Filed Pursuant to Rule 424(b)(3)
Registration No. 333-56538
PROSPECTUS
LOGO
AmeriSource Health Corporation
$300,000,000 Principal Amount of
5% Convertible Subordinated Notes Due December 2007 and
5,663,730 Shares of Common Stock Issuable Upon Conversion of the Notes
We issued the notes in a private placement in December 2000. This
prospectus will be used by selling securityholders to resell their notes and the
common stock issuable upon conversion of their notes at market prices prevailing
at the time of sale, fixed or varying prices determined at the time of sale, or
at negotiated prices. The selling security holders may sell the notes or the
common stock directly to purchasers or through underwriters, broker-dealers or
agents, who may receive compensation in the form of discounts or commissions. We
will not receive any proceeds from this offering.
The notes are convertible into shares of AmeriSource's common stock at any
time before their maturity or their prior redemption or repurchase by
AmeriSource. The notes will mature on December 1, 2007. The conversion rate is
18.8791 shares for each $1,000 principal amount of notes, subject to adjustment
in certain circumstances. This is equivalent to a conversion price of
approximately $52.97 per share.
AmeriSource will pay interest on the notes on June 1 and December 1 of each
year. The first interest payment will be made on June 1, 2001. The notes are
subordinated in right of payment to all of AmeriSource's existing and future
senior debt. The notes will be unconditionally guaranteed on a subordinated
basis by AmeriSource's direct wholly-owned subsidiary, AmeriSource Corporation.
The notes will be issued only in denominations of $1,000 and integral multiples
of $1,000.
On or after December 3, 2004, AmeriSource has the option to redeem all or a
portion of the notes that have not been previously converted at the redemption
prices set forth in this prospectus. A holder has the option, subject to certain
conditions, to require AmeriSource to repurchase any notes held by it in the
event of a "Change in Control," as described in this prospectus, at a price
equal to 100% of the principal amount of the notes plus accrued interest to the
date of repurchase.
We have not applied for listing of the notes on any securities exchange or
for quotation through any automated quotation system. The notes are eligible for
trading in the Private Offerings, Resale and Trading Through Automated Linkages
(PORTAL) market of the National Association of Securities Dealers, Inc. Our
Common Stock is traded on the New York Stock Exchange under the symbol "AAS".
The closing price of our Common Stock on the New York Stock Exchange on May 30,
2001 was $56.05 per share.
---------------------------
The securities offered hereby involve a high degree of risk. See "Risk
Factors" beginning on page 6.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
This prospectus is dated June 1, 2001
You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information contained in or incorporated by reference in this prospectus is
accurate as of any date other than the date on the front of this prospectus.
TABLE OF CONTENTS
Page
WHERE YOU CAN FIND MORE INFORMATION............................... 2
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION....... 3
SUMMARY........................................................... 4
RISK FACTORS...................................................... 6
USE OF PROCEEDS................................................... 9
RATIO OF EARNINGS TO FIXED CHARGES................................ 9
DESCRIPTION OF THE NOTES.......................................... 10
CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES.. 24
DESCRIPTION OF CAPITAL STOCK...................................... 28
SELLING SECURITYHOLDERS........................................... 30
PLAN OF DISTRIBUTION.............................................. 35
LEGAL MATTERS..................................................... 36
EXPERTS........................................................... 37
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements, information statements and other
information with the Securities and Exchange Commission. You may read and copy
this information, for a copying fee, at the Commission's Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices
of the Commission located at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New
York, New York 10048. Please call the Commission at 1-800-SEC-0330 for more
information on its public reference rooms. Our Commission filings are also
available to the public from commercial document retrieval services and at the
web site maintained by the Commission at http://www.sec.gov.
Our common stock is traded on the New York Stock Exchange and, therefore,
the information we file with the Commission may also be inspected at the offices
of the New York Stock Exchange, located at 20 Broad Street, New York, NY 10005.
We have filed with the Commission a registration statement on Form S-3 to
register with the Commission the resale of the notes and shares of our common
stock described in this prospectus. This prospectus is part of that registration
statement, and provides you with a general description of the notes and shares
of common stock being registered, but does not include all of the information
you can find in the registration statement or the exhibits. You should refer to
the registration statement and its exhibits for more information about
AmeriSource, the notes and the shares of common stock being registered.
The Commission allows us to "incorporate by reference" information into
this prospectus, which means that we can disclose important information to you
by referring to another document filed separately with the Commission. The
information incorporated by reference is deemed to be part of this prospectus,
except for information superseded by this prospectus. The prospectus
incorporates by reference the documents set forth below that we have previously
filed with the Commission. These documents contain important information about
AmeriSource.
. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2001;
. Our Quarterly Report on Form 10-Q for the quarter ended December 31, 2000;
. Our Annual Report on Form 10-K for the year ended September 30, 2000;
. Our Current Report on Form 8-K dated March 27, 2001;
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. Our Current Report on Form 8-K dated March 19, 2001;
. Our Current Report on Form 8-K dated December 4, 2000;
. Our Current Report on Form 8-K dated December 7, 2000;
. Our Current Report on Form 8-K dated December 14, 2000;
. Our description of AmeriSource's common stock contained in our Registration
Statement on Form 8-A, filed May 14, 1996 (SEC File No. 000-20485), which
incorporates by reference the section entitled "Description of Capital Stock"
in the Company's Registration Statement on Form S-2 (SEC File No. 33-57513),
filed March 8, 1995, and including any amendment or report filed for the
purpose of updating such description; and
. Our Proxy Statement on Form 14-A dated January 26, 2001.
We are also incorporating by reference additional documents that we may file
with the Commission under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act prior to the termination of this offering.
If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us or the
Commission. Documents incorporated by reference are available from us without
charge, except exhibits, unless we have specifically incorporated by reference
an exhibit into a document that this prospectus incorporates. Stockholders may
obtain documents incorporated by reference into this prospectus by requesting
them in writing or by telephone from:
AmeriSource Health Corporation, Attention: General Counsel, 1300 Morris
Drive, Suite 100, Chesterbrook, Pennsylvania 19087-5594 Telephone: (610) 727-
7000.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
Certain information contained in this prospectus includes forward- looking
statements (as defined in Section 27A of the Securities Act and Section 21E of
the Exchange Act) that reflect the Company's current views with respect to
future events and financial performance. Certain factors such as competitive
pressures, success of restructuring or systems initiatives, market interest
rates, regulatory changes, continued industry consolidation, changes in customer
mix, changes in pharmaceutical manufacturers' pricing and distribution policies,
changes in U.S. government policies, customer insolvencies, the loss of one or
more key customer or supplier relationships and other matters set forth in "Risk
Factors" and elsewhere in this prospectus or incorporated by reference could
cause actual results to differ materially from those in the forward-looking
statements. The Company assumes no obligation to update the matters discussed in
this prospectus.
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not assume the
information in this prospectus is accurate as of any date other than the date on
the front of those documents.
3
SUMMARY
The following summary highlights some information from this prospectus. It
is not complete and does not contain all of the information that you should
consider before making an investment decision. You should read this entire
prospectus, including the "Risk Factors" section, the financial statements and
related notes and the other more detailed information appearing elsewhere or
incorporated by reference in this prospectus. Unless otherwise indicated, "we",
"us", "our" and similar terms, as well as references to the "Company" and
"AmeriSource", refer to AmeriSource Health Corporation and its subsidiaries and
not to the selling securityholders. All industry statistics in this prospectus
were obtained from data prepared or provided by the National Wholesale
Druggists' Association and other recognized industry sources.
THE COMPANY
AmeriSource Health Corporation is a holding company and substantially all
of its operations are conducted through its direct wholly-owned subsidiary,
AmeriSource Corporation. We are a leading wholesale distributor of
pharmaceutical products and related healthcare solutions in the United States.
We provide services to health systems (hospitals and other acute care
facilities), alternate site customers (mail order facilities, nursing homes,
clinics and other non-acute care facilities), independent community pharmacies
and chain drugstores. We believe we are the largest provider of pharmaceuticals
to the health systems market.
We serve customers nationwide through 22 pharmaceutical distribution
facilities and two specialty products distribution facilities. We are typically
the primary source of supply for pharmaceutical and related products to our
customers. We offer a broad range of solutions to our customers and suppliers
designed to enhance the efficiency and effectiveness of their operations,
allowing them to improve the delivery of healthcare to patients and consumers.
Over the past five years we have grown significantly, primarily as a result
of overall industry growth, acquisitions, and a focused business strategy that
has created market share gains in existing markets. During that period, our
operating revenue has increased at a compound annual growth rate of 18.9%, and
our operating income (before unusual items) has increased at a compound annual
growth rate of 15.1%.
Our principal executive offices are located at 1300 Morris Drive, Suite
100, Chesterbrook, Pennsylvania 19087-5594. Our telephone number is (610) 727-
7000 and our web site is www.amerisource.com.
Recent Developments. On March 16, 2001, AmeriSource entered into a merger
agreement with Bergen Brunswig Corporation pursuant to which each of AmeriSource
and Bergen Brunswig would become wholly owned subsidiaries of a new parent
company named AmeriSource-Bergen Corporation. In that merger, subject to the
terms and conditions of the merger agreement with Bergen Brunswig, each share of
AmeriSource common stock will be converted into one share of AmeriSource-Bergen
common stock and each share of Bergen Brunswig common stock will be converted
into 0.37 shares of AmeriSource-Bergen common stock. If the merger with Bergen
Brunswig occurs, the stockholders of AmeriSource will become stockholders of
AmeriSource-Bergen, whose business will consist of the current businesses of
AmeriSource and Bergen Brunswig.
The merger with Bergen Brunswig is subject to a number of conditions,
including regulatory approvals and the approval of the stockholders of each of
AmeriSource and Bergen Brunswig. AmeriSource-Bergen has filed a registration
statement on Form S-4 relating to the merger with Bergen Brunswig. You are
encouraged to read that document and the documents filed by AmeriSource with the
Securities and Exchange Commission that are incorporated herein by reference.
See "Where You Can Find More Information" on page 2. If the merger is
consummated, upon consummation of the merger, AmeriSource-Bergen Corporation
will enter into a supplemental indenture providing that, subject to the terms
and conditions of the indenture, each note will thereafter be convertible into
the number of shares of AmeriSource-Bergen common stock which the note holder
would have received in the merger if the note holder had converted the note
immediately prior to the merger. The merger will not constitute a "change in
control" as defined in the Indenture relating to the notes, which would give the
note holders the right to require AmeriSource to repurchase the notes. See
"Description of the Notes - Repurchase at Option of Holders Upon a Change in
Control" on page 18.
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THE OFFERING
Securities offered........................................ $300,000,000 aggregate principal amount of 5% Convertible
Subordinated Notes and 5,663,730 shares of Common Stock
issuable upon conversion of the Notes.
Interest.................................................. We will pay interest on the notes semi-annually on June 1
and December 1 of each year, commencing June 1, 2001.
Guarantor................................................. Our subsidiary, AmeriSource Corporation, has fully and
unconditionally guaranteed the notes on a subordinated
basis.
Conversion................................................ You may convert each note into common stock at any time on
or before December 1, 2007 at a conversion rate of 18.8791
shares of common stock per $1,000 principal amount of notes
which is equivalent to a conversion price of approximately
$52.97 per share, subject to adjustment in certain events.
Subordination............................................. The notes are subordinated to our present and future senior
indebtedness. The notes are also effectively subordinated
in right of payment to all indebtedness and other
liabilities of our subsidiaries. AmeriSource Corporation's
obligations under the subsidiary guarantee is subordinated
to all existing and future senior indebtedness of
AmeriSource Corporation. Neither we nor our subsidiaries
are limited from incurring additional debt, including
senior indebtedness, under the indenture.
Optional redemption by AmeriSource........................ We may redeem the notes, at our option, in whole or in
part, on or after December 3, 2004, at the redemption
prices set forth in this prospectus plus accrued and unpaid
interest.
Repurchase at option of holders upon change in a control.. If a change in control of AmeriSource Health Corporation
occurs, each note holder will have the right, subject to
certain conditions and restrictions, to require us to
repurchase the notes held by them at 100% of their
principal amount, plus accrued interest to the repurchase
date. We may choose to pay this purchase price in cash or
in shares of our common stock valued at 95% of the average
closing sales prices for the five trading days immediately
preceding and including the third day prior to the
repurchase date.
Use of proceeds........................................... We will not receive any of the proceeds from the sale by
any selling securityholder of the notes or the underlying
common stock.
RISK FACTORS
An investment in the notes involves risks. Before you invest, you should
consider the risk factors described on pages 6 through 9 of this prospectus.
5
RISK FACTORS
An investment in our notes or our common stock involves a high degree of
risk. You should carefully consider the following risk factors and other
information contained in and incorporated by reference into this prospectus
before investing in our notes or our common stock. The trading price of our
notes and our common stock could decline due to any of these risks, and you may
lose all or part of your investment.
Intense competition may erode our profit margins.
The wholesale distribution of pharmaceuticals and related healthcare
services is highly competitive. We compete primarily with the following:
. National wholesale distributors of pharmaceuticals such as Bergen Brunswig
Corporation, Bindley Western Industries, Inc., Cardinal Health, Inc., and
McKesson HBOC Corporation;
. Regional and local distributors of pharmaceuticals;
. Chain drugstores that warehouse their own pharmaceuticals;
. Manufacturers who distribute their products directly to customers; and
. Other specialty distributors.
Some of our competitors have greater financial resources and geographic
coverage than we have. Competitive pressures have contributed to a decline in
our gross profit margins on operating revenue from 5.42% in fiscal 1996 to 4.48%
in fiscal 2000. This trend may continue and our business could be adversely
affected as a result.
The changing United States healthcare environment could negatively impact us.
Our products and services are intended to function within the structure of
the healthcare financing and reimbursement system currently being used in the
United States. In recent years, the healthcare industry has undergone
significant change in an effort to reduce costs. These changes include increased
use of managed care, cuts in Medicare, consolidation of competitors, suppliers
and customers, and the development of large, sophisticated purchasing groups. We
expect the healthcare industry to continue to change significantly in the
future. Some of these potential changes, such as a reduction in governmental
support of healthcare services or adverse changes in legislation or regulations
governing the delivery or pricing of prescription drugs, healthcare services or
mandated benefits, may cause healthcare industry participants to greatly reduce
the amount of our products and services they purchase or the price they are
willing to pay for our products and services. Changes in pharmaceutical
manufacturers' pricing or distribution policies could also significantly reduce
our income.
