<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 4, 1998
REGISTRATION NO. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
PRIME MEDICAL SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 8090 74-2652727
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
SEE TABLE OF ADDITIONAL REGISTRANTS
1301 CAPITAL OF TEXAS HIGHWAY, SUITE C-300
AUSTIN, TEXAS 78746-6550
(512) 328-2892
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
KENNETH S. SHIFRIN
PRIME MEDICAL SERVICES, INC.
1301 CAPITAL OF TEXAS HIGHWAY, SUITE C-300
AUSTIN, TEXAS 78746-6550
(512) 328-2892
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER
INCLUDING AREA CODE, OF REGISTRANT'S AGENT FOR SERVICE)
---------------
Copy to:
TIMOTHY L. LA FREY
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
1900 FROST BANK PLAZA
816 CONGRESS AVENUE
AUSTIN, TEXAS 78701
(512) 499-6200
FAX: (512) 499-6290
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the registration statement becomes effective.
---------------
If any of the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
8 3/4% Senior
Subordinated Notes Due
2008................... $100,000,000 100% $100,000,000 $29,500
- -------------------------------------------------------------------------------------------
Subordinated
Guarantees(2).......... $-0- $-0- $-0- $-0-
</TABLE>
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(1) Estimated pursuant to Rule 457 solely for purposes of calculating the
registration fee.
(2) No additional registration fee is payable in respect of the registration
of the Subordinated Guarantees.
---------------
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 SECURITIES
AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
STATE OR PRIMARY
OTHER STANDARD
JURISDICTION OF INDUSTRIAL I.R.S. EMPLOYER
INCORPORATION OR CLASSIFICATION IDENTIFICATION
NAME ORGANIZATION CODE NUMBER NUMBER
---- ---------------- -------------- ---------------
<S> <C> <C> <C>
Prime Medical Operating, Inc. Delaware 8090 13-2734997
Prime Management, Inc. Nevada 8090 88-0343988
Prime Cardiac Rehabilitation
Services, Inc. Delaware 8090 22-2477772
Prime Diagnostic Services,
Inc. Delaware 8090 13-3195916
Prime Lithotripsy Services,
Inc. New York 8090 11-2560396
Prime Kidney Stone Treatment,
Inc. New Jersey 8090 22-3167335
Prime Diagnostic Corp. of
Florida Delaware 8090 13-3354830
Prime Lithotripter Operations,
Inc. New York 8090 13-3044748
Prime Practice Management,
Inc. New York 8090 13-3073716
Texas Litho, Inc. Delaware 8090 75-2349671
R.R. Litho, Inc. Texas 8090 75-2342610
Ohio Litho, Inc. Delaware 8090 75-2387493
Alabama Renal Stone Institute,
Inc. Alabama 8090 63-0894773
Sun Medical Technologies, Inc. California 8090 77-0254359
Sun Acquisition, Inc. California 8090 77-0338063
Lithotripters, Inc. North Carolina 8090 56-1587298
Prime Medical Management, L.P. Delaware 8090 74-2757440
Prostatherapies, Inc. Delaware 8090 56-2019571
FastStart, Inc. North Carolina 8090 56-1768984
MedTech Investments, Inc. North Carolina 8090 56-1590815
Executive Medical Enterprises,
Inc. Delaware 8090 22-2822719
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THIS PRELIMINARY PROSPECTUS AND THE INFORMATION CONTAINED HEREIN ARE SUBJECT +
+TO CHANGE, COMPLETION OR AMENDMENT WITHOUT NOTICE. UNDER NO CIRCUMSTANCES +
+SHALL THIS PRELIMINARY PROSPECTUS CONSTITUTE AN OFFER TO SELL OR THE +
+SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALES OF THESE +
+SECURITIES IN ANY STATE IN WHICH OR TO ANY PERSON TO WHOM SUCH OFFER, +
+SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION +
+UNDER THE SECURITIES LAW OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 4, 1998
PROSPECTUS
PRIME MEDICAL SERVICES, INC.
OFFER TO EXCHANGE
8 3/4% SENIOR SUBORDINATED NOTES DUE 2008
FOR ALL THE OUTSTANDING
8 3/4% SENIOR SUBORDINATED NOTES DUE 2008
($100,000,000 PRINCIPAL AMOUNT)
-----------
The Exchange Offer will expire at 5:00 p.m., New York City time, on
, 1998, unless extended (the "Expiration Date").
-----------
Prime Medical Services, Inc., a Delaware corporation (the "Company"), hereby
offers (the "Exchange Offer"), upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), to exchange up to an aggregate principal amount of
$100,000,000 of its outstanding 8 3/4% Senior Subordinated Notes due 2008 (the
"Outstanding Notes") for an equal principal amount of its 8 3/4% Senior
Subordinated Notes due 2008 in integral multiples of $1,000 (the "Exchange
Notes" and, together with the Outstanding Notes, the "Notes"). The Exchange
Notes will be general unsecured obligations of the Company and are
substantially identical (including principal amount, interest rate, maturity
and redemption rights) to the Outstanding Notes for which they may be exchanged
pursuant to this Exchange Offer, except for certain transfer restrictions and
registration rights relating to the Outstanding Notes. The Outstanding Notes
have been, and the Exchange Notes will be, issued under an Indenture dated as
of March 27, 1998 (the "Indenture"), between the Company and State Street Bank
and Trust Company of Missouri, National Association, as trustee (the
"Trustee"). See "Description of Exchange Notes." There will be no proceeds to
the Company from the Exchange Offer; however, pursuant to that certain
Registration Rights Agreement dated as of March 27, 1998 (the "Registration
Rights Agreement") among the Company and the Initial Purchasers (as defined
herein) of the Outstanding Notes, the Company will bear certain offering
expenses.
(Cover text continued on next page)
-----------
SEE "RISK FACTORS" BEGINNING ON PAGE 17 FOR A DISCUSSION OF CERTAIN RISKS TO
BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER AND IN EVALUATING AN
INVESTMENT IN THE EXCHANGE NOTES.
-----------
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 , 1998.
<PAGE>
The Company will accept for exchange any and all validly tendered
Outstanding Notes on or prior to 5:00 p.m., New York City time, on the
Expiration Date. Tenders of Outstanding Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date; otherwise such
tenders are irrevocable. The Trustee is acting as exchange agent (the
"Exchange Agent") in connection with the Exchange Offer. The minimum period of
time that the Exchange Offer will remain open is 20 days after the date notice
of the Exchange Offer is mailed to the holders of the Outstanding Notes. The
Exchange Offer is not conditioned upon any minimum principal amount of
Outstanding Notes being tendered for exchange, but is otherwise subject to
certain customary conditions. See "The Exchange Offer."
The Exchange Notes will bear interest at a rate equal to 8 3/4% per annum on
the same terms as the Outstanding Notes. Interest on the Exchange Notes will
be payable semi-annually in arrears on April 1 and October 1 of each year,
commencing October 1, 1998. Interest on the Exchange Notes will accrue from
the most recent date to which interest has been paid on the Outstanding Notes
or, if no interest has been paid, from the date of original issuance of the
Outstanding Notes.
The Outstanding Notes in an aggregate principal amount of $100.0 million
were sold by the Company on March 27, 1998 (the "Initial Offering"), to
NationsBanc Montgomery Securities LLC, Donaldson, Lufkin & Jenrette Securities
Corporation, Prudential Securities Incorporated and J.C. Bradford & Co.
(collectively, the "Initial Purchasers"), in a transaction not registered
under the Securities Act of 1933, as amended (the "Securities Act"), in
reliance upon the exemption provided in Section 4(2) of the Securities Act.
The Initial Purchasers subsequently placed the Outstanding Notes with
qualified institutional buyers ("QIBs") in reliance upon Rule 144A under the
Securities Act ("Rule 144A"). Accordingly, the Outstanding Notes may not be
re-offered, resold or otherwise transferred in the United States unless
registered or unless an applicable exemption from the registration
requirements of the Securities Act is available. The Exchange Notes are being
offered hereunder in order to satisfy the obligations of the Company under the
Registration Rights Agreement. See "The Exchange Offer."
Under existing interpretations of the Securities and Exchange Commission
(the "Commisson") contained in no-action letters to third parties, the Company
believes the Exchange Notes will be freely transferable by holders thereof
(subject to certain exceptions set forth herein under "The Exchange Offer--
Resales of the Exchange Notes") after the Exchange Offer without further
registration under the Securities Act; provided, however, that each holder
that wishes to exchange its Outstanding Notes for Exchange Notes will be
required to represent (i) that any Exchange Notes to be received by it will be
acquired in the ordinary course of its business, (ii) that at the time of the
commencement of the Exchange Offer it has no arrangement or understanding with
any person to participate in the distribution (within the meaning of
Securities Act) of the Exchange Notes, (iii) that it is not an "affiliate" (as
defined in Rule 405 promulgated under the Securities Act) of the Company, (iv)
if such holder is not a broker-dealer, that it is not engaged in, and does not
intend to engage in, the distribution of Exchange Notes, and (v) if such
holder is a broker-dealer (a "Participating Broker-Dealer") that will receive
Exchange Notes for its own account in exchange for Outstanding Notes that were
acquired as a result of market-making or other trading activities, that it
will deliver a prospectus in connection with any resale of such Exchange
Notes. The Company will agree to make available, during the period required by
the Securities Act, a prospectus meeting the requirements of the Securities
Act for use by Participating Broker-Dealers and other persons, if any, with
similar prospectus delivery requirements for use in connection with any resale
of Exchange Notes. See "The Exchange Offer--Terms and Conditions of the Letter
of Transmittal."
The Outstanding Notes are traded on the Private Offering, Resales and
Trading through Automated Linkages ("PORTAL") Market of the National
Association of Securities Dealers, Inc. The Company does not intend to list
the Exchange Notes on any national securities exchange or to seek the
admission thereof to trading on the National Association of Securities Dealers
automatic quotation system ("NASDAQ"). The Initial Purchasers have advised the
Company that they intend to make a market in the Exchange Notes; however, they
are not obligated to do so and any market-making may be discontinued at any
time without notice. Accordingly, no assurance can be given that an active
public or other market will develop for the Exchange Notes or as to the
liquidity of or the trading market for the Exchange Notes.
2
<PAGE>
Any Outstanding Notes not tendered and accepted in the Exchange Offer will
remain outstanding. To the extent that any Outstanding Notes of other holders
are tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Outstanding Notes could be adversely affected. Following
consummation of the Exchange Offer, the holders of untendered Outstanding
Notes will continue to be subject to the existing restrictions upon transfer
thereof. See "The Exchange Offer--Consequences of Failure to Exchange
Outstanding Notes."
The Company expects that the Exchange Notes issued pursuant to this Exchange
Offer will be issued in the form of a global note (the "Global Exchange
Note"), which will be deposited with, or on behalf of, The Depository Trust
Company ("DTC") and registered in the name of a nominee of DTC. Beneficial
interests in the Global Exchange Note representing the Exchange Notes will be
shown on, and transfers therof to QIBs will be effected through, records
maintained by DTC and its participants. Outstanding Notes which remain
outstanding after the Expiration Date will continue to be represented by one
or more global notes (together with the Global Exchange Note, the "Global
Notes"). After the initial issuance of the Global Exchange Note, Notes in
certificated form will be issued in exchange for the Global Notes on the terms
set forth in the Indenture. See "Book-Entry, Delivery and Form."
No dealer, salesperson or other person has been authorized to give
information or to make any representations not contained in this Prospectus,
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy any
security other than the Exchange Notes offered hereby, nor does it constitute
an offer to sell or the solicitation of an offer to buy any of the Exchange
Notes to any person in any jurisdiction in which it is unlawful to make such
an offer or solicitation to such person. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any circumstances create
any implication that the information contained herein is correct as of any
date subsequent to the date hereof.
MARKET DATA USED THROUGHOUT THIS PROSPECTUS WERE OBTAINED FROM INTERNAL
COMPANY SURVEYS AND INDUSTRY PUBLICATIONS. INDUSTRY PUBLICATIONS GENERALLY
STATE THAT THE INFORMATION CONTAINED THERIN HAS BEEN OBTAINED FROM SOURCES
BELIEVED TO BE RELIABLE, BUT THE ACCURACY AND COMPLETENESS OF SUCH INFORMATION
IS NOT GUARANTEED. THE COMPANY HAS NOT INDEPENDENTLY VERIFIED ANY SUCH MARKET
DATA. SIMILARLY, INTERNAL COMPANY SURVEYS, WHILE BELIEVED BY THE COMPANY TO BE
RELIABLE, HAVE NOT BEEN VERIFIED BY ANY INDEPENDENT SOURCES.
THE INFORMATION CONTAINED IN THIS PROSPECTUS WAS OBTAINED FROM THE COMPANY
AND OTHER SOURCES, BUT NO ASSURANCE CAN BE GIVEN AS TO THE ACCURACY OR
COMPLETENESS OF SUCH INFORMATION. IN MAKING AN INVESTMENT DECISION, INVESTORS
MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE
OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE CONTENTS OF THIS
PROSPECTUS ARE NOT TO BE CONSTRUED AS LEGAL, BUSINESS OR TAX ADVICE. EACH
PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN ATTORNEY, BUSINESS ADVISOR AND TAX
ADVISOR AS TO LEGAL, BUSINESS OR TAX ADVICE.
3
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (which term shall encompass any amendment thereto) under the Securities
Act, for the registration of the Exchange Notes offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth or incorporated by reference in the
Registration Statement, certain items of which are contained in the schedules
and exhibits to the Registration Statement as permitted by the rules and
regulations of the Commission. For further information, reference is made to
the Registration Statement, including the exhibits filed as a part thereof or
incorporated by reference therein. Any statements made in this Prospectus
concerning the contents of any document referred to herein are not necessarily
complete. With respect to each such document filed with the Commission as an
exhibit to the Registration Statement, or otherwise filed with the Commission,
reference is made to the copy of such document so filed for a more complete
description of the matter involved and each such statement shall be deemed
qualified in its entirety by such reference. The Company is subject to the
periodic reporting and other informational requirements of the Exchange Act of
1934, as amended (the "Exchange Act") and, in accordance therewith, files
reports, proxy statements and other information with the Commission. Reports,
proxy statements and other information filed by the Company with the
Commission, including the Registration Statement and the exhibits thereto, can
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at Seven World Trade Center, 13th Floor, New
York, New York 10048 and CitiCorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can be obtained by mail
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Such reports, proxy statements
and other information concerning the Company are also available for inspection
at the offices of The Nasdaq National Market, Reports Section, 1735 K Street,
N.W., Washington, D.C. 20006. The Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission at
"http://www.sec.gov."
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(1)The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(2) The Company's Amendment on Form 10-K/A to its Annual Report for the
fiscal year ended December 31, 1997 (dated April 30, 1998);
(3) The Company's Current Report on Form 8-K, dated May 2, 1996; and
(4) The Company's Current Report on Form 8-K/A, dated June 4, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of this offering shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. 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 other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person,
a copy of any or all of the documents which are incorporated by reference
herein, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Such requests
should be directed to Prime Medical Services, Inc., 1301 Capital of Texas
Highway, Suite C-300, Austin, Texas 78746-6550, Attention: Chief Financial
Officer.
4
<PAGE>
As long as the Company is subject to the periodic reporting and
informational requirements of the Exchange Act, it will furnish all reports
and other information required thereby to the Commission and pursuant to the
Indenture will furnish copies of such reports and other information to the
Trustee.
The Company will deliver to the Trustee within 15 days after the filing of
the same with the Commission, copies of the quarterly and annual reports and
of the information, documents and other reports, if any, which the Company is
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act. Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will file with the Commission, to the extent permitted, and provide (without
exhibits) the Trustee and Holders with such annual reports and such
information, documents and other reports specified in Sections 13 and 15(d) of
the Exchange Act. The Company will also comply with the other provisions of
Section 314(a) of the Trust Indenture Act of 1939.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE EXCHANGE AGENT. NEITHER THE DELIVERY OF
THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER,
NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF
TRANSMITTAL, OR BOTH TOGETHER, CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
THE INFORMATION CONTAINED IN THIS PROSPECTUS CONTAINS "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995, WHICH ARE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH
AS "MAY," "WILL," "COULD," "SHOULD," "EXPECT," "ANTICIPATE," "INTEND," "PLAN,"
"ESTIMATE" OR "CONTINUE" OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREOF,
SUCH FORWARD-LOOKING STATEMENTS ARE NECESSARILY BASED ON VARIOUS ASSUMPTIONS
AND ESTIMATES AND ARE INHERENTLY SUBJECT TO VARIOUS RISKS AND UNCERTAINTIES,
INCLUDING RISKS AND UNCERTAINTIES RELATING TO THE POSSIBLE INVALIDITY OF THE
UNDERLYING ASSUMPTIONS AND ESTIMATES AND POSSIBLE CHANGES OR DEVELOPMENTS IN
SOCIAL, ECONOMIC, BUSINESS, INDUSTRY, MARKET, LEGAL AND REGULATORY
CIRCUMSTANCES AND CONDITIONS AND ACTIONS TAKEN OR OMITTED TO BE TAKEN BY THIRD
PARTIES, INCLUDING CUSTOMERS, SUPPLIERS, BUSINESS PARTNERS AND COMPETITORS AND
LEGISLATIVE, REGULATORY, JUDICIAL AND OTHER GOVERMENTAL AUTHORITIES AND
OFFICIALS. IN ADDITION TO ANY RISKS AND UNCERTAINTIES SPECIFICALLY IDENTIFIED
IN THE TEXT SURROUNDING SUCH FORWARD-LOOKING STATEMENTS, THE STATEMENTS IN
"RISK FACTORS" BEGINNING ON PAGE 17 OF THIS PROSPECTUS OR IN THE REPORTS,
PROXY STATEMENTS, AND OTHER INFORMATION REFERRED TO IN "AVAILABLE INFORMATION"
CONSTITUTE CAUTIONARY STATEMENTS IDENTIFYING IMPORTANT FACTORS THAT COULD
CAUSE ACTUAL AMOUNTS, RESULTS, EVENTS AND CIRCUMSTANCES TO DIFFER MATERIALLY
FROM THOSE REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS. ALL SUBSEQUENT
WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY OR
PERSONS ACTING ON ITS BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE
CAUTIONARY STATEMENTS.
5
<PAGE>
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in its
entirety by the more detailed information and financial statements and related
notes appearing or incorporated by reference elsewhere in this Prospectus.
Unless the context otherwise requires, references in this Prospectus to the
"Company" or "Prime" refer to Prime Medical Services, Inc., its consolidated
subsidiaries and affiliated partnerships and limited liability companies, and
references to the Company's "subsidiaries" refer to the Company's consolidated
subsidiaries and affiliated partnerships and limited liability companies. See
"Risk Factors" for information that should be carefully considered by
prospective investors.
THE COMPANY
The Company is the largest provider of lithotripsy services in the United
States. Lithotripsy is a non-invasive procedure for the treatment of kidney
stones, typically performed on an outpatient basis, that eliminates the need
for lengthy hospital stays and extensive recovery periods associated with
surgery. The Company has 62 lithotripters of which 55 are mobile and seven are
fixed site. The Company's lithotripters performed approximately 36,000, or 20%,
of the estimated 180,000 lithotripsy procedures in the United States in 1997
through its network of approximately 450 hospitals and surgery centers in 34
states. Approximately 2,300 urologists utilized the Company's lithotripters in
1997, representing 30% of the estimated 7,700 urologists in the U.S. Of these
physicians, approximately 1,150 also own minority interests in certain of the
Company's lithotripters. In addition, the Company has over 270 contracts with
managed care organizations.
Lithotripters fragment kidney stones by use of extracorporeal shock wave
lithotripsy. The Company provides services related to the operation of the
lithotripters, including scheduling, staffing, training, quality assurance,
maintenance, regulatory compliance and contracting with payors, hospitals and
surgery centers. Medical care is rendered by the urologists utilizing the
lithotripters. Management believes that the Company has collected the
industry's largest and most comprehensive lithotripsy database, containing
detailed treatment and outcomes data on over 120,000 lithotripsy procedures.
The Company and its associated urologists utilize this database in seeking to
provide the highest quality of lithotripsy services as efficiently as possible.
From 1992 through 1997, the Company completed 12 acquisitions involving 57
lithotripter operations and internally developed five new operations. Forty-
eight of the Company's 62 lithotripsy operations were formed by the Company's
current directors and managers prior to the Company's acquisition of such
operations. Since 1992, the Company has substantially divested its original
non-lithotripsy businesses. Lithotripsy revenues have grown from $4.3 million
in 1992 to $93.1 million in 1997, representing a compound annual growth rate of
approximately 85%. The Company had total revenues and EBITDA of approximately
$96.0 million and $33.7 million, respectively, for the year ended December 31,
1997.
INDUSTRY OVERVIEW
Kidney stones develop from crystals made up primarily of calcium which
separate from urine and build up on the inner surfaces of the kidney. The exact
cause of kidney stone formation is unclear, and there is no known preventative
cure in the vast majority of cases. Approximately 25% of all kidney stones do
not pass spontaneously and therefore require medical or surgical treatment.
Kidney stone treatments used by urologists include lithotripsy, drug therapy,
endoscopic extraction or open surgery. While the nature and location of a
kidney stone impacts the choice of treatment, the Company believes the majority
of all kidney stones that require treatment are treated with lithotripsy
because it is non-invasive, typically requires no general anesthesia, and
rarely requires hospital stays. After fragmentation by lithotripsy, the
resulting kidney stone fragments pass out of the body naturally. Recovery from
the procedure is usually a matter of hours. The Company believes the
6
<PAGE>
incidence of kidney stone disease is growing in the United States due to
overall growth in the population, the increase in the population of males ages
45-64 years old who experience kidney stones most frequently, and the
increasing population in the southern U.S. where kidney stones are most
prevalent.
The market for lithotripsy services is highly fragmented and is comprised of
independent service providers (like the Company), hospitals and small physician
affiliated partnerships. While the Company operates approximately 17% of the
estimated 350 lithotripters currently in use in the United States, the Company
believes that the next six largest lithotripsy service companies collectively
account for approximately 21% of the country's lithotripters. A substantial
percentage of all remaining lithotripters currently in operation are owned
through partnerships comprised of professional managers and groups of
urologists serving specific geographic markets.
Federal Medicare and Medicaid regulations covering the industry have
historically been interpreted to allow physicians to refer their government pay
patients to a hospital for lithotripsy treatment where the physician owned an
interest in the lithotripter operation. Lithotripsy services for these patients
are typically provided pursuant to an arrangement where the hospital bills the
government program directly. Recently proposed regulations would prohibit
physicians from making such a referral. Due to state law considerations,
hospital non-discrimination requirements, third-party payor policies and other
practical considerations, the Company believes this prohibition would
ultimately apply to non-government pay patient referrals as well. As a result,
if the proposed regulations are enacted, physicians who own interests in
lithotripsy operations would be forced to stop referring patients to the
facility in which they had an interest or to divest their interests. The
Company believes that if the proposed regulations are enacted, substantially
all of its physician-investors will be forced to sell their interests in
Company affiliated lithotripters in order to continue utilizing the
lithotripters they have traditionally used in the same manner. In this event,
the Company intends to offer to acquire physician interests in both affiliated
and non-affiliated lithotripsy operations. If the proposed regulations are not
enacted, or are enacted in a form which allows for ownership of the interests
by referring physician-investors, the Company will continue to pursue the
development and acquisition of new operations in partnership with urologists.
COMPETITIVE STRENGTHS
The Company attributes its market leadership and its significant
opportunities for continued growth and increased profitability to the following
strengths:
. LARGEST PROVIDER OF LITHOTRIPSY SERVICES. Given the highly fragmented
nature of the industry, the Company believes that its position as the
largest operator of lithotripters gives it a competitive advantage with
urologists, hospitals and third-party payors. Compared to its smaller
competitors, the Company believes it benefits from: (i) significant
equipment purchasing savings; (ii) more attractive service and
maintenance contracts from its suppliers; (iii) strong name recognition
and a reputation for quality service; (iv) substantial financial
flexibility and access to lower-cost capital; and (v) the ability to
efficiently deploy lithotripters in a manner which maximizes fleet
utilization while satisfying customer requirements.
. SUPERIOR CUSTOMER SERVICE AND STRONG CUSTOMER RELATIONSHIPS. The Company
positions itself as a service company rather than solely as an equipment
provider and competes on the basis of value-added services in addition
to price. The Company differentiates itself from competitors by
providing a full range of services to referring physicians, hospitals
and surgery centers. These value-added services include patient
scheduling and pre-screening, insurance pre-authorization, appointment
confirmations, billing, managed care contracting, and management
reporting. In addition, the Company typically fully staffs each unit
with a registered technician and a registered nurse and is therefore
able to accommodate higher patient volume and operate with greater
efficiency, resulting in high customer satisfaction levels.
7
<PAGE>
. PROPRIETARY OUTCOMES DATABASE. In 1991, the Company began to develop its
proprietary lithotripsy outcomes database, which currently includes
information on over 120,000 lithotripsy procedures. The Company utilizes
information from this database to assist in the improvement of the
quality and efficiency of patient care. This information also enables
the Company to negotiate more effectively with hospitals and third-party
payors. Moreover, the Company is able to provide clinical information
that helps establish strong relationships with referring physicians,
hospitals and surgery centers.
. EXPERIENCED MANAGEMENT TEAM. The Company's senior management team has an
average of 16 years of industry experience. The Company's managers have
successfully developed and implemented sophisticated marketing, fleet
management and financial strategies which have enabled the Company to
become the largest and among the most efficient and profitable
lithotripsy operators. Senior management includes Dr. Joseph Jenkins,
President and Chief Executive Officer, and Dr. Dan Myers, Senior Vice
President of Development, both of whom are board certified urologists
who were pioneers in the U.S. lithotripsy industry. Dr. Jenkins is also
a founding member and past president of the American Lithotripsy
Society.
BUSINESS STRATEGY
The Company's objective is to become the leading provider of medical related
services to urologists in the United States. The Company believes that its
reputation and position as the leading provider of lithotripsy services has
allowed it to establish strong relationships with physicians, equipment
manufacturers, managed care organizations and hospital groups which have
strategically positioned it to grow through the introduction of additional
services to the urological community. The Company has consistently pursued a
policy of growth through acquisitions since it entered the lithotripsy business
in 1992 and believes its acquisition experience and ability to leverage its
existing infrastructure will allow it to continue to take advantage of future
acquisition opportunities. The primary components of the Company's business
strategy are as follows:
. GROW THROUGH ACQUISITIONS. The Company intends to continue to
aggressively pursue acquisitions of both large and small lithotripsy
service providers. Since October 1995 the Company has acquired two of
the three other largest lithotripsy service companies in the United
States, and since 1992 the Company has made 12 acquisitions representing
a total of 57 lithotripters. The Company believes that the fragmented
nature of the lithotripsy industry, combined with operational challenges
created by increasing regulatory and business complexities, including
the recent regulatory proposals, will provide it with significant
lithotripsy acquisition opportunities. The Company believes that it is
viewed as the preferred acquirer of physician-owned lithotripters
because of its focus on the needs of the urological community and its
reputation for providing quality service.
. PROVIDE SUPERIOR SERVICE. The Company seeks to provide the highest level
of service possible to its customers. This includes consistently
providing: (i) high quality lithotripter facilities, properly staffed
with trained personnel; (ii) convenient scheduling for hospitals and
physicians; (iii) proper billing; and (iv) contracting with managed care
entities. In addition, the Company offers services not typically
provided in the industry including physician training, regulatory
compliance, quality assurance and the Company's proprietary outcomes
database. Management believes that providing superior service will
enable the Company to maintain its existing relationships with hospitals
and urologists and attract new relationships.
. MAINTAIN STATE OF THE ART EQUIPMENT. The Company has a policy of routine
maintenance and periodic upgrades to its lithotripters, which both
ensures consistent quality service and maintains its reputation with
hospitals and urologists as the leading provider of lithotripsy
services. During 1996 and 1997, the Company spent approximately $2
million on a system wide upgrade of substantially all of its 40
electromagnetic lithotripters, which improved performance and decreased
average treatment time by up to 30%. This benefited patients by
shortening treatment times and benefited hospitals, attending urologists
and the Company by effectively increasing capacity.
8
<PAGE>
. LEVERAGE RELATIONSHIPS WITH UROLOGISTS. The Company currently provides
services to approximately 30% of the estimated 7,700 urologists in the
United States and seeks to maintain close relationships with the medical
community through its network of local physician advisory boards. The
Company believes that it can utilize these relationships and its
management expertise to develop new opportunities resulting from
technological and other advances in affiliated urology businesses,
including new therapeutic services relating to prostate disease and
other urological disorders. As an example, in October 1997, the Company
began providing thermotherapy services for the treatment of non-
cancerous enlargement of the prostate through a mobile service operation
located in North Carolina.
RECENT DEVELOPMENTS
The Company utilized a portion of the proceeds from the sale of the
Outstanding Notes in the Initial Offering to repay all of the outstanding
indebtedness under its existing credit facility in the approximate aggregate
amount of $77.0 million. On April 20, 1998, the Company entered into a
syndicated senior credit facility (the "Senior Credit Facility") consisting of
a $100.0 million, five-year revolving line of credit. Advances under the Senior
Credit Facility will be used to fund future acquisitions and to finance capital
expenditures and working capital needs of the Company. All amounts owing under
the Senior Credit Facility will be guaranteed by the Company's wholly-owned
subsidiaries and will be secured by security interests in substantially all of
the assets of the Company and its wholly-owned subsidiaries. See "Description
of Other Indebtedness."
In March 1998 the Company entered into a non-binding letter of intent for the
possible acquisition of an interest in another provider of lithotripsy services
(the "Seller"). Under the terms of the letter of intent, the Company would
acquire a 50% ownership interest in the Seller for a cash price based on a
multiple of the Seller's recurring pre-tax income. In addition, the Company
would obtain the right to purchase the remaining 50% of the Seller on the
occurrence of certain triggering events to be mutually agreed upon by the
parties. The transactions are subject to due diligence reviews by the parties
and the negotiation and execution of definitive agreements. The Company
estimates that purchase price for the initial 50% interest would not exceed
$15.0 million.
9
<PAGE>
THE EXCHANGE OFFER
The Outstanding Notes..... The Outstanding Notes were sold by the Company
as of March 27, 1998, in the Initial Offering,
to the Initial Purchasers pursuant to the
Purchase Agreement. The Initial Purchasers
subsequently resold the Outstanding Notes to
QIBs as such term is defined in Rule 144A.
Registration Pursuant to the Purchase Agreement, the Company
Requirements.............. and the Initial Purchasers entered into the
Registration Rights Agreement, which grants the
holders of the Outstanding Notes certain
exchange and registration rights. The Exchange
Offer is intended to satisfy such exchange and
registration rights, which terminate upon the
consummation of the Exchange Offer. If
applicable law or applicable interpretations of
the staff of the Commission do not permit the
Company to effect the Exchange Offer, the
Company has agreed to file a shelf registration
statement (the "Shelf Registration Statement")
covering resales of the Outstanding Notes. See
"The Exchange Offer--Resales of the Exchange
Notes" and "--Shelf Registration Statement."
The Exchange Offer........ The Company is offering to exchange $1,000
principal amount of the Exchange Notes for each
$1,000 principal amount of Outstanding Notes.
As of the date hereof, $100.0 million aggregate
principal amount of Outstanding Notes are
outstanding. The Company will issue the
Exchange Notes subsequent to the Expiration
Date and on or before , 1998, unless the
Exchange Offer is extended (the "Exchange
Date"). See "Risk Factors--Exchange Offer
Procedures; Consequences of Failure to
Exchange."
Based on an interpretation of the staff of the
Commission set forth in no-action letters
issued to third parties, the Company believes
that the Exchange Notes issued pursuant to the
Exchange Offer in exchange for Outstanding
Notes may be offered for resale, resold and
otherwise transferred by any holder thereof
(other than (i) a broker-dealer who purchased
Outstanding Notes directly from the Company for
resale pursuant to Rule 144A under the
Securities Act or any other available exemption
under the Securities Act, or (ii) any such
holder that is an "affiliate" of the Company
within the meaning of Rule 405 under the
Securities Act) without compliance with the
registration and prospectus delivery provisions
of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary
course of such holder's business and that such
holder does not intend to participate and has
no arrangement or understanding with any person
to participate in the distribution of such
Exchange Notes.
Any holder who tenders in the Exchange Offer
with the intention to participate, or for the
purpose of participating, in a distribution of
the Exchange Notes could not rely on the
position of the staff of the Commission
enunciated in Exxon Capital Holdings
Corporation (available April 13, 1989) or
similar no-action letters and, in the absence
of an exemption therefrom, must comply with the
registration
10
<PAGE>
and prospectus delivery requirements of the
Securities Act in connection with the resale
transaction. Failure to comply with such
requirements in such instance may result in
such holder incurring liability under the
Securities Act for which the holder is not
indemnified by the Company.
Each Participating Broker-Dealer that receives
Exchange Notes for its own account in exchange
for Outstanding Notes, where such Outstanding
Notes were acquired by such broker-dealer as a
result of market-making activities or other
trading activities, must acknowledge that it
will deliver a prospectus in connection with
any resale of Exchange Notes. By so
acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may
be amended or supplemented from time to time,
may be used by a broker-dealer in connection
with resales of Exchange Notes received in
exchange for Outstanding Notes where such
Outstanding Notes were acquired by such broker-
dealer as a result of market-making activities
or other trading activities. The Company has
agreed to make this Prospectus available to any
Participating Broker-Dealer for use in
connection with any such resale for a period of
up to 180 days from the Expiration Date. See
"Plan of Distribution."
Expiration Date........... 5:00 p.m., New York City time, on , 1998,
unless extended.
Interest on Exchange Interest on the Exchange Notes will accrue at a
Notes..................... rate equal to 8 3/4% per annum and will be
payable semi-annually in arrears on April 1 and
October 1 of each year, commencing October 1,
1998. Interest on the Exchange Notes will
accrue from the most recent date to which
interest has been paid on the Outstanding Notes
or, if no interest has been paid, from the date
of original issuance of the Outstanding Notes.
Procedures for Tendering
Outstanding Notes........
Each holder of Outstanding Notes wishing to
accept the Exchange Offer must complete, sign
and date the accompanying Letter of
Transmittal, or a facsimile thereof, in
accordance with the instructions contained
herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or such
facsimile, together with the Outstanding Notes
and any other required documentation to the
Exchange Agent at the address set forth herein.
By executing the Letter of Transmittal, each
holder will represent to the Company that,
among other things, the holder or person
receiving such Exchange Notes, whether or not
such person is the holder, is acquiring the
Exchange Notes in the ordinary course of
business and that neither the holder nor any
such other person has any arrangement or
understanding with any person to participate in
the distribution of such Exchange Notes. In
lieu of physical delivery of the certificates
representing Outstanding Notes, tendering
holders may transfer Outstanding Notes pursuant
to the procedure for book-entry transfer as set
forth under "The Exchange Offer--Procedures for
Tendering Outstanding Notes."
11
<PAGE>
Each Participating Dealer which acquired
Outstanding Notes as a result of market-making
or other trading activities must acknowledge
that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See
"Plan of Distribution."
Special Procedures for
Beneficial Owners........ Any beneficial owner whose Outstanding Notes
are registered in the name of a broker-dealer,
commercial bank, trust company or other nominee
and who wishes to tender should contact such
registered holder promptly and instruct such
registered holder to tender on such beneficial
owner's behalf.
If such beneficial owner wishes to tender on
such owner's own behalf, such owner must prior
to completing and executing the Letter of
Transmittal and delivering its Outstanding
Notes, either make appropriate arrangements to
register ownership of the Outstanding Notes in
such owner's name or obtain a properly
completed bond power from the registered
holder. The transfer of record ownership may
take considerable time.
Guaranteed Delivery
Procedures................ Holders of Outstanding Notes who wish to tender
their Outstanding Notes and whose Outstanding
Notes are not immediately available or who
cannot deliver their Outstanding Notes, the
Letter of Transmittal or any other documents
required by the Letter of Transmittal to the
Exchange Agent (or comply with the procedures
for book-entry transfer) prior to the
Expiration Date must tender their Outstanding
Notes according to the guaranteed delivery
procedures set forth in "The Exchange Offer--
Guaranteed Delivery Procedures."
Withdrawal Rights......... Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the
Expiration Date pursuant to the procedures
described under "The Exchange Offer--Withdrawal
Rights."
Acceptance of Outstanding
Notes and Delivery of
Exchange Notes........... Subject to certain conditions, the Company will
accept for exchange any and all Outstanding
Notes that are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York
City time, on the Expiration Date. The Exchange
Notes issued pursuant to the Exchange Offer
will be delivered on the Exchange Date. See
"The Exchange Offer--Terms of the Exchange
Offer."
Federal Income Tax
Consequences.............. The exchange pursuant to the Exchange Offer
should not be a taxable event for United States
federal income tax purposes. See "Certain
Federal Income Tax Consequences."
Effect on Holders of
Outstanding Notes........ As a result of the making of this Exchange
Offer, the Company will have fulfilled one of
its obligations under the Registration Rights
Agreement, and, with certain exceptions noted
below, holders of Outstanding Notes who do not
tender their Outstanding Notes will not have
any further registration rights under the
Registration Rights
12
<PAGE>
Agreement or otherwise. Such holders will
continue to hold the untendered Outstanding
Notes and will be entitled to all the rights
and subject to all the limitations applicable
thereto under the Indenture, except to the
extent such rights or limitations, by their
terms, terminate or cease to have further
effectiveness as a result of the Exchange
Offer. All untendered Outstanding Notes will
continue to be subject to certain restrictions
on transfer. Accordingly, if any Outstanding
Notes are tendered and accepted in the Exchange
Offer, the trading market of the untendered
Outstanding Notes could be adversely affected.
See "Risk Factors--Exchange Offer Procedures;
Consequences of Failure to Exchange" and "--
Absence of Public Market; Restrictions on
Transfer."
Exchange Agent............ State Street Bank and Trust Company of
Missouri, National Association.
SUMMARY OF TERMS OF THE EXCHANGE NOTES
ISSUER.................... Prime Medical Services, Inc.
SECURITIES OFFERED........ $100,000,000 in aggregate principal amount of 8
3/4% Senior Subordinated Notes due 2008.
MATURITY DATE............. April 1, 2008.
INTEREST PAYMENT DATES.... Interest on the Exchange Notes will accrue at a
rate equal to 8 3/4% per annum and will be payable
semi-annually in arrears on April 1 and October 1
of each year, commencing October 1, 1998. Interest
on the Exchange Notes will accrue from the most
recent date to which interest has been paid on the
Outstanding Notes or, if no interest has been paid,
from the date of original issuance of the
Outstanding Notes.
SUBSIDIARY GUARANTEES..... The Exchange Notes will be fully and
unconditionally guaranteed by each of the existing
and future Wholly-Owned Restricted Subsidiaries (as
defined herein) of the Company other than not-for-
profit subsidiaries. See "Description of Exchange
Notes--Subsidiary Guarantees."
SUBORDINATION............. The Exchange Notes will be unsecured senior
subordinated obligations of the Company and will be
subordinated in right of payment to all existing
and future Senior Debt (as defined herein) of the
Company. The Exchange Notes will rank pari passu
with all existing and future senior subordinated
indebtedness of the Company and will rank senior to
all other existing and future subordinated
indebtedness of the Company. The Subsidiary
Guarantees (as defined herein) will be unsecured
senior subordinated obligations of the Subsidiary
Guarantors (as defined herein) and will be
subordinated in right of payment to all existing
and future Senior Debt of the Subsidiary
Guarantors. In addition, the Company conducts
substantial operations through subsidiaries that
will not guarantee the Exchange Notes and
accordingly all liabilities of such subsidiaries
and equity interests therein (other than equity
interests owned by the Company or a Subsidiary
Guarantor) will effectively rank senior to the
Exchange Notes. As of December 31, 1997, on an
adjusted basis, after giving
13
<PAGE>
effect to the Exchange Offer, the Initial Offering
and the application of net proceeds therefrom and
the establishment of the Senior Credit Facility,
the Company and the Subsidiary Guarantors would
have had $0.2 million of Senior Debt outstanding
(and $100.0 million available to be borrowed under
the Senior Credit Facility) and the Company's
subsidiaries that will not guarantee the Exchange
Notes would have had approximately $20.0 million of
indebtedness and other liabilities and $19.4
million of minority interests outstanding. See
"Risk Factors--Subordination" and "--Holding
Company Structure; Effective Subordination."
