving over 104,000 physician offices
(representing approximately 54% of all physician offices) in all 50 states (the
"Physician Supply Business"). The Company, which entered the imaging-supply
market in November 1996, has grown to be the second-largest distributor of
imaging supplies and equipment in the United States based on revenues, serving
over 12,000 customer sites in 21 states (the "Imaging Business"). PSS also
distributes medical products to office-based physicians and hospitals in five
European countries (the "International Business"). PSS has grown rapidly in
recent years through acquisitions, same-center growth and new-center
development. Net sales and EBITDA (as defined) for the twelve months ended June
30, 1997 were $743.0 million and $32.8 million, respectively, up from $351.2
million and $12.2 million, respectively, in fiscal year 1994.
PSS employed over 800 highly trained sales representatives as of September
30, 1997, over 700 of which are focused on the physician-office market. This
large sales organization enables PSS to market medical products on a national
basis and has positioned the Company as a distributor of choice for
manufacturers whose products require consultative selling. PSS has established
exclusive or semi-exclusive distribution arrangements for certain products with
such leading manufacturers as Abbott Laboratories ("Abbott"), Siemens AG,
Hologic, Inc., C. R. Bard, Inc., HumaScan Inc. and F. Hoffman-La Roche Ltd. PSS
distributes over 39,000 medical products from 89 service centers, 64 of which
are focused on the physician-office market, located throughout the United
States and in Europe, enabling the Company to be highly responsive to local
market needs, including providing same-day delivery service to most customers
on a regular basis.
The Company believes that the United States medical-products distribution
market aggregates approximately $34 billion in annual revenues, of which
approximately $6.5 billion represents the physician-office market (of which
approximately $1 billion are imaging-related medical products) and the balance
represents the hospital, ambulatory surgery center, long term care and home
health care markets. The Company believes that the imaging-supply market is an
approximately $5 billion component of the overall medical-products distribution
industry, encompassing each of the hospital, physician and other provider
segments. Revenues of the medical-products distribution industry are estimated
to be growing as a result of a growing and aging population, increasing health
care awareness, and expanding third-party insurance coverage. In addition, the
physician market is benefiting from the shift of procedures and diagnostic
testing from hospitals to alternate sites, particularly physician offices.
The Company believes that in the United States there are approximately 300
companies serving the non-imaging physician-supply market and an additional
approximately 400 companies serving the imaging-supply market. The physician-
supply market has experienced rapid consolidation in recent years. The Company
believes that the imaging-supply market is in the early stages of
consolidation. The Company believes the consolidation in the physician-supply
and imaging-supply markets is occurring due to local and regional distributors
1
<PAGE>
experiencing: (i) a lack of purchasing and administrative economies of scale;
(ii) reduced access to medical equipment lines as manufacturers seek to reduce
marketing costs by minimizing the number of distributors they use; (iii)
consolidation among providers, who are increasingly seeking to reduce the
number of suppliers from which they purchase medical products; (iv) a lack of
resources for continued development and training of personnel for maintenance,
expansion or replacement of existing business; and (v) a lack of resources to
develop new distribution system technologies and services. PSS believes that,
based on its broad scope of operations, commitment to superior customer
service, strong information systems and expertise in integrating acquired
businesses, the Company is well positioned to lead the consolidation of the
medical-products distribution industry.
COMPETITIVE STRENGTHS
PSS has developed leading market positions in the physician-supply and
imaging-supply markets. The Company's competitive strengths are as follows:
Large, Highly Trained Sales Force. The Company's sales force represents the
largest medical-products distribution sales organization in the United States.
PSS focuses on attracting sales personnel with superior sales aptitude and on
extensive sales training. This large, highly trained sales force enables PSS to
call on a majority of its office-based physician customers in the United States
on a weekly basis and to sell technologically sophisticated, high-margin
products. Furthermore, this sales organization positions PSS to serve as a
preferred distribution channel for medical-products manufacturers that desire
to outsource the distribution function.
National Distribution Network. The Company has built a domestic network of 86
service centers, including 61 physician-supply service centers serving
physician offices in all 50 states and 25 imaging-supply service centers
serving customers in 21 states. The Company delivers to its customers directly
from these service centers using its own fleet of approximately 620 delivery
vans. This broad network allows the Company to provide its customers with high-
quality service, including same-day delivery to most customers on a regular
basis, and facilitates the Company's "no-hassle" return policy. In addition to
its United States distribution network, the Company operates three service
centers serving five European countries.
Broad Line of Medical Products. PSS offers over 39,000 medical products,
enabling the Company to address virtually all medical supply, equipment and
pharmaceutical needs of office-based physicians. The Company sells a wide
variety of products, ranging from cotton balls to hematology analyzers. This
broad product line enables the Company to be a one-stop shop for its office-
based physician customers. The Company's product line also includes private-
label products, known as the Penny Saver product line, which has enabled PSS to
reduce product-acquisition and inventory-carrying costs.
Exclusive Distribution Relationships. The Company believes that it is a
distributor of choice for medical-products manufacturers whose products require
consultative selling because the PSS sales force has the expertise to
understand and sell sophisticated medical products. For this reason, several
medical-products manufacturers have outsourced distribution of certain products
on an exclusive or semi-exclusive basis to PSS, including Abbott, Siemens AG,
Hologic, Inc., C. R. Bard, Inc., HumaScan Inc. and F. Hoffman-La Roche Ltd.
Sophisticated Information Systems. Through its ongoing commitment to
information technology, PSS has developed several systems designed to enhance
the Company's operating efficiency. The Company's Instant Customer Order
Network ("ICONSM") system enables sales representatives to access customer
information and place orders from any location using a wireless, pen-based,
hand-held computer system, resulting in increased selling and operating
efficiencies as well as an enhanced ability to provide same-day delivery. The
Company's Back-Order Eliminator and Allocator of Resources ("BEAR") system
allows PSS to optimize its inventory levels while maintaining high fill rates
on a consistent basis. During fiscal year 1997, PSS developed and test-
2
<PAGE>
marketed the CustomerLink system, an Internet-based system that allows
customers to place orders, obtain product and pricing information, and generate
working-capital management reports. Additionally, the Company is currently
implementing a delivery automation system that will generate optimized
delivery-routing schedules.
Acquisition Expertise. The Company has developed significant expertise in
effecting and integrating acquisitions. PSS has completed 40, nine, and four
acquisitions since fiscal year 1989 in its Physician Supply Business, Imaging
Business and International Business, respectively. Through these acquisitions,
the Company has developed efficient processes for integrating acquired
companies' information systems and personnel into its business and for
expanding acquired companies' service and product offerings. The Company
believes that its acquisition expertise will allow it to continue to be a
leading consolidator of the medical-products distribution market.
Proven Management Team. The Company's management team has demonstrated a
consistent ability to achieve rapid profitable growth. Management has
maintained an annualized same-store sales growth rate in excess of 13% in its
Physician Supply Business since 1993 and has expanded its EBITDA margin from
3.5% in fiscal year 1994 to 4.7% for the quarter ended June 30, 1997. The
Company has achieved this expansion of EBITDA margins despite the ongoing
integration of acquired businesses that typically have lower margins than those
of the Company.
STRATEGY
The Company's objectives are to be the leading distributor and marketer of
medical products to office-based physicians and providers of imaging services
in the United States, to expand its European medical supplies and equipment
business, and to enhance its operating performance. The key components of the
Company's strategy to achieve these objectives are to continue to:
Pursue Strategic Acquisitions. The Company has made 40, nine, and four
acquisitions since fiscal year 1989 in its Physician Supply Business, Imaging
Business, and International Business, respectively. Recently, the Company
acquired General X-Ray (as defined) and S&W X-Ray, Inc. ("S&W"), which had
approximately $147.6 million in revenues, collectively, for the twelve months
ended March 31, 1997. After consummating a merger or acquisition, the Company
begins an intensive process of converting the acquired company to PSS' business
model through information systems conversion, personnel development and
training, and service and product expansion. The Company intends to continue to
acquire local, regional, and other distributors in new and existing markets
where PSS can leverage its distribution infrastructure, expand its geographic
coverage and gain market share.
Enhance Selling Capabilities. The Company believes its sales force and
managers are its most valuable corporate assets. PSS focuses not only on the
recruitment of sales personnel with superior sales aptitude, but also on the
initial and continued development of its sales force through training at PSS
University, its in-house educational center. The Company believes that this
investment in personnel and training enables PSS to provide high-quality
service to its customers, offer a sophisticated product line, and attract
manufacturers that desire a means of rapidly bringing new products and
technology to market.
Offer a Broad Product Line Emphasizing Exclusive Products. PSS seeks to meet
all of the medical products needs of office-based physicians and providers of
imaging services. The Company currently stocks over 35,500 medical products in
its Physician Supply Business and over 3,500 medical products in its Imaging
Business. PSS also seeks to establish exclusive distribution and marketing
arrangements for selected products. In the United States, the Company currently
has exclusive or semi-exclusive marketing arrangements for certain products
with Abbott, Siemens AG, Hologic, Inc., C. R. Bard, Inc., HumaScan, Inc. and F.
Hoffman-La Roche Ltd. The Company believes that its sophisticated selling
efforts, highly trained sales force, and large customer
3
<PAGE>
base provide manufacturers with a unique sales channel through which to
distribute new and existing products that require consultative selling.
Provide Differentiated, High-Quality Service. The Company believes its
success to date has been based largely on its ability to provide superior
customer service, including same-day delivery and "no-hassle" returns. Unlike
its competitors, which generally ship products via common carrier, the Company
operates its own fleet of over 620 delivery vans, thus enabling the Company to
provide same-day delivery to virtually all of its customers. In addition, the
Company believes its consultative selling approach enables it to understand and
anticipate customer needs and that its information systems simplify and
expedite the ordering process.
Utilize Sophisticated Information Systems. In 1994, the Company implemented
ICONSM, an ordering and customer data system, with its Physician Supply
Business sales representatives. ICONSM has increased time available to sales
representatives for selling, decreased operating expenses, and increased PSS'
ability to provide same-day delivery. During fiscal year 1997, the Company
developed and test marketed CustomerLink, an Internet-based system for
inventory management and purchasing. PSS is also currently developing a
separate hardware and software system for the Imaging Business that will
incorporate CustomerLink and ICONSM. The Company intends to continue to develop
sophisticated information technology, which it believes is essential to its
continued success in integrating acquired businesses and increasing sales and
profitability.
Expand Operating Margins. The Company is pursuing several initiatives to
enhance its operating margins. With respect to sales, PSS is focusing its
efforts on higher-margin accounts and on sales of diagnostic equipment, often
on an exclusive or semi-exclusive basis, that involve ongoing sales of high-
margin reagents. With respect to its product line, PSS seeks to generate high
sales volumes of selected products and to obtain such products on a discounted
basis from manufacturers. Additionally, PSS has developed a private-label
product line, Penny Saver, which has enabled PSS to lower product-acquisition
and inventory-carrying costs. Finally, with respect to the Company's service
center expansion program, PSS intends in the future to emphasize acquisitions
over new-center development, avoiding the substantial start-up losses
associated with new-center development.
As a result of the successful implementation of this strategy, the Company
has grown rapidly and expanded operating margins over the past several years.
Net sales have increased at a compound annual rate of over 25.7% annually since
fiscal year 1994 to $743.0 million for the twelve months ended June 30, 1997.
During the twelve-month period ended June 30, 1997, PSS had EBITDA of $32.8
million, up from $12.2 million in fiscal year 1994. EBITDA margins have
increased from 3.5% in fiscal year 1994 to 4.7% in the quarter ended June 30,
1997.
RECENT DEVELOPMENTS
On July 21, 1997, the Company completed the acquisition of General X-Ray,
Inc., General Med Ventures, Inc. and General Med Ventures International, Inc.
(collectively "General X-Ray"), a distributor of radiology and imaging
equipment, chemicals and supplies and a provider of technical service to
hospitals and alternate-site providers. General X-Ray operated seven sites in
seven states, primarily in the Midwest, and had approximately $75.6 million in
revenues for the twelve months ended March 31, 1997.
On September 23, 1997, the Company completed the acquisition of S&W of
Rochester, New York, a distributor of radiology and imaging equipment,
chemicals and supplies, and a provider of technical services to hospitals and
alternate-site providers. S&W operated five locations which served four
Northeastern states and had approximately $72.0 million in revenues for the
twelve months ended March 31, 1997.
The transactions with General X-Ray and S&W will increase the Imaging
Business' market presence in the Midwest and Northeast, respectively, and
enable the Company to leverage its existing infrastructure and enhance its
buying power.
4
<PAGE>
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains and incorporates by reference certain "forward-
looking statements" within the meaning of Section 27A of the Securities Act and
Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act")
with respect to results of operations and businesses of the Company. All
statements other than statements of historical facts included in this
Prospectus, including those regarding market trends, the Company's financial
position, business strategy, projected costs, and plans and objectives of
management for future operations, are forward-looking statements. In general,
such statements are identified by the use of forward-looking words or phrases
including, but not limited to, "intended," "will," "should," "may," "expects,"
"expected," "anticipates," and "anticipated" or the negative thereof or
variations thereon or similar terminology. These forward-looking statements are
based on the Company's current expectations. Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable,
there can be no assurance that such expectations will prove to be correct.
Because forward-looking statements involve risks and uncertainties, the
Company's actual results could differ materially. Important factors that could
cause actual results to differ materially from the Company's expectations
("Cautionary Statements") are disclosed under "Risk Factors," and elsewhere in
this Prospectus including, without limitation, in conjunction with the forward-
looking statements included in this Prospectus. These forward-looking
statements represent the Company's judgment as of the date of this Prospectus.
All subsequent written and oral forward-looking statements attributable to the
Company or persons acting on behalf of the Company are expressly qualified in
their entirety by the Cautionary Statements. The Company disclaims, however,
any intent or obligation to update its forward-looking statements.
THE INITIAL OFFERING
Private Notes............... The Private Notes were sold by the Company on
October 7, 1997 to BT Alex. Brown Incorporated,
Salomon Brothers Inc. and NationsBanc Montgomery
Securities, Inc. (the "Initial Purchasers")
pursuant to a Purchase Agreement dated October 2,
1997 (the "Purchase Agreement"). The Initial
Purchasers subsequently resold the Private Notes
(i) within the United States to qualified
institutional buyers, in reliance upon Rule 144A
under the Securities Act and (ii) to a limited
number of institutional "accredited investors"
that agreed in writing to comply with certain
transfer restrictions and other conditions.
Registration Rights Pursuant to the Purchase Agreement, the Company,
Agreement.................. the Subsidiary Guarantors and the Initial
Purchasers entered into the Registration Rights
Agreement, which grants the holders of the
Private Notes certain exchange and registration
rights. The Exchange Offer is intended to satisfy
such exchange rights which terminate upon the
consummation of the Exchange Offer.
THE EXCHANGE OFFER
Securities Offered.......... $125,000,000 aggregate principal amount of 8 1/2%
Senior Subordinated Notes due 2007.
The Exchange Offer.......... $1,000 principal amount of Exchange Notes in
exchange for each $1,000 principal amount of
Private Notes. As of the date hereof,
5
<PAGE>
$125,000,000 aggregate principal amount of
Private Notes are outstanding. The Company will
issue the Exchange Notes to holders on or
promptly after the Expiration Date.
Based on interpretations by the staff of the
Commission set forth in certain "no action"
letters issued to third parties and unrelated to
the Company and the Exchange Offer, the Company
believes that Exchange Notes issued pursuant to
the Exchange Offer in exchange for Private Notes
may be offered for resale, resold and otherwise
transferred by holders thereof (other than any
such holder which is an "affiliate" of the
Company 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
Exchange 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 Exchange Notes in violation of the
provisions of the Securities Act. Holders of
Private Notes wishing to accept the Exchange
Offer must represent to the Company, as required
by the Registration Rights Agreement, that such
conditions have been met.
A Participating Broker-Dealer holding Private
Notes may participate in the Exchange Offer
provided that it acquired the Private Notes for
its own account as a result of market-making or
other trading activities. Each Participating
Broker-Dealer that receives Exchange 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
Exchange Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a
prospectus, a Participating Broker-Dealer will
not be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in
connection with the resales of Exchange Notes
received in exchange for Private Notes where such
Private Notes were acquired by such Participating
Broker-Dealer as a result of market-making or
other trading activities. The Company and the
Guarantors have agreed to make available, during
the period required by the Securities Act, a
prospectus meeting the requirements of the
Securities Act for use by any Participating
Broker-Dealer and other persons, if any, with
similar prospectus delivery requirements for use
in connection with any such resale of Exchange
Notes. See "Plan of Distribution."
Any holder who tenders in the Exchange Offer with
the intention to participate, or for the purpose
of participating, in a distribution of the
Exchange Notes could not rely on the position of
the staff of the Commission enunciated in "no-
action" letters and, in the absence of an
exemption therefrom, must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with any
resale transaction. Failure to comply with such
requirements in such instance may result in such
holder incurring
6
<PAGE>
liability under the Securities Act for which the
holder is not indemnified by the Company.
Expiration Date............. 5:00 p.m., New York City time, on 1997
unless the Exchange Offer is extended, in which
case the term "Expiration Date" means the latest
date and time to which the Exchange Offer is
extended.
Accrued Interest on the
Exchange Notes and the
Private Notes..............
Interest on each Exchange Note will accrue from
the Issue Date, i.e., October 7, 1997. Holders
whose Private Notes are accepted for exchange
will be deemed to have waived the right to
receive any interest accrued on the Private
Notes.
Conditions to the Exchange The Exchange Offer is subject to certain
Offer...................... customary conditions, which may be waived by the
Company, but it is not conditioned upon any
minimum aggregate principal amount of Private
Notes being tendered for exchange. See "The
Exchange Offer--Conditions."
Procedures for Tendering
Private Notes..............
Each holder of Private Notes wishing to accept
the Exchange Offer must complete, sign and date
the accompanying Letter of Transmittal, or a
facsimile thereof, in accordance with the
instructions contained herein and therein, and
mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with the
Private Notes and any other required documents,
to the Exchange Agent, prior to 5:00 p.m., New
York City time, on the Expiration Date at the
address set forth herein. By executing the Letter
of Transmittal, each holder will represent to the
Company, among other things, (i) that any
Exchange Notes to be received by it will be
acquired in the ordinary course of its business,
(ii) that at the time of the commencement of the
Exchange Offer it has no arrangement or
understanding with any person to participate in
the distribution (within the meaning of
Securities Act) of the Exchange Notes in
violation of the Securities Act, (iii) that it is
not an "affiliate" (as defined in Rule 405
promulgated under the Securities Act) of the
Company, (iv) if such holder is not a
Participating Broker-Dealer, that it is not
engaged in, and does not intend to engage in, the
distribution of Exchange Notes and (v) if such
holder is a Participating Broker-Dealer that will
receive Exchange Notes for its own account in
exchange for Private Notes that were acquired as
a result of market-making or other trading
activities, that it will deliver a prospectus
meeting the requirements of the Securities Act in
connection with any resale of such Exchange
Notes. See "The Exchange Offer--Purpose and
Effect of the Exchange Offer" and "Procedures for
Tendering."
Untendered Private Notes.... Upon consummation of the Exchange Offer the
provisions of the Registration Rights Agreement
shall continue to apply (i) in the case of any
holders that, in certain circumstances, become
holders of unregistered Exchange Notes with
respect to Private Notes, (ii) in
7
<PAGE>
the case of any holder that participates in the
Exchange Offer and does not receive Exchange
Notes on the date of the exchange that may be
sold without restriction under state and federal
securities laws (other than due solely to the
status of such holder as an "affiliate" of the
Company within the meaning of the Securities Act)
and (iii) to Exchange Notes held by Participating
Broker-Dealers.
Consequences of Failure to The Private Notes that are not exchanged pursuant
Exchange................... to the Exchange Offer will remain restricted
securities. Accordingly, such Private Notes may
be resold only (i) to the Company, (ii) pursuant
to Rule 144A or Rule 144 under the Securities Act
or pursuant to some other exemption under the
Securities Act, (iii) outside the United States
to a foreign person pursuant to the requirements
of Rule 904 under the Securities Act, or (iv)
pursuant to an effective registration statement
under the Securities Act. See "The Exchange
Offer--Consequences of Failure to Exchange."
Shelf Registration If, (i) because of any change in law or in
Statement.................. currently prevailing interpretations of the staff
of the Commission, the Company and the Subsidiary
Guarantors are not permitted to effect an
Exchange Offer, (ii) the Exchange Offer is not
consummated within 165 days of the Issue Date,
(iii) in certain circumstances, certain holders
of unregistered Exchange Notes so request, or
(iv) in the case of any Holder that participates
in the Exchange Offer, such Holder does not
receive Exchange Notes on the date of the
exchange that may be sold without restriction
under state and federal securities laws (other
than due solely to the status of such Holder as
an affiliate of the Company or any Subsidiary
Guarantor within the meaning of the Securities
Act), then in each case, the Company and the
Subsidiary Guarantors have agreed to (x) promptly
deliver to the holders and the Trustee written
notice thereof and (y) at their sole expense,
(a) as promptly as practicable, file a shelf
registration statement covering resales of the
Notes (the "Shelf Registration Statement"), (b)
use their best efforts to cause the Shelf
Registration Statement to be declared effective
under the Securities Act and (c) use their best
efforts to keep effective the Shelf Registration
Statement until the earlier of two years after
the Issue Date or such time as all of the
applicable Notes have been sold thereunder. The
Company will, in the event that a Shelf
Registration Statement is filed, provide to each
holder copies of the prospectus that is a part of
the Shelf Registration Statement, notify each
such holder when the Shelf Registration Statement
for the Notes has become effective and take
certain other actions as are required to permit
unrestricted resales of the Notes. A Holder that
sells Notes pursuant to the Shelf Registration
Statement will be required to be named as a
selling security holder in the related prospectus
and to deliver a prospectus to purchasers, will
be subject to certain of the civil liability
provisions under the Securities Act in connection
with such sales and will be bound by the
provisions of the Registration Rights
8
<PAGE>
Agreement that are applicable to such holder
(including certain indemnification rights and
obligations).
Special Procedures for
Beneficial Owners..........
Any beneficial owner whose Private Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender should contact such
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 its Private
Notes, either make appropriate arrangements to
register ownership of the Private Notes in such
owner's name or obtain a properly completed bond
power from the registered holder. The transfer of
registered ownership may take considerable time.
The Company will keep the Exchange Offer open for
not less than thirty days after the date that
notice of the Exchange Offer is mailed in order
to provide for the transfer of registered
ownership.
Guaranteed Delivery Holders of Private Notes who wish to tender their
Procedures................. Private Notes and whose Private Notes are not
immediately available or who cannot deliver their
Private Notes, the Letter of Transmittal or any
other documents required by the Letter of
Transmittal to the Exchange Agent (or comply with
the procedures for book-entry transfer) prior to
the Expiration Date must tender their Private
Notes according to the guaranteed delivery
procedures set forth in "The Exchange Offer--
Guaranteed Delivery Procedures."
Withdrawal Rights........... Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expiration
Date.
Acceptance of Private Notes
and Delivery of Exchange
Notes...................... The Company will accept for exchange any and all
Private Notes which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The Exchange Notes
issued pursuant to the Exchange Offer will be
delivered promptly following the Expiration Date.
See "The Exchange Offer--Terms of the Exchange
Offer."
Certain Federal Income Tax
Considerations.............
It is anticipated that the exchange of Private
Notes for Exchange Notes pursuant to the Exchange
Offer will not be a taxable event for United
States federal income tax purposes, because under
existing Treasure regulations, the Exchange Notes
will not differ materially in kind or extent from
the Private Notes. See "The Exchange Offer--
Certain Federal Income Tax Considerations."
Accounting Treatment........ The Exchange Notes will be recorded at the same
carrying value as the Private Notes, which is
face value, as reflected in the Company's
accounting records on the date of exchange.
Accordingly, no gain or loss for accounting
purposes will be recognized by the Company. The
expenses of the Exchange Offer will be amortized
over the term of the Exchange Notes.
9
<PAGE>
Use of Proceeds............. There will be no cash proceeds to the Company
from the exchange pursuant to the Exchange Offer.
Exchange Agent.............. SunTrust Bank, Central Florida, National
Association.
THE EXCHANGE NOTES
General..................... The form and terms of the Exchange Notes are the
same as the form and terms of the Private Notes
(which they replace) except that (i) the Exchange
Notes bear a different CUSIP Number from the
Private Notes, (ii) the Exchange Notes have been
registered under the Securities Act and,
therefore, will not bear legends restricting the
transfer thereof, and (iii) the holders of
Exchange Notes will not be entitled to certain
rights under the Registration Rights Agreement,
including the provisions providing for an
increase in the interest rate on the Private
Notes in certain circumstances relating to the
timing of the Exchange Offer, which rights will
terminate when the Exchange Offer is consummated.
See "The Exchange Offer--Purpose and Effect of
the Exchange Offer." The Exchange Notes will
evidence the same debt as the Private Notes and
will be entitled to the benefits of the
Indenture. See "Description of Exchange Notes."
Exchange Notes Offered...... $125,000,000 aggregate principal amount of 8 1/2%
Senior Subordinated Notes due 2007.
Maturity Date............... October 1, 2007.
Interest Payment Dates...... Interest on the Exchange Notes will accrue from
the Issue Date, October 7, 1997, and will be
payable semi-annually on April 1 and October 1 of
each year, commencing April 1, 1998. Holders
whose Private Notes are accepted for exchange
will be deemed to have waived the right to
receive any interest accrued on the Private
Notes.
Optional Redemption......... The Exchange Notes will be redeemable, in whole
or in part, at the option of the Company on or
after October 1, 2002, at the redemption prices
set forth herein plus accrued and unpaid interest
to the date of redemption. In addition, at any
time on or before October 1, 2000, the Company at
its option, may redeem up to 40% of the aggregate
principal amount of the Notes originally issued
with the net proceeds of one or more Public
Equity Offerings (as defined) at a redemption
price equal to 108.500% of the principal amount
thereof, plus accrued and unpaid interest to the
date of redemption; provided that at least 60% of
the aggregate principal amount of the Notes
originally issued remains outstanding immediately
after any such redemption. See "Description of
Exchange Notes--Optional Redemption."
Change of Control........... Upon a Change of Control, each holder of Exchange
Notes will have the right to require the Company
to repurchase such holder's Exchange Notes at a
price equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any,
to the date of repurchase. See "Description of
Exchange Notes--Change of Control."
10
<PAGE>
Ranking..................... The Exchange Notes will be and the Private Notes
are (i) general unsecured obligations of the
Company, (ii) subordinated in right of payment to
all existing and future Senior Indebtedness (as
defined) and (iii) structurally subordinated to
all existing and future indebtedness of the
Company's subsidiaries that are not Subsidiary
Guarantors (as defined). The Exchange Notes will
rank and the Private Notes rank pari passu in
right of payment with all other senior
subordinated obligations of the Company and
senior in right of payment to all other
subordinated obligations of the Company. As of
June 30, 1997, the Company and its subsidiaries
had an aggregate of approximately $3.4 million of
Senior Indebtedness (including guarantees of $2.8
million of indebtedness of Foreign Subsidiaries,
but excluding unused commitments of $60.0 million
available under the Credit Facility (as defined))
which would rank senior to the Notes. See
"Description of Credit Facility."
Guarantees.................. The Notes are unconditionally guaranteed on a
senior subordinated basis by all of the Company's
domestic subsidiaries (the "Subsidiary
Guarantors"). The Guarantees are general
unsecured obligations of the Subsidiary
Guarantors and are subordinated in right of
payment to all existing and future Guarantor
Senior Indebtedness (as defined). The Guarantees
rank pari passu in right of payment with all
future senior subordinated indebtedness of the
Subsidiary Guarantors and rank senior in right of
payment to all other subordinated obligations of
the Subsidiary Guarantors. As of June 30, 1997,
the Subsidiary Guarantors had an aggregate of
$0.4 million of Guarantor Senior Indebtedness
(excluding unused commitments under the Credit
Facility) which would rank senior to the
Guarantees.
Certain Covenants........... The Indenture contains certain covenants with
respect to the Company and its subsidiaries that
restrict, among other things: (i) the incurrence
of additional indebtedness; (ii) the payment of
dividends and other restricted payments; (iii)
the creation of certain liens; (iv) the use of
proceeds from sales of assets and subsidiary
stock; (v) sale and leaseback transactions; and
(vi) transactions with affiliates. The Indenture
also restricts the Company's ability to
consolidate or merge with or into, or to transfer
all or substantially all of its assets to,
another person. In addition, under certain
circumstances, the Company will be required to
offer to purchase the Notes, in whole or in part,
at a purchase price equal to 100% of the
principal amount thereof plus accrued interest to
the date of repurchase, with the proceeds of
certain Asset Sales. These restrictions and
requirements are subject to a number of important
qualifications and exceptions. See "Description
of Exchange Notes--Certain Covenants."
For additional information regarding the Notes, see "Description of Exchange
Notes"
11
<PAGE>
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the
Exchange Notes offered hereby. In consideration for issuing the Exchange Notes
contemplated in this Prospectus, the Company will receive Private Notes in like
principal amount, the form and terms of which are the same as the forms and
terms of the Exchange Notes (which replace the Private Notes), except as
otherwise described herein. The Private Notes surrendered in exchange for the
Exchange Notes will be canceled and cannot be reissued.
The net proceeds of approximately $119.8 million from the Initial Offering
have been and will be used to finance future acquisitions of medical products
distributors and for working capital and general corporate purposes. Pending
such uses, the net proceeds of the Initial Offering have been invested in
short-term interest-bearing securities. See "Use of Proceeds."
RISK FACTORS
Holders of Private Notes should carefully consider the specific factors set
forth under "Risk Factors," as well as the other information and data included
in this Prospectus.
12
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED(1) THREE MONTHS ENDED
----------------------------------------------------- ----------------------- ---
APRIL 2, APRIL 1, MARCH 30, MARCH 29, MARCH 28, JUNE 30, JUNE 30,
1993 1994 1995 1996 1997 1996 1997
----------- -------- --------- --------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales.............. $268,473 $351,203 $413,301 $529,024 $691,020 $ 151,568 $ 203,543
Gross profit........... 83,294 105,968 119,613 149,664 188,116 41,835 55,443
Restructuring
charges(2)............ 303 308 4,389 -- -- -- --
Merger costs and ex-
penses(3)............. -- -- -- 15,732 12,128 6,934 --
Income (loss) from op-
erations.............. 4,030 6,513 3,732 2,966 2,875 (3,012) 6,531
Net income (loss)...... $ 692 $ 1,160 $ (847) $ 1,339 $ 4,373 $ (1,540) $ 4,370
BALANCE SHEET DATA:
Working capital........ $ 37,777 $ 46,148 $ 53,626 $172,696 $165,454 $ 160,070 $ 168,117
Total assets........... 93,962 125,545 134,426 278,958 298,286 284,536 308,201
Long-term liabilities.. 42,901 55,026 33,869 4,132 5,194 3,690 6,673
Total shareholders' eq-
uity.................. 18,897 23,588 46,326 199,550 205,600 192,346 210,380
OTHER HISTORICAL FINAN-
CIAL DATA
(UNAUDITED):
Same-center sales
growth(4)............. 18.5% 27.7% 23.3% 26.8% 18.2% 21.5% 13.2%
EBITDA(5).............. $ 7,998 $ 12,206 $ 13,318 $ 25,564 $ 29,225 $ 5,901 $ 9,465
EBITDA margin(6)....... 3.0% 3.5% 3.2% 4.8% 4.2% 3.9% 4.7%
Capital expenditures... $ 3,015 $ 3,904 $ 3,221 $ 5,350 $ 5,580 $ 1,438 $ 3,473
Ratio of earnings to
fixed charges(7)...... 1.3x 1.4x 1.3x 1.5x 3.7x -- (8) 13.4x
</TABLE>
<TABLE>
<S> <C>
PRO FORMA FINANCIAL AND OTHER DATA (UNAUDITED)(9):
LTM EBITDA(10)....................................................... $ 32,789
Pro forma total debt(11)............................................. 132,794
Pro forma LTM interest expense(12)................................... 10,959
Ratio of LTM EBITDA to pro forma LTM interest expense................ 3.0x
Ratio of pro forma total debt to LTM EBITDA.......................... 4.0x
Ratio of pro forma net debt to LTM EBITDA(13)........................ n.m.
</TABLE>
- --------
(footnotes on next page)
13
<PAGE>
- --------
(1) The Company's fiscal year ends on the Friday closest to March 31. Fiscal
years 1993 through 1995 ended on the Thursday closest to March 31. All
periods presented were 52 weeks.
(2) Restructuring charges reflect charges taken by a company merged with the
Company pursuant to a pooling-of-interests transaction, prior to the date
of merger. The fiscal year 1995 restructuring charge of $4,389 reflects the
assessment of former management of such merged company of the under-
realization of future benefits related to certain intangible assets. The
fiscal year 1994 restructuring charge of $308 resulted from such merged
company's consolidation of an acquisition. The fiscal year 1993
restructuring charge of $303 resulted from the write-down by former
management of such merged company of capitalized software costs.
(3) Merger costs and expenses reflect direct merger expenses incurred in
connection with mergers accounted for as pooling-of-interests transactions.
(4) Same-center sales growth is determined by comparing the aggregate sales for
service centers which have been in operation for at least two consecutive
12-month periods. Fiscal years 1993 through 1995 exclude the results of
Taylor Medical, Inc. ("Taylor") which merged with the Company in August
1995 in a pooling-of-interests transaction. All same-center sales growth
data exclude the Imaging Business and are adjusted for merged centers.
(5) EBITDA represents income (loss) before income taxes, interest expense,
depreciation and amortization, gains and losses on asset sales and non-
recurring charges such as restructuring costs, merger costs and expenses
and other operating charges related to mergers. EBITDA is not a measure of
performance or financial condition under generally accepted accounting
principles. EBITDA is not intended to represent cash flow from operations
and should not be considered as an alternative to income from operations or
net income computed in accordance with generally accepted accounting
principles, as an indicator of the Company's operating performance, as an
alternative to cash flow from operating activities or as a measure of
liquidity. The Company believes that EBITDA is a standard measure of
liquidity commonly reported and widely used by analysts, investors and
other interested parties in the financial markets. However, not all
companies calculate EBITDA using the same method and the EBITDA numbers set
forth above may not be comparable to EBITDA reported by other companies.
(6) EBITDA margin represents the ratio of EBITDA to net sales.
(7) For purposes of computing this ratio, earnings consist of income (loss)
before income taxes and extraordinary items and fixed charges, adjusted to
exclude capitalized interest. Fixed charges consist of interest expense,
including amounts capitalized and the portion of operating lease rental
expense that is representative of the interest factor (estimated to be one-
third of operating lease rental expense).
(8) Earnings were insufficient to cover fixed charges by $1.6 million for the
quarter ended June 30, 1996.
(9) Except as set forth in note 11 below, pro forma financial data are
presented as if consummation of the Initial Offering occurred on July 1,
1996. Pro forma financial data do not assume any investment return on the
net proceeds of the Initial Offering and do not reflect any adjustments for
acquisitions since July 1, 1997. Pro forma financial data are provided for
comparative purposes only and are not necessarily indicative of the actual
results that would have been achieved had the Initial Offering occurred on
the date indicated or that may be achieved in the future.
(10) LTM EBITDA represents the actual EBITDA for the twelve months ended June
30, 1997.
(11) Assumes consummation of the Initial Offering occurred on June 30, 1997.
(12) Pro forma LTM interest expense represents interest expense for the twelve
months ended June 30, 1997 assuming consummation of the Initial Offering
occurred on July 1, 1996.
(13) Ratio of pro forma net debt to LTM EBITDA represents pro forma total debt
less pro forma cash, cash equivalents and marketable securities divided by
LTM EBITDA. Because the sum of pro forma cash, cash equivalents and
marketable securities exceeds pro forma total debt, this ratio is not
meaningful.
14
<PAGE>
SUMMARY STATISTICAL DATA
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS
--------------------------------------------------- ENDED
APRIL 2, APRIL 1, MARCH 30, MARCH 29, MARCH 28, JUNE 30,
1993 1994 1995 1996 1997 1997
-------- -------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
TOTAL COMPANY:
Revenue growth......... 26.4% 30.8% 17.7% 28.0% 30.6% 34.3%
Adjusted revenue
growth(1)............. 29.4% 43.4% 39.2% 82.3% 52.5% 37.6%
Revenue mix:
Physician Supply Busi-
ness.................. $227,046 $304,492 $366,285 $483,294 $601,310 $154,459
Imaging Business(2).... 41,427 46,711 47,016 45,730 74,003 44,947
International Busi-
ness.................. 15,707 4,137
Gross margin percent-
age................... 31.0% 30.2% 28.9% 28.3% 27.2% 27.2%
Sales representatives.. 324 371 465 702 797 805
Service centers(3)..... 41 46 55 65 77 80
States served.......... 33 44 48 50 50 50
Days sales outstand-
ing(4)................ 51 53 55 55 56 53
Average inventory turn-
over(5)............... 7.7 7.8 8.3 8.3 8.1 8.7
PHYSICIAN SUPPLY BUSI-
NESS:
Revenue mix:
Medical supplies....... 70.7% 65.3% 64.2% 70.6% 67.3% 69.7%
Equipment.............. 15.4 17.7 21.7 18.1 21.0 19.6
Pharmaceuticals........ 10.0 13.6 12.6 10.4 11.0 9.9
Service and other...... 3.9 3.4 1.5 0.9 0.7 0.8
Gross margin percent-
age................... 34.0% 32.7% 30.8% 29.4% 27.9% 28.9%
Sales representatives.. 315 362 455 692 720 720
Service centers(3)..... 40 45 54 64 61 61
States served.......... 33 44 48 50 50 50
IMAGING BUSINESS(2):
Revenue mix:
Imaging supplies....... 80.8%
Equipment.............. 12.6
Service................ 6.6
Gross margin percent-
age................... 14.8% 14.0% 14.2% 16.9% 19.1% 20.5%
Sales representatives.. 9 9 10 10 53 60
Service specialists.... 30 32 34 35 145 160
Service centers........ 1 1 1 1 14 16
States served.......... 2 2 2 2 9 16
INTERNATIONAL BUSINESS:
Sales representatives.. 24 25
Service centers........ 2 3
Countries served....... 5 5
</TABLE>
- --------
(1) Adjusted revenue growth represents historical net sales growth excluding
the restatements for the mergers with Taylor and X-ray of Georgia ("X-ray
Georgia"), which were accounted for as poolings of interests.
(2) All Imaging Business data for periods prior to November 1996 reflect the
pre-merger financial data of a company acquired through a pooling-of-
interests transaction. Revenue mix for the Imaging Business is not
available for periods prior to the fiscal quarter ended June 30, 1997.
(3) Fiscal years 1993 through 1995 exclude Taylor service centers.
(4) Represents the average number of days that accounts receivable are
outstanding calculated by dividing the average annual accounts receivable
balance by the average daily sales.
(5) Represents the average number of inventory turns per year calculated by
dividing annual costs of sales by average annual inventory.
15
<PAGE>
RISK FACTORS
HIGH LEVEL OF INDEBTEDNESS
Upon consummation of the Initial Offering the Company became highly
leveraged. At June 30, 1997, the Company's consolidated indebtedness was $7.8
million and the Company had commitments of $60.0 million available for
borrowing under the Credit Facility. See "Capitalization." The Company may
incur additional indebtedness in the future, including Senior Indebtedness,
subject to limitations imposed by the Indenture and the Credit Facility. The
level of the Company's indebtedness could have important consequences to the
holders of the Notes, including: (i) a substantial portion of the Company's
cash flow from operations must be dedicated to debt service and will not be
available for other purposes; (ii) the Company's ability to obtain additional
debt financing in the future for working capital, capital expenditures or
acquisitions may be limited; and (iii) the Company's level of indebtedness
could limit its flexibility in reacting to changes in the industry and
economic conditions generally. Certain of the Company's competitors may
currently operate on a less leveraged basis and therefore could have
significantly greater operating and financing flexibility than the Company.
The Company's ability to make payments with respect to the Notes and to
satisfy its other debt obligations will depend on its future operating
performance, which will be affected by prevailing economic conditions and
financial, business and other factors, certain of which are beyond the
Company's control. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."
ABILITY TO SERVICE DEBT
As a result of the issuance of the Private Notes, the Company's interest
expense has increased compared to prior years. The Company believes, based on
current circumstances, that the Company's cash flow, together with available
borrowings under the Credit Facility, will be sufficient to permit the Company
to meet its operating expenses and to service its debt requirements as they
become due for the foreseeable future. This belief assumes, among other
things, that the Company will succeed in implementing its business strategy
and that there will be no material adverse developments in the business,
liquidity or capital requirements of the Company. However, if the Company is
unable to generate sufficient cash flow from operations to service its
indebtedness, it will be forced to adopt an alternate strategy that may
include actions such as reducing or delaying acquisitions and capital
expenditures, selling assets, restructuring or refinancing its indebtedness,
or seeking additional equity capital. There can be no assurance that any of
these strategies could be effected on satisfactory terms, if at all. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS
The Indenture imposes certain limitations on the ability of the Company to,
among other things, incur additional indebtedness, pay dividends or make
certain other restricted payments, consummate certain asset sales, enter into
certain transactions with affiliates, incur indebtedness that is subordinate
in right of payment to Senior Indebtedness and senior in right of payment to
the Notes, incur liens, imposes restrictions on the ability of a subsidiary to
pay dividends or make certain payments to the Company and its subsidiaries,
merge or consolidate with any other person or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of the assets of the
Company. See "Description of Exchange Notes--Certain Covenants." If the
Company fails to comply with these covenants, it would be in default under the
Indenture and the principal and accrued interest on the Notes would become due
and payable. In addition, the Credit Facility contains other and more
restrictive covenants and prohibits the Company from prepaying its
indebtedness (including the Notes). The Credit Facility also requires the
Company to maintain specified financial ratios and satisfy certain financial
condition tests. The Company's ability to meet those financial ratios and
tests may be affected by events beyond its control and there can be no
assurance that the Company will meet those tests. A breach of any of these
covenants could result in a default under the Credit Facility and/or the
Indenture. If an event of default should occur under the Credit Facility, the
lenders can elect to declare all amounts of principal outstanding under the
Credit Facility, together with all accrued interest, to be immediately due and
payable. If the Company were unable to repay those
16
<PAGE>
amounts, the lenders could proceed against the collateral granted to them to
secure that indebtedness. If the Credit Facility indebtedness were to be
accelerated, there can be no assurance that the assets of the Company would be
sufficient to repay in full that indebtedness and the other indebtedness of
the Company, including the Notes. Substantially all of the assets of the
Company are pledged as security under the Credit Facility. In addition, a
default under the Credit Facility or the instruments governing the Company's
or its subsidiaries' other indebtedness could constitute a cross-default under
the Indenture and any instruments governing the Company's or its subsidiaries'
other indebtedness, and a default under the Indenture could constitute a
cross-default under the Credit Facility or the instruments governing the
Company's or its subsidiaries' other indebtedness. See "Description of
Exchange Notes--Certain Covenants" and "--Events of Default" and "Description
of Credit Facility."
SUBORDINATION OF EXCHANGE NOTES; ASSET ENCUMBRANCE
The Exchange Notes will be, and the Private Notes are, subordinated in right
of payment to all Senior Indebtedness, including Senior Indebtedness incurred
after the date of the Indenture. As of June 30, 1997, the Company had an
aggregate of $3.4 million of Senior Indebtedness outstanding, including
guarantees of $2.8 million of indebtedness of Foreign Subsidiaries, and the
Company had available $60.0 million for borrowings under the Credit Facility.
The Indenture permits the Company to incur Senior Indebtedness under the
Credit Facility as well as additional Senior Indebtedness (provided certain
financial or other conditions are met). Certain of the Company's domestic
subsidiaries have guaranteed the obligations of the Company under the
Indenture and the Notes, but such guarantees are subordinated to all Senior
Indebtedness of such Subsidiary Guarantors, which include the guarantees of
the Company's indebtedness under the Credit Facility. The Exchange Notes and
the Guarantees will be, and the Private Notes and the Guarantees are,
subordinated in right of payment to all existing and future Senior
Indebtedness of the Company and the Subsidiary Guarantors, respectively,
including the principal, premium (if any) and interest with respect to the
Senior Indebtedness under the Credit Facility and guarantees thereof.
The Company may not pay principal of, premium (if any) on, or interest on,
the Notes, make any deposit pursuant to defeasance provisions or repurchase or
redeem or otherwise retire any Notes (i) if any Senior Indebtedness (as
defined) is not paid when due or (ii) if any other default on Designated
Senior Indebtedness occurs that permits the holders of such Designated Senior
Indebtedness to accelerate maturity of such Designated Senior Indebtedness, in
accordance with its terms, and the Trustee receives a notice of such default
unless, in either case, the default has been cured or waived, any such
acceleration has been rescinded or such Designated Senior Indebtedness has
been paid in full or, in the case of any default other than a payment default,
179 days have passed since the default notice is given. See "Description of
Exchange Notes--Subordination." Upon any payment or distribution of the assets
of the Company or any Subsidiary Guarantor in connection with a total or
partial liquidation or dissolution or reorganization of or similar proceeding
relating to the Company or such Subsidiary Guarantor, the holders of Senior
Indebtedness will be entitled to receive payment in full before the holders of
the Notes are entitled to receive any payment. See "Description of Exchange
Notes--Subordination." The Private Notes also are, and the Exchange Notes will
be, unsecured and thus, in effect, will rank junior to any secured
indebtedness of the Company or the Subsidiary Guarantors. The indebtedness and
guarantees outstanding under the Credit Facility are secured by liens upon
substantially all assets, including all receivables, inventory and general
intangibles and equipment. See "Description of Credit Facility."
RELIANCE ON PAYMENTS OF SUBSIDIARY GUARANTORS; SURETYSHIP DEFENSES
The Company conducts all of the operations of its Imaging Business and
International Business, as well as a portion of its Physician Supply Business,
through its subsidiaries. Therefore, the Company is required to rely, in part,
upon payment from its subsidiaries for the funds necessary to meet its
obligations, including the payment of interest on the principal of the Notes.
The ability of the subsidiaries to make such payments will be subject to,
among other things, applicable laws. Claims of creditors of the Company's
subsidiaries will generally have priority as to the assets of such
subsidiaries over the claims of the Company.
17
<PAGE>
Although the Guarantees provide the holders of the Notes with a direct claim
against the assets of the Subsidiary Guarantors, enforcement of the Guarantees
against any Subsidiary Guarantor would be subject to certain "suretyship"
defenses available to guarantors generally, and such enforcement would also be
subject to certain defenses available to the Subsidiary Guarantors in certain
circumstances. See "--Fraudulent Conveyance Risks." Although the Indenture
contains waivers of most "suretyship" defenses, there can be no assurance that
those waivers would be enforced by a court in a particular case. To the extent
that the Guarantees are not enforceable, the Notes and Guarantees would be
effectively subordinated to all liabilities of the Subsidiary Guarantors,
including trade payables of such Subsidiary Guarantors, whether or not such
liabilities otherwise constitute Guarantor Senior Indebtedness under the
Indenture. In addition, certain of the Company's subsidiaries, primarily the
foreign subsidiaries, are not Subsidiary Guarantors, and the Notes are
effectively subordinated to all liabilities of such subsidiaries, including
trade payables. Moreover, although the Credit Facility will generally permit
subsidiaries to pay dividends in amounts sufficient to pay interest on the
Notes, the payment of dividends to the Company by its subsidiaries is
contingent upon the earnings of those subsidiaries and approval of those
subsidiaries.
CONSEQUENCES OF FAILURE TO EXCHANGE PRIVATE NOTES
Holders of Private Notes who do not exchange their Private Notes for
Exchange Notes pursuant to the Exchange Offer will continue to be subject to
the provisions in the Indenture regarding transfer and exchange of the Private
Notes and the restrictions on transfer of such Private Notes set forth in the
legend thereon as a consequence of the issuance of the Private Notes pursuant
to an exemption from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Private Notes may not be offered or sold, unless registered under
the Securities Act and applicable state securities laws. The Company does not
currently anticipate that it will register Private Notes under the Securities
Act. See "The Exchange Offer."
FAILURE TO FOLLOW EXCHANGE OFFER PROCEDURES COULD ADVERSELY AFFECT HOLDERS
Issuance of the Exchange Notes in exchange for the Private Notes pursuant to
the Exchange Offer will be made only after a timely receipt by the Company of
such Private Notes, a properly completed and duly executed Letter of
Transmittal and all other required documents. Therefore, holders of the
Private Notes desiring to tender such Private Notes in exchange for Exchange
Notes should allow sufficient time to ensure timely delivery. The Company is
under no duty to give notification or defects or irregularities with respect
to the tenders of Private Notes for exchange. Private Notes that are not
tendered or are tendered but not accepted will, following the consummation of
the Exchange Offer, continue to be subject to the existing restrictions upon
transfer thereof, and, upon consummation of the Exchange Offer certain
registration rights under the Registration Rights Agreement will terminate. In
addition, any holder of Private Notes who tenders in the Exchange Offer for
the purpose of participating in a distribution of the Exchange Notes 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. Each Participating
Broker-Dealer that receives Exchange Notes for its own account in exchange for
Private Notes, where such Private Notes were acquired by such Participating
Broker-Dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution." To the
extent that Private Notes are tendered and accepted in the Exchange Offer, the
trading market for untendered and tendered but unaccepted Private Notes could
be adversely affected. See "The Exchange Offer."
FRAUDULENT CONVEYANCE RISKS
If the court in a lawsuit brought by an unpaid creditor or representatives
of creditors, such as a trustee in bankruptcy or the Company or any Subsidiary
Guarantor as a debtor-in-possession, were to find under relevant federal and
state fraudulent conveyance statutes that the Company or any Subsidiary
Guarantor did not receive fair consideration or reasonably equivalent value
for incurring the indebtedness represented by the Private Notes
18
<PAGE>
or the Guarantee and that, at the time of such incurrence, the Company or such
Subsidiary Guarantor: (i) was insolvent; (ii) was rendered insolvent by reason
of such incurrence; (iii) was engaged in a business or transaction for which
the assets remaining with the Company or such Subsidiary Guarantor constituted
unreasonably small capital; or (iv) intended to incur, or believed that it
would incur, debts beyond its ability to pay such debts as they matured; such
court, subject to applicable statutes of limitation, could avoid the Company's
obligations under the Notes, or the Subsidiary Guarantor's obligations under
the Guarantee, subordinate the Notes or the Guarantee to the other
indebtedness of the Company or such Subsidiary Guarantor, or take other action
detrimental to the holders of the Notes. The measure of insolvency used by a
court will vary depending upon the law of the jurisdiction being applied.
Generally, however, a company will be considered insolvent for these purposes
if, at the time it incurred or incurs the indebtedness constituting the Notes,
either (i) the fair market value (or fair salable value) of its assets was
less than the amount required to pay its total existing debts and liabilities
(including the probable liability on contingent liabilities) as they become
absolute and matured or (ii) it was incurring debts beyond its ability to pay
as such debts mature.
The Company believes that it has received and will receive fair
consideration and reasonably equivalent value for the Private Notes and
Exchange Notes and that at the time of, and after giving effect to, the
incurrence of the indebtedness and obligations evidenced by the Private Notes
and the Exchange Notes, the Company and the Subsidiary Guarantors (i) were not
and will not be, as the case may be, insolvent nor rendered insolvent thereby,
(ii) had and will have, as the case may be, sufficient capital to operate
their business effectively, (iii) were incurring and will be incurring, as the
case may be, debts within their ability to pay as the same mature or become
due and (iv) had and will have, as the case may be, sufficient resources to
satisfy any probable money judgment against them in any pending action. In
reaching the foregoing conclusions, the Company has relied upon its analysis
of internal cash flow projections and estimated values of assets and
liabilities of the Company. There can be no assurance, however, that such
analysis will prove to be correct or that a court passing on such questions
would reach the same conclusions.
Additionally, under federal bankruptcy or applicable state insolvency law,
if certain bankruptcy or insolvency proceedings are initiated by or against
the Company or any Subsidiary Guarantor within 90 days (or a longer period if
the holder of the Notes was deemed to be an "insider") after any payment by
the Company or any Subsidiary Guarantor with respect to the Notes or the
Guarantees or if the Company or any Subsidiary Guarantor anticipated becoming
insolvent at the time of such payment, all or a portion of such payment could
be avoided as a preferential transfer and the recipient of such payment could
be required to return such payment.
ABILITY TO PURCHASE NOTES UPON A CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each holder of Notes will have
the right to require the Company to repurchase its Notes at 101% of the
principal amount thereof plus accrued and unpaid interest outstanding, if any,
to the date of repurchase. A Change of Control will likely trigger an event of
default under the Credit Facility which would permit the lenders thereto to
accelerate the debt under the Credit Facility. However, there can be no
assurance that sufficient funds will be available at the time of any Change of
Control to make any required repurchases of Notes tendered and to repay debt
under the Credit Facility. In addition, the terms of the Credit Facility may
limit the Company's ability to purchase any Notes and will also identify
certain events that would constitute a change of control, as well as certain
other events with respect to the Company or certain of its subsidiaries, that
would constitute an event of default under the Credit Facility. See
"Description of Credit Facility." Any future credit agreements or other
agreements relating to other indebtedness to which the Company becomes a party
may contain similar restrictions and provisions. In the event a Change of
Control occurs at a time when the Company is prohibited from purchasing Notes,
the Company could seek the consent of its lenders to the purchase of Notes or
could attempt to refinance the borrowings that contain such prohibition. If
the Company does not obtain such consent or repay such borrowing, the Company
would remain prohibited from purchasing Notes. In such case, the Company's
failure to purchase tendered Notes would constitute an Event of Default under
the Indenture, which would, in turn, constitute a further default under
certain of the Company's existing debt agreements and may constitute a default
under the terms of other indebtedness that the Company may enter into from
time to time. In addition, the provisions of the Indenture may not afford
holders
19
<PAGE>
of Notes protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction involving the
Company that may adversely affect holders of Notes, if such transaction does
not result in a Change of Control. See "Description of Credit Facility" and
"Description of Exchange Notes--Change of Control."
ACQUISITION STRATEGY
The Company has grown through, and anticipates that it will continue to grow
through, the acquisition of medical-products distributors. The Company has
also added the Imaging Business and the International Business through
acquisitions and may enter new lines of business and new geographic areas
through acquisitions. Acquisitions may expose the Company to particular risks,
including, without limitation, diversion of management's attention, the
inability to integrate acquired companies into the Company's operations,
assumption of liabilities and amortization of goodwill and other acquired
intangible assets, some or all of which could have a material adverse effect
on the financial condition or results of operations of the Company. Depending
on the value and nature of the consideration paid by the Company for
acquisitions, such acquisitions may adversely affect the Company's liquidity.
In making acquisitions in the future, the Company anticipates that it may
compete for acquisitions with other companies, many of which are larger and
have greater financial resources than the Company. There can be no assurance
that the Company will be successful in consummating acquisitions and
integrating them into the Company's operations. The Company has financed
acquisitions, and anticipates that it will finance future acquisitions,
through cash on hand, the issuance of common stock and borrowings. The Credit
Facility limits acquisitions and contains financial covenants which may
further limit the Company's ability to make acquisitions. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources," "Business" and "Description of Credit
Facility."
OPENING OF START-UP SERVICE CENTERS
The Company has grown through, and the Company anticipates that it will
continue to grow through, the opening of start-up service centers. The Company
anticipates that each start-up service center opened will generally incur
operating losses for a period of time which has historically been
approximately 18 months. Accordingly, the Company's planned expansion creates
numerous risks, including the risk that the expansion may have an adverse
effect on working capital and earnings during the expansion period, and that
substantial indebtedness may be incurred in connection with, and significant
losses could result from, unsuccessful start-ups.
EXPANSION INTO NEW LINES OF BUSINESS
The Company recently has expanded into new product areas, including
distributing imaging equipment, chemicals and supplies and providing technical
service to physicians, other alternate-site providers and hospitals through
its Imaging Business. The integration and operation of this new business may
place significant demands on the Company's management and other resources.
There can be no assurance that there will be any operating efficiencies
between the Physician Supply Business and the Imaging Business or that the
Imaging Business can be operated profitably. The Company has pursued, and
anticipates that it will continue to aggressively pursue, expansion
opportunities in this market; however, there can be no assurance that the
Company will be successful in acquiring, integrating or operating additional
businesses. See "Acquisition Strategy" and "Business--Acquisitions." In
addition, although the Company is restricted by the terms of the Indenture
from engaging in any business other than those engaged in on the date of the
Indenture and certain reasonably related businesses, the Company may in the
future, enter into other lines of business, which may have the same or
additional risks as its existing businesses. There can be no assurance that if
the Company were to enter into any additional lines of business that it would
be able to operate such businesses successfully.
MANAGEMENT OF INTERNATIONAL BUSINESS
Through its WorldMed International, Inc. subsidiary, the Company has
recently acquired medical supply distributors serving physicians in Belgium,
France, Germany, Luxembourg and the Netherlands and plans to
20
<PAGE>
increase its presence in European markets. As the Company expands
internationally, it will need to hire, train and retain qualified personnel in
countries where language, cultural or regulatory impediments may exist. The
Company has encountered and expects to encounter significant expense and delay
in expanding its international operations because of language and cultural
differences, and staffing, communications and related issues. There can be no
assurance that the Company's services and business practices will be accepted
by vendors, physicians or other involved parties in foreign markets. The cost
of medical care in many European countries is funded by the government, which
may significantly impact spending budgets in certain markets. International
revenues are subject to inherent risks, including political and economic
instability, difficulties in staffing and managing foreign operations and in
accounts receivable collection, fluctuating currency exchange rates, costs
associated with localizing service offerings in foreign countries, unexpected
changes in regulatory requirements, difficulties in the repatriation of
earnings and burdens of complying with a wide variety of foreign laws and
labor practices.
DEPENDENCE ON VENDOR RELATIONSHIPS
The Company distributes over 39,000 medical products manufactured by
approximately 3,000 vendors and is dependent on these vendors for the
manufacture and supply of product. The Company has entered into a contract
with Abbott which accounted for approximately 16% and 18% of the Company's
revenues in fiscal years 1996 and 1997, respectively, and which may be
terminated by Abbott if the Company does not meet certain sales levels. The
Company and Abbott have in the past renegotiated such sales levels. Sales
pursuant to a distribution agreement with F. Hoffman-La Roche Ltd. accounted
for approximately four percent of the Company's sales in fiscal year 1997. In
addition, the Company has entered into other separate exclusive distribution
agreements, including agreements for certain products manufactured by Siemens
AG, Hologic, Inc., C. R. Bard, Inc., Tanita Corporation of America, Inc. and
HumaScan Inc. The Company's ability to maintain good relations with these
vendors will affect the profitability of its business. Currently, the Company
relies on vendors to provide: (i) field sales representatives' technical and
selling support; (ii) agreeable purchasing and delivery terms; (iii) sales
performance incentives; (iv) financial support of sales and marketing
programs; and (v) promotional materials. There can be no assurance that the
Company will maintain good relations with its vendors.
DEPENDENCE ON KEY MANAGEMENT
The success of the Company is dependent upon the efforts and abilities of
its senior management. The loss of one or more of such individuals may
adversely affect the Company's business. Because of the Company's
decentralized operating structure, the Company is also dependent upon its
operations and sales managers for each of its service areas. There can be no
assurance that the Company will be able to retain such key personnel or
attract qualified personnel in the future.
DEPENDENCE ON SALES REPRESENTATIVES AND SERVICE SPECIALISTS
The Company believes that to be successful it must continue to hire, train
and retain highly qualified sales representatives and service specialists. The
Company's sales growth has resulted largely from hiring and developing new
sales representatives and adding, through acquisitions, established sales
representatives whose existing customers generally have become customers of
the Company. Due to the relationships developed between the Company's sales
representatives and its customers, upon the departure of a sales
representative the Company faces the risk of losing the representative's
customers, especially if the representative were to act as a representative of
the Company's competitors. The Company generally requires its sales
representatives and service specialists to execute a non-competition agreement
as a condition of their employment, however the Company has not obtained non-
competition agreements from certain of the sales representatives and service
specialists hired through acquisitions. Although courts have generally upheld
the terms of the Company's non-competition agreements in the past, there can
be no assurance that such agreements will be upheld in the future. In
addition, the radiology and imaging equipment market served by the Imaging
Business is reliant on the hiring and retention of skilled service specialists
to maintain such equipment. There is a current shortage of these skilled
specialists, which may result in intense competition and increasing salaries.
Any inability of the Company to
21
<PAGE>
hire or retain such skilled specialists could limit its ability to expand its
Imaging Business and adversely affect its business, financial condition and
results of operations. There can be no assurance that the Company will be able
to retain or attract qualified personnel in the future.
IMAGING BUSINESS TECHNOLOGY
The development of new technology may change the manner in which diagnostic
imaging services are provided. Recently, certain manufacturers have developed
digital radiology equipment that does not rely on film and film products,
which currently constitute a substantial percentage of the products
distributed by the Imaging Business. No assurance can be given that the
introduction and proliferation of digital radiology or other technological
changes will not result in a material adverse change in the Imaging Business.
While the Company anticipates that it will distribute new imaging technology,
there can be no assurance that the Company will obtain distribution agreements
or develop vendor relationships to distribute such new technology. In
addition, there can be no assurance that the Company would be able to
distribute any such new technology profitably.
REGULATION OF AND CHANGE IN THE PRACTICE OF MEDICINE
The health care industry, including the practice of medicine by physicians,
is subject to extensive government regulation, licensure and operating
procedures. The Company cannot predict the impact that present or future
regulations may have on operations of the Company or on its plan to expand its
business activities. In addition, as consolidation among physician provider
groups continues and provider networks are created, purchasing decisions may
shift to individuals with whom the Company has not had prior selling
relationships. The Company is increasingly focusing on national accounts where
the purchasing decision may not be made by the Company's traditional physician
customers. There can be no assurance that the Company will be able to maintain
its customer relationships in such circumstances or that such provider
consolidation will not result in reduced operating margins. See "Business--
Regulatory Matters."
DEPENDENCE ON THIRD-PARTY REIMBURSEMENT
The cost of a significant portion of medical care in the United States is
funded by government and private insurance programs, such as Medicare,
Medicaid and corporate health insurance plans. In recent years, government-
imposed limits on reimbursement of hospitals and other health care providers
have significantly impacted spending budgets in certain markets within the
medical-products industry. Private third-party reimbursement plans are also
developing increasingly sophisticated methods of controlling health care costs
through redesign of benefits and exploration of more cost-effective methods of
delivering health care. Accordingly, there can be no assurance that
reimbursement for purchase and use of medical products will not be limited or
reduced and thereby adversely affect future sales by the Company.
TWO-TIER PRICING
As a result of the Non-Profit Act of 1944, the medical-products industry is
subject to a two-tier pricing structure. Under this structure, certain
institutions, originally limited to non-profit hospitals, can obtain more
favorable prices for medical products than the Company. The two-tiered pricing
structure continues to expand as many large integrated health care providers
and others with significant purchasing power demand more favorable pricing
terms. Although the Company is seeking to obtain similar terms from its
manufacturers, there can be no assurance that such terms can be obtained. Such
a pricing structure, should it persist, may place the Company at a competitive
disadvantage.
COMPETITION
The distribution and marketing of medical products is highly competitive.
The Company's competitors include full-line, full-service medical supply
companies, some of which are national in scope, local and regional
distributors and manufacturers who distribute their products directly to
users. These companies have sales representatives competing directly with the
Company. There are also several mail order firms which distribute
22
<PAGE>
medical products on a national or regional basis. Some of the Company's
competitors are substantially larger in size and have substantially greater
financial resources than the Company. The Company could encounter additional
competition because many of the products it sells are readily obtainable by
others from various sources of supply and such competitors could consolidate
into regional or national networks. In addition, a competitor of the Company
could obtain exclusive rights to market a certain product to the exclusion of
the Company. There can be no assurance that the Company will not face
increased competition in the future.
QUARTERLY FLUCTUATIONS IN OPERATING RESULTS
Net sales and operating results may fluctuate quarterly as a result of
demand for the Company's products and services, the introduction of new
products and services by the Company and its competitors, acquisitions or
investments, changes in manufacturers' prices or pricing policies, changes in
the level of operating expenses, product supply shortages, inventory
adjustments, changes in product mix and general competitive and economic
conditions. In additional, a substantial portion of the Company's net sales in
each quarter result from orders booked in such quarter. Accordingly, the
Company believes that period-to-period comparisons of its operating results
should not be relied upon as an indication of future performance. It is
possible that in certain future periods, the Company's operating results may
be below the expectations of analysts and investors, which could materially
and adversely affect the trading price of the Private Notes and, when issued,
the Exchange Notes. The Company anticipates taking a charge for the quarter
ended September 30, 1997 of approximately $8.0 million to $10.0 million due to
mergers completed in such quarter. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Quarterly Results of
Operations."
LIABILITY EXPOSURE
Although the Company is not a manufacturer, the distribution of medical
supplies and equipment entails risks of product liability. Despite the fact
that the Company has not to date experienced any significant product liability
claims and currently maintains liability insurance coverage, such insurance is
expensive, difficult to obtain and may be unobtainable in the future on
acceptable terms, if at all. The Company operates approximately 620 vans to
deliver medical products on a same-day delivery basis. The Company has
experienced various claims regarding motor vehicle accidents, all of which
have been covered by insurance, subject to applicable retentions and
deductibles. The Company believes that it maintains adequate insurance
coverage for such claims. Nevertheless, the amount and scope of any coverage
may be inadequate in the event that a product liability or motor vehicle
accident claim is successfully asserted against the Company.
RELIANCE ON DATA PROCESSING
The Company's business is dependent upon its ongoing ability to obtain,
process, analyze and manage data, and to maintain and upgrade its data
processing capabilities. The Company typically receives rebates from
manufacturers for the purchase of certain products for its Imaging Business
and needs sophisticated systems to carefully track and apply for such rebates.
Interruption of data processing capabilities for any extended length of time,
the failure to upgrade data services, the inability of the Company's data
processing system to support the expanded scope of the Company's business or
to adequately track the Imaging Business rebates, difficulties in converting
data and information systems after acquisitions, loss of stored data,
programming errors or other computer problems could have a material adverse
effect on the Company's business, financial condition and results of
operations.
ENVIRONMENTAL LIABILITIES AND REGULATIONS
The past and present business operations of the Company and the past and
present ownership and leasing of real property by the Company are subject to
extensive and changing federal, state, local and foreign environmental laws
and regulations, including those relating to the use, handling, storage,
discharge and disposal of hazardous substances. Certain of the products
distributed and serviced by the Imaging Business contain chemicals and
byproducts which require proper disposal under applicable environmental law.
The Company
23
<PAGE>
cannot predict what environmental legislation or regulations will be enacted
in the future, how existing or future laws or regulations will be administered
or interpreted or what environmental conditions may be found to exist on its
properties. Compliance with more stringent laws or regulations, as well as
more vigorous enforcement policies of applicable regulatory agencies or
stricter interpretations of existing laws, and discovery of new conditions,
may require additional expenditures by the Company, some of which may be
material.
ABSENCE OF ESTABLISHED TRADING MARKET
The Exchange Notes will constitute a new issue of securities with no
established trading market, and there can be no assurance as to: (i) the
liquidity of any such market that may develop; (ii) the ability of holders of
Exchange Notes to sell their Exchange Notes; or (iii) the price at which the
holders of Exchange Notes would be able to sell their Exchange Notes. If such
a market were to exist, the Exchange Notes could trade at prices that may be
higher or lower than their principal amount or purchase price, depending on
many factors, including prevailing interest rates, the market for similar
notes and the financial performance of the Company and its subsidiaries. The
Company has been advised by the Initial Purchasers that they presently intend
to make a market in the Exchange Notes, when issued. However, the Initial
Purchasers are not obligated to do so, and any market-making activity with
respect to the Exchange Notes may be discontinued at any time without notice.
In addition, such market-making activity will be subject to the limits imposed
by the Securities Act and the Exchange Act. See "Exchange Offer." There can be
no assurance that even following registration of the Exchange Notes an active
trading market will exist for the Exchange Notes, or that such trading market
will be liquid.
24
<PAGE>
USE OF PROCEEDS
This Exchange Offer is intended to satisfy certain of the Company's
obligations under the Registration Rights Agreement. The Company will not
receive any cash proceeds from the issuance of the Exchange Notes offered
hereby. In consideration for issuing the Exchange Notes contemplated in this
Prospectus, the Company will receive Private Notes in like principal amount,
the form and terms of which are the same as the forms and terms of the
Exchange Notes (which replace the Private Notes), except as otherwise
described herein. The Private Notes surrendered in the exchange for Exchange
Notes will be retired and canceled and cannot be reissued. Accordingly,
issuance of the Exchange Notes will not result in any increase or decrease in
the indebtedness of the Company. As such, no effect has been given to the
Exchange Offer in the capitalization tables.
The net proceeds of the Initial Offering (approximately $119.8 million after
Initial Purchasers' discounts and expenses associated with the Initial
Offering) have been and will be used to finance future acquisitions of
additional medical products distributors and for working capital and general
corporate purposes. Pending such uses, the net proceeds of the Initial
Offering have been invested in short-term interest-bearing securities. The
Company is restricted in its ability to invest the net proceeds of the Initial
Offering pending their application by the terms of the Indenture and the
Credit Facility. It is anticipated that the rate of return to be earned by the
Company on such net proceeds will be less than the interest rate on the Notes.
See "Description of Credit Facility" and "Description of Exchange Notes--
Certain Covenants--Limitation on Restricted Payments."
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1997, on an actual basis and as adjusted to reflect the Initial Offering
(after deducting the estimated offering expenses and the application of the
net proceeds therefrom). This table should be read in conjunction with
"Selected Consolidated Financial Data," "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Company's
Consolidated Financial Statements and the notes thereto included elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
-------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Debt (1):
Credit Facility........................................... -- --
Capital lease obligations................................. 273 273
Notes..................................................... -- 125,000
Other debt................................................ 7,521 7,521
------- -------
Total long-term debt.................................... 7,794 132,794
Total shareholders' equity.................................. 210,380 210,380
------- -------
Total capitalization.................................... 218,174 343,174
======= =======
</TABLE>
- --------
(1) Includes current maturities.
25
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On September 23, 1997, the Company acquired S&W in a merger (the "Merger")
accounted for as a pooling of interests. The unaudited pro forma condensed
combined balance sheet as of June 30, 1997 has been prepared as if the Merger
took place on that date. The unaudited pro forma condensed combined statements
of operations for the three years ended March 28, 1997 and for the quarters
ended June 30, 1996 and 1997 have been prepared as if the Merger and other
transactions requiring pro forma adjustments had occurred on April 1, 1994.
The unaudited pro forma condensed combined financial statements are based on
the separate historical condensed financial statements of PSS and S&W giving
effect to the transactions under the assumptions and adjustments outlined in
the accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements. The unaudited pro forma condensed combined financial statements
are provided for comparative purposes only and are not necessarily indicative
of the actual results that would have been obtained had the Merger occurred on
the dates indicated or that may be achieved in the future.
The unaudited pro forma condensed combined financial statements should be
read in conjunction with the separate audited consolidated financial
statements, including the notes thereto, of PSS, appearing in this Prospectus.
26
<PAGE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
---------------- ---------------------
PSS S&W ADJUSTMENTS COMBINED
-------- ------- ----------- --------
(IN THOUSANDS)
ASSETS
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents........... $ 48,172 $ 1 $ 48,173
Marketable securities............... 520 -- 520
Accounts receivable, net............ 121,593 10,331 131,924
Inventories......................... 68,477 5,772 74,249
Prepaid expenses and other.......... 20,502 1,941 22,443
-------- ------- --------
Total current assets.............. 259,264 18,045 277,309
Property and equipment, net........... 21,318 1,358 22,676
Intangibles, net...................... 22,248 458 22,706
Other assets.......................... 5,371 329 5,700
-------- ------- --------
Total assets...................... $308,201 $20,190 $328,391
======== ======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.................... $ 69,700 $ 3,968 $ 73,668
Accrued expenses.................... 13,764 825 $ 500 (1) 15,089
Notes payable to bank, notes payable
to related parties, and current ma-
turities of long-term debt......... -- 5,435 5,435
Other............................... 7,684 1,271 8,955
-------- ------- ----- --------
Total current liabilities......... 91,148 11,499 500 103,147
Long term debt and capital lease
obligations, net of current
maturities........................... 1,609 3,464 5,073
Other liabilities..................... 5,064 -- 5,064
-------- ------- ----- --------
Total liabilities................. 97,821 14,963 500 113,284
-------- ------- ----- --------
Shareholders' Equity:
Common stock........................ 373 10 12 (2) 395
Additional paid-in capital.......... 207,651 173 (12)(2) 207,812
Retained Earnings................... 2,016 6,350 (500)(1) 7,866
Cumulative foreign currency transla-
tion adjustment.................... 340 -- 340
-------- ------- ----- --------
210,380 6,533 (500) 216,413
Loan to employee stock ownership
plan............................... -- (1,306) -- (1,306)
-------- ------- ----- --------
Total shareholders' equity........ 210,380 5,227 (500) 215,107
-------- ------- ----- --------
Total liabilities and sharehold-
ers' equity...................... $308,201 $20,190 $ -- $328,391
======== ======= ===== ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
27
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------- --------------------
PSS S&W ADJUSTMENTS COMBINED
-------- ------- ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales............................ $203,543 $20,040 $223,583
Cost of goods sold................... 148,100 15,470 163,570
-------- ------- --------
Gross profit....................... 55,443 4,570 60,013
Selling, general and administrative
expenses............................ 48,912 4,039 52,951
Income from operations........... 6,531 531 7,062
-------- ------- --------
Other income (expense):
Interest expense................... -- (181) (181)
Interest and investment income..... 248 7 255
Other income....................... 582 -- 582
-------- ------- --------
830 (174) 656
-------- ------- --------
Income before income taxes....... 7,361 357 $ 7,718
Provision for income taxes........... (2,991) (147) $ (3,138)
Net income........................... $ 4,370 $ 210 $ 4,580
======== ======= ========
Net income per common and common
equivalent share ................... $ 0.12 $ 0.90 $ 0.12
======== ======= ========
Weighted average shares.............. 37,502 235 1,656(2) 39,393
======== ======= ===== ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
28
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------- --------------------
PSS S&W ADJUSTMENTS COMBINED
-------- ------- ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales............................. $151,568 $17,689 $169,257
Cost of goods sold.................... 109,733 13,995 123,728
-------- ------- --------
Gross profit........................ 41,835 3,694 45,529
Selling, general and administrative
expenses............................. 37,913 3,234 41,147
Merger costs and expenses........... 6,934 -- 6,934
-------- ------- --------
Income (loss) from operations..... (3,012) 460 (2,552)
-------- ------- --------
Other income (expense):
Interest expense.................... -- (145) (145)
Interest and investment income...... 528 2 530
Other income........................ 404 -- 404
-------- ------- --------
932 (143) 789
-------- ------- --------
Income (loss) before income
taxes............................ (2,080) 317 (1,763)
(Provision) Benefit for income taxes.. 540 (144) 396
-------- ------- --------
Net income (loss) .................... $ (1,540) $ 173 $ (1,367)
======== ======= ========
Net income (loss) per common and
common equivalent share.............. $ (0.04) $ 0.80 $ (0.04)
======== ======= ========
Pro forma tax adjustment on pooled S-
Corporation income................... (142) (142)
-------- --------
Pro forma net income (loss)........... $ (1,682) $( 1,509)
======== ========
Pro forma tax adjustment per common
and common equivalent share on pooled
S-Corporation income................. $ (0.01) $ --
-------- --------
Pro forma net income (loss) per common
and common equivalent share.......... $ (0.05) $ ( 0.04)
======== ========
Weighted average shares............... 35,189 216 1,528(2) 36,933
======== ======= ===== ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
29
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 28, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------- --------------------
PSS S&W ADJUSTMENTS COMBINED
-------- ------- ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales............................. $691,020 $72,034 $763,054
Cost of goods sold.................... 502,904 55,260 558,164
-------- ------- --------
Gross profit........................ 188,116 16,774 204,890
Selling, general and administrative
expenses............................. 173,114 15,774 188,888
Merger costs and expenses........... 12,128 -- 12,128
-------- ------- --------
Income from operations............ 2,874 1,000 3,874
-------- ------- --------
Other income (expense):
Interest expense.................... (324) (865) (1,189)
Interest and investment income...... 2,406 14 2,420
Other income........................ 1,537 -- 1,537
-------- ------- --------
3,619 (851) 2,768
-------- ------- --------
Income before income taxes........ 6,493 149 6,642
Provision for income taxes............ (2,120) (96) (2,216)
-------- ------- --------
Net income............................ $ 4,373 $ 53 $ 4,426
======== ======= ========
Net income per common and common
equivalent share..................... $ 0.12 $ 0.23 $ 0.12
======== ======= ========
Pro forma tax adjustment on pooled S-
Corporation income................... (357) (357)
-------- --------
Pro forma net income.................. $ 4,016 $ 4,069
======== ========
Pro forma tax adjustment per common
and common equivalent share on pooled
S-Corporation income................. $ (0.01) $ (0.01)
-------- --------
Pro forma net income per common and
common equivalent share.............. $ 0.11 $ 0.11
======== ========
Weighted average shares............... 36,501 235 1,656(2) 38,392
======== ======= ===== ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
30
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 29, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------- --------------------
PSS S&W ADJUSTMENTS COMBINED
-------- ------- ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales............................. $529,024 $60,096 $589,120
Cost of goods sold.................... 379,360 47,170 426,530
-------- ------- --------
Gross profit........................ 149,664 12,926 162,590
Selling, general and administrative
expenses............................. 130,966 11,044 142,010
Merger costs and expenses........... 15,732 -- 15,732
-------- ------- --------
Income from operations............ 2,966 1,882 4,848
-------- ------- --------
Other income (expense):
Interest expense.................... (3,068) (500) (3,568)
Interest and investment income...... 1,180 8 1,188
Other income........................ 1,585 1 1,586
-------- ------- --------
(303) (491) (794)
-------- ------- --------
Income before income taxes........ 2,663 1,391 4,054
Provision for income taxes............ (1,324) (601) (1,925)
-------- ------- --------
Net income............................ $ 1,339 $ 790 $ 2,129
======== ======= ========
Net income per common and common
equivalent share..................... $ 0.04 $ 3.65 $ 0.06
======== ======= ========
Pro forma tax adjustment on pooled S-
Corporation income................... (438) (438)
-------- --------
Pro forma net income.................. $ 901 $ 1,691
======== ========
Pro forma tax adjustment per common
and common equivalent share on pooled
S-Corporation income................. $ (0.01) $ (0.01)
-------- --------
Pro forma net income per common and
common equivalent share.............. $ 0.03 $ 0.05
======== ========
Weighted average shares............... 31,454 216 1,528(2) 33,198
======== ======= ===== ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
31
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
------------------ --------------------
PSS S&W ADJUSTMENTS COMBINED
-------- -------- ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales................... $413,301 $ 58,684 $471,985
Cost of goods sold.......... 293,688 45,982 339,670
-------- -------- --------
Gross profit.............. 119,613 12,702 132,315
Selling, general and admin-
istrative expenses......... 111,492 10,748 122,240
Restructuring charge...... 4,389 -- 4,389
-------- -------- --------
Income from operations.. 3,732 1,954 5,686
-------- -------- --------
Other income (expense):
Interest expense.......... (4,064) (441) (4,505)
Interest and investment
income................... -- 5 5
Other income.............. 1,906 6 1,912
-------- -------- --------
(2,158) (430) (2,588)
-------- -------- --------
Income before income
taxes.................. 1,574 1,524 3,098
Provision for income taxes.. (2,421) (617) (3,038)
-------- -------- --------
Net income (loss)........... $ (847) $ 907 $ 60
======== ======== ========
Net income (loss) per common
and common equivalent
share...................... $ (0.04) $ 4.43 $ --
======== ======== ========
Pro forma tax adjustment on
pooled S-Corporation
income..................... (23) (23)
-------- --------
Pro forma net income(loss)....$. (870) $ 37
======== ========
Pro forma tax adjustment per
common and common
equivalent share on pooled
S-Corporation income....... -- --
-------- --------
Pro forma net income (loss)
per common and common
equivalent share........... $ (0.04) $ --
======== ========
Weighted average shares..... 23,762 205 1,445(2) 25,412
======== ======== ===== ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
32
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
The unaudited pro forma condensed combined financial statements have been
prepared by combining the historical balances of PSS and the historical
balances of S&W as recast to a conforming March year end. The following notes
describe the pro forma adjustments and other items relevant to such
statements.
PURCHASE BUSINESS COMBINATIONS
PSS completed certain immaterial acquisitions during fiscal years 1995,
1996, and 1997. The aggregate terms of these acquisitions have been disclosed
in the PSS consolidated financial statements included elsewhere in this
Prospectus. Pro forma information for such acquisitions is not presented in
the pro forma financial statements because the impact on PSS' results of
operations would not be material.
S&W completed one immaterial acquisition in fiscal year 1996 which was
accounted for as a purchase.
MERGER COSTS AND EXPENSES AND ANTICIPATED COST SAVINGS
Significant expenses are expected to be incurred in connection with the
consolidation and restructuring of PSS and S&W. Such activities will include
restructuring regional and corporate functions, consolidating information
systems and reducing personnel. The expenses associated with these activities
cannot be currently estimated with a reasonable degree of accuracy, but
preliminary estimates indicate that these expenses may range between $8,000
and $10,000. Income tax benefits at the statutory rate resulting from these
charges range between $2,700 and $3,400. The estimated costs associated with
the restructuring activities will be expensed in the period in which the
companies complete the restructuring plan.
Efficiencies and net cost savings are expected to result from the
consolidation and restructuring. The unaudited pro forma condensed combined
financial statements do not reflect such savings.
PRO FORMA ADJUSTMENTS
(1) Transaction Fees
Under the pooling-of-interests accounting method, direct transaction costs
are expensed in the period in which the transaction is consummated. Such costs
are not currently estimable with a reasonable degree of accuracy, but
preliminary estimates indicate that these expenses may range between $400 to
$500 and include investment banking, legal, accounting, printing,
solicitation, filing fees and similar expenses. The June 30, 1997 unaudited
pro forma condensed combined balance sheet reflects $500 of such expenses.
These expenses have not been reflected in the unaudited pro forma condensed
combined statements of operations.
(2) Shareholders' Equity and Earnings Per Share
The weighted average common share amounts represent the aggregate weighted
average shares of PSS after the pooling, adjusted to reflect the maximum
exchange ratio of 8.0565 shares of common stock of PSS for each share of S&W
common stock, which includes all shares held in escrow.
33
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data for fiscal years 1994
through 1997 were derived from the audited consolidated financial statements
of the Company which include the pre-merger financial information for the
mergers of Taylor and X-ray Georgia. The selected financial data for fiscal
year 1993 has been derived from the Company's unaudited consolidated financial
statements which include the pre-merger financial information for the mergers
of Taylor and X-ray Georgia. The following information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," and the Consolidated Financial Statements of the
Company and the Notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED(1) THREE MONTHS ENDED
---------------------------------------------------- --------------------
APRIL 2, APRIL 1, MARCH 30, MARCH 29, MARCH 28, JUNE 30, JUNE 30,
1993 1994 1995 1996 1997 1996 1996
----------- -------- --------- --------- --------- ----------- --------
(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales.............. $268,473 $351,203 $413,301 $529,024 $691,020 $151,568 $203,543
Gross profit........... 83,294 105,968 119,613 149,664 188,116 41,835 55,443
Selling, general and
administrative
expenses.............. 78,961 99,147 111,492 130,966 173,113 37,913 48,912
Restructuring
charges(2)............ 303 308 4,389 -- -- -- --
Merger costs and
expenses(3)........... -- -- -- 15,732 12,128 6,934 --
Net income (loss)
before extraordinary
item.................. 692 1,487 (847) 1,339 4,373 (1,540) $ 4,370
Extraordinary loss, net
of tax(4)............. -- 327 -- -- -- -- --
Net income (loss)...... $ 692 $ 1,160 $ (847) $ 1,339 $ 4,373 $ (1,540) $ 4,370
Net income (loss)
before extraordinary
item per share........ $ 0.04 $ 0.08 $ (0.04) $ 0.04 $ 0.12 $ (0.04) $ 0.12
Extraordinary loss per
share, net of tax..... -- $ (0.02) -- -- -- -- --
Net income (loss) per
share................. $ 0.04 $ 0.06 $ (0.04) $ 0.04 $ 0.12 $ (0.04) $ 0.12
Unaudited pro forma net
income including pro
forma tax adjustment
on pooled
S-Corporation income
and excluding merger
costs and expenses,
restructuring charges,
and fiscal year 1997
other operating
charges(2)(3)(5)...... $ 878 $ 1,276 $ 2,018 $ 12,307 $ 15,078 $ 3,135 $ 4,370
Unaudited pro forma net
income per share
including pro forma
tax adjustment on
pooled S-Corporation
income and excluding
merger costs and
expenses,
restructuring charges,
and fiscal year 1997
other operating
charges(2)(3)(5)...... $ 0.05 $ 0.07 $ 0.08 $ 0.39 $ 0.41 $ 0.09 $ 0.12
Weighted average shares
outstanding(6)........ 16,731 17,772 23,762 31,454 36,501 35,189 37,502
BALANCE SHEET DATA AT
END OF PERIOD:
Working capital........ $ 37,777 $ 46,148 $ 53,626 $172,696 $165,454 $160,070 $168,117
Total assets........... 93,962 125,545 134,426 278,958 298,286 284,536 308,201
Long-term liabilities.. 42,901 55,026 33,869 4,132 5,194 3,690 6,673
Total shareholders'
equity................ 18,897 23,588 46,326 199,550 205,600 192,346 210,380
</TABLE>
- --------
(1) The Company's fiscal year ends on the Friday closest to March 31. Fiscal
years 1993 through 1995 ended on the Thursday closest to March 31. All
periods presented were 52 weeks.
(2) Restructuring charges reflect charges taken by a company merged with the
Company pursuant to a pooling-of-interests transaction, prior to the date
of merger. The fiscal year 1995 restructuring charge of $4,389 reflects
the assessment of former management of such merged company of the under-
realization of future benefits related to certain intangible assets. The
fiscal year 1994 restructuring charge of $308 resulted from such merged
company's consolidation of an acquisition. The fiscal year 1993
restructuring charge of $303 resulted from the write-down by former
management of such merged company of capitalized software costs.
(3) Merger costs and expenses reflect direct merger expenses incurred in
connection with mergers accounted for as pooling-of-interests
transactions.
(4) The extraordinary item in fiscal year 1994 resulted from early
extinguishment of debt by Taylor prior to its merger with the Company.
(5) Fiscal year 1997 other operating charges represent write-offs of inventory
of $4,090 and accounts receivable of $500 at branches involved in mergers.
(6) Adjusted to give effect to a three-for-one stock split in fiscal year
1996.
34
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the consolidated financial
condition and consolidated results of operations of PSS should be read in
conjunction with the more detailed information contained in the Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Prospectus.
COMPANY OVERVIEW
PSS is a specialty marketer and distributor of medical products to
physicians, other alternate-site providers and hospitals. PSS is the leading
distributor of medical supplies, equipment and pharmaceuticals to office-based
physicians in the United States based on revenues, serving over 104,000
physician offices (representing approximately 54% of all physician offices) in
all 50 states. The Company, which entered the imaging-supply market in
November 1996, has grown to be the second-largest distributor of imaging
supplies and equipment in the United States based on revenues, serving over
12,000 customer sites in 21 states. PSS also distributes medical products to
office-based physicians and hospitals in five European countries.
COMPANY GROWTH
PSS has grown rapidly in recent years through mergers and acquisitions,
same-center growth and new-center development. From the end of fiscal year
1993 through the end of fiscal year 1997, the Company's net sales, excluding
the pre-acquisition revenues of Taylor and X-ray Georgia, grew at a compound
annual rate of approximately 53.5%, and including pre-acquisition revenues of
Taylor and X-ray Georgia, the Company's net sales grew at a compound annual
rate of approximately 26.7%. The number of company service centers has grown
from two at the end of fiscal year 1984 to 89 currently, including 61
Physician Supply Business service centers, 25 Imaging Business service centers
and three International Business service centers. In order of priority, the
Company's growth has been accomplished through: (i) acquiring regional and
local Physician Supply Business medical-products distributors; (ii) acquiring
local and regional diagnostic imaging equipment and supply distributors; (iii)
increasing sales from existing service centers; and (iv) opening start-up
service centers.
The following table depicts the number of service centers, sales
representatives and states served by the Company for the periods indicated.
See "Business--Properties" for a list of the Physician Supply Business,
Imaging Business and International Business service centers.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------
QUARTER ENDED
1993 1994 1995 1996 1997 JUNE 30, 1997
---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Total Company:
Sales representatives................. 324 371 465 702 797 805
Service centers(1).................... 41 46 55 65 77 80
States served......................... 33 44 48 50 50 50
Physician Supply Business:
Sales representatives................. 315 362 455 692 720 720
Service centers(1).................... 40 45 54 64 61 61
States served......................... 33 44 48 50 50 50
Imaging Business(2):
Sales representatives................. 9 9 10 10 53 60
Service specialists................... 30 32 34 35 145 160
Service centers....................... 1 1 1 1 14 16
States served......................... 2 2 2 2 9 16
International Business:
Sales representatives................. 24 25
Service centers....................... 2 3
Countries served...................... 5 5
</TABLE>
- --------
(1) Excludes Taylor service centers prior to their acquisition.
(2) All Imaging Business data for periods prior to November 1996 reflect pre-
merger financial data of a company acquired through a pooling-of-interests
transaction.
35
<PAGE>
PSS has increased the number of its Physician Supply Business sales
representatives from 203 in fiscal 1991 to over 700 as of September 30, 1997.
The Company's sales representatives focus on a consultative and comprehensive
sales approach with an emphasis on sophisticated diagnostic products. The
Company invested approximately $2.6 million in the training and development of
its sales representatives and management in fiscal 1997.
The Company has focused on a comprehensive and consultative sales approach
with an emphasis on diagnostic products, which includes sophisticated
diagnostic equipment and supplies related to the use of such equipment. As a
result, the Company has been able to expand and increase its diagnostic
products sales in periods of uncertainty in the health care market.
Additionally, as manufacturers search for means to reduce sales and marketing
expenses, PSS has used its expertise and market reach to distribute products
to physicians as evidenced by the increase in total sales dollars of
diagnostic equipment and pharmaceuticals.
In addition to the opening of new service centers and the acquisition of
local medical-products distributors, PSS' sales growth is largely attributable
to high levels of same center sales growth. PSS quantifies same-center sales
growth by comparing the aggregate sales for service centers which have been in
operation for at least two consecutive 12-month periods.
The following table sets forth the same-center sales growth of the Physician
Supply Business for the periods indicated:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------
QUARTER ENDED
1993(1) 1994(1) 1995(1) 1996 1997 JUNE 30, 1997
------- ------- ------- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Number of centers....... 25 29 40 45 53 61
Same-center sales
growth(2).............. 18.5% 27.7% 23.3% 26.8% 18.2% 13.2%
</TABLE>
- --------
(1) Excludes Taylor service centers.
(2) Adjusted for merged centers.
This same-center sales growth rate has been accomplished by: (i) focusing on
diagnostic equipment which produces residual sales of reagents; (ii)
productivity gains of the Company's maturing sales force; (iii) pursuing
customer reach and penetration; and (iv) accessing new products not previously
distributed. Historically, the Company has had same-center sales growth in
excess of the estimates of industry growth rates. The Company experienced
rapid same-center sales growth in fiscal years 1994, 1995 and 1996 primarily
as a result of additional emphasis on new products manufactured by Abbott, F.
Hoffman-La Roche Ltd. and SmithKline Beecham not previously distributed by the
Company.
ACQUISITION PROGRAM
The Company views the acquisition of medical-products distributors as an
integral part of its growth strategy. The Physician Supply Business has grown
from one service center located in Jacksonville, Florida in 1983 to 61 service
centers currently. The Imaging Business and International Business began with
acquisitions in fiscal year 1997 and have acquired 25 and three service
centers, respectively, to date. Since fiscal year 1994 the Company has
accelerated its acquisition of medical-products distributors both in number
and in size of the operations acquired.
36
<PAGE>
The following table sets forth the number of acquisitions of the Company,
the prior revenues of the companies acquired and the aggregate consideration
paid for such acquisitions for the periods indicated.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------------- YEAR TO DATE
1993 1994 1995 1996 1997 FISCAL 1998
------ ------- ------- -------- -------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Number of acquisitions.. 3 4 9 11 10 6
Prior year revenues for
acquired companies(1).. $8,200 $26,300 $37,600 $167,600 $241,700 $168,700
Aggregate consideration
paid for acquired
companies.............. $1,200 $ 4,800 $ 9,700 $ 73,100 $ 83,100 $ 79,600
</TABLE>
- --------
(1) Reflects twelve-month trailing revenues for companies prior to their
acquisition by PSS and is not necessarily reflective of the revenues of
continued operations following their acquisition.
The Company anticipates taking a charge for the quarter ended September 30,
1997 of approximately $8.0 to $10.0 million due to mergers completed in such
quarter. See "Risk Factors--Quarterly Fluctuations in Operating Results."
SALES MIX
The following table sets forth information regarding the Company's net sales
by business and significant product category for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ENDED JUNE 30,
-------------------------- -------------------
1995 1996 1997 1996 1997
-------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET SALES
Total Company:
Physician Supply Business..... $366,285 $483,294 $601,310 $ 136,540 $ 154,459
Imaging Business.............. 47,016 45,730 74,003 11,865 44,947
International Business........ -- -- 15,707 3,163 4,137
-------- -------- -------- --------- ---------
Company total............... $413,301 $529,024 $691,020 $ 151,568 $ 203,543
======== ======== ======== ========= =========
Physician Supply Business(1):
Medical Supplies.............. $151,588 $297,058 $404,859 $ 93,772 $ 107,685
Equipment..................... 51,127 76,144 125,994 28,201 30,290
Pharmaceuticals............... 29,836 43,708 66,427 13,524 15,287
Service and other............. 3,637 3,845 4,030 1,043 1,197
Taylor........................ 130,097 62,539 -- -- --
-------- -------- -------- --------- ---------
Physician Supply Business
total...................... $366,285 $483,294 $601,310 $ 136,540 $ 154,459
======== ======== ======== ========= =========
Imaging Business(2):
Imaging supplies.............. $ 36,328
Equipment..................... 5,671
Service and other............. 2,948
Imaging Business total...... $ 47,016 $ 45,730 $ 74,003 $ 11,865 $ 44,947
======== ======== ======== ========= =========
International Business......... $ 15,707 $ 3,163 $ 4,137
======== ========= =========
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ENDED JUNE 30,
------------------- --------------------
1995 1996 1997 1996 1997
----- ----- ----- --------- ---------
<S> <C> <C> <C> <C> <C>
PERCENTAGE OF NET SALES
Total Company:
Physician Supply
Business................. 88.6% 91.4% 87.0% 90.1% 75.9%
Imaging Business.......... 11.4 8.6 10.7 7.8 22.1
International Business.... -- -- 2.3 2.1 2.0
----- ----- ----- --------- ---------
Company total........... 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ========= =========
Physician Supply
Business(1):
Medical Supplies.......... 64.2% 70.6% 67.3% 68.7% 69.7%
Equipment................. 21.7 18.1 21.0 20.7 19.6
Pharmaceuticals........... 12.6 10.4 11.0 9.9 9.9
Service and other......... 1.5 0.9 0.7 0.7 0.8
----- ----- ----- --------- ---------
Physician Supply
Business Total......... 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ========= =========
Imaging Business(2):
Imaging supplies.......... -- -- 80.8%
Equipment................. -- -- 12.6
Service and other......... -- -- 6.6
---------
Imaging Business total.. -- -- 100.0%
=========
</TABLE>
- --------
(1) Excludes Taylor net sales by category for period April 1, 1994 through
September 30, 1995. The Company began tracking combined net sales by
category beginning October 1, 1995.
(2) Net sales data by product category for the Imaging Business is not
available for periods prior to the quarter ended June 30, 1997.
The Company recently completed the second year of a Distributorship
Agreement (the "Abbott Agreement") with Abbott providing for the exclusive
distribution of certain Abbott diagnostic products. Gross profits for products
previously sold by Abbott are generally substantially less than standard PSS
margins. The average gross profit on sales of Abbott products by the Company's
Physician Supply Business improved to 18.0% and 22.2% for fiscal years 1996
and 1997, respectively. Gross profits on these products have gradually
improved over the term of the relationship.
38
<PAGE>
With respect to the Imaging Business, while gross margins are lower than
those of the Physician Supply Business, general and administrative expenses
are also lower than those in the Physician Supply Business due in part to
fewer products distributed, larger average order sizes, less frequent
deliveries and fewer personnel. PSS is focusing its sales efforts on higher-
margin accounts and on sales of equipment that involve ongoing sales of
higher-margin diagnostic reagents. The following table sets forth certain
gross margin trends of the Company for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED ENDED JUNE 30,
---------------------- ----------------
1995 1996 1997 1996 1997
------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
GROSS MARGIN TRENDS
Physician Supply Business(1):
Medical Supplies................... 33.3% 30.8% 29.8% 29.5% 30.2%
Equipment.......................... 26.8 25.3 24.8 24.3 24.8
Pharmaceuticals.................... 26.6 27.0 27.4 29.0 27.3
Service and other.................. 28.2 32.3 37.9 35.1 39.5
Taylor............................. 30.5 29.4 -- -- --
Physician Supply Business weighted
average.......................... 30.8 29.4 28.6 28.6 28.9
Imaging Business(2):
Imaging supplies................... 13.8
Equipment.......................... 29.8
Service and other.................. 73.8
Imaging Business weighted aver-
age.............................. 14.2 16.9 19.1 16.1 20.5
International Business.............. 40.7 36.5
Company weighted average(1)....... 28.9 28.3 27.8 27.6 27.2
</TABLE>
- --------
(1) Excludes fiscal year 1997 operating write-offs of inventory of branches
involved in mergers of approximately $4.1 million.
(2) Gross margin percentages by product category for the Imaging Business are
not available for periods prior to the quarter ended June 30, 1997.
The following table sets forth certain operating trends of the Company for
the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED ENDED JUNE 30,
---------------------- ----------------
1995 1996 1997 1996 1997
------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
Operating Trends:
Days Sales Outstanding.............. 55 55 56 58 53
Average Inventory Turnover.......... 8.3 8.3 8.1 7.1 8.7
</TABLE>
Accounts receivable, net of allowances, were $119.3 million and $121.6
million at March 28, 1997 and June 30, 1997, respectively. In March 1997, the
Company acquired an imaging company with accounts receivable of $3.3 million.
Excluding this increase in accounts receivable, the average days sales
outstanding were 55 days for the year ended March 28, 1997.
Inventories were $67.9 million and $68.5 million as of March 28, 1997 and
June 30, 1997, respectively. The increase in inventory resulting from the
acquisition described in the above paragraph was $2.5 million. Excluding this
increase in inventory, average inventory turnover was 8.3 times for the year
ended March 28, 1997.
39
<PAGE>
EXCLUSIVE DISTRIBUTION AGREEMENTS
The Company has focused on a comprehensive and consultative sales approach
with an emphasis on diagnostic products, which includes sophisticated
diagnostic equipment and supplies related to the use of such equipment. As a
result, the Company has been able to expand and increase its diagnostic
products sales in periods of uncertainty in the health care market.
Additionally, as manufacturers search for means to reduce selling and
marketing expenses, PSS has used its expertise and market reach to capitalize
upon such manufacturers' strategic initiatives as evidenced by PSS' increase
in sales of diagnostic equipment and pharmaceuticals.
The Abbott Agreement has positioned PSS as the sole distributor to physician
offices with 24 or fewer physicians for, among other products, the CELL DYN
1400, 1600 and 1700 hematology products, Abbott Vision blood chemistry
analyzers and reagents, AXyM and IMx immunoassay analyzers and reagents, and
the Abbott Testpack line of rapid tests and has also enabled the Company to
cross-sell its other products to Abbott customers.
The Company has entered into other exclusive and semi-exclusive distribution
agreements for certain products manufactured by Siemens AG, Hologic, Inc., C.
R. Bard, Inc., HumaScan, Inc. and F. Hoffman-La Roche Ltd. These strategic
alliances should continue to broaden the Company's medical product offerings.
See "Risk FactorsDependence on Vendor Relationships."
OTHER MARKETING PROGRAMS
PSS plans to continue to focus on providing products and services to the
primary care physician market whether the physician is a single practitioner
or a member of a large group practice. In that effort, PSS developed Network
PlusSM, a comprehensive savings plan for physicians in which PSS offers
special group purchasing contract pricing and provides periodic cost analyses
to help manage the supply needs of each physician. Under this program, when a
physician office guarantees at least 80% of its purchase volume to PSS, the
Company will guarantee the lowest purchase prices on certain products as well
as certain service guarantees. In addition to this program, the Company has
recently signed distribution agreements with several national and regional
integrated and managed care groups.
In order to lower product-acquisition and inventory-carrying costs, PSS has
implemented a new Penny Saver product line. The Penny Saver products are those
most frequently used by PSS customers. This product line provides customers a
choice between name-brand products and the Penny Saver quality, low-price
alternatives. Currently, the Company has over 250 products under the Penny
Saver label.
IMAGING BUSINESS
The Company's Imaging Business distributes over 3,500 medical diagnostic
imaging supplies, chemicals and equipment and provides technical service to
physician offices, other alternate-site providers and hospitals. This business
began operations in November 1996 with the acquisition of eight service
centers, 24 sales representatives and 75 service specialists. Currently, the
Imaging Business provides service to approximately 12,000 physician offices,
other alternate-site providers and hospitals through 25 service centers, with
over 95 sales representatives and over 300 service specialists as of September
30, 1997.
INTERNATIONAL BUSINESS
The Company also distributes medical products to office-based physicians and
hospitals in Belgium, France, Germany, Luxembourg and the Netherlands through
its WorldMed International, Inc. subsidiary. The International Business began
operations in April 1996 with the acquisition of its service center in Leuven,
Belgium. The Company currently has three International Business service
centers employing approximately 25 sales representatives.
40
<PAGE>
RESULTS OF OPERATIONS
The table below sets forth for each of the fiscal years 1995 through 1997
and the three months ended June 30, 1996 and 1997, certain financial
information as a percentage of net sales. The following financial information
includes the pre-acquisition financial information of Taylor and X-ray
Georgia.
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED ENDED JUNE 30,
---------------------- ----------------
1995 1996 1997 1996 1997
------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales........................... 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit........................ 28.9 28.3 27.2 27.6 27.2
General and administrative
expenses........................... 17.0 15.6 16.0 15.1 15.8
Selling expenses.................... 10.0 9.2 9.1 9.9 8.3
Restructuring charges(1)............ 1.1 -- -- -- --
Merger costs and expenses(2)........ -- 3.0 1.8 4.6 --
Net income (loss)................... (0.2) 0.3 0.6 (1.0) 2.1
Unaudited pro forma net income,
including pro forma tax adjustment
on pooled S-Corporation income and
excluding merger costs and
expenses, restructuring charges,
and 1997 other operating
charges(3)......................... 0.5 2.3 2.2 2.1 2.1
</TABLE>
- --------
(1) Restructuring charges reflect charges taken by a company that merged with
the Company pursuant to a pooling-of-interests transaction, prior to its
date of merger. The fiscal year 1995 restructuring charge reflects
assessment of former management of such merged company of the under-
realization of future benefits related to certain intangible assets.
(2) Merger costs and expenses reflect direct merger expenses incurred in
connection with mergers accounted for as pooling-of-interests
transactions.
(3) Fiscal year 1997 other operating charges represent write-offs of inventory
and accounts receivable at branches involved in mergers.
Three Months Ended June 30, 1997 Versus Three Months Ended June 30, 1996
Net Sales. Net sales for the three months ended June 30, 1997 totaled $203.5
million, an increase of $52.0 million or 34.3% over net sales of $151.6
million for the three months ended June 30, 1996. The net sales from the
Imaging Business increased to $44.9 million for the three months ended June
30, 1997 from $11.9 million for the three months ended June 30, 1996. In order
of contribution to the increase, net sales increased as the result of: (i) net
sales of the Imaging Business centers acquired during the last nine months of
fiscal year 1997; (ii) internal sales growth of Physician Supply Business
centers operating at least two years; and (iii) net sales of Physician Supply
Business centers recently acquired.
The Company's Physician Supply Business service centers that are expected to
be operating for at least 24 consecutive months as of fiscal year ended 1998
generated same center sales growth of 13% for the three months ended June 30,
1997. The sales growth resulted from the continued development of PSS's sales
force, further market penetration, increased emphasis on diagnostic equipment
and supplies and products not previously distributed, and expansion of
existing territories served by individual service centers.
Gross Profit. Gross profit for the three months ended June 30, 1997 totaled
$55.4 million, an increase of $13.6 million or 32.5% over the three months
ended June 30, 1996 total of $41.8 million. Gross profit as a percentage of
net sales decreased to 27.2% for the three months ended June 30, 1997 from
27.6% for the three months ended June 30, 1996. The decrease in gross profit
percentage is attributable to lower margins of the recently acquired Imaging
Business operations, which had an average gross profit of 20.5% for the three
months ended June 30, 1997. The Company is currently in the third year of a
five year exclusive distributorship agreement with Abbott. For the three
months ended June 30, 1996 and 1997, gross profit on sales of Abbott products
were 20.8% and 22.0%, respectively.
41
<PAGE>
General and Administrative Expenses. General and administrative expenses for
the three months ended June 30, 1997 totaled $32.1 million, an increase of
$9.2 million or 40.4% over the three months ended June 30, 1996 total of $22.9
million. As a percentage of sales, general and administrative expenses
increased to 15.8% for the three months ended June 30, 1997 from 15.1% for the
three months ended June 30, 1996. Contributing to the increase in general and
administrative expenses as a percentage of net sales was the Company's
strategy to focus its Physician Supply Business sales efforts on penetration
of more profitable areas of the market, which resulted in lower but more
profitable growth in sales. The increase in general and administrative
expenses is also attributable to continuing investment in resources to respond
to a changing health care market, including increased training and resources
to sell diagnostic equipment to office-based physicians and penetrate national
accounts.
Selling Expenses. Selling expenses for the three months ended June 30, 1997
totaled $16.8 million, an increase of $1.7 million or 11.7% over the three
months ended June 30, 1996 total of $15.1 million. As a percentage of sales,
selling expenses decreased to 8.3% for the three months ended June 30, 1997
from 9.9% for the three months ended June 30, 1996. The decrease in selling
expense as a percentage of sales was primarily a result of the operations of
the new Imaging Business which incurs significantly lower selling expense as a
percentage of net sales than the Physician Supply Business.
Merger Costs and Expenses. During the three months ended June 30, 1997, the
Company did not incur any non-recurring merger costs and expenses related to
acquisitions. During the three months ended June 30, 1996, the Company
recorded non-recurring merger costs and expenses of approximately $6.9 million
associated with the mergers of PSS and four medical-products distributors.
Such costs included direct merger costs primarily consisting of investment
banking, legal, accounting and filing fees as well as consolidation costs from
the closing of duplicate service center locations and reducing personnel.
Operating Income (Loss). The Company recorded operating income of $6.5
million for the three months ended June 30, 1997 as compared to an operating
loss of $3.0 million for the three months ended June 30, 1996. The operating
results for the three months ended June 30, 1996 include non-recurring merger
costs and expenses of approximately $6.9 million. Excluding the effect of
these non-recurring costs, operating income would have increased $2.6 million
or 67% to $6.5 million for the three months ended June 30, 1997 from $3.9
million for the three months ended June 30, 1996.
Interest Income. The Company recorded interest income from short-term
investments of approximately $0.3 million during the three months ended June
30, 1997. Interest expense for the three months ended June 30, 1997 was
approximately $0.1 million. Interest expense was related to debt of companies
acquired which was repaid upon acquisition.
Other Income. The Company's other income totaled $0.6 million and $0.4
million, an increase of $0.2 million or 43.9%, for the three months ended June
30, 1997 and 1996, respectively. Other income primarily represents finance
charges on customer accounts.
(Provision) Benefit For Income Taxes. The income tax provision totaled $3.0
million for the three months ended June 30, 1997 as compared to the income tax
benefit of $0.5 million for the three months ended June 30, 1996. The income
tax computation is affected by the non-deductible nature of certain non-
recurring merger costs and expenses in the period in which they were incurred.
Net Income (Loss). Net income totaled $4.4 million for the three months
ended June 30, 1997 as compared to a net loss of $1.5 million for the three
months ended June 30, 1996. The net loss for the three months ended June 30,
1996 includes approximately $6.9 million of non-recurring merger costs and
expenses. Pro forma net income excluding non-recurring merger costs and
expenses and the related tax effects would have been $4.4 million for the
three months ended June 30, 1997, compared to $3.1 million for the three
months ended June 30, 1996.
Fiscal Year Ended March 28, 1997 Versus Fiscal Year Ended March 29, 1996
Net Sales. Net sales increased $162.0 million, or 30.6%, to $691.0 million
for fiscal year 1997 compared to fiscal year 1996 net sales of $529.0 million.
The increase in net sales was attributable to: (i) internal sales
42
<PAGE>
growth of centers operating at least two years; (ii) the Company's focus on
diagnostic equipment sales; (iii) incremental sales generated in connection
with the Abbott Agreement; (iv) net sales of Physician Supply Business centers
and International Business centers acquired during fiscal year 1997; and (v)
sales from the acquisitions of the imaging companies during fiscal year 1997.
The net sales increase was slowed by the Company's efforts in the last six
months of fiscal year 1997 to reduce low gross margin sales. Physician Supply
Business same store sales growth approximated 18% for fiscal year 1997.
Fiscal year 1997 net sales resulting from the acquisitions of the Imaging
Business totaled $74.0 million, an increase of $28.3 million over the fiscal
year 1996 X-ray Georgia revenues. Net sales of the Imaging Business totaled
$33.2 million for the three months ended March 28, 1997. Fiscal year 1997 net
sales resulting from the acquisition of two Physician Supply Business medical
supply companies and three International Business medical supply companies
totaled approximately $25.5 million and $15.7 million, respectively.
Gross Profit. Gross profit increased $38.5 million, or 25.7%, for fiscal
year 1997 compared to fiscal year 1996. The increase in gross profit dollars
is attributable to the sales growth described above. Gross profit as a
percentage of net sales was 28.3% and 27.2% for fiscal years 1996 and 1997,
respectively. The decrease in gross profit percentage was attributable to: (i)
the write-off of inventory related to centers involved in mergers; (ii) lower
gross profit as a percent of sales of the Imaging Business; and (iii) the
continued penetration by the Company's Physician Supply Business into larger
physician group practices that require more competitive pricing but entail
lower selling and servicing costs.
Vendor performance incentives earned by PSS through the achievement of
certain predetermined Company purchase and sales levels also impacted gross
profits. These performance incentives totaled $6.4 million and $3.1 million
for fiscal years 1996 and 1997, respectively. Although the Company plans and
expects to continue to negotiate vendor performance incentives, there is no
assurance that vendor performance incentives will continue to positively
impact gross profit at the historical levels.
General and Administrative Expenses. General and administrative expenses
increased $27.8 million, or 33.7%, for fiscal year 1997 compared to fiscal
year 1996. General and administrative expenses as a percentage of net sales,
increased to 16.0% for fiscal year 1997 from 15.6% for fiscal year 1996. The
increase in general and administrative expenses as a percentage of net sales
was a result of operating costs associated with transitioning merged and
acquired operations offset by the continued leveraging of fixed costs of
mature service center operations.
Selling Expenses. Selling expenses increased $14.4 million, or 29.6%, for
fiscal year 1997 compared to fiscal year 1996 as a result of an increase in
net sales. Selling expense as a percentage of net sales was 9.2% and 9.1% for
fiscal years 1996 and 1997, respectively. The decrease in selling expense as a
percentage of net sales is due to leveraging of existing service centers'
fixed selling expenses, such as salaries paid to sales representatives during
the conversion period from a guaranteed salary to a commission compensation
arrangement and the leveraging of sales management salaries. The decrease in
selling expenses as a percentage of net sales is also due to the variable
commission plan of the Company, which pays commissions based on gross profit
as a percentage of net sales.
Merger Costs and Expenses. During fiscal year 1997, the Company recorded
merger costs and expenses of $12.1 million incurred in connection with mergers
accounted for as poolings of interests. Such costs include direct merger costs
consisting primarily of investment banking, legal, accounting, and filing fees
as well as consolidation costs from the closing of duplicate service center
locations, realigning regional and corporate functions, and reducing
personnel.
Operating Income. Operating income decreased $0.1 million, or 3.1%, for
fiscal year 1997 compared to fiscal year 1996. As a percentage of net sales,
operating income for fiscal year 1997 decreased to 0.4% from 0.6% for fiscal
year 1996 primarily due to operating costs and asset write-offs associated
with transitioning merged and acquired operations. On a pro forma basis,
excluding the effect of merger costs and expenses and
43
<PAGE>
1997 other operating charges for write-offs of inventory of $4.1 million and
receivables of $0.5 million at branches involved in mergers, operating income
for fiscal year 1997 would have increased to $19.6 million from $18.7 million
for fiscal year 1996.
Interest Expense. Interest expense for fiscal year 1997 decreased
approximately $2.7 million, or 89.4%, compared to fiscal year 1996. Interest
expense decreased due to the use of the net proceeds from an equity offering
during the three months ended December 31, 1995 to repay all outstanding debt
other than capital lease obligations. Interest expense for fiscal year 1997
represents interest expense from the accounting restatement for the operations
of X-ray Georgia.
Interest and Investment Income. Interest and investment income for fiscal
year 1997 increased approximately $1.2 million, or 104.0%, compared to fiscal
year 1996. The Company earned interest income of $1.9 million in 1997 from the
short-term investment of the remaining net proceeds from the equity offering
in fiscal year 1996 and recorded an unrealized gain of $0.5 million on equity
securities.
Other Income. Other income decreased approximately $0.1 million, or 3.0%,
for fiscal year 1997 compared to fiscal year 1996.
Provision for Income Taxes. Provision for income taxes increased $0.8
million, or 60.1%, for fiscal year 1997 compared to fiscal year 1996 due to
higher pretax income of $6.5 million in fiscal year 1997 compared to $2.7
million in fiscal year 1996 as a result of the factors discussed above and was
also affected by higher nontaxable investment income of $0.7 million in fiscal
year 1997 compared to $0.2 million in fiscal year 1996 and lower nondeductible
merger costs and expenses of $0.7 million in fiscal year 1997 compared to $2.2
million in fiscal year 1996. The effective income tax rate was 32.7% in fiscal
year 1997 primarily due to an income tax benefit resulting from a reduction in
the deferred tax asset valuation allowance of $0.9 million.
Net Income. Net income increased $3.0 million for fiscal year 1997 compared
to fiscal year 1996 for the reasons discussed above. As a percentage of net
sales, net income increased to 0.6% for fiscal year 1997 from 0.3% for fiscal
year 1996. On a pro forma basis, including a pro forma tax adjustment on
pooled S-Corporation income and excluding the effect of merger costs and
expenses and 1997 other operating charges for write-offs of inventory of $4.1
million and receivables of $0.5 million at branches involved in mergers, pro
forma net income would have increased 22.8% to $15.1 million for fiscal year
1997 compared to $12.3 million for fiscal year 1996.
Fiscal Year Ended March 29, 1996 Versus Fiscal Year Ended March 30, 1995
Net Sales. Net sales increased $115.7 million to $529.0 million, or 28.0%,
for fiscal year 1996 compared to fiscal year 1995 net sales of $413.3 million.
The increase in net sales was attributable to: (i) internal sales growth of
centers operating at least two years; (ii) incremental net sales generated in
connection with the Abbott Agreement; (iii) net sales of centers acquired
during fiscal year 1996; and (iv) net sales of fiscal year 1996 Company start-
up service centers.
Physician Supply Business same-center sales growth approximated 27% for
fiscal year 1996. The first-year performance goals as set forth in the Abbott
Agreement were met with PSS realizing approximately $55.0 million in
incremental net sales of Abbott products during fiscal year 1996. Excluding
Taylor and X-ray Georgia, Company acquisitions and start-ups added to the
growth in fiscal year 1996, with approximately $14.5 million of net sales
resulting from the acquisition of nine local and regional medical suppliers
and $9.2 million of net sales generated by four Company start-ups, one of
which was merged into an acquired Taylor location during fiscal year 1996.
Gross Profit. Gross profit increased $30.1 million, or 25.1%, for fiscal
year 1996 compared to fiscal year 1995. The increase in gross profit dollars
is attributable to the sales growth described above. Gross profit as a
percentage of net sales was 28.9% and 28.3% for fiscal years 1995 and 1996,
respectively. The decrease in gross profit as a percentage of net sales is
attributable to the penetration by the Company's Physician Supply Business
44
<PAGE>
into larger physician group practices that require more competitive pricing
but entail lower selling and servicing costs. The decrease in gross profit
percentage is also attributable to lower margins on diagnostic products
distributed under the Abbott Agreement. Margins under the Abbott Agreement are
scheduled to increase annually based on achievement by the Company of certain
performance goals as stipulated therein.
For fiscal year 1996, the Company sold approximately $75.1 million of Abbott
products with a gross profit percentage of 18.0%. Also the Company's gross
profits include first-year reimbursements by Abbott for gross profit on direct
sales by Abbott to PSS customers as set forth in the Abbott Agreement. These
reimbursements totaled $1.7 million during fiscal year 1996, effectively
raising gross profit by 0.4%. The Abbott sales, net of reimbursements,
negatively impacted the Company's gross profit percentage by 1.7%.
Also positively impacting gross profits are vendor performance incentives,
in addition to the Abbott direct sales reimbursements, earned by PSS through
the achievement of certain predetermined Company purchase and sales levels.
These performance incentives totaled $4.2 million and $6.4 million for fiscal
years 1995 and 1996, respectively. These vendor incentives effectively raised
the gross profit percentage by 1.1% and 1.3% during fiscal years 1995 and
1996, respectively. Although the Company plans and expects to continue to
negotiate vendor performance incentives, there is no assurance that vendor
performance incentives will continue to positively impact gross profit at the
historical levels.
General and Administrative Expenses. General and administrative expenses
increased $12.4 million, or 17.6%, for fiscal year 1996 compared to fiscal
year 1995. General and administrative expenses as a percentage of net sales,
however, decreased to 15.6% for fiscal year 1996 from 17.0% for fiscal year
1995. The decrease in general and administrative expenses as a percentage of
net sales was a result of: (i) improved leveraging by PSS of its existing
Physician Supply Business service centers' fixed general and administrative
expenses through increased sales volume; (ii) reduced overhead from the sale
of assets by Taylor in fiscal year 1995 and decreased depreciation expense
associated with the assets sold; and (iii) reduced amortization relating to
intangible assets written off by Taylor during fiscal year 1995. The decrease
in general and administrative expenses as a percentage of net sales was
accomplished despite the additional overhead costs associated with the
implementation of the Abbott product line and the acquisition and start-up of
new Physician Supply Business service centers.
Selling Expenses. Selling expenses increased $7.1 million, or 17.2%, for
fiscal year 1996 compared to fiscal year 1995. Selling expense as a percentage
of net sales was 10.0% and 9.2% for fiscal years 1995 and 1996, respectively.
The decrease in selling expense as a percentage of net sales is due to
improved leveraging of existing Physician Supply Business service centers'
fixed selling expenses, such as salaries paid to sales representatives during
the conversion period from a guaranteed salary to a commission compensation
arrangement and the leveraging of sales management salaries. The decrease in
selling expenses as a percentage of net sales is also due to the variable
commission plan of the Company which pays a lower commission on Abbott
products due to the lower gross profit as a percentage of net sales on those
products.
Merger Costs and Expenses. During fiscal year 1996, the Company recorded
merger costs and expenses of $15.7 million associated with the merger of PSS
and Taylor and the other immaterial poolings of interests. Such costs include
direct merger costs consisting primarily of investment banking, legal,
accounting, and filing fees as well as consolidation costs from the closing of
duplicate service center locations, realigning regional and corporate
functions, and reducing personnel.
Operating Income. Operating income decreased $0.8 million, or 20.5%, for
fiscal year 1996 compared to 1995. As a percentage of net sales, operating
income for fiscal year 1996 decreased to 0.6% from 0.9% for fiscal year 1995.
The decrease in operating income is the result of the merger costs and
expenses of $15.7 million related to the Taylor merger during fiscal year
1996. On a pro forma basis, excluding the effect of merger costs and expenses
incurred in fiscal year 1996 and the restructuring charge incurred in fiscal
year 1995, operating income for fiscal year 1996 would have increased 130.9%
to $18.7 million from $8.1 million for fiscal year 1995 due to the factors
discussed above.
45
<PAGE>
Interest Expense. Interest expense for fiscal year 1996 decreased
approximately $1.0 million, or 24.5%, compared to fiscal year 1995. Interest
expense decreased as a result of the decrease in average indebtedness and the
refinancing at a more favorable rate of Taylor debt assumed by PSS. The
decrease in average indebtedness for fiscal year 1996 compared to fiscal year
1995 is due to the use of the net proceeds from the secondary offering of
common stock of approximately $58.2 million of the total net proceeds of
$142.9 million to repay all outstanding debt, other than capital lease
obligations, on November 20, 1995.
Interest Income. The Company earned interest income of $1.2 million from the
short-term investment of the remaining net proceeds from the secondary
offering in fiscal year 1996.
Other Income. Other income decreased approximately $0.3 million, or 16.9%,
for fiscal year 1996 compared to fiscal year 1995. Other income decreased due
to a net gain on sale of assets by Taylor recorded during fiscal year 1995 of
approximately $0.9 million. Excluding the gain, other income would have
increased approximately $0.6 million primarily due to the increase in finance
charge income on customer accounts.
Provision for Income Taxes. Provision for income taxes decreased $1.1
million, or 45.3%, for fiscal year 1996 compared to fiscal year 1995 due to a
tax adjustment for the utilization of Taylor net operating losses and a change
in the valuation allowance. Net tax adjustments resulted in a decrease in net
income of $0.4 million.
Net Income. Net income increased $2.2 million for fiscal year 1996 compared
to fiscal year 1995 for the reasons discussed above. As a percentage of net
sales, net income increased for fiscal year 1996 to 0.3% from the net loss of
0.2% for fiscal year 1995. Excluding the effect of merger costs and expenses
in fiscal year 1996 and the restructuring charge in fiscal year 1995, pro
forma net income would have increased 515.0% to $12.3 million for fiscal year
1996 compared to $2.0 million for fiscal year 1995. The increase in pro forma
net income is primarily attributable to the increasing profitability of
maturing Physician Supply Business centers and the leveraging of fixed costs
through sales growth.
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following table presents summarized unaudited quarterly results of
operations for the Company for fiscal years 1996 and 1997 and the first
quarter of fiscal year 1998, including pre-acquisition financial information
of Taylor and X-ray Georgia. The Company believes all necessary adjustments
have been included in the amounts stated below to present fairly the following
selected information when read in conjunction with the Consolidated Financial
Statements of the Company and notes thereto included elsewhere in this
Prospectus. Future quarterly operating results may fluctuate depending on a
number of factors, including the timing of acquisitions of service centers,
the timing of the opening of start-up service centers, and changes in
physicians' buying patterns of supplies, diagnostic equipment and
pharmaceuticals. Results of operations for any particular quarter are not
necessarily indicative of results of operations for a full year or any other
quarter. See "Risk Factors Quarterly Fluctuations in Operating Results."
<TABLE>
<CAPTION>
FISCAL
FISCAL YEAR 1996 FISCAL YEAR 1997 YEAR 1998
------------------------------------ ------------------------------------ ---------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
-------- -------- -------- -------- -------- -------- -------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $116,082 $132,040 $137,600 $143,302 $151,568 $172,359 $179,612 $187,481 $203,543
Gross profit............ 33,575 36,093 39,140 40,856 41,835 46,768 51,054 48,459 55,443
Merger costs and
expenses............... -- 12,095 3,484 153 6,934 -- 317 4,877 --
Net income (loss)....... $ 1,317 $ (7,180) $ 1,318 $ 5,884 $ (1,540) $ 4,152 $ 4,465 $ (2,704) $ 4,370
======== ======== ======== ======== ======== ======== ======== ======== ========
Net income (loss) per
share.................. $ 0.04 $ (0.23) $ 0.04 $ 0.16 $ (0.04) $ 0.11 $ 0.12 $ (0.07) $ 0.12
======== ======== ======== ======== ======== ======== ======== ======== ========
Pro forma net income
(loss), excluding
merger costs and
expenses............... $ 1,317 $ 2,052 $ 3,366 $ 6,011 $ 3,135 $ 4,105 $ 4,652 $ 732 $ 4,370
======== ======== ======== ======== ======== ======== ======== ======== ========
Pro forma net income
(loss) per share,
excluding merger costs
and expenses........... $ 0.04 $ 0.07 $ 0.11 $ 0.16 $ 0.09 $ 0.11 $ 0.13 $ 0.02 $ 0.12
======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
46
<PAGE>
The fourth quarter of fiscal year 1997 includes a $4.1 million write-off of
inventories at branches involved in mergers, a $1.0 million increase in bad
debt expense and a reduction in the deferred tax asset valuation allowance of
$0.9 million.
LIQUIDITY AND CAPITAL RESOURCES
As the Company's business grows, its cash and working capital requirements
will also continue to increase as a result of the need to finance acquisitions
and anticipated growth of the Company's operations. This growth will be funded
through a combination of cash flow from operations, revolving credit
borrowings and proceeds from the Initial Offering and any future public
offerings.
Net cash provided by operating activities was $10.3 million for the three
months ended June 30, 1997 compared to net cash used in operating activities
of $2.6 million for the three months ended June 30, 1996 which resulted from
improved operated results for the three months ended June 30, 1997. Net cash
used in operating activities was $7.4 million, $21.0 million, and $0.2 million
in fiscal years 1995, 1996, and 1997, respectively. In fiscal year 1997, a
significant portion of operating cash flow was used for the closing of
duplicate service center locations, realigning regional and corporate
functions, consolidating information systems and reducing personnel in
conjunction with the mergers.
Net cash provided by investing activities of $9.6 million for the three
months ended June 30, 1997 consisted primarily of the proceeds from sales of
marketable securities offset by capital expenditures, payment for purchases of
net assets from business acquisitions, and the payment of noncompete
agreements. Net cash used in investing activities was $1.3 million, $30.5
million, and $10.1 million in fiscal years 1995, 1996, and 1997, respectively.
These funds were primarily utilized to finance the acquisition of new service
centers and capital expenditures including the use of the net proceeds from
sales and maturities of marketable securities.
Net cash used in financing activities was $0.5 million for the three months
ended June 30, 1997, which consisted primarily of repayments of outstanding
debt on companies acquired. Net cash (used in) provided by financing
activities was $8.8 million, $115.8 million, and $(26.5) million for fiscal
years 1995, 1996, and 1997, respectively. Net cash used in financing
activities is the result of the use of a part of the remaining net proceeds of
an equity offering in fiscal year 1996 to pay off debt assumed through fiscal
year 1997 acquisitions.
The Company had working capital of $165.5 million and $168.1 million as of
March 28, 1997 and June 30, 1997, respectively. Accounts receivable, net of
allowances, were $119.3 million and $121.6 million at March 28, 1997 and June
30, 1997, respectively. The average number of days sales in accounts
receivable outstanding was approximately 56 days for the year ended March 28,
1997 and 53 days for the three months ended June 30, 1997, respectively. In
March 1997, the Company acquired an imaging company with accounts receivable
of $3.3 million. Excluding this increase in accounts receivable, the average
days sales outstanding were 55 days for the year ended March 28, 1997.
Inventories were $67.9 million and $68.5 million as of March 28, 1997 and
June 30, 1997, respectively. The Company had annualized inventory turnover of
8.1 times for the year ended March 28, 1997 and 8.7 times for the three months
ended June 30, 1997. The increase in inventory resulting from the acquisition
described in the above paragraph was $2.5 million. Excluding this increase in
inventory, average inventory turnover was 8.3 times for the year ended March
28, 1997. Inventory financing has historically been achieved through
negotiating extended payment terms from suppliers.
The Company has made 40, nine, and four acquisitions since fiscal year 1989
in its Physician Supply Business, Imaging Business, and International
Business, respectively. Recently, the Company acquired General X-ray and S&W,
which had approximately $147.6 million in revenues, collectively, for the
twelve months ended March 31, 1997. After consummating a merger or
acquisition, the Company begins an intensive process of converting the
acquired company to PSS' business model through information systems
conversion, personnel development and training, and service and product
expansion. The Company intends to continue to acquire local,
47
<PAGE>
regional, and other distributors in new and existing markets where PSS can
leverage its distribution infrastructure, expand its geographic coverage and
gain market share. The Company anticipates that cash payments under non-
compete agreements for the remainder of fiscal year 1998 will be approximately
$2.8 million.
The Company has historically been able to finance its liquidity needs for
expansion through lines of credit provided by banks and proceeds from the
public and private offering of stock. In May 1994, the Company completed an
initial public offering of Common Stock resulting in proceeds, after deducting
issuance costs, of approximately $15.8 million. The Company used all of the
net proceeds to reduce outstanding debt. Also, in the third quarter of fiscal
year 1995, the Company amended and restated its Credit Facility, thereby
increasing the maximum availability under the Credit Facility to $60.0 million
with the option, on the part of the Company, to increase such availability to
$75.0 million.
In November 1995, the Company completed a secondary offering of 11.5 million
shares of common stock at $17.00 per share, 8.8 million of which were offered
by the Company. The Company used approximately $58.2 million and $26.9 million
of the total net proceeds of $142.9 million to repay Company debt and debt
assumed through acquisitions in fiscal years 1996 and 1997, respectively.
Management used approximately $50.0 million in connection with acquisitions
for the Imaging Business, Physician Supply Business and International
Business, and general corporate purposes, including capital expenditures
during fiscal year 1997. Management has used substantially all of the net
proceeds and intends to use the remaining net proceeds of the secondary
offering for general corporate purposes, including future acquisitions. The
Company expects that the remaining net proceeds will be substantially utilized
by recent acquisitions.
The Company believes that the expected cash flows from operations, bank
borrowings, the net proceeds of the Initial Offering, capital markets, and
vendor credit should be adequate to meet the Company's anticipated future
requirements for working capital, capital expenditures and scheduled payments
of interest on its debts (including the Notes) for the foreseeable future. As
of June 30, 1997, the Company had no outstanding debt under its Credit
Facility.
INFLATION AND GENERAL ECONOMIC CONDITIONS
Although the Company cannot anticipate future inflation, it does not believe
that inflation has had, or is likely in the foreseeable future to have, a
material impact on its results of operations. The Company does not have a
significant number of fixed price service contracts where the Company bears
the risk of costs increases. The Company's operating results could be
adversely affected by increases in interest rates which would result in higher
interest payments by the Company under its variable rate Credit Facility. The
Company has not historically entered into hedging transactions with respect to
its variable rate debt, but may do so in the future.
48
<PAGE>
BUSINESS
GENERAL
PSS is a specialty marketer and distributor of medical products to
physicians, other alternate-site providers and hospitals. PSS is the leading
distributor of medical supplies, equipment and pharmaceuticals to office-based
physicians in the United States based on revenues, serving over 104,000
physician offices (representing approximately 54% of all physician offices) in
all 50 states. The Company, which entered the imaging-supply market in
November 1996, has grown to be the second-largest distributor of imaging
supplies and equipment in the United States based on revenues, serving over
12,000 customer sites in 21 states. PSS also distributes medical products to
office-based physicians and hospitals in five European countries.
PSS employed over 800 highly trained sales representatives as of September
30, 1997, over 700 of which are focused on the physician-office market. This
large sales organization enables PSS to market medical products on a national
basis and has positioned the Company as a distributor of choice for
manufacturers whose products require consultative selling. PSS has established
exclusive or semi-exclusive distribution arrangements for certain products
with such leading manufacturers as Abbott, Siemens AG, Hologic, Inc., C. R.
Bard, Inc., HumaScan Inc. and F. Hoffman-La Roche Ltd. PSS distributes over
39,000 medical products from 89 service centers, 64 of which are focused on
the physician-office market, located throughout the United States and in
Europe, enabling the Company to be highly responsive to local market needs,
including providing same-day delivery service to most customers on a regular
basis.
INDUSTRY
The Company believes that the United States medical-products distribution
market aggregates approximately $34 billion in annual revenues, of which
approximately $6.5 billion represents the physician-office market (of which
approximately $1 billion are imaging-related medical products) and the balance
represents the hospital, ambulatory surgery center, long term care and home
health care markets. The Company believes that the imaging-supply market is an
approximately $5 billion component of the overall medical-products
distribution industry, encompassing each of the hospital, physician and other
provider segments. Revenues of the medical-products distribution industry are
estimated to be growing as a result of a growing and aging population,
increasing health care awareness, and expanding third-party insurance
coverage. In addition, the physician market is benefiting from the shift of
procedures and diagnostic testing from hospitals to alternate sites,
particularly physician offices.
The Company believes that in the United States there are approximately 300
companies serving the non-imaging physician-supply market and approximately
400 companies serving the imaging-supply market. The physician-supply market
has experienced rapid consolidation in recent years. The Company believes that
the imaging-supply market is in the early states of consolidation. The Company
believes that consolidation in the physician-supply and imaging-supply markets
is occurring due to local and regional distributors experiencing: (i) a lack
of purchasing and administrative economies of scale; (ii) reduced access to
medical equipment lines as manufacturers seek to reduce marketing costs by
minimizing the number of distributors they use; (iii) consolidation among
providers, who are increasingly seeking to reduce the number of suppliers from
which they purchase medical products; (iv) a lack of resources for continued
development and training of personnel for maintenance, expansion or
replacement of existing business; and (v) a lack of resources to develop new
distribution system technologies and services.
Through its subsidiary, WorldMed International, Inc., the Company operates
three European service centers distributing medical products to the physician
office and hospital markets in Belgium, France, Germany, Luxembourg and the
Netherlands. Government and industry estimates indicate that the medical-
products segment of the health care industry of these countries represents an
approximately $12 billion market. This industry is highly fragmented with over
1,000 distributors serving these countries.
49
<PAGE>
COMPANY STRATEGY
The Company's objectives are to be the leading distributor and marketer of
medical products to office-based physicians and providers of imaging services
in the United States, to expand its European medical supplies and equipment
business and to enhance its operating performance. The key components of the
Company's strategy to achieve these objectives are to continue to:
Pursue Strategic Acquisitions. The Company has made 40, nine, and four
acquisitions since fiscal year 1989 in its Physician Supply Business, Imaging
Business, and International Business, respectively. Recently, the Company
acquired General X-Ray and S&W, which had approximately $147.6 million in
revenues, collectively, for the twelve months ended March 31, 1997. After
consummating a merger or acquisition, the Company begins an intensive process
of converting the acquired company to PSS' business model through information
systems conversion, personnel development and training, and service and
product expansion. The Company intends to continue to acquire local, regional,
and other distributors in new and existing markets where PSS can leverage its
distribution infrastructure, expand its geographic coverage and gain market
share.
Enhance Selling Capabilities. The Company believes its sales force and
managers are its most valuable corporate assets. PSS focuses not only on the
recruitment of sales personnel with superior sales aptitude, but also on the
initial and continued development of its sales force through training at PSS
University, its in-house educational center. The Company believes that this
investment in personnel and training enables PSS to provide high-quality
service to its customers, offer a sophisticated product line, and attract
manufacturers that desire a means of rapidly bringing new products and
technology to market.
Offer a Broad Product Line Emphasizing Exclusive Products. PSS seeks to meet
all of the medical products needs of office-based physicians and providers of
imaging services. The Company currently stocks over 35,500 medical products in
its Physician Supply Business and over 3,500 medical products in its Imaging
Business. PSS also seeks to establish exclusive distribution and marketing
arrangements for selected products. In the United States, the Company
currently has exclusive or semi-exclusive marketing arrangements for certain
products with Abbott, Siemens AG, Hologic, Inc., C. R. Bard, Inc., HumaScan,
Inc. and F. Hoffman-La Roche Ltd. The Company believes that its sophisticated
selling efforts, highly trained sales force, and large customer base provide
manufacturers with a unique sales channel through which to distribute new and
existing products that require consultative selling.
Provide Differentiated, High-Quality Service. The Company believes its
success to date has been based largely on its ability to provide superior
customer service, including same-day delivery and "no-hassle" returns. Unlike
its competitors, which generally ship products via common carrier, the Company
operates its own fleet of over 620 delivery vans, thus enabling the Company to
provide same-day delivery to virtually all of its customers. In addition, the
Company believes its consultative selling approach enables it to understand
and anticipate customer needs and that its information systems simplify and
expedite the ordering process.
Utilize Sophisticated Information Systems. In 1994, the Company implemented
ICONSM, an ordering and customer data system, with all its Physician Supply
Business sales representatives. ICONSM has increased time available to sales
representatives for selling, decreased operating expenses, and increased PSS'
ability to provide same-day delivery. During fiscal year 1997, the Company
developed and test marketed CutomerLink, an Internet-based system for
inventory management and purchasing. PSS is also currently developing a
separate hardware and software system for the Imaging Business that will
incorporate CustomerLink and ICONSM. The Company intends to continue to
develop sophisticated information technology, which it believes is essential
to its continued success in integrating acquired businesses and increasing
sales and profitability.
Expand Operating Margins. The Company is pursuing several initiatives to
enhance its operating margins. With respect to sales, PSS is focusing its
efforts on higher-margin accounts and on sales of diagnostic equipment, often
on an exclusive or semi-exclusive basis, that involve ongoing sales of high-
margin reagents. With respect to its product line, PSS seeks to generate high
sales volumes of selected products and to obtain such products on
50
<PAGE>
a discounted basis from manufacturers. Additionally, PSS has developed a
private-label product line, Penny Saver, which has enabled PSS to lower
product-acquisition and inventory-carrying costs. Finally, with respect to the
Company's service center expansion program, PSS intends in the future to
emphasize acquisitions over new-center development, avoiding the substantial
start-up losses associated with new-center development.
SALES AND DISTRIBUTION
PSS focuses on complete customer satisfaction, which it characterizes to its
customers as "no hassle" service. Consistent with this approach, the Company
generally offers its customers same-day delivery service on a regular basis,
highly trained, consultative sales professionals, a broad product line
including medical supplies, sophisticated diagnostic equipment and reagents,
and pharmaceuticals, no minimum order size or shipping charges, and permits
returns of unused, salable products for instant credit.
The Company has increased its emphasis on national customer accounts,
including large physician group practices, physician practice management
companies, physician-hospital organizations, physician management service
organizations and group purchasing organizations. In selling to these national
accounts, the Company emphasizes its core strengths of same-day service, which
permits stockless inventory, competitive pricing and high service levels,
including inventory maintenance. See "Risk Factors--Regulation of and Change
in the Practice of Medicine."