If we lose significant customers, our revenue could decline.
During the fiscal year ended September 30, 2000, sales to the federal
government, including the Veterans Administration, accounted for 20% of our
total operating revenue. A growing portion of our increased sales this year has
been to that customer. Consequently, our sales and credit concentration have
significantly increased. Accordingly, any defaults in payment or a material
reduction in purchases of our products by that customer could have a significant
negative impact on our financial condition, results of operations and liquidity.
In addition, the Company has contracts with group purchasing organizations
("GPOs") which represent a concentration of buying power among multiple
healthcare providers. Failure to win renewal of contracts with GPOs could lead
to a loss of revenue.
Debt and interest expense may adversely affect earnings and operations.
Our balance sheet is leveraged. This could negatively affect our operations
in a number of ways, including:
. We may be unable to obtain additional financing when needed for our
operations or when desired for acquisitions or expansions.
6
. A large part of our cash flow from operations must be dedicated to interest
payments on our debt, thereby reducing funds available for other corporate
purposes.
. Since much of our debt is at variable or floating interest rates, a rise in
market interest rates will increase our interest expense.
. The level of our debt could limit our flexibility in responding to downturns
in the economy or in our business.
. The terms of our debt agreements limit our ability to borrow additional
money, pay dividends, divest assets and make acquisitions.
Our business could be adversely affected if there are changes in the regulations
affecting the healthcare industry.
The healthcare industry is highly regulated at the local, state and federal
level. Consequently, AmeriSource is subject to the risk of changes in various
local, state, federal and international laws, which include the operating and
security standards of the United States Drug Enforcement Administration, the
Food and Drug Administration (the "FDA"), various state boards of pharmacy and
comparable agencies. These changes may affect AmeriSource's operations,
including distribution of prescription pharmaceuticals (including certain
controlled substances), operation of pharmacies, and packaging pharmaceuticals.
A review of AmeriSource's business by regulatory authorities may result in
determinations that could adversely affect the operations of AmeriSource.
AmeriSource is also subject to changes in various federal, state and local laws,
regulations and recommendations relating to safe working conditions, laboratory
practices, and the use and disposal of hazardous substances. Also, the
healthcare regulatory environment may change in a manner that would restrict
AmeriSource's existing operations, limit the expansion of its business or
otherwise adversely affect AmeriSource.
If some of our key managers leave the company, our operating results could
suffer.
AmeriSource depends on its senior and regional management. If some of these
employees leave the Company, operating results could be adversely affected.
Although AmeriSource has employment contracts with its Chief Executive Officer
and Chief Operating Officer, the Company cannot be assured that it will be able
to retain these or any other key employees.
Our financial results could be adversely affected if we are not successful in
our acquisition strategy.
Since our initial public offering in April 1995, we have completed several
acquisitions. Through these acquisitions and other investments, we have expanded
our geographic presence and our breadth of service offerings. We expect to
continue to acquire companies as an element of our growth strategy. Acquisitions
involve certain risks that could cause our actual growth to differ from our
expectations. For example:
. We may not be able to continue to identify suitable acquisition candidates or
to complete acquisitions on favorable terms.
. We compete with other companies to acquire companies. We cannot predict
whether this competition will increase. If competition does increase, there
may be fewer suitable companies available to be acquired and the price for
suitable acquisitions may increase.
. We may not be able to successfully integrate acquired businesses in a timely
manner. We may also incur substantial costs, delays or other operational or
financial problems during the integration process.
The market price of our common stock and the notes may fluctuate significantly,
which may result in losses for investors.
The stock market and the price of our common stock may be subject to
volatile fluctuations based on general economic and market conditions, industry
trends and company performance. The market price for our common stock may also
be affected by our ability to meet analysts' expectations. Failure to meet such
expectations, even slightly, could have an adverse effect on the market price of
our common stock. In the past, following periods of volatility in the market
price of a company's securities, securities class action litigation has often
been instituted against such a company. If similar litigation were instituted
against us, it could result in substantial costs and a diversion of our
management's attention and resources, which could have an adverse effect on our
business. Because of the volatility, we may fail to meet the
7
expectations of our stockholders or of securities analysts at some time in the
future, and our stock price, and therefore the price of our notes, could decline
as a result.
We are a holding company and rely on dividends from our subsidiaries to make
payments on the notes.
Substantially all of our properties are owned by, and substantially all of
our operations are conducted through, our subsidiaries. As a result, we depend
on dividends and other payments from our subsidiaries to satisfy our financial
obligations and make payments to our investors. The ability of our subsidiaries
to pay dividends and make other payments to us is subject to certain
restrictions under the terms of our debt agreements. See "Risk Factors--Debt and
Interest Expense May Adversely Affect Earnings and Operations" and "Description
of the Notes -- Subordination". In addition, the ability of a subsidiary to pay
dividends to us will be limited by applicable law. In the event of bankruptcy
proceedings affecting a subsidiary, to the extent we are recognized as a
creditor of that subsidiary, our claim would still be subordinate to any
security interest in or other lien on any assets of that subsidiary and to any
of its debt and other obligations that are senior to the payment of the notes.
The notes are subordinated to other debt and not secured by any of our assets,
and we may be unable to repay our obligations under the notes.
The notes will be unsecured and subordinated in right of payment to all of
our existing and future senior debt and the obligations of AmeriSource
Corporation under the subsidiary guarantee will be unsecured and subordinated in
right of payment to all of the existing and future senior debt of AmeriSource
Corporation. Because the notes and the obligations of AmeriSource Corporation
under the subsidiary guarantee are subordinate to our and AmeriSource
Corporation's senior debt, if we experience:
. bankruptcy, liquidation or reorganization;
. an acceleration of the notes due to an event of default under the indenture;
or
. other specified events,
we and AmeriSource Corporation will be permitted to make payments on the notes
and the subsidiary guarantee, as the case may be, only after we have satisfied
all of our senior debt obligations. Therefore, neither we nor AmeriSource
Corporation may have sufficient assets remaining to pay amounts due on any or
all of the notes.
The indenture for the notes does not limit our ability, or that of any of
our presently existing or future subsidiaries, to incur senior debt, other
indebtedness and other liabilities. We and AmeriSource Corporation may have
difficulty paying our obligations under the notes or the subsidiary guarantee,
as the case may be, if we, or AmeriSource Corporation, incur additional
indebtedness or other liabilities. From time to time we and our subsidiaries may
incur additional indebtedness, including senior debt, which could adversely
affect our ability to pay our obligations under the notes.
The subsidiary guarantee may be unenforceable.
Although laws differ among various jurisdictions, a court could, under
fraudulent conveyance laws, further subordinate or avoid the subsidiary
guarantee if it found that the subsidiary guarantee was incurred with actual
intent to hinder, delay or defraud creditors or that AmeriSource Corporation did
not receive fair consideration or reasonably equivalent value for the subsidiary
guarantee and that AmeriSource Corporation was any of the following:
. insolvent or was rendered insolvent because of the subsidiary guarantee;
. engaged in a business or transaction for which its remaining assets
constituted unreasonably small capital; or
. intended to incur, or believed that it would incur, debts beyond its ability
to pay at maturity.
If a court voided the subsidiary guarantee as the result of a fraudulent
conveyance, or held it unenforceable for any other reason, holders of the notes
would cease to have a claim against AmeriSource Corporation based on the
subsidiary guarantee and would be solely creditors of AmeriSource Health
Corporation.
8
We may be unable to repay or repurchase the notes.
At maturity, the entire outstanding principal amount of the notes will
become due and payable. In addition, if we experience a change in control, as
defined in "Description of the Notes--Repurchase at Option of Holders Upon a
Change in Control", each holder of the notes may require us to repurchase all or
a portion of that holder's notes. At maturity or if a change in control occurs,
we may not have sufficient funds or may be unable to arrange for additional
financing to pay the principal amount or repurchase price due. Under the terms
of the indenture for the notes, we may elect, if we meet certain conditions, to
pay the repurchase price with shares of common stock. Any future borrowing
arrangements or agreements relating to senior debt to which we become a party
may contain restrictions on, or prohibitions against, our repayments or
repurchases of the notes. If the maturity date or change in control occurs at a
time when our other arrangements prohibit us from repaying or repurchasing the
notes, we could try to obtain the consent of the lenders under those
arrangements, or we could attempt to refinance the borrowings that contain the
restrictions. If we do not obtain the necessary consents or refinance these
borrowings, we will be unable to repay or repurchase the notes. In that case,
our failure to repurchase any tendered notes or repay the notes due upon
maturity would constitute an event of default under the indenture. Any such
default, in turn, may cause a default under the terms of our senior debt. As a
result, in those circumstances, the subordination provisions of the indenture
would, absent a waiver, prohibit any repayment or repurchase of the notes until
we pay the senior debt in full.
There may be no public market for the notes.
While the outstanding notes are eligible for trading in the Private
Offering, Resale, and Trading through Automated Linkages (PORTAL) Markert of the
National Association of Securities Dealers, Inc., a screen-based automated
market for trading securities for qualified institutional buyers, there is no
public trading market for the notes. Although the initial purchasers of the
notes have advised us that they currently intend to make a market in the notes,
they are not obligated to do so and may discontinue their market-making
activities at any time without notice. Consequently, we do not know if any
market for the notes will develop, or if one does develop, that it will continue
for any period of time. If an active market for the notes fails to develop or
continue, this failure could harm the trading price and liquidity of the notes.
We do not intend to apply for listing of the notes on any securities exchange or
any automated quotation system.
USE OF PROCEEDS
We will not receive any proceeds from the sale by any selling
securityholder of the notes or the underlying common stock.
RATIO OF EARNINGS TO FIXED CHARGES
Period
From Fiscal Fiscal Fiscal Fiscal Fiscal
October 1, Year Ended Year Ended Year Ended Year Ended Year Ended
2000 to September September September September September
March 31, 2001 30, 2000 30, 1999 30, 1998 30, 1997 30, 1996
------------- ------------- ------------- ------------- ------------- -------------
Ratio of earnings to fixed
charges.................... 4.7 4.4 3.6 2.3 2.7 2.6
The ratios of earnings to fixed charges have been computed by dividing our
earnings from continuing operations and our consolidated subsidiaries before
income taxes, extraordinary loss and fixed charges, by the fixed charges. For
purposes of these ratios, fixed charges consist of interest expense and the
portion of rent expense representative of interest.
9
DESCRIPTION OF THE NOTES
We issued the notes and AmeriSource Corporation issued the subsidiary
guarantee under a document called the "Indenture." The Indenture is a contract
among us, AmeriSource Corporation and Bank One Trust Company, N.A., as Trustee
(the "Trustee"). The Indenture, the notes and the subsidiary guarantee are
governed by New York law. Because this section is a summary, it does not
describe every aspect of the notes, the subsidiary guarantee and the Indenture.
This summary is subject to and qualified in its entirety by reference to all of
the provisions of the Indenture, including definitions of certain terms used in
the Indenture. For example, in this section we use capitalized words to signify
defined terms that have been given special meaning in the Indenture. We describe
the meaning of only the more important terms. Wherever we refer to particular
defined terms, those defined terms are incorporated by reference here. In this
section, references to "AmeriSource," "we," "our" or "us" refer solely to
AmeriSource Health Corporation and not its subsidiaries.
General
The notes are general, unsecured obligations of AmeriSource. The notes are
subordinated, which means that they rank behind certain of our indebtedness as
described below. The notes are limited to $300,000,000 aggregate principal
amount. We are required to repay the principal amount of the notes in full on
December 1, 2007. The notes bear interest at the rate of 5% per annum. We will
pay interest on the notes on June 1 and December 1 of each year, commencing on
June 1, 2001. Interest payable per $1,000 principal amount of notes for the
period from December 12, 2000 to June 1, 2001 will be $23.4722.
A holder of notes may convert the notes into shares of our Class A common
stock (the "common stock") initially at the conversion rate of 18.8791 shares
per $1,000 in principal amount of notes at any time before the close of business
on December 1, 2007, unless the notes have been previously redeemed or
repurchased. The conversion rate may be adjusted as described below.
We may redeem the notes at our option at any time on or after December 3,
2004, in whole or in part, at the redemption prices set forth below under "--
Optional Redemption by AmeriSource," plus accrued and unpaid interest to the
redemption date. If there is a Change in Control of AmeriSource, you may have
the right to require us to repurchase your notes as described below under "--
Repurchase at Option of Holders Upon a Change in Control."
Form, Denomination, Transfer, Exchange And Book-Entry Procedures
The notes were issued:
. only in fully registered form;
. without interest coupons; and
. in denominations of $1,000 and greater multiples.
The notes that are sold under this prospectus will be evidenced by one or
more global notes which are deposited with the Trustee as custodian for DTC and
registered in the name of Cede & Co. ("Cede"), as nominee of DTC. Except as set
forth below, record ownership of the global note may be transferred, in whole or
in part, only to another nominee of DTC or to a successor of DTC or its nominee.
The global note will not be registered in the name of any person, or
exchanged for notes that are registered in the name of any person, other than
DTC or its nominee unless either of the following occurs:
. DTC notifies us that it is unwilling, unable or no longer qualified to
continue acting as the depositary for the global note; or
. an event of default with respect to the notes represented by the global note
has occurred and is continuing.
In those circumstances, DTC will determine in whose names any securities
issued in exchange for the global note will be registered.
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DTC or its nominee will be considered the sole owner and holder of the
global note for all purposes, and as a result:
. you cannot get notes registered in your name if they are represented by the
global note;
. you cannot receive certificated (physical) notes in exchange for your
beneficial interest in the global notes;
. you will not be considered to be the owner or holder of the global note or
any note it represents for any purpose; and
. all payments on the global note will be made to DTC or its nominee.
The laws of some jurisdictions require that certain kinds of purchasers
(for example, certain insurance companies) can only own securities in definitive
(certificated) form. These laws may limit your ability to transfer your
beneficial interests in the global note to these types of purchasers.
Only institutions (such as a securities broker or dealer) that have
accounts with the DTC or its nominee (called "participants") and persons that
may hold beneficial interests through participants can own a beneficial interest
in the global note. The only place where the ownership of beneficial interests
in the global note will appear and the only way the transfer of those interests
can be made will be on the records kept by DTC (for their participants'
interests) and the records kept by those participants (for interests of persons
held by participants on their behalf).