OPTIONAL REDEMPTION....... On or after April 1, 2003, the Company may redeem
the Exchange Notes, in whole or in part, at the
redemption prices set forth herein, plus accrued
and unpaid interest thereon and Liquidated Damages
(as defined herein), if any, to the redemption
date. Notwithstanding the foregoing, at any time on
or before April 1, 2001, the Company may redeem up
to 35% of the original aggregate principal amount
of the Exchange Notes with the net proceeds of a
public offering of common stock of the Company at a
redemption price equal to 108.75% of the principal
amount thereof, plus accrued and unpaid interest
thereon and Liquidated Damages, if any, to the
redemption date; provided, that at least $65.0
million in aggregate principal amount of Exchange
Notes remains outstanding immediately after the
occurrence of such redemption. See "Description of
Exchange Notes--Optional Redemption."
CHANGE OF CONTROL......... Upon a Change of Control (as defined herein), the
Company will be required to make an offer to
repurchase all outstanding Exchange Notes at 101%
of the principal amount thereof plus accrued and
unpaid interest thereon and Liquidated Damages, if
any, to the date of repurchase. See "Description of
Exchange Notes--Repurchase at the Option of
Holders--Change of Control."
COVENANTS................. The Indenture will restrict, among other things,
the ability of the Company and its Restricted
Subsidiaries (as defined herein) to incur
additional indebtedness and issue preferred stock,
enter into sale and leaseback transactions, incur
liens, pay dividends or make certain other
restricted payments, apply net proceeds from
certain asset sales, enter into certain
transactions with affiliates, merge or consolidate
with any other person, sell stock of subsidiaries,
and assign, transfer, lease, convey or otherwise
dispose of substantially all of the assets of the
Company. See "Description of Exchange Notes--
Certain Covenants."
RISK FACTORS
Prospective investors should carefully consider the factors discussed in
detail elsewhere in this Prospectus under the caption "Risk Factors."
--------------------
The Company's principal executive offices are located at 1301 Capital of
Texas Highway, Suite C-300, Austin, Texas 78746, and its telephone number is
(512) 328-2892. The Company's common stock is quoted on The Nasdaq National
Market under the symbol "PMSI."
14
<PAGE>
SUMMARY CONSOLIDATED HISTORICAL FINANCIAL DATA
The following table presents summary consolidated historical financial data
of the Company for each of the fiscal years in the three-year period ended
December 31, 1997. The selected historical data presented below under the
captions "Statement of Income" for each of the years in the three-year period
ended December 31, 1997 and "Balance Sheet Data" as of December 31, 1997 are
derived from the consolidated financial statements of the Company, which
financial statements have been audited by KPMG Peat Marwick LLP, independent
certified public accountants, and are incorporated by reference in this
Prospectus. The following information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and notes thereto of the Company
incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1995 1996 1997
------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF INCOME:
Revenues:
Lithotripsy.................................. $22,153 $71,602 $93,113
Other........................................ 1,042 802 2,866
------- ------- -------
Total revenues............................. 23,195 72,404 95,979
Costs and expenses:
Lithotripsy.................................. 5,979 19,922 25,381
Other........................................ 1,505 632 2,221
Corporate expenses........................... 2,573 4,245 5,683
------- ------- -------
Total costs and expenses................... 10,057 24,799 33,285
Depreciation and amortization................. 3,195 8,422 9,911
------- ------- -------
Operating income........................... 9,943 39,183 52,783
Interest expense.............................. 1,231 5,977 7,477
Other income (deductions)(1).................. 799 (2,706) 386
------- ------- -------
Income before income taxes and minority
interest................................. 9,511 30,500 45,692
Provision for income taxes.................... 886 1,996 5,795
Minority interest in consolidated income...... 1,421 19,543 25,041
------- ------- -------
Net income................................. $ 7,204 $ 8,961 $14,856
======= ======= =======
OPERATING DATA:
Number of lithotripters at end of period...... 23 55 61
Number of lithotripsy procedures.............. 11,308 28,480 36,183
Approximate number of locations served........ 160 400 450
OTHER DATA:
Capital expenditures(2)....................... $ 473 $ 2,526 $ 4,546
Consolidated EBITDA(3)........................ 13,138 47,605 62,334
Consolidated EBITDA margin(4)................. 56.6% 65.7% 64.9%
EBITDA(5)..................................... $11,536 $25,652 $33,743
Ratio of EBITDA to interest expense........... 9.4x 4.3x 4.5x
Adjusted interest expense(6).................. $ 9,067
Ratio of EBITDA to adjusted interest expense.. 3.7x
Ratio of Net debt to EBITDA(7)................ 2.2x
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
-------------------------
HISTORICAL AS ADJUSTED(6)
---------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents(8)......................... $ 23,770 $ 40,403
Total assets......................................... 225,826 241,995
Long-term debt (including current maturities)........ 82,336 103,336
Minority interest.................................... 19,372 19,372
Stockholders' equity................................. 92,064 88,861
</TABLE>
- -----------------
(1) Includes immediate write-off of costs associated with offerings of debt
securities, the establishment of credit facilities and a canceled stock
offering of $3.5 million incurred during the second quarter of 1996 and
$360,000 incurred during the first quarter of 1997.
(2) Excludes acquisitions of $15.0 million, $70.1 million and $20.2 million in
the years of 1995, 1996 and 1997, respectively.
(3) Consolidated EBITDA is defined as income before income taxes, minority
interest, interest expense, depreciation and amortization, and other non-
operating items for the Company and its consolidated subsidiaries.
Consolidated EBITDA is not intended to represent net income or cash flows
from operating activities in accordance with generally accepted accounting
principles and should not be considered a measure of the Company's
profitability or liquidity.
(4) Consolidated EBITDA margin is defined as the ratio of Consolidated EBITDA
to total revenues.
(5) EBITDA is defined as Consolidated EBITDA for the Company less EBITDA
attributable to minority interests in consolidated subsidiaries. EBITDA is
presented because it is a widely accepted financial indicator of a
company's ability to service debt. EBITDA is not intended to represent net
income or cash flows from operating activities in accordance with generally
accepted accounting principles and should not be considered a measure of
the Company's profitability or liquidity.
(6) Adjusted to give effect to the issuance of the Outstanding Notes and the
application of the proceeds therefrom.
(7) Net debt is total debt less cash and cash equivalents (other than cash and
cash equivalents attributable to minority interests in consolidated
subsidiaries), as adjusted for the Initial Offering.
(8) Includes $11.2 million attributable to minority interests in consolidated
subsidiaries.
16
<PAGE>
RISK FACTORS
Prospective investors should carefully consider and evaluate the following
factors relating to the Company and the Exchange Offer together with the other
information and financial data set forth or incorporated by reference
elsewhere in this Prospectus, in evaluating, and before making an investment
in, the Exchange Notes offered hereby.
EXCHANGE OFFER PROCEDURES; CONSEQUENCES OF FAILURE TO EXCHANGE
Issuance of the Exchange Notes in exchange for Outstanding Notes pursuant to
the Exchange Offer will be made only after a timely receipt by the Company of
such Outstanding Notes, a properly completed and duly executed Letter of
Transmittal and all other required documents. Therefore, holders of the
Outstanding Notes desiring to tender such Outstanding Notes in exchange for
Exchange Notes should allow sufficient time to ensure timely delivery. The
Company is under no duty to give notification of defects or irregularities
with respect to the tenders of Outstanding Notes for exchange. Outstanding
Notes that are not tendered or are tendered but not accepted will, following
the consummation of the Exchange Offer, continue to be subject to the existing
restrictions upon transfer thereof. Upon consummation of the Exchange Offer,
the registration rights under the Registration Rights Agreement will
terminate. In addition, any holder of Outstanding Notes who tenders in the
Exchange Offer for the purpose of participating in a distribution of the
Exchange Notes may be deemed to have received restricted securities and, if
so, will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for the Outstanding Notes, where such Outstanding Notes were acquired
by such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution." TO THE
EXTENT THAT SOME OF THE OUTSTANDING NOTES ARE TENDERED AND ACCEPTED IN THE
EXCHANGE OFFER, THE TRADING MARKET FOR UNTENDERED AND TENDERED BUT UNACCEPTED
OUTSTANDING NOTES COULD BE ADVERSELY AFFECTED.
LEVERAGE
The Company has and will continue to have after the Exchange Offer,
substantial indebtedness. On December 31, 1997, after giving effect to the
Initial Offering and the application of the proceeds therefrom, the Company
would have had total indebtedness of approximately $103.3 million (of which
$100.0 million would have consisted of the Outstanding Notes and the balance
would have consisted of debt of the Company's subsidiaries) and stockholders'
equity of approximately $88.9 million. The Company and its subsidiaries will
be permitted to incur substantial additional indebtedness in the future
including $100.0 million of indebtedness under the Senior Credit Facility. See
"Capitalization," "Selected Historical Consolidated Financial and Operating
Data," "Description of Exchange Notes," and "Description of Other
Indebtedness."
The Company's ability to make scheduled payments of principal of, or to pay
the interest or Liquidated Damages, if any, on, or to refinance, its
indebtedness (including the Notes), or to fund planned capital expenditures
and possible acquisitions (including mandatory or optional purchases of its
affiliated physician-investors' interests) will depend on its future
performance, which, to a certain extent, is subject to general economic,
financial, competitive, legislative, regulatory and other factors that are
beyond its control. Based upon the current level of operations, management
believes that cash flow from operations and available cash, together with
available borrowings under the Senior Credit Facility, will be adequate to
meet the Company's future liquidity needs for at least the next several years.
The Company may, however, need to refinance all or a portion of the principal
of the Notes on or prior to maturity. There can be no assurance that the
Company's business will generate sufficient cash flow from operations or that
future borrowings will be available under the Senior Credit Facility in an
amount sufficient to enable the Company to service its indebtedness, including
the Notes, or to fund its other liquidity needs. In addition, there can be no
assurance that the Company will be able to effect any such refinancing on
commercially reasonable terms or at all. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."
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The degree to which the Company is, and following the Exchange Offering will
be, leveraged could have important consequences to holders of the Notes,
including, but not limited to: (i) making it more difficult for the Company to
satisfy its obligations with respect to the Notes; (ii) increasing the
Company's vulnerability to general adverse economic and industry conditions;
(iii) limiting the Company's ability to obtain additional financing to fund
future working capital, capital expenditures, acquisitions and other general
corporate requirements; (iv) requiring the dedication of a substantial portion
of the Company's cash flow from operations to the payment of principal of, and
interest on, its indebtedness, thereby reducing the availability of such cash
flow to fund working capital, capital expenditures, acquisitions or other
general corporate purposes; (v) limiting the Company's flexibility in planning
for, or reacting to, changes in its business and the industry; and (vi)
placing the Company at a competitive disadvantage vis-a-vis less leveraged
competitors. In addition, the Indenture and the Senior Credit Facility contain
financial and other restrictive covenants that limit the ability of the
Company to, among other things, borrow additional funds. Failure by the
Company to comply with such covenants could result in an event of default
which, if not cured or waived, could have a material adverse effect on the
Company. In addition, the degree to which the Company is leveraged could
prevent it from repurchasing all of the Notes tendered to it upon the
occurrence of a Change of Control. See "Description of Exchange Notes--
Repurchase at the Option of Holders--Change of Control" and "Description of
Other Indebtedness."
SUBORDINATION
The Notes and the Subsidiary Guarantees are and will be subordinated in
right of payment to all current and future Senior Debt of the Company and the
Subsidiary Guarantors. Upon any distribution to creditors of the Company or a
Subsidiary Guarantor in a liquidation or dissolution of the Company or a
Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or a Subsidiary
Guarantor or its property, the holders of Senior Debt will be entitled to be
paid in full in cash before any payment may be made with respect to the Notes.
In addition, the subordination provisions of the Indenture provide that
payments with respect to the Notes will be blocked in the event of a payment
default on Senior Debt and may be blocked for up to 179 days each year in the
event of certain non-payment defaults on Senior Debt. In the event of a
bankruptcy, liquidation or reorganization of the Company or a Subsidiary
Guarantor, holders of the Notes will participate ratably with all holders of
subordinated indebtedness of the Company or such Subsidiary Guarantor that is
deemed to be of the same class as the Notes, and potentially with all other
general creditors of the Company or such Subsidiary Guarantor, based upon the
respective amounts owed to each holder or creditor, in the remaining assets of
the Company. In any of the foregoing events, there can be no assurance that
there would be sufficient assets to pay amounts due on the Notes. As a result,
holders of Notes may receive less, ratably, than the holders of Senior Debt.
As of December 31, 1997, on an adjusted basis after giving effect to the
Exchange Offer, the Initial Offering and the application of the net proceeds
therefrom and the establishment of the Senior Credit Facility, the aggregate
amount of Senior Debt of the Company and the Subsidiary Guarantors would have
been approximately $0.2 million, and $100.0 million would have been available
for additional borrowing under the Senior Credit Facility. The Indenture
permits the incurrence of substantial additional indebtedness, including
Senior Debt, by the Company and its subsidiaries in the future. See
"Description of Exchange Notes" and "Description of Other Indebtedness."
HOLDING COMPANY STRUCTURE; EFFECTIVE SUBORDINATION
The Company has limited operations of its own and derives substantially all
of its revenue from its subsidiaries. Although the Company's Wholly-Owned
Restricted Subsidiaries (other than not-for-profit subsidiaries) are
guarantors of the Notes, a substantial portion of the Company's operations are
conducted by subsidiaries that will not guarantee the Notes. Creditors
(including trade creditors) of such subsidiaries of the Company are entitled
to payment in respect of their claims and interests from the assets of the
affected subsidiaries before such assets would be available for distribution
to the Company and minority interest holders. The Indenture permits the
incurrence of substantial additional indebtedness by the Company and its
subsidiaries, and permits significant investments by the Company in
subsidiaries.
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As of December 31, 1997, on an adjusted basis after giving effect to the
Initial Offering and the application of the net proceeds therefrom and the
establishment of the Senior Credit Facility, the aggregate amount of
indebtedness and other liabilities of the Company's subsidiaries that do not
guarantee the Notes would have been approximately $20.0 million. In addition,
as of December 31, 1997 minority interests in such subsidiaries were $19.4
million and for the year ended December 31, 1997 cash distributed in respect
of such minority interests was $28.7 million. In the event of a bankruptcy,
liquidation or reorganization of the Company, there can be no assurance that
the assets of the subsidiaries that do not guarantee the Notes will be
available to holders of debt of the Company after satisfying all liabilities
and equity interests in such subsidiaries, or that the assets of the Company
and of the other subsidiaries would be sufficient to repay in full the
indebtedness of the Company, including the Notes. See "Description of Other
Indebtedness."
ACQUISITION GROWTH STRATEGY
The Company has followed an aggressive acquisition strategy since 1992 that
has resulted in rapid growth in its business. This acquisition strategy is
dependent on the continued availability of suitable acquisition candidates and
subjects the Company to the risks inherent in assessing acquisition candidates
and integrating and managing the operations of acquired companies. The
Company's growth is also expected to place significant demands on the
Company's financial and management resources. Moreover, the Federal Trade
Commission ("FTC") initiated an investigation in 1991 to determine whether the
limited partnerships in which Lithotripters, Inc., now a wholly-owned
subsidiary of the Company, was the general partner posed an unreasonable
threat to competition in the healthcare field. While the FTC closed its
investigation and took no action, the FTC or another governmental authority
charged with the enforcement of federal or state antitrust laws or a private
litigant might, due to the Company's size and market share, seek to (i)
restrict the Company's future growth by prohibiting or restricting the
acquisition of additional lithotripsy facilities or (ii) require that the
Company divest of certain of its lithotripsy operations. Consequently, there
can be no assurance that the Company will be able to continue to grow or that
its growth strategy will prove successful. Moreover, in view of the Company's
significant recent growth, the Company's historical financial performance may
not be indicative of its future performance. The Company's failure to
implement its growth strategy successfully could adversely affect the Company.
See "Prospectus Summary--Recent Developments" and "Business--Business
Strategy."
OPERATIONS SUBJECT TO GOVERNMENT REGULATION; RECENT REGULATORY PROPOSALS
The Company is subject to extensive regulation by both the federal and state
governments. The Company is subject to Section 1128B of the Social Security
Act (known as the "Illegal Remuneration Statute"), which imposes civil and
criminal sanctions on persons who solicit, offer, receive or pay any
remuneration, directly or indirectly, for referring, or arranging for the
referral of, a patient for treatment that is paid for in whole or in part by
Medicare, Medicaid or similar government programs. The federal government has
published regulations that provide exceptions or a "safe harbor" for certain
business transactions. Transactions that are structured within the safe
harbors are deemed not to violate the Illegal Remuneration Statute.
Transactions that do not satisfy all elements of a relevant safe harbor do not
necessarily violate the Illegal Remuneration Statute, but may be subject to
greater scrutiny by enforcement agencies. The arrangements between the Company
and the partnerships and other entities in which it owns an indirect interest
and through which the Company provides most of its lithotripsy services (and
the corresponding arrangements between such partnerships and other entities
and the treating physicians who own interests therein and who use the
lithotripsy facilities owned by such partnerships and other entities) could
potentially be questioned under the illegal remuneration prohibition and may
not fall within the protection afforded by these safe harbors. Many states
also have laws similar to the Federal Illegal Remuneration Statute. While
failure to fall within the safe harbors may subject the Company to scrutiny
under the Illegal Remuneration Statute, such failure does not constitute a
violation of the Illegal Remuneration Statute. Nevertheless, these illegal
remuneration laws, as applied to activities and relationships similar to those
of the Company, have been subjected to limited judicial and regulatory
interpretation, and the Company has not obtained or applied for any opinion of
any regulatory or judicial authority that its business operations and
affiliations are in compliance with these laws. Therefore, no assurances can
be given that the Company's activities will be found to be in compliance with
these laws if scrutinized by such authorities.
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Section 1877 of the Social Security Act ("Stark II") imposes certain
restrictions upon referring physicians and providers of certain designated
health services under the Medicare, Medicaid and Champus programs ("Government
Programs"). Subject to certain exceptions, Stark II provides that if a
physician (or a family member of a physician) has a financial relationship
with an entity: (i) the physician may not make a referral to the entity for
the furnishing of designated health services under the Government Programs;
and (ii) the entity may not bill Government Programs, any individual or any
third-party payor for designated health services pursuant to a prohibited
referral under the Government Programs. The prohibitions of Stark II only
apply to the treatment of Government Program patients, and have no application
to services performed for non-government program patients. Entities and
physicians committing an act in violation of Stark II will be required to
refund amounts collected in violation of the statute and also are subject to
civil money penalties and to exclusion from the Government Programs. Of the
Company's lithotripsy revenues for the year ended December 31, 1997, 77% were
attributable to affiliates of the Company having referring physician-
investors. Urologists are investors in 44 of the Company's 62 lithotripsy
operations, and the two Company affiliates engaged in thermotherapy services
have referring physician-investors (the Company lithotripsy and thermotherapy
affiliates with referring physician-investors are referred to herein as the
"Company Physician Entities").
Many key terms in Stark II are not adequately defined and the statute is
silent regarding its application to vendors, such as the Company Physician
Entities, contracting "under arrangements" with hospitals for the provision of
outpatient services. Since the passage of Stark II, the Company interpreted
Stark II consistently with the informal view of the General Counsel for Health
and Human Services, and concluded that the statute did not apply to its method
of conducting business. Based upon a reasonable interpretation of Stark II, by
referring a patient to a hospital furnishing the outpatient lithotripsy or
thermotherapy services "under arrangements" with the Company Physician Entity,
a physician investor in a Company Physician Entity is not making a referral to
an entity (the hospital) in which they have an ownership interest.
On January 9, 1998, the federal government published proposed regulations
under Stark II (the "Proposed Stark Regulations"). By clarifying certain
ambiguities and defining certain statutory terms, the Proposed Stark
Regulations and accompanying commentary apply the physician referral
prohibitions of Stark II to the Company Physician Entities' practice of
contracting "under arrangements" with hospitals for treatment and billing of
Government Program patients. Only hospitals can bill the Government Programs
for lithotripsy and thermotherapy services; thus contracting under
arrangements with hospitals was the way the Company Physician Entities
economically participated in the treatment of Government Program patients.
Absent a restructuring of traditional operations, to comply with the
government's interpretation of Stark II the physician-investors will be
prohibited from referring Government Program patients to the hospitals
contracting with the Company Physician Entities. The Company cannot predict
when final Stark II regulations will be issued or the substance of the final
regulations, but the interpretive provisions of the Proposed Stark Regulations
may be viewed as the federal government's interim enforcement position until
final regulations are issued. Restructuring traditional operations may reduce
Company revenues and limit future growth by (i) reducing or eliminating
revenues attributable to the treatment of Government Program patients by
Company Physician Entities, (ii) reducing revenues from the treatment of non-
government patients by Company Physician Entities due to physician, hospital
and third-party payor anxiety and concern created by Stark II, (iii) requiring
the Company Physician Entities to restructure their operations to comply with
Stark II, (iv) restricting the acquisition or development of additional
lithotripsy or thermotherapy operations that will both treat Government
Program patients and have referring physician-investors, (v) impairing the
Company's relationship with urologists and (vi) otherwise materially adversely
impacting the Company.
Many states currently have laws similar to Stark II that restrict a
physician with a financial relationship with an entity from referring patients
to that entity. Often these laws contain statutory exceptions for
circumstances where the referring physician, or a member of his practice
group, treats their own patients. States also commonly require physicians to
disclose to patients their financial relationship with an entity. The Company
believes that it is in material compliance with these state laws.
Nevertheless, these state self-referral laws, as applied to activities and
relationships similar to those of the Company, have been subjected to limited
judicial and regulatory
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interpretation, and the Company has not obtained or applied for any opinion of
any regulatory or judicial authority that its business operations and
affiliations are in compliance with these laws. Therefore, no assurances can
be given that the Company's activities will be found to be in compliance with
these laws if scrutinized by such authorities.
In addition, upon the occurrence of changes in the law that may adversely
affect operations, the Company is required to purchase the interests of
physician-investors for certain of the Company Physician Entities. These
mandatory purchase obligations require the payment by the Company of a
multiple of earnings similar to multiples used by the Company in pricing the
original acquisition of such interests. The Company estimates that, as of
December 31, 1997, the aggregate potential cost of all such mandatory
purchases would not exceed $6.0 million. To the extent the Company is required
to purchase such interests, such purchases might cause a default under the
terms of the Senior Credit Facility, impair the Company's relationship with
urologists and otherwise have a material adverse impact on the Company.
Regulatory developments, such as the Proposed Stark Regulations, might also
dictate that the Company purchase all the interests of its physician-
investors, regardless of any contractual requirements to do so, or
substantially alter its business and operations to remain in compliance with
applicable laws. A purchase of all the interests of the physician-investors in
the Company Physician Entities would require significant resources, and there
can be no assurance that the Company could fund such acquisitions.
Additionally, there can be no assurance that the Company will not be required
to change its business practices or its investment relationships with
urologists or that the Company will not experience a material adverse effect
as a result of any challenge made by a federal or state regulatory agency. In
addition, there can be no assurance that physician-investors who, voluntarily
or otherwise, divest of their interests in Company Physician Entities will
continue to refer patients at the same rate or at all. See "Business--
Lithotripsy Operations," "Description of Other Indebtedness," and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
UNCERTAINTIES RELATED TO CHANGING HEALTHCARE ENVIRONMENT
The healthcare industry has experienced substantial changes in recent years.
Although managed care has yet to become a major factor in the delivery of
lithotripsy or thermotherapy services, the Company anticipates that managed
care programs, including capitation plans, may play an increasing role in the
delivery of lithotripsy and thermotherapy services and that competition for
these services may shift from individual practitioners to health maintenance
organizations and other significant providers of managed care. No assurance
can be given that the changing healthcare environment will not have a material
adverse effect on the Company.
In addition, the hospitals and surgery centers to which the Company provides
services are reimbursed for lithotripsy and thermotherapy services under
various federal and state programs, including Medicare, Medicaid and Champus,
primarily at fixed rates. These programs are subject to statutory and
regulatory changes, administrative rulings, interpretations of policy and
governmental funding restrictions, all of which may have the effect of
decreasing program payments, increasing costs or requiring the Company to
modify the way in which it operates its business. The Company is not able to
predict whether changes will be made in the rates prescribed by these
governmental programs. Furthermore, over the last several years, there has
been a general trend toward lower reimbursement rates for healthcare services
by government and other third-party payors. Such reimbursement reductions
could have a material adverse effect on the Company. Furthermore, increases in
operating costs that are subject to inflation, such as labor and supply costs,
without a compensating increase in prescribed rates may adversely affect the
Company.
There have been numerous initiatives at the federal and state levels for
comprehensive reforms affecting the payment for and availability of healthcare
services, including services provided by the Company. The Company believes
that such initiatives may continue in the future. Aspects of certain of these
reforms as proposed in the past could, if adopted, adversely affect the
Company.
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RISKS INHERENT IN THE PROVISION OF MEDICAL SERVICES
The urologists who use the Company's lithotripters and thermotherapy devices
are involved in the delivery of healthcare services to the public and,
therefore, are exposed to the risk of liability claims. Since the Company
typically operates the lithotripters and thermotherapy devices used by the
urologists and provides nurses and/or radiology technicians to assist the
urologists in the use of lithotripters and thermotherapy devices, the Company
may also be named in a claim against a urologist in connection with performing
a lithotripsy or thermotherapy procedure at the Company's facilities. Although
the Company has not experienced any losses due to claims for malpractice, such
claims, if successful, could result in substantial damage awards to the
claimants which may exceed the limits of any applicable insurance coverage.
While the Company maintains professional liability insurance, there can be no
assurance that any such claims against the Company will not exceed the amount
of insurance maintained. Successful malpractice claims asserted against the
Company, to the extent not covered by the Company's liability insurance, could
adversely affect the Company. See "Business--Lithotripsy Operations."
COMPETITION
The lithotripsy services industry is fragmented and highly competitive in
many respects. Moreover, certain of the Company's current and potential
competitors have substantially greater financial resources than the Company
and may compete with the Company for acquisitions and development of
operations in markets targeted by the Company. The Company has experienced
competition in the acquisition of existing lithotripsy facilities and the
development of relationships with treating physicians. The Company has also
experienced competition from hospitals or treating physicians who have opened
their own lithotripsy facilities. Such competition could intensify in the
event of a decrease in the purchase price of lithotripters, as a result of the
development of less expensive lithotripsy equipment, if the supply of new or
used lithotripters increases over time, or as a result of regulatory changes.
Most of the Company's lithotripsy services agreements have matured past their
initial terms and are now in annual renewal terms or are on a month-to-month
basis, which increases the risk that a large number of agreements may be
terminated over a relatively short period of time. Another significant
provider of lithotripsy services is also a manufacturer of lithotripsy
equipment, which may create different incentives for such provider in pricing
lithotripsy services. Moreover, the Company competes with alternative kidney
stone disease treatments. See "Business--Industry Overview."
TECHNOLOGICAL CHANGES
The equipment and software utilized by the Company in the provision of its
lithotripsy services and other business activities have been characterized by
technological changes. The development of new technologies or refinements of
existing ones might render the Company's existing equipment and software
technologically or economically obsolete. Regulatory approvals have recently
been received for smaller and less expensive lithotripsy equipment that can
either be utilized as a mobile or fixed site operation and can be transported
with smaller and less expensive vehicles than those utilized by the Company.
Although this compact lithotripsy technology is relatively new and not in
widespread use, the availability of such technology could materially and
adversely affect the Company's business. There is also a risk that the
particular manufacturers of the Company's equipment may discontinue the
manufacture of such equipment or may not offer equipment and software upgrades
necessary to keep such equipment technologically current. Even if such
upgrades are available, there can be no assurance that the Company will have
the financial resources to acquire them. See "Business--Industry Overview" and
"--Lithotripsy Operations."
DEPENDENCE ON KEY PERSONNEL
The Company is dependent upon the services and management experience of the
Company's executive officers, including Kenneth S. Shifrin, Chairman of the
Board, Joseph Jenkins, M.D., President and Chief Executive Officer, and
Michael Madler, Senior Vice President--Operations. The Company does not carry
key-man life insurance in material amounts on any of its officers. The loss
of, or the failure to attract, qualified
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employees could adversely affect the Company. In addition, the Company's
continued growth depends upon its ability to attract and retain skilled
employees, particularly highly skilled lithotripsy nurses and radiology
technicians.
DEPENDENCE ON PHYSICIANS
The Company depends upon the treatment of patients by urologists practicing
in the communities served by the Company's lithotripters and thermotherapy
units. In some cases, the Company's affiliated physician-investors have
entered into noncompetition agreements with the Company under which they have
agreed to refrain from owning interests in competing facilities for various
periods. The enforceability of these noncompetition agreements is generally a
matter of state law, varies from state-to-state and is evolving over time.
Additionally, in some cases the Company may be forced to purchase the minority
ownership interests of affiliated physician-investors under mandatory
repurchase arrangements existing between the Company and such physician-
investors. The loss of relationships with key treating urologists at a
particular facility, whether due to retirement, relocation, dissatisfaction
with the Company's services, regulatory referral prohibitions or other
factors, could adversely affect the Company. See "--Operations Subject to
Government Regulation; Recent Regulatory Proposals."
RESTRICTIVE COVENANTS AND ASSET ENCUMBRANCES
The Senior Credit Facility and the Indenture contain numerous restrictive
covenants which limit the discretion of Company management with respect to
certain business matters. These covenants place significant restrictions on,
among other things, the ability of the Company to incur additional
indebtedness, to create liens or other encumbrances, to pay dividends or make
other restricted payments, to make investments, loans and guarantees and to
sell or otherwise dispose of a substantial portion of assets to, or merge or
consolidate with, another entity. The Senior Credit Facility also contains a
number of financial covenants that require the Company to meet certain
financial ratios and tests and provide that a "change of control" constitutes
an event of default. A failure to comply with the obligations contained in the
Senior Credit Facility or the Indenture, if not cured or waived, could permit
acceleration of the related indebtedness and acceleration of indebtedness
under other instruments that contain cross-acceleration or cross-default
provisions. If the Company were obligated to repay all or a significant
portion of its indebtedness, there can be no assurance that the Company would
have sufficient cash to do so or that the Company could successfully refinance
such indebtedness. Other indebtedness of the Company that may be incurred in
the future may contain financial or other covenants more restrictive than
those applicable to the Senior Credit Facility or the Notes. In addition, the
obligations of the Company under the Senior Credit Facility are secured by
substantially all of the assets of the Company, and the Indenture permits
other Senior Debt of the Company to be secured. In the case of an event of
default under the Senior Credit Facility or such other secured indebtedness,
the lenders thereunder would be entitled to exercise the remedies available to
a secured lender under applicable law. See "Description of Exchange Notes--
Certain Covenants" and "Description of Other Indebtedness."
POSSIBLE INABILITY TO FUND A CHANGE OF CONTROL OFFER
Upon a Change of Control, the Company is required to offer to repurchase all
outstanding Notes at 101% of the principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, to the date of repurchase.
However, there can be no assurance that sufficient funds will be available at
the time of any Change of Control to make any required repurchases of Notes
tendered or that restrictions in the Senior Credit Facility will allow the
Company to make such required repurchases. Notwithstanding these provisions,
the Company could enter into certain transactions, including certain
recapitalizations, that would not constitute a Change of Control but would
increase the amount of debt outstanding at such time. See "Description of
Exchange Notes--Repurchase at the Option of Holders."
FRAUDULENT CONVEYANCE; UNENFORCEABILITY OF CERTAIN CORPORATE GUARANTEES
Under applicable provisions of federal bankruptcy law or comparable
provisions of state fraudulent transfer law, if, among other things, the
Company or any Subsidiary Guarantor, at the time it incurred the indebtedness
evidenced by the Notes or its Subsidiary Guarantee, (i) (a) was or is
insolvent or rendered insolvent by reason of
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such occurrence or (b) was or is engaged in a business or transaction for
which the assets remaining with the Company or such Subsidiary Guarantor
constituted unreasonably small capital or (c) intended or intends to incur, or
believed or believes that it would incur, debts beyond its ability to pay such
debts as they mature and (ii) the Company or such Subsidiary Guarantor
received or receives less than reasonably equivalent value or fair
consideration for the incurrence of such indebtedness, then the Notes and the
Subsidiary Guarantees, and any pledge or other security interest securing such
indebtedness, could be voided, or claims in respect of the Notes or the
Subsidiary Guarantees could he subordinated to all other debts of the Company
or such Subsidiary Guarantor, as the case may be. In addition, the payment of
interest and principal by the Company pursuant to the Notes or the payment of
amounts by a Subsidiary Guarantor pursuant to a Subsidiary Guarantee could be
voided and required to be returned to the person making such payment, or to a
fund for the benefit of the creditors of the Company or such Subsidiary
Guarantor, as the case may be.
The measures of insolvency for purposes of the foregoing considerations will
vary depending upon the law applied in any proceeding with respect to the
foregoing. Generally, however, the Company or Subsidiary Guarantor would be
considered insolvent if (i) the sum of its debts, including contingent
liabilities, were greater than the saleable value of all of its assets at a
fair valuation or if the present fair saleable value of its assets were less
than the amount that would be required to pay its probable liability on its
existing debts, including contingent liabilities, as they become absolute and
mature or (ii) it could not pay its debts as they become due.
On the basis of historical financial information, recent operating history
and other factors, the Company and each Subsidiary Guarantor believes that,
after giving effect to the indebtedness incurred in connection with the
Offering and the establishment of the Senior Credit Facility, it will not be
insolvent, will not have unreasonably small capital for the business in which
it is engaged and will not incur debts beyond its ability to pay such debts as
they mature. There can be no assurance, however, as to what standard a court
would apply in making such determinations or that a court would agree with the
Company's or the Subsidiary Guarantors' conclusions in this regard.
In addition, the enforceability of a guarantee by a subsidiary of
indebtedness of its corporate parent may be unclear or limited under the laws
of certain jurisdictions under which existing or future Subsidiary Guarantors
may be organized. Although substantially all of the existing Subsidiary
Guarantors are organized under the laws of jurisdictions under which no such
limitations exist for wholly-owned subsidiaries, the Company may form
additional subsidiaries under the laws of jurisdictions where such limitations
do exist. If a Subsidiary Guarantee is held to be invalid or unenforceable as
a result of any such limitation, then any right of the Company or any other
Subsidiary Guarantor to receive assets of the Subsidiary Guarantor whose
Subsidiary Guarantee is so limited upon the latter's liquidation or
reorganization (and the consequent right of the holders of the Notes to
participate in those assets) will be effectively subordinated to the claims of
the affected Subsidiary Guarantor's creditors, except to the extent that the
Company or any other Subsidiary Guarantor is itself recognized as a creditor
of such affected Subsidiary Guarantor, in which case the claims of the Company
or such other Subsidiary Guarantor would still be effectively subordinated to
any security interest in the assets of such affected Subsidiary Guarantor.
ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON TRANSFER
The Exchange Notes are a new issue of securities, have no established
trading market and may not be widely distributed. The Company does not intend
to list the Exchange Notes on any national securities exchange or to seek the
admission thereof to trading in the National Association of Securities Dealers
Automated Quotation System. No one has any obligation to make a market in the
Exchange Notes, and any market making activities with respect to the Exchange
Notes, if ever initiated, may be discontinued at any time without notice. In
addition, any market making activity will be subject to the limitations
imposed by the Exchange Act and may be limited during the Exchange Offer and
at certain other times. No assurance can be given that an active public or
other market will develop for the Exchange Notes or as to the liquidity of or
the trading market for the Exchange Notes. If a trading market does not
develop or is not maintained, holders of the Exchange Notes may experience
difficulty in reselling the Exchange Notes or may be unable to sell them at
all. If a market for the Exchange
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Notes develops, any such market may be discontinued at any time. If a public
trading market develops for the Exchange Notes, future trading prices of the
Exchange Notes will depend on many factors, including, among other things,
prevailing interest rates, the Company's results of operations and the market
for similar securities. Depending on prevailing interest rates, the market for
similar securities and other facts, including the financial condition of the
Company, the Exchange Notes may trade at a significant discount from their
principal amount.
YEAR 2000 COMPLIANCE
The Company is aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The "year 2000 problem"
is pervasive and complex as virtually every computer operation will be
affected in some way by the rollover of the two digit year value to 00. The
issue is whether computer systems will properly recognize date sensitive
information when the year changes to 2000. Systems that do not properly
recognize such information could generate erroneous data or cause a system to
fail. The Company does not anticipate that it will incur significant operating
expenses or be required to invest heavily in computer systems improvements to
be year 2000 compliant. However, significant uncertainty exists concerning the
potential costs and effects associated with any year 2000 compliance. Any year
2000 compliance problem of either the Company or its vendors, third-party
payors or customers could have a material adverse effect on the Company's
business, results of operations, financial condition and prospects.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT
The Outstanding Notes were sold by the Company to the Initial Purchasers on
March 27, 1998, pursuant to the Purchase Agreement. The Initial Purchasers
subsequently placed the Outstanding Notes with QIBs in reliance on Rule 144A.
As a condition to the sale of the Outstanding Notes, the Company, the
Subsidiary Guarantors and the Initial Purchasers also entered into the
Registration Rights Agreement, pursuant to which the Company agreed, with
respect to the Outstanding Notes and subject to the Company's determination
that the Exchange Offer is permitted under applicable law, to (i) cause to be
filed, on or prior to May 11, 1998, a registration statement with the
Commission under the Securities Act concerning the Exchange Offer, (ii) use
its best efforts (a) to cause such registration statement to be declared
effective by the Commission on or prior to August 24, 1998, and (b) to cause
the Exchange Offer to be consummated on or prior to 30 business days after the
date such registration statement is declared effective by the Commission. The
Company will keep the Exchange Offer open for a period of not less than 20
business days and not more than 30 business days. A copy of the Registration
Rights Agreement has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part. This Exchange Offer is intended to satisfy
the Company's exchange offer obligations under the Registration Rights
Agreement.
CONSEQUENCES OF FAILURE TO EXCHANGE OUTSTANDING NOTES
Following the expiration of the Exchange Offer, holders of Outstanding Notes
not tendered, or not properly tendered and not accepted, will continue to hold
such Outstanding Notes and will be entitled to all the rights and preferences
and subject to the limitations applicable thereto under the Indenture.
However, such holders will not have any further registration rights and such
Outstanding Notes will continue to be subject to the existing restrictions on
transfer thereof. To the extent that a portion of the Outstanding Notes are
tendered and accepted in the Exchange Offer, the liquidity of the market for a
holder's untendered and tendered but unaccepted Outstanding Notes could be
adversely affected upon expiration of the Exchange Offer. See "Risk Factors--
Exchange Offer Procedures; Consequences of Failure to Exchange."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth herein and in the
accompanying Letter of Transmittal, the Company, upon the Registration
Statement being declared effective, will accept for exchange any and all
Outstanding Notes validly tendered and not withdrawn prior to 5:00 p.m., New
York City time, on the Expiration Date. The Company will issue $1,000 in
principal amount of the Exchange Notes in exchange for each $1,000 in
principal amount of the Outstanding Notes accepted in the Exchange Offer.
Outstanding Notes may be tendered only in multiples of $1,000.
Subject to the foregoing, holders of Outstanding Notes may tender less than
the aggregate principal amount represented by the Outstanding Notes held by
them, provided that they appropriately indicate this fact on the Letter of
Transmittal accompanying the tendered Outstanding Notes. Tenders of the
Outstanding Notes may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the Expiration Date. The Exchange Offer is not conditioned upon
any minimum principal amount of Outstanding Notes being tendered for exchange.
However, the Exchange Offer is subject to the terms and provisions of the
Registration Rights Agreement. See "--Conditions of the Exchange Offer."
The Exchange Notes will evidence the same debt as the Outstanding Notes for
which they are exchanged, and are entitled to the benefits of the Indenture.
The form and terms of the Exchange Notes are the same as the form and terms of
the Outstanding Notes except that the Exchange Notes have been registered
under the Securities Act and hence will not bear legends restricting the
transfer thereof.