The Physician Supply Business of PSS maintains a highly decentralized
distribution network of 61 service centers operating over 550 delivery vans
throughout the United States. This distribution network, along with the
Company's ICONSM, has enabled PSS to generally provide same-day delivery
service. Customer orders received by 10:30 a.m. at the local service center
are generally delivered the same day within a 100 mile radius. Within a 30
mile radius, orders received by noon are generally delivered the same day.
Through its over 700 sales representatives in its Physician Supply Business
as of September 30, 1997, PSS distributes medical supplies and equipment to
physicians in approximately 104,000 office sites nationally. Generally, each
sales representative is responsible for calling on approximately 150 to 200
physician offices, with a minimum goal of visiting each office once every one
to two weeks.
The Imaging Business operates in a similar decentralized format with 25
service centers operating a total of over 70 delivery vans throughout 21
states. The Imaging Business has over 95 sales representatives and over 300
service specialists as of September 30, 1997. This business has approximately
12,000 customers including approximately 2,000 hospitals and approximately
10,000 alternate-site providers, including industrial and dental accounts.
The International Business operates three European service centers, located
in Belgium, Germany, and the Netherlands, employing approximately 25 sales
representatives and approximately 65 total employees.
All of the Company's service centers operate as a profit center led by a
management team that typically includes a sales manager and an operations
manager. Each service center employs sales representatives and staff,
including purchasing agents, customer service representatives, and warehouse
and delivery personnel. Employees are compensated based upon both individual
and service center performance. Both management and employee bonuses are based
largely upon asset management, attainment of goals and operating profit
performance.
PRODUCTS
The Company carries a significant investment in inventory to meet the rapid
delivery requirements of its customers. The Company distributes over 39,000
different products manufactured by approximately 3,000 manufacturers. During
the twelve months ended March 28, 1997, Abbott was the only vendor which
accounted for more than 10% of the Company's inventory purchases. See "Risk
Factors--Dependence on Vendor Relationships."
51
<PAGE>
Physician Supply Business
Through its Physician Supply Business, the Company distributes medical
products consisting of medical supplies, diagnostic equipment, and
pharmaceuticals. The following is a discussion of the types of products
offered by the Physician Supply Business. The Physician Supply Business sells
over 35,500 medical products.
Medical Supplies. The Physician Supply Business sells a broad range of
medical supplies, including various types and sizes of paper goods, needles
and syringes, gauze and wound dressings, sutures, latex gloves, orthopedic
soft goods and casting products, wood tongue blades and applicators,
sterilization and intravenous solutions, specimen containers, diagnostic
equipment reagents, and diagnostic rapid test kits for pregnancy, strep,
mononucleosis, chlamydia, H-Pylori, and bladder cancer.
In order to lower product-acquisition and inventory-carrying costs, PSS has
implemented a new Penny Saver product line. The Penny Saver products are those
most frequently used by PSS customers. This product line provides customers a
choice between name-brand products and the Penny Saver quality, low-price
alternatives. Currently, the Company has over 250 products under the Penny
Saver label.
PSS plans to continue to focus on providing products and services to the
primary care physician market whether the physician is a single practitioner
or a member of a large group practice. In that effort, PSS developed Network
PlusSM, a comprehensive savings plan for physicians in which PSS offers
special group purchasing contract pricing and provides periodic cost analyses
to help manage the supply needs of each physician. Under this program, when a
physician office guarantees 80% of its purchase volume to PSS, the Company
will guarantee the lowest purchase prices on certain products as well as
certain service guarantees. The Company has recently signed distribution
agreements with several national and regional integrated network systems and
managed care groups.
Medical Equipment. The Physician Supply Business equipment lines include
blood chemistry analyzers, automated cell and differential counters,
immunoassay analyzers, bone densitometers, exam tables and furniture,
electrocardiograph monitors and defibrillators, cardiac stress systems, holter
monitors, flexible sigmoidoscopy scopes, autoclaves, spirometers, pulse
oximeters, tympanometers, and microscopes. Demand for diagnostic equipment has
increased recently, reflecting in part, technological advances which enable
increasingly sophisticated diagnostic tests to be performed in the physician's
office. Sales of diagnostic equipment, while generally lower in gross margin
than supplies, normally entail the ongoing reordering of disposable diagnostic
reagents which generally yield higher margins.
The Company recently entered into four separate exclusive distribution
agreements for certain products manufactured by Siemens AG, Hologic, Inc., C.
R. Bard, Inc., and Tanita Corporation of America, Inc. These supplement the
Company's existing exclusive distribution agreements for certain products with
Abbott and HumaScan Inc. and a semi-exclusive distribution agreement with F.
Hoffman-La Roche Ltd. The Company believes these strategic alliances will
continue to broaden the Company's product offerings to the Physician Supply
Business customers.
Pharmaceuticals. The Company's pharmaceutical sales include vaccines,
injectables and ointments. As a result of the changing dynamics in the
pharmaceutical industry, particularly the reduction in sales personnel focused
on physicians' offices, pharmaceutical manufacturers are increasingly seeking
alternative means of distribution. The Company believes that its consultative
sales approach and its emphasis on training have allowed PSS to be highly
effective in selling pharmaceuticals to the physician-office market. The
Company has recently entered into a three-year primary distribution agreement
for certain pharmaceuticals and related products of Cardinal Health, Inc. The
Company believes this agreement will allow it to reduce its pharmaceutical
acquisition costs.
Imaging Business
The Imaging Business distributes a broad range of imaging equipment and
supplies, including general radiographic and mammography systems, fluoroscopic
and electrophysiologic systems, angiographic equipment,
52
<PAGE>
medical resonance imaging (MRI), cath lab and mobile vascular labs, C-arm and
ultrasound equipment. The Imaging Business also distributes consumable and
accessory products, including film and film handling products, barium, lead
and lead apparel and darkroom cabinets. See "Risk Factors--Imaging Business
Technology" and "--Environmental Liabilities and Regulation."
International Business
The International Business distributes medical supplies, equipment and
pharmaceuticals similar to those provided by the Physician Supply Business to
five European countries. The International Business offers products to the
European physician office and hospital markets. See "Risk FactorsManagement of
International Business."
RECRUITMENT AND DEVELOPMENT
The Company believes its managers and sales force are its most valuable
corporate assets. Accordingly, the Company invests significant resources in
recruiting, training and developing these employees. PSS spent approximately
$2.6 million for training and development in fiscal year 1997. Over the past
ten years, the Company has refined its recruitment practices and development
procedures for its Physician Supply Business and the Company is currently
developing a similar training program for the sales representatives and
service specialists of its Imaging Business. The Company's comprehensive
program for its Physician Supply Business includes the following:
Recruitment. The Company has developed a recruitment program to help provide
it with a source of mobile and committed sales representatives. The Company
believes that it is a leader in its industry in recruiting sales
representatives on college and university campuses. The Company's recruiters
use state-of-the-art marketing materials to attract candidates who demonstrate
superior sales aptitude. The Company also recruits college graduates with up
to five years experience in business, government or the military as
operational management trainees.
Initial Development. Each trainee is initially assigned to a service center.
Under the supervision of local managers, training consists of a combination of
self-study, individual instruction and interaction with customers and vendors.
Such training includes 16 one-week courses providing instruction on products,
procedures and selling skills. During this development program, the trainee
attends the Jacksonville, Florida training center ("PSS University") for
additional training. Individual progress is measured weekly through formal
testing and role playing, resulting in continued advancement to graduation,
usually within 20 weeks. The Company designs the program to be strenuous and
only approximately 70% of the trainees successfully complete the program. Upon
graduation, the newly appointed sales representative assumes responsibility
for the first available sales territory, within a preferred region regardless
of location. The Company typically has approximately 30 sales candidates at
various stages of the training process. The Company believes that the level of
its expenditures in developing new sales representatives and its ability to
place new sales representatives quickly in a new region is unique within the
industry. The new sales graduate is placed on a 15-month salary-to-commission
conversion program. Presently, approximately 95% of the Company's sales force
is compensated on a straight commission basis.
Operations Management. The Company's development program for its operations
management trainees consists of approximately twelve months of intensive
training and development. After recruitment, the operations management trainee
is transferred to at least three service centers and is given various and
gradually increasing levels of responsibility. The trainee is assigned to an
operations management position when it becomes available at a service center,
regardless of location. The Company has available approximately five
operations management trainees to support its growth.
Continued Development. The Company provides several programs to continue
development of its sales and management organization. The programs provided by
PSS University include a leadership program for
53
<PAGE>
management candidates, senior sales representatives and general managers, a
program emphasizing creativity and innovation for first-year managers, and a
management development program. In addition, the Company encourages its sales
representatives to participate in industry-accredited self-study programs.
Every sales representative routinely attends local sales meetings, annual
sales and marketing meetings, key vendor product conferences and continuing
education programs at PSS University. Additionally, the Company is developing
training programs on customer service, purchasing and other field operations.
At September 30, 1997, the Company had approximately 800 sales
representatives, 300 service specialists and 2,700 total employees. The
Company considers its employee relations to be excellent. See "Risk Factors--
Dependence on Key Management" and "--Dependence on Sales Representatives and
Service Specialists."
INFORMATION SYSTEMS
The Physician Supply Business maintains a decentralized information system
with data acquisition at the local service centers and a central corporate
data base that is accessible from all of the service centers. The information
systems were designed to allow the service center to have both the hardware
and software to conduct operations independently. The failure of a computer
system at a service center would not affect the operations of any other
service center or the corporate system. Likewise, the short-term failure of
the corporate system would not affect the operations of any service center.
See "Risk Factors--Reliance on Data Processing."
ICONSM is a sales force automation tool which allows the Physician Supply
Business sales representatives to access critical customer information and
place orders from any location using a pen-based, hand-held computer system.
ICONSM provides the sales representatives with customer pricing, contracts,
backorders, inventory levels, account status and instant ordering. The
customer's order is transmitted via wireless transmission to the corporate
system and then transmitted from the corporate system to the local service
center in less than two minutes. ICONSM has increased time available for
selling, decreased operating expenses in the service centers and enhanced the
Company's ability to provide same-day delivery to customers. Utilizing ICONSM,
sales representatives can give product demonstrations, provide equipment
feasibility studies and perform revenue and return-on-investment analyses for
specific equipment. ICONSM also gives the sales representative the ability to
provide quotes and bids to the larger accounts.
To enable the Company to maintain high customer order fill rates on a
consistent basis, the Company utilizes its BEAR system. Each service center
reports its inventory quantities on a daily basis. The separate service center
reports are combined into one company-wide inventory report containing product
number, quantity on hand and historical usage. This systems reduces back-
orders to customers and reduces the Company's total inventory through
increased inventory efficiencies. BEAR also displays the on-hand usage
quantities of neighboring service centers that are within one commercial-
shipping day of the service center.
During fiscal year 1997, PSS developed and test-marketed the CustomerLink
system. The Company believes this system is the first Internet-based health
care information system designed and used specifically for inventory
management and purchasing for the medical practice. Company customers can
access CustomerLink through the Internet at http://www.pssd.com after
receiving their personal password from the Company. All company customers,
regardless of size, with access to the Internet, will be given access to
services and on-line information, including: (i) on-line order placement and
confirmation; (ii) customer-specific pricing, product availability, back
orders and utilization reports; (iii) working capital management reports; and
(iv) practice compliance assistance for OSHA and CLIA, including a database of
medical safety sheets.
The Company is implementing a delivery automation system that is expected to
be completed in fiscal year 1998. The system will provide electronic signature
recognition and delivery routing which the Company believes will improve the
Company's distribution efficiency.
The Company is currently in the process of developing and implementing
separate systems for its Imaging Business which will include the ICONSM and
CustomerLink systems. The Company expects the Imaging Business system to be
implemented in fiscal year 1998.
54
<PAGE>
PURCHASING AND VENDOR RELATIONSHIPS
The Company aggressively seeks to purchase the medical supplies and equipment
it distributes at the lowest possible price through volume discounts, rebates
and product line consolidation. The Company's corporate materials management
department negotiates all of its contract terms with vendors. Individual orders
are placed by the Company's purchasing agents, located at the Company's service
centers, who are responsible for purchasing and maintaining the inventory.
Supplies and equipment are delivered directly from vendors to the service
centers.
The Company aggressively pursues the opportunity to market and sell medical
equipment and supplies on an exclusive basis. Manufacturers of medical
diagnostic equipment and supplies typically offer distribution rights only to a
selected group of distributors and are increasingly seeking to reduce the
number of distributors selling their products to end users in an effort to
reduce the cost associated with marketing and field support. The Company has
been successful in assisting manufacturers in their development and marketing
plans and in obtaining the exclusive right to sell certain products. The
Company believes that its ability to capture such distribution rights
represents a significant barrier to the entry of competitors.
The Company recently completed the second year of the Abbott Agreement, which
provides for the exclusive distribution of certain Abbott diagnostic products.
The Abbott Agreement has positioned PSS as the sole distributor to physician
offices with 24 or fewer physicians for, among other products, the CELL DYN(R)
1400, 1600 and 1700 hematology products, Abbott Vision(R) blood chemistry
analyzers and reagents, AXyM(R) and IMx(R) immunoassay analyzers and reagents,
and the Abbott Testpack(R) line of rapid tests and has also enabled the Company
to cross-sell its other products to Abbott customers. Abbott may terminate the
Abbott Agreement if the Company fails to meet certain sales levels. Abbott
products constituted approximately 16% and 18% of the Company's sales in fiscal
years 1996 and 1997, respectively.
Currently, the Company has contractual alliances with many vendors including
F. Hoffman-LaRoche, Ltd. These alliances provide the Company volume incentives,
dedicated field support, and select relationships with leading manufacturers.
As a result of the Company's performance in selling their products, these
entities participate with the Company in relationships ranging from exclusivity
to shared market resources. In the office-based physician market, the Company
is the United States leader of sales of hematology and chemistry products for
F. Hoffman-La Roche Ltd., which constituted approximately four percent of the
Company's sales in fiscal year 1997.
The Company recently entered into four separate exclusive distribution
agreements for certain products manufactured by Siemens AG (cardiology and
OB/GYN ultrasound equipment), Hologic, Inc. (bone densitometry analyzer), C. R.
Bard, Inc. (bladder cancer diagnostic test) and Tanita Corporation of America,
Inc. (body weight and fat analyzer). In addition, the Company has entered into
an exclusive distribution agreement with HumaScan Inc. (non-invasive breast
tumor detection screen) and has recently entered into a primary distribution
agreement with Cardinal Health, Inc. (certain pharmaceuticals). These strategic
alliances should continue to broaden the Company's product offerings to both
the Physician Supply Business and Imaging Business customers. See "Risk
Factors--Dependence on Vendor Relationships."
ACQUISITIONS
The Company's Physician Supply Business has grown from one service center
located in Jacksonville, Florida in 1983 to 61 service centers currently.
Historically, the Company's growth has been accomplished through both the
start-up of service centers and the acquisition of local and regional medical
supply and equipment distributors. Since fiscal year 1994 the Company has
accelerated its acquisition of medical supply and equipment distributors both
in number and in materiality of the operations acquired. See "Risk Factors--
Acquisition Strategy" and "--Opening of Start-Up Service Centers."
With the November 1996 acquisition of a medical diagnostic imaging supply and
equipment distributor, the Company began the operations of its Imaging
Business. Subsequent acquisitions have resulted in 25 Imaging
55
<PAGE>
Business service centers operating throughout 21 states. The Company's
objectives for the Imaging Business during fiscal year 1998 are to: (i)
continue geographic expansion with acquisitions of local and regional imaging
distributors to leverage existing infrastructure; (ii) develop and implement a
separate hardware and software system for the business utilizing the Physician
Supply Business' ICONSM and CustomerLink systems; (iii) expand the products
and services currently provided; (iv) implement same-day delivery; and (v)
develop a PSS University training program specifically tailored for the
Imaging Business. See "Risk Factors--Expansion into New Lines of Business."
PSS views the acquisition of medical-products distributors as an integral
part of its growth strategy. The Company intends to continue to acquire local
and regional distributors especially in existing markets where it can leverage
its distribution infrastructure, gain market share, and expand geographically.
PSS believes that the consolidation in the physician-supply and imaging-supply
markets is occurring due to local and regional distributors experiencing: (i)
a lack of purchasing and administrative economies of scale; (ii) reduced
access to medical equipment lines as manufacturers seek to reduce marketing
costs by minimizing the number of distributors; (iii) consolidation among
providers, who are increasingly seeking to reduce the number of suppliers from
which they purchase medical products; (iv) a lack of resources for continued
development and training of personnel for maintenance, expansion or
replacement of existing business; and (v) a lack of resources to develop new
distribution system technologies and services.
PSS has completed six mergers and acquisitions to date in fiscal year 1998.
For example, in July 1997, the Company completed the merger of General X-Ray
and certain affiliated entities, distributors of radiology and imaging
equipment which operated seven distribution centers and distributed to seven
states, primarily in the Midwest. In September 1997, the Company completed the
merger of S&W, a distributor of radiology and imaging equipment, chemicals and
supplies, and provider of technical services to hospitals and alternate-site
providers, which operated five locations which served four Northeastern
states.
The Company completed ten mergers and acquisitions in fiscal year 1997,
including the acquisition of Diagnostic Imaging, Inc., a distributor based in
Jacksonville, Florida which began the operations of its Imaging Business.
Diagnostic Imaging, Inc. operated eight distribution centers with 24 sales
representatives and 75 service specialists. In fiscal year 1997, the Company
expanded its Imaging Business through mergers with X-ray Georgia and Rad-Tech
X-Ray, Inc., both based in the Atlanta, Georgia area, which collectively
served six states in the Southeast with 13 sales representatives and 51
service specialists and the merger with Chesapeake X-Ray Corporation based in
Roanoke, Virginia, which served four states in the Southeast with five sales
representatives and 15 service specialists.
56
<PAGE>
PROPERTIES
The Company maintains 89 service centers providing service to 50 states
throughout the United States, as well as Belgium, France, Germany, Luxembourg
and the Netherlands. All service center locations are leased by the Company,
with the exception of the service center located in Leuven, Belgium. The
following tables set forth the service center locations and areas which they
service for the Physician Supply Business, Imaging Business and International
Business.
Physician Supply Business
<TABLE>
<CAPTION>
LOCATIONS STATES SERVED LOCATIONS STATES SERVED
--------- ------------- --------- -------------
<S> <C> <C> <C>
Albany, NY NY, CT, VT Louisville, KY IN, KY
Albuquerque, NM NM, CO, TX Lubbock, TX TX
Atlanta, GA GA, AL Memphis, TN AR, MS, TN
Baltimore, MD MD, PA, VA, WV Milwaukee, WI WI
Beaumont, TX TX Minneapolis, MN IA, MN, MT, ND, SD, WI
Birmingham, AL AL, MS Mobile, AL AL, FL, MS
Boise, ID ID, MT Nashville, TN IL, KY, TN
Charlotte, NC NC, SC, VA, TN New Orleans, LA LA, MS, TX
Chattanooga, TN AL, GA, TN Norfolk, VA NC, VA, WV
Chicago, IL IL, IN, WI Omaha, NE CO, NE, IA, WY
Cincinnati, OH KY, IN, OH, WV Orlando, FL FL
Cleveland, OH OH Philadelphia, PA DE, NJ, NY, PA
Columbia, SC SC, GA Phoenix, AZ AZ
Dallas, TX TX, OK Pittsburgh, PA PA, WV, MD, OH, NY
Davenport, IA IA, IL Portland, OR CA, OR, WA
Deerfield Beach, FL FL Raleigh, NC NC, VA
Denver, CO CO, NM, WY Richmond, VA VA
Detroit, MI MI Roanoke, VA TN, VA
Honolulu, HI HI Rochester, NY NY
Houston, TX TX, OK Salt Lake City, UT CO, NV, UT
Indianapolis, IN IN, IL San Antonio, TX TX
Jackson, MS MS, LA San Diego, CA CA
Jacksonville, FL FL, GA, SC San Francisco, CA CA
Kansas City, KS IL, IA, KS, MO Seattle, WA WA, AK
Knoxville, TN KY, NC, TN St. Louis, MO IL, MO
Lafayette, LA LA St. Petersburg, FL FL
Las Vegas, NV NV Tallahassee, FL AL, FL, GA
Little Rock, AR TX, AR Tulsa, OK AK, OK, MO
Long Island, NY CT, NJ, NY Union, NJ NJ, NY
Los Angeles, CA (North) CA Wareham, MA RI, CT, ME, MA, NH
Los Angeles, CA (South) CA
</TABLE>
57
<PAGE>
Imaging Business
<TABLE>
<CAPTION>
LOCATIONS STATES SERVED LOCATIONS STATES SERVED
--------- ------------- --------- -------------
<S> <C> <C> <C>
Atlanta, GA GA, SC Mobile, AL AL, FL, MS
Birmingham, AL AL, MS Nashville, TN KY, TN
Charlotte, NC NC, SC Raleigh, NC NC
Columbia, SC SC, GA Richmond, VA VA
Pompano Beach, FL FL Roanoke, VA TN, VA, WV
Jacksonville, FL FL, GA Tallahassee, FL FL, GA, AL
Gainesville, FL FL Savannah, GA GA, SC
Memphis, TN AR, KY, TN, MS Winston Salem, NC NC, VA
Tampa, FL FL Chicago, IL IL, IN, IA, WI
St. Louis, MO MO, IL, IA, AR Indianapolis, IN IN, OH, KY
Rochester, NY NY, PA Albany, NY NY, CT, PA
Syracuse, NY NY, PA Buffalo, NY NY, PA
Newburgh, NY NY, CT, NJ, PA
International Business
<CAPTION>
LOCATIONS COUNTRIES SERVED
--------- ----------------
<S> <C> <C> <C>
Leuven, Belgium Belgium, France, Germany
Dusseldorf, Germany Germany, Luxembourg
Utrecht, Netherlands Netherlands
</TABLE>
In the aggregate, the Company's service centers consist of approximately
945,000 square feet, of which all is leased, with the exception of the
distribution center in Leuven, Belgium and a building in Beaumont, Texas,
under lease agreements with expiration dates through 2001. The Company's
service centers range in size from 4,800 square feet to 51,000 square feet.
The corporate offices of PSS consist of approximately 50,000 square feet of
leased office space located at 4345 Southpoint Boulevard, Jacksonville,
Florida 32216. The lease for this space expires in April 2002.
At June 30, 1997, the Company's facilities provided adequate space for the
Company's operations. Throughout the Company's history of growth, the Company
has been able to secure the required facilities.
COMPETITION
PSS operates in a highly competitive environment. The Company's principal
competitors are multi-market medical distributors that are full-line, full-
service medical supply companies, some of which are national in scope. These
national companies have sales representatives and service specialists
competing directly with PSS, are substantially larger in size, and have
substantially greater financial resources than PSS. There are also numerous
local dealers and mail order firms that distribute medical supplies and
equipment within the same market as the Company. Most local dealers are
privately owned and operate with limited product lines. There are several mail
order firms which distribute medical supplies on a national or regional basis.
The Company also competes with certain manufacturers that sell their products
both to distributors and directly to users, including office-based physicians.
See "Risk Factors--Competition."
REGULATORY MATTERS
The Company's business is subject to regulation under the Federal Food,
Drug, and Cosmetic Act, the Prescription Drug Marketing Act of 1987, the
Controlled Substances Act and other regulation by the U.S. Food and Drug
Administration and state laws applicable to the distribution and manufacture
of medical devices and over-the-counter pharmaceutical products as well as the
distribution of prescription pharmaceutical products.
58
<PAGE>
The Federal Food, Drug, and Cosmetic Act generally regulates the manufacture
of drug and medical devices shipped in interstate commerce, including such
matters as labeling, packaging, storage and handling of such products. The
Prescription Drug Marketing Act of 1987, which amended the Federal Food, Drug
and Cosmetic Act, establishes certain requirements applicable to the wholesale
distribution of prescription drugs, including the requirements that wholesale
drug distributors be registered with the Secretary of Health and Human
Services or be licensed in each state in which they conduct business in
accordance with federally established guidelines on storage, handling, and
records maintenance. Under the Controlled Substances Act, the Company, as a
distributor of controlled substances, is required to obtain annually a
registration from the Attorney General in accordance with specified rules and
regulations and is subject to inspection by the Drug Enforcement
Administration acting on behalf of the Attorney General. The Company is
required to maintain licenses and permits for the distribution of
pharmaceutical products and medical devices under the laws of the states in
which it operates. In addition, the Company's physician customers are subject
to significant federal and state regulation. There can be no assurance that
regulations that impact the physicians' practices will not have a material
adverse impact on the Company's business.
The Company is also subject to regulation in the European countries where
the International Business markets its products. Many of the regulations
applicable in such countries are similar to those of the U.S. Food and Drug
Administration. The national health or social security organizations of
certain countries require the products distributed by the Company to be
qualified before they can be marketed in those countries.
Federal, state and foreign regulations regarding the sale and distribution
of medical supplies, equipment and devices by the Company are subject to
change. The Company cannot predict what impact, if any, such changes might
have on its business. See "Risk Factors--Regulation of and Change in the
Practice of Medicine" and "--Environmental Liabilities and Regulations."
LEGAL PROCEEDINGS
Although the Company does not manufacture products, the distribution of
medical supplies and equipment entails inherent risks of product liability.
The Company has not experienced any significant product liability claims and
maintains product liability insurance coverage. In addition, the Company is
party to various legal and administrative proceedings and claims arising in
the normal course of business. While any litigation contains an element of
uncertainty, the Company believes that the outcome of any proceedings or
claims which are pending or known to be threatened will not have a material
adverse effect on the Company's consolidated business, financial condition or
results of operations. See "Risk Factors--Liability
59
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Patrick C. Kelly.............. 50 Chairman of the Board, Chief Executive Officer and Director
John F. Sasen, Sr............. 55 President and Director
David A. Smith................ 37 Executive Vice President, Chief Financial Officer and Director
James B. Stallings, Jr. ...... 42 Chief Operating Officer
Frederick E. Dell............. 36 Executive Vice President; President of Diagnostic Imaging, Inc.
Delmer W. Dallas.............. 66 Director
T. O'Neal Douglas............. 61 Director
Fred Elefant.................. 50 General Counsel, Secretary and Director
Delores Kesler................ 56 Director
William C. Mason.............. 59 Director
James L.L. Tullis............. 50 Director
</TABLE>
Mr. Kelly, a co-founder of the Company, has served as Chairman of the Board
and Chief Executive Officer of the Company since its inception in May 1983 and
as President of the Company from May 1983 to August 1995. Prior to founding
the Company, from August 1976 to February 1983, Mr. Kelly served as Sales
Manager, General Manager and Vice President of Intermedco, Inc., a Houston-
based medical supply company. Mr. Kelly serves as the Chairman of the
Jacksonville Federal Reserve Board.
Mr. Sasen has served on the Board of Directors of the Company since July
1993, as President of the Company since August 1995 and as Chief Executive
Officer of the Physician Supply Business since April 1997. Mr. Sasen served as
Chief Operating Officer of the Company from December 1993 to March 1997 and
served as Executive Vice President of the Company from December 1993 to August
1995. From August 1990 to December 1992, he served the Company as Vice
President-Sales and Marketing; from January 1993 to July 1993, as Regional
Vice President, and from August 1993 to December 1993 as Executive Vice
President. Prior to joining the Company, Mr. Sasen was Vice President-Sales,
Marketing and Distributor Relations for a division of Becton Dickinson &
Company ("Becton Dickinson"), a manufacturer of health care products. In that
position, Mr. Sasen directed product development and marketing efforts,
technical services, product services and customer service. Mr. Sasen was with
Becton Dickinson for over 20 years. In addition, Mr. Sasen serves as a
director of HumaScan, Inc., a manufacturer of a breast tumor thermal detection
device.
Mr. Smith has served on the Board of Directors of the Company since July
1993 and as Executive Vice President since April 1996 and Chief Financial
Officer of the Company since April 1992. Mr. Smith served as a Vice President
of the Company from April 1992 to April 1996. Prior to serving as Vice
President and Chief Financial Officer, Mr. Smith served the Company as a
Regional Manager, General Manager, Sales Manager and Operations Manager from
July 1987 to June 1993. Prior to joining the Company, Mr. Smith was employed
by Coopers & Lybrand from October 1985 through June 1987, and by Smoak, Davis
and Nixon, C.P.A., from May 1983 through September 1985.
Mr. Stallings has served as Chief Operating Officer since July 1997. Prior
to this position, Mr. Stallings served as Executive Vice President--Southern
Region since March 1997 and Executive Vice President--Sales and Marketing from
April 1996 to March 1997. From 1988 to 1996, Mr. Stallings held several
positions with IBM Corporation, including Director of Worldwide Sales--AS/400
Division, Director of Business Re-engineering and General Manager. From 1984
to 1987, Mr. Stallings served as a manager of Rohm Corporation. In addition to
his responsibilities with the Company, Mr. Stallings serves on the Board of
Directors for Sun Bank of Northeast Florida.
60
<PAGE>
Mr. Dell has served as Executive Vice President of the Company and as
President of Diagnostic Imaging, Inc. since November 1996. Prior to these
positions, Mr. Dell served as Senior Vice President--Southern Region of the
Company from April 1996 to November 1996 and served as Vice President--
Southern Region from January 1994 to March 1996. Mr. Dell also served as
director of the Company from July 1991 through July 1992. He served as
Regional Manager and Vice President of the Company's Western Region from
December 1989 to January 1994. From April 1984 through November 1989, Mr. Dell
served the Company in various sales and management positions.
Mr. Dallas has served on the Board of Directors of the Company since October
1989. Since 1984, Mr. Dallas has been the Chairman of the Board of Acosta
Sales Co., Inc. ("Acosta"), a food brokerage company operating in the
Southeastern United Sates. He has also served on the Board of Directors of
Acosta since 1966.
Mr. Douglas has served on the Board of Directors of the Company since July
1993. Mr. Douglas is the Chairman and Chief Executive Officer of American
Heritage Life Insurance Co. and American Heritage Life Investment Company
(collectively, "AHL"). He has been with AHL since 1983, serving as President
since 1986 and Chief Executive Officer since 1990. In addition, Mr. Douglas
serves as a director of Barnett Bank of Jacksonville, N.A.
Mr. Elefant has served on the Board of Directors of the Company and as
Secretary of the Company since 1984. Mr. Elefant has been engaged in the
private practice of law in Jacksonville, Florida since 1973. Since January
1989, he has practiced as Fred Elefant, P.A. He was a member of the law firm
of Mahoney, Adams, Milam, Surface & Grimsley, P.A., now Mahoney Adams &
Criser, P.A., from 1983 to 1989.
Ms. Kesler has served on the Board of Directors of the Company since July
1993. Ms. Kesler has been Chairman and CEO of Kesler, Pass & Associates, Inc.
since 1996. Prior to that, Ms. Kesler was Chairman of AccuStaff Incorporated
("AccuStaff"), the successor to ATS Services, Inc. ("ATS"), a franchisor of
temporary employment operations from January until June 1996. She founded ATS
in May 1978 and served as its Chairman and Chief Executive Officer until its
merger with three other temporary employment agencies in May 1992. Ms. Kesler
is a past member of an executive committee with the National Association of
Temporary Services and serves on the Board of Directors of AccuStaff and Clay
County Bank in Orange Park, Florida.
Mr. Mason has served on the Board of Directors of the Company since April
1996. Mr. Mason is Vice Chairman and Chief Executive Officer of Baptist/St.
Vincent's Health System, Inc. located in Jacksonville, Florida and has served
in various positions throughout that organization since 1984.
Mr. Tullis has served on the Board of Directors of the Company since
November 1989. Mr. Tullis was nominated to serve on the Board of Directors of
the Company for a three-year term beginning in 1994 pursuant to an agreement
with the Company. Since September 1987, Mr. Tullis has been a general partner
of Tullis-Dickerson Partners, the general partner of Tullis-Dickerson Capital
Focus, L.P., a venture capital fund that invests in the health care industry
and a shareholder of the Company. Mr. Tullis has served as Chairman of the
Board of Directors and Chief Executive Officer of Tullis-Dickerson & Co.,
Inc., a venture capital company which acts as a management company for Tullis-
Dickerson Capital Focus, L.P., since July 1986. Mr. Tullis also serves on the
Board of Directors of American Consolidated Laboratories, Inc., a manufacturer
of contact lenses, Scandipharm, Inc., a developer and manufacturer of
pharmaceutical products and services, and Acme United, Inc., a manufacturer of
scissors and other medical products.
Executive officers of the Company are elected annually and serve at the
discretion of the Board. There are no family relationships between or among
any of the Company's directors or executive officers.
61
<PAGE>
CERTAIN TRANSACTIONS
Fred Elefant, a member of the Board of Directors and Secretary of the
Company, provides legal services as general counsel to the Company. Fees for
such legal services were approximately $124,000, $136,000 and $132,000 in
fiscal years 1995, 1996 and 1997, respectively.
T. O'Neal Douglas, a member of the Board of Directors, is chairman and chief
executive officer of the insurance company that administered the Company's
self-insurance program through December 31, 1995. Administrative fees paid to
the insurance company were approximately $339,000 for fiscal year 1995 and
$484,000 during the first nine months of fiscal year 1996. The Company changed
its self-insurance administrator as of January 1, 1996 to an unrelated party.
In May 1997, the Company loaned Patrick C. Kelly, Chairman of the Board and
Chief Executive Officer of the Company, approximately $216,000, all of which
is currently outstanding, and in September 1997, the Company loaned Mr. Kelly
an additional approximately $3.2 million to refinance debt that Mr. Kelly
incurred in connection with his previous purchases of Common Stock. The loans
bear interest at the applicable federal rate and 6.55%, respectively, and are
expected to be repaid over a 10-year period.
Prior to the date of issuance of the Private Notes, the Company made loans
to certain employees in the aggregate of $0.6 million.
62
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table reflects the number of shares of common stock, par value
$0.01 per share (the "Common Stock"), beneficially owned as of June 30, 1997,
by (i) each person who is known by the Company to beneficially own more than
five percent of the outstanding Common Stock, (ii) each of the Chief Executive
Officer and four other most highly compensated officers of the Company, (iii)
each director, and (iv) all of the Company's executive officers and directors
as a group. Unless otherwise noted, all shares are owned directly with sole
voting and dispositive powers.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME SHARES TOTAL(1)
---- --------- ----------
<S> <C> <C>
Putnam Investments, Inc.(2)......................................... 4,166,268 11.2%
Edgemont Asset Management Corp.(2).................................. 3,765,000 10.1%
Physician Sales & Service, Inc. Employee Stock Ownership Plan &
Trust(2)........................................................... 2,104,000 5.6
Patrick C. Kelly(3)(4).............................................. 1,131,323 3.0
John F. Sasen, Sr.(3)............................................... 229,844 *
Frederick E. Dell(3)................................................ 239,449 *
David A. Smith(3)................................................... 209,494 *
James B. Stallings, Jr.(3).......................................... 47,566 *
Delmer W. Dallas(3)................................................. 131,144 *
T. O'Neal Douglas................................................... 18,000 *
Fred Elefant(3)(5).................................................. 702,616 1.9
Delores P. Kesler(3)................................................ 1,500 *
James L.L. Tullis(6)................................................ 217,860 *
William C. Mason.................................................... -- --
All Executive Officers and Directors as a group (11 persons)(3)..... 3,236,181 8.7
</TABLE>
- --------
* Less than 1%
(1) Based upon 37,345,515 shares of Common Stock outstanding as of June 30,
1997.
(2) The addresses for holders of five percent or more of the Common Stock
outstanding are as follows: Putnam Investments, Inc., One Post Office
Square, Boston, MA 02109; Edgemont Asset Management Corp., 140 East 45th
Street, New York, New York 10017; and Physician Sales & Service, Inc.
Employee Stock Ownership Plan & Trust, 4345 Southpoint Boulevard,
Jacksonville, Florida 32216.
(3) Included in such beneficial ownership are shares of Common Stock issuable
upon the exercise of certain options exercisable immediately or within 60
days of June 30, 1997 as follows: Mr. Kelly, 506,806 shares; Mr. Sasen,
110,106 shares; Mr. Dell, 66,160 shares; Mr. Smith, 73,266 shares; Mr.
Stallings, 44,566 shares; Mr. Elefant, 17,539 shares; Mr. Tullis, 14,296
shares; and executive officers and directors as a group, 1,059,637 shares.
Also included in such beneficial ownership are shares held for the account
of certain individuals by the ESOP as follows: Mr. Kelly, 77,487 shares;
Mr. Sasen, 18,872 shares; Mr. Smith, 25,959 shares; Mr. Dell, 96,420
shares; and all executive officers and directors as a group, 386,830
shares.
(4) Excludes 600,000 shares held in trust for Mr. Kelly's daughters.
(5) Includes 600,000 shares held in trust for Mr. Kelly's daughters for which
Mr. Elefant serves as co-trustee.
(6) Includes 127,881 shares owned by Tullis Dickerson Capital Focus, L.P. and
11,200 shares owned by Tullis Dickerson Partners. Mr. Tullis is the
general partner of Tullis-Dickerson Partners, the sole general partner of
Tullis-Dickerson Capital Focus, L.P.
63
<PAGE>
DESCRIPTION OF CREDIT FACILITY
The Company is party to an Amended and Restated Loan and Security Agreement,
dated December 21, 1994, as amended, among the Company, certain of its
subsidiaries, NationsBank N.A. (formerly known as NationsBank of Georgia,
N.A.), as agent, and the lenders party thereto (the "Credit Facility"). The
Credit Facility consists of a $60.0 million revolving credit facility,
including a subfacility for letters of credit, which may be increased to $75.0
million at the option of the Company.
Loans under the Credit Facility will be evidenced by notes and mature on or
before April 30, 1998, at which time the Credit Facility may be extended
annually at the agent's sole discretion upon request by the Company. The
Credit Facility provides for loans in the amount of 85% of the outstanding
amount of eligible accounts receivable plus the lesser of $30.0 million or 50%
of eligible inventory (as such terms are defined in the Credit Facility).
Interest accrues at a variable rate indexed, at the Company's option, at the
agent's prime rate or the London Interbank Offered Rate ("LIBOR"), plus an
applicable margin which varies based upon certain leverage ratios
requirements. Interest rates may vary from prime to prime plus 75 basis points
or from LIBOR plus 150 basis points to LIBOR plus 250 basis points, based upon
the Company's applicable leverage ratio.
The Company's obligations under the Credit Facility are secured by a lien on
substantially all of the assets of the Company and certain of its
subsidiaries, including accounts receivable, inventory, equipment, intangible
and other property. Amounts outstanding under the Credit Facility are joint
and several direct obligations of the Company and certain of its subsidiaries.
The Credit Facility contains operating and financial covenants, including,
without limitation, requirements to maintain leverage and debt service
coverage ratios and minimum tangible net worth. In addition, the Credit
Facility includes customary covenants relating to the delivery of financial
statements, reports, notices and other information, access to information and
properties, maintenance of insurance, payment of taxes, maintenance of assets,
nature of business, corporate existence and rights, compliance with applicable
laws, including environmental laws, transactions with affiliates, use of
proceeds, limitations on indebtedness, limitations on liens, limitations on
certain mergers and sales of assets, limitations on investments, limitations
on stock repurchases, and limitations on debt payments and other
distributions, including prepayment or redemption of the Notes. The Company
obtained a waiver of such covenants to the extent necessary to permit the
offering of the Notes.
The Credit Facility provides for an annual fee to the agent, an unused
commitment fee, letter of credit fees and an activation fee if the Company
elects to increase the line of credit to $75.0 million.
The Credit Facility contains certain events of default after expiration of
applicable grace periods, including failure to make payments under the Credit
Facility, breach of representations and warranties, breach of covenants,
certain cross-defaults, certain events of insolvency or bankruptcy with
respect to the Company or its subsidiaries, certain judgments against the
Company and certain events relating to changes in senior management of the
Company.
64
<PAGE>
DESCRIPTION OF EXCHANGE NOTES
The Exchange Notes will be issued as a separate series under the Indenture
(the "Indenture"), dated as of October 7, 1997, by and among the Company, the
Subsidiary Guarantors and SunTrust Bank, Central Florida, National
Association, as Trustee (the "Trustee"). The form and terms of the Exchange
Notes are the same as the form and terms of the Private Notes (which they
replace) except that (i) the Exchange Notes bear a different CUSIP Number from
the Private Notes, (ii) the Exchange Notes have been registered under the
Securities Act and, therefore, will not bear legends restricting the transfer
thereof, and (iii) the holders of Exchange Notes will not be entitled to
certain rights under the Registration Rights Agreement, including the
provisions providing for an increase in the interest rate on the Private Notes
in certain circumstances relating to the timing of the Exchange Offer, which
rights will terminate when the Exchange Offer is consummated. The following
summary of certain provisions of the Indenture does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the Trust
Indenture Act of 1939, as amended (the "TIA"), 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 TIA as in effect on the
date of the Indenture. A copy of the Indenture and Registration Rights
Agreement may be obtained from the Company or the Trustee. 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 the
"Company" include only Physician Sales & Service, Inc., and not its
Subsidiaries.
The Private Notes are, and the Exchange Notes will be, general unsecured
obligations of the Company and will be subordinated in right of payment to all
existing and future Senior Indebtedness of the Company, including the
Company's obligations under the Credit Facility. The Guarantees will be
general unsecured obligations of the Subsidiary Guarantors and will be
subordinated in right of payment to all existing and future Guarantor Senior
Indebtedness of the Subsidiary Guarantors. As of June 30, 1997, the Company
had approximately $3.4 million of Senior Indebtedness (including guarantees of
$2.8 million of Indebtedness of Foreign Subsidiaries), and the Subsidiary
Guarantors had approximately $0.4 million of Guarantor Senior Indebtedness. In
addition, the Company had commitments of $60.0 million available under the
Credit Facility which is secured by substantially all of the assets of the
Company and certain of its subsidiaries. See "Risk Factors--Subordination of
Notes; Asset Encumbrance" and "--Reliance on Payments of Subsidiary
Guarantors; Suretyship Defenses." The Exchange Notes will also be, and the
Private Notes are, structurally subordinated to all indebtedness and other
obligations of each of the Company's Subsidiaries other than the Subsidiary
Guarantors (to the extent of the assets of such Subsidiary). As of June 30,
1997, the aggregate Indebtedness of the Company's Subsidiaries, other than the
Subsidiary Guarantors, was $2.8 million. The Indenture permits the incurrence
of additional Indebtedness in the future.
The operations of the Company are conducted both by the Company itself and
through its Subsidiaries, and the Company may, therefore, be dependent upon
the cash flow of its Subsidiaries to meet its debt obligations, including its
obligations under the Notes. While all of the existing domestic subsidiaries
of the Company are, and all future material domestic subsidiaries are expected
to be, Subsidiary Guarantors, the Foreign Subsidiaries of the Company are not
Subsidiary Guarantors and may be restricted in their ability to pay dividends
to the Company pursuant to instruments governing indebtedness of such
Subsidiaries. See "Risk Factors--Reliance on Payments of Subsidiary
Guarantors; Suretyship Defenses."
Initially, WorldMed, Inc., WorldMed International, Inc. and WorldMed, N.V.,
the Company's Foreign Subsidiaries, which as of June 30, 1997 represented less
than 1% of the Company's Consolidated Net Worth, will be Unrestricted
Subsidiaries. Under certain circumstances, the Company will be able to
designate any Subsidiary formed by the Company or acquired by the Company
after the original issuance of the Notes as Unrestricted Subsidiaries.
Unrestricted Subsidiaries will not be Subsidiary Guarantors and will not be
subject to most of the restrictive covenants set forth in the Indenture.
The Exchange Notes will be issued in fully registered form only, without
coupons, in denominations of $1,000 and integral multiples thereof. Initially,
the Trustee will act as Paying Agent and Registrar for the Private Notes and
the Exchange Notes. The Exchange Notes may be presented for registration or
transfer and exchange
65
<PAGE>
at the offices of the Registrar, which initially will be the Trustee's
corporate trust office. The Company may change any Paying Agent and Registrar
without notice to holders of the Notes (the "Holders"). The Company will pay
principal (and premium, if any) on the Notes at the Trustee's corporate office
in New York, New York. Except as set forth below under "Book Entry; Delivery
and Form--Same-Day Settlement and Payment" at the Company's option, interest
may be paid at the Trustee's corporate trust office or by check mailed to the
registered address of Holders; provided that all payments of principal,
interest, and premium, if any, with respect to Exchange Notes, the Holders of
which have given wire transfer instructions to the Company will be required to
be made by wire transfer of immediately available next day funds to the
accounts specified by the Holders thereof. Any Private Notes 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 Notes are limited in aggregate principal amount to $250,000,000, of
which Private Notes in the aggregate principal amount of $125,000,000 were
issued in the Initial Offering and will mature on October 1, 2007. Additional
amounts may be issued in one or more series from time to time subject to the
limitations set forth under "--Certain Covenants--Limitation on Incurrence of
Additional Indebtedness" and the restrictions contained in the Credit
Facility. Interest on the Notes will accrue at the rate of 8 1/2% per annum
and will be payable semiannually in cash on each April 1 and October 1,
commencing on April 1, 1998, to the Persons who are registered Holders at the
close of business on the March 15 and September 15 immediately preceding the
applicable interest payment date. Interest on the Exchange Notes will accrue
from the Issue Date. Holders whose Private Notes are accepted for exchange
will be deemed to have waived the right to receive any interest accrued on the
Private Notes. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
MANDATORY REDEMPTION
Except as set forth below under "--Change of Control" and "--Certain
Covenants--Limitation on Asset Sales," the Company is not required to make
mandatory redemption or sinking fund payments with respect to the Notes.
OPTIONAL REDEMPTION
Optional Redemption. The Exchange Notes will be, and the Private Notes are,
redeemable, at the Company's option, in whole at any time or in part from time
to time, on and after October 1, 2002, at the following redemption prices
(expressed as percentages of the principal amount thereof) if redeemed during
the twelve-month period commencing on October 1 of the year set forth below,
plus, in each case, accrued and unpaid interest thereon, if any, to the date
of redemption (subject to the rights of holders of record on the relevant
record date to receive interest due on the relevant interest payment date):
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002............................... 104.250%
2003.............................. 103.188%
2004.............................. 102.125%
2005.............................. 101.063%
2006 and thereafter............... 100.000%
</TABLE>
Optional Redemption upon Public Equity Offerings. At any time, or from time
to time, on or prior to October 1, 2000, the Company may, at its option, use
the net cash proceeds of one or more Public Equity Offerings to redeem up to
an aggregate of 40% of the principal amount of the Notes originally issued at
a redemption price equal to 108.500% of the principal amount thereof plus
accrued and unpaid interest thereon, if
66
<PAGE>
any, to the date of redemption (subject to the rights of holders of record on
the relevant record date to receive interest due on the relevant interest
payment date); provided that at least 60% of the aggregate principal amount of
the Notes originally issued in the Initial Offering remain outstanding
immediately after the occurrence of any such redemption. In order to effect
the foregoing redemption with the proceeds of any Public Equity Offering, the
Company shall make such redemption not more than 60 days after the
consummation of any such Public Equity Offering.
SELECTION AND NOTICE OF REDEMPTION
In the event that less than all of the Notes are to be redeemed at any time,
selection of such Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities
exchange, if any, on which such Notes are listed or, if such Notes are not
then listed on a national securities exchange, on a pro rata basis, by lot or
by such method as the Trustee shall deem fair and appropriate; provided,
however, that no Notes of a principal amount of $1,000 or less shall be
redeemed in part; provided, further, that if a partial redemption is made with
the proceeds of a Public Equity Offering, selection of the Notes or portions
thereof for redemption shall be made by the Trustee only on a pro rata basis
or on as nearly a pro rata basis as is practicable (subject to DTC
procedures), unless such method is otherwise prohibited. Notice of redemption
shall be mailed by first-class mail at least 30 but not more than 60 days
before the redemption date to each Holder of Notes to be redeemed at its
registered address. 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 a 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 the redemption date,
interest will cease to accrue on Notes or portions thereof called for
redemption so long as the Company has deposited with the Paying Agent funds in
satisfaction of the applicable redemption price pursuant to the Indenture.
SUBORDINATION
The payment of all Obligations on the Private Notes is, and on the Exchange
Notes will be, subordinated in right of payment to the prior Payment in Full
of all Obligations with respect to any Senior Indebtedness, whether
outstanding on the Issue Date or thereafter incurred. Upon any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, to creditors in an Insolvency or Liquidation
Proceeding relating to the Company or its property, whether voluntary or
involuntary, all Obligations due upon all Senior Indebtedness shall first be
paid in full in cash or Cash Equivalents, or such payment duly provided for to
the satisfaction of the holders of Senior Indebtedness, by the Company or any
of its Subsidiaries, before any payment or distribution of any kind or
character is made on account of any Obligations on the Notes, or for the
acquisition, by the Company or any of its Subsidiaries, of any of the Notes
for cash or property, except for Permitted Insolvency Payments. Upon any such
Insolvency or Liquidation Proceeding, any payment or distribution of assets of
the Company of any kind or character, whether in cash, property or securities
(other than Permitted Insolvency Payments), to which the Holders of the Notes
or the Trustee would be entitled will be paid by the Company or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, or by the Holders of the Notes or by the
Trustee if received by them, directly to the holders of Senior Indebtedness
(pro rata to such holders on the basis of the amounts of Senior Indebtedness
held by such holders) or their Representatives, as their interests may appear,
for application to the payment of the Senior Indebtedness remaining unpaid
until all such Senior Indebtedness has been paid in full, after giving effect
to any concurrent payment, distribution or provision therefor to or for the
holders of Senior Indebtedness.
If either: (i) any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on, unpaid drawings for letters of credit issued in
respect of, or regularly accruing fees with respect to, any Senior
Indebtedness, or (ii) any default occurs and is continuing with respect to any
Designated Senior Indebtedness resulting in the acceleration of the maturity
of all or any portion of any Designated Senior Indebtedness, no payment of any
kind or character (other than Permitted Insolvency Payments) shall be made by
the Company or any of its Subsidiaries with respect to any Obligations on the
Notes or to acquire any of the Notes for cash or property. In addition, if any
other event of
67
<PAGE>
default occurs and is continuing with respect to any Designated Senior
Indebtedness, as such event of default is defined in the instrument creating
or evidencing such Designated Senior Indebtedness, permitting the holders of
such Designated Senior Indebtedness then outstanding to accelerate the
maturity thereof and if the Representative for the respective issue of
Designated Senior Indebtedness gives written notice of the event of default to
the Trustee (a "Default Notice"), then, unless and until all events of default
have been cured or waived or have ceased to exist or the Trustee receives
notice from the Representative for the respective issue of Designated Senior
Indebtedness terminating the Blockage Period (as defined below), during the
179 days after the delivery of such Default Notice (the "Blockage Period"),
neither the Company nor any of its Subsidiaries shall: (x) make any payment of
any kind or character (other than Permitted Insolvency Payments) with respect
to any Obligations on the Notes or (y) acquire any of the Notes for cash or
property (other than in exchange for Permitted Insolvency Payments).
Notwithstanding anything herein to the contrary, in no event will a Blockage
Period extend beyond 179 days from the date of the commencement of the
Blockage Period and only one such Blockage Period may be commenced within any
365 consecutive days. No event of default which existed or was continuing on
the date of the commencement of any Blockage Period with respect to the
Designated Senior Indebtedness shall be, or be made, the basis for
commencement of a second Blockage Period by the Representative of such
Designated Senior Indebtedness whether or not within a period of 365
consecutive days, unless such event of default shall have been cured or waived
for a period of not less than 90 consecutive days (it being acknowledged that
any subsequent action, or any breach of any financial covenants for a period
commencing after the date of commencement of such Blockage Period that, in
either case, would give rise to an event of default pursuant to any provisions
under which an event of default previously existed or was continuing shall
constitute a new event of default for this purpose).
By reason of such subordination, in the event of an Insolvency or
Liquidation Proceeding relating to the Company, creditors of the Company who
are not holders of Senior Indebtedness, including the Holders of the Notes,
may recover less, ratably, than holders of Senior Indebtedness.
The Indenture contains other customary subordination provisions regarding
turnover of payments, subrogation and the like.
GUARANTEES
Each Subsidiary Guarantor has fully and unconditionally guaranteed and will
fully and unconditionally guarantee, jointly and severally, to each Holder and
the Trustee, subject to subordination provisions substantially the same as
those described above, the full and prompt payment of principal of and
interest on the Private Notes and Exchange Notes, respectively, and of all
other Obligations under the Indenture.
The obligations of each Subsidiary Guarantor under its Guarantee are and
shall be limited to the maximum amount as will, after giving effect to all
other contingent and fixed liabilities of such Subsidiary Guarantor
(including, without limitation, any Obligations under the Credit Facility) and
after giving effect to any collections from or payments made by or on behalf
of any other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under its Guarantee or pursuant to its contribution
obligations under the Indenture, result in the obligations of such Subsidiary
Guarantor under such Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law. Each Subsidiary Guarantor that
makes a payment or distribution under a Guarantee shall be entitled to a
contribution from each other Subsidiary Guarantor in a pro rata amount based
on the Adjusted Net Assets of each Subsidiary Guarantor.
The Indebtedness evidenced by each Guarantee (including the payment of
principal of, premium, if any, and interest on the Notes) is and will be
subordinated to Guarantor Senior Indebtedness (defined with respect to the
Indebtedness of a Subsidiary Guarantor in the same manner as Senior
Indebtedness is defined with respect to the Company) on the same terms as the
Private Notes are, and the Exchange Notes will be, subordinated to Senior
Indebtedness. As of June 30, 1997, the Subsidiary Guarantors had approximately
$0.4 million of Guarantor Senior Indebtedness. See "--Subordination" above.
68
<PAGE>
The Indenture provides that no Subsidiary Guarantor may consolidate with or
merge with or into (whether or not such Subsidiary Guarantor is the surviving
Person), another corporation, Person or entity whether or not affiliated with
such Subsidiary Guarantor unless, subject to the provisions of the following
paragraph: (i) the Person formed by or surviving any such consolidation or
merger (if other than such Subsidiary Guarantor) assumes all the Obligations
of such Subsidiary Guarantor under the Notes, the Indenture, and the
Registration Rights Agreement pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee; (ii) immediately after
giving effect to such transaction, no Default or Event of Default exists;
(iii) such Subsidiary Guarantor, or any Person formed by or surviving any such
consolidation or merger, would have Consolidated Net Worth (immediately after
giving effect to such transaction), equal to or greater than the Consolidated
Net Worth of such Subsidiary Guarantor immediately preceding the transaction;
and (iv) the Company would be permitted to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to the "Limitation
on Incurrence of Additional Indebtedness"covenant. The requirements of clauses
(iii) and (iv) of this paragraph will not apply in the case of a consolidation
with or merger with or into the Company or another Subsidiary Guarantor.
The Indenture provides that: (a) in the event of a sale or other disposition
of all or substantially all of the assets of any Subsidiary Guarantor, by way
of merger, consolidation or otherwise, or a sale or other disposition of all
of the Capital Stock of any Subsidiary Guarantor, or (b) in the event that the
Company designates a Subsidiary Guarantor to be an Unrestricted Subsidiary, or
such Subsidiary Guarantor ceases to be a Subsidiary of the Company, then such
Subsidiary Guarantor (in the event of a sale or other disposition, by way of
such a merger, consolidation or otherwise, of all of the Capital Stock of such
Subsidiary Guarantor or any such designation) or the entity acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of such Subsidiary Guarantor) will be released and relieved
of any obligations under its Guarantee; provided that the Net Cash Proceeds of
such sale or other disposition are applied in accordance with the applicable
provisions of the Indenture. See "--Change of Control" and "--Certain
Covenants--Limitation on Asset Sales." In the case of a sale, assignment,
lease, transfer, conveyance or other disposition of all or substantially all
of the assets of a Subsidiary Guarantor, upon the assumption provided for in
clause (i) of the covenant described in the prior paragraph, such Subsidiary
Guarantor shall be discharged from all further liability and obligation under
the Indenture.
CHANGE OF CONTROL
The Indenture provides that upon the occurrence of a Change of Control, each
Holder will have the right to require that the Company purchase all or a
portion of such Holder's Notes pursuant to the offer described below (the
"Change of Control Offer"), at a purchase price equal to 101% of the principal
amount thereof plus accrued interest to the date of purchase.
The Credit Facility will restrict the Company from repurchasing any Notes
and also provides that certain asset sales and change of control events with
respect to the Company would constitute a default thereunder. Any future
credit agreements or other agreements relating to Senior Indebtedness to which
the Company becomes a party may contain similar restrictions and provisions.
The Indenture provides that prior to the mailing of the notice referred to
below, but in any event within 30 days following any Change of Control, the
Company covenants to: (i) repay in full all Indebtedness and terminate all
commitments under the Credit Facility and all other Senior Indebtedness the
terms of which require repayment upon a Change of Control or offer to repay in
full and terminate all commitments under all Indebtedness under the Credit
Facility and all other such Senior Indebtedness and to repay the Indebtedness
owed to each lender which has accepted such offer or (ii) obtain the requisite
consents under the Credit Facility and all other Senior Indebtedness to permit
the repurchase of the Notes as provided below. If the Company does not obtain
such consent or repay such borrowings, the Company will remain prohibited from
purchasing Notes. In such case, the Company's failure to purchase tendered
Notes would constitute an Event of Default under the Indenture which would, in
turn, constitute a default under the Credit Facility and would likely cause an
event of default under any other outstanding Senior Indebtedness. In such
circumstances, the subordination provisions in the Indenture would likely
restrict payments to the Holders of Notes. See "Risk Factors--Subordination of
Notes; Asset Encumbrance" and "Description of Credit Facility."
69
<PAGE>
Within 30 days following the date upon which the Change of Control occurred,
the Company 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 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 the
Company 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 the Company is required to
purchase outstanding Notes pursuant to a Change of Control Offer, the Company
expects that it would seek third party financing to the extent it does not
have available funds to meet its purchase obligations. However, there can be
no assurance that the Company would be able to obtain such financing.
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.
Restrictions in the Indenture described herein on the ability of the Company
and its Subsidiaries to incur additional Indebtedness, to grant liens on its
property, to make Restricted Payments and to make Asset Sales may also make
more difficult or discourage a takeover of the Company, whether favored or
opposed by the management of the Company. Consummation of any such transaction
in certain circumstances may require redemption or repurchase of the Notes,
and there can be no assurance that the Company 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 the Company or any of its Subsidiaries by the management of the Company.
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, and the Indenture does not
contain provisions that permit the Holders of the Notes to require that the
Issuers repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction that does not constitute a Change of
Control.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of each of the Company and its Subsidiaries taken as a whole.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder of Notes to require
the Company to repurchase such Notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets of the Company
and its Subsidiaries taken as a whole to another Person or group may be
uncertain.
The Company 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, the Company 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.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times or otherwise in compliance with the requirements set
forth in the Indenture applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
70
<PAGE>
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Incurrence of Additional Indebtedness. The Company will not,
and will not permit any of its 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 of or as a consequence of the incurrence of any
such Indebtedness, the Company and its Subsidiaries may incur Indebtedness
(including, without limitation, Acquired Indebtedness) if on the date of the
incurrence of such Indebtedness, after giving effect to the incurrence
thereof, the Consolidated Fixed Charge Coverage Ratio of the Company is
greater than 2.0 to 1.0. For purposes of determining compliance with this
covenant, in the event that an item of Indebtedness meets the criteria of more
than one of the categories of Permitted Indebtedness described in the
definition thereof or is entitled to be incurred pursuant to the preceding
sentence, the Company shall, in its sole discretion, classify such item of
Indebtedness in any manner that complies with this covenant and such item of
Indebtedness will be treated as having been incurred pursuant to only one of
such category or pursuant to the preceding sentence.
Limitation on Restricted Payments. The Company will not, and will not cause
or permit any of its 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 of the Company) on or in
respect of shares of the Company's Capital Stock or any Restricted
Subsidiary's Capital Stock; (b) purchase, redeem or otherwise acquire or
retire for value any Capital Stock of the Company or any Subsidiary of the
Company or any warrants, rights or options to purchase or acquire shares of
any class of such Capital Stock; (c) make any Investment (other than Permitted
Investments); or (d) make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value any Pari Passu Debt
or Indebtedness subordinated in right of payment to the Notes or the
Guarantees, except a payment of interest or principal at Stated Maturity (each
of the foregoing actions set forth in clauses (a), (b), (c) and (d) being
referred to as a "Restricted Payment"; provided, however, that any payment
made by a Restricted Subsidiary prior to its acquisition by, or merger into,
the Company or a Subsidiary of the Company shall not constitute a Restricted
Payment for purposes of this covenant), unless at the time of such Restricted
Payment and immediately after giving effect thereto, (i) no Default or Event
of Default shall have occurred and be continuing; and (ii) the Company 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; and (iii) the aggregate amount of Restricted Payments
(including such proposed Restricted Payment) made subsequent to the Issue Date
(the amount expended for such purposes, if other than in cash, being the fair
market value of such property as determined reasonably and in good faith by
the Board of Directors of the Company) is less than the sum of: (w) 50% of the
cumulative Consolidated Net Income (or if cumulative Consolidated Net Income
shall be a loss, minus 100% of such loss) of the Company earned subsequent to
the Issue Date 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 the Company from any
Person (other than a Subsidiary of the Company) from the issuance and sale
subsequent to the Issue Date and on or prior to the Reference Date of
Qualified Capital Stock of the Company; plus (y) 100% of the net cash proceeds
from the sale of Investments by the Company (other than Permitted Investments)
provided that such Investment was made after the Issue Date; plus (z) without
duplication of any amounts included in clause (iii)(x) above, 100% of the
aggregate net cash proceeds of any equity contribution received by the Company
from a holder of the Company's Capital Stock (excluding, in the case of
clauses (iii)(x) and (z), any net cash proceeds from a Public Equity Offering
to the extent used to redeem the Notes).
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph shall not prohibit: (1) the payment of any dividend within
60 days after the date of declaration of such dividend if the dividend would
have been permitted on the date of declaration; or (2) if no Default or Event
of Default shall have occurred and be continuing, the acquisition of any
shares of Qualified Capital Stock of the Company or payment, redemption,
acquisition or defeasance of Pari Passu Debt or Indebtedness subordinated in
right of
71
<PAGE>
payment to the Notes or the Guarantees, either (i) solely in exchange for
shares of Qualified Capital Stock of the Company or (ii) through the
application of net proceeds of a substantially concurrent sale for cash (other
than to a Subsidiary of the Company) of shares of Qualified Capital Stock of
the Company (excluding, in the case of clause (2)(ii), any net cash proceeds
from a Public Equity Offering to the extent used to redeem the Notes); (3) the
defeasance, redemption, repurchase or other acquisition of Pari Passu Debt or
subordinated Indebtedness with the net cash proceeds from an incurrence of
Refinancing Indebtedness; (4) the payment of any dividend or distribution by a
Restricted Subsidiary of the Company to the Company or a Wholly Owned
Restricted Subsidiary of the Company; (5) the repurchase, redemption or other
acquisition or retirement for value of any Capital Stock of the Company held
by any member of the Company's (or any of its Subsidiaries') management
pursuant to any management equity subscription agreement, stock option
agreement or employment agreement either (a) in the case of a stock option
agreement, in effect as of the date of the Indenture, or (b) upon the
termination of such person's employment; provided that the aggregate price
paid for all such repurchased, redeemed, acquired or retired Capital Stock
pursuant to this clause (b) shall not exceed $1,000,000 in any twelve-month
period and no Default or Event of Default shall have occurred and be
continuing immediately after such transaction; (6) if no Default or Event of
Default shall have occurred and be continuing, 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) Investments in,
including Contributions to, a Restricted Subsidiary if such Restricted
Subsidiary is not a Foreign Subsidiary and (a) executes and delivers to the
Trustee a supplemental indenture in form reasonably satisfactory to the
Trustee pursuant to which such Restricted Subsidiary shall guarantee all of
the Obligations of the Company with respect to the Indenture and the Notes and
(b) delivers to the Trustee an Opinion of Counsel reasonably satisfactory to
the Trustee to the effect that such supplemental indenture has been duly
executed and delivered by such Restricted Subsidiary and is in compliance with
the terms of the Indenture; and (8) Investments made after the Issue Date in
Foreign Subsidiaries in an aggregate amount not exceeding $20,000,000 at any
one time outstanding. In determining the aggregate amount of Restricted
Payments made subsequent to the Issue Date in accordance with clause (iii) of
the immediately preceding paragraph, amounts expended pursuant to clauses (1)
and (5) shall be included and amounts expended pursuant to clauses (2), (3),
(4), (6), (7) and (8) shall not be included in such calculation.
Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment complies with the Indenture and setting forth in reasonable detail the
basis upon which the required calculations were computed, which calculations
may be based upon the Company's latest available internal quarterly financial
statements.
Limitation on Asset Sales. The Company will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless: (i) the
Company or the applicable Restricted Subsidiary, as the case may be, receives
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 the Company's Board of Directors); (ii) at least 75% of the consideration
received by the Company or such Restricted Subsidiary, as the case may be,
from such Asset Sale shall be in the form of cash or Cash Equivalents and is
received at the time of such disposition; provided that the amount of (x) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet), of the Company or any Restricted Subsidiary (other than
(I) contingent liabilities (except to the extent reflected (or reserved for)
on a balance sheet of the Company or any Restricted Subsidiary as of the date
prior to the date of consummation of such transaction) and (II) liabilities
that are by their terms subordinated to the Notes or the Guarantees) that are
assumed by the transferee of any such assets and (y) any securities, notes or
other obligations received by the Company or any such Restricted Subsidiary
from such transferee that are converted within 90 days by the Company or such
Restricted Subsidiary into cash or Cash Equivalents (to the extent so
received), shall be deemed to be cash or Cash Equivalents for purposes of this
provision, provided further, that the 75% limitation referred to above shall
not apply to any Asset Sale in which the cash portion of the consideration
received therefor is equal to or greater than the after-tax net cash proceeds
that would have been received by the Company had a transaction involving the
same assets complied with the aforementioned 75% limitation but was not
structured with the same tax benefits as the actual transaction; and (iii)
upon the consummation of an Asset Sale, the Company shall apply, or cause such
Restricted Subsidiary to apply, the Net
72
<PAGE>
Cash Proceeds relating to such Asset Sale within 365 days of receipt thereof
either (A) to prepay or irrevocably cash collateralize any 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, (B) to make an investment in, or Business
Acquisition of, properties and assets (other than cash, Cash Equivalents or
inventory) that (x) replace the properties and assets that were the subject of
such Asset Sale or (y) will be used in a Permitted Business ("Replacement
Assets"); provided, however, that in the event the Company or such Restricted
Subsidiary made an investment in, or Business Acquisition of, Replacement
Assets within 180 days prior to such sale, such prior investment shall also
satisfy the requirements of this clause (B), or (C) a combination of
prepayment and investment permitted by the foregoing clauses (iii)(A) and
(iii)(B). On the 366th day after an Asset Sale or such earlier date, if any,
as the Board of Directors of the Company or of such Subsidiary determines not
to apply the Net Cash Proceeds relating to such Asset Sale as set forth in
clauses (iii)(A), (iii)(B) and (iii)(C) of the next 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 (iii)(A), (iii)(B) and (iii)(C) of the
next preceding sentence (each a "Net Proceeds Offer Amount") shall be applied
by the Company or such Subsidiary to make an offer to purchase (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, that amount of Notes equal
to the Net Proceeds Offer Amount at a price 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 the Company or any Subsidiary of the
Company, as the case may be, in connection with any Asset Sale is converted
into or sold or otherwise disposed of for cash or Cash Equivalents (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. The Company may defer the Net Proceeds Offer until there
is an aggregate unutilized Net Proceeds Offer Amount equal to or in excess of
$5,000,000 resulting from one or more Asset Sales (at which time, the entire
unutilized Net Proceeds Offer Amount, and not just the amount in excess of
$5,000,000, shall be applied as required pursuant to this paragraph).
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and its Subsidiaries as an entirety to a
Person in a transaction permitted under "--Merger, Consolidation and Sale of
Assets," the successor corporation shall be deemed to have sold the properties
and assets of the Company and its Subsidiaries not so transferred for purposes
of this covenant, and shall comply with the provisions of this covenant with
respect to such deemed sale as if it were an Asset Sale. In addition, the fair
market value of such properties and assets of the Company or its Subsidiaries
deemed to be sold shall be deemed to be Net Cash Proceeds for purposes of this
covenant.
Notwithstanding the two immediately preceding paragraphs, the Company and
its 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 Replacement Assets (including
inventory) and the remainder constitutes cash or Cash Equivalents and (ii)
such Asset Sale is for fair market value; provided that any consideration not
constituting Replacement Assets (including inventory) received by the Company
or any of its Subsidiaries in connection with any Asset Sale permitted to be
consummated under this paragraph shall constitute Net Cash Proceeds subject to
the provisions of the two preceding paragraphs.
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, the Company may use any remaining Net
Proceeds Offer Amount for general corporate purposes.
73
<PAGE>
The Company 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 "Limitation
on Asset Sale" provisions of the Indenture, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the "Limitation on Asset Sale" provisions of
the Indenture by virtue thereof.
Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause
or permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary of the Company to (a) pay dividends or
make any other distributions on or in respect of its Capital Stock; (b) make
loans or advances or to pay or guarantee any Indebtedness or other obligation
owed to the Company or any other Restricted Subsidiary of the Company; or (c)
transfer any of its property or assets to the Company or any other Restricted
Subsidiary of the Company, except for such encumbrances or restrictions
existing under or by reason of: (1) applicable law; (2) the Indenture or the
Credit Facility as in effect on the Issue Date; (3) customary non-ssignment
provisions of any contract or any lease governing a leasehold interest of any
Subsidiary of the Company; (4) any instrument governing Acquired Indebtedness,
which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person or the properties or
assets of the Person so acquired or any Subsidiary thereof; (5) agreements
existing on the Issue Date to the extent and in the manner such agreements are
in effect on the Issue Date; (6) purchase money obligations for property
acquired that impose restrictions of the nature described in clause (4) above
on the property so acquired; (7) any instrument or agreement governing
Indebtedness permitted to be incurred under the Indenture, which is secured,
or permitted to be secured, by a Lien permitted to be incurred under the
Indenture, which encumbrance or restriction is not applicable to any property
or assets other than the property or assets subject to, or permitted to be
subject to, such Lien; (8) an agreement governing Indebtedness incurred to
Refinance the Indebtedness issued, assumed or incurred pursuant to an
agreement referred to in clause (2), (4), (5), (6) or (7) above; provided,
however, that the provisions relating to such encumbrance or restriction
contained in any such Refinancing are no less favorable to the Company in any
material respect as determined by the Board of Directors of the Company in
their reasonable and good faith judgment than the provisions relating to such
encumbrance or restriction contained in agreements referred to in such clause
(2), (4), (5), (6) or (7); or (9) restrictions contained in any purchase or
sale agreement relating to the purchase or sale of a Subsidiary; provided,
that such restriction does not extend to any assets other than those being
acquired or sold.
Limitation on Issuances and Sales of Capital Stock of Restricted
Subsidiaries. The Company (i) will not, and will not permit any of its
Restricted Subsidiaries to, transfer, convey, sell, lease or otherwise dispose
of any Capital Stock of any Restricted Subsidiary of the Company to any Person
(other than the Company or a Restricted Subsidiary of the Company), unless (a)
such transfer, conveyance, sale, lease or other disposition is of all the
Capital Stock of such Restricted Subsidiary or of Local Qualifying Securities
and (b) the Net Cash Proceeds from such transfer, conveyance, sale, lease or
other disposition are applied in accordance with the covenant described above
under the caption "--Limitation on Asset Sales," and (ii) will not permit any
Restricted Subsidiary of the Company to issue any of its Capital Stock (other
than, if necessary, shares of its Capital Stock constituting directors'
qualifying shares or Local Qualifying Securities) to any Person other than to
the Company or a Restricted Subsidiary of the Company; provided, however, the
foregoing restrictions will not apply to transfers, conveyances, sales, leases
or other dispositions (collectively "dispositions") of any Capital Stock of
any Restricted Subsidiary that have a fair market value at the time of such
disposition of less than $250,000.
Limitation on Liens. The Company will not, and will not cause or permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or permit or suffer to exist any Liens of any kind against or upon any
property or assets of the Company or any of its Restricted Subsidiaries
whether owned on the Issue Date or acquired after the Issue Date, or any
proceeds therefrom, or assign or otherwise convey any right to receive income
or profits therefrom unless: (i) in the case of Liens securing Indebtedness
that is expressly subordinate or
74
<PAGE>
junior in right of payment to the Notes, the Notes are secured by a Lien on
such property, assets or proceeds that is senior in priority to such Liens and
(ii) in all other cases, the Notes are equally and ratably secured, except for
(A) Liens existing as of the Issue Date to the extent and in the manner such
Liens are in effect on the Issue Date; (B) Liens securing Senior Indebtedness;
(C) Liens securing Guarantor Senior Indebtedness; (D) Liens of the Company or
a Wholly Owned Restricted Subsidiary of the Company on assets of any
Restricted Subsidiary of the Company; (E) Liens securing Refinancing
Indebtedness which is incurred to Refinance any Indebtedness which has been
secured by a Lien permitted under the Indenture and which has been incurred in
accordance with the provisions of the Indenture; provided, however, that such
Liens; (X) extend to no more assets and are no more restrictive than the Liens
in respect of the Indebtedness being Refinanced and (Y) do not extend to or
cover any property or assets of the Company or any of its Subsidiaries not
securing the Indebtedness so Refinanced; (F) Permitted Liens; and (G) Liens on
accounts and related general intangibles of an Accounts Receivable Subsidiary.
Prohibition on Incurrence of Layered Indebtedness. The Indenture provides
that (i) the Company will not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is both (a) subordinate or
junior in right of payment to any Senior Indebtedness and (b) senior in any
respect in right of payment to the Notes and (ii) no Subsidiary Guarantor will
incur, create, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is both (a) subordinate or junior in right of payment to its
Guarantor Senior Indebtedness and (b) senior in right of payment to its
Guarantee.
Merger, Consolidation and Sale of Assets. The Company will not, in a single
transaction or series of related transactions, consolidate or merge with or
into any Person, or sell, assign, transfer, lease, convey or otherwise dispose
of (or cause or permit any Subsidiary of the Company to sell, assign,
transfer, lease, convey or otherwise dispose of) all or substantially all of
the Company's assets (determined on a consolidated basis for the Company and
the Company's Subsidiaries) whether as an entirety or substantially as an
entirety to any Person unless: (i) either (1) the Company shall be the
surviving or continuing corporation or (2) the Person (if other than the
Company) formed by such consolidation or into which the Company is merged or
the Person which acquires by sale, assignment, transfer, lease, conveyance or
other disposition the properties and assets of the Company and of the
Company's Subsidiaries substantially as an entirety (the "Surviving Entity")
(x) shall be a corporation organized and validly existing under the laws of
the United States or any State thereof or the District of Columbia and (y)
shall expressly assume, by supplemental indenture (in form and substance
satisfactory to the Trustee), executed and delivered to the Trustee, the due
and punctual payment of the principal of, and premium, if any, and interest on
all of the Notes and the performance of every covenant of the Notes, the
Indenture and the Registration Rights Agreement on the part of the Company to
be performed or observed; (ii) immediately after giving effect to such
transaction and the assumption contemplated by clause (i)(2)(y) above
(including giving effect to any Indebtedness and Acquired Indebtedness
incurred or anticipated to be incurred in connection with or in respect of
such transaction), the Company or such Surviving Entity, as the case may be,
(1) shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such transaction
and (2) shall be able to incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to the "--Limitation on
Incurrence of Additional Indebtedness" covenant; (iii) immediately before and
immediately after giving effect to such transaction and the assumption
contemplated by clause (i)(2)(y) above (including, without limitation, giving
effect to any Indebtedness and Acquired Indebtedness incurred or anticipated
to be incurred and any Lien granted in connection with or in respect of the
transaction), no Default or Event of Default shall have occurred or be
continuing; and (iv) the Company or the Surviving Entity shall have delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture comply with
the applicable provisions of the Indenture and that all conditions precedent
in the Indenture relating to such transaction have been satisfied.
Upon any consolidation, combination or merger or any transfer of all or
substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the continuing corporation, the
75
<PAGE>
successor Person formed by such consolidation or into which the Company is
merged or to which such conveyance, lease or transfer is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under the Indenture and the Notes with the same effect as if such
surviving entity had been named as such.
Limitations on Transactions with Affiliates. The Company will not, and will
not permit any of its 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 its Affiliates (each an "Affiliate Transaction"), other
than (x) Affiliate Transactions permitted under the next succeeding paragraph
below and (y) Affiliate Transactions on terms that are no less favorable to
the Company or such Restricted Subsidiary than those that could reasonably
have been obtained in a comparable transaction at such time on an arm's-length
basis from a Person that is not an Affiliate of the Company or such Restricted
Subsidiary. All Affiliate Transactions (and each series of related Affiliate
Transactions which are similar or part of a common plan) involving aggregate
payments or other property with a fair market value in excess of $1,000,000
shall be approved by the Board of Directors of the Company or such Restricted
Subsidiary, as the case may be, such approval to be evidenced by a Board
Resolution stating that such Board of Directors has determined that such
transaction complies with the foregoing provisions. If the Company or any
Restricted Subsidiary of the Company enters into an Affiliate Transaction (or
a series of related Affiliate Transactions related to a common plan) that
involves aggregate payments or other property with a fair market value of more
than $5,000,000, the Company or such Restricted Subsidiary, as the case may
be, shall, prior to the consummation thereof, obtain a favorable opinion as to
the fairness of such transaction or series of related transactions to the
Company or the relevant Restricted Subsidiary, as the case may be, from a
financial point of view, from an Independent Financial Advisor and file the
same with the Trustee.
The restrictions set forth in the preceding paragraph shall not apply to,
and the following shall be deemed not to be Affiliate Transactions, (i)
reasonable fees and compensation paid to, and indemnity provided on behalf of,
officers, directors or employees of the Company or any Subsidiary of the
Company as determined in good faith by the Company's Board of Directors; (ii)
transactions exclusively between or among the Company and any of its Wholly
Owned Restricted Subsidiaries or exclusively between or among such Wholly
Owned Restricted Subsidiaries, provided such transactions are not otherwise
prohibited by the Indenture and in the case of transactions involving Wholly
Owned Restricted Subsidiaries that are Foreign Subsidiaries, such transactions
are on terms no less favorable to the other Wholly Owned Restricted Subsidiary
than those that could reasonably have been obtained in a comparable
transaction at such time on an arm's-length basis from a Person that is not an
Affiliate of the Company or such Subsidiary; (iii) 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; (iv) transactions permitted
by the provisions of the Indenture described under the covenant entitled
"Sales of Accounts Receivable;" (v) Restricted Payments and Permitted
Investments permitted by the Indenture; (vi) transactions entered into by
Subsidiaries prior to their acquisition by the Company or a Subsidiary
thereof; (vii) loans or credit, the forgiveness of loans or credit and
purchases of Capital Stock pursuant to an Executive Stock Purchase Program;
provided, that the gross proceeds of any loans or credit are used to purchase
Capital Stock of the Company from the Company; and (viii) purchases of Capital
Stock other than Disqualified Capital Stock by the Company's Employee Stock
Ownership Plan or Employee Stock Purchase Plan.
Sale and Leaseback Transactions. The Company will not, and will not permit
any of its Restricted Subsidiaries to, enter into any Sale and Leaseback
Transaction; provided that the Company or any Restricted Subsidiary may enter
into a Sale and Leaseback Transaction if (i) the Company could have (a)
incurred Indebtedness in an amount equal to the Attributable Debt relating to
such Sale and Leaseback Transaction pursuant to the covenant described above
under the caption "--Limitation on Incurrence of Additional Indebtedness" and
(b) incurred a Lien to secure such Indebtedness pursuant to the covenant
described above
76
<PAGE>
under the caption "--Limitation on Liens" and (ii) the gross cash proceeds of
such sale and leaseback transaction are at least equal to the fair market
value (in the case of gross cash proceeds in excess of $5,000,000 as
determined in good faith by the Board of Directors and set forth in an
Officers' Certificate delivered to the Trustee) of the property that is the
subject of such sale and leaseback transaction.
Limitation on Restricted and Unrestricted Subsidiaries. The Board of
Directors of the Company may, if no Default or Event of Default shall have
occurred and be continuing or would arise therefrom, designate an Unrestricted
Subsidiary to be a Restricted Subsidiary, provided, however, that (i) any such
redesignation shall be deemed to be an incurrence as of the date of such
redesignation by the Company and its Restricted Subsidiaries of the
Indebtedness (if any) of such redesignated Subsidiary for purposes of "--
Limitation on Incurrence of Additional Indebtedness" above, and (ii) unless
such redesignated Subsidiary shall not have any Indebtedness outstanding
(other than Permitted Indebtedness), no such designation shall be permitted if
immediately after giving effect to such redesignation and the incurrence of
any such additional Indebtedness (other than Permitted Indebtedness) the
Company could not incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to "--Limitation on Incurrence of Additional
Indebtedness" above.
The Board of Directors of the Company also may, if no Default or Event of
Default shall have occurred and be continuing or would arise therefrom,
designate any Restricted Subsidiary to be an Unrestricted Subsidiary if (i)
such designation is at that time permitted under "--Limitation on Restricted
Payments" above, (ii) immediately after giving effect to such designation, the
Company could incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to "--Limitation of Incurrence of Additional
Indebtedness" above, and (iii) such Subsidiary meets the requirements of
clause (II) of the definition of the term Unrestricted Subsidiary. Any such
designation by the Board of Directors of the Company shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions and was permitted by
the covenant described above under the caption "Certain Covenants--Limitation
on Restricted Payments" and setting forth in reasonable detail the underlying
calculations.
For purposes of the covenant described under "--Limitation on Restricted
Payments" above, (i) an "Investment" shall be deemed to have been made at the
time any Restricted Subsidiary of the Company is designated as an Unrestricted
Subsidiary in an amount (proportionate to the Company's equity interest in
such Subsidiary) equal to the net worth of such Restricted Subsidiary at the
time that such Restricted Subsidiary is designated as an Unrestricted
Subsidiary; (ii) at any date, the aggregate amount of all Restricted Payments
made as Investments since the Issue Date shall exclude and be reduced by an
amount (proportionate to the Company's equity interest in such Subsidiary)
equal to the net worth of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated as a Restricted Subsidiary, not to
exceed, in the case of any such redesignation of an Unrestricted Subsidiary as
a Restricted Subsidiary, the amount of Investments previously made by the
Company and its Restricted Subsidiaries in such Unrestricted Subsidiary (in
each case (i) and (ii), "net worth" is to be calculated based upon the fair
market value of the assets of such Subsidiary as of any such date of
designation); and (iii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer.
If, at any time, any Unrestricted Subsidiary would fail to meet the
requirements of clause (II) of the definition of the term Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the Company as of such
date (and, if such Indebtedness is not permitted to be incurred as of such
date under the covenant described under the caption "--Limitation on
Incurrence of Additional Indebtedness," the Company shall be in default of
such covenant).
The Subsidiaries of the Company that are not designated by the Board of
Directors of the Company as Restricted or Unrestricted Subsidiaries will be
deemed to be Restricted Subsidiaries of the Company. Notwithstanding the
foregoing, all Subsidiaries of an Unrestricted Subsidiary will be Unrestricted
Subsidiaries.
77
<PAGE>
Business Activities. The Company will not, and will not permit any of its
Restricted Subsidiaries to, engage in any business other than Permitted
Businesses, except to such extent as would not be material to the Company and
its Restricted Subsidiaries taken as a whole.
Sales of Accounts Receivable. The Company may, and any of its Restricted
Subsidiaries may, sell, at any time and from time to time, all of their
respective accounts receivable (and related general intangibles) to an
Accounts Receivable Subsidiary; provided that (i) the cash received in each
sale is not less than 90% of the aggregate face value of the receivables sold
and the remainder of the consideration received in each such sale is a
promissory note (a "Promissory Note") which is subordinated to no Indebtedness
or obligation other than that due to the financial institution or other entity
providing the financing to the Accounts Receivable Subsidiary with respect to
such accounts receivable (a "Financier");provided further that the Initial
Sale will include all eligible accounts receivable of the Company and/or its
Restricted Subsidiaries that will be party to such arrangements in existence
on the date of the Initial Sale, (ii) the cash proceeds received from the
Initial Sale less reasonable and customary transaction costs will be deemed to
be Net Cash Proceeds and will be applied in accordance with the covenant
entitled "Limitation on Asset Sales;" and (iii) the Company and its Restricted
Subsidiaries will sell their accounts receivable to the Accounts Receivable
Subsidiary no less frequently than on a weekly basis.
The Company (i) will not permit any Accounts Receivable Subsidiary to sell
any accounts receivable purchased from the Company or any of its Restricted
Subsidiaries to any other person except on an arm's-length basis and solely
for consideration in the form of cash or Cash Equivalents, (ii) will not
permit the Accounts Receivable Subsidiary to engage in any business or
transaction other than the purchase, financing and sale of accounts receivable
of the Company and its Restricted Subsidiaries and activities incidental
thereto, (iii) will not permit any Accounts Receivable Subsidiary to incur
Indebtedness in an amount in excess of the book value of such Accounts
Receivable Subsidiary's total assets, as determined in accordance with GAAP,
(iv) will, at least as frequently as monthly, cause the Accounts Receivable
Subsidiary to remit to the Company as payment on the Promissory Notes, all
available cash or Cash Equivalents not held in a collection account pledged to
a Financier, to the extent not applied to pay or maintain reserves for
reasonable operating expenses of the Accounts Receivable Subsidiary or to
satisfy reasonable minimum operating capital requirements and (v) will not,
and will not permit any of its Subsidiaries to, sell accounts receivable to
any Accounts Receivable Subsidiary upon (1) the occurrence of a Default with
respect to the Company and its Restricted Subsidiaries and (2) the occurrence
of certain events of bankruptcy or insolvency with respect to such Accounts
Receivable Subsidiary.
Payments for Consent. Neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Notes for or as an inducement to any consent, waiver or amendment of any
of the terms or provisions of the Indenture or the Notes unless such
consideration is offered to be paid or is paid to all Holders of the Notes
that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
Additional Guarantees. The Indenture provides that (i) if the Company or any
of its Restricted Subsidiaries shall, after the date of the Indenture,
transfer or cause to be transferred, including by way of any Investment, in
one or a series of transactions (whether or not related), any assets,
businesses, divisions, real property or equipment having an aggregate fair
market value (as determined in good faith by the Board of Directors) in excess
of $1.0 million to any Restricted Subsidiary that is not a Subsidiary
Guarantor or a Foreign Subsidiary, (ii) if the Company or any of its
Restricted Subsidiaries shall acquire another Restricted Subsidiary other than
a Foreign Subsidiary having total assets with a fair market value (as
determined in good faith by the Board of Directors) in excess of $1.0 million,
or (iii) if any Restricted Subsidiary other than a Foreign Subsidiary shall
incur Acquired Indebtedness in excess of $1.0 million, then the Company shall,
at the time of such transfer, acquisition or incurrence, (i) cause such
transferee, acquired Restricted Subsidiary or Restricted Subsidiary incurring
Acquired Indebtedness (if not then a Subsidiary Guarantor) to execute a
Guarantee of the Obligations of the Company under the Notes in the form set
forth in the Indenture and (ii) deliver to the Trustee an Opinion of Counsel,
in form reasonably satisfactory to the Trustee, that such Guarantee is a
valid, binding and enforceable
78
<PAGE>
obligation of such transferee, acquired Restricted Subsidiary or Restricted
Subsidiary incurring Acquired Debt, subject to customary exceptions for
bankruptcy, fraudulent conveyance and equitable principles. Notwithstanding
the foregoing, the Company or any of its Restricted Subsidiaries may make an
Investment in any Wholly Owned Restricted Subsidiary of the Company without
compliance with this covenant provided that such Investment is permitted by
the covenant described under the caption, "Limitation on Restricted Payments."
Reports to Holders. The Company 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 the Company is required to file with the Commission pursuant to Section
13 or 15(d) of the Exchange Act. The Indenture will further provide that,
notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company 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. The Company
will also comply with the other provisions of TIA (S) 314(a). At the Company's
expense, the Company shall cause an annual report if furnished by it to
stockholders generally and each quarterly or other financial report if
furnished by it to stockholders generally to be filed with the Trustee and
mailed to the Holders at their addresses appearing in the register of Notes
maintained by the Registrar at the time of such mailing or furnishing to
stockholders. The Company shall make such annual, quarterly and other
financial reports available to securities analysts and prospective investors
upon request.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) the failure to pay interest on any Notes or any amount payable
pursuant to any Guarantee with respect to interest 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);
(ii) the failure to pay the principal on any Notes or any amount payable
pursuant to any Guarantee (other than as provided in (i)), 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);
(iii) 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 the Company receives 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
(except in the case of a default with respect to the "Merger, Consolidation
and Sale of Assets" covenant, which will constitute an Event of Default
with such notice requirement but without such passage of time requirement);
(iv) there shall be a default under any Indebtedness of the Company or
any Subsidiary (other than an Unrestricted Subsidiary whose Indebtedness is
not then guaranteed by the Company or any of its Restricted Subsidiaries),
whether such Indebtedness now exists or shall hereinafter be created, if
both (A) such default either (1) results from the failure to pay any such
Indebtedness at its stated final maturity or (2) relates to an obligation
other than the obligation to pay such Indebtedness at its stated final
maturity and results in the holder or holders of such Indebtedness causing
such Indebtedness to become due prior to its stated final maturity and (B)
the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness in default for failure to pay
principal at stated final maturity or the maturity of which has been so
accelerated, aggregates $5,000,000 or more at any one time outstanding;
(v) one or more judgments (to the extent not covered by insurance and as
to which the insurer has not acknowledged coverage in writing) in an
aggregate amount in excess of $5,000,000 shall have been rendered against
the Company or any of its Subsidiaries and such judgments remain
undischarged, unpaid, unbonded or unstayed for a period of 60 days after
such judgment or judgments become final and non-appealable;
79
<PAGE>
(vi) certain events of bankruptcy affecting the Company, any Subsidiary
Guarantor or any of their Significant Subsidiaries (other than an
Unrestricted Subsidiary whose Indebtedness is not then guaranteed by the
Company or any of its Restricted Subsidiaries); or
(vii) except as permitted by the Indenture, any Guarantee shall cease to
be, or be asserted in writing by any Subsidiary Guarantor or the Company
not to be, in full force and effect, and enforceable in accordance with the
terms.
If an Event of Default (other than an Event of Default specified in clause
(vi) above with respect to the Company) shall occur and be continuing, 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 the Company and the Trustee specifying
the respective Event of Default and that it is a "notice of acceleration" (the
"Acceleration Notice"), and the same (i) shall become immediately due and
payable or (ii) if there are any amounts outstanding under the Credit
Facility, shall become immediately due and payable upon the first to occur of
an acceleration under the Credit Facility or 5 business days after receipt by
the Company and the Representative under the Credit Facility of such
Acceleration Notice. If an Event of Default specified in clause (vi) above
occurs and is continuing, then all unpaid principal of, and premium, if any,
and accrued and unpaid interest on all of the outstanding Notes 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.
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 (i) if the rescission would not conflict with any judgment or
decree, (ii) 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, (iii) 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, (iv) if the Company has paid the Trustee its reasonable
compensation and reimbursed the Trustee for its expenses, disbursements and
advances and (v) in the event of the cure or waiver of an Event of Default of
the type described in clause (vi) of the description above of Events of
Default, the Trustee shall have received an Officers' Certificate that such
Event of Default has been cured or waived. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
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.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture and under the TIA. Subject to the provisions of the
Indenture relating to the duties of the Trustee, the Trustee is under no
obligation to exercise any of its rights or powers under the Indenture at the
request, order or direction of any of the Holders, unless such Holders have
offered to the Trustee reasonable indemnity. Subject to all provisions of the
Indenture and applicable law, the Holders of a majority in aggregate principal
amount of the then outstanding Notes have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have
had to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding the prohibition on redemption of the
Notes prior to the First Call Date, then the premium specified in the
Indenture for redemption as of the First Call Date shall also become
immediately due and payable to the extent permitted by law upon the
acceleration of the Notes.
80
<PAGE>
Under the Indenture, the Company is required to provide an Officers'
Certificate to the Trustee promptly upon any such officer obtaining knowledge
of any Default or Event of Default (provided that such officers shall provide
such certification at least annually whether or not they know of any Default
or Event of Default) that has occurred and, if applicable, describe such
Default or Event of Default and the status thereof.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee or stockholder, as such, of the Company or
any Subsidiary shall have any liability for any obligations of the Company or
any Subsidiary under the Notes, any Guarantee or the Indenture. Each holder of
the 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.
This provision does not affect any possible claims under the federal
securities laws.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations discharged with respect to the outstanding Notes (and each
Subsidiary Guarantor shall be discharged from any and all obligations with
respect thereto and with respect to its Guarantee) ("Legal Defeasance"). Such
Legal Defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the outstanding Notes,
except for (i) the rights of Holders to receive payments in respect of the
principal of, premium, if any, and interest on the Notes when such payments
are due, (ii) the Company's obligations with respect to the Notes concerning
issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or
stolen Notes and the maintenance of an office or agency for payments, (iii)
the rights, powers, trust, duties and immunities of the Trustee and the
Company's obligations in connection therewith and (iv) the Legal Defeasance
provisions of the Indenture. In addition, the Company may, at its option and
at any time, elect to have the obligations of the Company 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, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders 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; (ii) in the case of Legal Defeasance, the Company shall have delivered to
the Trustee an opinion of counsel in the United States reasonably acceptable
to the Trustee confirming that (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B) since the date
of the Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such opinion of
counsel shall confirm that, the Holders 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; (iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the Holders will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Covenant Defeasance had not occurred; (iv) no Default or Event of
Default shall have occurred and be continuing on the date of such deposit or
insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date of
deposit; (v) 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 the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound; (vi) the Company shall have delivered to the Trustee an Officers'
81
<PAGE>
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company or others; (vii) the Company 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; (viii) the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that (A) the
trust funds will not be subject to any rights of holders of Senior
Indebtedness, including, without limitation, those arising under the Indenture
and (B) after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally; and (ix) 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 of registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (i) either (a) all the Notes 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 the Company and thereafter repaid to the
Company or discharged from such trust) have been delivered to the Trustee for
cancellation or (b) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company has 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 the Company directing the Trustee to apply
such funds to the payment thereof at maturity or redemption, as the case may
be; (ii) the Company has paid all other sums payable under the Indenture by
the Company; and (iii) the Company has 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, the Company, the Subsidiary Guarantors and the Trustee,
without the consent of the Holders, 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 affected thereby, no amendment
may: (i) reduce the principal amount of Notes whose Holders must consent to an
amendment; (ii) reduce the rate of or change or have the effect of changing
the time for payment of interest, including defaulted interest, on any Notes;
(iii) 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; (iv) make any Notes payable in money other than that stated in
the Notes; (v) make any change in provisions of the Indenture protecting the
right of each Holder 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 Notes to
waive Defaults or Events of Default; (vi) amend, change or modify in any
material respect the obligation of the Company to make and consummate a Change
of Control Offer in the event of a Change of Control 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; (vii) modify
or change any provision of the Indenture or the related definitions affecting
the subordination or ranking of the Notes or the Guarantees in a manner which
adversely affects the Holders or (ix) release any Subsidiary Guarantor from
any of its obligations under the Guarantee other than in accordance with the
terms of the Indenture.
82
<PAGE>
GOVERNING LAW
The Indenture provides that it and the Notes are governed by, and construed
in accordance with, the laws of the State of New York but without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set
forth in the Indenture. During the existence of an Event of Default, the
Trustee will exercise such rights and powers vested in it by the Indenture,
and use the same degree of care and skill in its exercise as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs.
The Indenture and the provisions of the TIA contain certain limitations on
the rights of the Trustee, should it become a creditor of the Company, to
obtain payments of claims in certain cases or to realize on certain property
received in respect of any such claim as security or otherwise. Subject to the
TIA, the Trustee will be permitted to engage in other transactions; provided
that if the Trustee acquires any conflicting interest as described in the TIA,
it must eliminate such conflict or resign.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Accounts Receivable Subsidiary" means a newly created, Unrestricted
Subsidiary of the Company (i) which is formed solely for the purpose of, and
which engages in no activities other than activities in connection with,
financing accounts receivable of the Company and/or its Restricted
Subsidiaries, (ii) which is designated by the Board of Directors of the
Company as an Accounts Receivable Subsidiary pursuant to a Board of Directors'
resolution set forth in an Officers' Certificate and delivered to the Trustee,
(iii) that has total assets at the time of such creation and designation with
a book value of $10,000 or less, (iv) which has no Indebtedness other than
Non-Recourse Debt, and (v) with which neither the Company nor any Restricted
Subsidiary of the Company has any contract, agreement, arrangement or
understanding other than contracts, agreements, arrangements and
understandings entered into in the ordinary course of business in connection
with sales of accounts receivable in accordance with the covenant entitled
"Sale of Accounts Receivables" and fees payable in the ordinary course of
business in connection with servicing accounts receivable.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of
its Subsidiaries or assumed in connection with the acquisition of assets from
such Person and in each case not incurred by such Person in connection with,
or in anticipation or contemplation of, such Person becoming a Subsidiary of
the Company or such acquisition, merger or consolidation.
"Act" means the Securities Act of 1933, as amended.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date shall mean the
lesser of the amount by which (x) the fair value of the property of such
Subsidiary Guarantor exceeds the total amount of liabilities, including,
without limitation, contingent liabilities (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date), but
excluding liabilities under the Guarantee of such Subsidiary Guarantor at such
date and (y) the present fair salable value of the assets of such Subsidiary
Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Subsidiary Guarantor on its debts (after giving
effect to all other fixed and contingent liabilities incurred or assumed on
such date and after giving effect to any collection from any Subsidiary of
such Subsidiary Guarantor in respect of the obligations of such Subsidiary
under the Guarantee), excluding debt in respect of the Guarantee, as they
become absolute and matured.
83
<PAGE>
"Affiliate" means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. 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;
provided,that beneficial ownership of 10% or more of the voting Capital Stock
of a Person shall be deemed to be control. The terms "controlling" and
"controlled" have meanings correlative of the foregoing.
"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 the Company or
any of its Restricted Subsidiaries (including any Sale and Leaseback
Transaction, but excluding any such transaction consummated by a Restricted
Subsidiary prior to its acquisition by, or merger into, the Company or a
Subsidiary of the Company) to any Person other than the Company or a Wholly
Owned Restricted Subsidiary of the Company of (a) any Capital Stock of any
Subsidiary of the Company; or (b) any other property or assets of the Company
or any Restricted Subsidiary of the Company other than in the ordinary course
of business; provided, however, that Asset Sales shall not include (i) a
transaction or series of related transactions for which the Company or its
Subsidiaries receive aggregate consideration of less than $250,000 provided
that aggregate of all such transactions in any single calendar year shall not
exceed $1,000,000, (ii) sales of accounts receivables to the Accounts
Receivable Subsidiary in accordance with the covenant entitled "Sales of
Accounts Receivable" and (iii) the sale, lease, conveyance, disposition or
other transfer (x) of all or substantially all of the assets of the Company as
permitted under "Merger, Consolidation and Sale of Assets," (y) involving only
cash, Cash Equivalents or inventory in the ordinary course of business or
obsolete equipment in the ordinary course of business consistent with past
practices of the Company, or (z) involving only the lease or sublease of any
real or personal property in the ordinary course of business.
"Attributable Debt" in respect of a Sale and Leaseback Transaction means at
the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such Sale and Leaseback Transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Board of Directors" means, as to any Person, the board of directors of such
Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a resolution
certified by the Secretary or an Assistant Secretary of such Person to have
been duly adopted by the Board of Directors of such Person and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.
"Business Acquisition" means (a) an Investment by the Company or any
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or any Subsidiary of the Company, or
shall be merged with or into the Company or any Subsidiary of the Company, or
(b) the acquisition by the Company or any Subsidiary of the Company of the
assets of any Person (other than a Subsidiary of the Company) which constitute
all or substantially all of the assets of such Person or comprises 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.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.
"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
84
<PAGE>
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.
"Cash Equivalents" means (i) 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;
(ii) 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 or which the holder has the right to require the issuer to repurchase
at a price greater than or equal to the principal amount thereof within one
year from the date of acquisition and, at the time of acquisition, having one
of the two highest ratings obtainable from both Standard & Poor's Corporation
("S&P") and Moody's Investors Service, Inc. ("Moody's"); (iii) commercial
paper maturing no more than one year from the date of creation thereof and, at
the time of acquisition, having one of the two highest ratings obtainable from
both S&P and Moody's; (iv) certificates of deposit or bankers' acceptances
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 $250,000,000; (v) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clause (i)
above with a fair market value greater than or equal to the repurchase price,
entered into with any bank meeting the qualifications specified in clause (iv)
above; and (vi) investments in money market funds which invest substantially
all their assets in securities of the types described in clauses (i) through
(v) above.
"Change of Control" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets of
the Company and its Subsidiaries taken as a whole to any Person or group of
related Persons 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); (ii) the approval by the holders of
Capital Stock of the Company of any plan or proposal for the liquidation or
dissolution of the Company (whether or not otherwise in compliance with the
provisions of the Indenture); (iii) the acquisition in one or more
transactions, by any Person or Group of beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) of either more than 30% (or in
the case of any Person or Group that beneficially owns 10% or more of the
aggregate ordinary voting power as of the Issue Date, 35%) of the aggregate
ordinary voting power represented by the issued and outstanding Capital Stock
of the Company or more than 40% of the aggregate issued and outstanding Common
Stock of the Company; or (iv) the replacement of a majority of the Board of
Directors of the Company over a two-year period from the directors who
constituted the Board of Directors of the Company at the beginning of such
period, and such replacement shall not have been approved by a vote of at
least a majority of the Board of Directors of the Company then still in office
who either were members of such Board of Directors at the beginning of such
period or whose election as a member of such Board of Directors was previously
so approved.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on
the Issue Date or issued after the Issue Date, and includes, without
limitation, all series and classes of such common stock.
"Consolidated EBITDA" means, with respect to any Person, for any period, the
sum (without duplication) of (i) Consolidated Net Income and (ii) to the
extent Consolidated Net Income has been reduced thereby, (A) all income taxes
of such Person and its Subsidiaries paid or accrued in accordance with GAAP
for such period (other than income taxes attributable to extraordinary,
unusual or nonrecurring gains or losses or taxes attributable to sales or
dispositions outside the ordinary course of business or other transactions the
effect of which has been excluded from Consolidated Net Income), (B)
Consolidated Interest Expense and (C) Consolidated Non-cash
85
<PAGE>
Charges less any non-cash items increasing Consolidated Net Income for such
period, all as determined on a consolidated basis for such Person and its
Subsidiaries in accordance with GAAP.
"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 (i) the
incurrence or repayment of any Indebtedness of such Person or any of its
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), other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital or revolving credit
facilities, 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 and (ii) any Asset Sales or Business Acquisitions (including,
without limitation, any Business Acquisition giving rise to the need to make
such calculation as a result of such Person or one of its Subsidiaries
(including any Person who becomes a Subsidiary as a result of the Business
Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA for such Four Quarter
Period attributable to the Person or assets which are the subject of the
Business 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 Business Acquisition (including the incurrence, assumption or
liability for any such Acquired Indebtedness) occurred on the first day of the
Four Quarter Period. If such Person or any of its 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 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," (1)
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; (2) 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 (3) notwithstanding clause (1)
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 (i) Consolidated Interest Expense,
plus (ii) the product of (x) the amount of all dividend payments on any series
of Preferred Stock of such Person and its Restricted Subsidiaries (other than
dividends paid in Qualified Capital Stock or dividends to the extent payable
to the Company or its Restricted Subsidiaries) paid, accrued or scheduled to
be paid or accrued during such period (other than in the case of Preferred
Stock of such Person and its Restricted Subsidiaries for which the dividends
are tax deductible for Federal income tax purposes) 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: (i) the aggregate of the interest
expense of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, whether paid or
accrued, including without limitation, (a) any amortization of debt discount
and amortization or write-off of deferred financing costs, (b) the
86
<PAGE>
net costs under Interest Swap Obligations, (c) all capitalized interest and
(d) the interest portion of any deferred payment obligation, including with
respect to Attributable Debt; (ii) the aggregate dividend payments of such
Person and its Restricted Subsidiaries for such period with respect to
Disqualified Capital Stock; and (iii) 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" means, with respect to any Person, for any period,
the aggregate net income (or loss) of such Person and its Subsidiaries for
such period on a consolidated basis (before Preferred Stock (other than
Disqualified Stock) dividend requirements), determined in accordance with
GAAP; provided that there shall be excluded therefrom (a) after-tax gains and
losses from Asset Sales or abandonments or reserves relating thereto, (b)
after-tax items classified as extraordinary or nonrecurring gains or losses,
(c) the net income of any Person acquired in a "pooling of interests"
transaction accrued prior to the date it becomes a Subsidiary of the referent
Person or is merged or consolidated with the referent Person or any Subsidiary
of the referent Person, (d) the net income (but not loss) of any Restricted
Subsidiary of the referent Person to the extent that the declaration of
dividends or similar distributions by that Restricted Subsidiary of that
income is restricted (or subject to tax) by a contract, operation of law or
otherwise, (e) the net income of any Person, other than a Restricted
Subsidiary of the referent Person, except to the extent of cash dividends or
distributions paid to the referent Person or to a Wholly Owned Restricted
Subsidiary of the referent Person by such Person, (f) any restoration to
income of any contingency reserve, except to the extent that provision for
such reserve was made out of Consolidated Net Income accrued at any time
following the Issue Date, (g) income or loss attributable to discontinued
operations (including, without limitation, operations disposed of during such
period whether or not such operations were classified as discontinued), (h) in
the case of a successor to the referent Person by consolidation or merger or
as a transferee of the referent Person's assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets, (i) any
gain realized in connection with the disposition of any securities other than
Cash Equivalents by such Person or any of its Restricted Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Restricted
Subsidiaries, (j) all gains or losses from the cumulative effect of any change
in accounting principles and (k) Consolidated Pooling Expenses.
"Consolidated Net Worth" means, (A) with respect to any partnership, the
common and preferred partnership equity of such partnership and its
consolidated subsidiaries, as determined on a consolidated basis in accordance
with GAAP, and (B) with respect to any other Person as of any date, the sum of
(i) the consolidated equity of the common equity holders of such Person and
its consolidated Subsidiaries as of such date plus (ii) the respective amounts
reported on such Person's balance sheet as of such date with respect to any
series of preferred equity (other than Disqualified Capital Stock) that by its
terms is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other
than write-ups resulting from foreign currency translations and write-ups of
tangible assets of a going concern business made within 12 months after the
acquisition of such business) subsequent to the date of the Indenture in the
book value of any asset owned by such Person or a consolidated Subsidiary of
such Person, (y) all investments as of such date in unconsolidated
Subsidiaries and in Persons that are not Subsidiaries (except, in each case,
Permitted Investments), plus (z) all unamortized debt discount and expense and
unamortized deferred charges as of such date, all of the foregoing determined
in accordance with GAAP.
"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 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
constituting an extraordinary item or loss or any such charge which requires
an accrual of or a reserve relating to possible cash charges or expenditures
for any future or past period).
"Consolidated Pooling Expenses" of any Person means for any period, with
respect to such Person and its Restricted Subsidiaries on a consolidated
basis, the transaction, merger-related and non-recurring costs and
87
<PAGE>
expenses for such period recorded in connection with a pooling-of-interests
transaction, in accordance with GAAP, but only to the extent such expenses
would have been capitalized, in accordance with GAAP, if such transaction had
been a purchase transaction including, but not limited to, severance costs,
plant closings, relocations and like costs.
"Contributions" means any loans, cash advances, capital contributions,
investments or other transfers of assets for either (i) Capital Stock or (ii)
less than fair value by the Company or any of its Restricted Subsidiaries to
any Subsidiary or other Affiliate of the Company or any of its Restricted
Subsidiaries other than to a Subsidiary Guarantor.
"Credit Facility" means the Amended and Restated Loan and Security
Agreement, dated as of December 21, 1994, by and among the Company, PSS Texas,
Inc., PSS Rhode Island, Inc., Standard/Crescent City Surgical Supplies, Inc.,
and the financial institutions party thereto from time to time and
NationsBank, N.A. (formerly known as NationsBank of Georgia, N.A.), as agent,
together with the related documents thereto (including, without limitation,
any guarantee agreements and security documents), in each case as such
agreements may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, and any agreement
extending the maturity of, Refinancing, replacing or otherwise restructuring
(including increasing the amount of available borrowings thereunder (provided
that such increase in borrowings is permitted by the "Limitation on Incurrence
of Additional Indebtedness"covenant above)) all or any portion of the
Indebtedness (or commitment to extend such Indebtedness) under such agreement
or any successor or replacement agreement and whether by the same or any other
agent, lender or group of lenders.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"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 (i) Indebtedness under or in respect
of the Credit Facility and (ii) any other Indebtedness constituting Senior
Indebtedness which, at the time of determination, has an aggregate principal
amount of at least $25.0 million and is specifically designated in the
instrument evidencing such Senior Indebtedness as "Designated Senior
Indebtedness" by the Company.
"Disqualified Capital Stock" means, with respect to any person, 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, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is exchangeable for Indebtedness, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
date that is 91 days after the date on which the Notes mature.
"Escrowed Purchase Price" means the deferred purchase price of property,
including a Business Acquisition, for which an escrow of cash or Cash
Equivalents has been established, and with respect to which the payment
obligation (whether contingent or fixed) does not exceed the amount of such
escrow, plus the earnings actually received thereon.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any
successor statute or statutes thereto.
"Executive Stock Purchase Program" means any plan or program implemented by
the Company pursuant to which the Company provides loans or otherwise extends
credit to officers of the Company for the purpose of purchasing Common Stock
of the Company from the Company in an amount not less than the amount of such
loans or credit. Under the terms of any Executive Stock Purchase Program, the
Company may, based on the financial performance of the Company, forgive the
repayment of all or any portion of such loan.
88
<PAGE>
"fair market value" means, 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 the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of
the Board of Directors of the Company delivered to the Trustee.
"First Call Date" means October 1, 2002.
"Foreign Subsidiary" means any Subsidiary of the Company either (a) which is
organized outside of the United States of America, (b) whose principal
activities are conducted outside of the United States of America or (c) whose
only material assets are Capital Stock in Subsidiaries which are Foreign
Subsidiaries.
"GAAP" means generally accepted accounting principles 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 may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Issue Date.
"Indebtedness" means with respect to any Person, without duplication, (i)
all indebtedness of such Person, whether or not contingent, for borrowed
money, (ii) all indebtedness of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) all Capitalized Lease Obligations of
such Person, (iv) all indebtedness or other obligations of such Person issued
or assumed as the deferred purchase price of property other than Escrowed
Purchase Price, all conditional sale obligations and all Obligations under any
title retention agreement (but excluding trade accounts payable and other
accrued liabilities arising in the ordinary course of business that are not in
default or overdue by 90 days or more or are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted), (v) all
indebtedness for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (vi) guarantees and other
contingent obligations in respect of Indebtedness referred to in clauses (i)
through (v) above and clause (viii) below of such Person or any other Person,
(vii) all indebtedness of any other Person of the type referred to in clauses
(i) through (vi) which are secured by any lien on any property or asset of
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, (viii) all indebtedness under Currency Agreements and
Interest Swap Agreements of such Person and (ix) 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, the "maximum fixed
repurchase price" of any Disqualified Capital 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. The amount of any
Indebtedness (other than Disqualified Capital Stock) outstanding as of any
date shall be (i) the accreted value thereof, to the extent such Indebtedness
does not require current payments of interest, and (ii) the principal amount
thereof, together with any interest thereon that is more than 30 days past
due, in the case of any other Indebtedness.
"Independent Financial Advisor" means a firm (i) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified
to perform the task for which it is to be engaged.
"Initial Sale" means the first transaction in which accounts receivable are
sold by the Company and/or its Restricted Subsidiaries to an Accounts
Receivable Subsidiary.
89
<PAGE>
"Insolvency or Liquidation Proceedings" means with respect to any Person (i)
any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding relative to
such Person or to the creditors of such Person, as such, or to the assets of
such Person, or (ii) any liquidation, dissolution, reorganization or winding
up of such Person, whether voluntary or involuntary and involving insolvency
or bankruptcy, or (iii) any assignment for the benefit of creditors or any
other marshaling of assets and liabilities of such Person.
"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
and shall include, without limitation, interest rate swaps, caps, floors,
collars and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect loan
or other extension of credit (including, without limitation, a guarantee,
other than a guarantee of Indebtedness of a Foreign Subsidiary permitted by
the "Limitation on Incurrence of Additional Indebtedness" covenant) 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, any
other Person (including a Subsidiary of the referent Person). "Investment"
shall exclude extensions of trade credit by the Company and its Subsidiaries
on commercially reasonable terms in accordance with normal trade practices of
the Company or such Subsidiary, as the case may be. If the Company or any
Restricted Subsidiary of the Company sells or otherwise disposes of any
Capital Stock of any direct or indirect Restricted Subsidiary of the Company
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary of the Company, the Company 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 Capital Stock of such Subsidiary not sold or
disposed. For the purposes of the "Limitation on Restricted Payments"
covenant, 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 Subsidiaries, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such
Investment, reduced by the payment of dividends or distributions 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.
"Issue Date" means October 7, 1997.
"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).
"Local Qualifying Securities" with respect to any Foreign Subsidiary means
the minimum amount of Capital Stock of such Foreign Subsidiary required by
applicable law of the country in which the Foreign Subsidiary is located to be
owned by a citizen of such country.
"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 the Company or any of its Restricted Subsidiaries from such Asset
Sale net of (a) reasonable out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting and investment
banking fees and sales commissions), (b) income taxes paid or payable after
taking into account any reduction in consolidated income tax liability due to
available tax credits or deductions and any tax sharing arrangements, (c)
repayment
90
<PAGE>
of Indebtedness that is required to be repaid in connection with such Asset
Sale and (d) appropriate amounts to be provided by the Company or any
Restricted Subsidiary, as the case may be, as a reserve, in accordance with
GAAP, against any liabilities associated with such Asset Sale and retained by
the Company or any Restricted Subsidiary, as the case may be, after such Asset
Sale, including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities
under any indemnification obligations associated with such Asset Sale.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness) or (b) is directly or indirectly liable (as a guarantor or
otherwise); (ii) no default with respect to which (including any rights that
the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness of the Company or its Restricted Subsidiaries
to declare a default on such other Indebtedness or cause the payment thereof
to be accelerated or payable prior to its stated maturity; and (iii) as to
which the lenders, except for lenders under Indebtedness in existence on the
Issue Date or instruments governing Acquired Indebtedness (a) have
acknowledged that they do not have recourse to the holder of the Capital Stock
of the debtor or (b) have been notified in writing that they will not have any
recourse to the stock or assets of either the Company or any of its Restricted
Subsidiaries.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Pari Passu Debt" means any Indebtedness of the Company or its Restricted
Subsidiaries which, by its terms, is pari passu in right of payment to the
Notes or the Guarantees.
"Payment in Full" (together with any correlative phrases, e.g., "paid in
full" and "pay in full") means (i) with respect to any Senior Indebtedness
other than Senior Indebtedness under or in respect of the Credit Facility,
payment in full thereof or due provision for payment thereof (x) in accordance
with the terms of the agreement or instrument pursuant to which such Senior
Indebtedness was issued or is governed or (y) otherwise to the reasonable
satisfaction of the holders of such Senior Indebtedness, which shall include,
in any Insolvency or Liquidation Proceeding, approval by such holders
individually or as a class, of the provision for payment thereof, and (ii)
with respect to Senior Indebtedness under or in respect of the Credit
Facility, payment in full thereof in cash or Cash Equivalents.
"Permitted Business" means the business of the Company and its Subsidiaries
as existing on the Issue Date or such other businesses as the Board of
Directors of the Company determines are reasonably related thereto as
evidenced by a Board Resolution.
"Permitted Indebtedness" means without duplication, each of the following:
i) Indebtedness under the Notes and the Indenture;
ii) Indebtedness under the Guarantees;
iii) Indebtedness incurred pursuant to the Credit Facility (and the
guarantees thereunder) in an aggregate principal amount at any time
outstanding not to exceed $30,000,000;
iv) other Indebtedness of the Company and its 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;
v) Interest Swap Obligations of the Company covering Indebtedness of the
Company or any of its Subsidiaries and Interest Swap Obligations of any
Subsidiary of the Company covering Indebtedness of such Subsidiary;
provided, however, that (x) such Interest Swap Obligations are designed to
protect the Company and its Subsidiaries from fluctuations in interest
rates on Indebtedness incurred in accordance with
91
<PAGE>
the Indenture (and are used for bona fide hedging, and not speculative,
purposes); and (y) the notional principal amount of such Interest Swap
Obligation does not exceed the principal amount of the Indebtedness to
which such Interest Swap Obligation relates;
vi) Indebtedness under Currency Agreements; provided that in the case of
Currency Agreements which relate to Indebtedness, such Currency Agreements
(i) are designed to protect against fluctuations in currency value (and are
used for bona fide hedging, and not speculative, purposes) and (ii) do not
increase the Indebtedness of the Company and its Subsidiaries outstanding
other than as a result of fluctuations in foreign currency exchange rates
or by reason of fees, indemnities and compensation payable thereunder;
vii) Indebtedness of the Company or a Wholly Owned Restricted Subsidiary
of the Company that is a Subsidiary Guarantor to the Company or to a Wholly
Owned Restricted Subsidiary of the Company that is Subsidiary Guarantor for
so long as such Indebtedness is held by the Company or a Wholly Owned
Restricted Subsidiary of the Company that is a Subsidiary Guarantor, in
each case subject to no Lien held by a Person other than the Company or a
Wholly Owned Restricted Subsidiary of the Company that is a Subsidiary
Guarantor; provided that (x) if as of any date any Person other than the
Company or a Wholly Owned Restricted Subsidiary of the Company that is a
Subsidiary Guarantor owns or holds any such Indebtedness or holds a Lien in
respect of such Indebtedness, such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness by the issuer of such
Indebtedness and (y) any Indebtedness of the Company to any Wholly Owned
Restricted Subsidiary of the Company is unsecured and subordinated,
pursuant to a written agreement, to the Company's Obligations under the
Indenture and the Notes;
viii) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except
in the case of daylight overdrafts) drawn against insufficient funds in the
ordinary course of business; provided, however, that such Indebtedness is
extinguished within two business days of incurrence;
ix) Indebtedness of the Company or any of its Subsidiaries represented by
letters of credit or guarantees by or for the account of the Company or
such Subsidiary, as the case may be, in order to provide security for
workers' compensation claims, payment obligations in connection with self-
insurance or similar requirements in the ordinary course of business;
x) Refinancing Indebtedness;
xi) Indebtedness incurred by the Company or any Restricted Subsidiary of
the Company in connection with the purchase, cost of construction or
improvement of property (real or personal) or equipment or other capital
expenditures in the ordinary course of business or consisting of
Capitalized Lease Obligations; provided that at the time of the incurrence
thereof, such Indebtedness, does not exceed $5,000,000 (less any
Refinancing Indebtedness incurred to refinance any Indebtedness incurred
under this clause xi);
xii) Acquired Indebtedness of a Subsidiary, which Subsidiary was acquired
after the Issue Date and which Acquired Indebtedness was in existence at
the time of acquisition of such Subsidiary, if such Acquired Indebtedness
is Non-Recourse Debt (except with respect to such Subsidiary and its
Subsidiaries) and such Acquired Indebtedness does not exceed $10,000,000 in
the aggregate outstanding at any time;
xiii) Indebtedness in the form of holdback notes or deferred purchase
price in connection with a Business Acquisition in an amount not to exceed
20% of the purchase price of such Business Acquisition;
xiv) Indebtedness arising from agreements of the Company or a Restricted
Subsidiary of the Company providing for indemnification, adjustment of
purchase price or similar obligations, in each case, incurred in connection
with the disposition of any business, assets or 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 aggregate
liability in respect of all such Indebtedness shall at no time exceed the
gross proceeds actually received by the Company and the Restricted
Subsidiary in connection with such disposition;
xv) Obligations in respect of performance bonds and completion guarantees
provided by the Company or any Restricted Subsidiary of the Company in the
ordinary course of business;
92
<PAGE>
xvi) Guarantees by the Company or a Restricted Subsidiary of the Company
of Indebtedness incurred by the Company or a Restricted Subsidiary of the
Company so long as the incurrence of such Indebtedness by the Company or
any such Restricted Subsidiary of the Company is otherwise permitted by the
terms of the Indenture;
xvii) Indebtedness of Foreign Subsidiaries (which is Non-Recourse Debt,
except with respect to such entities) that are Restricted Subsidiaries in
an amount, at any time outstanding not to exceed $5,000,000;
xviii) Non-Recourse Debt of Unrestricted Subsidiaries; provided, however,
that if any such Indebtedness ceases to be Non-Recourse Debt of an
Unrestricted Subsidiary, such event shall be deemed to constitute an
incurrence of Indebtedness by a Restricted Subsidiary of the Company; and
xix) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $35,000,000 at
any one time outstanding.
"Permitted Insolvency Payments" means (i) securities distributed to the
Holders of the Notes in an Insolvency or Liquidation Proceeding pursuant to a
plan of reorganization consented to by each class of the Senior Indebtedness,
but only if all of the terms and conditions of such securities (including,
without limitation, term, tenor, interest, amortization, subordination,
standstills, covenants and defaults), are at least as favorable (and provide
the same relative benefits) to the holders of Senior Indebtedness and to the
holders of any security distributed in such Insolvency or Liquidation
Proceeding on account of any such Senior Indebtedness as the terms and
conditions of the Notes and the Indenture are, and provide to the holders of
Senior Indebtedness, and (ii) payments from a trust established pursuant to
the provisions of the Indenture described under "Satisfaction and Discharge of
the Indenture", provided that payment into such trust was not made either (x)
within 90 days prior to the commencement of an Insolvency or Liquidation
Proceeding, or (y) during any period in which payment on the Notes is blocked
pursuant to the subordination provisions of the Indenture.
"Permitted Investments" means (i) Investments by the Company or any
Subsidiary of the Company in any Person engaged in a Permitted Business that
is or will become immediately after such Investment a Wholly Owned Restricted
Subsidiary of the Company other than a Foreign Subsidiary or that will merge
or consolidate into the Company or a Wholly Owned Restricted Subsidiary of the
Company other than a Foreign Subsidiary, (ii) Investments in the Company by
any Subsidiary of the Company; provided that any Indebtedness evidencing such
Investment is unsecured and subordinated to the Company's obligations under
the Notes and the Indenture, pursuant to a written agreement and to the same
extent that the Notes are subordinated to Senior Indebtedness; (iii)
investments in cash and Cash Equivalents; (iv) loans and advances to employees
and officers of the Company and its Subsidiaries (a) in existence as of the
Issue Date, (b) in the ordinary course of business for bona fide business
purposes not in excess of $2,000,000 at any one time outstanding or (c)
pursuant to an Executive Stock Purchase Program; (v) Currency Agreements and
Interest Swap Obligations entered into in the ordinary course of the Company's
or its Subsidiaries' businesses and otherwise in compliance with the
Indenture; (vi) Investments in securities of trade creditors or customers
received in settlement of trade receivables at such time as the account debtor
is insolvent or otherwise unable to pay or pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of
such trade creditors or customers; (vii) Investments made by the Company or
its Subsidiaries as a result of consideration received in connection with an
Asset Sale made in compliance with the "Limitation on Asset Sales" covenant;
(viii) Investments in an Accounts Receivable Subsidiary received in
consideration of sales of accounts receivable in accordance with the covenant
entitled "Sales of Accounts Receivable;" (ix) Investments by the Company or a
Wholly Owned Restricted Subsidiary in the form of loans or advances described
in clause (vii) of the definition of the term Permitted Indebtedness; and (x)
additional Investments made after the Issue Date in an aggregate amount not
exceeding $10,000,000 at any one time outstanding.
"Permitted Liens" means the following types of Liens:
i) Liens for taxes, assessments or governmental charges or claims either
(a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or its Subsidiaries shall have set
aside on its books such reserves as may be required pursuant to GAAP;
93
<PAGE>
ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
iii) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security;
iv) Liens securing letters of credit issued in the ordinary course of
business consistent with past practice in connection with the items
referred to in clause (iii) or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
v) judgment Liens not giving rise to an Event of Default so long as such
Lien is adequately bonded and any appropriate legal proceedings which may
have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
vi) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company
or any of its Subsidiaries;
vii) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
viii) purchase money Liens to finance property or assets of the Company
or any Subsidiary of the Company acquired or constructed in the ordinary
course of business; provided, however, that (A) the related purchase money
Indebtedness shall not exceed the cost of such property or assets and shall
not be secured by any property or assets of the Company or any Subsidiary
of the Company other than the property and assets so acquired and (B) the
Lien securing such Indebtedness shall be created within 90 days of such
acquisition;
ix) Liens upon specific items of inventory or other goods and proceeds of
any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory or other goods;
x) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to
such letters of credit and products and proceeds thereof;
xi) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Company
or any of its Subsidiaries, including rights of offset and set-off;
xii) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under the
Indenture;
xiii) Liens securing Indebtedness under Currency Agreements;
xiv) Liens securing Acquired Indebtedness incurred in accordance with the
"Limitation on Incurrence of Additional Indebtedness" covenant; provided
that (A) such Liens secured such Acquired Indebtedness at the time of and
prior to the incurrence of such Acquired Indebtedness by the Company or a
Subsidiary of the Company and were not granted in connection with, or in
anticipation of, the incurrence of such Acquired Indebtedness by the
Company or a Subsidiary of the Company and (B) such Liens do not extend to
or cover any property or assets of the Company or of any of its
Subsidiaries other than the property or assets that secured the Acquired
Indebtedness prior to the time such Indebtedness became Acquired
Indebtedness of the Company or a Subsidiary of the Company and are no more
favorable to the lien holders than those securing the Acquired Indebtedness
prior to the incurrence of such Acquired Indebtedness by the Company or a
Subsidiary of the Company;
94
<PAGE>
xv) Liens to secure Attributable Debt that is permitted to be incurred
pursuant to the covenant entitled "Sale and Leaseback Transactions;"
provided that any such Lien shall not extend to or cover any assets of the
Company or any Restricted Subsidiary other than the assets which are the
subject of the Sale and Leaseback Transaction in which the Attributable
Debt is incurred.
xvi) Leases or subleases granted to others not interfering in any
material respect with the business of the Company or any of its
Subsidiaries;
xvii) Any interest or title of a lessor in the property subject to any
lease, whether characterized as capitalized or operating other than any
such interest or title resulting from or arising out of a default by the
Company or any of its Subsidiaries of its obligations under such lease;
xviii) Liens arising from filing UCC financing statements for
precautionary purposes in connection with true leases of personal property
that are otherwise permitted under the Indenture and under which the
Company or any of its Subsidiaries is lessee; and
xix) Liens in favor of the Trustee and any substantially equivalent Lien
granted to any trustee or similar institution under any indenture governing
Indebtedness permitted to be incurred or outstanding under the Indenture.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, a governmental agency or political
subdivision thereof or other entity.
"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.
"Public Equity Offering" means an underwritten equity offering, pursuant to
an effective registration statement under the Act, of the Qualified Capital
Stock of the Company, or of any entity of which the Company is a direct or
indirect subsidiary, to the extent the proceeds thereof shall have been
received or contributed to the Company.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.
"Refinance" means, in respect of any security or Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a
security or Indebtedness in exchange or replacement for, such security or
Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have
correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
Subsidiary of the Company of Indebtedness (other than Indebtedness under the
Credit Facility) incurred in accordance with the "Limitation on Incurrence of
Additional Indebtedness" covenant (other than pursuant to clause (v), (vi),
(vii), (viii) or (ix) of the definition of Permitted Indebtedness), in each
case that does not (1) result in an increase in the aggregate principal amount
of Indebtedness of such Person as of the date of such proposed Refinancing
(plus the amount of any premium or penalty required to be paid under the terms
of the instrument governing such Indebtedness and plus the amount of
reasonable expenses incurred by the Company in connection with such
Refinancing) or (2) create Indebtedness with (A) a Weighted Average Life to
Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being Refinanced or (B) a final maturity earlier than the final
maturity of the Indebtedness being Refinanced; provided that (x) if such
Indebtedness being Refinanced is Indebtedness of the Company, then such
Refinancing Indebtedness shall be Indebtedness solely of the Company and (y)
if such Indebtedness being Refinanced is subordinate or junior to the Notes or
any Guarantee, then such Refinancing Indebtedness shall have a final maturity
date later than 91 days after the final maturity date of the Notes and shall
be subordinate to the Notes at least to the same extent and in the same manner
as the Indebtedness being Refinanced.
"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
95
<PAGE>
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 a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Revolving Credit Facility" means one or more revolving credit facilities
under the Credit Facility.
"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 the Company or a Subsidiary of any property, whether owned by the
Company or any Subsidiary at the Issue Date or later acquired, which has been
or is to be sold or transferred by the Company or such 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.
"Senior Indebtedness" means, all Indebtedness and other Obligations
specified below payable directly or indirectly by the Company or any of its
Restricted Subsidiaries (including any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an allowed
claim under applicable law), whether outstanding on the Issue Date or
thereafter created, incurred or assumed, by the Company or any of its
Restricted Subsidiaries: (i) the principal of, interest on and all other
Obligations related to, the Credit Facility (including without limitation all
loans, letters of credit and other extensions of credit under the Credit
Facility, and all expenses, fees, reimbursements, indemnities and other
amounts owing pursuant to the Credit Facility); (ii) amounts payable in
respect of any Interest Swap Obligations and Currency Agreements; (iii) all
Indebtedness not prohibited by the "--Limitation on Incurrence of Additional
Indebtedness" covenant that is not expressly pari passu with or subordinated
to the Notes; and (iv) all permitted Refinancings thereof. Notwithstanding the
foregoing, "Senior Indebtedness" shall not include (a) any Indebtedness of the
Company to a Subsidiary of the Company, (b) Indebtedness to, or guaranteed on
behalf of, any Affiliate of the Company or any Subsidiary of the Company
(including, without limitation, amounts owed for compensation), (c) accounts
payable and other amounts due to trade creditors in connection with obtaining
goods, materials or services, (d) Indebtedness represented by Disqualified
Capital Stock, (e) any liability for federal, state, local or other taxes owed
or owing by the Company, (f) Indebtedness incurred in violation of the
Indenture provisions set forth under "--Limitation on Incurrence of Additional
Indebtedness,"(g) Indebtedness which, when incurred and without respect to any
election under Section 1111(b) of Title 11, United States Code, is without
recourse to the Company and (h) any Indebtedness which is, by its express
terms, subordinated in right of payment to any other Indebtedness of the
Company.
"Significant Subsidiary" shall have the meaning set forth in Rule 1.02(w) of
Regulation S-X under the Securities Act.
"Stated Maturity" means, with respect to any installment of interest,
accreted value or principal on any series of Indebtedness, the date on which
such payment of interest or principal is due or is scheduled to be paid in the
original documentation governing such Indebtedness, and shall not include any
contingent obligations to repay, redeem or repurchase any such interest,
accreted value or principal prior to the date originally scheduled for the
payment or accretion thereof.
"Subsidiary", with respect to any Person, means (i) any corporation, limited
liability company, limited partnership or limited liability partnership,
general partnership of which the outstanding Capital Stock having at least a
majority of the votes entitled to be cast in the election of directors (or
Persons having similar control or authority) under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (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 (i) initially, Diagnostic Imaging, Inc., PSS
Service, Inc., PSS Holding, Inc., Physician Sales & Service Limited
Partnership, PSS Rhode Island, Inc., PSS Texas, Inc., PSS Delaware, Inc.,
96
<PAGE>
PSS Physician Services, Inc., Standard/Crescent City Surgical Supplies, Inc.
and S&W X-Ray, Inc., and (ii) each of the Company's Subsidiaries that in the
future executes a supplemental indenture in which such Subsidiary agrees to be
bound by the terms of the Indenture as a Subsidiary Guarantor; provided that
any Person constituting a Subsidiary Guarantor as described above shall cease
to be a Subsidiary Guarantor when its respective Guarantee is released in
accordance with the terms thereof.
"Unrestricted Subsidiary" means (I) WorldMed, Inc., WorldMed International,
Inc., and WorldMed, N.V. and (II) any Subsidiary that is designated by the
Board of Directors of the Company as an Unrestricted Subsidiary pursuant to a
Board Resolution in compliance with the "Limitation on Restricted and
Unrestricted Subsidiaries"covenant but only to the extent that such
Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; provided,
however,that any such Non-Recourse Debt may be guaranteed by the Company or
its Restricted Subsidiaries, provided, that such guarantee is permitted by the
"--Limitation on Incurrence of Additional Indebtedness"covenant; (b) on the
date of such designation is not party to any agreement, contract, arrangement
or understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates of the
Company or such Restricted Subsidiary; (c) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Capital Stock or (y) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; (d) has not guaranteed
or otherwise directly or indirectly provided credit support for any
Indebtedness of the Company or any of its Restricted Subsidiaries; and (e) has
at least one director on its board of directors that is not a director or
executive officer of the Company or its Restricted Subsidiaries and has at
least one executive officer that is not a director or executive officer of the
Company or its Restricted Subsidiaries.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) 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 (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means any Restricted
Subsidiary of such Person of which all the outstanding voting securities
(other than Local Qualifying Securities) are owned by such Person or any
Wholly Owned Restricted Subsidiary of such Person.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Private Notes were originally sold by the Company on October 7, 1997 to
the Initial Purchasers pursuant to the Purchase Agreement, dated as of October
2, 1997, by and among the Initial Purchasers, the Company and the Subsidiary
Guarantors (the "Purchase Agreement"). The Initial Purchasers subsequently
placed the Private Notes (i) within the United States to qualified
institutional buyers in reliance on Rule 144A under the Securities Act and
(ii) to a limited number on institutional "accredited investors," within the
meaning of Rule 501(a) (1), (2), (3) or (7) under the Securities Act, that
agreed in writing to comply with certain transfer restrictions and other
conditions. As a condition to the Purchase Agreement, the Company, the
Subsidiary Guarantors and the Initial Purchasers entered into the Registration
Rights Agreement on the Issue Date pursuant to which the Company agreed, for
the benefit of the holders, that it will at its expense (i) within 30 days
after the Issue Date (the "Filing Date"), file a registration statement on an
appropriate registration form (the "Exchange Offer Registration Statement")
with the Commission with respect to a registered offer (the "Exchange Offer")
to exchange the Private Notes for notes of the Company (the "Exchange Notes"),
guaranteed by the Subsidiary
97
<PAGE>
Guarantors which Exchange Notes will have terms identical to the Private Notes
(except (A) the Exchange Notes will bear a different CUSIP Number from the
Private Notes, (B) the issuance of the Exchange Notes will have been
registered under the Securities Act and, therefore, the Exchange Notes will
not bear legends restricting the transfer thereof and (C) holders of the
Exchange Notes will not be entitled to certain rights of holders of Private
Notes under the Registration Rights Agreement) and (ii) use its best efforts
to cause the Exchange Offer Registration Statement to be declared effective
under the Securities Act within 120 days after the Issue Date. Upon the
Exchange Offer Registration Statement being declared effective, the Company
and the Subsidiary Guarantors will offer the Exchange Notes (and the related
guarantees) in exchange for surrender of the Private Notes (and the related
guarantees). The Company and the Subsidiary Guarantors will keep the Exchange
Offer open for acceptance for not less than thirty days (or longer if required
by applicable law) after the date notice of the Exchange Offer is mailed to
the holders of Private Notes. For each of the Private Notes surrendered
pursuant to the Exchange Offer, the holder who surrendered such Private Note
will receive an Exchange Note having a principal amount equal to that of the
surrendered Private Note. Interest on each Exchange Note will accrue from the
Issue Date. Holders whose Private Notes are accepted for exchange will be
deemed to have waived the right to receive any interest accrued on the Private
Notes.
Under existing interpretations of the Commission contained in several "no-
action" letters to third parties and unrelated to the Company or the Exchange
Offer, the Company believes that holders of the Private Notes (other than any
such holder which is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act) who exchange the Private Notes for Exchange
Notes pursuant to the Exchange Offer generally may offer the Exchange Notes
for resale, resell the Exchange Notes and otherwise transfer the Exchange
Notes without compliance with the registration and prospectus delivery
provisions of the Securities Act; provided, however, that each holder that
wishes to exchange its Private Notes for Exchange Notes will be required to
represent (i) that any Exchange Notes to be received by it will be acquired in
the ordinary course of its business, (ii) that at the time of the commencement
of the Exchange Offer it has no arrangement or understanding with any person
to participate in the distribution (within the meaning of Securities Act) of
the Exchange Notes in violation of the Securities Act, (iii) that it is not an
"affiliate" (as defined in Rule 405 promulgated under the Securities Act) of
the Company, (iv) if such holder is not a Participating Broker-Dealer, that it
is not engaged in, and does not intend to engage in, the distribution of
Exchange Notes and (v) if such holder is a Participating Broker-Dealer that
will receive Exchange Notes for its own account in exchange for Private Notes
that were acquired as a result of market-making or other trading activities,
that it will deliver a prospectus meeting the requirements of the Securities
Act in connection with any resale of such Exchange Notes. The Commission has
taken the position that Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to the Exchange Notes (other
than a resale of an unsold allotment from the original sale of the Private
Notes) with the Prospectus contained in the Exchange Offer Registration
Statement. The Company and the Subsidiary Guarantors have agreed to make
available during the period required by the Securities Act, a prospectus
meeting the requirements of the Securities Act for use by Participating
Broker-Dealers and other persons, if any, with similar prospectus delivery
requirements for use in connection with any resale of such Exchange Notes. In
addition, to comply with the securities laws of certain jurisdictions, if
applicable, the Exchange Notes may not be offered or sold unless they have
been registered or qualified for sale in such jurisdictions or an exemption
therefrom is available and complied with.
If, (i) because of any change in law or in currently prevailing
interpretations of the staff of the Commission, the Company and the Subsidiary
Guarantors are not permitted to effect an Exchange Offer, (ii) the Exchange
Offer is not consummated within 165 days of the Issue Date, (iii) in certain
circumstances, certain holders of unregistered Exchange Notes so request, or
(iv) in the case of any holder that participates in the Exchange Offer, such
holder does not receive Exchange Notes on the date of the exchange that may be
sold without restriction under state and federal securities laws (other than
due solely to the status of such holder as an affiliate of the Company or any
Subsidiary Guarantor within the meaning of the Securities Act), then in each
case, the Company and the Subsidiary Guarantors will (x) promptly deliver to
the holders and the Trustee written notice (the "Shelf Notice") thereof and
(y) at their sole expense, (a) as promptly as practicable, file a shelf
registration statement covering resales of the Notes (the "Shelf Registration
Statement"), (b) use their best efforts to cause the Shelf
98
<PAGE>
Registration Statement to be declared effective under the Securities Act and
(c) use their best efforts to keep effective the Shelf Registration Statement
until the earlier of two years after the Issue Date or such time as all of the
applicable Notes have been sold thereunder. The Company will, in the event
that a Shelf Registration Statement is filed, provide to each holder copies of
the prospectus that it is a part of the Shelf Registration Statement, notify
each such holder when the Shelf Registration Statement for the Notes has
become effective and take certain other actions as are required to permit
unrestricted resales of the Notes. A holder that sells Notes pursuant to the
Shelf Registration Statement will be required to be named as a selling
security holder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement that are applicable to such
holder (including certain indemnification rights and obligations).