Secondary trading in bonds and notes of corporate issuers is generally
settled in clearinghouse (that is, next-day) funds. In contrast, beneficial
interests in a global note usually trade in DTC's same-day funds settlement
system, and settle in immediately available funds. We make no representations as
to the effect that settlement in immediately available funds will have on
trading activity in those beneficial interests.
We will make cash payments of interest on and principal of and the
redemption or repurchase price of the global note, as well as any payment of
Liquidated Damages, to Cede, the nominee for DTC, as the registered owner of the
global note. We will make these payments by wire transfer of immediately
available funds on each payment date.
We have been informed that DTC's practice is to credit participants'
accounts on the payment date with payments in amounts proportionate to their
respective beneficial interests in the notes represented by the global note as
shown on DTC's records, unless DTC has reason to believe that it will not
receive payment on that payment date. Payments by participants to owners of
beneficial interests in notes represented by the global note held through
participants will be the responsibility of those participants, as is now the
case with securities held for the accounts of customers registered in "street
name".
We will send any redemption notices to Cede. We understand that if less
than all the notes are being redeemed, DTC's practice is to determine by lot the
amount of the holdings of each participant to be redeemed.
We also understand that neither DTC nor Cede will consent or vote with
respect to the notes. We have been advised that under its usual procedures, DTC
will mail an "omnibus proxy" to us as soon as possible after the record date.
The omnibus proxy assigns Cede's consenting or voting rights to those
participants to whose accounts the notes are credited on the record date
identified in a listing attached to the omnibus proxy.
Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants, the ability of a person having a beneficial
interest in the principal amount represented by the global note to pledge the
interest to persons or entities that do not participate in the DTC book-entry
system, or otherwise take actions in respect of that interest, may be affected
by the lack of a physical certificate evidencing its interest.
DTC has advised us that it will take any action permitted to be taken by a
holder of notes (including the presentation of notes for exchange) only at the
direction of one or more participants to whose account with DTC interests in the
global note are credited and only in respect of such portion of the principal
amount of the notes represented by the global note as to which such participant
or participants has or have given such direction.
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DTC has also advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code, as amended, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities and Exchange Act of 1934, as amended
(the "Exchange Act"). DTC was created to hold securities for its participants
and facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and may include certain other organizations.
Certain of such participants (or their representatives), together with other
entities, own DTC. Indirect access to the DTC system is 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.
The policies and procedures of DTC, which may change periodically, will
apply to payments, transfers, exchanges and other matters relating to beneficial
interests in the global note. We and the Trustee have no responsibility or
liability for any aspect of DTC's or any participants' records relating to
beneficial interests in the global note, including for payments made on the
global note, and we and the Trustee are not responsible for maintaining,
supervising or reviewing any of those records.
Conversion Rights
A holder of notes may, at its option, convert any portion of the principal
amount of any note that is an integral multiple of $1,000 into shares of our
common stock at any time on or prior to the close of business on the maturity
date, unless the notes have been previously redeemed or repurchased, at a
conversion rate of 18.8791 shares of common stock per $1,000 principal amount of
notes. The conversion rate is equivalent to a conversion price of approximately
$52.97 per share. The right of a holder of notes to convert a note called for
redemption or delivered for repurchase will terminate at the close of business
on the redemption date or repurchase date for that note, unless we default in
making the payment due upon redemption or repurchase.
A holder of notes may convert all or part of any note by delivering the
note at the Corporate Trust Office of the Trustee in the Borough of Manhattan,
The City of New York, accompanied by a duly signed and completed notice of
conversion, a copy of which may be obtained by the Trustee. The conversion date
will be the date on which the note and the duly signed and completed notice of
conversion are so delivered.
As promptly as practicable on or after the conversion date, we will issue
and deliver to the Trustee a certificate or certificates for the number of full
shares of our common stock issuable upon conversion, together with payment in
lieu of any fraction of a share. The certificate will then be sent by the
Trustee to the conversion agent for delivery to the holder. The shares of our
common stock issuable upon conversion of the notes will be fully-paid and
nonassessable and will rank equally with the other shares of our common stock.
If a holder of notes surrenders a note for conversion on a date that is not
an Interest Payment Date, the holder will not be entitled to receive any
interest for the period from the next preceding Interest Payment Date to the
conversion date, except as described below in this paragraph. Any note
surrendered for conversion during the period from the close of business on any
Regular Record Date to the opening of business on the next succeeding Interest
Payment Date (except notes (or portions thereof) called for redemption on a
redemption date or to be repurchased on a repurchase date for which the right to
convert would terminate during such period) must be accompanied by payment of an
amount equal to the interest payable on such Interest Payment Date on the
principal amount of notes being surrendered for conversion. In the case of any
note which has been converted after any Regular Record Date but before the next
succeeding Interest Payment Date, interest payable on such Interest Payment Date
shall be payable on such Interest Payment Date notwithstanding such conversion,
and such interest shall be paid to the holder of such note on such Regular
Record Date.
No other payment or adjustment for interest, or for any dividends in
respect of our common stock, will be made upon conversion. Holders of our common
stock issued upon conversion will not be entitled to receive any dividends
payable to holders of our common stock as of any record time or date before the
close of business on the conversion date. We will not issue fractional shares
upon conversion. Instead, we will pay cash based on the market price of our
common stock at the close of business on the conversion date.
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A holder of notes will not be required to pay any taxes or duties relating
to the issue or delivery of our common stock on conversion but will be required
to pay any tax or duty relating to any transfer involved in the issue or
delivery of our common stock in a name other than that of the holder.
Certificates representing shares of our common stock will not be issued or
delivered unless all taxes and duties, if any, payable by the holder have been
paid.
The conversion rate will be subject to adjustment for, among other things:
. dividends (and other distributions) payable in our common stock on shares of
our capital stock,
. the issuance to all holders of our common stock of rights, options or
warrants entitling them to subscribe for or purchase our common stock at less
than the then Current Market Price of such common stock (determined as
provided in the Indenture) as of the record date for shareholders entitled to
receive such rights, options or warrants,
. subdivisions, combinations and reclassifications of our common stock,
. distributions to all holders of our common stock of evidences of indebtedness
of AmeriSource, shares of capital stock, cash or assets (including
securities, but excluding those dividends, rights, options, warrants and
distributions referred to above, dividends and distributions paid exclusively
in cash and distributions upon mergers or consolidations discussed below),
. distributions consisting exclusively of cash (excluding any cash portion of
distributions referred to in the immediately preceding clause, or cash
distributed upon a merger or consolidation to which the next succeeding
paragraph applies) to all holders of our common stock in an aggregate amount
that, combined together with (1) other such all-cash distributions made
within the preceding 365-day period n respect of which no adjustment has been
made and (2) any cash and the fair market value of other consideration
payable in connection with any tender offer by us or any of our subsidiaries
for our common stock concluded within the preceding 365-day period in respect
of which no adjustment has been made, exceeds 10% of our market
capitalization (being the product of the Current Market Price per share of
the common stock on the record date for such distribution and the number of
shares of common stock then outstanding), and
. the successful completion of a tender offer made by us or any of our
subsidiaries for our common stock which involves an aggregate consideration
that, together with (1) any cash and other consideration payable in a tender
offer by us or any of our subsidiaries for our common stock expiring within
the 365-day period preceding the expiration of such tender offer in respect
of which no adjustment has been made and (2) the aggregate amount of any such
all-cash distributions referred to in the immediately preceding clause above
to al holders of our common stock within the 365-day period preceding the
expiration of such tender offer in respect of which no adjustments have been
made, exceeds 10% of our market capitalization on the expiration of such
tender offer.
We reserve the right to effect such increases in the conversion rate in
addition to those required by the foregoing provisions as we consider to be
advisable in order that any event treated for United States federal income tax
purposes as a dividend of stock or stock rights will not be taxable to the
recipients. We will not be required to make any adjustment to the conversion
rate until the cumulative adjustments amount to 1.0% or more of the conversion
rate. We will compute all adjustments to the conversion rate and will give
notice by mail to holders of the registered notes of any adjustments.
In case of any consolidation or merger of AmeriSource with or into another
entity or any merger of another entity into AmeriSource (other than a merger
which does not result in any reclassification, conversion, exchange or
cancellation of our common stock), or in case of any sale or transfer of all or
substantially all of our assets, each note then outstanding will become
convertible only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer by a holder of the
number of shares of common stock into which the notes were convertible
immediately prior to the consolidation or merger or sale or transfer.
We may increase the conversion rate for any period of at least 20 days,
upon at least 15 days notice, if our Board of Directors determines that the
increase would be in our best interest. The Board of Directors' determination in
this regard will be conclusive. We will give holders of notes at least 15 days'
notice of such an increase in the conversion rate. Any
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increase, however, will not be taken into account for purposes of determining
whether the closing price of our common stock exceeds the conversion price by
105% in connection with an event which otherwise would be a Change In Control as
defined below.
If at any time we make a distribution of property to our stockholders that
would be taxable to such stockholders as a dividend for United States federal
income tax purposes, such as distributions of evidences of indebtedness or
assets of AmeriSource, but generally not stock dividends on common stock or
rights to subscribe for common stock, and, pursuant to the anti-dilution
provisions of the Indenture, the number of shares into which notes are
convertible is increased, that increase may be deemed for United States federal
income tax purposes to be the payment of a taxable dividend to holders of notes.
See "Certain United States Federal Income and Estate Tax Consequences--Tax
Consequences to U.S. Holders."
Subsidiary Guarantee
Our subsidiary, AmeriSource Corporation, has fully and unconditionally
guaranteed, on a subordinated basis, our obligations under the notes. The
obligations of AmeriSource Corporation under the subsidiary guarantee is
subordinated to the prior payment in full in cash or cash equivalents of all
Senior Debt of AmeriSource Corporation. The subordination provisions applicable
to the subsidiary guarantee are substantially the same as the subordination
provisions applicable to the notes. The obligations of AmeriSource Corporation
under the subsidiary guarantee are limited as necessary to seek to prevent such
subsidiary guarantee from constituting a fraudulent conveyance under applicable
law.
AmeriSource Corporation may not sell or otherwise dispose of all or
substantially all of its assets, or consolidate with or merge with or into,
another person unless:
. immediately after giving effect to that transaction, no default or event of
default exists under the Indenture; and
. the person acquiring the property in any similar sale or disposition or the
person formed by or surviving any similar consolidation or merger assumes all
the obligations of AmeriSource Corporation pursuant to a supplemental
indenture satisfactory to the trustee.
AmeriSource Corporation will be released from its subsidiary guarantee:
. in connection with any sale or other disposition of all or substantially all
of its assets, if the disposition is to us; or
. in connection with any sale of all of its capital stock, if the person
acquiring the capital stock assumes all the obligations of AmeriSource
Corporation pursuant to a supplemental indenture satisfactory to the trustee.
Subordination
The notes are subordinated and, as a result, the payment of the principal,
any premium and interest (including Liquidated Damages) on the notes, including
amounts payable on any redemption or repurchase, will be subordinated to the
prior payment in full, in cash or other payment satisfactory to holders of
Senior Debt, of all of our senior debt. The obligations of AmeriSource
Corporation under the subsidiary guarantee is subordinated to all existing and
future senior debt of AmeriSource Corporation.
"Senior Debt" is defined in the Indenture with respect to each of
AmeriSource Health Corporation and AmeriSource Corporation to mean: the
principal of (and premium, if any) and interest (including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowable as a claim in any such
proceeding) on, and all fees and other amounts payable in connection with, the
following, whether absolute or contingent, secured or unsecured, due or to
become due, outstanding on the date of the Indenture or thereafter created,
incurred or assumed:
. indebtedness evidenced by a credit or loan agreement, note, bond, debenture
or other written obligation,
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. obligations for money borrowed and obligations under the receivables
securitization facility,
. obligations evidenced by a note or similar instrument given in connection
with the acquisition of any businesses, properties or assets of any kind,
. obligations (1) as lessee under leases required to be capitalized on the
balance sheet of the lessee under generally accepted accounting principles or
(2) as lessee under other leases for facilities, capital equipment or related
assets, whether or not capitalized, entered into or leased for financing
purposes,
. obligations under interest rate and currency swaps, caps, floors, collars,
hedge agreements, forward contracts or similar agreements or arrangements,
. obligations with respect to letters of credit, bankers' acceptances and
similar facilities (including reimbursement obligations with respect to the
foregoing),
. obligations issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable and accrued liabilities
arising in the ordinary course of business),
. obligations of the type referred to in the above clauses of another person
and all dividends of another person, the payment of which, in either case, we
have assumed or guaranteed, or for which we are responsible or liable,
directly or indirectly, jointly or severally, as obligor, guarantor or
otherwise, or which are secured by a lien on our property, including, without
limitation, AmeriSource Corporation's $500 million revolving credit facility
and its $400 million receivables securitization facility, and
. renewals, extensions, modifications, replacements, restatements and
refundings of, or any indebtedness or obligation issued in exchange for, any
such indebtedness or obligation described in the above clauses of this
definition.
Senior Debt will not include the notes or any other indebtedness or obligation
if its terms or the terms of the instrument under which or pursuant to which it
is issued expressly provide that it is not superior in right of payment to the
notes or the obligations under the subsidiary guarantee.
We may not make any payment on account of principal, premium or interest
(including Liquidated Damages, if any) on the notes, or redemption or repurchase
of the notes, if either of the following occurs:
. we default in our obligations to pay principal, premium, interest or other
amounts on our Senior Debt, including a default under any redemption or
repurchase obligation, and the default continues beyond any grace period that
we may have to make those payments; or
. any other default occurs and is continuing on any Designated Senior Debt and
(1) the default permit the holders of the Designated Senior Debt to
accelerate its maturity and (2) the Trustee has received a notice (a "Payment
Blockage Notice") of the default from AmeriSource, the holder of such debt or
such other person permitted to give such notice under the Indenture.
If payments of the notes have been blocked by a payment default on Senior
Debt, payments on the notes may resume when the payment default has been cured
or waived or ceases to exist. If payments on the notes have been blocked by a
nonpayment default, payments on the notes may resume on the earlier of (1) the
date the nonpayment default is cured or waived or ceases to exist or (2) 179
days after the Payment Blockage Notice is received.
