As filed with the Securities and Exchange Commission on May 15, 1997
Registration No. 333-08269
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
Post-Effective Amendment No. 2 on
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
PHYMATRIX CORP.
(Exact name of registrant as specified in its charter)
Delaware 65-0617076
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
777 South Flagler Drive
West Palm Beach, FL 33401
(561) 655-3500
(Address, including zip code, and telephone number, including
area code of Registrant's principal executive offices)
---------------
Abraham D. Gosman
PhyMatrix Corp.
777 South Flagler Drive
West Palm Beach, FL 33401
(561) 655-3500
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
---------------
Copies to:
Michael J. Bohnen, Esquire
Nutter, McClennen & Fish, LLP
One International Place
Boston, MA 02110
(617) 439-2000
---------------
Approximate date of commencement of proposed sale to public:
From time to time after the effective date of this Registration Statement, as
determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If the Form is a post-effective amendment filed pursuant to Rule 426(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Proposed maximum Amount of
Title of each class of securities Amount to be offering price per Proposed maximum registration
to be registered registered share(1) aggregate offering price(1) fee
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
6 3/4% Convertible Subordinated $100,000,000 100% $100,000,000 $34,483(2)
Debentures due 2003
- ------------------------------------------------------------------------------------------------------------------------------
Shares of Common Stock, $.01 3,546,099 Not applicable Not Applicable None
par value shares(3)
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Determined pursuant to Rule 457(i) under the Securities Act of 1933, as
amended, solely for the purpose of calculating the registration fee.
(2) Previously paid.
(3) Includes the number of shares of Common Stock into which the Debentures
being registered hereunder may be converted at the initial conversion price,
together with such additional indeterminate number of shares as may become
issuable upon conversion by reason of adjustments to the conversion price.
No registration fee is required for Common Stock reserved for conversion,
because such shares will be issued for no additional consideration.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>
PROSPECTUS
PhyMatrix Corp.
a Physician Practice Management Company
$100,000,000
6 3/4% Convertible Subordinated Debentures due 2003
3,546,099 Shares of Common Stock, par value $.01 per share
---------------
This Prospectus relates to the resale of $100,000,000 aggregate principal
amount of 6 3/4% Convertible Subordinated Debentures due 2003 (the "Debentures")
of PhyMatrix, Corp., a Delaware corporation (sometimes referred to herein as the
"Company"), issued to the initial purchasers of the Debentures (the "Initial
Purchasers") in private placements consummated on June 26, 1996 (the "Debt
Offering"), and the resale of up to 3,546,099 shares of the Common Stock, par
value $.01 per share (the "Common Stock"), of the Company which are initially
issuable upon conversion of Debentures by any holders of Debentures that did not
purchase the Debentures under the Registration Statement (of which this
Prospectus is a part). The Registration Statement (of which this Prospectus is a
part) does not cover the issuance of shares of Common Stock upon conversion of
the Debentures into shares of Common Stock. The Debentures and such shares of
Common Stock issued upon conversion of the Debentures may be offered from time
to time for the accounts of holders of Debentures named herein or in supplements
to this Prospectus (the "Selling Securityholders"). See "Plan of Distribution."
Information concerning the Selling Securityholders may change from time to time
and will be set forth in Supplements to this Prospectus. The Company will not
receive any proceeds from the offering of the Debentures or the shares of Common
Stock issuable upon conversion thereof.
The Debentures are convertible into Common Stock of PhyMatrix Corp. at any
time after August 25, 1996 and at or before maturity, unless previously
redeemed, at a conversion price of $28.20 per share, subject to adjustment in
certain events. The Common Stock of the Company is traded on The Nasdaq National
Market under the symbol PHMX. On May 14, 1997, the closing price of the Common
Stock as reported by Nasdaq was $14.75 per share.
The Debentures do not provide for a sinking fund. The Debentures are not
redeemable by the Company prior to June 18, 1999. Thereafter, the Debentures are
redeemable at the option of the Company, in whole or in part, at anytime, at the
redemption prices set forth in this Prospectus, together with accrued interest.
Upon a Repurchase Event (as defined herein), each holder of Debentures shall
have the right, at the holder's option, to require the Company to repurchase
such holder's Debentures at a purchase price equal to 100% of the principal
amount thereof, plus accrued interest. See "Description of Debentures--Certain
Rights to Require Repurchase of Debentures."
The Debentures are unsecured obligations of the Company and are subordinate to
all present and future Senior Indebtedness (as defined herein) of the Company.
As of April 30, 1997 the Company had Senior Indebtedness in the amount of
approximately $8.2 million. The Indenture will not restrict the incurrence of
any other indebtedness or liabilities by the Company or its subsidiaries. See
"Description of Debentures--Subordination."
All of the Debentures were issued initially pursuant to an exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), provided by Section 4(2) thereof or Regulation D thereunder
and, to the Company's knowledge, were transferred to the Selling Securityholders
pursuant to Rule 144A or Regulation S under the Securities Act or to Selling
Securityholders meeting the definition of institutional accredited investors
under Rule 501(a)(1), (2), (3) or (7) under the Securities Act. Debentures
resold pursuant to the Registration Statement (of which this Prospectus is a
part) will no longer be eligible for trading in Private Offerings, Resales and
Trading through Automated Linkages ("PORTAL") Market.
The Selling Securityholders, acting as principals for their own account,
directly, through agents designated from time to time, or through brokers,
dealers, agents or underwriters also to be designated, may sell all or a portion
of the Debentures or shares of Common Stock which may be offered hereby by them
from time to time on terms to be determined at the time of sale. The aggregate
proceeds to the Selling Securityholders from the sale of Debentures and Common
Stock which may be offered hereby by the Selling Securityholders will be the
purchase price of such Debentures or Common Stock less commissions, if any. For
information concerning indemnification arrangements between the Company and the
Selling Securityholders, see "Plan of Distribution."
The Selling Securityholders and any brokers, dealers, agents or underwriters
that participate with the Selling Securityholders in the distribution of the
Debentures or shares of Common Stock may be deemed to be "underwriters" within
the meaning of the Securities Act, in which event any commissions received by
such broker-dealers, agents or underwriters and any profit on the resale of the
Debentures or shares of Common Stock purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
The Company intends that the Registration Statement of which this Prospectus
is a part will remain effective until September 19, 1999 or such earlier date
as of which such Registration Statement is no longer required for the transfer
of the subject securities. The Company has agreed to bear certain expenses in
connection with the registration and sale of the Debentures and Common Stock
being offered by the Selling Securityholders.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The Date of this Prospectus is May 14, 1997
<PAGE>
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information and representations must not
be relied upon as having been authorized by the Company. This Prospectus does
not constitute an offer to sell or a solicitation of any offer to buy the
securities described herein by anyone in any jurisdiction in which such offer or
solicitation is not authorized, or in which the person making the offer or
solicitation is not qualified to do so, or to any person to whom it is unlawful
to make such offer or solicitation. Under no circumstances shall the delivery of
this Prospectus or any sale made pursuant to this Prospectus create any
implication that the information contained in this Prospectus is correct as of
any time subsequent to the date of this Prospectus.
----------------
AVAILABLE INFORMATION
The Company has filed with the United States Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-1 (together
with all amendments, exhibits and schedules thereto, including Post- Effective
Amendment No. 2 on Form S-3, the "Registration Statement") under the Securities
Act covering the shares of Common Stock and Debentures offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement, and the exhibits and schedules thereto. For further information, with
respect to the Company, the Debentures and the Common Stock, reference is made
to the Registration Statement, and the exhibits and schedules thereto, which can
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices located at Seven World
Trade Center, 13th Floor, New York, New York 10048 and the Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. The Commission
maintains a web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that submit
electronic filings to the Commission. Statements made in this Prospectus as to
the contents of any contract or other document referred to are not necessarily
complete, and reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference.
The Company is subject to the informational requirements of the Exchange
Act, and, in accordance therewith, files periodic reports and other information
with the Commission. For further information with respect to the Company,
reference is hereby made to such reports and other information which can be
inspected and copied at the public reference facilities maintained by the
Commission referenced above.