If the Company or the Subsidiary Guarantors fails to comply with the above
provision or if the Exchange Offer Registration Statement or the Shelf
Registration Statement fails to become effective, then, as liquidated damages,
additional interest (the "Additional Interest") shall become payable in
respect of the Notes as follows:
(i) if (A) neither the Exchange Offer Registration Statement nor the
Shelf Registration Statement is filed with the Commission within 30 days
following the Issue Date or (B) notwithstanding that the Company and the
Subsidiary Guarantors have consummated or will consummate an Exchange
Offer, the Company and the Subsidiary Guarantors are required to file a
Shelf Registration Statement and such Shelf Registration Statement is not
filed on or prior to the date required by the Registration Rights
Agreement, then commencing on the day after either such required filing
date, Additional Interest shall accrue on the principal amount of the Notes
at a rate of .50% per annum for the first 90 days immediately following
each such filing date, such Additional Interest rate increasing by an
additional .50% per annum at the beginning of each subsequent 90-day
period; or
(ii) if (A) neither the Exchange Offer Registration Statement nor a Shelf
Registration Statement is declared effective by the Commission within 120
days following the Issue Date or (B) notwithstanding that the Company and
the Subsidiary Guarantors have consummated or will consummate an Exchange
Offer, the Company and the Subsidiary Guarantors are required to file a
Shelf Registration Statement and such Shelf Registration Statement is not
declared effective by the Commission on or prior to the 90th day following
the date such Shelf Registration Statement was filed, then, commencing on
the day after either such required effective date. Additional Interest
shall accrue on the principal amount of the Notes at a rate of .50% per
annum for the first 90 days immediately following such date, such
Additional Interest rate increasing by an additional .50% per annum at the
beginning of each subsequent 90-day period; or
(iii) if (A) the Company and the Subsidiary Guarantors have not exchanged
Exchange Notes for all Notes validly tendered in accordance with the terms
of the Exchange Offer on or prior to the 45th day after the date on which
the Exchange Offer Registration Statement was declared effective or (B) if
applicable, the Shelf Registration Statement has been declared effective
and such Shelf Registration Statement ceases to be effective at any time
prior to the second anniversary of the Issue Date (other than after such
time as all Notes have been disposed of thereunder), then Additional
Interest shall accrue on the principal amount of the Notes at a rate of
.50% per annum for the first 90 days commencing on (x) the 46th day after
such effective date, in the case of (A) above, or (y) the day such Shelf
Registration Statement ceases to be effective in the case of (B) above,
such Additional Interest rate increasing by an additional .50% per annum at
the beginning of each subsequent 90-day period;
provided, however, that the Additional Interest rate on the Notes may not
exceed in the aggregate 1.0% per annum; provided, further, however, that (1)
upon the filing of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of clause (i) above), (2) upon the
effectiveness of the Exchange Offer Registration or a Shelf Registration
Statement (in the case of clause (ii) above), or (3) upon the exchange of
Exchange Notes for all Notes tendered (in the case of clause (iii) (A) above),
or upon the effectiveness of the Shelf Registration Statement which had ceased
to remain effective (in the case of clause (iii) (B) above).
99
<PAGE>
Additional Interest on the Private Notes as a result of such clause (or the
relevant subclause thereof), as the case may be, shall cease to accrue.
Any amounts of Additional Interest due pursuant to clause (i), (ii) or (iii)
above will be payable in cash, on the same original interest payment dates as
the Private Notes.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified
in its entirety by reference to all the provisions of the Registration Rights
Agreement a copy of which will be available upon request to the Company.
TERM OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Private
Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. The Company will issue $1,000 principal amount
of Exchange Notes in exchange for each $1,000 principal amount of outstanding
Private Notes accepted in the Exchange Offer. Holders may tender some or all
of their Private Notes pursuant to the Exchange Offer. However, Private Notes
may be tendered only in integral multiples of $1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Private Notes except that (i) the Exchange Notes bear a different CUSIP
Number from the Private Notes, (ii) the Exchange Notes have been registered
under the Securities Act and hence will not bear legends restricting the
transfer thereof and (iii) the holders of the Exchange Notes will not be
entitled to certain rights under the Registration Rights Agreement, including
the provisions providing for an increase in the interest rate on the Private
Notes in certain circumstances relating to the timing of the Exchange Offer,
all of which rights will terminate when the Exchange Offer is terminated. The
Exchange Notes will evidence the same debt as the Private Notes and will be
entitled to the benefits of the Indenture. See "Description of Exchange
Notes."
As of the date of this Prospectus, $125,000,000 aggregate principal amount
of Private Notes were outstanding. This Prospectus and the Letter of
Transmittal are being mailed to persons who were Holders of Private Notes on
the close of business on the date of this Prospectus.
Holders of Private Notes do not have any appraisal or dissenters' rights
under the Business Corporation Act of Florida or the Indenture in connection
with the Exchange Offer. The Company intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Private Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the Exchange Notes from the Company.
If any tendered Private Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise the certificates for any such unaccepted Private Notes will be
returned, without expense, to the tendering holder thereof as promptly as
practicable after the Expiration Date.
Holders who tender Private Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Private
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than transfer taxes in certain circumstances in connection
with the Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1997, unless the Company in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended.
100
<PAGE>
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the
registered Holders an announcement thereof, each prior to 9:00 a.m., New York
City time on the next business day after the previously scheduled expiration
date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Private Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "--Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of
the Exchange Offer in any manner, whether before or after any tender of the
Private Notes. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written
notice thereof to the registered holders.
INTEREST ON THE EXCHANGE NOTES
Interest on the Exchange Notes will accrue from the Issue Date, i.e.,
October 7, 1997, payable semi-annually in arrears on each of April 1 and
October 1 of each year, commencing April 1, 1998 at the rate of 8 1/2% per
annum. Holders whose Private Notes are accepted for exchange will be deemed to
have waived the right to receive any interest accrued on the Private Notes.
PROCEDURES FOR TENDERING
Only a Holder of Private Notes may tender such Private Notes in the Exchange
Offer. To tender in the Exchange Offer, a holder must complete, sign and date
the Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the
Private Notes and any other required documents, to the Exchange Agent prior to
5:00 p.m., New York City time, on the Expiration Date. To be tendered
effectively, the Private Notes, Letter of Transmittal and other required
documents must be completed and received by the Exchange Agent at the address
set forth below under "Exchange Agent" prior to 5:00 p.m., New York City time,
on the Expiration Date. Delivery of the Private Notes may be made by book-
entry transfer in accordance with the procedures described below. Confirmation
of such book-entry transfer must be received by the Exchange Agent prior to
the Expiration Date.
By executing the Letter of Transmittal, each holder will make to the Company
the representations set forth above in the second paragraph under the heading
"--Purpose and Effect of the Exchange Offer."
The tender by a holder and the acceptance thereof by the Company will
constitute agreement between such holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF PRIVATE NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE
RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO
CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR PRIVATE NOTES SHOULD BE SENT TO
THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH
HOLDERS.
Any beneficial owner whose Private 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
register holder to tender on such beneficial owner's behalf. See "Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" included with the Letter of Transmittal.
101
<PAGE>
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Private Notes tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal
or (ii) for the account of an Eligible Institution (as defined). 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 member
firm of the Medallion System (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Private Notes listed therein, such Private Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Private
Notes with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Private Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, offices
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
The Company understands that the Exchange Agent will make a request promptly
after the date of this Prospectus to establish accounts with respect to the
Private Notes at the book-entry transfer facility. The Depository Trust
Company (the "Book-Entry Transfer Facility"), for the purpose of facilitating
the Exchange Offer, and subject to the establishment thereof, any financial
institution that is a participant in the Book-Entry Transfer Facility's system
may make book-entry delivery of Private Notes by causing such Book-Entry
Transfer Facility to transfer such Private Notes into the Exchange Agent's
account with respect to the Private Notes in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. Although delivery of the
Private Notes may be effected through book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility, an appropriate Letter of
Transmittal properly completed and duly executed with any required signature
guarantee and all other required documents must in each case be transmitted to
and received or confirmed by the Exchange Agent at its address set forth below
on or prior to the Expiration Date, or, if the guaranteed delivery procedures
described below are complied with, within the time period provided under such
procedures. Delivery of documents to the Book-Entry Transfer Facility does not
constitute delivery to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Private Notes and withdrawal of tendered
Private Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute
right to reject any and all Private Notes not properly tendered or any Private
Notes the Company's acceptance of which would, in the opinion of counsel for
the Company, be unlawful. The Company also reserves the right in their sole
discretion to waive any defects, irregularities or conditions of tender as to
particular Private Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Private Notes must be
cured within such time as the Issuer shall determine. Although the Company
intends to notify holders of defects or irregularities with respect to tenders
of Private Notes, neither the Company, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
Private Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Private Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in the Letter of
Transmittal, a soon as practicable following the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Private Notes and (i) whose Private Notes
are not immediately available, (ii) who cannot deliver their Private Notes,
the Letter of Transmittal or any other required documents to the Exchange
Agent or (iii) who cannot complete the procedures for book-entry transfer,
prior to the Expiration Date, may effect a tender if:
102
<PAGE>
(j) the tender is made through an Eligible Institution;
(k) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Private Notes and the principal amount of Private Notes tendered,
stating that the tender is being made thereby and guaranteeing that, within
five New York Stock Exchange trading days after the Expiration Date, the
Letter of Transmittal (or facsimile thereof) together with the
certificates(s) representing the Private Notes (or a confirmation of book-
entry transfer of such Notes into the Exchange Agent's account at the Book-
Entry Transfer Facility), and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the Exchange
Agent; and
(l) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificates(s) representing all
tendered Private Notes in proper form for transfer (or a confirmation of
book-entry transfer of such Private Notes into the Exchange Agent's account
at the Book-Entry Transfer Facility), and all other documents required by
the Letter of Transmittal are received by the Exchange Agent upon five New
York Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Private Notes according to the
guaranteed delivery procedures set forth above.
ACCEPTANCE OF PRIVATE NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Private Notes
properly tendered and will issue the Exchange Notes promptly after acceptance
of the Private Notes. See "Conditions" below. For purposes of the Exchange
Offer, the Company will be deemed to have accepted properly tendered Private
Notes for exchange when, as and if the Company has given oral or written
notice thereof to the Exchange Agent. For each Private Note accepted for
exchange, the holder of such Private Note will receive an Exchange Note having
a principal amount equal to that of the surrendered Private Note.
In all cases, issuance of Exchange Notes for Private Notes that are accepted
for exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of certificates for such Private Notes or a
timely Book-Entry Confirmation of such Private Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility, a properly completed and duly
executed Letter of Transmittal and all other required documents. If any
tendered Private Notes are not accepted for any reason set forth in the terms
and conditions of the Exchange Offer or if Private Notes are submitted for a
greater principal amount than the holder desires to exchange, such unaccepted
or non-exchanged Private Notes will be returned without expense to the
tendering holder thereof (for, in the case of Private 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 Private 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.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Private Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date.
To withdraw a tender of Private Notes in the Exchange Offer, a telegram,
telex, letter or facsimile transmission notice of withdrawal must be received
by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New
York City time, on the Expiration Date. Any such notice of withdrawal must (i)
specify the name of the person having deposited the Private Notes to be
withdrawn (the "Depositor"), (ii) identify the Private Notes to be withdrawn
(including the certificate number(s) and principal amount of such Private
Notes, or, in the case of Private Notes transferred by book-entry transfer,
the name and number of the account at the
103
<PAGE>
Book-Entry Transfer Facility to be credited), (iii) be signed by the holder in
the same manner as the original signature on the Letter of Transmittal by
which such Private Notes were tendered (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
Trustee with respect to the Private Notes register the transfer of such
Private Notes into the name of the person withdrawing the tender and (iv)
specify the name in which any such Private Notes are to be registered, if
different from that of the Depositor. All questions as to the validity, form
and eligibility (including time of receipt) of such notices will be determined
by the Company, whose determination shall be final and binding on all parties.
Any Private Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer and no Exchange Notes will be
issued with respect thereto unless the Private Notes so withdrawn are validly
retendered. Any Private Notes which have been tendered but which are not
accepted for exchange will be returned to the holder thereof without cost to
such holder as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Private Notes may be
retendered by following one of the procedures described above under "--
Procedures for Tendering" at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange Exchange Notes for, any
Private Notes, and may terminate or amend the Exchange Offer as provided
herein before the acceptance of such Private Notes, if:
(a) any action or proceeding is instituted or threatened in any court or
by any governmental agency which might materially impair the ability of the
Company or the Subsidiary Guarantors to proceed with the Exchange Offer or
any material adverse development has occurred in any existing action or
proceeding with respect to the Company or the Subsidiary Guarantors;
(b) the Exchange Offer violates applicable law or any applicable
interpretation of the staff of the Commission; or
(c) any governmental approval has not been obtained, which approval the
Company and the Subsidiary Guarantors shall deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its sole discretion that any of the conditions
are not satisfied, the Company may (i) refuse to accept any Private Notes and
return all tendered Private Notes to the tendering holders, (ii) extend the
Exchange Offer and retain all Private Notes tendered prior to the expiration
of the Exchange Offer, subject, however, to the rights of holders to withdraw
such Private Notes (see "--Withdrawal of Tenders") or (iii) waiver such
unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Private Notes which have not been withdrawn. In addition,
the Company has reserved the right, notwithstanding the satisfaction of each
of the foregoing conditions, to terminate or amend the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Private Notes being tendered or accepted for exchange.
104
<PAGE>
EXCHANGE AGENT
SunTrust Bank, Central Florida, NA, which also acts as Trustee under the
Indenture, has been appointed as Exchange Agent for the Exchange Offer.
Questions and requests for assistance, requests for additional copies of this
Prospectus or of the Letter of Transmittal and requests for Notice of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
By Registered or CertifiedBy Facsimile Transmission: By Overnight Courier:
Mail:
SunTrust Bank Central SunTrust Bank, Central
SunTrust Bank, Central Florida, NA Florida, NA
Florida, NA (407) 237-4791 c/o The First National
c/o The First National ATTN: Theresa Hawkins Bank of
Bank of Chicago Chicago
Corporate Trust Redemption Confirm by Telephone: Corporate Trust Securities
Unit Theresa Hawkins 1 N State Street Teller
1 First National Plaza 9th (407) 237-4791 9th Floor
Floor, Chicago, IL 60670
Suite 0124 ATTN: Debbie Randle
Chicago, IL 60670-0124
ATTN: Debbie Randle
For Information Call:
Theresa Hawkins
(407) 237-4791
DELIVERY TO AN ADDRESS OTHER THAN SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others to
solicit acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection
therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs,
among others.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Private Notes, which is face value, as reflected in the Company's accounting
records on the date of exchange. Accordingly, no gain or loss for accounting
purposes will be recognized by the Company. The expenses of the Exchange Offer
will be amortized over the term of the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Private Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Private
Notes may be resold only (i) to the Company (upon redemption thereof or
otherwise), (ii) so long as the Private Notes are eligible for resale pursuant
to Rule 144A, to a person inside the United States whom the seller reasonably
believes is a qualified institutional buyer within the meaning
105
<PAGE>
of Rule 144A under the Securities Act in a transaction meeting the
requirements of Rule 144A, in accordance with Rule 144 under the Securities
Act, or pursuant to another exemption from the registration requirements of
the Securities Act (and based upon an opinion of counsel reasonably acceptable
to the Company), (iii) outside the United States to a foreign person in a
transaction meeting the requirements of Rule 904 under the Securities Act, or
(iv) pursuant to an effective registration statement under the Securities Act,
in each case in accordance with any applicable securities laws of any state of
the United States.
Following the consummation of the Exchange Offer, holders of the Private
Notes who were eligible to participate in the Exchange Offer but who did not
tender their Private Notes will not have any further registration rights,
except with respect to a Shelf Registration Statement in the event that a
Shelf Notice is delivered by the Company, and such Private Notes will continue
to be subject to certain restrictions on transfer. Accordingly, the liquidity
of the market for such Private Notes could be adversely affected.
RESALE OF THE EXCHANGE NOTES
With respect to resales of Exchange Notes, based on interpretations by the
staff of the Commission set forth in certain "no-action" letters issued to
third parties and unrelated to the Company and the Exchange Offer, the Company
believes that Exchange Notes issued pursuant to the Exchange Offer in exchange
for Private Notes may be offered for resale, resold and otherwise transferred
by holders thereof (other than any such holder which is an "affiliate" of the
Company 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 Exchange Notes are acquired in the ordinary
course of such holders' business and such holders have no intention, nor any
arrangement or understanding with any person, to participate in the
distribution of such Exchange Notes in violation of the provisions of the
Securities Act. However, if any holder acquires Exchange Notes in the Exchange
Offer for the purpose of distributing or participating in the distribution of
the Exchange Notes, such holder cannot rely on the position of the staff of
the Commission enunciated in such "no-action" letters or any similar
interpretive letters, and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction, unless an exemption from registration is otherwise available.
Further, each Participating Broker-Dealer that receives Exchange Notes for its
own account in exchange for Private Notes, where such Private Notes were
acquired by such Participating Broker-Dealer as a result of market-making or
other trading activities, must acknowledge that it will deliver a prospectus
in connection with any resale of such Notes. As contemplated by these "no-
action" letters and the Registration Rights Agreement, each holder accepting
the Exchange Offer is required to make certain representations to the Company
in the Letter of Transmittal. See "Purpose and Effect of Exchange Offer."
BOOK-ENTRY; DELIVERY AND FORM
Except as described below under "--Certificated Securities," the Private
Notes (and the related guarantees) are represented by one or more permanent
global certificates in definitive, fully registered form (the "Outstanding
Global Notes") and the Exchange Notes will be issued in the form of one or
more, permanent global certificates in definitive fully registered form (the
"Exchange Global Notes"). The term "Global Notes" means the Outstanding Global
Note, or the Exchange Global Note, as the context may require. The Outstanding
Global Notes were deposited on the date of closing of the sale of the Private
Notes, and the Exchange Global Notes will be deposited on the date of closing
of the Exchange Offer, with the Trustee as custodian for The Depository Trust
Company ("DTC"), New York, New York, and registered in the name of a nominee
of DTC, in each case for credit to an account of a direct or indirect
participant as described below. The Outstanding Global Notes are subject to
certain restrictions on transfer set forth therein and will bear a legend
regarding such restrictions.
Except as set forth below, the Global Notes may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. In addition, transfer of beneficial interests in the Global Notes
will be subject to the applicable rules and procedures of DTC and its direct
or indirect participants,
106
<PAGE>
which may change from time to time. Beneficial interests in the Global Notes
may not be exchanged for Notes in certificated form except in the limited
circumstances described below. See "--Certificated Securities."
The Notes may be presented for registration of transfer and exchange at the
offices of the Registrar.
DEPOSITORY PROCEDURES
DTC has advised the Company that DTC is a limited-purpose company created to
hold securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of Participants. The Participants include securities brokers and
dealers (including the Initial Purchasers), banks, trust companies, clearing
corporations and certain other organizations. Access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own
securities held by or on behalf of DTC only through the Participants or
Indirect Participants. The ownership interest and transfer of ownership
interest of each actual purchaser of each security held by or on behalf of DTC
are recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Company that pursuant to procedures established by
it, (i) upon deposit of the Exchange Global Notes, DTC will credit the
accounts of Participants as designated in the appropriate Letters of
Transmittal with portions of the principal amount of Exchange Global Notes and
(ii) ownership of such interests in the Exchange Global Notes will be shown
on, and the transfer ownership thereof will be effected only through, records
maintained by DTC (with respect to Participants) or by Participants and the
Indirect Participants (with respect to other owners of beneficial interests in
the Exchange Global Notes). Investors in the Exchange Global Notes may hold
their interests therein directly through DTC, if they are Participants in such
system, or indirectly through organizations that are Participants in such
system.
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interest in a Global Note to such persons may be limited
to that extent. Because DTC can act only on behalf of Participants, which in
turn act on behalf of Indirect Participants and certain banks, the ability of
a person having a beneficial interest in a Global Note to pledge such interest
to persons or entities that do not participate in the DTC system, or otherwise
take actions in respect of such interests, may be affected by the lack of
physical certificate evidencing such interests. For certain other restrictions
on the transferability of the Notes, see "--Certificated Securities."
Except as described below, owners of interests in the Global Notes will not
have Notes registered in their names, will not receive physical delivery of
Notes in certificated form and will not be considered the registered owners or
holders thereof under the Indenture for any purpose.
Payments in respect of the principal and premium and interest on a Global
Note registered in the name of DTC or its nominee will be payable by the
Trustee to DTC or its nominee in its capacity as the registered holder under
the Indenture. Under the terms of the Indenture, the Company and the Trustee
will treat the persons in whose names the Notes, including the Global Notes,
are registered as the owners thereof for the purpose of receiving such
payments and for any and all other purposes whatsoever. Consequently, neither
the Company, the Trustee nor any agent of the Company or the Trustee has or
will have any responsibility or liability for (i) any aspect of DTC's records
or any Participant's or Indirect Participant's records relating to or payments
made on account of beneficial ownership interests in the Global Notes, or for
maintaining, supervising or reviewing any of DTC's records or any
Participant's or Indirect Participant's records relating to the beneficial
ownership interests in the Global Notes or (ii) any other matter relating to
the actions and practices of DTC or any of its Participants or Indirect
Participants.
DTC has advised the Company that its current practices, upon receipt of any
payment in respect of securities such as the Notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the relevant security
such as the Global Notes as shown on the records of DTC. Payments
107
<PAGE>
by Participants and the Indirect Participants to the beneficial owners of
Notes will be governed by standing instructions and customary practices and
will not be the responsibility of DTC, the Trustee or the Company. Neither the
Company nor the Trustee will be liable for any delay by DTC or its
Participants in identifying the beneficial owners of the Notes, and the
Company and the Trustee may conclusively rely on and will be protected in
relying on instructions from DTC or its nominee as the registered owner of the
Notes for all purposes.
Interests in the Global Notes will trade in DTC's Same-Day Funds Settlement
System and secondary market trading activity in such interests will therefore
settle in immediately available funds, subject in all cases to the rules and
procedures of DTC and its participants. Transfers between Participants in DTC
will be effected in accordance with DTC's procedures, and will be settled in
same-day funds.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes only at the direction of one or more Participants
to whose account DTC interests in the Global Notes are credited and only in
respect of such portion of the aggregate principal amount of the Notes as to
which such Participant or Participants has or have given direction. However,
if there is an Event of Default under the Indenture, DTC reserves the right to
exchange the Global Notes for legended Notes in certificated form, and to
distribute such Notes to its Participants.
The information in this section concerning DTC and its book-entry systems
has been obtained from sources that the Company believes to be reliable, but
the Company takes no responsibility for the accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the Global Notes among participants in DTC, it is under no
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. None of the Company, the Initial
Purchasers or the Trustee will have any responsibility for the performance by
DTC or their Participants or Indirect Participants of their obligations under
the rules and procedures governing their operations.
CERTIFICATED SECURITIES
Subject to certain conditions, any person having a beneficial interest in
the Global Notes may, upon request to the Trustee, exchange such beneficial
interest for Notes in certificated form ("Certificated Securities"). Upon any
such issuance, the Trustee is required to register such Certificated
Securities in the name of, and cause the same to be delivered to, such person
or persons (or the nominee of any thereof). All such certificated Notes would
be subject to the legend requirements described herein under "Transfer
Restrictions." In addition, if (i) the Company notifies the Trustee in writing
that the Depositary is no longer willing or able to act as a depositary and
the Company is unable to locate a qualified successor within 90 days or (ii)
the Company, at its option, notifies the Trustee in writing that it elects to
cause the issuance of Notes in the form of Certificated Securities under the
Indenture, then, upon surrender by the Global Note Holder of its Global Note,
Notes in such form will be issued to each person that the Global Note Holder
and the Depositary identify as being the beneficial owner of the related
Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
SAME-DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Notes represented by
the Global Notes (including principal of, interest and premium, if any, on the
Global Notes) be made by wire transfer of immediately available funds to the
accounts specified by the Global Note Holder. With respect to Certificated
Securities, the Issuers will make all payments of principal of, interest and
premium, if any, on the Notes, by wire transfer of immediately available funds
to the accounts specified by the Holders thereof or, if no such account is
specified,
108
<PAGE>
by mailing a check to each such Holder's registered address. Secondary trading
in long-term notes and debentures of corporate issuers is generally settled in
clearing-house or next-day funds. In contrast, the Notes represented by the
Global Notes are expected to be eligible to trade in the PORTAL market and to
trade in DTC's Same-Day Funds Settlement System, and any permitted secondary
market trading in such Senior Subordinated Notes will, therefore, be required
by DTC to be settled in immediately available funds. The Company expects that
secondary trading in the Certificated Securities will also be settled in
immediately available funds.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion describes the material federal income tax
consequences expected to result to holders whose Private Notes are exchanged
for Exchange Notes in the Exchange Offer. The following discussion is based
upon current provisions of the Internal Revenue Code of 1986, as amended,
applicable Treasury regulations, judicial authority and administrative rulings
and practice. There can be no assurance that the Internal Revenue service
("the Service") will not take a contrary view, and no ruling from the Service
has been or will be sought with respect to the Exchange Offer. Legislative,
judicial or administrative changes or interpretations may be forthcoming that
could alter or modify the statements and conclusions set forth herein. Any
such changes or interpretations may or may not be retroactive and could affect
the tax consequences to holders. Certain holders (including insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
foreign corporations, and persons who are not citizens or residents of the
United States) may be subject to special rules not discussed below. EACH
HOLDER OF PRIVATE NOTES SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES OF EXCHANGING PRIVATE NOTES FOR EXCHANGE NOTES,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN LAWS.
The exchange of Private Notes for Exchange Notes pursuant to the Exchange
Offer will not be considered a taxable exchange for U.S. federal income tax
purposes because the Exchange Notes will not be considered to differ
materially in kind or extent from the Private Notes. Exchange Notes received
by a holder of Private Notes will be treated as a continuation of the Private
Notes. Accordingly, there will not be any U.S. federal income tax consequences
to holders exchanging Private Notes for Exchange Notes in the Exchange Offer.
PLAN OF DISTRIBUTION
Except as provided herein, this Prospectus may not be used for an offer to
resell, resale or other transfer of Exchange Notes. There is no existing
market for the Private Notes. No assurance can be given as to the liquidity
of, or trading markets for, the Exchange Notes.
Based on existing interpretations 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, the Company believes that the
Exchange Notes issued pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by the holders thereof without
further compliance with the registration and prospectus delivery provisions of
the Securities Act. However, any holder of Private Notes who is an "affiliate"
of the Company or who intends to participate in the Exchange Offer for the
purpose of distributing the Exchange Notes (i) will not be able to rely on the
interpretation by the staff of the Commission set forth in the above-mentioned
no-action letters, (ii) will not be able to tender its Private Notes in the
Exchange Offer and (iii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or
transfer of the Private Notes unless such sale or transfer is made pursuant to
an exemption from such requirements.
Each holder of the Private Notes (other than certain specified holders) who
wishes to exchange Private Notes for Exchange Notes in the Exchange Offer will
be required to represent to the Company, among other things, (i) that any
Exchange Notes to be received by it will be acquired in the ordinary course of
its business, (ii) that at the time of the commencement of the Exchange Offer,
it has no arrangement or understanding with
109
<PAGE>
any person to participate in the distribution (within the meaning of the
Securities Act) of the Exchange Notes in violation of the Securities Act,
(iii) that it is not an "affiliate" (as defined in Rule 405 promulgated under
the Securities Act) of the Company, (iv) if such holder is not a Participating
Broker-Dealer, that is not engaged in, and does not intend to engage in, the
distribution of the Exchange Notes and (v) is such holder is a Participating
Broker-Dealer that will receive Exchange Notes for its own account in exchange
for Private Notes that were acquired as a result of market-making or other
trading activities, that it will deliver a prospectus in connection with any
resale of such Exchange Notes. The Letter of Transmittal also states that by
acknowledging that it will deliver a prospectus, 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. The Commission has
taken the position that Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to the Exchange Notes (other
than a resale of an unsold allotment from the original sale of the Private
Notes) with the Prospectus contained in the Exchange Offer Registration
Statement. The Company and the Subsidiary Guarantors have agreed to make
available, during the period required by the Securities Act, a prospectus
meeting the requirements of the Securities Act for use by Participating
Broker-Dealers and other persons, if any, with similar prospectus delivery
requirements for use in connection with any resale of such Exchange Notes. In
addition, until , 1997 (90 days after the date of this Prospectus), all
dealers effecting transactions in the Exchange Notes may be required to
deliver a prospectus.
Each Participating Broker-Dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver
this Prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer who hold Private Notes acquired for its
own account as a result of market-making activities or other trading
activities in connection with resales of Exchange Notes received in exchange
of Private Notes.
The Company will not receive any proceeds from the exchange of Private Notes
for Exchange Notes, including those exchanged by Participating Broker-Dealers.
Exchange 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
in the over-the-counter market, in negotiated transactions, through the
writing of options on the Exchange Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, or at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchasers or to or through broker-dealers who
may receive compensation in the form of commissions or concessions from any
such broker-dealer and/or the purchasers of any Exchange Notes. Any broker-
dealer that resells Exchange Notes that were received by it for its own
account pursuant to the Exchange Offer and any person that participates in the
distribution of such Exchange Notes may be deemed an "underwriter" within the
meaning of the Securities Act and any profit on any such resale of Exchange
Notes and any commissions or concessions received by any such broker-dealers
may be deemed to be underwriting compensation under the Securities Act.
For a period of 90 days after the Expiration Date, the Company will send
additional copies of this Prospectus and any amendment or supplement to this
Prospectus to any Participating Broker-Dealer that requests such documents in
the Letter of Transmittal. The Company has agreed to pay all expenses
incidental to the Exchange Offer other than discounts or commissions of any
broker-dealers and will indemnify the holders of the Private Notes (including
Participating Broker-Dealers) participating in the Exchange Offer against
certain liabilities, including liabilities under the Securities Act.
By acceptance of this Exchange Offer, each broker-dealer that receives
Exchange Notes for Private Notes pursuant to the Exchange Offer agrees that,
upon receipt of notice from the Company of the happening of any event which
makes any statement in this Prospectus untrue in any material respect or which
requires the making of any changes in this Prospectus in order to make any
statement herein not misleading (which notice the Company agrees to deliver
promptly to such broker-dealer), such broker-dealer will suspend the use of
this Prospectus until the Company has amended or supplemented this Prospectus
to correct such misstatement or omission and has furnished copies of the
amended and supplemented Prospectus to such broker-dealer. If the Company
gives any such notice to suspend the use of the Prospectus, it will extend the
90-day period referred to
110
<PAGE>
above by the number of days during the period from and including the date of
the giving of such notice up to and including when broker-dealers shall have
received copies of the supplemented or amended Prospectus necessary to permit
resales of Exchange Notes.
The Company has agreed, pursuant to the Registration Rights Agreement, to
pay all expenses incident to the Exchange Offer (other than any underwriting
discounts or commissions), including reasonable fees and disbursements of one
special counsel for all of the Holders of the Notes. In addition, the Company
and the Subsidiary Guarantors agreed to indemnify the holders of the Notes
against certain liabilities.
INDEPENDENT ACCOUNTANTS
The supplemental consolidated financial statements incorporated by reference
in this registration statement and the consolidated financial statements
appearing elsewhere herein have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm
as experts in giving said reports.
LEGAL MATTERS
The validity of the Exchange Notes being offered hereby are being passed
upon for the Company by Alston & Bird LLP, Atlanta, Georgia.
111
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN
WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIV-
ERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUM-
STANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS COR-
RECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 16
Use of Proceeds.......................................................... 25
Capitalization........................................................... 25
Unaudited Pro Forma Condensed Combined Financial Statements.............. 26
Selected Consolidated Financial Data..................................... 34
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 35
Business................................................................. 49
Management............................................................... 60
Certain Transactions..................................................... 62
Security Ownership by Certain Beneficial Owners and Management........... 63
Description of Credit Facility........................................... 64
Description of Exchange Notes............................................ 65
The Exchange Offer....................................................... 97
Book-Entry; Delivery and Form............................................ 106
Certain Federal Income Tax Considerations................................ 109
Plan of Distribution..................................................... 110
Independent Accountants.................................................. 111
Legal Matters............................................................ 111
Index to Consolidated Financial Statements............................... F-1
</TABLE>
UNTIL , 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDI-
TION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UN-
DERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PHYSICIAN SALES & SERVICE, INC.
OFFER FOR ALL OUTSTANDING 8 1/2% SENIOR SUBORDINATED NOTES DUE 2007 IN
EXCHANGE FOR 8 1/2% SENIOR SUBORDINATED NOTES DUE 2007, REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
---------------
PROSPECTUS
---------------
The Exchange Agent for the Exchange
Offer is:
SUNTRUST BANK, CENTRAL
FLORIDA, NA
By Facsimile:
(407) 237-5299
Confirm by Telephone:
(407) 237-4791
ATTENTION: Theresa Hawkins
By Overnight Courier:
SUNTRUST BANK, CENTRAL
FLORIDA, NA
c/o The First National Bank of Chicago
Corporate Trust Securities
1 N State Street Teller, 9th Floor
Chicago, IL 60602
ATTENTION: Debbie Randle
By Hand/Mail:
SUNTRUST BANK, CENTRAL
FLORIDA, NA
c/o The First National Bank of Chicago
Corporate Trust Redemption Unit
1 First National Plaza, 9th Floor, Ste 0124
Chicago, IL 60670-0124
ATTENTION: Debbie Randle
, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Amended and Restated Articles of Incorporation, as amended, and the
Amended and Restated Bylaws of the Registrant set forth the extent to which
the Registrant's directors and officers may be indemnified against liabilities
they may incur while serving in such capacities. Such indemnification will be
provided to the fullest extent allowed by the Florida Business Corporation
Act, as amended from time to time, and judicial or administrative decisions.
Under these indemnification provisions, the Registrant is required to
indemnify any of its directors and officers against any reasonable expenses
(including attorneys' fees) incurred by him in the defense of any action, suit
or proceeding, whether civil, criminal, administrative or investigative, to
which he was made a party, or in defense of any claim, issue or matter
therein, by reason of the fact that he is or was a director or officer of the
Registrant or who, while a director or officer of the Registrant, is or was
serving at the Registrant's request as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise to the extent that such director or
officer has been successful, on the merits or otherwise, in such defense. The
Registrant also may indemnify any of its directors or officers against any
liability incurred in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Registrant, in
which event, additional determinations must be made before indemnification is
provided) by reason of the fact that he is or was a director or officer of the
Registrant who, while a director or officer of the Registrant, is or was
serving at the Registrant's request as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, if such director or officer acted
in good faith and in a manner he believed to be in, or not opposed to, the
best interests of the Registrant, and with respect to any criminal proceeding,
had no reasonable cause to believe his conduct was unlawful. The Registrant
may also provide advancement of expenses incurred by a director or officer in
defending any such action, suit or proceeding upon receipt of a written
affirmation of such officer or director that he has met certain standards of
conduct and an understanding by or on behalf of such officer or director to
repay such advances unless it is ultimately determined that he is entitled to
indemnification by the Registrant. Notwithstanding the foregoing, the Amended
and Restated Bylaws of the Registrant provide that the Registrant shall not be
required to indemnify any of its directors or officers in connection with a
proceeding initiated by such person unless such authorization for such
proceeding was not denied by the Board of Directors of the Registrant prior to
sixty (60) days after receipt of notice thereof from such person stating his
or her intent to initiate such proceeding and only upon such terms and
conditions as the Board of Directors may deem appropriate.
The Florida Business Corporation Act contains a provision which limits the
personal liability for monetary damages to the corporation or any other person
for any statement, vote, decision, or failure to act, regarding corporate
management or policy, by a director, unless the director breached or failed to
perform his duties as a director and such breach constitutes (i) a violation
of criminal law, unless the director has reasonable cause to believe his
conduct was unlawful; (ii) a transaction from which the director received an
improper personal benefit; (iii) an unlawful distribution under Florida law,
(iv) in a proceeding by or in the right of a corporation to procure a judgment
in its favor or by or in the right of a shareholder, conscious disregard for
the best interest of the corporation, or willful misconduct; or (v) in a
proceeding by or in the right of someone other that the corporation or a
shareholder, recklessness or an act or omission which was committed in bad
faith or with malicious purpose or in a manner exhibiting wanton or willful
disregard of human rights, safety or property. The Registrant maintains an
insurance policy insuring the Registrant and directors and officers of the
Registrant against certain liabilities, including liabilities under the
Securities Act of 1933.
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
3.1 Amended and Restated Articles of Incorporation, as amended, of
Physician Sales & Service, Inc. (incorporated by reference from
Registrant's Registration Statement on Form S-3, effective
November 13, 1995, Registration No. 33-97524)
3.2 Amended and Restated Bylaws of Physician Sales & Service, Inc.
(incorporated by reference from Registrant's Registration
Statement on Form S-1, Registration No. 33-76580)
3.3 Restated Articles of Incorporation of Diagnostic Imaging, Inc.
3.4 Amended and Restated Bylaws of Diagnostic Imaging, Inc.
3.5 Certificate of Incorporation of PSS Delaware, Inc.
3.6 Amended and Restated Bylaws of PSS Delaware, Inc.
3.7 Articles of Incorporation of PSS Holding, Inc.
3.8 Amended and Restated Bylaws of PSS Holding, Inc.
3.9 Articles of Incorporation of PSS Physician Services, Inc.
3.10 Amended and Restated Bylaws of PSS Physician Services, Inc.
3.11 Articles of Incorporation of PSS Rhode Island, Inc.
3.12 Amended and Restated Bylaws of PSS Rhode Island, Inc.
3.13 Articles of Incorporation of PSS Service, Inc.
3.14 Amended and Restated Bylaws of PSS Service, Inc.
3.15 Articles of Incorporation of PSS Texas, Inc.
3.16 Amended and Restated Bylaws of PSS Texas, Inc.
3.17 Certificate of Limited Partnership of Physician Sales & Service
Limited Partnership
3.18 Limited Partnership Agreement of Physician Sales & Service Limited
Partnership
3.19 Articles of Incorporation, as amended, of Standard/Crescent City
Surgical Supplies, Inc.
3.20 Amended and Restated Bylaws of Standard/Crescent City Surgical
Supplies, Inc.
3.21 Certificate of Incorporation, as amended, of S&W X-Ray, Inc.
3.22 Amended and Restated Bylaws of S&W X-Ray, Inc.
4.1 Form of Indenture, dated as of October 7, 1997, by and among the
Company, the Subsidiary Guarantors named therein, and SunTrust
Bank, Central Florida, National Association, as Trustee
4.2 Registration Rights Agreement, dated as of October 7, 1997, by and
among the Company, the Subsidiary Guarantors named therein, BT
Alex. Brown Incorporated, Salomon Brothers Inc. and NationsBanc
Montgomery Securities, Inc.
4.3 Form of 8 1/2% Senior Subordinated Note due 2007, including Form
of Guarantee (Private Notes)
4.4 Form of 8 1/2% Senior Subordinated Note due 2007, including Form
of Guarantee (Exchange Notes)
5.1 Opinion of Alston & Bird LLP
12.1 Statement re. computation of ratios
21.1 Subsidiaries of Physician Sales & Service, Inc.
23.1 Consent of Alston & Bird LLP (included in the opinion filed as
Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Arthur Andersen LLP
24.1 Power of Attorney of officers and directors of the Company (see
Page II-7)
24.2 Power of Attorney of officers and directors of the Subsidiary
Guarantors (see Pages II-8 to II-18)
25.1 Statement of Eligibility of Trustee
99.1 Form of Letter of Transmittal with respect to the Exchange Offer
99.2 Form of Notice of Guaranteed Delivery
99.3 Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
other Nominees
99.4 Letter to Clients
99.5 Instruction to Registered Holder and/or Book Entry Transfer
Participant from Beneficial Owner
99.6 Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9
</TABLE>
(b) Financial Statement Schedules.
None
II-2
<PAGE>
ITEM 22. UNDERTAKINGS
(a) The Undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in the 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 and 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 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, 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 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.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 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 the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of this registration statement through
the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jacksonville, State of Florida, on November 5,
1997.
PHYSICIAN SALES & SERVICE, INC.
/s/ Patrick C. Kelly
By: _________________________________
Name: Patrick C. Kelly
Title: Chairman and Chief
Executive Officer
II-4
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Patrick
C. Kelly and David A. Smith, and each of them, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him or her and in his or her name, place
and stead, and in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement on Form
S-4 of Physician Sales & Service, Inc. or a registration statement filed
pursuant to Rule 462(b), and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them, or their or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on November 5, 1997.
SIGNATURE TITLE
/s/ Patrick C. Kelly Chairman of the Board and Chief
- ------------------------------------- Executive Officer (principal
PATRICK C. KELLY executive officer)
/s/ David A. Smith Executive Vice President, Chief
- ------------------------------------- Financial Officer and Director
DAVID A. SMITH (principal financial and accounting
officer)
/s/ John F. Sasen, Sr. Director
- -------------------------------------
JOHN F. SASEN, SR.
/s/ Delmer W. Dallas Director
- -------------------------------------
DELMER W. DALLAS
/s/ William C. Mason Director
- -------------------------------------
WILLIAM C. MASON
/s/ T. O'Neal Douglas Director
- -------------------------------------
T. O'NEAL DOUGLAS
/s/ Fred Elefant Director
- -------------------------------------
FRED ELEFANT
/s/ Delores Kesler Director
- -------------------------------------
DELORES KESLER
/s/ James L.L. Tullis Director
- -------------------------------------
JAMES L.L. TULLIS
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jacksonville, State of Florida, on November 5,
1997.
DIAGNOSTIC IMAGING, INC.
/s/ Frederick E. Dell
By: _________________________________
Name: Frederick E. Dell
Title: Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Patrick
C. Kelly and David A. Smith, and each of them, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him or her and in his or her name, place
and stead, and in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement on Form
S-4 or a registration statement filed pursuant to Rule 462(b), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on November 5, 1997.
SIGNATURE TITLE
/s/ Frederick E. Dell Chief Executive Officer and Director
- ------------------------------------- (principal executive officer)
FREDERICK E. DELL
- ------------------------------------- Chief Financial Officer (principal
financial and accounting officer)
/s/ Patrick C. Kelly Chairman of the Board and Director
- -------------------------------------
PATRICK C. KELLY
/s/ David A. Smith Director
- -------------------------------------
DAVID A. SMITH
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jacksonville, State of Florida, on November 5,
1997.
PSS DELEWARE, INC.
/s/ Patrick C. Kelly
By: _________________________________
Name: Patrick C. Kelly
Title: President
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Patrick
C. Kelly and David A. Smith, and each of them, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him or her and in his or her name, place
and stead, and in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement on Form
S-4 or a registration statement filed pursuant to Rule 462(b), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on November 5, 1997.
SIGNATURE TITLE
/s/ Patrick C. Kelly President and Director (principal
- ------------------------------------- executive officer)
PATRICK C. KELLY
/s/ David A. Smith Treasurer and Director (principal
- ------------------------------------- financial and accounting officer)
DAVID A. SMITH
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jacksonville, State of Florida, on November 5,
1997.
PSS HOLDING, INC.
/s/ Fred Elefant
By: _________________________________
Name: Fred Elefant
Title: President
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Patrick
C. Kelly and David A. Smith, and each of them, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him or her and in his or her name, place
and stead, and in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement on Form
S-4 or a registration statement filed pursuant to Rule 462(b), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on November 5, 1997.
SIGNATURE TITLE
/s/ Fred Elefant President, Treasurer and Director
- ------------------------------------- (principal executive and financial
FRED ELEFANT officer)
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jacksonville, State of Florida, on November 5,
1997.
PSS PHYSICIAN SERVICES, INC.
/s/ Patrick C. Kelly
By: _________________________________
Name: Patrick C. Kelly
Title: President
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Patrick
C. Kelly and David A. Smith, and each of them, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him or her and in his or her name, place
and stead, and in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement on Form
S-4 or a registration statement filed pursuant to Rule 462(b), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on November 5, 1997.
SIGNATURE TITLE
/s/ Patrick C. Kelly President and Director (principal
- ------------------------------------- executive officer)
PATRICK C. KELLY
/s/ David A. Smith Treasurer and Director (principal
- ------------------------------------- financial and accounting officer)
DAVID A. SMITH
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jacksonville, State of Florida, on November 5,
1997.
PSS RHODE ISLAND, INC.
/s/ Patrick C. Kelly
By: _________________________________
Name: Patrick C. Kelly
Title: President
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Patrick
C. Kelly and David A. Smith, and each of them, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him or her and in his or her name, place
and stead, and in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement on Form
S-4 or a registration statement filed pursuant to Rule 462(b), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on November 5, 1997.
SIGNATURE TITLE
/s/ Patrick C. Kelly President and Director (principal
- ------------------------------------- executive officer)
PATRICK C. KELLY
/s/ David A. Smith Treasurer and Director (principal
- ------------------------------------- financial and accounting officer)
DAVID A. SMITH
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jacksonville, State of Florida, on November 5,
1997.
PSS SERVICE, INC.
/s/ Patrick C. Kelly
By: _________________________________
Name: Patrick C. Kelly
Title: President
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Patrick
C. Kelly and David A. Smith, and each of them, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him or her and in his or her name, place
and stead, and in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement on Form
S-4 or a registration statement filed pursuant to Rule 462(b), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on November 5, 1997.
SIGNATURE TITLE
/s/ Patrick C. Kelly President and Director (principal
- ------------------------------------- executive officer)
PATRICK C. KELLY
/s/ David A. Smith Treasurer and Director (principal
- ------------------------------------- financial and accounting officer)
DAVID A. SMITH
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jacksonville, State of Florida, on November 5,
1997.
PSS TEXAS, INC.
/s/ Patrick C. Kelly
By: _________________________________
Name: Patrick C. Kelly
Title: President
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Patrick
C. Kelly and David A. Smith, and each of them, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him or her and in his or her name, place
and stead, and in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement on Form
S-4 or a registration statement filed pursuant to Rule 462(b), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on November 5, 1997.
SIGNATURE TITLE
/s/ Patrick C. Kelly President and Director (principal
- ------------------------------------- executive officer)
PATRICK C. KELLY
/s/ David A. Smith Treasurer and Director (principal
- ------------------------------------- financial and accounting officer)
DAVID A. SMITH
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jacksonville, State of Florida, on November 5,
1997.
PHYSICIANSALES & SERVICE LIMITED
PARTNERSHIP
PHYSICIAN SALES & SERVICE, INC.,
its general partner
/s/ Patrick C. Kelly
By: _________________________________
Name: Patrick C. Kelly
Title: Chief Executive Officer
II-13
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Patrick
C. Kelly and David A. Smith, and each of them, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him or her and in his or her name, place
and stead, and in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement on Form
S-4 of Physician Sales & Service Limited Partnership or a registration
statement filed pursuant to Rule 462(b), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on November 5, 1997.
SIGNATURE TITLE
/s/ Patrick C. Kelly Chairman of the Board and Chief
- ------------------------------------- Executive Officer (principal
PATRICK C. KELLY executive officer)
/s/ David A. Smith Executive Vice President, Chief
- ------------------------------------- Financial Officer and Director
DAVID A. SMITH (principal financial and accounting
officer)
/s/ John F. Sasen, Sr. Director
- -------------------------------------
JOHN F. SASEN, SR.
/s/ Delmer W. Dallas Director
- -------------------------------------
DELMER W. DALLAS
/s/ William C. Mason Director
- -------------------------------------
WILLIAM C. MASON
/s/ T. O'Neal Douglas Director
- -------------------------------------
T. O'NEAL DOUGLAS
/s/ Fred Elefant Director
- -------------------------------------
FRED ELEFANT
/s/ Delores Kesler Director
- -------------------------------------
DELORES KESLER
/s/ James L.L. Tullis Director
- -------------------------------------
JAMES L.L. TULLIS
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jacksonville, State of Florida, on November 5,
1997.
STANDARD/CRESCENT CITY SURGICAL
SUPPLIES, INC.
/s/ Patrick C. Kelly
By: _________________________________
Name: Patrick C. Kelly
Title: President
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Patrick
C. Kelly and David A. Smith, and each of them, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him or her and in his or her name, place
and stead, and in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement on Form
S-4 or a registration statement filed pursuant to Rule 462(b), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on November 5, 1997.
SIGNATURE TITLE
/s/ Patrick C. Kelly President and Director (principal
- ------------------------------------- executive officer)
PATRICK C. KELLY
/s/ David A. Smith Treasurer and Director (principal
- ------------------------------------- financial and accounting officer)
DAVID A. SMITH
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jacksonville, State of Florida, on November 5,
1997.
S&W X-RAY, INC.
/s/ Frederick E. Dell
By: _________________________________
Name: Frederick E. Dell
Title: President
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Patrick
C. Kelly and David A. Smith, and each of them, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him or her and in his or her name, place
and stead, and in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement on Form
S-4 or a registration statement filed pursuant to Rule 462(b), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on November 5, 1997.
SIGNATURE TITLE
/s/ Frederick E. Dell President and Director(principal
- ------------------------------------- executive officer)
FREDERICK E. DELL
/s/ David A. Smith Treasurer and Director(principal
- ------------------------------------- financial andaccounting officer)
DAVID A. SMITH
/s/ Patrick C. Kelly Chairman of the Board
- -------------------------------------
PATRICK C. KELLY
II-16
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
----------- ----------- -------------
<C> <S> <C>
3.1 Amended and Restated Articles of Incorporation, as
amended, of Physician Sales & Service, Inc.
(incorporated by reference from Registrant's
Registration Statement on Form S-3, effective
November 13, 1995, Registration No. 33-97524)
3.2 Amended and Restated Bylaws of Physician Sales &
Service, Inc. (incorporated by reference from
Registrant's Registration Statement on Form S-1,
Registration No. 33-76580)
3.3 Restated Articles of Incorporation of Diagnostic
Imaging, Inc.
3.4 Amended and Restated Bylaws of Diagnostic Imaging,
Inc.
3.5 Certificate of Incorporation of PSS Delaware, Inc.
3.6 Amended and Restated Bylaws of PSS Delaware, Inc.
3.7 Articles of Incorporation of PSS Holding, Inc.
3.8 Amended and Restated Bylaws of PSS Holding, Inc.
3.9 Articles of Incorporation of PSS Physician
Services, Inc.
3.10 Amended and Restated Bylaws of PSS Physician
Services, Inc.
3.11 Articles of Incorporation of PSS Rhode Island,
Inc.
3.12 Amended and Restated Bylaws of PSS Rhode Island,
Inc.
3.13 Articles of Incorporation of PSS Service, Inc.
3.14 Amended and Restated Bylaws of PSS Service, Inc.
3.15 Articles of Incorporation of PSS Texas, Inc.
3.16 Amended and Restated Bylaws of PSS Texas, Inc.
3.17 Certificate of Limited Partnership of Physician
Sales & Service Limited Partnership
3.18 Limited Partnership Agreement of Physician Sales &
Service Limited Partnership
3.19 Articles of Incorporation, as amended, of
Standard/Crescent City Surgical Supplies, Inc.
3.20 Amended and Restated Bylaws of Standard/Crescent
City Surgical Supplies, Inc.
3.21 Certificate of Incorporation, as amended, of S&W
X-Ray, Inc.
3.22 Amended and Restated Bylaws of S&W X-Ray, Inc.
4.1 Form of Indenture, dated as of October 7, 1997, by
and among the Company, the Subsidiary Guarantors
named therein, and SunTrust Bank, Central Florida,
National Association, as Trustee
4.2 Registration Rights Agreement, dated as of October
7, 1997, by and among the Company, the Subsidiary
Guarantors named therein, BT Alex. Brown
Incorporated, Salomon Brothers Inc. and
NationsBanc Montgomery Securities, Inc.
4.3 Form of 8 1/2% Senior Subordinated Note due 2007,
including Form of Guarantee (Private Notes)
4.4 Form of 8 1/2% Senior Subordinated Note due 2007,
including Form of Guarantee (Exchange Notes)
5.1 Opinion of Alston & Bird LLP
12.1 Statement re. computation of ratios
21.1 Subsidiaries of Physician Sales & Service, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
----------- ----------- -------------
<C> <S> <C>
23.1 Consent of Alston & Bird LLP (included in the
opinion filed as Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Arthur Andersen LLP
24.1 Power of Attorney of officers and directors of the
Company (see Page II-7)
24.2 Power of Attorney of officers and directors of the
Subsidiary Guarantors (see Pages II-8 to II-18)
25.1 Statement of Eligibility of Trustee
99.1 Form of Letter of Transmittal with respect to the
Exchange Offer
99.2 Form of Notice of Guaranteed Delivery
99.3 Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and other Nominees
99.4 Letter to Clients
99.5 Instruction to Registered Holder and/or Book Entry
Transfer Participant from Beneficial Owner
99.6 Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9
</TABLE>
<PAGE>
EXHIBIT 3.3
RESTATED ARTICLES OF INCORPORATION
OF
DIAGNOSTIC IMAGING, INC.
Pursuant to Section 607.1007 of the Florida Business Corporation Act,
Diagnostic Imaging, Inc. (the "Corporation") hereby restates its Articles of
Incorporation, as follows:
ARTICLE I - NAME
The name of this Corporation is DIAGNOSTIC IMAGING, INC.
ARTICLE II - PRINCIPAL OFFICE
The principal place of business and mailing address of the Corporation
shall be 4345 Southpoint Boulevard, Jacksonville, Florida 32216.
ARTICLE III - PURPOSE
The Corporation is organized for the purpose of transacting any and all
lawful business.
ARTICLE IV - CAPITAL STOCK
The total number of shares of capital stock that the Corporation shall
have authority to issue is 1,000 shares, par value $.01 per share, of Common
Stock.
ARTICLE V - DIRECTOR LIABILITY
No director of the Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for any breach of fiduciary
duty as a director except as expressly provided by the applicable provisions of
the Florida Business Corporation Act. No amendment to or repeal of this Article
V shall have the effect of creating or increasing liability or alleged liability
of any director of the Corporation for or with respect to any acts or omissions
of such director occurring prior to such amendment or repeal.
ARTICLE VI - INDEMNIFICATION
A. RIGHT TO INDEMNIFICATION. The Corporation shall indemnify each
officer and director of the Corporation, and may indemnify any other person, to
the maximum extent permitted by Section 607.0850 of the Florida Business
Corporation Act, or any successor provision, and other applicable laws.
B. NON-EXCLUSIVITY OF RIGHTS. The rights conferred by this Article VI
shall not be exclusive of any other right (including, without limitation, any
right relating to indemnification or advancement of expenses) that any director,
officer, representative, employee or other agent
<PAGE>
may have or hereafter acquire under the Florida Business Corporation Act, any
other statute or any agreement, or pursuant to a vote of shareholders or
directors, or otherwise.
C. EFFECT OF REPEAL OR MODIFICATION. No repeal or modification of this
Article VI shall limit the rights of an officer or director to indemnification
with respect to any action or omission occurring prior to such repeal or
modification.
ARTICLE VII - AFFILIATED TRANSACTIONS
Pursuant to Section 607.0901(5)(a) of the Florida Business Corporation
Act, the Corporation elects not to be governed by the provisions of Section
607.0901 of the Florida Business Corporation Act and any successor provision.
ARTICLE VIII - CONTROL SHARE ACQUISITION
Pursuant to Section 607.0902(5)(a) of the Florida Business Corporation
Act, the Corporation elects not to be governed by the provisions of Section
607.0902 of the Florida Business Corporation Act and any successor provision.
ARTICLE IX - AMENDMENTS
The Corporation reserves the right to alter, amend or rescind any
provision contained in these Articles of Incorporation.
ARTICLE X - REGISTERED AGENT AND ADDRESS
The name and address of the Corporation's registered agent are as follows:
Frederick E. Dell
Physician Sales & Service, Inc.
4345 Southpoint Boulevard
Jacksonville, Florida 32216
IN WITNESS WHEREOF, Diagnostic Imaging, Inc. has caused these Restated
Articles of Incorporation to be signed in its name by its duly authorized
officer this 7th day of July, 1997.
DIAGNOSTIC IMAGING, INC.
By:/s/ Frederick E. Dell
------------------------------
Frederick E. Dell
President
-2-
<PAGE>
CERTIFICATE OF APPROVAL OF THE
RESTATED ARTICLES OF INCORPORATION OF
DIAGNOSTIC IMAGING, INC.
Pursuant to Section 607.1007 of the Florida Business Corporation Act, the
undersigned hereby certifies that certain amendments to the Articles of
Incorporation of Diagnostic Imaging, Inc. (the "Corporation"), which are set
forth in the Restated Articles of Incorporation of the Corporation attached
hereto as Exhibit A, required shareholder approval. Furthermore, the
---------
undersigned certifies that a sufficient number of votes were cast by the
shareholders to approve all amendments requiring shareholder approval. Such
amendments were approved by the shareholders on July 7, 1997.
IN WITNESS WHEREOF, Diagnostic Imaging, Inc. has caused this Certificate to
be signed in its name by its duly authorized officer this 7th day of July, 1997.
DIAGNOSTIC IMAGING, INC.
By: /s/ Frederick E. Dell
------------------------------
Frederick E. Dell
President
<PAGE>
CERTIFICATE OF ACCEPTANCE
AS THE REGISTERED AGENT OF
DIAGNOSTIC IMAGING, INC.
Pursuant to section 607.0501(3) of the Florida Business Corporation Act,
the undersigned hereby accepts the appointment as the registered agent for
Diagnostic Imaging, Inc. (the "Corporation") set forth in the Corporation's
Restated Articles of Incorporation attached hereto as Exhibit A. Furthermore,
---------
the undersigned understands and accepts the obligations and responsibilities
associated with serving as the registered agent for the Corporation.
IN WITNESS WHEREOF, the undersigned executes this Certificate this 7th day
of July, 1997.
/s/ Frederick E. Dell
------------------------------
Frederick E. Dell
<PAGE>
EXHIBIT 3.4
DIAGNOSTIC IMAGING, INC.
AMENDED AND RESTATED
BYLAWS
SECTION I
CAPITAL STOCK
SECTION 1.1. CERTIFICATES. Every holder of stock in the Corporation shall
be entitled to have a certificate signed in the name of the Corporation by the
Chairman of the Board of Directors or the President or a Vice President, and by
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation certifying the number of shares in the Corporation
owned by such holder. If such certificate is countersigned (a) by a transfer
agent other than the Corporation or its employee, or, (b) by a registrar other
than the Corporation or its employee, any other signature on the certificate may
be a facsimile. In case any officer, transfer agent, or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent, or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent, or registrar at the date of
issue.
SECTION 1.2. RECORD OWNERSHIP. A record of the name and address of the
holder of each certificate, the number of shares represented thereby and the
date of issue thereof shall be made on the Corporation's books. The Corporation
shall be entitled to treat the holder of record of any share of stock as the
holder in fact thereof, and accordingly shall not be bound to recognize any
equitable or other claim to or interest in any share on the part of any other
person, whether or not it shall have express or other notice thereof, except as
required by the laws of the State of Florida.
SECTION 1.3. TRANSFER OF RECORD OWNERSHIP. Transfers of stock shall be
made on the books of the Corporation only by direction of the person named in
the certificate or such person's attorney, lawfully constituted in writing, and
only upon the surrender of the certificate therefor and a written assignment of
the shares evidenced thereby, which certificate shall be canceled before the new
certificate is issued.
SECTION 1.4. LOST CERTIFICATES. Any person claiming a stock certificate
in lieu of one lost, stolen or destroyed shall give the Corporation an affidavit
as to such person's ownership of the certificate and of the facts which go to
prove its loss, theft or destruction. Such person shall also, if required by
policies adopted by the Board of Directors, give the Corporation a bond, in such
form as may be approved by the Corporation, sufficient to indemnify the
Corporation against any claim that may be made
<PAGE>
against it on account of the alleged loss of the certificate or the issuance of
a new certificate.
SECTION 1.5. TRANSFER AGENTS; REGISTRARS; RULES RESPECTING CERTIFICATES.
The Board of Directors may appoint, or authorize any officer or officers to
appoint, one or more transfer agents and one or more registrars. The Board of
Directors may make such further rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates of the
Corporation.
SECTION 1.6. RECORD DATE. The Board of Directors may fix in advance a
future date, not exceeding 60 days (nor, in the case of a stockholders' meeting,
less than ten days) preceding the date of any meeting of stockholders, payment
of dividend or other distribution, allotment of rights, or change, conversion or
exchange of capital stock or for the purpose of any other lawful action, as the
record date for determination of the stockholders entitled to notice of and to
vote at any such meeting and any adjournment thereof, or to receive any such
dividend or other distribution or allotment of rights, or to exercise the rights
in respect of any such change, conversion or exchange of capital stock, or to
participate in any such other lawful action, and in such case such stockholders
and only such stockholders as shall be stockholders of record on the date so
fixed shall be entitled to such notice of and to vote at such meeting and any
adjournment thereof, or to receive such dividend or other distribution or
allotment of rights, or to exercise such rights, or to participate in any such
other lawful action, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any such record date fixed as
aforesaid.
SECTION II
MEETINGS OF STOCKHOLDERS
SECTION 2.1. ANNUAL. The annual meeting of stockholders for the election
of directors and the transaction of such other proper business shall be held
within or without the State of Florida on such date and at such time as shall be
designated by the Board of Directors.
SECTION 2.2. SPECIAL. Special meetings of stockholders for any purpose or
purposes may be called by the Board of Directors, pursuant to a resolution
adopted by a majority of the members of the Board of Directors then in office,
or by the holders of not less than fifty percent (50%) of all shares entitled to
vote at the meeting. Special meetings may be held at any place, within or
without the State of Florida, as determined by the Board of Directors. The only
business which may be conducted at such a meeting, other than procedural matters
and matters relating to the conduct of the meeting, shall be the matter or
matters described in the notice of the meeting.
-2-
<PAGE>
SECTION 2.3. NOTICE. Written notice of each meeting of stockholders,
stating the date, time, place and, in the case of a special meeting, the purpose
thereof, shall be given as provided by law by the Secretary or an Assistant
Secretary not less than ten days nor more than 60 days before such meeting
(unless a different time is specified by law) to every stockholder entitled by
law to notice of such meeting.
SECTION 2.4. LIST OF STOCKHOLDERS. A complete list of the stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder, shall be prepared by the Secretary and shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified at the place where the meeting is to be held, for at least ten days
before the meeting and at the place of the meeting during the whole time of the
meeting.
SECTION 2.5. QUORUM. The holders of shares of stock entitled to cast a
majority of the votes on the matters at issue at a meeting of stockholders,
present in person or represented by proxy, shall constitute a quorum, except as
otherwise required by the Florida Business Corporation Act. In the event of a
lack of a quorum, the chairman of the meeting or a majority in interest of the
stockholders present in person or represented by proxy may adjourn the meeting
from time to time without notice other than announcement at the meeting, until a
quorum shall be obtained. At any such adjourned meeting at which there is a
quorum, any business may be transacted that might have been transacted at the
meeting originally called.
SECTION 2.6. ORGANIZATION AND PROCEDURE.
(a) The Chairman of the Board, or, in the absence of the Chairman of the
Board, the Vice Chairman, if any, or, in the absence of the Vice Chairman, the
President, or any other person designated by the Board of Directors, shall
preside at meetings of stockholders. The Secretary of the Corporation shall act
as secretary, but in the absence of the Secretary, the presiding officer may
appoint a secretary.
(b) At each meeting of stockholders, the chairman of the meeting shall fix
and announce the date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at the meeting and shall
determine the order of business and all other matters of procedure. Except to
the extent inconsistent with any such rules and regulations as adopted by the
Board of Directors, the chairman of the meeting may establish rules, which need
not be in writing, to maintain order for the conduct of the meeting, including,
without limitation, restricting attendance to bona fide stockholders of record
and their proxies and other persons in attendance at the invitation of the
chairman and making rules governing speeches and debates. The chairman of the
meeting acts in his or her absolute discretion and his or her rulings are not
subject to appeal.
-3-
<PAGE>
SECTION 2.7. VOTING. Unless otherwise provided by the Florida Business
Corporation Act, each stockholder shall be entitled to one vote, in person or by
written proxy, for each share held of record by such stockholder who is entitled
to vote generally in the election of directors. All elections for the Board of
Directors shall be decided by a plurality of the votes cast and all other
questions shall be decided by a majority of the votes cast, except as otherwise
required by the Florida Business Corporation Act or as provided for in the
Certificate of Incorporation or these Bylaws. Abstentions shall not be
considered to be votes cast.
SECTION 2.8. INSPECTORS. The Board of Directors by resolution shall, in
advance of any meeting of stockholders, appoint one or more inspectors, which
inspector or inspectors may include individuals who serve the Corporation in
other capacities, including, without limitation, as officers, employees, agents
or representatives of the Corporation, to act at the meeting and make a written
report thereof. One or more persons may be designated by the Board of Directors
as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the chairman
of the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before discharging his or her duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his or her ability. The inspectors shall have the
duties prescribed by the Florida Business Corporation Act.
SECTION III
BOARD OF DIRECTORS
SECTION 3.1. POWERS OF THE BOARD OF DIRECTORS. The business and affairs
of the Corporation shall be managed by or under the direction of its Board of
Directors. In furtherance, and not in limitation, of the powers conferred by
the laws of the State of Florida, the Board of Directors is expressly authorized
to:
(a) adopt, amend, alter, change or repeal the Bylaws of the Corporation,
by the affirmative vote of a majority of the whole Board of Directors; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors; and provided, further, that no Bylaws hereafter adopted
-------- -------
shall invalidate any prior act of the directors that would have been valid if
such new Bylaws had not been adopted;
(b) determine the rights, powers, duties, rules and procedures that affect
the power of the Board of Directors to manage and direct the business and
affairs of the Corporation, including the power to designate and empower
committees of the Board of Directors, to elect, appoint and empower the officers
and other agents of the Corporation, and to determine the time and place of, and
the notice requirements for, Board meetings,
-4-
<PAGE>
as well as quorum and voting requirements for, and the manner of taking, Board
action; and
(c) exercise all such powers and do all such acts as may be exercised or
done by the Corporation, subject to the provisions of the laws of the State of
Florida, the Certificate of Incorporation and these Bylaws.
SECTION 3.2. NUMBER AND QUALIFICATIONS. The number of directors
constituting the Board of Directors shall be as authorized from time to time
exclusively by a vote of a majority of the voting power of all of the shares of
capital stock of the Corporation then entitled to vote generally in the election
of directors.
SECTION 3.3. VACANCIES. Any vacancies in the Board of Directors for any
reason and any newly created directorships resulting by reason of any increase
in the number of directors may be filled by a majority of the directors then in
office, although less than a quorum, or by the sole remaining director.
SECTION 3.4. REMOVAL OF DIRECTORS. Any director, or the entire Board of
Directors, may be removed from office at any time, with or without cause, by the
affirmative vote of the holders of at least a majority of the voting power of
all of the shares of capital stock of the Corporation then entitled to vote
generally in the election of directors, voting together as a single class.
SECTION 3.5. RESIGNATION. A director may resign at any time by giving
written notice to the Chairman of the Board, to the President, or to the
Secretary. Unless otherwise stated in such notice of resignation, the
acceptance thereof shall not be necessary to make it effective; and such
resignation shall take effect at the time specified therein or, in the absence
of such specification, it shall take effect upon the receipt thereof.
SECTION IV
MEETINGS OF BOARD OF DIRECTORS
SECTION 4.1. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without further notice at such time as shall from time to time be
determined by the Board of Directors. A meeting of the Board of Directors for
the election of officers and the transaction of such other business as may come
before it may be held without notice immediately following the annual meeting of
stockholders.
SECTION 4.2. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the President, or at the request
in writing of one-third of the members of the Board of Directors then in office.
SECTION 4.3. NOTICE OF SPECIAL MEETINGS. Notice of the date, time and
place of each special meeting shall be mailed by regular mail to each director
at his or her
-5-
<PAGE>
designated address at least six days before the meeting; or sent by overnight
courier to each director at his or her designated address at least two days
before the meeting (with delivery scheduled to occur no later than the day
before the meeting); or given orally by telephone or other means, or by
telegraph or telecopy, or by any other means comparable to any of the foregoing,
to each director at his designated address at least 24 hours before the meeting;
provided, however, that if less than five days' notice is provided and one-third
- -------- -------
of the members of the Board of Directors then in office object in writing prior
to or at the commencement of the meeting, such meeting shall be postponed until
five days after such notice was given pursuant to this sentence (or such shorter
period to which a majority of those who objected in writing agree), provided
that notice of such postponed meeting shall be given in accordance with this
Section 4.3. The notice of the special meeting shall state the general purpose
of the meeting, but other routine business may be conducted at the special
meeting without such matter being stated in the notice.
SECTION 4.4. PLACE OF MEETINGS. The Board of Directors may hold their
meetings and have an office or offices inside or outside of the State of
Florida.
SECTION 4.5. TELEPHONIC MEETING AND PARTICIPATION. Any or all of the
directors may participate in a meeting of the Board of Directors or any
committee thereof by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
such participation shall constitute presence in person at the meeting.
SECTION 4.6. ACTION BY DIRECTORS WITHOUT A MEETING. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board of Directors or of such committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.
SECTION 4.7. QUORUM AND ADJOURNMENT. A majority of the directors then
holding office shall constitute a quorum. The vote of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. Whether or not a quorum is present to conduct a
meeting, any meeting of the Board of Directors (including an adjourned meeting)
may be adjourned by a majority of the directors present, to reconvene at a
specific time and place. It shall not be necessary to give to the directors
present at the adjourned meeting notice of the reconvened meeting or of the
business to be transacted, other than by announcement at the meeting that was
adjourned; provided, however, notice of such reconvened meeting, stating the
-------- -------
date, time, and place of the reconvened meeting, shall be given to the directors
not present at the adjourned meeting in accordance with the requirements of
Section 4.3 hereof.
SECTION 4.8. ORGANIZATION. The Chairman of the Board, or in the absence
of the Chairman of the Board, a member of the Board of Directors selected by the
members present, shall preside at meetings of the Board of Directors. The
Secretary of the
-6-
<PAGE>
Corporation shall act as secretary, but in the absence of the Secretary, the
presiding officer may appoint a secretary.
SECTION 4.9. COMPENSATION OF DIRECTORS. Directors shall receive such
compensation for their services as the Board of Directors may determine. Any
director may serve the Corporation in any other capacity and receive
compensation therefor.
SECTION 4.10. PRESUMPTION OF ASSENT. A director of the Corporation who
is present at a meeting of the Board of Directors when a vote on any matter is
taken is deemed to have assented to the action taken unless he or she votes
against or abstains from the action taken, or unless at the beginning of the
meeting or promptly upon arrival the director objects to the holding of the
meeting or transacting specified business at the meeting. Any such dissenting
votes, abstentions or objections shall be entered in the minutes of the meeting.
SECTION V
COMMITTEES
SECTION 5.1. COMMITTEES. The Board of Directors may, by resolutions
passed by a majority of the members of the Board of Directors, designate members
of the Board of Directors to constitute committees which shall in each case
consist of such number of directors, and shall have and may execute such powers
as may be determined and specified in the respective resolutions appointing
them. Any such committee may fix its rules of procedure, determine its manner
of acting and the time and place, whether within or without the State of
Florida, of its meetings and specify what notice thereof, if any, shall be
given, unless the Board of Directors shall otherwise by resolution provide.
Unless otherwise provided by the Board of Directors or such committee, the
quorum, voting and other procedures shall be the same as those applicable to
actions taken by the Board of Directors. A majority of the members of the Board
of Directors then in office shall have the power to change the membership of any
such committee at any time, to fill vacancies therein and to discharge any such
committee or to remove any member thereof, either with or without cause, at any
time.
SECTION VI
OFFICERS
SECTION 6.1. DESIGNATION. The officers of the Corporation shall be a
Chairman of the Board, a President, a Treasurer and a Secretary, and the Board
of Directors may elect or appoint, or provide for the appointment of, one or
more Assistant Secretaries and Assistant Treasurers. The Board of Directors may
elect or appoint, or provide for the appointment of, such other officers,
including a Vice Chairman and one or more Vice Presidents in such gradation as
the Board of Directors may determine, or agents as may
-7-
<PAGE>
from time to time appear necessary or advisable in the conduct of the business
and affairs of the Corporation. Any number of offices may be held by the same
person.
SECTION 6.2. ELECTION TERM. At its first meeting after each annual
meeting of stockholders, the Board of Directors shall elect the officers or
provide for the appointment thereof. Subject to Sections 6.3 and 6.4 hereof,
the term of each officer elected by the Board of Directors shall be until the
first meeting of the Board of Directors following the next annual meeting of
stockholders and until such officer's successor is chosen and qualified.
SECTION 6.3. RESIGNATION. Any officer may resign at any time by giving
written notice to the President or the Secretary. Unless otherwise stated in
such notice of resignation, the acceptance thereof shall not be necessary to
make it effective; and such resignation shall take effect at the time specified
therein or, in the absence of such specification, it shall take effect upon the
receipt thereof.
SECTION 6.4. REMOVAL. Any officer may be removed at any time with or
without cause by the affirmative vote of a majority of the members of the Board
of Directors then in office. Any officer appointed by another officer may be
removed with or without cause by such officer or the Chief Executive Officer.
SECTION 6.5. VACANCIES. A vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors or, in the case of
offices held by officers who may be appointed by other officers, by any officer
authorized to appoint such officer.
SECTION 6.6. CHIEF EXECUTIVE OFFICER. The President shall initially be
the Chief Executive Officer of the Corporation and thereafter, at such time as
the Board of Directors shall determine, the Chief Executive Officer shall be
such officer as the Board of Directors shall designate from time to time. The
Chief Executive Officer shall be responsible for carrying out the policies
adopted by the Board of Directors.
SECTION 6.7. CHAIRMAN OF THE BOARD. The Chairman of the Board shall have
such powers and perform such duties as may be provided for herein and as may be
incident to the office and as may be assigned by the Board of Directors.
SECTION 6.8. PRESIDENT. The President shall have such powers and perform
such duties as may be provided for herein and as may be assigned by the Chairman
of the Board or the Board of Directors.
SECTION 6.9. VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board
shall have such powers and perform such duties as may be provided for herein and
as may be assigned by the Chairman of the Board, the President or the Board of
Directors.
-8-
<PAGE>
SECTION 6.10. VICE PRESIDENT. Each Vice President shall have such powers
and perform such duties as may be provided for herein and as may be assigned by
the Chairman of the Board, the President or the Board of Directors.
SECTION 611. TREASURER. The Treasurer shall have charge of all funds of
the Corporation and shall perform all acts incident to the position of
Treasurer, subject to the control of the Board of Directors.
SECTION 6.12. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
have the custody and operation of the accounting books and records of the
Corporation and shall perform all acts incident to the position of Chief
Financial Officer, subject to the control of the Board of Directors.
SECTION 6.13. SECRETARY. The Secretary shall keep the minutes, and give
notices, of all meetings of stockholders and directors and of such committees as
directed by the Board of Directors. The Secretary shall have charge of such
books and papers as the Board of Directors may require. The Secretary or any
Assistant Secretary is authorized to certify copies of extracts from minutes and
of documents in the Secretary's charge and anyone may rely on such certified
copies to the same effect as if such copies were originals and may rely upon any
statement of fact concerning the Corporation certified by the Secretary or any
Assistant Secretary. The Secretary shall perform all acts incident to the
office of Secretary, subject to the control of the Board of Directors.
SECTION 6.14. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant
Secretaries and Assistant Treasurers shall have such powers and perform such
duties as usually pertain to their respective offices and as may be assigned by
the Board of Directors or an officer designated by the Board of Directors.
SECTION 6.15. COMPENSATION OF OFFICERS. The officers of the Corporation
shall receive such compensation for their services as the Board of Directors may
determine. The Board of Directors may delegate its authority to determine
compensation to designated officers of the Corporation.
SECTION 6.16. EXECUTION OF INSTRUMENTS. Checks, notes, drafts, other
commercial instruments, assignments, guarantees of signatures and contracts
(except as otherwise provided herein or by law) shall be executed by the
Chairman of the Board, the President, any Vice President or such officers or
employees or agents as the Board of Directors or any of such designated officers
may direct.
SECTION 6.17. MECHANICAL ENDORSEMENTS. The Chairman of the Board, the
President, any Vice President or the Secretary may authorize any endorsement on
behalf of the Corporation to be made by such mechanical means or stamps as any
of such officers may deem appropriate.
-9-
<PAGE>
SECTION VII
INDEMNIFICATION
SECTION 7.1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact:
(a) that he or she is or was a director or officer of the Corporation, or
(b) that he or she, being at the time a director or officer of the
Corporation, is or was serving at the request of the Corporation as a director,
trustee, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (collectively, "another enterprise" or "other
enterprise"), whether either in case (a) or in case (b) the basis of such
proceeding is alleged action or inaction (x) in an official capacity as a
director or officer of the Corporation, or as a director, trustee, officer,
employee or agent of such other enterprise, or (y) in any other capacity related
to the Corporation or such other enterprise while so serving as a director,
trustee, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent not prohibited by Section 607.0850 of the
Florida Business Corporation Act (or any successor provision or provisions) as
the same exists or may hereafter be amended (but, in the case of any such
amendment, with respect to alleged action or inaction occurring prior to such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than permitted prior thereto), against
all expense, liability and loss (including without limitation attorneys' fees
and expenses, judgments, fines, ERISA excise taxes or penalties and amounts paid
in settlement) reasonably incurred or suffered by such person in connection
therewith. The persons indemnified by this Section VII are hereinafter referred
to as "indemnitees." Such indemnification as to such alleged action or inaction
shall continue as to an indemnitee who has after such alleged action or inaction
ceased to be a director or officer of the Corporation, or director, officer,
employee or agent of such other enterprise, and shall inure to the benefit of
the indemnitee's heirs, executors and administrators. Notwithstanding the
foregoing, except as may be provided in the Bylaws or by the Board of Directors,
the Corporation shall not indemnify any such indemnitee in connection with a
proceeding (or portion thereof) initiated by such indemnitee (but this
prohibition shall not apply to a counterclaim, cross-claim or third-party claim
brought by the indemnitee in any proceeding) unless such proceeding (or portion
thereof) was authorized by the Board of Directors. The right to indemnification
conferred in this Section VII: (i) shall be a contract right; (ii) shall not be
affected adversely to any indemnitee by any amendment of the Certificate of
Incorporation with respect to any alleged action or inaction occurring prior to
such amendment; and (iii) shall, subject to any requirements imposed by law and
these Bylaws, include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition.
-10-
<PAGE>
SECTION 7.2. RELATIONSHIP TO OTHER RIGHTS AND PROVISIONS CONCERNING
INDEMNIFICATION. The rights to indemnification and to the advancement of
expenses conferred in this Section VII shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, the
Certificate of Incorporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
SECTION 7.3. AGENTS AND EMPLOYEES. The Corporation may, to the extent
authorized from time to time by the Board of Directors, grant rights to
indemnification, and to the advancement of expenses, to any employee or agent of
the Corporation (or any person serving at the Corporation's request as a
director, trustee, officer, employee or agent of another enterprise) or to any
person who is or was a director, officer, employee or agent of any of the
Corporation's affiliates, predecessor or subsidiary corporations or of a
constituent corporation absorbed by the Corporation in a consolidation or merger
or who is or was serving at the request of such affiliate, predecessor or
subsidiary corporation or of such constituent corporation as a director,
officer, employee or agent of another enterprise, in each case as determined by
the Board of Directors to the fullest extent of the provisions of this Section
VII in cases of the indemnification and advancement of expenses of directors and
officers of the Corporation, or to any lesser extent (or greater extent, if
permitted by law) determined by the Board of Directors.
SECTION 7.4. UNDERTAKINGS FOR ADVANCES OF EXPENSES. If and to the extent
the Florida Business Corporation Act requires, an advancement by the Corporation
of expenses incurred by an indemnitee pursuant to clause (iii) of the last
sentence of Section 7.1 (hereinafter an "advancement of expenses") shall be made
only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section VII or otherwise.
SECTION 7.5. CLAIMS FOR INDEMNIFICATION. If a claim for indemnification
under Section 7.1 is not paid in full by the Corporation within 60 days after it
has been received in writing by the Corporation, except in the case of a claim
for an advancement of expenses, in which case the applicable period shall be 20
days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole
or in part in any such suit, or in a suit brought by the Corporation to recover
an advancement of expenses pursuant to the terms of an undertaking, the
indemnitee shall be entitled to be paid also the expense of prosecuting or
defending such suit. In any suit brought by the indemnitee to enforce a right
to indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
in any suit by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking the Corporation shall be entitled to recover such
expenses only upon a final adjudication that, the indemnitee has not met the
applicable standard of conduct set forth in Section
-11-
<PAGE>
607.0850 of the Florida Business Corporation Act (or any successor provision or
provisions). Neither the failure of the Corporation (including the Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in Section 607.0850 of the Florida
Business Corporation Act (or any successor provision or provisions), nor an
actual determination by the Corporation (including the Board of Directors,
independent legal counsel, or its stockholders) that the indemnitee has not met
such applicable standard of conduct, shall create a presumption that the
indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to have or
retain such advancement of expenses, under this Section VII or otherwise, shall
be on the Corporation.
SECTION 7.6. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, trustee, officer, employee or agent
of the Corporation or another enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the Florida Business Corporation
Act.
SECTION 7.7. SEVERABILITY. In the event that any of the provisions of
this Section VII (including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions are severable and shall remain
enforceable to the fullest extent permitted by law.
SECTION VIII
MISCELLANEOUS
SECTION 8.1. SEAL. The Corporation shall have a suitable seal, containing
the name of the Corporation. The Secretary shall be in charge of the seal and
may authorize one or more duplicate seals to be kept and used by any other
officer or person.
SECTION 8.2. WAIVER OF NOTICE. Whenever any notice is required to be
given, a waiver thereof in writing, signed by the person or persons entitled to
the notice, whether before or after the time stated therein shall be deemed
equivalent thereto. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
-12-
<PAGE>
SECTION 8.3. VOTING OF STOCK OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the Chairman of the Board, the President,
any Vice President or such officers or employees or agents as the Board of
Directors or any of such designated officers may direct. Any such officer may,
in the name of and on behalf of the Corporation, take all such action as any
such officer may deem advisable to vote in person or by proxy at any meeting of
security holders of any corporation in which the Corporation may own securities
and at any such meeting shall possess and may exercise any and all rights and
powers incident to the ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and possessed if present. The
Board of Directors may from time to time confer like powers upon any other
person or persons.
SECTION IX
AMENDMENT OF BYLAWS
The Board of Directors, by the affirmative vote of a majority of the whole
Board of Directors, shall have power to amend, alter, change, adopt or repeal
the Bylaws of the Corporation at any regular or special meeting; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors. The stockholders entitled to vote also shall have the
power to amend, alter, change, adopt or repeal the Bylaws of the Corporation at
any annual or special meeting subject to the requirements of the Certificate of
Incorporation.
-13-
<PAGE>
EXHIBIT 3.5
CERTIFICATE OF INCORPORATION
OF
PSS DELAWARE, INC.
FIRST: The name of the corporation is PSS Delaware, Inc.
SECOND: The registered office of the corporation in the State of Delaware
is located at 900 Market Street, Second Floor, Wilmington, Delaware, County of
New Castle 19801. The registered agent of the corporation at that address is
Griffin Corporate Services, Inc.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The corporation shall have authority to issue three thousand
(3,000) shares of common stock, having a par value of One Dollar ($1.00) per
share.
FIFTH: The corporation shall indemnify directors and officers of the
corporation to the fullest extent permitted by law.
SIXTH: The directors of the corporation shall incur no personal liability
to the corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director; provided, however, that the directors of the
corporation shall continue to be subject to
<PAGE>
liability (i) for any breach of their duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the directors derived an improper personal benefit. In
discharging the duties of their respective positions, the board of directors,
committees of the board, individual directors and individual officers may, in
considering the best interests of the corporation, consider the effects of any
action upon employees, suppliers and customers of the corporation, communities
in which offices or other establishments of the corporation are located, and all
other pertinent factors. In addition, the personal liability of directors shall
further be limited or eliminated to the fullest extent permitted by any future
amendments to Delaware law.
SEVENTH: The business and affairs of the corporation shall be managed by
or under the direction of the board of directors, the number of members of which
shall be set forth in the bylaws of the corporation. The directors need not be
elected by ballot unless required by the bylaws of the corporation.
-2-
<PAGE>
EIGHTH: Meetings of the stockholders may be held within or outside of the
State of Delaware. The books of the corporation will be kept (subject to the
provisions contained in the General Corporation Law) within or outside of the
State of Delaware at such place or places as may be designated from time to time
by the board of directors or in the bylaws of the corporation.
NINTH: In the furtherance and not in limitation of the objects, purposes
and powers prescribed herein and, conferred by the laws of the State of
Delaware, the board of directors is expressly authorized to make, amend and
repeal the bylaws.
TENTH: The corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation in the manner now or
hereinafter prescribed by the laws of the State of Delaware. All rights herein
conferred are granted subject to this reservation.
ELEVENTH: The name and mailing address of the incorporator is Gordon W.
Stewart, Esquire, 1201 Market Street, Suite 1700, Wilmington, Delaware 19801.
TWELFTH: The powers of the incorporator shall terminate upon the election
of directors.
-3-
<PAGE>
I, THE UNDERSIGNED, being the incorporator, for the purpose of forming a
corporation under the laws of the State of Delaware do make, file and record
this Certificate of Incorporation, and, accordingly, have hereunto set my hand
this 13th day of December, 1995.
/s/ Gordon W. Stewart
---------------------
Gordon W. Stewart
Incorporator
-4-
<PAGE>
EXHIBIT 3.6
PSS DELAWARE, INC.
AMENDED AND RESTATED
BYLAWS
SECTION I
CAPITAL STOCK
SECTION 1.1. CERTIFICATES. Every holder of stock in the Corporation shall
be entitled to have a certificate signed in the name of the Corporation by the
Chairman of the Board of Directors or the President or a Vice President, and by
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation certifying the number of shares in the Corporation
owned by such holder. If such certificate is countersigned (a) by a transfer
agent other than the Corporation or its employee, or, (b) by a registrar other
than the Corporation or its employee, any other signature on the certificate may
be a facsimile. In case any officer, transfer agent, or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent, or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if such
person were such officer, transfer agent, or registrar at the date of issue.
SECTION 1.2. RECORD OWNERSHIP. A record of the name and address of the
holder of each certificate, the number of shares represented thereby and the
date of issue thereof shall be made on the Corporation's books. The Corporation
shall be entitled to treat the holder of record of any share of stock as the
holder in fact thereof, and accordingly shall not be bound to recognize any
equitable or other claim to or interest in any share on the part of any other
person, whether or not it shall have express or other notice thereof, except as
required by the laws of the State of Delaware.
SECTION 1.3. TRANSFER OF RECORD OWNERSHIP. Transfers of stock shall be made
on the books of the Corporation only by direction of the person named in the
certificate or such person's attorney, lawfully constituted in writing, and only
upon the surrender of the certificate therefor and a written assignment of the
shares evidenced thereby, which certificate shall be canceled before the new
certificate is issued.
SECTION 1.4. LOST CERTIFICATES. Any person claiming a stock certificate in
lieu of one lost, stolen or destroyed shall give the Corporation an affidavit as
to such person's ownership of the certificate and of the facts which go to prove
its loss, theft or destruction. Such person shall also, if required by policies
adopted by the Board of Directors, give the Corporation a bond, in such form as
may be approved by the Corporation, sufficient to indemnify the Corporation
against any claim that may be made
<PAGE>
against it on account of the alleged loss of the certificate or the issuance of
a new certificate.
SECTION 1.5. TRANSFER AGENTS; REGISTRARS; RULES RESPECTING CERTIFICATES.
The Board of Directors may appoint, or authorize any officer or officers to
appoint, one or more transfer agents and one or more registrars. The Board of
Directors may make such further rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates of the
Corporation.
SECTION 1.6. RECORD DATE. The Board of Directors may fix in advance a
future date, not exceeding 60 days (nor, in the case of a stockholders' meeting,
less than ten days) preceding the date of any meeting of stockholders, payment
of dividend or other distribution, allotment of rights, or change, conversion or
exchange of capital stock or for the purpose of any other lawful action, as the
record date for determination of the stockholders entitled to notice of and to
vote at any such meeting and any adjournment thereof, or to receive any such
dividend or other distribution or allotment of rights, or to exercise the rights
in respect of any such change, conversion or exchange of capital stock, or to
participate in any such other lawful action, and in such case such stockholders
and only such stockholders as shall be stockholders of record on the date so
fixed shall be entitled to such notice of and to vote at such meeting and any
adjournment thereof, or to receive such dividend or other distribution or
allotment of rights, or to exercise such rights, or to participate in any such
other lawful action, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any such record date fixed as
aforesaid.
SECTION II
MEETINGS OF STOCKHOLDERS
SECTION 2.1. ANNUAL. The annual meeting of stockholders for the election of
directors and the transaction of such other proper business shall be held within
or without the State of Delaware on such date and at such time as shall be
designated by the Board of Directors.
SECTION 2.2. SPECIAL. Special meetings of stockholders for any purpose or
purposes may be called by the Board of Directors, pursuant to a resolution
adopted by a majority of the members of the Board of Directors then in office,
or by the holders of not less than fifty percent (50%) of all shares entitled to
vote at the meeting. Special meetings may be held at any place, within or
without the State of Delaware, as determined by the Board of Directors. The only
business which may be conducted at such a meeting, other than procedural matters
and matters relating to the conduct of the meeting, shall be the matter or
matters described in the notice of the meeting.
- 2 -
<PAGE>
SECTION 2.3. NOTICE. Written notice of each meeting of stockholders,
stating the date, time, place and, in the case of a special meeting, the purpose
thereof, shall be given as provided by law by the Secretary or an Assistant
Secretary not less than ten days nor more than 60 days before such meeting
(unless a different time is specified by law) to every stockholder entitled by
law to notice of such meeting.
SECTION 2.4. LIST OF STOCKHOLDERS. A complete list of the stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder, shall be prepared by the Secretary and shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified at the place where the meeting is to be held, for at least ten days
before the meeting and at the place of the meeting during the whole time of the
meeting.
SECTION 2.5. QUORUM. The holders of shares of stock entitled to cast a
majority of the votes on the matters at issue at a meeting of stockholders,
present in person or represented by proxy, shall constitute a quorum, except as
otherwise required by the General Corporation Law of the State of Delaware. In
the event of a lack of a quorum, the chairman of the meeting or a majority in
interest of the stockholders present in person or represented by proxy may
adjourn the meeting from time to time without notice other than announcement at
the meeting, until a quorum shall be obtained. At any such adjourned meeting at
which there is a quorum, any business may be transacted that might have been
transacted at the meeting originally called.
SECTION 2.6. ORGANIZATION AND PROCEDURE.
(a) The Chairman of the Board, or, in the absence of the Chairman of the
Board, the Vice Chairman, if any, or, in the absence of the Vice Chairman, the
President, or any other person designated by the Board of Directors, shall
preside at meetings of stockholders. The Secretary of the Corporation shall act
as secretary, but in the absence of the Secretary, the presiding officer may
appoint a secretary.
(b) At each meeting of stockholders, the chairman of the meeting shall fix
and announce the date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at the meeting and shall
determine the order of business and all other matters of procedure. Except to
the extent inconsistent with any such rules and regulations as adopted by the
Board of Directors, the chairman of the meeting may establish rules, which need
not be in writing, to maintain order for the conduct of the meeting, including,
without limitation, restricting attendance to bona fide stockholders of record
and their proxies and other persons in attendance at the invitation of the
chairman and making rules governing speeches and debates. The chairman of the
meeting acts in his or her absolute discretion and his or her rulings are not
subject to appeal.
- 3 -
<PAGE>
SECTION 2.7. VOTING. Unless otherwise provided by the General Corporation
Law of the State of Delaware, each stockholder shall be entitled to one vote, in
person or by written proxy, for each share held of record by such stockholder
who is entitled to vote generally in the election of directors. All elections
for the Board of Directors shall be decided by a plurality of the votes cast and
all other questions shall be decided by a majority of the votes cast, except as
otherwise required by the General Corporation Law of the State of Delaware or as
provided for in the Certificate of Incorporation or these Bylaws. Abstentions
shall not be considered to be votes cast.
SECTION 2.8. INSPECTORS. The Board of Directors by resolution shall, in
advance of any meeting of stockholders, appoint one or more inspectors, which
inspector or inspectors may include individuals who serve the Corporation in
other capacities, including, without limitation, as officers, employees, agents
or representatives of the Corporation, to act at the meeting and make a written
report thereof. One or more persons may be designated by the Board of Directors
as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the chairman
of the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before discharging his or her duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his or her ability. The inspectors shall have the
duties prescribed by the General Corporation Law of the State of Delaware.
SECTION III
BOARD OF DIRECTORS
SECTION 3.1. POWERS OF THE BOARD OF DIRECTORS. The business and affairs of
the Corporation shall be managed by or under the direction of its Board of
Directors. In furtherance, and not in limitation, of the powers conferred by the
laws of the State of Delaware, the Board of Directors is expressly authorized
to:
(a) adopt, amend, alter, change or repeal the Bylaws of the Corporation, by
the affirmative vote of a majority of the whole Board of Directors; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors; and provided, further, that no Bylaws hereafter adopted
-------- -------
shall invalidate any prior act of the directors that would have been valid if
such new Bylaws had not been adopted;
(b) determine the rights, powers, duties, rules and procedures that affect
the power of the Board of Directors to manage and direct the business and
affairs of the Corporation, including the power to designate and empower
committees of the Board of Directors, to elect, appoint and empower the officers
and other agents of the Corporation, and to determine the time and place of, and
the notice requirements for, Board meetings,
- 4 -
<PAGE>
as well as quorum and voting requirements for, and the manner of taking, Board
action; and
(c) exercise all such powers and do all such acts as may be exercised or
done by the Corporation, subject to the provisions of the laws of the State of
Delaware, the Certificate of Incorporation and these Bylaws.
SECTION 3.2. NUMBER AND QUALIFICATIONS. The number of directors
constituting the Board of Directors shall be as authorized from time to time
exclusively by a vote of a majority of the voting power of all of the shares of
capital stock of the Corporation then entitled to vote generally in the election
of directors.
SECTION 3.3. VACANCIES. Any vacancies in the Board of Directors for any
reason and any newly created directorships resulting by reason of any increase
in the number of directors may be filled by a majority of the directors then in
office, although less than a quorum, or by the sole remaining director.
SECTION 3.4. REMOVAL OF DIRECTORS. Any director, or the entire Board of
Directors, may be removed from office at any time, with or without cause, by the
affirmative vote of the holders of at least a majority of the voting power of
all of the shares of capital stock of the Corporation then entitled to vote
generally in the election of directors, voting together as a single class.
SECTION 3.5. RESIGNATION. A director may resign at any time by giving
written notice to the Chairman of the Board, to the President, or to the
Secretary. Unless otherwise stated in such notice of resignation, the acceptance
thereof shall not be necessary to make it effective; and such resignation shall
take effect at the time specified therein or, in the absence of such
specification, it shall take effect upon the receipt thereof.
SECTION IV
MEETINGS OF BOARD OF DIRECTORS
SECTION 4.1. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without further notice at such time as shall from time to time be
determined by the Board of Directors. A meeting of the Board of Directors for
the election of officers and the transaction of such other business as may come
before it may be held without notice immediately following the annual meeting of
stockholders.
SECTION 4.2. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the President, or at the request
in writing of one-third of the members of the Board of Directors then in office.
SECTION 4.3. NOTICE OF SPECIAL MEETINGS. Notice of the date, time and place
of each special meeting shall be mailed by regular mail to each director at his
or her
- 5 -
<PAGE>
designated address at least six days before the meeting; or sent by overnight
courier to each director at his or her designated address at least two days
before the meeting (with delivery scheduled to occur no later than the day
before the meeting); or given orally by telephone or other means, or by
telegraph or telecopy, or by any other means comparable to any of the foregoing,
to each director at his designated address at least 24 hours before the meeting;
provided, however, that if less than five days' notice is provided and one-third
- -------- -------
of the members of the Board of Directors then in office object in writing prior
to or at the commencement of the meeting, such meeting shall be postponed until
five days after such notice was given pursuant to this sentence (or such shorter
period to which a majority of those who objected in writing agree), provided
that notice of such postponed meeting shall be given in accordance with this
Section 4.3. The notice of the special meeting shall state the general purpose
of the meeting, but other routine business may be conducted at the special
meeting without such matter being stated in the notice.
SECTION 4.4. PLACE OF MEETINGS. The Board of Directors may hold their
meetings and have an office or offices inside or outside of the State of
Delaware.
SECTION 4.5. TELEPHONIC MEETING AND PARTICIPATION. Any or all of the
directors may participate in a meeting of the Board of Directors or any
committee thereof by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
such participation shall constitute presence in person at the meeting.
SECTION 4.6. ACTION BY DIRECTORS WITHOUT A MEETING. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board of Directors or of such committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.
SECTION 4.7. QUORUM AND ADJOURNMENT. A majority of the directors then
holding office shall constitute a quorum. The vote of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. Whether or not a quorum is present to conduct a meeting,
any meeting of the Board of Directors (including an adjourned meeting) may be
adjourned by a majority of the directors present, to reconvene at a specific
time and place. It shall not be necessary to give to the directors present at
the adjourned meeting notice of the reconvened meeting or of the business to be
transacted, other than by announcement at the meeting that was adjourned;
provided, however, notice of such reconvened meeting, stating the
- -------- -------
date, time, and place of the reconvened meeting, shall be given to the directors
not present at the adjourned meeting in accordance with the requirements of
Section 4.3 hereof.
SECTION 4.8. ORGANIZATION. The Chairman of the Board, or in the absence of
the Chairman of the Board, a member of the Board of Directors selected by the
members present, shall preside at meetings of the Board of Directors. The
Secretary of the
- 6 -
<PAGE>
Corporation shall act as secretary, but in the absence of the Secretary, the
presiding officer may appoint a secretary.
SECTION 4.9. COMPENSATION OF DIRECTORS. Directors shall receive such
compensation for their services as the Board of Directors may determine. Any
director may serve the Corporation in any other capacity and receive
compensation therefor.
SECTION 4.10. PRESUMPTION OF ASSENT. A director of the Corporation who is
present at a meeting of the Board of Directors when a vote on any matter is
taken is deemed to have assented to the action taken unless he or she votes
against or abstains from the action taken, or unless at the beginning of the
meeting or promptly upon arrival the director objects to the holding of the
meeting or transacting specified business at the meeting. Any such dissenting
votes, abstentions or objections shall be entered in the minutes of the meeting.
SECTION V
COMMITTEES
SECTION 5.1. COMMITTEES. The Board of Directors may, by resolutions passed
by a majority of the members of the Board of Directors, designate members of the
Board of Directors to constitute committees which shall in each case consist of
such number of directors, and shall have and may execute such powers as may be
determined and specified in the respective resolutions appointing them. Any such
committee may fix its rules of procedure, determine its manner of acting and the
time and place, whether within or without the State of Delaware, of its meetings
and specify what notice thereof, if any, shall be given, unless the Board of
Directors shall otherwise by resolution provide. Unless otherwise provided by
the Board of Directors or such committee, the quorum, voting and other
procedures shall be the same as those applicable to actions taken by the Board
of Directors. A majority of the members of the Board of Directors then in office
shall have the power to change the membership of any such committee at any time,
to fill vacancies therein and to discharge any such committee or to remove any
member thereof, either with or without cause, at any time.
SECTION VI
OFFICERS
SECTION 6.1. DESIGNATION. The officers of the Corporation shall be a
Chairman of the Board, a President, a Treasurer and a Secretary, and the Board
of Directors may elect or appoint, or provide for the appointment of, one or
more Assistant Secretaries and Assistant Treasurers. The Board of Directors may
elect or appoint, or provide for the appointment of, such other officers,
including a Vice Chairman and one or more Vice Presidents in such gradation as
the Board of Directors may determine, or agents as may
- 7 -
<PAGE>
from time to time appear necessary or advisable in the conduct of the business
and affairs of the Corporation. Any number of offices may be held by the same
person.
SECTION 6.2. ELECTION TERM. At its first meeting after each annual meeting
of stockholders, the Board of Directors shall elect the officers or provide for
the appointment thereof. Subject to Sections 6.3 and 6.4 hereof, the term of
each officer elected by the Board of Directors shall be until the first meeting
of the Board of Directors following the next annual meeting of stockholders and
until such officer's successor is chosen and qualified.
SECTION 6.3. RESIGNATION. Any officer may resign at any time by giving
written notice to the President or the Secretary. Unless otherwise stated in
such notice of resignation, the acceptance thereof shall not be necessary to
make it effective; and such resignation shall take effect at the time specified
therein or, in the absence of such specification, it shall take effect upon the
receipt thereof.
SECTION 6.4. REMOVAL. Any officer may be removed at any time with or
without cause by the affirmative vote of a majority of the members of the Board
of Directors then in office. Any officer appointed by another officer may be
removed with or without cause by such officer or the Chief Executive Officer.
SECTION 6.5. VACANCIES. A vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors or, in the case of
offices held by officers who may be appointed by other officers, by any officer
authorized to appoint such officer.
SECTION 6.6. CHIEF EXECUTIVE OFFICER. The President shall initially be the
Chief Executive Officer of the Corporation and thereafter, at such time as the
Board of Directors shall determine, the Chief Executive Officer shall be such
officer as the Board of Directors shall designate from time to time. The Chief
Executive Officer shall be responsible for carrying out the policies adopted by
the Board of Directors.
SECTION 6.7. CHAIRMAN OF THE BOARD. The Chairman of the Board shall have
such powers and perform such duties as may be provided for herein and as may be
incident to the office and as may be assigned by the Board of Directors.
SECTION 6.8. PRESIDENT. The President shall have such powers and perform
such duties as may be provided for herein and as may be assigned by the Chairman
of the Board or the Board of Directors.
SECTION 6.9. VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board
shall have such powers and perform such duties as may be provided for herein and
as may be assigned by the Chairman of the Board, the President or the Board of
Directors.
- 8 -
<PAGE>
SECTION 6.10. VICE PRESIDENT. Each Vice President shall have such powers
and perform such duties as may be provided for herein and as may be assigned by
the Chairman of the Board, the President or the Board of Directors.
SECTION 6.11. TREASURER. The Treasurer shall have charge of all funds of
the Corporation and shall perform all acts incident to the position of
Treasurer, subject to the control of the Board of Directors.
SECTION 6.12. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
have the custody and operation of the accounting books and records of the
Corporation and shall perform all acts incident to the position of Chief
Financial Officer, subject to the control of the Board of Directors.
SECTION 6.13. SECRETARY. The Secretary shall keep the minutes, and give
notices, of all meetings of stockholders and directors and of such committees as
directed by the Board of Directors. The Secretary shall have charge of such
books and papers as the Board of Directors may require. The Secretary or any
Assistant Secretary is authorized to certify copies of extracts from minutes and
of documents in the Secretary's charge and anyone may rely on such certified
copies to the same effect as if such copies were originals and may rely upon any
statement of fact concerning the Corporation certified by the Secretary or any
Assistant Secretary. The Secretary shall perform all acts incident to the office
of Secretary, subject to the control of the Board of Directors.
SECTION 6.14. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant
Secretaries and Assistant Treasurers shall have such powers and perform such
duties as usually pertain to their respective offices and as may be assigned by
the Board of Directors or an officer designated by the Board of Directors.
SECTION 6.15. COMPENSATION OF OFFICERS. The officers of the Corporation
shall receive such compensation for their services as the Board of Directors may
determine. The Board of Directors may delegate its authority to determine
compensation to designated officers of the Corporation.
SECTION 6.16. EXECUTION OF INSTRUMENTS. Checks, notes, drafts, other
commercial instruments, assignments, guarantees of signatures and contracts
(except as otherwise provided herein or by law) shall be executed by the
Chairman of the Board, the President, any Vice President or such officers or
employees or agents as the Board of Directors or any of such designated officers
may direct.
SECTION 6.17. MECHANICAL ENDORSEMENTS. The Chairman of the Board, the
President, any Vice President or the Secretary may authorize any endorsement on
behalf of the Corporation to be made by such mechanical means or stamps as any
of such officers may deem appropriate.
- 9 -
<PAGE>
SECTION VII
INDEMNIFICATION
SECTION 7.1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact:
(a) that he or she is or was a director or officer of the Corporation, or
(b) that he or she, being at the time a director or officer of the
Corporation, is or was serving at the request of the Corporation as a director,
trustee, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (collectively, "another enterprise" or "other
enterprise"), whether either in case (a) or in case (b) the basis of such
proceeding is alleged action or inaction (x) in an official capacity as a
director or officer of the Corporation, or as a director, trustee, officer,
employee or agent of such other enterprise, or (y) in any other capacity related
to the Corporation or such other enterprise while so serving as a director,
trustee, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent not prohibited by Section 145 of the
General Corporation Law of the State of Delaware (or any successor provision or
provisions) as the same exists or may hereafter be amended (but, in the case of
any such amendment, with respect to alleged action or inaction occurring prior
to such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than permitted prior
thereto), against all expense, liability and loss (including without limitation
attorneys' fees and expenses, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such person
in connection therewith. The persons indemnified by this Section VII are
hereinafter referred to as "indemnitees." Such indemnification as to such
alleged action or inaction shall continue as to an indemnitee who has after such
alleged action or inaction ceased to be a director or officer of the
Corporation, or director, officer, employee or agent of such other enterprise,
and shall inure to the benefit of the indemnitee's heirs, executors and
administrators. Notwithstanding the foregoing, except as may be provided in the
Bylaws or by the Board of Directors, the Corporation shall not indemnify any
such indemnitee in connection with a proceeding (or portion thereof) initiated
by such indemnitee (but this prohibition shall not apply to a counterclaim,
cross-claim or third-party claim brought by the indemnitee in any proceeding)
unless such proceeding (or portion thereof) was authorized by the Board of
Directors. The right to indemnification conferred in this Section VII: (i) shall
be a contract right; (ii) shall not be affected adversely to any indemnitee by
any amendment of the Certificate of Incorporation with respect to any alleged
action or inaction occurring prior to such amendment; and (iii) shall, subject
to any requirements imposed by law and these Bylaws, include the right to be
paid by the Corporation the expenses incurred in defending any such proceeding
in advance of its final disposition.
- 10 -
<PAGE>
SECTION 7.2. RELATIONSHIP TO OTHER RIGHTS AND PROVISIONS CONCERNING
INDEMNIFICATION. The rights to indemnification and to the advancement of
expenses conferred in this Section VII shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, the
Certificate of Incorporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
SECTION 7.3. AGENTS AND EMPLOYEES. The Corporation may, to the extent
authorized from time to time by the Board of Directors, grant rights to
indemnification, and to the advancement of expenses, to any employee or agent of
the Corporation (or any person serving at the Corporation's request as a
director, trustee, officer, employee or agent of another enterprise) or to any
person who is or was a director, officer, employee or agent of any of the
Corporation's affiliates, predecessor or subsidiary corporations or of a
constituent corporation absorbed by the Corporation in a consolidation or merger
or who is or was serving at the request of such affiliate, predecessor or
subsidiary corporation or of such constituent corporation as a director,
officer, employee or agent of another enterprise, in each case as determined by
the Board of Directors to the fullest extent of the provisions of this Section
VII in cases of the indemnification and advancement of expenses of directors and
officers of the Corporation, or to any lesser extent (or greater extent, if
permitted by law) determined by the Board of Directors.
SECTION 7.4. UNDERTAKINGS FOR ADVANCES OF EXPENSES. If and to the extent
the General Corporation Law of the State of Delaware requires, an advancement by
the Corporation of expenses incurred by an indemnitee pursuant to clause (iii)
of the last sentence of Section 7.1 (hereinafter an "advancement of expenses")
shall be made only upon delivery to the Corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal (hereinafter a "final
adjudication") that such indemnitee is not entitled to be indemnified for such
expenses under this Section VII or otherwise.
SECTION 7.5. CLAIMS FOR INDEMNIFICATION. If a claim for indemnification
under Section 7.1 is not paid in full by the Corporation within 60 days after it
has been received in writing by the Corporation, except in the case of a claim
for an advancement of expenses, in which case the applicable period shall be 20
days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
in any suit by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking the Corporation shall be entitled to recover such
expenses only upon a final adjudication that, the indemnitee has not met the
applicable standard of conduct set forth in Section 145 of
- 11 -
<PAGE>
the General Corporation Law of the State of Delaware (or any successor provision
or provisions). Neither the failure of the Corporation (including the Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in Section 145 of the General
Corporation Law of the State of Delaware (or any successor provision or
provisions), nor an actual determination by the Corporation (including the Board
of Directors, independent legal counsel, or its stockholders) that the
indemnitee has not met such applicable standard of conduct, shall create a
presumption that the indemnitee has not met the applicable standard of conduct
or, in the case of such a suit brought by the indemnitee, be a defense to such
suit. In any suit brought by the indemnitee to enforce a right to
indemnification or to an advancement of expenses hereunder, or by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that the indemnitee is not entitled to be
indemnified, or to have or retain such advancement of expenses, under this
Section VII or otherwise, shall be on the Corporation.
SECTION 7.6. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, trustee, officer, employee or agent
of the Corporation or another enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the General Corporation Law of the
State of Delaware.
SECTION 7.7. SEVERABILITY. In the event that any of the provisions of this
Section VII (including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions are severable and shall remain
enforceable to the fullest extent permitted by law.
SECTION VIII
MISCELLANEOUS
SECTION 8.1. SEAL. The Corporation shall have a suitable seal, containing
the name of the Corporation. The Secretary shall be in charge of the seal and
may authorize one or more duplicate seals to be kept and used by any other
officer or person.
SECTION 8.2. WAIVER OF NOTICE. Whenever any notice is required to be given,
a waiver thereof in writing, signed by the person or persons entitled to the
notice, whether before or after the time stated therein shall be deemed
equivalent thereto. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
- 12 -
<PAGE>
SECTION 8.3. VOTING OF STOCK OWNED BY THE CORPORATION. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the Chairman of the Board, the President, any Vice
President or such officers or employees or agents as the Board of Directors or
any of such designated officers may direct. Any such officer may, in the name of
and on behalf of the Corporation, take all such action as any such officer may
deem advisable to vote in person or by proxy at any meeting of security holders
of any corporation in which the Corporation may own securities and at any such
meeting shall possess and may exercise any and all rights and powers incident to
the ownership of such securities and which, as the owner thereof, the
Corporation might have exercised and possessed if present. The Board of
Directors may from time to time confer like powers upon any other person or
persons.
SECTION IX
AMENDMENT OF BYLAWS
The Board of Directors, by the affirmative vote of a majority of the whole
Board of Directors, shall have power to amend, alter, change, adopt or repeal
the Bylaws of the Corporation at any regular or special meeting; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors. The stockholders entitled to vote also shall have the
power to amend, alter, change, adopt or repeal the Bylaws of the Corporation at
any annual or special meeting subject to the requirements of the Certificate of
Incorporation.
- 13 -
<PAGE>
EXHIBIT 3.7
ARTICLES OF INCORPORATION
OF
PSS HOLDING, INC.
The undersigned, being an individual, does hereby act as incorporator in
adopting the following Articles of Incorporation for the purpose of organizing a
corporation for profit, pursuant to the provisions of the Florida Business
Corporation Act.
ARTICLE I
NAME
----
The corporate name for the corporation (hereinafter called the
"Corporation") is PSS Holding, Inc.
ARTICLE II
PRINCIPAL OFFICE
----------------
The street address and the mailing address of the principal office of the
Corporation is DuPont Center, 1650 Prudential Drive, Suite 105, Jacksonville,
Florida 32207.
ARTICLE III
BUSINESS AND ACTIVITIES
-----------------------
The purposes for which the Corporation is organized shall include the
authority of the Corporation to engage in any lawful business or activity for
which corporations may be organized under the laws of the United States and of
the State of Florida.
ARTICLE IV
CAPITAL STOCK
-------------
The total number of shares of stock which the Corporation shall have the
authority to issue is 1,000 shares of common stock, $.01 par value per share.
ARTICLE V
TERM OF EXISTENCE
-----------------
The effective date upon which the Corporation shall come into existence
shall be the date these Articles of Incorporation are filed with the office of
the Secretary of State and it shall exist perpetually thereafter unless
dissolved according to law.
<PAGE>
ARTICLE VI
INITIAL REGISTERED OFFICE AND AGENT
-----------------------------------
The name of the initial registered agent of the Corporation is Fred
Elefant, and the street address of the initial registered office of the
Corporation in the State of Florida is DuPont Center, 1650 Prudential Drive,
Suite 105, Jacksonville, Florida 32207.
The written acceptance of the said initial registered agent, as required by
the Florida Business Corporation Act, is set forth following the signature of
the incorporator and is made a part of these Articles of Incorporation.
ARTICLE VII
DIRECTORS
---------
The initial number of directors of the Corporation shall be one (1).
The name and street address of the initial member of the Board of
Directors, to hold office until the first annual meeting of the shareholders of
the Corporation or until his successor is elected or appointed and has
qualified, is as follows:
Fred Elefant
DuPont Center
1650 Prudential Drive, Suite 105
Jacksonville, Florida 32207
ARTICLE VIII
INCORPORATOR
------------
The name and address of the incorporator signing these Articles of
Incorporation are: Kimberly A. Knight, Alston & Bird LLP, One Atlantic Center,
1201 West Peachtree Street, Atlanta, Georgia 30309.
The written acceptance of the said initial registered agent, as required
by the Florida Business Corporation Act, is set forth following the signature of
the incorporator and is made a part of these Articles of Incorporation.
THE UNDERSIGNED, being the incorporator named above, for the purpose
of forming a corporation pursuant to the Florida Business Corporation Act, does
make these Articles, hereby declaring and certifying that this is my act and
deed and the facts herein stated are true, and accordingly have hereunto set my
hand as of this 20th day of March, 1997.
/s/ Kimberly A. Knight
--------------------------------
Kimberly A. Knight
-2-
<PAGE>
ACCEPTANCE OF INITIAL REGISTERED AGENT
Having been named as registered agent and to receive service of
process for the above stated corporation at the place designated in these
provisions, I hereby accept the appointment as registered agent and agree to act
in this capacity. I further agree to comply with the provisions of all statutes
relative to the proper and complete performance of my duties, and I am familiar
with and accept the obligations of my position as registered agent.
Dated: 3/20, 1997 /s/ Fred Elefant
----------------
Fred Elefant
<PAGE>
EXHIBIT 3.8
PSS HOLDING, INC.
AMENDED AND RESTATED
BYLAWS
SECTION I
CAPITAL STOCK
SECTION 1.1. CERTIFICATES. Every holder of stock in the Corporation shall
be entitled to have a certificate signed in the name of the Corporation by the
Chairman of the Board of Directors or the President or a Vice President, and by
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation certifying the number of shares in the Corporation
owned by such holder. If such certificate is countersigned (a) by a transfer
agent other than the Corporation or its employee, or, (b) by a registrar other
than the Corporation or its employee, any other signature on the certificate may
be a facsimile. In case any officer, transfer agent, or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent, or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent, or registrar at the date of
issue.
SECTION 1.2. RECORD OWNERSHIP. A record of the name and address of the
holder of each certificate, the number of shares represented thereby and the
date of issue thereof shall be made on the Corporation's books. The Corporation
shall be entitled to treat the holder of record of any share of stock as the
holder in fact thereof, and accordingly shall not be bound to recognize any
equitable or other claim to or interest in any share on the part of any other
person, whether or not it shall have express or other notice thereof, except as
required by the laws of the State of Florida.
SECTION 1.3. TRANSFER OF RECORD OWNERSHIP. Transfers of stock shall be
made on the books of the Corporation only by direction of the person named in
the certificate or such person's attorney, lawfully constituted in writing, and
only upon the surrender of the certificate therefor and a written assignment of
the shares evidenced thereby, which certificate shall be canceled before the new
certificate is issued.
SECTION 1.4. LOST CERTIFICATES. Any person claiming a stock certificate
in lieu of one lost, stolen or destroyed shall give the Corporation an affidavit
as to such person's ownership of the certificate and of the facts which go to
prove its loss, theft or destruction. Such person shall also, if required by
policies adopted by the Board of Directors, give the Corporation a bond, in such
form as may be approved by the Corporation, sufficient to indemnify the
Corporation against any claim that may be made
<PAGE>
against it on account of the alleged loss of the certificate or the issuance of
a new certificate.
SECTION 1.5. TRANSFER AGENTS; REGISTRARS; RULES RESPECTING CERTIFICATES.
The Board of Directors may appoint, or authorize any officer or officers to
appoint, one or more transfer agents and one or more registrars. The Board of
Directors may make such further rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates of the
Corporation.
SECTION 1.6. RECORD DATE. The Board of Directors may fix in advance a
future date, not exceeding 60 days (nor, in the case of a stockholders' meeting,
less than ten days) preceding the date of any meeting of stockholders, payment
of dividend or other distribution, allotment of rights, or change, conversion or
exchange of capital stock or for the purpose of any other lawful action, as the
record date for determination of the stockholders entitled to notice of and to
vote at any such meeting and any adjournment thereof, or to receive any such
dividend or other distribution or allotment of rights, or to exercise the rights
in respect of any such change, conversion or exchange of capital stock, or to
participate in any such other lawful action, and in such case such stockholders
and only such stockholders as shall be stockholders of record on the date so
fixed shall be entitled to such notice of and to vote at such meeting and any
adjournment thereof, or to receive such dividend or other distribution or
allotment of rights, or to exercise such rights, or to participate in any such
other lawful action, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any such record date fixed as
aforesaid.
SECTION II
MEETINGS OF STOCKHOLDERS
SECTION 2.1. ANNUAL. The annual meeting of stockholders for the election
of directors and the transaction of such other proper business shall be held
within or without the State of Florida on such date and at such time as shall be
designated by the Board of Directors.
SECTION 2.2. SPECIAL. Special meetings of stockholders for any purpose or
purposes may be called by the Board of Directors, pursuant to a resolution
adopted by a majority of the members of the Board of Directors then in office,
or by the holders of not less than fifty percent (50%) of all shares entitled to
vote at the meeting. Special meetings may be held at any place, within or
without the State of Florida, as determined by the Board of Directors. The only
business which may be conducted at such a meeting, other than procedural matters
and matters relating to the conduct of the meeting, shall be the matter or
matters described in the notice of the meeting.
-2-
<PAGE>
SECTION 2.3. NOTICE. Written notice of each meeting of stockholders,
stating the date, time, place and, in the case of a special meeting, the purpose
thereof, shall be given as provided by law by the Secretary or an Assistant
Secretary not less than ten days nor more than 60 days before such meeting
(unless a different time is specified by law) to every stockholder entitled by
law to notice of such meeting.
SECTION 2.4. LIST OF STOCKHOLDERS. A complete list of the stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder, shall be prepared by the Secretary and shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified at the place where the meeting is to be held, for at least ten days
before the meeting and at the place of the meeting during the whole time of the
meeting.
SECTION 2.5. QUORUM. The holders of shares of stock entitled to cast a
majority of the votes on the matters at issue at a meeting of stockholders,
present in person or represented by proxy, shall constitute a quorum, except as
otherwise required by the Florida Business Corporation Act. In the event of a
lack of a quorum, the chairman of the meeting or a majority in interest of the
stockholders present in person or represented by proxy may adjourn the meeting
from time to time without notice other than announcement at the meeting, until a
quorum shall be obtained. At any such adjourned meeting at which there is a
quorum, any business may be transacted that might have been transacted at the
meeting originally called.
SECTION 2.6. ORGANIZATION AND PROCEDURE.
(a) The Chairman of the Board, or, in the absence of the Chairman of the
Board, the Vice Chairman, if any, or, in the absence of the Vice Chairman, the
President, or any other person designated by the Board of Directors, shall
preside at meetings of stockholders. The Secretary of the Corporation shall act
as secretary, but in the absence of the Secretary, the presiding officer may
appoint a secretary.
(b) At each meeting of stockholders, the chairman of the meeting shall fix
and announce the date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at the meeting and shall
determine the order of business and all other matters of procedure. Except to
the extent inconsistent with any such rules and regulations as adopted by the
Board of Directors, the chairman of the meeting may establish rules, which need
not be in writing, to maintain order for the conduct of the meeting, including,
without limitation, restricting attendance to bona fide stockholders of record
and their proxies and other persons in attendance at the invitation of the
chairman and making rules governing speeches and debates. The chairman of the
meeting acts in his or her absolute discretion and his or her rulings are not
subject to appeal.
-3-
<PAGE>
SECTION 2.7. VOTING. Unless otherwise provided by the Florida Business
Corporation Act, each stockholder shall be entitled to one vote, in person or by
written proxy, for each share held of record by such stockholder who is entitled
to vote generally in the election of directors. All elections for the Board of
Directors shall be decided by a plurality of the votes cast and all other
questions shall be decided by a majority of the votes cast, except as otherwise
required by the Florida Business Corporation Act or as provided for in the
Certificate of Incorporation or these Bylaws. Abstentions shall not be
considered to be votes cast.
SECTION 2.8. INSPECTORS. The Board of Directors by resolution shall, in
advance of any meeting of stockholders, appoint one or more inspectors, which
inspector or inspectors may include individuals who serve the Corporation in
other capacities, including, without limitation, as officers, employees, agents
or representatives of the Corporation, to act at the meeting and make a written
report thereof. One or more persons may be designated by the Board of Directors
as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the chairman
of the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before discharging his or her duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his or her ability. The inspectors shall have the
duties prescribed by the Florida Business Corporation Act.
SECTION III
BOARD OF DIRECTORS
SECTION 3.1. POWERS OF THE BOARD OF DIRECTORS. The business and affairs
of the Corporation shall be managed by or under the direction of its Board of
Directors. In furtherance, and not in limitation, of the powers conferred by
the laws of the State of Florida, the Board of Directors is expressly authorized
to:
(a) adopt, amend, alter, change or repeal the Bylaws of the Corporation, by
the affirmative vote of a majority of the whole Board of Directors; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors; and provided, further, that no Bylaws hereafter adopted
-------- -------
shall invalidate any prior act of the directors that would have been valid if
such new Bylaws had not been adopted;
(b) determine the rights, powers, duties, rules and procedures that affect
the power of the Board of Directors to manage and direct the business and
affairs of the Corporation, including the power to designate and empower
committees of the Board of Directors, to elect, appoint and empower the officers
and other agents of the Corporation, and to determine the time and place of, and
the notice requirements for, Board meetings,
-4-
<PAGE>
as well as quorum and voting requirements for, and the manner of taking, Board
action; and
(c) exercise all such powers and do all such acts as may be exercised or
done by the Corporation, subject to the provisions of the laws of the State of
Florida, the Certificate of Incorporation and these Bylaws.
SECTION 3.2. NUMBER AND QUALIFICATIONS. The number of directors
constituting the Board of Directors shall be as authorized from time to time
exclusively by a vote of a majority of the voting power of all of the shares of
capital stock of the Corporation then entitled to vote generally in the election
of directors.
SECTION 3.3. VACANCIES. Any vacancies in the Board of Directors for any
reason and any newly created directorships resulting by reason of any increase
in the number of directors may be filled by a majority of the directors then in
office, although less than a quorum, or by the sole remaining director.
SECTION 3.4. REMOVAL OF DIRECTORS. Any director, or the entire Board of
Directors, may be removed from office at any time, with or without cause, by the
affirmative vote of the holders of at least a majority of the voting power of
all of the shares of capital stock of the Corporation then entitled to vote
generally in the election of directors, voting together as a single class.
SECTION 3.5. RESIGNATION. A director may resign at any time by giving
written notice to the Chairman of the Board, to the President, or to the
Secretary. Unless otherwise stated in such notice of resignation, the
acceptance thereof shall not be necessary to make it effective; and such
resignation shall take effect at the time specified therein or, in the absence
of such specification, it shall take effect upon the receipt thereof.
SECTION IV
MEETINGS OF BOARD OF DIRECTORS
SECTION 4.1. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without further notice at such time as shall from time to time be
determined by the Board of Directors. A meeting of the Board of Directors for
the election of officers and the transaction of such other business as may come
before it may be held without notice immediately following the annual meeting of
stockholders.
SECTION 4.2. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the President, or at the request
in writing of one-third of the members of the Board of Directors then in office.
SECTION 4.3. NOTICE OF SPECIAL MEETINGS. Notice of the date, time and
place of each special meeting shall be mailed by regular mail to each director
at his or her
-5-
<PAGE>
designated address at least six days before the meeting; or sent by overnight
courier to each director at his or her designated address at least two days
before the meeting (with delivery scheduled to occur no later than the day
before the meeting); or given orally by telephone or other means, or by
telegraph or telecopy, or by any other means comparable to any of the foregoing,
to each director at his designated address at least 24 hours before the meeting;
provided, however, that if less than five days' notice is provided and one-third
- -------- -------
of the members of the Board of Directors then in office object in writing prior
to or at the commencement of the meeting, such meeting shall be postponed until
five days after such notice was given pursuant to this sentence (or such shorter
period to which a majority of those who objected in writing agree), provided
that notice of such postponed meeting shall be given in accordance with this
Section 4.3. The notice of the special meeting shall state the general purpose
of the meeting, but other routine business may be conducted at the special
meeting without such matter being stated in the notice.
SECTION 4.4. PLACE OF MEETINGS. The Board of Directors may hold their
meetings and have an office or offices inside or outside of the State of
Florida.
SECTION 4.5. TELEPHONIC MEETING AND PARTICIPATION. Any or all of the
directors may participate in a meeting of the Board of Directors or any
committee thereof by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
such participation shall constitute presence in person at the meeting.
SECTION 4.6. ACTION BY DIRECTORS WITHOUT A MEETING. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board of Directors or of such committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.
SECTION 4.7. QUORUM AND ADJOURNMENT. A majority of the directors then
holding office shall constitute a quorum. The vote of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. Whether or not a quorum is present to conduct a
meeting, any meeting of the Board of Directors (including an adjourned meeting)
may be adjourned by a majority of the directors present, to reconvene at a
specific time and place. It shall not be necessary to give to the directors
present at the adjourned meeting notice of the reconvened meeting or of the
business to be transacted, other than by announcement at the meeting that was
adjourned; provided, however, notice of such reconvened meeting, stating the
-------- -------
date, time, and place of the reconvened meeting, shall be given to the directors
not present at the adjourned meeting in accordance with the requirements of
Section 4.3 hereof.
SECTION 4.8. ORGANIZATION. The Chairman of the Board, or in the absence
of the Chairman of the Board, a member of the Board of Directors selected by the
members present, shall preside at meetings of the Board of Directors. The
Secretary of the
-6-
<PAGE>
Corporation shall act as secretary, but in the absence of the Secretary, the
presiding officer may appoint a secretary.
SECTION 4.9. COMPENSATION OF DIRECTORS. Directors shall receive such
compensation for their services as the Board of Directors may determine. Any
director may serve the Corporation in any other capacity and receive
compensation therefor.
SECTION 4.10. PRESUMPTION OF ASSENT. A director of the Corporation who
is present at a meeting of the Board of Directors when a vote on any matter is
taken is deemed to have assented to the action taken unless he or she votes
against or abstains from the action taken, or unless at the beginning of the
meeting or promptly upon arrival the director objects to the holding of the
meeting or transacting specified business at the meeting. Any such dissenting
votes, abstentions or objections shall be entered in the minutes of the meeting.
SECTION V
COMMITTEES
SECTION 5.1. COMMITTEES. The Board of Directors may, by resolutions
passed by a majority of the members of the Board of Directors, designate members
of the Board of Directors to constitute committees which shall in each case
consist of such number of directors, and shall have and may execute such powers
as may be determined and specified in the respective resolutions appointing
them. Any such committee may fix its rules of procedure, determine its manner
of acting and the time and place, whether within or without the State of
Florida, of its meetings and specify what notice thereof, if any, shall be
given, unless the Board of Directors shall otherwise by resolution provide.
Unless otherwise provided by the Board of Directors or such committee, the
quorum, voting and other procedures shall be the same as those applicable to
actions taken by the Board of Directors. A majority of the members of the Board
of Directors then in office shall have the power to change the membership of any
such committee at any time, to fill vacancies therein and to discharge any such
committee or to remove any member thereof, either with or without cause, at any
time.
SECTION VI
OFFICERS
SECTION 6.1. DESIGNATION. The officers of the Corporation shall be a
Chairman of the Board, a President, a Treasurer and a Secretary, and the Board
of Directors may elect or appoint, or provide for the appointment of, one or
more Assistant Secretaries and Assistant Treasurers. The Board of Directors may
elect or appoint, or provide for the appointment of, such other officers,
including a Vice Chairman and one or more Vice Presidents in such gradation as
the Board of Directors may determine, or agents as may
-7-
<PAGE>
from time to time appear necessary or advisable in the conduct of the business
and affairs of the Corporation. Any number of offices may be held by the same
person.
SECTION 6.2. ELECTION TERM. At its first meeting after each annual
meeting of stockholders, the Board of Directors shall elect the officers or
provide for the appointment thereof. Subject to Sections 6.3 and 6.4 hereof,
the term of each officer elected by the Board of Directors shall be until the
first meeting of the Board of Directors following the next annual meeting of
stockholders and until such officer's successor is chosen and qualified.
SECTION 6.3. RESIGNATION. Any officer may resign at any time by giving
written notice to the President or the Secretary. Unless otherwise stated in
such notice of resignation, the acceptance thereof shall not be necessary to
make it effective; and such resignation shall take effect at the time specified
therein or, in the absence of such specification, it shall take effect upon the
receipt thereof.
SECTION 6.4. REMOVAL. Any officer may be removed at any time with or
without cause by the affirmative vote of a majority of the members of the Board
of Directors then in office. Any officer appointed by another officer may be
removed with or without cause by such officer or the Chief Executive Officer.
SECTION 6.5. VACANCIES. A vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors or, in the case of
offices held by officers who may be appointed by other officers, by any officer
authorized to appoint such officer.
SECTION 6.6. CHIEF EXECUTIVE OFFICER. The President shall initially be
the Chief Executive Officer of the Corporation and thereafter, at such time as
the Board of Directors shall determine, the Chief Executive Officer shall be
such officer as the Board of Directors shall designate from time to time. The
Chief Executive Officer shall be responsible for carrying out the policies
adopted by the Board of Directors.
SECTION 6.7. CHAIRMAN OF THE BOARD. The Chairman of the Board shall have
such powers and perform such duties as may be provided for herein and as may be
incident to the office and as may be assigned by the Board of Directors.
SECTION 6.8. PRESIDENT. The President shall have such powers and perform
such duties as may be provided for herein and as may be assigned by the Chairman
of the Board or the Board of Directors.
SECTION 6.9. VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board
shall have such powers and perform such duties as may be provided for herein and
as may be assigned by the Chairman of the Board, the President or the Board of
Directors.
-8-
<PAGE>
SECTION 6.10. VICE PRESIDENT. Each Vice President shall have such powers
and perform such duties as may be provided for herein and as may be assigned by
the Chairman of the Board, the President or the Board of Directors.
SECTION 611. TREASURER. The Treasurer shall have charge of all funds of
the Corporation and shall perform all acts incident to the position of
Treasurer, subject to the control of the Board of Directors.
SECTION 6.12. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
have the custody and operation of the accounting books and records of the
Corporation and shall perform all acts incident to the position of Chief
Financial Officer, subject to the control of the Board of Directors.
SECTION 6.13. SECRETARY. The Secretary shall keep the minutes, and give
notices, of all meetings of stockholders and directors and of such committees as
directed by the Board of Directors. The Secretary shall have charge of such
books and papers as the Board of Directors may require. The Secretary or any
Assistant Secretary is authorized to certify copies of extracts from minutes and
of documents in the Secretary's charge and anyone may rely on such certified
copies to the same effect as if such copies were originals and may rely upon any
statement of fact concerning the Corporation certified by the Secretary or any
Assistant Secretary. The Secretary shall perform all acts incident to the
office of Secretary, subject to the control of the Board of Directors.
SECTION 6.14. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant
Secretaries and Assistant Treasurers shall have such powers and perform such
duties as usually pertain to their respective offices and as may be assigned by
the Board of Directors or an officer designated by the Board of Directors.
SECTION 6.15. COMPENSATION OF OFFICERS. The officers of the Corporation
shall receive such compensation for their services as the Board of Directors may
determine. The Board of Directors may delegate its authority to determine
compensation to designated officers of the Corporation.
SECTION 6.16. EXECUTION OF INSTRUMENTS. Checks, notes, drafts, other
commercial instruments, assignments, guarantees of signatures and contracts
(except as otherwise provided herein or by law) shall be executed by the
Chairman of the Board, the President, any Vice President or such officers or
employees or agents as the Board of Directors or any of such designated officers
may direct.
SECTION 6.17. MECHANICAL ENDORSEMENTS. The Chairman of the Board, the
President, any Vice President or the Secretary may authorize any endorsement on
behalf of the Corporation to be made by such mechanical means or stamps as any
of such officers may deem appropriate.
-9-
<PAGE>
SECTION VII
INDEMNIFICATION
SECTION 7.1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact:
(a) that he or she is or was a director or officer of the Corporation, or
(b) that he or she, being at the time a director or officer of the
Corporation, is or was serving at the request of the Corporation as a director,
trustee, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (collectively, "another enterprise" or "other
enterprise"), whether either in case (a) or in case (b) the basis of such
proceeding is alleged action or inaction (x) in an official capacity as a
director or officer of the Corporation, or as a director, trustee, officer,
employee or agent of such other enterprise, or (y) in any other capacity related
to the Corporation or such other enterprise while so serving as a director,
trustee, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent not prohibited by Section 607.0850 of the
Florida Business Corporation Act (or any successor provision or provisions) as
the same exists or may hereafter be amended (but, in the case of any such
amendment, with respect to alleged action or inaction occurring prior to such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than permitted prior thereto), against
all expense, liability and loss (including without limitation attorneys' fees
and expenses, judgments, fines, ERISA excise taxes or penalties and amounts paid
in settlement) reasonably incurred or suffered by such person in connection
therewith. The persons indemnified by this Section VII are hereinafter referred
to as "indemnitees." Such indemnification as to such alleged action or inaction
shall continue as to an indemnitee who has after such alleged action or inaction
ceased to be a director or officer of the Corporation, or director, officer,
employee or agent of such other enterprise, and shall inure to the benefit of
the indemnitee's heirs, executors and administrators. Notwithstanding the
foregoing, except as may be provided in the Bylaws or by the Board of Directors,
the Corporation shall not indemnify any such indemnitee in connection with a
proceeding (or portion thereof) initiated by such indemnitee (but this
prohibition shall not apply to a counterclaim, cross-claim or third-party claim
brought by the indemnitee in any proceeding) unless such proceeding (or portion
thereof) was authorized by the Board of Directors. The right to indemnification
conferred in this Section VII: (i) shall be a contract right; (ii) shall not be
affected adversely to any indemnitee by any amendment of the Certificate of
Incorporation with respect to any alleged action or inaction occurring prior to
such amendment; and (iii) shall, subject to any requirements imposed by law and
these Bylaws, include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition.
-10-
<PAGE>
SECTION 7.2. RELATIONSHIP TO OTHER RIGHTS AND PROVISIONS CONCERNING
INDEMNIFICATION. The rights to indemnification and to the advancement of
expenses conferred in this Section VII shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, the
Certificate of Incorporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
SECTION 7.3. AGENTS AND EMPLOYEES. The Corporation may, to the extent
authorized from time to time by the Board of Directors, grant rights to
indemnification, and to the advancement of expenses, to any employee or agent of
the Corporation (or any person serving at the Corporation's request as a
director, trustee, officer, employee or agent of another enterprise) or to any
person who is or was a director, officer, employee or agent of any of the
Corporation's affiliates, predecessor or subsidiary corporations or of a
constituent corporation absorbed by the Corporation in a consolidation or merger
or who is or was serving at the request of such affiliate, predecessor or
subsidiary corporation or of such constituent corporation as a director,
officer, employee or agent of another enterprise, in each case as determined by
the Board of Directors to the fullest extent of the provisions of this Section
VII in cases of the indemnification and advancement of expenses of directors and
officers of the Corporation, or to any lesser extent (or greater extent, if
permitted by law) determined by the Board of Directors.
SECTION 7.4. UNDERTAKINGS FOR ADVANCES OF EXPENSES. If and to the extent
the Florida Business Corporation Act requires, an advancement by the Corporation
of expenses incurred by an indemnitee pursuant to clause (iii) of the last
sentence of Section 7.1 (hereinafter an "advancement of expenses") shall be made
only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section VII or otherwise.
SECTION 7.5. CLAIMS FOR INDEMNIFICATION. If a claim for indemnification
under Section 7.1 is not paid in full by the Corporation within 60 days after it
has been received in writing by the Corporation, except in the case of a claim
for an advancement of expenses, in which case the applicable period shall be 20
days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole
or in part in any such suit, or in a suit brought by the Corporation to recover
an advancement of expenses pursuant to the terms of an undertaking, the
indemnitee shall be entitled to be paid also the expense of prosecuting or
defending such suit. In any suit brought by the indemnitee to enforce a right
to indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
in any suit by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking the Corporation shall be entitled to recover such
expenses only upon a final adjudication that, the indemnitee has not met the
applicable standard of conduct set forth in Section
-11-
<PAGE>
607.0850 of the Florida Business Corporation Act (or any successor provision or
provisions). Neither the failure of the Corporation (including the Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in Section 607.0850 of the Florida
Business Corporation Act (or any successor provision or provisions), nor an
actual determination by the Corporation (including the Board of Directors,
independent legal counsel, or its stockholders) that the indemnitee has not met
such applicable standard of conduct, shall create a presumption that the
indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to have or
retain such advancement of expenses, under this Section VII or otherwise, shall
be on the Corporation.
SECTION 7.6. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, trustee, officer, employee or agent
of the Corporation or another enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the Florida Business Corporation
Act.
SECTION 7.7. SEVERABILITY. In the event that any of the provisions of
this Section VII (including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions are severable and shall remain
enforceable to the fullest extent permitted by law.
SECTION VIII
MISCELLANEOUS
SECTION 8.1. SEAL. The Corporation shall have a suitable seal, containing
the name of the Corporation. The Secretary shall be in charge of the seal and
may authorize one or more duplicate seals to be kept and used by any other
officer or person.
SECTION 8.2. WAIVER OF NOTICE. Whenever any notice is required to be
given, a waiver thereof in writing, signed by the person or persons entitled to
the notice, whether before or after the time stated therein shall be deemed
equivalent thereto. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
-12-
<PAGE>
SECTION 8.3. VOTING OF STOCK OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the Chairman of the Board, the President,
any Vice President or such officers or employees or agents as the Board of
Directors or any of such designated officers may direct. Any such officer may,
in the name of and on behalf of the Corporation, take all such action as any
such officer may deem advisable to vote in person or by proxy at any meeting of
security holders of any corporation in which the Corporation may own securities
and at any such meeting shall possess and may exercise any and all rights and
powers incident to the ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and possessed if present. The
Board of Directors may from time to time confer like powers upon any other
person or persons.