As of the date of this Prospectus, $100.0 million in aggregate principal
amount of the Outstanding Notes is outstanding. The Company has fixed the
close of business on , 1998, as the record date (the "Record Date") for
purposes of determining the persons to whom this Prospectus and the Letter of
Transmittal will be
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mailed initially. Only a holder of the Outstanding Notes (or such holder's
legal representative or attorney-in-fact) may participate in the Exchange
Offer. There will be no fixed record date for determining holders of the
Outstanding Notes entitled to participate in the Exchange Offer. The Company
believes that, as of the date of this Prospectus, no such holder is an
affiliate (as defined in Rule 405 under the Securities Act) of the Company.
The Company intends to conduct the Exchange Offer in accordance with the
applicable requirements of the Exchange Act and the rules and regulations of
the Commission thereunder, including Rule 14e-1 thereunder.
The Company shall be deemed to have accepted validly tendered Outstanding
Notes when, as and if the Company has given oral or written notice thereof to
the Exchange Agent. The Exchange Agent will act as agent for the tendering
holders of Outstanding Notes and for the purposes of receiving the Exchange
Notes from the Company.
If any tendered Outstanding Notes are not accepted for exchange because of
an invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Outstanding Notes will be
returned, without expense, to the tendering holder thereof as promptly as
practicable after the Expiration Date.
Holders who tender Outstanding Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of
the Outstanding Notes pursuant to the Exchange Offer. The Company will pay all
charges and expenses, other than certain applicable taxes, in connection with
the Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The Expiration Date shall be [ ], 1998, at 5:00 p.m., New York City time,
unless the Company, in its sole discretion, extends the Exchange Offer, in
which case the Expiration Date shall be the latest date and time to which the
Exchange Offer is extended, but shall not be later than [ ], 1998.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will make a public
announcement thereof, each prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Such announcement
may state that the Company is extending the Exchange Offer for a specified
period of time or on a daily basis until 5:00 p.m., New York City time, on the
date on which a specified percentage of Original Notes are tendered.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Outstanding Notes, (ii) to extend the Exchange Offer, (iii) if
any of the conditions set forth below under "--Conditions of the Exchange
Offer" shall not have been satisfied, to terminate the Exchange Offer and not
accept Outstanding Notes not previously accepted, by giving oral or written
notice of such delay, extension, or termination to the Exchange Agent, and
(iv) to amend the terms of the Exchange Offer in any manner. Any such delay in
acceptance, extension, termination or amendment will be followed as promptly
as practicable by oral or written notice thereof to the holders. If the
Exchange Offer is amended in a manner determined by the Company to constitute
a material change, the Company will promptly disclose such amendments by means
of a prospectus supplement that will be distributed to the registered holders
of the Outstanding Notes. Modification of the Exchange Offer, including, but
not limited to, (i) extension of the period during which the Exchange Offer is
open and (ii) satisfaction of the conditions set forth below under "--
Conditions of the Exchange Offer" may require that at least five (5) business
days remain in the Exchange Offer. During any extension of the Expiration
Date, all Outstanding Notes previously tendered will remain subject to the
Exchange Offer and may be accepted for exchange by the Company.
Without limiting the manner in which the Company may choose to make public
announcement of any extension, amendment or termination of the Exchange Offer,
the Company shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely
release to the Dow Jones News Service.
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CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, the Company's
obligation to accept for exchange, or exchange Exchange Notes for, any
Outstanding Notes not theretofore accepted for exchange is subject to the
following conditions:
(a) no action or proceeding having been instituted or threatened in any
court or by or before any governmental agency with respect to the Exchange
Offer which, in the judgment of the Company, might impair the ability of
the Company to proceed with the Exchange Offer or have a material adverse
effect on the Company or there shall not have occurred any material adverse
development in any existing action or proceeding with respect to the
Company or any of its subsidiaries;
(b) there shall not have been any material change, or development
involving a prospective change, in the business or financial affairs of the
Company or any of its subsidiaries which, in the judgment of the Company,
would materially impair the Company's ability to consummate the Exchange
Offer or have a material adverse impact on the Company if the Exchange
Offer is consummated;
(c) there shall not have been proposed, adopted or enacted any law,
statute, rule or regulation which, in the judgment of the Company, might
materially impair the ability of the Company to proceed with the Exchange
Offer or have a material adverse effect on the Company if the Exchange
Offer is consummated; or
(d) all governmental approvals which the Company shall deem necessary for
the consummation of the Exchange Offer as contemplated hereby shall have
been obtained.
If the Company determines in good faith that any of the conditions are not
met, the Company may (i) refuse to accept any Outstanding Notes and return all
tendered Outstanding Notes to exchanging holders, (ii) extend the Exchange
Offer and retain all Outstanding Notes tendered prior to the expiration of the
Exchange Offer, subject, however, to the rights of holders to withdraw such
Outstanding Notes (see "--Withdrawal Rights") or (iii) waive certain of such
unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Outstanding Notes which have not been withdrawn or revoked.
If such waiver constitutes a material change to the Exchange Offer, the
Company will promptly disclose such waiver by means of a prospectus supplement
that will be distributed to all registered holders of the Outstanding Notes.
Holders of the Outstanding Notes have certain rights and remedies against
the Company under the Registration Rights Agreement. If, notwithstanding a
failure of the conditions stated above, a Registration Default (as defined in
Section 5 of the Registration Rights Agreement) occurs, then with respect to
the first 90-day period following the date on which such Registration Default
occurs, holders of Outstanding Notes are entitled to receive liquidated
damages of $0.05 per week per $1,000 principal amount of Outstanding Notes
held by such holders for each week or portion thereof that the Registration
Default continues. The amount of the liquidated damages shall increase by an
additional $.05 per week per $1,000 in principal amount of Outstanding Notes
with respect to each subsequent 90-day period until all Registration Defaults
have been cured, up to a maximum amount of liquidated damages of $.50 per week
per $1,000 principal amount of Outstanding Notes (collectively, such remedies
are referred to herein as "Liquidated Damages"). The conditions of the
Exchange Offer are not intended to modify those rights or remedies in any
respect.
The foregoing conditions are for the benefit of the Company and may be
asserted by the Company in good faith regardless of the circumstances giving
rise to such conditions or may be waived by the Company in whole or in part at
any time and from time to time in its discretion. The failure by the Company
at any time to exercise the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time. In addition, the Company has
reserved the right, notwithstanding the satisfaction of each of the foregoing,
to terminate or amend the Exchange Offer.
TERMINATION OF CERTAIN RIGHTS
Holders of Exchange Notes will not be and, upon consummation of the Exchange
Offer, holders of Outstanding Notes will no longer be, entitled to (i) the
right to receive the liquidated damages described above
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<PAGE>
or (ii) certain other rights under the Registration Rights Agreement intended
for holders of Outstanding Notes. The Exchange Offer shall be deemed
consummated upon the occurrence of the delivery by the Company to the
registrar under the Indenture of Exchange Notes in the same aggregate
principal amount as the aggregate principal amount of Outstanding Notes that
are tendered by holders thereof pursuant to the Exchange Offer.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest at a rate equal to 8 3/4% per annum.
Interest accrues on the Outstanding Notes, and will accrue on the Exchange
Notes, in each case, from the most recent date to which interest has been paid
or, if no interest has been paid, from the date of the original issuance.
Interest will be payable semi-annually in arrears on April 1 and October 1,
commencing October 1, 1998. No interest will be payable on the Outstanding
Notes on the date of the exchange for the Exchange Notes and therefore no
interest will be paid thereon to the holders at such time. See "Description of
Exchange Notes--Principal, Maturity and Interest."
PROCEDURES FOR TENDERING OUTSTANDING NOTES
The tender of a holder's Outstanding Notes as set forth below and the
acceptance thereof by the Company will constitute a binding agreement between
the tendering holder and the Company upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal. Except as set forth below, a holder who wishes to tender
Outstanding Notes for exchange pursuant to the Exchange Offer must transmit
such Outstanding Notes, together with a properly completed and duly executed
Letter of Transmittal, including all other documents required by such Letter
of Transmittal, to the Exchange Agent at the address set forth below under "--
The Exchange Agent; Assistance" prior to 5:00 p.m., New York City time, on the
Expiration Date. Delivery of the Outstanding Notes may be made by book-entry
transfer in accordance with the procedures described below. Confirmation of
such book-entry transfer must be received by the Exchange Agent prior to the
Expiration Date.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES, LETTERS OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, BE USED. INSTEAD OF DELIVERY BY MAIL, IT IS
RECOMMENDED THAT THE HOLDER USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTER
OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES
OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner of the Outstanding Notes (a "Beneficial Owner") whose
Outstanding Notes are registered in the name of a broker, dealer, commercial
bank, trust company or other nominee and who wishes to tender Outstanding
Notes in the Exchange Offer should contact such registered holder promptly and
instruct such registered holder to tender on such Beneficial Owner's behalf.
If such Beneficial Owner wishes to tender directly, such Beneficial Owner
must, prior to completing and executing the Letter of Transmittal and
tendering Outstanding Notes, make appropriate arrangements to register
ownership of the Outstanding Notes in such Beneficial Owner's name. Beneficial
Owners should be aware that the transfer of registered ownership may take
considerable time and may not be able to be completed prior to the Expiration
Date.
Each signature on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Outstanding Notes surrendered for
exchange pursuant hereto are tendered (i) by a registered holder of the
Outstanding Notes who has not completed either the box entitled "Special
Registration Instructions" or the box entitled "Special Delivery Instructions"
on the Letter of Transmittal, or (ii) for the account of an Eligible
Institution (as defined below). In the event that a signature on a Letter of
Transmittal or a notice of withdrawal, as the case may be, is required to be
guaranteed, such guarantee must be by a firm which is a member firm of a
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<PAGE>
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States or otherwise an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Exchange Act (an
"Eligible Institution"). If the Letter of Transmittal is signed by any person
other than the registered holder or holders of the Outstanding Notes listed
therein, such Outstanding Notes surrendered for exchange must be endorsed or
accompanied by a properly completed bond power, in either case signed exactly
as the names of the registered holder or holders that appear on the
Outstanding Notes with each such signature thereon guaranteed by an Eligible
Institution. The term "registered holder" as used herein with respect to the
Outstanding Notes means any person in whose name the Outstanding Notes are
registered on the books of the Registrar.
If any Letter of Transmittal, Outstanding Notes, endorsement, bond power,
power of attorney or any other document required by the Letter of Transmittal
is signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and,
unless waived by the Company, proper evidence satisfactory to the Company, in
its sole discretion, of such person's authority to so act must be submitted
with the Letter of Transmittal.
The Company understands that the Exchange Agent will make a request promptly
after the date of this Prospectus to establish accounts with respect to the
Exchange Notes at DTC (the "Book-Entry Transfer Facility") for the purpose of
facilitating the Exchange Offer, and subject to the establishment thereof, any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the Outstanding Notes by
causing such Book-Entry Transfer Facility to transfer such Outstanding Notes
into the Exchange Agent's account with respect to the Outstanding Notes in
accordance with the Book-Entry Transfer Facility's procedures for such
transfer. Although delivery of the Outstanding Notes may be effected through
book-entry transfer into the Exchange Agent's account at the Book-Entry
Transfer Facility, an appropriate Letter of Transmittal properly completed and
duly executed with any required signature guarantee and all other required
documents must in each case be transmitted to and received or confirmed by the
Exchange Agent at its address set forth below on or prior to the Expiration
Date, or, if the guaranteed delivery procedures described below are complied
with, within the time period provided under such procedures; provided,
however, that a participant in DTC's book-entry system may, in accordance with
DTC's Automated Tender Offer Program procedures and in lieu of physical
delivery to the Exchange Agent of a Letter of Transmittal, electronically
acknowledge its receipt of, and agreement to be bound by, the terms of the
Letter of Transmittal. Delivery of documents to the Book-Entry Transfer
Facility does not constitute delivery to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of Outstanding Notes tendered for exchange
will be determined by the Company in its sole discretion, which determination
shall be final and binding. The Company reserves the absolute right to reject
any and all tenders of any Outstanding Notes not properly tendered and to
reject any Outstanding Notes the Company's acceptance of which might, in the
judgment of the Company or its counsel, be unlawful. The Company also reserves
the absolute right at its sole discretion to waive any defects or
irregularities or conditions of the Exchange Offer as to any particular
Outstanding Notes either before or after the Expiration Date (including the
right to waive the ineligibility of any holder who seeks to tender Outstanding
Notes in the Exchange Offer). The interpretation of the terms and conditions
of the Exchange Offer as to any Outstanding Notes either before or after the
Expiration Date (including the Letter of Transmittal and the instructions
thereto) by the Company shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of
Outstanding Notes for exchange must be cured within such period of time as the
Company shall determine. Neither the Company, the Exchange Agent nor any other
person shall be under any duty to give notification of any defects or
irregularities with respect to any tender of Outstanding Notes for exchange,
nor shall any of them incur any liability for failure to give such
notification. Tenders of the Outstanding Notes will not be deemed to have been
made until such irregularities have been cured or waived. Any Outstanding
Notes received by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
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TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
By tendering, each registered holder will represent to the Company that,
among other things that (i) the Exchange Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of business of the
person receiving such Exchange Notes, whether or not such person is the
registered holder, (ii) neither the registered holder nor any such other
person is engaged in, or intends to engage in, or has an arrangement or
understanding with any person to participate in the distribution (within the
meaning of the Securities Act) of such Exchange Notes, (iii) if the registered
holder or the person receiving the Exchange Notes covered hereby is (a)
participating in the Exchange Offer for the purpose of distributing the
Exchange Notes or (b) a broker-dealer that is receiving the Exchange Notes for
its own account in exchange for Outstanding Notes that were acquired as a
result of market-making activities or other trading activities, the registered
holder or such person will comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction of the acquired Exchange Notes and cannot rely on the
position of the Staff of the Commission set forth in "no-action" letters that
are discussed herein under "--Resales of the Exchange Notes" and (iv) neither
the registered holder nor the person receiving the Exchange Note covered
hereby is an affiliate (as defined under Rule 405 of the Securities Act) of
the Company, or, if the registered holder or any such other person is an
affiliate of the Company, whether as a result of tendering in the Exchange
Offer or otherwise, the registered holder understands and acknowledges that
such Exchange Notes may not be offered for resale, resold or otherwise
transferred by the registered holder or such other person without registration
under the Securities Act or an exemption therefrom.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Outstanding Notes and (i) whose Outstanding
Notes are not immediately available, (ii) who cannot deliver their Outstanding
Notes, the Letter of Transmittal or any other required documents to the
Exchange Agent or (iii) who cannot complete the procedures for book-entry
transfer, prior to the Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Outstanding Notes and the principal amount of Outstanding Notes
tendered, stating that the tender is being made thereby and guaranteeing
that, within five Nasdaq Stock Market trading days after the Expiration
Date, the Letter of Transmittal (or facsimile thereof), together with the
certificates representing the Outstanding Notes (or a confirmation of book-
entry transfer of such Outstanding Notes into the Exchange Agent's account
at the Book-Entry Transfer Facility) and any other documents required by
the Letter of Transmittal, will be deposited by the Eligible Institution
with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificates representing all tendered
Outstanding Notes in proper form for transfer (or a confirmation of book-
entry transfer of such Outstanding Notes into the Exchange Agent's account
at the Book-Entry Transfer Facility) and all other documents required by
the Letter of Transmittal, are received by the Exchange Agent within five
Nasdaq Stock Market trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Outstanding Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL RIGHTS
Outstanding Notes tendered pursuant to the Exchange Offer may be withdrawn
at any time prior to 5:00 p.m. New York City time, on the Expiration Date,
after which tenders of Outstanding Notes are irrevocable. To be effective, a
written, telegraphic or facsimile transmission notice of withdrawal must be
timely received by the Exchange Agent. Any such notice of withdrawal must (i)
specify the name of the person having deposited the
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Outstanding Notes to be withdrawn (the "Depositor"), (ii) identify the
Outstanding Notes to be withdrawn (including the certificate number(s) and
principal amount of such Outstanding Notes, or, in the case of Outstanding
Notes transferred by book-entry transfer, the name and number of the account
at the Book-Entry Transfer Facility to be credited), (iii) be signed by the
holder in the same manner as the original signature on the Letter of
Transmittal by which such Outstanding Notes were tendered (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Outstanding Notes register
the transfer of such Outstanding Notes into the name of the person withdrawing
the tender, (iv) specify the name in which any such Outstanding Notes are to
be registered, if different from that of the Depositor and (v) if applicable
because the Outstanding Notes have been tendered pursuant to book-entry
procedures, specify the name and number of the participant's account at DTC to
be credited, if different from that of the Depositor. All questions as to the
validity, form and eligibility (including time of receipt) of such notices
will be determined by the Company, whose determination shall be final and
binding on all parties. Any Outstanding Notes so withdrawn will be deemed not
to have been validly tendered for purposes of the Exchange Offer and no
Exchange Notes will be issued with respect thereto unless the Outstanding
Notes so withdrawn are validly retendered. Any Outstanding Notes that have
been tendered but not accepted for exchange, will be returned to the holder
thereof without cost to such holder as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn
Outstanding Notes may be retendered by following one of the procedures
described above under "--Procedures for Tendering Outstanding Notes" at any
time prior to the Expiration Date.
THE EXCHANGE AGENT; ASSISTANCE
State Street Bank and Trust Company of Missouri, NA is the Exchange Agent.
All tendered Outstanding Notes, executed Letters of Transmittal and other
related documents should be directed to the Exchange Agent. Questions and
requests for assistance and requests for additional copies of this Prospectus,
the Letter of Transmittal and other related documents should be addressed to
the Exchange Agent as follows:
By Registered or Certified Mail: By Hand or Overnight Courier:
State Street Bank and Trust Company State Street Bank and Trust Company of
of Missouri, Missouri,
National Association National Association
Corporate Trust Window Corporate Trust Window
Two International Place, Fourth Two International Place, Fourth Floor
Floor Boston, MA 02110
Boston, MA 02110
By Facsimile Transmission
(For Eligible Institutions Only):
(617) 664-5395
Attention: Corporate Trust Window
Confirm by Telephone: (800) 531-0368
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation is being made by mail;
however, additional solicitation may be made by telegraph, telephone,
facsimile or in person by officers and regular employees of the Company and
its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers or others soliciting
acceptances of the Exchange Offer. The Company, however, will pay the Exchange
Agent reasonable and customary fees for its services and registration
expenses, including fees and expenses of the Trustee, filing fees, blue sky
fees and printing and distribution expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of the Outstanding Notes pursuant to the Exchange Offer. If, however,
certificates representing the Exchange Notes or the Outstanding Notes for the
principal amounts not tendered or accepted for exchange are to be delivered
to, or are to be issued
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in the name of, any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of the Outstanding Notes pursuant to the Exchange Offer, then the
amount of any such transfer taxes (whether imposed on the registered holder or
any other person) will be payable by the tendering holder.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Outstanding Notes, as reflected in the Company's accounting records on the
date of the exchange. Accordingly, no gain or loss will be recognized by the
Company for accounting purposes. The costs of the Exchange Offer will be
expensed during the year in which they occur.
RESALES OF THE EXCHANGE NOTES
Based on an interpretation by the Staff of the Commission set forth in "no-
action" letters issued to third parties, the Company believes that the
Exchange Notes issued pursuant to the Exchange Offer to a holder in exchange
for Outstanding Notes may be offered for resale, resold and otherwise
transferred by such holder (other than (i) a broker-dealer who purchased
Outstanding Notes directly from the Company for resale pursuant to Rule 144A
or any other available exemption under the Securities Act, or (ii) a person
that is an affiliate of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such holder is
acquiring the Exchange Notes in the ordinary course of business and is not
participating, and has no arrangement or understanding with any person to
participate, in the distribution of the Exchange Notes. The Company has not
requested or obtained an interpretive letter from the Staff of the Commission
with respect to this Exchange Offer, and the Company and the holders are not
entitled to rely on interpretive advice provided by the Staff to other
persons, which advice was based on the facts and conditions represented in
such letters. However, the Exchange Offer is being conducted in a manner
intended to be consistent with the facts and conditions represented in such
letters. If any holder acquires Exchange Notes in the Exchange Offer for the
purpose of distributing or participating in a distribution of the Exchange
Notes, such holder cannot rely on the position of the Staff of the Commission
enunciated in Exxon Capital Holdings Corporation (available April 13, 1989) or
similar "no-action" or interpretive letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction, unless an exemption from
registration is otherwise available. Failure to comply with such requirements
in such instance could result in the undersigned or any such other person
incurring liability under the Securities Act for which such persons are not
indemnified by the Company.
As set forth above, affiliates of the Company are not entitled to rely on
the foregoing interpretations of the staff of the Commission with respect to
resales of the Exchange Notes without compliance with the registration and
prospectus delivery requirements of the Securities Act.
SHELF REGISTRATION STATEMENT
If the Company is not permitted to consummate the Exchange Offer because the
Exchange Offer is not permitted by any applicable law or applicable
interpretation of the Commission or the staff of the Commission, the Company
has agreed to file with the Commission and use its best efforts to have
declared effective and keep continuously effective for up to two years a
registration statement that would allow resales of Outstanding Notes.
OTHER
Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept. Holders of the Outstanding Notes are
urged to consult their financial and tax advisors in making their own decision
on what action to take.
The Company may in the future seek to acquire untendered Outstanding Notes
in open market or privately negotiated transactions, through subsequent
exchange offers or otherwise. The Company, however, has no present plans to
acquire any Outstanding Notes that are not tendered in the Exchange Offer or
to file a registration statement to permit resales of any untendered
Outstanding Notes.
33
<PAGE>
USE OF PROCEEDS
This Exchange Offer is intended to satisfy certain of the Company's
obligations under the Purchase Agreement and the Registration Rights Agreement
with respect to the Outstanding Notes. The Company will not receive any cash
proceeds from the issuance of the Exchange Notes offered hereby. In
consideration for issuing the Exchange Notes contemplated in this Prospectus,
the Company will receive Outstanding Notes in like principal amount, the form
and terms of which are substantially similar to the form and terms of the
Exchange Notes, except as otherwise described herein. The Outstanding Notes
surrendered in exchange for Exchange Notes will be retired and canceled and
cannot be reissued. Accordingly, issuance of the Exchange Notes will not
result in any increase or decrease in the indebtedness of the Company.
CAPITALIZATION
The following table sets forth as of December 31, 1997 (i) the actual cash
and cash equivalents and capitalization of the Company and (ii) the cash and
cash equivalents and capitalization of the Company on an adjusted basis to
give effect to the Initial Offering and the use of proceeds therefrom to repay
all the outstanding indebtedness under the Company's prior credit facility, as
if such transactions occurred on December 31, 1997.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------
HISTORICAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents(1)........................ $ 23,770 $ 40,403
======== ========
Total debt (including current maturities):
Debt payable to banks............................. $ 79,000 $ --
8 3/4% Senior Subordinated Notes due 2008......... -- 100,000
Other............................................. 3,336 3,336
-------- --------
Total debt(2)................................... 82,336 103,336
Minority interest................................... 19,372 19,372
Stockholders' equity:
Common Stock, 40,000,000 shares authorized;
19,306,267 shares issued and outstanding......... 193 193
Capital in excess of par value.................... 84,050 84,050
Accumulated earnings(3)........................... 7,821 4,618
-------- --------
Total stockholders' equity...................... 92,064 88,861
-------- --------
Total capitalization............................ $193,772 $211,569
======== ========
</TABLE>
- -----------------
(1) Includes $11.2 million attributable to the minority interests in
consolidated subsidiaries.
(2) Excludes availability of approximately $100.0 million under the Senior
Credit Facility, as if it existed at December 31, 1997.
(3) Reflects the Company's policy to expense estimated costs associated with
the Initial Offering and the Exchange Offer of approximately $3.2 million,
net of tax.
34
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA
The selected data presented below under the captions "Statement of Income
Data" and "Balance Sheet Data" as of and for each of the years in the five-
year period ended December 31, 1997 are derived from the consolidated
financial statements of the Company, which financial statements have been
audited by KPMG Peat Marwick LLP, independent certified public accountants.
This information is qualified by reference to, and should be read in
conjunction with, "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's consolidated financial statements
incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1993 1994 1995 1996 1997
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues:
Lithotripsy..................... $ 7,309 $14,843 $22,153 $71,602 $93,113
Other........................... 13,259 9,925 1,042 802 2,866
------- ------- ------- ------- -------
Total revenues................. 20,568 24,768 23,195 72,404 95,979
Costs and expenses:
Lithotripsy..................... 2,672 4,283 5,979 19,922 25,381
Other........................... 11,996 8,580 1,505 632 2,221
Corporate expenses.............. 1,198 2,414 2,573 4,245 5,683
------- ------- ------- ------- -------
Total costs and expenses....... 15,866 15,277 10,057 24,799 33,285
Depreciation and amortization.... 1,818 2,975 3,195 8,422 9,911
------- ------- ------- ------- -------
Operating income.............. 2,884 6,516 9,943 39,183 52,783
Interest expense................. 544 902 1,231 5,977 7,477
Other income (deductions)(1)..... 409 128 799 (2,706) 386
------- ------- ------- ------- -------
Income before income taxes and
minority interest............... 2,749 5,742 9,511 30,500 45,692
Provision for income taxes....... 210 547 886 1,996 5,795
Minority interest in consolidated
income.......................... -- 691 1,421 19,543 25,041
------- ------- ------- ------- -------
Net income.................... $ 2,539 $ 4,504 $ 7,204 $ 8,961 $14,856
======= ======= ======= ======= =======
Diluted earnings per share(2).... $ 0.21 $ 0.31 $ 0.48 $ 0.49 $ 0.76
Weighted average shares
outstanding (diluted basis)
(in thousands)(2)............... 11,991 14,323 15,350 18,638 19,461
OPERATING DATA:
Number of lithotripters at end of
period.......................... 5 13 23 55 61
Number of lithotripsy
procedures...................... 2,348 6,057 11,308 28,480 36,183
Approximate number of locations
served.......................... 26 90 160 400 450
OTHER DATA:
Capital expenditures(3).......... $ 406 $ 602 $ 473 $ 2,526 $ 4,546
Consolidated EBITDA(4)........... 4,702 9,491 13,138 47,605 62,334
Consolidated EBITDA margin(5).... 22.9% 38.3% 56.6% 65.7% 64.9%
Ratio of earnings to fixed
charges(6)...................... 6.1x 6.5x 7.3x 3.1x 4.4x
EBITDA(7)........................ $ 4,702 $ 8,733 $11,536 $25,652 $33,743
Ratio of EBITDA to interest
expense......................... 8.6x 9.7x 9.4x 4.3x 4.5x
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------------------
1993 1994 1995 1996 1997
------- ------- ------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents(8)........ $ 1,634 $ 2,912 $ 4,692 $ 20,096 $ 23,770
Total assets........................ 38,768 53,861 77,627 202,534 225,826
Long-term debt (including current
maturities)........................ 3,590 15,228 25,366 81,432 82,336
Minority interest................... -- 178 623 18,735 19,372
Stockholders' equity................ 29,976 34,421 42,750 76,427 92,064
</TABLE>
- -----------------
(1) Includes immediate write-off of costs associated with offerings of debt
securities, the establishment of credit facilities and a canceled stock
offering of $3.5 million incurred during the second quarter of 1996 and
$360,000 incurred during the first quarter of 1997.
(2) The Company has restated all previous earnings per share data to comply
with Statement of Financial Accounting Standards No. 128 "Earnings per
Share," which became effective on a retroactive basis with the issuance of
December 31, 1997 earnings data.
(3) Excludes acquisitions of $14.8 million, $15.0 million, $70.1 million and
$20.2 million in the years 1994, 1995, 1996 and 1997, respectively. The
Company made no acquisitions in 1993.
(4) Consolidated EBITDA is defined as income before income taxes, minority
interest, interest expense, depreciation and amortization, and other non-
operating items for the Company and its consolidated subsidiaries.
Consolidated EBITDA is not intended to represent net income or cash flows
from operating activities in accordance with generally accepted accounting
principles and should not be considered a measure of the Company's
profitability or liquidity.
(5) Consolidated EBITDA margin is defined as the ratio of Consolidated EBITDA
to total revenues.
(6) The ratio of earnings to fixed charges is computed by dividing fixed
charges into income before income taxes (after consideration of minority
interests in consolidated subsidiaries which have no fixed charges) plus
fixed charges. Fixed charges consist of interest expense, including debt
issuance costs expensed.
(7) EBITDA is defined as Consolidated EBITDA for the Company, less EBITDA
attributable to minority interests in consolidated subsidiaries. EBITDA is
presented because it is a widely accepted financial indicator of a
company's ability to service debt. EBITDA is not intended to represent net
income or cash flows from operating activities in accordance with
generally accepted accounting principles and should not be considered a
measure of the Company's profitability or liquidity.
(8) Includes $11.2 million attributable to the minority interests in
consolidated subsidiaries as of December 31, 1997.
36
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
As of December 31, 1997, the Company had 61 lithotripter operations located
in 34 states, of which 18 were wholly-owned, 38 were owned by partnerships or
limited liability companies where the Company was general partner or managing
member, and five were managed by third parties. Of the Company's 61
lithotripsy operations on December 31, 1997, 52 were wholly-owned or
controlled by the Company and therefore fully consolidated in the Company's
results of operations with provisions for minority interests where
appropriate. Revenues from these fully consolidated operations consist of fees
charged to hospitals, patients and third-party payors for lithotripsy
services. The remaining nine lithotripters are accounted for using the equity
method. Revenues in these cases include management fees paid to the Company
and equity income from the Company's ownership interests. For the year ended
December 31, 1997, 91% of the Company's lithotripsy revenues were generated
from fees charged for lithotripsy services, 7% were derived from management
fees, and 2% were derived from equity income. See "--Significant Accounting
Policies."
The Company completed its exit from the diagnostic imaging business in 1994
and has also substantially reduced its cardiac rehabilitation business, which
accounted for approximately 1% of the Company's total revenues for the year
ended December 31, 1997.
The Company's rapid growth has resulted primarily from acquisitions of or
investments in businesses engaged in providing lithotripsy services. During
the period from April 1, 1992 to December 31, 1997, the Company completed 12
acquisitions involving 57 lithotripter operations and developed four new
lithotripter operations. The Company believes that the fragmented nature of
the lithotripsy industry and changing regulatory environment will result in
additional acquisition opportunities in the future. See "Prospectus Summary--
Recent Developments."
The following table outlines the growth in the Company's number of
lithotripters during the periods indicated:
<TABLE>
<CAPTION>
NUMBER OF LITHOTRIPTERS YEAR ENDED DECEMBER 31,
----------------------- -----------------------------
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
At beginning of period.......................... -- 1 5 13 23 55
Acquired........................................ 1 4 7 10 31 4
Developed....................................... -- -- 1 -- 1 2
At end of period................................ 1 5 13 23 55 61
</TABLE>
The Company has generally not experienced an increase in revenues per
lithotripter after its acquisitions as increases in lithotripsy procedures
have been offset by general industry-wide declines in rates charged per
procedure. However, the Company centralizes certain functions, such as managed
care contracting, vendor relations, maintenance and supply contracting and
accounting, resulting in increased operating efficiencies and profitability.
The Company provides lithotripsy services under three types of contracts.
Under a wholesale contract, the Company bills and collects from the hospital
or surgery center for lithotripsy services provided by the Company to
patients. Under a retail contract, the Company bills the patient or the
patient's third-party payor a combined fee, which includes all aspects of the
procedure, excluding the treating urologist's fee, and the Company then pays
the hospital or surgery center a percentage of the collected amount for its
services. Under a true-up contract, the Company bills and collects a
negotiated fee from the hospital or surgery center, which is then
retrospectively reviewed and adjusted based on the payments received by the
hospital or surgery center for the corresponding treatments. In recent years
the Company has increased the number of its retail contracts, which the
Company believes generally result in greater margins per procedure.
In September 1997, the Company acquired a 75% interest in AK Associates,
L.L.C. ("AK"), a provider of products and services for major medical
equipment, for $4.8 million plus an earn-out of up to $1.1 million. The
remaining 25% of AK is owned by certain members of AK management. For the
eight months ended August 31, 1997, the predecessor of AK recognized revenues
and EBITDA of approximately $3.5 million and $1.1 million, respectively. For
the four month period ending December 31, 1997, revenues from AK were $2.4
million. During
37
<PAGE>
October 1997, the Company began providing thermotherapy services for the
treatment of non-cancerous enlargement of the prostate. Neither the
thermotherapy services nor AK have significantly impacted earnings to date.
The Company had approximately $2.8 million of net operating loss carry-
forward as of December 31, 1996, which the Company fully utilized in early
1997. As a result of the utilization of the loss carry-forward, the Company's
effective federal tax rate in the years ended December 31, 1996 and 1997 was
18% and 28%, respectively, and earnings are expected to be fully taxed at a
combined federal and state tax rate of approximately 40% in 1998.
SIGNIFICANT ACCOUNTING POLICIES
The Company's consolidated financial statements include the accounts of its
wholly-owned subsidiaries, entities in which the Company has more than a 50%
ownership interest and entities where the Company has control, even though its
ownership interest is less than 50%. Investments in entities not controlled by
the Company in which the Company's ownership interest is less than 50% are
accounted for by the equity method if ownership is between 20%-50%, or by the
cost method if ownership is less than 20%.
The Company records as goodwill the excess of the purchase price over the
fair value of the net assets of acquired businesses. Goodwill is amortized
over a period not to exceed 40 years using the straight-line method. Goodwill
is reviewed for impairment whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. If the sum of the
expected future undiscounted cash flows is less than the carrying value of the
goodwill, a loss is recognized for the difference between the fair value and
carrying value of the goodwill.
The Company immediately expenses the full amount of debt issuance costs
associated with offerings of its securities and the establishment of its
credit facilities, including the Senior Credit Facility, the Outstanding Notes
and the Exchange Notes offered hereby.
RESULTS OF OPERATIONS
The following table sets forth certain consolidated financial data as a
percentage of total net revenues (unless otherwise noted) for each of the
three years ended December 31, 1997.
<TABLE>
<CAPTION>
PERCENTAGE OF REVENUES
-------------------------
YEAR ENDED DECEMBER 31,
-------------------------
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Revenues:
Lithotripsy........................................ 95.5% 98.9% 97.0%
Other.............................................. 4.5 1.1 3.0
------- ------- -------
Total Revenues.................................... 100.0 100.0 100.0
------- ------- -------
Costs and expenses:
Lithotripsy as a percent of lithotripsy revenues... 27.0 27.8 27.3
Other as a percent of other revenues............... 144.4 78.8 77.5
Corporate expenses................................. 11.1 5.9 5.9
------- ------- -------
Total costs and expenses.......................... 43.4 34.3 34.7
Depreciation and amortization...................... 13.8 10.3 10.3
------- ------- -------
Operating income.................................. 42.9 55.5 55.0
Interest expense................................... (5.3) (8.3) (7.8)
Other income (deductions).......................... 3.4 (3.7) 0.4
------- ------- -------
Income before income taxes and minority interest.. 41.0 43.5 47.6
Provision for income taxes.......................... 3.8 2.8 6.0
Minority interest in consolidated income............ 6.1 28.3 26.1
------- ------- -------
Net income.......................................... 31.1% 12.4% 15.5%
======= ======= =======
</TABLE>
38
<PAGE>
COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO YEAR ENDED DECEMBER 31, 1996
For the year ended December 31, 1997, total revenues increased $23,575,000
(33%) as compared to the same period in 1996. Revenues from lithotripter
operations increased by $21,511,000 primarily due to the acquisitions of (i)
one lithotripter entity that owned or managed 31 lithotripters throughout the
United States effective May 1996, (ii) additional interests in 10 partnerships
in January 1997, (iii) one lithotripter entity that owned two lithotripters
effective June 1997 and (iv) a 38.25% interest in a lithotripter unit
effective May 1997. Revenues from manufacturing were $2,358,000, related to
the acquisition of the trailer manufacturer on September 1, 1997. Revenues
from cardiac centers decreased $323,000 primarily due to the one sold cardiac
center.
For the year ended December 31, 1997, costs and expenses (excluding
depreciation and amortization) increased from 34% to 35% of revenues, and
increased $8,486,000 (34%) in absolute terms, compared to the same period in
1996. Costs of services associated with lithotripter operations increased
$5,459,000 (27%) in absolute terms primarily due to the acquisitions discussed
above, and decreased from 28% to 27% of lithotripter revenues. Expenses from
manufacturing were $1,743,000. Cost of services associated with cardiac
centers decreased $322,000 (51%) primarily due to the sale of one cardiac
center. Corporate expenses were 6% of revenues for both years as the Company
was able to successfully grow without proportionately adding overhead.
Corporate expenses increased $1,438,000 (34%) primarily due to the additional
corporate expenses associated with the acquisitions discussed above.
For the year ended December 31, 1997, other deductions decreased $1,592,000
primarily due to $3,535,000 in debt issuance and canceled stock offering costs
in 1996, compared to only $360,000 which were recorded in 1997, partially
offset by an increase in interest expense of $1,500,000 due to borrowings in
1997 related to the acquisitions discussed above.
Minority interest in consolidated income increased $5,498,000 primarily due
to the other ownership interest associated with 21 partnerships in which
Lithotripters, Inc. holds a controlling interest. The Company concluded the
Lithotripters, Inc. acquisition effective May 1, 1996.
Provision for income taxes increased $3,799,000 due to the increase in
income before income taxes partially offset by the Company fully utilizing its
net operating loss and other carryforwards in 1997, which resulted in a
reduction in the beginning of year valuation allowance of $2,399,000.
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995
Total revenues increased $49,209,000 (212%) as compared to the same period
in 1995. Revenues from lithotripter operations increased by $49,449,000
primarily due to the acquisition of (i) an entity that owned or managed 31
lithotripters effective May 1, 1996 (ii) an entity that owned or managed eight
lithotripters effective October 1, 1995, and (iii) a 70% interest in an entity
that operated one lithotripter, as of July 1, 1995. In addition, the Company
acquired a 32.5% interest in an entity that operated one lithotripter in June
1995. Revenues from cardiac centers decreased $240,000 primarily due to four
discontinued/sold cardiac centers.
Costs and expenses (excluding depreciation and amortization) decreased from
43% to 34% of revenues, but increased $14,742,000 (147%) in absolute terms,
compared to the same period in 1995. Costs of services associated with
lithotripter operations increased $13,943,000 (233%) in absolute terms and
from 27% to 28% of lithotripter revenues primarily due to the acquisitions
discussed above. Cost of services associated with cardiac centers decreased
$873,000 (58%) primarily due to four discontinued/sold cardiac centers.
Corporate expenses decreased from 11% to 6% of revenues as the Company was
able to successfully grow without proportionately adding overhead. Corporate
expenses increased $1,672,000 (65%) primarily due to the additional corporate
expenses associated with the acquisition discussed above and the management
incentive plans tied to the performance of the Company.
Other deductions increased $8,251,000 primarily due to (i) the write-off of
$2,735,000 in fees paid to lenders to obtain financing, and $800,000 in fees
associated with a proposed stock offering that was canceled in August 1996 and
(ii) an increase in interest expense of $4,746,000 due to $74.0 million in new
borrowings in 1996 primarily for the Litho Acquisition, effective May 1, 1996.
39
<PAGE>
Minority interest in consolidated income increased $18,122,000 primarily due
to the minority interest associated with the 21 partnerships in which
Lithotripters, Inc. holds a controlling interest. The Company concluded the
Litho Acquisition effective May 1, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Cash was $23,770,000 and $20,096,000 at December 31, 1997 and December 31,
1996, respectively. Cash provided by operations was $51,693,000 for the year
ended December 31, 1997 and $41,602,000 for the year ended December 31, 1996.
The Company's subsidiaries generally distribute all of their available cash
quarterly, after establishing reserves for estimated capital expenditures and
working capital. For the years ended December 31, 1997 and 1996, the Company's
subsidiaries distributed cash of approximately $28,667,000 and $13,440,000,
respectively, to minority interest holders.
The following table details the capital expenditures for the periods
reflected:
<TABLE>
<CAPTION>
CAPITAL EXPENDITURES YEAR ENDED DECEMBER 31,
-------------------- -----------------------
1995 1996 1997
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Acquisitions.................................... $15,033 $70,129 $20,217
Other........................................... 473 2,526 4,546
------- ------- -------
Total.......................................... $15,506 $72,665 $24,763
======= ======= =======
</TABLE>
The Company's acquisitions have been funded by drawings under its bank
credit facilities, cash generated from operations and the issuance of shares
of its common stock.