The Company's Common Stock is listed for trading on The Nasdaq National
Market ("Nasdaq") under the trading symbol "PHMX." Reports, proxy statements and
other information about the Company also may be inspected at the offices of
Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.
DOCUMENTS INCORPORATED BY REFERENCE
The Company hereby incorporates by reference its Annual Report on Form 10-K
for the fiscal year ended January 31, 1997 and the description of the Company's
capital stock contained in its Registration Statement on Form S-1 dated December
17, 1996 (Reg. No. 333-08269)
All reports filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, subsequent to the date
hereof and prior to any termination of the offering of the Debentures and shares
of Common Stock covered by this Prospectus are deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the respective dates
of filing. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document that is also incorporated herein modifies
or supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
Copies of all documents incorporated herein by reference (other than
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into such documents) will be provided without charge to each person
who receives a copy of this Prospectus on written or oral request to Alberto M.
Hernandez, PhyMatrix Corp., 777 South Flagler Drive, West Palm, Beach, Florida
33401, or by telephone at (561) 655-3500.
2
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus, before
purchasing the Debentures and shares of Common Stock offered hereby, prospective
purchasers should carefully consider the factors set forth below and under
"Factors to be Considered" incorporated herein by reference to the Company's
Annual Report(s) on Form 10-K. Such factors could cause the Company's actual
results or other events to differ materially from the results or events
anticipated in certain forward-looking statements contained or incorporated by
reference herein. Such forward-looking statements involve risks and
uncertainties.
Subordination of Debentures
The Debentures are subordinate in right of payment to all current and
future Senior Indebtedness of the Company. Senior Indebtedness consists of all
secured indebtedness of the Company, whether existing on or created or incurred
after the date of the issuance of the Debentures, that is not made subordinate
to or pari passu with the Debentures by the instrument creating the
indebtedness. At April 30, 1997, the Company had Senior Indebtedness in the
amount of approximately $8.2 million. The Indenture does not limit the amount of
additional indebtedness, including Senior Indebtedness, which the Company can
create, incur, assume or guarantee. By reason of such subordination of the
Debentures, in the event of insolvency, bankruptcy, liquidation, reorganization,
dissolution or winding up of the business of the Company or upon a default in
payment with respect to any Senior Indebtedness of the Company or an event of
default with respect to such indebtedness resulting in the acceleration thereof,
the assets of the Company will be available to pay the amounts due on the
Debentures only after all Senior Indebtedness of the Company has been paid in
full. See "Description of Debentures."
Limitations on Repurchase of Debentures Upon a Repurchase Event
In the event of a Repurchase Event, which includes a Change in Control (as
defined herein), each holder of the Debentures will have the right, at the
holder's option, to require the Company to repurchase all or a portion of such
holder's Debentures at a price equal to 100% of the principal amount thereof
plus accrued interest to the repurchase date. The Company's ability to
repurchase the Debentures upon a Repurchase Event may be limited by the terms of
the Company's Senior Indebtedness and the subordination provisions of the
Indenture. Further, the ability of the Company to repurchase Debentures upon a
Repurchase Event will be dependent on the availability of sufficient funds and
compliance with applicable securities laws. Accordingly, there can be no
assurance that the Company will be able to repurchase the Debentures upon a
Repurchase Event. The term "Repurchase Event" is limited to certain specified
transactions and may not include other events that might adversely affect the
financial condition of the Company or result in a downgrade of any credit rating
of the Debentures nor would the requirement that the Company offer to repurchase
the Debentures upon a Repurchase Event necessarily afford holders of the
Debentures protection in the event of a highly leveraged reorganization, merger
or similar transaction involving the Company. See "Description of Debentures."
Absence of Public Market; Transfer Restrictions
There is no existing public market for the Debentures and there can be no
assurance as to the liquidity of any markets that may develop for the
Debentures, the ability of the holders to sell their Debentures or the price at
which holders of the Debentures may be able to sell their Debentures. Future
trading prices of the Debentures will depend on many factors, including, among
other things, prevailing interest rates, the Company's operating results, the
price of the Common Stock and the market for similar securities. The Initial
Purchasers have informed the Company that the Initial Purchasers intend to make
a market in the Debentures offered hereby, however, the Initial Purchasers are
not obligated to do so and any such market making activity may be terminated at
any time without notice to the holders of the Debentures. Prior to the resale
thereof pursuant to this Prospectus each of the Debentures was eligible for
trading in Private Offerings, Resales and Trading through the PORTAL Market.
Debentures sold pursuant to this Prospectus will no longer be eligible for
trading in the PORTAL Market. The Company does not intend to apply for listing
of the Debentures on any securities exchange.
THE COMPANY
The Company is a multi-specialty management company that provides
management services to the medical community. The Company also develops medical
malls, medical office buildings, and health parks both for its own account and
for leading hospitals and health systems. The Company's primary strategy is to
develop management
3
<PAGE>
networks in specific geographic locations by affiliating with physicians,
medical providers and medical networks. The Company affiliates with physicians
by acquiring their practices and entering into long-term management agreements
with the acquired practices and through the management of independent physician
associations ("IPAs") and specialty care physician networks by management
service organizations ("MSOs") in which the Company has ownership interests.
Where appropriate, the Company supports its affiliated physicians with related
diagnostic and therapeutic medical support services. The Company's medical
support services include radiation therapy, diagnostic imaging, infusion
therapy, home health care, lithotripsy services and ambulatory surgery.
The Company's principal place of business is 777 South Flagler Drive, West
Palm Beach, Florida 33401; and its telephone number at that address is (561)
655-3500. Unless otherwise indicated or required by the context, references to
the "Company" include its consolidated subsidiaries.
USE OF PROCEEDS
The Debentures and shares of Common Stock offered by the Selling
Securityholders are not being sold by the Company, and the Company will not
receive any proceeds from the sale thereof.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
June 24, 1994
(inception) Year Month Year
to Ended Ended Ended
December 31, 1994 December 31, 1995 January 31, 1996 January 31, 1997
-------------------- -------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Ratio ...... [less than] 1.0x [less than] 1.0x [less than] 1.0x 3.2
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
represent income from operations before minority interest and income taxes, plus
fixed charges. Earnings also includes the equity in less-than-fifty-
percent-owned investees only to the extent of distributions. Fixed charges
include interest, amortization of financing costs and the portion of operating
rental expense which management believes is representative of the interest
component of rental expense. For the period from June 24, 1994 (inception) to
December 31, 1994, the year ended December 31, 1995 and the month ended January
31, 1996 for purposes of computing the ratio of earnings to fixed charges, the
Company had earnings deficiencies of $1.1 million, $4.1 million and $.2 million,
respectively.
SELLING SECURITYHOLDERS
The following table sets forth information concerning the principal amount
of Debentures beneficially owned by each Selling Securityholder or record holder
of Debentures and the number of shares of Common Stock issuable upon conversion
of the Debentures (the "Conversion Shares") which may be offered from time to
time pursuant to this Prospectus. Other than their ownership of PhyMatrix
Corp.'s securities, none of the Selling Securityholders has had any material
relationship with the Company within the past three years, other than Paine
Webber, Inc. which has acted as an Initial Purchaser and underwriter for the
Company. The table has been prepared based on information furnished to the
Company by the Depository Trust Company and or by or on behalf of the Selling
Securityholders.