SECTION IX
AMENDMENT OF BYLAWS
The Board of Directors, by the affirmative vote of a majority of the whole
Board of Directors, shall have power to amend, alter, change, adopt or repeal
the Bylaws of the Corporation at any regular or special meeting; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors. The stockholders entitled to vote also shall have the
power to amend, alter, change, adopt or repeal the Bylaws of the Corporation at
any annual or special meeting subject to the requirements of the Certificate of
Incorporation.
-13-
<PAGE>
EXHIBIT 3.9
ARTICLES OF INCORPORATION
OF
PSS PHYSICIAN SERVICES, INC.
ARTICLE I. NAME
----------------
The name of the corporation is:
PSS Physician Services, Inc.
ARTICLE II. BUSINESS
---------------------
The general nature of the business or businesses to be transacted,
conducted and carried on by this corporation shall be to engage in any activity
or business permitted under the laws of Florida.
ARTICLE III. CAPITAL STOCK
---------------------------
The authorized capital stock of this corporation shall be seven thousand
(7,000) shares of common stock. Each share shall have a par value of One Dollar
($1.00).
ARTICLE IV. TERM
-----------------
The term for which this corporation is formed is and shall be perpetual or
until dissolved according to law.
ARTICLE V. INITIAL REGISTERED OFFICE AND AGENT
-----------------------------------------------
The street address of the initial registered office of this corporation in
the State of Florida is:
1900 Hendricks Avenue
Jacksonville, Florida 32207
The name of the initial registered agent of this corporation at that
address:
Fred Elefant
ARTICLE VI. INITIAL BOARD OF DIRECTORS
---------------------------------------
This corporation shall have three (3) directors initially. The number of
directors may be either increased or decreased from time to time by the Bylaws
but shall never be less than one (1). The name and addresses of the initial
directors of this corporation are:
<PAGE>
NAME STREET ADDRESS
---- --------------
Patrick C. Kelly 6320 St. Augustine Road, Suite 10
Jacksonville, FL 32217
William G. Riddell, Jr. 6320 St. Augustine Road, Suite 10
Jacksonville, FL 32217
Fred Elefant 1900 Hendricks Avenue
Jacksonville, FL 32207
ARTICLE VII. INCORPORATION
---------------------------
The name and address of the person signing these Articles is:
NAME STREET ADDRESS
---- ------ -------
Fred Elefant 1900 Hendricks Avenue
Jacksonville, FL 32207
IN WITNESS WHEREOF, the undersigned incorporator has hereunto set his hand
and seal on this 25th day of January, 1989, and does hereby accept his
designation as registered agent.
/s/ Fred Elefant (SEAL)
---------------------
FRED ELEFANT
STATE OF FLORIDA )
COUNTY OF DUVAL )
BEFORE ME, a notary public authorized to take acknowledgments in the state
and county set forth above, personally appeared FRED ELEFANT, known to me and
known by me to be the person who executed the foregoing articles of
incorporation, and he acknowledged before me that he executed those articles of
incorporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal, in the state and county aforesaid, this 25th day of January, 1989.
/s/ Lawanda G. Hodges
---------------------
Notary Public, State of Florida at
Large.
My Commission Expires:
My Comm.Exp. Jan. 8, 1990
-2-
<PAGE>
EXHIBIT 3.10
PSS PHYSICIAN SERVICES, INC.
AMENDED AND RESTATED
BYLAWS
SECTION I
CAPITAL STOCK
SECTION 1.1. CERTIFICATES. Every holder of stock in the Corporation shall
be entitled to have a certificate signed in the name of the Corporation by the
Chairman of the Board of Directors or the President or a Vice President, and by
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation certifying the number of shares in the Corporation
owned by such holder. If such certificate is countersigned (a) by a transfer
agent other than the Corporation or its employee, or, (b) by a registrar other
than the Corporation or its employee, any other signature on the certificate may
be a facsimile. In case any officer, transfer agent, or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent, or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent, or registrar at the date of
issue.
SECTION 1.2. RECORD OWNERSHIP. A record of the name and address of the
holder of each certificate, the number of shares represented thereby and the
date of issue thereof shall be made on the Corporation's books. The Corporation
shall be entitled to treat the holder of record of any share of stock as the
holder in fact thereof, and accordingly shall not be bound to recognize any
equitable or other claim to or interest in any share on the part of any other
person, whether or not it shall have express or other notice thereof, except as
required by the laws of the State of Florida.
SECTION 1.3. TRANSFER OF RECORD OWNERSHIP. Transfers of stock shall be
made on the books of the Corporation only by direction of the person named in
the certificate or such person's attorney, lawfully constituted in writing, and
only upon the surrender of the certificate therefor and a written assignment of
the shares evidenced thereby, which certificate shall be canceled before the new
certificate is issued.
SECTION 1.4. LOST CERTIFICATES. Any person claiming a stock certificate
in lieu of one lost, stolen or destroyed shall give the Corporation an affidavit
as to such person's ownership of the certificate and of the facts which go to
prove its loss, theft or destruction. Such person shall also, if required by
policies adopted by the Board of Directors, give the Corporation a bond, in such
form as may be approved by the Corporation, sufficient to indemnify the
Corporation against any claim that may be made
<PAGE>
against it on account of the alleged loss of the certificate or the issuance of
a new certificate.
SECTION 1.5. TRANSFER AGENTS; REGISTRARS; RULES RESPECTING CERTIFICATES.
The Board of Directors may appoint, or authorize any officer or officers to
appoint, one or more transfer agents and one or more registrars. The Board of
Directors may make such further rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates of the
Corporation.
SECTION 1.6. RECORD DATE. The Board of Directors may fix in advance a
future date, not exceeding 60 days (nor, in the case of a stockholders' meeting,
less than ten days) preceding the date of any meeting of stockholders, payment
of dividend or other distribution, allotment of rights, or change, conversion or
exchange of capital stock or for the purpose of any other lawful action, as the
record date for determination of the stockholders entitled to notice of and to
vote at any such meeting and any adjournment thereof, or to receive any such
dividend or other distribution or allotment of rights, or to exercise the rights
in respect of any such change, conversion or exchange of capital stock, or to
participate in any such other lawful action, and in such case such stockholders
and only such stockholders as shall be stockholders of record on the date so
fixed shall be entitled to such notice of and to vote at such meeting and any
adjournment thereof, or to receive such dividend or other distribution or
allotment of rights, or to exercise such rights, or to participate in any such
other lawful action, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any such record date fixed as
aforesaid.
SECTION II
MEETINGS OF STOCKHOLDERS
SECTION 2.1. ANNUAL. The annual meeting of stockholders for the election
of directors and the transaction of such other proper business shall be held
within or without the State of Florida on such date and at such time as shall be
designated by the Board of Directors.
SECTION 2.2. SPECIAL. Special meetings of stockholders for any purpose or
purposes may be called by the Board of Directors, pursuant to a resolution
adopted by a majority of the members of the Board of Directors then in office,
or by the holders of not less than fifty percent (50%) of all shares entitled to
vote at the meeting. Special meetings may be held at any place, within or
without the State of Florida, as determined by the Board of Directors. The only
business which may be conducted at such a meeting, other than procedural matters
and matters relating to the conduct of the meeting, shall be the matter or
matters described in the notice of the meeting.
-2-
<PAGE>
SECTION 2.3. NOTICE. Written notice of each meeting of stockholders,
stating the date, time, place and, in the case of a special meeting, the purpose
thereof, shall be given as provided by law by the Secretary or an Assistant
Secretary not less than ten days nor more than 60 days before such meeting
(unless a different time is specified by law) to every stockholder entitled by
law to notice of such meeting.
SECTION 2.4. LIST OF STOCKHOLDERS. A complete list of the stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder, shall be prepared by the Secretary and shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified at the place where the meeting is to be held, for at least ten days
before the meeting and at the place of the meeting during the whole time of the
meeting.
SECTION 2.5. QUORUM. The holders of shares of stock entitled to cast a
majority of the votes on the matters at issue at a meeting of stockholders,
present in person or represented by proxy, shall constitute a quorum, except as
otherwise required by the Florida Business Corporation Act. In the event of a
lack of a quorum, the chairman of the meeting or a majority in interest of the
stockholders present in person or represented by proxy may adjourn the meeting
from time to time without notice other than announcement at the meeting, until a
quorum shall be obtained. At any such adjourned meeting at which there is a
quorum, any business may be transacted that might have been transacted at the
meeting originally called.
SECTION 2.6. ORGANIZATION AND PROCEDURE.
(a) The Chairman of the Board, or, in the absence of the Chairman of the
Board, the Vice Chairman, if any, or, in the absence of the Vice Chairman, the
President, or any other person designated by the Board of Directors, shall
preside at meetings of stockholders. The Secretary of the Corporation shall act
as secretary, but in the absence of the Secretary, the presiding officer may
appoint a secretary.
(b) At each meeting of stockholders, the chairman of the meeting shall fix
and announce the date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at the meeting and shall
determine the order of business and all other matters of procedure. Except to
the extent inconsistent with any such rules and regulations as adopted by the
Board of Directors, the chairman of the meeting may establish rules, which need
not be in writing, to maintain order for the conduct of the meeting, including,
without limitation, restricting attendance to bona fide stockholders of record
and their proxies and other persons in attendance at the invitation of the
chairman and making rules governing speeches and debates. The chairman of the
meeting acts in his or her absolute discretion and his or her rulings are not
subject to appeal.
-3-
<PAGE>
SECTION 2.7. VOTING. Unless otherwise provided by the Florida Business
Corporation Act, each stockholder shall be entitled to one vote, in person or by
written proxy, for each share held of record by such stockholder who is entitled
to vote generally in the election of directors. All elections for the Board of
Directors shall be decided by a plurality of the votes cast and all other
questions shall be decided by a majority of the votes cast, except as otherwise
required by the Florida Business Corporation Act or as provided for in the
Certificate of Incorporation or these Bylaws. Abstentions shall not be
considered to be votes cast.
SECTION 2.8. INSPECTORS. The Board of Directors by resolution shall, in
advance of any meeting of stockholders, appoint one or more inspectors, which
inspector or inspectors may include individuals who serve the Corporation in
other capacities, including, without limitation, as officers, employees, agents
or representatives of the Corporation, to act at the meeting and make a written
report thereof. One or more persons may be designated by the Board of Directors
as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the chairman
of the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before discharging his or her duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his or her ability. The inspectors shall have the
duties prescribed by the Florida Business Corporation Act.
SECTION III
BOARD OF DIRECTORS
SECTION 3.1. POWERS OF THE BOARD OF DIRECTORS. The business and affairs
of the Corporation shall be managed by or under the direction of its Board of
Directors. In furtherance, and not in limitation, of the powers conferred by
the laws of the State of Florida, the Board of Directors is expressly authorized
to:
(a) adopt, amend, alter, change or repeal the Bylaws of the Corporation,
by the affirmative vote of a majority of the whole Board of Directors; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors; and provided, further, that no Bylaws hereafter adopted
-------- -------
shall invalidate any prior act of the directors that would have been valid if
such new Bylaws had not been adopted;
(b) determine the rights, powers, duties, rules and procedures that affect
the power of the Board of Directors to manage and direct the business and
affairs of the Corporation, including the power to designate and empower
committees of the Board of Directors, to elect, appoint and empower the officers
and other agents of the Corporation, and to determine the time and place of, and
the notice requirements for, Board meetings,
-4-
<PAGE>
as well as quorum and voting requirements for, and the manner of taking, Board
action; and
(c) exercise all such powers and do all such acts as may be exercised or
done by the Corporation, subject to the provisions of the laws of the State of
Florida, the Certificate of Incorporation and these Bylaws.
SECTION 3.2. NUMBER AND QUALIFICATIONS. The number of directors
constituting the Board of Directors shall be as authorized from time to time
exclusively by a vote of a majority of the voting power of all of the shares of
capital stock of the Corporation then entitled to vote generally in the election
of directors.
SECTION 3.3. VACANCIES. Any vacancies in the Board of Directors for any
reason and any newly created directorships resulting by reason of any increase
in the number of directors may be filled by a majority of the directors then in
office, although less than a quorum, or by the sole remaining director.
SECTION 3.4. REMOVAL OF DIRECTORS. Any director, or the entire Board of
Directors, may be removed from office at any time, with or without cause, by the
affirmative vote of the holders of at least a majority of the voting power of
all of the shares of capital stock of the Corporation then entitled to vote
generally in the election of directors, voting together as a single class.
SECTION 3.5. RESIGNATION. A director may resign at any time by giving
written notice to the Chairman of the Board, to the President, or to the
Secretary. Unless otherwise stated in such notice of resignation, the
acceptance thereof shall not be necessary to make it effective; and such
resignation shall take effect at the time specified therein or, in the absence
of such specification, it shall take effect upon the receipt thereof.
SECTION IV
MEETINGS OF BOARD OF DIRECTORS
SECTION 4.1. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without further notice at such time as shall from time to time be
determined by the Board of Directors. A meeting of the Board of Directors for
the election of officers and the transaction of such other business as may come
before it may be held without notice immediately following the annual meeting of
stockholders.
SECTION 4.2. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the President, or at the request
in writing of one-third of the members of the Board of Directors then in office.
SECTION 4.3. NOTICE OF SPECIAL MEETINGS. Notice of the date, time and
place of each special meeting shall be mailed by regular mail to each director
at his or her
-5-
<PAGE>
designated address at least six days before the meeting; or sent by overnight
courier to each director at his or her designated address at least two days
before the meeting (with delivery scheduled to occur no later than the day
before the meeting); or given orally by telephone or other means, or by
telegraph or telecopy, or by any other means comparable to any of the foregoing,
to each director at his designated address at least 24 hours before the meeting;
provided, however, that if less than five days' notice is provided and one-third
- -------- -------
of the members of the Board of Directors then in office object in writing prior
to or at the commencement of the meeting, such meeting shall be postponed until
five days after such notice was given pursuant to this sentence (or such shorter
period to which a majority of those who objected in writing agree), provided
that notice of such postponed meeting shall be given in accordance with this
Section 4.3. The notice of the special meeting shall state the general purpose
of the meeting, but other routine business may be conducted at the special
meeting without such matter being stated in the notice.
SECTION 4.4. PLACE OF MEETINGS. The Board of Directors may hold their
meetings and have an office or offices inside or outside of the State of
Florida.
SECTION 4.5. TELEPHONIC MEETING AND PARTICIPATION. Any or all of the
directors may participate in a meeting of the Board of Directors or any
committee thereof by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
such participation shall constitute presence in person at the meeting.
SECTION 4.6. ACTION BY DIRECTORS WITHOUT A MEETING. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board of Directors or of such committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.
SECTION 4.7. QUORUM AND ADJOURNMENT. A majority of the directors then
holding office shall constitute a quorum. The vote of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. Whether or not a quorum is present to conduct a
meeting, any meeting of the Board of Directors (including an adjourned meeting)
may be adjourned by a majority of the directors present, to reconvene at a
specific time and place. It shall not be necessary to give to the directors
present at the adjourned meeting notice of the reconvened meeting or of the
business to be transacted, other than by announcement at the meeting that was
adjourned; provided, however, notice of such reconvened meeting, stating the
-------- -------
date, time, and place of the reconvened meeting, shall be given to the directors
not present at the adjourned meeting in accordance with the requirements of
Section 4.3 hereof.
SECTION 4.8. ORGANIZATION. The Chairman of the Board, or in the absence
of the Chairman of the Board, a member of the Board of Directors selected by the
members present, shall preside at meetings of the Board of Directors. The
Secretary of the
-6-
<PAGE>
Corporation shall act as secretary, but in the absence of the Secretary, the
presiding officer may appoint a secretary.
SECTION 4.9. COMPENSATION OF DIRECTORS. Directors shall receive such
compensation for their services as the Board of Directors may determine. Any
director may serve the Corporation in any other capacity and receive
compensation therefor.
SECTION 4.10. PRESUMPTION OF ASSENT. A director of the Corporation who
is present at a meeting of the Board of Directors when a vote on any matter is
taken is deemed to have assented to the action taken unless he or she votes
against or abstains from the action taken, or unless at the beginning of the
meeting or promptly upon arrival the director objects to the holding of the
meeting or transacting specified business at the meeting. Any such dissenting
votes, abstentions or objections shall be entered in the minutes of the meeting.
SECTION V
COMMITTEES
SECTION 5.1. COMMITTEES. The Board of Directors may, by resolutions
passed by a majority of the members of the Board of Directors, designate members
of the Board of Directors to constitute committees which shall in each case
consist of such number of directors, and shall have and may execute such powers
as may be determined and specified in the respective resolutions appointing
them. Any such committee may fix its rules of procedure, determine its manner
of acting and the time and place, whether within or without the State of
Florida, of its meetings and specify what notice thereof, if any, shall be
given, unless the Board of Directors shall otherwise by resolution provide.
Unless otherwise provided by the Board of Directors or such committee, the
quorum, voting and other procedures shall be the same as those applicable to
actions taken by the Board of Directors. A majority of the members of the Board
of Directors then in office shall have the power to change the membership of any
such committee at any time, to fill vacancies therein and to discharge any such
committee or to remove any member thereof, either with or without cause, at any
time.
SECTION VI
OFFICERS
SECTION 6.1. DESIGNATION. The officers of the Corporation shall be a
Chairman of the Board, a President, a Treasurer and a Secretary, and the Board
of Directors may elect or appoint, or provide for the appointment of, one or
more Assistant Secretaries and Assistant Treasurers. The Board of Directors may
elect or appoint, or provide for the appointment of, such other officers,
including a Vice Chairman and one or more Vice Presidents in such gradation as
the Board of Directors may determine, or agents as may
-7-
<PAGE>
from time to time appear necessary or advisable in the conduct of the business
and affairs of the Corporation. Any number of offices may be held by the same
person.
SECTION 6.2. ELECTION TERM. At its first meeting after each annual
meeting of stockholders, the Board of Directors shall elect the officers or
provide for the appointment thereof. Subject to Sections 6.3 and 6.4 hereof,
the term of each officer elected by the Board of Directors shall be until the
first meeting of the Board of Directors following the next annual meeting of
stockholders and until such officer's successor is chosen and qualified.
SECTION 6.3. RESIGNATION. Any officer may resign at any time by giving
written notice to the President or the Secretary. Unless otherwise stated in
such notice of resignation, the acceptance thereof shall not be necessary to
make it effective; and such resignation shall take effect at the time specified
therein or, in the absence of such specification, it shall take effect upon the
receipt thereof.
SECTION 6.4. REMOVAL. Any officer may be removed at any time with or
without cause by the affirmative vote of a majority of the members of the Board
of Directors then in office. Any officer appointed by another officer may be
removed with or without cause by such officer or the Chief Executive Officer.
SECTION 6.5. VACANCIES. A vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors or, in the case of
offices held by officers who may be appointed by other officers, by any officer
authorized to appoint such officer.
SECTION 6.6. CHIEF EXECUTIVE OFFICER. The President shall initially be
the Chief Executive Officer of the Corporation and thereafter, at such time as
the Board of Directors shall determine, the Chief Executive Officer shall be
such officer as the Board of Directors shall designate from time to time. The
Chief Executive Officer shall be responsible for carrying out the policies
adopted by the Board of Directors.
SECTION 6.7. CHAIRMAN OF THE BOARD. The Chairman of the Board shall have
such powers and perform such duties as may be provided for herein and as may be
incident to the office and as may be assigned by the Board of Directors.
SECTION 6.8. PRESIDENT. The President shall have such powers and perform
such duties as may be provided for herein and as may be assigned by the Chairman
of the Board or the Board of Directors.
SECTION 6.9. VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board
shall have such powers and perform such duties as may be provided for herein and
as may be assigned by the Chairman of the Board, the President or the Board of
Directors.
-8-
<PAGE>
SECTION 6.10. VICE PRESIDENT. Each Vice President shall have such powers
and perform such duties as may be provided for herein and as may be assigned by
the Chairman of the Board, the President or the Board of Directors.
SECTION 611. TREASURER. The Treasurer shall have charge of all funds of
the Corporation and shall perform all acts incident to the position of
Treasurer, subject to the control of the Board of Directors.
SECTION 6.12. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
have the custody and operation of the accounting books and records of the
Corporation and shall perform all acts incident to the position of Chief
Financial Officer, subject to the control of the Board of Directors.
SECTION 6.13. SECRETARY. The Secretary shall keep the minutes, and give
notices, of all meetings of stockholders and directors and of such committees as
directed by the Board of Directors. The Secretary shall have charge of such
books and papers as the Board of Directors may require. The Secretary or any
Assistant Secretary is authorized to certify copies of extracts from minutes and
of documents in the Secretary's charge and anyone may rely on such certified
copies to the same effect as if such copies were originals and may rely upon any
statement of fact concerning the Corporation certified by the Secretary or any
Assistant Secretary. The Secretary shall perform all acts incident to the
office of Secretary, subject to the control of the Board of Directors.
SECTION 6.14. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant
Secretaries and Assistant Treasurers shall have such powers and perform such
duties as usually pertain to their respective offices and as may be assigned by
the Board of Directors or an officer designated by the Board of Directors.
SECTION 6.15. COMPENSATION OF OFFICERS. The officers of the Corporation
shall receive such compensation for their services as the Board of Directors may
determine. The Board of Directors may delegate its authority to determine
compensation to designated officers of the Corporation.
SECTION 6.16. EXECUTION OF INSTRUMENTS. Checks, notes, drafts, other
commercial instruments, assignments, guarantees of signatures and contracts
(except as otherwise provided herein or by law) shall be executed by the
Chairman of the Board, the President, any Vice President or such officers or
employees or agents as the Board of Directors or any of such designated officers
may direct.
SECTION 6.17. MECHANICAL ENDORSEMENTS. The Chairman of the Board, the
President, any Vice President or the Secretary may authorize any endorsement on
behalf of the Corporation to be made by such mechanical means or stamps as any
of such officers may deem appropriate.
-9-
<PAGE>
SECTION VII
INDEMNIFICATION
SECTION 7.1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact:
(a) that he or she is or was a director or officer of the Corporation, or
(b) that he or she, being at the time a director or officer of the
Corporation, is or was serving at the request of the Corporation as a director,
trustee, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (collectively, "another enterprise" or "other
enterprise"), whether either in case (a) or in case (b) the basis of such
proceeding is alleged action or inaction (x) in an official capacity as a
director or officer of the Corporation, or as a director, trustee, officer,
employee or agent of such other enterprise, or (y) in any other capacity related
to the Corporation or such other enterprise while so serving as a director,
trustee, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent not prohibited by Section 607.0850 of the
Florida Business Corporation Act (or any successor provision or provisions) as
the same exists or may hereafter be amended (but, in the case of any such
amendment, with respect to alleged action or inaction occurring prior to such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than permitted prior thereto), against
all expense, liability and loss (including without limitation attorneys' fees
and expenses, judgments, fines, ERISA excise taxes or penalties and amounts paid
in settlement) reasonably incurred or suffered by such person in connection
therewith. The persons indemnified by this Section VII are hereinafter referred
to as "indemnitees." Such indemnification as to such alleged action or inaction
shall continue as to an indemnitee who has after such alleged action or inaction
ceased to be a director or officer of the Corporation, or director, officer,
employee or agent of such other enterprise, and shall inure to the benefit of
the indemnitee's heirs, executors and administrators. Notwithstanding the
foregoing, except as may be provided in the Bylaws or by the Board of Directors,
the Corporation shall not indemnify any such indemnitee in connection with a
proceeding (or portion thereof) initiated by such indemnitee (but this
prohibition shall not apply to a counterclaim, cross-claim or third-party claim
brought by the indemnitee in any proceeding) unless such proceeding (or portion
thereof) was authorized by the Board of Directors. The right to indemnification
conferred in this Section VII: (i) shall be a contract right; (ii) shall not be
affected adversely to any indemnitee by any amendment of the Certificate of
Incorporation with respect to any alleged action or inaction occurring prior to
such amendment; and (iii) shall, subject to any requirements imposed by law and
these Bylaws, include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition.
-10-
<PAGE>
SECTION 7.2. RELATIONSHIP TO OTHER RIGHTS AND PROVISIONS CONCERNING
INDEMNIFICATION. The rights to indemnification and to the advancement of
expenses conferred in this Section VII shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, the
Certificate of Incorporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
SECTION 7.3. AGENTS AND EMPLOYEES. The Corporation may, to the extent
authorized from time to time by the Board of Directors, grant rights to
indemnification, and to the advancement of expenses, to any employee or agent of
the Corporation (or any person serving at the Corporation's request as a
director, trustee, officer, employee or agent of another enterprise) or to any
person who is or was a director, officer, employee or agent of any of the
Corporation's affiliates, predecessor or subsidiary corporations or of a
constituent corporation absorbed by the Corporation in a consolidation or merger
or who is or was serving at the request of such affiliate, predecessor or
subsidiary corporation or of such constituent corporation as a director,
officer, employee or agent of another enterprise, in each case as determined by
the Board of Directors to the fullest extent of the provisions of this Section
VII in cases of the indemnification and advancement of expenses of directors and
officers of the Corporation, or to any lesser extent (or greater extent, if
permitted by law) determined by the Board of Directors.
SECTION 7.4. UNDERTAKINGS FOR ADVANCES OF EXPENSES. If and to the extent
the Florida Business Corporation Act requires, an advancement by the Corporation
of expenses incurred by an indemnitee pursuant to clause (iii) of the last
sentence of Section 7.1 (hereinafter an "advancement of expenses") shall be made
only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section VII or otherwise.
SECTION 7.5. CLAIMS FOR INDEMNIFICATION. If a claim for indemnification
under Section 7.1 is not paid in full by the Corporation within 60 days after it
has been received in writing by the Corporation, except in the case of a claim
for an advancement of expenses, in which case the applicable period shall be 20
days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole
or in part in any such suit, or in a suit brought by the Corporation to recover
an advancement of expenses pursuant to the terms of an undertaking, the
indemnitee shall be entitled to be paid also the expense of prosecuting or
defending such suit. In any suit brought by the indemnitee to enforce a right
to indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
in any suit by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking the Corporation shall be entitled to recover such
expenses only upon a final adjudication that, the indemnitee has not met the
applicable standard of conduct set forth in Section
-11-
<PAGE>
607.0850 of the Florida Business Corporation Act (or any successor provision or
provisions). Neither the failure of the Corporation (including the Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in Section 607.0850 of the Florida
Business Corporation Act (or any successor provision or provisions), nor an
actual determination by the Corporation (including the Board of Directors,
independent legal counsel, or its stockholders) that the indemnitee has not met
such applicable standard of conduct, shall create a presumption that the
indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to have or
retain such advancement of expenses, under this Section VII or otherwise, shall
be on the Corporation.
SECTION 7.6. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, trustee, officer, employee or agent
of the Corporation or another enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the Florida Business Corporation
Act.
SECTION 7.7. SEVERABILITY. In the event that any of the provisions of
this Section VII (including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions are severable and shall remain
enforceable to the fullest extent permitted by law.
SECTION VIII
MISCELLANEOUS
SECTION 8.1. SEAL. The Corporation shall have a suitable seal, containing
the name of the Corporation. The Secretary shall be in charge of the seal and
may authorize one or more duplicate seals to be kept and used by any other
officer or person.
SECTION 8.2. WAIVER OF NOTICE. Whenever any notice is required to be
given, a waiver thereof in writing, signed by the person or persons entitled to
the notice, whether before or after the time stated therein shall be deemed
equivalent thereto. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
-12-
<PAGE>
SECTION 8.3. VOTING OF STOCK OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the Chairman of the Board, the President,
any Vice President or such officers or employees or agents as the Board of
Directors or any of such designated officers may direct. Any such officer may,
in the name of and on behalf of the Corporation, take all such action as any
such officer may deem advisable to vote in person or by proxy at any meeting of
security holders of any corporation in which the Corporation may own securities
and at any such meeting shall possess and may exercise any and all rights and
powers incident to the ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and possessed if present. The
Board of Directors may from time to time confer like powers upon any other
person or persons.
SECTION IX
AMENDMENT OF BYLAWS
The Board of Directors, by the affirmative vote of a majority of the whole
Board of Directors, shall have power to amend, alter, change, adopt or repeal
the Bylaws of the Corporation at any regular or special meeting; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors. The stockholders entitled to vote also shall have the
power to amend, alter, change, adopt or repeal the Bylaws of the Corporation at
any annual or special meeting subject to the requirements of the Certificate of
Incorporation.
-13-
<PAGE>
EXHIBIT 3.11
STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS
BUSINESS CORPORATION
____________
ORIGINAL ARTICLES OF INCORPORATION
____________
The undersigned acting as incorporator(s) of a corporation under Chapter
7-1.1 of the General Laws, 1956, as amended, adopt(s) the following Articles of
Incorporation for such corporation:
First. The name of the corporation is PSS RHODE ISLAND, INC.
--------------------------------
Second. The period of its duration is (if perpetual, so state)
perpetual
- --------------
Third. The purpose or purposes for which the corporation is organized are:
Sale and distribution of distribution of medical supplies.
The corporation shall have power: (See (S)7-1.1-4 of the General Laws,
1956, as amended.)
(a) To have perpetual succession by its corporate name unless a limited
period of duration is stated in its articles of incorporation.
(b) To sue and be sued, complain and defend, in its corporate name.
(c) To have a corporate seal which may be altered at pleasure, and to use
the same by causing it, or a facsimile thereof, to be impressed or affixed or in
any other manner reproduced.
(d) To purchase, take, receive, lease, or otherwise acquire, own, hold,
improve, use and otherwise deal in and with, real or personal property, or any
interest therein, wherever situated.
(e) To sell, convey, mortgage, pledge, lease, exchange, transfer and
otherwise dispose of all or any part of its property and assets.
(f) To lend money and to use its credit to assist its employees.
(g) To purchase, take, receive, subscribe for, or otherwise acquire, own,
hold, vote, use, employ, sell, mortgage, lend, pledge or otherwise dispose of,
and otherwise use and deal in and with, shares or other interests in, or
obligations of, other domestic or foreign corporations, associations,
partnerships or individuals, or direct or indirect obligations of the United
States or of any other government, state, territory, governmental district or
municipality or of any instrumentality thereof.
(h) To make contracts and guarantees and incur liabilities, borrow money
at such rates of interest as the corporation may determine, issue its notes,
bonds, and other obligations, and secure any of its obligations by mortgage or
pledge of all or any of its property, franchises, and income.
(i) To lend money for its corporate purposes, invest and reinvest its
funds, and take and hold real and personal property as security for the payment
of funds so loaned or invested.
(j) To conduct its business, carry on its operations, and have offices and
exercise the powers granted by this chapter, with or without this state.
<PAGE>
(k) To elect or appoint officers and agents of the corporation, and define
their duties and fix their compensation.
(l) To make and alter by-laws, not inconsistent with its articles of
incorporation or with the laws of this state, for the administration and
regulation of the affairs of the corporation.
(m) To make donations for the public welfare or for charitable, scientific
or educational purposes.
(n) To transact any lawful business which the board of directors shall
find will be in aid of governmental authority.
(o) To pay pensions and establish pension plans, pension trusts, profit-
sharing plans, stock bonus plans, stock option plans and other incentive plans
for any or all of its directors, officers and employees.
(p) To provide insurance for its benefit on the life of any of its
directors, officers, or employees, or on the life of any stockholder for the
purpose of acquiring at his death shares of its stock owned by such stockholder.
(q) To be a promoter, partner, member, associate, or manager of any
partnership, enterprise or venture.
(r) To have and exercise all powers necessary or convenient to effect its
purposes.
-2-
<PAGE>
Fourth. The aggregate number of shares with the corporation shall have
authority to issue is:
(a) If only one class: Total number of shares 8,000 with a par value of
---------------------------
One Dollar ($1.00) per share.
-------------------------------
(If the authorized shares are to consist of one class only, state
the par value of such shares or a statement that all of such shares
are to be without par value.)
or
(b) If more than one class: Total number of shares_______________________
(State (A) the number of shares of each class thereof that are to
have a par value and the par value of each share of each such class,
and/or (B) the number of such shares that are to be without par value,
and (C) a statement of all or any of the designations and the powers,
preferences and rights, including voting rights, and the
qualifications, limitations or restrictions thereof, which are
permitted by the provisions of title 7 of the General Laws in respect
of any class or classes of stock of the corporation and the fixing of
which by the articles of association is desired, and an express grant
of such authority as it may then be desired to grant to the board of
directors to fix by vote or votes any thereof that may be desired but
which shall not be fixed by the articles.)
Fifth. Provisions (if any) dealing with the preemptive right of
shareholders pursuant to (S)7-1.1-24 of the General Laws, 1956, as amended:
No shareholder shall be entitled as a matter of right to subscribe for or
receive additional shares of any class of stock of the corporation, whether new
or hereafter authorized, or any bonds, debentures or other securities
convertible into stock, but such additional shares of stock or other securities
convertible into stock may be issued or disposed of by the board of directors to
such persons and on such terms as, in its discretion, it shall deem advisable.
-3-
<PAGE>
Sixth. Provisions (if any) for the regulation of the internal affairs of
the corporation:
At each election for directors, every shareholder entitled to vote at such
election shall have the right to cumulate his votes either by giving one
candidate as may votes as the number of such directors multiplied by the number
of his shares shall equal or by distributing such votes on the same principle
among any number of such candidates.
Seventh. The address of the initial registered office of the corporation
is 123 Dyer Street, Providence, R.I. 02903 (add Zip Code) and the name of
-----------------------------------------
its initial registered agent at such address is: C T CORPORATION SYSTEM
----------------------------
Eighth. The number of directors constituting the initial board of
directors of the corporation is two (2) and the names and addresses of the
--------
persons who are to serve as directors until the first annual meeting of
shareholders or until their successors are elected and shall qualify are:
(If this is a close corporation pursuant to (S)7-1.1-51 of the General
Laws, 1956, as amended, state the name(s) and address(es) of the officers of the
corporation.) (NOT APPLICABLE)
NAME ADDRESS
Patrick C. Kelly 7800 Belfort Parkway, Ste. 250
- ---------------------------- ------------------------------
Jacksonville, FL 32556
____________________________ ------------------------------
Fred Elefant 1650 Prudential Drive, Ste.105
- ---------------------------- ------------------------------
Jacksonville, FL 32201
____________________________ ------------------------------
Ninth. The name and address of each incorporator is:
NAME ADDRESS
Madonna Cuddihy 1200 S. Pine Island Road
- ---------------------------- ------------------------------
Plantation, FL 33324
____________________________ ------------------------------
Tenth. Date when corporate existent to begin (not more than 30 days after
filing of these articles of incorporation):
Existence shall begin upon filing of these Articles of Incorporation.
- -------------------------------------------------------------------------------
Dated 12-7 , 19 93.
------------ ------
/s/ Madonna Cuddihy
--------------------------------
Madonna Cuddihy, Incorporator
-4-
<PAGE>
State of FLORIDA } City }
}In the } of Plantation
--------------------
County of BROWARD } Town }
in said county this 7th day of December, A.D. 1993
--- -------- --
then personally appeared before me Madonna Cuddihy
-------------------------------------------
________________________________________________________________________________
________________________________________________________________________________
each and all known to me and known by me to be the parties executing the
foregoing instrument, and they severally acknowledged said instrument by them
subscribing to be their free act and deed.
/s/ Tanya M. Villar
----------------------------------
Notary Public
-5-
<PAGE>
EXHIBIT 3.12
PSS RHODE ISLAND, INC.
AMENDED AND RESTATED
BYLAWS
SECTION I
CAPITAL STOCK
SECTION 1.1. CERTIFICATES. Every holder of stock in the Corporation shall
be entitled to have a certificate signed in the name of the Corporation by the
Chairman of the Board of Directors or the President or a Vice President, and by
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation certifying the number of shares in the Corporation
owned by such holder. If such certificate is countersigned (a) by a transfer
agent other than the Corporation or its employee, or, (b) by a registrar other
than the Corporation or its employee, any other signature on the certificate may
be a facsimile. In case any officer, transfer agent, or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent, or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent, or registrar at the date of
issue.
SECTION 1.2. RECORD OWNERSHIP. A record of the name and address of the
holder of each certificate, the number of shares represented thereby and the
date of issue thereof shall be made on the Corporation's books. The Corporation
shall be entitled to treat the holder of record of any share of stock as the
holder in fact thereof, and accordingly shall not be bound to recognize any
equitable or other claim to or interest in any share on the part of any other
person, whether or not it shall have express or other notice thereof, except as
required by the laws of the State of Rhode Island.
SECTION 1.3. TRANSFER OF RECORD OWNERSHIP. Transfers of stock shall be
made on the books of the Corporation only by direction of the person named in
the certificate or such person's attorney, lawfully constituted in writing, and
only upon the surrender of the certificate therefor and a written assignment of
the shares evidenced thereby, which certificate shall be canceled before the new
certificate is issued.
SECTION 1.4. LOST CERTIFICATES. Any person claiming a stock certificate
in lieu of one lost, stolen or destroyed shall give the Corporation an affidavit
as to such person's ownership of the certificate and of the facts which go to
prove its loss, theft or destruction. Such person shall also, if required by
policies adopted by the Board of Directors, give the Corporation a bond, in such
form as may be approved by the Corporation, sufficient to indemnify the
Corporation against any claim that may be made
<PAGE>
against it on account of the alleged loss of the certificate or the issuance of
a new certificate.
SECTION 1.5. TRANSFER AGENTS; REGISTRARS; RULES RESPECTING CERTIFICATES.
The Board of Directors may appoint, or authorize any officer or officers to
appoint, one or more transfer agents and one or more registrars. The Board of
Directors may make such further rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates of the
Corporation.
SECTION 1.6. RECORD DATE. The Board of Directors may fix in advance a
future date, not exceeding 60 days (nor, in the case of a stockholders' meeting,
less than ten days) preceding the date of any meeting of stockholders, payment
of dividend or other distribution, allotment of rights, or change, conversion or
exchange of capital stock or for the purpose of any other lawful action, as the
record date for determination of the stockholders entitled to notice of and to
vote at any such meeting and any adjournment thereof, or to receive any such
dividend or other distribution or allotment of rights, or to exercise the rights
in respect of any such change, conversion or exchange of capital stock, or to
participate in any such other lawful action, and in such case such stockholders
and only such stockholders as shall be stockholders of record on the date so
fixed shall be entitled to such notice of and to vote at such meeting and any
adjournment thereof, or to receive such dividend or other distribution or
allotment of rights, or to exercise such rights, or to participate in any such
other lawful action, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any such record date fixed as
aforesaid.
SECTION II
MEETINGS OF STOCKHOLDERS
SECTION 2.1. ANNUAL. The annual meeting of stockholders for the election
of directors and the transaction of such other proper business shall be held
within or without the State of Rhode Island on such date and at such time as
shall be designated by the Board of Directors.
SECTION 2.2. SPECIAL. Special meetings of stockholders for any purpose or
purposes may be called by the Board of Directors, pursuant to a resolution
adopted by a majority of the members of the Board of Directors then in office,
or by the holders of not less than fifty percent (50%) of all shares entitled to
vote at the meeting. Special meetings may be held at any place, within or
without the State of Rhode Island, as determined by the Board of Directors. The
only business which may be conducted at such a meeting, other than procedural
matters and matters relating to the conduct of the meeting, shall be the matter
or matters described in the notice of the meeting.
-2-
<PAGE>
SECTION 2.3. NOTICE. Written notice of each meeting of stockholders,
stating the date, time, place and, in the case of a special meeting, the purpose
thereof, shall be given as provided by law by the Secretary or an Assistant
Secretary not less than ten days nor more than 60 days before such meeting
(unless a different time is specified by law) to every stockholder entitled by
law to notice of such meeting.
SECTION 2.4. LIST OF STOCKHOLDERS. A complete list of the stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder, shall be prepared by the Secretary and shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified at the place where the meeting is to be held, for at least ten days
before the meeting and at the place of the meeting during the whole time of the
meeting.
SECTION 2.5. QUORUM. The holders of shares of stock entitled to cast a
majority of the votes on the matters at issue at a meeting of stockholders,
present in person or represented by proxy, shall constitute a quorum, except as
otherwise required by the Rhode Island Business Corporation Act. In the event
of a lack of a quorum, the chairman of the meeting or a majority in interest of
the stockholders present in person or represented by proxy may adjourn the
meeting from time to time without notice other than announcement at the meeting,
until a quorum shall be obtained. At any such adjourned meeting at which there
is a quorum, any business may be transacted that might have been transacted at
the meeting originally called.
SECTION 2.6. ORGANIZATION AND PROCEDURE.
(a) The Chairman of the Board, or, in the absence of the Chairman of the
Board, the Vice Chairman, if any, or, in the absence of the Vice Chairman, the
President, or any other person designated by the Board of Directors, shall
preside at meetings of stockholders. The Secretary of the Corporation shall act
as secretary, but in the absence of the Secretary, the presiding officer may
appoint a secretary.
(b) At each meeting of stockholders, the chairman of the meeting shall fix
and announce the date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at the meeting and shall
determine the order of business and all other matters of procedure. Except to
the extent inconsistent with any such rules and regulations as adopted by the
Board of Directors, the chairman of the meeting may establish rules, which need
not be in writing, to maintain order for the conduct of the meeting, including,
without limitation, restricting attendance to bona fide stockholders of record
and their proxies and other persons in attendance at the invitation of the
chairman and making rules governing speeches and debates. The chairman of the
meeting acts in his or her absolute discretion and his or her rulings are not
subject to appeal.
-3-
<PAGE>
SECTION 2.7. VOTING. Unless otherwise provided by the Rhode Island
Business Corporation Act, each stockholder shall be entitled to one vote, in
person or by written proxy, for each share held of record by such stockholder
who is entitled to vote generally in the election of directors. All elections
for the Board of Directors shall be decided by a plurality of the votes cast and
all other questions shall be decided by a majority of the votes cast, except as
otherwise required by the Rhode Island Business Corporation Act or as provided
for in the Certificate of Incorporation or these Bylaws. Abstentions shall not
be considered to be votes cast.
SECTION 2.8. INSPECTORS. The Board of Directors by resolution shall, in
advance of any meeting of stockholders, appoint one or more inspectors, which
inspector or inspectors may include individuals who serve the Corporation in
other capacities, including, without limitation, as officers, employees, agents
or representatives of the Corporation, to act at the meeting and make a written
report thereof. One or more persons may be designated by the Board of Directors
as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the chairman
of the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before discharging his or her duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his or her ability. The inspectors shall have the
duties prescribed by the Rhode Island Business Corporation Act.
SECTION III
BOARD OF DIRECTORS
SECTION 3.1. POWERS OF THE BOARD OF DIRECTORS. The business and affairs
of the Corporation shall be managed by or under the direction of its Board of
Directors. In furtherance, and not in limitation, of the powers conferred by
the laws of the State of Rhode Island, the Board of Directors is expressly
authorized to:
(a) adopt, amend, alter, change or repeal the Bylaws of the Corporation, by
the affirmative vote of a majority of the whole Board of Directors; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors; and provided, further, that no Bylaws hereafter adopted
-------- -------
shall invalidate any prior act of the directors that would have been valid if
such new Bylaws had not been adopted;
(b) determine the rights, powers, duties, rules and procedures that affect
the power of the Board of Directors to manage and direct the business and
affairs of the Corporation, including the power to designate and empower
committees of the Board of Directors, to elect, appoint and empower the officers
and other agents of the Corporation, and to determine the time and place of, and
the notice requirements for, Board meetings,
-4-
<PAGE>
as well as quorum and voting requirements for, and the manner of taking, Board
action; and
(c) exercise all such powers and do all such acts as may be exercised or
done by the Corporation, subject to the provisions of the laws of the State of
Rhode Island, the Certificate of Incorporation and these Bylaws.
SECTION 3.2. NUMBER AND QUALIFICATIONS. The number of directors
constituting the Board of Directors shall be as authorized from time to time
exclusively by a vote of a majority of the voting power of all of the shares of
capital stock of the Corporation then entitled to vote generally in the election
of directors.
SECTION 3.3. VACANCIES. Any vacancies in the Board of Directors for any
reason and any newly created directorships resulting by reason of any increase
in the number of directors may be filled by a majority of the directors then in
office, although less than a quorum, or by the sole remaining director.
SECTION 3.4. REMOVAL OF DIRECTORS. Any director, or the entire Board of
Directors, may be removed from office at any time, with or without cause, by the
affirmative vote of the holders of at least a majority of the voting power of
all of the shares of capital stock of the Corporation then entitled to vote
generally in the election of directors, voting together as a single class.
SECTION 3.5. RESIGNATION. A director may resign at any time by giving
written notice to the Chairman of the Board, to the President, or to the
Secretary. Unless otherwise stated in such notice of resignation, the
acceptance thereof shall not be necessary to make it effective; and such
resignation shall take effect at the time specified therein or, in the absence
of such specification, it shall take effect upon the receipt thereof.
SECTION IV
MEETINGS OF BOARD OF DIRECTORS
SECTION 4.1. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without further notice at such time as shall from time to time be
determined by the Board of Directors. A meeting of the Board of Directors for
the election of officers and the transaction of such other business as may come
before it may be held without notice immediately following the annual meeting of
stockholders.
SECTION 4.2. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the President, or at the request
in writing of one-third of the members of the Board of Directors then in office.
SECTION 4.3. NOTICE OF SPECIAL MEETINGS. Notice of the date, time and
place of each special meeting shall be mailed by regular mail to each director
at his or her
-5-
<PAGE>
designated address at least six days before the meeting; or sent by overnight
courier to each director at his or her designated address at least two days
before the meeting (with delivery scheduled to occur no later than the day
before the meeting); or given orally by telephone or other means, or by
telegraph or telecopy, or by any other means comparable to any of the foregoing,
to each director at his designated address at least 24 hours before the meeting;
provided, however, that if less than five days' notice is provided and one-third
- -------- -------
of the members of the Board of Directors then in office object in writing prior
to or at the commencement of the meeting, such meeting shall be postponed until
five days after such notice was given pursuant to this sentence (or such shorter
period to which a majority of those who objected in writing agree), provided
that notice of such postponed meeting shall be given in accordance with this
Section 4.3. The notice of the special meeting shall state the general purpose
of the meeting, but other routine business may be conducted at the special
meeting without such matter being stated in the notice.
SECTION 4.4. PLACE OF MEETINGS. The Board of Directors may hold their
meetings and have an office or offices inside or outside of the State of Rhode
Island.
SECTION 4.5. TELEPHONIC MEETING AND PARTICIPATION. Any or all of the
directors may participate in a meeting of the Board of Directors or any
committee thereof by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
such participation shall constitute presence in person at the meeting.
SECTION 4.6. ACTION BY DIRECTORS WITHOUT A MEETING. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board of Directors or of such committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.
SECTION 4.7. QUORUM AND ADJOURNMENT. A majority of the directors then
holding office shall constitute a quorum. The vote of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. Whether or not a quorum is present to conduct a
meeting, any meeting of the Board of Directors (including an adjourned meeting)
may be adjourned by a majority of the directors present, to reconvene at a
specific time and place. It shall not be necessary to give to the directors
present at the adjourned meeting notice of the reconvened meeting or of the
business to be transacted, other than by announcement at the meeting that was
adjourned; provided, however, notice of such reconvened meeting, stating the
-------- -------
date, time, and place of the reconvened meeting, shall be given to the directors
not present at the adjourned meeting in accordance with the requirements of
Section 4.3 hereof.
SECTION 4.8. ORGANIZATION. The Chairman of the Board, or in the absence
of the Chairman of the Board, a member of the Board of Directors selected by the
members present, shall preside at meetings of the Board of Directors. The
Secretary of the
-6-
<PAGE>
Corporation shall act as secretary, but in the absence of the Secretary, the
presiding officer may appoint a secretary.
SECTION 4.9. COMPENSATION OF DIRECTORS. Directors shall receive such
compensation for their services as the Board of Directors may determine. Any
director may serve the Corporation in any other capacity and receive
compensation therefor.
SECTION 4.10. PRESUMPTION OF ASSENT. A director of the Corporation who
is present at a meeting of the Board of Directors when a vote on any matter is
taken is deemed to have assented to the action taken unless he or she votes
against or abstains from the action taken, or unless at the beginning of the
meeting or promptly upon arrival the director objects to the holding of the
meeting or transacting specified business at the meeting. Any such dissenting
votes, abstentions or objections shall be entered in the minutes of the meeting.
SECTION V
COMMITTEES
SECTION 5.1. COMMITTEES. The Board of Directors may, by resolutions
passed by a majority of the members of the Board of Directors, designate members
of the Board of Directors to constitute committees which shall in each case
consist of such number of directors, and shall have and may execute such powers
as may be determined and specified in the respective resolutions appointing
them. Any such committee may fix its rules of procedure, determine its manner
of acting and the time and place, whether within or without the State of Rhode
Island, of its meetings and specify what notice thereof, if any, shall be given,
unless the Board of Directors shall otherwise by resolution provide. Unless
otherwise provided by the Board of Directors or such committee, the quorum,
voting and other procedures shall be the same as those applicable to actions
taken by the Board of Directors. A majority of the members of the Board of
Directors then in office shall have the power to change the membership of any
such committee at any time, to fill vacancies therein and to discharge any such
committee or to remove any member thereof, either with or without cause, at any
time.
SECTION VI
OFFICERS
SECTION 6.1. DESIGNATION. The officers of the Corporation shall be a
Chairman of the Board, a President, a Treasurer and a Secretary, and the Board
of Directors may elect or appoint, or provide for the appointment of, one or
more Assistant Secretaries and Assistant Treasurers. The Board of Directors may
elect or appoint, or provide for the appointment of, such other officers,
including a Vice Chairman and one or more Vice Presidents in such gradation as
the Board of Directors may determine, or agents as may
-7-
<PAGE>
from time to time appear necessary or advisable in the conduct of the business
and affairs of the Corporation. Any number of offices may be held by the same
person.
SECTION 6.2. ELECTION TERM. At its first meeting after each annual
meeting of stockholders, the Board of Directors shall elect the officers or
provide for the appointment thereof. Subject to Sections 6.3 and 6.4 hereof,
the term of each officer elected by the Board of Directors shall be until the
first meeting of the Board of Directors following the next annual meeting of
stockholders and until such officer's successor is chosen and qualified.
SECTION 6.3. RESIGNATION. Any officer may resign at any time by giving
written notice to the President or the Secretary. Unless otherwise stated in
such notice of resignation, the acceptance thereof shall not be necessary to
make it effective; and such resignation shall take effect at the time specified
therein or, in the absence of such specification, it shall take effect upon the
receipt thereof.
SECTION 6.4. REMOVAL. Any officer may be removed at any time with or
without cause by the affirmative vote of a majority of the members of the Board
of Directors then in office. Any officer appointed by another officer may be
removed with or without cause by such officer or the Chief Executive Officer.
SECTION 6.5. VACANCIES. A vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors or, in the case of
offices held by officers who may be appointed by other officers, by any officer
authorized to appoint such officer.
SECTION 6.6. CHIEF EXECUTIVE OFFICER. The President shall initially be
the Chief Executive Officer of the Corporation and thereafter, at such time as
the Board of Directors shall determine, the Chief Executive Officer shall be
such officer as the Board of Directors shall designate from time to time. The
Chief Executive Officer shall be responsible for carrying out the policies
adopted by the Board of Directors.
SECTION 6.7. CHAIRMAN OF THE BOARD. The Chairman of the Board shall have
such powers and perform such duties as may be provided for herein and as may be
incident to the office and as may be assigned by the Board of Directors.
SECTION 6.8. PRESIDENT. The President shall have such powers and perform
such duties as may be provided for herein and as may be assigned by the Chairman
of the Board or the Board of Directors.
SECTION 6.9. VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board
shall have such powers and perform such duties as may be provided for herein and
as may be assigned by the Chairman of the Board, the President or the Board of
Directors.
-8-
<PAGE>
SECTION 6.10. VICE PRESIDENT. Each Vice President shall have such powers
and perform such duties as may be provided for herein and as may be assigned by
the Chairman of the Board, the President or the Board of Directors.
SECTION 611. TREASURER. The Treasurer shall have charge of all funds of
the Corporation and shall perform all acts incident to the position of
Treasurer, subject to the control of the Board of Directors.
SECTION 6.12. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
have the custody and operation of the accounting books and records of the
Corporation and shall perform all acts incident to the position of Chief
Financial Officer, subject to the control of the Board of Directors.
SECTION 6.13. SECRETARY. The Secretary shall keep the minutes, and give
notices, of all meetings of stockholders and directors and of such committees as
directed by the Board of Directors. The Secretary shall have charge of such
books and papers as the Board of Directors may require. The Secretary or any
Assistant Secretary is authorized to certify copies of extracts from minutes and
of documents in the Secretary's charge and anyone may rely on such certified
copies to the same effect as if such copies were originals and may rely upon any
statement of fact concerning the Corporation certified by the Secretary or any
Assistant Secretary. The Secretary shall perform all acts incident to the
office of Secretary, subject to the control of the Board of Directors.
SECTION 6.14. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant
Secretaries and Assistant Treasurers shall have such powers and perform such
duties as usually pertain to their respective offices and as may be assigned by
the Board of Directors or an officer designated by the Board of Directors.
SECTION 6.15. COMPENSATION OF OFFICERS. The officers of the Corporation
shall receive such compensation for their services as the Board of Directors may
determine. The Board of Directors may delegate its authority to determine
compensation to designated officers of the Corporation.
SECTION 6.16. EXECUTION OF INSTRUMENTS. Checks, notes, drafts, other
commercial instruments, assignments, guarantees of signatures and contracts
(except as otherwise provided herein or by law) shall be executed by the
Chairman of the Board, the President, any Vice President or such officers or
employees or agents as the Board of Directors or any of such designated officers
may direct.
SECTION 6.17. MECHANICAL ENDORSEMENTS. The Chairman of the Board, the
President, any Vice President or the Secretary may authorize any endorsement on
behalf of the Corporation to be made by such mechanical means or stamps as any
of such officers may deem appropriate.
-9-
<PAGE>
SECTION VII
INDEMNIFICATION
SECTION 7.1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact:
(a) that he or she is or was a director or officer of the Corporation, or
(b) that he or she, being at the time a director or officer of the
Corporation, is or was serving at the request of the Corporation as a director,
trustee, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (collectively, "another enterprise" or "other
enterprise"), whether either in case (a) or in case (b) the basis of such
proceeding is alleged action or inaction (x) in an official capacity as a
director or officer of the Corporation, or as a director, trustee, officer,
employee or agent of such other enterprise, or (y) in any other capacity related
to the Corporation or such other enterprise while so serving as a director,
trustee, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent not prohibited by Section 7-1.1-4.1 of the
Rhode Island Business Corporation Act (or any successor provision or provisions)
as the same exists or may hereafter be amended (but, in the case of any such
amendment, with respect to alleged action or inaction occurring prior to such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than permitted prior thereto), against
all expense, liability and loss (including without limitation attorneys' fees
and expenses, judgments, fines, ERISA excise taxes or penalties and amounts paid
in settlement) reasonably incurred or suffered by such person in connection
therewith. The persons indemnified by this Section VII are hereinafter referred
to as "indemnitees." Such indemnification as to such alleged action or inaction
shall continue as to an indemnitee who has after such alleged action or inaction
ceased to be a director or officer of the Corporation, or director, officer,
employee or agent of such other enterprise, and shall inure to the benefit of
the indemnitee's heirs, executors and administrators. Notwithstanding the
foregoing, except as may be provided in the Bylaws or by the Board of Directors,
the Corporation shall not indemnify any such indemnitee in connection with a
proceeding (or portion thereof) initiated by such indemnitee (but this
prohibition shall not apply to a counterclaim, cross-claim or third-party claim
brought by the indemnitee in any proceeding) unless such proceeding (or portion
thereof) was authorized by the Board of Directors. The right to indemnification
conferred in this Section VII: (i) shall be a contract right; (ii) shall not be
affected adversely to any indemnitee by any amendment of the Certificate of
Incorporation with respect to any alleged action or inaction occurring prior to
such amendment; and (iii) shall, subject to any requirements imposed by law and
these Bylaws, include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition.
-10-
<PAGE>
SECTION 7.2. RELATIONSHIP TO OTHER RIGHTS AND PROVISIONS CONCERNING
INDEMNIFICATION. The rights to indemnification and to the advancement of
expenses conferred in this Section VII shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, the
Certificate of Incorporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
SECTION 7.3. AGENTS AND EMPLOYEES. The Corporation may, to the extent
authorized from time to time by the Board of Directors, grant rights to
indemnification, and to the advancement of expenses, to any employee or agent of
the Corporation (or any person serving at the Corporation's request as a
director, trustee, officer, employee or agent of another enterprise) or to any
person who is or was a director, officer, employee or agent of any of the
Corporation's affiliates, predecessor or subsidiary corporations or of a
constituent corporation absorbed by the Corporation in a consolidation or merger
or who is or was serving at the request of such affiliate, predecessor or
subsidiary corporation or of such constituent corporation as a director,
officer, employee or agent of another enterprise, in each case as determined by
the Board of Directors to the fullest extent of the provisions of this Section
VII in cases of the indemnification and advancement of expenses of directors and
officers of the Corporation, or to any lesser extent (or greater extent, if
permitted by law) determined by the Board of Directors.
SECTION 7.4. UNDERTAKINGS FOR ADVANCES OF EXPENSES. If and to the extent
the Rhode Island Business Corporation Act requires, an advancement by the
Corporation of expenses incurred by an indemnitee pursuant to clause (iii) of
the last sentence of Section 7.1 (hereinafter an "advancement of expenses")
shall be made only upon delivery to the Corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal (hereinafter a "final
adjudication") that such indemnitee is not entitled to be indemnified for such
expenses under this Section VII or otherwise.
SECTION 7.5. CLAIMS FOR INDEMNIFICATION. If a claim for indemnification
under Section 7.1 is not paid in full by the Corporation within 60 days after it
has been received in writing by the Corporation, except in the case of a claim
for an advancement of expenses, in which case the applicable period shall be 20
days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole
or in part in any such suit, or in a suit brought by the Corporation to recover
an advancement of expenses pursuant to the terms of an undertaking, the
indemnitee shall be entitled to be paid also the expense of prosecuting or
defending such suit. In any suit brought by the indemnitee to enforce a right
to indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
in any suit by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking the Corporation shall be entitled to recover such
expenses only upon a final adjudication that, the indemnitee has not met the
applicable standard of conduct set forth in Section 7-1.1-
-11-
<PAGE>
4.1 of the Rhode Island Business Corporation Act (or any successor provision or
provisions). Neither the failure of the Corporation (including the Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in Section 7-1.1-4.1 of the Rhode
Island Business Corporation Act (or any successor provision or provisions), nor
an actual determination by the Corporation (including the Board of Directors,
independent legal counsel, or its stockholders) that the indemnitee has not met
such applicable standard of conduct, shall create a presumption that the
indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to have or
retain such advancement of expenses, under this Section VII or otherwise, shall
be on the Corporation.
SECTION 7.6. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, trustee, officer, employee or agent
of the Corporation or another enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the Rhode Island Business
Corporation Act.
SECTION 7.7. SEVERABILITY. In the event that any of the provisions of
this Section VII (including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions are severable and shall remain
enforceable to the fullest extent permitted by law.
SECTION VIII
MISCELLANEOUS
SECTION 8.1. SEAL. The Corporation shall have a suitable seal, containing
the name of the Corporation. The Secretary shall be in charge of the seal and
may authorize one or more duplicate seals to be kept and used by any other
officer or person.
SECTION 8.2. WAIVER OF NOTICE. Whenever any notice is required to be
given, a waiver thereof in writing, signed by the person or persons entitled to
the notice, whether before or after the time stated therein shall be deemed
equivalent thereto. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
-12-
<PAGE>
SECTION 8.3. VOTING OF STOCK OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the Chairman of the Board, the President,
any Vice President or such officers or employees or agents as the Board of
Directors or any of such designated officers may direct. Any such officer may,
in the name of and on behalf of the Corporation, take all such action as any
such officer may deem advisable to vote in person or by proxy at any meeting of
security holders of any corporation in which the Corporation may own securities
and at any such meeting shall possess and may exercise any and all rights and
powers incident to the ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and possessed if present. The
Board of Directors may from time to time confer like powers upon any other
person or persons.
SECTION IX
AMENDMENT OF BYLAWS
The Board of Directors, by the affirmative vote of a majority of the whole
Board of Directors, shall have power to amend, alter, change, adopt or repeal
the Bylaws of the Corporation at any regular or special meeting; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors. The stockholders entitled to vote also shall have the
power to amend, alter, change, adopt or repeal the Bylaws of the Corporation at
any annual or special meeting subject to the requirements of the Certificate of
Incorporation.
-13-
<PAGE>
EXHIBIT 3.13
ARTICLES OF INCORPORATION
OF
PSS SERVICE, INC.
The undersigned, being an individual, does hereby act as incorporator in
adopting the following Articles of Incorporation for the purpose of organizing a
corporation for profit, pursuant to the provisions of the Florida Business
Corporation Act.
ARTICLE I
NAME
----
The corporate name for the corporation (hereinafter called the
"Corporation") is PSS Service, Inc.
ARTICLE II
PRINCIPAL OFFICE
----------------
The street address and the mailing address of the principal office of
the Corporation is 4345 Southpoint Boulevard, Jacksonville, Florida 32216.
ARTICLE III
BUSINESS AND ACTIVITIES
-----------------------
The purposes for which the Corporation is organized shall include the
authority of the Corporation to engage in any lawful business or activity for
which corporations may be organized under the laws of the United States and of
the State of Florida.
ARTICLE IV
CAPITAL STOCK
-------------
The total number of shares of stock which the Corporation shall have the
authority to issue is 1,000 shares of common stock, $.01 par value per share.
ARTICLE V
TERM OF EXISTENCE
-----------------
The effective date upon which the Corporation shall come into existence
shall be the date these Articles of Incorporation are filed with the office of
the Secretary of State and it shall exist perpetually thereafter unless
dissolved according to law.
<PAGE>
ARTICLE VI
INITIAL REGISTERED OFFICE AND AGENT
-----------------------------------
The name of the initial registered agent of the Corporation is Fred
Elefant, and the street address of the initial registered office of the
Corporation in the State of Florida is DuPont Center, 1650 Prudential Drive,
Suite 105, Jacksonville, Florida 32207.
The written acceptance of the said initial registered agent, as required
by the Florida Business Corporation Act, is set forth following the signature of
the incorporator and is made a part of these Articles of Incorporation.
ARTICLE VII
DIRECTORS
---------
The initial number of directors of the Corporation shall be one (1).
The name and street address of the initial member of the Board of
Directors, to hold office until the first annual meeting of the shareholders of
the Corporation or until his successor is elected or appointed and has
qualified, is as follows:
David A. Smith
4345 Southpoint Boulevard
Jacksonville, Florida 32216
ARTICLE VIII
INCORPORATOR
------------
The name and address of the incorporator signing these Articles of
Incorporation are: Kimberly A. Knight, Alston & Bird LLP, One Atlantic Center,
1201 West Peachtree Street, Atlanta, Georgia 30309.
The written acceptance of the said initial registered agent, as required
by the Florida Business Corporation Act, is set forth following the signature of
the incorporator and is made a part of these Articles of Incorporation.
THE UNDERSIGNED, being the incorporator named above, for the purpose
of forming a corporation pursuant to the Florida Business Corporation Act, does
make these Articles, hereby declaring and certifying that this is my act and
deed and the facts herein stated are true, and accordingly have hereunto set my
hand as of this 20th day of March, 1997.
/s/ Kimberly A. Knight
------------------------------
Kimberly A. Knight
-2-
<PAGE>
ACCEPTANCE OF INITIAL REGISTERED AGENT
Having been named as registered agent and to receive service of
process for the above stated corporation at the place designated in these
provisions, I hereby accept the appointment as registered agent and agree to act
in this capacity. I further agree to comply with the provisions of all statutes
relative to the proper and complete performance of my duties, and I am familiar
with and accept the obligations of my position as registered agent.
Dated: 3-20, 1997
/s/ Fred Elefant
----------------------------
Fred Elefant
<PAGE>
EXHIBIT 3.14
PSS SERVICE, INC.
AMENDED AND RESTATED
BYLAWS
SECTION I
CAPITAL STOCK
SECTION 1.1. CERTIFICATES. Every holder of stock in the Corporation shall
be entitled to have a certificate signed in the name of the Corporation by the
Chairman of the Board of Directors or the President or a Vice President, and by
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation certifying the number of shares in the Corporation
owned by such holder. If such certificate is countersigned (a) by a transfer
agent other than the Corporation or its employee, or, (b) by a registrar other
than the Corporation or its employee, any other signature on the certificate may
be a facsimile. In case any officer, transfer agent, or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent, or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if such
person were such officer, transfer agent, or registrar at the date of issue.
SECTION 1.2. RECORD OWNERSHIP. A record of the name and address of the
holder of each certificate, the number of shares represented thereby and the
date of issue thereof shall be made on the Corporation's books. The Corporation
shall be entitled to treat the holder of record of any share of stock as the
holder in fact thereof, and accordingly shall not be bound to recognize any
equitable or other claim to or interest in any share on the part of any other
person, whether or not it shall have express or other notice thereof, except as
required by the laws of the State of Florida.
SECTION 1.3. TRANSFER OF RECORD OWNERSHIP. Transfers of stock shall be
made on the books of the Corporation only by direction of the person named in
the certificate or such person's attorney, lawfully constituted in writing, and
only upon the surrender of the certificate therefor and a written assignment of
the shares evidenced thereby, which certificate shall be canceled before the new
certificate is issued.
SECTION 1.4. LOST CERTIFICATES. Any person claiming a stock certificate
in lieu of one lost, stolen or destroyed shall give the Corporation an affidavit
as to such person's ownership of the certificate and of the facts which go to
prove its loss, theft or destruction. Such person shall also, if required by
policies adopted by the Board of Directors, give the Corporation a bond, in such
form as may be approved by the Corporation, sufficient to indemnify the
Corporation against any claim that may be made
<PAGE>
against it on account of the alleged loss of the certificate or the issuance of
a new certificate.
SECTION 1.5. TRANSFER AGENTS; REGISTRARS; RULES RESPECTING CERTIFICATES.
The Board of Directors may appoint, or authorize any officer or officers to
appoint, one or more transfer agents and one or more registrars. The Board of
Directors may make such further rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates of the
Corporation.
SECTION 1.6. RECORD DATE. The Board of Directors may fix in advance a
future date, not exceeding 60 days (nor, in the case of a stockholders' meeting,
less than ten days) preceding the date of any meeting of stockholders, payment
of dividend or other distribution, allotment of rights, or change, conversion or
exchange of capital stock or for the purpose of any other lawful action, as the
record date for determination of the stockholders entitled to notice of and to
vote at any such meeting and any adjournment thereof, or to receive any such
dividend or other distribution or allotment of rights, or to exercise the rights
in respect of any such change, conversion or exchange of capital stock, or to
participate in any such other lawful action, and in such case such stockholders
and only such stockholders as shall be stockholders of record on the date so
fixed shall be entitled to such notice of and to vote at such meeting and any
adjournment thereof, or to receive such dividend or other distribution or
allotment of rights, or to exercise such rights, or to participate in any such
other lawful action, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any such record date fixed as
aforesaid.
SECTION II
MEETINGS OF STOCKHOLDERS
SECTION 2.1. ANNUAL. The annual meeting of stockholders for the election
of directors and the transaction of such other proper business shall be held
within or without the State of Florida on such date and at such time as shall be
designated by the Board of Directors.
SECTION 2.2. SPECIAL. Special meetings of stockholders for any purpose or
purposes may be called by the Board of Directors, pursuant to a resolution
adopted by a majority of the members of the Board of Directors then in office,
or by the holders of not less than fifty percent (50%) of all shares entitled to
vote at the meeting. Special meetings may be held at any place, within or
without the State of Florida, as determined by the Board of Directors. The only
business which may be conducted at such a meeting, other than procedural matters
and matters relating to the conduct of the meeting, shall be the matter or
matters described in the notice of the meeting.
-2-
<PAGE>
SECTION 2.3. NOTICE. Written notice of each meeting of stockholders,
stating the date, time, place and, in the case of a special meeting, the purpose
thereof, shall be given as provided by law by the Secretary or an Assistant
Secretary not less than ten days nor more than 60 days before such meeting
(unless a different time is specified by law) to every stockholder entitled by
law to notice of such meeting.
SECTION 2.4. LIST OF STOCKHOLDERS. A complete list of the stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder, shall be prepared by the Secretary and shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified at the place where the meeting is to be held, for at least ten days
before the meeting and at the place of the meeting during the whole time of the
meeting.
SECTION 2.5. QUORUM. The holders of shares of stock entitled to cast a
majority of the votes on the matters at issue at a meeting of stockholders,
present in person or represented by proxy, shall constitute a quorum, except as
otherwise required by the Florida Business Corporation Act. In the event of a
lack of a quorum, the chairman of the meeting or a majority in interest of the
stockholders present in person or represented by proxy may adjourn the meeting
from time to time without notice other than announcement at the meeting, until a
quorum shall be obtained. At any such adjourned meeting at which there is a
quorum, any business may be transacted that might have been transacted at the
meeting originally called.
SECTION 2.6. ORGANIZATION AND PROCEDURE.
(a) The Chairman of the Board, or, in the absence of the Chairman of the
Board, the Vice Chairman, if any, or, in the absence of the Vice Chairman, the
President, or any other person designated by the Board of Directors, shall
preside at meetings of stockholders. The Secretary of the Corporation shall act
as secretary, but in the absence of the Secretary, the presiding officer may
appoint a secretary.
(b) At each meeting of stockholders, the chairman of the meeting shall fix
and announce the date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at the meeting and shall
determine the order of business and all other matters of procedure. Except to
the extent inconsistent with any such rules and regulations as adopted by the
Board of Directors, the chairman of the meeting may establish rules, which need
not be in writing, to maintain order for the conduct of the meeting, including,
without limitation, restricting attendance to bona fide stockholders of record
and their proxies and other persons in attendance at the invitation of the
chairman and making rules governing speeches and debates. The chairman of the
meeting acts in his or her absolute discretion and his or her rulings are not
subject to appeal.
-3-
<PAGE>
SECTION 2.7. VOTING. Unless otherwise provided by the Florida Business
Corporation Act, each stockholder shall be entitled to one vote, in person or by
written proxy, for each share held of record by such stockholder who is entitled
to vote generally in the election of directors. All elections for the Board of
Directors shall be decided by a plurality of the votes cast and all other
questions shall be decided by a majority of the votes cast, except as otherwise
required by the Florida Business Corporation Act or as provided for in the
Certificate of Incorporation or these Bylaws. Abstentions shall not be
considered to be votes cast.
SECTION 2.8. INSPECTORS. The Board of Directors by resolution shall, in
advance of any meeting of stockholders, appoint one or more inspectors, which
inspector or inspectors may include individuals who serve the Corporation in
other capacities, including, without limitation, as officers, employees, agents
or representatives of the Corporation, to act at the meeting and make a written
report thereof. One or more persons may be designated by the Board of Directors
as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the chairman
of the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before discharging his or her duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his or her ability. The inspectors shall have the
duties prescribed by the Florida Business Corporation Act.
SECTION III
BOARD OF DIRECTORS
SECTION 3.1. POWERS OF THE BOARD OF DIRECTORS. The business and affairs
of the Corporation shall be managed by or under the direction of its Board of
Directors. In furtherance, and not in limitation, of the powers conferred by
the laws of the State of Florida, the Board of Directors is expressly authorized
to:
(a) adopt, amend, alter, change or repeal the Bylaws of the Corporation,
by the affirmative vote of a majority of the whole Board of Directors; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors; and provided, further, that no Bylaws hereafter adopted
-------- -------
shall invalidate any prior act of the directors that would have been valid if
such new Bylaws had not been adopted;
(b) determine the rights, powers, duties, rules and procedures that affect
the power of the Board of Directors to manage and direct the business and
affairs of the Corporation, including the power to designate and empower
committees of the Board of Directors, to elect, appoint and empower the officers
and other agents of the Corporation, and to determine the time and place of, and
the notice requirements for, Board meetings,
-4-
<PAGE>
as well as quorum and voting requirements for, and the manner of taking, Board
action; and
(c) exercise all such powers and do all such acts as may be exercised or
done by the Corporation, subject to the provisions of the laws of the State of
Florida, the Certificate of Incorporation and these Bylaws.
SECTION 3.2. NUMBER AND QUALIFICATIONS. The number of directors
constituting the Board of Directors shall be as authorized from time to time
exclusively by a vote of a majority of the voting power of all of the shares of
capital stock of the Corporation then entitled to vote generally in the election
of directors.
SECTION 3.3. VACANCIES. Any vacancies in the Board of Directors for any
reason and any newly created directorships resulting by reason of any increase
in the number of directors may be filled by a majority of the directors then in
office, although less than a quorum, or by the sole remaining director.
SECTION 3.4. REMOVAL OF DIRECTORS. Any director, or the entire Board of
Directors, may be removed from office at any time, with or without cause, by the
affirmative vote of the holders of at least a majority of the voting power of
all of the shares of capital stock of the Corporation then entitled to vote
generally in the election of directors, voting together as a single class.
SECTION 3.5. RESIGNATION. A director may resign at any time by giving
written notice to the Chairman of the Board, to the President, or to the
Secretary. Unless otherwise stated in such notice of resignation, the
acceptance thereof shall not be necessary to make it effective; and such
resignation shall take effect at the time specified therein or, in the absence
of such specification, it shall take effect upon the receipt thereof.
SECTION IV
MEETINGS OF BOARD OF DIRECTORS
SECTION 4.1. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without further notice at such time as shall from time to time be
determined by the Board of Directors. A meeting of the Board of Directors for
the election of officers and the transaction of such other business as may come
before it may be held without notice immediately following the annual meeting of
stockholders.
SECTION 4.2. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the President, or at the request
in writing of one-third of the members of the Board of Directors then in office.
SECTION 4.3. NOTICE OF SPECIAL MEETINGS. Notice of the date, time and
place of each special meeting shall be mailed by regular mail to each director
at his or her
-5-
<PAGE>
designated address at least six days before the meeting; or sent by overnight
courier to each director at his or her designated address at least two days
before the meeting (with delivery scheduled to occur no later than the day
before the meeting); or given orally by telephone or other means, or by
telegraph or telecopy, or by any other means comparable to any of the foregoing,
to each director at his designated address at least 24 hours before the meeting;
provided, however, that if less than five days' notice is provided and one-third
- -------- -------
of the members of the Board of Directors then in office object in writing prior
to or at the commencement of the meeting, such meeting shall be postponed until
five days after such notice was given pursuant to this sentence (or such shorter
period to which a majority of those who objected in writing agree), provided
that notice of such postponed meeting shall be given in accordance with this
Section 4.3. The notice of the special meeting shall state the general purpose
of the meeting, but other routine business may be conducted at the special
meeting without such matter being stated in the notice.
SECTION 4.4. PLACE OF MEETINGS. The Board of Directors may hold their
meetings and have an office or offices inside or outside of the State of
Florida.
SECTION 4.5. TELEPHONIC MEETING AND PARTICIPATION. Any or all of the
directors may participate in a meeting of the Board of Directors or any
committee thereof by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
such participation shall constitute presence in person at the meeting.
SECTION 4.6. ACTION BY DIRECTORS WITHOUT A MEETING. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board of Directors or of such committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.
SECTION 4.7. QUORUM AND ADJOURNMENT. A majority of the directors then
holding office shall constitute a quorum. The vote of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. Whether or not a quorum is present to conduct a meeting,
any meeting of the Board of Directors (including an adjourned meeting) may be
adjourned by a majority of the directors present, to reconvene at a specific
time and place. It shall not be necessary to give to the directors present at
the adjourned meeting notice of the reconvened meeting or of the business to be
transacted, other than by announcement at the meeting that was adjourned;
provided, however, notice of such reconvened meeting, stating the date, time,
- -------- -------
and place of the reconvened meeting, shall be given to the directors not present
at the adjourned meeting in accordance with the requirements of Section 4.3
hereof.
SECTION 4.8. ORGANIZATION. The Chairman of the Board, or in the absence
of the Chairman of the Board, a member of the Board of Directors selected by the
members present, shall preside at meetings of the Board of Directors. The
Secretary of the
-6-
<PAGE>
Corporation shall act as secretary, but in the absence of the Secretary, the
presiding officer may appoint a secretary.
SECTION 4.9. COMPENSATION OF DIRECTORS. Directors shall receive such
compensation for their services as the Board of Directors may determine. Any
director may serve the Corporation in any other capacity and receive
compensation therefor.
SECTION 4.10. PRESUMPTION OF ASSENT. A director of the Corporation who
is present at a meeting of the Board of Directors when a vote on any matter is
taken is deemed to have assented to the action taken unless he or she votes
against or abstains from the action taken, or unless at the beginning of the
meeting or promptly upon arrival the director objects to the holding of the
meeting or transacting specified business at the meeting. Any such dissenting
votes, abstentions or objections shall be entered in the minutes of the meeting.
SECTION V
COMMITTEES
SECTION 5.1. COMMITTEES. The Board of Directors may, by resolutions
passed by a majority of the members of the Board of Directors, designate members
of the Board of Directors to constitute committees which shall in each case
consist of such number of directors, and shall have and may execute such powers
as may be determined and specified in the respective resolutions appointing
them. Any such committee may fix its rules of procedure, determine its manner
of acting and the time and place, whether within or without the State of
Florida, of its meetings and specify what notice thereof, if any, shall be
given, unless the Board of Directors shall otherwise by resolution provide.
Unless otherwise provided by the Board of Directors or such committee, the
quorum, voting and other procedures shall be the same as those applicable to
actions taken by the Board of Directors. A majority of the members of the Board
of Directors then in office shall have the power to change the membership of any
such committee at any time, to fill vacancies therein and to discharge any such
committee or to remove any member thereof, either with or without cause, at any
time.
SECTION VI
OFFICERS
SECTION 6.1. DESIGNATION. The officers of the Corporation shall be a
Chairman of the Board, a President, a Treasurer and a Secretary, and the Board
of Directors may elect or appoint, or provide for the appointment of, one or
more Assistant Secretaries and Assistant Treasurers. The Board of Directors may
elect or appoint, or provide for the appointment of, such other officers,
including a Vice Chairman and one or more Vice Presidents in such gradation as
the Board of Directors may determine, or agents as may
-7-
<PAGE>
may from time to time appear necessary or advisable in the conduct of the
business and affairs of the Corporation. Any number of offices may be held by
the same person.
SECTION 6.2. ELECTION TERM. At its first meeting after each annual
meeting of stockholders, the Board of Directors shall elect the officers or
provide for the appointment thereof. Subject to Sections 6.3 and 6.4 hereof,
the term of each officer elected by the Board of Directors shall be until the
first meeting of the Board of Directors following the next annual meeting of
stockholders and until such officer's successor is chosen and qualified.
SECTION 6.3. RESIGNATION. Any officer may resign at any time by giving
written notice to the President or the Secretary. Unless otherwise stated in
such notice of resignation, the acceptance thereof shall not be necessary to
make it effective; and such resignation shall take effect at the time specified
therein or, in the absence of such specification, it shall take effect upon the
receipt thereof.
SECTION 6.4. REMOVAL. Any officer may be removed at any time with or
without cause by the affirmative vote of a majority of the members of the Board
of Directors then in office. Any officer appointed by another officer may be
removed with or without cause by such officer or the Chief Executive Officer.
SECTION 6.5. VACANCIES. A vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors or, in the case of
offices held by officers who may be appointed by other officers, by any officer
authorized to appoint such officer.
SECTION 6.6. CHIEF EXECUTIVE OFFICER. The President shall initially be
the Chief Executive Officer of the Corporation and thereafter, at such time as
the Board of Directors shall determine, the Chief Executive Officer shall be
such officer as the Board of Directors shall designate from time to time. The
Chief Executive Officer shall be responsible for carrying out the policies
adopted by the Board of Directors.
SECTION 6.7. CHAIRMAN OF THE BOARD. The Chairman of the Board shall have
such powers and perform such duties as may be provided for herein and as may be
incident to the office and as may be assigned by the Board of Directors.
SECTION 6.8. PRESIDENT. The President shall have such powers and perform
such duties as may be provided for herein and as may be assigned by the Chairman
of the Board or the Board of Directors.
SECTION 6.9. VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board
shall have such powers and perform such duties as may be provided for herein and
as may be assigned by the Chairman of the Board, the President or the Board of
Directors.
-8-
<PAGE>
SECTION 6.10. VICE PRESIDENT. Each Vice President shall have such powers
and perform such duties as may be provided for herein and as may be assigned by
the Chairman of the Board, the President or the Board of Directors.
SECTION 611. TREASURER. The Treasurer shall have charge of all funds of
the Corporation and shall perform all acts incident to the position of
Treasurer, subject to the control of the Board of Directors.
SECTION 6.12. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
have the custody and operation of the accounting books and records of the
Corporation and shall perform all acts incident to the position of Chief
Financial Officer, subject to the control of the Board of Directors.
SECTION 6.13. SECRETARY. The Secretary shall keep the minutes, and give
notices, of all meetings of stockholders and directors and of such committees as
directed by the Board of Directors. The Secretary shall have charge of such
books and papers as the Board of Directors may require. The Secretary or any
Assistant Secretary is authorized to certify copies of extracts from minutes and
of documents in the Secretary's charge and anyone may rely on such certified
copies to the same effect as if such copies were originals and may rely upon any
statement of fact concerning the Corporation certified by the Secretary or any
Assistant Secretary. The Secretary shall perform all acts incident to the
office of Secretary, subject to the control of the Board of Directors.
SECTION 6.14. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant
Secretaries and Assistant Treasurers shall have such powers and perform such
duties as usually pertain to their respective offices and as may be assigned by
the Board of Directors or an officer designated by the Board of Directors.
SECTION 6.15. COMPENSATION OF OFFICERS. The officers of the Corporation
shall receive such compensation for their services as the Board of Directors may
determine. The Board of Directors may delegate its authority to determine
compensation to designated officers of the Corporation.
SECTION 6.16. EXECUTION OF INSTRUMENTS. Checks, notes, drafts, other
commercial instruments, assignments, guarantees of signatures and contracts
(except as otherwise provided herein or by law) shall be executed by the
Chairman of the Board, the President, any Vice President or such officers or
employees or agents as the Board of Directors or any of such designated officers
may direct.
SECTION 6.17. MECHANICAL ENDORSEMENTS. The Chairman of the Board, the
President, any Vice President or the Secretary may authorize any endorsement on
behalf of the Corporation to be made by such mechanical means or stamps as any
of such officers may deem appropriate.
-9-
<PAGE>
SECTION VII
INDEMNIFICATION
SECTION 7.1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact:
(a) that he or she is or was a director or officer of the Corporation, or
(b) that he or she, being at the time a director or officer of the
Corporation, is or was serving at the request of the Corporation as a director,
trustee, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (collectively, "another enterprise" or "other
enterprise"), whether either in case (a) or in case (b) the basis of such
proceeding is alleged action or inaction (x) in an official capacity as a
director or officer of the Corporation, or as a director, trustee, officer,
employee or agent of such other enterprise, or (y) in any other capacity related
to the Corporation or such other enterprise while so serving as a director,
trustee, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent not prohibited by Section 607.0850 of the
Florida Business Corporation Act (or any successor provision or provisions) as
the same exists or may hereafter be amended (but, in the case of any such
amendment, with respect to alleged action or inaction occurring prior to such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than permitted prior thereto), against
all expense, liability and loss (including without limitation attorneys' fees
and expenses, judgments, fines, ERISA excise taxes or penalties and amounts paid
in settlement) reasonably incurred or suffered by such person in connection
therewith. The persons indemnified by this Section VII are hereinafter referred
to as "indemnitees." Such indemnification as to such alleged action or inaction
shall continue as to an indemnitee who has after such alleged action or inaction
ceased to be a director or officer of the Corporation, or director, officer,
employee or agent of such other enterprise, and shall inure to the benefit of
the indemnitee's heirs, executors and administrators. Notwithstanding the
foregoing, except as may be provided in the Bylaws or by the Board of Directors,
the Corporation shall not indemnify any such indemnitee in connection with a
proceeding (or portion thereof) initiated by such indemnitee (but this
prohibition shall not apply to a counterclaim, cross-claim or third-party claim
brought by the indemnitee in any proceeding) unless such proceeding (or portion
thereof) was authorized by the Board of Directors. The right to indemnification
conferred in this Section VII: (i) shall be a contract right; (ii) shall not be
affected adversely to any indemnitee by any amendment of the Certificate of
Incorporation with respect to any alleged action or inaction occurring prior to
such amendment; and (iii) shall, subject to any requirements imposed by law and
these Bylaws, include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition.
-10-
<PAGE>
SECTION 7.2. RELATIONSHIP TO OTHER RIGHTS AND PROVISIONS CONCERNING
INDEMNIFICATION. The rights to indemnification and to the advancement of
expenses conferred in this Section VII shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, the
Certificate of Incorporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
SECTION 7.3. AGENTS AND EMPLOYEES. The Corporation may, to the extent
authorized from time to time by the Board of Directors, grant rights to
indemnification, and to the advancement of expenses, to any employee or agent of
the Corporation (or any person serving at the Corporation's request as a
director, trustee, officer, employee or agent of another enterprise) or to any
person who is or was a director, officer, employee or agent of any of the
Corporation's affiliates, predecessor or subsidiary corporations or of a
constituent corporation absorbed by the Corporation in a consolidation or merger
or who is or was serving at the request of such affiliate, predecessor or
subsidiary corporation or of such constituent corporation as a director,
officer, employee or agent of another enterprise, in each case as determined by
the Board of Directors to the fullest extent of the provisions of this Section
VII in cases of the indemnification and advancement of expenses of directors and
officers of the Corporation, or to any lesser extent (or greater extent, if
permitted by law) determined by the Board of Directors.
SECTION 7.4. UNDERTAKINGS FOR ADVANCES OF EXPENSES. If and to the extent
the Florida Business Corporation Act requires, an advancement by the Corporation
of expenses incurred by an indemnitee pursuant to clause (iii) of the last
sentence of Section 7.1 (hereinafter an "advancement of expenses") shall be made
only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section VII or otherwise.
SECTION 7.5. CLAIMS FOR INDEMNIFICATION. If a claim for indemnification
under Section 7.1 is not paid in full by the Corporation within 60 days after it
has been received in writing by the Corporation, except in the case of a claim
for an advancement of expenses, in which case the applicable period shall be 20
days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
in any suit by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking the Corporation shall be entitled to recover such
expenses only upon a final adjudication that, the indemnitee has not met the
applicable standard of conduct set forth in Section
-11-
<PAGE>
607.0850 of the Florida Business Corporation Act (or any successor provision or
provisions). Neither the failure of the Corporation (including the Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in Section 607.0850 of the Florida
Business Corporation Act (or any successor provision or provisions), nor an
actual determination by the Corporation (including the Board of Directors,
independent legal counsel, or its stockholders) that the indemnitee has not met
such applicable standard of conduct, shall create a presumption that the
indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to have or
retain such advancement of expenses, under this Section VII or otherwise, shall
be on the Corporation.
SECTION 7.6. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, trustee, officer, employee or agent
of the Corporation or another enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the Florida Business Corporation
Act.
SECTION 7.7. SEVERABILITY. In the event that any of the provisions of
this Section VII (including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions are severable and shall remain
enforceable to the fullest extent permitted by law.
SECTION VIII
MISCELLANEOUS
SECTION 8.1. SEAL. The Corporation shall have a suitable seal, containing
the name of the Corporation. The Secretary shall be in charge of the seal and
may authorize one or more duplicate seals to be kept and used by any other
officer or person.
SECTION 8.2. WAIVER OF NOTICE. Whenever any notice is required to be
given, a waiver thereof in writing, signed by the person or persons entitled to
the notice, whether before or after the time stated therein shall be deemed
equivalent thereto. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
-12-
<PAGE>
SECTION 8.3. VOTING OF STOCK OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the Chairman of the Board, the President,
any Vice President or such officers or employees or agents as the Board of
Directors or any of such designated officers may direct. Any such officer may,
in the name of and on behalf of the Corporation, take all such action as any
such officer may deem advisable to vote in person or by proxy at any meeting of
security holders of any corporation in which the Corporation may own securities
and at any such meeting shall possess and may exercise any and all rights and
powers incident to the ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and possessed if present. The
Board of Directors may from time to time confer like powers upon any other
person or persons.
SECTION IX
AMENDMENT OF BYLAWS
The Board of Directors, by the affirmative vote of a majority of the whole
Board of Directors, shall have power to amend, alter, change, adopt or repeal
the Bylaws of the Corporation at any regular or special meeting; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors. The stockholders entitled to vote also shall have the
power to amend, alter, change, adopt or repeal the Bylaws of the Corporation at
any annual or special meeting subject to the requirements of the Certificate of
Incorporation.
-13-
<PAGE>
EXHIBIT 3.15
ARTICLES OF INCORPORATION
OF PSS TEXAS, INC.
The undersigned natural person of the age of eighteen years or more, acting
as the sole incorporator of a corporation under the Texas Business Corporation
Act, does hereby adopt the following Articles of Incorporation for such
corporation:
ARTICLE ONE
The name of the corporation is: PSS Texas, Inc.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purpose or purposes for which the corporation is organized are:
To transact any and all lawful business for which
corporations may be incorporated under the Texas Business
Corporation Act; and
In general, to have and exercise all of the powers
conferred by the laws of Texas upon corporations formed
under the Texas Business Corporation Act, and to do any and
all things hereinbefore set forth to the same extent as natural
persons might or could do.
ARTICLE FOUR
The aggregate number of shares which the corporation shall have
authority to issue is One Hundred (100) shares, and the par value of each
of such shares shall be One Dollar ($1.00). All such shares shall be of one
class and shall be designated as Common Stock.
<PAGE>
No shareholder shall have a preemptive right to acquire any shares or
securities of any class, whether now or hereafter authorized, which may at any
time be issued, sold or offered for sale by the corporation.
ARTICLE FIVE
The corporation will not commence business until it has received for
the issuance of its shares consideration of the value of One Thousand
Dollars ($1,000), consisting of money paid, labor done, or property actually
received.
ARTICLE SIX
The address of its initial registered office is 2003 108th Street, Suite
301, Grand Prairie, Texas 75050, and the name of its initial registered agent
at such address is David Smith.
ARTICLE SEVEN
The number of directors constituting the initial Board of Directors is
Two (2) and the names and addresses of the persons who are to serve as
the directors of the corporation until the first annual meeting of the
shareholders or until the successors are elected and qualified are:
Names Addresses
----- ---------
Patrick C. Kelly 7800 Belfort Parkway, Suite 250
Jacksonville, FL 32256
Fred Elefant P.O. Box 749
Jacksonville, FL 32201-749
The right of shareholders to cumulative voting in the election of
directors is expressly prohibited.
ARTICLE EIGHT
The name and address of the incorporator is Fred Elefant,
P.O. Box 749, Jacksonville, Florida 32201-749.
-2-
<PAGE>
ARTICLE NINE
Unless a Bylaw adopted by the shareholders provides otherwise as
to all or some portion of the corporation's Bylaws, the corporation's
shareholders may amend, repeal or adopt the corporation's Bylaws even
though the Bylaws may also be amended, repealed or adopted by its Board
of Directors.
ARTICLE TEN
A director of the Corporation shall not be liable to the Corporation or its
shareholders for monetary damages for an act or omission in the director's
capacity as a director, except that this Article Ten does not eliminate or limit
the liability of a director to the extent the director is found liable for (i) a
breach of the director's duty of loyalty to the Corporation or its shareholders;
(ii) an act or omission not in good faith that constitutes a breach of duty of
the director to the Corporation or an act or omission that involves intentional
misconduct or a knowing violation of the law; (iii) a transaction from which the
director received an improper benefit, whether or not the benefit resulted from
an action taken within the scope of the director's office; or (iv) an act or
omission for which the liability of a director is expressly provided by an
applicable statute. Any repeal or amendment of this Article Ten by the
shareholders of the Corporation shall be prospective only and shall not
adversely affect any limitation on the liability of a director of the
Corporation existing at the time of such repeal or amendment. In addition to the
circumstances in which the director of the Corporation is not liable as set
forth in the preceding sentences, the director shall not be liable to the
fullest extent permitted by any provisions of the statutes of Texas hereafter
enacted that further limits the liability of a director.
ARTICLE ELEVEN
Any action required by the Texas Business Corporation Act to be
taken at any annual or special meeting of shareholders, or any action which
may be taken at any annual or special meeting of shareholders, may be
taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of shares having not less than the minimum
number of votes that would be necessary to take such action at a meeting
-3-
<PAGE>
at which the holders of all shares entitled to vote on the action were present
and voted.
Prompt notice of the taking of any action by the shareholders without
a meeting by less than unanimous written consent shall be given to those
shareholders who did not consent in writing to the action.
IN WITNESS WHEREOF, the undersigned has set his hand this 3rd day of March,
1990.
/s/ Fred Elefant
----------------
Fred Elefant
-4-
<PAGE>
EXHIBIT 3.16
PSS TEXAS, INC.
AMENDED AND RESTATED
BYLAWS
SECTION I
CAPITAL STOCK
SECTION 1.1. CERTIFICATES. Every holder of stock in the Corporation shall
be entitled to have a certificate signed in the name of the Corporation by the
Chairman of the Board of Directors or the President or a Vice President, and by
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation certifying the number of shares in the Corporation
owned by such holder. If such certificate is countersigned (a) by a transfer
agent other than the Corporation or its employee, or, (b) by a registrar other
than the Corporation or its employee, any other signature on the certificate may
be a facsimile. In case any officer, transfer agent, or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent, or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent, or registrar at the date of
issue.
SECTION 1.2. RECORD OWNERSHIP. A record of the name and address of the
holder of each certificate, the number of shares represented thereby and the
date of issue thereof shall be made on the Corporation's books. The Corporation
shall be entitled to treat the holder of record of any share of stock as the
holder in fact thereof, and accordingly shall not be bound to recognize any
equitable or other claim to or interest in any share on the part of any other
person, whether or not it shall have express or other notice thereof, except as
required by the laws of the State of Texas.
SECTION 1.3. TRANSFER OF RECORD OWNERSHIP. Transfers of stock shall be
made on the books of the Corporation only by direction of the person named in
the certificate or such person's attorney, lawfully constituted in writing, and
only upon the surrender of the certificate therefor and a written assignment of
the shares evidenced thereby, which certificate shall be canceled before the new
certificate is issued.
SECTION 1.4. LOST CERTIFICATES. Any person claiming a stock certificate
in lieu of one lost, stolen or destroyed shall give the Corporation an affidavit
as to such person's ownership of the certificate and of the facts which go to
prove its loss, theft or destruction. Such person shall also, if required by
policies adopted by the Board of Directors, give the Corporation a bond, in such
form as may be approved by the Corporation, sufficient to indemnify the
Corporation against any claim that may be made
<PAGE>
against it on account of the alleged loss of the certificate or the issuance of
a new certificate.
SECTION 1.5. TRANSFER AGENTS; REGISTRARS; RULES RESPECTING CERTIFICATES.
The Board of Directors may appoint, or authorize any officer or officers to
appoint, one or more transfer agents and one or more registrars. The Board of
Directors may make such further rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates of the
Corporation.
SECTION 1.6. RECORD DATE. The Board of Directors may fix in advance a
future date, not exceeding 60 days (nor, in the case of a stockholders' meeting,
less than ten days) preceding the date of any meeting of stockholders, payment
of dividend or other distribution, allotment of rights, or change, conversion or
exchange of capital stock or for the purpose of any other lawful action, as the
record date for determination of the stockholders entitled to notice of and to
vote at any such meeting and any adjournment thereof, or to receive any such
dividend or other distribution or allotment of rights, or to exercise the rights
in respect of any such change, conversion or exchange of capital stock, or to
participate in any such other lawful action, and in such case such stockholders
and only such stockholders as shall be stockholders of record on the date so
fixed shall be entitled to such notice of and to vote at such meeting and any
adjournment thereof, or to receive such dividend or other distribution or
allotment of rights, or to exercise such rights, or to participate in any such
other lawful action, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any such record date fixed as
aforesaid.
SECTION II
MEETINGS OF STOCKHOLDERS
SECTION 2.1. ANNUAL. The annual meeting of stockholders for the election
of directors and the transaction of such other proper business shall be held
within or without the State of Texas on such date and at such time as shall be
designated by the Board of Directors.
SECTION 2.2. SPECIAL. Special meetings of stockholders for any purpose or
purposes may be called by the Board of Directors, pursuant to a resolution
adopted by a majority of the members of the Board of Directors then in office,
or by the holders of not less than fifty percent (50%) of all shares entitled to
vote at the meeting. Special meetings may be held at any place, within or
without the State of Texas, as determined by the Board of Directors. The only
business which may be conducted at such a meeting, other than procedural matters
and matters relating to the conduct of the meeting, shall be the matter or
matters described in the notice of the meeting.
-2-
<PAGE>
SECTION 2.3. NOTICE. Written notice of each meeting of stockholders,
stating the date, time, place and, in the case of a special meeting, the purpose
thereof, shall be given as provided by law by the Secretary or an Assistant
Secretary not less than ten days nor more than 60 days before such meeting
(unless a different time is specified by law) to every stockholder entitled by
law to notice of such meeting.
SECTION 2.4. LIST OF STOCKHOLDERS. A complete list of the stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder, shall be prepared by the Secretary and shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified at the place where the meeting is to be held, for at least ten days
before the meeting and at the place of the meeting during the whole time of the
meeting.
SECTION 2.5. QUORUM. The holders of shares of stock entitled to cast a
majority of the votes on the matters at issue at a meeting of stockholders,
present in person or represented by proxy, shall constitute a quorum, except as
otherwise required by the Texas Business Corporation Act. In the event of a
lack of a quorum, the chairman of the meeting or a majority in interest of the
stockholders present in person or represented by proxy may adjourn the meeting
from time to time without notice other than announcement at the meeting, until a
quorum shall be obtained. At any such adjourned meeting at which there is a
quorum, any business may be transacted that might have been transacted at the
meeting originally called.
SECTION 2.6. ORGANIZATION AND PROCEDURE.
(a) The Chairman of the Board, or, in the absence of the Chairman of the
Board, the Vice Chairman, if any, or, in the absence of the Vice Chairman, the
President, or any other person designated by the Board of Directors, shall
preside at meetings of stockholders. The Secretary of the Corporation shall act
as secretary, but in the absence of the Secretary, the presiding officer may
appoint a secretary.
(b) At each meeting of stockholders, the chairman of the meeting shall fix
and announce the date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at the meeting and shall
determine the order of business and all other matters of procedure. Except to
the extent inconsistent with any such rules and regulations as adopted by the
Board of Directors, the chairman of the meeting may establish rules, which need
not be in writing, to maintain order for the conduct of the meeting, including,
without limitation, restricting attendance to bona fide stockholders of record
and their proxies and other persons in attendance at the invitation of the
chairman and making rules governing speeches and debates. The chairman of the
meeting acts in his or her absolute discretion and his or her rulings are not
subject to appeal.
-3-
<PAGE>
SECTION 2.7. VOTING. Unless otherwise provided by the Texas Business
Corporation Act, each stockholder shall be entitled to one vote, in person or by
written proxy, for each share held of record by such stockholder who is entitled
to vote generally in the election of directors. All elections for the Board of
Directors shall be decided by a plurality of the votes cast and all other
questions shall be decided by a majority of the votes cast, except as otherwise
required by the Texas Business Corporation Act or as provided for in the
Certificate of Incorporation or these Bylaws. Abstentions shall not be
considered to be votes cast.
SECTION 2.8. INSPECTORS. The Board of Directors by resolution shall, in
advance of any meeting of stockholders, appoint one or more inspectors, which
inspector or inspectors may include individuals who serve the Corporation in
other capacities, including, without limitation, as officers, employees, agents
or representatives of the Corporation, to act at the meeting and make a written
report thereof. One or more persons may be designated by the Board of Directors
as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the chairman
of the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before discharging his or her duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his or her ability. The inspectors shall have the
duties prescribed by the Texas Business Corporation Act.
SECTION III
BOARD OF DIRECTORS
SECTION 3.1. POWERS OF THE BOARD OF DIRECTORS. The business and affairs
of the Corporation shall be managed by or under the direction of its Board of
Directors. In furtherance, and not in limitation, of the powers conferred by
the laws of the State of Texas, the Board of Directors is expressly authorized
to:
(a) adopt, amend, alter, change or repeal the Bylaws of the Corporation, by
the affirmative vote of a majority of the whole Board of Directors; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors; and provided, further, that no Bylaws hereafter adopted
-------- -------
shall invalidate any prior act of the directors that would have been valid if
such new Bylaws had not been adopted;
(b) determine the rights, powers, duties, rules and procedures that affect
the power of the Board of Directors to manage and direct the business and
affairs of the Corporation, including the power to designate and empower
committees of the Board of Directors, to elect, appoint and empower the officers
and other agents of the Corporation, and to determine the time and place of, and
the notice requirements for, Board meetings,
-4-
<PAGE>
as well as quorum and voting requirements for, and the manner of taking, Board
action; and
(c) exercise all such powers and do all such acts as may be exercised or
done by the Corporation, subject to the provisions of the laws of the State of
Texas, the Certificate of Incorporation and these Bylaws.
SECTION 3.2. NUMBER AND QUALIFICATIONS. The number of directors
constituting the Board of Directors shall be as authorized from time to time
exclusively by a vote of a majority of the voting power of all of the shares of
capital stock of the Corporation then entitled to vote generally in the election
of directors.
SECTION 3.3. VACANCIES. Any vacancies in the Board of Directors for any
reason and any newly created directorships resulting by reason of any increase
in the number of directors may be filled by a majority of the directors then in
office, although less than a quorum, or by the sole remaining director.
SECTION 3.4. REMOVAL OF DIRECTORS. Any director, or the entire Board of
Directors, may be removed from office at any time, with or without cause, by the
affirmative vote of the holders of at least a majority of the voting power of
all of the shares of capital stock of the Corporation then entitled to vote
generally in the election of directors, voting together as a single class.
SECTION 3.5. RESIGNATION. A director may resign at any time by giving
written notice to the Chairman of the Board, to the President, or to the
Secretary. Unless otherwise stated in such notice of resignation, the
acceptance thereof shall not be necessary to make it effective; and such
resignation shall take effect at the time specified therein or, in the absence
of such specification, it shall take effect upon the receipt thereof.
SECTION IV
MEETINGS OF BOARD OF DIRECTORS
SECTION 4.1. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without further notice at such time as shall from time to time be
determined by the Board of Directors. A meeting of the Board of Directors for
the election of officers and the transaction of such other business as may come
before it may be held without notice immediately following the annual meeting of
stockholders.
SECTION 4.2. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the President, or at the request
in writing of one-third of the members of the Board of Directors then in office.
SECTION 4.3. NOTICE OF SPECIAL MEETINGS. Notice of the date, time and
place of each special meeting shall be mailed by regular mail to each director
at his or her
-5-
<PAGE>
designated address at least six days before the meeting; or sent by overnight
courier to each director at his or her designated address at least two days
before the meeting (with delivery scheduled to occur no later than the day
before the meeting); or given orally by telephone or other means, or by
telegraph or telecopy, or by any other means comparable to any of the foregoing,
to each director at his designated address at least 24 hours before the meeting;
provided, however, that if less than five days' notice is provided and one-third
- -------- -------
of the members of the Board of Directors then in office object in writing prior
to or at the commencement of the meeting, such meeting shall be postponed until
five days after such notice was given pursuant to this sentence (or such shorter
period to which a majority of those who objected in writing agree), provided
that notice of such postponed meeting shall be given in accordance with this
Section 4.3. The notice of the special meeting shall state the general purpose
of the meeting, but other routine business may be conducted at the special
meeting without such matter being stated in the notice.
SECTION 4.4. PLACE OF MEETINGS. The Board of Directors may hold their
meetings and have an office or offices inside or outside of the State of Texas.
SECTION 4.5. TELEPHONIC MEETING AND PARTICIPATION. Any or all of the
directors may participate in a meeting of the Board of Directors or any
committee thereof by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
such participation shall constitute presence in person at the meeting.
SECTION 4.6. ACTION BY DIRECTORS WITHOUT A MEETING. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board of Directors or of such committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.
SECTION 4.7. QUORUM AND ADJOURNMENT. A majority of the directors then
holding office shall constitute a quorum. The vote of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. Whether or not a quorum is present to conduct a
meeting, any meeting of the Board of Directors (including an adjourned meeting)
may be adjourned by a majority of the directors present, to reconvene at a
specific time and place. It shall not be necessary to give to the directors
present at the adjourned meeting notice of the reconvened meeting or of the
business to be transacted, other than by announcement at the meeting that was
adjourned; provided, however, notice of such reconvened meeting, stating the
-------- -------
date, time, and place of the reconvened meeting, shall be given to the directors
not present at the adjourned meeting in accordance with the requirements of
Section 4.3 hereof.
SECTION 4.8. ORGANIZATION. The Chairman of the Board, or in the absence
of the Chairman of the Board, a member of the Board of Directors selected by the
members present, shall preside at meetings of the Board of Directors. The
Secretary of the
-6-
<PAGE>
Corporation shall act as secretary, but in the absence of the Secretary, the
presiding officer may appoint a secretary.
SECTION 4.9. COMPENSATION OF DIRECTORS. Directors shall receive such
compensation for their services as the Board of Directors may determine. Any
director may serve the Corporation in any other capacity and receive
compensation therefor.
SECTION 4.10. PRESUMPTION OF ASSENT. A director of the Corporation who
is present at a meeting of the Board of Directors when a vote on any matter is
taken is deemed to have assented to the action taken unless he or she votes
against or abstains from the action taken, or unless at the beginning of the
meeting or promptly upon arrival the director objects to the holding of the
meeting or transacting specified business at the meeting. Any such dissenting
votes, abstentions or objections shall be entered in the minutes of the meeting.
SECTION V
COMMITTEES
SECTION 5.1. COMMITTEES. The Board of Directors may, by resolutions
passed by a majority of the members of the Board of Directors, designate members
of the Board of Directors to constitute committees which shall in each case
consist of such number of directors, and shall have and may execute such powers
as may be determined and specified in the respective resolutions appointing
them. Any such committee may fix its rules of procedure, determine its manner
of acting and the time and place, whether within or without the State of Texas,
of its meetings and specify what notice thereof, if any, shall be given, unless
the Board of Directors shall otherwise by resolution provide. Unless otherwise
provided by the Board of Directors or such committee, the quorum, voting and
other procedures shall be the same as those applicable to actions taken by the
Board of Directors. A majority of the members of the Board of Directors then in
office shall have the power to change the membership of any such committee at
any time, to fill vacancies therein and to discharge any such committee or to
remove any member thereof, either with or without cause, at any time.
SECTION VI
OFFICERS
SECTION 6.1. DESIGNATION. The officers of the Corporation shall be a
Chairman of the Board, a President, a Treasurer and a Secretary, and the Board
of Directors may elect or appoint, or provide for the appointment of, one or
more Assistant Secretaries and Assistant Treasurers. The Board of Directors may
elect or appoint, or provide for the appointment of, such other officers,
including a Vice Chairman and one or more Vice Presidents in such gradation as
the Board of Directors may determine, or agents as may
-7-
<PAGE>
from time to time appear necessary or advisable in the conduct of the business
and affairs of the Corporation. Any number of offices may be held by the same
person.
SECTION 6.2. ELECTION TERM. At its first meeting after each annual
meeting of stockholders, the Board of Directors shall elect the officers or
provide for the appointment thereof. Subject to Sections 6.3 and 6.4 hereof,
the term of each officer elected by the Board of Directors shall be until the
first meeting of the Board of Directors following the next annual meeting of
stockholders and until such officer's successor is chosen and qualified.
SECTION 6.3. RESIGNATION. Any officer may resign at any time by giving
written notice to the President or the Secretary. Unless otherwise stated in
such notice of resignation, the acceptance thereof shall not be necessary to
make it effective; and such resignation shall take effect at the time specified
therein or, in the absence of such specification, it shall take effect upon the
receipt thereof.
SECTION 6.4. REMOVAL. Any officer may be removed at any time with or
without cause by the affirmative vote of a majority of the members of the Board
of Directors then in office. Any officer appointed by another officer may be
removed with or without cause by such officer or the Chief Executive Officer.
SECTION 6.5. VACANCIES. A vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors or, in the case of
offices held by officers who may be appointed by other officers, by any officer
authorized to appoint such officer.
SECTION 6.6. CHIEF EXECUTIVE OFFICER. The President shall initially be
the Chief Executive Officer of the Corporation and thereafter, at such time as
the Board of Directors shall determine, the Chief Executive Officer shall be
such officer as the Board of Directors shall designate from time to time. The
Chief Executive Officer shall be responsible for carrying out the policies
adopted by the Board of Directors.
SECTION 6.7. CHAIRMAN OF THE BOARD. The Chairman of the Board shall have
such powers and perform such duties as may be provided for herein and as may be
incident to the office and as may be assigned by the Board of Directors.
SECTION 6.8. PRESIDENT. The President shall have such powers and perform
such duties as may be provided for herein and as may be assigned by the Chairman
of the Board or the Board of Directors.
SECTION 6.9. VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board
shall have such powers and perform such duties as may be provided for herein and
as may be assigned by the Chairman of the Board, the President or the Board of
Directors.
-8-
<PAGE>
SECTION 6.10. VICE PRESIDENT. Each Vice President shall have such powers
and perform such duties as may be provided for herein and as may be assigned by
the Chairman of the Board, the President or the Board of Directors.
SECTION 6.11. TREASURER. The Treasurer shall have charge of all funds of
the Corporation and shall perform all acts incident to the position of
Treasurer, subject to the control of the Board of Directors.
SECTION 6.12. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
have the custody and operation of the accounting books and records of the
Corporation and shall perform all acts incident to the position of Chief
Financial Officer, subject to the control of the Board of Directors.
SECTION 6.13. SECRETARY. The Secretary shall keep the minutes, and give
notices, of all meetings of stockholders and directors and of such committees as
directed by the Board of Directors. The Secretary shall have charge of such
books and papers as the Board of Directors may require. The Secretary or any
Assistant Secretary is authorized to certify copies of extracts from minutes and
of documents in the Secretary's charge and anyone may rely on such certified
copies to the same effect as if such copies were originals and may rely upon any
statement of fact concerning the Corporation certified by the Secretary or any
Assistant Secretary. The Secretary shall perform all acts incident to the
office of Secretary, subject to the control of the Board of Directors.
SECTION 6.14. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant
Secretaries and Assistant Treasurers shall have such powers and perform such
duties as usually pertain to their respective offices and as may be assigned by
the Board of Directors or an officer designated by the Board of Directors.
SECTION 6.15. COMPENSATION OF OFFICERS. The officers of the Corporation
shall receive such compensation for their services as the Board of Directors may
determine. The Board of Directors may delegate its authority to determine
compensation to designated officers of the Corporation.
SECTION 6.16. EXECUTION OF INSTRUMENTS. Checks, notes, drafts, other
commercial instruments, assignments, guarantees of signatures and contracts
(except as otherwise provided herein or by law) shall be executed by the
Chairman of the Board, the President, any Vice President or such officers or
employees or agents as the Board of Directors or any of such designated officers
may direct.
SECTION 6.17. MECHANICAL ENDORSEMENTS. The Chairman of the Board, the
President, any Vice President or the Secretary may authorize any endorsement on
behalf of the Corporation to be made by such mechanical means or stamps as any
of such officers may deem appropriate.
-9-
<PAGE>
SECTION VII
INDEMNIFICATION
SECTION 7.1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact:
(a) that he or she is or was a director or officer of the Corporation, or
(b) that he or she, being at the time a director or officer of the
Corporation, is or was serving at the request of the Corporation as a director,
trustee, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (collectively, "another enterprise" or "other
enterprise"), whether either in case (a) or in case (b) the basis of such
proceeding is alleged action or inaction (x) in an official capacity as a
director or officer of the Corporation, or as a director, trustee, officer,
employee or agent of such other enterprise, or (y) in any other capacity related
to the Corporation or such other enterprise while so serving as a director,
trustee, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent not prohibited by Article 2.02-1 of the
Texas Business Corporation Act (or any successor provision or provisions) as the
same exists or may hereafter be amended (but, in the case of any such amendment,
with respect to alleged action or inaction occurring prior to such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than permitted prior thereto), against all
expense, liability and loss (including without limitation attorneys' fees and
expenses, judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such person in connection
therewith. The persons indemnified by this Section VII are hereinafter referred
to as "indemnitees." Such indemnification as to such alleged action or inaction
shall continue as to an indemnitee who has after such alleged action or inaction
ceased to be a director or officer of the Corporation, or director, officer,
employee or agent of such other enterprise, and shall inure to the benefit of
the indemnitee's heirs, executors and administrators. Notwithstanding the
foregoing, except as may be provided in the Bylaws or by the Board of Directors,
the Corporation shall not indemnify any such indemnitee in connection with a
proceeding (or portion thereof) initiated by such indemnitee (but this
prohibition shall not apply to a counterclaim, cross-claim or third-party claim
brought by the indemnitee in any proceeding) unless such proceeding (or portion
thereof) was authorized by the Board of Directors. The right to indemnification
conferred in this Section VII: (i) shall be a contract right; (ii) shall not be
affected adversely to any indemnitee by any amendment of the Certificate of
Incorporation with respect to any alleged action or inaction occurring prior to
such amendment; and (iii) shall, subject to any requirements imposed by law and
these Bylaws, include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition.
-10-
<PAGE>
SECTION 7.2. RELATIONSHIP TO OTHER RIGHTS AND PROVISIONS CONCERNING
INDEMNIFICATION. The rights to indemnification and to the advancement of
expenses conferred in this Section VII shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, the
Certificate of Incorporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
SECTION 7.3. AGENTS AND EMPLOYEES. The Corporation may, to the extent
authorized from time to time by the Board of Directors, grant rights to
indemnification, and to the advancement of expenses, to any employee or agent of
the Corporation (or any person serving at the Corporation's request as a
director, trustee, officer, employee or agent of another enterprise) or to any
person who is or was a director, officer, employee or agent of any of the
Corporation's affiliates, predecessor or subsidiary corporations or of a
constituent corporation absorbed by the Corporation in a consolidation or merger
or who is or was serving at the request of such affiliate, predecessor or
subsidiary corporation or of such constituent corporation as a director,
officer, employee or agent of another enterprise, in each case as determined by
the Board of Directors to the fullest extent of the provisions of this Section
VII in cases of the indemnification and advancement of expenses of directors and
officers of the Corporation, or to any lesser extent (or greater extent, if
permitted by law) determined by the Board of Directors.
SECTION 7.4. UNDERTAKINGS FOR ADVANCES OF EXPENSES. If and to the extent
the Texas Business Corporation Act requires, an advancement by the Corporation
of expenses incurred by an indemnitee pursuant to clause (iii) of the last
sentence of Section 7.1 (hereinafter an "advancement of expenses") shall be made
only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section VII or otherwise.
SECTION 7.5. CLAIMS FOR INDEMNIFICATION. If a claim for indemnification
under Section 7.1 is not paid in full by the Corporation within 60 days after it
has been received in writing by the Corporation, except in the case of a claim
for an advancement of expenses, in which case the applicable period shall be 20
days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole
or in part in any such suit, or in a suit brought by the Corporation to recover
an advancement of expenses pursuant to the terms of an undertaking, the
indemnitee shall be entitled to be paid also the expense of prosecuting or
defending such suit. In any suit brought by the indemnitee to enforce a right
to indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
in any suit by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking the Corporation shall be entitled to recover such
expenses only upon a final adjudication that, the indemnitee has not met the
applicable standard of conduct set forth in Article 2.02-1 of
-11-
<PAGE>
the Texas Business Corporation Act (or any successor provision or provisions).
Neither the failure of the Corporation (including the Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such suit that indemnification of the indemnitee is
proper in the circumstances because the indemnitee has met the applicable
standard of conduct set forth in Article 2.02-1 of the Texas Business
Corporation Act (or any successor provision or provisions), nor an actual
determination by the Corporation (including the Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has not met such
applicable standard of conduct, shall create a presumption that the indemnitee
has not met the applicable standard of conduct or, in the case of such a suit
brought by the indemnitee, be a defense to such suit. In any suit brought by the
indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified, or to have or retain such
advancement of expenses, under this Section VII or otherwise, shall be on the
Corporation.
SECTION 7.6. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, trustee, officer, employee or agent
of the Corporation or another enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the Texas Business Corporation
Act.
SECTION 7.7. SEVERABILITY. In the event that any of the provisions of
this Section VII (including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions are severable and shall remain
enforceable to the fullest extent permitted by law.
SECTION VIII
MISCELLANEOUS
SECTION 8.1. SEAL. The Corporation shall have a suitable seal, containing
the name of the Corporation. The Secretary shall be in charge of the seal and
may authorize one or more duplicate seals to be kept and used by any other
officer or person.
SECTION 8.2. WAIVER OF NOTICE. Whenever any notice is required to be
given, a waiver thereof in writing, signed by the person or persons entitled to
the notice, whether before or after the time stated therein shall be deemed
equivalent thereto. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
-12-
<PAGE>
SECTION 8.3. VOTING OF STOCK OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the Chairman of the Board, the President,
any Vice President or such officers or employees or agents as the Board of
Directors or any of such designated officers may direct. Any such officer may,
in the name of and on behalf of the Corporation, take all such action as any
such officer may deem advisable to vote in person or by proxy at any meeting of
security holders of any corporation in which the Corporation may own securities
and at any such meeting shall possess and may exercise any and all rights and
powers incident to the ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and possessed if present. The
Board of Directors may from time to time confer like powers upon any other
person or persons.
SECTION IX
AMENDMENT OF BYLAWS
The Board of Directors, by the affirmative vote of a majority of the whole
Board of Directors, shall have power to amend, alter, change, adopt or repeal
the Bylaws of the Corporation at any regular or special meeting; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors. The stockholders entitled to vote also shall have the
power to amend, alter, change, adopt or repeal the Bylaws of the Corporation at
any annual or special meeting subject to the requirements of the Certificate of
Incorporation.
-13-
<PAGE>
EXHIBIT 3.17
CERTIFICATE OF LIMITED PARTNERSHIP
OF
PHYSICIAN SALES & SERVICE LIMITED PARTNERSHIP
The undersigned General Partner of Physician Sales & Service Limited
Partnership, a limited partnership formed pursuant to the Florida Revised
Uniform Limited Partnership Act ((S)(S) 620.101-620.192 Florida Statutes),
hereby certifies the following:
1. The name of the limited partnership is Physician Sales & Service
Limited Partnership.
2. The registered agent for service of process at the registered office
of the limited partnership is Fred Elefant. The registered office of the limited
partnership is located at DuPont Center, 1650 Prudential Drive, Suite 105,
Jacksonville, Florida 32207.
3. The sole General Partner of the limited partnership is Physician Sales
& Service, Inc., a Florida corporation with its principal office located at 4345
Southpoint Boulevard, Jacksonville, Florida 32256.
4. The mailing address for the limited partnership is 4345 Southpoint
Boulevard, Jacksonville, Florida 32256.
5. The latest date upon which the limited partnership shall be dissolved
is December 31, 2030.
The undersigned declares under penalties of perjury that the matters set
forth in this Certificate of Limited Partnership are true and correct.
Dated: March 31, 1997
--
PHYSICIAN SALES & SERVICE, INC.,
General Partner
By: /s/ David A. Smith
------------------------------------
Name: David A. Smith
----------------------------------
Title: Executive Vice President and CFO
---------------------------------
<PAGE>
Having been named as registered agent and to accept service of process for
Physician Sales & Service Limited Partnership at the place designated in this
Certificate of Limited Partnership, I hereby accept the appointment as
registered agent and agree to act in this capacity. I further agree to comply
with the provisions of all statutes relative to the proper and complete
performance of my duties, and I am familiar with and accept the obligations of
my position as registered agent.
/s/ Fred Elefant
-----------------------------------------
Fred Elefant
<PAGE>
AFFIDAVIT OF CAPITAL CONTRIBUTIONS
FOR FLORIDA LIMITED PARTNERSHIP
The undersigned, constituting the sole general partner of Physician Sales &
Service Limited Partnership, a Florida limited partnership, certifies:
The amount of capital contributions to date of the limited partners is
$900.00.
The total amount contributed and anticipated to be contributed by the
limited partners at this time totals $900.00.
Signed this 31st day of March, 1997.
----
FURTHER AFFIANT SAYETH NOT.
The undersigned declares under penalties of perjury that the matters set
forth in this Affidavit of Capital Contributions are true and correct.
Dated: March 31, 1997
--
PHYSICIAN SALES & SERVICE, INC.,
General Partner
By: /s/ David A. Smith
---------------------------------------
Name: David A. Smith
----------------------------------
Title: Executive Vice President and CFO
---------------------------------
<PAGE>
PHYSICIAN SALES & SERVICE, INC.
4345 Southpoint Boulevard
Jacksonville, Florida 32216
CONSENT TO USE OF NAME
Physician Sales & Service, Inc., a corporation organized under the laws of
the State of Florida, hereby consents to the formation of Physician Sales &
Service Limited Partnership in the State of Florida.
IN WITNESS WHEREOF, Physician Sales & Service, Inc. has caused this consent
to be executed by its duly authorized officer this 31st day of March, 1997.
PHYSICIAN SALES & SERVICE, INC.
By: /s/ David A. Smith
-----------------------------------------
David A. Smith
Title: Executive Vice President and Chief
Financial Officer
<PAGE>
EXHIBIT 3.18
LIMITED PARTNERSHIP AGREEMENT
OF
PHYSICIAN SALES & SERVICE LIMITED PARTNERSHIP
March 28, 1997
________________________________________________________________________________
THE LIMITED PARTNERSHIP INTERESTS IN PHYSICIAN SALES & SERVICE LIMITED
PARTNERSHIP (THE "INTERESTS") ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER AND
OTHER TERMS AND CONDITIONS SET FORTH IN ARTICLE 14 OF THIS AGREEMENT AND MAY NOT
BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED, OR TRANSFERRED AT
ANY TIME EXCEPT IN COMPLIANCE WITH THE TERMS AND CONDITIONS THEREOF. THEREFORE,
PURCHASERS OF THE INTERESTS WILL BE REQUIRED TO BEAR THE RISK OF THEIR
INVESTMENTS FOR AN INDEFINITE PERIOD OF TIME. THE INTERESTS HAVE NOT BEEN
REGISTERED (I) UNDER ANY STATE SECURITIES LAWS (THE "STATE ACTS"), OR (II) UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "FEDERAL ACT"), AND NEITHER THE
INTERESTS NOR ANY PART THEREOF MAY BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED,
SOLD, ASSIGNED, OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH THE TERMS
AND CONDITIONS OF ARTICLE 14 OF THIS AGREEMENT AND (1) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER ANY APPLICABLE STATE ACTS OR IN A TRANSACTION WHICH
IS EXEMPT FROM REGISTRATION UNDER SUCH STATE ACTS OR FOR WHICH SUCH REGISTRATION
OTHERWISE IS NOT REQUIRED, AND (2) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE FEDERAL ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM
REGISTRATION UNDER THE FEDERAL ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM
REGISTRATION UNDER THE FEDERAL ACT OR FOR WHICH SUCH REGISTRATION OTHERWISE IS
NOT REQUIRED.
<PAGE>
CONTENTS
<TABLE>
<S> <C>
ARTICLE I - DEFINITIONS........................................................ 1
ARTICLE II - FORMATION OF THE PARTNERSHIP...................................... 7
2.1 Formation........................................................... 7
2.2 Name................................................................ 7
2.3 Principal Office.................................................... 7
2.4 Initial Registered Agent............................................ 7
2.5 Purpose............................................................. 7
2.6 Statutory Compliance................................................ 8
2.7 Title to Partnership Property....................................... 8
2.8 Commencement and Term............................................... 8
ARTICLE III - CAPITAL CONTRIBUTIONS............................................ 8
3.1 Initial Capital Contributions....................................... 8
3.2 Additional Capital Contributions.................................... 8
3.3 Other Matters....................................................... 9
ARTICLE IV - ALLOCATIONS OF PROFIT AND LOSS.................................... 9
4.1 Profits and Losses.................................................. 9
4.2 Special Allocation Rules............................................ 10
4.3 General Rules....................................................... 11
4.4 Power of General Partner to Vary Allocations of Profits and Losses.. 12
ARTICLE V - DISTRIBUTIONS...................................................... 12
5.1 Net Operating Income................................................ 12
5.2 Distribution Among Partners......................................... 12
5.3 Amounts Withheld.................................................... 12
5.4 Proceeds Available Upon Dissolution................................. 12
5.5 In Kind Distributions............................................... 12
5.6 Standards........................................................... 13
ARTICLE VI - THE GENERAL PARTNER............................................... 13
6.1 Authority and Obligations of General Partner........................ 13
6.2 Tax Matters Partner................................................. 14
6.3 Right to Rely on General Partner.................................... 14
6.4 Restrictions on Authority of General Partner........................ 14
6.5 Duties and Obligations of General Partner........................... 15
6.6 Liability of General Partner........................................ 16
6.7 Compensation and Loans.............................................. 17
6.8 Operating Restrictions.............................................. 17
ARTICLE VII - LIMITED PARTNERS................................................. 17
7.1 Limitation on Limited Partners' Liabilities......................... 17
7.2 No Control of Business or Right to Act for Partnership.............. 17
7.3 No Priority......................................................... 17
7.4 Voting Rights....................................................... 17
7.5 Effect of Bankruptcy, Death or Incompetency of a Limited Partner.... 17
ARTICLE VIII - INDEMNIFICATION OF GENERAL PARTNER.............................. 18
8.1 Generally........................................................... 18
8.2 Insurance........................................................... 18
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE IX - TRANSFER OF INTERESTS.............................................. 19
9.1 Restriction on Transfers............................................ 19
9.2 Permitted Transfers................................................. 19
9.3 Prohibited Transfers................................................ 19
9.4 Rights of Unadmitted Assignees...................................... 19
9.5 Admission of Interest Holders as Partners........................... 19
9.6 Right of First Refusal.............................................. 20
9.7 Exercise of Option.................................................. 20
9.8 Failure of Exercise of Right of First Refusal....................... 20
9.9 Payment of Call Premium............................................. 21
9.10 Closing............................................................. 21
9.11 Indemnification..................................................... 21
ARTICLE X - APPOINTMENT OF THE GENERAL PARTNER AS ATTORNEY-IN-FACT.............. 21
10.1 General Partner As Attorney-in-Fact................................. 21
10.2 Survival of Appointment............................................. 21
ARTICLE XI - BOOKS, RECORDS, ACCOUNTING AND REPORTS, AND TAX MATTERS............ 22
11.1 Availability........................................................ 22
11.2 Annual Reports and Quarterly Information............................ 22
11.3 Accounting Decisions................................................ 22
11.4 Taxable Year and Accounting Method.................................. 22
11.5 Tax Elections....................................................... 22
ARTICLE XII - AMENDMENT OF CERTIFICATE OF LIMITED PARTNERSHIP................... 23
ARTICLE XIII - MEETINGS......................................................... 23
ARTICLE XIV - DISSOLUTION OF THE PARTNERSHIP.................................... 23
14.1 Events Causing Dissolution.......................................... 23
14.2 Liquidation of Assets and Application of Proceeds................... 24
ARTICLE XV - MISCELLANEOUS...................................................... 24
15.1 Notices............................................................. 24
15.2 Severability........................................................ 24
15.3 Captions............................................................ 24
15.4 Person and Gender................................................... 24
15.5 Binding Agreement................................................... 24
15.6 Applicable Law...................................................... 25
15.7 Entire Agreement.................................................... 25
15.8 Agreement in Counterparts........................................... 25
</TABLE>
-2-
<PAGE>
LIMITED PARTNERSHIP AGREEMENT
OF
PHYSICIAN SALES & SERVICE LIMITED PARTNERSHIP
THIS LIMITED PARTNERSHIP AGREEMENT (the "Agreement") of PHYSICIAN SALES &
SERVICE LIMITED PARTNERSHIP (the "Partnership"), dated this 28th day of March,
1997, is made and entered into by and between PHYSICIAN SALES & SERVICE, INC., a
Florida corporation (the "General Partner") and PSS HOLDING, INC., a Florida
corporation (collectively, the "Limited Partners").
IN CONSIDERATION of the mutual covenants and agreements set forth below,
the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
As used herein, the following terms shall have the following meanings:
"Act" shall mean the Securities Act of 1933, as amended.
"Adjusted Capital Account Deficit" means, with respect to any Partner, the
deficit balance, if any, in such Partner's Capital Account as of the end of the
relevant fiscal year, after giving effect to the following adjustments:
(a) Such Capital Account shall be increased to reflect the amounts, if
any, which such Partner is obligated to restore to the Partnership or is deemed
to be obligated to restore pursuant to Regulations (S)(S) 1.704-1(b)(2)(ii)(c),
1.704-2(g)(1)(ii) and 1.704-2(i)(5);
(b) Such Capital Account shall be reduced to reflect any items
described in Regulations (S)(S) 1.704-1(b)(2)(ii)(d)(4), (5) and (6);
(c) If such Adjusted Capital Account Deficit is being determined as of
the last day of a fiscal year for purposes of Section 4.2.3 hereof, then such
Capital Account shall be adjusted to reflect the allocation to such Partner of
all amounts required to be allocated to such Partner for such fiscal year under
Article IV hereof (other than Section 4.1);
(d) If such Adjusted Capital Account Deficit is being determined as of
the last day of a fiscal year for purposes of Section 4.2.5 hereof, then such
Capital Account shall be adjusted to reflect the tentative allocation to such
Partner of all amounts that would be required to be allocated to such Partner
for such fiscal Year if neither Section 4.2.5 nor Section 4.2.4 were a part of
this Agreement; and
(e) If such Adjusted Capital Account Deficit is being determined as of
the last day of a fiscal year for purposes of Section 4.2.4 hereof, then such
Capital Account shall be adjusted to reflect the tentative allocation to such
Partner of all amounts that would be required to be
<PAGE>
allocated to such Partner for such fiscal year if neither Section 4.2.4 nor
Section 4.2.5 were a part of this Agreement.
"Affiliate" shall mean with respect to a specified person or entity, a
person or entity that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the person or entity specified.
"Assignee" means a person or entity to whom all or a portion of a
Partnership Interest has been transferred, by transfer or assignment, in a
manner permitted under this Agreement but who has not been admitted to the
Partnership as a Substitute Limited Partner or a General Partner.
"Capital Account" means with respect to any Partner, the Capital Account
maintained for such Partner in accordance with the following provisions:
(i) To each Partner's Capital Account there shall be credited such
Partner's Capital Contributions, such Partners' distributive share of Profits
and any items in the nature of income or gain which are specially allocated
pursuant to Section 4.2 hereof, and the amount of any Partnership liabilities
assumed by such Partner or which are secured by any Property distributed to such
Partner;
(ii) To each Partner's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any Property distributed to such
Partner pursuant to any provision of this Agreement, such Partner's distributive
share of Losses and any items in the nature of expenses or losses which are
specially allocated pursuant to Section 4.2 hereof, and the amount of any
liabilities of such Partner assumed by the Partnership or which are secured by
any property contributed by such Partner to the Partnership;
(iii) In the event any interest in the Partnership is transferred in
accordance with the terms of this Agreement and such transfer does not terminate
the Partnership under Code section 708(b)(1)(B), the transferee shall succeed to
the Capital Account of the transferor to the extent it relates to the
transferred interest; and
(iv) In determining the amount of any liability for purposes of
subpart (i) and (ii) hereof, there shall be taken into account Code Section
752(c) and any other applicable provisions of the Code and Regulations.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations (S)1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Regulations. The General Partner is empowered to make
modifications to the manner in which Capital Accounts are computed if it is
determined that such adjustments are necessary in order to comply with such
Regulations, provided that such adjustments are not likely to have a material
effect on the amounts distributable to a Partner hereunder upon the dissolution
of the Partnership in accordance with Article XIV. The General Partner shall
also make any adjustments that are necessary or appropriate to maintain the
Capital Amounts of the Partners in accordance with Regulations (S)1.704-
1(b)(2)(iv)(g).
"Capital Contributions" shall mean with respect to any Partner, the amount
of money and the initial Gross Asset Value of any property (other than money)
contributed to the Partnership with respect to the Partnership Interest held by
such Partner pursuant to the terms of this Agreement.
-2-
<PAGE>
"Certificate" shall mean the valid Certificate of Limited Partnership of
the Partnership, duly filed with the Office of the Secretary of State of Florida
as it may from time to time be amended and restated, in accordance with (and in
all respects sufficient in form and substance under) the Florida Act.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended from time to time (or any corresponding provisions of succeeding law).
"Depreciation" shall mean, for each fiscal year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that if the federal income tax
depreciation, amortization or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the Partners.
"Florida Act" shall mean the Florida Revised Uniform Limited Partnership
Act, as amended from time to time.
"Gain or Loss on Sale" shall mean the net gain or loss realized on a sale
of any significant portion of the Property.
"General Partner" shall mean Physician Sales & Service, Inc., a Florida
corporation.
"Gross Asset Value" shall mean, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such asset,
as determined by the contributing Partner and the Partnership;
(ii) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as determined by
the General Partner, as of the following times: (a) the acquisition of an
additional interest in the Partnership by any new or existing Partner in
exchange for more than a de minimis Capital Contribution after the date hereof;
(b) the distribution by the Partnership to a Partner of more than a de minimis
amount of Property; and (c) the liquidation of the Partnership within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g); provided however, that
adjustments pursuant to clauses (a) and (b) above shall be made only if the
General Partner reasonably determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the Partners in the
Partnership;
(iii) The Gross Asset Value of any Partnership asset distributed to
any Partner shall be the gross fair market value of such asset on the date of
distribution; and
-3-
<PAGE>
(iv) The Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b) but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided however, that
Gross Asset Values shall not be adjusted pursuant to this Section 1.15(iv) to
the extent the General Partner determines that an adjustment pursuant to Section
1.14(ii) hereof is necessary or appropriate in connection with a transaction
that would otherwise result in an adjustment pursuant to this subpart (iv).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to subparts (i), (ii) or (iv) hereof, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing Profits and Losses.
"Gross Revenues" means
(i) with respect to the Property, for any calendar month, all
revenues of any kind or description received during such calendar month by or on
behalf of the owner of said Property from the operation of, or arising out of,
or relating to said Property, and shall include, but not be limited to, all
sales and use taxes collected by or on behalf of the owner of said Property, any
refunds and rebates of federal, state or local taxes or assessments previously
paid by the owner of said Property, the proceeds of any insurance policies
specifically paid to or for the account of the owner of said Property to
reimburse it for loss of business revenues (but excluding any and all proceeds
from the sale of immovable or real property, sales proceeds, condemnation
proceeds and insurance proceeds from policies for casualty, property or other
similar insurance to the extent that such proceeds are required (a) to be paid
to a mortgagee under the terms of a mortgage encumbering said Property; or (b)
to be applied for the cost of repairing or restoring said Property), and any and
all other income, revenues, earnings or cash flow generated by or received on
account of the Property; and
(ii) with respect to any Partnership, for any calendar month, all
revenues, income, earnings, or cash flow of any kind or description received
during such calendar month by or on behalf of such Partnership in respect of
Property or Assets owned by such Partnership, provided that in no event shall
the definition of "Gross Revenues" include loan proceeds.
"Income before Income Taxes" shall mean income before income taxes after
giving effect to, among other things, depreciation, amortization and interest
determined on an accrual basis of accounting in accordance with generally
accepted accounting principles.
"Limited Partner" shall mean PSS Holding, Inc., a Florida corporation.
"Limited Partnership Interests" shall mean the Interests owned by the
Limited Partners.
"Majority in Interest" shall mean Partners owning more than fifty percent
(50%) of the Partnership Interests in issue.
"Net Operating Income" means, for any period, the Gross Revenues from
Partnership operations less the portion thereof used to pay all Operating
Expenses for such period. "Net Operating Income" shall not be reduced by
depreciation and amortization.
-4-
<PAGE>
"Operating Expenses" means, with respect to the Partnership for any period,
all costs and expenses paid or incurred during such period by the Partnership in
the ordinary course of its business, including but not limited to, debt
payments, capital improvements, amounts used to replenish and fund the Reserves,
attorneys' fees, accounting fees, and the direct expenses incurred by the
corporate management team in connection with the operation of the Partnership.
"Partners" shall refer, collectively, to the General Partner and the
Limited Partners. Reference to a "Partner" shall be to any one of the Partners.
"Partnership" shall mean Physician Sales & Service Limited Partnership,
which is the limited partnership established by this Agreement.
"Partnership Agreement" or "Agreement" means this Limited Partnership
Agreement, as it may be amended, restated or supplemented from time to time.
"Partnership Interest" or "Interest" means the ownership rights of a
Partner in this Partnership and shall be 10% for the General Partner and 90% for
the Limited Partner. In the event any Partnership Interest is transferred in
accordance with the provisions of this Agreement, the transferee of such
interest shall succeed to the Partnership Interest, in whole or in part as the
case may be, of its transferor to the extent it relates to the transferred
Interest.
"Person" means any individual, partnership, corporation, trust,
unincorporated association, joint venture or other entity or any government or
any agency or political subdivision thereof or any other form of entity.
"Profits" and "Losses" means, for each fiscal year or other period, an
amount equal to the Partnership's taxable income or loss for such year or
period, determined in accordance with Code Section 703(a) (for this purpose, all
items if income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:
(i) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Profits or Losses
shall be added to such taxable income or loss;
(ii) Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Profits or Losses pursuant to this Section 1.31 shall be subtracted
from such taxable income or loss;
(iii) In the event the Gross Asset Value of any Partnership asset is
adjusted, the amount of such adjustment shall be taken into account as gain or
loss from the disposition of such asset for purposes of computing Profits or
Losses;
(iv) Gain or loss resulting from any disposition of Property with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the Property disposed
of, notwithstanding that the adjusted tax basis of such Property differs from
its Gross Asset Value;
-5-
<PAGE>
(v) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year or other
period; and
(vi) Notwithstanding any other provision of this definition, any
items which are specially allocated pursuant to Section 4.2 hereof shall not be
taken into account in computing Profits or Losses.
"Property" shall mean all assets owned by the Partnership and forming a
part of or in any way related to or used in connection with the ownership,
operation, management of the business of the Partnership including, without
limitation, all real and personal property.
"Regulations" shall mean the Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as such Regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"Reserves" means, with respect to any period, the amount of funds set aside
for, or amounts allocated during such period for the purpose of (i) funding
reserves for contingent liabilities, incurred but not reported liabilities,
working capital, repairs, replacements or renewals, and (ii) paying taxes,
insurance, debt service, including principal and interest on any Partner Loans,
or other costs or expenses incident to the ownership or operation of the
Partnership or otherwise deemed by the General Partner necessary to meet the
current or anticipated future needs of the Partnership.