No nonpayment default that existed on the day a Payment Blockage Notice was
delivered to the Trustee can be used as the basis for any subsequent Payment
Blockage Notice. In addition, once a holder of Designated Senior Debt has
blocked payment on the notes by giving a Payment Blockage Notice, no new period
of payment blockage can be commenced pursuant to a subsequent Payment Blockage
Notice until both of the following are satisfied:
. 365 days have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice; and
. all scheduled payments of principal, any premium and interest with respect to
the notes that have come due have been paid in full in cash.
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"Designated Senior Debt" means our obligations under the Liquidity Credit
Facility, the Receivables Securitization Facility and the Revolving Credit
Facility and under any other particular Senior Debt in which the instrument
creating or evidencing the same or the assumption or guarantee thereof (or
related agreements or documents to which we are a party), whether or not
executed contemporaneously with the issuance of such Senior Debt expressly
provides that such Senior Debt shall be "Designated Senior Debt" for purposes of
this prospectus (provided that such instrument, agreement or other document may
place limitations and conditions on the right of such Senior Debt to exercise
the rights of Designated Senior Debt).
"Liquidity Credit Facility" means the credit facility created pursuant to the
Liquidity Facility Credit Agreement dated as of October 3, 2000 among
AmeriSource Corporation, as borrower, AmeriSource Health Corporation, as a
guarantor, the lenders identified therein and Bank of America, N.A. as
administrative agent, as such agreement has been or may be amended,
supplemented, restated, extended, renewed or otherwise modified from time to
time and includes any agreement (and all successor agreements thereto) extending
the maturity of, refinancing or otherwise restructuring all or any portion of
the indebtedness under such agreement or any successor agreement.
"Receivables Securitization Facility" means a credit facility which was entered
into pursuant to the Receivables Purchase Agreement, dated May 14, 1999, among
AmeriSource Receivables Financial Corporation, as seller, AmeriSource
Corporation, as servicer, AmeriSource Health Corporation, as guarantor, Delaware
Funding Corporation, as buyer, and Morgan Guaranty Trust Company of New York, as
administrative agent, as such agreement has been or may be amended,
supplemented, restated, extended, renewed or otherwise modified from time to
time and includes any agreement (and all successor agreements thereto (extending
the maturity of, refinancing or otherwise restructuring all or any portion of
the indebtedness under such agreement or any successor agreement.
"Revolving Credit Facility" means a credit facility created pursuant to the
Revolving Credit Agreement dated as of January 8, 1997 among AmeriSource
Corporation, as borrower, AmeriSource Health Corporation, as a guarantor, the
lenders identified therein and Bank of America, N.A., as administrative agent,
as such agreement has been or may be amended, supplemented, restated, extended,
renewed or otherwise modified from time to time and includes any agreement (and
all successor agreements thereto) extending the maturity of, refinancing or
otherwise restructuring all or any portion of the indebtedness under such
agreement or any successor agreement.
In addition, upon any acceleration of the principal due on the notes as a
result of an Event of Default or payment or distribution of our assets to
creditors upon any dissolution, winding up, liquidation or reorganization,
whether voluntary or involuntary, marshaling of assets, assignment for the
benefit of creditors, or in bankruptcy, insolvency, receivership or other
similar proceedings, all principal, premium, if any, interest and other amounts
due on all of our Senior Debt must be paid in full before a holder of notes is
entitled to receive any payment. By reason of such subordination, in the event
of insolvency, our creditors who are holders of our Senior Debt are likely to
recover more, ratably, than a holder of notes is, and a holder of notes will
likely experience a reduction or elimination of payments on the notes.
The Indenture does not limit our ability or the ability of AmeriSource
Corporation to incur Senior Debt or our ability or the ability of AmeriSource
Corporation or our other subsidiaries to incur any other indebtedness.
Optional Redemption by AmeriSource
On or after December 3, 2004, we may redeem the notes, in whole or in part,
at the prices set forth below. If we elect to redeem all or part of the notes,
we will give at least 30, but no more than 60, days notice to you.
The redemption price, expressed as a percentage of principal amount, is as
follows for the 12-month periods beginning on December 1 of the following years
(December 3, 2004 through December 1, 2005 in the case of the first such
period):
Redemption
Year Price
---- ----------
2004 102.143%
2005 101.429%
2006 100.714%
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and thereafter is equal to 100% of the principal amount, in each case together
with accrued interest to the date of redemption.
No sinking fund is provided for the notes, which means that the Indenture
does not require us to redeem or retire the notes periodically.
Payment and Conversion
We will make all payments of principal and interest on the notes by dollar
check drawn on an account maintained at a bank in The City of New York. If a
holder of notes holds registered notes with a face value greater than
$2,000,000, at the request of the holder we will make payments of principal or
interest to the holder by wire transfer to an account maintained by the holder
at a bank in The City of New York. Payment of any interest on the notes will be
made to the person in whose name the note, or any predecessor note, is
registered at the close of business on December 1 or June 1 (whether or not a
business day) immediately preceding the relevant Interest Payment Date (a
"Regular Record Date"). If a holder of notes holds registered notes with a face
value in excess of $2,000,000 and the holder would like to receive payments by
wire transfer, the holder will be required to provide the Trustee with wire
transfer instructions at least 15 days prior to the relevant payment date.
Payments on any 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, we and
the Trustee will treat the persons in whose names the notes, including any
global note, are registered as the owners for the purpose of receiving payments
and for all other purposes. Consequently, neither we, the Trustee nor any of our
agents or the Trustee's agents has or will have any responsibility or liability
for (1) 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 note, 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 note, or
(2) any other matter relating to the actions and practices of DTC or any of its
participants or indirect participants.
We will not be required to make any payment on the notes due on any day
which is not a business day until the next succeeding business day. The payment
made on the next succeeding business day will be treated as though it were paid
on the original due date and no interest will accrue on the payment for the
additional period of time.
Notes may be surrendered for conversion at the Corporate Trust Office of
the Trustee in the Borough of Manhattan, The City of New York. Notes surrendered
for conversion must be accompanied by appropriate notices and any payments in
respect of interest or taxes, as applicable, as described above under "--
Conversion Rights."
We have initially appointed the Trustee as paying agent and conversion
agent. We may terminate the appointment of any paying agent or conversion agent
and appoint additional or other paying agents and conversion agents. However,
until the notes have been delivered to the Trustee for cancellation, or moneys
sufficient to pay the principal of, premium, if any, and interest on the notes
have been made available for payment and either paid or returned to us as
provided in the Indenture, the Trustee will maintain an office or agency in the
Borough of Manhattan, The City of New York for surrender of notes for
conversion. Notice of any termination or appointment and of any change in the
office through which any paying agent or conversion agent will act will be given
in accordance with "--Notices" below.
All moneys deposited with the Trustee or any paying agent, or then held by
us, in trust for the payment of principal of, premium, if any, or interest on
any notes which remain unclaimed at the end of two years after the payment has
become due and payable will be repaid to us, and a holder of notes will then
look only to us for payment.
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Repurchase at Option of Holders Upon a Change in Control
If a Change in Control as defined below occurs, a holder of notes will have
the right, at its option, to require us to repurchase all of its notes not
previously called for redemption, or any portion of the principal amount
thereof, that is equal to $1,000 or an integral multiple of $1,000. The price we
are required to pay is 100% of the principal amount of the notes to be
repurchased, together with interest accrued to, but excluding, the repurchase
date.
At our option, instead of paying the repurchase price in cash, we may pay
the repurchase price in our common stock valued at 95% of the average of the
closing prices of our common stock for the five trading days immediately
preceding and including the third day prior to the repurchase date. We may only
pay the repurchase price in our common stock if we satisfy conditions provided
in the Indenture.
Within 30 days after the occurrence of a Change in Control, we are
obligated to give to the holders of notes notice of the Change in Control and of
the repurchase right arising as a result of the Change of Control. In addition,
at such time, we must give notice if we are exercising our option to pay the
repurchase price in our common stock. We must also deliver a copy of this notice
to the Trustee. To exercise the repurchase right, a holder of notes must deliver
on or before the 30th day after the date of our notice irrevocable written
notice to the Trustee of the holder's exercise of its repurchase right, together
with the notes with respect to which the right is being exercised. We are
required to repurchase the notes on the date that is 45 days after the date of
our notice.
A Change in Control will be deemed to have occurred at the time after the
notes are originally issued that any of the following occurs:
(1) any person, including any syndicate or group deemed to be a
"person" under Section 13(d)(3) of the Exchange Act, acquires beneficial
ownership, directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of shares of our capital
stock entitling the person to exercise 50% or more of the total voting
power of all shares of our capital stock that is entitled to vote generally
in elections of directors, other than an acquisition by us, any of our
subsidiaries or any of our employee benefit plans; or
(2) we merge or consolidate with or into any other person, any merger
of another person into us, or we convey, sell, transfer or lease all or
substantially all of our assets to another Person, other than any such
transaction (a) that does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of our capital stock, or (b)
pursuant to which the holders of our common stock immediately prior to such
transaction have the entitlement to exercise, directly or indirectly, 50%
or more of the total voting power of all shares of capital stock entitled
to vote generally in the election of directors of the continuing or
surviving corporation immediately after such transaction, or (c) which is
effected solely to change our jurisdiction of incorporation and results in
a reclassification, conversion or exchange of outstanding shares of our
common stock into solely shares of common stock.
However, a Change in Control will not be deemed to have occurred if either
(A) the closing price per share of our common stock for any five trading days
within the period of 10 consecutive trading days ending immediately after the
later of the Change in Control or the public announcement of the Change in
Control, in the case of a Change in Control relating to an acquisition of
capital stock, or the period of 10 consecutive trading days ending immediately
before the Change in Control, in the case of Change in Control relating to a
merger, consolidation or asset sale, equals or exceeds 105% of the conversion
price of the notes in effect on each of those trading days, or (B) all of the
consideration (excluding cash payments for fractional shares and cash payments
made pursuant to dissenters' appraisal rights) in a merger or consolidation
otherwise constituting a Change of Control under clause (1) and/or clause (2)
above consists of shares of common stock traded on a national securities
exchange or listed on the New York Stock Exchange (or will be so traded or
quoted immediately following such merger or consolidation) and as a result of
such merger or consolidation the notes become convertible into such common
stock.
For purposes of these provisions:
. the conversion price is equal to $1,000 divided by the conversion rate;
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. whether a person is a "beneficial owner" will be determined in accordance
with Rule 13d-3 under the Exchange Act; and
. "person" includes any syndicate or group that would be deemed to be a
"person" under Section 13(d)(3) of the Exchange Act.
Rule 13e-4 under the Exchange Act requires the dissemination of prescribed
information to security holders in the event of an issuer tender offer and may
apply in the event that the repurchase option becomes available to the holders
of notes. We will comply with this rule to the extent it applies at that time.
We may, to the extent permitted by applicable law, at any time purchase
notes in the open market, by tender at any price or by private agreement. Any
note that we purchase may, to the extent permitted by applicable law and subject
to restrictions contained in the purchase agreement with the Initial Purchasers,
be re-issued or resold or may, at our option, be surrendered to the Trustee for
cancellation. Any notes surrendered for cancellation may not be re-issued or
resold and will be canceled promptly.
The definition of Change in Control includes a phrase relating to the
conveyance, transfer, sale, lease or disposition of "all or substantially all"
of our assets. There is no precise, established definition of the phrase
"substantially all" under applicable law. Accordingly, the ability of a holder
of notes to require us to repurchase its notes as a result of conveyance,
transfer, sale, lease or other disposition of less than all of our assets may be
uncertain.
The foregoing provisions would not necessarily provide you with protection
if we are involved in a highly leveraged or other transaction that may adversely
affect the holders.
Our ability to repurchase notes upon the occurrence of a Change in Control
is subject to important limitations. Some of the events constituting a Change in
Control could result in an event of default under our Senior Debt. Moreover, a
Change in Control could cause an event of default under, or be prohibited or
limited by, the terms of our Senior Debt. As a result, unless we were to obtain
a waiver, a repurchase of the notes in cash could be prohibited under the
subordination provisions of the Indenture until the Senior Debt is paid in full.
Although we have the right to repurchase the notes with our common stock,
subject to certain conditions, we cannot assure you that we would have the
financial resources, or would be able to arrange financing, to pay the
repurchase price in cash for all the notes that might be delivered by holders of
notes seeking to exercise the repurchase right. If we were to fail to repurchase
the notes when required following a Change in Control, an Event of Default under
the Indenture would occur, whether or not such repurchase is permitted by the
subordination provisions of the Indenture. Any such default may, in turn, cause
a default under our Senior Debt. See "--Subordination".
Mergers and Sales of Assets by the Company
We may not consolidate with or merge into any other person or convey,
transfer, sell or lease our properties and assets substantially as an entirety
to any person, and we may not permit any person to consolidate with or merge
into us or convey, transfer, sell or lease such person's properties and assets
substantially as an entirety to us unless:
. the person formed by such consolidation or into or with which we are merged
or the person to which our properties and assets are so conveyed,
transferred, sold or leased, shall be a corporation, limited liability
company, partnership or trust organized and existing under the laws of the
United States, any State within the United States or he District of Columbia
and, if we are not the surviving person, the surviving person assumes the
payment of the principal of, premium, if any, and interest on the notes and
the performance of our other covenants under the Indenture, and
. immediately after giving effect to the transaction, no event of default, and
no event that, after notice or lapse of time or both, would become an event
of default, will have occurred and be continuing.
Events of Default
The following will be Events of Default under the Indenture:
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. we fail to pay principal of or premium, if any, on any note when due, whether
or not prohibited by the subordination provisions of the Indenture;
. we fail to pay any interest, including any Liquidated Damages, on any note
when due, which failure continues for 30 days, whether or not prohibited by
the subordination provisions of the Indenture;
. we fail to provide notice of a Change in Control, whether or not such notice
is prohibited by the subordination provisions of the Indenture;
. we fail to perform any other covenant in the Indenture, which failure
continues for 60 days after written notice as provided in the Indenture;
. any indebtedness under any bonds, debentures, notes or other evidences of
indebtedness for money borrowed (or any guarantee thereof) by us or any of
our significant subsidiaries in an aggregate principal amount in excess of
$15.0 million is not paid when due either at its stated maturity or upon
acceleration thereof, and such indebtedness is not discharged, or such
acceleration is not rescinded or annulled, within a period of 30 days after
notice as provided in the Indenture;
. certain events of bankruptcy, insolvency or reorganization involving us or
any of our significant subsidiaries; or
. except as permitted by the Indenture, the subsidiary guarantee shall for any
reason cease to be, or be asserted in writing by the AmeriSource Corporation
or us not to be in full force and effect and enforceable in accordance with
its terms.