<TABLE>
<CAPTION>
Principal
Amount of Number of
Debentures Conversion
Beneficially Percentage of Shares Percentage of
Owned That May Debentures That May Common Stock
Name (1) Be Sold (1) Outstanding Be Sold (2) Outstanding (3)
- ----------------------------------------- ----------------- ---------------- -------------- -----------------
<S> <C> <C> <C> <C>
Bank of New York ..................... 2,205,000 2.2% 78,191 *
Bankers Trust Company .................. 8,570,000 8.6 303,900 1.3%
Bear Stearns Securities Corp. ......... 250,000 * 8,865 *
Boston Safe Deposit & Trust Co. ...... 11,920,000 11.9 422,695 1.8
Chase Manhattan Bank .................. 1,800,000 1.8 63,829 *
Chase Manhattan Bank/Chemical ......... 130,000 * 4,609 *
Citicorp Services, Inc. ............... 1,378,000 1.4 48,865 *
Custodial Trust Company ............... 3,330,000 3.3 118,085 *
Donaldson, Lufkin & Jenrette Securities
Corporation .......................... 100,000 * 3,546 *
First National Bank of Maryland ...... 170,000 * 6,028 *
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount of Number of
Debentures Conversion
Beneficially Percentage of Shares Percentage of
Owned That May Debentures That May Common Stock
Name (1) Be Sold (1) Outstanding Be Sold (2) Outstanding (3)
- -------------------------------------------- ---------------- ---------------- -------------- -----------------
<S> <C> <C> <C> <C>
Investors Bank & Trust/M.F. Custody ...... 300,000 * 10,638 *
Mercantile, Safe Deposit and Trust
Company ................................ 2,515,000 2.5 89,184 *
Merrill Lynch, Pierce, Fenner & Smith
Safekeeping ............................. 7,000,000 7.0 248,226 1.1
Northern Trust Company .................. 1,435,000 1.4 50,886 *
Nesbitt Burns Inc. ........................ 88,000 * 3,120 *
PaineWebber, Inc. ........................ 1,000,000 1.0 35,460 *
PNC National Association .................. 100,000 * 3,546 *
Salomon Brothers, Inc. .................. 1,250,000 1.3 44,326 *
Sanwa Bank California ..................... 1,175,000 1.2 41,666 *
SSB-Custodian ........................... 9,560,000 9.6 339,007 1.5
</TABLE>
- ----------
(1) The information set forth herein is as of May 9, 1997 and will be updated as
required.
(2) Assumes conversion of the full amount of Debentures held by such holder at
the initial rate of $28.20 in principal amount of Debentures per share of
Common Stock. Under the terms of the Indenture, fractional shares will not
be issued upon conversion of the Debentures; cash will be paid in lieu of
fractional shares, if any.
(3) Based upon the 22,666,784 shares of Common Stock outstanding as of April 25,
1997, treating as outstanding the number of Conversion Shares shown as being
issuable upon the assumed conversion by the named holder of the full amount
of such holder's Debentures but not assuming the conversion of the
Debentures of any other holder.
The information concerning the Selling Securityholders may change from time
to time and will be set forth in supplements to this Prospectus. In addition,
the per share conversion price and, therefore, the number of shares of Common
Stock issuable upon conversion of the Debentures is subject to adjustment under
certain circumstances as specified in the Indenture (as defined herein).
Accordingly, the number of shares of Common Stock issuable upon conversion of
the Debentures may change. In addition, the aggregate principal amount of the
Debentures is subject to change as a result of redemptions and conversions under
the terms of the Indenture. As of the date of this Prospectus, the aggregate
principal amount of Debentures outstanding is $100,000,000, which may be
converted into 3,546,099 shares of Common Stock.
Because the Selling Securityholders may offer all or some of the Debentures
and shares of Common Stock issued upon conversion thereof pursuant to the
offering contemplated by this Prospectus, and to the Company's knowledge there
are currently no agreements, arrangements or understandings with respect to the
sale of any of the Debentures or shares of Common Stock that may be held by the
Selling Securityholders after completion of this offering, no estimate can be
given as to the principal amount of the Debentures or shares of Common Stock
that will be held by Selling Securityholders after completion of this offering.
See "Plan of Distribution."
PLAN OF DISTRIBUTION
The Selling Securityholders may sell all or a portion of the Debentures and
shares of Common Stock beneficially owned by them and which may be offered
hereby from time to time on any exchange or market on which the securities are
listed or quoted, as applicable, on terms to be determined at the times of such
sales. The Selling Securityholders may also make private sales directly or
through a broker or brokers. Alternatively, any of the Selling Securityholders
may from time to time offer the Debentures or shares of Common Stock which may
be offered hereby and beneficially owned by them through underwriters, dealers
or agents, who may receive compensation in the form of underwriting discounts,
commissions or concessions from the Selling Securityholders and the purchasers
of the Debentures or shares of Common Stock for whom they may act as agent. Such
underwriters, dealers or agents may include the Initial Purchasers of the
Debentures, which may perform investment banking or other services for or engage
in other transactions with the Company from time to time in the future.
5
<PAGE>
To the extent required, the aggregate principal amount of Debentures and
number of shares of Common Stock to be sold hereby, the names of the Selling
Securityholders, the purchase price, the name of any such agent, dealer or
underwriter and any applicable commissions, discounts or other terms
constituting compensation with respect to a particular offer will be set forth
in an accompanying Prospectus Supplement. The aggregate proceeds to the Selling
Securityholders from the sale of the Debentures or shares of Common Stock
offered by them hereby will be the purchase price of such Debentures or shares
of Common Stock less discounts and commissions, if any.
The Debentures and the shares of Common Stock which may be offered hereby
may be sold from time to time in one or more transactions at fixed offering
prices, which may be changed, or at varying prices determined at the time of
sale or at negotiated prices. Such prices will be determined by the holders of
such securities or by agreement between such holders and underwriters or dealers
who receive fees or commissions in connection therewith.
The outstanding Common Stock is listed for trading on Nasdaq, and the
shares of Common Stock issuable upon conversion of the Debentures have been
authorized for listing on Nasdaq. There is no assurance as to the development or
liquidity of any trading market that may develop for the Debentures.
In order to comply with the securities laws of certain states, if
applicable, the Debentures and shares of Common Stock offered hereby will be
sold in such jurisdictions only through registered or licensed brokers or
dealers. In addition, in certain states the Debentures and shares of Common
Stock offered hereby may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and compliance with same is effected.
The Selling Securityholders and any broker-dealers, agent or underwriters
that participate with the Selling Securityholders in the distribution of the
Debentures or shares of Common Stock offered hereby may be deemed to be
"underwriters" within the meaning of the Securities Act, in which event any
commissions or discounts received by such broker-dealers, agents or underwriters
and any profit on the resale of the Debentures or shares of Common Stock offered
hereby and purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
The Company and the Selling Securityholders have agreed to indemnify each
other against certain liabilities arising under the Securities Act. The Company
has agreed to pay all expenses incident to the offer and sale of the Debentures
and Common Stock offered hereby by the Selling Securityholders to the public,
other than selling commissions and fees.
DESCRIPTION OF DEBENTURES
The Debentures initially were issued under an indenture dated as of June
15, 1996 (the "Indenture") between the Company and Chemical Bank, as trustee
(the "Trustee"). Holders of the Debentures and shares of Common Stock acquired
upon conversion thereof are entitled to certain rights under the Registration
Rights Agreement dated as of June 21, 1996 between the Company and the Initial
Purchasers (the "Registration Rights Agreement"). The following summaries of
certain provisions of the Indenture and the Registration Rights Agreement do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Indenture and the Registration
Rights Agreement, including the definition therein of certain terms. Wherever
particular sections or defined terms of the Indenture or the Registration Rights
Agreement are referred to, such sections or defined terms are incorporated
herein by reference. Copies of the Indenture and the Registration Rights
Agreement are available from the Company or the Initial Purchasers upon request.
General
The Debentures will be unsecured obligations of the Company, will be
limited to $100,000,000 in aggregate principal amount and will mature on June
15, 2003. The Debentures will bear interest at the rate per annum shown on the
front cover of this Prospectus from the date of original issuance of Debentures
pursuant to the Indenture, or from the most recent Interest Payment Date to
which interest has been paid or provided for, payable semiannually on June 15
and December 15 of each year, commencing December 15, 1996, to the Person in
whose name the Debenture (or any predecessor Debenture) is registered at the
close of business on the preceding June 1 or December 1, as the case may be.
Interest on the Debentures will be paid on the basis of a 360-day year of 12 30-
day months.
6
<PAGE>
Principal of, and premium, if any, and interest on, the Debentures will be
payable (i) in respect of Debentures held of record by the Depository Trust
Company ("DTC") or its nominee in same day funds on or prior to the payment
dates with respect to such amounts and (ii) in respect of Debentures held of
record by holders other than DTC or its nominee at the office of the Trustee in
New York, New York, and the Debentures may be surrendered for transfer, exchange
or conversion at the office of the Trustee in New York, New York. In addition,
with respect to Debentures held of record by holders other than DTC or its
nominee, payment of interest may be made at the option of the Company by check
mailed to the address of the persons entitled thereto as it appears in the
Register for the Debentures on the Regular Record Date for such interest.