"Transfer" means, as a noun, any voluntary or involuntary transfer, sale,
pledge, hypothecation, or other disposition and, as a verb, voluntarily or
involuntarily to transfer, sell, pledge, hypothecate, or otherwise dispose of.
"Withdrawal" when used with reference to the General Partner, shall occur
upon:
(i) The resignation or retirement of the General Partner from the
Partnership;
(ii) The transfer, sale, assignment, pledge, encumbrance or other
disposition of the General Partner's Interest in the Partnership; provided,
however, that any transfer of the General Partner's Interest if permitted in
Article IX hereof shall be excluded; or
(iii) The bankruptcy, liquidation or dissolution of the General
Partner.
For purposes of this definition, "bankruptcy" of the General Partner shall
be deemed to occur if the General Partner is voluntarily adjudicated as bankrupt
or insolvent, or seeks, consents to or does not contest the appointment of a
receiver or trustee for itself or for all or any part of its property, or files
a petition seeking relief under the bankruptcy, arrangement, reorganization or
other debtor relief laws of the United States or any state or any other
competent jurisdiction, or makes a general assignment for the benefit of
creditors, or admits in writing an inability to pay its debts as they may
mature, or a petition is filed against such General Partner seeking relief under
the bankruptcy, arrangement, reorganization or other debtor relief laws of the
United States or any state, or a court of competent jurisdiction enters an
order, judgment or decree appointing, without the consent of such General
Partner, a receiver or trustee for it, or for all or any part of its property,
and such petition, order, judgment or decree shall not be discharged or stayed
within a period of ninety (90) days after its entry.
-6-
<PAGE>
For purposes of this Agreement, "withdraw" shall mean the taking or
suffering of any action constituting a Withdrawal. Withdrawal shall not include
an assignment, pledge, encumbrance or transfer of the General Partner's interest
in the Partnership to any entity as collateral security for any loans made to
the Partnership, directly or indirectly, by such entity or any financial
institution.
ARTICLE II
FORMATION OF THE PARTNERSHIP
2.1 Formation. The Partnership constitutes a limited partnership formed
---------
pursuant to the Florida Act and other applicable laws of the State of Florida.
The General Partner shall promptly file the Certificate, and when required, such
amendments or restatements thereto, in such public offices in the State of
Florida or elsewhere as may be required by the business of the Partnership as
shall be required to give effect to the provisions of this Agreement and the
Certificate, or such amendments and restatements thereto, and to preserve the
character of the Partnership as a limited partnership.
2.2 Name. The Partnership is and shall be conducted under the name
----
"PHYSICIAN SALES & SERVICE LIMITED PARTNERSHIP" or such other name as the
General Partner and the Limited Partner shall mutually agree.
2.3 Principle Office. The principle office and place of business of the
----------------
Partnership shall be 4345 Southpoint Boulevard, Jacksonville, Florida 32216.
2.4 Initial Registered Agent. The initial registered agent for service of
------------------------
process at the registered office of the Partnership shall be Fred Elefant. The
registered office of the Partnership shall be located at DuPont Center, Suite
105, 1650 Prudential Drive, Jacksonville, Florida 32207.
2.5 Purpose. The purposes of the Partnership shall be as follows:
-------
(i) To serve as a distributor of medical equipment and supplies.
(ii) To exercise all powers necessary or reasonably related to the
Partnership's business that may be legally exercised by limited partnerships
under the Florida Act; and
(iii) To engage in all activities necessary, customary, convenient or
incident to such purpose.
2.6 Statutory Compliance. The Partnership shall exist under and be
--------------------
governed by, and this Agreement shall be construed in accordance with, the
applicable laws of the State of Florida. The Partners shall make all filings
and disclosures required by, and shall otherwise comply with, all such laws.
The Partners shall execute and file such other documents and instruments as may
be necessary or appropriate with respect to the formation of, and the conduct of
business by, the Partnership.
-7-
<PAGE>
2.7 Title to Partnership Property. All property owned by the Partnership
-----------------------------
shall be owned by the Partnership as an entity and, insofar as permitted by
applicable law, no Partner shall have any ownership interest in Property in its
individual name or right, and each Partner's Interest in the Partnership shall
be personal property for all purposes.
2.8 Commencement and Term. The Partnership shall commence on the date the
---------------------
Certificate is filed with the Office of the Secretary of State of Florida. The
term of the Partnership shall continue until December 31, 2030 unless sooner
terminated or dissolved in accordance with the provisions of this Agreement or
as otherwise provided by law.
ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 Initial Capital Contributions. The Partners have each contributed the
-----------------------------
amounts and shall have the Capital Accounts Balances set forth on Exhibit A.
---------
3.2 Additional Capital Contributions. No Partner shall be required to
--------------------------------
make an additional Capital Contribution without the consent of all Partners.
3.3 Other Matters.
-------------
3.3.1 Except as otherwise provided in this Agreement, no Partner
shall demand or receive a return of its Capital Contributions from the
Partnership without the consent of all Partners. Furthermore, no Partner shall
have the right to receive property other than cash except as may be specifically
provided herein.
3.3.2 No Partner shall receive any interest, salary, or drawing with
respect to its Capital Account or for services rendered on behalf of the
Partnership or otherwise in its capacity as a Partner, except as otherwise
provided in this Agreement.
3.3.3 Except as otherwise provided by this Agreement, no Limited
Partner shall be liable for the debts, liabilities, contracts, or any other
obligations of the Partnership or be required to lend funds to the Partnership.
The General Partner shall not have any personal liability for the repayment of
any Capital Contributions of any Limited Partner.
ARTICLE IV
ALLOCATIONS OF PROFIT AND LOSS
4.1 Profits and Losses. Except as otherwise provided in this Article IV,
------------------
any Profits or Losses recognized by the Partnership in any fiscal year shall be
allocated among Partners as follows:
4.1.1 Profits. Profits shall be allocated as follows:
-------
-8-
<PAGE>
(a) First, to the Partners, in proportion to and to the
extent of, the amount by which zero exceeds their respective Capital Account
balances as of the last day of the fiscal year (the "Last Day"); then
(b) To the Partners in proportion to their Partnership
Interests.
4.1.2 Losses. Losses shall be allocated among the Partners as
------
follows:
(a) First, to the Partners to the extent of and in
proportion to their positive balances in their Capital Accounts; and
(b) Second, among the Partners in proportion to their
Partnership Interests.
4.2 Special Allocation Rules.
------------------------
4.2.1 Allocable Cash Basis Items. Any "allocable cash basis item" of
--------------------------
the Partnership (as defined in Section 706(d) of the Code) for any fiscal year
that is required to be allocated to the Partners in the manner provided in
Section 706(d) of the Code shall be allocated to the Partners in the manner so
required.
4.2.2 Section 704(c) Allocation. In accordance with Code Section
-------------------------
704(c) and the Treasury Regulations thereunder and with Section 1.704-
1(b)(2)(iv)(f)(4) and 1.704-1(b)(4)(i) as contemplated by Section 1.704-1(c)(3)
of the Treasury Regulations, income, gain, loss and deduction with respect to
any property contributed to the capital of the Partnership or property revalued
on the Partnership's books and in the Capital Accounts shall, solely for tax
purposes, be allocated among the Partners so as to take account of any variation
between the adjusted basis of such property to the Partnership for federal
income tax purposes and its initial Gross Asset Value.
4.2.3 Limitation on Allocation of Losses. Notwithstanding the
----------------------------------
provisions of Section 4.1 hereof, if the amount of Losses that would otherwise
be allocated to a Partner in any fiscal year under Section 4.1 hereof would
cause or increase a Partner's Adjusted Capital Account Deficit as of the Last
Day, then a proportionate part of such Losses equal to such excess shall be
allocated to the other Partners to the extent such allocation can be made
without violating the provisions of this Section 4.2.3 with respect to such
other Partners, and the remainder of such Losses, if any, shall be allocated to
the General Partner.
4.2.4 Qualified Income Offset. Notwithstanding any provision hereof
-----------------------
to the contrary, if a Partner unexpectedly receives in any fiscal year any
adjustment, allocation or distribution described in Treasury Regulations (S)(S)
1.704-1(b)(2)(ii)(d)(4), (5), or (6), and if a Partner has an Adjusted Capital
Account Deficit as of the last day of such fiscal year, then all items of income
and gain of the Partnership (consisting of a pro rata portion of each item of
Partnership income and gain) for such fiscal year (and, if necessary, for
subsequent fiscal years) shall be allocated to the Partner in the amount and in
the manner necessary to eliminate such Adjusted Capital Account Deficit as
quickly as possible.
4.2.5 Gross Income Allocation. Notwithstanding any provision hereof
-----------------------
to the contrary, if a Partner has an Adjusted Capital Account Deficit as of the
last day of any fiscal year,
-9-
<PAGE>
then all items of income and gain of the Partnership (consisting of a pro rata
portion of each item of Partnership income and gain, including gross income) for
such fiscal year shall be allocated to such Partner in the amount and in the
manner necessary to eliminate such Adjusted Capital Account Deficit as quickly
as possible.
4.2.6 Minimum Gain Chargeback. Notwithstanding any provision hereof
-----------------------
to the contrary, any item of Partnership income or gain for any fiscal year (or
any portion of any such item) that is required to be allocated to the Partners
under Treasury Regulations (S)(S) 1.704-2(f) or 1.704-2(i)(4) shall be allocated
to the Partners for such fiscal year in the manner so required by such
Regulations.
4.2.7 Partner Nonrecourse Deductions. Notwithstanding any provision
------------------------------
hereof to the contrary, any item of Partnership loss, deduction or expenditure
described in Section 705(a)(2)(B) of the Code for any fiscal year (or any
portion of any such item) that is required to be allocated to the Partners under
Treasury Regulations (S) 1.704-2(i)(l) shall be allocated to the Partners for
such fiscal year in the manner so required by such Regulation, including
Regulation (S)1.704-2(j)(2).
4.2.8 Curative Allocations. The allocations set forth in subsections
--------------------
4.2.3, through 4.2.7 of this Section 4.2 (the "Regulatory Allocations") are
intended to comply with certain requirements of Sections 1.704-1(b) and 1.704-2
of the Treasury Regulations. Notwithstanding any other provision of this
Article IV other than the Regulatory Allocations, the Regulatory Allocations
shall be taken into account in allocating Profits, Losses and items of
Partnership income, gain, loss and deduction to the Partners so that, to the
extent possible, the net amount of such allocations of Profits, Losses and other
items and the Regulatory Allocations to each Partner shall be equal to the net
amount that would have been allocated to each such Partner if the Regulatory
Allocations had not occurred.
4.2.9 Special Allocation of Tax Benefit. It is hereby recognized,
---------------------------------
acknowledged and agreed that each Partner's interest in the Profits and Losses
and Gain and Loss on Sale of the Partnership is attributable solely to such
Partner's contributions to the capital of the Partnership. In the event,
however, that any Partner is determined to have received all or any part of such
Partner's interest in the Profits and Losses and Gain and Loss on Sale of the
Partnership (as distinguished from such Partner's interest in the capital of the
Partnership) as compensation for services, and, as a result of such
determination, is required to recognize compensation income for federal and/or
state income tax purposes with respect to such interest in the Partnership, any
corresponding federal and/or state income tax benefit inuring to the Partnership
as a result of such determination, whether in the form of a deduction for
compensation paid, a deduction for depreciation or amortization of any asset of
the Partnership, a reduction in the gain required to be recognized by the
Partnership upon a sale of any of its assets, or otherwise, shall be allocated
for income tax purposes solely to the Partners required to recognize such
compensation income in an amount to each such Partner equal to the amount which
bears the same ratio to any such income tax benefit as the amount of such
compensation income required to be recognized by such Partner bears to the total
amount of such compensation income required to be recognized by all of such
Partners.
4.2.10 Transfer of Partnership Interests. If one or more Partnership
---------------------------------
Interest(s) are transferred during any fiscal year of the Partnership, the
Partnership income or loss attributable to such Partnership Interest(s) for such
fiscal year shall be allocated between the transferor and the transferee in any
manner permitted by law as they shall agree; provided, however, that if the
-10-
<PAGE>
Partnership does not receive on or before January 31 of the year following the
year in which the transfer occurs written notice stating the manner in which
such parties have agreed to allocate such Partnership income or loss, then all
such Partnership income or loss shall be allocated between the parties based on
the percentage of the year each party was, according to the books and records of
the Partnership, the owner of record of the Partnership interest(s) transferred
during that year.
4.3 General Rules.
-------------
4.3.1 Except as otherwise provided in this Agreement, all items of
Partnership income, gain, loss, deduction for federal and state income tax
purposes, and any other allocations not otherwise provided for shall be divided
among the Partners in the same proportions as they share Profits or Losses, as
the case may be, for the year.
4.3.2 For purposes of determining the Profits, Losses, or any other
items allocable to any period, Profits, Losses, and any such other items shall
be determined on a daily, monthly, or other basis, as determined by the General
Partner using any permissible method under Code Section 706 and the Regulations
thereunder.
4.4 Power of General Partner to Vary Allocations of Profits and Losses.
-------------------------------------------------------------------
It is the intent of the Partners that each Partner's allocable share of Profits
and Losses shall be determined and allocated in accordance with the provisions
of this Article IV to the fullest extent permitted by Section 704(b) of the
Code, or its statutory successor. However, if the Partnership is advised that
the allocations provided in this Article IV will not be respected for Federal
income tax purposes, the allocation provisions of this Agreement shall be
amended, on advice of accountants or legal counsel, in the manner and to the
extent in the best interest and consistent with the economic sharing of the
Partners, but in no event shall such reallocation be greater than the minimum
reallocation necessary so that the allocation in this Article IV will be
respected for Federal income tax purposes.
ARTICLE V
DISTRIBUTIONS
5.1 Net Operating Income. Except as provided in Article XIV or Section
--------------------
5.4 relating to the dissolution of the Partnership, any distribution of Net
Operating Income (less necessary and appropriate Reserves) approved by the
General Partner shall be distributed, subject to the provisions of Section
6.7.3, to the Partners in proportion to their Partnership Interests.
5.2 Distribution Among Partners. If any Interest in the Partnership is
----------------------------
sold, assigned or transferred in accordance with the terms of this Agreement
during any accounting period, then all distributions on or before the date of
such transfer shall be made to the transferor, and all distributions thereafter
shall be made to the transferee.
5.3 Amounts Withheld. All amounts withheld pursuant to the Code or any
-----------------
provision of any state or local tax law with respect to any payment or
distribution to the Partners shall be treated as amounts distributed to the
Partners pursuant to this Article V for all purposes under this Agreement.
5.4 Proceeds Available Upon Dissolution. Upon the dissolution and winding
------------------------------------
up of the Partnership, subject to (i) the requirement of Section 14.2 hereof,
(ii) the payment of all liabilities of
-11-
<PAGE>
the Partnership, including any debts owed to a Partner, and (iii) the
establishment of such Reserves as are reasonably necessary for any contingent or
unforeseen liabilities or obligations, the proceeds from such liquidation shall
be distributed, as expeditiously as possible, to the Partners in accordance with
their Capital Accounts, after giving effect to all contributions, distributions,
and allocations for all periods.
5.5 In Kind Distributions. If any assets of the Partnership shall be
----------------------
distributed in kind, such assets shall be distributed to the Partners entitled
thereto as tenants-in-common in the same proportions as such Partners would have
been entitled to cash distributions or in such other manner as the Partners
shall mutually agree.
5.6 Standards. The methods hereinabove set forth by which distributions
----------
and allocations are made are hereby expressly consented to by each Partner as an
express condition to becoming a Partner.
ARTICLE VI
THE GENERAL PARTNER
6.1 Authority and Obligations of General Partner. Except as expressly
---------------------------------------------
limited by the provisions of this Agreement, the General Partner shall have the
sole and exclusive right to manage and control, and shall have complete and
exclusive discretion in the management and control of the affairs and business
of the Partnership and shall have all powers necessary, convenient or
appropriate to carry out the purposes and business of the Partnership and shall
possess and enjoy with respect to the Partnership all of the rights and powers
of a general partner of a limited partnership to the extent permitted by the
Florida Act, including, without limitation, the right and power to:
(i) acquire by purchase, lease, or otherwise any real or personal
property which may be necessary, convenient, or incidental to the accomplishment
of the purposes of the Partnership;
(ii) operate, maintain, finance, improve, construct, own, grant
options with respect to, sell, convey, assign, mortgage, and lease any real
estate and any personal property necessary, convenient, or incidental to the
accomplishment of the purposes of the Partnership;
(iii) execute any and all agreements, contracts, documents,
certifications, and instruments necessary or convenient in connection with the
management, maintenance, and operation of Property, or in connection with
managing the affairs of the Partnership, including entering into management
agreements for the management of the Partnership and other agreements with
Affiliates of the Partnership, provided such agreements are arms length
transactions, and executing amendments to the Agreement and the Certificate in
accordance with the terms of the Agreement, pursuant to any power of attorney
granted by the Partner to the General Partner;
(iv) execute, in furtherance of any or all of the purposes of the
Partnership, any deed, lease, mortgage, deed of trust, mortgage note, promissory
note, bill of sale, contract, or other instrument purporting to convey or
encumber any or all of the Property;
-12-
<PAGE>
(v) advance funds on behalf of the Partnership for cash management
purposes or borrow money and issue evidences of indebtedness in furtherance of
any of the purposes of the Partnership and to prepay in whole or in part,
refinance, recast, increase, modify, or extend any liabilities affecting the
Property, and in connection therewith execute any extensions or renewals of
encumbrances on any or all of the Property;
(vi) care for and distribute funds to the General Partner and the
Limited Partners by way of cash, income, return of capital, or otherwise, all in
accordance with the provisions of this Agreement, and perform all matters in
furtherance of the objectives of the Partnership or this Agreement;
(vii) contract on behalf of the Partnership for the employment and
services of employees and/or independent contractors, such as lawyers and
accountants, and delegate to such Persons the duty to manage or supervise any of
the assets or operations of the Partnership;
(viii) engage in any activity necessary or incidental to, or in
connection with, the accomplishment of the purposes of the Partnership, as may
be lawfully carried on or performed by a partnership under the laws of each
state in which the Partnership is then formed or qualified;
(ix) take, or refrain from taking, all actions, not expressly
proscribed or limited by this Agreement, as may be necessary or appropriate to
accomplish the purposes of the Partnership; and
(x) institute, prosecute, defend, settle, compromise, and dismiss
lawsuits or other judicial or administrative proceedings brought on or in behalf
of, or against, the Partnership or the Partners in connection with activities
arising out of, in connection with, or incidental to this Agreement, and to
engage counsel or others in connection therewith.
6.2 Tax Matters Partner. The General Partner shall be the "Tax Matters
-------------------
Partner" of the Partnership within the meaning of Code Section 6231. By the
execution of this Agreement, each Limited Partner hereby appoints and agrees to
the designation of the General Partner as the Tax Matters Partner. In serving
as the Tax Matters Partner, the General Partner shall incur liability only as
set forth in Section 6.7 and shall be entitled to the indemnification contained
in Article VII.
6.3 Right to Rely on General Partner. The exercise of any power conferred
--------------------------------
by this Agreement on the General Partner shall serve to bind the Partnership and
constitute the act of the Partnership. Any Person dealing with the Partnership
may rely (without duty of further inquiry) upon a certificate signed by any
General Partner as to:
(i) the identity of any General Partner or Limited Partner;
(ii) the existence or nonexistence of any fact or facts which
constitute a condition precedent to acts by a General Partner or which are in
any other manner germane to the affairs of the Partnership;
(iii) the Persons who are authorized to execute and deliver any
instrument or document of the Partnership; or
-13-
<PAGE>
(iv) any act or failure to act by the Partnership or any other
matter whatsoever involving the Partnership or any Partner.
6.4 Restrictions on Authority of General Partner.
--------------------------------------------
6.4.1 Without the consent of Limited Partner, the General Partner
shall have no authority to:
(i) do any act in contravention of this Agreement:
(ii) do any act which would make it impossible to carry on the
ordinary business of the Partnership, except as otherwise provided in this
Agreement;
(iii) possess Property, or assign rights in specific Property, for
other than a Partnership purpose;
(iv) knowingly perform any act that would subject any Limited
Partner to liability as a general partner in any jurisdiction;
(v) file a voluntary petition or otherwise initiate proceedings to
have the Partnership adjudicated insolvent or seeking an order for relief of the
Partnership as debtor under the United States Bankruptcy Code (11 U.S.C.
(S)(S)101 et seq.), or file any petition seeking any composition,
-- ---
reorganization, readjustment, liquidation, dissolution or similar relief under
the present or any future federal bankruptcy laws or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency, or other relief for debtors with respect to the Partnership; or seek
the appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, liquidator (or other similar official) of the Partnership or of all
or any substantial part of the properties and assets of the Partnership, or make
any general assignment for the benefit of creditors of the Partnership, or admit
in writing the inability of the Partnership to pay its debts generally as they
become due, or declare or effect a moratorium on the Partnership's debt or take
any action in furtherance of any action; or
(vi) amend this Agreement except as permitted by Article XII;
(vii) become a surety, guarantor, endorser or accommodation endorser
for any other Person on behalf of the Partnership; or
(viii) make a confession of judgment against the Partnership for the
benefit of any creditor.
6.5 Duties and Obligations of General Partner.
-----------------------------------------
6.5.1 The General Partner shall take all actions which may be
necessary or appropriate (i) for the continuation of the Partnership's valid
existence as a limited partnership under the laws of the State of Florida and of
each other jurisdiction in which such existence is necessary to protect the
limited liability of the Limited Partners or to enable the Partnership to
conduct the business in which it is engaged and (ii) for the accomplishment of
the Partnership's purposes, including the development, maintenance,
preservation, and operation of the Property in accordance with the provisions of
this Agreement and applicable laws and regulations.
-14-
<PAGE>
6.5.2 The General Partner shall devote to the Partnership such time
as may be necessary for the proper performance of all duties hereunder, but the
General Partner shall not be required to devote full time to the performance of
such duties.
6.6 Liability of General Partner. The General Partner and all officers,
-----------------------------
directors, and stockholders of the General Partner shall not be liable to the
Partnership or to the Limited Partners or Assignees for any losses sustained or
liabilities incurred as a result of any act or omission of the General Partner
or any such officer, director, or stockholder if: the conduct of such General
Partner or such officer, director, or stockholder did not constitute fraud,
gross negligence, or willful or wanton misconduct. Except as otherwise
specifically set forth herein, the General Partner shall not be liable to the
Limited Partners because any taxing authorities disallow or adjust income,
deductions or credits in a Partnership income tax return. For purposes of this
Agreement, any act or omission, if done or omitted to be done in reliance, in
whole or in part, upon the advice of independent legal counsel or independent
public accountants selected with reasonable care, will be presumed to have been
done or omitted to be done in good faith and not to constitute gross negligence
or willful or wanton misconduct.
6.7 Compensation and Loans.
----------------------
6.7.1 Expenses. The General Partner may charge the Partnership for
--------
any direct expenses reasonably incurred in connection with the Partnership's
business.
6.7.2 Loans to the Partnership. Any Person may, with the consent of
------------------------
the General Partner, lend or advance money to the Partnership. If any Partner
shall make any loan or loans to the Partnership or advance money on its behalf,
the amount of any such loan or advance shall not be treated as a Capital
Contribution but shall be a debt due from the Partnership (the "Partner Loan").
The amount of any such loan or advance by a lending Partner shall be repayable
out of the Partnership's cash and shall bear interest at such rate as the
General Partner and the lending Partner shall agree. If a General Partner is the
lending Partner, the rate of interest shall be determined by the General Partner
taking into consideration, without limitation, prevailing interest rates and the
interest rates such General Partner is required to pay in the event such General
Partner has itself borrowed funds to loan or advance to the Partnership. None of
the Limited Partners shall be obligated to make any loan or advance to the
Partnership. Each Partner Loan shall accelerate and become immediately due and
payable upon the dissolution of the Partnership or upon the occurrence of such
other events set forth in the promissory note evidencing any such loan.
6.8 Operating Restrictions.
----------------------
6.8.1 All Property in the form of cash not otherwise invested shall
be deposited in one or more accounts maintained in such financial institutions
as the General Partner shall determine or shall be invested in short-term liquid
securities or shall be left in escrow and withdrawals shall be made only in the
regular course of Partnership business on such signature or signatures as the
General Partner may determine from time to time.
6.8.2 The signature of any General Partner shall be necessary and
sufficient to convey title to any real property owned by the Partnership or to
execute any promissory notes, trust deeds, mortgages, or other instruments of
hypothecation, and all of the Partners agree that a copy of this Agreement may
be shown to the appropriate parties in order to confirm the same, and further
-15-
<PAGE>
agree that the signature of any General Partner shall be sufficient to execute
any "statement of partnership" or other documents necessary to effectuate this
or any other provision of this Agreement. All of the Partners do hereby appoint
each General Partner as their attorney-in-fact for the execution of any or all
of the documents described herein.
ARTICLE VII
LIMITED PARTNER
7.1 Limitation on Limited Partner's Liabilities. The Limited Partner
-------------------------------------------
shall not be bound by, or be personally liable for, the expenses, liabilities or
obligations of the Partnership or the General Partner beyond the amount
contributed by the Limited Partners to the capital of the Partnership, the
Limited Partners' share of the accumulated but undistributed Net Operating
Income and the amount of any distribution (including the return of any Capital
Contribution) made to the Limited Partners that must be returned to the
Partnership pursuant to applicable law.
7.2 No Control of Business or Right to Act for Partnership. The Limited
------------------------------------------------------
Partner shall take no part in the management, conduct or control of the business
of the Partnership and shall have no right or authority to act for or to bind
the Partnership.
7.3 No Priority. Except as otherwise specifically set forth herein, the
-----------
Limited Partner shall not have the right to demand or receive property other
than cash in return of his Capital Contribution or as a distribution pursuant to
Section IV hereof.
7.4 Voting Rights. The Limited Partner shall only have the right to vote
-------------
on matters explicitly set forth in this Agreement.
7.5 Effect of Bankruptcy, Death or Incompetency of a Limited Partner. The
----------------------------------------------------------------
bankruptcy, death, dissolution, liquidation, termination or adjudication of
incompetency of a Limited Partner shall not cause the termination or dissolution
of the Partnership and the business of the Partnership shall continue. Upon any
such occurrence, the trustee, receiver, executor, administrator, committee,
guardian or conservator of such Limited Partner shall have all the rights of
such Limited Partner for the purpose of settling or managing its estate or
property, subject to satisfying conditions precedent to the admission of such
Assignee as a Substitute Limited Partner. The transfer by such trustee,
receiver, executor, administrator, committee, guardian or conservator of any
Partnership Interest shall be subject to all of the restrictions hereunder to
which such transfer would have been subject if such transfer had been made by
such bankrupt, deceased, dissolved, liquidated, terminated or incompetent
Limited Partner.
ARTICLE VIII
INDEMNIFICATION OF GENERAL PARTNER
8.1 Generally.
---------
8.1.1 The Partnership, its receiver, or its trustee shall indemnify,
save harmless, and pay all judgments and claims against any General Partner
relating to any liability or damage incurred by reason of any act performed or
omitted to be performed by such General Partner in
-16-
<PAGE>
connection with the business of the Partnership, including attorneys' fees
incurred by such General Partner in connection with the defense of any action
based on any such act or omission, which attorneys' fees may be paid as
incurred, including all such liabilities under federal and state securities laws
(including the Securities Act of 1933, as amended) as permitted by law.
8.1.2 In the event of any action by a Partner against the General
Partner, including a Partnership derivative suit, the Partnership shall
indemnify, save harmless, and pay all expenses of such General Partner,
including attorneys' fees, incurred in the defense of such action, if such
General Partner is successful in such action.
8.1.3 The Partnership shall indemnify, save harmless, and pay all
expenses, costs, or liabilities of the General Partner who for the benefit of
the Partnership makes any deposit, acquires any option, or makes any other
similar payment or assumes any obligation in connection with any property
proposed to be acquired by the Partnership and who suffers any financial loss as
the result of such action.
8.1.4 The General Partner shall not be entitled to indemnification
under this Section 8.1 if the conduct of the General Partner constitutes fraud,
gross negligence or willful or wanton misconduct. For purposes of this
Agreement, any act or omission, if done or omitted to be done in reliance, in
whole or in part, upon the advice of independent legal counsel or independent
public accountants selected with reasonable care, will be presumed to have been
done or omitted to be done in good faith and not to constitute gross negligence
or willful or wanton misconduct.
8.2 Insurance. The Partnership may purchase and maintain insurance
---------
on behalf of any one or more indemnitees under Section 8.1 and such other
persons as the General Partner shall determine against any liability which may
be asserted against or expense which may be incurred by such person in
connection with the Partnership's activities, whether or not the Partnership
would have the power to indemnify such person against such liability or expense
under the provisions of this Agreement. The General Partner and the Partnership
may enter into indemnity contracts with Indemnitees and adopt written procedures
pursuant to which arrangements are made for the advancement of expenses and the
funding of obligations under this Section 8.2 and containing such other
procedures regarding indemnification as are appropriate.
ARTICLE IX
TRANSFER OF INTERESTS
9.1 Restriction on Transfers. Except as otherwise permitted by this
------------------------
Agreement, no Partner shall Transfer all or any portion of his interest in the
Partnership.
9.2 Permitted Transfers. Subject to the terms of Section 9.6 hereof, the
-------------------
General Partner or the Limited Partner may Transfer ("Permitted Transfer") all
or any portion of their Partnership Interest with the consent of the other
Partner.
9.3 Prohibited Transfers.
--------------------
9.3.1 Any purported Transfer of Partnership Interest that is not a
Permitted Transfer shall be null and void and of no effect whatever; provided
that, if the Partnership is required
-17-
<PAGE>
to recognize a Transfer that is not a Permitted Transfer (or if the Partnership,
in its sole discretion, elects to recognize a Transfer that is not a Permitted
Transfer), the interest Transferred shall be strictly limited to the
transferor's rights to allocations and distributions as provided by this
Agreement with respect to the transferred Partnership Interest, which
allocations and distributions may be applied (without limiting any other legal
or equitable rights of the Partnership) to satisfy any debts, obligations, or
liabilities for damages that the transferor or transferee of such Partnership
Interest may have to the Partnership
9.3.2 In the case of a Transfer or attempted Transfer of a
Partnership Interest that is not a Permitted Transfer, the parties engaging or
attempting to engage in such transfer shall be liable to indemnify and hold
harmless the Partnership and the other Partners from all cost, liability, and
damage that any of such indemnified Persons may incur (including, without
limitation, incremental tax liability and lawyers' fees and expenses) as a
result of such Transfer or attempted Transfer and efforts to enforce the
indemnity granted hereby.
9.4 Rights of Unadmitted Assignees. A Person who acquires a Partnership
------------------------------
Interest but who is not admitted as a Substitute Partner pursuant to Section 9.5
hereof shall be entitled only to allocations and distributions with respect to
such interests in accordance with this Agreement, but shall have no right to any
information or accounting of the affairs of the Partnership, shall not be
entitled to inspect the books or records of the Partnership, and shall not have
any of the rights of a General Partner or a Limited Partner under the Act or the
Agreement.
9.5 Admission of Interest Holders as Partners. Subject to the other
-----------------------------------------
provisions of this Article IX, a transferee of Interests may be admitted to the
Partnership as a Substitute Partner only upon satisfaction of the following
conditions:
9.5.1 The Partnership Interest with respect to which the transferee
is being admitted were acquired by means of a Permitted Transfer with the
approval of the other Partners in the Partnership;
9.5.2 The transferee becomes a party to this Agreement as a Partner
and executes such documents and instruments as the General Partner may
reasonably request (including, without limitation, amendments to the
Certificate) as may be necessary or appropriate to confirm such transferee as a
Partner in the Partnership and such transferee's agreement to be bound by the
terms and conditions hereof;
9.5.3 The transferee pays or reimburses the Partnership for all
reasonable legal, filing, and publication costs that the Partnership incurs in
connection with the admission of the transferee as a Partner with respect to the
Transferred Interests; and
9.5.4 If the transferee is not an individual of legal majority, the
transferee provides the Partnership with evidence satisfactory to counsel for
the Partnership of the authority of the transferee to become a Partner and to be
bound by the terms and conditions of this Agreement.
-18-
<PAGE>
ARTICLE X
APPOINTMENT OF THE GENERAL PARTNER AS ATTORNEY-IN-FACT
10.1 General Partner As Attorney-in-Fact. Each Limited Partner,
-----------------------------------
irrevocably constitutes and appoints the General Partner as such Limited
Partner's true and lawful attorney and agent, with full power and authority in
such Limited Partner's name, place and stead, to execute, acknowledge, deliver,
file and record in the appropriate public offices all certificates or other
instruments (including without limitation counterparts of this Agreement) which
the General Partner deems appropriate to qualify or continue the Partnership as
a limited partnership in the jurisdictions in which the Partnership conducts
business including all amendments of this Agreement necessary to correct
scriveners' errors.
10.2 Survival of Appointment. The appointment by Limited Partner of the
-----------------------
General Partner as attorney-in-fact shall be deemed to be a power coupled with
an interest, in recognition of the fact that each of the Partners under this
Partnership Agreement will be relying upon the General Partner to act as
contemplated by this Partnership Agreement in any filing and other action by it
on behalf of the Partnership, and shall survive the death or incapacity of any
person hereby giving such power and the transfer by a Limited Partner of all or
part of his Interest. The foregoing power of attorney of a transferor Partner
shall survive such transfer only until such time as the transferee shall have
been admitted to the Partnership as a Substitute Limited Partner and all
required documents and instruments shall have been duly executed, filed and
recorded to effect such substitution. Any person dealing with the Partnership
may conclusively presume and rely upon the fact that any such instrument
executed by such agent and attorney-in-fact is authorized, regular and binding
without further inquiry.
ARTICLE XI
BOOK, RECORDS, ACCOUNTING AND REPORTS, AND TAX MATTERS
11.1 Availability. At all times during the existence of the Partnership,
------------
the General Partner shall keep or cause to be kept complete and accurate books
and records and shall be appropriate and adequate for the Partnership's
business. Such books and records, whether financial, operational or otherwise
and including a copy of this Agreement and any amendments thereto, shall at all
times be maintained at the principal place of business of the Partnership or
General Partner. Any Partner or his or its duly authorized representative shall
have the right at any time to inspect and copy from such books and documents
during normal business hours and the General Partner shall not have the right to
keep any information relating to the Partnership confidential from a Limited
Partner.
11.2 Annual Reports. As soon as practicable after the close of each fiscal
--------------
year but in no event later than ninety days after the fiscal year, the General
Partner shall deliver to each Limited Partner such information as shall be
necessary for the Limited Partner to use to prepare its federal and state tax
returns and shall deliver to each Limited Partner a financial report of the
Partnership for such fiscal year which shall include a balance sheet, a profit
and loss statement, a summary of the source and application of Partnership
funds, and a determination of individual Capital Accounts.
-19-
<PAGE>
11.3 Accounting Decisions. All decisions as to accounting matters, except
--------------------
as specifically provided to the contrary herein, shall be made by the General
Partner, including the method of accounting (cash or accrual). All such
decisions shall be in accordance with generally accepted accounting principles
or with the comprehensive method of accounting used for tax purposes. The
General Partner may rely upon the advice of the accountants of the Partnership
as to whether such decisions are in accordance with such methods.
11.4 Taxable Year and Accounting Method. The Partnership's taxable and
----------------------------------
fiscal years shall be the calendar year.
11.5 Tax Elections. In the case of a transfer of all or part of any
-------------
Interest, at the request of any Partner the Partnership will elect, pursuant to
Code Section 754 and pursuant to corresponding provisions of applicable state
and local tax laws, to adjust the basis of the Partnership's assets pursuant to
Code Sections 734 and 743 and pursuant to corresponding provisions of state and
local tax laws.
ARTICLE XII
AMENDMENT OF CERTIFICATE OF LIMITED PARTNERSHIP
The Certificate shall be amended without the prior agreement of the Limited
Partners whenever required by law or necessary to effect changes of a
ministerial nature which do not materially and adversely affect the rights or
increase the obligations of the Limited Partners including, without limitation,
changes in Partners or their addresses, or the admission of Substitute Limited
Partners pursuant to this Agreement.
ARTICLE XIII
MEETINGS
Informational meetings of the Partners shall be called by the General
Partner whenever it deems necessary or when requested in writing to do so by the
Limited Partner. Any such meeting may be held in person or by telephone
conference call.
ARTICLE XIV
DISSOLUTION OF THE PARTNERSHIP
14.1 Events Causing Dissolution. The Partnership shall be dissolved and
--------------------------
its affairs wound up on the first to occur of the following:
14.1.1 The General Partner, with the consent of a majority in
interest of the Limited Partners, shall determine that the Partnership should be
dissolved;
14.1.2 The sale or other disposition by the Partnership of all or
substantially all of the assets of the Partnership, unless the Partnership as
part of the consideration for any such sale or
-20-
<PAGE>
other disposition acquired a note, in which case the Partnership shall be
dissolved following the receipt by it of all required payments pursuant to the
terms of such note;
14.1.3 The expiration of the Partnership term pursuant to Article II
hereof;
14.1.4 When required by law; or
14.1.5 The Withdrawal or removal of the General Partner, unless the
business of the Partnership is continued by the consent of the Majority in
Interest of the Partners within 90 days after the Withdrawal and there are at
least two Partners.
14.2 Liquidation of Assets and Application of Proceeds. Upon the
-------------------------------------------------
dissolution and winding up of the Partnership, the General Partner shall
distribute the proceeds and undisposed Property as follows:
(i) First, to creditors, including Partners who are creditors, to
the extent and in the order of priority provided by law, in satisfaction of
liabilities of the Partnership, whether by payment or the making of reasonable
provisions for payment of such liabilities; and
(ii) Thereafter, to the Partners in accordance with Section 5.4.
ARTICLE XV
MISCELLANEOUS
15.1 Notices. All notices, demands, requests, consents or other
-------
communications required or permitted to be given or made under this Partnership
Agreement shall be in writing and signed by the party giving the same and shall
be deemed given or made upon delivery by overnight courier service or three days
after being mailed by certified or registered mail, postage prepaid to the
intended recipient as indicated at the address set forth on Exhibit A or any
other address of which prior written notice has been given.
15.2 Severability. In the event of the invalidity of any provision hereof,
------------
same shall be deemed stricken from this Agreement, which shall continue in full
force and effect as if the offending provision were never a part hereof.
15.3 Captions. Captions contained in this Agreement are inserted only as a
--------
matter of convenience and for reference and in no way define, limit, or extend
or describe the scope of this Agreement or the intent of any provision hereof.
15.4 Person and Gender. The masculine gender shall include the feminine
-----------------
and neuter genders, the singular shall include the plural and the word "person"
shall include a corporation, firm, partnership or other form of association.
15.5 Binding Agreement. Subject to the restrictions on assignment herein
-----------------
contained, the terms and provisions of this Agreement shall be binding upon, and
inure to the benefit of, the successors, assigns, personal representatives,
estates, heirs and legatees of the respective Partners.
-21-
<PAGE>
15.6 Applicable Law. Notwithstanding the place where this Agreement may be
--------------
executed by any of the parties hereto, the parties expressly agree that all the
terms and provisions hereof shall be construed under the laws of the State of
Florida.
15.7 Entire Agreement. This Agreement, together with the Exhibits hereto,
----------------
constitutes the entire agreement of the parties hereto with respect to matters
set forth herein and supersedes any prior understanding or agreement, oral or
written, with respect thereto.
15.8 Agreement in Counterparts. This Agreement may be executed in two or
-------------------------
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as
of the date first above written.
PHYSICIAN SALES & SERVICE, INC.
By: /s/ David A. Smith
-----------------------------------
Name: David A. Smith
Title: Executive Vice President
PSS HOLDING, INC.
By: /s/ Fred Elefant
-----------------------------------
Name: Fred Elefant
Title: President
-22-
<PAGE>
EXHIBIT A
---------
<TABLE>
<CAPTION>
Partners' Names and Addresses Capital Contributions Partnership Interests
- ------------------------------- -------------------------- --------------------------
<S> <C> <C>
Physician Sales & Service, Inc. Transfer of certain 10% General Partnership
assets related to the Interest
sale and distribution of
medical supplies and
equipment plus $90.
PSS Holding, Inc. Transfer of certain 90% Limited Partnership
assets related to the Interest
sale and distribution of
medical supplies and
equipment plus $810.
</TABLE>
<PAGE>
EXHIBIT 3.19
ARTICLES OF INCORPORATION
OF
CRESCENT CITY SURGICAL SUPPLIES, INC.
On this 28th day of August, 1979, the undersigned, a person of the full age
of majority, availing himself of the Business Corporation Law of the State of
Louisiana, does hereby organize a corporation subject to the following Articles
of Incorporation, to-wit.
ARTICLE I.
The name and title of this corporation shall be CRESCENT CITY SURGICAL
SUPPLIES, INC., and under and by said name, unless sooner dissolved in
accordance with law, it shall exist and continue and shall have and enjoy
corporate existence and succession in perpetuity or such maximum period as may
be authorized by the laws of Louisiana, during which time it shall have and
possess all the powers, rights, privileges, and immunities which corporations
are and may hereafter be authorized to have and possess under the Constitution
and laws of the State of Louisiana.
ARTICLE II.
The purpose of this corporation is to engage in any lawful activity for
which corporations may be formed under the Business Corporation Law of the State
of Louisiana.
ARTICLE III.
The aggregate number of shares which the corporation shall have the
authority to issue is One Hundred Thousand (100,000) shares of common stock;
said shares to be the only class of shares issued, and shall have no par value.
ARTICLE IV.
The name and post office address of the incorporator of this corporation is
Richard Cary Scofield, 4005 James Drive, Metairie, Louisiana 70003.
<PAGE>
ARTICLE V.
Cash, property or share dividends, shares issuable to shareholders in
connection with a reclassification of stock, and the redemption price of
redeemed shares, which are not claimed by the shareholders entitled thereto
within eighteen (18) months after the dividend or redemption price became
payable or the shares became issuable, despite reasonable efforts by the
corporation to pay the dividend or redemption price or deliver the certificates
for the shares to such shareholders within such time, shall, at the expiration
of such time, revert in full ownership to the corporation, and the corporation's
obligation to pay such dividend or redemption price or issue such shares, as the
case may be, shall thereupon cease; provided that the Board of Directors may, at
any time, for any reason satisfactory to it, but need not, authorize (a) payment
of the amount of any cash or property dividend or redemption price or (b)
issuance of any shares, ownership of which has reverted to the corporation
pursuant to this provision, to the entity who or which would be entitled thereto
had such reversion not occurred.
ARTICLE VI.
Any director or shareholder absent from a meeting of the Board of Directors
or shareholders, may, upon written appointment of a representative, be
represented by any shareholder or other director, who may cast the vote of the
absent director or shareholder according to the written instructions, general or
special, of the absent director or shareholder, filed with the Secretary.
ARTICLE VII.
The corporation may confer upon holders of any bonds, debentures or other
obligations issued or to be issued by the corporation, whether secured or
unsecured, the power to vote with the shareholders for directors or on other
matter, but any such power to vote, and the extent to which, and the conditions
and the manner in which such power
-2-
<PAGE>
to vote is to be exercised, may only be conferred with the authority or approval
of not less than seventy (70%) percent of the voting power present at any annual
or special meeting of the Shareholders the notice of which set forth the
proposed voting power to be conferred, its extent, and the conditions and manner
of exercise.
ARTICLE VIII.
Should the corporation reacquire any of its issued shares, by redemption or
purchase or any other means, then, unless otherwise required by law, such
reacquired shares shall be deemed treasury shares until such time as the Board
of Directors may, in its discretion, choose to cancel any or all such reacquired
shares. Shares which are canceled are thereby restored to the status of
authorized but unissued shares.
ARTICLE IX.
Shareholders shall have preemptive rights. In the event any shareholder
does not exercise his preemptive right, the shares in respect of which such
rights are not exercised shall then be offered pro rata to the remaining
shareholders who shall have preemptive rights to such shares, ad infinitum,
before any such shares may be offered to outside purchasers.
ARTICLE X.
No shareholder shall transfer (the word transfer meaning, for purposes of
this Article, any donation, sale, conveyance, assignment, alienation,
encumbrance or other transfer) his shares without first giving written notice to
the corporation, at its registered address, and to one of the registered, agents
of the corporation, of the nature and precise terms of the proposed transfer, at
least fifteen (15) days prior to the proposed date of closing such proposed
transfer. Upon receipt of such notice the corporation shall transmit same to
all other holders of the same class of shares proposed to be transferred, one or
more of whom (if more than one, in such proportions as they may agree or if no
-3-
<PAGE>
agreement can be reached then according to their percentage ownership of shares
relative to each other) shall for a period of fifteen (15) days after such
notice is received by the corporation be entitled: (i) to purchase all (but not
less thin all) of the shares at their fair market value, if the proposed
transfer is a bona fide sale the consideration for which is not readily and
accurately convertible into a cash equivalent, or is a bona fide donation,
except that no such right of purchase shall exist and this Article X shall not
apply to any donation to the spouse or descendants of a-shareholder; (ii) to
substitute himself or themselves for the proposed transferee on the same terms
and with the same collateral as set forth in the notice of transfer, if the
proposed transfer is an encumbrance; (iii) to purchase all (but all) of the
shares for the consideration stated in the notice of transfer, if the proposed
transfer is a bona fide sale for cash or for a consideration readily and
accurately convertible into a cash equivalent; and (iv) to purchase all (but not
less than all) of said shares at the lesser of their book market value, if the
proposed transfer is proposed in bad faith for the purpose of avoiding the
provisions of this Article or is any transfer other than those described in (i),
(ii), and (iii) above. The shareholder proposing to transfer his shares shall
be free to consummate the proposed transfer if the other shareholders do not
exercise the rights granted by this Article ,within the time permitted for such
exercise. If such rights are exercised, then the transaction between the
transferring shareholder and the other
-4-
<PAGE>
shareholders shall be consummated on the date on which the proposed transfer
would have been consummated, in default of which by the other shareholders for
any reason other than a bona fide dispute as to the terms of such transaction
between them and the transferring shareholder, the transferring shareholder
shall be free to consummate the proposed transfer.
The rights granted by this Article may be waived at any time in writing, by
those shareholders to whom they are granted. Reference shall be made to the
provisions of this Article X on each share of stock issued by the corporation.
ARTICLE XI.
The corporation shall have the authority expressed in Section 56 of the
Business Corporation Law (La. R.S. 12:56), but only upon the approval of seventy
(70%) percent of the total voting power of the shareholders.
ARTICLE XII.
Agreements of merger and/or consolidation must be approved by seventy (70%)
percent of the total voting power of the corporation.
ARTICLE XIII.
Whenever by any provision of law, these Articles of Incorporation or the
By-Laws of this corporation the affirmative vote by Shareholders or directors is
required to authorize, approve, initiate, or in any way constitute corporate
action, the consent in writing to such corporate action signed by shareholders
or directors holding that proportion of the total voting power on the question
which is required by the Articles, By-Laws or provision of law, whichever
requirement is higher, shall be sufficient for the purpose, without necessity
for a meeting of the Shareholders or Directors.
-5-
<PAGE>
ARTICLE XIV.
These Articles of Incorporation way be amended only by the affirmative
vote, in favor of any amendment, of seventy (70%) percent of the total voting
power of the corporation.
IN WITNESS WHEREOF, these Articles of incorporation are executed by the
undersigned incorporator in triplicate, at New Orleans, Louisiana, on the date
first above written.
/s/ Richard Cary Scofield
-------------------------------------
RICHARD CARY SCOFIELD, Incorporator
-6-
<PAGE>
A C K N O W L E D G M E N T
---------------------------
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned authority, personally came and appeared:
RICHARD CARY SCOFIELD.
who, being by me duly sworn, did depose and state that:
He is a person of-the full age of majority and he executed the foregoing
Articles of Incorporation of Crescent City Surgical Supplies, Inc., for the
purpose therein expressed and as his free act and deed.
/s/ Richard Cary Scofield
--------------------------------------
RICHARD CARY SCOFIELD, Incorporator
SWORN TO AND SUBSCRIBED
BEFORE ME, NOTARY, THIS
28th DAY OF August, 1979.
_____________________________
Notary Public
-7-
<PAGE>
(R.S. 1950, 12:101)
STATE OF LOUISIANA
PARISH OF JEFFERSON
TO: The Secretary of State
Baton Rouge, Louisiana
Complying with R.S. 1950, 12:101, CRESCENT CITY SURGICAL SUPPLIES, INC.
Hereby makes its initial report as follows:
Location & Post Office address at:
2917 Lime Street, Metairie, Louisiana 70001
Name & Post Office address of each of its Registered Agents:
Michael C. McCrossen, 8012 Borocco Street, Harahan, LA 70023
Gerald J. Jeandran, 8308 Prince Drive, Chalmette, LA
Names & Addresses of the First Directors (if selected when articles are filed)
Richard Cary Scofield, 4005 James Drive, Metairie, LA 70003
Raphael W. Roy, Jr., 9717 Paula Drive, River Ridge, LA 70123
Michael Clayton McCrossen, 8012 Borocco Street, Harahan, LA 70023
David Loyd Davidson, 3741 Fran Street, Metairie, LA 70001
Gerald J. Jeandron, 8308 Prince Drive, Chalmette, LA 70043
Dated at Metairie, Louisiana, on the 27th day of August, 1979.
/s/ Richard Cary Scofield
-------------------------------------
RICHARD CARY SCOFIELD, Incorporator
<PAGE>
AMENDMENT TO ARTICLES OF INCORPORATION
OF
CRESCENT CITY SURGICAL SUPPLIES, INC.
On May 21, 1982, the shareholders of CRESCENT CITY SURGICAL SUPPLIES
Louisiana corporation, at a special meeting at which over seventy (70%) of the
outstanding shares of common stock entitled to vote were represented, by a vote
of 100,000 shares for and 0 shares against, amended its Articles of
Incorporation as follows:
Article X of the original Articles of Incorporation of CRESCENT CITY
SURGICAL SUPPLIES, INC. is hereby deleted.
These Articles of Amendment are dated March 1, 1983.
/s/ Michael C. McCrossen
---------------------------------------
MICHAEL C. McCROSSEN, President
/s/ David L. Davidson
---------------------------------------
DAVID L. DAVIDSON, Secretary/Treasurer
SWORN TO AND SUBSCRIBED
BEFORE ME THIS
17th DAY OF JUNE, 1983
/s/ Vallerie Dyner
- ---------------------------------------
NOTARY PUBLIC
<PAGE>
ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION
of
CRESCENT CITY SURGICAL SUPPLIES, INC.
On March 29, 1984, the holders of all of the outstanding voting shares of
Crescent City Surgical Supplies, Inc., a Louisiana corporation, unanimously
consented to:
1 - The amendment of Article III of its Articles of Incorporation to
read: "The corporation has authority to issue one million (1,000,000)
shares of no-par value common stock";
2 - The amendment of Article VII of its Articles of Incorporation to
read: "Any corporate action of shareholders, including specifically,
but not by way of limitation, adoption of amendments to the articles
and approval thereof by class vote, approval of merger and
consolidation agreements, and authorization of voluntary disposition
of all or substantially all of the corporate assets, may be taken on
affirmative vote of (a) a majority of the voting power present, or (b)
in the case of a class vote, the holders of a majority of the shares
of each class or series present or represented at the meeting";
3 - The amendment of Article VIII of its Articles of Incorporation to
read: "Consents in writing to corporate action may be signed by
shareholders having that proportion of the total voting power which
would be required to authorize or constitute such action at a meeting
of shareholders"; and
4 - The deletion, in their entirety, of Articles IX, XI, XII, XIII and
XIV of its Articles of Incorporation.
<PAGE>
Metairie, Louisiana, March 29, 1984.
CRESCENT CITY SURGICAL SUPPLIES, INC.
By: /s/ Michael C. McCrossen
----------------------------------
Michael C. McCrossen
President
By: /s/ Raphael W. Roy, Jr.
----------------------------------
Raphael W. Roy, Jr.
Secretary-Treasurer
-2-
<PAGE>
STATE OF LOUISIANA:
PARISH OF JEFFERSON:
On March 29, 1984, before me and the undersigned witnesses personally
appeared Michael C. McCrossen, to me personally known, who being by me first
duly sworn, did say he is the president of Crescent City Surgical Supplies, and
that the foregoing instrument was signed by him in behalf of said corporation,
and he further acknowledged said instrument to be the free act and deed of said
corporation.
WITNESSES:
/s/ Judy N. Melancon
- --------------------
/s/ Christina G. Aimes /s/ Michael C. McCrossen
- ---------------------- ------------------------
Michael C. McCrossen
________________________
Notary Public
<PAGE>
CERTIFICATE OF MERGER
---------------------
The undersigned, being the duly elected and qualified President and
Secretary of Crescent City Surgical Supplies, Inc., a Louisiana corporation,
hereby certify that in order to merge Standard Surgical Supply, Inc., a
Louisiana corporation and a owned subsidiary of Crescent City Surgical Supplies,
Inc., Crescent City Surgical Supplies, Inc., the Board of Directors of Crescent
City Surgical Supplies, Inc. adopted the following resolutions at a meeting duly
held on January 2, 1986.
RESOLVED, that Standard Surgical Supply, Inc., a wholly owned subsidiary of
this corporation, be and is hereby merged into this corporation, and that
is corporation, as the surviving corporation, assume all of the obligations
of the said Standard Surgical Supply, Inc. as of said date.
RESOLVED FURTHER, that Walter L. Brown, Jr., President and Jack D. Dienes,
Secretary, of this corporation, be and they are hereby authorized and
directed, for and on behalf of this corporation and in its name, to execute
and file a certificate of Merger with the Secretary of State of Louisiana,
the Recorder of Mortgages for the Parish of Orleans, State of Louisiana and
the Clerk of Court, and Officio Recorder of Mortgages for the Parish of
Jefferson, State of Louisiana, in accordance with the provisions of La.
R.S. 12:112(H), and to execute any and all other documents and to do every
other act or thing which they, in their uncontrolled discretion, may deem
necessary or proper to effectuate said merger.
The undersigned further certify that said resolutions have never been
rescinded nor modified.
Witness our signatures this 2nd day of January, 1986.
/s/ Walter L. Brown, Jr.
-----------------------------------
Walter L. Brown, Jr., President
/s/ Jack D. Dienes
-----------------------------------
Jack D. Dienes, Secretary
<PAGE>
STATE OF LOUISIANA
PARISH OF ORLEANS
On this 2nd day of January, 1986, before me appeared Walter own, Jr. and
Jack D. Dienes, to me personally known, who, duly sworn did say that they are
the President and Secretary, respectively, of crescent City Surgical Supplies,
that they executed the above and foregoing Certificate of Merger, that the
instrument was signed in behalf of the corporation by authority of its Board of
Directors, and that Walter L. Brown, Jr. and Jack D. Dienes acknowledged the
instrument to be the free act and deed of the corporation.
/s/ Christopher J. Dicharry
---------------------------
NOTARY PUBLIC
<PAGE>
AMENDMENT TO THE ARTICLES OF
INCORPORATION OF CRESCENT
CITY SURGICAL SUPPLIES, INC.
---------------------------
KNOW ALL MEN BY THESE PRESENTS that the holders and owners of all of the
outstanding shares of the capital stock of Crescent City Surgical Supplies,
Inc., a Louisiana corporation, a special meeting of the shareholders held on
January 2, 1986, have amended Articles I and III of the Articles of corporation
of the said Crescent City Surgical Supplies, c., to read in their entirety as
follows, to-wit:
"ARTICLE I.
"The name of this corporation is:
Standard/Crescent City Surgical Supplies, Inc.,"
"ARTICLE III.
"The corporation has authority to issue an aggregate of 200,000 shares of
no par value common stock, 100,000 shares of which shall be designated as
Class A common stock and the remaining 100,000 shares of which shall be
designated as Class B common stock.
"The shares of Class A common stock and :h., shares of Class B common stock
shall be identical in all respects except that the Class A common stock
shall have voting power, at all elections and general and special meetings
of the shareholders, of one vote for each share and the Class B common
stock shall have no voting power whatsoever except as otherwise provided by
statute.
"Each share of the no par value capital stock of this corporation now
issued and outstanding shall be equal to and is hereby changed into one-
twentieth fully paid nonassessable share of the Class A common stock of
this corporation authorized to be issued under the Articles of
Incorporation as hereby amended and restated. Certificates of Class A
common stock shall be issued in place of and upon the surrender of
certificates for shares of the no par value common stock of this
corporation now issued and outstanding on the aforesaid basis; provided,
however, that as of the date of this amendment the holders of the shares of
the issued and outstanding no par value capital stock of this corporation
shall cease to be holders of such shares and shall be holders of Class A
common stock, whether or not certificates representing said Class A common
stock shall have been issued and delivered."
<PAGE>
IN WITNESS WHEREOF the undersigned have executed and dated this Amendment
of the Articles of Incorporation of Crescent City Surgical Supplies, Inc. on
behalf of said corporation this 2nd day of January, 1986.
CRESCENT CITY SURGICAL SUPPLIES, INC.
By: /s/ Walter L. Brown, Jr.
---------------------------------
Walter L. Brown, Jr., President
/s/ Jack D. Dienes
---------------------------------
Jack D. Dienes, Secretary
STATE OF LOUISIANA
PARISH OF ORLEANS
On this 2nd day of January, 1986, before me appeared WALTER L. BROWN, JR.
and JACK D. DIENES, to me personally known, who, being by me duly sworn did say
that they are the President and Secretary, respectively, of Crescent City
Surgical Supplies, Inc., that they executed the above and going Amendment of the
Articles of Incorporation of Crescent City Surgical Supplies, Inc., and that the
instrument signed in behalf of said corporation by authority of its
shareholders, and that the said Walter L. Brown, Jr. and Jack Dienes,
acknowledged the instrument to be the free act and deed of the said corporation.
IN WITNESS WHEREOF I have hereunto set my hand and official seal of office
this day of January, 1986.
/s/ Christopher J. Dicharry
---------------------------
NOTARY PUBLIC
-2-
<PAGE>
NOTICE OF NEW ADDRESS OF REGISTERED AGENT
FOR SERVICE OF PROCESS
TO: The Secretary of State for the State of Louisiana
Notice is hereby given pursuant to La. R.S. Title 12:104, Title 12:236 and
Title 12:308, of the new address of C T Corporation System's Office in the State
of Louisiana where process may be served for the corporations represented by C T
Corporation System, as shown on the records of the Secretary of State, and under
Title 9:3424 for foreign partnerships.
The Agent for Service of Process, C T Corporation System, was formerly
located at 601 Poydras Street, New Orleans, Louisiana 70130.
The new address for the subject Agent for Service of Process, C T
Corporation System is 8550 United Plaza Boulevard, Baton Rouge, Louisiana 70809.
Notice is also given pursuant to La. R.S. Title 12:104, Title 12:236 and
Title 12:308, that the registered office of each corporation shown on the
records of the Secretary of State; and under Title 9:3424 for foreign
partnerships, to be represented by C T Corporation System and designating 601
Poydras Street, New Orleans, Louisiana 70130, is changed to 8550 United Plaza
Boulevard, Baton Rouge, Louisiana 70809.
All such corporations and foreign partnerships may now be served at the new
address of the Agent for Service of Process as set forth above, as of February
1, 1993.
I Kenneth J. Uva, Vice President of the aforesaid corporation, hereby
declare the contents of this Notice true to the best of my knowledge and belief,
as of this 19th day of January, 1993.
C T CORPORATION SYSTEM
By: /s/ Kenneth J. Uva
------------------
Kenneth J. Uva
<PAGE>
This form prepared and furnished by: Fee for Filing $20.00
Secretary of State
NOTICE OF CHANGE OF LOCATION OF REGISTERED OFFICE
AND/OR CHANGE OF REGISTERED AGENT BY LOUISIANA CORPORATIONS
(R.S. 12:104 - R.S. 12:236)
Name of Corporation: STANDARD/CRESCENT CITY SURGICAL SUPPLIES, INC.
Registered Office: 601 Poydras Street
New Orleans, Louisiana 70130
Name and Address of Registered Agent(s):
C T CORPORATION SYSTEM
601 Poydras Street
New Orleans, Louisiana 70130
If the registered agent is changed, the new agent(s) must sign below before a
notary public as required by Act 769 of 1987.
I hereby accept the appointment of registered agent.
New registered agent(s):
C T CORPORATION SYSTEM
/s/ Peter F. Souza
- ------------------
Peter F. Souza
Special Assistant Secretary Sworn to and subscribed before me
this 16th day of March, 1992
__________________________________
___________________________
__________________________________ Notary Public
Date: ____________________________ /s/ Patrick Kelly
-----------------
To be signed by President,
Vice-President, or Secretary
Patrick Kelly, President
<PAGE>
Exhibit 3.20
STANDARD/CRESCENT CITY SURGICAL SUPPLIES, INC.
AMENDED AND RESTATED
BYLAWS
SECTION I
CAPITAL STOCK
SECTION 1.1. CERTIFICATES. Every holder of stock in the Corporation shall
be entitled to have a certificate signed in the name of the Corporation by the
Chairman of the Board of Directors or the President or a Vice President, and by
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation certifying the number of shares in the Corporation
owned by such holder. If such certificate is countersigned (a) by a transfer
agent other than the Corporation or its employee, or, (b) by a registrar other
than the Corporation or its employee, any other signature on the certificate may
be a facsimile. In case any officer, transfer agent, or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent, or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if such
person were such officer, transfer agent, or registrar at the date of issue.
SECTION 1.2. RECORD OWNERSHIP. A record of the name and address of the
holder of each certificate, the number of shares represented thereby and the
date of issue thereof shall be made on the Corporation's books. The Corporation
shall be entitled to treat the holder of record of any share of stock as the
holder in fact thereof, and accordingly shall not be bound to recognize any
equitable or other claim to or interest in any share on the part of any other
person, whether or not it shall have express or other notice thereof, except as
required by the laws of the State of Louisiana.
SECTION 1.3. TRANSFER OF RECORD OWNERSHIP. Transfers of stock shall be
made on the books of the Corporation only by direction of the person named in
the certificate or such person's attorney, lawfully constituted in writing, and
only upon the surrender of the certificate therefor and a written assignment of
the shares evidenced thereby, which certificate shall be canceled before the new
certificate is issued.
SECTION 1.4. LOST CERTIFICATES. Any person claiming a stock certificate in
lieu of one lost, stolen or destroyed shall give the Corporation an affidavit as
to such person's ownership of the certificate and of the facts which go to prove
its loss, theft or destruction. Such person shall also, if required by policies
adopted by the Board of Directors, give the Corporation a bond, in such form as
may be approved by the Corporation, sufficient to indemnify the Corporation
against any claim that may be made
<PAGE>
against it on account of the alleged loss of the certificate or the issuance of
a new certificate.
SECTION 1.5. TRANSFER AGENTS; REGISTRARS; RULES RESPECTING CERTIFICATES.
The Board of Directors may appoint, or authorize any officer or officers to
appoint, one or more transfer agents and one or more registrars. The Board of
Directors may make such further rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates of the
Corporation.
SECTION 1.6. RECORD DATE. The Board of Directors may fix in advance a
future date, not exceeding 60 days (nor, in the case of a stockholders' meeting,
less than ten days) preceding the date of any meeting of stockholders, payment
of dividend or other distribution, allotment of rights, or change, conversion or
exchange of capital stock or for the purpose of any other lawful action, as the
record date for determination of the stockholders entitled to notice of and to
vote at any such meeting and any adjournment thereof, or to receive any such
dividend or other distribution or allotment of rights, or to exercise the rights
in respect of any such change, conversion or exchange of capital stock, or to
participate in any such other lawful action, and in such case such stockholders
and only such stockholders as shall be stockholders of record on the date so
fixed shall be entitled to such notice of and to vote at such meeting and any
adjournment thereof, or to receive such dividend or other distribution or
allotment of rights, or to exercise such rights, or to participate in any such
other lawful action, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any such record date fixed as
aforesaid.
SECTION II
MEETINGS OF STOCKHOLDERS
SECTION 2.1. ANNUAL. The annual meeting of stockholders for the election
of directors and the transaction of such other proper business shall be held
within or without the State of Louisiana on such date and at such time as shall
be designated by the Board of Directors.
SECTION 2.2. SPECIAL. Special meetings of stockholders for any purpose or
purposes may be called by the Board of Directors, pursuant to a resolution
adopted by a majority of the members of the Board of Directors then in office,
or by the holders of not less than fifty percent (50%) of all shares entitled to
vote at the meeting. Special meetings may be held at any place, within or
without the State of Louisiana, as determined by the Board of Directors. The
only business which may be conducted at such a meeting, other than procedural
matters and matters relating to the conduct of the meeting, shall be the matter
or matters described in the notice of the meeting.
-2-
<PAGE>
SECTION 2.3. NOTICE. Written notice of each meeting of stockholders,
stating the date, time, place and, in the case of a special meeting, the purpose
thereof, shall be given as provided by law by the Secretary or an Assistant
Secretary not less than ten days nor more than 60 days before such meeting
(unless a different time is specified by law) to every stockholder entitled by
law to notice of such meeting.
SECTION 2.4. LIST OF STOCKHOLDERS. A complete list of the stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder, shall be prepared by the Secretary and shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified at the place where the meeting is to be held, for at least ten days
before the meeting and at the place of the meeting during the whole time of the
meeting.
SECTION 2.5. QUORUM. The holders of shares of stock entitled to cast a
majority of the votes on the matters at issue at a meeting of stockholders,
present in person or represented by proxy, shall constitute a quorum, except as
otherwise required by the Louisiana Business Corporation Law. In the event of a
lack of a quorum, the chairman of the meeting or a majority in interest of the
stockholders present in person or represented by proxy may adjourn the meeting
from time to time without notice other than announcement at the meeting, until a
quorum shall be obtained. At any such adjourned meeting at which there is a
quorum, any business may be transacted that might have been transacted at the
meeting originally called.
SECTION 2.6. ORGANIZATION AND PROCEDURE.
(a) The Chairman of the Board, or, in the absence of the Chairman of the
Board, the Vice Chairman, if any, or, in the absence of the Vice Chairman, the
President, or any other person designated by the Board of Directors, shall
preside at meetings of stockholders. The Secretary of the Corporation shall act
as secretary, but in the absence of the Secretary, the presiding officer may
appoint a secretary.
(b) At each meeting of stockholders, the chairman of the meeting shall fix
and announce the date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at the meeting and shall
determine the order of business and all other matters of procedure. Except to
the extent inconsistent with any such rules and regulations as adopted by the
Board of Directors, the chairman of the meeting may establish rules, which need
not be in writing, to maintain order for the conduct of the meeting, including,
without limitation, restricting attendance to bona fide stockholders of record
and their proxies and other persons in attendance at the invitation of the
chairman and making rules governing speeches and debates. The chairman of the
meeting acts in his or her absolute discretion and his or her rulings are not
subject to appeal.
-3-
<PAGE>
SECTION 2.7. VOTING. Unless otherwise provided by the Louisiana Business
Corporation Act, each stockholder shall be entitled to one vote, in person or by
written proxy, for each share held of record by such stockholder who is entitled
to vote generally in the election of directors. All elections for the Board of
Directors shall be decided by a plurality of the votes cast and all other
questions shall be decided by a majority of the votes cast, except as otherwise
required by the Louisiana Business Corporation Law or as provided for in the
Certificate of Incorporation or these Bylaws. Abstentions shall not be
considered to be votes cast.
SECTION 2.8. INSPECTORS. The Board of Directors by resolution shall, in
advance of any meeting of stockholders, appoint one or more inspectors, which
inspector or inspectors may include individuals who serve the Corporation in
other capacities, including, without limitation, as officers, employees, agents
or representatives of the Corporation, to act at the meeting and make a written
report thereof. One or more persons may be designated by the Board of Directors
as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the chairman
of the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before discharging his or her duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his or her ability. The inspectors shall have the
duties prescribed by the Louisiana Business Corporation Law.
SECTION III
BOARD OF DIRECTORS
SECTION 3.1. POWERS OF THE BOARD OF DIRECTORS. The business and affairs of
the Corporation shall be managed by or under the direction of its Board of
Directors. In furtherance, and not in limitation, of the powers conferred by the
laws of the State of Louisiana, the Board of Directors is expressly authorized
to:
(a) adopt, amend, alter, change or repeal the Bylaws of the Corporation,
by the affirmative vote of a majority of the whole Board of Directors; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors; and provided, further, that no Bylaws hereafter adopted
-------- -------
shall invalidate any prior act of the directors that would have been valid if
such new Bylaws had not been adopted;
(b) determine the rights, powers, duties, rules and procedures that affect
the power of the Board of Directors to manage and direct the business and
affairs of the Corporation, including the power to designate and empower
committees of the Board of Directors, to elect, appoint and empower the officers
and other agents of the Corporation, and to determine the time and place of, and
the notice requirements for, Board meetings,
-4-
<PAGE>
as well as quorum and voting requirements for, and the manner of taking, Board
action; and
(c) exercise all such powers and do all such acts as may be exercised or
done by the Corporation, subject to the provisions of the laws of the State of
Louisiana, the Certificate of Incorporation and these Bylaws.
SECTION 3.2. NUMBER AND QUALIFICATIONS. The number of directors
constituting the Board of Directors shall be as authorized from time to time
exclusively by a vote of a majority of the voting power of all of the shares of
capital stock of the Corporation then entitled to vote generally in the election
of directors.
SECTION 3.3. VACANCIES. Any vacancies in the Board of Directors for any
reason and any newly created directorships resulting by reason of any increase
in the number of directors may be filled by a majority of the directors then in
office, although less than a quorum, or by the sole remaining director.
SECTION 3.4. REMOVAL OF DIRECTORS. Any director, or the entire Board of
Directors, may be removed from office at any time, with or without cause, by the
affirmative vote of the holders of at least a majority of the voting power of
all of the shares of capital stock of the Corporation then entitled to vote
generally in the election of directors, voting together as a single class.
SECTION 3.5. RESIGNATION. A director may resign at any time by giving
written notice to the Chairman of the Board, to the President, or to the
Secretary. Unless otherwise stated in such notice of resignation, the acceptance
thereof shall not be necessary to make it effective; and such resignation shall
take effect at the time specified therein or, in the absence of such
specification, it shall take effect upon the receipt thereof.
SECTION IV
MEETINGS OF BOARD OF DIRECTORS
SECTION 4.1. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without further notice at such time as shall from time to time be
determined by the Board of Directors. A meeting of the Board of Directors for
the election of officers and the transaction of such other business as may come
before it may be held without notice immediately following the annual meeting of
stockholders.
SECTION 4.2. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the President, or at the request
in writing of one-third of the members of the Board of Directors then in office.
SECTION 4.3. NOTICE OF SPECIAL MEETINGS. Notice of the date, time and
place of each special meeting shall be mailed by regular mail to each director
at his or her
-5-
<PAGE>
designated address at least six days before the meeting; or sent by overnight
courier to each director at his or her designated address at least two days
before the meeting (with delivery scheduled to occur no later than the day
before the meeting); or given orally by telephone or other means, or by
telegraph or telecopy, or by any other means comparable to any of the foregoing,
to each director at his designated address at least 24 hours before the meeting;
provided, however, that if less than five days' notice is provided and one-third
- -------- -------
of the members of the Board of Directors then in office object in writing prior
to or at the commencement of the meeting, such meeting shall be postponed until
five days after such notice was given pursuant to this sentence (or such shorter
period to which a majority of those who objected in writing agree), provided
that notice of such postponed meeting shall be given in accordance with this
Section 4.3. The notice of the special meeting shall state the general purpose
of the meeting, but other routine business may be conducted at the special
meeting without such matter being stated in the notice.
SECTION 4.4. PLACE OF MEETINGS. The Board of Directors may hold their
meetings and have an office or offices inside or outside of the State of
Louisiana.
SECTION 4.5. TELEPHONIC MEETING AND PARTICIPATION. Any or all of the
directors may participate in a meeting of the Board of Directors or any
committee thereof by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
such participation shall constitute presence in person at the meeting.
SECTION 4.6. ACTION BY DIRECTORS WITHOUT A MEETING. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board of Directors or of such committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.
SECTION 4.7. QUORUM AND ADJOURNMENT. A majority of the directors then
holding office shall constitute a quorum. The vote of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. Whether or not a quorum is present to conduct a meeting,
any meeting of the Board of Directors (including an adjourned meeting) may be
adjourned by a majority of the directors present, to reconvene at a specific
time and place. It shall not be necessary to give to the directors present at
the adjourned meeting notice of the reconvened meeting or of the business to be
transacted, other than by announcement at the meeting that was adjourned;
provided, however, notice of such reconvened meeting, stating the
- -------- -------
date, time, and place of the reconvened meeting, shall be given to the directors
not present at the adjourned meeting in accordance with the requirements of
Section 4.3 hereof.
SECTION 4.8. ORGANIZATION. The Chairman of the Board, or in the absence
of the Chairman of the Board, a member of the Board of Directors selected by the
members present, shall preside at meetings of the Board of Directors. The
Secretary of the
-6-
<PAGE>
Corporation shall act as secretary, but in the absence of the Secretary, the
presiding officer may appoint a secretary.
SECTION 4.9. COMPENSATION OF DIRECTORS. Directors shall receive such
compensation for their services as the Board of Directors may determine. Any
director may serve the Corporation in any other capacity and receive
compensation therefor.
SECTION 4.10. PRESUMPTION OF ASSENT. A director of the Corporation who is
present at a meeting of the Board of Directors when a vote on any matter is
taken is deemed to have assented to the action taken unless he or she votes
against or abstains from the action taken, or unless at the beginning of the
meeting or promptly upon arrival the director objects to the holding of the
meeting or transacting specified business at the meeting. Any such dissenting
votes, abstentions or objections shall be entered in the minutes of the meeting.
SECTION V
COMMITTEES
SECTION 5.1. COMMITTEES. The Board of Directors may, by resolutions passed
by a majority of the members of the Board of Directors, designate members of the
Board of Directors to constitute committees which shall in each case consist of
such number of directors, and shall have and may execute such powers as may be
determined and specified in the respective resolutions appointing them. Any such
committee may fix its rules of procedure, determine its manner of acting and the
time and place, whether within or without the State of Louisiana, of its
meetings and specify what notice thereof, if any, shall be given, unless the
Board of Directors shall otherwise by resolution provide. Unless otherwise
provided by the Board of Directors or such committee, the quorum, voting and
other procedures shall be the same as those applicable to actions taken by the
Board of Directors. A majority of the members of the Board of Directors then in
office shall have the power to change the membership of any such committee at
any time, to fill vacancies therein and to discharge any such committee or to
remove any member thereof, either with or without cause, at any time.
SECTION VI
OFFICERS
SECTION 6.1. DESIGNATION. The officers of the Corporation shall be a
Chairman of the Board, a President, a Treasurer and a Secretary, and the Board
of Directors may elect or appoint, or provide for the appointment of, one or
more Assistant Secretaries and Assistant Treasurers. The Board of Directors may
elect or appoint, or provide for the appointment of, such other officers,
including a Vice Chairman and one or more Vice Presidents in such gradation as
the Board of Directors may determine, or agents as may
-7-
<PAGE>
from time to time appear necessary or advisable in the conduct of the business
and affairs of the Corporation. Any number of offices may be held by the same
person.
SECTION 6.2. ELECTION TERM. At its first meeting after each annual meeting
of stockholders, the Board of Directors shall elect the officers or provide for
the appointment thereof. Subject to Sections 6.3 and 6.4 hereof, the term of
each officer elected by the Board of Directors shall be until the first meeting
of the Board of Directors following the next annual meeting of stockholders and
until such officer's successor is chosen and qualified.
SECTION 6.3. RESIGNATION. Any officer may resign at any time by giving
written notice to the President or the Secretary. Unless otherwise stated in
such notice of resignation, the acceptance thereof shall not be necessary to
make it effective; and such resignation shall take effect at the time specified
therein or, in the absence of such specification, it shall take effect upon the
receipt thereof.
SECTION 6.4. REMOVAL. Any officer may be removed at any time with or
without cause by the affirmative vote of a majority of the members of the Board
of Directors then in office. Any officer appointed by another officer may be
removed with or without cause by such officer or the Chief Executive Officer.
SECTION 6.5. VACANCIES. A vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors or, in the case of
offices held by officers who may be appointed by other officers, by any officer
authorized to appoint such officer.
SECTION 6.6. CHIEF EXECUTIVE OFFICER. The President shall initially be the
Chief Executive Officer of the Corporation and thereafter, at such time as the
Board of Directors shall determine, the Chief Executive Officer shall be such
officer as the Board of Directors shall designate from time to time. The Chief
Executive Officer shall be responsible for carrying out the policies adopted by
the Board of Directors.
SECTION 6.7. CHAIRMAN OF THE BOARD. The Chairman of the Board shall have
such powers and perform such duties as may be provided for herein and as may be
incident to the office and as may be assigned by the Board of Directors.
SECTION 6.8. PRESIDENT. The President shall have such powers and perform
such duties as may be provided for herein and as may be assigned by the Chairman
of the Board or the Board of Directors.
SECTION 6.9. VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board
shall have such powers and perform such duties as may be provided for herein and
as may be assigned by the Chairman of the Board, the President or the Board of
Directors.
-8-
<PAGE>
SECTION 6.10. VICE PRESIDENT. Each Vice President shall have such powers
and perform such duties as may be provided for herein and as may be assigned by
the Chairman of the Board, the President or the Board of Directors.
SECTION 611. TREASURER. The Treasurer shall have charge of all funds of
the Corporation and shall perform all acts incident to the position of
Treasurer, subject to the control of the Board of Directors.
SECTION 6.12. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
have the custody and operation of the accounting books and records of the
Corporation and shall perform all acts incident to the position of Chief
Financial Officer, subject to the control of the Board of Directors.
SECTION 6.13. SECRETARY. The Secretary shall keep the minutes, and give
notices, of all meetings of stockholders and directors and of such committees as
directed by the Board of Directors. The Secretary shall have charge of such
books and papers as the Board of Directors may require. The Secretary or any
Assistant Secretary is authorized to certify copies of extracts from minutes and
of documents in the Secretary's charge and anyone may rely on such certified
copies to the same effect as if such copies were originals and may rely upon any
statement of fact concerning the Corporation certified by the Secretary or any
Assistant Secretary. The Secretary shall perform all acts incident to the office
of Secretary, subject to the control of the Board of Directors.
SECTION 6.14. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant
Secretaries and Assistant Treasurers shall have such powers and perform such
duties as usually pertain to their respective offices and as may be assigned by
the Board of Directors or an officer designated by the Board of Directors.
SECTION 6.15. COMPENSATION OF OFFICERS. The officers of the Corporation
shall receive such compensation for their services as the Board of Directors may
determine. The Board of Directors may delegate its authority to determine
compensation to designated officers of the Corporation.
SECTION 6.16. EXECUTION OF INSTRUMENTS. Checks, notes, drafts, other
commercial instruments, assignments, guarantees of signatures and contracts
(except as otherwise provided herein or by law) shall be executed by the
Chairman of the Board, the President, any Vice President or such officers or
employees or agents as the Board of Directors or any of such designated officers
may direct.
SECTION 6.17. MECHANICAL ENDORSEMENTS. The Chairman of the Board, the
President, any Vice President or the Secretary may authorize any endorsement on
behalf of the Corporation to be made by such mechanical means or stamps as any
of such officers may deem appropriate.
-9-
<PAGE>
SECTION VII
INDEMNIFICATION
SECTION 7.1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact:
(a) that he or she is or was a director or officer of the Corporation, or
(b) that he or she, being at the time a director or officer of the
Corporation, is or was serving at the request of the Corporation as a director,
trustee, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (collectively, "another enterprise" or "other
enterprise"), whether either in case (a) or in case (b) the basis of such
proceeding is alleged action or inaction (x) in an official capacity as a
director or officer of the Corporation, or as a director, trustee, officer,
employee or agent of such other enterprise, or (y) in any other capacity related
to the Corporation or such other enterprise while so serving as a director,
trustee, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent not prohibited by Section 12:83 of the
Louisiana Business Corporation Law (or any successor provision or provisions) as
the same exists or may hereafter be amended (but, in the case of any such
amendment, with respect to alleged action or inaction occurring prior to such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than permitted prior thereto), against
all expense, liability and loss (including without limitation attorneys' fees
and expenses, judgments, fines, ERISA excise taxes or penalties and amounts paid
in settlement) reasonably incurred or suffered by such person in connection
therewith. The persons indemnified by this Section VII are hereinafter referred
to as "indemnitees." Such indemnification as to such alleged action or inaction
shall continue as to an indemnitee who has after such alleged action or inaction
ceased to be a director or officer of the Corporation, or director, officer,
employee or agent of such other enterprise, and shall inure to the benefit of
the indemnitee's heirs, executors and administrators. Notwithstanding the
foregoing, except as may be provided in the Bylaws or by the Board of Directors,
the Corporation shall not indemnify any such indemnitee in connection with a
proceeding (or portion thereof) initiated by such indemnitee (but this
prohibition shall not apply to a counterclaim, cross-claim or third-party claim
brought by the indemnitee in any proceeding) unless such proceeding (or portion
thereof) was authorized by the Board of Directors. The right to indemnification
conferred in this Section VII: (i) shall be a contract right; (ii) shall not be
affected adversely to any indemnitee by any amendment of the Certificate of
Incorporation with respect to any alleged action or inaction occurring prior to
such amendment; and (iii) shall, subject to any requirements imposed by law and
these Bylaws, include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition.
-10-
<PAGE>
SECTION 7.2. RELATIONSHIP TO OTHER RIGHTS AND PROVISIONS CONCERNING
INDEMNIFICATION. The rights to indemnification and to the advancement of
expenses conferred in this Section VII shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, the
Certificate of Incorporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
SECTION 7.3. AGENTS AND EMPLOYEES. The Corporation may, to the extent
authorized from time to time by the Board of Directors, grant rights to
indemnification, and to the advancement of expenses, to any employee or agent of
the Corporation (or any person serving at the Corporation's request as a
director, trustee, officer, employee or agent of another enterprise) or to any
person who is or was a director, officer, employee or agent of any of the
Corporation's affiliates, predecessor or subsidiary corporations or of a
constituent corporation absorbed by the Corporation in a consolidation or merger
or who is or was serving at the request of such affiliate, predecessor or
subsidiary corporation or of such constituent corporation as a director,
officer, employee or agent of another enterprise, in each case as determined by
the Board of Directors to the fullest extent of the provisions of this Section
VII in cases of the indemnification and advancement of expenses of directors and
officers of the Corporation, or to any lesser extent (or greater extent, if
permitted by law) determined by the Board of Directors.
SECTION 7.4. UNDERTAKINGS FOR ADVANCES OF EXPENSES. If and to the extent
the Louisiana Business Corporation Act requires, an advancement by the
Corporation of expenses incurred by an indemnitee pursuant to clause (iii) of
the last sentence of Section 7.1 (hereinafter an "advancement of expenses")
shall be made only upon delivery to the Corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal (hereinafter a "final
adjudication") that such indemnitee is not entitled to be indemnified for such
expenses under this Section VII or otherwise.
SECTION 7.5. CLAIMS FOR INDEMNIFICATION. If a claim for indemnification
under Section 7.1 is not paid in full by the Corporation within 60 days after it
has been received in writing by the Corporation, except in the case of a claim
for an advancement of expenses, in which case the applicable period shall be 20
days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
in any suit by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking the Corporation shall be entitled to recover such
expenses only upon a final adjudication that, the indemnitee has not met the
applicable standard of conduct set forth in Section 12:83 of
-11-
<PAGE>
the Louisiana Business Corporation Law (or any successor provision or
provisions). Neither the failure of the Corporation (including the Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in Section 12:83 of the Louisiana
Business Corporation Law (or any successor provision or provisions), nor an
actual determination by the Corporation (including the Board of Directors,
independent legal counsel, or its stockholders) that the indemnitee has not met
such applicable standard of conduct, shall create a presumption that the
indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to have or
retain such advancement of expenses, under this Section VII or otherwise, shall
be on the Corporation.
SECTION 7.6. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, trustee, officer, employee or agent
of the Corporation or another enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the Louisiana Business Corporation
Law.
SECTION 7.7. SEVERABILITY. In the event that any of the provisions of this
Section VII (including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions are severable and shall remain
enforceable to the fullest extent permitted by law.
SECTION VIII
MISCELLANEOUS
SECTION 8.1. SEAL. The Corporation shall have a suitable seal, containing
the name of the Corporation. The Secretary shall be in charge of the seal and
may authorize one or more duplicate seals to be kept and used by any other
officer or person.
SECTION 8.2. WAIVER OF NOTICE. Whenever any notice is required to be
given, a waiver thereof in writing, signed by the person or persons entitled to
the notice, whether before or after the time stated therein shall be deemed
equivalent thereto. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
-12-
<PAGE>
SECTION 8.3. VOTING OF STOCK OWNED BY THE CORPORATION. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the Chairman of the Board, the President, any Vice
President or such officers or employees or agents as the Board of Directors or
any of such designated officers may direct. Any such officer may, in the name of
and on behalf of the Corporation, take all such action as any such officer may
deem advisable to vote in person or by proxy at any meeting of security holders
of any corporation in which the Corporation may own securities and at any such
meeting shall possess and may exercise any and all rights and powers incident to
the ownership of such securities and which, as the owner thereof, the
Corporation might have exercised and possessed if present. The Board of
Directors may from time to time confer like powers upon any other person or
persons.
SECTION IX
AMENDMENT OF BYLAWS
The Board of Directors, by the affirmative vote of a majority of the whole
Board of Directors, shall have power to amend, alter, change, adopt or repeal
the Bylaws of the Corporation at any regular or special meeting; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors. The stockholders entitled to vote also shall have the
power to amend, alter, change, adopt or repeal the Bylaws of the Corporation at
any annual or special meeting subject to the requirements of the Certificate of
Incorporation.
-13-
<PAGE>
EXHIBIT 3.21
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
S & W X-Ray OF ROCHESTER, NEW YORK, INC.
Under Section 805 of the
Business Corporation Law
The undersigned, being the president and secretary of S & W X-Ray of
Rochester, New York, Inc., hereby certify as follows:
1. Name
----
The name of the corporation is S & W X-Ray of Rochester, New York,
Inc. The name under which the corporation was formed was S & W X-Ray of
Rochester, New York, Inc.
2. Date of Filling of the Certificate of Incorporation
---------------------------------------------------
Its Certificate of Incorporation was filed by the Department of State
on April 26, 1973.
3. Amendments
----------
The Certificate of Incorporation as now in full force and effect is
amended, as authorized by Sections 801 and 805 of the Business Corporation Law,
to effect the following amendments: to change the name of the corporation to S
& W X-Ray, Inc.; and to change the total number of shares which the corporation
is authorized to issue from 200 common shares without par value to 500,000
common shares having a par value of $.04 per share, and to change shares,
thereby reducing stated capital.
4. Text of Amendments
------------------
Paragraphs 1 and 3, which refer respectively to the name of the
corporation and to the number of shares that may be issued, are amended to read
as follows:
1. The name of the corporation shall be: S & W X-Ray, Inc.
<PAGE>
3. The aggregate number of shares which the corporation shall have
authority to issue is 500,000 shares, all of which are to be common shares
having a par value of $.04 per share.
5. Change of Issued Shares
-----------------------
The number of issued shares changed is 100 common shares without
par value. The 100 issued shares shall be changed into 250,000 issued common
shares having a par value of $.04 per share, at the rate of 2,500 shares for
each share presently issued.
6. Change of Unissued Shares
-------------------------
The number of unissued shares changed is 100 common shares
without par value. The 100 unissued shares shall be changed into 250,000
unissued common shares having a par value of $.04 per share, at the rate of
2,500 shares for each share presently unissued.
7. Reduction of Stated Capital
---------------------------
The stated capital of the corporation is reduced from $28,000 to
$20,000 by a change of shares under subparagraph (b)(11) of Section 801 of the
Business Corporation Law.
8. Authorization
-------------
This amendment to the Certificate of Incorporation was authorized
by a vote of the board of directors followed by a vote of the holders of a
majority of all of the outstanding shares entitled to vote thereon at a meeting
of the shareholders.
IN WITNESS WHEREOF, we have signed this Certificate of Amendment this
14th day of February, 1992.
/s/ Bruce Ashby President
---------------------------
Bruce Ashby
/s/ Joseph S. Miller, Jr. Secretary
----------------------------
Joseph E. Miller, Jr.
-2-
<PAGE>
STATE OF NEW YORK )
COUNTY OF MONROE ) SS.
Joseph E. Miller, Jr., being duly sworn, deposes and says that he is the
secretary of the corporation named in the foregoing Certificate of Amendment;
that he has read and signed the same; and that the statements contained therein
are true.
/s/ Joseph E. Miller, Jr.
---------------------------------
Joseph E. Miller, Jr.
Sworn to before me this
14 day of February, 1992.
- -- --------
/s/ Roxann Gendron
- ----------------------------
<PAGE>
CERTIFICATE OF CHANGE OF THE
CERTIFICATE OF INCORPORATION OF
S & W X-RAY OF ROCHESTER, NEW YORK, INC.
Under Section 805-A of the Business Corporation Law
IT IS HEREBY CERTIFIED THAT:
(1) The name of the corporation is:
S & W X-RAY OF ROCHESTER, NEW YORK, INC.
(2) The certificate of incorporation was filed by the Department of State
on the 26th day of April, 1973.
(3) The certificate of incorporation is changed as follows:
Paragraph Five (5) of the Certificate of Incorporation is hereby amended to
reflect the following changes:
The Secretary of State is designated as agent of the Corporation upon whom
process against it may be served. The post office address to which the
Secretary of State shall mail a copy of any process against the Corporation
served upon him is:
c/o The Corporation
72 Marway Circle
Rochester, NY 14624
(4) The change to the Certificate of Incorporation was authorized by a
vote of the Board of Director(s), followed by a vote of the holder(s) of a
majority of all outstanding shares entitled to vote thereon at a meeting of
shareholders.
<PAGE>
IN WITNESS WHEREOF, this certificate has been subscribed this 25th day of 8,
---- -
1988 by the undersigned who affirm that the statements made herein are true
- ----
under the penalties of perjury.
Bruce Ashby, President/Secretary /s/ Bruce Ashby
- -------------------------------- -------------------------
Joseph E. Miller, Jr.,, V-Pres./Trea. /s/ Joseph S. Miller, Jr.
- ------------------------------------- -------------------------
<PAGE>
CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF
S & W X-RAY OF ROCHESTER, NEW YORK, INC.
under Section 805 of the Business Corporation Law
IT IS HEREBY CERTIFIED THAT:
(1) The name of the corporation is:
S & W X-Ray of Rochester, New York, Inc.
(2) The certificate of incorporation was filed by the department of state
on the 26th day of April, 1973.
(3) The certificate of incorporation is hereby amended to effect the
following change:
Paragraphs "5" and "6" of the Certificate of Incorporation dealing
with the address of the corporation shall be amended to read as
follows:
5. The office of the corporation is to be located at 1322
Buffalo Road, Town of Gates, County of Monroe and State of
New York, 14624.
6. The Secretary of State of the State of New York is
designated as agent of the Corporation upon whom process
against it may be served. The post office address to which
the Secretary of State shall mail a copy of any process
against the Corporation served upon him is:
c/o The Corporation
72 Marway Circle
Rochester, NY 14624
<PAGE>
(4) The amendment to the certificate of incorporation was authorized:
* [at a meeting of shareholders by vote of a majority of all the
outstanding shares entitled to vote thereon.]
* by unanimous written consent of the holders of all the outstanding
shares entitled to vote thereon.
* [at a meeting of shareholders by vote of
all outstanding shares entitled to vote thereon as required by the
certificate of] incorporation.
* by the sole in[corporate for the reason that no shares have been
issued, no directors or officers have been elected, and there are no
subscribers for shares whose subscriptions have been accepted.]
* STRIKE OUT WHERE INAPPLICABLE
<PAGE>
IN WITNESS WHEREOF, this certificate has been subscribed this 22nd day of 2,
---- -
1983 by the undersigned who affirm(s) that the statements made herein are true
under the penalties of perjury.
<TABLE>
<CAPTION>
Type Name Capacity in which signed Signature
--------- ------------------------ ---------
<S> <C> <C>
Bruce Ashby President /s/ Bruce Ashby
Keith Ashby Secretary /s/ Keith Ashby
</TABLE>
<PAGE>
CERTIFICATE OF INCORPORATION
OF
S & W X-Ray OF ROCHESTER, NEW YORK, INC.
PURSUANT TO SECTION 402 OF THE
BUSINESS CORPORATION LAW
We, the undersigned, in order to form and organize a corporation under the
Business Corporation law of the State of New York, do hereby make, execute, and
present to the Department of State of said State, for filing pursuant to Law,
the following Certificate of Incorporation:
1. The name of the corporation shall be The undersigned, being the
president and secretary of S & W X-Ray of Rochester, New York, Inc.
2. The purposes for which it is to be formed are to do any all of the
things hereafter set forth to the same extent as natural persons might or could
do in any part of the world namely:
To conduct and carry on the business of engaging in the purchase and sale
of radiographic chemicals and equipment. To purchase and sell all types of
photographic chemistry. To buy, to sell and purchase all types of photographic
and radiographic film processors. To buy, sell and install photographic and x-
ray accessories and to buy and sell photographic film.
To purchase, lease or otherwise acquire, and to hold, own, sell, dispose of
real and personal property of all kinds and in particular lands, buildings,
business concerns and undertakings, share of street mortgages, bonds,
debentures, and securities, merchandise, book debts and claim, trade marks,
trade names, and any interest in real or personal property.
<PAGE>
To sell, improve, manage, develop, lease, mortgage, dispose or to otherwise
turn to account or deal with all or any part of the property of the corporation.
3. The total number of shares of stock that may be issued is Two Hundred
(200), all of which are to be without par value.
4. The share of stock shall be all common stock with equal voting powers
and privileges.
5. The office of the corporation is to be located at 150 Garford Road, in
the City of Rochester, County of Monroe and State of New York 14622.
6. The Secretary of State of the State of New York is hereby designated
as agent of the corporation upon whom process against it may served, and the
Post Office Address to which the Secretary of State shall mail a copy of any
process against it served upon him is 150 Garford Road, in the City of
Rochester, County of Monroe, and State of New York, 14622.
-2-
<PAGE>
IN WITNESS WHEREOF, We, being over twenty-one years of age, have made,
signed, and acknowledged this certificate this 23rd day of March, 1973.
----
/s/ Keith Ashby
---------------------------------
KEITH E. ASHBY
150 Garford Road
Rochester, New York 14622
/s/ Bruce P. Ashby
---------------------------------
BRUCE P. ASHBY
150 Garford Road
Rochester, New York 14622
STATE OF NEW YORK )
COUNTY OF MONROE ) SS.
TOWN OF PENFIELD )
On this 23rd day of March, 1973, before me personally came Keith E. Ashby,
----
to me known and known to me to be the same person described in and who executed
the foregoing certificate of incorporation, and that he duly acknowledged to me
that he executed the same.
/s/ Donald J. Mark
--------------------------------
Comm. of Deeds
--------------------------------
STATE OF NEW YORK )
COUNTY OF MONROE ) SS.
TOWN OF PENFIELD )
On this 23rd day of March, 1973, before me personally came Bruce Ashby, to
----
me known and known to me to be the same person described in and who executed the
foregoing certificate of incorporation, and that he duly acknowledged to me that
he executed the same.
/s/ Donald J. Mark
--------------------------------
Comm. of Deeds
--------------------------------
-3-
<PAGE>
EXHIBIT 3.22
S&W X-RAY, INC.
AMENDED AND RESTATED
BYLAWS
SECTION I
CAPITAL STOCK
SECTION 1.1. CERTIFICATES. Every holder of stock in the Corporation
shall be entitled to have a certificate signed in the name of the Corporation by
the Chairman of the Board of Directors or the President or a Vice President, and
by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation certifying the number of shares in the Corporation
owned by such holder. If such certificate is countersigned (a) by a transfer
agent other than the Corporation or its employee, or, (b) by a registrar other
than the Corporation or its employee, any other signature on the certificate may
be a facsimile. In case any officer, transfer agent, or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent, or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if such
person were such officer, transfer agent, or registrar at the date of issue.
SECTION 1.2. RECORD OWNERSHIP. A record of the name and address of the
holder of each certificate, the number of shares represented thereby and the
date of issue thereof shall be made on the Corporation's books. The Corporation
shall be entitled to treat the holder of record of any share of stock as the
holder in fact thereof, and accordingly shall not be bound to recognize any
equitable or other claim to or interest in any share on the part of any other
person, whether or not it shall have express or other notice thereof, except as
required by the laws of the State of New York.
SECTION 1.3. TRANSFER OF RECORD OWNERSHIP. Transfers of stock shall be
made on the books of the Corporation only by direction of the person named in
the certificate or such person's attorney, lawfully constituted in writing, and
only upon the surrender of the certificate therefor and a written assignment of
the shares evidenced thereby, which certificate shall be canceled before the new
certificate is issued.
SECTION 1.4. LOST CERTIFICATES. Any person claiming a stock certificate
in lieu of one lost, stolen or destroyed shall give the Corporation an affidavit
as to such person's ownership of the certificate and of the facts which go to
prove its loss, theft or destruction. Such person shall also, if required by
policies adopted by the Board of Directors, give the Corporation a bond, in such
form as may be approved by the Corporation, sufficient to indemnify the
Corporation against any claim that may be made
<PAGE>
against it on account of the alleged loss of the certificate or the issuance of
a new certificate.
SECTION 1.5. TRANSFER AGENTS; REGISTRARS; RULES RESPECTING CERTIFICATES.
The Board of Directors may appoint, or authorize any officer or officers to
appoint, one or more transfer agents and one or more registrars. The Board of
Directors may make such further rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates of the
Corporation.
SECTION 1.6. RECORD DATE. The Board of Directors may fix in advance a
future date, not exceeding 60 days (nor, in the case of a stockholders' meeting,
less than ten days) preceding the date of any meeting of stockholders, payment
of dividend or other distribution, allotment of rights, or change, conversion or
exchange of capital stock or for the purpose of any other lawful action, as the
record date for determination of the stockholders entitled to notice of and to
vote at any such meeting and any adjournment thereof, or to receive any such
dividend or other distribution or allotment of rights, or to exercise the rights
in respect of any such change, conversion or exchange of capital stock, or to
participate in any such other lawful action, and in such case such stockholders
and only such stockholders as shall be stockholders of record on the date so
fixed shall be entitled to such notice of and to vote at such meeting and any
adjournment thereof, or to receive such dividend or other distribution or
allotment of rights, or to exercise such rights, or to participate in any such
other lawful action, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any such record date fixed as
aforesaid.
SECTION II
MEETINGS OF STOCKHOLDERS
SECTION 2.1. ANNUAL. The annual meeting of stockholders for the election
of directors and the transaction of such other proper business shall be held
within or without the State of New York on such date and at such time as shall
be designated by the Board of Directors.
SECTION 2.2. SPECIAL. Special meetings of stockholders for any purpose
or purposes may be called by the Board of Directors, pursuant to a resolution
adopted by a majority of the members of the Board of Directors then in office,
or by the holders of not less than fifty percent (50%) of all shares entitled to
vote at the meeting. Special meetings may be held at any place, within or
without the State of New York, as determined by the Board of Directors. The only
business which may be conducted at such a meeting, other than procedural matters
and matters relating to the conduct of the meeting, shall be the matter or
matters described in the notice of the meeting.
-2-
<PAGE>
SECTION 2.3. NOTICE. Written notice of each meeting of stockholders,
stating the date, time, place and, in the case of a special meeting, the purpose
thereof, shall be given as provided by law by the Secretary or an Assistant
Secretary not less than ten days nor more than 60 days before such meeting
(unless a different time is specified by law) to every stockholder entitled by
law to notice of such meeting.
SECTION 2.4. LIST OF STOCKHOLDERS. A complete list of the stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder, shall be prepared by the Secretary and shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified at the place where the meeting is to be held, for at least ten days
before the meeting and at the place of the meeting during the whole time of the
meeting.
SECTION 2.5. QUORUM. The holders of shares of stock entitled to cast a
majority of the votes on the matters at issue at a meeting of stockholders,
present in person or represented by proxy, shall constitute a quorum, except as
otherwise required by the New York Business Corporation Law. In the event of a
lack of a quorum, the chairman of the meeting or a majority in interest of the
stockholders present in person or represented by proxy may adjourn the meeting
from time to time without notice other than announcement at the meeting, until a
quorum shall be obtained. At any such adjourned meeting at which there is a
quorum, any business may be transacted that might have been transacted at the
meeting originally called.
SECTION 2.6. ORGANIZATION AND PROCEDURE.
(a) The Chairman of the Board, or, in the absence of the Chairman of the
Board, the Vice Chairman, if any, or, in the absence of the Vice Chairman, the
President, or any other person designated by the Board of Directors, shall
preside at meetings of stockholders. The Secretary of the Corporation shall act
as secretary, but in the absence of the Secretary, the presiding officer may
appoint a secretary.
(b) At each meeting of stockholders, the chairman of the meeting shall fix
and announce the date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at the meeting and shall
determine the order of business and all other matters of procedure. Except to
the extent inconsistent with any such rules and regulations as adopted by the
Board of Directors, the chairman of the meeting may establish rules, which need
not be in writing, to maintain order for the conduct of the meeting, including,
without limitation, restricting attendance to bona fide stockholders of record
and their proxies and other persons in attendance at the invitation of the
chairman and making rules governing speeches and debates. The chairman of the
meeting acts in his or her absolute discretion and his or her rulings are not
subject to appeal.
-3-
<PAGE>
SECTION 2.7. VOTING. Unless otherwise provided by the New York Business
Corporation Law, each stockholder shall be entitled to one vote, in person or by
written proxy, for each share held of record by such stockholder who is entitled
to vote generally in the election of directors. All elections for the Board of
Directors shall be decided by a plurality of the votes cast and all other
questions shall be decided by a majority of the votes cast, except as otherwise
required by the New York Business Corporation Law or as provided for in the
Certificate of Incorporation or these Bylaws. Abstentions shall not be
considered to be votes cast.
SECTION 2.8. INSPECTORS. The Board of Directors by resolution shall, in
advance of any meeting of stockholders, appoint one or more inspectors, which
inspector or inspectors may include individuals who serve the Corporation in
other capacities, including, without limitation, as officers, employees, agents
or representatives of the Corporation, to act at the meeting and make a written
report thereof. One or more persons may be designated by the Board of Directors
as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the chairman
of the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before discharging his or her duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his or her ability. The inspectors shall have the
duties prescribed by the New York Business Corporation Law.
SECTION III
BOARD OF DIRECTORS
SECTION 3.1. POWERS OF THE BOARD OF DIRECTORS. The business and affairs
of the Corporation shall be managed by or under the direction of its Board of
Directors. In furtherance, and not in limitation, of the powers conferred by
the laws of the State of New York, the Board of Directors is expressly
authorized to:
(a) adopt, amend, alter, change or repeal the Bylaws of the Corporation,
by the affirmative vote of a majority of the whole Board of Directors; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors; and provided, further, that no Bylaws hereafter adopted
-------- -------
shall invalidate any prior act of the directors that would have been valid if
such new Bylaws had not been adopted;
(b) determine the rights, powers, duties, rules and procedures that affect
the power of the Board of Directors to manage and direct the business and
affairs of the Corporation, including the power to designate and empower
committees of the Board of Directors, to elect, appoint and empower the officers
and other agents of the Corporation, and to determine the time and place of, and
the notice requirements for, Board meetings,
-4-
<PAGE>
as well as quorum and voting requirements for, and the manner of taking, Board
action; and
(c) exercise all such powers and do all such acts as may be exercised or
done by the Corporation, subject to the provisions of the laws of the State of
New York, the Certificate of Incorporation and these Bylaws.
SECTION 3.2. NUMBER AND QUALIFICATIONS. The number of directors
constituting the Board of Directors shall be as authorized from time to time
exclusively by a vote of a majority of the voting power of all of the shares of
capital stock of the Corporation then entitled to vote generally in the election
of directors.
SECTION 3.3. VACANCIES. Any vacancies in the Board of Directors for any
reason and any newly created directorships resulting by reason of any increase
in the number of directors may be filled by a majority of the directors then in
office, although less than a quorum, or by the sole remaining director.
SECTION 3.4. REMOVAL OF DIRECTORS. Any director, or the entire Board of
Directors, may be removed from office at any time, with or without cause, by the
affirmative vote of the holders of at least a majority of the voting power of
all of the shares of capital stock of the Corporation then entitled to vote
generally in the election of directors, voting together as a single class.
SECTION 3.5. RESIGNATION. A director may resign at any time by giving
written notice to the Chairman of the Board, to the President, or to the
Secretary. Unless otherwise stated in such notice of resignation, the
acceptance thereof shall not be necessary to make it effective; and such
resignation shall take effect at the time specified therein or, in the absence
of such specification, it shall take effect upon the receipt thereof.
SECTION IV
MEETINGS OF BOARD OF DIRECTORS
SECTION 4.1. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without further notice at such time as shall from time to
time be determined by the Board of Directors. A meeting of the Board of
Directors for the election of officers and the transaction of such other
business as may come before it may be held without notice immediately following
the annual meeting of stockholders.
SECTION 4.2. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Chairman of the Board or the President, or at the
request in writing of one-third of the members of the Board of Directors then in
office.
SECTION 4.3. NOTICE OF SPECIAL MEETINGS. Notice of the date, time and
place of each special meeting shall be mailed by regular mail to each director
at his or her
-5-
<PAGE>
designated address at least six days before the meeting; or sent by overnight
courier to each director at his or her designated address at least two days
before the meeting (with delivery scheduled to occur no later than the day
before the meeting); or given orally by telephone or other means, or by
telegraph or telecopy, or by any other means comparable to any of the foregoing,
provided, however, that if less than five days' notice is provided and one-third
- -------- -------
of the members of the Board of Directors then in office object in writing prior
to or at the commencement of the meeting, such meeting shall be postponed until
five days after such notice was given pursuant to this sentence (or such shorter
period to which a majority of those who objected in writing agree), provided
that notice of such postponed meeting shall be given in accordance with this
Section 4.3. The notice of the special meeting shall state the general purpose
of the meeting, but other routine business may be conducted at the special
meeting without such matter being stated in the notice.
SECTION 4.4. PLACE OF MEETINGS. The Board of Directors may hold their
meetings and have an office or offices inside or outside of the State of New
York.
SECTION 4.5. TELEPHONIC MEETING AND PARTICIPATION. Any or all of the
directors may participate in a meeting of the Board of Directors or any
committee thereof by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
such participation shall constitute presence in person at the meeting.
SECTION 4.6. ACTION BY DIRECTORS WITHOUT A MEETING. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board of Directors or of such committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.
SECTION 4.7. QUORUM AND ADJOURNMENT. A majority of the directors then
holding office shall constitute a quorum. The vote of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. Whether or not a quorum is present to conduct a
meeting, any meeting of the Board of Directors (including an adjourned meeting)
may be adjourned by a majority of the directors present, to reconvene at a
specific time and place. It shall not be necessary to give to the directors
present at the adjourned meeting notice of the reconvened meeting or of the
business to be transacted, other than by announcement at the meeting that was
adjourned; provided, however, notice of such reconvened meeting, stating the
-------- -------
date, time, and place of the reconvened meeting, shall be given to the directors
not present at the adjourned meeting in accordance with the requirements of
Section 4.3 hereof.
SECTION 4.8. ORGANIZATION. The Chairman of the Board, or in the absence
of the Chairman of the Board, a member of the Board of Directors selected by the
members present, shall preside at meetings of the Board of Directors. The
Secretary of the
-6-
<PAGE>
Corporation shall act as secretary, but in the absence of the Secretary, the
presiding officer may appoint a secretary.
SECTION 4.9. COMPENSATION OF DIRECTORS. Directors shall receive such
compensation for their services as the Board of Directors may determine. Any
director may serve the Corporation in any other capacity and receive
compensation therefor.
SECTION 4.10. PRESUMPTION OF ASSENT. A director of the Corporation who
is present at a meeting of the Board of Directors when a vote on any matter is
taken is deemed to have assented to the action taken unless he or she votes
against or abstains from the action taken, or unless at the beginning of the
meeting or promptly upon arrival the director objects to the holding of the
meeting or transacting specified business at the meeting. Any such dissenting
votes, abstentions or objections shall be entered in the minutes of the meeting.
SECTION V
COMMITTEES
SECTION 5.1. COMMITTEES. The Board of Directors may, by resolutions
passed by a majority of the members of the Board of Directors, designate members
of the Board of Directors to constitute committees which shall in each case
consist of such number of directors, and shall have and may execute such powers
as may be determined and specified in the respective resolutions appointing
them. Any such committee may fix its rules of procedure, determine its manner
of acting and the time and place, whether within or without the State of New
York, of its meetings and specify what notice thereof, if any, shall be given,
unless the Board of Directors shall otherwise by resolution provide. Unless
otherwise provided by the Board of Directors or such committee, the quorum,
voting and other procedures shall be the same as those applicable to actions
taken by the Board of Directors. A majority of the members of the Board of
Directors then in office shall have the power to change the membership of any
such committee at any time, to fill vacancies therein and to discharge any such
committee or to remove any member thereof, either with or without cause, at any
time.
SECTION VI
OFFICERS
SECTION 6.1. DESIGNATION. The officers of the Corporation shall be a
Chairman of the Board, a President, a Treasurer and a Secretary, and the Board
of Directors may elect or appoint, or provide for the appointment of, one or
more Assistant Secretaries and Assistant Treasurers. The Board of Directors may
elect or appoint, or provide for the appointment of, such other officers,
including a Vice Chairman and one or more Vice Presidents in such gradation as
the Board of Directors may determine, or agents as may
-7-
<PAGE>
from time to time appear necessary or advisable in the conduct of the business
and affairs of the Corporation. Any number of offices may be held by the same
person.
SECTION 6.2. ELECTION TERM. At its first meeting after each annual
meeting of stockholders, the Board of Directors shall elect the officers or
provide for the appointment thereof. Subject to Sections 6.3 and 6.4 hereof,
the term of each officer elected by the Board of Directors shall be until the
first meeting of the Board of Directors following the next annual meeting of
stockholders and until such officer's successor is chosen and qualified.
SECTION 6.3. RESIGNATION. Any officer may resign at any time by giving
written notice to the President or the Secretary. Unless otherwise stated in
such notice of resignation, the acceptance thereof shall not be necessary to
make it effective; and such resignation shall take effect at the time specified
therein or, in the absence of such specification, it shall take effect upon the
receipt thereof.
SECTION 6.4. REMOVAL. Any officer may be removed at any time with or
without cause by the affirmative vote of a majority of the members of the Board
of Directors then in office. Any officer appointed by another officer may be
removed with or without cause by such officer or the Chief Executive Officer.
SECTION 6.5. VACANCIES. A vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors or, in the case of
offices held by officers who may be appointed by other officers, by any officer
authorized to appoint such officer.
SECTION 6.6. CHIEF EXECUTIVE OFFICER. The President shall initially be
the Chief Executive Officer of the Corporation and thereafter, at such time as
the Board of Directors shall determine, the Chief Executive Officer shall be
such officer as the Board of Directors shall designate from time to time. The
Chief Executive Officer shall be responsible for carrying out the policies
adopted by the Board of Directors.
SECTION 6.7. CHAIRMAN OF THE BOARD. The Chairman of the Board shall have
such powers and perform such duties as may be provided for herein and as may be
incident to the office and as may be assigned by the Board of Directors.
SECTION 6.8. PRESIDENT. The President shall have such powers and perform
such duties as may be provided for herein and as may be assigned by the Chairman
of the Board or the Board of Directors.
SECTION 6.9. VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board
shall have such powers and perform such duties as may be provided for herein and
as may be assigned by the Chairman of the Board, the President or the Board of
Directors.
-8-
<PAGE>
SECTION 6.10. VICE PRESIDENT. Each Vice President shall have such powers
and perform such duties as may be provided for herein and as may be assigned by
the Chairman of the Board, the President or the Board of Directors.
SECTION 611. TREASURER. The Treasurer shall have charge of all funds of
the Corporation and shall perform all acts incident to the position of
Treasurer, subject to the control of the Board of Directors.
SECTION 6.12. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
have the custody and operation of the accounting books and records of the
Corporation and shall perform all acts incident to the position of Chief
Financial Officer, subject to the control of the Board of Directors.
SECTION 6.13. SECRETARY. The Secretary shall keep the minutes, and give
notices, of all meetings of stockholders and directors and of such committees as
directed by the Board of Directors. The Secretary shall have charge of such
books and papers as the Board of Directors may require. The Secretary or any
Assistant Secretary is authorized to certify copies of extracts from minutes and
of documents in the Secretary's charge and anyone may rely on such certified
copies to the same effect as if such copies were originals and may rely upon any
statement of fact concerning the Corporation certified by the Secretary or any
Assistant Secretary. The Secretary shall perform all acts incident to the
office of Secretary, subject to the control of the Board of Directors.
SECTION 6.14. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant
Secretaries and Assistant Treasurers shall have such powers and perform such
duties as usually pertain to their respective offices and as may be assigned by
the Board of Directors or an officer designated by the Board of Directors.
SECTION 6.15. COMPENSATION OF OFFICERS. The officers of the Corporation
shall receive such compensation for their services as the Board of Directors may
determine. The Board of Directors may delegate its authority to determine
compensation to designated officers of the Corporation.
SECTION 6.16. EXECUTION OF INSTRUMENTS. Checks, notes, drafts, other
commercial instruments, assignments, guarantees of signatures and contracts
(except as otherwise provided herein or by law) shall be executed by the
Chairman of the Board, the President, any Vice President or such officers or
employees or agents as the Board of Directors or any of such designated officers
may direct.
SECTION 6.17. MECHANICAL ENDORSEMENTS. The Chairman of the Board, the
President, any Vice President or the Secretary may authorize any endorsement on
behalf of the Corporation to be made by such mechanical means or stamps as any
of such officers may deem appropriate.
-9-
<PAGE>
SECTION VII
INDEMNIFICATION
SECTION 7.1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact:
(a) that he or she is or was a director or officer of the Corporation, or
(b) that he or she, being at the time a director or officer of the
Corporation, is or was serving at the request of the Corporation as a director,
trustee, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (collectively, "another enterprise" or "other
enterprise"), whether either in case (a) or in case (b) the basis of such
proceeding is alleged action or inaction (x) in an official capacity as a
director or officer of the Corporation, or as a director, trustee, officer,
employee or agent of such other enterprise, or (y) in any other capacity related
to the Corporation or such other enterprise while so serving as a director,
trustee, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent not prohibited by Section 722 of the New
York Business Corporation Law (or any successor provision or provisions) as the
same exists or may hereafter be amended (but, in the case of any such amendment,
with respect to alleged action or inaction occurring prior to such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than permitted prior thereto), against all
expense, liability and loss (including without limitation attorneys' fees and
expenses, judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such person in connection
therewith. The persons indemnified by this Section VII are hereinafter referred
to as "indemnitees." Such indemnification as to such alleged action or inaction
shall continue as to an indemnitee who has after such alleged action or inaction
ceased to be a director or officer of the Corporation, or director, officer,
employee or agent of such other enterprise, and shall inure to the benefit of
the indemnitee's heirs, executors and administrators. Notwithstanding the
foregoing, except as may be provided in the Bylaws or by the Board of Directors,
the Corporation shall not indemnify any such indemnitee in connection with a
proceeding (or portion thereof) initiated by such indemnitee (but this
prohibition shall not apply to a counterclaim, cross-claim or third-party claim
brought by the indemnitee in any proceeding) unless such proceeding (or portion
thereof) was authorized by the Board of Directors. The right to indemnification
conferred in this Section VII: (i) shall be a contract right; (ii) shall not be
affected adversely to any indemnitee by any amendment of the Certificate of
Incorporation with respect to any alleged action or inaction occurring prior to
such amendment; and (iii) shall, subject to any requirements imposed by law and
these Bylaws, include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition.
-10-
<PAGE>
SECTION 7.2. RELATIONSHIP TO OTHER RIGHTS AND PROVISIONS CONCERNING
INDEMNIFICATION. The rights to indemnification and to the advancement of
expenses conferred in this Section VII shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, the
Certificate of Incorporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
SECTION 7.3. AGENTS AND EMPLOYEES. The Corporation may, to the extent
authorized from time to time by the Board of Directors, grant rights to
indemnification, and to the advancement of expenses, to any employee or agent of
the Corporation (or any person serving at the Corporation's request as a
director, trustee, officer, employee or agent of another enterprise) or to any
person who is or was a director, officer, employee or agent of any of the
Corporation's affiliates, predecessor or subsidiary corporations or of a
constituent corporation absorbed by the Corporation in a consolidation or merger
or who is or was serving at the request of such affiliate, predecessor or
subsidiary corporation or of such constituent corporation as a director,
officer, employee or agent of another enterprise, in each case as determined by
the Board of Directors to the fullest extent of the provisions of this Section
VII in cases of the indemnification and advancement of expenses of directors and
officers of the Corporation, or to any lesser extent (or greater extent, if
permitted by law) determined by the Board of Directors.
SECTION 7.4. UNDERTAKINGS FOR ADVANCES OF EXPENSES. If and to the extent
the New York Business Corporation Law requires, an advancement by the
Corporation of expenses incurred by an indemnitee pursuant to clause (iii) of
the last sentence of Section 7.1 (hereinafter an "advancement of expenses")
shall be made only upon delivery to the Corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal (hereinafter a "final
adjudication") that such indemnitee is not entitled to be indemnified for such
expenses under this Section VII or otherwise.
SECTION 7.5. CLAIMS FOR INDEMNIFICATION. If a claim for indemnification
under Section 7.1 is not paid in full by the Corporation within 60 days after it
has been received in writing by the Corporation, except in the case of a claim
for an advancement of expenses, in which case the applicable period shall be 20
days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole
or in part in any such suit, or in a suit brought by the Corporation to recover
an advancement of expenses pursuant to the terms of an undertaking, the
indemnitee shall be entitled to be paid also the expense of prosecuting or
defending such suit. In any suit brought by the indemnitee to enforce a right
to indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
in any suit by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking the Corporation shall be entitled to recover such
expenses only upon a final adjudication that, the indemnitee has not met the
applicable standard of conduct set forth in Section 722 of
-11-
<PAGE>
the New York Business Corporation Law (or any successor provision or
provisions). Neither the failure of the Corporation (including the Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in Section 722 of the New York Business
Corporation Law (or any successor provision or provisions), nor an actual
determination by the Corporation (including the Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has not met such
applicable standard of conduct, shall create a presumption that the indemnitee
has not met the applicable standard of conduct or, in the case of such a suit
brought by the indemnitee, be a defense to such suit. In any suit brought by the
indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified, or to have or retain such
advancement of expenses, under this Section VII or otherwise, shall be on the
Corporation.
SECTION 7.6. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, trustee, officer, employee or agent
of the Corporation or another enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the New York Business Corporation
Law.
SECTION 7.7. SEVERABILITY. In the event that any of the provisions of
this Section VII (including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions are severable and shall remain
enforceable to the fullest extent permitted by law.
SECTION VIII
MISCELLANEOUS
SECTION 8.1. SEAL. The Corporation shall have a suitable seal,
containing the name of the Corporation. The Secretary shall be in charge of the
seal and may authorize one or more duplicate seals to be kept and used by any
other officer or person.
SECTION 8.2. WAIVER OF NOTICE. Whenever any notice is required to be
given, a waiver thereof in writing, signed by the person or persons entitled to
the notice, whether before or after the time stated therein shall be deemed
equivalent thereto. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
-12-
<PAGE>
SECTION 8.3. VOTING OF STOCK OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the Chairman of the Board, the President,
any Vice President or such officers or employees or agents as the Board of
Directors or any of such designated officers may direct. Any such officer may,
in the name of and on behalf of the Corporation, take all such action as any
such officer may deem advisable to vote in person or by proxy at any meeting of
security holders of any corporation in which the Corporation may own securities
and at any such meeting shall possess and may exercise any and all rights and
powers incident to the ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and possessed if present. The
Board of Directors may from time to time confer like powers upon any other
person or persons.
SECTION IX
AMENDMENT OF BYLAWS
The Board of Directors, by the affirmative vote of a majority of the whole
Board of Directors, shall have power to amend, alter, change, adopt or repeal
the Bylaws of the Corporation at any regular or special meeting; provided,
--------
however, that the stockholders entitled to vote may prescribe that any Bylaw
- -------
adopted by the stockholders may not be amended, altered, changed or repealed by
the Board of Directors. The stockholders entitled to vote also shall have the
power to amend, alter, change, adopt or repeal the Bylaws of the Corporation at
any annual or special meeting subject to the requirements of the Certificate of
Incorporation.
-13-
<PAGE>
EXHIBIT 4.1
INDENTURE
INDENTURE, dated as of October 7, 1997, by and among Physician Sales &
Service, Inc., a Florida corporation (the "Company"), the Subsidiary Guarantors
-------
(as hereinafter defined) and SunTrust Bank, Central Florida, National
Association, as Trustee (the "Trustee").
-------
The Company has duly authorized the creation of an issue of 8 1/2%
Senior Subordinated Notes due 2007 and, to provide therefor, the Company has
duly authorized the execution and delivery of this Indenture. All things
necessary to make the Notes, when duly issued and executed, by the Company and
authenticated and delivered hereunder, the valid obligations of the Company, and
to make this Indenture a valid and binding agreement of the Company, have been
done.
Each party hereto agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions.
-----------
"Acceleration Notice" has the meaning provided in Section 6.2.
-------------------
"Accounts Receivable Subsidiary" means a newly created, Unrestricted
------------------------------
Subsidiary of the Company (i) which is formed solely for the purpose of, and
which engages in no activities other than activities in connection with,
financing accounts receivable of the Company and/or its Restricted Subsidiaries,
(ii) which is designated by the Board of Directors of the Company as an Accounts
Receivable Subsidiary pursuant to a Board Resolution set forth in an Officers'
Certificate and delivered to the Trustee, (iii) that has total assets at the
time of such creation and designation with a book value of $10,000 or less, (iv)
which has no Indebtedness other than Non-Recourse Debt, and (v) with which
neither the Company nor any Restricted Subsidiary of the Company has any
contract, agreement, arrangement or understanding other than contracts,
agreements, arrangements and understandings entered into in the ordinary course
of business in connection with sales of accounts receivable in accordance with
Section 4.23 and fees payable in the ordinary course of business in connection
with servicing accounts receivable.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
---------------------
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and in each case not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Subsidiary of the
Company or such acquisition, merger or consolidation.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date shall mean
-------------------
the lesser of the amount by which (x) the fair value of the property of such
Subsidiary Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving
<PAGE>
effect to all other fixed and contingent liabilities incurred or assumed on such
date), but excluding liabilities under the Note Guarantee of such Subsidiary
Guarantor at such date and (y) the present fair salable value of the assets of
such Subsidiary Guarantor at such date exceeds the amount that will be required
to pay the probable liability of such Subsidiary Guarantor on its debts (after
giving effect to all other fixed and contingent liabilities incurred or assumed
on such date and after giving effect to any collection from any Subsidiary of
such Subsidiary Guarantor in respect of the obligations of such Subsidiary under
the Note Guarantee), excluding debt in respect of the Note Guarantee, as they
become absolute and matured.
"Affiliate" means, with respect to any specified Person, any other
---------
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such specified Person.
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;
provided, that beneficial ownership of 10% or more of the voting Capital Stock
of a Person shall be deemed to be control. The terms "controlling" and
"controlled" have meanings correlative of the foregoing.
"Affiliate Transaction" has the meaning provided in Section 4.11.
---------------------
"Agent" means any Registrar, Paying Agent or co-Registrar.
-----
"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 the Company or any of
its Restricted Subsidiaries (including any Sale and Leaseback Transaction, but
excluding any such transaction consummated by a Restricted Subsidiary prior to
its acquisition by, or merger into, the Company or a Subsidiary of the Company)
to any Person other than the Company or a Wholly Owned Restricted Subsidiary of
the Company of (a) any Capital Stock of any Subsidiary of the Company; or (b)
any other property or assets of the Company or any Restricted Subsidiary of the
Company other than in the ordinary course of business; provided, however, that
Asset Sales shall not include (i) a transaction or series of related
transactions for which the Company or its Subsidiaries receive aggregate
consideration of less than $250,000 provided that aggregate of all such
transactions in any single calendar year shall not exceed $1,000,000, (ii) sales
of accounts receivable to the Accounts Receivable Subsidiary in accordance with
Section 4.23 and (iii) the sale, lease, conveyance, disposition or other
transfer (x) of all or substantially all of the assets of the Company as
permitted under Section 5.1, (y) involving only cash, Cash Equivalents or
inventory in the ordinary course of business or obsolete equipment in the
ordinary course of business consistent with past practices of the Company, or
(z) involving only the lease or sublease of any real or personal property in the
ordinary course of business.
"Attributable Debt" in respect of a Sale and Leaseback Transaction
-----------------
means at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such Sale and Leaseback Transaction
-2-
<PAGE>
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended).
"Authenticating Agent" has the meaning provided in Section 2.2.
--------------------
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
--------------
state or foreign law for the relief of debtors.
"Blockage Period" has the meaning provided in Section 10.2(a).
---------------
"Board of Directors" means, as to any Person, the board of directors
------------------
of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
----------------
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Acquisition" means (a) an Investment by the Company or any
--------------------
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or any Subsidiary of the Company, or
shall be merged with or into the Company or any Subsidiary of the Company, or
(b) the acquisition by the Company or any Subsidiary of the Company of the
assets of any Person (other than a Subsidiary of the Company) which constitute
all or substantially all of the assets of such Person or comprises 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.
"Business Day" means a day that is not a Legal Holiday.
------------
"Capital Stock" means (i) in the case of a corporation, corporate
-------------
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"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.
"Cash Equivalents" means (i) 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; (ii)
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
-3-
<PAGE>
thereof maturing within one year from the date of acquisition thereof or which
the holder has the right to require the issuer to repurchase at a price greater
than or equal to the principal amount thereof within one year from the date of
acquisition and, at the time of acquisition, having one of the two highest
ratings obtainable from both Standard & Poor's Corporation ("S&P") and Moody's
---
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
-------
than one year from the date of creation thereof and, at the time of acquisition,
having one of the two highest ratings obtainable from both S&P and Moody's; (iv)
certificates of deposit or bankers' acceptances 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 $250,000,000; (v) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clause (i) above with a fair market value greater than or
equal to the repurchase price, entered into with any bank meeting the
qualifications specified in clause (iv) above; and (vi) investments in money
market funds which invest substantially all their assets in securities of the
types described in clauses (i) through (v) above.
"Change of Control" means the occurrence of one or more of the
-----------------
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company and its Subsidiaries taken as a whole to any Person or
group of related Persons 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 this Indenture); (ii) the approval by the
holders of Capital Stock of the Company of any plan or proposal for the
liquidation or dissolution of the Company (whether or not otherwise in
compliance with the provisions of this Indenture); (iii) the acquisition in one
or more transactions, by any Person or Group of beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) of either more than 30% (or in the
case of any Person or Group that beneficially owns 10% or more of the aggregate
ordinary voting power as of the Issue Date, 35%) of the aggregate ordinary
voting power represented by the issued and outstanding Capital Stock of the
Company or more than 40% of the aggregate issued and outstanding Common Stock of
the Company; or (iv) the replacement of a majority of the Board of Directors of
the Company over a two-year period from the directors who constituted the Board
of Directors of the Company at the beginning of such period, and such
replacement shall not have been approved by a vote of at least a majority of the
Board of Directors of the Company then still in office who either were members
of such Board of Directors at the beginning of such period or whose election as
a member of such Board of Directors was previously so approved.
"Change of Control Date" has the meaning provided in Section 4.15.
----------------------
"Change of Control Offer" has the meaning provided in Section 4.15.
-----------------------
"Change of Control Payment Date" has the meaning provided in Section
------------------------------
4.15.
"Common Stock" of any Person means any and all shares, interests or
------------
other participations in, and other equivalents (however designated and whether
voting or non-voting) of
-4-
<PAGE>
such Person's common stock, whether outstanding on the Issue Date or issued
after the Issue Date, and includes, without limitation, all series and classes
of such common stock.
"Company" means Physician Sales & Service, Inc., a Delaware
-------
corporation and its successors that become a party to this Indenture in
accordance with its terms.
"Consolidated EBITDA" means, with respect to any Person, for any
-------------------
period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to
the extent Consolidated Net Income has been reduced thereby, (A) all income
taxes of such Person and its Subsidiaries paid or accrued in accordance with
GAAP for such period (other than income taxes attributable to extraordinary,
unusual or nonrecurring gains or losses or taxes attributable to sales or
dispositions outside the ordinary course of business or other transactions the
effect of which has been excluded from Consolidated Net Income), (B)
Consolidated Interest Expense and (C) Consolidated Non-cash Charges less any
non-cash items increasing Consolidated Net Income for such period, all as
determined on a consolidated basis for such Person and its Subsidiaries in
accordance with GAAP.
"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 (i) the incurrence or
repayment of any Indebtedness of such Person or any of its 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), other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital purposes
pursuant to working capital or revolving credit facilities, 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 and (ii) any Asset Sales or
Business Acquisitions (including, without limitation, any Business Acquisition
giving rise to the need to make such calculation as a result of such Person or
one of its Subsidiaries (including any Person who becomes a Subsidiary as a
result of the Business Acquisition) incurring, assuming or otherwise being
liable for Acquired Indebtedness and also including any Consolidated EBITDA for
such Four Quarter Period attributable to the Person or assets which are the
subject of the Business 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 Business Acquisition (including the incurrence,
assumption or liability for any such Acquired Indebtedness) occurred on the
first day of the Four Quarter Period. If such Person or any of its 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 Subsidiary of such Person had directly incurred or
otherwise assumed such Guaranteed Indebtedness. Furthermore, in calculating
"Consolidated Fixed Charges" for
-5-
<PAGE>
purposes of determining the denominator (but not the numerator) of this
"Consolidated Fixed Charge Coverage Ratio," (1) 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; (2) 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 (3) notwithstanding clause (1) 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 (i) Consolidated Interest Expense, plus
(ii) the product of (x) the amount of all dividend payments on any series of
Preferred Stock of such Person and its Restricted Subsidiaries (other than
dividends paid in Qualified Capital Stock or dividends to the extent payable to
the Company or its Restricted Subsidiaries) paid, accrued or scheduled to be
paid or accrued during such period (other than in the case of Preferred Stock of
such Person and its Restricted Subsidiaries for which the dividends are tax
deductible for Federal income tax purposes) 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: (i) the aggregate of the interest
expense of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, whether paid or
accrued, including without limitation, (a) any amortization of debt discount and
amortization or write-off of deferred financing costs, (b) the net costs under
Interest Swap Obligations, (c) all capitalized interest and (d) the interest
portion of any deferred payment obligation, including with respect to
Attributable Debt; (ii) the aggregate dividend payments of such Person and its
Restricted Subsidiaries for such period with respect to Disqualified Capital
Stock; and (iii) 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" means, with respect to any Person, for any
-----------------------
period, the aggregate net income (or loss) of such Person and its Subsidiaries
for such period on a consolidated basis (before Preferred Stock (other than
Disqualified Stock) dividend requirements), determined in accordance with GAAP;
provided that there shall be excluded therefrom (a) after-tax gains and losses
from Asset Sales or abandonments of reserves relating thereto, (b) after-tax
items classified as extraordinary or nonrecurring gains or losses, (c) the net
income of any Person acquired in a "pooling of interests" transaction accrued
prior to the date it becomes a Subsidiary of the referent Person or is merged or
consolidated with the referent Person or any Subsidiary of the referent Person,
(d) the net income (but not loss) of any Restricted Subsidiary of the referent
Person to the extent that the declaration of dividends or similar
-6-
<PAGE>
distributions by that Restricted Subsidiary of that income is restricted (or
subject to tax) by a contract, operation of law or otherwise, (e) the net income
of any Person, other than a Restricted Subsidiary of the referent Person, except
to the extent of cash dividends or distributions paid to the referent Person or
to a Wholly Owned Restricted Subsidiary of the referent Person by such Person,
(f) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of Consolidated Net Income accrued
at any time following the Issue Date, (g) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued), (h) in the case of a successor to the referent Person by
consolidation or merger or as a transferee of the referent Person's assets, any
earnings of the successor corporation prior to such consolidation, merger or
transfer of assets, (i) any gain realized in connection with the disposition of
any securities other than Cash Equivalents by such Person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person
or any of its Restricted Subsidiaries, (j) all gains or losses from the
cumulative effect of any change in accounting principles and (k) Consolidated
Pooling Expenses.
"Consolidated Net Worth" means, (A) with respect to any partnership,
----------------------
the common and preferred partnership equity of such partnership and its
consolidated subsidiaries, as determined on a consolidated basis in accordance
with GAAP, and (B) with respect to any other Person as of any date, the sum of
(i) the consolidated equity of the common equityholders of such Person and its
consolidated Subsidiaries as of such date plus (ii) the respective amounts
reported on such Person's balance sheet as of such date with respect to any
series of preferred equity (other than Disqualified Capital Stock) that by its
terms is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of this Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments), plus
(z) all unamortized debt discount and expense and unamortized deferred charges
as of such date, all of the foregoing determined in accordance with GAAP.
"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 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
constituting an extraordinary item or loss or any such charge which requires an
accrual of or a reserve relating to possible cash charges or expenditures for
any future or past period).
"Consolidated Pooling Expenses" of any Person means for any period,
-----------------------------
with respect to such Person and its Restricted Subsidiaries on a consolidated
basis, the transaction, merger-related and non-recurring costs and expenses for
such period recorded in connection with a pooling-of-interests transaction, in
accordance with GAAP, but only to the extent such expenses
-7-
<PAGE>
would have been capitalized, in accordance with GAAP, if such transaction had
been a purchase transaction including, but not limited to, severance costs,
plant closings, relocations and like costs.
"Contributions" means any loans, cash advances, capital contributions,
-------------
investments or other transfers of assets for either (i) Capital Stock or (ii)
less than fair value by the Company or any of its Restricted Subsidiaries to any
Subsidiary or other Affiliate of the Company or any of its Restricted
Subsidiaries other than to a Subsidiary Guarantor.
"Covenant Defeasance" has the meaning provided in Section 8.2(c).
-------------------
"Credit Facility" means the Amended and Restated Loan and Security
---------------
Agreement, dated as of December 21, 1994, by and among the Company, PSS Texas,
Inc., PSS Rhode Island, Inc., Standard/Crescent City Surgical Supplies, Inc.,
and the financial institutions party thereto from time to time and NationsBank,
N.A. (formerly known as NationsBank of Georgia, N.A.), as agent, together with
the related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, and any agreement extending the maturity
of, Refinancing, replacing or otherwise restructuring (including increasing the
amount of available borrowings thereunder (provided that such increase in
borrowings is permitted by Section 4.12)) all or any portion of the Indebtedness
(or commitment to extend such Indebtedness) under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"Currency Agreement" means any foreign exchange contract, currency
------------------
swap agreement or other similar agreement or arrangement.
"Custodian" means any receiver, trustee, assignee, liquidator,
---------
sequestrator or similar official under any Bankruptcy Law.
"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.
"Default Notice" has the meaning provided in Section 10.2(a).
--------------
"Depository" means The Depository Trust Company, its nominees and
----------
successors.
"Depository Participants" has the meaning provided in Section 2.15.
-----------------------
"Designated Senior Indebtedness" means (i) Indebtedness under or in
------------------------------
respect of the Credit Facility and (ii) any other Indebtedness constituting
Senior Indebtedness which, at the time of determination, has an aggregate
principal amount of at least $25,000,000 and is specifically designated in the
instrument evidencing such Senior Indebtedness as "Designated Senior
Indebtedness" by the Company.
"Disqualified Capital Stock" means, with respect to any person, 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, matures or is mandatorily redeemable,
-8-
<PAGE>
pursuant to a sinking fund obligation or otherwise, or is exchangeable for
Indebtedness, or is redeemable at the option of the holder thereof, in whole or
in part, on or prior to the date that is 91 days after the date on which the
Notes mature.
"Escrowed Purchase Price" means the deferred purchase price of
-----------------------
property, including a Business Acquisition, for which an escrow of cash or Cash
Equivalents has been established, and with respect to which the payment
obligation (whether contingent or fixed) does not exceed the amount of such
escrow, plus the earnings actually received thereon.
"Event of Default" has the meaning provided in Section 6.1.
----------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
or any successor statute or statutes thereto.
"Exchange Notes" means the 8 1/2% Senior Subordinated Notes due 2007
--------------
to be issued in exchange for the Initial Notes pursuant to the Registration
Rights Agreement or, with respect to Initial Notes issued under this Indenture
subsequent to the Issue Date pursuant to Section 2.2, a registration rights
agreement substantially identical to the Registration Rights Agreement.
"Exchange Offer" has the meaning assigned to such term in the
--------------
Registration Rights Agreement, dated as of October 7, 1997, by and among the
Company, the Subsidiary Guarantors, BT Alex. Brown Incorporated, Salomon
Brothers Inc, and NationsBanc Montgomery Securities, Inc., as initial purchasers
(the "Registration Rights Agreement").
-----------------------------
"Executive Stock Purchase Program" means any plan or program
--------------------------------
implemented by the Company pursuant to which the Company provides loans or
otherwise extends credit to officers of the Company for the purpose of
purchasing Common Stock of the Company from the Company in an amount not less
than the amount of such loans or credit. Under the terms of any Executive Stock
Purchase Program, the Company may, based on the financial performance of the
Company, forgive the repayment of all or any portion of such loan.
"fair market value" means, 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 the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of the Company delivered to the Trustee.
"First Call Date" means October 1, 2002.
---------------
"Foreign Subsidiary" means any Subsidiary of the Company either (a)
------------------
which is organized outside of the United States of America, (b) whose principal
activities are conducted outside of the United States of America or (c) whose
only material assets are Capital Stock in Subsidiaries which are Foreign
Subsidiaries.
"Funding Guarantor" has the meaning provided in Section 11.6.
-----------------
-9-
<PAGE>
"GAAP" means generally accepted accounting principles 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 may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Issue Date.
"Global Note" has the meaning provided in Section 2.1.
-----------
"Guarantee" means a guarantee, direct or indirect, in any manner of
---------
all or any part of any Indebtedness.
"Guarantor Blockage Period" has the meaning provided in Section
-------------------------
12.2(a).
"Guarantor Default Notice" has the meaning provided in Section
------------------------
12.2(a).
"Guarantor Designated Senior Indebtedness", with respect to any
----------------------------------------
Subsidiary Guarantor, means (i) if such Subsidiary Guarantor is party to the
Credit Facility, Indebtedness under or in respect of the Credit Facility and
(ii) any other Indebtedness constituting Guarantor Senior Indebtedness of such
Subsidiary Guarantor which, at the time of determination, has an aggregate
principal amount of at least $25,000,000 (including the principal amount of
Obligations of the Company and its Subsidiaries under such Indebtedness) and is
specifically designated in the instrument evidencing such Guarantor Senior
Indebtedness as "Designated Senior Indebtedness" or "Guarantor Designated Senior
Indebtedness" by the Company or any of its Subsidiaries.