Cash used in financing activities for the year ended December 31, 1997 was
$25,070,000, primarily due to distributions to minority interests of
$28,667,000 offset by net borrowings of $873,000, and contributions received
from minority interests of $2,381,000. Cash provided by financing activities
for the year ended December 31, 1996 was $45,572,000, which was primarily due
to $58,649,000 million in net borrowings under credit facilities, partially
offset by distributions to minority interests of $13,440,000.
The Company utilized the net proceeds from the sale of the Outstanding Notes
in the Initial Offering to repay all of the outstanding indebtedness under its
prior credit facility in the approximate aggregate amount of $77.0 million.
The balance of the net proceeds from the Initial Offering (approximately $19.0
million) has been used for general working capital purposes or is being held
in short-term investments. As of April 20, 1998, the Company replaced the
prior credit facility with the Senior Credit Facility. See "Description of
Other Indebtedness."
The Company is currently evaluating its alternatives in light of the
Proposed Stark Regulations. While the Company believes the changing regulatory
environment may benefit the Company by creating new lithotripsy acquisition
opportunities, the Company is reevaluating its historical model for providing
lithotripsy and thermotherapy services through operations which include
physician-investors and has delayed the organization of physician partnerships
that were in various stages of development.
The Company intends to increase the number of its lithotripsy operations
primarily through acquisitions. The Company believes that the fragmented
nature of the lithotripsy industry, combined with operational challenges
created by increasing regulatory and business complexities, including Stark
II, the Illegal Remuneration Statute and similar state laws, will provide
significant lithotripsy acquisition opportunities. Where appropriate, the
Company will seek to increase its ownership interest in current lithotripsy
operations by purchasing interests of urologists and other investors who
desire to divest due to concerns over regulatory issues, a desire to realize a
return on their investment or retirement. For the year ended December 31,
1997, EBITDA attributable to minority interests in the Company's subsidiaries
was approximately $28.6 million. In addition, upon the occurrence of changes
in the law that may adversely affect operations, the Company may be required
to purchase the interests of physician-investors for certain of the Company
Physician Entities, and the Company estimates that, as of December 31, 1997,
the aggregate potential cost of all such mandatory purchases would not exceed
$6.0 million. See "Prospectus Summary--Recent Deveopments."
40
<PAGE>
The Company intends to fund the purchase price for such acquisitions using
borrowings under the Senior Credit Facility, cash flow from operations and the
proceeds of the Outstanding Notes. In addition, the Company may use shares of
its common stock in such acquisitions where appropriate. However, there can be
no assurance that the Company will be able to consummate such acquisitions or
that acquisitions consummated will be or become profitable. See "Risk
Factors."
The Company has announced a stock repurchase program of up to $15.0 million
of common stock. As of April 21, 1998, the Company has repurchased 154,000
shares of common stock for a total aggregate consideration of approximately
$1.8 million. From time to time, the Company may purchase additional shares of
its common stock where, in the judgment of management, market valuations of
its stock do not accurately reflect the Company's past and projected results
of operations. The Company intends to fund any such purchases using available
cash, cash flow from operations and borrowings under the Senior Credit
Facility.
The Company's ability to make scheduled payments of principal of, or to pay
the interest or Liquidated Damages, if any, on, or to refinance, its
indebtedness (including the Notes), or to fund planned capital expenditures
will depend on its future performance, which, to a certain extent, is subject
to general economic, financial, competitive, legislative, regulatory and other
factors that are beyond its control. Based upon the current level of
operations and anticipated cost savings and revenue growth, management
believes that cash flow from operations and available cash, together with
available borrowings under the Senior Credit Facility, will be adequate to
meet the Company's future liquidity needs for at least the next several years.
The Company may, however, need to refinance all or a portion of the principal
of the Notes on or prior to maturity. There can be no assurance that the
Company's business will generate sufficient cash flow from operations, that
anticipated revenue growth and operating improvements will be realized or that
future borrowings will be available under the Senior Credit Facility in an
amount sufficient to enable the Company to service its indebtedness, including
the Notes, or to fund its other liquidity needs. In addition, there can be no
assurance that the Company will be able to effect any such refinancing on
commercially reasonable terms or at all. See "Risk Factors."
INFLATION
The assets of the Company are not affected by inflation because the Company
is not required to make large investments in fixed assets. However, the rate
of inflation will affect certain of the Company's expenses, such as employee
compensation and benefits.
YEAR 2000 COMPLIANCE
The Company is aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The "year 2000 problem"
is pervasive and complex as virtually every computer operation will be
affected in some way by the rollover of the two digit year value to 00. The
issue is whether computer systems will properly recognize date sensitive
information when the year changes to 2000. Systems that do not properly
recognize such information could generate erroneous data or cause a system to
fail. The Company does not anticipate that it will incur significant operating
expenses or be required to invest heavily in computer systems improvements to
be year 2000 compliant. However, significant uncertainty exists concerning the
potential costs and effects associated with any year 2000 compliance. Any year
2000 compliance problem of either the Company or its vendors, third party
payors or customers could have a material adverse effect on the Company's
business, results of operations, financial condition and prospects.
41
<PAGE>
BUSINESS
THE COMPANY
The Company is the largest provider of lithotripsy services in the United
States. Lithotripsy is a non-invasive procedure for the treatment of kidney
stones, typically performed on an outpatient basis, that eliminates the need
for lengthy hospital stays and extensive recovery periods associated with
surgery. The Company has 62 lithotripters of which 55 are mobile and seven are
fixed site. The Company's lithotripters performed approximately 36,000, or
20%, of the estimated 180,000 lithotripsy procedures in the United States in
1997 through its network of approximately 450 hospitals and surgery centers in
34 states. Approximately 2,300 urologists utilized the Company's lithotripters
in 1997, representing 30% of the estimated 7,700 urologists in the U.S. Of
these physicians, approximately 1,150 also own minority interests in certain
of the Company's lithotripters. In addition, the Company has over 270
contracts with managed care organizations.
Lithotripters fragment kidney stones by use of extracorporeal shock wave
lithotripsy. The Company provides services related to the operation of the
lithotripters, including scheduling, staffing, training, quality assurance,
maintenance, regulatory compliance and contracting with payors, hospitals and
surgery centers. Medical care is rendered by the urologists utilizing the
lithotripters. Management believes that the Company has collected the
industry's largest and most comprehensive lithotripsy database, containing
detailed treatment and outcomes data on over 120,000 lithotripsy procedures.
The Company and its associated urologists utilize this database in seeking to
provide the highest quality of lithotripsy services as efficiently as
possible.
From 1992 through 1997, the Company completed 12 acquisitions involving 57
lithotripter operations and internally developed five new operations. Forty-
eight of the Company's 62 lithotripsy operations were formed by the Company's
current directors and managers prior to the Company's acquisition of such
operations. Since 1992, the Company has substantially divested its original
non-lithotripsy businesses. Lithotripsy revenues have grown from $4.3 million
in 1992 to $93.1 million in 1997, representing a compound annual growth rate
of approximately 85%. The Company had total revenues and EBITDA of
approximately $96.0 million and $33.7 million, respectively, for the year
ended December 31, 1997.
INDUSTRY OVERVIEW
Kidney stones develop from crystals made up primarily of calcium which
separate from urine and build up on the inner surfaces of the kidney. The
exact cause of kidney stone formation is unclear, and there is no known
preventative cure in the vast majority of cases. Approximately 25% of all
kidney stones do not pass spontaneously and therefore require medical or
surgical treatment. Kidney stone treatments used by urologists include
lithotripsy, drug therapy, endoscopic extraction or open surgery. While the
nature and location of a kidney stone impacts the choice of treatment, the
Company believes the majority of all kidney stones that require treatment are
treated with lithotripsy because it is non-invasive, typically requires no
general anesthesia, and rarely requires hospital stays. After fragmentation by
lithotripsy, the resulting kidney stone fragments pass out of the body
naturally. Recovery from the procedure is usually a matter of hours. The
Company believes the incidence of kidney stone disease is growing in the
United States due to overall growth in the population, the increase in the
population of males ages 45-64 years old who experience kidney stones most
frequently, and the increasing population in the southern U.S. where kidney
stones are most prevalent.
The market for lithotripsy services is highly fragmented and is comprised of
independent service providers (like the Company), hospitals and small
physician affiliated partnerships. While the Company operates approximately
17% of the estimated 350 lithotripters currently in use in the United States,
the Company believes that the next six largest lithotripsy service companies
collectively account for approximately 21% of the country's lithotripters. A
substantial percentage of all remaining lithotripters currently in operation
are owned through partnerships comprised of professional managers and groups
of urologists serving specific geographic markets.
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KIDNEY STONE DISEASE
The exact cause of kidney stone formation is unclear, although it has been
attributed to genetics, diet, climate, metabolism and certain medications.
While certain life-style and diet modifications may decrease the incidence of
kidney stones, there is no known preventative cure in the vast majority of
cases. Approximately 25% of all kidney stones do not pass spontaneously and
therefore require medical or surgical treatment. These patients suffer from
extreme pain and, without treatment, may develop serious adverse health
consequences that, in extreme cases, may lead to renal failure, loss of a
kidney or even death. However, through the use of pain medication and other
techniques, treatment can be postponed in nearly all cases for several weeks
without adverse consequences.
Kidney stone disease is most prevalent in the southern United States. Men
are afflicted with kidney stones more than twice as frequently as women, with
the highest incidence occurring in men 45 to 64 years of age.
TREATMENT METHODS
A number of kidney stone treatments are used by urologists ranging from non-
invasive procedures, such as drug therapy or lithotripsy, to invasive
procedures, such as endoscopic extraction or open surgery. The type of
treatment a urologist chooses depends on a number of factors, such as the size
and chemical make-up of the stone, the stone's location in the urinary system
and whether the stone is contributing to other urinary complications such as
blockage or infection.
Certain types of less common kidney stones may be dissolved by drugs which
allow normal passage from the urinary system. Stones located in certain areas
of the urinary tract may be extracted endoscopically. These procedures
commonly require general or local anesthesia and can injure the involved areas
of the urinary tract. Frequently, kidney stones are located where they are not
accessible by an endoscopic procedure. Prior to the development of
lithotripsy, stones lodged in the upper urinary tract were often treated by
open surgery or percutaneous stone removal, both major operations requiring an
incision to gain access to the stone. After such procedures, the patient
typically spends several days in the hospital followed by a convalescence
period of three to six weeks. As the technology for treating kidney stones has
improved, there has been a shift from more expensive and complicated invasive
procedures to safer, more cost efficient and less painful non-invasive
procedures, such as lithotripsy.
EXTRACORPOREAL SHOCK WAVE LITHOTRIPSY
General. The lithotripter has dramatically changed the course of kidney
stone disease treatment since lithotripsy is normally performed on an
outpatient basis, often without general anesthesia. Recovery times are
generally only a few hours, and most patients can return to work the next day.
There are three basic types of lithotripsy treatment currently available:
electromagnetic, spark-gap and piezoelectric. A decision regarding which type
is used in any instance may depend on several factors, among which are the
treating physician's preferences, treatment times, stone location, and
anesthesia considerations. The Company has 40 electromagnetic machines, 20
spark-gap machines and one piezoelectric machine.
Electromagnetic Technology. Most new lithotripters utilize an
electromagnetic shock wave component that eliminates the need for disposable
electrodes. The use of lithotripters employing electromagnetic technology
allows for more precise focusing of shock wave energy and more predictable
energy delivery than other lithotripsy technologies, which eliminates the need
for anesthesia in most cases. Utilization of systems employing electromagnetic
technology usually results in fragmentation of the kidney stone in between 60
and 90 minutes.
Spark Gap Technology. With these lithotripsy systems, shock waves generated
by a disposable high-voltage spark electrode are focused on a kidney stone.
Utilization of systems employing spark gap technology usually results in
fragmentation of the kidney stone in less than 60 minutes. The use of spark-
gap technology often requires the administration of sedatives or intravenous
anesthesia care and in some cases requires general anesthesia.
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Piezoelectric Technology. Lithotripters applying piezoelectric technology
focus shock waves on the kidney stone using a linear array of ceramic
elements. This technology has not been widely adopted, and there are only a
few lithotripters utilizing piezoelectric technology operating in the United
States.
BUSINESS STRATEGY
The Company's objective is to become the leading provider of medical related
services to urologists in the United States. The Company believes that its
reputation and position as the leading provider of lithotripsy services has
allowed it to establish strong relationships with physicians, equipment
manufacturers, managed care organizations and hospital groups which have
strategically positioned it to grow through the introduction of additional
services to the urological community. The Company has consistently pursued a
policy of growth through acquisitions since it entered the lithotripsy
business in 1992 and believes its acquisition experience and ability to
leverage its existing infrastructure will allow it to continue to take
advantage of future acquisition opportunities. The primary components of the
Company's business strategy are as follows:
GROWTH THROUGH ACQUISITIONS.
The Company intends to continue to aggressively pursue acquisitions of both
large and small lithotripsy service providers. Since October 1995 the Company
has acquired two of the three other largest lithotripsy service companies in
the United States, and since 1992 the Company has made 12 acquisitions
representing a total of 57 lithotripters. The Company believes that the
fragmented nature of the lithotripsy industry, combined with operational
challenges created by increasing regulatory and business complexities,
including Stark II, the Illegal Remuneration Statute and similar state laws,
will provide it with significant lithotripsy acquisition opportunities. The
Company believes that it is viewed as the preferred acquirer of physician-
owned lithotripters because of its focus on the needs of the urological
community and its reputation for providing quality service.
PROVIDE SUPERIOR SERVICE.
The Company seeks to provide the highest level of service possible to its
customers. This includes consistently providing: (i) high quality lithotripter
facilities, properly staffed with trained personnel; (ii) convenient
scheduling for hospitals and physicians; (iii) proper billing; and (iv)
contracting with managed care entities. In addition, the Company offers
services not typically provided in the industry including physician training,
regulatory compliance, quality assurance and the Company's proprietary
outcomes database. Management believes that providing superior service will
enable the Company to maintain its existing relationships with hospitals and
urologists and attract new relationships.
MAINTAIN STATE OF THE ART EQUIPMENT.
The Company has a policy of routine maintenance and periodic upgrades to its
lithotripters, which both ensures consistent quality service and maintains its
reputation with hospitals and urologists as the leading provider of
lithotripsy services. During 1996 and 1997, the Company spent approximately $2
million on a system wide upgrade of substantially all of its 40
electromagnetic lithotripters, which improved performance and decreased
average treatment time by up to 30%. This benefited patients by shortening
treatment times and benefited hospitals, attending urologists and the Company
by effectively increasing capacity.
LEVERAGE RELATIONSHIPS WITH UROLOGISTS.
The Company currently provides services to approximately 30% of the
estimated 7,700 urologists in the United States and seeks to maintain close
relationships with the medical community through its network of local
physician advisory boards. The Company believes that it can utilize these
relationships and its management expertise to develop new opportunities
resulting from technological and other advances in affiliated urology
businesses, including new therapeutic services relating to prostate disease
and other urological disorders. As an example, in October 1997, the Company
began providing thermotherapy services for the treatment of non-cancerous
enlargement of the prostate through a mobile service operation located in
North Carolina.
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ACQUISITIONS
The Company's rapid growth has resulted primarily from acquisitions of or
investments in businesses engaged in providing lithotripsy services. During
the period from April 1, 1992 to December 31, 1997, the Company completed 12
acquisitions involving 57 lithotripter operations and developed four
operations. The Company's growth strategy has historically focused on the
acquisition of profitable and well managed lithotripsy operations. The Company
believes that the fragmented nature of the lithotripsy industry and the
changing regulatory environment, including Stark II, the Illegal Remuneration
Statute and similar state laws, will likely result in future acquisition
opportunities.
Because its operations are spread over 34 states and given the importance of
maintaining positive relationships with local urologists and hospitals, the
Company generally retains local management and related functions where no
clear economies of scale exist. However, certain functions, such as managed
care contracting, vendor relations, maintenance and supply contracting, and
accounting, have been centralized where obvious benefits have been identified.
Furthermore, the Company has implemented a regional management structure
whereby a senior manager oversees all related business functions in each of
the Company's four geographic service areas, enhancing oversight, operating
efficiencies and profitability.
LITHOTRIPSY OPERATIONS
The Company manages the operation of 57 of its 62 lithotripters and the
remaining five are operated by certain of the founding physician-investors in
these operations. All of its lithotripters are operated in connection with
hospitals or surgery centers. The Company operates its lithotripters either as
the general partner or managing member of a limited partnership or limited
liability company, or through a wholly-owned subsidiary. The Company provides
a full range of management and other non-medical support services to the
lithotripsy operations, while medical care is provided by urologists utilizing
the facilities and certain medical support services are provided by the
hospital or surgery center. Urologists are investors in 44 of the 62
operations. See "Government Regulation and Supervision."
MANAGEMENT SERVICES
In general, the Company provides turn-key management services to its
lithotripsy operations, including the following:
. routing and scheduling of mobile lithotripters;
. centralized patient scheduling;
. pre-procedure insurance verification and post procedure billing and
collection;
. arranging for the hiring, training and continuing education of
lithotripsy nurses and radiology technicians;
. negotiating contracts with hospitals, surgery centers and all types of
payors;
. monitoring regulatory, legal and legislative issues affecting operations
and arranging Certificate of Need preparation, testimony and support;
. performing satisfaction surveys with hospitals, physicians and patients;
. providing patient education materials;
. arranging for consultation services from leading lithotripsy experts to
treating physicians via a toll free telephone number;
. as necessary, providing for the training and certification of urologists
in the use of lithotripters;
. maintaining the Company's proprietary outcomes database; and
. providing quality assurance, utilization review and continuing medical
education for hospitals and physicians.
The breadth of these services greatly differentiates the Company from its
competitors and helps to strengthen relationships with urologists, hospitals
and managed care providers.
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LITHOTRIPSY FACILITIES
The Company currently outsources its equipment maintenance needs and has not
experienced significant interruptions in operations. In addition, the Company
continues to upgrade its lithotripters as technological advances are developed
and proven to enhance the quality of care and increase efficiency in
operations. The Company's recent upgrades to its electromagnetic lithotripters
allow for use of higher energy levels reducing the usual treatment time by up
to 30% which has significantly increased capacity on these machines. The
Company does not anticipate that any of its existing machines will need to be
replaced or will become obsolete in the foreseeable future.
Mobile Lithotripsy. Of the Company's 62 lithotripters, 55 are mobile units
mounted in tractor-trailers or self-contained coaches serving locations in 34
states. The typical cost of a mobile lithotripter (including the coach) can
range from $400,000 to $1,200,000. Mobile lithotripsy services are widely
accepted and are utilized by most physicians, hospitals and patients. The
increased convenience of bringing the mobile unit to the physician and patient
has greatly enhanced the use of lithotripsy over alternative invasive
treatment methods. In addition, few hospitals in the United States have the
patient volume to justify the purchase and operation of an in-house system.
Typically, a mobile unit will have a scheduled route of stops, visiting each
hospital or surgery center from one to eight times per month. Most lithotripsy
patients can delay the need for immediate treatment through the use of pain
medication and can be scheduled to have their procedure in a timely manner
without risk. In some locations, the Company has developed a flexible schedule
that allows units to move between locations more than once per day, providing
for greater flexibility to accommodate both physicians and patients.
Fixed Site Lithotripsy. The Company also operates seven fixed site
lithotripters in six states. All of the Company's fixed lithotripsy units are
located and operated in conjunction with a hospital or surgery center. Most of
these locations are in major metropolitan markets where the population can
support such an operation. Fixed site lithotripters generally cannot be
economically justified in other locations.
PROPRIETARY OUTCOMES DATABASE
The Company believes that it maintains the most comprehensive quality
outcomes database and information system in the lithotripsy services industry.
The Company has detailed information on over 120,000 procedures covering
patient demographic information and medical condition prior to treatment, the
clinical and technical parameters of the procedure and resulting outcomes.
Information is collected before, during and up to three months after the
procedure through internal data collection by doctors, nurses and technicians
and through patient questionnaires. Because consistency is a key factor in
organizing and evaluating this data, it is collected at a centralized location
which disperses results to management and affiliated urologists on a regular
basis.
This information benefits the physician and patient by giving them
comparable information that helps to establish standard treatments and improve
the quality of their care. Hospitals value the availability of clinical and
regulatory information which improves the effectiveness of their quality
assurance programs. Consequently, the Company is able to strengthen its
relationships with referring physicians and hospitals and become more
efficient in its contract negotiations with both hospitals and managed care
organizations.
PHYSICIAN RELATIONS AND MARKETING
Of the 2,300 urologists which utilized the Company's lithotripters in 1997,
approximately 1,150 have invested in 44 of the Company's 62 lithotripsy
operations. The Company markets its services to urologists by providing (i)
top quality, well-maintained facilities and equipment, (ii) well-trained
lithotripsy nurses and radiology technicians, (iii) professional management
and a full range of support services and (iv) convenient scheduling, all of
which enable the urologists to focus on the practice of medicine. The Company
believes that its reputation and management experience, as well as "word-of-
mouth" marketing from urologists currently utilizing its facilities, also play
a significant role in attracting and retaining urologists.
In all of its operations, the Company seeks to maintain strong relationships
with its referring physicians. In most locations, the Company has established
local physician advisory boards that meet periodically to discuss
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the provision and quality of services, financial performance and other factors
with management that may impact operations.
CONTRACTS FOR LITHOTRIPSY SERVICES
The Company contracts for its lithotripsy services with hospitals and
surgery centers for utilization by urologists practicing at these facilities.
The Company markets to such facilities by providing well-maintained and
conveniently scheduled equipment for the use of the facility's doctors and
patients and by providing a full range of administrative and support services
that enable the facility to provide higher quality and more efficient care.
The Company believes that its reputation and management experience, together
with input from urologists who wish to utilize the Company's facilities, also
provide significant incentives for hospitals and surgery centers to contract
with the Company.
The Company's service agreements, which generally have initial terms of one
to five years with automatic renewal provisions, provide for the three basic
types of billing arrangements described below. Because approximately 47% of
the Company's billings are directly to hospitals or surgery centers, the
Company has historically recorded a rate of collection and days sales
outstanding of receivables that is more favorable than those typically
associated with other segments of the healthcare industry. In all instances,
urologists who perform lithotripsy procedures bill separately for their
professional fees.
WHOLESALE CONTRACTS
Under a wholesale contract, the Company bills and collects from the hospital
or surgery center for lithotripsy services provided by the Company to
patients. The rates charged under these arrangements vary and may be based on
the number of procedures performed in a specific period or may be based on
different rates depending on whether the patient is covered by private
insurance or government payment plans or is a private pay patient. The
hospital or surgery center is responsible for billing and collecting from the
patient or third-party payor directly. Approximately 42% of the Company's fee
revenue comes from wholesale contracts.
RETAIL CONTRACTS
Under a retail contract, the Company bills the patient or the patient's
third-party payor a combined fee, which includes all aspects of the procedure,
excluding the treating urologist's fee. The Company then pays the hospital or
surgery center a percentage of the collected amount for its services.
Contracts of this type are advantageous to the Company because they provide it
with considerable market feedback concerning reimbursement rates, which the
Company utilizes when negotiating with hospitals, surgery centers and managed
care organizations. Approximately 53% of the Company's fee revenue comes from
retail contracts.
TRUE-UP CONTRACTS
Under a true-up contract, the Company bills and collects a negotiated fee
from the hospital or surgery center, which is then retrospectively reviewed
and adjusted based on the payments received by the hospital or surgery center
for the corresponding treatments. The hospital or surgery center is
responsible for billing and collecting from the patient or third-party payor
directly, which forms the basis for any true-up. Approximately 5% of the
Company's fee revenue comes from true-up contracts.
COMPETITION
The market to provide lithotripsy services is highly fragmented and
competitive. The Company competes with other private facilities and medical
centers that offer lithotripsy services and with hospitals, clinics and
individual medical practitioners that offer conventional medical treatment for
kidney stones. Certain of the Company's current and potential competitors have
substantially greater financial resources than the Company and may compete
with the Company for acquisitions and development of operations in markets
targeted by the Company. A decrease in the purchase price of lithotripters as
a result of the development of less expensive lithotripsy equipment could
decrease the Company's competitive advantage. Most of the Company's
lithotripsy services agreements have matured past their initial terms and are
now in annual renewal terms or are on a month-
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to-month basis. Another significant provider of lithotripsy services is also a
manufacturer of lithotripsy equipment, which may create different incentives
for such provider in pricing lithotripsy services. Moreover, while the Company
believes that lithotripsy has emerged as the superior treatment for kidney
stone disease, the Company competes with alternative kidney stone disease
treatments. See "Business--Industry Overview" and "Risk Factors--Competition."
NEW LINES OF BUSINESS
In September 1997, the Company, through its acquisition of a 75% interest in
AK, began providing manufacturing services and installation, upgrade,
refurbishment and repair of major medical equipment for mobile medical
services providers. This acquisition increases the Company's ability to ensure
access to quality mobile medical facilities, and refurbishment of its
currently owned facilities, at competitive prices. The acquisition also allows
the Company to explore the market for providing products and services for
major medical equipment manufacturers. The Company did not receive significant
revenues from AK during 1997.
In October 1997, the Company began providing thermotherapy services for the
treatment of benign prostatic hyperplasia ("BPH"). BPH is the non-cancerous
enlargement of the prostate, a condition common in men over age 60.
Thermotherapy uses microwaves to apply heat to the prostate, resulting in
relief of the symptoms of BPH without damaging surrounding tissues.
Thermotherapy relieves the symptoms of BPH without incurring the risks of
complications often associated with surgery and more invasive procedures. The
Company operates one mobile thermotherapy device servicing hospitals and
surgery centers in eastern North Carolina, and has been granted an
unrestricted license to provide thermotherapy services with a second mobile
system in southern California. The Company intends to evaluate the success of
its thermotherapy operations and may expand such operations in the future. The
Company did not receive significant revenues from this activity during 1997.
The Company also is evaluating business opportunities involving physician
practice management services. Management believes that the skills and
expertise required to manage its lithotripsy business are very similar to
those required for the management of physician practices.
GOVERNMENT REGULATION AND SUPERVISION
The Company is subject to extensive regulation by both the federal
government and the states in which the Company conducts its business. The
Company is subject to the Illegal Remuneration Statute, which imposes civil
and criminal sanctions on persons who solicit, offer, receive or pay any
remuneration, directly or indirectly, for referring, or arranging for the
referral of, a patient for treatment that is paid for in whole or in part by
Medicare, Medicaid or similar government programs. The federal government has
published regulations that provide exceptions or a "safe harbor" for certain
business transactions. Transactions that are structured within the safe
harbors are deemed not to violate the Illegal Remuneration Statute.
Transactions that do not satisfy all elements of a relevant safe harbor do not
necessarily violate the Illegal Remuneration Statute, but may be subject to
greater scrutiny by enforcement agencies. The arrangements between the Company
and the partnerships and other entities in which it owns an indirect interest
and through which the Company provides most of its lithotripsy services (and
the corresponding arrangements between such partnerships and other entities
and the treating physicians who own interests therein and who use the
lithotripsy facilities owned by such partnerships and other entities) could
potentially be questioned under the illegal remuneration prohibition and may
not fall within the protection afforded by these safe harbors. Many states
also have laws similar to the Federal Illegal Remuneration Statute. While
failure to fall within the safe harbors may subject the Company to scrutiny
under the Illegal Remuneration Statute, such failure does not constitute a
violation of the Illegal Remuneration Statute. Nevertheless, these illegal
remuneration laws, as applied to activities and relationships similar to those
of the Company, have been subjected to limited judicial and regulatory
interpretation, and the Company has not obtained or applied for any opinion of
any regulatory or judicial authority that its business operations and
affiliations are in compliance with these laws. Therefore, no assurances can
be given that the Company's activities will be found to be in compliance with
these laws if scrutinized by such authorities.
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In addition to the Illegal Remuneration Statute, Stark II imposes certain
restrictions upon referring physicians and providers of certain designated
health services under the Government Programs. Subject to certain exceptions,
Stark II provides that if a physician (or a family member of a physician) has
a financial relationship with an entity: (i) the physician may not make a
referral to the entity for the furnishing of designated health services
reimbursable under the Government Programs; and (ii) the entity may not bill
Government Programs, any individual or any third-party payor for designated
health services furnished pursuant to a prohibited referral. The prohibitions
of Stark II only apply to the treatment of Government Program patients, and
have no application to services performed for non-government program patients.
Entities and physicians committing an act in violation of Stark II will be
required to refund amounts collected in violation of the statute and also are
subject to civil money penalties and exclusion from the Government Programs.
Of the Company's lithotripsy revenues for the year ended December 31, 1997,
77% were attributable to affiliates of the Company having referring physician-
investors. Urologists are investors in 44 of the Company's 62 lithotripsy
operations, and the two Company affiliates engaged in thermotherapy services
have referring physician-investors.
Many key terms in Stark II are not adequately defined and the statute is
silent regarding its application to vendors, such as the Company Physician
Entities, contracting "under arrangements" with hospitals for the provision of
outpatient services. Since the passage of Stark II, the Company, interpreted
Stark II consistent with the informal view of the General Counsel for Health
and Human Services, and concluded that the statute did not apply to its method
of conducting business. Based upon a reasonable interpretation of Stark II, by
referring a patient to a hospital furnishing the outpatient lithotripsy or
thermotherapy services "under arrangements" with the Company Physician Entity,
a physician investor in a Company Physician Entity is not making a referral to
an entity (the hospital) in which they have an ownership interest.
On January 9, 1998, the federal government published the Proposed Stark
Regulations. By clarifying certain ambiguities and defining certain statutory
terms, the Proposed Stark Regulations and accompanying commentary apply the
physician referral prohibitions of Stark II to the Company Physician Entities'
practice of contracting "under arrangements" with hospitals for treatment and
billing of Government Program patients. Only hospitals can bill the Government
Programs for lithotripsy and thermotherapy services; thus contracting under
arrangements with hospitals was the way the Company Physician Entities
economically participated in the treatment of Government Program patients.
Absent a restructuring of traditional operations, to comply with the
government's interpretation of Stark II, the physician-investors will be
prohibited from referring Government Program patients to the hospitals
contracting with the Company Physician Entities. The Company cannot predict
when final Stark II regulations will be issued or the substance of the final
regulations, but the interpretive provisions of the Proposed Stark Regulations
may be viewed as the federal government's interim enforcement position until
final regulations are issued. Restructuring traditional operations may reduce
Company revenues and limit future growth by (i) reducing or eliminating
revenues attributable to the treatment of Government Program patients by
Company Physician Entities, (ii) reducing revenues from the treatment of non-
government patients by Company Physician Entities due to physician, hospital
and third-party payor anxiety and concern created by the Proposed Stark
Regulations, (iii) requiring the Company Physician Entities to restructure
their operations to comply with Stark II and the Proposed Stark Regulations,
(iv) restricting the acquisition or development of additional lithotripsy or
thermotherapy operations that will both treat Government Program patients and
have referring physician-investors, (v) impairing the Company's relationship
with urologists and (vi) otherwise materially adversely impacting the Company.
In addition, upon the occurrence of changes in the law that may adversely
affect operations, the Company is required to purchase the interests of
physician-investors for certain of the Company Physician Entities. These
mandatory purchase obligations require the payment by the Company of a
multiple of earnings similar to multiples used by the Company in pricing the
original acquisition of such interests. The Company estimates that, as of
December 31, 1997, the aggregate potential cost of all such mandatory
purchases would not exceed $6 million. To the extent the Company is required
to purchase such interests, such purchases might cause a default under the
terms of the Company's Senior Credit Facility, impair the Company's
relationship with urologists and otherwise have a material adverse impact on
the Company. Regulatory developments, such as Stark II, might
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also dictate that the Company purchase all the interests of its physician-
investors, regardless of any contractual requirements to do so, or
substantially alter its business and operations to remain in compliance with
applicable laws. Accordingly, there can be no assurance that the Company will
not be required to change its business practices or its investment
relationships with urologists or that the Company will not experience a
material adverse effect as a result of any challenge made by a federal or
state regulatory agency. In addition, there can be no assurance that
physician-investors who, voluntarily or otherwise, divest of their interests
in Company Physician Entities will continue to refer patients at the same rate
or at all. See "Business--Lithotripsy Operations," "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources," and "Description of Other Indebtedness."
Many states currently have laws similar to Stark II that restrict a
physician with a financial relationship with an entity from referring patients
to that entity. Often these laws contain statutory exceptions for
circumstances where the referring physician, or a member of his practice
group, treats their own patients. States also commonly require physicians to
disclose to patients their financial relationship with an entity. The Company
believes that it is in material compliance with these state laws.
Nevertheless, these state self-referral laws, as applied to activities and
relationships similar to those of the Company, have been subjected to limited
judicial and regulatory interpretation, and the Company has not obtained or
applied for any opinion of any regulatory or judicial authority that its
business operations and affiliations are in compliance with these laws.
Therefore, no assurances can be given that the Company's activities will be
found to be in compliance with these laws if scrutinized by such authorities.
Some states require approval, usually in the form of a certificate of need
("CON"), prior to the purchase of major medical equipment exceeding a
predesignated capital expenditure threshold or for the commencement of certain
clinical health services. Such approval is generally based upon the
anticipated utilization of the service and the projected need for the service
in the relevant geographical area of the state where the service is to be
provided. CON laws differ in many respects, and not every state's CON law
applies to the Company. Most of the Company's operations originated in states
which did not require a CON for lithotripsy services, and the Company has
obtained a CON in states where one is required. Some states also require
registration of lithotripters with the state agency which administers its CON
program. Such registration is not subject to any required approval, but rather
is an administrative matter imposed so that the state will be aware of all
existing clinical health services. The Company registers in those states which
require these filings.
All states in which the Company operates require registration of the
fluoroscopic x-ray tubes which are utilized to locate the kidney stones
treated with the Company's lithotripters. The registration requirements are
imposed in order to facilitate periodic inspection of the fluoroscopic tubes.
Some states have regulations that require facilities such as mobile
lithotripters to be licensed and to have appropriate emergency care resources
and qualified staff meeting the stated educational and experience criteria.
The Company's lithotripsy equipment is subject to regulation by the U.S. Food
& Drug Administration, and the motor vehicles utilized to transport the
Company's mobile lithotripsy equipment are subject to safety regulation by the
U.S. Department of Transportation and the states in which the Company conducts
its mobile lithotripsy business. The Company believes that it is in material
compliance with these regulations.
Except as provided herein, the Company believes it complies in all material
respects with the foregoing laws and regulations, and all other applicable
regulatory requirements; however, these laws are complex and have been broadly
construed by courts and enforcement agencies. Thus, there can be no assurance
that the Company will not be required to change its practices or its
relationships with treating physicians who are investors in the Company
Physician Entities, or that the Company will not experience material adverse
effects as a result of any investigations or enforcement actions by a federal
or state regulatory agency. Further, the Company acknowledges that the
Proposed Stark Regulations apply the physician referral prohibitions of Stark
II to the Company Physician Entities' practice of contracting under
arrangements with hospitals for the treatment and billing of Medicare and
Medicaid patients. As a consequence, the Company Physician Entities will have
to restructure or modify their business practices in order to comply with the
Stark II statute as interpreted by the Proposed Stark Regulations.
50
<PAGE>
A number of proposals for healthcare reform have been made in recent years,
some of which have included radical changes in the healthcare system. Health
care reform could result in material changes in the financing and regulation
of the healthcare business, and the Company is unable to predict the effect of
such changes on its future operations. It is uncertain what legislation on
healthcare reform, if any, will ultimately be implemented or whether other
changes in the administration or interpretation of governmental healthcare
programs will occur. There can be no assurance that future healthcare
legislation or other changes in the administration or interpretation of
governmental healthcare programs will not have a material adverse effect on
the results of operations of the Company.
REGULATORY BUSINESS CONSIDERATIONS
The Company is currently evaluating its alternatives in light of the
Proposed Stark Regulations. While these regulations may have a material
adverse effect on the Company, the Company believes the changing regulatory
environment may benefit the Company by creating new lithotripsy acquisition
opportunities at attractive prices and by creating opportunities for the
Company to pursue physician practice acquisitions and practice management
services.
The Proposed Stark Regulations may create acquisition opportunities with
respect to both non-affiliated physician owned operations and the interests of
physician-investors in the Company Physician Entities. Additionally, the
regulatory restrictions could lessen competition from treating physicians who
might otherwise seek to acquire their own lithotripsy facilities. However, due
to the Proposed Stark Regulations, the Company is reevaluating its historical
model for providing lithotripsy and thermotherapy services through operations
which include physician-investors and has delayed the organization of
physician partnerships that were in various stages of development.
The Proposed Stark Regulations contain certain exceptions for large
integrated physician practice groups and the Company is evaluating
opportunities to develop and expand working relationships with such groups. In
addition, the Company will continue to evaluate opportunities to provide
lithotripsy and thermotherapy services through operations that do not involve
physician-investors. If the Proposed Stark Regulations are not enacted, or are
enacted in a form which allows for the interests of referring physician-
investors, the Company will continue to develop and acquire new lithotripsy
and thermotherapy operations in partnership with urologists.
LEGAL PROCEEDINGS
From time to time, the Company may be named as a party to litigation
proceedings incidental to its business. The Company does not believe the
outcome of any such litigation is likely to have a material adverse effect on
its business, financial condition or results of operations.
PROPERTIES
The Company leases approximately 5,575 square feet of office space for its
executive offices in Austin, Texas, under a lease expiring in 1999 and
approximately 11,000 square feet of office space in Fayetteville, North
Carolina, under two leases expiring in 2001. The Company believes its
facilities are adequate for its reasonably foreseeable needs. The Company
leases approximately 24,000 square feet of manufacturing and office space for
AK under a lease expiring in 2000.
EMPLOYEES
The Company has approximately 330 employees. None of these employees are
subject to a collective bargaining agreement and the Company has experienced
no work stoppages. The Company believes that its employee relations are good.
51
<PAGE>
MANAGEMENT
The following table sets forth certain information regarding the Company's
directors and executive officers including their respective ages, as of April
29, 1998.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- -----------
<S> <C> <C>
Kenneth S. Shifrin............ 49 Chairman of the Board
Joseph Jenkins, M.D., J.D. ... 50 President, Chief Executive Officer and
Director
Michael Madler................ 39 Sr. Vice President--Operations
Dan Myers, M.D. .............. 49 Sr. Vice President--Development
Cheryl Williams............... 46 Chief Financial Officer, Vice President--
Finance and Secretary
Stan D. Johnson............... 44 Vice President
Paul R. Butrus................ 57 Director
William E. Foree, M.D. ....... 66 Director
Irwin Katz.................... 78 Director
John A. McEntire.............. 36 Director
William A. Searles............ 55 Director
Michael J. Spalding, M.D. .... 57 Director
</TABLE>
Mr. Shifrin has been Chairman of the Board and a director of the Company
since October 1989. In addition, Mr. Shifrin has served in various capacities
with APS since February 1985, and is currently Chairman of the Board and Chief
Executive Officer of APS.
Dr. Jenkins has been President and Chief Executive Officer and a director of
the Company since April 1996. From May 1990 until December 1991, Dr. Jenkins
was a Vice President of Lithotripters, Inc. Since January 1992, Dr. Jenkins
has been President of Lithotripters, Inc. Dr. Jenkins is a board certified
urologist and is a founding member, a past president and currently a director
of the American Lithotripsy Society.
Mr. Madler has been Sr. Vice President--Operations of the Company since
August 1996. From July 1993 to August 1996, Mr. Madler was Vice President--
Operations of the Company. Previously, Mr. Madler was Vice President of
Operations of American Health Services Corp., a diagnostic imaging company,
from July 1991 to June 1993. He was employed by the Company from 1985 to 1991,
most recently as its Vice President of Operations.
Dr. Myers has been Sr. Vice President--Development of the Company since
August 1996. Dr. Myers is a board certified urologist and was a Vice President
of Lithotripters, Inc. from January 1990 until it was acquired by the Company
in April 1996.