The Debentures will be issued only in registered form, without coupons and
in denominations of $1,000 or any integral multiple thereof. No service charge
will be made for any transfer or exchange of the Debentures, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge and any other expenses (including the fees and expenses of the Trustee)
payable in connection therewith. The Company is not required (i) to issue,
register the transfer of or exchange any Debentures during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption and ending at the close of business on the day of such mailing, or
(ii) to register the transfer of or exchange any Debenture selected for
redemption in whole or in part, except the unredeclined portion of Debentures
being redeemed in part.
All monies paid by the Company to the Trustee or any Paying Agent for the
payment of principal of and premium and interest on any Debenture which remain
unclaimed for two years after such principal, premium or interest become due and
payable may be repaid to the Company. Thereafter, the Holder of such Debenture
may, as an unsecured general creditor, look only to the Company for payment
thereof.
The Indenture does not contain any provisions that would provide protection
to Holders of the Debentures against a sudden and dramatic decline in credit
quality of the Company resulting from any takeover, recapitalization or similar
restructuring, except as described below under "Certain Rights to Require
Repurchase of Debentures."
Conversion Rights
The Debentures will be convertible into Common Stock at any time after
August 25, 1996 (the 60th day following the date of original issuance of the
Debentures) and prior to redemption or final maturity, initially at the
conversion price of $28.20 per share. The right to convert Debentures which have
been called for redemption will terminate at the close of business on the second
business day preceding the Redemption Date. See "Optional Redemption" below.
The conversion price will be subject to adjustment upon the occurrence of
any of the following events: (i) the subdivision, combination or
reclassification of outstanding shares of Common Stock; (ii) the payment in
shares of Common Stock of a dividend or distribution on any class of capital
stock of the Company; (iii) the issuance of rights or warrants to all holders of
Common Stock entitling them to acquire shares of Common Stock at a price per
share less than the Current Market Price; (iv) the distribution to holders of
Common Stock of shares of capital stock other than Common Stock, evidences of
indebtedness, cash or assets (including securities, but excluding dividends or
distributions paid exclusively in cash and dividends, distributions, rights and
warrants referred to above); (v) a distribution consisting exclusively of cash
(excluding any cash distributions referred to in (iv) above) to all holders of
Common Stock in an aggregate amount that, together with (A) all other cash
distributions (excluding any cash distributions referred to in (iv) above) made
within the 12 months preceding such distribution and (B) any cash and the fair
market value of other consideration payable in respect of any tender offer by
the Company or a subsidiary of the Company for the Common Stock consummated
within the 12 months preceding such distribution, exceeds the greater of (I)
12.5% of the Company's market capitalization (being the product of the Current
Market Price times the number of shares of Common Stock then outstanding) or
(II) the Company's retained earnings, in each case on the date fixed for
determining the stockholders entitled to such distribution; and (vi) the
consummation of a tender offer made by the Company or any subsidiary of the
Company for the Common Stock which involves an aggregate consideration that,
together with (X) any cash and other consideration payable in respect of any
tender offer by the Company or a subsidiary of the Company for the Common Stock
consummated within the 12 months preceding the consummation of such tender offer
and (Y) the aggregate amount of all cash distributions (excluding any cash
distributions referred to in (iv) above) to all holders of the Common Stock
within the 12 months preceding the consummation of such tender offer, exceeds
the greater of (I) 12.5% of the Company's
7
<PAGE>
market capitalization or (II) the Company's retained earnings, in each case at
the date of consummation of such tender offer. No adjustment of the conversion
price will be required to be made until cumulative adjustments amount to at
least one percent of the conversion price, as last adjusted. Any adjustment that
would otherwise be required to be made shall be carried forward and taken into
account in any subsequent adjustment.
In addition to the foregoing adjustments, the Company will be permitted to
reduce the conversion price as it considers to be advisable in order that any
event treated for federal income tax purposes as a dividend of stock or stock
rights will not be taxable to the holders of the Company Stock or, if that is
not possible, to diminish any income taxes that are otherwise payable because of
such event. In the case of any consolidation or merger of the Company with any
other corporation (other than one in which no change is made in the Common
Stock), or any sale or transfer of all or substantially all of the assets of the
Company, the Holder of any Debenture then outstanding will, with certain
exceptions, have the right thereafter to convert such Debenture 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 such Debenture might have been converted immediately
prior to such consolidation, merger, sale or transfer; and adjustments will be
provided for events subsequent thereto that are as nearly equivalent as
practical to the conversion price adjustments described above.
Fractional shares of Common Stock will not be issued upon conversion, but,
in lieu thereof, the Company will pay a cash adjustment based upon the then
Closing Price at the close of business on the day of conversion. If any
Debentures are surrendered for conversion during the period from the close of
business on any Regular Record Date through and including the next succeeding
Interest Payment Date (except any such Debentures called for redemption), such
Debentures when surrendered for conversion must be accompanied by payment in
next day funds of an amount equal to the interest thereon which the registered
Holder on such Regular Record Date is to receive. Except as described in the
preceding sentence, no interest will be payable by the Company on converted
Debentures with respect to any Interest Payment Date subsequent to the date of
conversion. No other payment or adjustment for interest or dividends is to be
made upon conversion.
Subordination
The payment of the principal of and premium, if any, and interest on the
Debentures will, to the extent set forth in the Indenture, be subordinated in
right of payment to the prior payment in full of all Senior Indebtedness. If
there is a payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshalling of assets or any bankruptcy, insolvency or similar
proceedings of the Company, the holders of all Senior Indebtedness will be
entitled to receive payment in full of all amounts due or to become due thereon
or provision for such payment in money or money's worth before the Holders of
the Debentures will be entitled to receive any payment in respect of the
principal of or premium, if any, or interest on the Debentures. In the event of
the acceleration of the Maturity of the Debentures, the holders of all Senior
Indebtedness will first be entitled to receive payment in full in cash of all
amounts due thereon or provision for such payment in money or money's worth
before the Holders of the Debentures will be entitled to receive any payment for
the principal of or premium, if any, or interest on the Debentures. No payments
on account of principal of or premium, if any, or interest on the Debentures or
on account of the purchase or acquisition of Debentures may be made if there has
occurred and is continuing a default in any payment with respect to Senior
Indebtedness, any acceleration of the maturity of any Senior Indebtedness or if
any judicial proceeding is pending with respect to any such default.
Senior Indebtedness is defined in the Indenture as (a) the principal of and
premium, if any, and interest (including, without limitation, any interest
accruing subsequent to the filing of a petition or other action concerning
bankruptcy or other similar proceedings, whether or not constituting an allowed
claim in any such proceedings) on all secured indebtedness of the Company,
whether outstanding on the date of execution of the Indenture or thereafter
created, incurred or assumed, except any such other indebtedness that by the
terms of the instrument or instruments by which such indebtedness was created or
incurred expressly provides that it (i) is junior in right of payment to the
Debentures or (ii) ranks pari passu in right of payment with the Debentures, and
(b) any amendments, renewals, extensions, modifications, refinancings and
refundings of any of the foregoing. The term "secured indebtedness" when used
with respect to the Company is defined to mean any or all of the following to
the extent not unsecured, as such term is used in Section 279(b)(2)(B) of the
Internal Revenue Code of 1986, as amended: (i) any obligation of the Company for
the repayment of borrowed money (including without limitation fees, penalties
8
<PAGE>
and other obligations in respect thereof), whether or not evidenced by bonds,
debentures, notes or other written instruments, (ii) any deferred payment
obligation of the Company for the payment of the purchase price of property or
assets evidenced by a note or written instrument, (iii) any obligation of the
Company for the payment of rent or other amounts under a lease of property or
assets which obligation is required to be classified and accounted for as a
capitalized lease on the balance sheet of the Company under generally accepted
accounting principles, (iv) any obligation of the Company for the reimbursement
of any obligor of any letter of credit, banker's acceptance or similar credit
transaction, (v) any obligation of the Company under interest rate swaps, caps,
collars, options and similar arrangements, (vi) any obligation of the Company
under any foreign exchange contract, currency swap agreement, futures contract,
currency option contract or other foreign currency hedge and (vii) any
liabilities of others described in the preceeding clauses (i), (ii), (iii),
(iv), (v) and (vi) which the Company has guaranteed or for which the Company is
otherwise liable.