"Guarantor Senior Indebtedness" means, with respect to any Subsidiary
-----------------------------
Guarantor, all Indebtedness and other Obligations specified below payable
directly or indirectly by such Subsidiary Guarantor (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law), whether outstanding on the
Issue Date or thereafter created, incurred or assumed, by such Subsidiary
Guarantor: (i) the principal of, interest on and all other Obligations related
to, the Credit Facility (including without limitation all loans, letters of
credit and other extensions of credit under the Credit Facility, and all
expenses, fees, reimbursements, indemnities and other amounts owing pursuant to
the Credit Facility); (ii) amounts payable in respect of any Interest Swap
Obligations and Currency Agreements; (iii) all Indebtedness not prohibited by
Section 4.12 that is not expressly pari passu with or subordinated to the Note
Guarantee of such Subsidiary Guarantor; and (iv) all permitted Refinancings
thereof. Notwithstanding the foregoing, "Guarantor Senior Indebtedness" shall
not include (a) any Indebtedness of the Subsidiary Guarantor to the Company or a
Subsidiary of the Company, (b) Indebtedness to, or guaranteed on behalf of, any
Affiliate of the Company or any Subsidiary of the Company (including, without
limitation, amounts owed for compensation), (c) accounts payable and other
amounts due to trade creditors in connection with obtaining goods, materials or
services, (d) Indebtedness represented by Disqualified Capital Stock, (e) any
liability for federal, state, local or other taxes owed or owing by the
Subsidiary Guarantor, (f) Indebtedness incurred in violation of Section 4.12,
(g) Indebtedness which, when incurred and without respect to any election under
Section 1111(b) of Title 11, United States Code, is without
-10-
<PAGE>
recourse to the Subsidiary Guarantor and (h) any Indebtedness which is, by its
express terms, subordinated in right of payment to any other Indebtedness of the
Subsidiary Guarantor.
"Holder" or "Noteholder" means the person in whose name a Note is
------ ----------
registered on the Registrar's books.
"incur" has the meaning provided in Section 4.12.
-----
"Indebtedness" means with respect to any Person, without duplication,
------------
(i) all indebtedness of such Person, whether or not contingent, for borrowed
money, (ii) all indebtedness of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) all Capitalized Lease Obligations of
such Person, (iv) all indebtedness or other obligations of such Person issued or
assumed as the deferred purchase price of property other than Escrowed Purchase
Price, all conditional sale obligations and all Obligations under any title
retention agreement (but excluding trade accounts payable and other accrued
liabilities arising in the ordinary course of business that are not in default
or overdue by 90 days or more or are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted), (v) all
indebtedness for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (vi) guarantees and other
contingent obligations in respect of Indebtedness referred to in clauses (i)
through (v) above and clause (viii) below of such Person or any other Person,
(vii) all indebtedness of any other Person of the type referred to in clauses
(i) through (vi) which are secured by any lien on any property or asset of 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, (viii) all indebtedness under Currency Agreements and Interest Swap
Agreements of such Person and (ix) 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, the "maximum fixed repurchase price" of
any Disqualified Capital 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 this 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. The amount of any Indebtedness (other than
Disqualified Capital Stock) outstanding as of any date shall be (i) the accreted
value thereof, to the extent such Indebtedness does not require current payments
of interest, and (ii) the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of any other
Indebtedness.
"Independent Financial Advisor" means a firm (i) which does not, and
-----------------------------
whose directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
-11-
<PAGE>
"Indenture" means this Indenture, as amended or supplemented from time
---------
to time in accordance with the terms hereof.
"Initial Notes" means, collectively, (i) the 8 1/2% Senior
-------------
Subordinated Notes due 2007 of the Company issued on the Issue Date and (ii) one
or more series of 8 1/2% Senior Subordinated Notes due 2007 that are issued
under this Indenture subsequent to the Issue Date pursuant to Section 2.2, in
each case for so long as such securities constitute Restricted Securities.
"Initial Sale" means the first transaction in which accounts
------------
receivable are sold by the Company and/or its Restricted Subsidiaries to an
Accounts Receivable Subsidiary.
"Insolvency or Liquidation Proceedings" means with respect to any
-------------------------------------
Person (i) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding relative to such
Person or to the creditors of such Person, as such, or to the assets of such
Person, or (ii) any liquidation, dissolution, reorganization or winding up of
such Person, whether voluntary or involuntary and involving insolvency or
bankruptcy, or (iii) any assignment for the benefit of creditors or any other
marshaling of assets and liabilities of such Person.
"Institutional Accredited Investor" means an institution that is an
---------------------------------
"accredited investor" as that term is defined in Rule 501 (a)(1), (2), (3) or
(7) under the Securities Act.
"Interest Payment Date" when used with respect to any Note, means the
---------------------
stated maturity of an installment of interest specified in such Note.
"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 and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect
----------
loan or other extension of credit (including, without limitation, a guarantee,
other than a guarantee of Indebtedness of a Foreign Subsidiary permitted by
Section 4.12) 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, any other Person (including a Subsidiary of the referent Person).
"Investment" shall exclude extensions of trade credit by the Company and its
Subsidiaries on commercially reasonable terms in accordance with normal trade
practices of the Company or such Subsidiary, as the case may be. If the Company
or any Restricted Subsidiary of the Company sells or otherwise disposes of any
Capital Stock of any direct or indirect Restricted Subsidiary of the Company
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary of
-12-
<PAGE>
the Company, the Company 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 Capital
Stock of such Subsidiary not sold or disposed. For the purposes of Section
4.10, 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
Subsidiaries, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment, reduced by
the payment of dividends or distributions 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.
"Issue Date" means the date of original issuance of the Notes.
----------
"Legal Defeasance" has the meaning provided in Section 8.2(b).
----------------
"Legal Holiday" has the meaning provided in Section 13.7.
-------------
"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).
"Local Qualifying Securities" with respect to any Foreign Subsidiary
---------------------------
means the minimum amount of Capital Stock of such Foreign Subsidiary required by
applicable law of the country in which the Foreign Subsidiary is located to be
owned by a citizen of such country.
"Maturity Date" means October 1, 2007.
-------------
"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 the Company or any of its Restricted Subsidiaries from
such Asset Sale net of (a) reasonable out-of-pocket expenses and fees relating
to such Asset Sale (including, without limitation, legal, accounting and
investment banking fees and sales commissions), (b) income taxes paid or payable
after taking into account any reduction in consolidated income tax liability due
to available tax credits or deductions and any tax sharing arrangements, (c)
repayment of Indebtedness that is required to be repaid in connection with such
Asset Sale and (d) appropriate amounts to be provided by the Company or any
Restricted Subsidiary, as the case may be, as a reserve, in accordance with
GAAP, against any liabilities associated with such Asset Sale and retained by
the Company or any Restricted Subsidiary, as the case may be, after such Asset
Sale, including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale.
"Net Proceeds Offer" has the meaning provided in Section 4.16.
------------------
-13-
<PAGE>
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
-----------------
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor
or otherwise); (ii) no default with respect to which (including any rights that
the holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of any
other Indebtedness of the Company or its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders, except for lenders under Indebtedness in existence on the Issue Date or
instruments governing Acquired Indebtedness (a) have acknowledged that they do
not have recourse to the holder of the Capital Stock of the debtor or (b) have
been notified in writing that they will not have any recourse to the stock or
assets of either the Company or any of its Restricted Subsidiaries.
"Non-U.S. Person" means a Person other than a "U.S. Person" (as
---------------
defined in Regulation S under the Securities Act).
"Note Guarantee" means the Guarantees executed and delivered by any
--------------
Subsidiary Guarantor with respect to the Company's obligations under this
Indenture and the Notes.
"Notes" means, collectively, the Initial Notes, the Private Exchange
-----
Notes, if any, and the Unrestricted Notes, treated as a single class of
securities, as amended or supplemented from time to time in accordance with the
terms hereof, that are issued pursuant to this Indenture.
"Obligations" means all obligations for principal, premium, interest,
-----------
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Officer" means, with respect to any person, the Chairman of the
-------
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Controller, or the Secretary of such
person, or any other officer designated by the Board of Directors serving in a
similar capacity.
"Officers' Certificate" means, with respect to any Person, a
---------------------
certificate signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of such Person and otherwise complying with
the requirements of Sections 13.4 and 13.5, as they relate to the making of an
Officers' Certificate.
"Offshore Physical Notes" has the meaning provided in Section 2.1.
-----------------------
"Opinion of Counsel" means a written opinion from legal counsel, who
------------------
may be counsel for the Company and who is reasonably acceptable to the Trustee,
complying with the requirements of Sections 13.4 and 13.5, as they relate to the
giving of an Opinion of Counsel.
-14-
<PAGE>
"Pari Passu Debt" means any Indebtedness of the Company or its
---------------
Restricted Subsidiaries which, by its terms, is pari passu in right of payment
to the Notes or the Note Guarantees.
"Paying Agent" has the meaning provided in Section 2.3.
------------
"Payment in Full" (together with any correlative phrases, e.g., "paid
---------------
in full" and "pay in full") means (i) with respect to any Senior Indebtedness
other than Senior Indebtedness under or in respect of the Credit Facility,
payment in full thereof or due provision for payment thereof (x) in accordance
with the terms of the agreement or instrument pursuant to which such Senior
Indebtedness was issued or is governed or (y) otherwise to the reasonable
satisfaction of the holders of such Senior Indebtedness, which shall include, in
any Insolvency or Liquidation Proceeding, approval by such holders individually
or as a class, of the provision for payment thereof, and (ii) with respect to
Senior Indebtedness under or in respect of the Credit Facility, payment in full
thereof in cash or Cash Equivalents.
"Permitted Business" means the business of the Company and its
------------------
Subsidiaries as existing on the Issue Date or such other businesses as the Board
of Directors of the Company determines are reasonably related thereto as
evidenced by a Board Resolution.
"Permitted Indebtedness" has the meaning provided in Section 4.12(b).
----------------------
"Permitted Insolvency Payments" means (i) securities distributed to
-----------------------------
the Holders of the Notes in an Insolvency or Liquidation Proceeding pursuant to
a plan of reorganization consented to by each class of the Senior Indebtedness,
but only if all of the terms and conditions of such securities (including,
without limitation, term, tenor, interest, amortization, subordination,
standstills, covenants and defaults), are at least as favorable (and provide the
same relative benefits) to the holders of Senior Indebtedness and to the holders
of any security distributed in such Insolvency or Liquidation Proceeding on
account of any such Senior Indebtedness as the terms and conditions of the Notes
and this Indenture are, and provide to the holders of Senior Indebtedness, and
(ii) payments from a trust established pursuant Article VIII, provided that
payment into such trust was not made either (x) within 90 days prior to the
commencement of an Insolvency or Liquidation Proceeding, or (y) during a
Blockage Period.
"Permitted Investments" means (i) Investments by the Company or any
---------------------
Subsidiary of the Company in any Person engaged in a Permitted Business that is
or will become immediately after such Investment a Wholly Owned Restricted
Subsidiary of the Company other than a Foreign Subsidiary or that will merge or
consolidate into the Company or a Wholly Owned Restricted Subsidiary of the
Company other than a Foreign Subsidiary, (ii) Investments in the Company by any
Subsidiary of the Company; provided that any Indebtedness evidencing such
Investment is unsecured and subordinated to the Company's obligations under the
Notes and this Indenture, pursuant to a written agreement and to the same extent
that the Notes are subordinated to Senior Indebtedness; (iii) investments in
cash and Cash Equivalents; (iv) loans and advances to employees and officers of
the Company and its Subsidiaries (a) in existence as of the Issue Date, (b) in
the ordinary course of business for bona fide business purposes not in excess of
$2,000,000 at any one time outstanding or (c) pursuant to an Executive Stock
Purchase Program; (v)
-15-
<PAGE>
Currency Agreements and Interest Swap Obligations entered into in the ordinary
course of the Company's or its Subsidiaries' businesses and otherwise in
compliance with this Indenture; (vi) Investments in securities of trade
creditors or customers received in settlement of trade receivables at such time
as the account debtor is insolvent or otherwise unable to pay or pursuant to any
plan of reorganization or similar arrangement upon the bankruptcy or insolvency
of such trade creditors or customers; (vii) Investments made by the Company or
its Subsidiaries as a result of consideration received in connection with an
Asset Sale made in compliance with Section 4.16; (viii) Investments in an
Accounts Receivable Subsidiary received in consideration of sales of accounts
receivable in accordance with Section 4.23; (ix) Investments by the Company or a
Wholly Owned Restricted Subsidiary in the form of loans or advances described in
clause (vii) of the definition of the term Permitted Indebtedness; and (x)
additional Investments made after the Issue Date in an aggregate amount not
exceeding $10,000,000 at any one time outstanding.
"Permitted Liens" means the following types of Liens:
---------------
i) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or its Subsidiaries shall have set
aside on its books such reserves as may be required pursuant to GAAP;
ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security;
iv) Liens securing letters of credit issued in the ordinary course of
business consistent with past practice in connection with the items
referred to in clause (iii) or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
v) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
vi) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company
or any of its Subsidiaries;
-16-
<PAGE>
vii) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
viii) purchase money Liens to finance property or assets of the
Company or any Subsidiary of the Company acquired or constructed in the
ordinary course of business; provided, however, that (A) the related
purchase money Indebtedness shall not exceed the cost of such property or
assets and shall not be secured by any property or assets of the Company or
any Subsidiary of the Company other than the property and assets so
acquired and (B) the Lien securing such Indebtedness shall be created
within 90 days of such acquisition;
ix) Liens upon specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory or other goods;
x) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to
such letters of credit and products and proceeds thereof;
xi) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Company
or any of its Subsidiaries, including rights of offset and set-off;
xii) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under this
Indenture;
xiii) Liens securing Indebtedness under Currency Agreements;
xiv) Liens securing Acquired Indebtedness incurred in accordance with
Section 4.12; provided that (A) such Liens secured such Acquired
Indebtedness at the time of and prior to the incurrence of such Acquired
Indebtedness by the Company or a Subsidiary of the Company and were not
granted in connection with, or in anticipation of, the incurrence of such
Acquired Indebtedness by the Company or a Subsidiary of the Company and (B)
such Liens do not extend to or cover any property or assets of the Company
or of any of its Subsidiaries other than the property or assets that
secured the Acquired Indebtedness prior to the time such Indebtedness
became Acquired Indebtedness of the Company or a Subsidiary of the Company
and are no more favorable to the lienholders than those securing the
Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness
by the Company or a Subsidiary of the Company;
xv) Liens to secure Attributable Debt that is permitted to be incurred
pursuant to Section 4.21; provided that any such Lien shall not extend to
or cover any assets of the Company or any Restricted Subsidiary other than
the assets which are the subject of the Sale and Leaseback Transaction in
which the Attributable Debt is incurred.
-17-
<PAGE>
xvi) Leases or subleases granted to others not interfering in any
material respect with the business of the Company or any of its
Subsidiaries;
xvii) Any interest or title of a lessor in the property subject to any
lease, whether characterized as capitalized or operating other than any
such interest or title resulting from or arising out of a default by the
Company or any of its Subsidiaries of its obligations under such lease;
xviii) Liens arising from filing UCC financing statements for
precautionary purposes in connection with true leases of personal property
that are otherwise permitted under this Indenture and under which the
Company or any of its Subsidiaries is lessee; and
xix) Liens in favor of the Trustee and any substantially equivalent
Lien granted to any trustee or similar institution under any indenture
governing Indebtedness permitted to be incurred or outstanding under this
Indenture.
"Person" means an individual, partnership, corporation, unincorporated
------
organization, trust or joint venture, a governmental agency or political
subdivision thereof or other entity.
"Physical Notes" has the meaning provided in Section 2.1.
--------------
"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" of any Indebtedness (including the Notes) means the
---------
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Private Exchange Notes" has the meaning set forth in the Registration
----------------------
Rights Agreement.
"Private Placement Legend" means the legend initially set forth on the
------------------------
Initial Notes in the form set forth in Exhibit A(l).
------------
"Proceeds Purchase Date" has the meaning provided in Section 4.16.
----------------------
"pro forma" means, with respect to any calculation made or required to
---------
be made pursuant to the terms of this Indenture, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act, as determined by the
Board of Directors of the Company in consultation with its independent public
accountants.
"Property" of any person means all types of real, personal, tangible,
--------
intangible or mixed property owned by such person whether or not included in the
most recent consolidated balance sheet of such person and its Subsidiaries under
GAAP.
-18-
<PAGE>
"Public Equity Offering" means an underwritten equity offering of the
----------------------
Qualified Capital Stock of the Company, or of any entity of which the Company is
a direct or indirect subsidiary, to the extent the proceeds thereof shall have
been contributed to the Company, pursuant to an effective registration statement
under the Securities Act.
"Qualified Capital Stock" means any Capital Stock that is not
-----------------------
Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
----------------------------- ---
specified in Rule 144A under the Securities Act.
"Record Date" means, with respect to any Note, any of the Record Dates
-----------
specified in such Note, whether or not a Legal Holiday.
"Redemption Date," when used with respect to any Note to be redeemed,
---------------
means the date fixed for such redemption pursuant to this Indenture and the
Notes.
"Redemption Price," when used with respect to any Note to be redeemed,
----------------
means the price fixed for such redemption pursuant to this Indenture and the
Notes.
"Reference Date" has the meaning provided in Section 4.10.
--------------
"Refinance" means, in respect of any security or Indebtedness, to
---------
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
------------------------
Subsidiary of the Company of Indebtedness (other than Indebtedness under the
Credit Facility) incurred in accordance with Section 4.12 (other than pursuant
to clause (v), (vi), (vii), (viii) or (ix) of the definition of Permitted
Indebtedness), in each case that does not (1) result in an increase in the
aggregate principal amount of Indebtedness of such Person as of the date of such
proposed Refinancing (plus the amount of any premium or penalty required to be
paid under the terms of the instrument governing such Indebtedness and plus the
amount of reasonable expenses incurred by the Company in connection with such
Refinancing) or (2) create Indebtedness with (A) a Weighted Average Life to
Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being Refinanced or (B) a final maturity earlier than the final
maturity of the Indebtedness being Refinanced; provided that (x) if such
Indebtedness being Refinanced is Indebtedness of the Company, then such
Refinancing Indebtedness shall be Indebtedness solely of the Company and (y) if
such Indebtedness being Refinanced is subordinate or junior to the Notes or any
Note Guarantee, then such Refinancing Indebtedness shall have a final maturity
date later than 91 days after the final maturity date of the Notes and shall be
subordinate to the Notes at least to the same extent and in the same manner as
the Indebtedness being Refinanced.
"Registrar" has the meaning provided in Section 2.3.
---------
-19-
<PAGE>
"Registration Rights Agreement" has the meaning provided in the
-----------------------------
definition of "Exchange Offer."
"Regulation S" means Regulation S under the Securities Act.
------------
"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.
"Repurchase Date" has the meaning provided in Section 4.15.
---------------
"Restricted Payment" has the meaning provided in Section 4.10.
------------------
"Restricted Security" has the meaning assigned to such term in Rule
-------------------
144(a)(3) under the Securities Act; provided that the Trustee shall be entitled
to request and conclusively rely on an Opinion of Counsel with respect to
whether any Note constitutes a Restricted Security.
"Restricted Subsidiary" of a Person means any Subsidiary of the
---------------------
referent Person that is not an Unrestricted Subsidiary.
"Revolving Credit Facility" means one or more revolving credit
-------------------------
facilities under the Credit Facility.
"Rule 144A" means Rule 144A under the Securities Act.
---------
"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 the Company or a Subsidiary of any property, whether owned by
the Company or any Subsidiary at the Issue Date or later acquired, which has
been or is to be sold or transferred by the Company or such 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.
"SEC" means the United States Securities and Exchange Commission and
---
any successor agency.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations of the SEC promulgated thereunder.
"Senior Indebtedness" means, all Indebtedness and other Obligations
-------------------
specified below payable directly or indirectly by the Company or any of its
Restricted Subsidiaries (including any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the documentation
with respect thereto, whether or not such interest is an allowed claim under
applicable law), whether outstanding on the Issue Date or thereafter created,
incurred or assumed, by the Company or any of its Restricted Subsidiaries: (i)
the principal of, interest on
-20-
<PAGE>
and all other Obligations related to, the Credit Facility (including without
limitation all loans, letters of credit and other extensions of credit under the
Credit Facility, and all expenses, fees, reimbursements, indemnities and other
amounts owing pursuant to the Credit Facility); (ii) amounts payable in respect
of any Interest Swap Obligations and Currency Agreements; (iii) all Indebtedness
not prohibited by Section 4.12 that is not expressly pari passu with or
subordinated to the Notes; and (iv) all permitted Refinancings thereof.
Notwithstanding the foregoing, "Senior Indebtedness" shall not include (a) any
Indebtedness of the Company to a Subsidiary of the Company, (b) Indebtedness to,
or guaranteed on behalf of, any Affiliate of the Company or any Subsidiary of
the Company (including, without limitation, amounts owed for compensation), (c)
accounts payable and other amounts due to trade creditors in connection with
obtaining goods, materials or services, (d) Indebtedness represented by
Disqualified Capital Stock, (e) any liability for federal, state, local or other
taxes owed or owing by the Company, (f) Indebtedness incurred in violation of
Section 4.12, (g) Indebtedness which, when incurred and without respect to any
election under Section 1111(b) of Title 11, United States Code, is without
recourse to the Company and (h) any Indebtedness which is, by its express terms,
subordinated in right of payment to any other Indebtedness of the Company.
"Significant Subsidiary" shall have the meaning set forth in Rule
----------------------
1.02(w) of Regulation S-X under the Securities Act.
"Stated Maturity" means, with respect to any installment of interest,
---------------
accreted value or principal on any series of Indebtedness, the date on which
such payment of interest or principal is due or is scheduled to be paid in the
original documentation governing such Indebtedness, and shall not include any
contingent obligations to repay, redeem or repurchase any such interest,
accreted value or principal prior to the date originally scheduled for the
payment or accretion thereof.
"Subsidiary", with respect to any Person, means (i) any corporation,
----------
limited liability company, limited partnership or limited liability partnership,
general partnership of which the outstanding Capital Stock having at least a
majority of the votes entitled to be cast in the election of directors (or
Persons having similar control or authority) under ordinary circumstances shall
at the time be owned, directly or indirectly, by such Person or (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 (i) initially, Diagnostic Imaging, Inc.,
--------------------
PSS Service, Inc., PSS Holding, Inc., Physician Sales & Service Limited
Partnership, PSS Rhode Island, Inc., PSS Texas, Inc., PSS Delaware, Inc., PSS
Physician Services, Inc., Standard/Crescent City Surgical Supplies, Inc. and S&W
X-Ray, Inc., and (ii) each of the Company's Subsidiaries that in the future
executes a supplemental indenture in which such Subsidiary agrees to be bound by
the terms of this Indenture as a Subsidiary Guarantor; provided that any Person
constituting a Subsidiary Guarantor as described above shall cease to be a
Subsidiary Guarantor when its respective Note Guarantee is released in
accordance with the terms hereof.
"Surviving Entity" has the meaning provided in Section 5.1.
----------------
-21-
<PAGE>
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
---
77bbbb), as amended, as in effect on the date of this Indenture, except as
otherwise provided in Section 9.4.
"Trustee" means the party named as such in this Indenture until a
-------
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Trust Officer" means any officer of the Trustee assigned by the
-------------
Trustee to administer this Indenture, or in the case of a successor trustee, an
officer assigned to the department, division or group performing the corporation
trust work of such successor and assigned to administer this Indenture.
"U.S. Government Obligations" means non-callable direct obligations
---------------------------
of, and non-callable obligations guaranteed by, the United States of America for
the payment of which the full faith and credit of the United States of America
is pledged.
"U.S. Legal Tender" means such coin or currency of the United States
-----------------
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"U.S. Physical Notes" has the meaning provided in Section 2.1.
-------------------
"Unrestricted Notes" means one or more Notes that do not and are not
------------------
required to bear the private placement legend in the form set forth on Exhibit
-------
A(l), including, without limitation, the Exchange Notes in the form set forth as
- ----
Exhibit A(2) hereto.
- ------------
"Unrestricted Subsidiary" means (I) WorldMed, Inc., WorldMed
-----------------------
International, Inc., and WorldMed, N.V. and (II) any Subsidiary that is
designated by the Board of Directors of the Company as an Unrestricted
Subsidiary pursuant to a Board Resolution in compliance with Section 4.22 but
only to the extent that such Subsidiary: (a) has no Indebtedness other than Non-
Recourse Debt; provided, however, that any such Non-Recourse Debt may be
Guaranteed by the Company or its Restricted Subsidiaries, provided, that such
Guarantee is permitted by Section 4.12; (b) on the date of such designation is
not party to any agreement, contract, arrangement or understanding with the
Company or any Restricted Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Company or such Restricted
Subsidiary; (c) is a Person with respect to which neither the Company nor any of
its Restricted Subsidiaries has any direct or indirect obligation (x) to
subscribe for additional Capital Stock or (y) to maintain or preserve such
Person's financial condition or to cause such Person to achieve any specified
levels of operating results; (d) has not Guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Company or any of
its Restricted Subsidiaries; and (e) has at least one director on its board of
directors that is not a director or executive officer of the Company or its
Restricted Subsidiaries and has at least one executive officer that is not a
director or executive officer of the Company or its Restricted Subsidiaries.
-22-
<PAGE>
"Weighted Average Life to Maturity" means, when applied to any
---------------------------------
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) 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 (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means any
----------------------------------
Restricted Subsidiary of such Person of which all the outstanding voting
securities (other than Local Qualifying Securities) are owned by such Person or
any Wholly Owned Restricted Subsidiary of such Person.
Section 1.2. Incorporation by Reference of TIA.
---------------------------------
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes.
"indenture security holder" means a Holder or a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company, the
Subsidiary Guarantors, or any other obligor on the Notes or the Note Guarantees.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
Section 1.3. Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in
the plural include the singular; and
-23-
<PAGE>
(5) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
ARTICLE II.
THE NOTES
Section 2.1. Form and Dating.
---------------
The Initial Notes, the notation thereon relating to the Note
Guarantees and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A(1) hereto. The Exchange Notes, the
------------
notation thereon relating to the Note Guarantees and the Trustee's certificate
of authentication shall be substantially in the form of Exhibit A(2) hereto.
------------
The Notes may have notations, legends or endorsements required by law, stock
exchange rule or depository rule or usage. The Company and the Trustee shall
approve the form of the Notes and any notation, legend or endorsement on them.
Each Note shall be dated the date of its issuance.
The terms and provisions contained in the Notes and the Note
Guarantees annexed hereto as Exhibits A(l) and A(2), shall constitute, and are
------------- ----
hereby expressly made, a part of this Indenture and, to the extent applicable,
the Company, the Subsidiary Guarantors and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and to
be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent global Notes in registered form,
substantially in the form set forth in Exhibit A(l) (the "Global Note"),
------------ -----------
deposited with the Trustee, as custodian for the Depository, and shall bear the
legend set forth in Exhibit B, duly executed by the Company and the Subsidiary
---------
Guarantors, if any, and authenticated by the Trustee as hereinafter provided.
The aggregate principal amount of the Global Note may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depository, as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued in the form of permanent certificated Notes in
registered form in substantially the form set forth in Exhibit A(l) (the
------------
"Offshore Physical Notes"). Notes offered and sold in reliance on any other
- ------------------------
exemption from registration under the Securities Act other than as described in
the preceding paragraph shall be issued, and Notes offered and sold in reliance
on Rule 144A may be issued, in the form of permanent certificated Notes in
registered form, in substantially the form set forth in Exhibit A(1) (the "U.S.
------------ ----
Physical Notes"). The Offshore Physical Notes and the U.S. Physical Notes are
- --------------
sometimes collectively herein referred to as the "Physical Notes."
--------------
-24-
<PAGE>
Section 2.2. Execution and Authentication; Aggregate Principal
-------------------
Amount.
-------
Two Officers, or an Officer and an Assistant Secretary, shall sign, or
one Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to the Notes for the Company by manual or facsimile
signature. The Company's seal shall also be reproduced on the Notes. Each
Subsidiary Guarantor shall execute the Note Guarantee in the manner set forth in
Section 11.8.
If an Officer or Assistant Secretary whose signature is on a Note was
an Officer or Assistant Secretary at the time of such execution but no longer
holds that office or position at the time the Trustee authenticates the Note,
the Note shall nevertheless be valid.
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue in
the aggregate principal amount not to exceed $250,000,000 in one or more series,
(ii) Private Exchange Notes from time to time only in exchange for a like
principal amount of Initial Notes and (iii) Unrestricted Notes from time to time
only (x) in exchange for a like principal amount of Initial Notes or (y) in an
aggregate principal amount of not more than the excess of $250,000,000 over the
sum of the aggregate principal amount of (A) Initial Notes then outstanding, (B)
Private Exchange Notes then outstanding and (C) Unrestricted Notes issued in
accordance with (iii)(x) above, in each case upon a written order of the Company
in the form of an Officers' Certificate of the Company. Each such written order
shall specify the amount of Notes to be authenticated and the date on which the
Notes are to be authenticated, whether the Notes are to be Initial Notes,
Private Exchange Notes or Unrestricted Notes and whether the Notes are to be
issued as Physical Notes or Global Notes or such other information as the
Trustee may reasonably request. In addition, with respect to authentication
pursuant to clauses (ii) or (iii) of the first sentence of this paragraph, the
first such written order from the Company shall be accompanied by an Opinion of
Counsel of the Company in a form reasonably satisfactory to the Trustee stating
that the issuance of the Private Exchange Notes or the Unrestricted Notes, as
the case may be, does not give rise to an Event of Default, complies with this
Indenture and has been duly authorized by the Company. The aggregate principal
amount of Notes outstanding at any time may not exceed $250,000,000, except as
provided in Section 2.8.
In the event that the Company shall issue and the Trustee shall
authenticate any Notes issued under this Indenture subsequent to the Issue Date
pursuant to clauses (i) and (iii) of the first sentence of the immediately
preceding paragraph, the Company shall use its best efforts to obtain the same
"CUSIP" number for such Notes as is printed on the Notes outstanding at such
time; provided, however, that if any series of Notes issued under this Indenture
subsequent to the Issue Date is determined, pursuant to an Opinion of Counsel of
the Company in a form reasonably satisfactory to the Trustee to be a different
class of security than the Notes outstanding at such time for federal income tax
purposes, the Company may obtain a "CUSIP" number for such Notes that is
different than the "CUSIP" number printed on the Notes then outstanding.
-25-
<PAGE>
Notwithstanding the foregoing, all Notes issued under this Indenture shall vote
and consent together on all matters as one class and no series of Notes will
have the right to vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent (the "Authenticating
--------------
Agent") reasonably acceptable to the Company to authenticate Notes. Unless
- -----
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Company and Affiliates of the Company.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 and any integral multiple thereof.
Section 2.3. Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency (which shall be located
in the Borough of Manhattan in the City of New York, State of New York) where
(a) Notes may be presented or surrendered for registration of transfer or for
exchange ("Registrar"), (b) Notes may be presented or surrendered for payment
---------
("Paying Agent") and (c) notices and demands to or upon the Company in respect
------------
of the Notes and this Indenture may be served. The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company, upon
prior written notice to the Trustee, may have one or more co-Registrars and one
or more additional paying agents reasonably acceptable to the Trustee. The term
"Paying Agent" includes any additional Paying Agent. Neither the Company nor
any Affiliate of the Company may act as Paying Agent.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee, in advance, of the name
and address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with
Section 7.7.
The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of demands and notices in connection with the Notes, until
such time as the Trustee has resigned or a successor has been appointed. The
Paying Agent or Registrar may resign upon 30 days prior written notice to the
Company.
Section 2.4. Paying Agent To Hold Assets in Trust.
------------------------------------
The Company shall require each Paying Agent other than the Trustee to
agree in writing that, subject to Articles Ten and Eleven, each Paying Agent
shall hold in trust for the benefit of the Holders or the Trustee all assets
held by the Paying Agent for the payment of principal of, or interest on, the
Notes (whether such assets have been distributed to it by the Company or any
other obligor on the Notes), and the Company and the Paying Agent shall notify
the Trustee in writing of any Default by the Company (or any other obligor on
the Notes) in
-26-
<PAGE>
making any such payment. The Company at any time may require a Paying Agent to
distribute all assets held by it to the Trustee and account for any assets
disbursed and the Trustee may at any time during the continuance of any payment
Default, upon written request to a Paying Agent, require such Paying Agent to
distribute all assets held by it to the Trustee and to account for any assets
distributed. Upon distribution to the Trustee of all assets that shall have
been delivered by the Company to the Paying Agent, the Paying Agent shall have
no further liability for such assets.
Section 2.5. Noteholder Lists.
----------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Noteholders. If the Trustee is not the Registrar, the Company shall furnish or
cause the Registrar to furnish to the Trustee as of each Record Date and before
each related Interest Payment Date and at such other times as the Trustee may
request in writing a list as of such date and in such form as the Trustee may
reasonably require of the names and addresses of Noteholders, which list may be
conclusively relied upon by the Trustee.
Section 2.6. Transfer and Exchange.
---------------------
Subject to the provisions of Sections 2.15 and 2.16, when Notes are
presented to the Registrar or a co-Registrar with a request to register the
transfer of such Notes or to exchange such Notes for an equal principal amount
of Notes of other authorized denominations, the Registrar or co-Registrar shall
register the transfer or make the exchange as requested if its requirements for
such transaction are met; provided, however, that the Notes presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar or co-Registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing. To permit registrations of transfer
and exchanges, the Company shall issue and execute and the Trustee shall
authenticate Notes at the Registrar's or co-Registrar's request. No service
charge shall be made to a Noteholder for any registration of transfer or
exchange. The Company may require from such Noteholder payment of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer taxes or similar governmental
charge payable upon exchanges or transfers pursuant to Sections 2.10, 3.6, 4.15,
4.16 or 9.6, in which event the Company shall be responsible for the payment of
such taxes).
The Registrar or co-Registrar shall not be required to register the
transfer of or exchange of any Note (i) during a period beginning at the opening
of business 15 days before the mailing of a notice of redemption of Notes and
ending at the close of business on the day of such mailing and (ii) selected for
redemption in whole or in part pursuant to Article III, except the unredeemed
portion of any Note being redeemed in part.
Any Holder of the Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Notes may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Global Note shall be required to be reflected in a book entry.
-27-
<PAGE>
Section 2.7. Replacement Notes.
-----------------
If a mutilated Note is surrendered to the Trustee or if the Holder of
a Note claims that the Note has been lost, destroyed or wrongfully taken, the
Company shall issue and execute and the Trustee shall authenticate a replacement
Note if the Trustee's requirements are met. If required by the Trustee or the
Company, such Holder must provide an affidavit of lost certificate and an
indemnity bond or other indemnity, sufficient in the judgment of both the
Company and the Trustee, to protect the Company, the Trustee or any Agent from
any loss which any of them may suffer if a Note is replaced. The Company may
charge such Holder for its reasonable, out-of-pocket expenses in replacing a
Note, including reasonable fees and expenses of the Trustee and counsel and the
Trustee may charge the Company for the Trustee's reasonable out-of-pocket
expenses in replacing such Note. Every replacement Note shall constitute an
additional Obligation of the Company.
Section 2.8. Outstanding Notes.
-----------------
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those cancelled by it, those delivered to it
for cancellation and those described in this Section as not outstanding.
Subject to the provisions of Section 2.9, a Note does not cease to be
outstanding because the Company, any Subsidiary Guarantor or any of their
respective Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.7 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender
- ---- ----
of such Note and replacement thereof pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal and interest due on the Notes payable on that date and is not
prohibited from paying such money to the Holders thereof pursuant to the terms
of this Indenture, then on and after that date such Notes shall cease to be
outstanding and interest on them shall cease to accrue.
Section 2.9. Treasury Notes.
--------------
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver, consent or notice, Notes owned by
the Company, any Subsidiary Guarantor or any of their respective Affiliates
shall be considered as though they are not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Notes which a Trust Officer of the
Trustee actually knows are so owned shall be so considered. The Company shall
notify the Trustee, in writing, when it, any Subsidiary Guarantor or any of
their respective Affiliates repurchases or otherwise acquires Notes, and of the
aggregate principal amount of such Notes so repurchased or otherwise acquired.
-28-
<PAGE>
Section 2.10. Temporary Notes.
---------------
Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon receipt of a written
order of the Company in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of temporary Notes to be authenticated and
the date on which the temporary Notes are to be authenticated, and shall direct
the Trustee to authenticate such Notes and certify that all conditions precedent
to the issuance of such Notes contained herein have been complied with.
Temporary Notes shall be substantially in the form of definitive Notes but may
have variations that the Company and the Trustee consider appropriate for
temporary Notes. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate upon receipt of a written order of the Company
pursuant to Section 2.2 definitive Notes in exchange for temporary Notes.
Section 2.11. Cancellation.
------------
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee, or
at the direction of the Trustee, the Registrar or the Paying Agent, and no one
else, shall cancel and, at the written direction of the Company, shall (subject
to the record-retention requirements of the Exchange Act) dispose of all Notes
surrendered for registration of transfer, exchange, payment or cancellation.
Subject to Section 2.7, the Company may not issue new Notes to replace Notes
that it has paid or delivered to the Trustee for cancellation. If the Company or
any Subsidiary Guarantor shall acquire any of the Notes, such acquisition shall
not operate as a redemption or satisfaction of the Indebtedness represented by
such Notes unless and until the same are surrendered to the Trustee for
cancellation pursuant to this Section 2.11.
Section 2.12. Defaulted Interest.
------------------
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a subsequent
special record date, which date shall be the fifteenth day next preceding the
date fixed by the Company for the payment of defaulted interest or the next
succeeding Business Day if such date is not a Business Day. At least 15 days
before the subsequent special record date, the Company shall mail to each
Holder, with a copy to the Trustee, a notice that states the subsequent special
record date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid.
Section 2.13. CUSIP Number.
------------
The Company in issuing the Notes may use one or more "CUSIP" numbers,
and if so, the appropriate CUSIP number(s) shall be included in all notices of
redemption or exchange as a convenience to Holders; provided that any such
notice may state that no representation is made by the Trustee as to the
correctness or accuracy of any CUSIP number(s) printed in the notice or on the
Notes, and that reliance may be placed only on the other identification numbers
printed on the Notes. The Company shall promptly notify the Trustee of any
change in the CUSIP number.
-29-
<PAGE>
Section 2.14. Deposit of Moneys.
-----------------
Prior to 10:00 a.m., New York City time, on each Interest Payment Date
and on the Maturity Date, the Company shall have deposited with the Paying Agent
in immediately available funds money sufficient to make cash payments, if any,
due on such Interest Payment Date or Maturity Date, as the case may be, in a
timely manner which permits the Paying Agent to remit payment to the Holders on
such Interest Payment Date or Maturity Date, as the case may be.
Section 2.15. Book-Entry Provisions for Global Note.
-------------------------------------
(a) The Global Note initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Exhibit B. Members of, or participants in, the Depository ("Depository
- --------- ----------
Participants") shall have no rights under this Indenture with respect to any
- ------------
Global Note held on their behalf by the Depository, or the Trustee as its
custodian, or under the Global Note, and the Depository may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the absolute
owner of the Global Note for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depository or impair, as between
the Depository and its Depository Participants, the operation of customary
practices governing the exercise of the rights of a holder of any Note.
(b) Transfers of the Global Note shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Note may be transferred
or exchanged for Physical Notes in accordance with the rules and procedures of
the Depository and the provisions of Section 2.16. In addition, Physical Notes
shall be transferred to all beneficial owners in exchange for their beneficial
interests in the Global Note if (i) the Depository notifies the Company that it
is unwilling or unable to continue as Depository for the Global Note and a
successor depositary is not appointed by the Company within 90 days of such
notice or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depository to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in the Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Company
shall execute, and the Trustee shall authenticate and deliver, one or more
Physical Notes of like tenor and amount.
(d) In connection with the transfer of the entire Global Note to
beneficial owners pursuant to paragraph (b), the Global Note shall be deemed to
be surrendered to the Trustee for cancellation, and the Company shall execute,
and the Trustee shall authenticate and deliver, to each beneficial owner
identified by the Depository in exchange for its beneficial interest
-30-
<PAGE>
in the Global Note, an equal aggregate principal amount of Physical Notes of
authorized denominations.
(e) Any Physical Note constituting a Restricted Security delivered in
exchange for an interest in the Global Note pursuant to paragraph (b) or (c)
shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section
2.16, bear the Private Placement Legend.
(f) The Holder of the Global Note may grant proxies and otherwise
authorize any person, including Depository Participants and persons that may
hold interests through Depository Participants, to take any action which a
Holder is entitled to take under this Indenture or the Notes.
Section 2.16. Special Transfer Provisions.
---------------------------
(a) Transfers to Non-QIB Institutional Accredited Investors and Non-
---------------------------------------------------------------
U.S. Persons. The following provisions shall apply with respect to the
- ------------
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after the
second anniversary of the date of this Indenture and the transferor
certifies that it is not, and for the preceding three months has not
been, an Affiliate of the Company or any Subsidiary Guarantor, and
that the Restricted Security was not acquired from the Company or an
Affiliate of the Company less than two years prior to the date of the
proposed transfer or (y) (1) in the case of a transfer to an
Institutional Accredited Investor which is not a QIB (excluding Non-
U.S. Persons), the proposed transferee has delivered to the Registrar
a certificate substantially in the form of Exhibit C hereto or (2) in
---------
the case of a transfer to a Non-U.S. Person, the proposed transferor
has delivered to the Registrar a certificate substantially in the form
of Exhibit D hereto; and
---------
(ii) if the proposed transferor is a Depository Participant
holding a beneficial interest in the Global Note, upon receipt by the
Registrar of (x) the certificate, if any, required by paragraph (i)
above and (y) instructions given in accordance with the Depository's
and the Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the
date and (if the transfer does not involve a transfer of outstanding
Physical Notes) a decrease in the principal amount of the Global Note in an
amount equal to the principal amount of the beneficial interest in the
Global Note to be transferred, and (b) the Company shall execute and the
Trustee shall authenticate and deliver one or more Physical Notes of like
tenor and amount.
-31-
<PAGE>
(b) Transfers to QIBs. The following provisions shall apply with
-----------------
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer
is being made by a proposed transferor who has checked the box
provided for on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a transferee who has
signed the certification provided for on the form of Note stating, or
has otherwise advised the Company and the Registrar in writing, that
it is purchasing the Note for its own account or an account with
respect to which it exercises sole investment discretion and that it
and any such account is a QIB within the meaning of Rule 144A, and is
aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the
Company as it has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is a Depository Participant,
and the Notes to be transferred consist of Physical Notes which after
transfer are to be evidenced by an interest in the Global Note, upon
receipt by the Registrar of instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and an increase in the
principal amount of the Global Note in an amount equal to the
principal amount of the Physical Notes to be transferred, and the
Trustee shall cancel the Physical Notes so transferred.
(c) Private Placement Legend. Upon the registration of transfer,
------------------------
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the registration of transfer, exchange or replacement of Notes bearing the
Private Placement Legend, the Registrar shall deliver only Notes that bear the
Private Placement Legend unless (i) the circumstance contemplated by paragraph
(a)(i)(x) of this Section 2.16 exist or (ii) there is delivered to the Registrar
an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to
the effect that neither such Private Placement Legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.
(d) General. By its acceptance of any Note bearing the Private
-------
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.15 or this Section 2.16
for a period of three years. The Company shall have the right to inspect and
make copies of all such letters, notices or other
-32-
<PAGE>
written communications at any reasonable time upon the giving of reasonable
written notice to the Registrar.
ARTICLE III.
REDEMPTION
Section 3.1. Notices to Trustee.
------------------
If the Company elects to redeem Notes pursuant to Paragraph Six of the
Notes, it shall notify both the Trustee and the Paying Agent in writing of the
Redemption Date and the principal amount of the Notes to be redeemed. The
Company shall give each notice provided for in this Section 3.1 at least 30 days
before the Redemption Date, together with an Officers' Certificate and Opinion
of Counsel stating that such redemption shall comply with the conditions
contained herein and in the Notes.
Section 3.2. Selection of Notes To Be Redeemed.
---------------------------------
In the event that less than all of the Notes are to be redeemed at any
time, selection of such Notes for redemption shall be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which such Notes are listed or, if such Notes are not then listed on
a national securities exchange, on a pro rata basis, by lot or by such method as
the Trustee shall deem fair and appropriate; provided, however, that if a
partial redemption is made with the proceeds of a Public Equity Offering,
selection of the Notes or portions thereof for redemption shall be made by the
Trustee only on a pro rata basis or on as nearly a pro rata basis as is
practicable (subject to Depository procedures), unless such method is otherwise
prohibited. The Trustee shall make the selection from the Notes outstanding and
not previously called for redemption and shall promptly notify the Company in
writing of the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the principal amount thereof to be redeemed.
Notes in denominations of $1,000 may be redeemed only in whole. The Trustee may
select for redemption portions (equal to $1,000 or any integral multiple
thereof) of the principal of Notes that have denominations larger than $1,000.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.3. Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail or cause to be mailed a notice of redemption by first
class mail, postage prepaid, to each Holder whose Notes are to be redeemed, with
a copy to the Trustee and any Paying Agent.
Each notice for redemption shall identify the Notes to be redeemed and
shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued
interest, if any, to be paid;
-33-
<PAGE>
(3) the name and address of the Paying Agent;
(4) the subparagraph of the Notes pursuant to which such
redemption is being made;
(5) that Notes called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price plus accrued
interest, if any;
(6) that, unless (a) the Company defaults in making the
redemption payment or (b) such redemption payment is prohibited
pursuant to Article X or XII hereof or otherwise, interest on Notes
called for redemption ceases to accrue on and after the Redemption
Date, and the only remaining right of the Holders of such Notes is to
receive payment of the Redemption Price plus accrued interest, if any,
upon surrender to the Paying Agent of the Notes redeemed;
(7) if any Note is being redeemed in part, the portion of
the principal amount (equal to $1,000 or any integral multiple
thereof) of such Note to be redeemed and that, on or after the
Redemption Date, and upon surrender of such Note, a new Note or Notes
in the aggregate principal amount equal to the unredeemed portion
thereof will be issued; and
(8) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption.
Section 3.4. Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.3,
Notes called for redemption become due and payable on the Redemption Date and at
the Redemption Price plus accrued interest, if any. Upon surrender to the
Trustee or Paying Agent, such Notes called for redemption, unless prohibited
pursuant to Article X or XII or otherwise pursuant to this Indenture, shall be
paid at the Redemption Price (which shall include accrued interest thereon to
the Redemption Date), but installments of interest, the maturity of which is on
or prior to the Redemption Date, shall be payable to Holders of record at the
close of business on the relevant record dates referred to in the Notes.
Section 3.5. Deposit of Redemption Price.
---------------------------
On or before the Redemption Date, the Company shall deposit with the
Paying Agent in immediately available funds U.S. Legal Tender sufficient to pay
the Redemption Price plus accrued interest, if any, of all Notes or portions
thereof to be redeemed on that date. The Paying Agent shall promptly return to
the Company any U.S. Legal Tender so deposited which is not required for that
purpose, except with respect to monies owed as obligations to the Trustee
pursuant to Article VII.
-34-
<PAGE>
If the Company complies with the preceding paragraph and payment of
the Notes is not prohibited under Article X or XII or otherwise, then, unless
the Company defaults in the payment of such Redemption Price plus accrued
interest, if any, interest on the Notes to be redeemed shall cease to accrue on
and after the applicable Redemption Date, whether or not such Notes are
presented for payment.
Section 3.6. Notes Redeemed in Part.
----------------------
Upon surrender of a Note that is to be redeemed in part, the Company
shall issue and execute, and the Trustee shall authenticate for the Holder, a
new Note or Notes equal in principal amount to the unredeemed portion of the
Note surrendered.
ARTICLE IV.
COVENANTS
Section 4.1. Payment of Notes.
----------------
The Company shall pay the principal of and interest on the Notes on
the dates and in the manner provided in the Notes and in this Indenture. An
installment of principal of or interest on the Notes shall be considered paid on
the date it is due if the Trustee or Paying Agent (other than the Company or an
Affiliate of the Company) holds on that date U.S. Legal Tender designated for
and sufficient to pay the installment in full and is not prohibited from paying
such money to the Holders pursuant to the terms of this Indenture.
The Company shall pay, to the extent such payments are lawful,
interest on overdue principal and on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the rate
borne by the Notes. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
Section 4.2. Maintenance of Office or Agency.
-------------------------------
The Company shall maintain the office or agency required under Section
2.3. The Company shall give prior written notice to the Trustee of the location,
and any change in the location, of such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the Trustee set
forth in Section 13.2.
Section 4.3. Corporate Existence.
-------------------
Except as otherwise permitted by Article V, the Company shall do or
cause to be done, at its own cost and expense, all things necessary to preserve
and keep in full force and effect its corporate existence and the corporate
existence of each of the Restricted Subsidiaries in accordance with the
respective organizational documents of each such Restricted Subsidiary and the
material rights (charter and statutory) and franchises of the Company and each
such Restricted Subsidiary; provided, however, that the Company shall not be
required to preserve, with respect
-35-
<PAGE>
to itself, any material right or franchise and, with respect to any of its
Subsidiaries, any such existence, material right or franchise, if the Board of
Directors of the Company shall determine in good faith that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
its Subsidiaries, taken as a whole.
Section 4.4. Payment of Taxes and Other Claims.
---------------------------------
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon it or any of its Subsidiaries or
its Properties or any of its Subsidiaries' Properties; provided, however, that
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings properly
instituted and diligently conducted for which adequate reserves, to the extent
required under GAAP, have been taken.
Section 4.5. Business Activities.
-------------------
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any business other than Permitted Businesses, except
to such extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole.
Section 4.6. Compliance Certificate;
Notice of Default.
-------------------
(a) The Company shall deliver to the Trustee, within 120 days after
the end of the Company's fiscal year, an Officers' Certificate which complies
with TIA (S) 314(a)(4) stating that a review of its activities during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether it has kept, observed, performed and
fulfilled its Obligations under this Indenture and further stating, as to each
such Officer signing such certificate, that to such Officer's knowledge the
Company during such preceding fiscal year has kept, observed, performed and
fulfilled each and every such covenant and the Obligations contained in this
Indenture and the Notes and no Default or Event of Default occurred during such
year and at the date of such certificate there is no Default or Event of Default
that has occurred and is continuing or, if such signers do know of such Default
or Event of Default, the certificate shall describe the Default or Event of
Default and its status with particularity. The Officers' Certificate shall also
notify the Trustee should the Company elect to change the manner in which it
fixes its fiscal year end.
(b) The annual financial statements delivered pursuant to Section 4.8
shall be accompanied by a written report of the Company's independent
accountants (who shall be a firm of established national reputation) that in
conducting their audit of such financial statements nothing has come to their
attention that would lead them to believe that the Company has violated any
provisions of Article IV, V or VI of this Indenture insofar as they relate to
accounting matters or, if any such violation has occurred, specifying the nature
and period of existence thereof, it
-36-
<PAGE>
being understood that such accountants shall not be liable directly or
indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) (i) If any Default or Event of Default has occurred and is
continuing or (ii) if any Holder seeks to exercise any remedy hereunder with
respect to a claimed Default under this Indenture or the Notes, the Company
shall deliver to the Trustee, at its address set forth in Section 13.2 hereof,
by registered or certified mail or by telegram, telex or facsimile transmission
followed by hard copy by registered or certified mail an Officers' Certificate
specifying such event, notice or other action (including any action the Company
is taking or proposes to take in respect thereof) within thirty days of such
occurrence.
Section 4.7. Compliance with Laws.
--------------------
The Company shall, and shall cause each of its Subsidiaries to, comply
with all applicable statutes, rules, regulations, orders and restrictions of the
United States of America, all states and municipalities thereof, and of any
governmental department, commission, board, regulatory authority, bureau, agency
and instrumentality of the foregoing, in respect of the conduct of its
businesses and the ownership of its properties, except for such noncompliances
as are not in the aggregate reasonably likely to have a material adverse effect
on the business or financial condition of the Company and its Subsidiaries,
taken as a whole.
Section 4.8. Reports to Holders.
------------------
(a) The Company shall 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 the
Company is required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act. Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall 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. The Company
shall also comply with the other provisions of TIA (S) 314(a).
(b) At the Company's expense, regardless of whether the Company is
required to furnish such reports and other information referred to in paragraph
(a) above to its stockholders pursuant to the Exchange Act, the Company shall
cause such reports and other information to be mailed to the Holders at their
addresses appearing in the register of Notes maintained by the Registrar within
15 days after it files (or if it is no longer subject to such requirement, would
have been required to file) them with the SEC.
(c) The Company shall provide to any Holder any information
reasonably requested by such Holder concerning the Company (including financial
statements) necessary in order to permit such Holder to sell or transfer Notes
in compliance with Rule 144A under the Securities Act.
-37-
<PAGE>
(d) At the Company's expense, the Company shall cause an annual
report if furnished by it to stockholders generally and each quarterly or other
financial report if furnished by it to stockholders generally to be filed with
the Trustee and mailed to the Holders at their addresses appearing in the
register of Notes maintained by the Registrar at the time of such mailing or
furnishing to stockholders. The Company shall make such annual, quarterly and
other financial reports available to securities analysts and prospective
investors upon request.
Section 4.9. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company and each Subsidiary Guarantor covenants (to the extent
that it may lawfully do so) that it shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive the
Company or any such Subsidiary Guarantor, as the case may be, from paying all or
any portion of the principal of or interest on the Notes or performing its Note
Guarantee, as the case may be and as contemplated herein, wherever enacted, now
or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
the Company and each Subsidiary Guarantor hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not hinder, delay or
impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law had
been enacted.
Section 4.10. Limitation on Restricted Payments.
---------------------------------
The Company shall not, and shall not cause or permit any of its
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 of the Company) on or in respect of shares of the
Company's Capital Stock or any Restricted Subsidiary's Capital Stock; (b)
purchase, redeem or otherwise acquire or retire for value any Capital Stock of
the Company or any Subsidiary of the Company or any warrants, rights or options
to purchase or acquire shares of any class of such Capital Stock; (c) make any
Investment (other than Permitted Investments); or (d) make any payment on or
with respect to, or purchase, redeem, defease or otherwise acquire or retire for
value any Pari Passu Debt or Indebtedness subordinated in right of payment to
the Notes or the Note Guarantees, except a payment of interest or principal at
Stated Maturity (each of the foregoing actions set forth in clauses (a), (b),
(c) and (d) being referred to as a "Restricted Payment"; provided, however, that
------------------
any payment made by a Restricted Subsidiary prior to its acquisition by, or
merger into, the Company or a Subsidiary of the Company shall not constitute a
Restricted Payment for purposes of this Section 4.10), unless at the time of
such Restricted Payment and immediately after giving effect thereto, (i) no
Default or Event of Default shall have occurred and be continuing; and (ii) the
Company is able to incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in compliance with Section 4.12; and (iii) the aggregate
amount of Restricted Payments (including such proposed Restricted Payment) made
subsequent to the Issue Date (the amount expended for such purposes, if other
than in cash, being the fair market value of such property as determined
reasonably and in good faith by the Board of Directors of the Company) is less
than the sum of: (w) 50% of the cumulative Consolidated Net Income (or if
cumulative Consolidated Net Income shall be a loss, minus 100% of such loss) of
the Company earned subsequent to the Issue Date and on or prior to the date the
Restricted
-38-
<PAGE>
Payment occurs (the "Reference Date") (treating such period as a single
--------------
accounting period); plus (x) 100% of the aggregate net cash proceeds received by
the Company from any Person (other than a Subsidiary of the Company) from the
issuance and sale subsequent to the Issue Date and on or prior to the Reference
Date of Qualified Capital Stock of the Company; plus (y) 100% of the net cash
proceeds from the sale of Investments by the Company (other than Permitted
Investments) provided that such Investment was made after the Issue Date; plus
(z) without duplication of any amounts included in clause (iii)(x) above, 100%
of the aggregate net cash proceeds of any equity contribution received by the
Company from a holder of the Company's Capital Stock (excluding, in the case of
clauses (iii)(x) and (z), any net cash proceeds from a Public Equity Offering to
the extent used to redeem the Notes).
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph shall not prohibit: (1) the payment of any
dividend within 60 days after the date of declaration of such dividend if the
dividend would have been permitted on the date of declaration; or (2) if no
Default or Event of Default shall have occurred and be continuing, the
acquisition of any shares of Qualified Capital Stock of the Company or payment,
redemption, acquisition or defeasance of Pari Passu Debt or Indebtedness
subordinated in right of payment to the Notes or the Note Guarantees, either (i)
solely in exchange for shares of Qualified Capital Stock of the Company or (ii)
through the application of net proceeds of a substantially concurrent sale for
cash (other than to a Subsidiary of the Company) of shares of Qualified Capital
Stock of the Company (excluding, in the case of clause (2)(ii), any net cash
proceeds from a Public Equity Offering to the extent used to redeem the Notes);
(3) the defeasance, redemption, repurchase or other acquisition of Pari Passu
Debt or subordinated Indebtedness with the net cash proceeds from an incurrence
of Refinancing Indebtedness; (4) the payment of any dividend or distribution by
a Restricted Subsidiary of the Company to the Company or a Wholly Owned
Restricted Subsidiary of the Company; (5) the repurchase, redemption or other
acquisition or retirement for value of any Capital Stock of the Company held by
any member of the Company's (or any of its Subsidiaries') management pursuant to
any management equity subscription agreement, stock option agreement or
employment agreement either (a) in the case of a stock option agreement, in
effect as of the date of this Indenture, or (b) upon the termination of such
person's employment; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Capital Stock pursuant to this clause
(b) shall not exceed $1,000,000 in any twelve-month period and no Default or
Event of Default shall have occurred and be continuing immediately after such
transaction; (6) if no Default or Event of Default shall have occurred and be
continuing, 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) Investments in, including Contributions to, a Restricted Subsidiary
if such Restricted Subsidiary is not a Foreign Subsidiary and (a) executes and
delivers to the Trustee a supplemental indenture in the form of Exhibit E hereto
---------
pursuant to which such Restricted Subsidiary shall guarantee all of the
Obligations of the Company with respect to this Indenture and the Notes and (b)
delivers to the Trustee an Opinion of Counsel reasonably satisfactory to the
Trustee to the effect that such supplemental indenture has been duly executed
and delivered by such Restricted Subsidiary and is in compliance with the terms
of this Indenture; and (8) Investments made after the Issue Date in Foreign
Subsidiaries in an aggregate amount not exceeding $20,000,000 at any one time
outstanding. In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date in accordance with
-39-
<PAGE>
clause (iii) of the immediately preceding paragraph, amounts expended pursuant
to clauses (1) and (5) shall be included and amounts expended pursuant to
clauses (2), (3), (4), (6), (7) and (8) shall not be included in such
calculation.
Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment complies with this Indenture and setting forth in reasonable
detail the basis upon which the required calculations were computed, which
calculations may be based upon the Company's latest available internal quarterly
financial statements.
Section 4.11. Limitation on Transactions
with Affiliates.
--------------------------
The Company shall not, and shall not permit any of its 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 its Affiliates (each an "Affiliate
Transaction"), other than (x) Affiliate Transactions permitted under the next
succeeding paragraph below and (y) Affiliate Transactions on terms that are no
less favorable to the Company or such Restricted Subsidiary than those that
could reasonably have been obtained in a comparable transaction at such time on
an arm's-length basis from a Person that is not an Affiliate of the Company or
such Restricted Subsidiary. All Affiliate Transactions (and each series of
related Affiliate Transactions which are similar or part of a common plan)
involving aggregate payments or other property with a fair market value in
excess of $1,000,000 shall be approved by the Board of Directors of the Company
or such Restricted Subsidiary, as the case may be, such approval to be evidenced
by a Board Resolution stating that such Board of Directors has determined that
such transaction complies with the foregoing provisions. If the Company or any
Restricted Subsidiary of the Company enters into an Affiliate Transaction (or a
series of related Affiliate Transactions related to a common plan) that involves
aggregate payments or other property with a fair market value of more than
$5,000,000, the Company or such Restricted Subsidiary, as the case may be,
shall, prior to the consummation thereof, obtain a favorable opinion as to the
fairness of such transaction or series of related transactions to the Company or
the relevant Restricted Subsidiary, as the case may be, from a financial point
of view, from an Independent Financial Advisor and file the same with the
Trustee.
The restrictions set forth in the preceding paragraph shall not apply
to, and the following shall be deemed not to be Affiliate Transactions, (i)
reasonable fees and compensation paid to, and indemnity provided on behalf of,
officers, directors or employees of the Company or any Subsidiary of the Company
as determined in good faith by the Company's Board of Directors; (ii)
transactions exclusively between or among the Company and any of its Wholly
Owned Restricted Subsidiaries or exclusively between or among such Wholly Owned
Restricted Subsidiaries, provided such transactions are not otherwise prohibited
by this Indenture and in the case of transactions involving Wholly Owned
Restricted Subsidiaries that are Foreign Subsidiaries, such transactions are on
terms no less favorable to the other Wholly Owned Restricted Subsidiary than
those that could reasonably have been obtained in a comparable transaction at
such time on an arm's-length basis from a Person that is not an Affiliate of the
-40-
<PAGE>
Company or such Subsidiary; (iii) 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; (iv) transactions permitted by Section 4.23; (v) Restricted
Payments permitted by Section 4.10 and Permitted Investments; (vi) transactions
entered into by Subsidiaries prior to their acquisition by the Company or a
Subsidiary thereof; (vii) loans or credit, the forgiveness of loans or credit
and purchases of Capital Stock pursuant to an Executive Stock Purchase Program;
provided, that the gross proceeds of any loans or credit are used to purchase
Capital Stock of the Company from the Company; and (viii) purchases of Capital
Stock other than Disqualified Capital Stock by the Company's Employee Stock
Ownership Plan or Employee Stock Purchase Plan.
Section 4.12. Limitation on Indebtedness.
--------------------------
(a) The Company shall not, and shall not permit any of its
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 of or as a
consequence of the incurrence of any such Indebtedness, the Company and its
Subsidiaries may incur Indebtedness (including, without limitation, Acquired
Indebtedness) if on the date of the incurrence of such Indebtedness, after
giving effect to the incurrence thereof, the Consolidated Fixed Charge Coverage
Ratio of the Company is greater than 2.0 to 1.0.
(b) "Permitted Indebtedness" means without duplication, each of the
----------------------
following:
(i) Indebtedness under the Notes and the Indenture;
(ii) Indebtedness under the Note Guarantees;
(iii) Indebtedness incurred pursuant to the Credit Facility (and
the Guarantees thereunder) in an aggregate principal amount at any
time outstanding not to exceed $30,000,000;
(iv) other Indebtedness of the Company and its 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;
(v) Interest Swap Obligations of the Company covering
Indebtedness of the Company or any of its Subsidiaries and Interest
Swap Obligations of any Subsidiary of the Company covering
Indebtedness of such Subsidiary; provided, however, that (x) such
Interest Swap Obligations are designed to protect the Company and its
Subsidiaries from fluctuations in interest rates on Indebtedness
incurred in accordance with the Indenture (and are used for bona fide
hedging, and not speculative, purposes); and (y) the notional
principal amount of such Interest
-41-
<PAGE>
Swap Obligation does not exceed the principal amount of the
Indebtedness to which such Interest Swap Obligation relates;
(vi) Indebtedness under Currency Agreements; provided that in
the case of Currency Agreements which relate to Indebtedness, such
Currency Agreements (i) are designed to protect against fluctuations
in currency value (and are used for bona fide hedging, and not
speculative, purposes) and (ii) do not increase the Indebtedness of
the Company and its Subsidiaries outstanding other than as a result of
fluctuations in foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder;
(vii) Indebtedness of the Company or a Wholly Owned Restricted
Subsidiary of the Company that is a Subsidiary Guarantor to the
Company or to a Wholly Owned Restricted Subsidiary of the Company that
is Subsidiary Guarantor for so long as such Indebtedness is held by
the Company or a Wholly Owned Restricted Subsidiary of the Company
that is a Subsidiary Guarantor, in each case subject to no Lien held
by a Person other than the Company or a Wholly Owned Restricted
Subsidiary of the Company that is a Subsidiary Guarantor; provided
that (x) if as of any date any Person other than the Company or a
Wholly Owned Restricted Subsidiary of the Company that is a Subsidiary
Guarantor owns or holds any such Indebtedness or holds a Lien in
respect of such Indebtedness, such date shall be deemed the incurrence
of Indebtedness not constituting Permitted Indebtedness by the issuer
of such Indebtedness and (y) any Indebtedness of the Company to any
Wholly Owned Restricted Subsidiary of the Company is unsecured and
subordinated, pursuant to a written agreement, to the Company's
Obligations under the Indenture and the Notes;
(viii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn
against insufficient funds in the ordinary course of business;
provided, however, that such Indebtedness is extinguished within two
business days of incurrence;
(ix) Indebtedness of the Company or any of its Subsidiaries
represented by letters of credit or guarantees by or for the account
of the Company or such Subsidiary, as the case may be, in order to
provide security for workers' compensation claims, payment obligations
in connection with self-insurance or similar requirements in the
ordinary course of business;
(x) Refinancing Indebtedness;
(xi) Indebtedness incurred by the Company or any Restricted
Subsidiary of the Company in connection with the purchase, cost of
construction or improvement of property (real or personal) or
equipment or other capital expenditures in the ordinary course of
business or consisting of Capitalized Lease Obligations; provided that
at the time of the incurrence thereof, such Indebtedness
-42-
<PAGE>
does not exceed $5,000,000 (less any Refinancing Indebtedness incurred
to refinance any Indebtedness incurred under this clause xi);
(xii) Acquired Indebtedness of a Subsidiary, which Subsidiary
was acquired after the Issue Date and which Acquired Indebtedness was
in existence at the time of acquisition of such Subsidiary, if such
Acquired Indebtedness is Non-Recourse Debt (except with respect to
such Subsidiary and its Subsidiaries) and such Acquired Indebtedness
does not exceed $10,000,000 in the aggregate outstanding at any time;
(xiii) Indebtedness in the form of holdback notes or deferred
purchase price in connection with a Business Acquisition in an amount
not to exceed 20% of the purchase price of such Business Acquisition;
(xiv) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary of the Company providing for indemnification,
adjustment of purchase price or similar obligations, in each case,
incurred in connection with the disposition of any business, assets or
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 aggregate liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds actually
received by the Company and the Restricted Subsidiary in connection
with such disposition;
(xv) Obligations in respect of performance bonds and completion
guarantees provided by the Company or any Restricted Subsidiary of the
Company in the ordinary course of business;
(xvi) Guarantees by the Company or a Restricted Subsidiary of
the Company of Indebtedness incurred by the Company or a Restricted
Subsidiary of the Company so long as the incurrence of such
Indebtedness by the Company or any such Restricted Subsidiary of the
Company is otherwise permitted by the terms of the Indenture;
(xvii) Indebtedness of Foreign Subsidiaries (which is Non-
Recourse Debt, except with respect to such entities) that are
Restricted Subsidiaries in an amount, at any time outstanding not to
exceed $5,000,000;
(xviii) Non-Recourse Debt of Unrestricted Subsidiaries;
provided, however, that if any such Indebtedness ceases to be Non-
Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company; and
(xix) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed
$35,000,000 at any one time outstanding.
-43-
<PAGE>
(c) For purposes of determining compliance with this Section 4.12, in
the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Indebtedness described in Section 4.12(b) or is
entitled to be incurred pursuant to Section 4.12(a), the Company shall, in its
sole discretion, classify such item of Indebtedness in any manner that complies
with this Section 4.12 and such item of Indebtedness shall be treated as having
been incurred pursuant to only one of Section 4.12(a) or (b).
Section 4.13. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries.
---------------------------------------
The Company shall not, and shall not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary of the Company to (a) pay dividends or make
any other distributions on or in respect of its Capital Stock; (b) make loans or
advances or to pay or guarantee any Indebtedness or other obligation owed to the
Company or any other Restricted Subsidiary of the Company; or (c) transfer any
of its property or assets to the Company or any other Restricted Subsidiary of
the Company, except for such encumbrances or restrictions existing under or by
reason of: (1) applicable law; (2) this Indenture or the Credit Facility as in
effect on the Issue Date; (3) customary non-assignment provisions of any
contract or any lease governing a leasehold interest of any Subsidiary of the
Company; (4) any instrument governing Acquired Indebtedness, which encumbrance
or restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person or the properties or assets of the Person so
acquired or any Subsidiary thereof; (5) agreements existing on the Issue Date to
the extent and in the manner such agreements are in effect on the Issue Date;
(6) purchase money obligations for property acquired that impose restrictions of
the nature described in clause (4) above on the property so acquired; (7) any
instrument or agreement governing Indebtedness permitted to be incurred under
Section 4.12, which is secured, or permitted to be secured, by a Lien permitted
to be incurred under Section 4.18, which encumbrance or restriction is not
applicable to any property or assets other than the property or assets subject
to, or permitted to be subject to, such Lien; (8) an agreement governing
Indebtedness incurred to Refinance the Indebtedness issued, assumed or incurred
pursuant to an agreement referred to in clause (2), (4), (5), (6) or (7) above;
provided, however, that the provisions relating to such encumbrance or
restriction contained in any such Refinancing are no less favorable to the
Company in any material respect as determined by the Board of Directors of the
Company in their reasonable and good faith judgment than the provisions relating
to such encumbrance or restriction contained in agreements referred to in such
clause (2), (4), (5), (6) or (7); or (9) restrictions contained in any purchase
or sale agreement relating to the purchase or sale of a Subsidiary; provided,
that such restriction does not extend to any assets other than those being
acquired or sold.
Section 4.14. Prohibition on Incurrence of Layered
Indebtedness.
------------------------------------
The Company shall not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is both (a) subordinate or
junior in right of payment to any Senior Indebtedness and (b) senior in any
respect in right of payment to the Notes. No
-44-
<PAGE>
Subsidiary Guarantor shall incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is both (a) subordinate or junior in
right of payment to its Guarantor Senior Indebtedness and (b) senior in right of
payment to its Note Guarantee.
Section 4.15. Limitation on Change of Control.
-------------------------------
(a) Upon the occurrence of a Change of Control, each Holder shall
have the right to require the repurchase of such Holder's Notes pursuant to the
offer described in paragraph (b) below (the "Change of Control Offer"), at a
-----------------------
purchase price equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase (the "Repurchase Date")
---------------
(subject to the rights of the holders of record on the relevant record date to
receive interest on the relevant interest payment date). Within 10 days after
the date upon which the Change of Control occurs (the "Change of Control Date")
----------------------
requiring the Company to make a Change of Control Offer pursuant to this Section
4.15, the Company shall so notify in writing the Trustee.
(b) Within 30 days following any Change of Control Date, the Company
shall 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.
The notice to the Holders shall contain all instructions and materials necessary
to enable such Holders to tender Notes pursuant to the Change of Control Offer.
Such notice shall state:
(1) that the Change of Control Offer is being made pursuant
to this Section 4.15 and that all Notes tendered will be accepted for
payment;
(2) the purchase price (including the amount of accrued
interest) and the purchase date (which shall 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");
----
(3) that any Note not tendered will continue to accrue
interest if interest is then accruing;
(4) that, unless the Company defaults in making payment
therefor, any Note accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(5) that 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 the Paying Agent at the address
specified in the notice prior to 5:00 p.m., New York City time, on the
third Business Day prior to the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than 5:00 p.m., New
York City time, on the third
-45-
<PAGE>
Business Day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Notes the Holder delivered for
purchase and a statement that such Holder is withdrawing his election
to have such Note purchased; and
(7) the circumstances and relevant facts regarding such
Change of Control.
(c) On or before the Change of Control Payment Date, the Company
shall (i) accept for payment Notes or portions thereof tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price plus accrued interest, if any, of all Notes
or portions thereof so tendered and accepted and (iii) deliver to the Trustee
Notes so accepted for cancellation pursuant to Section 2.11, together with an
Officers' Certificate stating the Notes or portions thereof being purchased by
the Company. The Paying Agent shall promptly mail or deliver to the Holders of
Notes so accepted payment in an amount equal to the purchase price plus accrued
interest, if any, and the Company shall execute and issue, and the Trustee shall
promptly authenticate and mail or deliver to such Holders new Notes equal in
principal amount to any unpurchased portion of the Notes surrendered. Any Notes
not so accepted shall be promptly mailed or delivered by the Company to the
Holder thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date. For purposes of this Section 4.15, the Trustee shall act as the Paying
Agent.
(d) Prior to the mailing of the notice to Holders described in clause
(b) above, but in any event within 30 days following any Change of Control, the
Company shall (i) repay in full all Indebtedness and terminate all commitments
under the Credit Facility and all other Senior Indebtedness the terms of which
require repayment upon a Change of Control or offer to repay in full and
terminate all commitments under all Indebtedness under the Credit Facility and
all other such Senior Indebtedness and to repay the Indebtedness owed to each
lender which has accepted such offer or (ii) obtain the requisite consents under
the Credit Facility and all other Senior Indebtedness to permit the repurchase
of the Notes as described above.
(e) The Company shall 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 this Section
4.15, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.15 by virtue thereof.
(f) The Company shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times or otherwise in compliance with the
requirements set forth in this Section 4.15 and purchases all Notes validly
tendered and not withdrawn under such Change of Control Offer.
-46-
<PAGE>
Section 4.16. Limitation on Asset Sales.
-------------------------
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(i) the Company or the applicable Restricted Subsidiary, as the
case may be, receives 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 the Company's Board of
Directors);
(ii) at least 75% of the consideration received by the Company
or such Restricted Subsidiary, as the case may be, from such Asset
Sale shall be in the form of cash or Cash Equivalents and is received
at the time of such disposition; provided that the amount of (x) any
liabilities (as shown on the Company's or such Restricted Subsidiary's
most recent balance sheet), of the Company or any Restricted
Subsidiary (other than (I) contingent liabilities (except to the
extent reflected (or reserved for) on a balance sheet of the Company
or any Restricted Subsidiary as of the date prior to the date of
consummation of such transaction) and (II) liabilities that are by
their terms subordinated to the Notes or the Note Guarantees) that are
assumed by the transferee of any such assets and (y) any securities,
notes or other obligations received by the Company or any such
Restricted Subsidiary from such transferee that are converted within
90 days by the Company or such Restricted Subsidiary into cash or Cash
Equivalents (to the extent so received), shall be deemed to be cash or
Cash Equivalents for purposes of this provision, provided further,
that the 75% limitation referred to above shall not apply to any Asset
Sale in which the cash portion of the consideration received therefor
is equal to or greater than the after-tax net cash proceeds that would
have been received by the Company had a transaction involving the same
assets complied with the aforementioned 75% limitation but was not
structured with the same tax benefits as the actual transaction; and
(iii) upon the consummation of an Asset Sale, the Company 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 (A) to prepay or irrevocably cash collateralize any
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, (B) to make an
investment in, or Business Acquisition of, properties and assets
(other than cash, Cash Equivalents or inventory) that (x) replace the
properties and assets that were the subject of such Asset Sale or (y)
will be used in a Permitted Business ("Replacement Assets"); provided,
------------------
however, that in the event the Company or such Restricted Subsidiary
made an investment in, or Business Acquisition of, Replacement Assets
within 180 days prior to such sale, such prior investment shall also
satisfy the requirements of this clause (B), or (C) a combination of
prepayment and investment permitted by the foregoing clauses (iii)(A)
and (iii)(B).
-47-
<PAGE>
(b) On the 366th day after an Asset Sale or such earlier date, if
any, as the Board of Directors of the Company or of such Subsidiary
determines not to apply the Net Cash Proceeds relating to such Asset Sale
as set forth in clauses (a)(iii)(A), (iii)(B) and (iii)(C) (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 (a)(iii)(A), (iii)(B) and (iii)(C) (each a
"Net Proceeds Offer Amount") shall be applied by the Company or such
-------------------------
Subsidiary to make an offer to purchase (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, that amount of Notes equal to the Net Proceeds
Offer Amount at a price 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 the Company or any Subsidiary of the Company, as
the case may be, in connection with any Asset Sale is converted into or
sold or otherwise disposed of for cash or Cash Equivalents (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 Section 4.16. The Company may defer the Net Proceeds Offer until
there is an aggregate unutilized Net Proceeds Offer Amount equal to or in
excess of $5,000,000 resulting from one or more Asset Sales (at which time,
the entire unutilized Net Proceeds Offer Amount, and not just the amount in
excess of $5,000,000, shall be applied as required pursuant to this
paragraph).
(c) In the event of the transfer of substantially all (but not all)
of the property and assets of the Company and its Subsidiaries as an
entirety to a Person in a transaction permitted under Section 5.1, the
successor corporation shall be deemed to have sold the properties and
assets of the Company and its Subsidiaries not so transferred for purposes
of this Section 4.16, and shall comply with the provisions of this Section
4.16 with respect to such deemed sale as if it were an Asset Sale. In
addition, the fair market value of such properties and assets of the
Company or its Subsidiaries deemed to be sold shall be deemed to be Net
Cash Proceeds for purposes of this Section 4.16.
(d) Notwithstanding paragraphs (a) and (b), the Company and its
Subsidiaries shall 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 Replacement Assets (including
inventory) and the remainder constitutes cash or Cash Equivalents and (ii)
such Asset Sale is for fair market value; provided that any consideration
not constituting Replacement Assets (including inventory) received by the
Company or any of its Subsidiaries in connection with any Asset Sale
permitted to be consummated under this paragraph shall constitute Net Cash
Proceeds subject to the provisions of paragraph (b).
(e) Each Net Proceeds Offer shall 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. The notice shall contain
all instructions and materials
-48-
<PAGE>
necessary to enable such Holders to tender Notes pursuant to the Net
Proceeds Offer and shall state the following terms:
(1) that the Net Proceeds Offer is being made pursuant to
Section 4.16 and that all Notes tendered will be accepted for payment;
provided, however, that if the aggregate principal amount of Notes
tendered in a Net Proceeds Offer plus accrued interest at the
expiration of such offer exceeds the aggregate amount of the Net
Proceeds Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (based on amounts tendered) (with such
adjustments as may be deemed appropriate by the Company so that only
Notes in denominations of $1,000 or integral multiples thereof shall
be purchased);
(2) the purchase price (including the amount of accrued
interest) and the purchase date (which shall be 20 Business Days from
the date such notice is mailed, or such longer period as may be
required by law) (the "Proceeds Purchase Date");
----------------------
(3) that any Note not tendered will continue to accrue
interest if interest is then accruing;
(4) that, unless the Company defaults in making payment
therefor, any Note accepted for payment pursuant to the Net Proceeds
Offer shall cease to accrue interest after the Proceeds Purchase Date;
(5) that Holders electing to have a Note purchased pursuant
to a Net Proceeds 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 the Paying Agent at the address specified in
the notice prior to 5:00 p.m., New York City time, on the Proceeds
Purchase Date;
(6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than 5:00 p.m., New
York City time, on the Proceeds Purchase Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Notes the Holder delivered for purchase
and a statement that such Holder is withdrawing his election to have
such Note purchased; and
(7) that Holders whose Notes were purchased only in part
will be issued new Notes equal to principal amount to the unpurchased
portion of the Notes surrendered.
(f) On or before the Proceeds Purchase Date, the Company shall (i)
accept for payment Notes or portions thereof tendered pursuant to the Net
Proceeds Offer which are to be purchased in accordance with item (b) above, (ii)
deposit with the Paying Agent U.S. Legal Tender sufficient to pay the purchase
price of all Notes to be purchased and (iii) deliver to the Trustee Notes so
accepted for cancellation pursuant to Section 2.11, together with an Officers'
-49-
<PAGE>
Certificate stating the Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to the Holders of Notes so
accepted payment in an amount equal to the purchase price plus accrued interest,
if any and the Company shall execute and issue, and the Trustee shall promptly
authenticate and mail or deliver to such Holders new Notes equal in principal
amount to any unpurchased portion of the Notes surrendered. The Company shall
publicly announce the results of the Net Proceeds Offer on or as soon as
practicable after the Proceeds Purchase Date. For purposes of this Section
4.16, the Trustee shall act as the Paying Agent.
(g) To the extent that the aggregate amount of Notes tendered
pursuant to a Net Proceeds Offer is less than the Net Proceeds Offer Amount, the
Company may use any remaining Net Proceeds Offer Amount for general corporate
purposes.
(h) The Company shall 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 Section 4.16, the
Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under Section 4.16 by
virtue thereof.
Section 4.17. Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries.
-----------------------------------------------------
The Company: (i) shall not, and shall not permit any of its Restricted
Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any
Capital Stock of any Restricted Subsidiary of the Company to any Person (other
than the Company or a Restricted Subsidiary of the Company), unless (a) such
transfer, conveyance, sale, lease or other disposition is of all the Capital
Stock of such Restricted Subsidiary or of Local Qualifying Securities and (b)
the Net Cash Proceeds from such transfer, conveyance, sale, lease or other
disposition are applied in accordance with Section 4.16, and (ii) shall not
permit any Restricted Subsidiary of the Company to issue any of its Capital
Stock (other than, if necessary, shares of its Capital Stock constituting
directors' qualifying shares or Local Qualifying Securities) to any Person other
than to the Company or a Restricted Subsidiary of the Company; provided,
however, the foregoing restrictions shall not apply to transfers, conveyances,
sales, leases or other dispositions (collectively "dispositions") of any Capital
------------
Stock of any Restricted Subsidiary that have a fair market value at the time of
such disposition of less than $250,000.
Section 4.18. Limitation on Liens.
-------------------
The Company shall not, and shall not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
permit or suffer to exist any Liens of any kind against or upon any property or
assets of the Company or any of its Restricted Subsidiaries whether owned on the
Issue Date or acquired after the Issue Date, or any proceeds therefrom, or
assign or otherwise convey any right to receive income or profits therefrom
unless: (i) in the case of Liens securing Indebtedness that is expressly
subordinate or junior in right of payment to the Notes, the Notes are secured by
a Lien on such property, assets or proceeds that
-50-
<PAGE>
is senior in priority to such Liens and (ii) in all other cases, the Notes are
equally and ratably secured, except for (A) Liens existing as of the Issue Date
to the extent and in the manner such Liens are in effect on the Issue Date; (B)
Liens securing Senior Indebtedness; (C) Liens securing Guarantor Senior
Indebtedness; (D) Liens of the Company or a Wholly Owned Restricted Subsidiary
of the Company on assets of any Restricted Subsidiary of the Company; (E) Liens
securing Refinancing Indebtedness which is incurred to Refinance any
Indebtedness which has been secured by a Lien permitted under this Indenture and
which has been incurred in accordance with the provisions of this Section 4.18;
provided, however, that such Liens; (X) extend to no more assets and are no more
restrictive than the Liens in respect of the Indebtedness being Refinanced and
(Y) do not extend to or cover any property or assets of the Company or any of
its Subsidiaries not securing the Indebtedness so Refinanced; (F) Permitted
Liens; and (G) Liens on accounts and related general intangibles of an Accounts
Receivable Subsidiary.
Section 4.19. Payments for Consent.
--------------------
Neither the Company nor any of its Restricted Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
or is paid to all Holders of the Notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
-51-
<PAGE>
Section 4.20. Additional Note Guarantees.
--------------------------
If (i) the Company or any of its Restricted Subsidiaries shall, after
the date of this Indenture, transfer or cause to be transferred, including by
way of any Investment, in one or a series of transactions (whether or not
related), any assets, businesses, divisions, real property or equipment having
an aggregate fair market value (as determined in good faith by the Board of
Directors) in excess of $1,000,000 to any Restricted Subsidiary that is not a
Subsidiary Guarantor or a Foreign Subsidiary, (ii) the Company or any of its
Restricted Subsidiaries shall acquire another Restricted Subsidiary other than a
Foreign Subsidiary having total assets with a fair market value (as determined
in good faith by the Board of Directors) in excess of $1,000,000, or (iii) any
Restricted Subsidiary other than a Foreign Subsidiary shall incur Acquired
Indebtedness in excess of $1,000,000, then the Company shall, at the time of
such transfer, acquisition or incurrence, (i) cause such transferee, acquired
Restricted Subsidiary or Restricted Subsidiary incurring Acquired Indebtedness
(if not then a Subsidiary Guarantor) to execute a Note Guarantee of the
Obligations of the Company under the Notes in the form set forth in Exhibit E
---------
hereto and (ii) deliver to the Trustee an Opinion of Counsel, in form reasonably
satisfactory to the Trustee, that such Note Guarantee is a valid, binding and
enforceable obligation of such transferee, acquired Restricted Subsidiary or
Restricted Subsidiary incurring Acquired Indebtedness, subject to customary
exceptions for bankruptcy, fraudulent conveyance and equitable principles.
Notwithstanding the foregoing, the Company or any of its Restricted Subsidiaries
may make an Investment in any Wholly Owned Restricted Subsidiary of the Company
without compliance with this Section 4.20 provided that such Investment is
otherwise permitted by Section 4.10.
Section 4.21. Sale and Leaseback Transactions.
-------------------------------
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any Sale and Leaseback Transaction; provided that
the Company or any Restricted Subsidiary may enter into a Sale and Leaseback
Transaction if (i) the Company could have (a) incurred Indebtedness in an amount
equal to the Attributable Debt relating to such Sale and Leaseback Transaction
pursuant to Section 4.12 and (b) incurred a Lien to secure such Indebtedness
pursuant to Section 4.18 and (ii) the gross cash proceeds of such sale and
leaseback transaction are at least equal to the fair market value (in the case
of gross cash proceeds in excess of $5,000,000 as determined in good faith by
the Board of Directors and set forth in an Officers' Certificate delivered to
the Trustee) of the property that is the subject of such sale and leaseback
transaction.
Section 4.22. Limitation on Restricted and
Unrestricted Subsidiaries.
----------------------------
(a) The Company may, if no Default or Event of Default shall have
occurred and be continuing or would arise therefrom, designate an Unrestricted
Subsidiary to be a Restricted Subsidiary, provided, however, that (i) any such
redesignation shall be deemed to be an incurrence as of the date of such
redesignation by the Company and its Restricted Subsidiaries of the Indebtedness
(if any) of such redesignated Subsidiary for purposes of Section 4.12, and (ii)
unless such redesignated Subsidiary shall not have any Indebtedness outstanding
(other than
-52-
<PAGE>
Permitted Indebtedness), no such designation shall be permitted if immediately
after giving effect to such redesignation and the incurrence of any such
additional Indebtedness (other than Permitted Indebtedness) the Company could
not incur $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to Section 4.12.
(b) The Board of Directors of the Company also may, if no Default or
Event of Default shall have occurred and be continuing or would arise therefrom,
designate any Restricted Subsidiary to be an Unrestricted Subsidiary if (i) such
designation is at that time permitted under Section 4.10, (ii) immediately after
giving effect to such designation, the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.12, and
(iii) such Subsidiary meets the requirements of clause (II) of the definition of
the term Unrestricted Subsidiary. Any such designation by the Board of
Directors of the Company shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by Section 4.10 and
setting forth in reasonable detail the underlying calculations.
(c) For purposes of Section 4.10, (i) an "Investment" shall be deemed
to have been made at the time any Restricted Subsidiary of the Company is
designated as an Unrestricted Subsidiary in an amount (proportionate to the
Company's equity interest in such Subsidiary) equal to the net worth of such
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
as an Unrestricted Subsidiary; (ii) at any date, the aggregate amount of all
Restricted Payments made as Investments since the Issue Date shall exclude and
be reduced by an amount (proportionate to the Company's equity interest in such
Subsidiary) equal to the net worth of any Unrestricted Subsidiary at the time
that such Unrestricted Subsidiary is designated as a Restricted Subsidiary, not
to exceed, in the case of any such redesignation of an Unrestricted Subsidiary
as a Restricted Subsidiary, the amount of Investments previously made by the
Company and its Restricted Subsidiaries in such Unrestricted Subsidiary (in each
case (i) and (ii), "net worth" is to be calculated based upon the fair market
value of the assets of such Subsidiary as of any such date of designation); and
(iii) any property transferred to or from an Unrestricted Subsidiary shall be
valued at its fair market value at the time of such transfer.
(d) If, at any time, any Unrestricted Subsidiary would fail to meet
the requirements of clause (II) of the definition of the term Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of this Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the Company as of such date
(and, if such Indebtedness is not permitted to be incurred as of such date under
Section 4.12, the Company shall be in default of such covenant).
(e) The Subsidiaries of the Company that are not designated by the
Board of Directors of the Company as Restricted or Unrestricted Subsidiaries
shall be deemed to be Restricted Subsidiaries of the Company. Notwithstanding
the foregoing, all Subsidiaries of an Unrestricted Subsidiary shall be
Unrestricted Subsidiaries.
-53-
<PAGE>
Section 4.23. Sales of Accounts Receivable.
----------------------------
The Company may, and any of its Restricted Subsidiaries may, sell, at
any time and from time to time, all of their respective accounts receivable (and
related general intangibles) to an Accounts Receivable Subsidiary; provided that
(i) the cash received in each sale is not less than 90% of the aggregate face
value of the receivables sold and the remainder of the consideration received in
each such sale is a promissory note (a "Promissory Note") which is subordinated
---------------
to no Indebtedness or obligation other than that due to the financial
institution or other entity providing the financing to the Accounts Receivable
Subsidiary with respect to such accounts receivable (a "Financier"); provided
---------
further that the Initial Sale shall include all eligible accounts receivable of
the Company and/or its Restricted Subsidiaries that shall be party to such
arrangements in existence on the date of the Initial Sale, (ii) the cash
proceeds received from the Initial Sale less reasonable and customary
transaction costs will be deemed to be Net Cash Proceeds and shall be applied in
accordance with Section 4.16; and (iii) the Company and its Restricted
Subsidiaries shall sell their accounts receivable to the Accounts Receivable
Subsidiary no less frequently than on a weekly basis.
The Company (i) shall not permit any Accounts Receivable Subsidiary to
sell any accounts receivable purchased from the Company or any of its Restricted
Subsidiaries to any other person except on an arm's-length basis and solely for
consideration in the form of cash or Cash Equivalents, (ii) shall not permit the
Accounts Receivable Subsidiary to engage in any business or transaction other
than the purchase, financing and sale of accounts receivable of the Company and
its Restricted Subsidiaries and activities incidental thereto, (iii) shall not
permit any Accounts Receivable Subsidiary to incur Indebtedness in an amount in
excess of the book value of such Accounts Receivable Subsidiary's total assets,
as determined in accordance with GAAP, (iv) shall, at least as frequently as
monthly, cause the Accounts Receivable Subsidiary to remit to the Company as
payment on the Promissory Notes, all available cash or Cash Equivalents not held
in a collection account pledged to a Financier, to the extent not applied to pay
or maintain reserves for reasonable operating expenses of the Accounts
Receivable Subsidiary or to satisfy reasonable minimum operating capital
requirements and (v) shall not, and shall not permit any of its Subsidiaries to,
sell accounts receivable to any Accounts Receivable Subsidiary upon (1) the
occurrence of a Default with respect to the Company and its Restricted
Subsidiaries and (2) the occurrence of any of the events specified in Section
6.1(6) with respect to such Accounts Receivable Subsidiary.
ARTICLE V.
SUCCESSOR CORPORATION
Section 5.1. When Company May Merge, Etc.
---------------------------
(a) The Company shall not, in a single transaction or series of
related transactions, consolidate or merge with or into any Person, or
sell, assign, transfer, lease, convey or otherwise dispose of (or cause or
permit any Subsidiary of the Company to sell,
-54-
<PAGE>
assign, transfer, lease, convey or otherwise dispose of) all or
substantially all of the Company's assets (determined on a consolidated
basis for the Company and the Company's Subsidiaries) whether as an
entirety or substantially as an entirety to any Person unless:
(i) either (1) the Company shall be the surviving or
continuing corporation or (2) the Person (if other than the Company)
formed by such consolidation or into which the Company is merged or
the Person which acquires by sale, assignment, transfer, lease,
conveyance or other disposition the properties and assets of the
Company and of the Company's Subsidiaries substantially as an entirety
(the "Surviving Entity") (x) shall be a corporation organized and
----------------
validly existing under the laws of the United States or any State
thereof or the District of Columbia and (y) shall expressly assume, by
supplemental indenture (in form and substance satisfactory to the
Trustee), executed and delivered to the Trustee, the due and punctual
payment of the principal of, and premium, if any, and interest on all
of the Notes and the performance of every covenant of the Notes, this
Indenture and the Registration Rights Agreement on the part of the
Company to be performed or observed;
(ii) immediately after giving effect to such transaction and
the assumption contemplated by clause (i)(2)(y) above (including
giving effect to any Indebtedness and Acquired Indebtedness incurred
or anticipated to be incurred in connection with or in respect of such
transaction), the Company or such Surviving Entity, as the case may
be, (1) shall have a Consolidated Net Worth equal to or greater than
the Consolidated Net Worth of the Company immediately prior to such
transaction and (2) shall be able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant
to Section 4.12;
(iii) immediately before and immediately after giving effect to
such transaction and the assumption contemplated by clause (i)(2)(y)
above (including, without limitation, giving effect to any
Indebtedness and Acquired Indebtedness incurred or anticipated to be
incurred and any Lien granted in connection with or in respect of the
transaction), no Default or Event of Default shall have occurred or be
continuing; and
(iv) the Company or the Surviving Entity shall have delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition and, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with the applicable
provisions of this Indenture and that all conditions precedent in this
Indenture relating to such transaction have been satisfied.
(b) For purposes of clause (a) above, 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 Subsidiaries of the Company the Capital Stock of
-55-
<PAGE>
which constitutes all or substantially all of the properties and assets of
the Company shall be deemed to be the transfer of all or substantially all
of the properties and assets of the Company. Notwithstanding the foregoing
clauses (a)(ii) and (a)(iii) of this Section 5.1, the Company may merge
with an Affiliate incorporated solely for the purpose of reincorporating
the Company in another jurisdiction.
Section 5.2. Successor Corporation Substituted.
---------------------------------
Upon any consolidation, combination or merger or any transfer of all
or substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the continuing corporation, the Surviving
Entity shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture and the Notes with the same
effect as if such Surviving Entity had been named as such.
ARTICLE VI.
DEFAULT AND REMEDIES
Section 6.1. Events of Default.
-----------------
The following events are defined as "Events of Default":
(1) the failure to pay interest on any Notes or any amount
payable pursuant to any Note Guarantee with respect to interest 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 Article X or XII);
(2) the failure to pay the principal on any Notes or any amount
payable pursuant to any Note Guarantee (other than as provided in (1)), 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 Article X or XII);
(3) 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 the Company receives 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
(except in the case of a default with respect to Section 5.1, which will
constitute an Event of Default with such notice requirement but without such
passage of time requirement);
(4) there shall be a default under any Indebtedness of the
Company or any Subsidiary (other than an Unrestricted Subsidiary whose
Indebtedness is not then Guaranteed by the Company or any of its Restricted
Subsidiaries), whether such Indebtedness now exists or shall hereinafter be
created, if both (A) such default either (1) results from the failure to pay
any such Indebtedness at its stated final maturity or (2)
-56-
<PAGE>
relates to an obligation other than the obligation to pay such Indebtedness
at its stated final maturity and results in the holder or holders of such
Indebtedness causing such Indebtedness to become due prior to its stated
final maturity and (B) the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness in default for
failure to pay principal at stated final maturity or the maturity of which
has been so accelerated, aggregates $5,000,000 or more at any one time
outstanding;
(5) one or more judgments (to the extent not covered by
insurance and as to which the insurer has not acknowledged coverage in
writing) in an aggregate amount in excess of $5,000,000 shall have been
rendered against the Company or any of its Subsidiaries and such judgments
remain undischarged, unpaid, unbonded or unstayed for a period of 60 days
after such judgment or judgments become final and non-appealable;
(6) With respect to the Company, any Subsidiary Guarantor or any
of their Significant Subsidiaries (other than an Unrestricted Subsidiary
whose Indebtedness is not then Guaranteed by the Company or any of its
Restricted Subsidiaries), either:
(X) such entity (A) commences a voluntary case or
proceeding under any Bankruptcy Law with respect to itself, (B)
consents to the entry of a judgment, decree or order for relief
against it in an involuntary case or proceeding under any
Bankruptcy Law, (C) consents to the appointment of a Custodian of
it or for substantially all of its property, (D) consents to or
acquiesces in the institution of a bankruptcy or an insolvency
proceeding against it, (E) makes a general assignment for the
benefit of its creditors, or (F) takes any corporate action to
authorize or effect any of the foregoing; or
(Y) a court of competent jurisdiction enters a judgment,
decree or order for relief in respect of such entity, which shall
(A) approve as properly filed a petition seeking reorganization,
arrangement, adjustment or composition in respect of such entity,
(B) appoint a Custodian of such entity or for substantially all
of its property or (C) order the winding-up or liquidation of its
affairs, and in any such case, such judgment, decree or order
shall remain unstayed and in effect for a period of 60
consecutive days;
(7) except as permitted by the Indenture, any Note Guarantee
shall cease to be, or be asserted in writing by any Subsidiary Guarantor or
the Company not to be, in full force and effect, and enforceable in
accordance with the terms.
Section 6.2. Acceleration.
------------
(a) If an Event of Default (other than an Event of Default specified
in clause (6) above) shall occur and be continuing, either 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 the Company and the
-57-
<PAGE>
Trustee specifying the respective Event of Default and that it is a "notice
of acceleration" (the "Acceleration Notice"), and the same (i) shall become
-------------------
immediately due and payable or (ii) if there are any amounts outstanding
under the Credit Facility, shall become immediately due and payable upon
the first to occur of an acceleration under the Credit Facility or 5
Business Days after receipt by the Company and the Representative under the
Credit Facility of such Acceleration Notice. If an Event of Default
specified in clause (6) above occurs and is continuing, then all unpaid
principal of, and premium, if any, and accrued and unpaid interest on all
of the outstanding Notes 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.
(b) The Holders of a majority in principal amount of the Notes may,
at any time after a declaration of acceleration with respect to the Notes
as described in paragraph (a), rescind and cancel such declaration and its
consequences (i) if the rescission would not conflict with any judgment or
decree, (ii) 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, (iii) 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, (iv) if the Company has paid the Trustee
its reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of an
Event of Default of the type described in clause (vi) of the description
above of Events of Default, the Trustee shall have received an Officers'
Certificate that such Event of Default has been cured or waived. No such
rescission shall affect any subsequent Default or impair any right
consequent thereto.
(c) Holders of the Notes may not enforce the Indenture or the Notes
except as provided in the Indenture and under the TIA.
(d) In the case of any Event of Default occurring by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the
Notes pursuant to the optional redemption provisions of the Indenture, an
equivalent premium shall also become and be immediately due and payable to
the extent permitted by law upon the acceleration of the Notes. If an
Event of Default occurs by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the intention of
avoiding the prohibition on redemption of the Notes prior to the First Call
Date, then the premium specified herein for redemption as of the First Call
Date shall also become immediately due and payable to the extent permitted
by law upon the acceleration of the Notes.
Section 6.3. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or
-58-
<PAGE>
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All available remedies are cumulative to the extent permitted by
law.
Section 6.4. Waiver of Past Defaults.
-----------------------
Subject to Sections 2.9, 6.7 and 9.2, the Holders of a majority in
principal amount of the outstanding Notes by notice to the Trustee may waive an
existing Default or Event of Default and its consequences, except a Default in
the payment of principal of or interest on any Note as specified in clauses (1)
and (2) of Section 6.1. When a Default or Event of Default is waived, it is
cured and ceases.
Section 6.5. Control by Majority.
-------------------
Subject to Section 2.9, the Holders of a majority in principal amount
of the outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it, including, without limitation, any remedies provided for
in Section 6.3. Subject to Section 7.1, however, the Trustee may refuse to
follow any direction that the Trustee reasonably believes conflicts with any law
or this Indenture, that the Trustee determines may be unduly prejudicial to the
rights of another Holder, or that may involve the Trustee in personal liability;
provided that the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 6.6. Limitation on Suits.
-------------------
A Holder may not pursue any remedy with respect to this Indenture or
the Notes unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee indemnity
reasonably satisfactory to the Trustee against any loss, liability or
expense to be incurred in compliance with such request;
(4) the Trustee does not comply with the request within 30
days after receipt of the request and the offer of satisfactory
indemnity; and
-59-
<PAGE>
(5) during such 30-day period the Holders of a majority in
principal amount of the outstanding Notes do not give the Trustee a
direction which, in the opinion of the Trustee, is inconsistent with
the request.
The foregoing limitations shall not apply to a suit instituted by a
Holder for the enforcement of the payment of principal and premium, if any, or
interest on such Note on or after the respective due dates set forth in such
Note (including upon acceleration thereof); provided that upon institution of
any proceeding or exercise of any remedy, such Holders provide the Trustee with
prompt written notice thereof.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.
Section 6.7. Rights of Holders To Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on a Note, on or
after the respective due dates expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
Section 6.8. Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of principal or interest specified
in clause (1) or (2) of Section 6.1 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company, any Subsidiary Guarantor, or any other obligor on the Notes for the
whole amount of principal and accrued interest remaining unpaid, together with
interest on overdue principal and, to the extent that payment of such interest
is lawful, interest on overdue installments of interest, in each case at the
rate per annum borne by the Notes, and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
Section 6.9. Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relating to the Company or any other
obligor upon the Notes, any of their respective creditors or any of their
respective property and shall be entitled and empowered to collect and receive
any monies or other property payable or deliverable on any such claims and to
distribute the same, and any Custodian in any such judicial proceedings is
hereby authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, taxes, disbursements and advances of the Trustee, its
agent and counsel, and any other amounts due the Trustee under Section 7.7. The
Company's payment obligations under this Section 6.9
-60-
<PAGE>
shall be secured in accordance with the provisions of Section 7.7 hereunder.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
----------
If the Trustee collects any money or property pursuant to this Article
VI, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.7;
Second: subject to Articles X and XII, to Holders for amounts
due and unpaid on the Notes for interest and premium, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Notes for interest and premium, respectively;
Third: subject to Articles X and XII, to Holders for amounts due
and unpaid on the Notes for principal, ratably without preference or
priority of any kind, according to the amounts due and payable on the
Notes for principal; and
Fourth: subject to Articles X and XII, to the Company, the
Subsidiary Guarantors, or any other obligor on the Notes, as their
interests may appear, or as a court of competent jurisdiction may
direct.
The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Holders pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.7, or a suit by a Holder or Holders of more than 10% in
principal amount of the outstanding Notes.
Section 6.12. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture or any Note and such proceeding has
been discontinued or abandoned for any reason, or has been determined adversely
to the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions
-61-
<PAGE>
hereunder, and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
ARTICLE VII.
TRUSTEE
Section 7.1. Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in its exercise thereof
as a prudent person would exercise or use under the circumstances in the
conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties as are
specifically set forth in this Indenture and the TIA and no others and
no covenants or obligations shall be implied in this Indenture against
the Trustee.
(ii) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, in the case of any such certificate or
opinion which by any provision hereof is specifically required to be
furnished to the Trustee, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except
that:
(i) This paragraph does not limit the effect of paragraph (b)
of this Section 7.1.
(ii) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.2, 6.4 or 6.5.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of any of
its rights or powers if it shall have reasonable
-62-
<PAGE>
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.1.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from
other assets except to the extent required by law.
Section 7.2. Rights of Trustee.
-----------------
Subject to Section 7.1:
(a) The Trustee may rely and shall be fully protected in acting or
refraining from acting upon any document reasonably believed by it to be
genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of
Counsel, or both, which shall conform to Sections 13.4 and 13.5. The
Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any attorney or
agent appointed with due care.
(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith which it reasonably believes to be authorized
or within its rights or powers.
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters
as it may see fit.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee security
or indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities which may be incurred by it in compliance with
such request, order or direction.
(g) The Trustee may consult with counsel that is regularly engaged in
matters involving trust indentures and selected by the Trustee in good
faith, and the written
-63-
<PAGE>
opinion of such counsel as to matters of law shall be full and complete
authorization and protection from liability in respect of any action taken,
omitted or suffered by it hereunder in good faith and in accordance with
the advice or opinion of such counsel.
(h) The Trustee shall not be charged with knowledge of any Defaults
or Events of Default unless either (1) a Trust Officer of the Trustee shall
have actual knowledge of such Default or Event of Default or (2) written
notice of such Default or Event of Default shall have been given to the
Trustee by any Holder or by the Company or any other obligor on the Notes
or any holder of Senior Indebtedness or Guarantor Senior Indebtedness or
any representative thereof.
Section 7.3. Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company, any
Subsidiary of the Company, or their respective Affiliates with the same rights
it would have if it were not Trustee. Any Agent may do the same with like
rights. However, the Trustee must comply with Sections 7.10 and 7.11.
Section 7.4. Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Notes, and it shall not be accountable for the Company's
use of the proceeds from the Notes, and it shall not be responsible for any
statement of the Company in this Indenture or the Notes other than the Trustee's
certificate of authentication.
Section 7.5. Notice of Default.
-----------------
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Holder notice of the
uncured Default or Event of Default within 90 days after such Default or Event
of Default becomes known to the Trustee.
Section 7.6. Reports by Trustee to Holders.
-----------------------------
Within 60 days after each May 15, the Trustee shall, to the extent
that any of the events described in TIA (S) 313(a) occurred within the previous
twelve months, but not otherwise, mail to each Holder a brief report dated as
of such date that complies with TIA (S) 313(a). The Trustee also shall comply
with TIA (S)(S) 313(b) and (c).
A copy of each report at the time of its mailing to Holders shall be
mailed to the Company and filed with the SEC and each stock exchange, if any, on
which the Notes are listed.
The Company shall promptly notify the Trustee in writing if the Notes
become listed on any stock exchange and the Trustee shall comply with TIA (S)
313(d).
-64-
<PAGE>
Section 7.7. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
incurred or made by it in connection with the performance of its duties under
this Indenture. Such expenses shall include the reasonable fees and expenses of
the Trustee's agents and counsel.
The Company shall indemnify the Trustee and its agents, employees,
officers, directors and shareholders for, and hold it harmless against, any
loss, liability or expense incurred by it (except for such actions to the extent
caused by any negligence, bad faith or willful misconduct on its part), arising
out of or in connection with the administration of this trust including the
reasonable costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its rights, powers or
duties hereunder. The Trustee shall notify the Company promptly of any claim
asserted against the Trustee for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. At the Trustee's sole discretion, the Company shall
defend the claim and the Trustee shall provide reasonable cooperation and may
participate at the Company's expense in the defense. Alternatively, the Trustee
may at its option have separate counsel of its own choosing and the Company
shall pay the reasonable fees and expenses of such counsel; provided that the
Company shall not be required to pay such fees and expenses if it assumes the
Trustee's defense, there is no conflict of interest between the Company and the
Trustee in connection with such defense as reasonably determined by the Trustee
and no Default or Event of Default has occurred and is continuing. The Company
need not pay for any settlement made without its written consent, which consent
shall not be unreasonably withheld. The Company need not reimburse any expense
or indemnify against any loss or liability to the extent incurred by the Trustee
through its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a lien prior to the Notes on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of or interest on particular Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(6) occurs, such expenses and the compensation
for such services are intended to constitute expenses of administration under
any Bankruptcy Law.
The obligations of the Company under this Section 7.7 and any lien
arising hereunder shall survive the resignation or removal of the Trustee, the
discharge of the Company's Obligations pursuant to Article VIII or the
termination of this Indenture.
Section 7.8. Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company in writing, such
resignation to be effective upon the appointment of a successor Trustee. The
Holders of a majority in
-65-
<PAGE>
principal amount of the outstanding Notes may remove the Trustee by so notifying
the Company and the Trustee in writing and may appoint a successor Trustee with
the Company's consent which consent shall not be unreasonably withheld. The
Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the Notes may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.7, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's obligations under Section 7.7 shall continue for the benefit
of the retiring Trustee.
Section 7.9. Successor Trustee by Merger, Etc.
--------------------------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or national banking association, the resulting, surviving or
transferee corporation without any further act shall, if such resulting,
surviving or transferee corporation is otherwise eligible hereunder, be the
successor Trustee; provided that such corporation shall be otherwise qualified
and eligible under this Article VII.
-66-
<PAGE>
Section 7.10. Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the
requirement of TIA (S)(S) 310(a)(1), (2) and (5). The Trustee (or, in the case
of a corporation included in a bank holding company system, the related bank
holding company) shall have a combined capital and surplus of at least
$100,000,000 as set forth in its most recent published annual report of
condition. In addition, if the Trustee is a corporation included in a bank
holding company system, the Trustee, independently of such bank holding company,
shall meet the capital requirements of TIA (S) 310(a)(2). The Trustee shall
comply with TIA (S) 310(b); provided, however, that there shall be excluded from
the operation of TIA (S) 310(b)(1) any indenture or indentures under which other
securities, or certificates of interest or participation in other securities, of
the Company are outstanding, if the requirements for such exclusion set forth in
TIA (S) 310(b)(1) are met.
Section 7.11. Preferential Collection of Claims Against Company.
----------------------
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE VIII.
DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.1. Termination of the Company's Obligations.
---------------------
The Company may terminate its obligations under the Notes and this
Indenture, except those obligations referred to in the penultimate paragraph of
this Section 8.1, if all Notes previously authenticated and delivered (other
than destroyed, lost or stolen Notes which have been replaced or paid or Notes
for whose payment U.S. Legal Tender has theretofore been deposited with the
Trustee or the Paying Agent in trust or segregated and held in trust by the
Company and thereafter repaid to the Company, as provided in Section 8.5) have
been delivered to the Trustee for cancellation and the Company has paid all sums
payable by it hereunder, or if:
(a) either (i) pursuant to Article III, the Company shall have given
notice to the Trustee and mailed a notice of redemption to each Holder of
the redemption of all of the Notes under arrangements satisfactory to the
Trustee for the giving of such notice or (ii) all Notes have otherwise
become due and payable hereunder;
(b) the Company shall have irrevocably deposited or caused to be
deposited with the Trustee or a trustee satisfactory to the Trustee, under
the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust solely for the benefit
of the Holders for that purpose, U.S. Legal Tender in such amount as is
sufficient without consideration of reinvestment of such interest, to pay
principal of, premium, if any, and interest on the outstanding Notes to
maturity or redemption; provided that the Trustee shall have been
irrevocably instructed to apply such U.S. Legal Tender to the payment of
said principal, premium, if any, and interest with respect to the
-67-
<PAGE>
Notes and, provided, further, that from and after the time of deposit, the
money deposited shall not be subject to the rights of holders of Senior
Indebtedness pursuant to the provisions of Article X;
(c) no Default or Event of Default with respect to this Indenture or
the Notes shall have occurred and be continuing on the date of such deposit
or shall occur as a result of such deposit and such deposit shall not
result in a breach or violation of, or constitute a default under, any
other instrument to which the Company is a party or by which it is bound;
(d) the Company shall have paid all other sums payable by it
hereunder; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent providing for the termination of the Company's obligations under
the Notes and this Indenture have been complied with. Such Opinion of
Counsel shall also state that such satisfaction and discharge does not
result in a default under the Credit Facility (if then in effect) or any
other agreement or instrument then known to such counsel that binds or
affects the Company.
Notwithstanding the foregoing paragraph, the Company's obligations in
Sections 2.5, 2.6, 2.7, 2.8, 4.1, 4.2, 7.7, 8.5 and 8.6 shall survive until the
Notes are no longer outstanding pursuant to the last paragraph of Section 2.8.
After the Notes are no longer outstanding, the Company's obligations in Sections
7.7, 8.5 and 8.6 shall survive.
After such delivery or irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's and the Subsidiary
Guarantors' obligations under the Notes, the Note Guarantees and this Indenture
except for those surviving obligations specified above.
Section 8.2. Legal Defeasance and Covenant Defeasance.
-------------------
(a) The Company may, at its option by Board Resolution of the Board
of Directors of the Company, at any time, elect to have either paragraph
(b) or (c) below be applied to all outstanding Notes upon compliance with
the conditions set forth in Section 8.3.
(b) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (b), the Company and the Subsidiary
Guarantors shall, subject to the satisfaction of the conditions set forth
in Section 8.3, be deemed to have been discharged from its obligations with
respect to all outstanding Notes on the date the conditions set forth below
are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal
----------------
Defeasance means that the Company shall be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Notes,
which shall thereafter be deemed to be "outstanding" only for the purposes
of Section 8.4 hereof and the other Sections of this Indenture referred to
in (i) and (ii) below, and to have satisfied
-68-
<PAGE>
all its other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging the same), and Holders of the Notes and
any amounts deposited under Section 8.3 hereof shall cease to be subject to
any obligations to, or the rights of, any holder of Senior Indebtedness or
Guarantor Senior Indebtedness under Article X or XII, as the case may be,
or otherwise, except for the following provisions, which shall survive
until otherwise terminated or discharged hereunder: (i) the rights of
Holders of outstanding Notes to receive solely from the trust fund
described in Section 8.4 hereof, and as more fully set forth in such
Section, payments in respect of the principal of and interest on such Notes
when such payments are due, (ii) the Company's obligations with respect to
such Notes under Article II and Section 4.2 hereof, (iii) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and the
Company's obligations in connection therewith and (iv) this Article VIII.
Subject to compliance with this Article VIII, the Company may exercise its
option under this paragraph (b) notwithstanding the prior exercise of its
option under paragraph (c) hereof.
(c) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (c), the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.3 hereof, be released
from its obligations under Section 4.5, Sections 4.10 through 4.23 and
Article V hereof with respect to the outstanding Notes on and after the
date the conditions set forth below are satisfied (hereinafter, "Covenant
--------
Defeasance"), and the Notes shall thereafter be deemed not "outstanding"
----------
for the purposes of any direction, waiver, consent or declaration or act of
Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other
purposes hereunder (it being understood that such Notes shall not be deemed
outstanding for accounting purposes) and Holders of the Notes and any
amounts deposited under Section 8.3 hereof shall cease to be subject to any
obligations to, or the rights of, any holder of Senior Indebtedness or
Guarantor Senior Indebtedness under Article X or Article XII or otherwise.
For this purpose, such Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any
such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any
such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event or
Default under Section 6.1(3) hereof, but, except as specified above, the
remainder of this Indenture and such Notes shall be unaffected thereby. In
addition, upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (c), subject to the satisfaction of the
conditions set forth in Section 8.3 hereof, those events described in
Section 6.1 (except those events described in Section 6.1(1), (2), and
(6)) shall not constitute Events of Default.
Section 8.3. Conditions to Legal Defeasance or Covenant Defeasance.
----------------------
The following shall be the conditions to the application of either
Section 8.2(b) or 8.2(c) hereof to the outstanding Notes:
-69-
<PAGE>
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of U.S. Legal Tender or 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;
(b) in the case of an election under Section 8.2(b) hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of the Indenture, there has
been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such opinion of counsel shall confirm
that, the Holders 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;
(c) in the case of an election under Section 8.2(c) hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that the
Holders will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(d) No Default or Event of Default shall have occurred and be
continuing on the date of the deposit specified in paragraph (a) or insofar
as an Event of Default specified in Section 6.1(6) is concerned, at any
time in the period ending on the 91st day after the date of the deposit
specified in paragraph (a);
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of or constitute a default under this Indenture or
any other material agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company or others;
(g) the Company 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; and
-70-
<PAGE>
(h) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that (A) the trust funds will not be subject to any
rights of holders of Senior Indebtedness, including, without limitation,
those arising under the Indenture and (B) after the 91st day following the
date of deposit specified in paragraph (a), the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally.
Section 8.4. Application of Trust Money.
--------------------------
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or
U.S. Government Obligations deposited with it pursuant to Article VIII, and
shall apply the deposited U.S. Legal Tender and the money from U.S. Government
Obligations in accordance with this Indenture to the payment of principal of and
interest on the Notes. The Trustee shall be under no obligation to invest said
U.S. Legal Tender or U.S. Government Obligations except as it may agree with the
Company.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.3 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Section 8.5. Repayment to the Company or the Subsidiary Guarantors.
----------------------------
(a) Anything in this Article VIII to the contrary not withstanding,
the Trustee shall deliver or pay to the Company , or if deposited with the
Trustee by any Subsidiary Guarantor, to such Subsidiary Guarantor, from
time to time upon request any U.S. Legal Tender or U.S. Government
Obligations held by it as provided in Section 8.3 hereof which, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are
in excess of the amount thereof that would then be required to be deposited
to effect an equivalent Legal Defeasance or Covenant Defeasance.
(b) The Trustee and the Paying Agent shall pay to the Company, or if
deposited with the Trustee by any Subsidiary Guarantor, to such Subsidiary
Guarantor, upon request any money held by them for the payment of principal
or interest that remains unclaimed for two years after the date due;
provided that the Trustee or such Paying Agent, before being required to
make any payment may at the expense of the Company cause to be published
once in a newspaper of general circulation in the City of New York or mail
to each Holder entitled to such money notice that such money remains
unclaimed and that after a date specified therein which shall be at least
30 days from the date of such publication or mailing any unclaimed balance
of such money then remaining will be repaid to the Company or a Subsidiary
Guarantor. After payment to the Company or a Subsidiary Guarantor, as the
case may be, Noteholders entitled to such money must look to the Company
for payment as general creditors unless an applicable law designates
another Person.
-71-
<PAGE>
Section 8.6. Satisfaction and Discharge.
--------------------------
This Indenture will be discharged and will cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
the Notes, as expressly provided for in the Indenture) as to all outstanding
Notes when (i) either (a) all the Notes 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 the Company and thereafter repaid to the Company
or discharged from such trust) have been delivered to the Trustee for
cancellation or (b) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company has 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 the Company directing the Trustee to apply such
funds to the payment thereof at maturity or redemption, as the case may be; (ii)
the Company has paid all other sums payable under the Indenture by the Company;
and (iii) the Company has 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.
Section 8.7. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Article VIII by reason
of any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's and each Subsidiary Guarantor's obligations under
this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Article VIII until such time as the Trustee or
Paying Agent is permitted to apply all such U.S. Legal Tender or U.S. Government
Obligations in accordance with Article VIII; provided that if the Company or any
Subsidiary Guarantor, as the case may be, has made any payment of interest on or
principal of any Notes because of the reinstatement of its obligations, the
Company or any Subsidiary Guarantor, as the case may be, shall be subrogated to
the rights of the Holders of such Notes to receive such payment from the U.S.
Legal Tender or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1. Without Consent of Holders.
--------------------------
The Company, when authorized by a Board Resolution, and the Trustee,
together, may amend or supplement this Indenture, the Notes or any Note
Guarantee without notice to or consent of any Holder:
-72-
<PAGE>
(1) to cure any ambiguity, defect or inconsistency;
provided that such amendment or supplement does not adversely affect
the rights of any Holder;
(2) to comply with Article V;
(3) to provide for uncertificated Notes in addition to or
in place of certificated Notes;
(4) to comply with any requirements of the SEC in order to
effect or maintain the qualification of this Indenture under the TIA;
or
(5) to make any change that would provide any additional
benefit or rights to the Holders or that does not adversely affect the
rights of any Holder;
provided that the Company has delivered to the Trustee an Opinion of Counsel and
an Officers' Certificate stating that such amendment or supplement complies with
the provisions of this Section 9.1.
Section 9.2. With Consent of Holders.
-----------------------
Subject to Section 6.7, the Company, when authorized by a Board
Resolution, and the Trustee, together, with the written consent of the Holder or
Holders of at least a majority in aggregate principal amount of the outstanding
Notes, may amend or supplement this Indenture, the Notes or any Note Guarantee
without notice to any other Holders. Subject to Section 6.7, the Holder or
Holders of a majority in aggregate principal amount of the outstanding Notes may
waive compliance by the Company with any provision of this Indenture or the
Notes without notice to any other Holder. No amendment, supplement or waiver,
including a waiver pursuant to Section 6.4, shall, without the consent of each
Holder of each Note affected thereby:
(1) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver of any provision of this
Indenture, the Notes or any Note Guarantee;
(2) reduce the rate of or change or have the effect of
changing the time for payment of interest, including defaulted
interest, on any Notes;
(3) 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;
(4) make any Notes payable in money other than that stated
in the Notes;
-73-
<PAGE>
(5) make any change in the provisions of the Indenture
protecting the right of each Holder 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 Notes to waive Defaults or Events of Default;
(6) amend, change or modify in any material respect the
obligation of the Company to make and consummate a Change of Control
Offer in the event of a Change of Control 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;
(7) modify or change any provision of the Indenture or the
related definitions affecting the subordination or ranking of the
Notes or the Note Guarantees in a manner which adversely affects the
Holders; or
(8) release any Subsidiary Guarantor from any of its
obligations under the Note Guarantee other than in accordance with the
terms of this Indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.2
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
Section 9.3. Effect on Senior Indebtedness.
-----------------------------
No amendment, supplement or waiver of this Indenture shall adversely
affect the rights of any holder of Senior Indebtedness or Guarantor Senior
Indebtedness, if any (including their rights under Article X or Article XII of
this Indenture), without the consent of such holder.
Section 9.4. Compliance with TIA.
-------------------
Every amendment, waiver or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect.
Section 9.5. Revocation and Effect of Consents.
---------------------------------
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
-74-
<PAGE>
written notice to the Trustee or the Company received before the date on which
the Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be at least 30 days prior to the
first solicitation of such consent. If a record date is fixed, then
notwithstanding the last sentence of the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to revoke any consent previously
given, whether or not such Persons continue to be Holders after such record
date. No such consent shall be valid or effective for more than 90 days after
such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it makes a change described in any of clauses (1)
through (8) of Section 9.2, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note; provided that any such waiver shall not impair or
affect the right of any Holder to receive payment of principal of and interest
on a Note, on or after the respective due dates expressed in such Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates without the consent of such Holder.
Section 9.6. Notation on or Exchange of Notes.
--------------------------------
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may, at the written direction of the Company, require the Holder of the
Note to deliver it to the Trustee. The Trustee at the written direction of the
Company may place an appropriate notation on the Note regarding the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms. Any such
notation or exchange shall be made at the sole cost and expense of the Company.
Failure to make the appropriate notation or issue a new Note shall not affect
the validity and effect of such amendment, supplement or waiver.
Section 9.7. Trustee To Sign Amendments, Etc.
-------------------------------
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX; provided that the Trustee may, but shall
not be obligated to, execute any such amendment, supplement or waiver which
affects the Trustee's own rights, duties or immunities under this Indenture.
The Trustee shall be entitled to receive, if requested, an indemnity reasonably
satisfactory to it and to receive, and shall be fully protected in relying upon,
an Opinion of Counsel and an Officers' Certificate each stating that the
execution of any amendment, supplement or waiver authorized pursuant to this
Article IX is authorized or permitted by this Indenture.
-75-
<PAGE>
ARTICLE X.
SUBORDINATION
Section 10.1. Notes Subordinated to Senior Indebtedness.
-------------------
The Company covenants and agrees and the Trustee and each Holder of
the Notes, by its acceptance thereof, likewise covenants and agrees, that all
Notes shall be issued subject to the provisions of this Article X; and the
Trustee and each person holding any Note, whether upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees that the payment of
all Obligations on the Notes by the Company shall, to the extent and in the
manner herein set forth, be subordinated and junior in right of payment to the
prior Payment in Full of all Obligations with respect to any Senior
Indebtedness, whether outstanding on the Issue Date or thereafter incurred; that
the subordination is for the benefit of, and shall be enforceable directly by,
the holders of Senior Indebtedness, and that each holder of Senior Indebtedness
whether now outstanding or hereinafter created, incurred, assumed or guaranteed
shall be deemed to have acquired Senior Indebtedness in reliance upon the
covenants and provisions contained in this Indenture and the Notes.
Section 10.2. No Payment on Notes in Certain Circumstances.
---------------------
(a) If either (i) any default occurs and is continuing in the payment
when due, whether at maturity, upon any redemption, by declaration or
otherwise, of any principal of, interest on, unpaid drawings for letters of
credit issued in respect of, or regularly accruing fees with respect to,
any Senior Indebtedness, or (ii) any default occurs and is continuing with
respect to any Designated Senior Indebtedness resulting in the acceleration
of the maturity of all or any portion of any Designated Senior
Indebtedness, no payment of any kind or character (other than Permitted
Insolvency Payments) shall be made by the Company or any of its
Subsidiaries with respect to any Obligations on the Notes or to acquire any
of the Notes for cash or property. In addition, if any other event of
default occurs and is continuing with respect to any Designated Senior
Indebtedness, as such event of default is defined in the instrument
creating or evidencing such Designated Senior Indebtedness, permitting the
holders of such Designated Senior Indebtedness then outstanding to
accelerate the maturity thereof and if the Representative for the
respective issue of Designated Senior Indebtedness gives written notice of
the event of default to the Trustee (a "Default Notice"), then, unless and
--------------
until all events of default have been cured or waived or have ceased to
exist or the Trustee receives notice from the Representative for the
respective issue of Designated Senior Indebtedness terminating the Blockage
Period (as defined below), during the 179 days after the delivery of such
Default Notice (the "Blockage Period"), neither the Company nor any of its
---------------
Subsidiaries shall: (x) make any payment of any kind or character (other
than Permitted Insolvency Payments) with respect to any Obligations on the
Notes or (y) acquire any of the Notes for cash or property (other than in
exchange for Permitted Insolvency Payments). Notwithstanding anything
herein to the contrary, in no event shall a Blockage Period extend beyond
179 days from the date of the commencement of the Blockage Period and only
one such Blockage Period may be commenced within any 365 consecutive days.
No event of default which existed or was
-76-
<PAGE>
continuing on the date of the commencement of any Blockage Period with
respect to the Designated Senior Indebtedness shall be, or be made, the
basis for commencement of a second Blockage Period by the Representative of
such Designated Senior Indebtedness whether or not within a period of 365
consecutive days, unless such event of default shall have been cured or
waived for a period of not less than 90 consecutive days (it being
acknowledged that any subsequent action, or any breach of any financial
covenants for a period commencing after the date of commencement of such
Blockage Period that, in either case, would give rise to an event of
default pursuant to any provisions under which an event of default
previously existed or was continuing shall constitute a new event of
default for this purpose).
(b) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is
prohibited by Section 10.2(a), such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior
Indebtedness (pro rata to such holders on the basis of the respective
amount of Senior Indebtedness held by such holders) or their respective
Representatives, as their respective interests may appear. The Trustee
shall be entitled to rely on information regarding amounts then due and
owing on the Senior Indebtedness, if any, received from the holders of
Senior Indebtedness (or their Representatives) or, if such information is
not received from such holders or their Representatives, from the Company
and only amounts included in the information provided to the Trustee shall
be paid to the holders of Senior Indebtedness.
(c) Nothing contained in this Article X shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the
maturity of the Notes pursuant to Section 6.2 or to pursue any rights or
remedies hereunder.
Section 10.3. Payment Over of Proceeds Upon Dissolution, Etc.
---------------------
(a) Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors in
an Insolvency or Liquidation Proceeding relating to the Company or its
property, whether voluntary or involuntary, all Obligations due upon all
Senior Indebtedness shall first be paid in full in cash or Cash
Equivalents, or such payment duly provided for to the satisfaction of the
holders of Senior Indebtedness, by the Company or any of its Subsidiaries,
before any payment or distribution of any kind or character is made on
account of any Obligations on the Notes, or for the acquisition, by the
Company or any of its Subsidiaries, of any of the Notes for cash or
property, except for Permitted Insolvency Payments. Upon any such
Insolvency or Liquidation Proceeding, any payment or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities (other than Permitted Insolvency Payments), to which the Holders
of the Notes or the Trustee would be entitled shall be paid by the Company
or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other person making such payment or distribution, or by the Holders of the
Notes or by the Trustee if received by them, directly to the holders of
Senior Indebtedness (pro rata to such holders on the basis of the amounts
of Senior Indebtedness held by such holders) or their Representatives, as
their interests may appear,
-77-
<PAGE>
for application to the payment of the Senior Indebtedness remaining unpaid
until all such Senior Indebtedness has been paid in full, after giving
effect to any concurrent payment, distribution or provision therefor to or
for the holders of Senior Indebtedness.
(b) To the extent any payment of Senior Indebtedness (whether by or
on behalf of the Company, as proceeds of security or enforcement of any
right of setoff or otherwise) is declared to be fraudulent or preferential,
set aside or required to be paid to any Custodian under any Bankruptcy,
Law, then, if such payment is recovered by, or paid over to, such Custodian
the Senior Indebtedness or part thereof originally intended to be satisfied
shall be deemed to be reinstated and outstanding as if such payment had not
occurred.
(c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, shall be received by any Holder when such
payment or distribution is prohibited by Section 10.3(a), such payment or
distribution shall be held in trust for the benefit of, and shall be paid
over or delivered to, the holders of Senior Indebtedness (pro rata to such
holders on the basis of the respective amount of Senior Indebtedness held
by such holders) or their respective Representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may
appear, for application to the payment of Senior Indebtedness remaining
unpaid until all such Senior Indebtedness has been paid in full in cash or
Cash Equivalents, after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of such Senior
Indebtedness.
Section 10.4. Payments May Be Paid Prior to Dissolution.
--------------
Nothing contained in this Article X or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions described in Sections
10.2 and 10.3, from making payments at any time for the purpose of making
payments of principal of and interest on the Notes, or from depositing with the
Trustee any moneys for such payments, or (ii) in the absence of actual knowledge
of the Trustee that a given payment would be prohibited by Section 10.2 or 10.3,
the application by the Trustee of any moneys deposited with it for the purpose
of making such payments of principal of and interest on the Notes to the Holders
entitled thereto, unless at least one Business Day prior to the date upon which
such payment would otherwise become due and payable, the Trustee shall have
received the written notice provided for in Section 10.2(a) or in Section 10.7
(provided that, notwithstanding the foregoing, such application shall otherwise
be subject to the provisions of the first sentence of Section 10.2(a) and
Section 10.3). The Company shall give prompt written notice to the Trustee of
any dissolution, winding-up, liquidation or reorganization of the Company.
Section 10.5. Subrogation.
-----------
Subject to the payment in full in cash or Cash Equivalents of all
Senior Indebtedness, the Holders of the Notes shall be subrogated to the rights
of the holders of Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company
-78-
<PAGE>
applicable to the Senior Indebtedness until the Notes shall be paid in full;
and, for the purposes of such subrogation, no such payments or distributions to
the holders of the Senior Indebtedness by or on behalf of the Company or by or
on behalf of the Holders by virtue of this Article X which otherwise would have
been made to the Holders shall, as between the Company and the Holders of the
Notes, be deemed to be a payment by the Company to or on account of the Senior
Indebtedness, it being understood that the provisions of this Article X are and
are intended solely for the purpose of defining the relative rights of the
Holders of the Notes, on the one hand, and the holders of the Senior
Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article X shall have been
applied, pursuant to the provisions of this Article X, to the payment of amounts
payable under the Senior Indebtedness, then the Holders shall be entitled to
receive from the holders of such Senior Indebtedness any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount sufficient to pay all amounts payable under or in respect of the Senior
Indebtedness in full in cash or Cash Equivalents.
Section 10.6. Obligations of the Company Unconditional.
-------------
Nothing any contained in this Article X or elsewhere in this Indenture
or in the Notes is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders of the
Notes, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders of the Notes the principal of and any interest on the Notes
as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the Holders of
the Notes and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Holder of any
Note or the Trustee on its behalf from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
Section 10.7. Notice to Trustee.
-----------------
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Notes pursuant to the provisions of this
Article X, but the failure of the Company to so notify the Trustee shall not
relieve the Trustee or any Holder from its obligations under this Article.
Regardless of anything to the contrary contained in this Article X or elsewhere
in this Indenture, the Trustee shall not be charged with knowledge of the
existence of any default or event of default with respect to any Senior
Indebtedness or of any other facts which would prohibit the making of any
payment to or by the Trustee unless and until the Trustee shall have received
notice in writing from the Company, or from a holder of Senior Indebtedness or a
Representative therefor, and, prior to the receipt of any such written notice,
the Trustee shall be entitled to assume (in the absence of actual knowledge to
the contrary) that no such facts exist.
-79-
<PAGE>
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article X, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of Senior Indebtedness
held by such person, the extent to which such person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such person under this Article X and, if such evidence is not furnished, the
Trustee may defer any payment to such person pending judicial determination as
to the right of such person to receive such payment.
Section 10.8. Reliance on Judicial Order or Certificate of
--------------
Liquidating Agent.
------------------
Upon any payment or distribution of assets of the Company referred to
in this Article X, the Trustee, subject to the provisions of Article VII hereof,
and the Holders of the Notes shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which Insolvency or Liquidation
Proceedings are pending, or upon a certificate of the Custodian or other person
making such payment or distribution, delivered to the Trustee or the holders of
the Notes, for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article X.
Section 10.9. Trustee's Relation to Senior Indebtedness.
-------------------
The Trustee and any agent of the Company or the Trustee shall be
entitled to all the rights set forth in this Article X with respect to any
Senior Indebtedness which may at any time be held by it in its individual or any
other capacity to the same extent as any other holder of Senior Indebtedness and
nothing in this Indenture shall deprive the Trustee or any such agent of any of
its rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article X, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and shall not be liable
to any such holders if the Trustee shall pay over or distribute to or on behalf
of Holders or the Company or any other person money or assets to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article,
except if such payment is made as a result of willful misconduct or gross
negligence of the Trustee.
Whenever a distribution is to be made or a notice given to holders or
owners of Senior Indebtedness, the distribution may be made and the notice given
to their Representatives, if any.
-80-
<PAGE>
Section 10.10. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Indebtedness.
---------------------------------
No right of any present or future holders of any Senior Indebtedness
to enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee, without incurring
responsibility to the Trustee or the Holders of the Notes and without impairing
or releasing the subordination provided in this Article X or the obligations
hereunder of the Holders of the Notes to the holders of the Senior Indebtedness,
do any one or more of the following: (i) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior
Indebtedness, or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the payment or
collection of Senior Indebtedness; and (iv) exercise or refrain from exercising
any rights against the Company and any other Person.
Section 10.11. Noteholders Authorize Trustee To
Effectuate Subordination of Notes.
---------------------------------
Each Holder of Notes by its acceptance of them authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Senior
Indebtedness and the Holders of Notes, the subordination provided in this
Article X, and appoints the Trustee its attorney-in-fact for such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or otherwise) tending towards liquidation of the business or assets of
the Company, the filing of a claim for the unpaid balance of its or his Notes
and accrued interest in the form required in those proceedings.
If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Indebtedness
or their Representative are or is hereby authorized to have the right to file
and are or is hereby authorized to file an appropriate claim for and on behalf
of the Holders of said Notes. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Indebtedness or their
Representative to authorize or consent to or accept or adopt on behalf of any
Holders any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee or the holders of Senior Indebtedness or their Representative to vote in
respect of the claim of any Holder in any such proceeding.
-81-
<PAGE>
Section 10.12. This Article X Not To
Prevent Events of Default.
-------------------------
The failure to make a payment on account of principal of or interest
on the Notes by reason of any provision of this Article X shall not be construed
as preventing the occurrence of an Event of Default.
Section 10.13. Trustee's Compensation Not Prejudiced.
-------------------------------------
Nothing in this Article X shall apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
ARTICLE VII.
NOTE GUARANTEES
Section 11.1. Unconditional Guarantee.
-----------------------
Each Subsidiary Guarantor fully and unconditionally, jointly and
severally, Guarantees (such guarantee to be referred to herein as the "Note
----
Guarantee") to each Holder of a Note authenticated and delivered by the Trustee
- ---------
and to the Trustee and its successors and assigns, the Notes or the obligations
of the Company hereunder or thereunder, that: (i) the principal of and interest
on the Notes shall be promptly paid in full when due, subject to any applicable
grace period, whether at maturity, by acceleration or otherwise and interest on
the overdue principal, if any, and interest on any interest, to the extent
lawful, of the Notes and all other Obligations of the Company to the Holders or
the Trustee hereunder or thereunder will be promptly paid in full or performed,
all in accordance with the terms hereof and thereof and (ii) in case of any
extension of time of payment or renewal of any Notes or of any such other
obligations, the same shall be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, subject to any applicable
grace period, whether at stated maturity, by acceleration or otherwise, subject,
however, in the case of clauses (i) and (ii) above, to the limitations set forth
in Section 11.4. Each Subsidiary Guarantor agrees that its Obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstances which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Subsidiary Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenants that this Note
Guarantee shall not be discharged except by complete performance of the
Obligations contained in the Notes, this Indenture and in this Note Guarantee.
If any Noteholder or the Trustee is required by any court or otherwise to return
to the Company, any Subsidiary Guarantor, or any Custodian acting in relation to
the Company or any Subsidiary Guarantor, any amount paid by the Company or any
Subsidiary Guarantor to the Trustee or such Noteholder, this Note Guarantee, to
the extent theretofore discharged, shall be reinstated in full force and effect
as to such amount only.
-82-
<PAGE>
Each Subsidiary Guarantor further agrees that as between each Subsidiary
Guarantor, on the one hand, and the Holders and the Trustee, on the other hand,
(x) the maturity of the Obligations Guaranteed hereby may be accelerated as
provided in Article VI for the purposes of this Note Guarantee, notwithstanding
any stay, injunction or other prohibition preventing such acceleration in
respect of the Obligations Guaranteed hereby, and (y) in the event of any
acceleration of such obligations as provided in Article VI, such Obligations
(whether or not due and payable) shall forthwith become due and payable by each
Subsidiary Guarantor for the purpose of this Note Guarantee.
Section 11.2. Severability.
------------
In case any provision of this Note Guarantee shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Section 11.3. Release of a Subsidiary Guarantor.
---------------------------------
(a) In the event of either (a) a sale or other disposition of all or
substantially all of the assets of any Subsidiary Guarantor, by way of
merger, consolidation or otherwise, or a sale or other disposition of all
of the Capital Stock of any Subsidiary Guarantor, or (b) in the event that
the Company designates a Subsidiary Guarantor to be an Unrestricted
Subsidiary, or such Subsidiary Guarantor ceases to be a Subsidiary of the
Company, then such Subsidiary Guarantor (in the event of a sale or other
disposition, by way of such a merger, consolidation or otherwise, of all of
the Capital Stock of such Subsidiary Guarantor or any such designation) or
the entity acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such Subsidiary
Guarantor) shall be released and relieved of any obligations under its Note
Guarantee; provided that the Net Cash Proceeds of such sale or other
disposition are applied in accordance with Section 4.15 or 4.16, as
applicable.
(b) In the case of a sale, assignment, lease, transfer, conveyance or
other disposition of all or substantially all of the assets of a Subsidiary
Guarantor, upon the assumption provided for in Section 11.5(b), such
Subsidiary Guarantor shall be discharged from all further liability and
obligation under the Indenture.
(c) The Trustee shall deliver an appropriate instrument evidencing
such release upon receipt of a written request by the Company accompanied
by an Officers' Certificate certifying as to the compliance with this
Section 11.3 and the other provisions of this Indenture.
(d) Any Subsidiary Guarantor not so released remains liable for the
full amount of principal of and interest on the Notes as provided in this
Article XI.