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any holder, unless the holder shall
have offered reasonable indemnity to the Trustee. Subject to providing
indemnification of the Trustee, the holders of a majority in aggregate principal
amount of the outstanding notes will 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.
If an Event of Default, other than an Event of Default arising from events
of insolvency, bankruptcy or reorganization with respect to us or any of our
significant subsidiaries, occurs and is continuing, either the Trustee or the
holders of at least 25% in principal amount of the outstanding notes may,
subject to the subordination provisions of the Indenture, accelerate the
maturity of all notes. However, after such acceleration, but before a judgment
or decree based on acceleration, the holders of a majority in aggregate
principal amount of outstanding notes may, under certain circumstances, rescind
and annul the acceleration if all Events of Default, other than the non-payment
of principal of the notes which have become due solely by such declaration of
acceleration, have been cured or waived as provided in the Indenture. If an
Event of Default arising from events of insolvency, bankruptcy or reorganization
with respect to us occurs, then the principal of, and accrued interest on, all
the notes will automatically become immediately due and payable without any
declaration or other act on the part of the holders of the notes or the Trustee.
For information as to waiver of defaults, see "-- Meetings, Modification and
Waiver".
A holder of notes will not have any right to institute any proceeding with
respect to the Indenture, or for any remedy under the Indenture, unless the
holder give the Trustee written notice of a continuing Event of Default and the
holders of at least 25% in aggregate principal amount of the outstanding notes
have made written request, and offered reasonable indemnity, to the Trustee to
institute proceedings, and the Trustee has not received from the holders of a
majority in aggregate principal amount of the outstanding notes a direction
inconsistent with the written request and shall have failed to institute such
proceeding within 60 days. However, these limitations do not apply to a suit
instituted by a holder of notes for the enforcement of payment of the principal
of, premium, if any, or interest, including Liquidated Damages, on the holder's
note on or after the respective due dates expressed in its note or the holder's
right to convert its note in accordance with the Indenture.
We will be required to furnish to the Trustee annually a statement as to
our performance of certain of our obligations under the Indenture and as to any
default in such performance.
20
Meetings, Modification and Waiver
The Indenture contains provision for convening meetings of the holders of
notes to consider matters affecting their interests.
Certain limited modifications of the Indenture may be made without the
necessity of obtaining the consent of the holders of the notes. Other
modifications and amendments of the Indenture may be made, and certain past
defaults by us may be waived, either (i) with the written consent of the holders
of not less than a majority in aggregate principal amount of the notes at the
time outstanding or (ii) by the adoption of a resolution, at a meeting of
holders of the notes at which a quorum is present, by the holders of at least 66
2/3% in aggregate principal amount of the notes represented at such meeting. The
quorum at any meeting called to adopt a resolution will be persons holding or
representing a majority in aggregate principal amount of the notes at the time
outstanding and, at any reconvened meeting adjourned for lack of a quorum, 25%
of such aggregate principal amount.
However, a modification or amendment requires the consent of the holder of
each outstanding note affected if it would:
. change the stated maturity of the principal or interest of a note;
. reduce the principal amount of, or any premium or interest on, any note;
. reduce the amount payable upon a redemption or mandatory repurchase;
. modify the provisions with respect to the repurchase rights of holders of
notes in a manner adverse to the holders;
. change the place or currency of payment on a note;
. impair the right to institute suit for the enforcement of any payment on any
note;
. modify our obligation to maintain an office or agency in New York City;
. modify the subordination provisions in a manner that is adverse to the
holders of the notes;
. adversely affect the right to convert the notes;
. modify our obligation to deliver information required under Rule 144A to
permit resales of the notes and common stock issued upon conversion of the
notes if we cease to be subject to the reporting requirements under the
Exchange Act;
. reduce the above-stated percentage of the principal amount of the holders
whose consent is needed to modify or amend the Indenture;
. reduce the percentage of the principal amount of the holders whose consent is
needed to waive compliance with certain provisions of the Indenture or to
waive certain defaults; or
. reduce the percentage required for the adoption of a resolution or the quorum
required at any meeting of holders of notes at which a resolution is adopted.
The holders of a majority in aggregate principal amount of the outstanding
notes may waive compliance by us with certain restrictive provisions of the
Indenture by written consent. Holders of a majority of the principal amount of
notes attending a meeting may also waive compliance by us with certain
restrictive provisions of the Indenture by the adoption of a resolution at the
meeting if a quorum of holders are present and certain other conditions are met.
The holders of a majority in aggregate principal amount of the outstanding notes
also may waive by written consent any past default under the Indenture, except a
default in the payment of principal, premium, if any, or interest.
21
Registration Rights
The registration statement of which this prospectus forms a part has been
filed under the terms of a Registration Rights Agreement, which we entered into
with the initial purchasers of the notes. In the Registration Rights Agreement
we and AmeriSource Corporation agree, for the benefit of the holders of the
notes and the shares of common stock issuable upon conversion of the notes
(together, the "Registrable Securities"), that we and AmeriSource Corporation
would, at our expense:
. file with the SEC, within 90 days after the date the notes were originally
issued, a shelf registration statement covering resales of the Registrable
Securities, subject to our right to postpone the filing of the shelf
registration statement for an additional 90 days in limited circumstances;
. use our reasonable efforts to cause the shelf registration statement to be
declared effective under the Securities Act within 180 days after the date
the notes are originally issued, subject to our right to postpone having the
shelf registration statement declared effective for an additional 90 days in
limited circumstances; and
. use our reasonable efforts to keep effective the shelf registration statement
until two years after the date the notes are issued or, if earlier, until
there are no outstanding Registrable Securities, which is referred to as the
Effectiveness Period.
We will be permitted to suspend the use of this prospectus that is part of
the shelf registration statement in connection with the sales of Registrable
Securities during prescribed periods of time for reasons relating to pending
corporate developments, public filings with the SEC and other events. The
periods during which we can suspend the use of the prospectus may not, however,
exceed a total of 45 days in any 90 day period or a total of 90 days in any 365-
day period. Following the effectiveness of the registration statement of which
this prospectus forms a part, we will provide to each holder of Registrable
Securities copies of this prospectus, notify each holder that the shelf
registration statement has become effective and take certain other actions
required to permit public resales of the Registrable Securities.
We may, upon written notice to all the holders of notes, postpone having
the shelf registration statement declared effective for a reasonable period not
to exceed 90 days if we possess material nonpublic information the disclosure of
which would have a material adverse effect on us and our subsidiaries taken as a
whole. Notwithstanding any such postponement, additional interest, which is
referred to as Liquidated Damages, will accrue on the notes if either of the
following events, which is referred to as Registration Defaults occurs:
. on or prior to 90 days following the date the notes were originally issued, a
shelf registration statement has not been filed with the SEC; or
. on or prior to 180 days following the date the notes were originally issued,
the shelf registration statement is not declared effective.
In that case, Liquidated Damages will accrue on the notes from and
including the day following the Registration Default to but excluding the day on
which the Registration Default has been cured. Liquidated Damages will be paid
semi-annually in arrears, with the first semi-annual payment due on the first
Interest Payment Date following the date on which the Liquidated Damages began
to accrue.
The rates at which Liquidated Damages will accrue will be as follows:
. 0.25% of the principal amount per annum to and including the 90th day after
the Registration Default; and
. 0.50% of the principal amount per annum from and after the 91st day after the
Registration Default.
In addition, the interest rate on the notes will be increased if:
. the shelf registration statement ceases to be effective, or we otherwise
prevent or restrict holders of Registrable Securities from making sales under
the shelf registration statement, for more than 45 days, whether or not
consecutive; or
22
. the shelf registration statement ceases to be effective, or we otherwise
prevent or restrict holders of Registrable Securities from making sales under
the shelf registration statement, for more than 90 days, whether or not
consecutive, during any 12-month period.
In either event, the interest rate on the notes will increase by an
additional 0.50% per annum from the 46th day of the 90-day period or the 91st
day of the 12-month period. The increased rate will continue until the earlier
of the following:
. the time the shelf registration statement again becomes effective or the
holders of Registrable Securities are again able to make sales under the
shelf registration statement, depending on which event triggered the increase
in interest rate; or
. the date the Effectiveness Period expires.
A holder who elects to sell any Registrable Securities pursuant to the
shelf registration statement will be required to be named as a selling
securityholder in this prospectus, may be required to deliver a prospectus to
purchasers, may be subject to certain civil liability provisions under the
Securities Act in connection with those sales and is bound by the provisions of
the Registration Rights Agreement that apply to a holder making such an
election, including certain indemnification provisions.
No holder of Registrable Securities will be entitled to be named as a
selling securityholder in this prospectus, and no holder of Registrable
Securities is entitled to use this prospectus for offers and resales of
Registrable Securities at any time, unless the holder has returned a completed
and signed Notice and Questionnaire to us.
Beneficial owners of Registrable Securities who have not returned a Notice
and Questionnaire to us may receive another Notice and Questionnaire from us
upon request. Following our receipt of a completed and signed Notice and
Questionnaire, we will include the Registrable Securities covered thereby in the
shelf registration statement, subject to restrictions on the timing and number
of supplements to the shelf registration statement provided in the Registration
Rights Agreement.
We agreed in the Registration Rights Agreement to use our reasonable
efforts to cause the shares of common stock issuable upon conversion of the
notes to be listed on the New York Stock Exchange. However, if the common stock
is not then listed on the New York Stock Exchange, we will use our reasonable
efforts to cause the shares of common stock issuable upon conversion of the
notes to be quoted or listed on whichever market or exchange the common stock is
then quoted or listed, upon effectiveness of the shelf registration statement.
This summary of certain provisions of the Registration Rights Agreement may
not contain all the information important to the holders of notes. Holders of
notes may request from us a copy of the Registration Rights Agreement.
Notices
Notice to holders of the registered notes will be given by mail to the
addresses as they appear in the security register. Notices will be deemed to
have been given on the date of such mailing.
Notice of a redemption of notes will be given not less than 30 nor more
than 60 days prior to the redemption date and will specify the redemption date.
A notice of redemption of the notes will be irrevocable.
Replacement of Notes
We will replace any note that becomes mutilated, destroyed, stolen or lost
at the expense of the holder upon delivery to the Trustee of the mutilated notes
or evidence of the loss, theft or destruction satisfactory to us and the
Trustee. In the case of a lost, stolen or destroyed note, indemnity satisfactory
to the Trustee and us may be required at the expense of the holder of the note
before a replacement note will be issued.
Payment of Stamp and Other Taxes
We have paid all stamp and other duties, if any, which may have been
imposed by the United States or any political subdivision thereof or taxing
authority thereof or therein with respect to the issuance of the notes. We were
not
23
required to make any payment with respect to any other tax, assessment or
governmental charge imposed by any government or any political subdivision
thereof or taxing authority thereof or therein.
Governing Law
The Indenture, the notes and the subsidiary guarantee are governed by and
construed in accordance with the laws of the State of New York, United States of
America.
The Trustee
If an Event of Default occurs and is continuing, the Trustee will be
required to use the degree of care of a prudent person in the conduct of his own
affairs in the exercise of its powers. Subject to such provisions, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any of the holders of notes, unless they shall have
offered to the Trustee reasonable security or indemnity.
CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES
The following is a general discussion of certain U.S. federal income and
estate tax consequences to you of holding the notes and common stock issuable
upon conversion of the notes. This discussion is based upon the Internal Revenue
Code of 1986, as amended (the "Code"), U.S. Treasury Regulations
("Regulations"), Internal Revenue Service ("IRS") rulings and pronouncements,
and judicial decisions now in effect, all of which are subject to change
(possibly with retroactive effect) or different interpretation.
This discussion is for your general information only and does not address
all aspects of U.S. federal income taxation that may be relevant to you. This
discussion does not describe the tax consequences arising under the laws of any
foreign, state or local jurisdiction, nor does it describe all of the tax
consequences to you in light of your personal circumstances (such as the U.S.
federal alternative minimum tax). It also does not address certain tax
consequences that may apply to you if you are subject to special tax rules,
such as if you are a financial institution, an insurance company, a tax-exempt
entity, a dealer in securities, if you hold the notes or common stock in
connection with a "straddle", "hedging", or "conversion" transaction for U.S.
federal income tax purposes, if you are a non-U.S. person, and your holding the
notes or common stock is effectively connected with a trade or business that you
conduct in the United States, or if your "functional currency" is not the U.S.
dollar. This discussion assumes that you acquired our notes on their original
issuance at their original offering price and hold the notes and common stock
received upon conversion thereof as capital assets within the meaning of Section
1221 of the Code. We have not sought any ruling from the IRS with respect to
statements made and the conclusions reached in this discussion and there can be
no assurance that the IRS will agree with our statements and conclusions.
YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISOR REGARDING THE FEDERAL, STATE,
LOCAL AND FOREIGN TAX CONSEQUENCES OF YOUR PARTICIPATION IN THIS OFFERING, AND
YOUR OWNERSHIP AND DISPOSITION OF THE NOTES (INCLUDING CONVERSION OF THE NOTES)
OR COMMON STOCK, INCLUDING THE EFFECT THAT YOUR PARTICULAR CIRCUMSTANCES MAY
HAVE ON THE TAX CONSEQUENCES OF YOUR PARTICIPATION IN THIS OFFERING, AS WELL AS
THE CONSEQUENCES OF ANY PROPOSED CHANGE IN THE APPLICABLE LAWS.
Tax Consequences to U.S. Holders
The following tax discussion applies to you if you are a beneficial owner
of the notes or common stock and you are:
. a citizen or resident of the United States,
. a corporation (or other entity taxed as a corporation) created or organized
under the laws of the United States or a political subdivision thereof,
. an estate the income of which is subject to U.S. federal income taxation
regardless of source, or
24
. a trust if (A) a U.S. court is able to exercise primary supervision over the
trust's administration or (B) one or more U.S. persons, as defined under
section 7701(a)(30) of the Code, have authority to control all the trust's
substantial decisions.