The Debentures are primary obligations of the Company. Each of the
Company's wholly-owned subsidiaries has guaranteed the Company's payment
obligations under the Debentures, so long as such subsidiary is a member of an
affiliated group (within the meaning of Section 279(g) of the Internal Revenue
Code of 1986, as amended) which includes the Company. The satisfaction by the
Company's subsidiaries of their contractual guarantees may be subject to certain
statutory or contractual restrictions, are contingent upon the earnings of such
subsidiaries and are subject to various business considerations.
The Indenture does not limit or prohibit the incurrence of Senior
Indebtedness. At April 30, 1997, the Company had Senior Indebtedness in the
amount of approximately $8.2 million. The Company also expects to incur Senior
Indebtedness from time to time in the future. See "Capitalization."
Optional Redemption
The Debentures will be redeemable, at the Company's option, in whole or
from time to time in part, at any time on or after June 18, 1999, upon not less
than 15 nor more than 60 days' notice mailed to each Holder of Debentures to be
redeemed at its address appearing in the Security Register and prior to Maturity
at the following Redemption Prices (expressed as percentages of the principal
amount) plus accrued interest to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date to receive interest due on
an Interest Payment Date that is on or prior to the Redemption Date).
If redeemed during the 12-month period beginning June 15 in the year
indicated (June 18, in the case of 1999), the redemption price shall be:
Redemption
Year Price
---- ----------
1999 .............................. 103.86%
2000 .............................. 102.89%
2001 .............................. 101.93%
2002 .............................. 100.96%
No sinking fund is provided for the Debentures.
Consolidation, Merger and Sale of Assets
The Company will not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entity
to any Person, or permit any Person to consolidate with or merge into the
Company or convey, transfer or lease its properties substantially as all
entirely to the Company, unless (a) if applicable, the Person formed by such
consolidation or into which the Company is merged or the Person or corporation
which acquires the properties and assets of the Company substantially as an
entirely is a corporation, partnership or trust organized and validly existing
under the laws of the United States or any state thereof or the District of
Columbia and expressly assumes payment of the principal of and premium, if any,
and interest on the Debentures and performance and observance of each obligation
of the Company under the Indenture, (b) after consummating such consolidation,
merger, transfer or lease, no Default or Event of Default will occur and be
continuing, (c) such consolidation, merger or acquisition does not adversely
affect the validity or enforceability of the Debentures and (d) the Company has
delivered to the Trustee an Officer's Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, conveyance, transfer or lease
complies with the provisions of the Indenture.
9
<PAGE>
Certain Rights to Require Repurchase of Debentures
In the event of any Repurchase Event (as defined below) occurring after the
date of issuance of the Debentures and on or prior to Maturity, each Holder of
Debentures will have the right, at the Holder's option, to require the Company
to repurchase all or any part of the Holder's Debentures on the date (the
"Repurchase Date") that is 30 days after the date the Company gives notice of
the Repurchase Event as described below at a price (the "Repurchase Price")
equal to 100% of the principal amount thereof, together with accrued and unpaid
interest to the Repurchase Date. On or prior to the Repurchase Date, the Company
shall deposit with the Trustee or a Paying Agent an amount of money sufficient
to pay the Repurchase Price of the Debentures which are to be repaid on or
promptly following the Repurchase Date.
Failure by the Company to provide timely notice of a Repurchase Event, as
provided for below, or to repurchase the Debentures when required under the
preceding paragraph will result in an Event of Default under the Indenture
whether or not such repurchase is permitted by the subordination provisions of
the Indenture.
On or before the 15th day after the occurrence of a Repurchase Event, the
Company is obligated to mail to all Holders of Debentures a notice of the
occurrence of such Repurchase Event and identifying the Repurchase Date, the
date by which the repurchase right must be exercised, the Repurchase Price for
Debentures and the procedures which the Holder must follow to exercise this
right. To exercise the repurchase right, the Holder of a Debenture must deliver,
on or before the close of business on the Repurchase Date, written notice to the
Company (or an agent designated by the Company for such purpose) and to the
Trustee of the Holder's exercise of such right, together with the certificates
evidencing the Debentures with respect to which the right is being exercised,
duly endorsed for transfer.
A "Repurchase Event" shall have occurred upon the occurrence of a Change in
Control (as defined below).
A "Change in Control" shall occur when: (i) all or substantially all of the
Company's assets are sold as an entirety to any person or related group of
persons (other than a Permitted Holder (as defined below)); (ii) there shall be
consummated any consolidation or merger of the Company (A) in which the Company
is not the continuing or surviving corporation (other than a consolidation or
merger with a wholly owned subsidiary of the Company in which all shares of
Common Stock outstanding immediately prior to the effectiveness thereof are
changed into or exchanged for the same consideration) or (B) pursuant to which
the Common Stock would be converted into cash, securities or other property, in
each case other than a consolidation or merger of the Company in which the
holders of the Common Stock immediately prior to the consolidation or merger
have, directly or indirectly, at least a majority of the total voting power of
all classes of capital stock entitled to vote generally in the election of
directors of the continuing or surviving corporation immediately after such
consolidation or merger in substantially the same proportion as their ownership
of Common Stock immediately before such transaction; (iii) any person, or any
persons acting together which would constitute a "group" for purposes of Section
13(d) of the Exchange Act (other than a Permitted Holder), together with any
affiliates thereof, shall beneficially own (as defined in Rule 13d-3 under the
Exchange Act) at least 50% of the total voting power of all classes of capital
stock of the Company entitled to vote generally in the election of directors of
the Company; (iv) at any time during any consecutive two-year period,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the stockholders of the
Company was approved by a vote of 662/3% of the directors then still in office
who were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company then in office;
or (v) the Company is liquidated or dissolved or adopts a plan of liquidation or
dissolution.
"Permitted Holder" means (i) each of the Company's current officers and
directors; (ii) the members of the immediate family of Abraham D. Gosman; and
(iii) any group (within the meaning of Section 13(d) of the Exchange Act) of
which Mr. Gosman is a member so long as, with respect to any such group, Mr.
Gosman owns more than 25% of the total voting power of (a) all classes of
capital stock of the acquiring entity entitled to vote generally in the election
of directors of such entity or (b) the securities of the Company owned by such
group.
The right to require the Company to repurchase Debentures as a result of
the occurrence of a Repurchase Event could create an event of default under
Senior Indebtedness of the Company, as a result of which any repurchase could,
absent a waiver, be blocked by the subordination provisions of the Debentures.
See "Subordination." Failure
10
<PAGE>
by the Company to repurchase the Debentures when required will result in an
Event of Default with respect to the Debentures whether or not such repurchase
is permitted by the subordination provisions. The Company's ability to pay cash
to the Holders of Debentures upon a repurchase may be limited by certain
financial covenants contained in the Company's Senior Indebtedness.
In the event a Repurchase Event occurs and the Holders exercise their
rights to require the Company to repurchase Debentures, the Company intends to
comply with applicable tender offer rules under the Exchange Act, including
Rules 13e-4 and 14e-1, as then in effect, with respect to any such purchase.
The foregoing provisions would not necessarily afford Holders of the
Debentures protection in the event of highly leveraged or other transactions
involving the Company that may adversely affect Holders. In addition, the
foregoing provisions may discourage open market purchases of the Common Stock or
a non-negotiated tender or exchange offer for such stock and, accordingly, may
limit a stockholder's ability to realize a premium over the market price of the
Common Stock in connection with any such transaction.