Ms. Williams has been Chief Financial Officer, Vice President--Finance and
Secretary of the Company since October 1989. Ms. Williams was Controller of
Fairchild Aircraft Corporation from August 1988 to October 1989. From 1985 to
1988, Ms. Williams served as the Chief Financial Officer of APS Systems, Inc.,
a wholly-owned subsidiary of APS.
Mr. Johnson has been a Vice President of the Company and President of Sun
Medical Technologies, Inc. ("Sun"), a wholly-owned subsidiary of the Company,
since November 1995. Mr. Johnson was the Chief Financial Officer of Sun from
1990 to 1995.
Mr. Butrus has been a director of the Company since September 1992. Mr.
Butrus is also an Executive Vice President and a director of MAIC Holdings,
Inc. ("MAIC") and its wholly-owned subsidiary, Mutual Assurance, Inc. ("Mutual
Assurance"), and has served in such positions since 1991. Mutual Assurance is
a property and casualty insurance company.
52
<PAGE>
Dr. Foree has been a director of the Company since October 1993. Dr. Foree
is a board certified urologist and has been practicing medicine since 1965.
Mr. Katz has been a director of the Company since 1986. From 1952 until his
retirement in January 1987, Mr. Katz was a partner with Katz, Sapper & Miller,
Certified Public Accountants.
Mr. McEntire has been a director of the Company since September 1996. Mr.
McEntire is currently managing partner of M2 Capital Partners, a private
equity investment firm. From August 1994 to December 1996, Mr. McEntire served
as Vice President of Strategic Planning and Corporate Development for Parker
and Parsley Petroleum, Inc., an oil and gas exploration company. Prior to
1994, Mr. McEntire spent ten years in commercial banking and corporate
finance.
Mr. Searles has been a director of the Company since October 1989. He is an
independent business consultant and from 1981 to 1989 was associated with
Bear, Stearns & Co., Inc., an investment banking firm, most recently as an
Associate Director/Limited Partner. He currently serves as a director of APS.
Dr. Spalding has been a director of the Company since October 1993. Dr.
Spalding is a board certified urologist and has been practicing medicine since
1973. Dr. Spalding was the Chairman of Tennessee Valley Lithotripters, which
was acquired by the Company in 1993.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has established an Audit Committee, a
Compensation Committee and a Nominating Committee. The Audit Committee's
functions include recommending to the Board of Directors the engagement of the
Company's independent public accountants, reviewing with such accountants the
plans for and the results and scope of their auditing engagement and certain
other matters relating to their services to the Company, including matters
relating to the independence of such accountants. The Compensation Committee
makes recommendations to the Board of Directors with respect to the
compensation of executive officers, including issuance of options under the
Option Plan. The Nominating Committee has primary responsibility for
nominating persons for election to the Board of Directors. Mr. Katz and Dr.
Foree serve on the Audit Committee, Dr. Spalding and Mr. Searles serve on the
Compensation Committee, and Mr. Katz, Mr. Butrus and Mr. Searles serve on the
Nominating Committee.
53
<PAGE>
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
Set forth below is information concerning aggregate compensation paid during
each of the Company's last three fiscal years to the Company's Chief Executive
Officer and each of the Company's other most highly compensated executive
officers who received in excess of $100,000 in salary and bonuses during any
of the last three fiscal years (collectively, the "Named Executives").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) OPTIONS(#)(2) COMPENSATION($)(3)
- --------------------------- ---- --------- ----------- ------------- ------------------
<S> <C> <C> <C> <C> <C>
Kenneth S. Shifrin........ 1997 183,336 327,709 25,000 696
Chairman of the Board 1996 115,225 178,947 100,000 696
1995 112,500 68,425 -- 696
Joseph Jenkins, M.D.(4)... 1997 325,000 90,000 25,000 4,750
President and Chief
Executive Officer 1996 243,750 -- 75,000 --
Michael Madler............ 1997 150,000 158,758 25,000 5,014
Sr. Vice President--
Operations 1996 150,000 178,947 50,000 2,268
1995 150,000 68,425 -- 37,081
Dan Myers, M.D. .......... 1997 180,000 50,000 25,000 4,750
Sr. Vice President--
Development 1996 135,000 -- 50,000 --
Cheryl Williams........... 1997 100,000 178,533 25,000 5,272
Chief Financial Officer, 1996 83,653 178,947 90,000 2,407
Vice President--Finance
and Secretary 1995 80,736 68,425 -- 228
Stan Johnson.............. 1997 165,006 -- 5,000 4,750
Vice President 1996 173,733 -- -- 5,029
</TABLE>
- -----------------
(1) Reflects bonuses paid during the year.
(2) Options to acquire common stock.
(3) Consists of life insurance premiums paid and Company contributions to
401(k) plan during the fiscal year. Also reflects moving expenses
reimbursed to Mr. Madler in the amount of $36,905.
(4) Dr. Joseph Jenkins was elected to the Board of Directors and appointed
President and Chief Executive Officer of the Company in April 1996. Under
his employment agreement with the Company, Dr. Jenkins will receive an
annual salary of not less than $325,000 and will be entitled to receive a
performance bonus and stock options at the discretion of the Company's
Board of Directors.
54
<PAGE>
OPTION GRANTS DURING 1997
The following table provides information related to options granted to the
Named Executives during 1997.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE(2) EXPIRATION ----------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ------------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Kenneth S. Shifrin..... 25,000 6% $10.50 07/01/02 72,524 160,259
Chairman of the Board
Joseph Jenkins, M.D.... 25,000 6% $10.50 07/01/02 72,524 160,259
President and Chief
Executive Officer
Michael Madler......... 25,000 6% $14.31 09/11/02 98,840 218,410
Sr. Vice President--
Operations
Dan Myers, M.D......... 25,000 6% $14.31 09/11/02 98,840 218,410
Sr. Vice President--
Development
Cheryl Williams........ 25,000 6% $14.31 09/11/02 98,840 218,410
Chief Financial
Officer,
Vice President--
Finance and
Secretary
Stan Johnson........... 5,000 1% $10.50 03/19/03 14,505 32,052
Vice President
</TABLE>
- -----------------
(1) The dollar amounts in these columns represent potential value that might
be realized upon exercise of the options immediately prior to the
expiration of their term, assuming that the market price of the Company's
common stock appreciates in value from the date of grant at the 5% and 10%
annual appreciation rates prescribed by the regulation, and therefore are
not intended to forecast possible future appreciation, if any, of the
price of the Company's common stock.
(2) The exercise price of the option was equal to the fair market value of the
common stock on the date of the grant.
55
<PAGE>
OPTION EXERCISES DURING 1997 AND OPTION VALUES AT DECEMBER 31, 1997
The following table provides information related to options exercised by the
Named Executives during 1997 and the value of options held at December 31,
1997. The Company does not have any outstanding stock appreciation rights.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT FISCAL OPTIONS/SARS AT FISCAL
ACQUIRED YEAR-END YEAR-END($)(2)
ON VALUE ------------------------------- -------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE UNEXERCISABLE
---- ----------- -------------- -------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth S. Shifrin...... -- -- 150,000 75,000 1,387,500 118,750
Joseph Jenkins, M.D..... -- -- 12,500 87,500 12,500 93,750
Stan Johnson............ 8,000 57,500 8,000 29,000 62,080 202,490
Michael Madler.......... -- -- 60,833 74,167 417,500 215,000
Dan Myers, M.D. ........ -- -- 12,500 62,500 12,500 12,500
Cheryl Williams......... -- -- 85,333 76,667 694,788 92,150
</TABLE>
- -----------------
(1) Calculated by subtracting the per share exercise price of the option from
the closing price for the Company's common stock on the date of exercise
and multiplying the difference by the number of shares of common stock
purchased upon the exercise of the option.
(2) Calculated by subtracting the per share exercise price of the option from
the closing price for the Company's common stock on December 31, 1997
($13.75) and multiplying the difference by the number of shares of common
stock underlying the option.
COMPENSATION OF DIRECTORS
The Company pays Dr. Foree, Mr. Katz, Mr. McEntire, Mr. Searles and Dr.
Spalding a monthly fee of $1,250 for serving as directors. The Company's
directors are also eligible to receive stock options under the Company's
Option Plan. The Company's directors receive reimbursement of all ordinary and
necessary expenses incurred in attending any meeting of the Board of Directors
or any committee of the Board of Directors.
OTHER COMPENSATION AND RELATED ARRANGEMENTS
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Joseph Jenkins,
M.D., President and Chief Executive Officer of the Company and Stan D.
Johnson, a Vice President of the Company. Dr. Jenkins is currently paid
$325,000 per year and Mr. Johnson is currently paid $165,000 per year under
such agreements. Each of these agreements provides for the payment of basic
salary amounts, performance bonuses and other customary benefits. Dr. Jenkins'
employment agreement provides for his employment through April 30, 1998 and
Mr. Johnson's employment agreement provides for his employment through
September 30, 1998. The Company currently anticipates that Dr. Jenkins will
remain with the Company in the same capacity and at the same compensation
level after the expiration of his employment agreement. Each of the agreements
entitles such individual to receive severance payments if the Company
terminates such individual's employment without cause. Mr. Johnson would be
entitled to receive an amount equal to the lesser of $165,000 or the amount of
salary otherwise payable to Mr. Johnson through September 30, 1998. Dr.
Jenkins and Mr. Johnson may terminate their employment agreements with the
Company with or without cause by providing sixty days prior written notice to
the Board of Directors.
56
<PAGE>
NONCOMPETITION AGREEMENTS
The Company has entered into noncompetition agreements with Dr. Jenkins, Mr.
Johnson, Dr. Foree, Dr. Spalding, and Dr. Myers. While the terms of such
agreements vary, they generally provide that each such person, during the
period specified in his agreement, will not own, manage or control any
business that competes with the Company and will not advise a customer or
supplier of the Company to cancel or curtail its dealings with, or influence
any employee of the Company to terminate his or her employment with, the
Company.
INDEMNITY AGREEMENTS
The Company has entered into indemnity agreements with a number of persons
who either are or have been officers, directors or key employees of the
Company, including Mr. Shifrin, who is Chairman of the Board and a director of
the Company; Dr. Jenkins, who is President and Chief Executive Officer and a
director of the Company; Mr. Butrus, Dr. Foree, Mr. Katz, Mr. McEntire, Mr.
Searles, and Dr. Spalding, who are directors of the Company; and Mr. Johnson,
Ms. Williams, Mr. Madler, and Dr. Myers, who are officers of the Company. The
agreements generally provide that, to the extent permitted by law, the Company
must indemnify each such person for judgments, expenses, fines, penalties and
amounts paid in settlement of claims that result from the fact that such
person was an officer, director or employee of the Company. In addition, the
Company's and certain of its subsidiaries' certificates of incorporation
provide for certain limitations on director liability.
OPTION PLAN
The Company's Option Plan provides for the issuance of incentive and non-
qualified stock options to purchase up to 2,500,000 shares of common stock.
Non-qualified stock options may be granted to employees (including officers
and directors) of the Company or its affiliates or to persons performing
services for the Company or its affiliates. Incentive stock options may only
be granted to employees of the Company. The Company has granted options to
purchase 2,372,500 shares of common stock under the Option Plan, of which
options covering 992,000 shares of common stock have been exercised, and
options covering 493,365 shares of common stock were vested (but had not been
exercised) as of April 27, 1998.
57
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the common stock as of April 29, 1998, by (i) each person known
by the Company to own beneficially more than 5% of the Company's common stock,
(ii) each of the Company's directors, (iii) each current director and
executive officer of the Company, and (iv) all current directors and executive
officers of the Company as a group. Unless otherwise indicated, the Company
believes that each person or entity named below has sole voting and investment
power with respect to all shares shown as beneficially owned by such person or
entity, subject to community property laws where applicable and the
information set forth in the footnotes to the table below.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
----------------------
NUMBER OF
NAME SHARES PERCENT
- ---- ------------ ---------
<S> <C> <C>
American Physicians Service Group, Inc. ............... 3,064,503 15.9%
1301 Capital of Texas Highway
Austin, Texas 78746
Paul R. Butrus(1)...................................... 182,675 *
William E. Foree, M.D.(1).............................. 225,760 1.2%
Joseph Jenkins, M.D.(1)................................ 82,273 *
Stan Johnson(1)........................................ 1,000 *
Irwin Katz(1).......................................... 42,600 *
Michael Madler(1)...................................... 72,666 *
John McEntire(1)....................................... 18,333 *
Dan Myers, M.D.(1)..................................... 72,841 *
William A. Searles(1)(2)............................... 20,933 *
Kenneth S. Shifrin(1)(2)............................... 272,400 1.4%
Michael J. Spalding, M.D.(1)........................... 68,998 *
Cheryl Williams(1)..................................... 111,235 *
All directors and executive officers as a group (12
persons).............................................. 1,171,714 5.9%
</TABLE>
- -----------------
* less than one percent
(1) Includes the following number of shares subject to options that are
presently exercisable or exercisable within 60 days after April 29, 1998:
Mr. Butrus, 37,500; Dr. Foree, 25,000; Dr. Jenkins, 25,000; Mr. Johnson,
1,000; Mr. Katz, 37,500; Mr. Madler, 69,166; Mr. McEntire, 8,333; Dr.
Myers, 18,750; Mr. Searles, 20,833; Mr. Shifrin, 162,500; Dr. Spalding,
20,833; and Ms. Williams, 93,666.
(2) Mr. Searles and Mr. Shifrin are each directors of APS and, together with
the other officers and directors of APS, may share in the voting and
investment power with respect to the shares of common stock of the Company
owned by APS. Each of such persons disclaims the beneficial ownership of
any such shares.
APS, the Company's largest stockholder, is a management and financial
services firm which, through its subsidiaries, provides medical malpractice
insurance services for doctors and investment services to institutions and
individuals. APS is headquartered in Austin, Texas and maintains offices in
Dallas and Houston.
Mr. Shifrin and Mr. Searles are each directors of both the Company and APS
and, together with the other officers and directors of APS, may share in the
voting and investment power with respect to the shares of common stock of the
Company owned by APS. Each of such persons disclaims the beneficial ownership
of any such shares. Mr. Shifrin has been Chairman of the Board, Chief
Executive Officer and a director of APS since March 1990, March 1989 and
February 1987, respectively. Mr. Searles has been a director of APS since July
1989.
The Company occupies approximately 5,575 square feet of office space owned
by APS and also shares certain personnel with APS. The Company pays APS rent
and personnel cost reimbursements of approximately $7,500 per month. As of
April 29, 1998, the Company owned 50,000 shares of common stock of APS.
On February 17, 1998, the Company filed a registration statement on Form S-3
to register, on a continuous basis, all shares of the Company's stock held by
APS. APS has indicated that it has no present intention to sell such shares
and that such registration was requested primarily to facilitate the pledge of
such shares by APS to secure a bank line of credit.
58
<PAGE>
DESCRIPTION OF OTHER INDEBTEDNESS
On April 20, 1998, the Company entered into a syndicated Senior Credit
Facility consisting of a $100.0 million, five-year revolving line of credit.
Advances under the Senior Credit Facility will be used to fund future
acquisitions and to finance capital expenditures and working capital needs of
the Company. All amounts owing under the Senior Credit Facility will be
guaranteed by the Company's wholly-owned subsidiaries and will be secured by
security interests in substantially all of the assets of the Company and its
wholly-owned subsidiaries.
Amounts outstanding under the Senior Credit Facility will bear interest at
LIBOR plus a specified margin ranging from one percent to two percent; or at
the Company's option at a rate based on a specified margin of up to 0.5% plus
the higher of (i) a specified prime rate or (ii) 0.5% over the federal funds
rate. Interest will be payable quarterly. The Company will pay a commitment
fee on the unused portion of the Senior Credit Facility which will be payable
quarterly in arrears. The amount of the commitment fee will range from 0.25%
to 0.375%.
The obligations of the lenders under the Senior Credit Facility are subject
to the satisfaction of certain conditions precedent, including, without
limitation, repayment of certain outstanding indebtedness of the Company and
the absence of a material adverse change in the business of the Company. The
Company and each of its existing and future subsidiaries are subject to
certain affirmative and negative covenants contained in the Senior Credit
Facility, including without limitation covenants that restrict, subject to
specified exceptions: (i) the incurrence of additional indebtedness and other
obligations and the granting of additional liens; (ii) mergers, acquisitions,
investments and acquisitions and dispositions of assets; (iii) the incurrence
of capitalized lease obligations; (iv) dividends and stock redemptions; (v)
prepayments or repurchases of other indebtedness and amendments to certain
agreements governing indebtedness, including the Indenture and the Notes; (vi)
engaging in transactions with affiliates and formation of subsidiaries; (vii)
the use of proceeds; (viii) changes of lines of business; (ix) investments;
and (x) other customary covenants. There are also covenants relating to
compliance with ERISA and environmental and other laws, acquisitions, payment
of taxes, maintenance of corporate existence and rights, maintenance of
insurance and financial reporting. Certain of these covenants are more
restrictive than those set forth in the Indenture. In addition, the Senior
Credit Facility requires the Company to maintain compliance with certain
specified financial covenants, including covenants relating to minimum
consolidated net worth, minimum debt service coverage ratio, debt to total
capitalization ratio, maximum debt to EBITDA ratio and maximum senior debt to
EBITDA ratio.
The Senior Credit Facility includes customary events of default. The
occurrence of any of such events of default could result in acceleration of
the Company's obligations under the Senior Credit Facility and foreclosure on
the collateral securing such obligations, which could have a material adverse
effect on holders of the Notes.
59
<PAGE>
DESCRIPTION OF EXCHANGE NOTES
GENERAL
The Outstanding Notes were, and the Exchange Notes will be, issued pursuant
to the Indenture among the Company, the Subsidiary Guarantors and the Trustee.
The terms of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (the
"Trust Indenture Act"). The Notes are subject to all such terms, and holders
of Notes are referred to the Indenture and the Trust Indenture Act for a
statement thereof. The following summary of the material provisions of the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture, including the definitions therein of certain terms
used below. Copies of the Indenture and Registration Rights Agreement are
available as set forth below under "--Additional Information." The definitions
of certain terms used in the following summary are set forth below under "--
Certain Definitions." For purposes of this summary, the term "Company" refers
only to Prime Medical Services, Inc. and not to any of its Subsidiaries.
The Outstanding Notes are, and the Exchange Notes will be, general unsecured
obligations of the Company, subordinated in right of payment to all Senior
Debt of the Company, including Senior Debt under the Senior Credit Facility,
and senior in rank or pari passu in right of payment with all existing and
future subordinated indebtedness of the Company. As of December 31, 1997, on a
pro forma basis after giving effect to the Initial Offering and the
application of the net proceeds therefrom and the establishment of the Senior
Credit Facility, the aggregate principal amount of Senior Debt of the Company
and the Subsidiary Guarantors would have been approximately $0.2 million and
the Company would have had $100.0 million available to be borrowed under the
Senior Credit Facility. The terms of the Indenture limit the ability of the
Company and its subsidiaries to incur additional Indebtedness.
As of the date of the Indenture, all of the Company's Subsidiaries are
Restricted Subsidiaries. However, under certain circumstances, the Company
will be able to designate current or future Subsidiaries as Unrestricted
Subsidiaries. Unrestricted Subsidiaries are not subject to many of the
restrictive covenants set forth in the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $100.0 million and
will mature on April 1, 2008. Interest on the Notes will accrue at the rate of
8 3/4% per annum and will be payable semi-annually in arrears on April 1 and
October 1, commencing on October 1, 1998, to holders of record on the
immediately preceding March 15 and September 15. Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of original issuance. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
Principal, premium, if any, and interest and Liquidated Damages on the Notes
will be payable at the office or agency of the Company maintained for such
purpose within the City and State of New York or, at the option of the
Company, payment of interest and Liquidated Damages may be made by check
mailed to the holders of the Notes at their respective addresses set forth in
the register of holders of Notes; provided that all payments of principal,
premium, interest and Liquidated Damages with respect to Notes the holders of
which have given wire transfer instructions to the Company will be required to
be made by wire transfer of immediately available funds to the accounts
specified by the holders thereof. Until otherwise designated by the Company,
the Company's office or agency in New York will be the office of the Trustee
maintained for such purpose. The Outstanding Notes were, and the Exchange
Notes will be, issued in denominations of $1,000 and integral multiples
thereof.
SUBORDINATION
The payment of principal, premium, if any, and interest and Liquidated
Damages, if any, on the Notes is subordinated in right of payment, as set
forth in the Indenture, to the prior payment in full of all Senior Debt,
whether outstanding on the date of the Indenture or thereafter incurred.
60
<PAGE>
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities, the holders of Senior Debt will be entitled to receive
payment in full of all Obligations due in respect of such Senior Debt
(including interest after the commencement of any such proceeding at the rate
specified in the applicable Senior Debt) before the holders of Notes will be
entitled to receive any payment with respect to the Notes, and until all
Obligations with respect to Senior Debt are paid in full, any distribution to
which the holders of Notes would be entitled shall be made to the holders of
Senior Debt (except that, in each case, holders of Notes may receive and
retain Permitted Junior Securities and payments made from the trust described
under the caption "--Legal Defeasance and Covenant Defeasance").
The Company also may not make any payment upon or in respect of the Notes
(except in Permitted Junior Securities or from the trust described under the
caption "--Legal Defeasance and Covenant Defeasance") if (i) a default in the
payment of the principal of, premium, if any, or interest on Designated Senior
Debt occurs and is continuing beyond any applicable period of grace or (ii)
any other default occurs and is continuing with respect to Designated Senior
Debt that permits holders of the Designated Senior Debt as to which such
default relates to accelerate its maturity and the Trustee receives a notice
of such default (a "Payment Blockage Notice") from the Company or the holders
of any Designated Senior Debt. Payments on the Notes may and shall be resumed
(a) in the case of a payment default, upon the date on which such default is
cured or waived and (b) in case of a nonpayment default, the earlier of the
date on which such nonpayment default is cured or waived or 179 days after the
date on which the applicable Payment Blockage Notice is received, unless the
maturity of any Designated Senior Debt has been accelerated. No new period of
payment blockage may be commenced unless and until (i) 360 days have elapsed
since the effectiveness of the immediately prior Payment Blockage Notice and
(ii) all scheduled payments of principal, premium, if any, interest and
Liquidated Damages, if any, on the Notes that have come due have been paid in
full in cash. No nonpayment default that existed or was continuing on the date
of delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice.
The Indenture further requires that the Company promptly notify holders of
Senior Debt if payment of the Notes is accelerated because of an Event of
Default.
As a result of the subordination provisions described above, in the event of
a liquidation or insolvency, Holders of Notes may recover less ratably than
creditors of the Company who are holders of Senior Debt. As of December 31,
1997, on a pro forma basis after giving effect to the Initial Offering and the
application of the proceeds therefrom and the establishment of a new $100.0
million line of credit, the aggregate principal amount of Senior Debt of the
Company and the Subsidiary Guarantors would have been approximately $0.2
million and the Company would have had $100.0 million available to be borrowed
under the Senior Credit Facility. The Indenture limits, subject to certain
financial tests, the amount of additional Indebtedness, including Senior Debt,
that the Company and its Subsidiaries can incur. See " --Certain Covenants --
Incurrence of Indebtedness and Issuance of Preferred Stock."
SUBSIDIARY GUARANTEES
The Company's payment obligations under the Notes are jointly and severally
guaranteed on a senior subordinated basis (the "Subsidiary Guarantees") by the
Subsidiary Guarantors. The Company has caused each Wholly Owned Restricted
Subsidiary (other than not-for-profit subsidiaries) to become a Subsidiary
Guarantor. The Subsidiary Guarantees are subordinated in right of payment to
all existing and future Senior Debt of the Subsidiary Guarantors, including
all obligations of the Subsidiary Guarantors under the Senior Credit Facility
and rank senior or pari passu in right of payment with any subordinated
indebtedness of the Subsidiary Guarantors. The obligation of each Subsidiary
Guarantor under its Subsidiary Guarantee is limited so as not to constitute a
fraudulent conveyance under applicable law. See "Risk Factors--Fraudulent
Conveyance."
The Indenture provides that no Subsidiary Guarantor may consolidate with or
merge with or into (whether or not such Subsidiary Guarantor is the surviving
Person), another corporation, Person or entity whether or not affiliated with
such Subsidiary Guarantor unless (i) subject to the provisions of the
following paragraph, the
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Person formed by or surviving any such consolidation or merger (if other than
such Subsidiary Guarantor) assumes all the obligations of such Subsidiary
Guarantor pursuant to a supplemental indenture in form and substance
reasonably satisfactory to the Trustee, under the Notes and the Indenture and
(ii) immediately after giving effect to such transaction, no Default or Event
of Default exists.
The Indenture provides that in the event of a sale or other disposition of
all of the assets of any Subsidiary Guarantor, by way of merger, consolidation
or otherwise, or a sale or other disposition of all of the capital stock of
any Subsidiary Guarantor, then such Subsidiary Guarantor (in the event of a
sale or other disposition, by way of such a merger, consolidation or
otherwise, of all of the capital stock of such Subsidiary Guarantor) or the
corporation acquiring the property (in the event of a sale or other
disposition of all of the assets of such Subsidiary Guarantor) will be
released and relieved of any obligations under its Subsidiary Guarantee;
provided that the Net Proceeds of such sale or other disposition are applied
in accordance with the applicable provisions of the Indenture. See "--
Repurchase at the Option of Holders--Asset Sales."
OPTIONAL REDEMPTION
The Notes are not redeemable at the Company's option prior to April 1, 2003.
Thereafter, the Notes are subject to redemption at any time at the option of
the Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated
Damages thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on April 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003........................................................... 104.375%
2004........................................................... 102.917%
2005........................................................... 101.458%
2006 and thereafter............................................ 100.000%
</TABLE>
Notwithstanding the foregoing, at any time on or before, April 1, 2001, the
Company may redeem up to 35% of the aggregate principal amount of Notes
originally issued under the Indenture at a redemption price of 108.75% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the redemption date, with the net cash proceeds to
the Company of one or more public offerings of common stock; provided that at
least $65.0 million in aggregate principal amount of Notes remain outstanding
immediately after the occurrence of such redemption (excluding Notes held by
the Company or any of its Subsidiaries); and provided, further, that such
redemption shall occur within 90 days of the date of the closing of such
public offering.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
the Notes are listed, or, if the Notes are not so listed, on a pro rata basis,
by lot or by such method as the Trustee shall deem fair and appropriate;
provided that no Notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than
60 days before the redemption date to each holder of Notes to be redeemed at
its registered address. Notices of redemption may not be conditional. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the holder thereof upon cancellation of
the original Note. Notes called for redemption become due on the date fixed
for redemption. On and after the redemption date, interest ceases to accrue on
Notes or portions of them called for redemption.
MANDATORY REDEMPTION
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
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REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, each holder of Notes will have
the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of
purchase (the "Change of Control Payment"). Within 30 days following any
Change of Control, the Company will mail a notice to each holder describing
the transaction or transactions that constitute the Change of Control and
offering to repurchase Notes on the date specified in such notice, which date
shall be no earlier than 30 days and no later than 60 days from the date such
notice is mailed (the "Change of Control Payment Date"), pursuant to the
procedures required by the Indenture and described in such notice. The Company
will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of Notes in
connection with a Change of Control and, to the extent inconsistent with the
provisions of the Indenture, such laws and regulations shall govern.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Company. The Paying Agent will promptly mail to each holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Indenture
provides that, prior to complying with the provisions of this covenant, but in
any event within 90 days following a Change of Control, the Company will
either repay all outstanding Senior Debt or obtain the requisite consents, if
any, under all agreements governing outstanding Senior Debt to permit the
repurchase of Notes required by this covenant. The Company will publicly
announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the holders of the Notes to require that the
Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
The Senior Credit Facility provides that certain change of control events
with respect to the Company would constitute a default thereunder. Any future
credit agreements or other agreements relating to Senior Debt to which the
Company becomes a party may contain similar restrictions and provisions. In
the event a Change of Control occurs at a time when the Company is prohibited
under the Senior Credit Facility from repurchasing Notes, the Company could
seek the consent of its lenders under the Senior Credit Facility to the
repurchase of Notes or could attempt to refinance the borrowings that contain
such prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will remain prohibited from repurchasing Notes. In
such case, the Company's failure to repurchase tendered Notes would constitute
an Event of Default under the Indenture which would, in turn, constitute a
default under the Senior Credit Facility. In such circumstances, the
subordination provisions in the Indenture would likely restrict payments to
holders of Notes.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the Indenture applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
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The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of the phrase under
applicable law. Accordingly, the ability of a holder of Notes to require the
Company to repurchase such Notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets of the Company
and its Subsidiaries taken as a whole to another Person or group may be
uncertain.
Asset Sales
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary
is in the form of cash and Cash Equivalents; provided that the amount of (x)
any liabilities (as shown on the Company's or such Restricted Subsidiary's
most recent balance sheet), of the Company or any Restricted Subsidiary (other
than contingent liabilities and liabilities that are by their terms
subordinated to the Notes or any guarantee thereof) that are assumed by the
transferee of any such assets pursuant to a customary novation agreement that
releases the Company or such Restricted Subsidiary from further liability and
(y) any securities, notes or other obligations received by the Company or any
such Restricted Subsidiary from such transferee that are contemporaneously
(subject to ordinary settlement periods) converted by the Company or such
Restricted Subsidiary into cash or Cash Equivalents (to the extent of the cash
and Cash Equivalents received), shall be deemed to be cash for purposes of
this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to repay Senior
Debt of the Company or a Subsidiary Guarantor, (b) to the acquisition of a
majority of the assets of, or a majority of the Voting Stock of, another
Permitted Business, the making of a capital expenditure or the acquisition of
other long-term assets that are used or useful in a Permitted Business or (c)
to the acquisition by the Company or a Restricted Subsidiary of Equity
Interests in any Restricted Subsidiary of the Company, which Equity Interests
are owned by a Person other than the Company or an Affiliate of the Company.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by the Indenture. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
first sentence of this paragraph will be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million,
the Company will be required to make an offer to all holders of Notes and all
holders of other Indebtedness containing provisions similar to those set forth
in the Indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes and such other Indebtedness that may be purchased
out of the Excess Proceeds, at an offer price in cash in an amount equal to
100% of the principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase, in accordance
with the procedures set forth in the Indenture and such other Indebtedness. To
the extent that any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by the Indenture. If the aggregate principal amount of Notes and
such other Indebtedness tendered into such Asset Sale Offer surrendered by
holders thereof exceeds the amount of Excess Proceeds, the Trustee shall
select the Notes and such other Indebtedness to be purchased on a pro rata
basis. Upon completion of such offer to purchase, the amount of Excess
Proceeds shall be reset at zero.
CERTAIN COVENANTS
Restricted Payments
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other similar payment or distribution on account of the
Company's or any of its Restricted Subsidiaries' Equity Interests (including,
without limitation,
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any payment in connection with any merger or consolidation involving the
Company or any of its Restricted Subsidiaries) or to the direct or indirect
holders of the Company's or any of its Restricted Subsidiaries' Equity
Interests in their capacity as such (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company or
dividends or other distributions payable to the Company or a Restricted
Subsidiary of the Company); (ii) purchase, redeem or otherwise acquire or
retire for value (including, without limitation, in connection with any merger
or consolidation involving the Company) any Equity Interests of the Company
(other than any such Equity Interests owned by the Company or any Wholly Owned
Restricted Subsidiary of the Company); (iii) make any payment on or with
respect to, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is subordinated to the Notes, except a payment of
interest or principal at Stated Maturity; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i)
through (iv) above being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(a)no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b)the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of the covenant described below under the caption "--
Incurrence of Indebtedness and Issuance of Preferred Stock"; and
(c)such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of the Indenture (excluding Restricted
Payments permitted by clauses (ii), (iii) and (iv) of the next
succeeding paragraph), is less than the sum, without duplication, of
(i) 50% of the Consolidated Net Income of the Company for the period
(taken as one accounting period) from the beginning of the first fiscal
quarter commencing after the date of the Indenture to the end of the
Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, less 100% of such deficit), plus (ii) 100% of the aggregate
net cash proceeds received by the Company since the date of the
Indenture as a contribution to its common equity capital or from the
issue or sale of Equity Interests of the Company (other than
Disqualified Stock) or from the issue or sale of Disqualified Stock or
debt securities of the Company that have been converted into such
Equity Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of the Company), plus
(iii) to the extent that any Restricted Investment that was made after
the date of the Indenture is sold for cash and Cash Equivalents or
otherwise liquidated or repaid for cash and Cash Equivalents, the
lesser of (A) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if any) and (B)
the initial amount of such Restricted Investment, plus (iv) to the
extent that any Unrestricted Subsidiary is redesignated as a Restricted
Subsidiary after the Issue Date not in violation of the Indenture the
lesser of (A) the fair market value of the Investment of the Company
and its Restricted Subsidiaries in such Subsidiary as of the date of
such redesignation or (B) such fair market value as of the date on
which such Subsidiary was originally designated as an Unrestricted
Subsidiary, plus (v) $15.0 million.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the
Company in exchange for, or out of the net cash proceeds of (x) the
substantially concurrent sale (other than to a Restricted Subsidiary of the
Company) of, other Equity Interests of the Company (other than any
Disqualified Stock) or (y) a substantially concurrent contribution of cash to
the common equity of the Company; provided that the amount of any such net
cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause (c)
(ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase
or other acquisition of subordinated Indebtedness with the net cash proceeds
from an incurrence of Permitted Refinancing Indebtedness; (iv) the
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payment of any dividend by a Restricted Subsidiary of the Company to the
holders of its common Equity Interests on a pro rata basis; and (v) the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company held by any member of the Company's (or any of
its Restricted Subsidiaries') management (or any estate, heir or legatee of
any such member); provided that the aggregate price paid for all such
purchased, redeemed, acquired or retired Equity Interests shall not exceed
$250,000 in any twelve-month period and no Default or Event of Default shall
have occurred and be continuing immediately after such transaction.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash)
in the Subsidiary so designated will be deemed to be Restricted Payments or,
at the election of the Company Permitted Investments (if in compliance with
such definition) at the time of such designation and will reduce the amount
available for Restricted Payments under the first paragraph of this covenant
or Permitted Investments as applicable. All such outstanding Investments will
be deemed to constitute Investments in an amount equal to the fair market
value of such Investments at the time of such designation. Such designation
will only be permitted if such Restricted Payment or Permitted Investments, as
applicable, would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined
by the Board of Directors whose resolution with respect thereto shall be
delivered to the Trustee, such determination to be based upon an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing if such fair market value exceeds $5.0 million. Not later
than the date of making any Restricted Payment, the Company shall deliver to
the Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
the covenant "Restricted Payments" were computed, together with a copy of any
fairness opinion or appraisal required by the Indenture.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt), and that the Company will not issue any Disqualified Stock and
will not permit any of its Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness (including
Acquired Debt) or issue shares of Disqualified Stock and the Subsidiary
Guarantors may incur Indebtedness or issue preferred stock if the Fixed Charge
Coverage Ratio for the Company's most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding
the date on which such additional Indebtedness is incurred or such
Disqualified Stock or preferred stock is issued would have been at least 2.5
to 1, determined on a pro forma basis (including a pro forma application of
the net proceeds therefrom), as if the additional Indebtedness had been
incurred, or the Disqualified Stock or preferred stock had been issued, as the
case may be, at the beginning of such four-quarter period.
The foregoing provisions will not apply to the incurrence of any of the
following items of Indebtedness (collectively, "Permitted Debt"):
(i)the incurrence by the Company or the Subsidiary Guarantors of
Indebtedness (including letters of credit, with letters of credit being
deemed to have a principal amount equal to the maximum potential liability
of the Company and its Restricted Subsidiaries thereunder) under the Senior
Credit Facility; provided that the aggregate principal amount of all
Indebtedness (including letters of credit) outstanding under the Senior
Credit Facility after giving effect to such incurrence does not exceed an
amount equal to
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$100.0 million less the aggregate amount of all Net Proceeds of Asset Sales
applied to permanently repay any such Indebtedness pursuant to the covenant
described above under the caption "Repurchase at the Option of Holders--
Asset Sales;"
(ii)the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(iii)the incurrence by the Company of Indebtedness represented by the Notes
and the incurrence by the Subsidiary Guarantors of Indebtedness represented
by the Subsidiary Guarantees;
(iv)the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or purchase money obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of the
Company or such Subsidiary, in an aggregate principal amount not to exceed
$5.0 million at any time outstanding;
(v)the incurrence by the Company or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that is either the Existing Indebtedness or was
permitted by the Indenture to be incurred under the first paragraph hereof
or clauses (ii), (iii), (iv), (v) or (ix) of this paragraph;
(vi)the incurrence by the Company or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Restricted Subsidiaries; provided, however, that (i) if the Company is the
obligor on such Indebtedness, such Indebtedness is expressly subordinated
to the prior payment in full in cash of all Obligations with respect to the
Notes and (ii)(A) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other than the
Company or a Restricted Subsidiary thereof and (B) any sale or other
transfer of any such Indebtedness to a Person that is not either the
Company or a Restricted Subsidiary thereof shall be deemed, in each case,
to constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be, that was not permitted by this
clause (vi);
(vii)the incurrence by the Company or a Subsidiary Guarantor of Hedging
Obligations that are incurred for the purpose of fixing or hedging interest
rate risk with respect to any floating rate Indebtedness that is permitted
by the terms of the Indenture to be outstanding;
(viii)the guarantee by the Company or any of the Subsidiary Guarantors of
Indebtedness of the Company or a Subsidiary Guarantor that was permitted to
be incurred by another provision of this covenant;
(ix)the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness in connection with the acquisition by the Company or a
Restricted Subsidiary of assets or a new Restricted Subsidiary; provided
that such Indebtedness was incurred by the prior owner of such assets or
such Restricted Subsidiary prior to such acquisition by the Company or a
Restricted Subsidiary and was not incurred in connection with, or in
contemplation of, such acquisition by the Company or a Restricted
Subsidiary; and provided further that the principal amount of such
Indebtedness does not exceed $5.0 million at any time outstanding;
(x)the incurrence by the Company or any of its Restricted Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (x), not to exceed $10.0
million; and
(xi)the incurrence by the Company's Unrestricted Subsidiaries of Non-
Recourse Debt, provided, however, that if any such Indebtedness ceases to
be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company that was not permitted by this clause (xi).
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For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories
of Permitted Debt described in clauses (i) through (x) above or is entitled to
be incurred pursuant to the first paragraph of this covenant, the Company
shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this covenant. Accrual of interest, accretion or
amortization of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms, and
the payment of dividends on Disqualified Stock in the form of additional
shares of the same class of Disqualified Stock will not be deemed to be an
incurrence of Indebtedness or an issuance of Disqualified Stock for purposes
of this covenant; provided, in each such case, that the amount thereof is
included in Fixed Charges of the Company as accrued.
Liens
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or suffer
to exist any Lien securing Indebtedness or trade payables on any asset now
owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except Permitted Liens, unless
all payments due under the Indenture and the Notes are secured on an equal and
ratable basis with the Indebtedness so secured until such time as such is no
longer secured by a Lien; provided that if such Indebtedness is by its terms
expressly subordinated to the Notes or any Subsidiary Guarantee, the Lien
securing such Indebtedness shall be subordinate and junior to the Lien
securing the Notes and the Subsidiary Guarantees with the same relative
priority as such subordinate or junior Indebtedness shall have with respect to
the Notes and the Subsidiary Guarantees.
Sale and Leaseback Transactions
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, enter into any sale and leaseback transaction;
provided that the Company and its Restricted Subsidiaries may enter into a
sale and leaseback transaction if (i) the Company or such Restricted
Subsidiary, as the case may be, could have (a) incurred Indebtedness in an
amount equal to the Attributable Debt relating to such sale and leaseback
transaction pursuant to the covenant described above under the caption "--
Incurrence of Additional Indebtedness and Issuance of Preferred Stock" and (b)
incurred a Lien to secure such Indebtedness pursuant to the covenant described
above under the caption "--Liens," (ii) the gross cash proceeds of such sale
and leaseback transaction are at least equal to the fair market value (which,
if such proceeds exceed $1.0 million, shall be determined in good faith by the
Board of Directors and set forth in an Officers' Certificate delivered to the
Trustee) of the property that is the subject of such sale and leaseback
transaction and (iii) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Company applies the proceeds of such
transaction in compliance with, the covenant described above under the caption
"--Asset Sales."