If you are a partnership or beneficial owner of an interest in a
partnership, your tax treatment may depend upon both your status and the
partnership's or the partners' status, as the case may be, and you are urged to
consult your tax advisor.
If you are a beneficial owner of the notes or common stock not included in
the above list, you are a Non-U.S. Holder and subject to the rules described in
"--Tax Consequences to Non-U.S. Holders" below.
Interest on Notes. You will be taxed on interest on a note as the interest
accrues or when you actually or constructively receive it, in accordance with
your method of accounting for U.S. federal income tax purposes. We do not
believe that the notes were issued with "original issue discount" within the
meaning of the Code.
Conversion of Notes. You generally will not recognize gain or loss on the
conversion of the notes into common stock, except to the extent that you receive
cash in lieu of a fractional share. Your aggregate basis in the common stock
received upon conversion of the note will be equal to your adjusted tax basis in
the note at the time of conversion (less any portion of that basis allocable to
cash received in lieu of a fractional share). Your holding period for the common
stock you receive upon conversion of a note generally will include the period
during which you held the note prior to the conversion.
If you receive cash in lieu of a fractional share of common stock, it will
be treated as a payment in exchange for the fractional share. You generally will
recognize capital gain or loss equal to the difference between the amount of
cash received and the amount of tax basis allocable to the fractional share.
Adjustment of Conversion Rate. The conversion rate of the notes is subject
to adjustment in certain circumstances. See "Description of the Notes--
Conversion Rights". Under Section 305(c) of the Code, adjustments that have the
effect of increasing or decreasing your proportionate interest in our assets or
earnings (for example, an adjustment following a distribution of property to our
stockholders) may in some circumstances give rise to a deemed distribution to
you. Similarly, a failure to adjust the conversion rate of the notes to reflect
a stock dividend or other event increasing the proportionate interest of
shareholders of outstanding stock can in some instances give rise to deemed
distributions to the shareholders. The deemed distributions will be treated as
dividends, returns of capital, or capital gains in accordance with the earnings
and profits rules discussed under "--Distributions on Common Stock" below.
Liquidated Damages. We intend to take the position that the Liquidated
Damages described above under "Description of Notes--Registration Rights" will
be taxable to you as ordinary income in accordance with your method of
accounting for U.S. federal income tax purposes only as and if you become
entitled to or receive such Liquidated Damages, depending upon your method of
accounting. The IRS, however, may take a different position, which could affect
the timing of both your income and our deduction with respect to the Liquidated
Damages.
Distributions on Common Stock. Distributions that you receive on common
stock will be treated as dividends for U.S. federal income tax purposes to the
extent of current or accumulated earnings and profits as determined under U.S.
federal income tax principles. If you are a U.S. corporation, you may qualify
for the dividends received deduction. If you are not a corporation, you are not
entitled to a dividends received deduction.
To the extent, if any, that you receive a distribution that would otherwise
constitute a dividend for U.S. federal income tax purposes but that exceeds our
current and accumulated earnings and profits, the excess will be treated first
as a non-taxable return of capital reducing your basis in the common stock. To
the extent that such a distribution also exceeds your basis in the common stock,
the excess will be treated as capital gain from the sale or exchange of your
common stock.
Sale or Exchange of Notes or Common Stock. In general, subject to the
discussion under "--Market Discount" below, you will recognize capital gain or
loss on the sale, redemption, retirement or other disposition of a note measured
by the difference between the amount of cash and the fair market value of any
property received (except to the extent attributable to the payment of accrued
interest) and your adjusted tax basis in the note. In general, subject to the
discussion under "--Market Discount" below, if you receive common stock upon
conversion of a note, you will recognize gain or loss upon a subsequent sale,
exchange, redemption or other disposition of the common stock under rules
similar to the
25
computation of gain or loss on disposition of the notes. However, special rules
may apply to a redemption of common stock which may result in the proceeds of
the redemption being treated as a dividend. In general, if you are not a
corporation, and have held the notes or common stock for more than one year, you
will be subject to a maximum federal tax rate of 20% on the capital gains
resulting from the disposition.
Market Discount. If you acquire a note other than at original issue, you
may be affected by the "market discount" provisions of the Code. For this
purpose, market discount on a note generally equals the amount, if any, by which
the stated redemption price at maturity of the note immediately after you
acquire it exceeds your adjusted tax basis in the note. Subject to a de minimis
exception, if you acquire a note with market discount and later dispose of the
note, you must treat the gain as ordinary income to the extent of the "accrued
market discount" on the note when you dispose of it, unless you have made an
election to include accrued market discount in your income on a current basis.
In general, market discount will be treated as accruing from the time you buy it
over the remaining term of the note on a straight-line basis or, at your
election, under a constant yield method. If you acquire a note at a market
discount and do not elect to include accrued market discount income currently,
and you borrowed money (or maintained outstanding debt) to finance your purchase
of the note, you may be required to defer the deduction of a portion of the
interest on that debt until you dispose of the note in a taxable transaction. If
you acquire a note with market discount and receive common stock upon its
conversion, and you subsequently sell the common stock, you will be required to
treat as ordinary income the amount of accrued market discount that you had not
yet included in your income (if any) through the date of conversion.
IRS Reporting and Backup Withholding. If you are not a corporation, you may
be subject to IRS reporting and backup withholding at a rate of 31% on payments
of interest on the notes, dividends on common stock, and proceeds from the sale
or other disposition of the notes or common stock, if:
. you fail to furnish your taxpayer identification number ("TIN"), which
ordinarily would be your social security number,
. you furnish an incorrect TIN,
. you are notified by the IRS that you have failed to properly report payments
of interest or dividends, or
. under certain circumstances, you fail to certify, under penalties of perjury,
that you have furnished a correct TIN and have not been notified by the IRS
that you are subject to backup withholding.
We will also institute backup withholding on payments made to you if
instructed to do so by the IRS. If you do not provide us with a correct TIN, you
may also be subject to penalties imposed by the IRS.
You will be allowed to claim any amounts that we withhold as a credit
against your U.S. federal income tax liability, if any. If the amount of the
backup withholding exceeds your U.S. federal income tax liability, you may seek
a refund from the IRS, provided that you follow the requisite procedures. You
should consult your own tax advisor regarding your qualification for exemption
from backup withholding and the procedure for obtaining such an exemption, if
applicable.
Tax Consequences to Non-U.S. Holders
The following discussion applies to you if you are a Non-U.S. Holder.
Payments of interest. Generally, if you or someone acting on your behalf
receive payments of interest (including for this purpose, any Liquidated
Damages) on the notes, the payments will not be subject to U.S. federal
withholding tax if:
. you do not actually or constructively own 10% or more of the total combined
voting power of all classes of our stock;
. you are not (a) a controlled foreign corporation for U.S. federal income tax
purposes that is related to us through stock ownership or (b) a bank that
received the note on an extension of credit made pursuant to a loan agreement
entered into in the ordinary course of its trade or business; and
26
. you provide a statement, signed under penalties of perjury, that includes
your name and address and certifies that you are not a U.S. person.
If you cannot satisfy these requirements, you will be subject to U.S.
federal withholding tax at a rate of 30% unless you qualify for a reduced rate
under a tax treaty or under certain other special circumstances. If you qualify
for a reduced withholding rate, you will have to declare that you are so
qualified by providing us with the appropriate form, signed under penalties of
perjury.
Conversion of Notes. You generally will not be subject to U.S. federal
withholding tax on the conversion of a note into common stock. To the extent
that you receive cash in lieu of fractional shares on the conversion, you may
recognize gain subject to the rules described below with respect to the sale or
exchange of a note or common stock. See "--Sale or Exchange of Notes or Common
Stock" below.
Adjustment of Conversion Rate. The conversion rate of the notes may be
adjusted in certain circumstances. See "Description of Notes--Conversion
Rights". Any such adjustment could give rise to a deemed distribution to you in
the same manner as was described for U.S. Holders. See "Tax Consequences to U.S.
Holders--Adjustment of Conversion Rate" above. If so, the deemed distribution
would be subject to the rules described below regarding withholding of U.S.
federal income tax on dividends. See "--Distributions on Common Stock" below.
Distributions on Common Stock. If you receive distributions on common
stock, they will be dividends for U.S. federal income tax purposes to the extent
of our current or accumulated earnings and profits, as determined under U.S.
federal income tax principles, and will be subject to U.S. federal withholding
tax at a rate of 30% unless you qualify for a reduced rate under a tax treaty
or under certain other special circumstances. If you qualify for a reduced
withholding rate, you will have to declare that you are so qualified by
providing us with the appropriate form, signed under penalties of perjury.
Sale or Exchange of Notes or Common Stock. In general, you will not be
subject to U.S. federal withholding tax on gain recognized upon the sale or
other disposition (including a redemption) of a note or common stock received
upon conversion thereof unless:
. you are a nonresident alien individual present in the United States for 183
days or more in the taxable year in which gain is realized, and certain other
conditions are satisfied;
. you are subject to tax pursuant to the provisions of U.S. tax law applicable
to certain U.S. expatriates; or
. we are or have been a United States real property holding corporation
("USRPHC") for U.S. federal income tax purposes at any time within the
shorter of the five year period preceding the disposition or your holding
period.
We believe we are not presently, and are not likely to become, a USRPHC.
U.S. Estate Tax. If you own notes when you die and you are not a citizen or
resident (as specifically defined for U.S. federal estate tax purposes) of the
United States at the time of your death, the notes will not be includible in
your gross estate for U.S. federal estate tax purposes, provided that, at the
time of your death, you do not own, actually or constructively, 10% or more of
the total combined voting power of all classes of our stock, and any payments
with respect to the notes would not have been effectively connected with your
conduct of a trade or business in the United States. However, the common stock
you own will be includible in your gross estate for U.S. federal estate tax
purposes as a result of your death, and subject to applicable treaty
limitations, may be subject to U.S. federal estate tax.
IRS Reporting and Backup Withholding. We must report annually to the IRS
and to you any interest and dividends paid with respect to any notes or common
stock that you hold, and whether they are subject to U.S. federal withholding
tax or exempt from such tax under an applicable treaty or the Code. We also
report to the IRS and to you any income that we paid to you and that is exempt
from federal withholding tax because it is effectively connected with your U.S.
trade or business even though that "effectively connected income" is exempt from
withholding, you will be required to pay U.S. federal income tax on it. However,
you will not be subject to IRS reporting or backup withholding if we have
received the appropriate forms from you or on your behalf and provided that we
do not have actual knowledge that you are in fact a U.S. Holder. If we pay the
proceeds from the disposition of notes or common stock to or through the U.S.
office of
27
any broker, the payment will be subject to IRS reporting and possibly backup
withholding unless you certify as to your non-U.S. status under penalties of
perjury or otherwise establish an exemption, provided that the broker does not
have actual knowledge that you are in fact a U.S. Holder or that the conditions
of any other exemption are not, in fact, satisfied. If we pay any proceeds from
the distribution of a note or common stock to or through a non-U.S. office of a
non-U.S. broker that is not a "U.S. related person", those proceeds will not be
subject to IRS reporting or backup withholding. For this purpose, a "U.S.
related person" is:
. a "controlled foreign corporation" for U.S. federal income tax purposes;
. a person 50% or more of whose gross income from all sources for the three-
year period ending with the close of its taxable year preceding the payment
(or for such part of the period that the broker has been in existence) is
derived from activities that are effectively connected with the conduct of a
U.S. trade or business, or
. a foreign partnership, if at any time during its tax year, one or more of its
partners are U.S. persons (as defined in the Regulations) who in the
aggregate hold more than 50% of the income or capital interest in the
partnership, or if at any time during the tax year the partnership is engaged
in a U.S. trade or business.
If we pay proceeds from the disposition of notes or common stock to or
through a non-U.S. office of a broker that is a U.S. related person, the
Regulations require us to report on the payment unless the broker has
documentary evidence in its files that you are a Non-U.S. Holder and the broker
has no knowledge to the contrary. Backup withholding will not apply to such
payments, unless we have actual knowledge that you are a U.S. Person.
DESCRIPTION OF CAPITAL STOCK
We are authorized to issue up to 100,000,000 shares of Class A Common
Stock, par value $0.01 per share, 15,000,000 shares of Class B Common Stock, par
value $0.01 per share, and 2,000,000 shares of Class C Common Stock, par value
$0.01 per share.
Common Stock
The Class A Common Stock trades on the New York Stock Exchange. There is no
established public trading market for the Class B Common Stock. The Class C
Common Stock trades on a limited basis in the over-the-counter market. Class A
Common Stock is referred to elsewhere in this prospectus as "common stock".
Class A Common Stock. Holders of Class A Common Stock are entitled to one
vote per share on all matters on which holders of Class A Common Stock are
entitled to vote and have no cumulative voting rights. Holders of Class A Common
Stock do not have the preemptive right to subscribe for shares of Class A Common
Stock issued by the Company, nor do they have any redemption rights. Holders of
Class A Common Stock may elect at any time to convert any and all such shares
into Class B Common Stock, on a share-for-share basis. Holders of Class A Common
Stock are entitled to receive such dividends, if any, as may from time to time
be declared by the Board of Directors of the Company out of funds legally
available therefore. The Credit Agreement contains limitations on the Company's
ability to pay dividends to its stockholders. Upon liquidation, dissolution or
winding up of the Company, holders of Class A Common Stock are entitled to a pro
rata share of the distribution of assets remaining after the payment of debts
and expenses and after payment of the liquidation preference accorded to the
holders of any preferred stock of the Company which may be issued in the future.
Each share of Class A Common Stock has the same rights, privileges and
preferences as every other share of Class A Common Stock. Shares of the Class A
Common Stock to be issued pursuant to the Offering, when issued and paid for,
will be fully-paid and nonassessable. The transfer agent and registrar for the
Class A Common Stock is Mellon Securities Trust Company.
Class B Common Stock. The rights of holders of Class B Common Stock and
holders of Class A Common Stock are identical and entitle the holders thereof to
the same rights, privileges, benefits and notices, except as otherwise described
herein. Holders of Class B Common Stock generally do not possess the right to
vote on any matters to be voted upon by the stockholders of the Company, except
as provided by law. Under Section 242(b)(2) of the Delaware General Corporation
Law, the holders of the Class B Common Stock shall be entitled to vote as a
class upon any proposed
28
amendment to the Company's Certificate of Incorporation, if such amendment would
increase or decrease the number of shares or the par value of the shares of such
class, or alter or change the powers, preferences or special rights of the
shares of such class so as to affect them adversely. Holders of Class B Common
Stock may elect at any time to convert any and all of such shares into Class A
Common Stock, on a share-for-share basis, to the extent the holder thereof is
not prohibited from owning additional voting securities by virtue of regulatory
restrictions.