Events of Default
The following are Events of Default under the Indenture with respect to the
Debentures: (a) default in the payment of principal of or any premium on any
Debenture when due (even if such payment is prohibited by the subordination
provisions of the Indenture); (b) default in the payment of any interest on any
Debenture when due, which default continues for 30 days (even if such payment is
prohibited by the subordination provisions of the Indenture); (c) failure to
provide timely notice of a Repurchase Event as required by the Indenture; (d)
default in the payment of the Repurchase Price in respect of any Debenture on
the Repurchase Date therefor (even if such payment is prohibited by the
subordination provisions of the Indenture); (e) default in the performance of
any other covenant of the Company in the Indenture which continues for 60 days
after written notice as provided in the Indenture; (f) default under any bond,
debenture, note or other evidence of indebtedness for money borrowed by the
Company or any subsidiary of the Company or under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Company or any subsidiary
of the Company, whether such indebtedness now exists or shall hereafter be
created, which default shall constitute a failure to pay the principal of
indebtedness in excess of $10,000,000 when due and payable after the expiration
of any applicable grace period with respect thereto or shall have resulted in
indebtedness in excess of $10,000,000 becoming or being declared due and payable
prior to the date on which it would otherwise have become due and payable,
without such indebtedness having been discharged, or such acceleration having
been rescinded or annulled, within a period of 30 days after there shall have
been given to the Company by the Trustee or to the Company and the Trustee by
the Holders of at least 25% in aggregate principal amount of the Outstanding
Debentures a written notice specifying such default and requiring the Company to
cause such indebtedness to be discharged or cause such acceleration to be
rescinded or annulled; and (g) certain events in bankruptcy, insolvency or
reorganization of the Company or any subsidiary of the Company.
If an Event of Default with respect to the Debentures shall occur and be
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Debentures then outstanding may declare the
principal of and premium, if any, on all such Debentures to be due and payable
immediately, but if the Company cures all Events of Default (except the
nonpayment of interest on, premium, if any, and principal of any Notes) and
certain other conditions are met, such declaration may be canceled and past
defaults may be waived by the holders of a majority in principal amount of
Outstanding Debentures. If an Event of Default shall occur as a result of an
event of bankruptcy, insolvency or reorganization of the Company or any
subsidiary of the Company, the aggregate principal amount of the Debentures
shall automatically become due and payable. The Company is required to furnish
to the Trustee annually a statement as to the performance by the Company of
certain of its obligations under the Indenture and as to any default in such
performance. The Indenture provides that the Trustee may withhold notice to the
Holders of the Debentures of any continuing default (except in the payment of
the principal of or premium, if any, or interest on any Debentures) if the
Trustee considers it in the interest of Holders of the Debentures to do so.
11
<PAGE>
Modification, Amendments and Waivers
Modifications and amendments of the Indenture may be made by the Company
and the Trustee without the consent of the Holders to: (a) cause the Indenture
to be qualified under the Trust Indenture Act; (b) evidence the succession of
another Person to the Company and the assumption by any such successor of the
covenants of the Company herein and in the Debentures; (c) add to the covenants
of the Company for the benefit of the Holders or an additional Event of Default,
or surrender any right or power conferred upon the Company; (d) secure the
Debentures; (e) make provision with respect to the conversion rights of Holders
in the event of a consolidation, merger or sale of assets involving the Company,
as required by the Indenture; (f) evidence and provide for the acceptance of
appointment by a successor Trustee with respect to the Debentures; or (g) cure
any ambiguity, correct or supplement any provision which may be defective or
inconsistent with any other provision, or make any other provisions with respect
to matters or questions arising under the Indenture which shall not be
inconsistent with the provisions of the Indenture, provided, however, that no
such modifications or amendment may adversely affect the interest of Holders in
any material respect.
Satisfaction and Discharge
The Company may discharge its obligations under the Indenture while
Debentures remain Outstanding if (a) all Outstanding Debentures will become due
and payable at their scheduled maturity within one year or (b) all Outstanding
Debentures are scheduled for redemption within one year, and in either case the
Company has deposited with the Trustee an amount sufficient to pay and discharge
all Outstanding Debentures on the date of their scheduled maturity or the
scheduled date of redemption.
Payments of Principal and Interest
The Indenture will require that payments in respect of the Debentures
(including principal, premium, if any, and interest) held of record by DTC
(including Debentures evidenced by the Restricted Global Note) be made in same
day funds. Payments in respect of the Debentures held of record by holders other
than DTC may, at the option of the Company, be made by check and mailed to such
holders of record as shown on the register for the Debentures.
Registration Rights; Liquidated Damages
The Company has filed the Registration Statement (the "Shelf Registration
Statement") pursuant to the terms of the Registration Rights Agreement. Under
the Registration Rights Agreement, the Company agreed to use its best efforts to
cause the Shelf Registration Statement to become effective on or prior to 90
days from the latest date of the original issuance of the Debentures and to keep
such Shelf Registration Statement effective until the earlier of such date that
is three years after the effective date thereof or until the Shelf Registration
Statement is no longer required for the transfer of any Debentures or shares of
Common Stock issuable upon conversion of the Debentures (the "Securities").
Notwithstanding the foregoing, the Company will be permitted to prohibit offers
and sales of Transfer Restricted Securities pursuant to the Shelf Registration
Statement under certain circumstances and subject to certain conditions (any
period during which offers and sales are prohibited being referred to as a
"Suspension Period"). "Transfer Restricted Securities" means each Debenture and
any underlying share of Common Stock until the date on which such Debenture or
underlying share of Common Stock has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement, the date on which such Debenture or underlying share of Common Stock
is distributed to the public pursuant to Rule 144 under the Securities Act or
the date on which such Debenture or share of Common Stock may be sold or
transferred pursuant to Rule 144(k)(or any similar provisions then in force). If
the Shelf Registration Statement has not become effective on or prior to 90 days
from the latest date of the original issuance of the Debentures, or the Shelf
Registration Statement is filed and declared effective but shall thereafter
cease to be effective (without being succeeded immediately by an additional
registration statement filed and declared effective) or usable for the offer and
sale of Transfer Restricted Securities for a period of time (including any
Suspension Period) which shall exceed 90 days in the aggregate in any one of the
one-year periods ending on the first, second and third anniversaries of the
Closing Date as defined in the Registration Rights Agreement, or which shall
exceed 30 days in any calendar quarter (each such event a "Registration
Default"), the Company will pay liquidated damages to each Holder of Transfer
Restricted Securities. The amount of liquidated damages payable during any
period during which a Registration Default shall have occurred and be continuing
is that amount which is equal to one-quarter of one percent (25 basis points)
per annum per $1,000 principal amount, or $0.01 per week
12
<PAGE>
per share (subject to adjustment in the event of stock splits, stock
recombinations, stock dividends and the like) of issued Common Stock
constituting Transfer Restricted Securities, for each 90-day period or part
thereof until the applicable registration statement is filed and the applicable
registration statement is declared effective, or the Shelf Registration
Statement again becomes effective or usable, as the case may be, up to a maximum
amount of liquidated damages of $0.25 per week per $1,000 principal amount of
Debentures or $0.05 per week per share (subject to adjustment as set forth
above) of Common Stock constituting Transfer Restricted Securities. All accrued
liquidated damages shall be paid to holders of Debentures by wire transfer of
immediately available funds or by federal funds check by the Company on each
Damages Payment Date (as defined in the Registration Rights Agreement).
Following the cure of a Registration Default, liquidated damages will cease to
accrue with respect to such Registration Default.
Governing Law
The Indenture and Debentures will be governed by and construed in
accordance with the laws of the State of New York, without giving effect to such
State's conflicts of laws principles.
Information Concerning the Trustee
The Company and its subsidiaries may maintain deposit accounts and conduct
other banking transactions with the Trustee in the ordinary course of business.