-83-
<PAGE>
Section 11.4. Limitation of Subsidiary
Guarantor's Liability.
---------------------
Each Subsidiary Guarantor and by its acceptance hereof each Holder
hereby confirms that it is the intention of all such parties that the Guarantee
by such Subsidiary Guarantor pursuant to its Note Guarantee not constitute a
fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar Federal or state law. To effectuate the foregoing intention, the
Holders and each such Subsidiary Guarantor hereby irrevocably agree that the
Obligations of such Subsidiary Guarantor under its Note Guarantee shall be
limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor (including,
without limitation, any Obligations under the Credit Facility) and after giving
effect to any collections from or payments made by or on behalf of any other
Subsidiary Guarantor in respect of the obligations of such other Subsidiary
Guarantor under its Note Guarantee or pursuant to Section 11.6, result in the
Obligations of such Subsidiary Guarantor under its Note Guarantee not
constituting such fraudulent transfer or conveyance.
Section 11.5. Subsidiary Guarantors May
Consolidate, Etc., on Certain Terms.
-----------------------------------
(a) No Subsidiary Guarantor may consolidate with or merge with or
into (whether or not such Subsidiary Guarantor is the surviving Person),
another corporation, Person or entity whether or not affiliated with such
Subsidiary Guarantor unless, either:
(x) such consolidation or merger constitutes an Asset Sale in
compliance with Sections 4.16 and 4.17 which is subject to the
provisions of Section 11.3(a); or
(y) (i) the Person formed by or surviving any such consolidation
or merger (if other than such Subsidiary Guarantor) assumes all the
Obligations of such Subsidiary Guarantor under the Notes, the Note
Guarantee, the Indenture, and the Registration Rights Agreement
pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee; (ii) immediately after giving effect to
such transaction, no Default or Event of Default exists; (iii) such
Subsidiary Guarantor, or any Person formed by or surviving any such
consolidation or merger, would have Consolidated Net Worth
(immediately after giving effect to such transaction), equal to or
greater than the Consolidated Net Worth of such Subsidiary Guarantor
immediately preceding the transaction; and (iv) the Company would be
permitted to incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to Section 4.12(a).
(b) The requirements of Section 11.5(a)(y)(iii) and (iv) shall not
apply in the case of a consolidation with or merger with or into the
Company or another Subsidiary Guarantor.
-84-
<PAGE>
Section 11.6. Contribution.
------------
In order to provide for just and equitable contribution among the
Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in the
event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under this Note Guarantee, such Funding Guarantor shall be
-----------------
entitled to a contribution from all other Subsidiary Guarantors in a pro rata
amount based on the Adjusted Net Assets of each Subsidiary Guarantor (including
the Funding Guarantor) for all payments, damages and expenses incurred by that
Funding Guarantor in discharging the Company's obligations with respect to the
Notes or any other Subsidiary Guarantor's Obligations with respect to this Note
Guarantee.
Section 11.7. Waiver of Subrogation.
---------------------
Each Subsidiary Guarantor hereby irrevocably waives any claim or other
rights which it may now or hereafter acquire against the Company that arise from
the existence, payment, performance or enforcement of such Subsidiary
Guarantor's Obligations under this Note Guarantee and this Indenture, including,
without limitation, any right of subrogation, reimbursement, exoneration,
indemnification, and any right to participate in any claim or remedy of any
Holder of Notes against the Company, whether or not such claim, remedy or right
arises in equity, or under contract, statute or common law, including, without
limitation, the right to take or receive from the Company, directly or
indirectly, in cash or other property or by setoff or in any other manner,
payment or security on account of such claim or other rights. If any amount
shall be paid to any Subsidiary Guarantor in violation of the preceding sentence
and the Notes shall not have been paid in full, such amount shall have been
deemed to have been paid to such Subsidiary Guarantor for the benefit of, and
held in trust for the benefit of, the Holders of the Notes, and shall forthwith
be paid to the Trustee for the benefit of such Holders to be credited and
applied upon the Notes, whether matured or unmatured, in accordance with the
terms of this Indenture. Each Subsidiary Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by this Indenture and that the waiver set forth in this Section
11.7 is knowingly made in contemplation of such benefits.
Section 11.8. Execution of Note Guarantee.
---------------------------
To evidence their guarantee to the Noteholders specified in Section
11.1, the Subsidiary Guarantors hereby agree to execute the Note Guarantee in
substantially the form of Exhibit A recited to be endorsed on each Note ordered
---------
to be authenticated and delivered by the Trustee. Each Subsidiary Guarantor
hereby agrees that its Note Guarantee set forth in Section 11.1 shall remain in
full force and effect notwithstanding any failure to endorse on each Note a
notation of such Note Guarantee. Each such Note Guarantee shall be signed on
behalf of each Subsidiary Guarantor by two Officers, or an Officer and an
Assistant Secretary or one Officer shall sign and one Officer or an Assistant
Secretary (each of whom shall, in each case, have been duly authorized by all
requisite corporate actions) shall attest to such Note Guarantee prior to the
authentication of the Note on which it is endorsed, and the delivery of such
Note by the Trustee, after the authentication thereof hereunder, shall
constitute due delivery of such Note Guarantee on behalf of such Subsidiary
Guarantor. Such signatures upon the Note Guarantee may be by manual or
facsimile signature of such officers and may be imprinted or otherwise
-85-
<PAGE>
reproduced on the Note Guarantee, and in case any such officer who shall have
signed the Note Guarantee shall cease to be such officer before the Note on
which such Note Guarantee is endorsed shall have been authenticated and
delivered by the Trustee or disposed of by the Company, such Note nevertheless
may be authenticated and delivered or disposed of as though the person who
signed the Note Guarantee had not ceased to be such officer of the Subsidiary
Guarantor.
ARTICLE VIII.
SUBORDINATION OF NOTE GUARANTEES
Section 12.1. Subordination of Note Guarantee.
-------------------------------
Each Subsidiary Guarantor covenants and agrees and the Trustee and
each Holder of the Note Guarantees, by its acceptance thereof, likewise
covenants and agrees, that all Note Guarantees shall be issued subject to the
provisions of this Article XII; and the Trustee and each person holding any Note
Guarantee, whether upon original issue or upon transfer, assignment or exchange
thereof, accepts and agrees that the payment of all Obligations on the Note
Guarantees by such Subsidiary shall, to the extent and in the manner herein set
forth, be subordinated and junior in right of payment to the prior Payment in
Full of all Obligations with respect to any Guarantor Senior Indebtedness of
such Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter
incurred; that the subordination is for the benefit of, and shall be enforceable
directly by, the holders of Guarantor Senior Indebtedness, and that each holder
of Guarantor Senior Indebtedness whether now outstanding or hereinafter created,
incurred, assumed or guaranteed shall be deemed to have acquired Guarantor
Senior Indebtedness in reliance upon the covenants and provisions contained in
this Indenture and the Notes.
Section 12.2. No Payment on Note Guarantees in
Certain Circumstances.
---------------------
(a) If either (i) any default occurs and is continuing in the payment
when due, whether at maturity, upon any redemption, by declaration or
otherwise, of any principal of, interest on, or other amounts due and owing
on, any Guarantor Senior Indebtedness or any Senior Indebtedness guaranteed
by a Subsidiary Guarantor (which Guarantee constitutes Guarantor Senior
Indebtedness of such Subsidiary Guarantor), unpaid drawings for letters of
credit issued in respect of, or regularly accruing fees with respect to,
any Guarantor Senior Indebtedness, or (ii) any default occurs and is
continuing with respect to any Guarantor Designated Senior Indebtedness
resulting in the acceleration of the maturity of all or any portion of any
Guarantor Designated Senior Indebtedness, no payment of any kind or
character (other than Permitted Insolvency Payments) shall be made by such
Subsidiary Guarantor or any of its Subsidiaries with respect to any
Obligations on the Notes or to acquire any of the Notes for cash or
property. In addition, if any other event of default occurs and is
continuing with respect to any Guarantor Designated Senior Indebtedness, as
such event of default is defined in the instrument creating or evidencing
such Guarantor Designated Senior Indebtedness, permitting the holders of
such Guarantor Designated Senior Indebtedness then outstanding to
accelerate
-86-
<PAGE>
the maturity thereof and if the Representative for the respective issue of
Guarantor Designated Senior Indebtedness gives written notice of the event
of default to the Trustee (a "Guarantor Default Notice"), then, unless and
------------------------
until all events of default have been cured or waived or have ceased to
exist or the Trustee receives notice from the Representative for the
respective issue of Guarantor Designated Senior Indebtedness terminating
the Guarantor Blockage Period (as defined below), during the 179 days after
the delivery of such Guarantor Default Notice (the "Guarantor Blockage
------------------
Period"), neither the Subsidiary Guarantor nor any of its Subsidiaries
------
shall: (x) make any payment of any kind or character (other than Permitted
Insolvency Payments) with respect to any Obligations on the Notes or (y)
acquire any of the Notes for cash or property (other than in exchange for
Permitted Insolvency Payments). Notwithstanding anything herein to the
contrary, in no event shall a Guarantor Blockage Period extend beyond 179
days from the date of the commencement of the Guarantor Blockage Period and
only one such Guarantor Blockage Period may be commenced within any 365
consecutive days. No event of default which existed or was continuing on
the date of the commencement of any Guarantor Blockage Period with respect
to the Guarantor Designated Senior Indebtedness shall be, or be made, the
basis for commencement of a second Guarantor Blockage Period by the
Representative of such Guarantor Designated Senior Indebtedness whether or
not within a period of 365 consecutive days, unless such event of default
shall have been cured or waived for a period of not less than 90
consecutive days (it being acknowledged that any subsequent action, or any
breach of any financial covenants for a period commencing after the date of
commencement of such Guarantor Blockage Period that, in either case, would
give rise to an event of default pursuant to any provisions under which an
event of default previously existed or was continuing shall constitute a
new event of default for this purpose).
(b) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is
prohibited by Section 12.2(a), such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of
Guarantor Senior Indebtedness (pro rata to such holders on the basis of the
respective amount of Guarantor Senior Indebtedness held by such holders) or
their respective Representatives, as their respective interests may appear.
The Trustee shall be entitled to rely on information regarding amounts then
due and owing on the Guarantor Senior Indebtedness, if any, received from
the holders of Guarantor Senior Indebtedness (or their Representatives) or,
if such information is not received from such holders or their
Representatives, from such Subsidiary Guarantor and only amounts included
in the information provided to the Trustee shall be paid to the holders of
Guarantor Senior Indebtedness.
(c) Nothing contained in this Article XII shall limit the right of
the Trustee or the Holders of Notes to take any action to accelerate the
maturity of the Notes pursuant to Section 6.2 or to pursue any rights or
remedies hereunder.
-87-
<PAGE>
Section 12.3. Payment Over of Proceeds
Upon Dissolution, Etc.
---------------------
(a) Upon any payment or distribution of assets of any Subsidiary
Guarantor of any kind or character, whether in cash, property or
securities, to creditors in an Insolvency or Liquidation Proceeding
relating to the Subsidiary Guarantor or its property, whether voluntary or
involuntary, all Obligations due upon all Guarantor Senior Indebtedness
shall first be paid in full in cash or Cash Equivalents, or such payment
duly provided for to the satisfaction of the holders of Guarantor Senior
Indebtedness, by the Subsidiary Guarantor or any of its Subsidiaries,
before any payment or distribution of any kind or character is made on
account of any Obligations on the Notes, or for the acquisition, by the
Subsidiary Guarantor or any of its Subsidiaries, of any of the Notes for
cash or property, except for Permitted Insolvency Payments. Upon any such
Insolvency or Liquidation Proceeding, any payment or distribution of assets
of the Subsidiary Guarantor of any kind or character, whether in cash,
property or securities (other than Permitted Insolvency Payments), to which
the Holders of the Notes or the Trustee would be entitled shall be paid by
the Subsidiary Guarantor or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or
distribution, or by the Holders of the Notes or by the Trustee if received
by them, directly to the holders of Guarantor Senior Indebtedness (pro rata
to such holders on the basis of the amounts of Guarantor Senior
Indebtedness held by such holders) or their Representatives, as their
interests may appear, for application to the payment of the Guarantor
Senior Indebtedness remaining unpaid until all such Guarantor Senior
Indebtedness has been paid in full, after giving effect to any concurrent
payment, distribution or provision therefor to or for the holders of
Guarantor Senior Indebtedness.
(b) To the extent any payment of Guarantor Senior Indebtedness
(whether by or on behalf of such Subsidiary Guarantor, as proceeds of
security or enforcement of any right of setoff or otherwise) is declared to
be fraudulent or preferential, set aside or required to be paid to any
Custodian, under any Bankruptcy Law, then, if such payment is recovered by,
or paid over to such Custodian, the Guarantor Senior Indebtedness or part
thereof originally intended to be satisfied shall be deemed to be
reinstated and outstanding as if such payment had not occurred.
(c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of a Subsidiary Guarantor of any kind or character,
whether in cash, property or securities, shall be received by any Holder
when such payment or distribution is prohibited by Section 12.3(a), such
payment or distribution shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Guarantor Senior
Indebtedness (pro rata to such holders on the basis of the respective
amount of Guarantor Senior Indebtedness held by such holders) or their
respective Representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Guarantor Senior Indebtedness may
have been issued, as their respective interests may appear, for application
to the payment of Guarantor Senior Indebtedness remaining unpaid until all
such Guarantor Senior Indebtedness has been paid in full in cash or Cash
Equivalents,
-88-
<PAGE>
after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of such Guarantor Senior Indebtedness.
Section 12.4. Payments May Be Paid
Prior to Dissolution.
--------------------
Nothing contained in this Article XII or elsewhere in this Indenture
shall prevent (i) any Subsidiary Guarantor, except under the conditions
described in Sections 12.2 and 12.3, from making payments at any time for the
purpose of making payments of principal of and interest on the Notes, or from
depositing with the Trustee any moneys for such payments, or (ii) in the absence
of actual knowledge by the Trustee that a given payment would be prohibited by
Section 12.2 or 12.3, the application by the Trustee of any moneys deposited
with it for the purpose of making such payments of principal of and interest on
the Notes to the Holders entitled thereto, unless at least one Business Day
prior to the date upon which such payment would otherwise become due and
payable, the Trustee shall have received the written notice provided for in
Section 12.2(a) or in Section 12.7 (provided that, notwithstanding the
foregoing, such application shall otherwise be subject to the provisions of the
first sentence of Section 12.2(a) and Section 12.3). Each Subsidiary Guarantor
shall give prompt written notice to the Trustee of any dissolution, winding-up,
liquidation or reorganization of any Subsidiary Guarantor.
Section 12.5. Subrogation.
-----------
Subject to the payment in full in cash or Cash Equivalents of all
Guarantor Senior Indebtedness, the Holders of the Notes shall be subrogated to
the rights of the holders of Guarantor Senior Indebtedness to receive payments
or distributions of cash, property or securities of such Subsidiary Guarantor
applicable to the Guarantor Senior Indebtedness of such Subsidiary Guarantor
until the Notes shall be paid in full; and, for the purposes of such
subrogation, no such payments or distributions to the holders of the Guarantor
Senior Indebtedness by or on behalf of such Subsidiary Guarantor or by or on
behalf of the Holders by virtue of this Article XII which otherwise would have
been made to the Holders shall, as between the Subsidiary Guarantor and the
Holders of the Notes, be deemed to be a payment by such Subsidiary Guarantor to
or on account of the Guarantor Senior Indebtedness, it being understood that the
provisions of this Article XII are and are intended solely for the purpose of
defining the relative rights of the Holders of the Notes, on the one hand, and
the holders of the Guarantor Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article XII shall have been
applied, pursuant to the provisions of this Article XII, to the payment of
amounts payable under the Guarantor Senior Indebtedness, then the Holders shall
be entitled to receive from the holders of such Guarantor Senior Indebtedness
any payments or distributions received by such holders of Guarantor Senior
Indebtedness in excess of the amount sufficient to pay all amounts payable under
or in respect of the Guarantor Senior Indebtedness in full in cash or Cash
Equivalents.
-89-
<PAGE>
Section 12.6. Obligations of Each Subsidiary Guarantor
Unconditional.
-------------
Nothing contained in this Article XII or elsewhere in this Indenture
or in the Notes or the Note Guarantees is intended to or shall impair, as among
any Subsidiary Guarantor, its creditors other than the holders of Guarantor
Senior Indebtedness, and the Holders of the Notes, the obligation of such
Subsidiary Guarantor, which is absolute and unconditional, to pay to the Holders
of the Notes the principal of and any interest on the Notes as and when the same
shall become due and payable in accordance with the terms of the Note
Guarantees, or is intended to or shall affect the relative rights of the Holders
of the Notes and creditors of any Subsidiary Guarantor other than the holders of
Guarantor Senior Indebtedness, nor shall anything herein or therein prevent the
Holder of any Note or the Trustee on its behalf from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, in respect of cash, property or securities of any
Subsidiary Guarantor received upon the exercise of any such remedy.
Section 12.7. Notice to Trustee.
-----------------
The Company or any Subsidiary Guarantor shall give prompt written
notice to the Trustee of any fact known to the Company or any such Subsidiary
Guarantor which would prohibit the making of any payment to or by the Trustee in
respect of the Note Guarantees pursuant to the provisions of this Article XII
but the failure of the Company to so notify the Trustee shall not relieve the
Trustee or any Holder from its obligations under this Article. Regardless of
anything to the contrary contained in this Article XII or elsewhere in this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any default or event of default with respect to any Guarantor Senior
Indebtedness or of any other facts which would prohibit the making of any
payment to or by the Trustee unless and until the Trustee shall have received
notice in writing from the Company or a Subsidiary Guarantor, or from a holder
of Guarantor Senior Indebtedness or a Representative therefor, and, prior to the
receipt of any such written notice, the Trustee shall be entitled to assume (in
the absence of actual knowledge to the contrary) that no such facts exist.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any person as a holder of
Guarantor Senior Indebtedness to participate in any payment or distribution
pursuant to this Article XII, the Trustee may request such person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amounts of
Guarantor Senior Indebtedness held by such person, the extent to which such
person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such person under this Article XII, and if such
evidence is not furnished the Trustee may defer any payment to such person
pending judicial determination as to the right of such person to receive such
payment.
Section 12.8. Reliance on Judicial Order or
Certificate of Liquidating Agent.
--------------------------------
Upon any payment or distribution of assets of any Subsidiary Guarantor
referred to in this Article XII, the Trustee, subject to the provisions of
Article VII hereof, and the Holders of
-90-
<PAGE>
the Notes shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which Insolvency or Liquidation Proceedings are
pending, or upon certificate of the Custodian or other person making such
payment or distribution, delivered to the Trustee or the holders of the Notes,
for the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Guarantor Senior Indebtedness and other
Indebtedness of such Subsidiary Guarantor, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article XII.
Section 12.9. Trustee's Relation to Guarantor
Senior Indebtedness.
-------------------
The Trustee and any agent of any Subsidiary Guarantor or the Trustee
shall be entitled to all the rights set forth in this Article XII with respect
to any Guarantor Senior Indebtedness which may at any time be held by it in its
individual or any other capacity to the same extent as any other holder of
Guarantor Senior Indebtedness and nothing in this Indenture shall deprive the
Trustee or any such agent of any of its rights as such holder.
With respect to the holders of Guarantor Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article XII, and no implied
covenants or obligations with respect to the holders of Guarantor Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Guarantor Senior
Indebtedness and shall not be liable to any such holders if the Trustee shall
pay over or distribute to or on behalf of Holders or any such Subsidiary
Guarantor or any other person money or assets to which any holders of Guarantor
Senior Indebtedness shall be entitled by virtue of this Article, except if such
payment is made as a result of willful misconduct or gross negligence of the
Trustee.
Whenever a distribution is to be made or a notice given to holders or
owners of Guarantor Senior Indebtedness, the distribution may be made and the
notice given to their Representatives, if any.
Section 12.10. Subordination Rights Not Impaired by Acts or Omissions
of a Subsidiary Guarantor or Holders of Guarantor
Senior Indebtedness.
-------------------
No right of any present or future holders of any Guarantor Senior
Indebtedness to enforce subordination as provided herein shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
any Subsidiary Guarantor or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by such Subsidiary Guarantor with the terms
of this Indenture, regardless of any knowledge thereof which any such holder may
have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Guarantor Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee, without incurring
responsibility to the Trustee or the Holders of the Notes and without impairing
or releasing the subordination provided in this Article XII or the
-91-
<PAGE>
obligations hereunder of the Holders of the Notes to the holders of the
Guarantor Senior Indebtedness, do any one or more of the following: (i) change
the manner, place or terms of payment or extend the time of payment of, or renew
or alter, Guarantor Senior Indebtedness, or otherwise amend or supplement in any
manner Guarantor Senior Indebtedness, or any instrument evidencing the same or
any agreement under which Guarantor Senior Indebtedness is outstanding; (ii)
sell, exchange, release or otherwise deal with any property pledged, mortgaged
or otherwise securing Guarantor Senior Indebtedness; (iii) release any person
liable in any manner for the payment or collection of Guarantor Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
such Subsidiary Guarantor and any other person.
Section 12.11. Noteholders Authorize Trustee To Effectuate
Subordination of Note Guarantees.
----------
Each Holder of Notes by its acceptance of them authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Guarantor
Senior Indebtedness and the Holders of Notes, the subordination provided in this
Article XII, and appoints the Trustee its attorney-in-fact for such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of any Subsidiary Guarantor (whether in bankruptcy, insolvency,
receivership, reorganization or similar proceedings or upon an assignment for
the benefit of creditors or otherwise) tending towards liquidation of the
business or assets of such Subsidiary Guarantor, the filing of a claim for the
unpaid balance of its or his Notes and accrued interest in the form required in
those proceedings.
If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Guarantor Senior
Indebtedness or their Representative are or is hereby authorized to have the
right to file and are or is hereby authorized to file an appropriate claim for
and on behalf of the Holders of said Notes. Nothing herein contained shall be
deemed to authorize the Trustee or the holders of Guarantor Senior Indebtedness
or their Representative to authorize or consent to or accept or adopt on behalf
of any Holders any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee or the holders of Guarantor Senior Indebtedness or their
Representative to vote in respect of the claim of any Holder thereof, or to
authorize the Trustee or the holders of Guarantor Senior Indebtedness or their
Representative to vote in respect of the claim of any Holder in any such
proceeding.
Section 12.12. This Article XI Not To Prevent
Events of Default.
-----------------
The failure to make a payment on account of principal of or interest
on the Note Guarantees by reason of any provision of this Article XII shall not
be construed as preventing the occurrence of an Event of Default.
-92-
<PAGE>
Section 12.13. Trustee's Compensation Not Prejudiced.
Nothing in this Article XII shall apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
ARTICLE I.
MISCELLANEOUS
Section 13.1. TIA Controls.
------------
If any provision of this Indenture limits, qualifies, or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required provision shall control.
Section 13.2. Notices.
-------
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by private courier service guaranteeing next day delivery, by telex, by
telecopier or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
if to the Company or the Subsidiary Guarantors, if any:
Physician Sales & Service, Inc.
4345 Southpoint Boulevard
Jacksonville, FL 32216
Attention: David A. Smith
Telecopy: (904) 332-3204
if to the Trustee:
SunTrust Bank, Central Florida, National Association
225 East Robinson Street
Suite 250
Orlando, FL 32801
Attention: Corporate Trust Department
Telecopy: (407) 237-5299
Each of the Company, the Subsidiary Guarantors, and the Trustee by
written notice to each other such Person may designate additional or different
addresses for notices to such Person. Any notice or communication to the
Company, the Subsidiary Guarantors, or the Trustee shall be deemed to have been
given or made as of the date so delivered if personally delivered or delivered
by private courier service guaranteeing next day delivery; when answered back,
if telexed; when receipt is acknowledged, if faxed; and five (5) calendar days
after mailing if
-93-
<PAGE>
sent by registered or certified mail, postage prepaid (except that a notice of
change of address shall not be deemed to have been given until actually received
by the addressee).
Any notice or communication mailed to a Holder shall be mailed to such
Holder by first class mail or other equivalent means at such Holder's address as
it appears on the registration books of the Registrar and shall be sufficiently
given to such Holder if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
Section 13.3. Communications by Holders
with Other Holders.
------------------
Holders may communicate pursuant to TIA (S) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Subsidiary Guarantors, the Trustee, the Registrar and any other Person shall
have the protection of TIA (S) 312(c).
Section 13.4. Certificate and Opinion as
to Conditions Precedent.
-----------------------
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee upon
request:
(1) an Officers' Certificate, in form and substance reasonably
satisfactory to the Trustee, stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with;
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(3) where applicable, a certificate or opinion by an independent
certified public accountant reasonably satisfactory to the Trustee
that complies with TIA (S) 314(c).
Section 13.5. Statements Required in
Certificate or Opinion.
----------------------
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.6, shall include:
-94-
<PAGE>
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made
such examination or investigation as is reasonably necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each
such Person, such condition or covenant has been complied with.
Section 13.6. Rules by Trustee, Paying Agent, Registrar.
---------
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Holders. The Paying Agent
or Registrar may make reasonable rules for its functions.
Section 13.7. Legal Holdings.
--------------
A "Legal Holiday" used with respect to a particular place of payment
is a Saturday, a Sunday or a day on which banking institutions in New York, New
York or at such place of payment are not required to be open. If a payment date
is a Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
Section 13.8. Governing Law.
-------------
THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE.
Section 13.9. No Adverse Interpretation
of Other Agreements.
-------------------
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
-95-
<PAGE>
Section 13.10. No Recourse Against Others.
--------------------------
No director, officer, employee or stockholder, as such, of the Company
or any Subsidiary shall have any liability for any obligations of the Company or
any Subsidiary under the Notes, any Note Guarantee or this Indenture. Each
Holder by accepting a Note waives and releases all such liability. Such waiver
and release are part of the consideration for the issuance of the Notes. This
provision does not affect any possible claims under federal securities laws.
Section 13.11. Successors.
----------
All agreements of the Company and the Subsidiary Guarantors in this
Indenture, the Notes and the Note Guarantees shall bind their successors. All
agreements of the Trustee in this Indenture shall bind its successors.
Section 13.12. Duplicate Originals.
-------------------
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
Section 13.13. Severability.
------------
In case any one or more of the provisions in this Indenture or in the
Notes or in the Note Guarantees shall be held invalid, illegal or unenforceable,
in any respect for any reason, the validity, legality and enforceability of any
such provision in every other respect and of the remaining provisions shall not
in any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the fullest extent permitted by law.
-96-
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
PHYSICIAN SALES & SERVICE, INC.
By:____________________________________________
Name:
Title:
DIAGNOSTIC IMAGING, INC.
By:_________________________
Name:
Title:
PSS SERVICE, INC.
By:_________________________
Name:
Title:
PSS HOLDING, INC.
By:_________________________
Name:
Title:
PHYSICIAN SALES & SERVICE LIMITED PARTNERSHIP
By:_________________________
Name:
Title:
PSS RHODE ISLAND, INC.
By:_________________________
Name:
Title:
PSS TEXAS, INC.
By:_________________________
-97-
<PAGE>
Name:
Title:
PSS DELAWARE, INC.
By:_________________________
Name:
Title:
PSS PHYSICIAN SERVICES, INC.
By:_________________________
Name:
Title:
STANDARD/CRESCENT CITY SURGICAL SUPPLIES, INC.
By:_________________________
Name:
Title:
S & W X-RAY, INC.
By:_________________________
Name:
Title:
SUNTRUST BANK, CENTRAL FLORIDA, National
Association, as Trustee
By:_________________________
Name:
Title:
-98-
<PAGE>
EXHIBIT A(l)
------------
[FORM OF INITIAL NOTE]
----------------------
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE ACT)
OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR
(7) UNDER THE ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE ACT, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY
EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES
TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT,
(C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO
THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND
THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF
THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXTENSION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S
UNDER THE ACT.
<PAGE>
CUSIP No.:
PHYSICIAN SALES & SERVICE, INC.
[ ]% SENIOR SUBORDINATED NOTE DUE 2007
No. $
PHYSICIAN SALES & SERVICE, INC., a _____________ corporation (the
"Company," which term includes any successor entity), for value received
promises to pay to or registered assigns, the principal sum
of Dollars, on [ ],2007.
Interest Payment Dates: [ ] and [ ]
Record Dates: [ ] and [ ]
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
PHYSICIAN SALES & SERVICE, INC.
By:________________________________________
Name:
Title:
By:________________________________________
Name:
Dated: [ ], 1997 Title:
Certificate of Authentication
This is one of the [ ]% Senior Subordinated Notes due 2007 referred
to in the within-mentioned Indenture.
SUNTRUST BANK, CENTRAL FLORIDA, National
Association, as Trustee
By:______________________________________________
Authorized Signatory
A.1-2
<PAGE>
(REVERSE OF SECURITY)
---------------------
[ ]% Senior Subordinated Note due 2007
-----------------------------------------
1. Interest. PHYSICIAN SALES & SERVICE, INC., a __________
--------
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at the rate per annum shown above. Interest on the Notes will accrue
from the most recent date on which interest has been paid or, if no interest has
been paid, from [ ], 1997. The Company will pay interest semi-annually in
arrears on each Interest Payment Date, commencing [ ], 1998. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the Notes
-----------------
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are canceled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). Payments
in respect of the Notes represented by the Restricted Global Note (including
principal of, interest and premium, if any, on the Restricted Global Note) shall
be made by wire transfer of immediately available funds to the accounts
specified by the Restricted Global Note Holder. In all other cases, however, the
Company may pay principal and interest by its check payable in such U.S. Legal
Tender. The Company may deliver any such interest payment to the Paying Agent or
to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, SunTrust Bank, Central
--------------------------
Florida, National Association (the "Trustee") will act as Paying Agent and
Registrar. The Company may change any Paying Agent, Registrar or co-Registrar
without notice to the Holders.
4. Indenture. The Company issued the Notes under an Indenture, dated
---------
as of [ ], 1997 (the "Indenture"), by and among the Company, the Subsidiary
Guarantors and the Trustee. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. This Note is one of a duly authorized
issue of Initial Notes of the Company designated as its [ ]% Senior Subordinated
Notes due 2007 (the "Initial Notes"). The Notes include the Initial Notes, the
Private Exchange Notes and the Unrestricted Notes issued in exchange for the
Initial Notes pursuant to the Registration Rights Agreement or, with respect to
Initial Notes issued under the Indenture subsequent to the Issue Date, a
registration rights agreement substantially identical to the Registration Rights
Agreement. The Initial Notes and the Unrestricted Notes are treated as a single
class of securities under the Indenture. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb) (the "TIA"), as
in effect on the date of the Indenture. Notwithstanding anything to the contrary
herein, the Notes are subject to all such
A.1-3
<PAGE>
terms, and Holders of Notes are referred to the Indenture and the TIA for a
statement of them. The Notes are general unsecured obligations of the Company
limited in aggregate principal amount to $250,000,000. As provided for in
Article XI of the Indenture, the payment on each Note is guaranteed on a senior
subordinated basis by the Subsidiary Guarantors. Each Holder, by accepting a
Note, agrees to be bound by all of the terms and provisions of the Indenture, as
the same may be amended from time to time.
5. Subordination. The Notes are subordinated in right of payment, in
-------------
the manner and to the extent set forth in the Indenture, to the prior payment in
full of all Senior Indebtedness of the Company, whether outstanding on the date
of the Indenture or thereafter created, incurred, assumed or guaranteed. The
Note Guarantees in respect of the Notes are subordinated in right of payment, in
the manner and to the extent set forth in the Indenture, to the prior payment in
full of all Guarantor Senior Indebtedness of each Subsidiary Guarantor, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assured or guaranteed. Each Holder by its acceptance hereof agrees to be bound
by such provisions and authorizes and expressly directs the Trustee, on its
behalf, to take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee its
attorney-in-fact for such purposes.
6. Redemption Provisions. Except as provided below, the Notes may
---------------------
not be redeemed prior to [ ], 2002.
(a) Optional Redemption. On or after such date, the Notes may be
-------------------
redeemed at the option of the Company, at any time as a whole, or from time to
time in part, on not less than 30 nor more than 60 days' notice, at the
following redemption prices (expressed as percentages of principal amount), plus
accrued and unpaid interest (if any) to the date of redemption (subject to the
rights of holders of record on the relevant record date to receive interest due
on the relevant interest payment date), if redeemed during the 12-month period
commencing [ ]:
Redemption
Price
-----------
2002........................... [ ]%
2003........................... [ ]%
2004........................... [ ]%
2005........................... [ ]%
2006 and thereafter............ 100.000%
(b) Notwithstanding the foregoing, at any time prior to [ ], 2000, the
Company may, at its option, use the net cash proceeds of one or more Public
Equity Offerings to redeem up to an aggregate of 40% of the principal amount of
the Notes originally issued at a redemption price equal to [ ]% of the principal
amount thereof plus accrued and unpaid interest thereon, if
A.1-4
<PAGE>
any, to the date of redemption (subject to the rights of holders of record on
the relevant record date to receive interest due on the relevant interest
payment date); provided that at least 60% of the aggregate principal amount of
the Notes originally issued in the offering remain outstanding immediately after
the occurrence of any such redemption. In order to effect the foregoing
redemption with the proceeds of any Public Equity Offering, the Company shall
make such redemption not more than 60 days after the consummation of any such
Public Equity Offering.
7. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the Redemption Date. Notes in
denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption shall cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
8. Offers to Purchase. Section 4.15 of the Indenture provides that,
------------------
upon a Change of Control, each holder will have the right, subject to certain
conditions set forth in the Indenture, to require the Company to repurchase such
holder's Notes at a price equal to 101% of the principal amount thereof plus
accrued interest to the date of repurchase. Section 4.16 of the Indenture
provides that, after certain Asset Sales, and subject to further limitations
contained therein, the Company will make an offer to purchase certain amounts of
the Notes in accordance with the procedures set forth in the Indenture.
9. Denominations; Transfer; Exchange. The Notes are in registered
---------------------------------
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Notes or portions thereof selected for redemption.
10. Persons Deemed Owners. The registered Holder of a Note shall be
---------------------
treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or
---------------
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company at any
-----------------------------------------
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain
A.1-5
<PAGE>
provisions of the Indenture and the Notes (including certain covenants, but
excluding its obligation to pay the principal of and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain exceptions,
-----------------------------
the Indenture, the Notes or the Note Guarantees may be amended or supplemented
with the written consent of the Holders of at least a majority in aggregate
principal amount of the Notes then outstanding, and any existing Default or
Event of Default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in aggregate principal amount of
the Notes then outstanding. Without notice to or consent of any Holder, the
parties thereto may amend or supplement the Indenture or the Notes to, among
other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated Notes, or comply
with Article V of the Indenture or make any other change that does not adversely
affect in any material respect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain limitations
---------------------
on the ability of the Company and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness or Liens, make payments in respect of its
Capital Stock or certain Indebtedness, enter into transactions with Affiliates,
create dividend or other payment restrictions affecting Subsidiaries, incur
Indebtedness that is subordinated in right of payment to Senior Indebtedness and
senior in right of payment to the Notes, merge or consolidate with any other
Person, sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets or adopt a plan of liquidation and sell Capital
Stock of a Restricted Subsidiary. Such limitations are subject to a number of
important qualifications and exceptions. The Company must annually report to
the Trustee on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with the
----------
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
16. Defaults and Remedies. If an Event of Default occurs and is
---------------------
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power.
17. Trustee Dealings with Company. The Trustee under the Indenture,
-----------------------------
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Subsidiaries or their
respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No director, officer, employee or
--------------------------
stockholder, as such, of the Company shall have any liability for any obligation
of the Company or any Subsidiary under the Notes, any Note Guarantee or the
Indenture. Each Holder of a Note by
A.1-6
<PAGE>
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
19. Authentication. This Note shall not be valid until the Trustee
--------------
or Authenticating Agent manually signs the certificate of authentication on this
Note.
20. Governing Law. The laws of the State of New York shall govern
-------------
this Note and the Indenture, without regard to principles of conflict of laws.
21. Abbreviations and Defined Terms. Customary abbreviations may be
-------------------------------
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
23. Indenture. Each Holder, by accepting a Note, agrees to be bound
---------
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may be made to: Physician Sales & Service, Inc., 4345
Southpoint Boulevard, Jacksonville, FL 32216, Attn: David A. Smith.
A.1-7
<PAGE>
SENIOR SUBORDINATED NOTE GUARANTEE
----------------------------------
Diagnostic Imaging, Inc., PSS Service, Inc., PSS Holding, Inc.,
Physician Sales & Service Limited Partnership, PSS Rhode Island, Inc., PSS
Texas, Inc., PSS Delaware, Inc., PSS Physician Services, Inc., Standard/Crescent
City Surgical Supplies, Inc. and S & W X-Ray, Inc. (the "Subsidiary Guarantors")
have unconditionally guaranteed on a senior subordinated basis (such guarantee
by each Subsidiary Guarantor being referred to herein as the "Note Guarantee")
(i) the due and punctual payment of the principal of and interest on the Notes,
whether at maturity, by acceleration or otherwise, the due and punctual payment
of interest on the overdue principal and interest, if any, on the Notes, to the
extent lawful, and the due and punctual performance of all other Obligations of
the Company to the Holders or the Trustee all in accordance with the terms set
forth in Article XI of the Indenture and (ii) in case of any extension of time
of payment or renewal of any Notes or any of such other obligations, that the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise.
The obligations of each Subsidiary Guarantor to the Holders and to the
Trustee pursuant to the Note Guarantee and the Indenture are expressly set forth
and are expressly subordinated and subject in right of payment to the prior
payment in full in cash or Cash Equivalents of all Guarantor Senior Indebtedness
of such Subsidiary Guarantor, to the extent and in the manner provided, in
Article XII of the Indenture, and reference is hereby made to such Indenture for
the precise terms of the Note Guarantee therein made.
No stockholder, director, officer, employee or stockholder, as such,
of the Subsidiary Guarantor shall have any liability under the Note Guarantee.
Each holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Note Guarantees.
A.1-8
<PAGE>
The Note Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Notes upon which the Note
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
DIAGNOSTIC IMAGING, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS SERVICE, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS HOLDING, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PHYSICIAN SALES & SERVICE LIMITED
PARTNERSHIP
By:_________________ By:_________________
A.1-9
<PAGE>
Name: Name:
Title: Title:
PSS RHODE ISLAND, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS TEXAS, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS DELAWARE, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS PHYSICIAN SERVICES, INC.
By:_________________ By:_________________
Name: Name:
A.1-10
<PAGE>
Title: Title:
STANDARD/CRESCENT CITY SURGICAL SUPPLIES,
INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
S & W X-RAY, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
A.1-11
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint, ___________________, agent to transfer this Note on
the books of the Company. The agent may substitute another to act for him.
Date:_____________________________ Signed:__________________________________
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee:_______________________________________
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) [ ], 1999, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that this Note is being transferred:
[Check One]
---------
(1) _______ to the Company or a subsidiary thereof; or
(2) _______ pursuant to and in compliance with Rule 144A under the Securities
Act; or
(3) _______ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that has
furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
(4) _______ outside the United States to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act; or
A.1-12
<PAGE>
(5) _______ pursuant to the exemption from registration provided by Rule 144
under the Securities Act; or
(6) _______ pursuant to an effective registration statement under the
Securities Act; or
(7) _______ pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; provided that if box (3), (4), (5) or (7) is checked,
the Company or the Trustee may require, prior to registering any such transfer
of the Notes, in its sole discretion, such legal opinions, certifications
(including an investment letter in the case of box (3) or (4)) and other
information as the Trustee or the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
If none of the foregoing boxes is checked, the Trustee or Registrar
shall not be obligated to register this Note in the name of any person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.16 of the Indenture shall have
been satisfied.
Date: ____________________________ Signed: ________________________________
(Sign exactly as your name
appears on the other side of this
Note)
Signature Guarantee:___________________________________________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
----------------------------------------------------
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's
A.1-13
<PAGE>
foregoing representations in order to claim the exemption from registration
provided by Rule 144A.
Date: ______________________________ Signed: _______________________________
NOTICE: To be executed by an
executive officer
A.1-14
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
----------------------------------
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
principal amount you elect to have purchased:
$________________
Dated: ______________________________ ______________________________________
NOTICE: The signature on this
assignment must correspond with the
name as it appears upon the face of the
within Note in every particular without
alteration or enlargement or any change
whatsoever and be guaranteed by the
endorser's bank or broker.
Signature Guarantee: ________________________________________
A.1-15
<PAGE>
EXHIBIT A(2)
------------
[FORM OF EXCHANGE NOTE]
---------------------
CUSIP No.:
PHYSICIAN SALES & SERVICE, INC.
[ ]% SENIOR SUBORDINATED NOTE DUE 2007
No. $
PHYSICIAN SALES & SERVICE, INC., a _____________ corporation (the
"Company," which term includes any successor entity), for value received
promises to pay to or registered assigns, the principal sum of
Dollars, on [ ], 2007.
Interest Payment Dates: [ ] and [ ]
Record Dates: [ ] and [ ]
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
PHYSICIAN SALES & SERVICE, INC.
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
Dated: [ ], 1997
Certificate of Authentication
This is one of the [ ]% Senior Subordinated Notes due 2007
referred to in the within-mentioned Indenture.
SUNTRUST BANK, CENTRAL FLORIDA,
National Association, as Trustee
By: ____________________________________
Authorized Signatory
A.2-1
<PAGE>
(REVERSE OF SECURITY)
[ ]% Senior Subordinated Note due 2007
------------------------------------------
1. Interest. PHYSICIAN SALES & SERVICE, INC., a _______________
--------
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at the rate per annum shown above. Interest on the Notes will accrue
from the most recent date on which interest has been paid or, if no interest has
been paid, from [ ], 1997. The Company will pay interest semi-annually in
arrears on each Interest Payment Date, commencing [ ], 1998. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the Notes
-----------------
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are canceled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by its check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment to the Paying
Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, SunTrust Bank, Central
--------------------------
Florida, National Association (the "Trustee") will act as Paying Agent and
Registrar. The Company may change any Paying Agent, Registrar or co-Registrar
without notice to the Holders.
4. Indenture. The Company issued the Notes under an Indenture, dated
---------
as of [ ], 1997 (the "Indenture"), by and among the Company, the Subsidiary
Guarantors and the Trustee. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. This Note is one of a duly authorized
issue of Unrestricted Notes of the Company designated as its [ ]% Senior
Subordinated Notes due 2007 (the "Unrestricted Notes"). The Notes include the
Initial Notes, the Private Exchange Notes and the Unrestricted Notes issued in
exchange for the Initial Notes pursuant to the Registration Rights Agreement or,
with respect to Initial Notes issued under the Indenture subsequent to the Issue
Date, a registration rights agreement substantially identical to the
Registration Rights Agreement. The Initial Notes and the Unrestricted Notes are
treated as a single class of securities under the Indenture. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-
77bbbb) (the "TIA"), as in effect on the date of the Indenture. Notwithstanding
anything to the contrary herein, the Notes are subject to all such terms, and
Holders of Notes are referred to the Indenture and the TIA for a statement of
them. The Notes are general unsecured obligations of the Company limited in
aggregate principal amount to $250,000,000. As provided for in Article XI of the
Indenture, the payment on each Note is guaranteed on a senior subordinated basis
by the Subsidiary Guarantors. Each Holder, by
A.2-2
<PAGE>
accepting a Note, agrees to be bound by all of the terms and provisions of the
Indenture, as the same may be amended from time to time.
5. Subordination. The Notes are subordinated in right of payment, in
-------------
the manner and to the extent set forth in the Indenture, to the prior payment in
full of all Senior Indebtedness of the Company, whether outstanding on the date
of the Indenture or thereafter created, incurred, assumed or guaranteed. The
Note Guarantees in respect of the Notes are subordinated in right of payment, in
the manner and to the extent set forth in the Indenture, to the prior payment in
full of all Guarantor Senior Indebtedness of each Subsidiary Guarantor, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. Each Holder by its acceptance hereof agrees to be bound
by such provisions and authorizes and expressly directs the Trustee, on its
behalf, to take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee its
attorney-in-fact for such purposes.
6. Redemption Provisions. Except as provided below, the Notes may
---------------------
not be redeemed prior to [ ], 2002.
(a) Optional Redemption. On or after such date, the Notes may be
-------------------
redeemed at the option of the Company, at any time as a whole, or from time to
time in part, on not less than 30 nor more than 60 days' notice, at the
following redemption prices (expressed as percentages of principal amount), plus
accrued and unpaid interest (if any) to the date of redemption (subject to the
rights of holders of record on the relevant record date to receive interest due
on the relevant interest payment date), if redeemed during the 12-month period
commencing [ ]:
Redemption
Price
----------
2002............................. [ ]%
2003............................. [ ]%
2004............................. [ ]%
2005............................. [ ]%
2006 and thereafter.............. 100.000%
(b) Notwithstanding the foregoing, at any time prior to [ ], 2000, the
Company may, at its option, use the net cash proceeds of one or more Public
Equity Offerings to redeem up to an aggregate of 40% of the principal amount of
the Notes originally issued at a redemption price equal to [ ]% of the principal
amount thereof plus accrued and unpaid interest thereon, if any, to the date of
redemption (subject to the rights of holders of record on the relevant record
date to receive interest due on the relevant interest payment date); provided
that at least 60% of the aggregate principal amount of the Notes originally
issued in the offering remain outstanding immediately after the occurrence of
any such redemption. In order to effect the foregoing
A.2-3
<PAGE>
redemption with the proceeds of any Public Equity Offering, the Company shall
make such redemption not more than 60 days after the consummation of any such
Public Equity Offering.
7. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the Redemption Date. Notes in
denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption shall cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
8. Offers to Purchase. Section 4.15 of the Indenture provides that,
------------------
upon a Change of Control each holder will have the right, subject to certain
conditions set forth in the Indenture, to require the Company to repurchase such
holder's Notes at a price equal to 101% of the principal amount thereof plus
accrued interest to the date of repurchase. Section 4.16 of the Indenture
provides that, after certain Asset Sales, and subject to further limitations
contained therein, the Company will make an offer to purchase certain amounts of
the Notes in accordance with the procedures set forth in the Indenture.
9. Denominations; Transfer; Exchange. The Notes are in registered
---------------------------------
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Notes or portions thereof selected for redemption.
10. Persons Deemed Owners. The registered Holder of a Note shall be
---------------------
treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or
---------------
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company at any
-----------------------------------------
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but excluding its obligation to pay
the principal of and interest on the Notes).
A.2-4
<PAGE>
13. Amendment; Supplement; Waiver. Subject to certain exceptions,
-----------------------------
the Indenture, the Notes or the Note Guarantees, may be amended or supplemented
with the written consent of the Holders of at least a majority in aggregate
principal amount of the Notes then outstanding, and any existing Default or
Event of Default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in aggregate principal amount of
the Notes then outstanding. Without notice to or consent of any Holder, the
parties thereto may amend or supplement the Indenture or the Notes to, among
other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated Notes, or comply
with Article V of the Indenture or make any other change that does not adversely
affect in any material respect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain limitations
---------------------
on the ability of the Company and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness or Liens, make payments in respect of its
Capital Stock or certain Indebtedness, enter into transactions with Affiliates,
create dividend or other payment restrictions affecting Subsidiaries, incur
Indebtedness that is subordinated in right of payment to Senior Indebtedness and
senior in right of payment to the Notes, merge or consolidate with any other
Person, sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets or adopt a plan of liquidation and sell Capital
Stock of a Restricted Subsidiary. Such limitations are subject to a number of
important qualifications and exceptions. The Company must annually report to
the Trustee on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with the
----------
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
16. Defaults and Remedies. If an Event of Default occurs and is
---------------------
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power.
17. Trustee Dealings with Company. The Trustee under the Indenture,
-----------------------------
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Subsidiaries or their
respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No director, officer, employee or
--------------------------
stockholder, as such, of the Company shall have any liability for any obligation
of the Company under the Notes or the Indenture. Each Holder of a Note by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
A.2-5
<PAGE>
19. Authentication. This Note shall not be valid until the Trustee
--------------
or Authenticating Agent manually signs the certificate of authentication on this
Note.
20. Governing Law. The laws of the State of New York shall govern
-------------
this Note and the Indenture, without regard to principles of conflict of laws.
21. Abbreviations and Defined Terms. Customary abbreviations may be
-------------------------------
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
23. Indenture. Each Holder, by accepting a Note, agrees to be bound
---------
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may be made to: Physician Sales & Service, Inc., 4345
Southpoint Boulevard, Jacksonville, FL 32216, Attn: David A. Smith.
A.2-6
<PAGE>
SENIOR SUBORDINATED NOTE GUARANTEE
----------------------------------
Diagnostic Imaging, Inc., PSS Service, Inc., PSS Holding, Inc.,
Physician Sales & Service Limited Partnership, PSS Rhode Island, Inc., PSS
Texas, Inc., PSS Delaware, Inc., PSS Physician Services, Inc., Standard/Crescent
City Surgical Supplies, Inc. and S & W X-Ray, Inc. (the "Subsidiary Guarantors")
have unconditionally guaranteed on a senior subordinated basis (such guarantee
by each Subsidiary Guarantor being referred to herein as the "Note Guarantee")
(i) the due and punctual payment of the principal of and interest on the Notes,
whether at maturity, by acceleration or otherwise, the due and punctual payment
of interest on the overdue principal and interest, if any, on the Notes, to the
extent lawful, and the due and punctual performance of all other Obligations of
the Company to the Holders or the Trustee all in accordance with the terms set
forth in Article XI of the Indenture and (ii) in case of any extension of time
of payment or renewal of any Notes or any of such other obligations, that the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise.
The obligations of each Subsidiary Guarantor to the Holders and to the
Trustee pursuant to the Note Guarantee and the Indenture are expressly set forth
and are expressly subordinated and subject in right of payment to the prior
payment in full in cash or Cash Equivalents of all Guarantor Senior Indebtedness
of such Subsidiary Guarantor, to the extent and in the manner provided, in
Article XII of the Indenture, and reference is hereby made to such Indenture for
the precise terms of the Note Guarantee therein made.
No director, officer, employee or stockholder, as such, of the
Subsidiary Guarantor shall have any liability under the Note Guarantee. Each
holder of a Note by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for the issuance of the
Note Guarantees.
A.2-7
<PAGE>
The Note Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Notes upon which the Note
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
DIAGNOSTIC IMAGING, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS SERVICE, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS HOLDING, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PHYSICIAN SALES & SERVICE LIMITED
PARTNERSHIP
By:_________________ By:_________________
A.2-8
<PAGE>
Name: Name:
Title: Title:
PSS RHODE ISLAND, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS TEXAS, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS DELAWARE, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS PHYSICIAN SERVICES, INC.
By:_________________ By:_________________
Name: Name:
A.2-9
<PAGE>
Title: Title:
STANDARD/CRESCENT CITY
SURGICAL SUPPLIES, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
S & W X-RAY, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
A.2-10
<PAGE>
ASSIGNMENT FORM
---------------
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
__________________________________________________________
__________________________________________________________
__________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint, ___________________, agent to transfer this Note on
the books of the Company. The agent may substitute another to act for him.
Date: ________________________ Signed: _________________________
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee:_________________________________
A.2-11
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
----------------------------------
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
principal amount you elect to have purchased:
$________________
Dated: ________________ ____________________________________________
NOTICE: The signature on this assignment
must correspond with the name as it appears
upon the face of the within Note in every
particular without alteration or enlargement
or any change whatsoever and be guaranteed
by the endorser's bank or broker.
Signature Guarantee:______________________________
A.2-12
<PAGE>
EXHIBIT B
---------
FORM OF LEGEND FOR GLOBAL NOTES
-------------------------------
Any Global Note authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT
EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS
NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
B-1
<PAGE>
EXHIBIT C
---------
Form of Certificate To Be
-------------------------
Delivered in Connection with
----------------------------
Transfers to Non-QIB Accredited Investors
-----------------------------------------
__________, ____
SunTrust Bank, Central Florida, National Association
225 East Robinson Street
Suite 250
Orlando, FL 32801
Attention: Corporate Trust Department
Re: PHYSICIAN SALES & SERVICE, INC.
(the "Company")
8 1/2% Senior Subordinated
Notes due 2007 (the "Notes")
----------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of $_________ aggregate
principal amount of the Notes, we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated October 2, 1997, relating to the Notes and such other
information as we deem necessary in order to make our investment decision. We
acknowledge that we have read and agreed to the matters stated on pages (i)-
(iii) of the Offering Memorandum and in the section entitled "Transfer
Restrictions" in the Offering Memorandum, including the restrictions on
duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
relating to the Notes (the "Indenture") and the undersigned agrees to be bound
by, and not to resell, pledge or otherwise transfer the Notes except in
compliance with, such restrictions and conditions and the Securities Act of
1933, as amended (the "Securities Act") and all applicable State securities
laws.
3. We understand that the offer and sale of the Notes (and the
related Note Guarantees) have not been registered under the Securities Act, and
that the Notes (and the related Guarantees) may not be offered or sold within
the United States or to, or for the account or benefit of, U.S. Persons except
as permitted in the following sentence. We agree, on our own
C-1
<PAGE>
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell or otherwise transfer any Notes we will do so
only (i) to the Company or any subsidiary thereof, (ii) inside the United States
in accordance with Rule 144A promulgated under the Securities Act to a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act), (iii) inside the United States to an institutional "accredited investor"
(as defined below) that, prior to such transfer, furnishes (or has furnished on
its behalf by a U.S. broker-dealer) to you a signed letter containing certain
representations and agreements relating to the restrictions on transfer of the
Notes, substantially in the form of this letter, (iv) outside the United States
in accordance with Rule 904 of Regulation S under the Securities Act, (v)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act (if available), or (vi) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing Notes from us a notice advising such purchaser that resales of
the Notes are restricted as stated herein.
4. We are not acquiring the Notes for or on behalf of, and will not
transfer the Notes to, any pension or welfare Plan (as defined the section
entitled "Transfer Restrictions" in the Offering Memorandum), except as
permitted in the section entitled "Transfer Restrictions" of the Offering
Memorandum.
5. We understand that, on any proposed resale of any Notes, we will
be required to furnish to you and the Company such certification, legal opinions
and other information as you and the Company may reasonably require to confirm
that the proposed sale complies with the foregoing restrictions. We further
understand that the Notes purchased by us will bear a legend to the foregoing
effect.
6. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or their investment, as the case may be.
7. We are acquiring the Notes purchased by us for our own account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You, the Company and the Initial Purchasers (as defined in the
Offering Memorandum) are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
[Name of Transferee]
By: _______________________________
Authorized Signature
C-2
<PAGE>
EXHIBIT D
---------
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
-----------------------------------
SunTrust Bank, Central Florida, National Association
225 East Robinson Street
Suite 250
Orlando, FL 32801
Attention: Corporate Trust Department
Re: PHYSICIAN SALES & SERVICE, INC.
(the "Company") 8 1/2% Senior Subordinated
Notes due 2007 (the "Notes")
-------------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $____________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
1. the offer of the Notes was not made to a person in the United
States;
2. either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United States, or
(b) the transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither we nor any person acting on
our behalf knows that the transaction has been pre-arranged with a buyer in the
United States;
3. no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation
S, as applicable;
4. the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
D-1
<PAGE>
5. we have advised the transferee of the transfer restrictions
applicable to the Notes.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters
D-2
<PAGE>
covered hereby. Terms used in this certificate have the meanings set forth in
Regulation S.
Very truly yours,
[Name of Transferor]
By: ______________________________
Authorized Signature
D-3
<PAGE>
EXHIBIT E
---------
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
________ __, 199_ between Subsidiary Guarantor (the "New Subsidiary Guarantor"),
a direct or indirect domestic Restricted Subsidiary of Physician Sales &
Service, Inc. and SunTrust Bank, Central Florida, National Association, as
trustee under the indenture referred to below (the "Trustee"). Capitalized
terms used herein and not defined herein shall have the meaning ascribed to them
in the Indenture (as defined below).
W I T N E S S E T H
WHEREAS, the Issuer has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of October 7, 1997, providing
for the issuance of an aggregate principal amount of $250,000,000 of 8 1/2%
Senior Subordinated Notes due 2007 (the "Notes");
WHEREAS, Section ____ of the Indenture provides that under certain
circumstances the Issuer may cause, and Section ____ of the Indenture provides
that under certain circumstances the Issuers must cause, certain of its
subsidiaries to execute and deliver to the Trustee a supplemental indenture
pursuant to which such subsidiaries shall unconditionally guarantee all of the
Issuer's Obligations under the Notes pursuant to a Note Guarantee on the terms
and conditions set forth herein; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantor and the Trustee mutually covenant and agree for the equal
and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO NOTE GUARANTEE. The New Subsidiary Guarantor hereby
agrees, jointly and severally with all other Subsidiary Guarantors, to guarantee
the Issuer's Obligations under the Notes and the Indenture on the terms and
subject to the conditions set forth in Article XI and XII of the Indenture and
to be bound by all other applicable provisions of the Indenture.
3. NO RECOURSE AGAINST OTHERS. No director, officer, employee or
stockholder, as such, of the Subsidiary Guarantor shall have any liability for
any obligations of the Issuer or any Subsidiary under the Notes, any Note
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder by accepting a Note waives and
D-4
<PAGE>
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
4. NEW YORK LAW TO GOVERN. The Internal law of the State of New York
shall govern and be used to construe this Supplemental Indenture.
5. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
7. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the correctness of the recitals of fact
contained herein, all of which recitals are made solely by the New Subsidiary
Guarantor.
8. EFFECT OF SUPPLEMENTAL INDENTURE. Except as amended by this
Supplemental Indenture, the terms and provisions of the Indenture shall remain
in full force and effect.
D-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated:________________ [Name of New Subsidiary Guarantor]
By:_____________________________
Name:
Title:
SUNTRUST BANK, CENTRAL FLORIDA, National Association
as Trustee
By:_______________________________________
Name:
Title:
D-6
<PAGE>
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
Dated as of October 7, 1997
By and Among
PHYSICIAN SALES & SERVICE, INC.,
THE GUARANTORS SIGNATORY HERETO
and
BT ALEX. BROWN INCORPORATED,
SOLOMON BROTHERS INC.
and
NATIONSBANC MONTGOMERY SECURITIES, INC.
as Initial Purchasers
8 1/2% Senior Subordinated Notes due 2007
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C>
1. DEFINITIONS............................................ 1
2. EXCHANGE OFFER......................................... 4
3. SHELF REGISTRATION..................................... 8
4. ADDITIONAL INTEREST.................................... 10
5. REGISTRATION PROCEDURES................................ 12
6. REGISTRATION EXPENSES.................................. 20
7. INDEMNIFICATION........................................ 21
8. RULES 144 AND 144A..................................... 25
9. UNDERWRITTEN REGISTRATIONS............................. 25
10. MISCELLANEOUS.......................................... 26
(a) No Inconsistent Agreements........................ 26
(b) Adjustments Affecting Registrable Notes........... 26
(c) Amendments and Waivers............................ 26
(d) Notices........................................... 27
(e) Successors and Assigns............................ 28
(f) Counterparts...................................... 28
(g) Headings.......................................... 28
(h) Governing Law..................................... 28
(i) Severability...................................... 28
(j) Securities Held by the Issuers or their Affiliates 29
(k) Third Party Beneficiaries......................... 29
</TABLE>
-i-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated as of
---------
October 7, 1997, by and among PHYSICIAN SALES & SERVICE, INC., a Florida
corporation (the "Company"), the guarantors signatory hereto (the "Guarantors,"
------- ----------
and together with the Company, the "Issuers"), and BT ALEX. BROWN INCORPORATED,
-------
SALOMON BROTHERS INC, and NATIONSBANC MONTGOMERY SECURITIES, INC. (collectively,
the "Initial Purchasers").
------------------
This Agreement is entered into in connection with the Purchase
Agreement, dated as of October 2, 1997, by and among the Issuers and the Initial
Purchasers (the "Purchase Agreement") relating to the sale by the Company to the
------------------
Initial Purchasers, severally, of $125,000,000 aggregate principal amount of its
8 1/2% Senior Subordinated Notes due 2007 (the "Notes"). In order to induce the
-----
Initial Purchasers to enter into the Purchase Agreement, the Issuers have agreed
to provide the registration rights set forth in this Agreement for the equal
benefit of the Initial Purchasers and their direct and indirect transferees.
The execution and delivery of this Agreement is a condition to the Initial
Purchasers, obligation to purchase the Notes under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4(a) hereof.
-------------------
Advice: See the last paragraph of Section 5 hereof.
------
Agreement: See the introductory paragraphs hereto.
---------
Applicable: Period: See Section 2(b) hereof.
----------
Company: See the preamble hereto.
-------
Effectiveness Date: With respect to (i) the Exchange Offer
------------------
Registration Statement, the 120th day after the Issue Date and (ii) any Shelf
Registration Statement, the 90th day after the Filing Date with respect thereto.
Effectiveness Period: See Section 3(a) hereof.
--------------------
Event Date: See Section 4(b) hereof.
----------
-1-
<PAGE>
Exchange Act: The Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a) hereof.
--------------
Exchange Offer: See Section 2(a) hereof.
--------------
Exchange Offer Registration Statement: See Section 2(a) hereof.
-------------------------------------
Filing Date: (A) If no Registration Statement has been filed by the
-----------
Issuers pursuant to this Agreement, the 30th day after the Issue Date; and (B)
in any other case (which may be applicable notwithstanding the consummation of
the Exchange Offer), the 30th day after the delivery of a Shelf Notice.
Holder: Any holder of a Registrable Note or Registrable Notes.
------
Indemnified Person: See Section 7(c) hereof.
------------------
Indemnifying Person: See Section 7(c) hereof.
-------------------
Indenture: means the Indenture, dated as of the Issue Date, by and
---------
among the Issuers, and SunTrust Bank, Central Florida, National Association, as
trustee, relating to the Notes as it may be amended or supplemented from time to
time.
Initial Purchasers: See the preamble hereto.
------------------
Initial Shelf Registration: See Section 3(a) hereof.
--------------------------
Inspectors: See Section 5(n) hereof.
----------
Issue Date: October 7, 1997, the date of original issuance of the
----------
Notes.
NASD: See Section 5(s) hereof.
----
Notes: See the introductory paragraphs hereto.
-----
Participant: See Section 7(a) hereof.
-----------
Participating Broker-Dealer: See Section 2(b) hereof.
---------------------------
Person: An individual, trustee, corporation, partnership, joint stock
------
company, trust, unincorporated association, union, business association, firm or
other legal entity.
-2-
<PAGE>
Private Exchange: See Section 2(b) hereof.
----------------
Private Exchange Notes: See Section 2(b) hereof.
----------------------
Prospectus: The prospectus included in any Registration Statement
----------
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
under the Securities Act and any term sheet filed pursuant to Rule 434 under the
Securities Act), as amended or supplemented by any prospectus supplement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs hereof.
------------------
Records: See Section 5(n) hereof.
-------
Registrable Notes: Each Note upon its original issuance and at all
-----------------
times subsequent thereto, each Exchange Note as to which Section 2(c)(iv) hereof
is applicable upon original issuance and at all times subsequent thereto and
each Private Exchange Note upon original issuance thereof and at all times
subsequent thereto, until (i) a Registration Statement (other than, with respect
to any Exchange Note as to which Section 2(c)(iv) hereof is applicable, the
Exchange Offer Registration Statement) covering such Note, Exchange Note or
Private Exchange Note has been declared effective by the SEC and such Note,
Exchange Note or such Private Exchange Note, as the case may be, has been
disposed of in accordance with such effective Registration Statement, (ii) such
Note has been exchanged pursuant to the Exchange Offer for an Exchange Note or
Exchange Notes that may be resold without restriction under federal securities
laws, (iii) such Note, Exchange Note or Private Exchange Note, as the case may
be, ceases to be outstanding for purposes of the Indenture or (iv) such Note,
Exchange Note or Private Exchange Note, as the case may be, may be resold
without restriction pursuant to Rule 144 under the Securities Act.
Registration Statement: Any registration statement of the Issuers
----------------------
that covers any of the Notes, the Exchange Notes or the Private Exchange Notes
filed with the SEC under the Securities Act, including the Prospectus,
amendments and supplements to such registration statement, including post
effective amendments, all exhibits, and all material incorporated by reference
or deemed to be incorporated by reference in such registration statement.
"Reoffer Condition" shall be deemed to have occurred if either (1) a
-----------------
Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus
contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be
-3-
<PAGE>
delivered under the Securities Act by any Participating Broker-Dealer that seeks
to sell Exchange Notes during the Applicable Period.
----
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of the Issuers of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such
---------
Rule may be amended from time to time, or any similar rule (other than Rule 144)
or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission and any successor agency.
---
Securities Act: The Securities Act of 1933, as amended, and the rules
--------------
and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c) hereof.
------------
Shelf Registration: See Section 3(b) hereof.
------------------
Shelf Registration Statement: Any Registration Statement relating to
----------------------------
a Shelf Registration.
Subsequent Shelf Registration: See Section 3(b) hereof.
-----------------------------
TIA: The Trust Indenture Act of 1939, as amended.
---
Trustee: The trustee under the Indenture.
-------
Underwritten registration or underwritten offering: A registration in
--------------------------------------------------
which securities of the Issuers are sold to an underwriter for reoffering to the
public.
2. Exchange Offer
--------------
(a) The Issuers shall file with the SEC, no later than the Filing
Date, a Registration Statement (the "Exchange Offer Registration Statement") on
-------------------------------------
an appropriate registration form with respect to a registered offer (the
"Exchange Offer") to exchange any and all of the Registrable Notes for a like
- ---------------
aggregate principal amount of notes (the
-4-
<PAGE>
"Exchange Notes") of the Issuers that are identical in all material respects to
--------------
the Notes except that the Exchange Notes shall contain no restrictive legend
thereon. The Exchange Offer shall comply with all applicable tender offer rules
and regulations under the Exchange Act and other applicable laws, including
state "Blue Sky" laws. The Issuers shall use their best efforts (x) to cause
the Exchange Offer Registration Statement to be declared effective under the
Securities Act on or before the Effectiveness Date; (y) to keep the Exchange
Offer open for at least 30 days (or longer if required by applicable law) after
the date that notice of the Exchange Offer is mailed to Holders; and (z) to
consummate the Exchange Offer on or prior to the 45th day following the date on
which the Exchange Offer Registration Statement is declared effective by the
SEC. If, after the Exchange Offer Registration Statement is initially declared
effective by the SEC, the Exchange Offer or the issuance of the Exchange Notes
thereunder is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, the Exchange
Offer Registration Statement shall be deemed not to have become effective for
purposes of this Agreement.
Each Holder that participates in the Exchange Offer will be required
to represent in writing to the Company that any Exchange Notes to be received by
it will be acquired in the ordinary course of its business, that at the time of
the consummation of the Exchange Offer such Holder will have no arrangement or
understanding with any Person to participate in the distribution of the Exchange
Notes in violation of the provisions of the Securities Act, and that such Holder
is not an affiliate of the Issuers within the meaning of the Securities Act.
Upon consummation of the Exchange Offer in accordance with this
Section 2 the provisions of this Agreement shall continue to apply, solely with
respect to Registrable Notes that are Private Exchange Notes, Exchange Notes as
to which Section 2(c)(iv) is applicable and Exchange Notes held by Participating
Broker-Dealers, and the Issuers shall have no further obligation to register
Registrable Notes (other than Private Exchange Notes and other than in respect
of any Exchange Notes as to which clause 2(c)(iv) hereof applies) pursuant to
Section 3 hereof. No securities other than the Exchange Notes and the
Guarantees shall be included in the Exchange Offer Registration Statement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, which shall contain a summary
statement of the positions taken or policies made by the staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Notes received by such broker-dealer in the Exchange Offer (a "Participating
-------------
Broker-Dealer"), whether such positions or policies have been publicly
- -------------
disseminated by the staff of the SEC or such positions or policies represent the
prevailing views of the staff of the SEC. Such "Plan of Distribution" section
shall include all information with respect to the sale of Exchange Notes by
Participating Broker Dealers that the SEC may require in order to permit such
sales pursuant thereto, but such
-5-
<PAGE>
"Plan of Distribution" shall not name any such Participating Broker-Dealer or
disclose the amount of Notes held by any such Participating Broker Dealer except
to the extent required by the SEC. Such "Plan of Distribution" section shall
also expressly permit, to the extent permitted by applicable policies and
regulations of the SEC, the use of the Prospectus by all Persons subject to the
prospectus delivery requirements of the Securities Act, including, to the extent
permitted by applicable policies and regulations of the SEC, all Participating
Broker-Dealers, and include a statement describing the means by which
Participating Broker-Dealers may resell the Exchange Notes in compliance with
the Securities Act.
The Issuers shall use their best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the Prospectus
contained therein in order to permit such Prospectus to be lawfully delivered by
all Persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as is necessary to comply with applicable law in
connection with any resale of the Exchange Notes covered thereby; provided,
--------
however, that such period shall not exceed 180 days after such Exchange Offer
Registration Statement is declared effective (or such longer period if extended
pursuant to the last paragraph of Section 5 hereof) (the "Applicable Period").
-----------------
If, prior to consummation of the Exchange Offer, an Initial Purchaser
holds any Notes acquired by it that have, or that are reasonably likely to be
determined to have, the status of any unsold allotment in an initial
distribution, or any Holder is not entitled to participate in the Exchange
Offer, the Issuers upon the request of any such Holder shall simultaneously with
the delivery of the Exchange Notes in the Exchange Offer, issue and deliver to
any such Holder, in exchange (the "Private Exchange") for such Notes held by any
----------------
such Holder, a like principal amount of notes (the "Private Exchange Notes") of
----------------------
the Issuers that are identical in all material respects to the Exchange Notes
(except that they may bear a customary legend with respect to restrictions on
transfer). The Private Exchange Notes shall be issued pursuant to the same
indenture as the Exchange Notes and bear the same SIP number as the Exchange
Notes.
Interest on the Exchange Notes and the Private Exchange Notes will
accrue in accordance with the terms of the Indenture from (A) the later of (i)
the last interest payment date on which interest was paid on the Notes
surrendered in exchange therefor or (ii) if the Notes are surrendered for
exchange on a date subsequent to the record date for an interest payment date to
occur on or after the date of such exchange and as to which interest will be
paid, the date of such interest payment or (B) if no interest has been paid on
the Notes, from the date of the original issuance of the Notes.
In connection with the Exchange Offer, the Issuers shall:
(1) mail, or cause to be mailed, to each Holder entitled to
participate in the Exchange Offer a copy of the Prospectus forming part of
the Exchange Offer
-6-
<PAGE>
Registration Statement, together with an appropriate letter of transmittal
and related documents;
(2) keep the Exchange Offer open for not less than 30 days after the
date that notice of the Exchange Offer is mailed to Holders (or longer if
required by applicable law);
(3) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York;
(4) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York time, on the last business day on which the
Exchange Offer shall remain open; and
(5) otherwise comply in all material respects with all applicable
laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer and the
Private Exchange, if any, the Issuers shall:
(1) accept for exchange all Registrable Notes validly tendered and
not validly withdrawn pursuant to the Exchange Offer and the Private
Exchange, if any;
(2) deliver to the Trustee for cancellation all Registrable Notes so
accepted for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to each
Holder of Notes, Exchange Notes or Private Exchange Notes, as the case may
be, equal in principal amount to the Notes of such Holder so accepted for
exchange.
The Exchange Offer and the Private Exchange shall not be subject to
any conditions, other than that (i) the Exchange Offer or Private Exchange, as
the case may be, does not violate applicable law or any applicable
interpretation of the staff of the SEC, (ii) no action or proceeding shall have
been instituted or threatened in any court or by any governmental agency which
might materially impair the ability of the Issuers to proceed with the Exchange
Offer or the Private Exchange, and no material adverse development shall have
occurred in any existing action or proceeding with respect to the Issuers and
(iii) all governmental approvals shall have been obtained, which approvals the
Issuers deems necessary for the consummation of the Exchange Offer or Private
Exchange.
The Exchange Notes and the Private Exchange Notes shall be issued
under (i) the Indenture or (ii) an indenture identical in all material respects
to the Indenture and which, in either case, has been qualified under the TIA or
is exempt from such qualification and shall provide that the Exchange Notes
shall not be subject to the transfer
-7-
<PAGE>
restrictions set forth in the Indenture. The Indenture or such indenture shall
provide that the Exchange Notes, the Private Exchange Notes and the Notes shall
vote and consent together on all matters as one class and that none of the
Exchange Notes, the Private Exchange Notes or the Notes will have the right to
vote or consent as a separate class on any matter.
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the staff of the SEC, the Issuers are not permitted to effect
the Exchange Offer, (ii) the Exchange Offer is not consummated within 165 days
of the Issue Date any holder of Private Exchange Notes so requests in writing to
the Issuers at any time after the consummation of the Exchange Offer, or (iii)
in the case of any Holder that participates in the Exchange Offer, such Holder
does not receive Exchange Notes on the date of the exchange that may be sold
without restriction under federal securities laws (other than due solely to the
status of such Holder as an affiliate of any of the Issuers within the meaning
of the Securities Act) and so notifies the Issuers within 30 days after such
Holder first becomes aware of such restrictions, in the case of each of clauses
(i) to and including (iii) of this sentence, then the Issuers shall promptly
deliver to the Holders and the Trustee written notice thereof (the "Shelf
-----
Notice") and shall file a Shelf Registration pursuant to Section 3 hereof.
- ------
3. Shelf Registration
------------------
If at any time a Shelf Notice is delivered as contemplated by Section
2(c) hereof, then:
(a) Shelf Registration. The Issuers shall file with the SEC a
------------------
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415 covering all of the Registrable Notes not permitted to be exchanged
in the Exchange Offer in accordance with the terms of this Agreement, Private
Exchange Notes and Exchange Notes as to which Section 2(c)(iv) is applicable
(the "Initial Shelf Registration"). The Issuers shall. use their best efforts
--------------------------
to file with the SEC the Initial Shelf Registration on or before the applicable
Filing Date. The Initial Shelf Registration shall be on Form S-1 or another
appropriate form permitting registration of such Registrable Notes for resale by
Holders in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings).
The Issuers shall use their best efforts to cause the Initial Shelf
Registration to be declared effective under the Securities Act on or prior to
the Effectiveness Date and to keep the Initial Shelf Registration continuously
effective under the Securities Act until the date which is two years from the
Issue Date (the "Effectiveness Period"), or such shorter period ending when all
--------------------
Registrable Notes covered by the Shelf Registration have been sold in the manner
set forth and as contemplated in the Initial Shelf Registration or, if
applicable, a Subsequent Shelf Registration; provided, however, that the
-------- -------
Effectiveness Period in respect of the Initial Shelf Registration shall be
extended to the extent required
-8-
<PAGE>
to permit dealers to comply with the applicable prospectus delivery requirements
of Rule 174 under the Securities Act and as otherwise provided herein.
No holder of Registrable Notes may include any of its Registrable
Notes in any Shelf Registration Statement pursuant to this Agreement unless and
until such holder furnishes to the Issuers in writing, after receipt of a
request therefor, such information as the Issuers may reasonably request for use
in connection with any Shelf Registration Statement or Prospectus or preliminary
prospectus included therein. No Holder shall be entitled to Additional Interest
pursuant to Section 4 hereof unless and until such Holder shall have provided
all such reasonably requested information. Each Holder as to which any Shelf
Registration Statement is being effected will be required to agree to furnish
promptly to the Issuers all information required to be disclosed in order to
make information previously furnished to the Issuers by such Holder not
materially misleading.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
------------------------------
or any Subsequent Shelf Registration ceases to be effective for any reason at
any time during the Effectiveness Period (other than because of the sale of all
of the securities registered thereunder), the Issuers shall, in addition to
fulfilling their obligations under (d) below, within 30 days of such cessation
of effectiveness amend the Initial Shelf Registration in a manner to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional Shelf Registration Statement pursuant to Rule 415 covering all of the
Registrable Notes covered by and not sold under the Initial Shelf Registration
or an earlier Subsequent Shelf Registration (each, a "Subsequent Shelf
----------------
Registration"). If a Subsequent Shelf Registration is filed, the Issuers shall
- ------------
use their best efforts to cause the Subsequent Shelf Registration to be declared
effective under the Securities Act as soon as practicable after such filing and
to keep such subsequent Shelf Registration continuously effective for a period
equal to the number of days in the Effectiveness Period less the aggregate
number of days during which the Initial Shelf Registration or any Subsequent
Shelf Registration was previously continuously effective. As used herein the
term "Shelf Registration" means the Initial Shelf Registration and any
------------------
Subsequent Shelf Registration.
(c) Supplements and Amendments. The Issuers shall promptly supplement
--------------------------
and amend any Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested by
the Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Registration Statement or by any underwriter of such Registrable
Notes.
(d) Withdrawal of Stop Orders. If the Shelf Registration ceases to be
-------------------------
effective for any reason at any time during the Effectiveness Period (other than
because of the sale of all of the securities registered thereunder), the Issuers
shall use their best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof.
-9-
<PAGE>
4. Additional Interest
-------------------
(a) The Issuers and the Initial Purchasers agree that the Holders
will suffer damages if the Issuers fail to fulfill their obligations under
Section 2 or Section 3 hereof and that it would not be feasible to ascertain the
extent of such damages with precision. Accordingly, the Issuers agree to pay, as
liquidated damages, additional interest on the Notes ("Additional Interest")
-------------------
under the circumstances and to the extent set forth below (each of which shall
be given independent effect):
(i) if (A) neither the Exchange Offer Registration Statement nor the
Initial Shelf Registration has been filed on or prior to the Filing Date
applicable thereto or (B) notwithstanding that the Issuers have consummated
or will consummate the Exchange Offer, the Issuers are required to file a
Shelf Registration and such Shelf Registration is not filed on or prior to
the Filing Date applicable thereto, then, commencing on the day after any
such Filing Date, Additional Interest shall accrue on the principal amount
of the Notes at a rate of 0.50'-. per annum for the first 90 days
immediately following such applicable Filing Date, and such Additional
Interest rate shall increase by an additional 0.50% per annum at the
beginning of each subsequent 90-day period; or
(ii) if (A) neither the Exchange Offer Registration Statement nor the
Initial Shelf Registration is declared effective by the SEC on or prior to
the Effectiveness Date applicable thereto or (B) notwithstanding that the
Issuers have consummated or will consummate the Exchange Offer, the Issuers
are required to file a Shelf Registration and such Shelf Registration is
not declared effective by the SEC on or prior to the Effectiveness Date
applicable to such Shelf Registration, then, commencing on the day after
such Effectiveness Date, Additional Interest shall accrue on the principal
amount of the Notes at a rate of 0.5006 per annum for the first 90 days
immediately following the day after such Effectiveness Date, and such
Additional Interest rate shall increase by an additional 0.50% per annum at
the beginning of each subsequent 90-day period; or
(iii) if (A) the Issuers have not exchanged Exchange Notes for all
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior to the 45th day after the date on which the Exchange Offer
Registration Statement relating thereto was declared effective or (B) if
applicable, a Shelf Registration has been declared effective and such Shelf
Registration ceases to be effective at any time during the Effectiveness
Period, then Additional Interest shall accrue on the principal amount of
the Notes at a rate of 0.50% per annum for the first 90 days commencing on
the (x) 46th day after such effective date, in the case of (A) above, or
(y) the day such Shelf Registration ceases to be effective in the case of
(B) above, and such Additional Interest rate shall increase by an
additional 0.50% per annum at the beginning of each such subsequent 90-day
period;
-10-
<PAGE>
provided, however, that the Additional Interest rate on the Notes may not exceed
- -------- -------
at any one time in the aggregate 1.0% per annum; provided, further, however,
-------- ------- -------
that (1) upon the filing of the applicable Exchange Offer Registration Statement
or the applicable Shelf Registration as required hereunder (in the case of
clause (4) above of this Section 4), (2) upon the effectiveness of the Exchange
Offer Registration Statement or the applicable Shelf Registration Statement as
required hereunder (it the case of clause (ii) of this Section 4), or (3) upon
the exchange of the Exchange Notes for all Notes tendered (in the case of clause
(iii)(A) of this Section 4), or upon the effectiveness of the applicable Shelf
Registration Statement which had ceased to remain effective (in the case of
(iii)(B) of this Section 4), Additional Interest on the Notes in respect of
which such events relate as a result of such clause (or the relevant subclause
thereof), as the case may be, shall cease to accrue.
(b) The Issuers shall notify the Trustee within three business days
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Any amounts of
----------
Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section
4 shall be payable in cash semi-annually on each interest payment date with
respect to the Notes (to the Holders of record on the record date with respect
thereto), commencing with the first such date occurring after any such
Additional Interest commences to accrue. The amount of Additional Interest will
be determined by multiplying the applicable Additional Interest rate by the
principal amount of the Registrable Notes, multiplied by a fraction, the
numerator of which is the number of days such Additional Interest rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months and, in the case of a partial month, the
actual number of days elapsed), and the denominator of which is 360.
5. Registration Procedures
-----------------------
In connection with the filing of any Registration Statement pursuant
to Sections 2 or 3 hereof, the Issuers shall effect such registrations to permit
the sale of the securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto and in connection
with any Registration Statement filed by the Issuers hereunder the Issuers
shall:
(a) Prepare and file with the SEC prior to the applicable Filing
Date, a Registration Statement or Registration Statements as prescribed by
Sections 2 or 3 hereof, and use their best efforts to cause each such
Registration Statement to become effective and remain effective as provided
herein; provided, however, that, if (1) such filing is pursuant to Section 3
-------- -------
hereof or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period relating thereto, before filing any
Registration Statement or Prospectus or any amendments or supplements thereto,
the Issuers shall furnish to and afford the Holders of the Registrable Notes
covered by such Registration Statement or each such Participating Broker-Dealer,
as the case may be, their counsel and the managing
-11-
<PAGE>
underwriters, if any, a reasonable opportunity to review copies of all such
documents (including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (in each case at least
five business days prior to such filing, or such later date as is reasonable
under the circumstances). The Issuers shall not file any Registration Statement
or Prospectus or any amendments or supplements thereto if the Holders of a
majority in aggregate principal amount of the Registrable Notes covered by such
Registration Statement, their counsel, or the managing underwriters, if any,
shall reasonably object.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration Statement or Exchange Offer Registration
Statement, as the case may be, as maybe necessary to keep such Registration
Statement continuously effective for the Effectiveness Period or the Applicable
Period or until consummation of the Exchange Offer, as the case may be; cause
the related Prospectus to be supplemented by any Prospectus supplement required
by applicable law, and as so supplemented to be filed pursuant to Rule 424 (or
any similar provisions then in force) promulgated under the Securities Act; and
comply with the provisions of the Securities Act and the Exchange Act applicable
to it with respect to the disposition of all securities covered by such
Registration Statement as so amended or in such Prospectus as so supplemented
and with respect to the subsequent resale of any securities being sold by a
Participating Broker-Dealer covered by any such Prospectus. The Issuers shall
be deemed not to have used their diligent best efforts to keep a Registration
Statement effective during the Effective Period or the Applicable Period, as the
case may be, relating thereto if the Issuers voluntarily take any action that
would result in selling Holders of the Registrable Notes covered thereby or
Participating Broker-Dealers seeking to sell Exchange Notes not being able to
sell such Registrable Notes or such Exchange Notes during that period unless (i)
such action is required by applicable law or (ii) the Issuers comply with this
Agreement, including without limitation, the provisions of Section 5(k) or the
last paragraph of this Section 5.
(c) If the Reoffer Condition has occurred, notify the selling Holders
of Registrable Notes, or each Participating Broker-Dealer from whom the Issuers
has received written notice that it will be a Participating Broker-Dealer in the
Exchange Offer, as the case may be, their counsel and the managing underwriters,
if any, promptly (but in any event within two business days), and confirm such
notice in writing, (i) when a Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective
under the Securities Act (including in such notice a written statement that any
Holder may, upon request, obtain, at the sole expense of the Issuers, one
conformed copy of such Registration Statement or post-effective amendment
including financial statements and schedules, documents incorporated or deemed
to be incorporated by reference therein and exhibits), (ii) of the issuance by
the SEC of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus or the initiation of any proceedings for that purpose, (iii) if at
any time when a prospectus is required by the Securities Act to be
-12-
<PAGE>
delivered in connection with sales of the Registrable Notes or resales of
Exchange Notes by Participating Broker-Dealers the representations and
warranties of the Issuers contained in any agreement (including any underwriting
agreement) contemplated by Section 5(m) hereof cease to be true and correct in
all material respects, (iv) of the receipt by the Issuers of any notification
with respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable Notes or the
Exchange Notes to be sold by any Participating Broker-Dealer for offer or sale
in any jurisdiction, or the initiation or threatening of any proceeding for such
purpose, (v) of the happening of any event, the existence of any condition or
any information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in or amendments or supplements to such
Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (vi) of the determination by any of the Issuers that a
post-effective amendment to a Registration Statement would be appropriate.
(d) If the Reoffer Condition has occurred, use its best efforts to
prevent the issuance of any order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of a Prospectus or
suspending the qualification (or exemption from qualification) of any of the
Registrable Notes or the Exchange Notes to be sold by any Participating Broker-
Dealer, for sale in any Jurisdiction, and, if any such order is issued, to use
its best efforts to obtain the withdrawal of any such order at the earliest
possible date.
(e) If the Reoffer Condition has occurred, and if requested by the
managing underwriter or underwriters (if any), the Holders of a majority in
aggregate principal amount of the Registrable Notes being sold in connection
with an underwritten offering or any Participating Broker-Dealer, (i) promptly
as practicable incorporate in a prospectus supplement or post effective
amendment such information as the managing underwriter or underwriters (if any),
such Holders, any Participating Broker-Dealer or counsel for any of them
reasonably request to be included therein, (ii) make all required filings of
such prospectus supplement or such post-effective amendment as soon as
practicable after the Issuers have received notification of the matters to be
incorporated in such prospectus supplement or post effective amendment, and
(iii) supplement or make amendments to such Registration Statement.
(f) If the Reoffer Condition has occurred, furnish to each selling
Holder of Registrable Notes and to each such Participating Broker-Dealer who so
requests and to counsel and each managing underwriter, if any, at the sole
expense of the
-13-
<PAGE>
Issuers, one conformed copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto, including financial
statements and schedules, and, if requested, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits.
(g) If the Reoffer Condition has occurred, deliver to each selling
Holder of Registrable Notes, or each such Participating Broker-Dealer, as the
case may be, their respective counsel, and the underwriters, if any, at the sole
expense of the Issuers, as many copies of the Prospectus or Prospectuses
(including each form of preliminary prospectus) and each amendment or supplement
thereto and any documents incorporated by reference therein as such Persons may
reasonably request; and, subject to the last paragraph of this Section 5, the
Issuers hereby consent to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders of Registrable Notes or each
such Participating Broker-Dealer, as the case may be, and the underwriters or
agents, if any, and dealers (if any), in connection with the offering and sale
of the Registrable Notes covered by, or the sale by Participating Broker-Dealers
of the Exchange Notes pursuant to, such Prospectus and any amendment or
supplement thereto.
(h) Prior to any public offering of Registrable Notes or any delivery
of a Prospectus contained in the Exchange Offer Registration Statement by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, to use its best efforts to register or qualify, and to
cooperate with the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, the managing underwriter or
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Notes for offer and sale under the securities
or Blue Sky laws of such jurisdictions within the United States as any selling
Holder, Participating Broker-Dealer, or the managing underwriter or underwriters
reasonably request in writing; provided, however, that where Exchange Notes held
-------- -------
by Participating Broker-Dealers or Registrable Notes are offered other-than
through an underwritten offering, the Issuers agree to cause their counsel to
perform Blue Sky investigations and file registrations and qualifications
required to be filed pursuant to this Section 5(h); keep each such registration
or qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all other
acts or things reasonably necessary or advisable to enable the disposition in
such jurisdictions of the Exchange Notes held by Participating Broker-Dealers or
the Registrable Notes covered by the applicable Registration Statement;
provided, however, that the Company shall not be required to (A) qualify
- -------- -------
generally to do business in any jurisdiction where it is not then so qualified,
(B) take any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject or (C) subject itself to
taxation in excess of a nominal dollar amount in any such jurisdiction where it
is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3 hereof,
cooperate with the selling Holders of Registrable Notes and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates
-14-
<PAGE>
representing Registrable Notes to be sold, which certificates shall not bear any
restrictive legends and shall be in a form eligible for deposit with The
Depository Trust Company; and enable such Registrable Notes to be in such
denominations and registered in such names as the managing underwriter or
underwriters, if any, or Holders may request.
(j) Use its best efforts to cause the Registrable Notes covered by
the Registration Statement to be registered with or approved by state securities
governmental agencies or authorities as may be reasonably necessary to enable
the seller or sellers thereof or the underwriter or underwriters, if any, to
consummate the disposition of such Registrable Notes, except as may be required
solely as a consequence of the nature of such selling Holder's business, in
which case the Issuers will cooperate in all reasonable respects (not requiring
the expenditure of material funds) with the filing of such Registration
Statement and the granting of such approvals.
(k) If the Reoffer Condition has occurred, upon the occurrence of any
event contemplated by paragraph 5(c)(iii), 5(c)(v) or 5(c)(vi) hereof, as
promptly as practicable prepare and (subject to Section 5(a) hereof) file with
the SEC, at the sole expense of the Issuers, a supplement or post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference, or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Notes being sold thereunder or to the
purchasers of the Exchange Notes to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact requited to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, the Issuers shall not be required to amend or supplement a Shelf
Registration Statement, any related Prospectus or any document incorporated
therein by reference, for a period not to exceed an aggregate of 60 days in any
calendar year if, (i) an event occurs and is continuing as a result of which the
Shelf Registration would, in the Issuer's good faith judgment, contain an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading and (ii) the Issuers determine in their good
faith judgment that the disclosure of such event at such time would have a
material adverse effect on the business, operations, or prospects of the Company
or the disclosure otherwise relates to a pending material business transaction
that has not yet been publicly disclosed.
(l) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with certificates for
the Registrable Notes or Exchange Notes, as the case may be, in a form eligible
for deposit with The Depository Trust Company and (ii) provide a CUSIP number
for the Registrable Notes or Exchange Notes, as the case may be.
(m) In connection with any underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as is
customary in
-15-
<PAGE>
underwritten offerings of debt securities similar to the Notes in form and
substance reasonably satisfactory to the Issuers and take all such other actions
as are reasonably requested by the managing underwriter or underwriters in order
to expedite or facilitate the registration or the disposition of such
Registrable Notes and, in such connection, (i) make such representations and
warranties to, and covenants with, the underwriters with respect to the business
of the Issuers and its subsidiaries and the Registration Statement, Prospectus
and documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters in
underwritten offerings of debt securities similar to the Notes, and confirm the
same in writing if and when requested in form and substance reasonably
satisfactory to the Issuers; (ii) obtain the written opinions of counsel to the
Issuers and written updates thereof in form, scope and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to the
underwriters covering the matters customarily covered in opinions reasonably
requested in underwritten offerings and such other matters as may be reasonably
requested by the managing underwriter or underwriters; (iii) use its best
efforts to obtain "cold comfort" letters and updates thereof in form, scope and
substance reasonably satisfactory to the managing underwriter or underwriters
from the independent certified public accountants of the Issuers (and, if
necessary, any other independent certified public accountants of any subsidiary
of the Issuers or of any business acquired by the Issuers for which financial
statements and financial data are, or are required to be, included or
incorporated by reference in the Registration Statement), addressed to the
underwriter, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection with
underwritten offerings of debt securities similar to the Notes and such other
matters as reasonably requested by the managing underwriter or underwriters as
permitted by the Statement on Auditing Standards No, 72; and (iv) if an
underwriting agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable to the sellers and underwriters, if
any, than those set forth in Section 7 hereof (or such other provisions and
procedures acceptable to Holders of a majority in aggregate principal amount of
Registrable Notes covered by such Registration Statement and the managing
underwriter or underwriters or agents, if any). The above shall be done at each
closing under such underwriting agreement, or as and to the extent required
thereunder.
(n) If the Reoffer Condition has occurred, make available for
inspection by any selling Holder of such Registrable Notes being sold, or each
such Participating Broker-Dealer, as the case may be, any underwriter
participating in any such disposition of Registrable Notes, if any, and any
attorney, accountant or other agent retained by any such selling Holder or each
such Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept, during
----------
reasonable business hours, all financial and other records, pertinent corporate
documents and instruments of the Issuers and its subsidiaries (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise any
-------
applicable due diligence responsibilities, and cause the officers, directors and
employees of the Issuers and their subsidiaries to supply all information
reasonably requested by any such Inspector in connection with such Registration
Statement and Prospectus. Each Inspector shall agree
-16-
<PAGE>
in writing that it will keep the Records confidential and that it will not
disclose any of the Records unless (i) the disclosure of such Records is
necessary to avoid or correct a material misstatement or omission in such
Registration Statement or Prospectus, (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction, (iii) disclosure of such information is necessary, in the opinion
of counsel for any Inspector, in connection with any action, claim, suit or
proceeding involving such Inspector and arising out of or based upon this
Agreement or the Purchase Agreement, or any transactions contemplated hereby or
thereby or arising hereunder or thereunder, or (iv) the information in such
Records has been made generally available to the public. Each selling Holder of
such Registrable Notes and -each such Participating Broker-Dealer will be
required to agree that information obtained by it as a result-of such
inspections shall be deemed confidential and that they shall take all reasonable
actions to protect the confidentiality of such information and shall not be used
by it as the basis for any market transactions in the securities of the Issuers
unless and until such is made generally available to the public. Each selling
Holder of such Registrable Notes and each such Participating Broker-Dealer will
be required to further agree that it will provide prior written notice to the
Issuers of the disclosure of any information by such Inspector pursuant to
Section 5(n)(i), (ii) or (iii) and allow the Issuers to undertake appropriate
action to prevent disclosure of the Records deemed confidential at the Issuers'
expense, including, without limitation, obtaining a protective order from court
of competent jurisdiction.
(o) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a) hereof, as the case may be, to be
qualified under the TIA not later than the effective date of the first
Registration Statement relating to the Registrable Notes; and in connection
therewith, cooperate with the trustee under any such indenture and the Holders
of the Registrable Notes, to effect such changes to such indenture as may be
required for such indenture to be so qualified in accordance with the terms of
the TIA; and execute, and use its best efforts to cause such trustee to execute,
all documents as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable such indenture to be so
qualified in a timely manner.
(p) Comply with all applicable rules and regulations of the SEC and
make generally available to their respective securityholders with regard to an
applicable Registration Statement, consolidated earnings statement satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Registrable Notes are sold to underwriters in a firm commitment
or best efforts underwritten offering and (ii) if not sold to underwriters in
such an offering, commencing on the first day of the first fiscal quarter of the
Issuers after the effective date of a Registration Statement, which statements
shall cover said 12-month periods.
-17-
<PAGE>
(q) If the Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Issuers (or to such
other Person as directed by the Issuers) in exchange for the Exchange Notes or
the Private Exchange Notes, as the case may be, the Issuers shall mark, or cause
to be marked, on such Registrable Notes that such Registrable Notes are being
canceled in exchange for the Exchange Notes or the Private Exchange Notes, as
the case may be; in no event shall such Registrable Notes be marked as paid or
otherwise satisfied-.
(r) If not then rated, use its best efforts to cause the Registrable
Notes covered by a Registration Statement or the Exchange Notes, as the case may
be, to be rated with the appropriate rating agencies, if so requested by the
Holders of a majority in aggregate principal amount of Registrable Notes covered
by such Registration Statement or the Exchange Notes, as the case may be, or the
managing underwriter or underwriters, if any.
(s) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in connection
with any filings required to be made with the National Association of Securities
Dealers, Inc. (the "NASD"),
----
(t) Use its best efforts to take all other steps reasonably necessary
to effect the registration of the Exchange Notes and/or Registrable Notes
covered by a Registration Statement contemplated hereby.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by its acquisition of such Registrable Notes or Exchange Notes to be sold
by such Participating Broker-Dealer, as the case may be, that, upon actual
receipt of any notice from the Issuers of the happening of any event of the kind
described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such
Holder will forthwith discontinue disposition of such Registrable Notes covered
by such Registration Statement or Prospectus or Exchange Notes to be sold by
such Holder or Participating Broker-Dealer, as the case may be, until such
Holder's or Participating Broker-Dealer's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof, or until
it is advised in writing (the "Advice") by the Issuers that the use of the
applicable Prospectus may be resumed, and has received copies of any amendments
or supplements thereto. In the event that the Issuers shall give any such
notice, each of the Effectiveness Period and the Applicable Period shall be
extended by the number of days during such periods from and including the date
of the giving of such notice to and including the date when each seller of
Registrable Notes covered by such Registration Statement or Exchange Notes to be
sold by such Participating Broker-Dealer, as the case may be, shall have
received (x) the copies of the supplemented or amended Prospectus contemplated
by Section 5(k) hereof or (y) the Advice.
-18-
<PAGE>
6. Registration Expenses
---------------------
All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers (except for any underwriting fees,
commissions or discounts) shall be borne by the Issuers whether or not the
Exchange Offer Registration Statement or any Shelf Registration Statement is
filed or becomes effective or the Exchange Offer is consummated, including,
without limitation, (i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the NASD
in connection with an underwritten offering and (B) fees and expenses of
compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with Blue
Sky qualifications of the Registrable Notes or Exchange Notes and determination
of the eligibility of the Registrable Notes or Exchange Notes for investment
under the laws of such jurisdictions (x) where the holders of Registrable Notes
are located, in the case of the Exchange Notes, or (y) as provided in Section
5(h) hereof, in the case of Registrable Notes or Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses, including, without limitation, expenses of printing certificates for
Registrable Notes or Exchange Notes in a form eligible for deposit with The
Depository Trust Company and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriter or underwriters, if any,
by the Holders of a majority in aggregate principal amount of the Registrable
Notes included in any Registration Statement or in respect of Exchange Notes to
be sold by any Participating Broker-Dealer during the Applicable Period, as the
case may be, (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Issuers and, in the case of a Shelf
Registration, reasonable fees and disbursements of one special counsel for all
of the sellers of Registrable Notes (exclusive of any counsel retained pursuant
to Section 7 hereof), M fees and disbursements of all independent certified
public accountants referred to in Section 5(m)(iii) hereof (including, without
limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) Securities Act liability
insurance, if the Issuers desire such insurance, (vii) fees and expenses of all
other Persons retained by the Issuers, (viii) internal expenses of the Issuers
(including, without limitation, all salaries and expenses of officers and
employees of the Issuers performing legal or accounting duties), (ix) the
expense of any annual audit, (x) the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange,
and the obtaining of a rating of the securities, in each case, if applicable,
and (xi) the expenses relating to printing, word processing and distributing all
Registration Statements, underwriting agreements, indentures and any other
documents necessary in order to comply with this Agreement.
7. Indemnification
---------------
(a) The Issuers jointly and severally agree to indemnify and hold
harmless each Holder of Registrable Notes and each Participating Broker-Dealer
selling Exchange Notes during the Applicable Period, the officers, directors,
employees and agents of each such-Person, and each Person, if any, who controls
any such Person within
-19-
<PAGE>
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act (each, a "Participant"), from and against any and all losses,
-----------
claims, damages, judgments, liabilities and expenses (including, without
limitation, the reasonable legal fees and other expenses actually incurred in
connection with any suit, action or proceeding or any claim asserted) caused by,
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement (or any amendment
thereto) or Prospectus (as amended or supplemented if the Issuers shall have
furnished any amendments or supplements thereto) or any preliminary prospectus,
including, without limitation, any document incorporated by reference therein,
or caused by, arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the case of the Prospectus in the light of the
circumstances under which they were made, not misleading, except insofar as such
------
losses, claims, damages or liabilities are caused by, arise out of or are based
upon any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with information relating to any
Participant furnished to the Issuers in writing by such Participant expressly
for use therein; provided, however, that the Issuers will not be liable if such
untrue statement or omission or alleged untrue statement or omission was
contained or made in any preliminary prospectus and corrected in the final
Prospectus or any amendment or supplement thereto and any such loss, liability,
claim, or damage or expense suffered or incurred by the Participant resulted
from any action, claim or suit by any Person who purchased Registrable Notes or
Exchange Notes which are the subject thereof from such Participant and it is
established in the related proceeding that such Participant failed to deliver or
provide a copy of the final Prospectus (as amended or supplemented) to such
Person with or prior to the confirmation of the sale of such Registrable Notes
or Exchange Notes sold to such Person if required by applicable law, unless such
failure to deliver or provide a copy of the Prospectus (as amended or
supplemented) was a result of noncompliance by the Issuers with Section 5 of
this Agreement.
(b) Each Participant will, as a condition to the inclusion of its
Notes in any Shelf Registration, be required to and shall be deemed to agree,
severally and not jointly, to indemnify and hold harmless the Issuers, their
respective directors, officers, employees and agents who sign the Registration
Statement and each Person who controls the Issuers within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Issuers to each Participant, but only with
reference to information relating to such Participant furnished to the Issuers
in writing by such Participant expressly for use in any Registration Statement
or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of' any Participant under this paragraph shall in no
event exceed the proceeds received by such Participant from sales of Registrable
Notes or Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding
-20-
<PAGE>
paragraphs, such Person (the "Indemnified Person") shall promptly notify-the
------------------
Persons against whom such indemnity may be sought (the "Indemnifying Persons")
--------------------
in writing, and the Indemnifying Persons, upon request of the Indemnified
Person, shall retain counsel reasonably satisfactory to the Indemnified Person
to represent the Indemnified Person and any others the Indemnifying Persons may
reasonably designate in such proceeding and shall pay the reasonable fees and
expenses actually incurred by such counsel related to such proceeding; provided,
--------
however, that the failure to so notify the Indemnifying Persons shall not
- -------
relieve any of them of any obligation or liability which any of them may have
hereunder or otherwise except to the extent it is materially prejudiced by such
failure,. In any such proceeding, any Indemnified Person shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless (i) the Indemnifying Persons and
the Indemnified Person shall have mutually agreed to the contrary, (ii) the
Indemnifying Persons shall have failed within a reasonable period of time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both any Indemnifying Person and the Indemnified Person or any affiliate thereof
and representation of both parties by the same counsel would be inappropriate
due to actual or potential conflicting interests between them. It is understood
that, unless there exists a conflict among Indemnified Persons, the Indemnifying
Persons shall not, in connection with such proceeding or separate but
substantially similar related proceeding in the same jurisdiction arising out of
the same general allegations, be liable for the fees and expenses of more than
one separate firm (in addition to any local counsel) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed promptly as
they are incurred. Any such separate firm for the Participants and such control
Persons of Participants shall be designated in writing by Participants who sold
a majority in interest of Registrable Notes and Exchange Notes sold by all such
Participants and any such separate firm for the Issuers, their respective
directors, officers, employees and agents and such control Persons of the
Issuers shall be designated in writing by the Company and shall be reasonably
acceptable to the Holders. The Indemnifying Persons shall not be liable for any
settlement of any proceeding effected without its prior written consent (which
consent shall not be unreasonably withheld or-delayed), but if settled with such
consent or if there-be a final non-appealable judgment for the plaintiff for
which the Indemnified Person is entitled to indemnification pursuant to this
Agreement, each of the Indemnifying Persons agrees to indemnify and hold
harmless each Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. No Indemnifying Person shall, without
the prior written consent of the Indemnified Persons (which consent shall not be
unreasonably withheld or delayed), effect any settlement or compromise of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party, or indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement (A) includes an unconditional
written release of such Indemnified Person, in form and substance reasonably
satisfactory to such Indemnified Person, from all liability on claims that are
the subject matter of such proceeding and (B) does not include any statement as
to an admission of fault, culpability or failure to act by or on behalf of such
Indemnified Person.
-21-
<PAGE>
(d) If the indemnification provided for in clauses (a) and (b) of
this Section 7 is for any reason unavailable to, or insufficient to hold
harmless, an Indemnified Person in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraphs, in lieu of indemnifying such Indemnified Person thereunder and in
order to provide for just and equitable contribution, shall contribute to the
amount. paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
(i) the relative benefits received by the Indemnifying Person or Persons on the
one hand and the Indemnified Person or Persons on the other from the offering of
the Notes or (ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, not only such relative benefits but also the
relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as any
other relevant equitable considerations. The relative benefits received by the
Issuers on the one hand and the Participants on the other shall be deemed to be
in the same proportion as the total proceeds from the offering (net of discounts
and commissions but before deducting expenses) of the Notes received by the
Issuers bears to the total proceeds received by such Participant from the sale
of Registrable Notes or Exchange Notes, as the case may be, as set forth in the
table on the cover page of the Offering Memorandum dated October 2, 1997 in
respect of the sale of the Notes. The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Issuers on the one hand
or such Participant or such other Indemnified Person, as the case may be, on the
other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
--- ----
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages, judgments, liabilities and expenses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
-22-
<PAGE>
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the Indemnifying Party to the Indemnified Party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Issuers set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Holder or any person who controls a
Holder, the Issuers and their respective directors, officers, employees or
agents or any person controlling the Issuers, and (ii) any termination of this
Agreement.
(g) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
------------------
The Issuers covenant and agree that, so long as Registrable Notes
remain outstanding, they will file the reports required to be filed by them
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder in a timely manner in accordance with the
requirements of the Securities Act and the Exchange Act and, if at any time an
Issuer is not required to file such reports, such Issuer will, upon the request
of any Holder or beneficial owner of Registrable Notes, make publicly available
annual reports and such information, documents and other reports of the type
specified in Sections 13 and 15(d) of the Exchange Act. The Issuers further
covenant for so long as any Registrable Notes remain outstanding, to make
available to any Holder or beneficial owner of Registrable Notes in connection
with any sale thereof and any prospective purchaser of such Registrable Notes
from such Holder or beneficial owner the information required by Rule 144A(d)(4)
under the Securities Act in order to permit resales of such Registrable Notes
pursuant to Rule 144A.
9. Underwritten Registrations
--------------------------
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and shall be reasonably acceptable to the
Issuers.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
-23-
<PAGE>
10. Miscellaneous
-------------
(a) No Inconsistent Agreements. As of the date hereof, the Issuers
--------------------------
have not entered into any agreement with respect to any of their securities that
is inconsistent with the rights granted to the Holders of Registrable Notes in
this Agreement or otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of any of the Issuers' other
issued and outstanding securities. As of the date hereof, the Issuers have not
entered into any agreement with respect to any of their securities which will
grant to any Person piggyback registration rights with respect to the Exchange
Offer Registration Statement required to be filed by the Issuers pursuant to
this Agreement.
(b) Adjustments Affecting Registrable Notes. The Issuers shall not,
---------------------------------------
directly or indirectly, take any action with respect to the Registrable Notes as
a class that would adversely affect the ability 'of the Holders of Registrable
Notes to include such Registrable Notes in a registration undertaken pursuant to
this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may not
----------------------
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of (I) the Issuers and (II)(A) the Holders of not less than a majority
in aggregate principal amount of the then outstanding Registrable Notes and (B)
in circumstances that would adversely affect the Participating Broker-Dealers,
the Participating Broker-Dealers holding not less than a majority in aggregate
principal amount of the Exchange Notes held by all Participating Broker-Dealers;
provided, however, that Section 7 and this Section 10(c) may not be amended,
- -------- -------
modified or supplemented without the prior written consent of each Holder and
each Participating Broker-Dealer (including any person who was a Holder or
Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case
may be, disposed of pursuant to any Registration Statement) affected by any such
amendment, modification or supplement. Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof (other than Sections 7 and
10(c)) with respect to a matter that relates exclusively to the rights of
Holders of Registrable Notes whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect, impair,
limit or compromise the rights of other Holders of Registrable Notes may be
given by Holders of at least a majority in aggregate principal amount of the
Registrable Notes being sold pursuant to such Registration Statement.
(d) Notices. All notices and other communications (including,
-------
without limitation, any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or facsimile:
-24-
<PAGE>
(i) if to a Holder of the Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or Participating
Broker-Dealer, as the case may be, set forth on the records of the
registrar under the Indenture, with a copy in like manner to the Initial
Purchasers as specified in Section 10(d)(ii);
(ii) if to the Initial Purchasers, as follows:
BT Alex. Brown Incorporated
One Bankers Trust Plaza
130 Liberty Street
New York, NY 10006
Facsimile No: (212) 250-7200
Attention: Corporate Finance
Salomon Brothers Inc.
Seven World Trade Center
New York, NY 10048
Facsimile No:
Attention:
NationsBanc Montgomery Securities, Inc.
100 North Tryon
Nationsbanc Corporate Center
Charlotte, NC 28255
with a copy to:
Willkie Farr & Gallagher
153 East 53rd Street
New York, NY 10022
Facsimile No: (212) 821-8111
Attention: William J. Grant, Jr.
(iii) if to the Issuers, at the address as follows:
Physician Sales & Service, Inc.
4345 Southpoint Boulevard
Jacksonville, FL 32216
Facsimile No: (904) 332-3210
Attention: David A. Smith
-25-
<PAGE>
with a copy to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, GA 30309-3424
Facsimile No: (404) 881-4777
Attention: J. Vaughan Curtis
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air courier; and upon receiving
confirmation receipt by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address and in the manner specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and assigns of each of the parties hereto,
the Holders and the Participating Broker-Dealers, provided that nothing herein
--------
shall be deemed to permit any assignment, transfer or other disposition of
Registrable Notes in violation of the terms of the Purchase Agreement or the
Indenture.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect-the meaning hereof.
(H) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
(i) Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated
-26-
<PAGE>
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(j) Securities Held by the Issuers or their Affiliates. Whenever the
--------------------------------------------------
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Issuers or any of their
affiliates (as such term is defined in Rule 405 under the Securities Act) shall
not be counted in determining whether such consent or approval was given by the
Holders of such required percentage.
(k) Third Party Beneficiaries. Holders of Registrable Notes and
-------------------------
Participating Broker-Dealers are intended third party beneficiaries of this
Agreement, and this Agreement may be enforced by such Persons.
-27-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PHYSICIAN SALES & SERVICE,
INC.
By:________________________________
Name:
Title:
DIAGNOSTIC IMAGING, INC.
By:________________________________
Name:
Title:
PSS SERVICE, INC.
By:________________________________
Name:
Title:
PSS HOLDING, INC.
By:________________________________
Name:
Title:
PHYSICIAN SALES & SERVICE
LIMITED PARTNERSHIP
By:________________________________
Name:
Title:
-28-
<PAGE>
PSS RHODE ISLAND, INC.
By:________________________________
Name:
Title:
PSS TEXAS, INC.
By:________________________________
Name:
Title:
PSS DELAWARE, INC.
By:________________________________
Name:
Title:
PSS PHYSICIAN SERVICES, INC.
By:________________________________
Name:
Title:
STANDARD/CRESCENT CITY
SURGICAL SUPPLIES, INC.
By:________________________________
Name:
Title:
-29-
<PAGE>
S & W X-RAY, INC.
By:________________________________
Name:
Title:
BT ALEX. BROWN INCORPORATED,
SOLOMON BROTHERS INC
NATIONSBANC MONTGOMERY SECURITIES, INC.
as Initial Purchasers
By: BT ALEX. BROWN INCORPORATED
By:________________________________
Name:
Title:
-30-
<PAGE>
EXHIBIT 4.3
CUSIP No.: ___________
PHYSICIAN SALES & SERVICE, INC.
8 1/2% SENIOR SUBORDINATED NOTE DUE 2007
No. R1 $__________
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A
DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER
OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO
A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY
OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE ACT)
OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR
(7) UNDER THE ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE ACT, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY
EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES
TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT,
1
<PAGE>
(C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO
THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND
THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF
THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXTENSION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S
UNDER THE ACT.
2
<PAGE>
PHYSICIAN SALES & SERVICE, INC., a Florida corporation (the "Company,"
which term includes any successor entity), for value received promises to pay to
Cede & Co. or registered assigns, the principal sum of ________________________
Dollars, on October 1, 2007.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
PHYSICIAN SALES & SERVICE, INC.
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
Dated: October 7, 1997
Certificate of Authentication
This is one of the 8 1/2% Senior Subordinated Notes due 2007 referred
to in the within-mentioned Indenture.
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION, as Trustee
By:_____________________________
Authorized Signatory
3
<PAGE>
(REVERSE OF SECURITY)
---------------------
8 1/2% Senior Subordinated Note due 2007
----------------------------------------
1. Interest. PHYSICIAN SALES & SERVICE, INC., a Florida
--------
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at the rate per annum shown above. Interest on the Notes will accrue
from the most recent date on which interest has been paid or, if no interest has
been paid, from October 7, 1997. The Company will pay interest semi-annually in
arrears on each Interest Payment Date, commencing April 1, 1998. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
-----------------
Notes (except defaulted interest) to the Persons who are the registered Holders
at the close of business on the Record Date immediately preceding the Interest
Payment Date even if the Notes are canceled on registration of transfer or
registration of exchange after such Record Date. Holders must surrender Notes to
a Paying Agent to collect principal payments. The Company shall pay principal
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). Payments
in respect of the Notes represented by the Restricted Global Note (including
principal of, interest and premium, if any, on the Restricted Global Note) shall
be made by wire transfer of immediately available funds to the accounts
specified by the Restricted Global Note Holder. In all other cases, however, the
Company may pay principal and interest by its check payable in such U.S. Legal
Tender. The Company may deliver any such interest payment to the Paying Agent or
to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, SunTrust Bank, Central
--------------------------
Florida, National Association (the "Trustee") will act as Paying Agent and
Registrar. The Company may change any Paying Agent, Registrar or co-Registrar
without notice to the Holders.
4. Indenture. The Company issued the Notes under an Indenture,
---------
dated as of October 7, 1997 (the "Indenture"), by and among the Company, the
Subsidiary Guarantors and the Trustee. Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. This Note is one of a
duly authorized issue of Initial Notes of the Company designated as its 8 1/2%
Senior Subordinated Notes due 2007 (the "Initial Notes"). The Notes include the
Initial Notes, the Private Exchange Notes and the Unrestricted Notes issued in
exchange for the Initial Notes pursuant to the Registration Rights Agreement or,
with respect to Initial Notes issued under the Indenture subsequent to the Issue
Date, a registration rights agreement substantially identical to the
Registration Rights Agreement. The Initial Notes and the Unrestricted Notes are
treated as a single class of securities under the Indenture. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-
77bbbb) (the "TIA"), as in effect on the date of the Indenture. Notwithstanding
anything to the contrary herein, the Notes are subject to
1
<PAGE>
all such terms, and Holders of Notes are referred to the Indenture and the TIA
for a statement of them. The Notes are general unsecured obligations of the
Company limited in aggregate principal amount to $250,000,000. As provided for
in Article XI of the Indenture, the payment on each Note is guaranteed on a
senior subordinated basis by the Subsidiary Guarantors. Each Holder, by
accepting a Note, agrees to be bound by all of the terms and provisions of the
Indenture, as the same may be amended from time to time.
5. Subordination. The Notes are subordinated in right of payment,
-------------
in the manner and to the extent set forth in the Indenture, to the prior payment
in full of all Senior Indebtedness of the Company, whether outstanding on the
date of the Indenture or thereafter created, incurred, assumed or guaranteed.
The Note Guarantees in respect of the Notes are subordinated in right of
payment, in the manner and to the extent set forth in the Indenture, to the
prior payment in full of all Guarantor Senior Indebtedness of each Subsidiary
Guarantor, whether outstanding on the date of the Indenture or thereafter
created, incurred, assured or guaranteed. Each Holder by its acceptance hereof
agrees to be bound by such provisions and authorizes and expressly directs the
Trustee, on its behalf, to take such action as may be necessary or appropriate
to effectuate the subordination provided for in the Indenture and appoints the
Trustee its attorney-in-fact for such purposes.
6. Redemption Provisions. Except as provided, below, the Notes
---------------------
may not be redeemed prior to October 1, 2002.
(a) Optional Redemption. On or after such date, the Notes may be
-------------------
redeemed at the option of the Company, at any time as a whole, or from time to
time in part, on not less than 30 nor more than 60 days' notice, at the
following redemption prices (expressed as percentages of principal amount), plus
accrued and unpaid interest (if any) to the date of redemption (subject to the
rights of holders of record on the relevant record date to receive interest due
on the relevant interest payment date), if redeemed during the 12-month period
commencing October 1:
REDEMPTION
PRICE
--------
2002......................... 104.250%
2003......................... 103.188%
2004......................... 102.125%
2005......................... 101.063%
2006 and thereafter.......... 100.000%
(b) Notwithstanding the foregoing, at any time prior to October 1, 2000,
the Company may, at its option, use the net cash proceeds of one or more Public
Equity Offerings to redeem up to an aggregate of 40% of the principal amount of
the Notes originally issued at a redemption price equal to 108.500% of the
principal amount thereof plus accrued and unpaid interest thereon,
2
<PAGE>
if any, to the date of redemption (subject to the rights of holders of record on
the relevant record date to receive interest due on the relevant interest
payment date); provided that at least 60% of the aggregate principal amount of
the Notes originally issued in the offering remain outstanding immediately after
the occurrence of any such redemption. In order to effect the foregoing
redemption with the proceeds of any Public Equity Offering, the Company shall
make such redemption not more than 60 days after the consummation of any such
Public Equity Offering.
7. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the Redemption Date. Notes in
denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption shall cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
8. Offers to Purchase. Section 4.15 of the Indenture provides
------------------
that, upon a Change of Control, each holder will have the right, subject to
certain conditions set forth in the Indenture, to require the Company to
repurchase such holder's Notes at a price equal to 101% of the principal amount
thereof plus accrued interest to the date of repurchase. Section 4.16 of the
Indenture provides that, after certain Asset Sales, and subject to further
limitations contained therein, the Company will make an offer to purchase
certain amounts of the Notes in accordance with the procedures set forth in the
Indenture.
9. Denominations; Transfer; Exchange. The Notes are in registered
---------------------------------
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Notes or portions thereof selected for redemption.
10. Persons Deemed Owners. The registered Holder of a Note shall
---------------------
be treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or
---------------
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company at
-----------------------------------------
any time deposits with the Trustee U.S. Legal Tender or U.S. Government
Obligations sufficient to pay the principal of and interest on the Notes to
redemption or maturity and complies with the other provisions of the Indenture
relating thereto, the Company will be discharged from certain
3
<PAGE>
provisions of the Indenture and the Notes (including certain covenants, but
excluding its obligation to pay the principal of and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain exceptions,
-----------------------------
the Indenture, the Notes or the Note Guarantees may be amended or supplemented
with the written consent of the Holders of at least a majority in aggregate
principal amount of the Notes then outstanding, and any existing Default or
Event of Default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in aggregate principal amount of
the Notes then outstanding. Without notice to or consent of any Holder, the
parties thereto may amend or supplement the Indenture or the Notes to, among
other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated Notes, or comply
with Article V of the Indenture or make any other change that does not adversely
affect in any material respect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain limitations
---------------------
on the ability of the Company and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness or Liens, make payments in respect of its
Capital Stock or certain Indebtedness, enter into transactions with Affiliates,
create dividend or other payment restrictions affecting Subsidiaries, incur
Indebtedness that is subordinated in right of payment to Senior Indebtedness and
senior in right of payment to the Notes, merge or consolidate with any other
Person, sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets or adopt a plan of liquidation and sell Capital
Stock of a Restricted Subsidiary. Such limitations are subject to a number of
important qualifications and exceptions. The Company must annually report to
the Trustee on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with the
----------
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
16. Defaults and Remedies. If an Event of Default occurs and is
---------------------
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power.
17. Trustee Dealings with Company. The Trustee under the Indenture,
-----------------------------
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Subsidiaries or their
respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No director, officer, employee or
--------------------------
stockholder, as such, of the Company shall have any liability for any obligation
of the Company or any Subsidiary under the Notes, any Note Guarantee or the
Indenture. Each Holder of a Note by
4
<PAGE>
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
19. Authentication. This Note shall not be valid until the Trustee
--------------
or Authenticating Agent manually signs the certificate of authentication on this
Note.
20. Governing Law. The laws of the State of New York shall govern
-------------
this Note and the Indenture, without regard to principles of conflict of laws.
21. Abbreviations and Defined Terms. Customary abbreviations may be
-------------------------------
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
23. Indenture. Each Holder, by accepting a Note, agrees to be bound
---------
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may be made to: Physician Sales & Service, Inc., 4345
Southpoint Boulevard, Jacksonville, FL 32216, Attn: David A. Smith.
5
<PAGE>
SENIOR SUBORDINATED NOTE GUARANTEE
----------------------------------
Diagnostic Imaging, Inc., PSS Service, Inc., PSS Holding, Inc.,
Physician Sales & Service Limited Partnership, PSS Rhode Island, Inc., PSS
Texas, Inc., PSS Delaware, Inc., PSS Physician Services, Inc., Standard/Crescent
City Surgical Supplies, Inc. and S & W X-Ray, Inc. (the "Subsidiary Guarantors")
have unconditionally guaranteed on a senior subordinated basis (such guarantee
by each Subsidiary Guarantor being referred to herein as the "Note Guarantee")
(i) the due and punctual payment of the principal of and interest on the Notes,
whether at maturity, by acceleration or otherwise, the due and punctual payment
of interest on the overdue principal and interest, if any, on the Notes, to the
extent lawful, and the due and punctual performance of all other Obligations of
the Company to the Holders or the Trustee all in accordance with the terms set
forth in Article XI of the Indenture and (ii) in case of any extension of time
of payment or renewal of any Notes or any of such other obligations, that the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise.
The obligations of each Subsidiary Guarantor to the Holders and to the
Trustee pursuant to the Note Guarantee and the Indenture are expressly set forth
and are expressly subordinated and subject in right of payment to the prior
payment in full in cash or Cash Equivalents of all Guarantor Senior Indebtedness
of such Subsidiary Guarantor, to the extent and in the manner provided, in
Article XII of the Indenture, and reference is hereby made to such Indenture for
the precise terms of the Note Guarantee therein made.
No stockholder, director, officer, employee or stockholder, as such,
of the Subsidiary Guarantor shall have any liability under the Note Guarantee.
Each holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Note Guarantees.
6
<PAGE>
The Note Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Notes upon which the Note
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
DIAGNOSTIC IMAGING, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS SERVICE, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS HOLDING, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PHYSICIAN SALES & SERVICE
LIMITED PARTNERSHIP
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS RHODE ISLAND, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS TEXAS, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS DELAWARE, INC.
7
<PAGE>
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS PHYSICIAN SERVICES, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
STANDARD/CRESCENT CITY
SURGICAL SUPPLIES, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
S & W X-RAY, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
8
<PAGE>
Exhibit 4.4
CUSIP No.: ___________
PHYSICIAN SALES & SERVICE, INC.
8 1/2% SENIOR SUBORDINATED NOTE DUE 2007
No. R__ $__________
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A
DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER
OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO
A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY
OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
1
<PAGE>
PHYSICIAN SALES & SERVICE, INC., a Florida corporation (the "Company,"
which term includes any successor entity), for value received promises to pay to
Cede & Co. or registered assigns, the principal sum of ________________________
Dollars, on October 1, 2007.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
PHYSICIAN SALES & SERVICE, INC.
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
Dated: October 7, 1997
Certificate of Authentication
This is one of the 8 1/2% Senior Subordinated Notes due 2007 referred
to in the within-mentioned Indenture.
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION, as Trustee
By:__________________________________
Authorized Signatory
2
<PAGE>
(REVERSE OF SECURITY)
---------------------
8 1/2% Senior Subordinated Note due 2007
----------------------------------------
1. Interest. PHYSICIAN SALES & SERVICE, INC., a Florida corporation
--------
(the "Company"), promises to pay interest on the principal amount of this Note
at the rate per annum shown above. Interest on the Notes will accrue from the
most recent date on which interest has been paid or, if no interest has been
paid, from October 7, 1997. The Company will pay interest semi-annually in
arrears on each Interest Payment Date, commencing April 1, 1998. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the Notes
-----------------
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are canceled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). Payments
in respect of the Notes represented by the Restricted Global Note (including
principal of, interest and premium, if any, on the Restricted Global Note) shall
be made by wire transfer of immediately available funds to the accounts
specified by the Restricted Global Note Holder. In all other cases, however, the
Company may pay principal and interest by its check payable in such U.S. Legal
Tender. The Company may deliver any such interest payment to the Paying Agent or
to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, SunTrust Bank, Central
--------------------------
Florida, National Association (the "Trustee") will act as Paying Agent and
Registrar. The Company may change any Paying Agent, Registrar or co-Registrar
without notice to the Holders.
4. Indenture. The Company issued the Notes under an Indenture, dated
---------
as of October 7, 1997 (the "Indenture"), by and among the Company, the
Subsidiary Guarantors and the Trustee. Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. This Note is one of a
duly authorized issue of Initial Notes of the Company designated as its 8 1/2%
Senior Subordinated Notes due 2007 (the "Initial Notes"). The Notes include the
Initial Notes, the Private Exchange Notes and the Unrestricted Notes issued in
exchange for the Initial Notes pursuant to the Registration Rights Agreement or,
with respect to Initial Notes issued under the Indenture subsequent to the Issue
Date, a registration rights agreement substantially identical to the
Registration Rights Agreement. The Initial Notes and the Unrestricted Notes are
treated as a single class of securities under the Indenture. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-
77bbbb) (the "TIA"), as in effect on the date of the Indenture. Notwithstanding
anything to the contrary herein, the Notes are subject to
1
<PAGE>
all such terms, and Holders of Notes are referred to the Indenture and the TIA
for a statement of them. The Notes are general unsecured obligations of the
Company limited in aggregate principal amount to $250,000,000. As provided for
in Article XI of the Indenture, the payment on each Note is guaranteed on a
senior subordinated basis by the Subsidiary Guarantors. Each Holder, by
accepting a Note, agrees to be bound by all of the terms and provisions of the
Indenture, as the same may be amended from time to time.
5. Subordination. The Notes are subordinated in right of payment, in
-------------
the manner and to the extent set forth in the Indenture, to the prior payment in
full of all Senior Indebtedness of the Company, whether outstanding on the date
of the Indenture or thereafter created, incurred, assumed or guaranteed. The
Note Guarantees in respect of the Notes are subordinated in right of payment, in
the manner and to the extent set forth in the Indenture, to the prior payment in
full of all Guarantor Senior Indebtedness of each Subsidiary Guarantor, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assured or guaranteed. Each Holder by its acceptance hereof agrees to be bound
by such provisions and authorizes and expressly directs the Trustee, on its
behalf, to take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee its
attorney-in-fact for such purposes.
6. Redemption Provisions. Except as provided below, the Notes may
---------------------
not be redeemed prior to October 1, 2002.
(a) Optional Redemption. On or after such date, the Notes may be
-------------------
redeemed at the option of the Company, at any time as a whole, or from time to
time in part, on not less than 30 nor more than 60 days' notice, at the
following redemption prices (expressed as percentages of principal amount), plus
accrued and unpaid interest (if any) to the date of redemption (subject to the
rights of holders of record on the relevant record date to receive interest due
on the relevant interest payment date), if redeemed during the 12-month period
commencing October 1:
REDEMPTION
Price
-----------
2002.............................. 104.250%
2003.............................. 103.188%
2004.............................. 102.125%
2005.............................. 101.063%
2006 and thereafter............... 100.000%
(b) Notwithstanding the foregoing, at any time prior to October 1, 2000,
the Company may, at its option, use the net cash proceeds of one or more Public
Equity Offerings to redeem up to an aggregate of 40% of the principal amount of
the Notes originally issued at a redemption price equal to 108.500% of the
principal amount thereof plus accrued and unpaid interest thereon,
2
<PAGE>
if any, to the date of redemption (subject to the rights of holders of record on
the relevant record date to receive interest due on the relevant interest
payment date); provided that at least 60% of the aggregate principal amount of
the Notes originally issued in the offering remain outstanding immediately after
the occurrence of any such redemption. In order to effect the foregoing
redemption with the proceeds of any Public Equity Offering, the Company shall
make such redemption not more than 60 days after the consummation of any such
Public Equity Offering.
7. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the Redemption Date. Notes in
denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption shall cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
8. Offers to Purchase. Section 4.15 of the Indenture provides that,
------------------
upon a Change of Control, each holder will have the right, subject to certain
conditions set forth in the Indenture, to require the Company to repurchase such
holder's Notes at a price equal to 101% of the principal amount thereof plus
accrued interest to the date of repurchase. Section 4.16 of the Indenture
provides that, after certain Asset Sales, and subject to further limitations
contained therein, the Company will make an offer to purchase certain amounts of
the Notes in accordance with the procedures set forth in the Indenture.
9. Denominations; Transfer; Exchange. The Notes are in registered
---------------------------------
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Notes or portions thereof selected for redemption.
10. Persons Deemed Owners. The registered Holder of a Note shall be
---------------------
treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or
---------------
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company at any
-----------------------------------------
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain
3
<PAGE>
provisions of the Indenture and the Notes (including certain covenants, but
excluding its obligation to pay the principal of and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain exceptions,
-----------------------------
the Indenture, the Notes or the Note Guarantees may be amended or supplemented
with the written consent of the Holders of at least a majority in aggregate
principal amount of the Notes then outstanding, and any existing Default or
Event of Default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in aggregate principal amount of
the Notes then outstanding. Without notice to or consent of any Holder, the
parties thereto may amend or supplement the Indenture or the Notes to, among
other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated Notes, or comply
with Article V of the Indenture or make any other change that does not adversely
affect in any material respect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain limitations
---------------------
on the ability of the Company and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness or Liens, make payments in respect of its
Capital Stock or certain Indebtedness, enter into transactions with Affiliates,
create dividend or other payment restrictions affecting Subsidiaries, incur
Indebtedness that is subordinated in right of payment to Senior Indebtedness and
senior in right of payment to the Notes, merge or consolidate with any other
Person, sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets or adopt a plan of liquidation and sell Capital
Stock of a Restricted Subsidiary. Such limitations are subject to a number of
important qualifications and exceptions. The Company must annually report to
the Trustee on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with the
----------
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
16. Defaults and Remedies. If an Event of Default occurs and is
---------------------
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power.
17. Trustee Dealings with Company. The Trustee under the Indenture,
-----------------------------
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Subsidiaries or their
respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No director, officer, employee or
--------------------------
stockholder, as such, of the Company shall have any liability for any obligation
of the Company or any Subsidiary under the Notes, any Note Guarantee or the
Indenture. Each Holder of a Note by
4
<PAGE>
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
19. Authentication. This Note shall not be valid until the Trustee
--------------
or Authenticating Agent manually signs the certificate of authentication on this
Note.
20. Governing Law. The laws of the State of New York shall govern
-------------
this Note and the Indenture, without regard to principles of conflict of laws.
21. Abbreviations and Defined Terms. Customary abbreviations may be
-------------------------------
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
23. Indenture. Each Holder, by accepting a Note, agrees to be bound
---------
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may be made to: Physician Sales & Service, Inc., 4345
Southpoint Boulevard, Jacksonville, FL 32216, Attn: David A. Smith.
5
<PAGE>
SENIOR SUBORDINATED NOTE GUARANTEE
----------------------------------
Diagnostic Imaging, Inc., PSS Service, Inc., PSS Holding, Inc.,
Physician Sales & Service Limited Partnership, PSS Rhode Island, Inc., PSS
Texas, Inc., PSS Delaware, Inc., PSS Physician Services, Inc., Standard/Crescent
City Surgical Supplies, Inc. and S & W X-Ray, Inc. (the "Subsidiary Guarantors")
have unconditionally guaranteed on a senior subordinated basis (such guarantee
by each Subsidiary Guarantor being referred to herein as the "Note Guarantee")
(i) the due and punctual payment of the principal of and interest on the Notes,
whether at maturity, by acceleration or otherwise, the due and punctual payment
of interest on the overdue principal and interest, if any, on the Notes, to the
extent lawful, and the due and punctual performance of all other Obligations of
the Company to the Holders or the Trustee all in accordance with the terms set
forth in Article XI of the Indenture and (ii) in case of any extension of time
of payment or renewal of any Notes or any of such other obligations, that the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise.
The obligations of each Subsidiary Guarantor to the Holders and to the
Trustee pursuant to the Note Guarantee and the Indenture are expressly set forth
and are expressly subordinated and subject in right of payment to the prior
payment in full in cash or Cash Equivalents of all Guarantor Senior Indebtedness
of such Subsidiary Guarantor, to the extent and in the manner provided, in
Article XII of the Indenture, and reference is hereby made to such Indenture for
the precise terms of the Note Guarantee therein made.
No stockholder, director, officer, employee or stockholder, as such,
of the Subsidiary Guarantor shall have any liability under the Note Guarantee.
Each holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Note Guarantees.
6
<PAGE>
The Note Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Notes upon which the Note
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
DIAGNOSTIC IMAGING, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS SERVICE, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS HOLDING, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PHYSICIAN SALES & SERVICE LIMITED
PARTNERSHIP
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS RHODE ISLAND, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS TEXAS, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS DELAWARE, INC.
7
<PAGE>
By:_________________ By:_________________
Name: Name:
Title: Title:
PSS PHYSICIAN SERVICES, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
STANDARD/CRESCENT CITY SURGICAL
SUPPLIES, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
S & W X-RAY, INC.
By:_________________ By:_________________
Name: Name:
Title: Title:
8
<PAGE>
Exhibit 5.1
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
404-881-7000
Fax: 404-881-4777
www.alston.com
November 5, 1997
Physician Sales & Service, Inc.
4345 Southpoint Boulevard
Jacksonville, Florida 32216
Re: Physician Sales & Service, Inc. -- Registration Statement on Form
S-4 with respect to 8-1/2% Senior Subordinated Notes due 2007 in
exchange for 8-1/2% Senior Subordinated Notes Due 2007, which
have been registered under the Securities Act of 1933, as amended
Gentlemen:
We have acted as counsel to Physician Sales & Service, Inc., a Florida
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, of $125,000,000 aggregate principal amount
of 8-1/2% Senior Subordinated Notes due 2007 (the "Exchange Notes"), pursuant to
a Registration Statement on Form S-4 (the "Registration Statement"). The
Exchange Notes will be issued pursuant to the terms of the Indenture, dated
October 7, 1997, between the Company and SunTrust Bank, Central Florida,
National Association ("SunTrust"), as trustee (the "Indenture"), in exchange for
(the "Exchange Offer") the identical principal amount of any and all of the
Company's outstanding 8-1/2% Senior Subordinated Notes due 2007, which are not
registered under the Securities Act of 1933, as amended (the "Private Notes").
In connection with the foregoing, we have examined the Company's
Articles of Incorporation and Bylaws, the corporate proceedings taken by the
Company to authorize the offering, sale and issuance of the Private Notes and
the Exchange Notes, the Indenture (including the form of the Exchange Notes),
and the Registration Statement. We also have examined and relied upon such
other records, documents and other instruments in our judgment are necessary or
appropriate in order to express the opinions hereinafter set forth.
<PAGE>
Based on the foregoing, we are of the opinion that the Exchange Notes
and the Guarantees thereof have been duly authorized and, when issued and
exchanged for the Private Notes in accordance with the terms of the Exchange
Offer described in the Prospectus included in the Registration Statement, will
be validly issued and binding obligations of the Company and the Guarantors.
We are licensed to practice law in the State of Georgia and before the
federal courts having jurisdiction in Georgia, and we express no opinion with
respect to the laws of any jurisdiction other than the State of Georgia, the
State of Florida, the State of New York and the federal laws of the United
States of America. As to matters of Florida law and certain matters of New York
law, we have relied solely on the opinions of local counsel.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Sincerely,
ALSTON & BIRD LLP
BY: /s/ J. Vaughan Curtis
------------------------------
J. Vaughan Curtis, A Partner
JVC:sac
- 2 -
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 12.1
PHYSICIANS SALES & SERVICE, INC.
RATIO OF EARNINGS TO FIXED CHARGES
Fiscal year ended
--------------------------------------------------- June 30,
1993 1994 1995 1996 1997 1997
---- ---- ---- ---- ---- ----
in thousands
<S> <C> <C> <C> <C> <C> <C>
Income before provision for income taxes 1,267 2,551 1,574 2,663 6,493 7,361
Fixed charges 4,830 6,585 6,177 4,950 2,423 595
-------------------------------------------------------------
Income before provision for income taxes
and fixed charges 6,097 9,136 7,751 7,613 8,916 7,956
=============================================================
Fixed charges:
Interest on debt and capital leases 3,695 5,116 4,451 3,178 361 79
Interest element of rentals 1,135 1,469 1,726 1,772 2,062 516
-------------------------------------------------------------
4,830 6,585 6,177 4,950 2,423 595
=============================================================
Ratio of income before provision for income
taxes and fixed charges to fixed charges 1.3 1.4 1.3 1.5 3.7 13.4
</TABLE>
<PAGE>
Exhibit 21.1
Subsidiaries of Physician Sales & Service, Inc.
-----------------------------------------------
<TABLE>
<CAPTION>
Names under which such
----------------------
Jurisdiction of Subsidiaries Conduct
--------------- --------------------
Subsidiary Incorporation Business
---------- ------------- --------
<S> <C> <C>
Diagnostic Imaging, Inc. Florida Diagnostic Imaging; X-Ray of
Georgia;
Chesapeake X-Ray
PSS Rhode Island, Inc. Rhode Island
PSS Texas, Inc. Texas
PSS Delaware, Inc. Delaware
PSS Physician Services, Inc. Florida
PSS Holding, Inc. Florida
PSS Service, Inc. Florida
Physician Sales & Service Limited Florida
Partnership
Standard/Crescent City Surgical Louisiana
Supplies, Inc.
S&W X-Ray, Inc. New York S&W X-Ray
WorldMed, Inc. Delaware
WorldMed International, Inc. Delaware
WorldMed, N.V. Belgium
</TABLE>
All subsidiaries are 100% owned by Physician Sales & Service, Inc., except for
WorldMed, N.V. which is owned by WorldMed, Inc. and WorldMed International, Inc.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
October 31,1997, on Physician Sales & Service, Inc.'s supplemental consolidated
financial statements giving retroactive effect to the merger with S&W X-ray,
Inc. included in the Company's Form 8-K filed on November 6,1997, and to all
references to our Firm included in or made a part of this registration
statement.
/s/ ARTHUR ANDERSEN LLP
Jacksonville, Florida
October 31, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference of our report dated May 27,1997 (except with respect
to Note 16, as to which the date is October 31,1997) included in this Form S-4,
into the Company's previously filed Registration Statement File Nos. 33-80657,
333-15043, 333-151076, and 333-30427.
/s/ ARTHUR ANDERSEN LLP
Jacksonville, Florida
October 31, 1997
<PAGE>
Exhibit 25.1
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_______________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)___________
-----------------------
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
Not Applicable 59-1424500
(State of incorporation if (I.R.S. Employer
not a U.S. national bank) Identification Number)
200 South Orange Avenue
Post Office Box 3631
Orlando, Florida 32802
(Address of trustee's principal (Zip Code)
executive offices)
Jonathan D. Rich, Esq.
Maguire, Voorhis & Wells, P.A.
200 South Orange Avenue, Suite 3000, Orlando, FL 32801
(407) 244-1105
(Name, address and telephone number of agent for service)
-----------------------
PHYSICIAN SALES & SERVICE, INC.