Class C Common Stock. The rights of holders of Class C Common Stock and
holders of Class A Common Stock are identical and entitle the holders thereof to
the same rights, privileges, benefits and notices, except as otherwise described
herein. Holders of Class C Common stock generally do not possess the right to
vote on any matters to be voted upon by the stockholders of the Company, except
as provided by law. Under Section 242(b)(2), of the Delaware General Corporation
Law, the holders of the Class C Common Stock shall be entitled to vote as a
class upon any proposed amendment to the Company's Certificate of Incorporation
if such amendment would increase or decrease the number of shares or the par
value of the shares of such class, or alter or change the powers, preferences or
special rights of the shares of such class so as to affect them adversely. The
Class C Common Stock is subject to substantial restrictions on transfer and has
certain registration and "take-along" rights. A share of Class C Common Stock
will automatically be converted into a share of Class A Common Stock (a)
immediately prior to its sale in a future public offering or (b) at such time as
such share of Class C Common Stock has been sold publicly after a future public
offering in a transaction that complies with any maximum quantity limitations
applicable to such sale. Once a share of Class C Common Stock has been converted
into Class A Common Stock it will no longer be subject to any restrictions on
transfer nor will it be entitled to the benefits of registration and take-along-
rights.
Section 203 of the Delaware General Corporation Law; Certain Anti-Takeover,
Limited Liability and Indemnification Provisions
Section 203 of the Delaware General Corporation Law
Section 203 of the Delaware General Corporation Law prevents an "interested
stockholder" (defined in Section 203, generally, as a person owning 15% or more
of a corporation's outstanding voting stock) from engaging in a "business
combination" (defined in Section 203, generally, as mergers, asset sales and
other transactions resulting in a financial benefit to the interested
stockholder) with a publicly-held Delaware corporation for three years following
the date such person became an interested stockholder unless (i) before such
person became an interested stockholder, the board of directors of the
corporation approved either the business combination or the transaction that
resulted in the interested stockholder becoming an interested stockholder; (ii)
upon consummation of the transaction that resulted in the interested stockholder
becoming an interested stockholder, the interested stockholder owns at least 85%
of the voting stock of the corporation outstanding at the time the transaction
commenced (excluding stock held by directors who are also officers of the
corporation and by employee stock plans that do not provide employees with the
rights to determine confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer); or (iii) following the transaction
in which such person became an interested stockholder, the business combination
is approved by the board of directors of the corporation and authorized at a
meeting of stockholders by the affirmative vote of the holders of two-thirds of
the outstanding voting stock of the corporation not owned by the interested
stockholder. The Company will opt out of Section 203 prior to the Offering, but
this will not be effective until one year after the Offering. Accordingly, the
provisions of Section 203 will apply to the Company for approximately one year
following the consummation of the Offering.
Special Meetings
Our bylaws provide that special meetings of shareholders may be called only
by our president, our board of directors or the holders of a majority of the
outstanding shares of stock of the Company entitled to vote at the meeting.
Number of Directors; Term
Our certificate of incorporation and bylaws provide that our board of
directors will have the authority to determine the number of directors and to
fix the terms of office of directors.
Indemnification
We have included in our certificate of incorporation and bylaws provisions
to (i) eliminate the personal liability of our directors for monetary damages
resulting from breaches of their fiduciary duty to the extent permitted by the
Delaware
29
General Corporation Law and (ii) indemnify our directors and officers to the
fullest extent permitted by Section 145 of the Delaware General Corporation Law,
including circumstances in which indemnification is otherwise discretionary. We
believe that these provisions are necessary to attract and retain qualified
persons as directors and officers.
Bylaws
Our certificate of incorporation provides that our bylaws are subject to
amendment, alteration, or repeal either by (i) our board of directors without
the assent or vote of our shareholders or (ii) the affirmative vote of the
holders of not less than a majority of the outstanding voting securities
entitled to vote.
SELLING SECURITYHOLDERS
We originally issued the notes in a private placement in December, 2000.
The initial purchasers of the notes have advised us that the notes were resold
in transactions exempt from the registration requirements of the Securities Act
to "qualified institutional buyers", as defined in Rule 144A of the Securities
Act. These subsequent purchasers, or their transferees, pledgees, donees or
successors, may from time to time offer and sell any or all of the notes and/or
shares of the common stock issuable upon conversion of the notes pursuant to
this prospectus.
The notes and the shares of common stock issuable upon conversion of the
notes have been registered in accordance with the registration rights agreement.
Pursuant to the registration rights agreement, we are required to file a
registration statement with regard to the notes and the shares of our common
stock issuable upon conversion of the notes and to keep the registration
statement effective until the earlier of:
(1) the sale of all the securities registered under the registration rights
agreement;
(2) the expiration of the holding period applicable to these securities under
Rule 144(k) under the Securities Act with respect to persons who are not
our affiliates; and
(3) two years from the date the notes were originally issued.
The selling securityholders may choose to sell notes and/or the shares of
common stock issuable upon conversion of the notes from time to time. See "Plan
of Distribution".
The following table sets forth:
(1) the name of each selling securityholder who has provided us with notice as
of the date of this prospectus pursuant to the registration rights
agreement of their intent to sell or otherwise dispose of notes and/or
shares of common stock issuable upon conversion of the notes pursuant to
the registration statement,
(2) the principal amount of notes and the number of shares of our common stock
issuable upon conversion of the notes which they may sell from time to time
pursuant to the registration statement, and
(3) the amount of outstanding notes and our common stock beneficially owned by
the selling securityholder prior to the offering, assuming no conversion of
the notes.
To our knowledge, no selling securityholder nor any of its affiliates has
held any position or office with, been employed by or otherwise has had any
material relationship with us or our affiliates during the three years prior to
the date of this prospectus.
A selling securityholder may offer all or some portion of the notes and
shares of the common stock issuable upon conversion of the notes. Accordingly,
no estimate can be given as to the amount or percentage of notes or our common
stock that will be held by the selling securityholders upon termination of sales
pursuant to this prospectus. In addition, the selling securityholders identified
below may have sold, transferred or disposed of all or a portion of their notes
since the date on which they provided the information regarding their holdings
in transactions exempt from the registration requirements of the Securities Act.
30
The information contained under the column heading "Shares That May be
Sold" assumes conversion of the full amount of the notes held by the holder at
the initial rate of 18.8791 shares of common stock per each $1,000 principal
amount of notes.
Amount of Notes Amount of Shares of Common
Owned Before Notes that May Stock Owned Before Shares That
Name Offering be Sold Offering May be Sold
- ------------------------------------------------- --------------- -------------- ------------------ --------------------
AAM Zazove Institutional Income Fund, L.P........ $ 900,000 $ 900,000 0 16,991
Aftra Health Fund................................ $ 600,000 $ 600,000 0 11,327
AIG/National Union Fire Insurance................ $ 300,000 $ 300,000 0 5,664
Alpine Associates................................ $ 6,100,000 $ 6,100,000 0 115,163
Alpine Partners, L.P............................. $ 950,000 $ 950,000 0 17,935
American Motorist Insurance Company.............. $ 462,000 $ 462,000 0 8,722
Arapahoe County Colorado......................... $ 44,000 $ 44,000 0 831
Arbitex Master Fund, L.P......................... $ 2,000,000 $ 2,000,000 0 37,758
Arkansas PERS.................................... $ 990,000 $ 990,000 0 18,690
Associated Electric & Gas Insurance Services $ 500,000 $ 500,000 0 9,440
Limited.......................................
Aventis Pension Master Trust..................... $ 110,000 $ 110,000 0 2,077
Banc of America Securities L.L.C. (1)............ $12,901,000 $12,901,000 0 243,559
Bank Austria Cayman Islands, Ltd................. $ 9,330,000 $ 9,330,000 0 176,142
BBT Fund, L.P.................................... $10,000,000 $10,000,000 0 188,791
Bear, Stearns & Company, Inc..................... $ 2,500,000 $ 2,500,000 0 47,198
Boilermaker-Blacksmith Pension Trust............. $ 685,000 $ 685,000 0 12,932
Boilermakers Blacksmith Pension Trust............ $ 1,380,000 $ 1,380,000 0 26,053
BP Amoco Corporation Master Trust for
Employee Pension Plans........................ $ 8,240,000 $ 8,240,000 0 155,564
BP Amoco PLC Master Trust........................ $ 1,669,000 $ 1,669,000 0 31,509
British Virgin Island Social Security Board...... $ 33,000 $ 33,000 0 623
BS Debt Income Fund - Class A.................... $ 10,000 $ 10,000 0 189
BT Opportunity................................... $ 4,000,000 $ 4,000,000 0 75,516
BT Strategy...................................... $ 1,000,000 $ 1,000,000 0 18,879
Calamos Convertible Fund - Calamos
Investment Trust.............................. $ 2,430,000 $ 2,430,000 0 45,876
Calamos Convertible Growth and Income
Fund - Calamos Investment Trust.............. $ 1,520,000 $ 1,520,000 0 28,696
Calamos Convertible Portfolio - Calamos
Advisors Trust................................ $ 100,000 $ 100,000 0 1,888
Calamos Global Convertible Fund - Calamos
Investment Trust.............................. $ 305,000 $ 305,000 0 5,758
Castle Convertible Fund, Inc..................... $ 500,000 $ 500,000 0 9,440
Chrysler Corporation Master Retirement
Trust......................................... $ 3,110,000 $ 3,110,000 0 58,714
Citi Cap Arb Fund................................ $ 689,000 $ 689,000 0 13,008
City of Albany Pension Plan...................... $ 65,000 $ 65,000 0 1,227
City of Knoxville Pension System................. $ 150,000 $ 150,000 0 2,832
City of New Orleans.............................. $ 172,000 $ 172,000 0 3,247
City University of New York...................... $ 112,000 $ 112,000 0 2,114
Clarica Life Insurance Co. - U.S................. $ 275,000 $ 275,000 0 5,192
Continental Assurance Company.................... $ 2,480,000 $ 2,480,000 0 46,820
Continental Assurance Company on behalf of
ITS........................................... $ 3,480,000 $ 3,480,000 0 65,699
Convertible Arb Qib.............................. $ 1,300,000 $ 1,300,000 0 24,543
De Am Convertible Arbitrage Fund................. $ 5,250,000 $ 5,250,000 0 99,115
31
Amount of Notes Amount of Shares of Common
Owned Before Notes that May Stock Owned Before Shares That
Name Offering be Sold Offering May be Sold
- ------------------------------------------------- --------------- -------------- ------------------ --------------------
Delaware PERS.................................... $ 1,525,000 $ 1,525,000 0 28,791
Delta Air Lines Master Trust..................... $ 1,285,000 $ 1,285,000 0 24,260
Delta Airlines Master Trust...................... $ 1,275,000 $ 1,275,000 0 24,071
Delta Pilots D & S Trust......................... $ 215,000 $ 215,000 0 4,059
Delta Pilots Disability and Survivorship Trust... $ 375,000 $ 375,000 0 7,080
Diversified Arb Fund............................. $ 2,425,000 $ 2,425,000 0 45,782
Drury University................................. $ 40,000 $ 40,000 0 755
Employee Benefit Convertible Securities Fund..... $ 180,000 $ 180,000 0 3,398
Enron North America, Corp........................ $ 2,000,000 $ 2,000,000 0 37,758
F.R. Convertible Securities Fund................. $ 80,000 $ 80,000 0 1,510
Family Service Life Insurance Company............ $ 100,000 $ 100,000 0 1,888
Federated Equity Income Fund, Inc................ $31,470,000 $31,470,000 0 594,125
Federated Insurance Series on behalf of
Federated Equity Income Fund II............... $ 1,200,000 $ 1,200,000 0 22,655
Fidelity Financial Trust: Fidelity Convertible
Securities Fund............................... $ 4,300,000 $ 4,300,000 0 81,180
General Motors Investment Management
Corp.......................................... $ 4,000,000 $ 4,000,000 0 75,516
General Motors Welfare Benefit Trust Arb
Fund.......................................... $ 375,000 $ 375,000 0 7,080
Goldman, Sachs & Company(1)(2)................... $12,450,000 $12,450,000 0 235,045
Grady Hospital Foundation........................ $ 99,000 $ 99,000 0 1,869
Greek Catholic Union............................. $ 20,000 $ 20,000 0 378
Greek Catholic Union II.......................... $ 15,000 $ 15,000 0 283
Guardian Life Insurance Company of America....... $ 4,700,000 $ 4,700,000 0 88,732
Guardian Pension Trust........................... $ 200,000 $ 200,000 0 3,776
H.K. Porter Company, Inc......................... $ 20,000 $ 20,000 0 378
HFR Convertible Arbitrage Account................ $ 200,000 $ 200,000 0 3,776
Hotel Union and Hotel Industry of Hawaii......... $ 339,000 $ 339,000 0 6,400
ICI American Holdings............................ $ 825,000 $ 825,000 0 15,575
Independence Blue Cross.......................... $ 120,000 $ 120,000 0 2,265
Island Holdings.................................. $ 15,000 $ 15,000 0 283
Jefferies & Company Inc.......................... $ 7,000 $ 7,000 0 132
KBC Financial Products USA....................... $ 500,000 $ 500,000 0 9,440
Kemper Foundation................................ $ 100,000 $ 100,000 0 1,888
Kentfield Trading, Ltd........................... $11,070,000 $11,070,000 0 208,992
Kettering Medical Center Funded
Depreciation Account.......................... $ 45,000 $ 45,000 0 850
Knoxville Utilities Board Retirement System...... $ 100,000 $ 100,000 0 1,888
Lancer Securities Cayman Ltd..................... $ 250,000 $ 250,000 0 4,720
Lincoln National Convertible Securities Fund..... $ 1,600,000 $ 1,600,000 0 30,207
Lipper Convertible Series II, L.P................ $ 2,000,000 $ 2,000,000 0 37,758
Lipper Convertibles, L.P......................... $ 8,850,000 $ 8,850,000 0 167,080