Absence of Public Trading Market
There is no existing market for the Debentures and there can be no
assurance as to the liquidity of any markets that may develop for the
Debentures, the ability of the holders to sell their Debentures or at what price
holders of the Debentures will be able to sell their Debentures. Future trading
prices of the Debentures will depend upon many factors including, among other
things, prevailing interest rates, the Company's operating results, the price of
the Common Stock and the market for similar securities. The Initial Purchasers
have informed the Company that they intend to make a market in the Debentures
offered hereby; however, the Initial Purchasers are not obligated to do so and
any such market making activity may be terminated at any time without notice to
the holders of the Debentures. Prior to the resale thereof, pursuant to this
Prospectus each of the Debentures was eligible for trading in Private Offerings,
Resales and Trading through the PORTAL Market. Debentures sold pursuant to this
Prospectus will no longer be eligible for trading in the PORTAL Market. The
Company does not intend to apply for listing of the Debentures on any Securities
exchange.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain United States federal
income tax considerations to holders of the Debentures. This discussion is based
upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations, Internal Revenue Service ("IRS") rulings, and judicial decisions
now in effect, all of which are subject to change (possibly with retroactive
effect) or different interpretations.
This discussion does not deal with all aspects of United States federal
income taxation that may be important to holders of the Debentures or shares of
Common Stock and does not deal with tax consequences arising under the laws of
any foreign, state or local jurisdiction. This discussion is for general
information only, and does not purport to address all tax consequences that may
be important to particular purchasers in light of their personal circumstances,
or to certain types of purchasers (such as certain financial institutions,
insurance companies, tax- exempt entities, dealers in securities or persons who
hold the Debentures or Common Stock in connection with a straddle) that may be
subject to special rules. This discussion assumes that each holder holds the
Debentures and the shares of Common Stock received upon conversion thereof as
capital assets.
For the purpose of this discussion, a "Non-U.S. Holder" refers to any
holder who is not a United States person. The term "United States person" means
a citizen or resident of the united States, a corporation or partnership created
or organized in the united States or any state thereof, or an estate or trust,
the income of which is includible in income for United States federal income tax
purposes regardless of its source.
PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THEIR
13
<PAGE>
PARTICIPATION IN THIS OFFERING, OWNERSHIP AND DISPOSITION OF THE DEBENTURES,
INCLUDING CONVERSION OF THE DEBENTURES, AND THE EFFECT THAT THEIR PARTICULAR
CIRCUMSTANCES MAY HAVE ON SUCH TAX CONSEQUENCES.
Ownership of the Debentures
Interest on Debentures. Interest paid on Debentures will be taxable to a
holder as ordinary interest income in accordance with the holder's methods of
tax accounting at the time that such interest is accrued or (actually or
constructively) received. The Company expects that the Debentures will not be
issued with original issue discount ("OID") within the meaning of the Code.
Constructive Dividend. Certain corporate transactions, such as
distributions of assets to holders of Common Stock, may cause a deemed
distribution to the holders of the Debentures if the conversion price or
conversion ratio of the Debentures is adjusted to reflect such corporation
transaction. Such deemed distributions will be taxable as a dividend, return of
capital, or capital gain in accordance with the earnings and profits rules
discussed under "Dividends on Shares of Common Stock."
Sale or Exchange of Debentures or Shares of Common Stock. In general, a
holder of Debentures will recognize gain or loss upon the sale, redemption,
retirement or other disposition of the Debentures 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 the
holder's adjusted tax basis in the Debentures. A holder's tax basis in
Debentures generally will equal the cost of the Debentures to the holder
increased by the amount of market discount, if any, previously taken into income
by the holder or decreased by any bond premium theretofore amortized by the
holder with respect to the Debentures. (For the basis and holding period of
shares of Common Stock, see "Conversion of Debentures.") In general, each holder
of Common Stock into which the Debentures have been converted will recognize
gain or loss upon the sale, exchange, redemption, or other disposition of the
Common Stock under rules similar to those applicable to the Debentures. Special
rules may apply to redemptions, or other disposition of the common stock under
rules similar to those applicable to the Debentures. Special rules may apply to
redemptions of the Common stock which may result in the amount paid being
treated as a dividend. Subject to the market discount rules discussed below, the
gain or loss on the disposition of the Debentures or shares of Common Stock will
be capital gain or loss and will be long-term gain or loss if the Debentures or
shares of Common Stock have been held for more than one year at the time of such
disposition.
Conversion of Debentures. A holder of Debentures will not recognize gain or
loss on the conversion of the Debentures into shares of Common Stock. The
holder's tax basis in the shares of Common Stock received upon conversion of the
Debentures will be equal to the holder's aggregate basis in the Debentures
exchanged therefor (less any portion thereof allocable to cash received in lieu
of a fractional share). The holding period of the shares of Common Stock
received by the holder upon conversion of Debentures will generally include the
period during which the holder held the Debentures prior to the conversion.
Cash received in lieu of a fractional share of Common Stock should be
treated as a payment in exchange for such fractional share rather than as a
dividend. Gain or loss recognized on the receipt of cash paid in lieu of such
fractional shares generally will equal the difference between the amount of cash
received and the amount of tax basis allocable to the fractional shares.
Market Discount. The resale of Debentures may be affected by the "market
discount" provisions of the Code. For this purpose, the market discount on a
Debenture will generally be equal to the amount, if any, by which the stated
redemption price at maturity of the Debenture immediately after its acquisition
exceeds the holder's tax basis in the debenture. Subject to a de minimis
exception, these provisions generally require a holder of a Debenture acquired
at a market discount to treat as ordinary income any gain recognized on the
disposition of such Debenture to the extent of the "accrued market discount" on
such Debenture at the time of disposition. In general, market discount on a
Debenture will be treated as accruing on a straight-line basis over the term of
such Debenture, or, at the election of the holder, under a constant yield
method. A holder of a Debenture acquired at a market discount may be required to
defer the deduction of a portion of the interest on any indebtedness incurred or
maintained to purchase or carry the Debenture until the Debenture is disposed of
in a taxable transaction, unless the holder elects to include accrued market
discount in income currently.
14
<PAGE>
Dividends on Shares of Common Stock. Distributions on shares of Common
Stock will constitute dividends for United States federal income tax purposes to
the extent of current or accumulated earnings and profits of the Company as
determined under United States federal income tax principles. Dividends paid to
holders that are United States corporations may qualify for the
dividends-received deduction.
To the extent, if any, that a holder receives distributions on shares of
Common Stock that would otherwise constitute dividends for United States federal
income tax purposes but that exceeds current and accumulated earnings and
profits of the Company, such distribution will be treated first as a non-taxable
return of capital reducing the holder's basis in the shares of Common Stock. Any
such distribution in excess of the holder's basis in the shares of Common Stock
will be treated as capital gain.
Certain Federal Income Tax Considerations Applicable to Non-U.S. Holders
Interest on Debentures. Generally, interest paid on the Debentures to a Non
U.S.-Holder will not be subject to United States federal income tax if: (I) such
interest is not effectively connected with the conduct of a trade or business
within the United States by such Non-U.S. Holder; (II) the Non-U.S. Holder does
not actually or constructively own 10% or more of the total voting power of all
classes of stock of the Company entitled to vote and is not a controlled foreign
corporation with respect to which the Company is a "related person" within the
meaning of the Code; and (III) the beneficial owner, under penalty of perjury,
certifies that the owner is not a United States person and provides the owner's
name and address. If certain requirements are satisfied, the certification
described in paragraph (III) above may be provided by a securities clearing
organization, a bank, or other financial institution that holds customers'
securities in the ordinary course of its trade or business. For this purpose,
the holder of Debentures would be deemed to own constructively the Common Stock
into which it could be converted. A holder that is not exempt from tax under
these rules will be subject to United States federal income tax withholding at a
rate of 30% unless the interest is effectively connected with the conduct of a
United States trade or business, in which case the interest will be subject to
the Untied States federal income tax on net income that applies to United States
persons generally. Non-U.S. Holders should consult applicable income tax
treaties, which may provide different rules.
Sales or Exchange of Debentures or Shares of Common Stock. A Non-U.S.
Holder generally will not be subject to United States federal income tax on gain
recognized upon the sale or other disposition unless (I) the gain is effectively
connected with the conduct of a trade or business within the United States by
the Non-U.S. Holder, or (ii) in the case of a Non-U.S. Holder who is a
nonresident alien individual and holds the Common Stock as a capital asset, such
holder is present in the United States for 183 or more days in the taxable year
and certain other circumstances are present. If the Company is a "United States
real property holding corporation," a Non-U.S. Holder may be subject to federal
income tax with respect to gain realized on the disposition of such shares as if
it were effectively connected with a United States trade or business and the
amount realized will be subject to withholding at the rate of 10%. The amount
withheld pursuant to these rules will be creditable against such Non-U.S.