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any
other distributions to the Company or any of its Restricted Subsidiaries (1)
on its Capital Stock or (2) with respect to any other interest or
participation in, or measured by, its profits, or (b) pay any indebtedness
owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or
advances to the Company or any of its Restricted Subsidiaries or (iii)
transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries. However, the foregoing restrictions will not apply to
encumbrances or restrictions existing under or by reason of (a) Existing
Indebtedness as in effect on the date of the Indenture, (b) the Indenture and
the Notes, (c) applicable law, (d) any instrument governing Indebtedness or
Capital Stock of a Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to the
extent such Indebtedness was incurred in connection with or in contemplation
of such acquisition), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than the Person,
or the property or assets of the Person, so acquired, provided that, in the
case of Indebtedness, such Indebtedness was permitted by
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the terms of the Indenture to be incurred, (e) customary non-assignment
provisions in leases and licenses entered into in the ordinary course of
business and consistent with past practices, (f) purchase money obligations
for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iii) above on the property so
acquired, (g) any agreement for the sale of a Restricted Subsidiary or an
asset that restricts distributions by that Restricted Subsidiary or transfers
of such asset pending its sale, (h) Permitted Refinancing Indebtedness,
provided that the restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive, taken as a whole,
than those contained in the agreements governing the Indebtedness being
refinanced (whether or not such prior agreements remain outstanding),
(i) secured Indebtedness otherwise permitted to be incurred pursuant to the
provisions of the covenant described above under the caption "--Liens" that
limit the right of the debtor to dispose of the assets securing such
Indebtedness, (j) customary provisions in partnership agreements, limited
liability company organizational governance documents, joint venture
agreements and other similar agreements entered into in the ordinary course of
business, (k) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business and
(l) the Senior Credit Facility as in effect from time to time, provided that
the restrictions contained therein shall be no more restrictive, taken as a
whole, than those contained in the Senior Credit Facility as in effect on the
Issue Date.
Merger, Consolidation, or Sale of Assets
The Indenture provides that the Company may not consolidate or merge with or
into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially
all of its properties or assets in one or more related transactions, to
another corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the entity or
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Registration Rights Agreement, the Notes
and the Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction no
Default or Event of Default exists; and (iv) except in the case of a merger of
the Company with or into a Wholly Owned Restricted Subsidiary of the Company,
the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made (A) will have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of the Company immediately
preceding the transaction and (B) will, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at
the beginning of the applicable four-quarter period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first paragraph of the covenant described above
under the caption "--Incurrence of Indebtedness and Issuance of Preferred
Stock."
Transactions with Affiliates
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by the Company or
such Restricted Subsidiary with an unrelated Person and (ii) the Company
delivers to the Trustee (a) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate consideration in
excess of $1.0 million, a resolution of the Board of Directors set forth in an
Officers' Certificate
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certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point
of view issued by an accounting, appraisal or investment banking firm of
national standing. Notwithstanding the foregoing, the following items shall
not be deemed to be Affiliate Transactions: (i) any employment agreement
entered into by the Company or any of its Restricted Subsidiaries in the
ordinary course of business and consistent with the past practice of the
Company or such Restricted Subsidiary; (ii) transactions between or among the
Company and/or its Restricted Subsidiaries; (iii) payment of reasonable
directors fees to Persons who are not otherwise Affiliates of the Company; and
(iv) Restricted Payments (other than Restricted Investments) that are
permitted by the provisions of the Indenture described above under the caption
"--Restricted Payments," and Permitted Investments described in clause (g) of
the definition thereof.
Limitation on Issuances and Sales of Equity Interests in Wholly Owned
Subsidiaries
The Indenture provides that the Company (i) will not, and will not permit
any Wholly Owned Restricted Subsidiary of the Company to, transfer, convey,
sell, lease or otherwise dispose of any Equity Interests in any Wholly Owned
Restricted Subsidiary of the Company to any Person (other than the Company or
a Wholly Owned Restricted Subsidiary of the Company), unless (a) such
transfer, conveyance, sale, lease or other disposition is of all the Equity
Interests in such Wholly Owned Restricted Subsidiary and (b) the cash Net
Proceeds from such transfer, conveyance, sale, lease or other disposition are
applied in accordance with the covenant described above under the caption "--
Asset Sales," and (ii) will not permit any Wholly Owned Restricted Subsidiary
of the Company to issue any of its Equity Interests (other than, if necessary,
shares of its Capital Stock constituting directors' qualifying shares) to any
Person other than to the Company or a Wholly Owned Restricted Subsidiary of
the Company. For purposes of this covenant, the grant of any Lien permitted to
be incurred under the Indenture (and any foreclosure thereon conducted in a
commercially reasonable manner) shall be deemed not to be a transfer,
conveyance, sale, lease or other disposition.
Business Activities
The Company will not, and will not permit any Restricted Subsidiary to,
engage in any business other than Permitted Businesses, except to such extent
as would not be material to the Company and its Restricted Subsidiaries taken
as a whole.
Limitation on Other Senior Subordinated Debt
The Indenture provides that neither the Company nor a Subsidiary Guarantor
will incur, or permit to remain outstanding, any Indebtedness (including
Acquired Debt and Permitted Debt) other than the Notes or the Subsidiary
Guarantee of such Subsidiary Guarantor, as the case may be, that is
subordinated in right of payment to any Indebtedness, unless such Indebtedness
is either (i) pari passu with the Notes or the Subsidiary Guarantee of such
Subsidiary Guarantor, as the case may be, pursuant to subordination provisions
(including related definitions) substantially similar to those contained in
the Indenture (which provides for the subordination of such Indebtedness to
substantially the same extent as the Notes and the Subsidiary Guarantees are
subordinated to Senior Debt), or (ii) subordinated in right of payment to the
Notes and the Subsidiary Guarantees, as the case may be.
Payments for Consent
The Indenture provides that neither the Company nor any of its Subsidiaries
will, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any holder of any Notes for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of the Indenture or the Notes unless such consideration is offered
to be paid or is paid to all holders of the Notes that consent, waive or agree
to amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
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Reports
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the
Company will furnish to the holders of Notes (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if the Company were required to file
such Forms, including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed
with the Commission on Form 8-K if the Company were required to file such
reports, in each case within the time periods specified in the Commission's
rules and regulations. In addition, following the consummation of this
Exchange Offer, whether or not required by the rules and regulations of the
Commission, the Company will file a copy of all such information and reports
with the Commission for public availability within the time periods specified
in the Commission's rules and regulations (unless the Commission will not
accept such a filing) and make such information available to securities
analysts and prospective investors upon request. In addition, the Company and
the Subsidiary Guarantors have agreed that, for so long as any Notes remain
outstanding, they will furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Guarantees of Certain Indebtedness
The Indenture provides that (i) the Company will not permit any of its
Restricted Subsidiaries that is not a Subsidiary Guarantor to incur, Guarantee
or secure through the granting of Liens the payment of any Indebtedness of the
Company or any other Restricted Subsidiary and (ii) the Company will not and
will not permit any of its Restricted Subsidiaries to pledge any intercompany
notes representing obligations of any of its Restricted Subsidiaries, to
secure the payment of any Indebtedness of the Company or any other Restricted
Subsidiary, in each case unless such Subsidiary, the Company and the Trustee
execute and deliver a supplemental indenture evidencing such Subsidiary's
Subsidiary Guarantee (providing for the unconditional Guarantee by such
Restricted Subsidiary, on a senior subordinated basis, of the Notes).
Notwithstanding the foregoing, any Subsidiary Guarantee issued pursuant to
this covenant by any Restricted Subsidiary may provide by its terms that it
shall be automatically and unconditionally released upon the release or
discharge of the incurrence, Guarantee or grant of Lien which required the
issuance of such Subsidiary Guarantee under this covenant (other than a
release or discharge by or as a result of payment under such Guarantee);
provided that such release shall be deemed to be an incurrence by such
Restricted Subsidiary of all its outstanding Indebtedness and Liens and such
release shall only be permitted if before and after giving pro forma effect to
such release (i) all such Indebtedness and such Liens would be permitted to be
incurred by such Restricted Subsidiary under the Indenture as of the time of
such release and (ii) no Default or Event of Default shall have occurred and
is continuing.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes (whether or not prohibited by
the subordination provisions of the Indenture); (ii) default in payment when
due of the principal of or premium, if any, on the Notes (whether or not
prohibited by the subordination provisions of the Indenture); (iii) failure by
the Company or any of its Subsidiaries to comply with the provisions described
under the captions "--Change of Control," "--Asset Sales," "--Restricted
Payments" or "--Incurrence of Indebtedness and Issuance of Preferred Stock;"
(iv) failure by the Company or any of its Restricted Subsidiaries for 60 days
after notice to comply with any of its other agreements in the Indenture or
the Notes; (v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Restricted Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of the Indenture, which default (a) is
caused by a failure to pay principal of or
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premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $5.0 million or more; (vi) failure
by the Company or any of its Restricted Subsidiaries to pay final judgments
aggregating in excess of $5.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; (vii) except as permitted by the
Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding
to be unenforceable or invalid or shall cease for any reason to be in full
force and effect or any Subsidiary Guarantor, or any Person acting on behalf
of any Subsidiary Guarantor, shall deny or disaffirm its obligations under its
Subsidiary Guarantee; and (viii) certain events of bankruptcy or insolvency
with respect to the Company or any of its Restricted Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the holders
of at least 25% in principal amount of the then outstanding Notes may declare
all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Restricted Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Restricted Subsidiary, all
outstanding Notes will become due and payable without further action or
notice. Holders of the Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. Subject to certain limitations, holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest.
In the event of a declaration of acceleration because an Event of Default
set forth in clause (v) above has occurred and is continuing, such declaration
of acceleration shall be automatically rescinded and annulled if the event of
default triggering such Event of Default pursuant to clause (v) shall be
remedied or cured or waived by the holders of the relevant Indebtedness within
30 days after such event of default; provided that no judgment or decree for
the payment of the money due on the Notes has been obtained by the Trustee as
provided in the Indenture and (a) the annulment of the acceleration of such
Notes would not conflict with any judgment or decree of a court of competent
jurisdiction and (b) all existing Events of Default, except nonpayment of
principal or interest on the Notes that became due solely because of the
acceleration of the Notes, have been cured or waived.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have
had to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to
April 1, 2003 by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to April 1, 2003 then the premium
specified in the Indenture shall also become immediately due and payable to
the extent permitted by law upon the acceleration of the Notes.
The holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the holders of all of
the Notes waive an existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
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NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or any Subsidiary Guarantor, as such, shall have any liability for any
obligations of the Company and the Subsidiary Guarantors under the Notes, the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations and the obligations of the Subsidiary Guarantors discharged with
respect to the outstanding Notes ("Legal Defeasance") except for (i) the
rights of holders of outstanding Notes to receive payments in respect of the
principal of, premium, if any, and interest and Liquidated Damages on such
Notes when such payments are due from the trust referred to below, (ii) the
Company's obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and
the maintenance of an office or agency for payment and money for security
payments held in trust, (iii) the rights, powers, trusts, duties and
immunities of the Trustee, and the Company's obligations in connection
therewith and (iv) the Legal Defeasance provisions of the Indenture. In
addition, the Company may, at its option and at any time, elect to have the
obligations of the Company and the Subsidiary Guarantors released with respect
to certain covenants that are described in the Indenture ("Covenant
Defeasance") and thereafter any omission to comply with such obligations shall
not constitute a Default or Event of Default with respect to the Notes. In the
event Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, rehabilitation and insolvency events) described
under "Events of Default" will no longer constitute an Event of Default with
respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance: (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient,
in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest and
Liquidated Damages on the outstanding Notes on the stated maturity or on the
applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date; (ii) in the case of Legal Defeasance, the Company shall have delivered
to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that (A) the Company has received from,
or there has been published by, the Internal Revenue Service a ruling or (B)
since the date of the Indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based thereon
such opinion of counsel shall confirm that, the holders of the outstanding
Notes will not recognize income, gain or loss for federal income tax purposes
as a result of such Legal Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred; (iii) in the case of
Covenant Defeasance, the Company shall have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that the holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Covenant Defeasance had not occurred; (iv) no Default or Event of
Default shall have occurred and be continuing on the date of such deposit
(other than a Default or Event of Default resulting from the borrowing of
funds to be applied to such deposit) or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period
ending on the 91st day after the date of deposit; (v) such Legal Defeasance or
Covenant Defeasance will not result in a breach or violation of, or constitute
a default under any material agreement or instrument (other than the
Indenture) to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound; (vi) the Company must
have delivered to the Trustee an opinion of counsel to the effect that after
the 91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally; (vii) the
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Company must deliver to the Trustee an Officers' Certificate stating that the
deposit was not made by the Company with the intent of preferring the holders
of Notes over the other creditors of the Company with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or others; and
(viii) the Company must deliver to the Trustee an Officers' Certificate and an
opinion of counsel, each stating that all conditions precedent provided for
relating to the Legal Defeasance or the Covenant Defeasance have been complied
with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note
selected for redemption. Also, the Company is not required to transfer or
exchange any Note for a period of 15 days before a selection of Notes to be
redeemed.
The registered holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the holders of at
least a majority in principal amount of the Notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the holders of a majority in principal amount of the then
outstanding Notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver; (ii) reduce the principal of or change the fixed
maturity of any Note or alter the provisions with respect to the redemption of
the Notes (other than provisions relating to the covenants described above
under the caption "--Repurchase at the Option of Holders"); (iii) reduce the
rate of or change the time for payment of interest on any Note; (iv) waive a
Default or Event of Default in the payment of principal of or premium, if any,
or interest on the Notes (except a rescission of acceleration of the Notes by
the holders of at least a majority in aggregate principal amount of the Notes
and a waiver of the payment default that resulted from such acceleration); (v)
make any Note payable in money other than that stated in the Notes; (vi) make
any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of holders of Notes to receive payments of principal of
or premium, if any, or interest on the Notes; (vii) waive a redemption payment
with respect to any Note (other than a payment required by one of the
covenants described above under the caption "--Repurchase at the Option of
Holders"); (viii) release any Subsidiary Guarantor from any of its obligations
under its Subsidiary Guarantee or the Indenture, except in accordance with the
terms of the Indenture; or (ix) make any change in the foregoing amendment and
waiver provisions. In addition, any amendment to the provisions of Article 10
of the Indenture (which relate to subordination) will require the consent of
the holders of at least 75% in aggregate principal amount of the Notes then
outstanding if such amendment would adversely affect the rights of holders of
Notes.
Notwithstanding the foregoing, without the consent of any holder of Notes,
the Company, the Subsidiary Guarantors and the Trustee may amend or supplement
the Indenture or the Notes to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's or any Subsidiary
Guarantor's obligations to holders of Notes in the case of a merger or
consolidation or sale of all or substantially all of the Company's assets, to
make any change that would provide any additional rights or benefits to the
holders of Notes or that does not adversely affect the legal rights under the
Indenture of any such holder, or to comply with requirements of the Commission
in order to effect or maintain the qualification of the Indenture under the
Trust Indenture Act.
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CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage
in other transactions; however, if it acquires any conflicting interest it
must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.
The holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the
Indenture at the request of any holder of Notes, unless such holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture and
Registration Rights Agreement without charge by writing to Prime Medical
Services, Inc., 1301 Capital of Texas Highway, Suite C-300, Austin, Texas,
78746-6550, Attention: Chief Financial Officer.
BOOK-ENTRY, DELIVERY AND FORM
The Exchange Notes for which QIBs initially exchange their Outstanding Notes
will be represented by a Global Exchange Note. The Global Exchange Note will
be deposited on the Exchange Date with DTC and registered in the name of Cede
& Co., as nominee of DTC. Except as set forth below, the Global Notes may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the Global Notes may
not be exchanged for Notes in certificated form except in the limited
circumstances described below. See "-- Exchange of Book-Entry Notes for
Certificated Notes." Except in the limited circumstances described below,
owners of beneficial interests in the Global Notes will not be entitled to
receive physical delivery of Certificated Notes (as defined below).
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic book-
entry changes in accounts of its Participants. The Participants include
securities brokers and dealers (including the Initial Purchasers), banks,
trust companies, clearing corporations and certain other organizations. Access
to DTC's system is also available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may
beneficially own securities held by or on behalf of DTC only through the
Participants or the Indirect Participants. The ownership interests in, and
transfers of ownership interests in, each security held by or on behalf of DTC
are recorded on the records of the Participants and Indirect Participants.
The Company expects that, pursuant to procedures established by the DTC, (i)
upon deposit of the Global Exchange Note, the DTC will credit on its internal
system the principal amounts of the Exchange Notes of the individual
beneficial interests represented by such Global Exchange Note to the
respective accounts of exchanging holders who have account with the DTC and
(ii) ownership of such interest in the Global Exchange Notes will be shown on,
and the transfer of ownership thereof will be effected only through, records
maintained by the DTC (with respect to the interests of the DTC's
Participants), the DTC's Participants and the DTC's Indirect Participants.
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EXCEPT AS DESCRIBED BELOW, OWNERS OF INTEREST IN THE GLOBAL NOTES WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
"HOLDERS" THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal of, and premium, if any, Liquidated
Damages, if any, and interest on a Global Note registered in the name of DTC
or its nominee will be payable to DTC in its capacity as the registered Holder
under the Indenture. Under the terms of the Indenture, the Company and the
Trustee will treat the persons in whose names the Notes, including the Global
Notes, are registered as the owners thereof for the purpose of receiving such
payments and for any and all other purposes whatsoever. Consequently, neither
the Company, the Trustee nor any agent of the Company or the Trustee has or
will have any responsibility or liability for (i) any aspect of DTC's records
or any Participant's or Indirect Participant's records relating to or payments
made on account of beneficial ownership interest in the Global Notes, or for
maintaining, supervising or reviewing any of DTC's records or any
Participant's or Indirect Participant's records relating to the beneficial
ownership interests in the Global Notes or (ii) any other matter relating to
the actions and practices of DTC or any of its Participants or Indirect
Participants. DTC has advised the Company that its current practice, upon
receipt of any payment in respect of securities such as the Notes (including
principal and interest), is to credit the accounts of the relevant
Participants with the payment on the payment date, in amounts proportionate to
their respective holdings in the principal amount of beneficial interest in
the relevant security as shown on the records of DTC unless DTC has reason to
believe it will not receive payment on such payment date. Payments by the
Participants and the Indirect Participants to the beneficial owners of Notes
will be governed by standing instructions and customary practices and will be
the responsibility of the Participants or the Indirect Participants and will
not be the responsibility of DTC, the Trustee or the Company. Neither the
Company nor the Trustee will be liable for any delay by DTC or any of its
Participants in identifying the beneficial owners of the Notes, and the
Company and the Trustee may conclusively rely on and will be protected in
relying on instructions from DTC or its nominee for all purposes.
EXCHANGE OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for definitive Notes in registered
certificated form ("Certificated Notes") if (i) DTC (x) notifies the Company
that it is unwilling or unable to continue as depositary for the Global Notes
and the Company thereupon fails to appoint a successor depositary or (y) has
ceased to be a clearing agency registered under the Exchange Act, (ii) the
Company, at its option, notifies the Trustee in writing that it elects to
cause the issuance of the Certificated Notes or (iii) there shall have
occurred and be continuing a Default or Event of Default with respect to the
Notes. In addition, beneficial interests in a Global Note may be exchanged for
Certificated Notes upon request but only upon prior written notice given to
the Trustee by or on behalf of DTC in accordance with the Indenture. In all
cases, Certificated Notes delivered in exchange for any Global Note or
beneficial interests therein will be registered in the names, and issued in
any approved denominations, requested by or on behalf of the depositary (in
accordance with its customary procedures) and will bear any applicable
restrictive legend, unless the Company determines otherwise in compliance with
applicable law.
EXCHANGE OF CERTIFICATED NOTES FOR BOOK-ENTRY NOTES
Notes issued in certificated form may not be exchanged for beneficial
interests in any Global Note unless the transferor first delivers to the
Trustee a written certificate (in the form provided in the Indenture) to the
effect that such transfer will comply with the appropriate transfer
restrictions applicable to such Notes.
SAME DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Notes represented by
the Global Notes (including principal, premium, if any, interest and
Liquidated Damages, if any) be made by wire transfer of immediately
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available funds to the accounts specified by the Global Note Holder in New
York, New York or as otherwise specified by the Global Note Holder. With
respect to Notes in certificated form, the Company will make all payments of
principal, premium, if any, interest and Liquidated Damages, if any, by wire
transfer of immediately available funds to the accounts specified by the
Holders thereof in New York, New York or as otherwise specified by such
Holders or, if no such account is specified, by mailing a check to each such
Holder's registered address. The Notes represented by the Global Notes are
expected to be eligible to trade in the PORTAL market and to trade in the
Depositary's Same-Day Funds Settlement System, and any permitted secondary
market trading activity in such Notes will, therefore, be required by the
Depositary to be settled in immediately available funds. The Company expects
that secondary trading in any certificated Notes will also be settled in
immediately available funds.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of inventory and dispositions of Cash Equivalents,
in each case, in the ordinary course of business (provided that the sale,
lease, conveyance or other disposition of all or substantially all of the
assets of the Company and its Restricted Subsidiaries taken as a whole will be
governed by the provisions of the Indenture described above under the caption
"--Change of Control" and/or the provisions described above under the caption
"--Merger, Consolidation or Sale of Assets" and not by the provisions of the
Asset Sale covenant), and (ii) the issue by any Restricted Subsidiaries of the
Company of any Equity Interests of such Restricted Subsidiary and the sale by
the Company or any of its Restricted Subsidiaries of Equity Interest of any of
the Company's Subsidiaries, in the case of either clause (i) or (ii), whether
in a single transaction or a series of related transactions (a) that have a
fair market value in excess of $1.0 million or (b) for net proceeds in excess
of $1.0 million. Notwithstanding the foregoing, the following items shall not
be deemed to be Asset Sales: (i) a transfer of assets by the Company to a
Restricted Subsidiary or by a Restricted Subsidiary to the Company or to
another Restricted Subsidiary, (ii) an issuance of Equity Interests by a
Restricted Subsidiary to the Company or to another Restricted Subsidiary,
(iii) a Restricted Payment that is permitted by the covenant described above
under the caption "Certain Covenants--Restricted Payments" and (iv) the grant
of any Lien permitted to be incurred under the Indenture (and any foreclosure
thereon conducted in a commercially reasonable manner).
"Attributable Debt" in respect of a sale and leaseback transaction means, at
the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
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"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof) having maturities of not
more than six months from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of six months or less
from the date of acquisition, demand deposits, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any lender party to the Senior Credit Facility or with any domestic
commercial bank having capital and surplus in excess of $500 million and a
Thompson Bank Watch Rating of "B" or better, or foreign branches thereof,
having capital and surplus in excess of $500.0 million or any commercial bank
of any other country that is a member of the Organization for Economic
Cooperation and Development ("OECD") and has total assets in excess of $500.0
million and has one of the two highest ratings available from Moody's
Investors Service, Inc. or Standard & Poor's Ratings Group, (iv) repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clauses (ii) and (iii) above entered into with any
financial institution meeting the qualifications specified in clause (iii)
above, (v) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Ratings Group and in each case
maturing within six months after the date of acquisition and (vi) money market
funds the assets of which constitute Cash Equivalents of the kinds described
in clauses (i)--(v) of this definition.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all
or substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act); (ii) the adoption of a plan relating to the
liquidation or dissolution of the Company; (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above) becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire,
whether such right is currently exercisable or is exercisable only upon the
occurrence of a subsequent condition), directly or indirectly, of more than
50% of the Voting Stock of the Company (measured by voting power rather than
number of shares); (iv) the first day on which a majority of the members of
the Board of Directors of the Company are not Continuing Directors; or (iv)
the Company consolidates with, or merges with or into, any Person, or any
Person consolidates with, or merges with or into, the Company, in any such
event pursuant to a transaction in which any of the outstanding Voting Stock
of the Company is converted into or exchanged for cash, securities or other
property, other than any such transaction where the Voting Stock of the
Company outstanding immediately prior to such transaction is converted into or
exchanged for Voting Stock (other than Disqualified Stock) of the surviving or
transferee Person constituting a majority of the outstanding shares of such
Voting Stock of such surviving or transferee Person (immediately after giving
effect to such issuance).
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with
an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was included in computing such
Consolidated Net
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Income, plus (iii) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and whether
or not capitalized (including, without limitation, amortization or write-off
of debt issuance costs and original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations), to the extent that any such expense was deducted in computing
such Consolidated Net Income, plus (iv) depreciation, amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) and other non-cash
expenses (excluding any such depreciation, amortization and other non-cash
charges attributable to minority interests and any other non-cash expense to
the extent that it represents an accrual of or reserve for cash expenses in
any future period or amortization of a prepaid cash expense that was paid in a
prior period) of such Person and its Restricted Subsidiaries for such period
to the extent that such depreciation, amortization and other non-cash expenses
were deducted in computing such Consolidated Net Income, minus (v) non-cash
items increasing such Consolidated Net Income for such period (excluding any
items which represent the reversal of any accrual of, or cash reserves for,
anticipated cash charges in any prior period), in each case, on a consolidated
basis and determined in accordance with GAAP. Notwithstanding the foregoing,
the provision for taxes on the income or profits of, and the depreciation and
amortization and other non-cash expenses of, a Restricted Subsidiary of the
referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in the same proportion) that
the Net Income of such Restricted Subsidiary was included in calculating the
Consolidated Net Income of such Person and only if a corresponding amount
would be permitted at the date of determination to be dividended to the
Company by such Restricted Subsidiary without prior governmental approval
(that has not been obtained), and without direct or indirect restriction
pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to that Restricted Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Restricted Subsidiary
thereof, (ii) the Net Income of any Restricted Subsidiary shall be excluded to
the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Restricted Subsidiary or
the holders of its Equity Interests, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the
date of such acquisition shall be excluded and (iv) the cumulative effect of a
change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date
with respect to any series of preferred stock (other than Disqualified Stock)
that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (x) all
write-ups (other than write-ups resulting from foreign currency translations
and write-ups of tangible assets of a going concern business made within 12
months after the acquisition of such business) subsequent to the date of the
Indenture in the book value of any asset owned by such Person or a
consolidated Subsidiary of such Person, (y) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except,
in each case, Permitted Investments), and (z) all unamortized debt discount
and expense and unamortized deferred charges as of such date, all of the
foregoing determined in accordance with GAAP.
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"Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Debt to Cash Flow Ratio" means, with respect to any Person as of any date
of determination (the "Calculation Date") the ratio of (a) the consolidated
Indebtedness of such Person and its Restricted Subsidiaries as of the
Calculation Date to (b) the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for the most recent four full fiscal quarters ending
immediately prior to the Calculation Date for which internal financial
statements are available determined on a pro forma basis after giving effect
to all financing transactions and acquisitions or dispositions of assets made
by such Person and its Restricted Subsidiaries from the beginning of such
four-quarter period through and including the Calculation Date as if such
transactions had occurred at the beginning of such quarter. In addition, for
purposes of making the computation referred to above, (i) acquisitions that
have been made by such Person or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the reference period or subsequent to such reference
period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the reference period and Consolidated Cash Flow
for such reference period shall be calculated without giving effect to clause
(iii) of the proviso set forth in the definition of Consolidated Net Income,
and (ii) the Consolidated Cash Flow attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed
of prior to the Calculation Date, shall be excluded.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Designated Senior Debt" means (i) any Obligations outstanding under the
Senior Credit Facility and (ii) any other Senior Debt permitted under the
Indenture the aggregate principal amount of which is $10.0 million or more and
that has been designated by the Company as "Designated Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of
any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the
right to require the Company to repurchase such Capital Stock upon the
occurrence of a Change of Control or an Asset Sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with the covenant
described above under the caption "--Certain Covenants--Restricted Payments."
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Senior Credit Facility) in
existence on the Issue Date, including without limitation obligations to make
earn-out or other contingent payments arising under agreements in existence on
the Issue Date, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication (and determined in each case an accordance with GAAP), of
(i) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued (including, without
limitation, amortization or write-off of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and
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charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations) and
(ii) the consolidated interest of such Person and its Restricted Subsidiaries
that was capitalized during such period, and (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one
of its Restricted Subsidiaries (whether or not such Guarantee or Lien is
called upon) and (iv) the product of (a) all dividend payments, whether or not
in cash, on any series of preferred stock of such Person or any of its
Restricted Subsidiaries, other than dividend payments on Equity Interests
payable solely in Equity Interests of the Company (other than Disqualified
Stock) or to the Company or a Restricted Subsidiary of the Company, times (b)
a fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person
and its Restricted Subsidiaries for such period. In the event that the
referent Person or any of its Restricted Subsidiaries incurs, assumes,
Guarantees or repays or redeems any Indebtedness (other than revolving credit
borrowings) or issues or redeems preferred stock subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the date on which the event for which the calculation
of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the
Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to
such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that
have been made by the Company or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to
have occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated without
giving effect to clause (iii) of the proviso set forth in the definition of
Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded,
and (iii) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be obligations of
the referent Person or any of its Restricted Subsidiaries following the
Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced
by bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the
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extent any of the foregoing (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others
secured by a Lien on any asset of such Person (whether or not such
Indebtedness is assumed by such Person) (provided that in the case of any such
Lien, if the obligations so secured have not been assumed by such Person or
are not otherwise such Person's legal liability, such obligations shall be
deemed to be in an amount equal to the fair market value of such properties or
assets (which, if such value is in excess of $1.0 million, shall be determined
in good faith by the Board of Directors of such Person, which determination
shall be evidenced by a Board Resolution)) and, to the extent not otherwise
included, the Guarantee by such Person of any Indebtedness of any other Person
(to the extent of such Guarantee). The amount of any Indebtedness outstanding
as of any date shall be (i) the accreted value thereof, in the case of any
Indebtedness issued with original issue discount, and (ii) the principal
amount thereof, together with any interest thereon that is more than 45 days
past due, in the case of any other Indebtedness. Indebtedness shall not
include open payables owed by the Company to any Subsidiary arising in the
ordinary course of business solely from the collection by the Company of
amounts due to such Subsidiary.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers, directors and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or
would be classified as investments on a balance sheet prepared in accordance
with GAAP. If the Company or any Restricted Subsidiary of the Company sells or
otherwise disposes of any Equity Interests of any direct or indirect
Restricted Subsidiary of the Company such that, after giving effect to any
such sale or disposition, such Person is no longer a Restricted Subsidiary of
the Company, the Company shall be deemed to have made an Investment on the
date of any such sale or disposition equal to the fair market value of the
Equity Interests of such Restricted Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of the covenant described
above under the caption "--Certain Covenants--Restricted Payments."
"Issue Date" means the closing date for the sale and original issuance of
the Notes under the Indenture.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but
not loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any
of its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain
(but not loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of
any non-cash consideration received in any Asset Sale), net of (without
duplication) the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available
tax credits or deductions and any tax sharing arrangements), amounts required
to be applied to the repayment of Indebtedness (other than debt under the
Senior Credit Facility) secured by a Lien on the asset or assets that were the
subject of such Asset Sale, any reserve for
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adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP, all distributions and other payments required to be made
pursuant to customary partnership agreements, limited liability company
organizational documents, joint venture agreements or similar agreements
entered into in the ordinary course of business to minority interest holders
in Restricted Subsidiaries as a result of such Asset Sale, and appropriate
amounts to be provided by the seller as a reserve, in accordance with GAAP,
against any liabilities associated with the assets disposed of in such Asset
Sale and retained by the Company or any Restricted Subsidiary after such Asset
Sale.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity; and (iii) as to which the lenders have been
notified in writing that they will not have any recourse to the stock or
assets of the Company or any of its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Business" means the business conducted by the Company and its
Restricted Subsidiaries on the Issue Date and businesses reasonably related
thereto.
"Permitted Investments" means (a) any Investment in the Company or in a
Restricted Subsidiary of the Company; (b) any Investment in Cash Equivalents;
(c) any Investment by the Company or any Restricted Subsidiary of the Company
in a Person, if as a result of such Investment (i) such Person becomes a
Restricted Subsidiary of the Company or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary of the Company; (d) any Investment made as a result of
the receipt of non-cash consideration from an Asset Sale that was made
pursuant to and in compliance with the covenant described above under the
caption "--Repurchase at the Option of Holders--Asset Sales"; (e) any
acquisition of Equity Interests, assets or Investments in a Person solely in
exchange for the issuance of Equity Interests (other than Disqualified Stock)
of the Company; (f) any acquisition by the Company or a Restricted Subsidiary
of outstanding Equity Interests in any Restricted Subsidiary; (g) working
capital advances on fair and reasonable terms to the Company (in the good
faith judgment of senior management of the Company) to Unrestricted
Subsidiaries in the ordinary course of business on a basis consistent with
past practice, provided that such advances are not outstanding for more than
ninety days; (h) stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to the Company or
any of its Restricted Subsidiaries or in satisfaction of judgments or pursuant
to any plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of any debtor, (i) accounts receivable created or acquired, and
prepaid expenses arising, in the ordinary course of business; (j) the
endorsements of negotiable instruments for collection or deposit in the
ordinary course of business; (k) the incurrence, assumption or creation of
Hedging Obligations entered into in compliance with the Indenture in the
ordinary course of business; and (l) other Investments in Persons (other than
Restricted Subsidiaries) engaged primarily in lithotripsy operations, which
Investments have an aggregate fair market value (measured on the date each
such Investment was made and without giving effect to subsequent changes in
value), when taken together with all other Investments made pursuant to this
clause (l) that are at the time outstanding (it being understood that an
Investment shall be deemed not to be outstanding for purposes of this clause
(l) if such Person subsequently becomes a Restricted Subsidiary), not to
exceed $50.0 million if both before and after giving pro forma effect to any
such Investment (i) no Default or Event of Default shall have occurred and is
continuing, (ii) the Company's Fixed Charge Coverage Ratio for the Company's
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date of such proposed
Investment would have been at least 3.5 to 1 and (iii) the Company's Debt to
Cash Flow Ratio for the Company's most
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recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date of such proposed
Investment would have been no greater than 3.5 to 1.
"Permitted Junior Securities" means Equity Interests in the Company or a
Subsidiary Guarantor or debt securities that are subordinated to all Senior
Debt (and any debt securities issued in exchange for Senior Debt) to
substantially the same extent as, or to a greater extent than, the Notes, or
such Subsidiary Guarantor's Subsidiary Guarantee, as appropriate, are
subordinated to Senior Debt pursuant to the Indenture.
"Permitted Liens" means (i) Liens on assets of the Company or any of the
Subsidiary Guarantors securing Senior Debt under the Senior Credit Facility
that were permitted by the terms of the Indenture to be incurred; (ii) Liens
in favor of the Company or a Subsidiary Guarantor; (iii) Liens on property of
a Person existing at the time such Person is merged into or consolidated with
the Company or any Subsidiary of the Company or becomes a Subsidiary of the
Company; provided that such Liens were in existence prior to the contemplation
of such transaction and do not extend to any assets other than those of such
Person; (iv) Liens on property existing at the time of acquisition thereof by
the Company or any Subsidiary of the Company, provided that such Liens were in
existence prior to the contemplation of such acquisition; (v) Landlord's Liens
or Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business; (vi) Liens to secure Indebtedness (including
Capital Lease Obligations) permitted by clauses (iv) or (x) of the second
paragraph of the covenant entitled "Incurrence of Indebtedness and Issuance of
Preferred Stock" covering only the assets acquired with such Indebtedness;
(vii) Liens existing on the date of the Indenture; (viii) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (ix) Liens incurred in the ordinary course of business of
the Company or any Subsidiary of the Company with respect to obligations that
do not exceed $5.0 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of
advances or credit (other than trade credit in the ordinary course of
business) and (b) do not in the aggregate materially detract from the value of
the property or materially impair the use thereof in the operation of business
by the Company or such Subsidiary; (x) Liens on assets of Unrestricted
Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries; (xi)
Liens on assets of the Company securing Senior Debt of the Company that was
permitted to be incurred by the terms of the Indenture and Liens on assets of
a Subsidiary Guarantor securing Senior Debt of such Subsidiary Guarantor that
was permitted to be incurred by the terms of the Indenture; (xii) Liens
securing Permitted Refinancing Indebtedness which is incurred to refinance any
Indebtedness which has been secured by a Lien permitted under the Indenture
and which has been incurred in accordance with the provisions of the
Indenture, provided, however, that such Liens (A) are not materially less
favorable to the Holders and are not materially more favorable to the
lienholders with respect to such Liens than the Liens in respect of the
Indebtedness being refinanced and (B) do not extend to or cover any property
or assets of the Company or any of its Restricted Subsidiaries not securing
the Indebtedness so refinanced (other than improvements to such property or
assets); (xiii) Liens arising under the Indenture in favor of the Trustee for
its own benefit and similar Liens in favor of other trustees arising under
instruments governing Indebtedness permitted to be incurred under the
Indenture; (xiv) judgment Liens not giving rise to an Event of Default so long
as such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have
finally terminated or other period within which such proceedings may be
initiated shall not have expired; (xv) Liens resulting from the deposit of
funds or government securities in trust for the purpose of discharging or
defeasing Indebtedness of the Company and its Restricted Subsidiaries so long
as such deposit of funds or government securities and such discharging or
defeasing of Indebtedness are permitted under the "Restricted Payments"
covenant; (xvi) setoff, chargeback and other rights of depository and
collecting banks and other regulated financial institutions with respect to
money or instruments of the Company or its Restricted Subsidiaries on deposit
with or in the possession of such institutions; (xvii) pledges or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other social security legislation;
and (xviii) Liens securing Hedging Obligations otherwise permitted under the
Indenture.
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"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund, in whole or in part, other Indebtedness of the Company or any of its
Restricted Subsidiaries (other than intercompany Indebtedness); provided that:
(i) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or accreted
value, if applicable), plus accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final
maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Notes, such Permitted
Refinancing Indebtedness is subordinated in right of payment to the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either
by the Company or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Senior Credit Facility" means that certain credit agreement existing on the
Issue Date by and among the Company, certain lending parties thereto and Bank
Boston, N.A. and NationsBank of Texas, N.A., as agents, including any related
notes, guarantees (by Subsidiaries or otherwise), collateral documents,
instruments and agreements executed in connection therewith, as such credit
agreement and/or related documents may be amended, restated, supplemented,
renewed, replaced or otherwise modified from time to time (in each case, in
whole or in part, and without limitation as to amount, terms, conditions,
covenants and other provisions), with the same or other agents, trustees,
representative lenders or holders, irrespective of any changes in the terms
and conditions thereof. Without limiting the generality of the foregoing, the
term "Senior Credit Facility" shall include any amendment, amendment and
restatement, renewal, extension, restructuring, supplement or modification to
any Senior Credit Facility and all refundings, refinancings and replacements
of any Senior Credit Facility, including any agreement (i) extending the
maturity of any Obligations incurred thereunder or contemplated thereby, (ii)
adding or deleting borrowers or guarantors thereunder, so long as borrowers
and guarantors include one or more of the Company and its Subsidiaries and
their respective successors and assigns, or (iii) increasing the amount of
Indebtedness incurred thereunder or available to be borrowed thereunder.
"Senior Debt" means (i) all Obligations of the Company or any Subsidiary
Guarantors outstanding under the Senior Credit Facility and all Hedging
Obligations with respect thereto, (ii) any other Indebtedness permitted to be
incurred by the Company or any Subsidiary Guarantors under the terms of the
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes or any Subsidiary Guarantor's Subsidiary Guarantee of the
Notes and (iii) all Obligations with respect to the foregoing. Notwithstanding
anything to the contrary in the foregoing, Senior Debt will not include (v)
any liability for federal, state, local or other taxes owed or owing by the
Company or any of its Subsidiaries, (w) any Indebtedness of the Company or any
of its Subsidiaries to any Subsidiary or other Affiliate, (x) any trade
payables, (y) any Indebtedness that is incurred in violation of the Indenture
or (z) any Indebtedness which is, by its express terms, subordinated in right
of payment to any other Indebtedness of the Company.
"Significant Restricted Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of the Indenture.
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"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the
date originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership or limited
liability company (a) the sole general partner, the managing general partner
or the managing member, as the case may be, of which is such Person or a
Subsidiary of such Person or (b) the only general partners or managing
members, as the case may be, of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantors" means (i) each Wholly Owned Restricted Subsidiary of
the Company on the Issue Date and (ii) any other subsidiary that executes a
Subsidiary Guarantee in accordance with the provisions of the Indenture, and
their respective successors and assigns.