(Exact name of obligor as specified in its charter)
Florida 59-2280364
(State of incorporation) (I.R.S. Employer
Identification No.)
<PAGE>
DIAGNOSTIC IMAGING, INC.
(Exact name of obligor as specified in its charter)
Florida 59-1608817
(State of incorporation) (I.R.S. Employer
Identification No.)
PSS DELAWARE, INC.
(Exact name of obligor as specified in its charter)
Florida 51-0370961
(State of incorporation) (I.R.S. Employer
Identification No.)
PSS HOLDING, INC.
(Exact name of obligor as specified in its charter)
Florida 59-3475761
(State of incorporation) (I.R.S. Employer
Identification No.)
PSS PHYSICIAN SERVICES, INC.
(Exact name of obligor as specified in its charter)
Florida 59-2280364
(State of incorporation) (I.R.S. Employer
Identification No.)
PSS RHODE ISLAND, INC.
(Exact name of obligor as specified in its charter)
Rhode Island 05-0475209
(State of incorporation) (I.R.S. Employer
Identification No.)
PSS SERVICE, INC.
(Exact name of obligor as specified in its charter)
Florida 59-3448733
(State of incorporation) (I.R.S. Employer
Identification No.)
<PAGE>
PSS TEXAS, INC.
(Exact name of obligor as specified in its charter)
Texas 59-3085754
(State of incorporation) (I.R.S. Employer
Identification No.)
PHYSICIAN SALES & SERVICE LIMITED PARTNERSHIP
(Exact name of obligor as specified in its charter)
Florida 59-3475763
(State of incorporation) (I.R.S. Employer
Identification No.)
STANDARD/CRESCENT CITY SURGICAL SUPPLIES, INC.
(Exact name of obligor as specified in its charter)
Louisiana 72-0869631
(State of incorporation) (I.R.S. Employer
Identification No.)
S&W X-RAY, INC.
(Exact name of obligor as specified in its charter)
New York 16-1010210
(State of incorporation) (I.R.S. Employer
Identification No.)
4345 Southpoint Boulevard 32256
Jacksonville, Florida (Zip Code)
(Address of principal executive offices)
---------------------------------------------------
8-1/2% SENIOR SUBORDINATED NOTES DUE 2007 OF
PHYSICIAN SALES & SERVICE, INC.
(Title of indenture securities)
===============================================================================
<PAGE>
Item 1. General Information. Furnish the following information as to the
-------------------
trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Name Address
---- -------
Comptroller of Currency Washington, D.C.
The Board of Governors of
the Federal Reserve System
Corporation Washington, D.C.
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor. If the obligor or any underwriter for
-----------------------------
the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 16. List of Exhibits.
----------------
List below all exhibits filed as a part of this statement of
eligibility.
Exhibit 1 - Copy of the articles of association of the Trustee as now
in effect (see Exhibit 1 to Form T-1 filed in connection with
Registration Statement No. 33-34738, which is incorporated by
reference).
Exhibit 2 - Copy of the certificate of authority of the Trustee to
commence business (see Exhibit 2 to Form T-1 filed in connection with
Registration Statement No. 33-34738, which is incorporated by
reference).
Exhibit 3 - Copy of the authorization of the Trustee to exercise
corporate trust powers (see Exhibit 3 to Form T-1 filed in connection
with Registration Statement No. 33-34738, which is incorporated by
reference).
Exhibit 4 - Copy of the existing bylaws of the Trustee (see Exhibit 4
to Form T-1 filed in connection with Registration Statement No. 33-
34738, which is incorporated by reference).
Exhibit 5 - Not applicable.
Exhibit 6 - Not applicable.
<PAGE>
Exhibit 7 - Copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising or
examining authority.
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, SunTrust Bank, Central Florida, National Association, a national
banking association organized and existing under the laws of the United States
of America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Orlando, State of Florida, on the 29th day of October, 1997.
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION
By: /s/ Theresa Hawkins
-------------------
Vice President
<PAGE>
EXHIBIT 7
---------
Report of Condition of
SunTrust Bank, Central Florida, National Association
<PAGE>
<TABLE>
<CAPTION>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Federal Financial Institutions Examination Council Expires March 31, 2000
- ---------------------------------------------------------------------------------------------------------
Please refer to page i,
Table of Contents, for
the required disclosure
of estimated burden.
- ---------------------------------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC OFFICES ONLY AND TOTAL ASSETS OF
$300 MILLION OR MORE -- FFIEC 032
<S> <C>
Report at the close of business June 30, 1997 (970630)
-----------
(RCRI 9999)
This report is required by law: 12 U.S.C. (S)324 This report form is to be filed by banks with
(State member banks); 12 U.S.C. (S)1817 (State domestic offices only. Banks with branches and
nonmember banks); and 12 U.S.C. (S)161 (National consolidated subsidiaries in U.S. territories and
banks). possessions, Edge or Agreement subsidiaries,
foreign branches, consolidated foreign
subsidiaries, or International Banking Facilities
must file FFIEC 031.
- ---------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be The Reports of Condition and Income are to be
signed by an authorized officer and the Report of prepared in accordance with Federal regulatory
Condition must be attested to by not less than authority instructions. NOTE: These instructions
two directors (trustees) for State nonmember may in some cases differ from generally accepted
banks and three directors for State member and accounting principles.
National banks.
We, the undersigned directors (trustees), attest to
I, R. Todd Bowers/Senior Vice President & CFO the correctness of this Report of Condition
----------------------------------------------- (including the supporting schedules and declare
Name and Title of Officer Authorized to Sign that it has been examined by us and to the best of
Report our knowledge and belief has been prepared in
conformance with the instructions issued by the
of the named bank do hereby declare that these appropriate Federal regulatory authority and is
Reports of Condition and Income (including the true and correct.
supporting schedules) have been prepared in
conformance with the instructions issued by the /s/ George W. Koehn
appropriate Federal regulatory authority and are ----------------------------------------------------
true to the best of my knowledge and belief. Director (Trustee)
/s/ R. Todd Bowers /s/ Robert L. Mellen, III
- --------------------------------------------------- ----------------------------------------------------
Signature of Officer Authorized to Sign Report Director (Trustee)
July 25, 1997 /s/ William B. Wilson
- --------------------------------------------------- ----------------------------------------------------
Date of Signature Director (Trustee)
- ---------------------------------------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS: NATIONAL BANKS: Return the original only in the
STATE MEMBER BANKS: Return the original and one special return address envelope provided. If
copy to the appropriate Federal Reserve District express mail is used In lieu of the special return
Bank. address envelope, return the original only to the
STATE NONMEMBER BANKS: Return the original only FDIC, c/o Quality Data Systems, 2127 Espey Court,
in the special return address envelope provided. Suits 204, Crofton, MD 21114.
If express mail is used in lieu of the special
return address envelope, return the original only
to the FDIC, c/o Quality Data Systems, 2127 Espey
Court, Suite 204, Crofton, MD 21114.
- ---------------------------------------------------------------------------------------------------------
FDIC Certificate Number /___/___/___/____/___/ CALL NO. 2CO 32 06-30-97
STBK: 12-1159 08514 STCERT: 12-21043
SUNTRUST BANK, CENTRAL FLORIDA, NATI
P.O. Box 3833
Orlando, FL 32802
</TABLE>
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 R1-1
ATLANTA, GA 30302 Transit #: 06310215
---------
3
---------
</TABLE>
CONSOLIDATED REPORT OF INCOME FOR THE PERIOD JANUARY 1, 1997 - JUNE 30, 1997
All Report of Income schedules are to be reported on a calendar year-to-date
basis in thousands of dollars.
<TABLE>
<CAPTION>
SCHEDULE RI - INCOME STATEMENT
1380
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------
1. Interest Income: RIAD
----
<S> <C> <C> <C>
a. Interest and fee income on loans:
(1) Loans secured by real estate 4011 70,803 1.a.1
(2) Loans to finance agricultural production and other loans to farmers 4024 1,260 1.a.2
(3) Commercial and industrial loans 4012 61,454 1.a.3
(4) Loans to individuals for household, family, and other personal
expenditures:
(a) Credit cards and related plans 4054 1,647 1.a.4.a
(b) Other 4055 19,766 1.a.4.b
(5) Loans to foreign governments and official institutions 4056 0 1.a.5
(6) Obligations (other than securities and leases) of states and political
subdivisions in the U.S.:
(a) Taxable obligations 4503 155 1.a.6.a
(b) Tax-exempt obligations 4504 5,004 1.a.6.b
(7) All other loans 4058 11,936 1.a.7
b. Income from lease financing receivables:
(1) Taxable leases 4505 4,050 1.b.1
(2) Tax-exempt leases 4307 106 1.b.2
c. Interest income on balances due from depository institutions(1) 4115 111 1.c
d. Interest and dividend income on securities:
(1) U.S. Treasury securities and U.S. Government agency obligations 4027 27,308 1.d.1
(2) Securities issued by states and political subdivisions in the U.S.:
(a) Taxable securities 4506 0 1.d.2.a
(b) Tax-exempt securities 4507 1,104 1.d.2.b
(3) Other domestic debt securities 3657 5 1.d.3
(4) Foreign debt securities 3658 10 1.d.4
(5) Equity securities (including investments in mutual funds) 3659 116 1.d.5
e. Interest income from trading assets 4069 0 1.e
f. Interest income on federal funds sold and securities purchased under 4020 15,438 1.f
agreements to resell
g. Total interest income (sum of items 1.a through 1.f) 4107 220,273 1.g
</TABLE>
- ------------
(1) Includes interest income on time certificates of deposits not held for
trading.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 R1-1
ATLANTA, GA 30302 Transit #: 06310215
---------
4
---------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RI - CONTINUED
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year to
2. Interest expense: RIAD Date
----
a. Interest on deposits:
(1) Transaction accounts (NOW accounts, ATS accounts, 4508 881 2.a.1
and telephone and preauthorized transfer accounts)
(2) Nontransaction accounts:
(a) Money market deposit accounts (MMDAs) 4509 6,884 2.a.2a
(b) Other savings deposits 4511 18,489 2.a.2b
(c) Time deposits of $100,000 or more A517 6,022 2.a.2c
(d) Time deposits of less than $100,000 A518 17,712 2.a.2d
b. Expense of federal funds purchased and securities sold under
agreements to repurchase 4180 56,658 2.b
c. Interest on demand notes issued to the U.S. Treasury, trading
liabilities, and on other borrowed money 4185 407 2.c
d. Not applicable
e. Interest on subordinated notes and debentures 4200 115 2.e
f. Total interest expense (sum of items 2.a through 2.e) 4073 107,168 RIAD 2.f
----
3. Net interest income (item 1.g minus 2.f) 4074 113,105 3.
4. Provisions:
a. Provision for loan and lease losses 4230 3,498 4.a
b. Provision for allocated transfer risk 4243 0 4.b
5. Noninterest income: RIAD
----
a. Income from fiduciary activities 4070 13,207 5.a
b. Service charges on deposit accounts 4080 19,941 5.b
c. Trading revenue (must equal Schedule RI, sum of
Memorandum items 8.a through 8.d) A220 0 5.c
d.-e. Not applicable
f. Other noninterest income:
(1) Other fee income 5407 36,115 5.f.1
(2) All other noninterest income * 5408 3,198 RIAD 5.f.2
----
g. Total noninterest income (sum of items 5.a through 5.f) 4079 72,461 5.g
6.a. Realized gains (losses) on held-to maturity securities 3521 0 6.a
b. Realized gains (losses) on available-for-sale securities 3196 (446) 6.b
7. Noninterest expense: RIAD
----
a. Salaries and employee benefits 4135 33,752 7.a
b. Expenses of premises and fixed assets (net of rental income)
(excluding salaries and employee benefits and mortgage
interest) 4217 12,036 7.b
c. other noninterest expense * 4092 63,387 RIAD 7.c
----
d. Total noninterest expense (sum of items 7.a through 7.c) 4093 109,175 7.d
8. Income (loss) before income taxes and extraordinary items and other
adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, 4301 72,447 8.
and 7.d
9. applicable income taxes (on item 8) 4302 26,337 9.
10. Income (loss) before extraordinary items and other adjustments
(item 8 minus 9) 4300 46,110 10.
11. Extraordinary items and other adjustments, net of income taxes * 4320 0 11
12. Net income (loss) (sum of items 10 and 11) 4340 46,110 12.
</TABLE>
- ------------
(*) Describe on Schedule RI-E - Explanations.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 R1-1
ATLANTA, GA 30302 Transit #: 06310215
-------
5
-------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RI - CONTINUED
1381
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------
Memoranda RIAD Year to Date
-----
<S> <C> <C> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and leases
acquired after August 7, 1986, that is not deductible for federal income
tax purposes 4513 1,063 M.1
2. Income from the sale and servicing of mutual funds and annuities
(included in Schedule RI, item 8) 8431 2,868 M.2
3. Not applicable Number
4. Number of full-time equivalent employees on payroll at end of current
period (round to nearest whole number) 4150 1,608 M.4
5-6. Not applicable CCYY/ MM/ DD
7. If the reporting bank has restated its balance sheet as a result of applying
push down accounting this calendar year, report the date of the bank's
acquisition 9106 N/A M.7
8. Trading revenue (from cash instruments and off-balance sheet derivative
instruments) (sum of Memorandum items 8.a through 8.d
must equal Schedule RI, item 5.c):
a. Interest rate exposures 8757 0 M.8.a
b. Foreign exchange exposures 8758 0 M.8.b
c. Equity security and index exposures 8759 0 M.8.c
d. Commodity and other exposures 8760 0 M.8.d
9. Impact on income of off-balance sheet derivatives held for purposes other
than trading:
a. Net increase (decrease) to interest income 8761 0 M.9.a
b. Net (increase) decrease to interest expense 8762 2 M.9.b
c. Other (noninterest) allocations 8763 0 M.9.c
10. Credit losses on off-balance sheet derivatives (see instructions) A251 0 M.10
Yes/No
11. Does the reporting bank have a Subchapter S election in effect for
federal income tax purposes for the current tax year? A530 N/A M.11
12. Deferred portion of total applicable income taxes included in Schedule RI,
items 9 and 11 (to be reported with the December Report of Income) 4772 N/A M.12
</TABLE>
- ------------
(1) For example, a bank acquired on June 1, 1997, would report 1997/06/01
SCHEDULE RI-A - CHANGES IN EQUITY CAPITAL
Indicate decreases and losses in parentheses.
<TABLE>
<CAPTION>
1383
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------
RIAD
----
<S> <C> <C> <C>
1. Total equity capital originally reported in the December 31, 1996
Reports of condition and Income 3215 477,333 1.
2. Equity capital adjustments from amended Reports of Income, net * 3216 0 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2) 3217 477,333 3.
4. Net income (loss) (must equal Schedule RI, item 12) 4340 46,110 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net 4346 0 5.
6. Changes incident to business combinations, net 4356 0 6.
7. LESS: Cash dividends declared on preferred stock 4470 0 7.
8. LESS: Cash dividends declared on common stock 4460 25,000 8.
9. Cumulative effect of changes in accounting principles from prior
years * (see instructions for this schedule) 4411 0 9.
10. Corrections of material accounting errors from prior
years * (see instructions for this schedule) 4412 0 10.
11. Change in net unrealized holding gains (losses) on available-for-sale 8433 (448) 11.
securities
12. Other transactions with parent holding company *
(not included in item 5. 7, or 8 above) 4415 0 12.
13. Total equity capital end of current period (sum of items 3 through 12)
(must equal Schedule RC item 28) 3210 497,995 13.
</TABLE>
- ------------
* Describe on Schedule RI-E - Explanations.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 R1-4
ATLANTA, GA 30302 Transit #: 06310215
--------
6
--------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RI-B - CHARGE-OFFS AND RECOVERIES AND CHANGES IN ALLOWANCE
FOR LOAN AND LEASE LOSSES
PART 1. CHARGE-OFFS AND RECOVERIES ON LOANS AND LEASES (1)
Part 1 excludes charge-offs and recoveries through the allocated transfer risk reserve.
1381
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------
--Calendar year-to-date--
(Column A) (Column B)
RIAD Charge-offs RIAD Recoveries
----
<S> <C> <C> <C> <C> <C>
1. Loans secured by real estate
a. to U.S. addressees (domicile) 4651 1,298 4661 378 1.a
b. To non-U.S. addressees (domicile) 4652 0 4662 0 1.b
2. Loans to depository institutions and acceptances of other banks:
a. To U.S. banks and other U.S. depository institutions 4653 0 4663 0 2.a
b. To foreign banks 4654 0 4664 0 2.b
3. Loans to finance agricultural production and other loans to farmers 4655 0 4665 0 3
4. Commercial and industrial loans:
a. To U.S. addressees (domicile) 4645 118 4617 72 4.a
b. To non-U.S. addressees (domicile) 4646 0 4618 0 4.b
5. Loans to individuals for household, family, and other personal
expenditures:
a. Credit cards and related plans 4656 334 4666 119 5.a
b. Other (includes single payment, installment, and all
student loans) 4657 1,464 4667 376 5.b
6. Loans to foreign governments and official institutions 4643 0 4627 0 6
7. All other loans 4644 155 4628 69 7
8. Lease financing receivables:
a. Of U.S. addressees (domicile). 4659 0 4669 0 8.b.
b. Of non-U.S. addressees (domicile)
9. Total (sum of items 1 through 8) 4635 3,369 4605 1,017 9
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MEMORANDA Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------
--Calendar year-to-date--
(Column A) (Column B)
RIAD Charge-offs RIAD Recoveries
<S> <C> <C> <C> <C> <C>
1.-3. Not applicable.
4. Loans to finance commercial real estate, construction, and land
development activities (not secured by real estate)
included in Schedule RI-13, part 1, items 4 and 7, above 5409 0 5410 0 M.4
5. Loans secured by real estate (sum of Memorandum items 5.a
through 5.e must equal sum of Schedule RI-B, part 1,
item 1.a and 1.b, above):
a. Construction and land development 3582 0 3583 0 M.5.a
b. Secured by farmland 3584 0 3585 0 M.5.b
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured by 1-4 family
residential properties and extended under lines
of credit 5411 18 5412 0 M.5.c1
(2) All other loans secured by 1-4 family residential
properties 5413 188 5414 3 M.5.c2
d. Secured by multifamily (5 or more) residential properties 3588 0 3589 0 M.5.d
e. Secured by nonfarm nonresidential properties 3590 1,092 3591 375 M.5.e
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RI-5
ATLANTA, GA 30302 Transit #: 06310215
--------
7
--------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RI-B - CONTINUED
PART II. CHANGES IN ALLOWANCE FOR LOAN AND LEASE LOSSES
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
RIAD
----
<C> <S> <C> <C> <C>
1. Balance originally reported in the December 31, 1996, Reports of Condition and Income 3124 87,104 1.
2. Recoveries (must equal part 1, Item 9, column B above) 4605 1,017 2.
3. LESS: Charge-offs (must equal part 1, item 9, column A above) 4635 3,369 3.
4. Provision for loan and lease losses (must equal Schedule RI, item 4.a) 4230 3,498 4.
5. Adjustments * (see instructions for this schedule) 4815 0 5.
6. Balance end of current period (sum of items 1 through 5) (must equal Schedule RC, item 4.b) 3123 88,250 6.
</TABLE>
- ------------
* Describe on Schedule RI-B - Explanations.
<TABLE>
<CAPTION>
SCHEDULE RI-E - EXPLANATIONS
SCHEDULE RL-E IS TO BE COMPLETED EACH QUARTER ON A CALENDAR YEAR-TO-DATE BASIS.
Detail all adjustments in Schedules Rl-A and RI-B, all extraordinary items and
other adjustments in Schedule RI, and all significant items of other noninterest
income and other noninterest expense in Schedule RI. (See instructions for
details)
L395
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. All other noninterest income (from Schedule RI, item 5.f.(2)) YEAR TO
Report amounts that exceed 10% of Schedule RI, item 5.f.(2): RIAD DATE
----
a. Net gains (losses) on other real estate owned 5415 0 1.a
b. Net gains (losses) on sales of loans 5416 702 1.b
c. Net gains (losses) on sales of premises and fixed assets 5417 0 1.c
Itemize and describe the three largest other amounts that
exceed 10% of Schedule RI,
item 5.f.(2):
TEXT
d. 4461 SALE OF CUSTOMER CHECKS 4461 895 1.d
e. 4462 FOREIGN EXCHG-GAIN/LOSS 4462 785 1.e
f. 4463 4463 0 1.f
2. Other noninterest expense (from Schedule RI, item 7.c):
a. Amortization expense of intangible assets 4531 0 2.a
Report amounts that exceed 10% of Schedule RI, item 7c
b. Net (gains) losses on other real estate owned 5418 0 2.b
c. Net (gains) losses on sales of loans 5419 2.c
d. Net (gains) losses on sales of premises and fixed assets 5420 2.d
Itemize and describe the three largest other amounts that
exceed 10% of Schedule RI, item 7.c:
TEXT
e. 4464 I/C DATA PROCESSING FEE 4464 21,117 2.e
f. 4467 CR CD-INTERCHANGE EXP 4467 14,083 2.f
g. 4468 4468 0 2.g
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 R1-6
ATLANTA, GA 30302 Transit #: 06310215
--------
8
--------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RI-E - CONTINUED
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
3. Extraordinary items and other adjustments
(from Schedule RI, item 11.a) and applicable
income tax effect (from Schedule RI, item
11.b) (itemize and describe all extraordinary
items and other adjustments):
TEXT RIAD RIAD YEAR-TO-DATE
---- ----
a. (1) 4469 EM 4469 0 3.a.1
(2) Applicable income tax effect 4486 0 3.a.2
b. (1) 4487 4487 0 3.b.1
(2) Applicable income tax effect 4488 0 3.b.2
c. (1) 4489 4489 0 3.c.1
(2) Applicable income tax effect 4491 0 3.c.2
4. Equity capital adjustments from amended
Reports of Income (from Schedule RI-A, item
2) (itemize and describe all adjustments):
TEXT RIAD
----
a. 4492 4492 0 4.a
b. 4493 4493 0 4.b
5. Cumulative effect of changes in accounting
principles from prior years (from Schedule
RI-A, item 9) (itemize and describe all
changes in accounting principles):
TEXT RIAD
----
a. A546 Effect of change to GAAP from A546 0 5.a
previous non-GAAP instructions
b. 4495 4495 5.b
6. Corrections of material accounting errors
from prior years (from Schedule RI-A, item 1
0) (itemize and describe all corrections):
TEXT RIAD
----
a. 4496 4496 6.a
b. 4497 4497 6.b
7. Other transactions with parent holding
company (from Schedule RI-A, item 12)
(itemize and describe all such transactions):
a. 4498 4498 7.a
b. 4499 4499 7.b
8. Adjustments to allowance for loan and lease
losses (from Schedule RI-13, part 11, item 5)
(itemize and describe all adjustments):
a. 4521 4521 8.a
b. 4522 4522 8.b
L398 L399
9. Other explanations (the space below is
provided for bank to briefly describe, at its
option, any other significant items affecting
the Report of In
X = NO COMMENT - Y = COMMENT 4769 X
Other explanations (please type or prior
clearly):
</TABLE>
TEXT4769 (70 CHARACTERS PER LINE)
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 R1-1
ATLANTA, GA 30302 Transit #: 06310215
-------
9
-------
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC - BALANCE SHEET
C300
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A): RCON
----
a. Noninterest-bearing balances and currency and coin (1) 0081 444,101 1.a
b. Interest-bearing balances (2) 0071 4,167 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A) 1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D) 1773 903,744 2.b
3. Federal funds sold and securities purchased under agreements to resell 1350 628,128 3.
4. Loans and lease financing receivables: RCON
----
a. Loans and leases, net of unearned income (from Schedule RC-C) 2122 4,866,971 4.a
b. LESS: Allowance for loan and lease losses 3123 88,250 4.b
c. LESS: Allocated transfer risk reserve 3128 0 4.c
RCON
d. Loans and leases, net of unearned income, ----
allowance, and reserve (item 4.a minus 4.b and 4.c) 2125 4,778,721 4.d
5. Trading assets (from Schedule RC-D) 3545 0 5.
6. Premises and fixed assets (including capitalized leases) 2145 56,351 6.
7. Other real estate owned (from Schedule RC-M) 2150 5,762 7.
8. Investments in unconsolidated subsidiaries and associated companies 8.
(from Schedule RC-M) 2130 7,804
9. Customers' liability to this bank on acceptances outstanding 2155 3,290 9.
10. Intangible assets (from Schedule RC-M) 2143 0 10.
11. Other assets (from Schedule RC-F) 2160 98,529 11.
12. Total assets (sum of items 1 through 11) 2170 6,930,597 12.
</TABLE>
- ------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 R1-2
ATLANTA, GA 30302 Transit #: 06310215
-------
10
-------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC - CONTINUED
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIABILITIES
13. Deposits: RCON
----
a. In domestic offices (sum totals of columns A and C from Schedule RC-E) RCON 2200 3,959,905 13.a
----
(1) Noninterest-bearing (1) 6631 1,191,530 13.a.1
(2) Interest-bearing 6636 2,768,375 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(1) Noninterest-bearing
(2) Interest-bearing
14. Federal funds purchased and securities sold under agreements to repurchase 2800 2,281,082 14.
15. a. Demand notes issued to the U.S. Treasury 2840 0 15.a.
b. Trading liabilities (from Schedule RC-D) 3548 0 15.b
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
a. With a remaining maturity of one year or less 2332 62,778 16.a
B. WITH A REMAINING MATURITY OF MORE THAN ONE YEAR THROUGH THREE
YEARS A547 0 16.b
C. WITH A REMAINING MATURITY OF MORE THAN THREE YEARS A548 0 16.c
17. Not applicable
18. Bank's liability on acceptances executed and outstanding 2920 3,290 18.
19. Subordinated notes and debentures 3200 100,000 19.
20. Other liabilities (from Schedule RC-G) 2930 25,547 20.
21. Total liabilities (sum of items 13 through 20) 2948 6,432,602 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus 3838 0 23
24. Common stock 3230 5,098 24.
25. Surplus (exclude all surplus related to preferred stock) 3839 124,125 25.
26. a. Undivided profits and capital reserves 3632 366,845 26.a.
b. Net unrealized holding gains (losses) on available for-sale securities 8434 1,927 26.b.
27. Cumulative foreign currency translation adjustments 27.
28. Total equity capital (sum of items 23 through 27) 3210 497,995 28.
29. Total liabilities and equity capital (sum of items 21 and 28) 3300 6,930,597 29.
MEMORANDUM
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the
bank by independent external auditors as of any date during 1996 6724 N/A M.1
</TABLE>
<TABLE>
<CAPTION>
<C> <S> <C> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company (but external auditors
not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in accordance 8 = No external audit work
with generally accepted auditing standards by a certified
public accounting firm (may be required by state chartering
authority)
</TABLE>
- ------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 R1-3
ATLANTA, GA 30302 Transit #: 06310215
--------
11
--------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-A - CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS
Exclude assets held for trading.
C305
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Cash items in process of collection, unposted debits, and currency and coin: RCON
----
a. Cash items in process of collection and unposted debits 0020 296,656 1.a
b. Currency and coin 0080 101,551 1.b
2. Balance due from depository institutions in the U.S.:
a. U.S. branches and agencies of foreign banks 0083 0 2.a
b. Other commercial banks in the U.S. and other depository institutions in the U.S. 0085 8,553 2.b
3. Balances due from banks in foreign countries and foreign central banks:
a. Foreign branches of other U.S. banks 0073 0 3.a
b. Other banks in foreign countries and foreign central banks 0074 384 3.b
4. Balances due from Federal Reserve Banks 0090 41,124 4.
5. Total (sum of items 1 through 4) (must equal Schedule RC, sum of items 1.a and 1.b) 0010 448,268 5.
MEMORANDUM
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCON 4,386 M.1
1. Noninterest-bearing balances due from commercial banks in the U.S. (included in items ----
2.a and 2.b above) 0050
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-B - SECURITIES
Exclude assets held for trading.
C310
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------
-----Held to maturity----- -----Available-for-sale-----
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value (1)
RCON RCON RCON RCON
---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. U.S. Treasury securities 0211 0 0213 0 1286 478,289 1287 480,164 1.
2. U.S. Government agency obligations
(exclude mortgage-backed securities):
a. Issued by U.S. Government agencies (2) 1289 0 1290 0 1291 0 1293 0 2.a
b. Issued by U.S. Government-sponsored
agencies 1294 0 1295 0 1297 69,221 1298 70,292 2.b
</TABLE>
- ------------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.b, column D.
(2) Includes Small Business Administration 'Guaranteed Loan Pool Certificates,'
U.S. Maritime Administration obligations, and Export - Import Bank
participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by the
Farm Credit System, the Federal Home Loan Bank System, The Federal Home Loan
Mortgage Corporation, the Federal National Mortgage Association, the
Financing Corporation the Resolution Funding Corporation, the Student Loan
Marketing Association, and the Tennessee Valley Authority.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 R1-4
ATLANTA, GA 30302 Transit #: 06310215
---------
12
---------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-B - CONTINUED
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------
-----Held to maturity----- -----Available-for-sale-----
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value (1)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3. Securities issued by states and political
subdivisions of the U.S.: RCON RCON RCON RCON
---- ---- ---- ----
a. General obligations 1676 0 1677 0 1678 1679 35,566 3.a
b. Revenue obligations 1681 0 1686 0 1690 5,283 1691 5,575 3.b
c. Industrial development
and similar obligations 1694 0 1695 0 1696 0 1967 0 3.c
4. Mortgage-backed securities (MBS):
a. Pass-through securities:
(1) Guaranteed by GNMA 1698 0 1699 0 1701 62,829 1702 63,511 4.a.(1)
(2) Issued by FNMA and FHLMC 1703 0 1705 0 1706 93,047 1707 92,034 4.a.(2)
(3) Other pass-through securities 1709 0 1710 0 1711 0 1713 0 4.a.(3)
b. Other mortgage-backed securities (include
CMOs, REMICs and stripped MBS):
(1) Issued or guaranteed by FNMA,
FHLMC, or GNMA 1714 0 1715 0 1716 1 22,456 1717 121,999 4.b.(1)
(2) Collateralized by MBS issued or
guaranteed by FNMA, FHLMC,
or GNMA 1718 0 1719 0 1731 0 1732 0 4.b.(2)
(3) All other mortgage-backed securities 1733 0 1734 0 1735 0 1736 0 4.b.(3)
5. Other debt securities:
a. Other domestic debt securities 1737 0 1738 0 1739 0 1741 0 5.a
b. Foreign debt securities 1742 0 1743 0 1744 250 1746 250 5.b
6. Equity securities :
a. Investments in mutual funds and
other equity securities with
readily determinable fair values A510 30,437 A511 30,437 6.a
b. All other equity securities (1) 1752 3,876 1753 3,876 6.b
7. Total (sum of items 1 through 6) (total of
Column A must equal Schedule RC item 2.a)
(total of column D must equal Schedule RC, RCON RCON RCON RCON
item 2.b) ---- ---- ---- ----
1754 0 1771 0 1772 900,584 1773 903,744 7.
</TABLE>
- ------------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.b, column D.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 R1-5
ATLANTA, GA 30302 Transit #: 06310215 7
-------
13
-------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-B - CONTINUED
C312
Memoranda Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCON
----
1. Pledged securities (1) 0416 656,486 M.1
2. MATURITY AND REPRICING DATE FOR DEBT SECURITIES (1,2) (EXCLUDING THOSE IN
NONACCRUAL STATUS):
A. SECURITIES ISSUED BY THE U.S. TREASURY, U.S. GOVERNMENT AGENCIES, AND
STATES AND POLITICAL SUBDIVISIONS IN THE U.S.; OTHER NON-MORTGAGE DEBT
SECURITIES; AND MORTGAGE PASS-THROUGH SECURITIES OTHER THAN THOSE
BACKED BY CLOSED-END FIRST LIEN 1-4 FAMILY RESIDENTIAL MORTGAGES WITH A
REMAINING MATURITY OR REPRICING FREQUENCY OF: (3,4)
(1) THREE MONTHS OR LESS A549 1,425 M.2.a1
(2) OVER THREE MONTHS THROUGH 12 MONTHS A550 172,897 M.2.a2
(3) OVER ONE YEAR THROUGH THREE YEARS A551 326,297 M.2.a3
(4) OVER THREE YEARS THROUGH FIVE YEARS A552 74,499 M.2.a4
(5) OVER FIVE YEARS THROUGH 15 YEARS A553 16,730 M.2.a5
(6) OVER 15 YEARS A554 0 M.2.a6
B. MORTGAGE PASS-THROUGH SECURITIES BACKED BY CLOSED-END FIRST LIEN 1-4
FAMILY RESIDENTIAL MORTGAGES WITH A REMAINING MATURITY OR REPRICING
FREQUENCY OF: (3,5)
(1) THREE MONTHS OR LESS A555 17,468 M.2.b1
(2) OVER THREE MONTHS THROUGH 12 MONTHS A556 68,017 M.2.b.2
(3) OVER ONE YEAR THROUGH THREE YEARS A557 55,887 M.2.b.3
(4) OVER THREE YEARS THROUGH FIVE YEARS A558 9,316 M.2.b.4
(5) OVER FIVE YEARS THROUGH 15 YEARS A559 4,747 M.2.b.5
(6) OVER 15 YEARS A560 149 M.2.b.6
C. OTHER MORTGAGE-BACKED SECURITIES (INCLUDE CMOS, REMICS, AND
STRIPPED MBS; EXCLUDE MORTGAGE PASS-THROUGH SECURITIES) WITH AN
EXPECTED AVERAGE LIFE OF: (6)
(1) THREE YEARS OR LESS A561 86,643 M.2.c.1
(2) OVER THREE YEARS A562 35,356 M.2.c2
D. FIXED RATE AND FLOATING RATE DEBT SECURITIES WITH A REMAINING
MATURITY OF ONE YEAR OR LESS (INCLUDED IN MEMORANDUM ITEMS 2.A
THROUGH 2.C ABOVE) A248 174,322 M.2.d
3.-6. Not applicable
7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale
or trading securities during the calendar year-to-date (report the amortized cost at
date of sale or transfer) 1778 0 M.7
8. High-risk mortgage securities (included in the held-to-maturity and available-for-sale
accounts in Schedule RC-B, item 4.b):
a. Amortized cost 8780 0 M.8.a
b. Fair value 8781 0 M.8.b
9. Structured notes (included in the held-to-maturity and available-for-sale
accounts in Schedule RC-B, items 2, 3, and 5):
a. Amortized cost 8782 0 M.9.a
b. Fair value 8783 0 M.9.b
</TABLE>
- ------------
(1) Includes held-to-maturity securities at amortized cost and available-for-
sale securities at fair value.
(2) Exclude equity securities, e.g., investments in mutual funds, Federal
Reserve stock, common stock, and preferred stock.
(3) REPORT FIXED RATE DEBT SECURITIES BY REMAINING MATURITY AND FLOATING RATE
DEBT SECURITIES BY REPRICING FREQUENCY.
(4) SUM OF MEMORANDUM ITEMS 2.A.(1) THROUGH 2.A.(6) PLUS ANY NONACCRUAL DEBT
SECURITIES IN THE CATEGORIES OF DEBT SECURITIES REPORTED IN MEMORANDUM ITEM
2.A THAT ARE INCLUDED IN SCHEDULE RC-N, ITEM 9, COLUMN C, MUST EQUAL
SCHEDULE RC-B, SUM OF ITEMS 1, 2, 3 AND 5, COLUMNS A AND D, PLUS MORTGAGE
PASS-THROUGH SECURITIES OTHER THAN THOSE BACKED BY CLOSED-END FIRST LIEN 1-4
FAMILY RESIDENTIAL MORTGAGES INCLUDED IN SCHEDULE RC-B, ITEM 4.A, COLUMNS A
AND D.
(5) SUM OF MEMORANDUM ITEMS 2.B.(1) THROUGH 2.B.96) PLUS ANY NONACCRUAL MORTGAGE
PASS-THROUGH SECURITIES BACKED BY CLOSED-END FIRST LIEN 1-4 FAMILY
RESIDENTIAL MORTGAGES INCLUDED IN SCHEDULE RC-N, ITEM 9, COLUMN C, MUST
EQUAL SCHEDULE RC-B, ITEM 4.A, SUM OF COLUMNS A AND D, LESS THE AMOUNT OF
MORTGAGE PASS-THROUGH SECURITIES OTHER THAN THOSE BACKED BY CLOSED-END FIRST
LIEN 1-4 FAMILY RESIDENTIAL MORTGAGES INCLUDED IN SCHEDULE RC-B, ITEM 4.A,
COLUMNS A AND D.
(6) SUM OF MEMORANDUM ITEMS 2.C.(1) AND 2.C.(2) PLUS ANY NONACCRUAL "OTHER
MORTGAGE-BACKED SECURITIES" INCLUDED IN SCHEDULE RC-N, ITEM 9, COLUMN C,
MUST EQUAL SCHEDULE RC-B, ITEM 4.B, SUM OF COLUMNS A AND D.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 R1-5
ATLANTA, GA 30302 Transit #: 06310215 7
------
14
------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-C - LOANS AND LEASE FINANCING RECEIVABLES
PART I. LOANS AND LEASES
Do not deduct the allowance for loan and lease losses from amounts reported in
this schedule. Report total loans and leases, net of unearned income. Exclude
assets held for trading and commercial paper.
C315
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Loans secured by real estate: RCON
----
a. Construction and land development 1415 153,395 1.a
b. Secured by farmland (including farm residential and other improvements) 1420 28,682 1.b
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured by 1-4 family residential properties and
extended under lines of credit 1797 96,297 1.c.1
(2) All other loans secured by 1-4 family residential properties:
(a) Secured by first liens 5367 954,345 1.c.2a
(b) Secured by junior liens 5368 90,689 1.c.2b
d. Secured by multifamily (5 or more) residential properties 1460 32,084 1.d
e. Secured by nonfarm nonresidential properties 1480 439,801 1.e
2. Loans to depository institutions:
a. To commercial banks in the U.S.:
(1) To U.S. branches and agencies of foreign banks 1506 0 2.a1
(2) To other commercial banks in the U.S. 1507 212,698 2.a2
b. To other depository institutions in the U.S. 1517 138 2.b
c. To banks in foreign countries:
(1) To foreign branches of other U.S. banks 1513 0 2.c1
(2) To other banks in foreign countries 1516 0 2.c2
3. Loans to finance agricultural production and other loans to farmers 1590 28,112 3.
4. Commercial and industrial loans:
a. To U.S. addressees (domicile) 1763 1,868,171 4.a
b. To non-U.S. addressees (domicile) 1764 1,020 4.b
5. Acceptance of other banks:
a. Of U.S. banks 1756 285 5.a
b. Of foreign banks 1757 320 5.b
6. Loans to individuals for household, family, and other personal expenditures
(i.e., consumer loans) (includes purchased paper):
a. Credit cards and related plans (includes check credit and other revolving credit
plans 2008 27,448 6.a
b. Other (includes single payment, installment, and all student loans) 2011 486,509 6.b
7. Loans to foreign government and official institutions (including foreign central banks) 2081 0 7.
8. Obligations (other than securities and leases) of states and political subdivisions
in the U.S. (includes nonrated industrial development obligations) 2107 181,548 8.
9. Other Loans:
a. Loans for purchasing or carrying securities (secured and unsecured) 1545 35,769 9.a
b. All other loans (exclude consumer loans) 1564 112,804 9.b
10. Lease financing receivables (net of unearned income):
a. Of. U.S. addressees (domicile) 2182 116,856 10.a
b. Of non-U.S. addressees (domicile) 2183 0 10.b
11. LESS: Any unearned income on loans reflected in items 1-9 above 2123 0 11.
12. Total loans and leases, net of unearned income (sum of items 1 through 10 12.
minus item 11) (must equal Schedule RC, item 4.a) 2122 4,866,971
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-7
ATLANTA, GA 30302 Transit #: 06310215
------------
SCHEDULE RC-C - CONTINUED 15
------------
PART I. CONTINUED
</TABLE>
<TABLE>
<CAPTION>
MEMORANDA Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Not applicable
2. Loans and Leases restructured and in compliance with modified terms (included in
Schedule RC-C, part I, above, and not reported as past due or nonaccrual in Schedule
RC-N, Memorandum item 1):
a. Loans secured by real estate: RCON
----
(1) To U.S. addressees (domicile) 1687
(2) To non-U.S. addressees (domicile) 1689 0 M.2.a.2
b. All other loans and lease financing receivables (exclude loans to individuals for
household, family, and other personal expenditures 8691
c. Commercial and industrial loans to and lease financing receivables of
non-U.S. addressees (domicile) included in Memorandum item 2.b. above 8692
3. Maturity and repricing data for loans and leases (excluding those in nonaccrual status):
A. CLOSED-END LOANS SECURED BY FIRST LIENS ON 1-4 FAMILY RESIDENTIAL
PROPERTIES WITH A REMAINING MATURITY OR REPRICING FREQUENCY OF: (1,2)
(1) THREE MONTHS OR LESS A564 515 M.3.a.1
(2) OVER THREE MONTHS THROUGH 12 MONTHS A565 893,391 M.3.a.2
(3) OVER ONE YEAR THROUGH THREE YEARS A566 227 M.3.a.3
(4) OVER THREE YEARS THROUGH FIVE YEARS A567 872 M.3.a.4
(5) OVER FIVE YEARS THROUGH 15 YEARS A568 20,301 M.3.a.5
(6) OVER 15 YEARS A569 39,039 M.3.a.6
B. ALL LOANS AND LEASES OTHER THAN CLOSED-END SECURED BY FIRST LIENS ON 1-4
FAMILY RESIDENTIAL PROPERTIES WITH A REMAINING MATURITY OR REPRICING
FREQUENCY OF: (1,3)
(1) THREE MONTHS OR LESS A570 1,587,252 M.3.b.1
(2) OVER THREE MONTHS THROUGH 12 MONTHS A571 2,162,341 M.3.b.2
(3) OVER ONE YEAR THROUGH THREE YEARS A572 35,135 M.3.b.3
(4) OVER THREE YEARS THROUGH FIVE YEARS A573 117,400 M.3.b.4
(5) OVER FIVE YEARS THROUGH 15 YEARS A574 160 M.3.b.5
(6) OVER 15 YEARS A575 106 M.3.b.6
C. FIXED RATE AND FLOATING RATE LOANS AND LEASES WITH A REMAINING MATURITY
OF ONE YEAR OR LESS (INCLUDED IN MEMORANDUM ITEMS 3.A AND 3.B ABOVE) A247 1,359,759 M.3.c
D. FIXED RATE AND FLOATING RATE LOANS SECURED BY NONFARM RESIDENTIAL PROPERTIES
(4) WITH A REMAINING MATURITY OF OVER FIVE YEARS (INCLUDED IN
MEMORANDUM ITEM 3.B. ABOVE) A577 135,417 M.3.d
E. FIXED RATE AND FLOATING RATE COMMERCIAL AND INDUSTRIAL LOANS (5) WITH A
REMAINING MATURITY OF OVER THREE YEARS (INCLUDED IN MEMORANDUM
ITEMS 3.B. ABOVE) A578 878,813 M.3.e
- ----------------------------
(1) REPORT FIXED RATE LOANS AND LEASES BY REMAINING MATURITY AND FLOATING RATE
LOANS BY REPRICING FREQUENCY.
(2) SUM OF MEMORANDUM ITEMS 3.A.(1) THROUGH 3.A.(6) PLUS TOTAL NONACCRUAL
CLOSED-END LOANS SECURED BY FIRST LIENS ON 1-4 FAMILY RESIDENTIAL
PROPERTIES INCLUDED IN SCHEDULE RC-N, MEMORANDUM ITEM 3.C.(2), COLUMN C,
MUST EQUAL TOTAL CLOSED-END LOANS SECURED BY FIRST LIENS ON 1-4 FAMILY
RESIDENTIAL PROPERTIES FROM SCHEDULE RC-C, PART I, ITEM 1.C.(2)(A).
(3) SUM OF MEMORANDUM ITEMS 3.B.(1) THROUGH 3.B.(6) PLUS TOTAL NONACCRUAL
LOANS AND LEASES FROM SCHEDULE RC-N, SUM OF ITEMS 1 THROUGH 8, COLUMN C,
MINUS NONACCRUAL CLOSED-END LOANS SECURED BY FIRST LIENS ON 1-4 FAMILY
RESIDENTIAL PROPERTIES INCLUDED IN SCHEDULE RC-N, MEMORANDUM ITEM 3.C.(2),
COLUMN C, MUST EQUAL TOTAL LOANS AND LEASES FROM SCHEDULE RC-C, PART I,
SUM OF ITEMS 1 THROUGH 10, MINUS TOTAL CLOSED-END LOANS SECURED BY FIRST
LIENS ON 1-4 FAMILY RESIDENTIAL PROPERTIES IN DOMESTIC OFFICES FROM
SCHEDULE RCC-C, PART I, ITEM 1.C.(2)(A).
(4) AS DEFINED FOR SCHEDULE RC-C, PART I, ITEM 1.E, COLUMN B.
(5) AS DEFINED FOR SCHEDULE RC-C, PART I, ITEM 4, COLUMN A.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-8
ATLANTA, GA 30302 Transit #: 06310215 ------------
16
------------
</TABLE>
<TABLE>
<CAPTION>
<S>
SCHEDULE RC-C - CONTINUED
PART I. CONTINUED <C>
MEMORANDA Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4. Loans to finance commercial real estate, construction, and land development activities
(not secured by real estate) included in Schedule RC-C, part I, items 4 and 9.b,
page RC-6 (1) 2746 67,904 M.4
5. Loans and leases held for sale (included in Schedule RC-C, part I, page RC-C) 5369 8,078 M.5
6. Adjustable rate closed-end loans secured by first liens on 1-4 family residential
properties (included in Schedule RC-C, part I, item 1.c.(2)(a), page RC-6 5370 789,973 M.6
</TABLE>
- --------------------
(1) Exclude liens secured by real estate that are included in Schedule RC-C,
part I, items 1.a through 1.e.
SCHEDULE RC-D - TRADING ASSETS AND LIABILITIES
Schedule RC-D is to be completed by banks with $1 billion or more in total
assets or with $2 billion or more in par/notional amount of off-balance sheet
derivative contracts (as reported in Schedule RC-L, items 14.a through 14.e,
columns A through D).
<TABLE>
<CAPTION>
C320
ASSETS Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCON
----
1. U.S. Treasury securities 3531 0 1.
2. U.S. Government agency obligations (exclude mortgage-backed securities) 3532 0 2.
3. Securities issued by states and political subdivisions in the U.S. 3533 0 3.
4. Mortgage-backed securities (MBS):
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA 3534 0 4.a
b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC,
or GNMA (include CMOs, REMICs, and stripped MBS) 3535 0 4.b
c. All other mortgage-backed securities 3536 0 4.c
5. Other debt securities 3537 0 5.
6. Certificates of deposit 3538 0 6.
7. Commercial paper 3539 0 7.
8. Bankers acceptances 3540 0 8.
9. Other trading assets 3541 0 9.
10. Not applicable
11. Revaluation gains on interest rate, foreign exchange rate, and other
commodity and equity contracts 3543 0 11
12. Total trading assets (sum of items 1 through 11) 3545 0 12.
(must equal Schedule RC, item 5)
LIABILITIES
13. Liability for short positions 3546 0 13.
14. Revaluation losses on interest rate, foreign exchange rate,
and other commodity and equity contracts 3547 0 14.
15. Total trading liabilities (sum of items 13 and 14) 3548 0 15.
(must equal Schedule RC, item 15.b)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-8a
ATLANTA, GA 30302 Transit #: 06310215
-----------
16A
-----------
</TABLE>
SCHEDULE RC-C - CONTINUED
PART II. LOANS TO SMALL BUSINESSES AND SMALL FARMS
Schedule RC-C, Part II is to be reported only with the June Report of Condition.
Report the number and amount currently outstanding as of June 30 of business
loans with "original amounts" of $1,000.00 or less and farm loans with "original
amounts" of $500,000 or less. The following guidelines should be used to
determine the "original amount" of a loan: (1) For loans drawn down under lines
of credit or loan commitments, the "original amount" of the loan is the size of
the line of credit or loan commitment when the line of credit or loan commitment
was most recently approved, extended, or renewed prior to the report date.
However, if the amount currently outstanding as of the report date exceeds this
size, the "original amount" is the amount currently outstanding on the report
date. (2) For loan participations and syndications, the "original amount" of
the loan participation or syndication is the entire amount of credit originated
by the lead lender. (3) For all other loans, the "original amount" is the total
amount of the loan at origination or the amount currently outstanding as of the
report date, whichever is larger.
<TABLE>
<CAPTION>
L318
LOANS TO SMALL BUSINESSES
<S> <C> <C> <C>
1. Indicate in the appropriate box at the right whether all or substantially all of the
dollar volume of your bank's "Loans secured by nonfarm nonresidential properties"
reported in Schedule RC-C, part I, item 1.e, and all or substantially all of the dollar
volume of your bank's "Commercial and industrial loans to U.S. addressees" reported
in Schedule RC-C, part I, item 4.a have original amounts of $100,000 or less (If your RCON YES/NO
bank has no loans outstanding in BOTH of these two loan categories, place an "X" in ----
the box marked "NO") 6999 No 1.
If YES, complete item 2.a and 2.b below, sip item 3 and 4, and go to item 5.
If NO, and your bank has loans outstanding in either loan category, skip item 2.a and 2.b,
complete items 3 and 4 below, and go to item 5. If NO and your bank has no loans
outstanding in both loan categories, skip items 2 through 4, and go to item 5:
2. Report the total number of loans currently outstanding for each of the following
Schedule RC-C, part I, loan categories: NUMBER
a. "Loans secured by nonresidential properties" reported in Schedule RC-C, RCON OF
part I, item 1.e (Note: Item 1.e divided by the number of loans should ---- LOANS
NOT exceed $100,000.) 5562 1,219 2.a
b. "Commercial and industrial loans" reported in Schedule RC-C, part I, item 4.a
(Note: Item 4.a divided by the number of loans should NOT exceed $100,000) 5563 5,201 2.b
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B)
<S> <C> <C> <C> <C> <C>
3. Number and amount currently outstanding of "Loans Number Amount
secured by nonfarm nonresidential properties" reported of Loans Currently
in Schedule RC-C, part I, item 1.e (sum of items 3.a Outstanding
through 3.c must be less than or equal to Schedule RC-C,
part I, item 1.e): RCON RCON
---- -----
a. With original amounts of $100,000 or less 5564 213 5,565 11,558 3.a
b. With original amounts of more than $100,000
through $250,000 5566 336 5,567 48,935 3.b
c. With original amounts of more than $250,000
through $1,000,000 5568 315 5,569 133,841 3.c
4. Number and amount currently outstanding of
"Commercial and industrial loans to U.S. addressees"
reported in Schedule RC-C, part I, item 4.a (sum of items
4.a through 4.c must be less than or equal to Schedule
RC-C, part I, item 4.a):
a. With original amounts of $100,000 or less 5570 2,351 5,571 50,366 4.a
b. With original amounts of more than $100,000
through $250,000 5572 321 5,573 35,548 4.b
c. With original amounts of more than $250,000
through $1,000,000 5574 256 5,575 71,675 4.c
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-8b
ATLANTA, GA 30302 Transit #: 06310215
------------
16B
------------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-C - CONTINUED
PART II. CONTINUED
Agricultural Loans to Small Farms
<S> <C> <C> <C>
5. Indicate in the appropriate box at the right whether all or substantially all of the
dollar volume of your bank's "Loans secured by farmland (including farm residential
and other improvements)" reported in Schedule RC-C, part I, item 1.b, and all or
substantially all of the dollar volume of your bank's "Loans to financial agricultural
production and other loans to farmers" reported in Schedule RC-C, part I, item 3,
have originally amounts of $100,000 or less (if your bank has no loans outstanding RCON
in BOTH of these two loan categories, place an "X" in the box marked "NO".) ---- YES/NO
6860 No 5.
If YES, complete items 6.a and 6.b below and do not complete items 7 and 8.
If NO, and your bank has loans outstanding in either loan category skip item 6.a
and 6.b and complete items 7 and 8 below. If NO and your bank has no loans
outstanding in both loan categories, do not complete items 6 through 8.
6. Report the total number of loans currently outstanding for each of the following Schedule
RC-C, part I, loan categories:
a. "Loans secured by farmland (including farm residential and other improvements)" NUMBER
reported in Schedule RC-C, part I, item 1.b (Note: Item 1.b divided by the OF
number of loans should NOT exceed $100,000.) RCON LOANS
----
5576 29 6.a
b. "Loans to finance agricultural production and other loans to farmers "reported in
Schedule RC-C, part I, item 3 (Note: Item 3 divided by the number of loans
should NOT exceed $100,000.) 5577 28 6.b
----
</TABLE>
<TABLE>
<CAPTION> Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------
(Column A) (Column B)
<S> <C> <C> <C> <C> <C>
7. Number and amount currently outstanding of "Loans Number Amount
secured by farmland (including farm residential and other of Loans Currently
improvements)" reported in Schedule RC-C, part I, item 1. Outstanding
b (sum of items 7.a through 7.c must be less than or equal
to Schedule RC-C, part I, item 1.b): RCON RCON
---- -----
a. With original amounts of $100,000 or less 5578 2 5,579 110 7.a
b. With original of more than $100,000 through $250,000 5580 3 5,581 651 7.b
c. With original amounts of more than $250,000 through $500,000
5582 2 5,583 355 7.c
8. Number and amount currently outstanding of "Loans to
finance agricultural production and other loans to farmers"
reported in Schedule RC-C, part I, item 3 (sum of items 8.a
through 8.c must be less than or equal to Schedule RC-C,
part I, item 3):
a. With original amounts of $100,000 or less 5584 2 5,585 29 8.a
b. With original of more than $100,000 through $250,000 5586 2 5,587 286 8.b
c. With original amounts of more than $250,000 through $500,000
5588 0 5,589 0 8.c
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-9
ATLANTA, GA 30302 Transit #: 06310215
------------
17
------------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-E - DEPOSIT LIABILITIES
C325
--Transaction Accounts-- -Nontransaction-
Accounts
(Column A) (Column B) (Column C)
Total Memo: Total Total
Transaction Demand nontransaction
accounts Deposits Accounts
(including total (included in (including
demand deposits) Column A) MMDAs)
Dollar Amounts in Thousands
------------------------------------
DEPOSITS OF: RCON RCON RCON
---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
1. Individuals, partnerships and corporations 2201 1,016,494 2240 859,039 2346 2,714,993 1.
2. U.S. Government 2202 1,785 2280 1,785 2520 0 2.
3. States and political subdivisions in the 2203 21,025 2290 17,496 2530 8,735 3.
U.S.
4. Commercial banks in the U.S. 2206 156,344 2310 156,344 2550 0 4.
5. Other depository institutions in the U.S. 2207 6,185 2312 6,185 2349 0 5.
6. Banks in foreign countries 2213 398 2320 398 2236 0 6.
7. Foreign governments, and official institu-
tions (including foreign central banks) 2216 0 2300 0 2377 0 7.
8. Certified and official checks 2230 33,946 2330 33,946 8.
9. Total (sum of items 1 through 8) (sum of
columns A and C must equal Schedule RC,
item 13.a) 2215 1,236,177 2210 1,075,193 2385 2,723,728 9.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MEMORANDA Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Selected components of total deposits (i.e., sum of item 9, columns A and C): RCON
-----
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts 6835 144,764 M.1.a
b. Total brokered deposits 2365 4,000 M.1.b
c. Fully insured brokered deposits (included in Memorandum item 1.b above):
(1) Issued in denominations of less than $100,000 2343 0 M.1.c1
(2) Issued either in denominations of $100,000 or in denominations
greater than $100,000 and participated out by the broker in shares
of $100,000 or less 2344 0 M.1.c2
d. Maturity data for brokered deposits:
(1) Brokered deposits issued in denominations of less than $100,000 with a
remaining maturity of one year or less (included in Memorandum
item 1.c.(1) above) A243 0 M.1.d.1
(2) Brokered deposits issued in denominations of $100,000 or more with
a remaining maturity of one year or less (included in
Memorandum item 1.b above) A244 4,000 M.1.d.2
e. Preferred deposits (uninsured deposits of states and political subdivisions in the
U.S. reported in item 3 above which are secured or collateralized as required
under state law) 5590 25,215 M.1.e
2. Components of total nontransaction accounts (sum of Memorandum items 2.a
through 2.d must equal item 9, column C, above):
a. (1) Money market deposit accounts (MMDAs) 6810 826,360 M.2.a.1
(2) Other savings deposits (excludes MMDAs) 0352 980,847 M.2.a.2
b. Total time deposits of less than $100,000 6648 692,447 M.2.b
c. Total time deposits of $100,000 or more 2604 224,074 M.2.c
3. All NOW accounts (included in Column A above) 2398 160,984 M.3
4. Not applicable
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-10
ATLANTA, GA 30302 Transit #: 06310215 -------------
18
-------------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-E - CONTINUED
MEMORANDA (CONTINUED) Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5. Maturity and repricing data for time deposits of less than $100,000:
a. Time deposits of less than $100,000 with a remaining maturity or
repricing frequency of: (1,2) RCON
----
(1) Three months or less A579 184,998 M.5.a1
-------
(2) Over three months through 12 months A580 292,179 M.5.a2
-------
(3) Over one year through three years A581 200,611 M.5.a3
-------
(4) Over three years A582 14,659 M.5.a4
-------
b. Fixed rate AND floating rate deposits of less than $100,000 whit a
REMAINING MATURITY of one year or less (included in
Memorandum item 5.a.(1) through 5.a.(4) above) A241 472,228 M.5.b
-------
6. Maturity and repricing data for time deposits of $100,000 or more:
a. Time deposits of $100,000 or more with a remaining maturity or
repricing frequency of (1,3)
(1) Three months or less A584 65,148 M.6.a1
------
(2) Over three months through 12 months A585 99,875 M.6.a2
------
(3) Over one year through three years A586 52,668 M.6.a3
------
(4) Over three years A587 6,383 M.6.a4
------
b. Fixed rate AND floating rate time deposits of $100,000 or more with a
REMAINING MATURITY of one year or less (included in Memorandum items
6.a.(1) through 6.a.(4) above) A242 164,880 M.6.b
-------
</TABLE>
_________
(1) Report fixed rate time deposits by remaining maturity and floating rate
time deposits by repricing frequency.
(2) Sum of Memorandum items 5.a.(1) through 5.a.(4) must equal Schedule RC-E
Memorandum item 2.b above.
(3) Sum of Memorandum items 6.a.(1) through 6.b.(4) must equal Schedule RC-E
Memorandum item 2.c above.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-11
ATLANTA, GA 30302 Transit #: 06310215 --------------
19
--------------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-F - OTHER ASSETS
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------
<C> <C> <C>
<S> RCON
----
1. Income earned, not collected on loans 2164 27,389 1.
2. Net deferred tax assets (1) 2148 30,912 2.
3. INTEREST-ONLY STRIPS RECEIVABLE (NOT IN THE FORM OF A SECURITY) (2) ON:
A. MORTGAGE LOANS A519 0 3.a
B. OTHER FINANCIAL ASSETS A520 0 3.b
4. Other (itemize and describe amounts that exceed
25% of this item) 2168 40,228 4.
TEXT RCON
----
a. 3549 SECURITIES-ACCRD INC 3549 11,573 4.a
b. 3550 CR CD-EXCHANGE/CLEAR 3550 10,581 4.b
c. 3551 3551 0 4.c
RCON
----
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11) 2160 98,529 5.
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------
Memorandum
RCON
----
1. Deferred tax assets disallowed for regulatory capital purposes 5610 0 M.1
SCHEDULE RC-G - OTHER LIABILITIES
C330
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------
1. a. Interest accrued and unpaid on deposits (3) 3645 9,547 1.a
b. Other expenses accrued and unpaid (includes accrued
income taxes payable) 3646 10,596 1.b
2. Net deferred tax liabilities (1) 3049 0 2.
3. Minority interest in consolidated subsidiaries 3000 0 3.
4. Other (itemize and describe amounts that exceed 25% of this item) 2938 5,404 4.
TEXT RCON
----
a. 3552 UNEARNED I/C INSURANCE 3552 1,395 4.a
b. 3553 3553 0 4.b
c. 3554 3554 0 4.c
RCON
----
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20) 2030 25,547 5.
</TABLE>
__________
(1) See discussion of deferred income taxes in Glossary entry on "income taxes".
(2) Report interest-only strips receivable in the form of a security as
available-for sale securities
in Schedule RC, item 2.b, or as trading assets in Schedule RC, item 5, as
appropriate.
(3) For savings banks, includes "dividends" accrued and unpaid on deposits.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-12
ATLANTA, GA 30302 Transit #: 06310215 -----------
20
-----------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-K - QUARTERLY AVERAGES (1)
C355
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SCHEDULE RC-K - QUARTERLY AVERAGES (1)
Assets RCON
----
1. Interest-bearing balances due from depository institutions 3381 4,166 1.
-----
2. U.S. Treasury securities, U. S. Government agency 3382 860,166 2.
obligations (2) -------
3. Securities issued by states and political subdivisions in the U.S. (2) 3383 40,177 3.
------
4. a. Other debt securities (2) 3647 250 4.a
---
b. Equity securities (3) (includes investments in mutual funds 3648 16,371 4.b
and Federal Reserve stock) ------
5. Federal funds sold and securities purchased under agreements to resell 3365 563,326 5.
-------
6. Loans:
a. Total loans 3360 4,650,283 6.a
---------
b. Loans security by real estate 3385 1,736,192 6.b
---------
c. Loans to finance agricultural production and other 3386 33,346 6.c
loans to farmers ---------
d. Commercial and industrial loans 3387 1,912,418 6.d
---------
e. Loans to individuals for household, family, and other 3388 509,803 6.e
personal expenditures ---------
7. Trading assets 3401 0 7.
-
8. Lease financing receivables (net of unearned income) 3484 111,441 8.
-------
9. Total assets (4) 3368 6,727,489 9.
---------
LIABILITIES
10. Interest-bearing transaction accounts (NOW accounts, ATS 3485 167,549 10.
accounts, and telephone and preauthorized transfer -------
accounts) (exclude demand deposits)
11. Nontransaction accounts:
a. Money market deposit accounts (MMDAs) 3486 813,872 11.a
-------
b. Other savings deposits 3487 981,969 11.b
-------
c. Time deposits of $100,000 or more A514 220,456 11.c
-------
d. Time deposits of less than $100,000 A529 689,484 11.d
-------
12. Federal funds purchased and securities sold under 3353 2,208,205 12.
agreements to repurchase ---------
13. Other borrowed money (includes mortgage indebtedness and 3355 29,983 13.
obligations under capitalized leases) ------
</TABLE>
- ----------
(1) For all items, banks have the option of reporting either (1) an average of
daily figures for the quarter or (2) an average of weekly figures (i.e., the
Wednesday of each week of the quarter).
(2) Quarterly averages for all debt securities should be based on amortized
cost.
(3) Quarterly averages for all equity securities should be based on historical
cost.
(4) The quarterly averages for total assets should reflect all debt securities
(not held for trading) at amortized cost, equity securities with readily
determinable fair values at the lower of cost or fair value, and equity
securities without readily determinable fair values at historical cost.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-13
ATLANTA, GA 30302 Transit #: 06310215
-----------
21
-----------
SCHEDULE RC-L - OFF-BALANCE SHEET ITEMS
Please read carefully the instructions for the preparation of Schedule RC-L.
Some of the amounts reported in Schedule RC-L are regarded as volume indicators
and not necessarily as measures of risk.
<S> <C> <C> <C>
C360
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------
1. Unused commitments:
a. Revolving, open-end lines secured by 1-4 family residential properties, RCON
----
e.g., home equity lines 3814 171,890 1.a
-------
b. Credit card lines 3815 0 1.b
---
c. Commercial real estate, construction, and land development:
(1) Commitments to fund loans secured by real estate 3816 161,337 1.c.1
-------
(2) Commitments to fund loans not secured by real estate 6550 81,384 1.c.2
------
d. Securities underwriting 3817 0 1.d
--
e. Other unused commitments 3818 5,197,746 1.e
---------
2. Financial standby letters of credit 3819 615,348
a. Amount of financial standby letters of credit conveyed to others 3820 276,919 2.a
3. Performance standby letters of credit 3821 30,476 3.
-------
a.Amount of performance standby letters of credit conveyed to others 3822 8,183 3.a
4. Commercial and similar letters of credit 3411 11,686 4.
------
5. Participations in acceptances (as described in the instructions) conveyed to
others by the reporting bank 3428 408 5.
---
6. Participations in acceptances (as described in the instructions) acquired by
the reporting (nonaccepting) bank 3429 0 6.
-
7. Securities borrowed 3432 0 7.
-
8. Securities lent (including customers' securities lent where the customer is
indemnified against loss by the reporting bank) 3433 0 8.
-
9. FINANCIAL ASSETS TRANSFERRED WITH RECOURSE THAT HAVE BEEN TREATED
AS SOLD FOR CALL REPORT PURPOSES:
A. FIRST LIEN 1-TO-4 FAMILY RESIDENTIAL MORTGAGE LOANS:
(1) OUTSTANDING PRINCIPAL BALANCE OF MORTGAGES TRANSFERRED RCON
----
AS OF THE REPORT DATE A521 0 9.a.1
-
(2) AMOUNT OF RECOURSE EXPOSURE ON THESE MORTGAGES
AS OF THE REPORT DATE A522 0 9.a.2
-
B. OTHER FINANCIAL ASSETS (EXCLUDING SMALL BUSINESS OBLIGATIONS
REPORTED IN ITEM 9.C):
(1) OUTSTANDING PRINCIPAL BALANCE OF ASSETS TRANSFERRED
AS OF THE REPORT DATE A523 0 9.b.1
-
(2) AMOUNT OF RECOURSE EXPOSURE ON THESE ASSETS
AS OF THE REPORT DATE A524 0 9.b.2
-
c. Small business obligations transferred with recourse under Section 208 of
the Riegle Community Development and Regulatory Improvement Act of 1994:
(1) Outstanding principal balance of small business obligations
(1) Outstanding principal balance of small business obligations
transferred as of the report date A249 0 9.c.1
-
(2) Amount of retained recourse on these obligations as of
the report date A250 0 9.c.2
-
10.NOTIONAL AMOUNT OF CREDIT DERIVATIVES:
A. CREDIT DERIVATIVES ON WHICH THE REPORTING BANK IS THE GUARANTOR A534 0 10.a
-
B. CREDIT DERIVATIVES ON WHICH THE REPORTING BANK IS THE BENEFICIARY A535 0 10.b
-
11. Spot foreign exchange contracts 8765 0 11.
-
12. All other off-balance sheet liabilities (exclude off-balance sheet
derivatives) (itemize and describe each component of this item over
25% of Schedule RC, item 28, "Total equity capital") 3430 0 12.
-
TEXT RCON
----
a. 3555 3555 0 12.a
b. 3556 3556 0 12.b
c. 3557 3557 0 12.c
d. 3558 3558 0 12.d
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-14
ATLANTA, GA 30302 Transit #: 06310215
-----------
22
-----------
SCHEDULE RC-L - CONTINUED
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------
<C>
13. All other off-balance sheet assets (exclude off-balance sheet derivatives) (itemize and RCON
describe each component of this item over 25% Schedule RC, item 28.,
"Total equity capital") 5591 0 13
-
TEXT RCON
----
a. 5592 5592 0 13.a
-
b. 5593 5593 0 13.b
-
c. 5594 5594 0 13.c
-
d. 5595 5595 0 13.d
-
</TABLE>
OFF-BALANCE SHEET DERIVATIVES
POSITION INDICATORS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(Column A) (Column B) (Column C) (Column D)
Interest Foreign Equity Equity
Rate Exchange Derivative Derivative
14. Gross amounts (e.g., notional Contracts Contracts Contracts Contracts
amounts) (for each column, sum of
items 14.a through 14.e must equal sum <C> <C> <C> <C> <C> <C>
of items 15, 16.a and 16.b): RCON RCON RCON RCON
---- ---- ---- ----
a. Futures contracts 8693 0 8694 0 8695 0 8696 0 14.a
- - - -
b. Forward contracts 8697 0 8698 0 8699 0 8700 0 14.b
- - - -
c. Exchange-traded option contracts:
(1) Written options 8701 0 8702 0 8703 0 8704 0 14.c1
- - - -
(2) Purchased Options 8705 0 8706 0 8707 0 8708 0 14.c2
- - - -
d. Over-the-counter contracts:
(1) Written options 8709 0 8710 0 8711 0 8712 0 14.d1
- - - -
(2) Purchased options 8713 0 8714 0 8715 0 8716 0 14.d2
- - - -
e. Swaps 3450 148,893 3826 0 8719 0 8720 0 14.e
------- - - -
15. Total gross notional amount of
derivative contracts held for trading A126 0 A127 0 8723 0 8724 0 15
- - - -
16. Total gross notional amount of
derivative contracts held for purposes
other than trading:
a. Contracts marked to market 8725 0 8726 0 8727 0 8728 0 16.a
- - - -
b. Contracts not marked to market 8729 148,893 8730 0 8731 0 8732 0 16.b
------- - - -
c. Interest rate swaps where the bank
has agreed to pay a fixed rate A589 48,893 16.c
------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-15
ATLANTA, GA 30302 Transit #: 06310215 ---------
23
---------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-L - CONTINUED
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OFF-BALANCE SHEET DERIVATIVES" (Column A) (Column B) (Column C) (Column D)
POSITION INDICATORS Interest Foreign Equity Equity
Rate Exchange Derivative Derivative
17. Total gross fair value of Contracts Contracts Contracts Contracts
derivative contracts:
a. Contracts held for trading: RCON RCON RCON RCON
---- ---- ---- ----
(1) Gross positive fair value 8733 0 8734 0 8735 0 8736 0 17.a1
- - - -
(2) Gross negative fair value 8737 0 8738 0 8739 0 8740 0 17.a2
- - - -
b. Contracts held for purposes other
than trading that are marked to
market:
RCON RCON RCON RCON
---- ---- ---- ----
(1) Gross positive fair value 8741 0 8742 0 8743 0 8744 0 17.b1
- - - -
(2) Gross negative fair value 8745 0 8746 0 8747 0 8748 0 17.b2
- - - -
c. Contracts held for purposes other
than trading that are not marked
to market:
(1) Gross positive fair value 8749 515 8750 0 8751 0 8752 0 17.c1
--- - - -
(2) Gross negative fair value 8753 1041 8754 0 8755 0 8756 0 17.c2
---- - - -
MEMORANDA Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------
1.-2. Not applicable
3. Unused commitments with an original maturity exceeding one year that are reported in RCON
Schedule RC-L, items 1.a through 1.e above (report only the unused portions of ----
commitments that are fee paid or otherwise legally binding) 3833 3,797,551 M.3
a. Participations in commitments with an original maturity RCON
exceeding one year conveyed to others ----
3834 584,502 M.3.a
4. To be completed only by banks with $1 billion or more
in total assets:
Standby letters of credit (both financial and performance) RCON
issued to non-U.S. addresses (domicile) included in Schedule ----
RC-L, items 2 and 3, above 3377 1,585 M.4
5. Installment loans to individuals for household, family, and other personal
expenditures that have been securitized and sold (with servicing retained),
amounts outstanding by type of loan:
RCON
a. Loans to purchase private passenger automobiles ----
(to be completed for the September report only) 2741 N/A M.5.a
b. Credit cards and related plans (TO BE COMPLETED QUARTERLY) 2742 0 M.5.b
-
c. All other consumer installment credit (including mobile
home loans) (to be completed for the September report only) 2743 N/A M.5.c
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State # 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert # 21043 RC-11
ATLANTA, GA 30302 Transit #: 06310215 ---------
24
---------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-M - MEMORANDA
C365
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers,
directors, principals shareholders, and their related interests as of
the report date:
a. Aggregate amount of all extensions of credit RCON
to all executive officers, directors, ----
principal shareholders, and their related interests 6164 200,705 1.a
b. Number of executive officers, directors, and principal shareholders to whom
the amount of all extensions of credit by the reporting bank (including
extensions of credit to related interests) equals or exceeds the lesser of RCON
$500,000 or 5 percent of total capital as defined for this purpose in ---- Number
agency regulations 6165 14 1.b
2. Federal funds sold and securities purchased under agreements to resell RCON
with U.S. branches and agencies of foreign banks (1) (included in Schedule ----
RC, item 3) 3405 0 2
3. Not applicable.
4. Outstanding principal balance of 1-4 family residential mortgage loans
serviced for others
(include both retained servicing and purchased servicing):
a. Mortgages serviced under a GNMA contract 5500 0 4.a
b. Mortgages serviced under a FHLMC contract:
(1) Serviced with recourse to servicer 5501 0 4.b.1
(2) Serviced without recourse to servicer 5502 0 4.b.2
c. Mortgages serviced under FNMA contract:
(1) Serviced under a regular option contract 5503 0 4.c.1
(2) Serviced under a special option contract 5504 0 4.c.2
d. Mortgages serviced under other servicing contracts 5505 0 4.d
5. To be completed only by banks with $1 billion or more in total assets:
Customers' liability to this bank on acceptances outstanding (sum of items 5.a
and 5.b must equal Schedule RC item 9):
a. U.S. addressees (domicile) 2103 3,290 5.a
b. Non-U.S. addressees (domicile) 2104 0 5.b
6. Intangible assets:
a. Mortgage servicing rights 3164 0 6.a
(1) ESTIMATED FAIR VALUE OF MORTGAGE SERVICING ASSETS A590 0 6.a.1
b. Other identifiable intangible assets:
(1) Purchased credit card relationships 5506 0 6.b.1
(2) All other identifiable intangible assets 5507 0 6.b.2
c. Goodwill 3163 0 6.c
d. Total (sum of items 5.a, 6.b.(1), 6.b.(2), and 6.c) (must equal Schedule
RC, item 10) 2143 0 6.d
e. Amount of intangible assets (included in item 6.b.(2) above) that have been
grandfathered or are otherwise qualifying for regulatory capital purposes 6442 0 6.e
7. Mandatory convertible debt, net of common or perpetual preferred stock
dedicated to redeem at the debt 3295 0 7
- ----------
</TABLE>
(1) Do not report federal funds sold and securities purchased under agreements
to resell with other commercial banks in the U.S. in this item.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-11
ATLANTA, GA 30302 Transit #: 06310215 ---------
25
---------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-M - CONTINUED
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCON
8. a. Other real estate owned: ----
(1) Direct and indirect investments in real estate 5372 0 8.a.1
ventures
(2) All other real estate owned:
(a) Construction and land development 5508 3,623
(b) Farmland 5509 0 8.a.2b
(c) 1-4 family residential properties 5510 2,139 8.a.2c
(d) Multifamily (5 or more) residential properties 5511 0 8.a.2d
(e) Nonfarm nonresidential properties 5512 0 8.a.2e
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must 2150 5,762 8.a.3
equal Schedule RC, item 7)
b. Investments in unconsolidated subsidiaries and associated companies:
(1) Direct and indirect investments in real estate ventures 5374 0 8.b.1
(2) All other investments in unconsolidated subsidiaries and associated
companies 5375 7,804 8.b.2
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8) 2130 7,804 8.b.3
9. Noncumulative perpetual preferred stock and related surplus included in
Schedule RC, item 23, "Perpetual preferred stock and related surplus" 3778 0 9
10. Mutual fund and annuity sales during the quarter (including proprietary,
private label, and third party products):
a. Money market funds 6441 103,501 10.a
b. Equity securities funds 8427 9,099 10.b
c. Debt securities funds 8428 4,670 10.c
d. Other mutual funds 8429 6,795 10.d
e. Annuities 8430 5,904 10.e
f. Sales of proprietary mutual funds and annuities (included in items 10.a
through 10.e above) 8784 114,004 10.f
11. NET UNAMORTIZED REALIZED DEFERRED GAINS (LOSSES)
ON OFF-BALANCE SHEET DERIVATIVE CONTRACTS INCLUDED
in assets and liabilities reported in Schedule RC A525 0 11
12. AMOUNT OF ASSETS NETTED AGAINST NONDEPOSIT
LIABILITIES ON THE BALANCE SHEET (SCHEDULE RC)
IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(1) A526 0 12
13. OUTSTANDING PRINCIPAL BALANCE OF LOANS OTHER THAN 1-4 FAMILY RESIDENTIAL
MORTGAGE LOANS THAT ARE SERVICED FOR OTHERS (TO BE COMPLETED
IF THIS BALANCE IS MORE THAN $10 MILLION AND EXCEEDS TEN PERCENT
OF TOTAL ASSETS) A591 0 13
Memorandum Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------
1. Reciprocal holdings of banking organizations' capital instruments
(TO BE COMPLETED FOR THE DECEMBER REPORT ONLY) 3836 N/A M.1
</TABLE>
__________
(1) Exclude netted on-balance sheet amounts associated with off-balance sheet
derivative contracts, deferred tax assets netted against deferred tax
liabilities, and assets netted in accounting for pensions.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-11
ATLANTA, GA 30302 Transit #: 06310215 ---------
26
---------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-N - PAST DUE AND NONACCRUAL LOANS, LEASES, AND OTHER ASSETS
The FFIEC regards the information reported in all of Memorandum item 1, in items
1 through 10, column A, and in Memorandum items 2 through 4, column A, as
confidential. C370
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------
--(Column A)-- --(Column B)-- --(Column C)--
Past Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
accruing accruing
RCON RCON RCON
---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
1. Loans secured by real estate:
a. To U.S. addressees (domicile) 1245 4,405 1246 1,419 1247 6,730 1.a
b. To non-U.S. addressees (domicile) 1248 0 1249 0 1250 0 1.b
2. Loans to depository institutions and acceptances
of other banks:
a. To U.S. banks and other U.S. depository
institutions 5377 0 5378 0 5379 0 2.a
b. To foreign banks 5380 0 5381 0 5382 0 2.b
3. Loans to finance agricultural production and
other loans to farmers 1594 0 1597 0 1583 22 3.
4. Commercial and industrial loans:
a. To U.S. addressees (domicile) 1251 2,225 1252 94 1253 3,259 4.a
b. To non-U.S. addressees (domicile) 1254 0 1255 0 1256 0 4.b
5. Loans to individuals for household, family, and
other personal expenditures:
a. Credit card and related plans 5383 274 5384 22 5385 0 5.a
b. Other (includes single payment, installment,
and all student loans) 5386 2,558 5387 125 5388 221 5.b
6. Loans to foreign governments and official
institutions 5389 0 5390 0 5391 0 6.
7. All other loans 5459 0 5460 0 5461 0 7.
8. Lease financing receivables:
a. Of U.S. addressees (domicile) 1257 137 1258 0 1259 0 8.a
b. Of non-U.S. addressees (domicile) 1271 0 1272 0 1791 0 8.b
9. Debt securities and other assets (exclude other
real estate owned and other repossessed assets) 3505 0 3506 0 3507 0 9.
====================================================================================================================================
Amounts reported in items 1 through 8 above include guaranteed and ungauranteed
portions of past due and nonaccrual loans and leases. Report in item 10 below
certain guaranteed loans and leases that have already been included in the
amounts reported in items 1 through 8.
RCON RCON RCON
10. Loans and leases reported in items 1 ---- ---- ----
through 8 above which are wholly or partially
guaranteed by the U.S. Government 5612 34 5613 39 5614 585 10.
a. Guaranteed portion of loans and leases
included in item 10 above 5615 30 5616 35 5617 462 10.a
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-11
ATLANTA, GA 30302 Transit #: 06310215 ---------
27
---------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-N - CONTINUED
C373
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--(Column A)-- --(Column B)-- --(Column C)--
MEMORANDUM Past Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
accruing accruing
1. Restructured loans and leases included in
Schedule RC-N, items 1 through 8, above
(and not reported in Schedule RC-C, RCON RCON RCON
---- ---- ----
Memorandum item 2) 1658 0 1659 0 1661 0 M.1
2. Loans to finance commercial real estate,
construction, and land development activities
(not secured by real estate) included in
Schedule RC-N, items 4 and 7, above 6558 0 6559 0 6560 0 M.2
3. Loans secured by real estate (sum of
Memorandum items 3.a through 3.e must
equal sum of Schedule RC-N items 1.a and
1.b above):
a. Construction and land development 2759 594 2769 0 3492 21 M.3a
b. Secured by farmland 3493 700 3494 0 3495 1,976 M.3b
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured by
1-4 family residential properties and
extended under lines of credit 5398 46 5399 24 5400 354 M.3.c1
(2) All other loans secured by 1-4 family
residential properties 5401 1,873 5402 226 5403 2,804 M.3c2
d. Secured by multifamily (5 or more) residential
properties 3499 47 3500 0 3501 0 M.3d
e. Secured by nonfarm nonresidential properties 3502 1,145 3503 1,169 3504 1,575 M.3e
--(Column A)-- --(Column B)-- --(Column C)--
Past Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
accruing accruing
4. Interest rate, foreign exchange rate, and other
commodity and equity contracts: RCON RCON
---- ----
a. Book value of amounts carried as assets 3522 0 3528 0 M.4.a
b. Replacement cost of contracts with a
positive replacement cost 3529 0 3530 0 M.4.b
- ------------------------------------------------------------------------------------------------------------------------------------
PERSON TO WHOM QUESTION ABOUT THE REPORTS OF CONDITION AND INCOME SHOULD BE DIRECTED:
C377
NAME TITLE AREA CODE/PHONE NUMBER/EXTENSION
8901 KEN MUTELL 8901 VICE PRESIDENT 8902 (404) 724-3833
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-11
ATLANTA, GA 30302 Transit #: 06310215 ---------
28
---------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-O - OTHER DATA FOR DEPOSIT INSURANCE AND FICO ASSESSMENTS
C375
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Unposted debits (see instructions): RCON
----
a. Actual amount of all unposted debits 0030 864 1.a
OR
b. Separate amount of unposted debits:
(1) Actual amount of unposted debits to demand deposits 0031 0 1.b.1
(2) Actual amounts of unposted debits to time and
savings deposits (1) 0032 0 1.b.2
2. Unposted credits (see instructions):
a. Actual amount of all unposted credits 3510 0 2.a
OR
b. Separate amount of unposted credits:
(1) Actual amount of unposted credits to demand deposits 3512 19,219 2.b.1
(2) Actual amount of unposted credits to time and savings deposits (1) 3514 0 2.b.2
3. Uninvested trust funds (cash) held in bank's own trust department
(not included in total deposits) 3520 0 3.
4. Deposits of consolidated subsidiaries (not included in total deposits):
a. Demand deposits of consolidated subsidiaries 2211 0 4.a
b. Time and savings deposits (1) of consolidated subsidiaries 2351 0 4.b
c. Interest accrued and unpaid on deposits of consolidated subsidiaries 5514 0 4.c
5. Not applicable.
6. Reserve balances actually passed through to the Federal Reserve by the
reporting bank on behalf of its respondent depository institutions
that are also reflected as deposit liabilities of the reporting bank: RCON
a. Amount reflected in demand deposits (included in Schedule RC-E, ----
Memorandum item 4.a) 2314 132 6.a
b. Amount reflected in time and savings deposits (1) (included in
Schedule RC-E, Memorandum item 4.b) 2315 0 6.b
7. Unamortized premiums and discounts on time and savings deposits: (1)(2)
a. Unamortized premiums 5516 0 7.a
b. Unamortized discounts 5517 0 7.b
8. TO BE COMPLETED BY BANKS WITH "OAKER DEPOSITS".
A. DEPOSITS PURCHASED OR ACQUIRED FROM OTHER FDIC-INSURED
INSTITUTIONS DURING THE QUARTER:
(1) TOTAL DEPOSITS PURCHASED AND ACQUIRED FROM OTHER
FDIC-INSURED INSTITUTIONS DURING THE QUARTER A531 0 8.A.1
(2) AMOUNT PURCHASED OR ACQUIRED DEPOSITS REPORTED
IN ITEM 8.A.(1) ABOVE ATTRIBUTABLE TO A SECONDARY
FUND (I.E., BIF MEMBER REPORT DEPOSITS ATTRIBUTABLE
TO SAIF; SAIF MEMBERS REPORT DEPOSITS ATTRIBUTABLE
TO BIF) A532 0 8.a.2
B. TOTAL DEPOSITS SOLD OR TRANSFERRED TO OTHER FDIC-INSURED
INSTITUTIONS DURING THE QUARTER A533 0 8.b
9. Deposits in lifeline accounts 5596 9
10. Benefit-responsive "Depository Institution Investment Contracts"
(included in total deposits) 8432 0 10
- --------
(1) For FDIC insurance and FICO assessment purposes, 'time and savings deposits' consists
of nontransaction accounts and nontransaction accounts and all transaction accounts
other than demand deposits.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-11
ATLANTA, GA 30302 Transit #: 06310215 ---------
29
---------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-O - CONTINUED
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
11. ADJUSTMENTS TO DEMAND DEPOSITS REPORTED
IN SCHEDULE RC-E FOR CERTAIN RECIPROCAL DEMAND BALANCES:
A. AMOUNT BY WHICH DEMAND DEPOSITS WOULD BE REDUCED IF
THE REPORTING BANK'S RECIPROCAL DEMAND BALANCES WITH THE
DOMESTIC OFFICES OF U.S. BANKS AND SAVINGS ASSOCIATIONS
AND INSURED BRANCHES IN PUERTO RICO AND U.S. TERRITORIES RCON
AND POSSESSIONS THAT WERE REPORTED ON A GROSS BASIS IN ----
SCHEDULE RC-E HAS BEEN REPORTED ON A NET BASIS 8785 0 11.a
B. AMOUNT BY WHICH DEMAND DEPOSITS WOULD BE INCREASED
IF THE REPORTING BANK'S RECIPROCAL DEMAND BALANCES
WITH FOREIGN BANKS AND FOREIGN OFFICES OF OTHER
U.S. BANKS (OTHER THAN INSURED BRANCHES IN
PUERTO RICO AND U.S. TERRITORIES AND POSSESSIONS)
THAT WERE REPORTED ON A NET BASIS IN
SCHEDULE RC-E HAD BEEN REPORTED ON A GROSS BASIS A181 0 11.b
C. AMOUNT BY WHICH DEMAND DEPOSITS WOULD BE REDUCED
IF CASH ITEMS IN PROCESS OF COLLECTION WERE INCLUDED
IN THE CALCULATION OF THE REPORTING BANK'S NET
RECIPROCAL DEMAND BALANCES WITH THE DOMESTIC
OFFICES OF U.S. BANKS AND SAVINGS ASSOCIATIONS AND
INSURED BRANCHES IN PUERTO RICO AND U.S.
TERRITORIES AND POSSESSIONS IN SCHEDULE RC-E A182 0 11.c
12. AMOUNT OF ASSETS NETTED AGAINST DEPOSIT LIABILITIES
ON THE BALANCE SHEET (SCHEDULE RC) IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (EXCLUDE
AMOUNTS RELATED TO RECIPROCAL DEMAND BALANCES):
A. AMOUNT OF ASSETS NETTED AGAINST DEMAND DEPOSITS A527 0 12.a
B. AMOUNT OF ASSETS NETTED AGAINST TIME AND SAVINGS
DEPOSITS A528 0 12.b
Memoranda (To be completed each quarter except as noted) Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------
1. Total deposits of the bank (sum of Memorandum items 1.a.(1) and 1.b.(1)
must equal Schedule RC, item 13.a): RCON
a. Deposit accounts of $100,000 or less: ----
(1) Amount of deposit accounts of $100,000 or less 2702 2,551,000 M.1a1
(2) Number of deposit accounts of $100,000 or less RCON Number
----
(TO BE COMPLETED FOR THE JUNE REPORT ONLY) 3779 314,478 M.1.a2
b. Deposit accounts of more than $100,000: RCON
----
(1) Amount of deposit accounts of more than $100,000 2710 1,408,905 M.1.b1
(2) Number of deposit accounts of more than $100,000 2722 4,442 M.1.b2
2. Estimated amount of uninsured deposits of the bank:
a. An estimate of your bank's uninsured deposits can be
determined by multiplying the number of deposit
accounts of more than $100,000 reported in Memorandum
item 1.b.(2) above by $100,000 and subtracting the
result from the amount of deposit accounts of
more than $100,000 reported in Memorandum item 1.b.(1) above.
Indicate in the appropriate box at right whether your bank has a
method or procedure for determining a better estimate of uninsured RCON YES/NO
deposits than the ----
estimate described above 6861 NO M.2.a
b. If the box marked YES has been checked, report the estimate
of uninsured deposits determined by using your bank's
method or procedure 5597 N/A M.2.b
3. HAS THE REPORTING INSTITUTION BEEN CONSOLIDATED WITH A PARENT BANK
OR SAVINGS ASSOCIATION IN THAT PARENT BANK'S OR PARENT SAVINGS ASSOCIATION'S
CALL REPORT OR THRIFT FINANCIAL REPORT?
IF SO, REPORT THE LEGAL TITLE AND FDIC CERTIFICATE NUMBER OF THE
PARENT BANK OR PARENT SAVINGS ASSOCIATION:
TEXT RCON FDIC Cert No.
----
A545 A545 N/A M.3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State # 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert # 21043 RC-11
ATLANTA, GA 30302 Transit #: 06310215
------
30
------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SCHEDULE RC-R - REGULATORY CAPITAL
This schedule must be completed by all banks as follows: Banks that report
total assets of $1 billion or more in Schedule RC item 12, for June 30, 1996,
must complete items 2 through 9 and Memoranda items 1 and 2.
BANKS WITH ASSETS OF LESS THAN $1 BILLION MUST COMPLETE ITEMS 1 THROUGH 3 BELOW
OR SCHEDULE RCR IN ITS ENTIRETY, DEPENDING ON THEIR RESPONSE TO ITEM 1 BELOW.
1. TEST FOR DETERMINING THE EXTENT TO WHICH SCHEDULE RC-R MUST BE COMPLETED.
TO BE COMPLETED ONLY BY BANKS WITH TOTAL ASSETS OF LESS THAN $1 BILLION. RCON YES/NO
Indicate in the appropriate box at the right whether the bank has total ----
capital greater than or equal to eight percent of adjusted total assets 6056 NO 1.
For purposes of this test, adjusted total assets equals total assets less
cash, U.S. Treasuries, U.S. Government agency obligations, and 80 percent
of U.S. Government-sponsored agency obligations plus the allowance for
loan and lease losses and selected off-balance sheet items as reported
on Schedule RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to
complete items 2 and 3 below. If the box marked NO has been checked, the
bank must complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual
risk-based capital ratio is less than eight percent or that the bank is not
in compliance with the risk-based capital guidelines.
NOTE: ALL BANKS ARE REQUIRED TO COMPLETE
ITEMS 2 AND 3 BELOW
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
2. Portion of qualifying limited-life capital instruments (original weighted
average maturity of at least 5 years) that is includible in Tier 2 capital: RCON
----
a. Subordinated debt (1) and intermediate term preferred stock A515 100,000 2.a
b. Other limited-life capital instruments A516 0 2.b
3. Amounts used in calculating regulatory capital ratios (report amounts
determined by the bank for its own internal regulatory capital analysis
consistent with applicable capital standards):
a. Tier 1 capital 8274 496,068 3.a
b. Tier 2 capital 8275 181,082 3.b
c. Total risk-based capital 3792 677,150 3.c
d. Excess allowance for loan and lease losses
(amount that exceeds 1.25% of gross risk-weighted assets) A222 7,168 3.d
e. Net risk-weighted assets (gross risk-weighted assets less excess
allowance reported in item 3.d above and all other deductions) A223 6,479,385 3.e
f. "Average total assets" (quarterly average reported in Schedule RC-K,
item 9, less all assets deducted from Tier 1 capital) (2) A224 6,727,489 3.f
<PAGE>
Items 4-9 and Memoranda items 1 and 2 are to be completed
by banks that answered no to item 1 above and
by banks with total assets of $1 billion or more.
</TABLE>
<TABLE>
<CAPTION>
--(Column A)-- --(Column B)--
Assets Credit
Recorded Equivalent Amount
on the of Off-Balance
Dollar Amount in Thousands Balance Sheet Sheet Items (3)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4. Assets and credit equivalent amount of off-balance
sheet items assigned to the Zero percent risk category: RCON
----
a. Assets recorded on the balance sheet 5163 1,039,695 RCON 4.a
----
b. Credit equivalent amount of off-balance sheet items 3796 0 4.b
</TABLE>
- ------------
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not deduct excess allowance for loan and lease losses.
(3) Do not report in column B the risk-weighted amount of assets reported in
column A.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State # 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert # 21043 RC-11
ATLANTA, GA 30302 Transit #: 06310215
-------
31
-------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-R - CONTINUED
--(Column A)-- --(Column B)--
Assets Credit
Recorded Equivalent Amount
on the of Off-Balance
Dollar Amount in Thousands Balance Sheet Sheet Items (3)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5. Assets and credit equivalent amounts of off-balance sheet items
assigned to the 20 percent risk category: RCON
----
a. Assets recorded on the balance sheet 5165 1,131,917 RCON 5.a
----
b. Credit equivalent amount of off-balance sheet items 3801 573,262 5.b
6. Assets and credit equivalent amounts of off-balance sheet items
assigned to the 50 percent risk category:
a. Assets recorded on the balance sheet 3802 1,220,769 6.a
b. Credit equivalent amount of off-balance sheet items 3803 149,437 6.b
7. Assets and credit equivalent amounts of off-balance sheet items
assigned to the 100 percent risk category:
a. Assets recorded on the balance sheet 3804 3,623,306 7.a
b. Credit equivalent amount of off-balance sheet items 3805 1,811,513 7.b
8. On-balance sheet asset values excluded from and deducted in
the calculation of the risk-based capital ratio(2) 3806 3,160 8.
9. Total assets recorded on the balance sheet (sum of
items 4.a, 5.a, 6.a, 7.a, and 8, column A) (must equal Schedule RC,
item 12.c plus items 4.b and 4.c) 3807 7,018,847 9.
MEMORANDA Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------
1. Current credit exposure across all off-balance sheet derivative contracts
covered by the risk-based capital standards 8764 515 M.1
</TABLE>
<TABLE>
<CAPTION>
---------WITH A REMAINING MATURITY OF --------
--(Column A)-- --(Column B)-- --(Column C)--
One Year Over Over
or less one year five years
thru five years
2. Notional principal amounts of off-balance
sheet derivative contracts: (3) RCON RCON RCON
---- ---- ----
<C> <S> <C> <C> <C> <C> <C> <C> <C>
a. Interest rate contracts 3809 0 8766 23,572 8767 125,321 M.2.a
b. Foreign exchange contracts 3812 0 8769 0 8770 0 M.2.b
c. Gold contracts 8771 0 8772 0 8773 0 M.2.c
d. Other precious metals contracts 8774 0 8775 0 8776 0 M.2.d
e. Other commodity contracts 8777 0 8778 0 8779 0 M.2.e
f. Equity derivatives contracts A000 0 A001 0 A002 0 M.2.f
</TABLE>
- ------------
(1) Do not report in column B the risk-weighted amount of assets reported in
column A.
(2) Include the difference between the fair value and the amortized cost of its
available-for-sale securities in item 8 and report the amortized cost of
these securities in items 4 through 7 above. Item 8 also includes on-balance
sheet asset values (or portions thereof) of off-balance sheet interest rate,
foreign exchange rate, and commodity contracts and those (e.g. future
contracts) not subject to risk-based capital. Item 8 margin accounts and
accrued receivables not included in the calculation of credit equivalent
amounts of off-balance sheet derivatives as well as any portion of the
allowance for loan and lease losses in excess of the amount that may be
included in Tier 2 capital.
(3) Exclude foreign exchange contracts with an original maturity of 14 days or
less and all future contracts.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 06/30/97 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-11
ATLANTA, GA 30302 Transit #: 06310215
------
32
------
</TABLE>
OPTIONAL NARRATIVE STATEMENT CONCERNING THE AMOUNTS REPORTED
IN THE REPORTS OF CONDITION AND INCOME
at close of business on June 30, 1997
SUNTRUST BANK, CENTRAL FLORIDA N.A. ATLANTA GA
- ----------------------------------- ------- --
Legal Title of Bank City State
The management of the reporting bank may, if it wishes, submit a brief narrative
statement on the amounts reported in the Reports of Condition and Income. This
optional statement will be made available to the public, along with the publicly
available data in the Reports of Condition and Income, in response to any
request for individual bank report data. However, the information reported in
column A and in all of Memorandum item 1 of Schedule RC-N is regarded as
confidential and will not be released to the public.
BANKS CHOOSING TO SUBMIT THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE
STATEMENT DOES NOT CONTAIN THE NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL BANK
CUSTOMERS, REFERENCES TO THE AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS IN
SCHEDULE RC-N, OR ANY OTHER INFORMATION THAT THEY ARE NOT WILLING TO HAVE MADE
PUBLIC OR THAT WOULD COMPROMISE THE PRIVACY OF THEIR CUSTOMERS.
All information furnished by the bank in the narrative statement must be
accurate and not misleading. Appropriate efforts shall be taken by the
submitting bank to ensure the statement's accuracy.
If, subsequent to the original submission, material changes are submitted for
the data reported in the Reports of Condition and Income, the existing narrative
statement will be deleted from the files, and from disclosure; the bank at its
option, may replace it with a statement appropriate to the amended area.
The optional narrative statement will appear in agency records and in release to
the public exactly as submitted (or amended as described in the preceding
paragraph) by the management of the bank.
THE STATEMENT WILL NOT BE EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY
AGENCIES FOR ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT
SIGNIFY THAT ANY FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE
ACCURACY OF THE INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL
APPEAR ON ANY PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE
MANAGEMENT OF THE REPORTING BANK.
- -------------------------------------------------------------------------------
C371 C372
RCON
----
No comment: 6979 X
BANK MANAGEMENT STATEMENT (please type or print clearly):
TEXT 6980 (70 CHARACTERS PER LINE)
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
/s/ R. Todd Bowers 7/28/97
- -------------------------------------------------------------------------------
SIGNATURE OF EXECUTIVE OFFICER OF BANK DATE OF SIGNATURE
THIS PAGE IS TO BE COMPLETED BY ALL BANKS
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. OMB No. For FDIC: 1557-0081
P.O. BOX 4418 CENTER 632 OMB No. For FDIC: 3064-0052
ATLANTA, GA 30302 OMB No. For Federal Reserve: 7100-0036 ------
Expiration Date: 3/31/2000 33
------
</TABLE>
<TABLE>
<CAPTION>
SPECIAL REPORT
C700
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------
Close of Business Date: FDIC CERT. #
<S> <C> <C>
06/30/97 21043
- -------------------------------------------------------------------------------------------------------------------
LOANS TO EXECUTIVE OFFICERS (COMPLETE AS OF EACH CALL REPORT DATE)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The following information is required by Public Laws 90-44 and 102-242, but does
not constitute a part of the Report of Condition. With each Report of
condition, these Laws require all banks to furnish a report of all loans or
other extensions of credit to their executive officers made since the date of
the previous Report of Condition. Data regarding individual loans or other
extensions of credit are not required. If no such loans or other extensions of
credit were made during the period, insert "none" against subitem (a). (Exclude
the first $15,000 of indebtedness of each executive officer under bank credit
card plan.) See Sections 215.2 and 215.3 of Title 12 of the Code of Federal
Regulations. (Federal Reserve Board Regulation O) for the definitions of
"executive officer" and "extension of credit", respectively. Exclude loans and
other extensions of credit to directors and principal shareholders who are not
executive officers.
The following information is required by Public Laws 90-44 and 102-242, but does
not constitute a part of the Report of
<TABLE>
<CAPTION>
RCON
----
<S> <C> <C> <C> <C> <C>
a. Number of loans made to executive officers since the previous Call
Report date 3561 0 a.
b. Total dollar amount of above loans (in thousands of dollars) 3561 0 b.
RCON From To
c. Range of interest charged on above loans ----
(example: 9-3/4% = 9.75) 7701 0.00% 7702 0.00% c.
</TABLE>
<TABLE>
<S> <C>
/s/ R. Todd Bowers, SVP & CFO 07/28/97
- -----------------------------------------------------------------------------------------------
SIGNATURE AND TITLE OF OFFICER AUTHORIZED TO SIGN REPORT: DATE (Month,Day,Year):
</TABLE>
NAME AND TITLE OF PERSON TO WHOM INQUIRIES MAY BE DIRECTED: (TEXT)
8903
--------------------------------------------------------------------------
8903
--------------------------------------------------------------------------
AREA CODE/PHONE NUMBER/EXTENSION: (TEXT)
8904
--------------------------------------------------------------------------
- -------------------------------------------------------------------------------
FDIC 8040/53 (6-95)
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
8-1/2% SENIOR SUBORDINATED NOTES DUE 2007
OF
PHYSICIAN SALES & SERVICE, INC.
PURSUANT TO THE PROSPECTUS, DATED ______________, 1997
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ____________
1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR
TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal should be
completed, signed and submitted timely to the Exchange Agent:
<TABLE>
<S> <C> <C>
By Registered or Certified Mail: By Facsimile Transmission: By Overnight Courier:
- ------------------------------------ ----------------------------- ---------------------------------------
SunTrust Bank, Central Florida, NA SunTrust Bank Central SunTrust Bank, Central Florida, NA
c/o The First National Bank of Florida, NA c/o The First National Bank of Chicago
Chicago (407) 237-4791 Corporate Trust Securities
Corporate Trust Redemption Unit ATTN: Theresa Hawkins 1 N State Street Teller 9th Floor
1 First National Plaza 9th Floor, Chicago, IL 60670
Suite 0124 Confirm by Telephone: ATTN: Debbie Randle
Chicago, IL 60670-0124 Theresa Hawkins
ATTN: Debbie Randle (407) 237-4791
For Information Call:
--------------------
Theresa Hawkins
(407) 237-4791
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
The Exchange Offer is not being mailed to, nor will tenders be accepted
from or on behalf of, Holders of Private Notes in any jurisdiction in which the
making or acceptance of the Exchange Offer would not be in compliance with the
laws of such jurisdiction.
<PAGE>
The undersigned acknowledges that it has received and reviewed the
Prospectus, dated ___________, 1997 (the "Prospectus"), of Physician Sales &
Service, Inc., a Florida corporation (the "Company") and this Letter of
Transmittal (the "Letter"), which together constitute the Company's offer to
exchange any and all outstanding 8-1/2% Senior Subordinated Notes Due 2007 (the
"Private Notes") of the Company for a like aggregate principal amount of 8-1/2%
Senior Subordinated Notes due 2007 which have been registered pursuant to the
Securities Act of 1933, as amended (the "Exchange Notes," and together with the
Private Notes, the "Notes") of the Company from the holders ("Holders") thereof
(the "Exchange Offer").
For each Private Note accepted for exchange, the Holder of such Private
Note will receive an Exchange Note having a principal amount equal to the that
of the surrendered Private Note. The terms of the Exchange Notes are identical
in all material respects to the Private Notes, except that (i) the Exchange
Notes will bear a different CUSIP Number from the Private Notes, (ii) the
issuance of the Exchange Notes will have been registered under the Securities
Act of 1933, as amended (the "Securities Act") and, therefore, the Exchange
Notes will not bear legends restricting the transfer thereof and (iii) Holders
of the Exchange Notes will not be entitled to certain registration rights
relating to the Private Notes. The Exchange Notes, and the Private Notes
remaining after the Exchange Offer, mature on October 1, 2007. Interest on the
Exchange Notes will accrue from the date of original issuance thereof, i.e.
October 1, 1997, payable semi-annually on each of April 1 and October 1 of each
year, commencing April 1, 1998 at the rate of 8-1/2% per annum. Holders whose
Private Notes are accepted for exchange will be deemed to have waived the right
to receive any interest accrued on the Private Notes. The Exchange Notes will
be redeemable, in whole or in part, at the option of the Company, on or after
October 1, 2002 at the redemption prices set forth therein, plus accrued
interest to the date of redemption. See "Description of Exchange Notes" section
of the Prospectus.
The Company reserves the right, at any time and from time to time, to
extend the Exchange Offer at its discretion, in which event the term "Expiration
Date" shall mean the latest time and date to which the Exchange Offer is
extended. The Company shall notify the Holders of the Private Notes of any
extension by means of a press release or other public announcement prior to 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Private Notes being tendered or accepted for exchange. However, the
Exchange Offer is subject to certain conditions. Please see the Prospectus
under the section entitled "The Exchange Offer -- Conditions."
This Letter is to be completed by a Holder of Private Notes either if
certificates are to be forwarded herewith or if a tender of certificates for
Private Notes, if available, is to be made by book-entry transfer to the account
maintained by SunTrust Bank, Central Florida, National Association (the
"Exchange Agent") at the Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in "The Exchange Offer --
Procedures for Tendering" section of the Prospectus. Holders of Private Notes
whose certificates are not immediately available, or who are unable to deliver
their certificates or confirmation of the book-entry tender of their Private
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility (a
"Book-Entry Confirmation") and all other documents required by this Letter to
the Exchange Agent on or prior to the Expiration Date, must tender their Private
Notes according to the guaranteed delivery procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures" section of the Prospectus. See
Instruction 1. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
-2-
<PAGE>
List below the Private Notes to which this Letter relates. If the space
provided below is inadequate, the Certificate numbers and principal amount of
Private Notes should be listed on a separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
1 2 3
DESCRIPTION OF PRIVATE NOTES Aggregate Principal Principal
Certificate Amount of Private Amount
Number(s)* Note(s) Tendered**
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Name(s) and Address(es) of Registered Holder(s):
- -----------------------------------------------------------------------------------------------
Total
- -----------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed if Private Notes are being tendered by book-entry
transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have
tendered ALL of the Private Notes represented by the Private Notes
indicated in column 2. See Instruction 2.
[ ] CHECK HERE IF TENDERED PRIVATE NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:_________________________________________
Account Number________________ Transaction Code Number________________
[ ] CHECK HERE IF TENDERED PRIVATE NOTES ARE BEING DELIVERED HEREWITH.
[ ] CHECK HERE IF TENDERED PRIVATE NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)_________________________________________
Window Ticket Number (if any)___________________________________________
Date of Execution of Notice of Guaranteed Delivery______________________
Name of Institution which guaranteed delivery___________________________
If Delivered by Book-Entry Transfer, Complete the Following:
Name of Tendering Institution:__________________________________________
Account Number________________ Transaction Code Number_________________
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO:
Name____________________________________________________________________
Address_________________________________________________________________
-3-
<PAGE>
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of
Private Notes indicated above. Subject to, and effective upon, the acceptance
for exchange of the Private Notes tendered hereby, the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Company all right, title and
interest in and to such Private Notes as are being tendered hereby.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent its agent and attorney-in-fact (with full knowledge that the Exchange
Agent also acts as the agent of the Company) with respect to the tendered
Private Notes with the full power of substitution to (i) deliver certificates
for such Private Notes to the Company and deliver all accompanying evidences of
transfer and authenticity to, or upon the order of, the Company, (ii) present
such Private Notes for transfer on the books of the Company and (iii) receive
for the account of the Company all benefits and otherwise exercise all rights of
beneficial ownership of such Private Notes, all in accordance with the terms of
the Exchange Offer. The power of attorney granted in this paragraph shall be
deemed to be irrevocable from and after the Expiration Date and coupled with an
interest.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Private Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim when the same are accepted by the Company. The
undersigned hereby further represents that any Exchange Notes acquired in
exchange for Private Notes tendered hereby will have been acquired in the
ordinary course of business of the undersigned, that the undersigned has no
arrangement or understanding with any person to participate in the distribution
(within the meaning of the Securities Act) of such Exchange Notes in violation
of the Securities Act and that the undersigned is not an "affiliate," (as
defined in Rule 405 under the Securities Act) of the Company.
The undersigned agrees that acceptance of any tendered Private Notes by the
Company and the issuance of Exchange Notes in exchange therefor will constitute
performance in full by the Company of its obligations under the Registration
Rights Agreement (as defined in the Prospectus) and that the Company will have
no further obligations or liabilities thereunder (except in limited
circumstances).
The undersigned also acknowledges as follows: This Exchange Offer is being
made in reliance on interpretations by the staff of the Securities and Exchange
Commission (the "Commission") set forth in certain "no-action" letters issued to
third parties and unrelated to the Company and the Exchange Offer, and based on
such interpretations, the Company believes that the Exchange Notes issued
pursuant to the Exchange Offer in exchange for the Private Notes may be offered
for resale, resold and otherwise transferred by holders thereof (other than any
such holder that is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act), without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
Exchange 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 Exchange Notes in violation of the provisions of the
Securities Act. Any Holder who tenders in the Exchange Offer with the intention
to participate, or for the purpose of participating, in a distribution of the
Exchange Notes could not rely on the position of the staff of the Commission
enunciated in "no-action" letters and, in the absence of an exemption therefrom,
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Failure to comply
with such requirements in such instance may result in such Holder incurring
liability under the Securities Act for which the Holder is not indemnified by
the Company. However, the undersigned acknowledges that the Company has not
sought its own no-action letter and 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.
-4-
<PAGE>
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive
Exchange Notes for its own account in exchange for Private Notes that were
acquired as a result of market-making or other trading activities, it
acknowledges that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Notes; however, by
so acknowledging and by delivering a prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act. The above-referenced prospectus may be the prospectus relating to the
Exchange Offer only if it contains a plan of distribution with respect to such
resale transactions (but need not name the undersigned or disclose the amount of
Exchange Notes held by the undersigned).
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company or the Exchange Agent to be necessary or
desirable to complete the sale, assignment and transfer of the Private Notes
tendered hereby. All authority conferred or agreed to be conferred in this
Letter and every obligation of the undersigned hereunder shall be binding upon
the successors, assigns, heirs, executors, administrators, trustees in
bankruptcy and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
This tender may be withdrawn only in accordance with the procedures set forth in
"The Exchange Offer -- Withdrawal Rights" section of the Prospectus.
For purposes of this Exchange Offer, the Company shall be deemed to have
accepted validly tendered Private Notes when, as and if the Company has given
oral and written notice thereof to the Exchange Agent.
The undersigned understands that tenders of the Private Notes pursuant to
any one of the procedures described under "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the Instructions hereto will constitute a
binding agreement between the undersigned and the Company in accordance with the
terms and subject to the conditions set forth herein and in the Prospectus.
The undersigned recognizes that under certain circumstances set forth in
the Prospectus under "The Exchange offer -- Conditions" the Company will not be
required to accept for exchange any of the Private Notes tendered. Private
Notes not accepted for exchange or withdrawn will be returned (or, in the case
of Private Notes tendered by book-entry transfer through the Book-Entry Transfer
Facility, will promptly be credited to an account maintained at the Book-Entry
Transfer Facility) without expense, to the undersigned at the address set forth
below unless otherwise indicated under "Special Delivery Instructions" below as
promptly as practicable after the Expiration Date.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the Exchange Notes and, if applicable,
substitute certificates representing Private Notes for any Private Notes not
exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Private Notes, please credit the account indicated above maintained
at the Book-Entry Transfer Facility. Similarly, unless otherwise indicated
under the box entitled "Special Delivery Instructions" below, please send the
Exchange Notes (and, if applicable, substitute certificates representing Private
Notes for any Private Notes not exchanged to the undersigned at the address
shown above in the box entitled "Description of Private Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF PRIVATE
NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
PRIVATE NOTES AS SET FORTH IN SUCH BOX ABOVE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING ANY
BOX BELOW.
-5-
<PAGE>
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete Accompanying Substitute Form W-9)
Dated:______________________ _______________, 199__
X _______________, 199__
______________________
X _______________, 199__
______________________
Signature(s) by Owner Date
Area Code and Telephone Number_________________________________________
If a holder is tendering any Private Notes, this Letter must be signed
by the registered holder(s) as the name(s) appear(s) on the certificate(s) for
the Private Notes or by any person(s) authorized to become registered holder(s)
by endorsements and documents transmitted herewith. If signature is by a
trustee, executor, administrator, guardian, officer or other person acting in a
fiduciary or representative capacity, please set forth full title. See
Instruction 3.
Name(s): ________________________________________________________________
________________________________________________________________
(Please Type or Print)
Capacity: ________________________________________________________________
Address: ________________________________________________________________
________________________________________________________________
(Including Zip Code)
SIGNATURE GUARANTEE
(if required by instruction 3)
Signature(s) Guaranteed by
an Eligible Institution: ______________________________________
(Authorized Signature)
______________________________________
(Title)
______________________________________
(Name and Firm)
- --------------------------------------------------------------------------------
-6-
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
[ ]
PAYOR'S NAME: PHYSICIAN SALES & SERVICE, INC.*
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
Name (if joint names, list first and circle the name of the person or entity
whose number you enter in Part 1 below. See instructions if your name has
changed.)
----------------------------------------------------------------------------------
Address
----------------------------------------------------------------------------------
SUBSTITUTE City, State and ZIP Code
----------------------------------------------------------------------------------
Form W-9 List account number(s) here (optional)
----------------------------------------------------------------------------------
Department of the Part 1--PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION Social Security Number
Treasury NUMBER ("TIN") IN THE BOX AT RIGHT AND CERTIFY BY or TIN
Internal Revenue Service SIGNING AND DATING BELOW
----------------------------------------------------------------------------------
Part 2--Check the box if you are NOT subject to backup withholding under the
provisions of section 3406(a)(I)(C) of the Internal Revenue Code because (1) you
have not been notified that you are subject to backup withholding as a result of
failure to report all interest or dividends or (2) the Internal Revenue Service
has notified you that you are no longer subject to backup withholding. [ ]
- -----------------------------------------------------------------------------------------------------------------
CERTIFICATION--UNDER THE PENALTIES OR PERJURY, I CERTIFY THAT THE INFORMATION Part 3--
PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.
Awaiting TIN [ ]
SIGNATURE_______________ DATE__________
- -----------------------------------------------------------------------------------------------------------------
*See Instruction 5.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Note: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
- ----
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
SUBSTITUTE FORM W-9.
- -------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration office or (b)
I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number to the payor, 31% of
all payments made to me pursuant to the Exchange Offer shall be retained until I
provide a taxpayer identification number to the payor and that, if I do not
provide my taxpayer identification number within sixty (60) days, such retained
amounts shall be remitted to the Internal Revenue Service as a backup
withholding and 31% of all reportable payments made to me thereafter will be
withheld and remitted to the Internal Revenue Service until I provide a number.
DATE: , 199__
____________________________ ___________________________________
Signature
- -------------------------------------------------------------------------------
-7-
<PAGE>
- -------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if certificates for Private Notes not exchanged
and/or Exchange Notes are to be issued in the name of and sent to someone other
than the person or persons whose signature(s) appear(s) on this Letter above, or
if Private Notes delivered by book-entry transfer which are not accepted for
exchange are to be returned by credit to an account maintained at the Book-Entry
Transfer Facility other indicated above.
Issue: Exchange Notes and/or Private Notes to:
Name(s)_________________________________________________________
(Please Type or Print)
________________________________________________________
(Please Type or Print)
Address_________________________________________________________
_________________________________________________________
(Zip Code)
(Complete Substitute Form W-9)
Credit unexchanged Private Notes delivered by
book-entry transfer to the Book-Entry
Transfer Facility account set forth below.
________________________________________________________
(Book-Entry Transfer Facility
Account Number, if applicable)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if certificates for Private Notes not exchanged
and/or Exchange Notes are to be sent to someone other than the person or persons
whose signature(s) appear(s) on this Letter above or to such person or persons
at an address other than shown in the box entitled "Description of Private
Notes" on this Letter above.
Issue: Exchange Notes and/or Private Notes to:
Name(s)____________________________________________________
(Please Type or Print)
___________________________________________________________
(Please Type or Print)
Address____________________________________________________
____________________________________________________
(Zip Code)
- --------------------------------------------------------------------------------
-8-
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the
Offer to Exchange
8-1/2% Senior Subordinated Notes due 2007
of
PHYSICIAN SALES & SERVICE, INC.
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES
FOR PRIVATE NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS
OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT
PRIOR TO 5:00 P.M. NEW YORK CITY TIME, ON THE EXPIRATION DATE.
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES.
This Letter is to be completed by noteholders either if certificates are to
be forwarded herewith or if tenders are to be made pursuant to the procedure for
delivery by book-entry transfer set forth in "The Exchange Offer - Procedures
for Tendering" section of the Prospectus. Certificates for all physically
tendered Private Notes, or Book-Entry Confirmation, as the case may be, as well
as a properly completed and duly executed Letter (or manually signed facsimile
hereof) and any other documents required by this Letter, must be reviewed by the
Exchange Agent at the address set forth herein on or prior to the Expiration
Date, or the tendering holder must comply with the guaranteed delivery
procedures set forth below.
Noteholders whose certificates for Private Notes are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Private Notes pursuant to the guaranteed delivery procedures set
forth in "The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures (i) such entry must be made through an
Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent must
receive from such Eligible Institution a properly completed and duly executed
letter (or a facsimile thereof) and Notice of Guaranteed Delivery, substantially
in the form provided by the Company (by telegram, telex, facsimile transmission,
mail or hand delivery), setting forth the name and address of the holder of
Private Notes and the amount of Private Notes tendered, setting forth the tender
is being made thereby and guaranteeing that within five New York Stock Exchange
("NYSE") trading days after the Expiration Date, the certificates for all
physically tendered Private Notes, or a Book-Entry Confirmation, and any other
documents required by the Letter will be deposited by the Eligible Institution
with the Exchange Agent, and the certificates for all physically tendered
Private Notes, in proper form for transfer, or Book-Entry Confirmation as the
case may be, and all other documents required by this Letter, are received by
the Exchange Agent within five NYSE trading days after the Expiration Date.
The method of delivery of this Letter, the Private Notes and all other
required documents is at the election and risk of the tendering holders, but the
delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. If Private Notes are sent by mail, it is suggested that the
mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent prior to 5 p.m., New York City time, on the
Expiration Date.
See "The Exchange Offer" section of the Prospectus.
-9-
<PAGE>
2. TENDER BY HOLDER, PARTIAL TENDERS.
Only a Holder of Private Notes may tender such Private Notes in the
Exchange Offer. Any beneficial owner whose Private 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 behalf of such beneficial owners. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing this Letter and delivering such owner's
Private Notes, either make appropriate arrangements to register ownership of the
Private Notes in such owner's name or obtain a properly completed bond power
from the registered Holder. The transfer of registered ownership may take
considerable time.
Tenders of Private Notes will be accepted only in denominations of $1,000
or interim multiples thereof. If less than all of the Private Notes evidenced
by a submitted certificate are to be tendered, the tendering holder(s) should
fill in the aggregate principal amount of Private Notes to be tendered in the
box above entitled "Description of Private Notes -- Principal Amount Tendered."
A reissued certificate representing the balance of nontendered Private Notes
will be sent to such tendering Holder (except in the case of book-entry
tenders), unless otherwise provided in the appropriate box on this Letter
promptly after the Expiration Date. All of the Private Notes delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
3. SIGNATURES OF THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES,
If this Letter is signed by the registered holder of the Private Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.
If any tendered Private Notes are owned of record by two or more joint
owners, all such owners must sign this Letter.
If any tendered Private Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the
Private Notes specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If, however, the Exchange
Notes are to be issued, or any untendered Private Notes are to be reissued, to a
person other than the registered holder, then endorsements of any certificates
transmitted hereby or separate bond powers are required. Signatures on such
certificate(s) must be guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
-10-
<PAGE>
ENDORSEMENTS ON CERTIFICATES FOR PRIVATE NOTES OR SIGNATURES ON BOND POWERS
REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FIRM WHICH IS A MEMBER OF
A REGISTERED NATIONAL SECURITIES EXCHANGE OR A MEMBER OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. OR BY A COMMERCIAL BANK OR TRUST COMPANY
HAVING AN OFFICE OR CORRESPONDENT IN THE UNITED STATES (AN "ELIGIBLE
INSTITUTION").
SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN ELIGIBLE
INSTITUTION, PROVIDED THE PRIVATE NOTES ARE TENDERED: (i) BY A REGISTERED
HOLDER OF PRIVATE NOTES (WHICH TERM, FOR PURPOSES OF THE EXCHANGE OFFER,
INCLUDES ANY PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY SYSTEM WHOSE NAME
APPEARS ON A SECURITY POSITION LISTING AS THE HOLDER OF SUCH PRIVATE NOTES
TENDERED) WHO HAS NOT COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS"
OR "SPECIAL DELIVERY INSTRUCTIONS" ON THIS LETTER, OR (ii) FOR THE ACCOUNT OF AN
ELIGIBLE INSTITUTION.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Private Notes should indicate in the applicable box
the name and address to which Exchange Notes issued pursuant to the Exchange
Offer and/or substitute certificates evidencing Private Notes not exchanged are
to be issued or sent if different from the name or address of the Person signing
this Letter. In the case of issuance in a different name, the employer
identification or social security number of the person named must also be
indicated. Noteholders tendering Private Notes by book-entry transfer may
request that Private Notes not exchanged be credited to such account maintained
at the Book-Entry Transfer Facility as such noteholder may designate hereon. If
no such instructions are given, such Private Notes not exchanged will be
returned to the name or address of the person signing this Letter.
5. TAX IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose
Private Notes are accepted for exchange must provide the Company (as payor) with
such holder's correct Taxpayer Identification Number ("TIN") on Substitute Form
W-9 above, which in the case of a tendering holder who is an individual, is his
or her social security number. If the Company is not provided with the current
TIN or an adequate basis for an exemption, such tendering holder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, delivery
to such tendering holder of Exchange Notes may be subject to backup withholding
in an amount equal to 31% of all reportable payments made after the exchange.
If withholding results in an overpayment of taxes, a refund may be obtained.
Exempt holders of Private Notes (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of
Taxpayer identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder of Private Notes must
provide its correct TIN by completing the "Substitute Form W-9" set forth above,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, or (ii) the
holder has not been notified by the Internal Revenue Service that such holder is
subject to backup withholding as a result of a failure to report all interest or
dividends or (iii) the internal Revenue Service has notified the holder that
such holder is no longer subject to backup withholding. If the tendering holder
of Private Notes is a nonresident alien or foreign entity not subject to backup
withholding, such holder must give the Company a completed Form W-8, Certificate
of Foreign Status. These forms may be obtained from the Exchange Agent. If the
Private Notes are in more than one name or are not in the
-11-
<PAGE>
name of the actual owner, such holder should consult the W-9 Guidelines for
information on which TIN to report. If such holder does not have a TIN, such
holders should consult the W-9 Guidelines for instructions on applying for a
TIN, check the box in Part 3 of the Substitute Form W-9 and write "applied for"
in lieu of its TIN. Note: Checking this box and writing "applied for" on the
form means that such holder has already applied for a TIN or that such holder
intends to apply for one in the near future. If such holder does not provide its
TIN to the Company within 60 days, backup withholding will begin and continue
until such holder furnishes its TIN to the Company.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Private Notes to it or its order pursuant to the Exchange Offer. If,
however, Exchange Notes and/or substitute Private Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person other
than the registered holder of the Private Notes tendered hereby, or if tendered
Private Notes are registered in the name of any person other than the person
signing this Letter, or if a transfer tax is imposed for any reason other than
the transfer of Private Notes to the company or its order pursuant to the
Exchange Offer, the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly to
such tendering holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE PRIVATE NOTES SPECIFIED IN THIS LETTER.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Private Notes, by execution of this Letter,
shall waive any right to receive notice of the acceptance of their Private Notes
for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of
Private Notes nor shall any of them incur any liability for failure to give any
such notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED PRIVATE NOTES.
Any holder whose Private Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, may be directed to the
Exchange Agent, at the address and telephone number indicated above.
-12-
<PAGE>
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
With Respect to
TENDER FOR EXCHANGE OF
8-1/2% SENIOR SUBORDINATED NOTES DUE 2007
OF
PHYSICIAN SALES & SERVICE, INC.
PURSUANT TO THE PROSPECTUS, DATED ________________, 1997.
As set forth in the Prospectus dated _____________, 1997 (as the same may
be amended from time to time, the "Prospectus") of Physician Sales & Service,
Inc. (the "Company") under the caption "The Exchange Offer--Guaranteed Delivery
Procedures," and in the accompanying Letter of Transmittal (the "Letter of
Transmittal") and Instruction 1 thereto, this form or one substantially
equivalent hereto must be used to accept the Company's offer (the "Exchange
Offer") to exchange any and all outstanding 8-1/2% Senior Subordinated Notes Due
2007 (the "Private Notes") of the Company for a like aggregate principal amount
of 8-1/2% Senior Subordinated Notes Due 2007 (the "Exchange Notes") of the
Company from the holders ("Holders") thereof if (i) certificates representing
the Private Notes to be exchanged are not immediately available or (ii) the
procedures for book-entry transfer cannot be completed prior to the Expiration
Date (as defined below). This form, properly completed and duly executed, may
be delivered by mail or hand delivery or transmitted, via facsimile, to SunTrust
Bank, Central Florida, National Association (the "Exchange Agent") as set forth
below. All capitalized terms used herein but not defined herein shall have the
meanings ascribed to them in the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5 P.M., NEW YORK CITY TIME, ON ____________
1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR
TO 5 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
The Exchange Agent for the Exchange offer is:
SUNTRUST BANK, CENTRAL FLORIDA, NA
<TABLE>
<S> <C> <C>
By Registered or Certified Mail: By Facsimile By Overnight Courier:
- ------------------------------- ------------ --------------------
Transmission:
------------
SunTrust Bank, Central Florida, NA SunTrust Bank, Central Florida, NA
c/o The First National Bank of SunTrust Bank Central c/o The First National Bank of
Chicago Florida, NA Chicago
Corporate Trust Redemption Unit (407) 237-4791 Corporate Trust Securities
1 First National Plaza 9th Floor, ATTN: Theresa Hawkins 1 N State Street Teller 9th Floor
Suite 0124 Chicago, IL 60670
Chicago, IL 60670-0124 Confirm by Telephone: ATTN: Debbie Randle
ATTN: Debbie Randle Theresa Hawkins
(407) 237-4791
For Information Call:
--------------------
Theresa Hawkins
(407) 237-4791
</TABLE>
<PAGE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on the
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the Letter of Transmittal,
receipt of which is hereby acknowledged, the principal amount of Private Notes
set forth below pursuant to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures."
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
PLEASE SIGN AND COMPLETE
Signatures of Registered Holder(s) or Authorized
Signatory _________________________________________________________________
_________________________________________________________________
_________________________________________________________________
Name(s) of Registered Holder(s): _______________________________________________
_________________________________________________________________
_________________________________________________________________
Principal Amount of Private Notes Tendered: ____________________________________
Date: __________________________________________________________________________
Address: _______________________________________________________________________
Area Code and Telephone No.: ___________________________________________________
If Notes will be delivered by book-entry transfer, check trust company below:
[_] The Depository Trust Company
Depository Account No: _________________________________________________________
-2-
<PAGE>
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly as
their name(s) appear on certificates for Private Notes or on a security position
listing as the owner of Private Notes, or by person(s) authorized to become
Holder(s) by endorsements and documents transmitted with this notice of
Guaranteed Delivery. if signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s): ________________________________________________________
________________________________________________________
Capacity: ________________________________________________________
Address(es): ________________________________________________________
________________________________________________________
Do not send Private Notes with this form. Private Notes should be sent to the
Exchange Agent together with a properly completed and duly executed Letter of
Transmittal.
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities exchange or
of the National Association of Securities Dealers, Inc. or a commercial bank or
trust company having an office or a correspondent in the United States, hereby
guarantees that, within five New York Stock Exchange trading days after the
Expiration Date, a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof), together with certificates representing the Private
Notes tendered hereby in proper form for transfer or confirmation of the book-
entry transfer of such Private Notes into the Exchange Agent's account at a
Book-Entry Transfer Facility, pursuant to the procedure for book-entry transfer
set forth in the Prospectus under the caption "The Exchange Offer -- Procedures
for Tendering", and required documents will be deposited by the undersigned with
the Exchange Agent.
Name of Firm: __________________________ _____________________________
Authorized Signature
Address: __________________________ Name: _______________________
__________________________ Title: ______________________
Area Code and Telephone No. ____________ Date: ______________________
DO NOT SEND PRIVATE NOTES WITH THIS FORM. ACTUAL SURRENDER OF PRIVATE
NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND
VALIDLY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
-3-
<PAGE>
Exhibit 99.3
Offer to Exchange
8-1/2% Senior Subordinated Notes Due 2007
of
PHYSICIAN SALES & SERVICE, INC.
Pursuant to the Prospectus
dated ______________, 1997
_____________, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We are enclosing herewith the materials listed below relating to the offer
by Physician Sales & Service, Inc. (the "Company") to exchange, upon the terms
and subject to the conditions set forth in the Prospectus dated ____________,
1997 (the "Prospectus") and in the related Letter of Transmittal (the "Letter of
Transmittal," together with the Prospectus, the "Exchange Offer"), any and all
outstanding 8-1/2% Senior Subordinated Notes Due 2007 ("Private Notes") of the
Company for a like aggregate principal amount of 8-1/2% Senior Subordinated
Notes Due 2007 of the Company, which have been registered under the Securities
Act of 1933, as amended (the "Exchange Notes").
Enclosed herewith are copies of the following documents:
1. The Prospectus;
2. The Letter of Transmittal for your use and for the information of your
client, together with guidelines of the Internal Revenue Service for
Certification of Taxpayer Identification Number on Substitute Form W-9 providing
information relating to backup federal income tax withholding;
3. Notice of Guaranteed Delivery to be used to accept the Exchange Offer
if the Private Notes and all other required documents cannot be delivered on or
prior to the Expiration Date;
4. Instruction to Registered Holder and/or Book-Entry Transfer
Participant from Beneficial Owner; and
5. A form of letter which may be sent to your clients for whose account
you hold the Private Notes in your name or in the name of a nominee,
accompanying the instruction form referred to above, for obtaining such clients,
instructions with record to the Exchange offer,
PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY
TIME, ON _______________, 1997, UNLESS EXTENDED. WE URGE YOU TO CONTACT YOUR
CLIENTS AS PROMPTLY AS POSSIBLE.
The Exchange offer is not conditioned upon any minimum number of Private
Notes being tendered.
Pursuant to the Letter of Transmittal, each holder of Private Notes will
represent to the Company that (i) any Exchange Notes acquired in exchange for
Private Notes pursuant to the Exchange Offer are being acquired in the ordinary
course of business of such holder, (ii) such holder has no arrangement or
understanding with any person to participate in the distribution (within the
meaning of the Securities Act of 1933, as amended (the "Securities Act")) of
such Exchange Notes, (iii) if such holder is not a broker-dealer, such holder is
not engaged in, and does not intend to engage in, a distribution of Exchange
Notes and (iv) such holder is not an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act. If the tendering holder is a
broker-
<PAGE>
dealer that will. receive Exchange Notes for its own account in exchange for
Private Notes that were acquired as a result of market-making or other trading
activities it acknowledges that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Notes. By acknowledging that it will deliver and by delivering a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Notes, such broker-dealer will not be deemed to admit
that it is an "Underwriter" within the meaning of the Securities Act.
The enclosed Instruction to Registered Holder and/or Book-Entry Transfer
Participant from Beneficial Owner contains an authorization by the beneficial
owners of the Private Notes for you to make the foregoing representations.
The Company will not pay any fees or commissions to any broker or dealer or
other Person (other than the Exchange Agent (as defined below)) for soliciting
tenders of the Private Notes pursuant to the Exchange Offer. The Company will
pay or cause to be paid any transfer taxes payable on the transfer of Private
Notes to it, except as otherwise provided in Instruction 6 of the enclosed
Letter of Transmittal.
Additional copies of the enclosed materials may be obtained from SunTrust
Bank, Central Florida, National Association (the "Exchange Agent"), at its
address and telephone number set forth on the back cover of the enclosed
Prospectus.
Very truly yours,
Physician Sales & Service, Inc.
-2-
<PAGE>
EXHIBITS 99.4
Offer to Exchange
8-1/2% Senior Subordinated Notes Due 2007
of
PHYSICIAN SALES & SERVICE, INC.
Pursuant to the Prospectus
dated ______________, 1997
___________, 1997
TO OUR CLIENTS:
Enclosed for your consideration is the Prospectus dated ______________,
1997 (as the same may be amended from time to time, the "Prospectus") and a
related Letter of Transmittal (the "Letter of Transmittal," together with the
Prospectus, the "Exchange Offer") relating to the offer by Physician Sales &
Service, Inc. (the "Company") to exchange any and all outstanding 8-1/2% Senior
Subordinated Notes Due 2007 of the Company for a like aggregate principal amount
of 8-1/2% Senior Subordinated Notes Due 2007 of the Company which have been
registered under the Securities Act of 1933, as amended.
Please Note that the Exchange Offer will expire at 5.00 p.m., New York City
time, on _______________ 1997, unless extended.
The Exchange Offer is not conditioned upon any minimum number of Private
Notes being tendered.
WE ARE THE REGISTERED HOLDER OF THE PRIVATE NOTES HELD BY US FOR YOUR
ACCOUNT. A TENDER OF ANY SUCH PRIVATE NOTES CAN BE MADE ONLY BY US AS THE
REGISTERED HOLDER AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL
IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO
TENDER PRIVATE NOTES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish us to tender
any or all of the Private Notes held by us for your account, pursuant to the
terms and conditions set forth in the Exchange offer. We also request that you
confirm that we may on your behalf make the representations contained in the
Letter of Transmittal that are to be made with respect to you as beneficial
owner.
Pursuant to the Letter of Transmittal, each holder of Private Notes will
represent to the Company that (i) any Exchange Notes acquired in exchange for
Private Notes pursuant to the Exchange Offer are being acquired in the ordinary
course of business of such holder, (ii) such holder has no arrangement or
understanding with any person to participate in the distribution (within the
meaning of the Securities Act of 1933, as amended (the "Securities Act")) of
such Exchange Notes, (iii) if such holder is not a broker-dealer, such holder is
not engaged in, and does not intend to engage in. a distribution of Exchange
Notes and (iv) such holder is not an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act. If the tendering holder is a
broker-dealer that will receive Exchange Notes for its own account in exchange
for Private Notes that were acquired by it, as a result of market-making or
other trading activities, it acknowledges that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such Exchange Notes. By acknowledging that it will deliver and by delivering a
prospectus, meeting the requirements of the Securities Act in connection with
any resale of such Exchange Notes, such broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
Very truly yours,
-------------------------
<PAGE>
Exhibit 99.5
Instruction to Registered Holder and/or Book
Entry Transfer Participant from Beneficial Owner
for
Offer for Exchange of
8-1/2% Senior Subordinated Notes Due 2007
OF PHYSICIAN SALES & SERVICE, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P M., NEW YORK CITY TIME, ON ___________,
1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
PRIVATE NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO THE EXPIRATION DATE.
Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus dated
________________, 1997 the "Prospectus") of Physician Sales & Service, Inc., a
Florida corporation (the "Company"), and the accompanying Letter of Transmittal
(the "Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer") to exchange any and all outstanding 8-1/2% Senior Subordinated
Notes Due 2007 (the "Private Notes") of the Company for a like aggregate
principal amount of 8-1/2% Senior Subordinated Notes Due 2007 registered under
the Securities Act of 1933, as amended (the "Exchange Notes") of the Company.
Capitalized terms used but not defined herein have the meanings ascribed to them
in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participants as to the action to be taken by you relating to the
Exchange Offer with respect to the Private Notes held by you for the account of
the undersigned.
The aggregate face amount of the Private Notes held by you for the account
of the undersigned is (FILL IN AMOUNT):
$_________ of the 8-1/2% Senior Subordinated Notes Due 2007.
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
[_] To TENDER the following Private Notes held by you for the account of
the undersigned (INSERT PRINCIPAL AMOUNT OF PRIVATE NOTES TO BE TENDERED (IF
ANY)):
$_____________________
[_] Not to TENDER any Private Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Private Notes held by you
for the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations and warranties contained in
<PAGE>
the Letter of Transmittal that are to be made with respect to the undersigned as
a beneficial owner, including, but not limited to, the representations, that (i)
any Exchange Notes acquired in exchange for Private Notes pursuant to the
Exchange Offer are being acquired in the ordinary course of business of the
undersigned, the undersigned has no arrangement or understanding with any person
to participate in the distribution (within the meaning of the Securities Act of
1933, as amended (the "Securities Act")) of such Exchange Notes, (iii) if the
undersigned is not a broker-dealer, the undersigned is not engaged in, and does
not intend to engage in, a distribution of Exchange Notes and (iv) the
undersigned is not an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act. If the undersigned is a broker-dealer that will
receive Exchange Notes for its own account in exchange for Private Notes that
were acquired as a result of market-making or other trading activities, it
acknowledges that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Notes. By
acknowledging that it will deliver and by delivering a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Notes, the undersigned is not deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
SIGN HERE
Name of beneficial owner(s): ___________________________________________________
Signature(s): __________________________________________________________________
Name(s) (please print):_________________________________________________________
Address:________________________________________________________________________
Telephone Number:_______________________________________________________________
Taxpayer Identification or Social Security Number:______________________________
Date:___________________________________________________________________________
-2-
<PAGE>
Exhibit 99.6
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYOR --
Social Security numbers have nine digits separated by two hyphens: i e., 000-
00-0000. Employer identification numbers have nine digits separated by only one
hyphen: i.e., 00-0000000. Individual Taxpayer identification numbers have nine
digits and are used solely for tax purposes by individuals who are required to
have a taxpayer identification number but who do not have one, and are not
eligible to obtain a Social Security number. The table below will help
determine the number to give the Payor.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
GIVE THE GIVE THE
IDENTIFICATION IDENTIFICATION
FOR THIS TYPE OF ACCOUNT NUMBER OF FOR THIS TYPE OF ACCOUNT NUMBER OF
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. An individual's account The individual 8. Sole proprietorship account The Owner(4)
2. Two or more individuals The actual owner of 9. A valid trust, estate, or Legal entity (Do not
(joint account) the account or, if pension trust furnish the
combined funds, any identifying number of
one of the the personal
individuals(1) representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(5)
3. Husband and wife (joint The actual owner of 10. Corporate account The corporation
account) the account or, if
joint funds, either
person (1)
4. Custodian account of a The minor(2) 11. Religious, charitable, or The organization
minor (Uniform Gift to educational organization
Minors Act) account
5. Adult and minor (joint The adult or, if the 12. Partnership account held in The partnership
account) minor is the only the name of the business
contributor, the
minor(1)
6. Account in the name of The ward, minor, or 13. Association, club or other The organization
guardian or incompetent person(3) tax-exempt organization
committee for a
designated ward,
minor, or incompetent
person
7. a. The usual revocable The grantor-trustee(1) 14. A broker or registered The broker or nominee
savings trust nominee
account (grantor is also
trustee)
b. So-called trust The actual owner(1) 15. Account with the Department The public entity
account that is of Agriculture in the name
not a legal or valid of a public entity (such as a
trust under State law State or local governmental
school district or prison)
that receives agricultural
program payments
</TABLE>
<PAGE>
_______________________________
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
-2-
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
W-7, Application for Individual Taxpayer Identification Number or Form SS-4,
Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), or an individual
retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to Partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the account received is not paid in
money.
<PAGE>
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE -- Section 6109 requires most recipients of dividend
interest, or other payments to give taxpayer identification numbers to Payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications
or affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