Holder's United States federal income tax liability and may entitle such
Non-U.S. Holder to a refund upon furnishing the required information to the
Internal Revenue Service. Non-U.S. Holders should consult applicable income tax
treaties, which may provide different rules.
Conversion of Debentures. A Non-U.S. Holder generally will not be subject
to United States federal income tax on the conversion of a Debenture into shares
of Common Stock. To the extent a Non-U.S. Holder receives cash in lieu of a
fractional share on conversion, such cash may give rise to gain that would be
subject to the rules described above with respect to the sale or exchange of a
Debenture or Common Stock.
Dividends on Shares of Common Stock. Generally, any distribution on shares
of Common Stock to a Non- U.S. Holder will be subject to United States federal
income tax withholding at a rate of 30% unless the dividend is effectively
connected with the conduct of trade or business within the United States by the
Non-U.S. Holders, in which case the dividend will be subject to the United
States federal income tax on net income that applies to United States persons
generally (and, with respect to corporate holders and under certain
circumstances, the branch profits tax). Non-U.S. Holders should consult any
applicable income tax treaties, which may provide for a lower rate of
withholding or other rules different from those described above. A Non-U.S.
Holder may be required to satisfy certain certification requirements in order to
claim a reduction of or exemption from withholding under the foregoing rules.
15
<PAGE>
Information Reporting and Backup Withholding
U.S. Holders. Information reporting and backup withholding may apply to
payments of interest or dividends on or the proceeds of the sale or other
disposition of the Debentures or shares of Common Stock made by the Company with
respect to certain noncorporate U.S. Holders. Such U.S. holders generally will
be subject to backup withholding at a rate of 31% unless the recipient of such
payment supplies a taxpayer identification number, certified under penalties of
perjury, as well as certain other information, or otherwise establishes, in the
manner prescribed by law, an exemption from backup withholding. Any amount
withheld under backup withholding is allowable as a credit against the U.S.
holder's federal income tax, upon furnishing the required information.
Non-U.S. Holders. Generally, information reporting and backup withholding
of United States federal income tax at a rate of 31% may apply to payments of
principal, interest and premium (if any) to Non-U.S. Holders if the payee fails
to certify that the holder is a Non-U.S. person or if the Company or its paying
agent has actual knowledge that the payee is a United States person. The 31%
backup withholding tax generally will not apply to dividends paid to foreign
holders outside the United States that are subject to 30% withholding discussed
above or that are subject to a tax treaty that reduces such withholding.
The payment of the proceeds on the disposition of Debenture or shares of
Common Stock to or through the United States office of a United States or
foreign broker will be subject to information reporting and backup withholding
unless the owner provides the certification described above or otherwise
establishes an exemption. The proceeds of the disposition by a Non-U.S. Holder
of Debentures or share of Common Stock to or through a foreign office of a
broker will not be subject to backup withholding. However, if such broker is a
U.S. person, a controlled foreign corporation for United States tax purposes, or
a foreign person 50% or more of whose gross income from all sources for certain
periods is from activities that are effectively connected with a United States
trade or business, information reporting will apply unless such broker has
documentary evidence in its files of the owner's foreign status and has no
actual knowledge to the contrary or unless the owner otherwise establishes an
exemption. Both backup withholding and information reporting will apply to the
proceeds from such dispositions if the broker has actual knowledge that the
payee is a U.S. Holder.
LEGAL MATTERS
Certain legal matters in connection with the Debentures and the shares of
Common Stock being offered hereby will be passed upon by Nutter, McClennen &
Fish, LLP, Boston, Massachusetts, counsel to the Company.
EXPERTS
The consolidated financial statements of the Company for the fiscal year
ended January 31, 1997 and the one-month period ended January 31, 1996 and
combined financial statements of the Company for the year ended December 31,
1995 and for the period from June 24, 1994 (inception) through December 31,
1994, incorporated in this Prospectus by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 1997, have been so
incorporated in reliance on the report of Coopers & Lybrand, LLP, independent
accountants, given upon the authority of said firm as experts in accounting and
auditing.
16
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table itemizes the expenses incurred by the Company in
connection with the offering. All amounts are estimated except for the
Registration Fee.
Registration Fee ..................... $ 34,483
Nasdaq Listing Fee .................. 17,500
Printing and Engraving Expenses ...... 40,000
Legal Fees and Expenses ............... 35,000
Accounting Fees and Expenses ......... 100,000
Miscellaneous ........................ 23,017
---------
TOTAL .............................. 250,000
Item 15. Indemnification of Directors and Officers
The Company is a Delaware corporation. Reference is made to Section 145 of
the Delaware General Corporation Law, as amended, which provides that a
corporation may indemnify any person who was or is a party to or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact that he
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceedings, had no
reasonable cause to believe his conduct was unlawful. Section 145 further
provides that a corporation similarly may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Delaware Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite an adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper. The Company's Certificate of
Incorporation further provides that the Company shall indemnify its directors
and officers to the full extent permitted by the law of the State of Delaware.
The Company's Certificate of Incorporation provides that the Company's
directors shall not be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except to the extent that
exculpation from liability is not permitted under the Delaware General
Corporation Law as in effect at the time such liability is determined.
The Company maintains an indemnification insurance policy covering all
directors and officers of the Company and its subsidiaries.
Item 16. Exhibits and Financial Statements
(a) Exhibits. The following is a list of exhibits which are incorporated as
part of the Registration Statement by reference.
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ------------ -------------------------------------------------------------------------------------------
<S> <C>
4.1 Indenture with respect to the Company's 63/4% Convertible Subordinated Debentures.
5.1 Opinion of Nutter, McClennen & Fish, LLP as to the legality of the securities registered
hereunder.
*23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Nutter, McClennen & Fish, LLP (contained in Exhibit 5)
24.1 Power of Attorney (Contained on page II-5 of the original filing)
25.1 Statement of Eligibility of Trustee
</TABLE>
- ----------
* Filed herewith.
All other exhibits have been previously filed.
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted against such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this
section do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the registrant pursuant to section
13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering; and
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 15th day of May
1997.
PHYMATRIX CORP.
By: /s/ Frederick R. Leathers
----------------------------------
Frederick R. Leathers
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
/s/ * May 15, 1997
- -------------------------
Abraham D. Gosman
Chairman of the Board of
Directors and Chief
Executive Officer
(Principal Executive Officer)
/s/ Frederick R. Leathers May 15, 1997
- -------------------------
Frederick R. Leathers
Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ * May 15, 1997
- -------------------------
Joseph N. Cassese
Director
/s/ * May 15, 1997
- -------------------------
David Livingston, M.D.
Director
/s/ * May 15, 1997
- -------------------------
Bruce Rendina
Vice Chairman of the
Board of Directors
/s/ * May 15, 1997
- -------------------------
Stephen E. Ronai, Esq.
Director
II-3
<PAGE>
/s/ * May 15, 1997
- -------------------------
Governor Hugh L. Carey
Director
/s/ * May 15, 1997
- -------------------------
John Chay
Director
- ------------------------- May 15, 1997
Eric Moskow
Director and Executive
Vice President Strategic Planning
*By: /s/ Frederick R. Leathers
- -------------------------
Frederick R. Leathers
Attorney-in-fact
II-4
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement of
PhyMatrix Corp. on Form S-3 (File No. 333-08269) of our report dated March 13,
1997, except as to the information presented in Note 20, for which the date is
April 24, 1997, on our audits of the consolidated financial statements and
financial statement schedule of PhyMatrix Corp. as of January 31, 1997 and
January 31, 1996, and for the year ended January 31, 1997, and for the one month
period ended January 31, 1996 and the combined financial statements of Phymatrix
Corp. as of December 31, 1995 and for the year ended December 31, 1995 and the
period ended June 24, 1994 (inception) to December 31, 1994. We also consent to
the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
May 14, 1997