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary (and any Subsidiary of such
Unrestricted Subsidiary) pursuant to a Board Resolution; but only to the
extent that such Subsidiary: (a) has no Indebtedness other than Non-Recourse
Debt; (b) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates of the
Company (other than (x) open payables owed by the Company to such Subsidiary
arising in the ordinary course of business solely from the collection by the
Company of amounts due to such Subsidiary and (y) working capital advances on
fair and reasonable terms to the Company (in the good faith judgment of senior
management of the Company) to such Subsidiary in the ordinary course of
business on a basis consistent with past practice, provided that such advances
are not outstanding for more than 90 days); (c) is a Person with respect to
which neither the Company nor any of its Restricted Subsidiaries has any
direct or indirect obligation (x) to subscribe for additional Equity Interests
or (y) to maintain or preserve such Person's financial condition or to cause
such Person to achieve any specified levels of operating results; and (d) has
not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries. Any
such designation by the Board of Directors shall be evidenced to the Trustee
by filing with the Trustee a certified copy of the Board Resolution giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by the
covenant described above under the caption "--Certain Covenants--Restricted
Payments." If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter
cease to be an Unrestricted Subsidiary for purposes of the Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under the covenant described under
the caption "Incurrence of Indebtedness and Issuance of Preferred Stock," the
Company shall be in default of such covenant). The Board of Directors of the
Company may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that such designation shall be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of the Company of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (i) such Indebtedness is permitted under the
covenant described under the caption "Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock," calculated on a pro forma basis
as if such designation had occurred at the beginning of the four-quarter
reference period and (ii) no Default or Event of Default would be in existence
following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
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"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly-Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall
at the time be owned by such Person or by one or more Wholly-Owned Restricted
Subsidiaries of such Person.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain United States federal income tax
consequences resulting from the acquisition, ownership and disposition of the
Exchange Notes which may be relevant to a holder or prospective purchaser of
one or more of such Exchange Notes. The following summary is of a general
nature only and is not intended to be, and should not be construed to be,
legal or tax advice to any prospective investor and no representation with
respect to the tax consequences of any particular investor is made.
Accordingly, prospective investors should consult with their own tax advisors
for advice with respect to the income tax consequences to them having regard
to their own particular circumstances, including any consequences of an
investment in the Exchange Notes arising under state, provincial or local tax
laws or tax laws of jurisdictions outside the United States.
IN ADDITION, PERSONS CONSIDERING THE ACQUISITION OF THE EXCHANGE NOTES
SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION OF U.S.
FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS OF ANY STATE, LOCAL OR FOREIGN
TAXING JURISDICTION, TO THEIR PARTICULAR SITUATIONS AND THE POSSIBLE EFFECT OF
CHANGES IN U.S. FEDERAL OR OTHER TAX LAWS.
The legal conclusions expressed in this summary are based upon current
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
applicable Treasury regulations ("Regulations"), judicial authority and
administrative rulings and practice, all as in effect as of the date of this
Prospectus, and all of which are subject to change, either prospectively or
retroactively. There can be no assurance that the Internal Revenue Service
(the "Service") will not take a contrary view, and no rulings from the Service
have been or will be sought with respect to any matter involving the tax
aspects of the purchase, ownership or exchange or other disposition of the
Notes. Legislative, judicial or administrative changes or interpretations may
be forthcoming that could alter or modify the statements and conclusions set
forth herein. Any such changes or interpretations may or may not be
retroactive and could affect the tax consequences to holders.
This summary deals only with persons who will hold the Exchange Notes as
capital assets within the meaning of Section 1221 of the Code, and does not
address tax considerations applicable to investors who may be subject to
special tax rules, such as financial institutions, tax-exempt organizations,
foreign corporations, foreign individuals, insurance companies, dealers in
securities or currencies, persons who hold Exchange Notes as a hedge or as a
position in a "straddle" for tax purposes, and persons who have a "functional
currency" other than the U.S. dollar.
In addition, the description does not consider the effect of any applicable
foreign, state, local or other tax laws or estate or gift tax considerations.
U.S. HOLDERS
The following discussion is limited to the United States federal income tax
consequences relevant to a holder of the Notes that is a U.S. Holder. The term
"U.S. Holder" refers to a person that is classified for U.S. federal tax
purposes as a United States person. For this purpose, a United States person
includes (i) a resident (within the meaning of Section 7701(b) of the Code) or
current or former citizen of the United States, (ii) a corporation, limited
liability company, partnership or other business entity created or organized
in the United States or under the laws of the United States or of any state or
political subdivision thereof (iii) an estate or trust whose income is
includable in gross income for U.S. federal income tax purposes regardless of
its source or (iv) a person whose worldwide income or gain is otherwise
subject to U.S. federal income taxation on a net basis.
The Exchange Offer. Pursuant to recently finalized Regulations, the exchange
of Outstanding Notes for Exchange Notes pursuant to the Exchange Offer should
not constitute a significant modification of the terms of the Outstanding
Notes and, accordingly, such exchange should be treated as a "non-event" for
federal income tax purposes. Therefore, such exchange should have no federal
income tax consequences to U.S. Holders of Outstanding Notes who exchange such
notes for Exchange Notes, the holding period of an Exchange Note should
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include the holding period of the Outstanding Note for which it was exchanged,
the basis of an Exchange Note should be the same as the basis of the
Outstanding Note for which it was exchanged, and each U.S. Holder of Exchange
Notes should continue to be required to include interest on the Outstanding
Notes in its gross income in accordance with its method of accounting for
federal income tax purposes.
Payment of Interest. Interest on a Note generally will be includable in the
income of a U.S. Holder as ordinary income at the time such interest is
received or accrued, in accordance with such U.S. Holder's method of
accounting for United States federal income tax purposes.
The Company is obligated to pay additional interest amounts in the event of
a Registration Default (as defined). Under the Regulations, certain contingent
payments on debt instruments must be accrued into gross income by a holder
(regardless of such holder's method of accounting). However, any payment
subject to a remote or incidental contingency (i.e., there is a remote
likelihood that the contingency will occur or the potential amount of the
contingent payment is insignificant relative to the total expected amount of
remaining payments) is not treated as a contingent payment and is ignored
until payment, if any, is actually made. The Company intends to take the
position that the additional interest payments resulting from a Registration
Default are subject to a remote or incidental contingency. Accordingly, a U.S.
Holder of a Note should report any additional interest payments resulting from
a Registration Default as ordinary income in accordance with such holder's
method of accounting for United States federal income tax purposes.
Original Issue Discount. If the Notes are not issued at a discount or are
deemed to be issued with no discount because such discount is de minimis, a
U.S. Holder will include in income as ordinary interest income the gross
amount of interest paid or payable in respect of the Notes as provided above
in "--Payment of Interest."
Market Discount. If a U.S. Holder purchases a Note for less than the stated
redemption price at maturity (the sum of all payments on the Note other than
qualified stated interest), the difference is considered "market discount,"
unless such difference is de minimis. A discount will be considered de minimis
if it is less than one-fourth ( 1/4) of one percent of the Note Issue Price
multiplied by the number of complete years to maturity (after the holder
acquires the Note). Under the market discount rules, any gain realized by the
U.S. Holder on a taxable disposition of a Note having "market discount," as
well as on any partial principal payment made with respect to such Note, will
be treated as ordinary income to the extent of the then "accrued market
discount" of the Note. An overview of the rules concerning the calculation of
"accrued market discount" is set forth in the paragraph immediately below. In
addition, a U.S. Holder of such Note may be required to defer the deduction of
all or a portion of the interest expense on any indebtedness incurred or
continued to purchase or carry a Note.
Any market discount will accrue ratably from the date of acquisition to the
maturity date of the Note, unless the U.S. Holder elects, irrevocably, to
accrue market discount on a constant interest rate method. The constant
interest rate method generally accrues interest at times and in amounts
equivalent to the result which would have occurred had the market discount
been original issue discount computed from the U.S. Holder's acquisition of
the Note through the maturity date. The election to accrue market discount on
a constant interest rate method is irrevocable but may be made separately as
to each Note held by the U.S. Holder. Accrual of market discount will not
cause the accrued amounts to be included currently in a U.S. Holder's taxable
income, in the absence of a disposition of, or principal payment on, the Note.
However, a U.S. Holder of a Note may elect to include market discount in
income currently as it accrues on either a ratable or constant interest rate
method. In such event, interest expense relating to the acquisition of a Note
which would otherwise be deferred would be currently deductible to the extent
otherwise permitted by the Code. The election to include market discount in
income currently, once made, applies to all market discount obligations
acquired by such holder on or after the first day of the first taxable year to
which the election applies, and may not be revoked without the consent of the
Service. Accrued market discount which is included in a U.S. Holder's gross
income will increase the adjusted tax basis of the Note in the hands of the
U.S. Holder.
Amortizable Bond Premium. If a subsequent U.S. Holder acquires a Note for an
amount which is greater than the amount payable at maturity, such holder will
be considered to have purchased such Note with "amortizable bond premium"
equal to the amount of such excess. The U.S. Holder may elect to amortize the
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premium, using a constant yield method employing six-month compounding, over
the period from the acquisition date to the maturity date of the Note. The
"amount payable at maturity" will be determined as of an earlier call date,
using the call price payable on such earlier date if the combination of such
earlier date and call price will produce a smaller amortizable bond premium
than would result from using the scheduled maturity date and its amount
payable. If an earlier call date is used and the Note is not called, the Note
will be treated as having matured on such earlier call date and then as having
been reissued on such date for the amount so payable. Amortized amounts may be
offset only against interest payments due under the Note and will reduce the
U.S. Holder's adjusted tax basis in the Note to the extent so used.
Once made, an election to amortize and offset interest on bonds, such as the
Notes, will apply to all bonds in respect of which the election was made that
were owned by the taxpayer on the first day of the taxable year to which the
election relates and to all bonds of such class or classes subsequently
acquired by such taxpayer. Such election may only be revoked with the consent
of the Service. If a U.S. Holder of a Note does not elect to amortize the
premium, the premium will decrease the gain or increase the loss which would
otherwise be recognized upon disposition of the Note.
Sale, Exchange or Retirement of Notes. Upon the sale, exchange, redemption,
retirement, or other disposition of a Note, other than the exchange of a Note
for an Exchange Note (see "The Exchange Offer" above), a U.S. Holder of a Note
generally will recognize gain or loss in an amount equal to the difference
between the amount of cash and the fair market value of any property received
on the sale, exchange or retirement of the Note (other than in respect of
accrued and unpaid interest on the Note, which such amounts are treated as
ordinary interest income) and such U.S. Holder's adjusted tax basis in the
Note. If a U.S. Holder holds the Note as a capital asset, such gain or loss
will be capital gain or loss, except to the extent of any accrued market
discount (see "--Market Discount" above), and will be long-term capital gain
or loss if the Note has a holding period of more than one year at the time of
sale, exchange or retirement (and may be subject to lower tax rates applicable
to capital gains depending on the U.S. Holder's status and the length of the
holding period of the Note).
Backup Withholding and Information Reporting. In general, information
reporting requirements will apply to interest payments on the Notes made to
U.S. Holders other than certain exempt recipients (such as corporations) and
to proceeds realized by such U.S. Holders on dispositions of Notes. A 31%
backup withholding tax will apply to such amounts if the U.S. Holder (i) fails
to furnish its social security or other taxpayer identification number ("TIN")
within a reasonable time after request therefor, (ii) furnishes an incorrect
TIN, (iii) fails to report properly interest or dividend income, or (iv)
fails, under certain circumstances, to provide a certified statement, signed
under penalty of perjury, that the TIN provided is its correct number and that
it is not subject to backup withholding. Any amount withheld from a payment to
a U.S. Holder under the backup withholding rules is allowable as a refund or
as a credit against such U.S. Holder's federal income tax liability, provided
that the required information is furnished to the Service. U.S. Holders of
Notes should consult their tax advisors as to their qualification for
exemption from backup withholding and the procedure for obtaining such an
exemption.
NON-U.S. HOLDERS
This Section summarizes certain U.S. federal tax consequences of the
ownership and disposition of Notes by "Non-U.S. Holders." The term "Non-U.S.
Holder" refers to a person that is not classified for U.S. federal tax
purposes as a "United States person," as defined in "--U.S. Holders" above.
Interest on Notes. In general, a Non-U.S. Holder will not be subject to U.S.
federal income tax or regular withholding tax with respect to stated interest
received or accrued on the Notes so long as (a) such interest is not
effectively connected with the conduct of a trade or business within the
United States, (b) the Non-U.S. Holder does not actually or constructively own
10% or more of the total combined voting power of all classes of stock of the
Company entitled to vote, (c) the Non-U.S. Holder is not controlled by a
foreign corporation that is related to the Company actually or constructively
through stock ownership, and (d) either (i) the beneficial owner of the Note
certifies to the Company or its agent, under penalties of perjury, that it is
not a U.S. Holder and provides
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its name and address on U.S. Treasury Form W-8 (or on a suitable substitute
form) or (ii) the Note is held by a securities clearing organization, bank or
other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "financial institution") on behalf of such
Non-U.S. Holder and such financial institution certifies under penalties of
perjury that such a Form W-8 (or suitable substitute form) has been received
from the beneficial owner by it or by a financial institution between it and
the beneficial owner and furnishes the payor with a copy thereof.
If interest received on the Notes by a Non-U.S. Holder is effectively
connected with the conduct by such Non-U.S. Holder of a trade or business
within the United States, such interest will be subject to U.S. federal income
tax on a net basis at the rates applicable to U.S. persons generally (and,
with respect to corporate holders under certain circumstances, may also be
subject to a 30% branch profits tax). If payments are subject to U.S. federal
income tax on a net basis in accordance with the rules described in the
preceding sentence, such payments will not be subject to U.S. withholding tax
so long as the Non-U.S. Holder provides the Company or their paying agent with
a properly executed Form 4224.
Non-U.S. Holders should consult any applicable income tax treaties, which
may provide for a lower rate of withholding tax, or other rules different from
those described above.
Gain on Disposition of Notes. Non-U.S. Holders generally will not be subject
to U.S. federal income taxation on gain recognized on a disposition of Notes
so long as (i) the gain is not effectively connected with the conduct by the
Non-U.S. Holder of a trade or business within the United States and (ii) in
the case of a Non-U.S. Holder who is an individual, either such Non-U.S.
Holder is not present in the United States for 183 days or more in the taxable
year of disposition or such Non-U.S. Holder does not have a "tax home" (within
the meaning of section 911(d)(3) of the Code) in the United States.
U.S. Information Reporting Requirements and Backup Withholding. Generally,
payments of interest, OID, premium or principal on the Notes to Non-U.S.
Holders will not be subject to information reporting or backup withholding if
the Non-U.S. Holder complies with the certification requirements set forth in
clause (d) under "--Interest on Notes" above.
Non-U.S. Holders will not be subject to information reporting or backup
withholding with respect to the payment of proceeds from the disposition of
Notes, effected by, to or through the foreign office of a broker; provided,
however, that if the broker is a U.S. person or a U.S.-related person,
information reporting (but not backup withholding) would apply unless the
broker has documentary evidence in its records as to the Non-U.S. Holder's
foreign status (and has not actual knowledge to the contrary), or the Non-U.S.
Holder certifies as to its non-U.S. status under penalty of perjury or
otherwise establishes an exemption. Non-U.S. Holders will be subject to
information reporting and back withholding at a rate of 31% with respect to
the payment of proceeds from the disposition of Notes effected by, to or
through the U.S. office of a broker, unless the Non-U.S. Holder certifies as
to its Non-U.S. Holder status under penalty of perjury or otherwise
establishes an exemption.
The Service has proposed Regulations that, if issued as final Regulations,
would require Non-U.S. Holders to provide additional information in order to
establish an exemption from, or reduce the rate of, withholding tax or backup
withholding tax and, in particular, would require certain Non-U.S. Holders,
and foreign partners of partnerships that are Non-U.S. Holders, to provide
certain information and comply with certain certification requirements not
required under existing law, including requirements that the Non-U.S. Holder
furnish its name, address and taxpayer identification number. Such proposed
Regulations are proposed to be effective generally for payments made after
December 31, 1997. It is not possible to predict whether, or in what form, the
proposed Regulations ultimately will be adopted.
Amounts withheld under the backup withholding rules do not constitute a
separate U.S. federal income tax. Rather, amounts withheld under the backup
withholding rules from a payments to a Non-U.S. Holder will be allowed as a
credit against such Non-U.S. Holder's U.S. federal income tax liability and
any amounts withheld in excess of such Non-U.S. Holder's U.S. federal income
tax liability would be refunded, provided that the required information is
furnished to the Service.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. The Prospectus, as it may
be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Notes received in exchange for
Outstanding Notes where such Outstanding Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with such resale. In addition, until 25 days after the
Expiration Date, all dealers effecting transactions in the Exchange Notes may
be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange Notes by
broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from
any such broker-dealer or the purchasers of any such Exchange Notes. Any
broker-dealer that resells Exchange Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commission or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that, by acknowledging that
it will deliver and by delivering a Prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
For a period of 180 days after the Expiration Date the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the
Letter of Transmittal. The Company has agreed to pay all expenses incident to
the Exchange Offer (including, only with respect to certain provisions under
the Registration Rights Agreement, the expenses of one counsel for the holders
of the Notes) other than commissions or concessions of any brokers or dealers
and will indemnify the holders of the Notes (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Exchange Notes and the Subsidiary Guarantees will be
passed upon for the Company by Akin, Gump, Strauss, Hauer & Feld, L.L.P.,
Austin, Texas.
EXPERTS
The consolidated financial statements of Prime Medical Services, Inc. and
its subsidiaries as of December 31, 1997 and 1996, and for each of the years
in the three-year period ended December 31, 1997, have been incorporated by
reference herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Lithotripters, Inc. and its
subsidiaries as of December 31, 1994 and 1995 for each of the years in the
three-year period ended December 31, 1995, have been incorporated by reference
herein in reliance upon the reports of Arthur Andersen LLP, independent public
accountants, upon the authority of said firm as experts in accounting and
auditing.
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- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASERS. THIS PROSPEC-
TUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO
BUY, THE NOTES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UN-
LAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PRO-
SPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................................................... 4
Prospectus Summary....................................................... 6
Risk Factors............................................................. 17
The Exchange Offer....................................................... 26
Use of Proceeds.......................................................... 34
Capitalization........................................................... 34
Selected Historical Consolidated Financial and Operating Data............ 35
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 37
Business................................................................. 42
Management............................................................... 52
Principal Stockholders................................................... 58
Description of Other Indebtedness........................................ 59
Description of Exchange Notes............................................ 60
Certain Federal Income Tax Considerations................................ 88
Plan of Distribution..................................................... 92
Legal Matters............................................................ 92
Experts.................................................................. 92
</TABLE>
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- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
---------------
PROSPECTUS
---------------
LOGO
PRIME MEDICAL SERVICES, INC.
$100,000,000
8 3/4% SENIOR SUBORDINATED NOTESDUE 2008
FOR
8 3/4% SENIOR SUBORDINATED NOTESDUE 2008
, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Certificate of Incorporation of the Company provides that the Company
shall indemnify any person who was or is a party or is threatened to be made a
party to a proceeding by reason of the fact that he or she (i) is or was a
director or officer of the Company or (ii) while a director or officer of the
Company, is or was serving at the request of the Company as a director,
officer, partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other
enterprise, to the fullest extent permitted under the Delaware General
Corporation Law, as the same exists or may hereafter be amended.
Pursuant to Section 145 of the Delaware Corporation Law, the Company
generally has the power to indemnify its present and former directors and
officers against expenses and liabilities incurred by them in connection with
any suit to which they are, or are threatened to be made, a party by reason of
their serving in those positions so long as they acted in good faith and in a
manner they reasonably believed to be in, or not opposed to, the best
interests of the Company, and with respect to any criminal action, so long as
they had no reasonable cause to believe their conduct was unlawful. With
respect to suits by or in the right of the Company, however, indemnification
is generally limited to attorneys' fees and other expenses and is not
available if the person is adjudged to be liable to the Company, unless the
court determines that indemnification is appropriate. The statute expressly
provides that the power to indemnify authorized thereby is not exclusive of
any rights granted under any bylaws, agreement, vote of stockholders or
disinterested directors, or otherwise. The Company also has the power to
purchase and maintain insurance for its directors and officers and has
obtained such insurance.
The preceding discussion of the Company's Certificate of Incorporation and
Section 145 of the Delaware General Corporation Law is not intended to be
exhaustive and is qualified in its entirety by the Certificate of
Incorporation and Section 145 of the Delaware General Corporation Law.
The Company has entered into indemnity agreements with certain of its
directors and officers. Pursuant to these agreements, the Company will, to the
extent permitted under applicable law, indemnify these persons against all
judgments, expenses, fines and penalties incurred in connection with the
defense or the settlement of any actions brought against them by reason of the
fact that they are or were directors or officers of the Company or that they
assumed certain responsibilities at the direction of the Company.
ITEM 21. EXHIBITS.
<TABLE>
<C> <S>
(4)(a) Indenture, dated as of March 27, 1998, between Prime Medical
Services, Inc. and certain of its subsidiaries and State Street
Bank and Trust Company of Missouri, National Association, with
form of 8 3/4% Senior Subordinated Notes due 2008 attached as
exhibit
(4)(b) Registration Rights Agreement, dated as of March 27, 1998, between
Prime Medical Services, Inc. and certain of its subsidiaries and
Nationsbanc Montgomery Securities LLC, Donaldson, Lufkin &
Jenrette Securities Corporation, Prudential Securities
Incorporated, and J.C. Bradford & Co.
(5) Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(10) Purchase Agreement, dated as of March 24, 1998 between Prime
Medical Services, Inc. and certain of its subsidiaries and
Nationsbanc Montgomery Securities LLC, Donaldson, Lufkin &
Jenrette Securities Corporation, Prudential Securities
Incorporated, and J.C. Bradford & Co.
(12) Computation of Ratio of Earnings to Fixed Charges
(23)(a) Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in
Exhibit 5)
(b) Consent of KPMG Peat Marwick LLP
(c) Consent of Arthur Andersen LLP
</TABLE>
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<TABLE>
<C> <S>
(24) Powers of Attorney (included in the signature pages of this
Registration Statement)
(25) Statement of Eligibility of Trustee on Form T-1 of State Street Bank
and Trust Company of Missouri, National Association
(99) Letter of Transmittal
</TABLE>
ITEM 22. UNDERTAKINGS.
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 in 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; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) 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.
(5) That for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be
deemed to be part of the Registration Statement as of the time it was
declared effective.
(6) That for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus 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.
(7) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise,
the Company has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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<PAGE>
(8) To respond to requests for information that is incorporated by
reference into the Prospectus pursuant to Item 4.10(b), 11 or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Sstatement through the date of
responding to the request.
(9) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the Registration Statement when
it became effective.
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<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Prime Medical Services, Inc.
/s/ Cheryl Williams
By: _________________________________
CHERYL WILLIAMS,VICE PRESIDENT--
FINANCE
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment
thereto) filed in reliance upon Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Kenneth S. Shifrin Chairman of the May 4, 1998
- ------------------------------------- Board and Director
KENNETH S. SHIFRIN
/s/ Joseph Jenkins, M.D. President, Chief May 4, 1998
- ------------------------------------- Executive Officer
JOSEPH JENKINS, M.D. and Director
/s/ Cheryl Williams Chief Financial May 4, 1998
- ------------------------------------- Officer, Vice
CHERYL WILLIAMS President--Finance
and Secretary
(Chief Accounting
Officer)
/s/ Paul R. Butrus Director May 4, 1998
- -------------------------------------
PAUL R. BUTRUS
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<PAGE>
SIGNATURE TITLE DATE
/s/ William E. Foree, M.D. Director May 4, 1998
- -------------------------------------
WILLIAM E. FOREE, M.D.
/s/ Irwin Katz Director May 4, 1998
- -------------------------------------
IRWIN KATZ
/s/ John A. Mcentire IV Director May 4, 1998
- -------------------------------------
JOHN A. MCENTIRE IV
/s/ William A. Searles Director May 4, 1998
- -------------------------------------
WILLIAM A. SEARLES
/s/ Michael J. Spalding, M.D. Director May 4, 1998
- -------------------------------------
MICHAEL J. SPALDING, M.D.
II-5
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Prime Medical Operating, Inc.
/s/ Cheryl Williams
By: _________________________________
CHERYL WILLIAMS,CHIEF FINANCIAL
OFFICER, TREASURER AND DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment
thereto) filed in reliance upon Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Kenneth S. Shifrin Chairman of the May 4, 1998
- ------------------------------------- Board, President
KENNETH S. SHIFRIN and Director
/s/ Cheryl Williams Chief Financial May 4, 1998
- ------------------------------------- Officer, Treasurer
CHERYL WILLIAMS and Director (Chief
Accounting Officer)
/s/ Michael Madler Vice President and May 4, 1998
- ------------------------------------- Director
MICHAEL MADLER
II-6
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Prime Management, Inc.
/s/ Cheryl Williams
By: __________________________________
CHERYL WILLIAMS,TREASURER
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment thereto)
filed in reliance upon Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as they might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents or any of them, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Stan Johnson President, May 4, 1998
- ------------------------------------ Secretary and
STAN JOHNSON Director
/s/ Cheryl Williams Treasurer (Chief May 4, 1998
- ------------------------------------ Financial and
CHERYL WILLIAMS Accounting
Officer)
/s/ Janice George Assistant Secretary May 4, 1998
- ------------------------------------ and Director
JANICE GEORGE
II-7
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Prime Cardiac Rehabilitation
Services, Inc.
/s/ Cheryl Williams
By: _________________________________
CHERYL WILLIAMS,CHIEF FINANCIAL
OFFICER, TREASURER AND VICE
PRESIDENT
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment
thereto) filed in reliance upon Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Michael Madler President and May 4, 1998
- ------------------------------------- Director
MICHAEL MADLER
/s/ Cheryl Williams Chief Financial May 4, 1998
- ------------------------------------- Officer, Treasurer
CHERYL WILLIAMS and Vice President
(Chief Accounting
Officer)
/s/ Kenneth S. Shifrin Director May 4, 1998
- -------------------------------------
KENNETH S. SHIFRIN
II-8
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Prime Diagnostic Services, Inc.
/s/ Cheryl Williams
By: _________________________________
CHERYL WILLIAMS,CHIEF FINANCIAL
OFFICER AND TREASURER
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment
thereto) filed in reliance upon Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Kenneth S. Shifrin President and May 4, 1998
- ------------------------------------- Director
KENNETH S. SHIFRIN
/s/ Michael Madler Vice President May 4, 1998
- -------------------------------------
MICHAEL MADLER
/s/ Cheryl Williams Chief Financial May 4, 1998
- ------------------------------------- Officer and
CHERYL WILLIAMS Treasurer (Chief
Accounting Officer)
II-9
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Prime Lithotripsy Services, Inc.
/s/ Cheryl Williams
By: _________________________________
CHERYL WILLIAMS,TREASURER
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment
thereto) filed in reliance upon Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Kenneth S. Shifrin Chairman of the May 4, 1998
- ------------------------------------- Board and Director
KENNETH S. SHIFRIN
/s/ Michael Madler President and May 4, 1998
- ------------------------------------- Director
MICHAEL MADLER
/s/ Cheryl Williams Treasurer (Chief May 4, 1998
- ------------------------------------- Financial and
CHERYL WILLIAMS Accounting Officer)
II-10
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Prime Kidney Stone Treatment, Inc.
/s/ Cheryl Williams
By: _________________________________
CHERYL WILLIAMS,VICE PRESIDENT AND
DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment
thereto) filed in reliance upon Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Michael Madler President and May 4, 1998
- ------------------------------------- Director
MICHAEL MADLER
/s/ Cheryl Williams Vice President and May 4, 1998
- ------------------------------------- Director (Chief
CHERYL WILLIAMS Financial and
Accounting Officer)
II-11
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Prime Diagnostic Corp. of Florida
/s/ Cheryl Williams
By: _________________________________
CHERYL WILLIAMS,CHIEF FINANCIAL
OFFICER AND TREASURER
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment
thereto) filed in reliance upon Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Michael Madler President May 4, 1998
- -------------------------------------
MICHAEL MADLER
/s/ Cheryl Williams Chief Financial May 4, 1998
- ------------------------------------- Officer and
CHERYL WILLIAMS Treasurer (Chief
Accounting Officer)
/s/ Kenneth S. Shifrin Director May 4, 1998
- -------------------------------------
KENNETH S. SHIFRIN
II-12
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Prime Lithotripter Operations, Inc.
/s/ Cheryl Williams
By: _________________________________
CHERYL WILLIAMS,TREASURER AND
DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment
thereto) filed in reliance upon Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Michael Madler President May 4, 1998
- -------------------------------------
MICHAEL MADLER
/s/ Cheryl Williams Treasurer and May 4, 1998
- ------------------------------------- Director (Chief
CHERYL WILLIAMS Financial and
Accounting Officer)
II-13
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Prime Practice Management, Inc.
/s/ Cheryl Williams
By: _________________________________
CHERYL WILLIAMS,PRESIDENT,
TREASURER AND DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment
thereto) filed in reliance upon Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Cheryl Williams President, Treasurer May 4, 1998
- ------------------------------------- and Director (Chief
CHERYL WILLIAMS Financial and
Accounting Officer)
II-14
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Texas Litho, Inc.
/s/ Cheryl Williams
By: _________________________________
CHERYL WILLIAMS,VICE PRESIDENT AND
DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment
thereto) filed in reliance upon Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Michael Madler Chairman of the May 4, 1998
- ------------------------------------- Board and Director
MICHAEL MADLER
/s/ Kenneth S. Shifrin President and May 4, 1998
- ------------------------------------- Director
KENNETH S. SHIFRIN
/s/ Cheryl Williams Vice President and May 4, 1998
- ------------------------------------- Director (Chief
CHERYL WILLIAMS Financial and
Accounting Officer)
II-15
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
R.R. Litho, Inc.
/s/ Cheryl Williams
By: __________________________________
CHERYL WILLIAMS,CHIEF FINANCIAL
OFFICER AND TREASURER
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment thereto)
filed in reliance upon Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as they might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents or any of them, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Kenneth S. Shifrin President and May 4, 1998
- ------------------------------------ Director
KENNETH S. SHIFRIN
/s/ Michael Madler Vice President and May 4, 1998
- ------------------------------------ Director
MICHAEL MADLER
/s/ Cheryl Williams Chief Financial May 4, 1998
- ------------------------------------ Officer and
CHERYL WILLIAMS Treasurer (Chief
Accounting
Officer)
II-16
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Ohio Litho, Inc.
/s/ Cheryl Williams
By: __________________________________
CHERYL WILLIAMS,PRESIDENT AND
DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment thereto)
filed in reliance upon Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as they might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents or any of them, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Kenneth S. Shifrin Chairman of the May 4, 1998
- ------------------------------------ Board and Director
KENNETH S. SHIFRIN
/s/ Cheryl Williams President and May 4, 1998
- ------------------------------------ Director (Chief
CHERYL WILLIAMS Financial and
Accounting
Officer)
/s/ Michael Madler Vice President and May 4, 1998
- ------------------------------------ Director
MICHAEL MADLER
II-17
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Alabama Renal Stone Institute, Inc.
/s/ Cheryl Williams
By: _________________________________
CHERYL WILLIAMS,TREASURER AND
DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment
thereto) filed in reliance upon Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Michael Madler President and May 4, 1998
- ------------------------------------- Director
MICHAEL MADLER
/s/ Cheryl Williams Treasurer and May 4, 1998
- ------------------------------------- Director (Chief
CHERYL WILLIAMS Financial and
Accounting Officer)
II-18
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Sun Medical Technologies, Inc.
/s/ Cheryl Williams
By: _________________________________
CHERYL WILLIAMS,ASSISTANT
SECRETARY AND DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment
thereto) filed in reliance upon Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Stan Johnson President and May 4, 1998
- ------------------------------------- Director
STAN JOHNSON
/s/ Cheryl Williams Assistant Secretary May 4, 1998
- ------------------------------------- and Director (Chief
CHERYL WILLIAMS Financial and
Accounting Officer)
/s/ Kenneth S. Shifrin Director May 4, 1998
- -------------------------------------
KENNETH S. SHIFRIN
/s/ Michael Madler Director May 4, 1998
- -------------------------------------
MICHAEL MADLER
II-19
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Sun Acquisition, Inc.
/s/ Cheryl Williams
By: _________________________________
CHERYL WILLIAMS,ASSISTANT
SECRETARY AND DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment
thereto) filed in reliance upon Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Stan Johnson President and May 4, 1998
- ------------------------------------- Director
STAN JOHNSON
/s/ Cheryl Williams Assistant Secretary May 4, 1998
- ------------------------------------- and Director (Chief
CHERYL WILLIAMS Financial and
Accounting Officer)
/s/ Kenneth S. Shifrin Director May 4, 1998
- -------------------------------------
KENNETH S. SHIFRIN
/s/ Michael Madler Director May 4, 1998
- -------------------------------------
MICHAEL MADLER
II-20
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Lithotripters, Inc.
/s/ Cheryl Williams
By: _________________________________
CHERYL WILLIAMS,VICE PRESIDENT AND
DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment
thereto) filed in reliance upon Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Joseph Jenkins, M.D. President, Chief May 4, 1998
- ------------------------------------- Executive Officer
JOSEPH JENKINS, M.D. and Director
/s/ Cheryl Williams Vice President and May 4, 1998
- ------------------------------------- Director (Chief
CHERYL WILLIAMS Financial and
Accounting Officer)
/s/ Kenneth S. Shifrin Director May 4, 1998
- -------------------------------------
KENNETH S. SHIFRIN
II-21
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Prime Medical Management, L.P.
By: Prime Medical Operating, Inc.,
General Partner
/s/ Cheryl Williams
By: ___________________________
CHERYL WILLIAMS,
CHIEF FINANCIAL OFFICER,
TREASURER AND DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment
thereto) filed in reliance upon Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Kenneth S. Shifrin Chairman of the May 4, 1998
- ------------------------------------- Board, President
KENNETH S. SHIFRIN and Director of
Prime Medical
Operating, Inc.
/s/ Cheryl Williams Chief Financial May 4, 1998
- ------------------------------------- Officer, Treasurer
CHERYL WILLIAMS and Director of
Prime Medical
Operating, Inc.
/s/ Michael Madler Vice President and May 4, 1998
- ------------------------------------- Director of Prime
MICHAEL MADLER Medical Operating,
Inc.
II-22
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Prostatherapies, Inc.
/s/ Cheryl Williams
By: _________________________________
CHERYL WILLIAMS,TREASURER AND
DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment
thereto) filed in reliance upon Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Dan Myers, M.D. President May 4, 1998
- -------------------------------------
DAN MYERS, M.D.
/s/ Michael Madler Vice President May 4, 1998
- -------------------------------------
MICHAEL MADLER
/s/ Cheryl Williams Treasurer and May 4, 1998
- ------------------------------------- Director (Chief
CHERYL WILLIAMS Financial and
Accounting Officer)
/s/ Kenneth S. Shifrin Director May 4, 1998
- -------------------------------------
KENNETH S. SHIFRIN
/s/ Joseph Jenkins, M.D. Director May 4, 1998
- -------------------------------------
JOSEPH JENKINS, M.D.
II-23
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Fast Start, Inc.
/s/ Cheryl Williams
By: __________________________________
CHERYL WILLIAMS,PRESIDENT,
TREASURER AND DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment thereto)
filed in reliance upon Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as they might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents or any of them, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Cheryl Williams President, May 4, 1998
- ------------------------------------ Treasurer and
CHERYL WILLIAMS Director (Chief
Financial and
Accounting
Officer)
/s/ Kenneth S. Shifrin Vice President, May 4, 1998
- ------------------------------------ Secretary and
KENNETH S. SHIFRIN Director
II-24
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
MedTech Investments, Inc.
/s/ Cheryl Williams
By: __________________________________
CHERYL WILLIAMS,TREASURER
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment thereto)
filed in reliance upon Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as they might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents or any of them, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Michael Madler President and May 4, 1998
- ------------------------------------ Director
MICHAEL MADLER
/s/ Cheryl Williams Treasurer (Chief May 4, 1998
- ------------------------------------ Financial and
CHERYL WILLIAMS Accounting
Officer)
/s/ Joseph Jenkins, M.D. Director May 4, 1998
- ------------------------------------
JOSEPH JENKINS, M.D.
II-25
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN, STATE OF TEXAS
ON MAY 4, 1998.
Executive Medical Enterprises, Inc.
/s/ Cheryl Williams
By: __________________________________
CHERYL WILLIAMS,EXECUTIVE VICE
PRESIDENT AND DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth S. Shifrin, Joseph Jenkins, M.D., and
Cheryl L. Williams and each of them as their true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for them and in
their name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment thereto)
filed in reliance upon Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as they might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents or any of them, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Stan Johnson President and May 4, 1998
- ------------------------------------ Director
STAN JOHNSON
/s/ Cheryl Williams Executive Vice May 4, 1998
- ------------------------------------ President and
CHERYL WILLIAMS Director (Chief
Financial and
Accounting
Officer)
/s/ Michael Madler Vice President-- May 4, 1998
- ------------------------------------ Operations
MICHAEL MADLER
II-26
<PAGE>
INDEX TO EXHIBITS
EXHIBITS
<TABLE>
<C> <S>
(4)(a) Indenture, dated as of March 27, 1998, between Prime Medical
Services, Inc. and certain of its subsidiaries and State Street
Bank and Trust Company of Missouri, National Association, with
form of 8 3/4% Senior Subordinated Notes due 2008 attached as
exhibit
(4)(b) Registration Rights Agreement, dated as of March 27, 1998, between
Prime Medical Services, Inc. and certain of its subsidiaries and
Nationsbanc Montgomery Securities LLC, Donaldson, Lufkin &
Jenrette Securities Corporation, Prudential Securities
Incorporated, and J.C. Bradford & Co.
(5) Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(10) Purchase Agreement, dated as of March 24, 1998 between Prime
Medical Services, Inc. and certain of its subsidiaries and
Nationsbanc Montgomery Securities LLC, Donaldson, Lufkin &
Jenrette Securities Corporation, Prudential Securities
Incorporated, and J.C. Bradford & Co.
(12) Computation of Ratio of Earnings to Fixed Charges
(23)(a) Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (Included in
Exhibit 5).
(b) Consent of KPMG Peat Marwick LLP
(c) Consent of Arthur Andersen LLP
(24) Powers of Attorney (included in the signature pages of this
Registration Statement)
(25) Statement of Eligibility of Trustee on Form T-1 of State Street
Bank and Trust Company of Missouri, National Association
(99) Letter of Transmittal
</TABLE>
<PAGE>
EXHIBIT (4)(a)
================================================================================
PRIME MEDICAL SERVICES, INC.
THE SUBSIDIARY GUARANTORS PARTIES HERETO
----------------------------------------------
SERIES A AND SERIES B
8 3/4% SENIOR SUBORDINATED NOTES DUE 2008
------------------------------
INDENTURE
------------------------------
Dated as of March 27, 1998
------------------------------
State Street Bank and Trust Company of Missouri, N.A.
Trustee
================================================================================
<PAGE>
<TABLE>
<CAPTION>
CROSS-REFERENCE TABLE*
(a) Trust Indenture
Act Section Indenture Section
<S> <C>
310(a)(1)............................................................7.10
(a)(2) ..............................................................7.10
(a)(3)...............................................................N.A.
(a)(4)...............................................................N.A.
(a)(5)...............................................................7.10
(i)(b)...............................................................7.10
(ii)(c)..............................................................N.A.
311(a)...............................................................7.11
(b)..................................................................7.11
(iii(c)..............................................................N.A.
312 (a)..............................................................2.05
(b)..................................................................11.03
(iv)(c)..............................................................11.03
313(a)...............................................................7.06
(b)(1)...............................................................10.03
(b)(2)...............................................................7.07
(v)(c)...............................................................7.06;
11.02
(vi)(d)..............................................................7.06
314(a)...............................................................4.03;
11.02
(A)(b)...............................................................10.02
(c)(1)...............................................................11.04
(c)(2)...............................................................11.04
(c)(3)...............................................................N.A.