Lipper Convertibles, L.P. (Class B).............. $ 581,000 $ 581,000 0 10,969
Lipper Offshore Convertibles, L.P................ $ 3,000,000 $ 3,000,000 0 56,637
Lipper Offshore Convertibles, L.P. #2............ $ 419,000 $ 419,000 0 7,910
Local Initiatives Support Corporation............ $ 53,000 $ 53,000 0 1,001
Louisiana Workers' Compensation Corp............. $ 100,000 $ 100,000 0 1,888
Lumbermens....................................... $ 750,000 $ 750,000 0 14,159
Mainstay Convertible Fund........................ $ 8,795,000 $ 8,795,000 0 166,042
Mainstay VP Convertible Portfolio................ $ 2,250,000 $ 2,250,000 0 42,478
32
Amount of Notes Amount of Shares of Common
Owned Before Notes that May Stock Owned Before Shares That
Name Offering be Sold Offering May be Sold
- ------------------------------------------------- --------------- -------------- ------------------ --------------------
Market Neutral Arb Fund.......................... $ 1,002,000 $ 1,002,000 0 18,917
McMahan Securities Co. L.P....................... $ 1,020,000 $ 1,020,000 0 19,257
Merrill Lynch Insurance Group.................... $ 291,000 $ 291,000 0 5,494
Morgan Stanley & Co.............................. $ 1,528,000 $ 1,528,000 0 28,847
Motion Picture Industry Health Plan - Active
Member Fund................................... $ 435,000 $ 435,000 0 8,212
Motion Picture Industry Health Plan - Retiree
Member Fund................................... $ 220,000 $ 220,000 0 4,153
Municipal Employees.............................. $ 140,000 $ 140,000 0 2,643
Muni Strategy Arbitrage.......................... $ 4,447,000 $ 4,447,000 0 83,955
Nabisco Holdings................................. $ 41,000 $ 41,000 0 774
Nalco Chemical Company........................... $ 100,000 $ 100,000 0 1,888
Nations Convertible Securities Fund.............. $ 4,745,000 $ 4,745,000 0 89,581
Nationwide Separate Account Trust on
behalf of Nationwide Equity Income Fund....... $ 640,000 $ 640,000 0 12,083
New Orleans Firefighters Pension/Relief Fund..... $ 144,000 $ 144,000 0 2,719
New York Life Insurance Company.................. $ 7,200,000 $ 7,200,000 0 135,930
New York Life Insurance Company and
Annuity Corporation........................... $ 800,000 $ 800,000 0 15,103
New York Life Separate Account #7................ $ 1,200,000 $ 1,200,000 0 22,655
1976 Distribution Trust FBO Jane A. Lauder....... $ 17,000 $ 17,000 0 321
1976 Distribution Trust FBO
Lauder/Zinterhofer............................ $ 18,000 $ 18,000 0 340
Occidental Petroleum Corporation................. $ 178,000 $ 178,000 0 3,360
OCM Convertible Trust............................ $ 1,845,000 $ 1,845,000 0 34,832
Ohio Bureau of Workers Compensation.............. $ 150,000 $ 150,000 0 2,832
Ohio National Fund, Inc. on behalf of
Equity Income Portfolio....................... $ 120,000 $ 120,000 0 2,265
Pacific Life Insurance Company................... $ 500,000 $ 500,000 0 9,440
Palladin Securities L.L.C........................ $ 500,000 $ 500,000 0 9,440
Partner Reinsurance Company Ltd.................. $ 750,000 $ 750,000 0 14,159
Policemen and Firemen Retirement System of
the City of Detroit........................... $ 500,000 $ 500,000 0 9,440
Port Authority of Allegheny County
Retirement and Disability Allowance Plan
for the Employees represented by Local 85
of the Amalgamated Transit Union.............. $ 725,000 $ 725,000 0 13,687
Primerica Life Insurance Company................. $ 869,000 $ 869,000 0 16,406
Pro Mutual....................................... $ 560,000 $ 560,000 0 10,572
Ramius Capital Group Holdings, Ltd............... $ 600,000 $ 600,000 0 11,327
Ramius Capital Group Latitude Master Fund........ $ 1,500,000 $ 1,500,000 0 28,319
Raytheon Master Pension Trust.................... $ 506,000 $ 506,000 0 9,553
Regence Oregon................................... $ 166,000 $ 166,000 0 3,134
Regence Utah..................................... $ 56,000 $ 56,000 0 1,057
Regence Washington............................... $ 278,000 $ 278,000 0 5,248
RJR Reynolds..................................... $ 86,000 $ 86,000 0 1,624
SB Convertible Fund.............................. $ 1,000,000 $ 1,000,000 0 18,879
SCI Endowment Care Common Trust Fund -
National Fiduciary Services................... $ 55,000 $ 55,000 0 1,038
SCI Endowment Care Common Trust Fund -
Suntrust...................................... $ 85,000 $ 85,000 0 1,605
33
Amount of Notes Amount of Shares of Common
Owned Before Notes that May Stock Owned Before Shares That
Name Offering be Sold Offering May be Sold
- ------------------------------------------------- --------------- -------------- ------------------ --------------------
SG Cowen Securities, Inc. $ 2,040,000 $ 2,040,000 0 38,513
Shell Pension Trust.............................. $ 393,000 $ 393,000 0 7,419
SPT.............................................. $ 570,000 $ 570,000 0 10,761
Starvest Combined Portfolio...................... $ 310,000 $ 310,000 0 5,853
State Employees' Retirement Fund of the
State of Delaware............................. $ 1,570,000 $ 1,570,000 0 29,640
State of Connecticut Combined Investment
Funds......................................... $ 4,120,000 $ 4,120,000 0 77,782
State of Maryland Retirement System.............. $ 2,358,000 $ 2,358,000 0 44,517
State of Oregon/Equity........................... $ 4,950,000 $ 4,950,000 0 93,452
The Class 1C Company............................. $ 2,000,000 $ 2,000,000 0 37,758
The Dow Chemical Company Employees'
Retirement Plan............................... $ 1,400,000 $ 1,400,000 0 26,431
The Estate of James Campbell..................... $ 285,000 $ 285,000 0 5,381
The Fondren Foundation........................... $ 50,000 $ 50,000 0 944
The Grable Foundation............................ $ 86,000 $ 86,000 0 1,624
The Travelers Indemnity Company.................. $ 2,565,000 $ 2,565,000 0 48,425
The Travelers Insurance Company.................. $ 166,000 $ 166,000 0 3,134
The Travelers Insurance Company-Life............. $ 1,474,000 $ 1,474,000 0 27,828
The Travelers Life and Annuity Company........... $ 176,000 $ 176,000 0 3,323
Travelers Series Managed Assets Trust............ $ 75,000 $ 75,000 0 1,416
Travelers Series Trust Convertible Bond
Portfolio..................................... $ 225,000 $ 225,000 0 4,248
UBKAM Arbitrage Fund Ltd......................... $ 1,500,000 $ 1,500,000 0 28,319
UBKAM Global High Yield Fund Ltd................. $ 1,500,000 $ 1,500,000 0 28,319
UBS O'Connor, LLC F/B/O Global Equity............ $ 4,000,000 $ 4,000,000 0 75,516
UBS Warburg, LLC................................. $ 6,800,000 $ 6,800,000 0 128,378
Unifi, Inc. Profit Sharing Plan and Trust........ $ 70,000 $ 70,000 0 1,322
United Food and Commercial Workers Local
1262 and Employers Pension Fund.............. $ 330,000 $ 330,000 0 6,230
United Healthcare Insurance Company.............. $ 450,000 $ 450,000 0 8,496
Value Line Convertible Fund, Inc................. $ 500,000 $ 500,000 0 9,440
Van Kampen Harbor Fund........................... $ 4,000,000 $ 4,000,000 628,000(3) 75,516
Van Waters & Rogers, Inc. Retirement Plan........ $ 195,000 $ 195,000 0 3,681
Vanguard Convertible Securities Fund, Inc........ $ 4,450,000 $ 4,450,000 0 84,012
Zeneca AG Products, Inc.......................... $ 150,000 $ 150,000 0 2,832
Zeneca Holdings Trust............................ $ 375,000 $ 375,000 0 7,080
Zurich HFR Master Hedge Fund Index Ltd........... $ 80,000 $ 80,000 0 1,510
Zurich Institutional Benchmarks Master Fund
Ltd. (Global)................................. $ 1,100,000 $ 1,100,000 0 20,767
Unknown (4)...................................... $17,810,000 $17,810,000 -- 336,237
- -----------
(1) One of the initial purchasers.
(2) Goldman, Sachs & Company acted as financial advisor to the Company in its
merger transaction with Bergen Brunswig Corporation.
(3) All of these shares of common stock are held by entities affiliated with the
Van Kampen Harbor Fund.
(4) The name "Unknown" represents the remaining selling securityholders. We are
unable to provide the names of these securityholders because certain of
these notes are currently evidenced by a global note which has been
deposited with DTC and registered in the name of CEDE & Co. as DTC's
nominee.
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If, after the date of this prospectus, a securityholder notifies us
pursuant to the registration rights agreement of its intent to dispose of notes
pursuant to the registration statement, we may supplement this prospectus to
include that information.
PLAN OF DISTRIBUTION
We are registering the notes and the shares of our common stock issuable
upon conversion of the notes to permit public secondary trading of these
securities by the holders from time to time after the date of this prospectus.
We have agreed, among other things, to bear all expenses, other than
underwriting discounts and selling commissions, in connection with the
registration and sale of the notes and the shares of our common stock issuable
upon conversion of the notes covered by this prospectus.
We will not receive any of the proceeds from the offering of the notes or
the shares of our common stock issuable upon conversion of the notes by the
selling securityholders. The notes and shares of common stock issuable upon
conversion of the notes may be sold from time to time directly by any selling
securityholder or, alternatively, through underwriters, broker-dealers or
agents. If notes or shares of common stock issuable upon conversion of the notes
are sold through underwriters or broker-dealers, the selling securityholder will
be responsible for underwriting discounts or commissions or agents' commissions.
The notes or shares of common stock issuable upon conversion of the notes
may be sold:
. in one or more transactions at fixed prices,
. at prevailing market prices at the time of sale,
. at varying prices determined at the time of sale or
. at negotiated prices.
These sales may be effected in transactions, which may involve block trades
or transactions in which the broker acts as agent for the seller and the buyer:
. on any national securities exchange or quotation service on which the notes
or shares of common stock issuable upon conversion of the notes may be listed
or quoted at the time of sale,
. in the over-the-counter market,
. in transactions otherwise than on a national securities exchange or quotation
service or in the over-the-counter market or through the writing of options.
In connection with sales of the notes or shares of common stock issuable
upon conversion of the notes or otherwise, any selling securityholder may:
. enter into hedging transactions with broker-dealers, which may in turn engage
in short sales of the notes or shares of common stock issuable upon
conversion of the notes in the course of hedging the positions they assume,
. sell short and deliver notes or shares of common stock issuable upon
conversion of the notes to close out the short positions or
. loan or pledge notes or shares of common stock issuable upon conversion of
the notes to broker-dealers that in turn may sell the securities.
The outstanding common stock is publicly traded on the New York Stock
Exchange. The initial purchasers of the notes have advised us that certain of
the initial purchasers are making and currently intend to continue making a
market in the notes; however, they are not obligated to do so and any market-
making of this type may be discontinued at any time without notice, in the sole
discretion of the initial purchasers. We do not intend to apply for listing of
the notes on the New
35
York Stock Exchange or any securities exchange. Accordingly, we cannot assure
that any trading market will develop or have any liquidity.
The selling securityholders and any broker-dealers, agents or underwriters
that participate with the selling securityholders in the distribution of the
notes or the shares of common stock issuable upon conversion of the notes may be
deemed to be "underwriters" within the meaning of the Securities Act, in which
event any commissions received by these broker-dealers, agents or underwriters
and any profits realized by the selling securityholders on the resales of the
notes or the shares may be deemed to be underwriting commissions or discounts
under the Securities Act.
In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144, Rule 144A or any other available exemption from
registration under the Securities Act may be sold under Rule 144, Rule 144A or
any of the other available exemptions rather than pursuant to this prospectus.
There is no assurance that any selling securityholder will sell any or all
of the notes or shares of common stock issuable upon conversion of the notes
described in this prospectus, and any selling securityholder may transfer,
devise or gift the securities by other means not described in this prospectus.
We originally sold the notes to the initial purchasers in December 2000 in
a private placement. We agreed to indemnify and hold the initial purchasers of
the notes harmless against certain liabilities under the Securities Act that
could arise in connection with the sale of the notes by the initial purchasers.
The registration rights agreement provides for us and the selling
securityholders to indemnify each other against certain liabilities arising
under the Securities Act.
We agreed pursuant to the registration rights agreement to use reasonable
efforts to cause the registration statement to which this prospectus relates to
become effective within 180 days after the date the notes were originally issued
and to keep the registration statement effective until the earlier of:
. the sale of all the securities registered under the registration rights
agreement,
. the expiration of the holding period applicable to the securities under Rule
144(k) under the Securities Act with respect to persons who are not our
affiliates, and
. two years from the date the notes were originally issued.
The registration rights agreement provides that we may suspend the use of
this prospectus in connection with sales of notes and shares of common stock
issuable upon conversion of the notes by holders for a period not to exceed an
aggregate of 45 days in any 90-day period or 90 days in any 12-month period if
any event occurs or any fact exists that would render the registration statement
materially misleading. We will bear the expenses of preparing and filing the
registration statement and all post-effective amendments.
LEGAL MATTERS
The validity of the notes and the shares of common stock issuable upon
conversion of the notes offered hereby will be passed upon for AmeriSource by
Dechert, 4000 Bell Atlantic Tower, 1717 Arch Street, Philadelphia, Pennsylvania
19103. Barton J. Winokur, a partner of Dechert, which performs various legal
services for the Company, is a director of the Company and beneficially owns
75,500 shares of its common stock.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedules included in our Annual Report on Form 10-K
for the fiscal year ended September 30, 2000, as set forth in their report,
which is incorporated by reference in this prospectus and elsewhere in the
registration statement. Our financial statements and schedules are incorporated
by reference in reliance on Ernst & Young LLP's report, given on their authority
as experts in accounting and auditing.
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