(d)..................................................................10.03,
10.04, 10.05
(vii)(e).............................................................11.05
(f)..................................................................N.A.
315(a)...............................................................7.01
(b)..................................................................7.05,
11.02
(A)(c)...............................................................7.01
(d)..................................................................7.01
(e)..................................................................6.11
316(a)(last sentence)................................................2.09
(a)(1)(A)............................................................6.05
(a)(1)(B)............................................................6.04
(a)(2)...............................................................N.A.
(b)..................................................................6.07
</TABLE>
2
<PAGE>
(B)(c)...............................................................2.12
317(a)(1)............................................................6.08
(a)(2)...............................................................6.09
(b)..................................................................2.04
318 (a)..............................................................11.01
(b)..................................................................N.A.
(c)..................................................................11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
3
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.........................1
Section 1.01. Definitions..................................................1
Section 1.02. Other Definitions...........................................17
Section 1.03. Provisions of the TIA.......................................18
Section 1.04. Rules of Construction.......................................18
ARTICLE 2. THE NOTES.........................................................18
Section 2.01. Form and Dating.............................................18
Section 2.02. Execution and Authentication................................20
Section 2.03. Registrar and Paying Agent..................................20
Section 2.04. Paying Agent to Hold Money in Trust.........................21
Section 2.05. Holder Lists................................................21
Section 2.06. Transfer and Exchange.......................................21
Section 2.07. Replacement Notes...........................................33
Section 2.08. Outstanding Notes...........................................33
Section 2.09. Treasury Notes..............................................33
Section 2.10. Temporary Notes.............................................34
Section 2.11. Cancellation................................................34
Section 2.12. Defaulted Interest..........................................34
ARTICLE 3. REDEMPTION AND PREPAYMENT.........................................34
Section 3.01. Notices to Trustee..........................................34
Section 3.02. Selection of Notes to Be Redeemed...........................35
Section 3.03. Notice of Redemption........................................35
i
<PAGE>
Section 3.04. Effect of Notice of Redemption..............................36
Section 3.05. Deposit of Redemption Price.................................36
Section 3.06. Notes Redeemed in Part......................................36
Section 3.07. Optional Redemption.........................................36
Section 3.08. Mandatory Redemption........................................37
Section 3.09. Offer to Purchase by Application of Excess Proceeds.........37
ARTICLE 4. COVENANTS.........................................................39
Section 4.01. Payment of Notes............................................39
Section 4.02. Maintenance of Office or Agency.............................39
Section 4.03. Reports.....................................................40
Section 4.04. Compliance Certificate......................................40
Section 4.05. Taxes.......................................................41
Section 4.06. Stay, Extension and Usury Laws..............................41
Section 4.07. Restricted Payments.........................................41
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries................................................43
Section 4.09. Incurrence of Indebtedness and Issuance of
Preferred Stock.............................................44
Section 4.10. Asset Sales.................................................46
Section 4.11. Transactions with Affiliates................................47
Section 4.12. Liens.......................................................47
Section 4.13. Business Activities.........................................48
Section 4.14. Corporate Existence.........................................48
Section 4.15. Offer to Repurchase Upon Change of Control..................48
Section 4.16. Limitation on Other Senior Subordinated Debt................49
Section 4.17. Sale and Leaseback Transactions.............................49
Section 4.18. Limitation on Issuances and Sales of Equity Interests
in Wholly Owned Subsidiaries................................50
ii
<PAGE>
Section 4.19. Payments for Consent........................................50
Section 4.20. Guarantees of Certain Indebtedness..........................50
ARTICLE 5. SUCCESSORS........................................................51
Section 5.01. Merger, Consolidation or Sale of Assets.....................51
Section 5.02. Successor Corporation Substituted...........................51
ARTICLE 6. DEFAULTS AND REMEDIES.............................................52
Section 6.01. Events of Default...........................................52
Section 6.02. Acceleration................................................53
Section 6.03. Other Remedies..............................................54
Section 6.04. Waiver of Past Defaults.....................................54
Section 6.05. Control by Majority.........................................54
Section 6.06. Limitation on Suits.........................................55
Section 6.07. Rights of Holders of Notes to Receive Payment...............55
Section 6.08. Collection Suit by Trustee..................................55
Section 6.09. Trustee May File Proofs of Claim............................55
Section 6.10. Priorities..................................................56
Section 6.11. Undertaking for Costs.......................................56
ARTICLE 7. TRUSTEE...........................................................57
Section 7.01. Duties of Trustee...........................................57
Section 7.02. Rights of Trustee...........................................58
Section 7.03. Individual Rights of Trustee................................58
Section 7.04. Trustee's Disclaimer........................................58
Section 7.05. Notice of Defaults..........................................59
Section 7.06. Reports by Trustee to Holders of the Notes..................59
Section 7.07. Compensation and Indemnity..................................59
iii
<PAGE>
Section 7.08. Replacement of Trustee......................................60
Section 7.09. Successor Trustee by Merger, etc............................61
Section 7.10. Eligibility; Disqualification...............................61
Section 7.11. Preferential Collection of Claims Against Company...........61
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE..........................61
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance..................................................61
Section 8.02. Legal Defeasance and Discharge..............................61
Section 8.03. Covenant Defeasance.........................................62
Section 8.04. Conditions to Legal or Covenant Defeasance..................62
Section 8.05. Deposited Money and Government Securities to be Held
in Trust; Other Miscellaneous Provisions....................64
Section 8.06. Repayment to Company........................................64
Section 8.07. Reinstatement...............................................64
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER..................................65
Section 9.01. Without Consent of Holders of Notes.........................65
Section 9.02. With Consent of Holders of Notes............................65
Section 9.03. Compliance with Trust Indenture Act.........................67
Section 9.04. Revocation and Effect of Consents...........................67
Section 9.05. Notation on or Exchange of Notes............................67
Section 9.06. Trustee to Sign Amendments, etc.............................67
ARTICLE 10. SUBORDINATION....................................................68
Section 10.01. Agreement to Subordinate...................................68
Section 10.02. Liquidation; Dissolution; Bankruptcy.......................68
Section 10.03. Default on Designated Senior Debt..........................68
Section 10.04. Acceleration of Notes......................................69
iv
<PAGE>
Section 10.05. When Distribution Must Be Paid Over........................69
Section 10.06. Notice by Company..........................................69
Section 10.07. Subrogation................................................70
Section 10.08. Relative Rights............................................70
Section 10.09. Subordination May Not Be Impaired by Company...............70
Section 10.10. Distribution or Notice to Representative...................70
Section 10.11. Rights of Trustee and Paying Agent.........................71
Section 10.12. Authorization to Effect Subordination......................71
Section 10.13. Amendments.................................................71
ARTICLE 11. SUBSIDIARY GUARANTEES............................................71
Section 11.01. Guarantee..................................................71
Section 11.02. Limitation on Subsidiary Guarantor Liability...............72
Section 11.03. Execution and Delivery of Subsidiary Guarantee.............73
Section 11.04. Subsidiary Guarantors May Consolidate, etc.,
on Certain Terms...........................................73
Section 11.05. Releases Following Sale of Assets..........................74
ARTICLE 12. SUBORDINATION OF SUBSIDIARY GUARANTEE............................74
Section 12.01. Agreement to Subordinate...................................74
Section 12.02. Liquidation; Dissolution; Bankruptcy.......................75
Section 12.03. Default on Designated Senior Debt..........................75
Section 12.04. Acceleration of Notes......................................76
Section 12.05. When Distribution Must Be Paid Over........................76
Section 12.06. Notice by Company..........................................76
Section 12.07. Subrogation................................................76
Section 12.08. Relative Rights............................................77
Section 12.09. Subordination May Not Be Impaired by Subsidiary
Guarantor..................................................77
v
<PAGE>
Section 12.10. Distribution or Notice to Representative...................77
Section 12.11. Rights of Trustee and Paying Agent.........................78
Section 12.12. Authorization to Effect Subordination......................78
Section 12.13. Amendments.................................................78
ARTICLE 13. SATISFACTION AND DISCHARGE........................................78
Section 13.01. Satisfaction and Discharge of Indenture....................78
Section 13.02. Application of Trust Money.................................79
ARTICLE 14. MISCELLANEOUS.....................................................80
Section 14.01. Trust Indenture Act Controls...............................80
Section 14.02. Notices....................................................80
Section 14.03. Communication by Holders of Notes with Other Holders
of Notes...................................................81
Section 14.04. Certificate and Opinion as to Conditions Precedent.........81
Section 14.05. Statements Required in Certificate or Opinion..............81
Section 14.06. Rules by Trustee and Agents................................82
Section 14.07. No Personal Liability of Directors, Officers, Employees
and Stockholders...........................................82
Section 14.08. Governing Law..............................................82
Section 14.09. No Adverse Interpretation of Other Agreements..............82
Section 14.10. Successors.................................................82
Section 14.11. Severability...............................................82
Section 14.12. Counterpart Originals......................................82
Section 14.13. Table of Contents, Headings, etc...........................83
EXHIBITS
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF CERTIFICATE OF TRANSFER
EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE
vi
<PAGE>
EXHIBIT D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL
ACCREDITED INVESTOR
EXHIBIT E FORM OF SUBSIDIARY GUARANTEE
EXHIBIT F FORM OF SUPPLEMENTAL INDENTURE
<PAGE>
INDENTURE dated as of March 27, 1998 by and among Prime Medical
Services, Inc., a Delaware corporation (the "Company"), each of the existing
domestic subsidiaries of the Company listed on the signature page of this
Indenture (together, the "Initial Guarantors"), and State Street Bank and Trust
Company of Missouri, N.A., as trustee (the "Trustee").
The Company, the Initial Guarantors and the Trustee agree as follows
for the benefit of each other and for the equal and ratable benefit of the
Holders of the 8 3/4% Series A Senior Subordinated Notes due 2008 (the "Series A
Notes") and the 8 3/4% Series B Senior Subordinated Notes due 2008 (the "Series
B Notes" and, together with the Series A Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Note" means a global note in the form of Exhibit A1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory and dispositions of Cash
Equivalents, in each case, in the ordinary course of business (provided that the
sale, lease, conveyance or other disposition of all or substantially all of the
assets of the Company and its Restricted Subsidiaries taken as a whole will be
governed by Section 4.15 hereof and/or Section 5.01 hereof and not by Section
4.10 hereof), and (ii) the issue by any Restricted Subsidiaries of the Company
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of any Equity Interests of such Restricted Subsidiary and the sale by the
Company or any of its Restricted Subsidiaries of Equity Interest of any of the
Company's Subsidiaries, in the case of either clause (i) or (ii), whether in a
single transaction or a series of related transactions (a) that have a fair
market value in excess of $1.0 million or (b) for net proceeds in excess of $1.0
million. Notwithstanding the foregoing, the following items shall not be deemed
to be Asset Sales: (i) a transfer of assets by the Company to a Restricted
Subsidiary or by a Restricted Subsidiary to the Company or to another Restricted
Subsidiary, (ii) an issuance of Equity Interests by a Restricted Subsidiary to
the Company or to another Restricted Subsidiary, (iii) a Restricted Payment that
is permitted by Section 4.07 hereof and (iv) the grant of any Lien permitted to
be incurred under this Indenture (and any foreclosure thereon conducted in a
commercially reasonable manner).
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, demand deposits, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any lender party to the Senior Credit Facility or
with any domestic commercial bank having capital and surplus in excess of $500
million and a Thompson Bank Watch Rating of "B" or better, or foreign branches
thereof, having capital and surplus in excess of $500.0 million or any
commercial bank of any other country that is a member of the Organization for
Economic Cooperation and Development ("OECD") and has total assets in excess of
$500.0 million and has one of the two highest ratings available from Moody's
Investors Service, Inc. or Standard & Poor's Ratings Group, (iv)
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repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) above entered into
with any financial institution meeting the qualifications specified in clause
(iii) above, (v) commercial paper having the highest rating obtainable from
Moody's Investors Service, Inc. or Standard & Poor's Ratings Group and in each
case maturing within six months after the date of acquisition and (vi) money
market funds the assets of which constitute Cash Equivalents of the kinds
described in clauses (i)--(v) of this definition.
"Cedel" means Cedel Bank, SA.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act); (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company; (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as defined above) becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that
a person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 50% of the Voting Stock of the
Company (measured by voting power rather than number of shares); (iv) the first
day on which a majority of the members of the Board of Directors of the Company
are not Continuing Directors; or (iv) the Company consolidates with, or merges
with or into, any Person, or any Person consolidates with, or merges with or
into, the Company, in any such event pursuant to a transaction in which any of
the outstanding Voting Stock of the Company is converted into or exchanged for
cash, securities or other property, other than any such transaction where the
Voting Stock of the Company outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than Disqualified Stock) of
the surviving or transferee Person constituting a majority of the outstanding
shares of such Voting Stock of such surviving or transferee Person (immediately
after giving effect to such issuance).
"Company" means Prime Medical Services, Inc., and any and all
successors thereto.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was included in computing such Consolidated
Net Income, plus (iii) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization or write-off of
debt issuance costs and original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash
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expenses (excluding any such depreciation, amortization and other non-cash
charges attributable to minority interests and any other non-cash expense to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Restricted Subsidiaries for such period to the
extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income, minus (v) non-cash items
increasing such Consolidated Net Income for such period (excluding any items
which represent the reversal of any accrual of, or cash reserves for,
anticipated cash charges in any prior period), in each case, on a consolidated
basis and determined in accordance with GAAP. Notwithstanding the foregoing, the
provision for taxes on the income or profits of, and the depreciation and
amortization and other non-cash expenses of, a Restricted Subsidiary of the
referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in the same proportion) that the
Net Income of such Restricted Subsidiary was included in calculating the
Consolidated Net Income of such Person and only if a corresponding amount would
be permitted at the date of determination to be dividended to the Company by
such Restricted Subsidiary without prior governmental approval (that has not
been obtained), and without direct or indirect restriction pursuant to the terms
of its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to that Restricted
Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Restricted Subsidiary
thereof, (ii) the Net Income of any Restricted Subsidiary shall be excluded to
the extent that the declaration or payment of dividends or similar distributions
by that Restricted Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (that has not
been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary or the holders
of its Equity Interests, (iii) the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded and (iv) the cumulative effect of a change in
accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of this Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments), and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
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"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 14.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Debt to Cash Flow Ratio" means, with respect to any Person as of any
date of determination (the "Calculation Date") the ratio of (a) the consolidated
Indebtedness of such Person and its Restricted Subsidiaries as of the
Calculation Date to (b) the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for the most recent four full fiscal quarters ending
immediately prior to such date for which internal financial statements are
available determined on a pro forma basis after giving effect to all financing
transactions and acquisitions or dispositions of assets made by such Person and
its Restricted Subsidiaries from the beginning of such four quarter period
through and including such Calculation Date as if such transactions had occurred
at the beginning of such quarter. In addition, for purposes of making the
computation referred to above, (i) acquisitions that have been made by such
Person or any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
reference period or subsequent to such reference period and on or prior to the
Calculation Date shall be deemed to have occurred on the first day of the
reference period and Consolidated Cash Flow for such reference period shall be
calculated without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A1 hereto except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Designated Senior Debt" means (i) any Obligations outstanding under
the Senior Credit Facility and (ii) any other Senior Debt permitted under this
Indenture the aggregate principal amount of which is $10.0 million or more and
that has been designated by the Company as "Designated Senior Debt."
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"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a
Change of Control or an Asset Sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that the Company may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with Section 4.07 hereof.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant
to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Senior Credit Facility) in
existence on the Issue Date, including without limitation obligations to make
earn-out or other contingent payments arising under agreements in existence on
the Issue Date, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication (and determined in each case an accordance with GAAP),
of (i) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued (including, without
limitation, amortization or write-off of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations) and (ii) the consolidated interest of such Person and
its Restricted Subsidiaries that was capitalized during such period, and (iii)
any interest expense on Indebtedness of another Person that is Guaranteed by
such Person or one of its Restricted Subsidiaries or secured by a Lien on assets
of such Person or one of its Restricted Subsidiaries (whether or not such
Guarantee or Lien is called upon) and (iv) the product of (a) all dividend
payments, whether or not in cash, on any series of preferred stock of such
Person or any of its Restricted Subsidiaries, other than dividend payments on
Equity Interests payable solely in Equity Interests of the Company (other than
Disqualified Stock) or to the Company or a
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Restricted Subsidiary of the Company, times (b) a fraction, the numerator of
which is one and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of such Person, expressed as a
decimal, in each case, on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the referent
Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees or
repays or redeems any Indebtedness (other than revolving credit borrowings) or
issues or redeems preferred stock subsequent to the commencement of the period
for which the Fixed Charge Coverage Ratio is being calculated but prior to the
date on which the event for which the calculation of the Fixed Charge Coverage
Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio
shall be calculated giving pro forma effect to such incurrence, assumption,
Guarantee or redemption of Indebtedness, or such issuance or redemption of
preferred stock, as if the same had occurred at the beginning of the applicable
four-quarter reference period. In addition, for purposes of making the
computation referred to above, (i) acquisitions that have been made by the
Company or any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (iii) of
the proviso set forth in the definition of Consolidated Net Income, and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A1 hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
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"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means the global Note in the form of Exhibit A1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) (provided that in the case of any such Lien, if the
obligations so secured have not been assumed by such Person or are not otherwise
such Person's legal liability, such obligations shall be deemed to be in an
amount equal to the fair market value of such properties or assets (which, if
such value is in excess of $1.0 million, shall be determined in good faith by
the Board of Directors of such Person, which determination shall be evidenced by
a Board Resolution)) and, to the extent not otherwise included, the Guarantee by
such Person of any Indebtedness of any other Person (to the extent of such
Guarantee). The amount of any Indebtedness outstanding as of any date shall be
(i) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount, and (ii) the principal amount thereof, together with
any interest thereon that is more than 45 days past due, in the case of any
other Indebtedness. Indebtedness shall not include open payables owed by the
Company to any Subsidiary arising in the ordinary course of business solely from
the collection by the Company of amounts due to such Subsidiary.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Initial Guarantors" means the Guarantors who executed this Indenture
on the Issue Date.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers, directors and employees made in the ordinary course of
business), purchases
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or other acquisitions for consideration of Indebtedness, Equity Interests or
other securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Restricted Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary of the Company
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Restricted Subsidiary not sold
or disposed of in an amount determined as provided in Section 4.07 hereof.
"Issue Date" means the closing date for the sale and original issuance
of the Notes under this Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, St. Louis, Missouri or at a place of
payment are authorized by law, regulation or executive order to remain closed.
If a payment date is a Legal Holiday at a place of payment, payment may be made
at that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue on such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" shall have the meaning set forth in the
Registration Rights Agreement.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
(without duplication) the direct costs relating to such Asset Sale (including,
without limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), amounts required to be
applied to the repayment of Indebtedness (other than debt under the Senior
Credit Facility) secured by a Lien on the asset or assets
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that were the subject of such Asset Sale, any reserve for adjustment in respect
of the sale price of such asset or assets established in accordance with GAAP,
all distributions and other payments required to be made pursuant to customary
partnership agreements, limited liability company organizational documents,
joint venture agreements or similar agreements entered into in the ordinary
course of business to minority interest holders in Restricted Subsidiaries as a
result of such Asset Sale, and appropriate amounts to be provided by the seller
as a reserve, in accordance with GAAP, against any liabilities associated with
the assets disposed of in such Asset Sale and retained by the Company or any
Restricted Subsidiary after such Asset Sale.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 14.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
14.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
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"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Permitted Business" means the business conducted by the Company and
its Restricted Subsidiaries on the Issue Date and businesses reasonably related
thereto.
"Permitted Investments" means (a) any Investment in the Company or in
a Restricted Subsidiary of the Company; (b) any Investment in Cash Equivalents;
(c) any Investment by the Company or any Restricted Subsidiary of the Company in
a Person, if as a result of such Investment (i) such Person becomes a Restricted
Subsidiary of the Company or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary of the
Company; (d) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with Section 4.10 hereof; (e) any acquisition of Equity Interests, assets or
Investments in a Person solely in exchange for the issuance of Equity Interests
(other than Disqualified Stock) of the Company; (f) any acquisition by the
Company or a Restricted Subsidiary of outstanding Equity Interests in any
Restricted Subsidiary; (g) working capital advances on fair and reasonable terms
to the Company (in the good faith judgment of senior management of the Company)
to Unrestricted Subsidiaries in the ordinary course of business on a basis
consistent with past practice, provided that such advances are not outstanding
for more than ninety days; (h) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Company or any of its Restricted Subsidiaries or in satisfaction of judgments or
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of any debtor, (i) accounts receivable created or
acquired, and prepaid expenses arising, in the ordinary course of business; (j)
the endorsements of negotiable instruments for collection or deposit in the
ordinary course of business; (k) the incurrence, assumption or creation of
Hedging Obligations entered into in compliance with this Indenture in the
ordinary course of business; and (l) other Investments in Persons (other than
Restricted Subsidiaries) engaged primarily in lithotripsy operations, which
Investments have an aggregate fair market value (measured on the date each such
Investment was made and without giving effect to subsequent changes in value),
when taken together with all other Investments made pursuant to this clause (l)
that are at the time outstanding (it being understood that an Investment shall
be deemed not to be outstanding for purposes of this clause (l) if such Person
subsequently becomes a Restricted Subsidiary), not to exceed $50.0 million if
both before and after giving pro forma effect to any such Investment (i) no
Default or Event of Default shall have occurred and is continuing, (ii) the
Company's Fixed Charge Coverage Ratio for the Company's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date of such proposed Investment would have been at
least 3.5 to 1 and (iii) the Company's Debt to Cash Flow Ratio for the Company's
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date of such proposed
Investment would have been no greater than 3.5 to 1.
"Permitted Junior Securities" means Equity Interests in the Company or
a Subsidiary Guarantor or debt securities that are subordinated to all Senior
Debt (and any debt securities issued in exchange for Senior Debt) to
substantially the same extent as, or to a greater extent than, the Notes, or
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such Subsidiary Guarantor's Subsidiary Guarantee, as appropriate, are
subordinated to Senior Debt pursuant to this Indenture.
"Permitted Liens" means (i) Liens on assets of the Company or any of
the Subsidiary Guarantors securing Senior Debt under the Senior Credit Facility
that were permitted by the terms of this Indenture to be incurred; (ii) Liens in
favor of the Company or a Subsidiary Guarantor; (iii) Liens on property of a
Person existing at the time such Person is merged into or consolidated with the
Company or any Subsidiary of the Company or becomes a Subsidiary of the Company;
provided that such Liens were in existence prior to the contemplation of such
transaction and do not extend to any assets other than those of such Person;
(iv) Liens on property existing at the time of acquisition thereof by the
Company or any Subsidiary of the Company, provided that such Liens were in
existence prior to the contemplation of such acquisition; (v) Landlord's Liens
or Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business; (vi) Liens to secure Indebtedness (including
Capital Lease Obligations) permitted by clauses (iv) or (x) of the second
paragraph Section 4.09 hereof covering only the assets acquired with such
Indebtedness; (vii) Liens existing on the date of this Indenture; (viii) Liens
for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings
promptly instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (ix) Liens incurred in the ordinary course of business of
the Company or any Subsidiary of the Company with respect to obligations that do
not exceed $5.0 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of advances
or credit (other than trade credit in the ordinary course of business) and (b)
do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by the Company or
such Subsidiary; (x) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries; (xi) Liens on assets of the
Company securing Senior Debt of the Company that was permitted to be incurred by
the terms of this Indenture and Liens on assets of a Subsidiary Guarantor
securing Senior Debt of such Subsidiary Guarantor that was permitted to be
incurred by the terms of this Indenture; (xii) Liens securing Permitted
Refinancing Indebtedness which is incurred to refinance any Indebtedness which
has been secured by a Lien permitted under this Indenture and which has been
incurred in accordance with the provisions of this Indenture, provided, however,
that such Liens (A) are not materially less favorable to the Holders and are not
materially more favorable to the lienholders with respect to such Liens than the
Liens in respect of the Indebtedness being refinanced and (B) do not extend to
or cover any property or assets of the Company or any of its Restricted
Subsidiaries not securing the Indebtedness so refinanced (other than
improvements to such property or assets); (xiii) Liens arising under this
Indenture in favor of the Trustee for its own benefit and similar Liens in favor
of other trustees arising under instruments governing Indebtedness permitted to
be incurred under this Indenture; (xiv) judgment Liens not giving rise to an
Event of Default so long as such Lien is adequately bonded and any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment shall not have finally terminated or other period within which such
proceedings may be initiated shall not have expired; (xv) Liens resulting from
the deposit of funds or government securities in trust for the purpose of
discharging or defeasing Indebtedness of the Company and its Restricted
Subsidiaries so long as such deposit of funds or government securities and such
discharging or defeasing of Indebtedness are permitted under Section 4.07
hereof; (xvi) setoff, chargeback and other rights of depository and collecting
banks and other regulated financial institutions with respect to money or
instruments of the Company or its Restricted Subsidiaries on deposit with or in
the possession of such institutions; (xvii) pledges or deposits made in the
ordinary course of business in connection with
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workers' compensation, unemployment insurance and other social security
legislation; and (xviii) Liens securing Hedging Obligations otherwise permitted
under this Indenture.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund, in whole or in part, other Indebtedness of the Company or any of its
Restricted Subsidiaries (other than intercompany Indebtedness); provided that:
(i) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or accreted
value, if applicable), plus accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness is subordinated in right of payment to the Notes on terms at least
as favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of March 27, 1998, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note
or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in
the form of Exhibit A1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
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"Regulation S Temporary Global Note" means a temporary global Note in
the form of Exhibit A2 hereto bearing the Global Note Legend, the Regulation S
Temporary Legend and the Private Placement Legend and deposited with or on
behalf of and registered in the name of the Depositary or its nominee, issued in
a denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.
"Regulation S Temporary Legend" means the legend set forth in Section
2.06 (g)(iii) to be placed on the Regulation S Temporary Global Note.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means that certain credit agreement existing
on the Issue Date by and among the Company, certain lending parties thereto and
Bank Boston, N.A. and NationsBank of Texas, N.A., as agents, including any
related notes, guarantees (by Subsidiaries or otherwise), collateral documents,
instruments and agreements executed in connection therewith, as such credit
agreement and/or related documents may be amended, restated, supplemented,
renewed, replaced or otherwise modified from time to time (in each case, in
whole or in part, and without limitation as to amount, terms, conditions,
covenants and other provisions), with the same or other agents, trustees,
representative lenders or holders, irrespective of any changes in the terms and
conditions thereof. Without limiting the generality of the foregoing, the term
"Senior Credit Facility" shall include any amendment, amendment
14
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and restatement, renewal, extension, restructuring, supplement or modification
to any Senior Credit Facility and all refundings, refinancings and replacements
of any Senior Credit Facility, including any agreement (i) extending the
maturity of any Obligations incurred thereunder or contemplated thereby, (ii)
adding or deleting borrowers or guarantors thereunder, so long as borrowers and
guarantors include one or more of the Company and its Subsidiaries and their
respective successors and assigns, or (iii) increasing the amount of
Indebtedness incurred thereunder or available to be borrowed thereunder.
"Senior Debt" means (i) all Obligations of the Company or any
Subsidiary Guarantors outstanding under the Senior Credit Facility and all
Hedging Obligations with respect thereto, (ii) any other Indebtedness permitted
to be incurred by the Company or any Subsidiary Guarantors under the terms of
this Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes or any Subsidiary Guarantor's Subsidiary Guarantee of the
Notes and (iii) all Obligations with respect to the foregoing. Notwithstanding
anything to the contrary in the foregoing, Senior Debt will not include (v) any
liability for federal, state, local or other taxes owed or owing by the Company
or any of its Subsidiaries, (w) any Indebtedness of the Company or any of its
Subsidiaries to any Subsidiary or other Affiliate, (x) any trade payables, (y)
any Indebtedness that is incurred in violation of this Indenture or (z) any
Indebtedness which is, by its express terms, subordinated in right of payment to
any other Indebtedness of the Company.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"Significant Restricted Subsidiary" means any Subsidiary that would be
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership or limited liability company (a) the sole
general partner, the managing general partner or the managing member, as the
case may be, of which is such Person or a Subsidiary of such Person or (b) the
only general partners or managing members, as the case may be, of which are such
Person or of one or more Subsidiaries of such Person (or any combination
thereof).
"Subsidiary Guarantee" means the Guarantee by each Subsidiary
Guarantor of the Company's payment obligations under this Indenture and the
Notes, executed pursuant to the provisions of this Indenture.
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"Subsidiary Guarantors" means (i) the limited Guarantors and (ii) any
other Subsidiary that executes a Subsidiary Guarantee in accordance with the
provisions of this Indenture, and their respective successors and assigns, in
each case so long as such Person guarantees the obligations of the Company
pursuant to Article 11 hereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S)
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Global Note" means a permanent global Note in the form
of Exhibit A1 attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend or the Regulation S Temporary Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated
by the Board of Directors as an Unrestricted Subsidiary (and any Subsidiary of
such Unrestricted Subsidiary) pursuant to a Board Resolution; but only to the
extent that such Subsidiary: (a) has no Indebtedness other than Non-Recourse
Debt; (b) is not party to any agreement, contract, arrangement or understanding
with the Company or any Restricted Subsidiary of the Company unless the terms of
any such agreement, contract, arrangement or understanding are no less favorable
to the Company or such Restricted Subsidiary than those that might be obtained
at the time from Persons who are not Affiliates of the Company (other than (x)
open payables owed by the Company to such Subsidiary arising in the ordinary
course of business solely from the collection by the Company of amounts due to
such Subsidiary and (y) working capital advances on fair and reasonable terms to
the Company (in the good faith judgment of senior management of the Company) to
such Subsidiary in the ordinary course of business on a basis consistent with
past practice, provided that such advances are not outstanding for more than 90
days); (c) is a Person with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation (x) to subscribe
for additional Equity Interests or (y) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results; and (d) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Company or any of
its Restricted Subsidiaries. Any such designation by the Board of Directors
shall be evidenced to the Trustee by filing with the Trustee a certified copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions and was permitted by Section 4.07 hereof. If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Company shall be in
default of such covenant). The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any
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outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (i) such Indebtedness is permitted under Section 4.09
hereof, calculated on a pro forma basis as if such designation had occurred at
the beginning of the four-quarter reference period and (ii) no Default or Event
of Default would be in existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"...........................4.11
"Asset Sale Offer"................................4.10
"Authentication Order"............................2.02
"Change of Control Offer".........................4.15
"Change of Control Payment Date"..................4.15
"Covenant Defeasance".............................8.03
"DTC".............................................2.03
"Event of Default"................................6.01
"Excess Proceeds".................................4.10
"incur"...........................................4.09
"Legal Defeasance"................................8.02
"Offer Amount"....................................3.09
"Offer Period"....................................3.09
"Paying Agent"....................................2.03
"Payment Default".................................6.01
"Permitted Debt"..................................4.09
"Purchase Date"...................................3.09
"Registrar".......................................2.03
"Restricted Payments".............................4.07
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SECTION 1.03. PROVISIONS OF THE TIA
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes and the Subsidiary Guarantees means the Company
and the Subsidiary Guarantors, respectively, and any successor obligor upon the
Notes and the Subsidiary Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include the
singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall be deemed
to include substitute, replacement or successor sections or rules adopted
by the SEC from time to time.
ARTICLE 2.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The
Notes may have notations, legends or endorsements
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required by law, stock exchange rule or usage. Each Note shall be dated the date
of its authentication. The Notes shall be in denominations of $1,000 and
integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company, the
Subsidiary Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Note conflicts with the express
provisions of this Indenture, the provisions of this Indenture shall govern and
be controlling.
(b) Global Notes. Notes issued in global form shall be substantially
in the form of Exhibits A1 or A2 attached hereto (including the Global Note
Legend thereon and the "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Notes issued in definitive form shall be substantially in the
form of Exhibit A1 attached hereto (but without the Global Note Legend thereon
and without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S Temporary
Global Note, which shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee, as custodian for the Depositary, and
registered in the name of the Depositary or the nominee of the Depositary for
the accounts of designated agents holding on behalf of Euroclear or Cedel Bank,
duly executed by the Company and authenticated by the Trustee as hereinafter
provided. The Restricted Period shall be terminated upon the receipt by the
Trustee of (i) a written certificate from the Depositary, together with copies
of certificates from Euroclear and Cedel Bank certifying that they have received
certification of non-United States beneficial ownership of 100% of the aggregate
principal amount of the Regulation S Temporary Global Note (except to the extent
of any beneficial owners thereof who acquired an interest therein during the
Restricted Period pursuant to another exemption from registration under the
Securities Act and who will take delivery of a beneficial ownership interest in
a 144A Global Note or an IAI Global Note bearing a Private Placement Legend, all
as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers'
Certificate from the Company. Following the termination of the Restricted
Period, beneficial interests in the Regulation S Temporary Global Note shall be
exchanged for beneficial interests in Regulation S Permanent Global Notes
pursuant to the Applicable Procedures. Simultaneously with the authentication
of Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation
S Temporary Global Note. The aggregate principal amount of the Regulation S
Temporary Global Note and the Regulation S Permanent Global Notes may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee, as the case may be, in connection
with transfers of interest as hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the
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"General Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel
Bank shall be applicable to transfers of beneficial interests in the Regulation
S Temporary Global Note and the Regulation S Permanent Global Notes that are
held by Participants through Euroclear or Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
One Officer shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal may be reproduced on the Notes and may
be in facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall
notify the Trustee in writing of the name and address of any Agent not a party
to this Indenture. If the Company fails to appoint or maintain another entity
as Registrar or Paying Agent, the Trustee shall act as such. The Company or any
of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
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SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Subject to applicable escheat and abandoned property laws, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of (and premium, if any, on) or interest
or Liquidated Damages, if any, on any Note and remaining unclaimed for two years
after such principal (and premium, if any) or interest or Liquidated Damages, if
any, has become due and payable shall be paid to the Company on Company request,
or (if then held by the Company) shall be discharged from such trust; and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Company for payment hereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of the Company
as trustee thereof, shall thereupon cease; provided, however, that the Trustee
or such Paying Agent, before being required to make any such repayment, may at
the expense of the Company cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in the Borough of Manhattan, the City of New York, notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA (S) 312. If the Trustee is not
the Registrar, the Company shall furnish to the Trustee at least seven Business
Days before each interest payment date and at such other times as the Trustee
may request in writing, a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of the Holders of Notes and
the Company shall otherwise comply with TIA (S) 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. All Global Notes will be exchanged by the
Company for Definitive Notes if (i) the Company delivers to the Trustee notice
from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary, (ii)
the Company in its sole
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discretion determines that the Global Notes (in whole but not in part) should be
exchanged for Definitive Notes and delivers a written notice to such effect to
the Trustee, (iii) there shall have occurred and be continuing a Default or
Event of Default or (iv) upon request but only upon prior written notice given
to the Trustee by or on behalf of the Depositary and upon compliance with the
other applicable requirements of this Indenture; provided that in no event shall
the Regulation S Temporary Global Note be exchanged by the Company for
Definitive Notes prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates required pursuant to Rule
903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of any of the
preceding events in (i), (ii), (iii) or (iv) above, Definitive Notes shall be
issued in such names and principal amounts as the Depositary shall instruct the
Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as
provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and
delivered in exchange for, or in lieu of, a Global Note or any portion thereof,
pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be
authenticated and delivered in the form of, and shall be, a Global Note. A
Global Note may not be exchanged for another Note other than as provided in this
Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial
interests in any Restricted Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in the same Restricted
Global Note in accordance with the transfer restrictions set forth in the
Private Placement Legend; provided, however, that prior to the expiration of the
Restricted Period, transfers of beneficial interests in the Temporary Regulation
S Global Note may not be made to a U.S. Person or for the account or benefit of
a U.S. Person (other than an Initial Purchaser). Beneficial interests in any
Unrestricted Global Note may be transferred to Persons who take delivery thereof
in the form of a beneficial interest in an Unrestricted Global Note. No written
orders or instructions shall be required to be delivered to the Registrar to
effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes.
In connection with all transfers and exchanges of beneficial interests that are
not subject to Section 2.06(b)(i) above, the transferor of such beneficial
interest must deliver to the Registrar either (A) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in accordance
with the Applicable Procedures directing the Depositary to credit or cause to be
credited a beneficial interest in another Global Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions given in
accordance with the Applicable Procedures containing information regarding the
Participant account to be credited with such increase or (B) (1) a written order
from a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause to
be issued a Definitive Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary to the
Registrar containing information regarding the Person in whose name such
Definitive Note shall be registered to effect the
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transfer or exchange referred to in (1) above; provided that in no event shall
Definitive Notes be issued upon the transfer or exchange of beneficial interests
in the Regulation S Temporary Global Note prior to (x) the expiration of the
Restricted Period and (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903 under the Securities Act. Upon consummation of an
Exchange Offer by the Company in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been satisfied
upon receipt by the Registrar of the instructions contained in the Letter of
Transmittal delivered by the Holder of such beneficial interests in the
Restricted Global Notes. Upon satisfaction of all of the requirements for
transfer or exchange of beneficial interests in Global Notes contained in this
Indenture and the Notes or otherwise applicable under the Securities Act, the
Trustee shall adjust the principal amount of the relevant Global Note(s)
pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global Note. A
beneficial interest in any Restricted Global Note may be transferred to a Person
who takes delivery thereof in the form of a beneficial interest in another
Restricted Global Note if the transfer complies with the requirements of Section
2.06(b)(ii) above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial
interest in the 144A Global Note, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transferee will take delivery in the form of a beneficial
interest in the Regulation S Temporary Global Note or the Regulation S Global
Note, then the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a beneficial
interest in the IAI Global Note, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications and certificates
and Opinion of Counsel required by item (3) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note
for Beneficial Interests in the Unrestricted Global Note. A beneficial interest
in any Restricted Global Note may be exchanged by any holder thereof for a
beneficial interest in an Unrestricted Global Note or transferred to a Person
who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note if the exchange or transfer complies with the
requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the holder of the
beneficial interest to be transferred, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person participating in
the distribution of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration Statement in
accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the Registration
Rights Agreement;
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(D) such transfer is effected pursuant to an effective registration statement
under the Securities Act and the transferor delivers a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item (3)(c)
thereof; or
(E) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in the form of Exhibit
C hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global Note
proposes to transfer such beneficial interest to a Person who shall take
delivery thereof in the form of a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (E), if the Registrar
or the Company so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar and the
Company to the effect that such exchange or transfer is in compliance with
the Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (E)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (E) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Restricted Definitive
Note or to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Restricted Definitive Note, then, upon receipt by the
Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a Restricted Definitive Note,
a certificate from such holder in the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in accordance
with Rule 144A under the Securities Act, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (1) thereof;
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(C) if such beneficial interest is being transferred to an Institutional
Accredited Investor in reliance on an exemption from the registration
requirements of the Securities Act other than that listed in subparagraph (B)
above, a certificate to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item (3)(d)
thereof, if applicable; or
(D) if such beneficial interest is being transferred to the Company or any of
its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive
Notes. A holder of a beneficial interest in a Restricted Global Note may
exchange such beneficial interest for an Unrestricted Definitive Note or may
transfer such beneficial interest to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the holder of such
beneficial interest, in the case of an exchange, or the transferee, in the case
of a transfer, certifies in the applicable Letter of Transmittal that it is not
(1) a broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of
the Company;
(B) such transfer is effected pursuant to the Shelf Registration Statement in
accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the Registration Rights
Agreement;
(D) such transfer is effected pursuant to an effective registration statement
under the Securities Act and the transferor delivers a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item (3)(c)
thereof; or
(E) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a Definitive Note that does
not bear the Private Placement Legend, a
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certificate from such holder in the form of Exhibit C hereto, including the
certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global Note
proposes to transfer such beneficial interest to a Person who shall take
delivery thereof in the form of a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (E), if the
Registrar or the Company so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to the
Registrar and the Company to the effect that such exchange or transfer is
in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to Unrestricted
Definitive Notes. If any holder of a beneficial interest in an Unrestricted
Global Note proposes to exchange such beneficial interest for a Definitive Note
or to transfer such beneficial interest to a Person who takes delivery thereof
in the form of a Definitive Note, then, upon satisfaction of the conditions set
forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate
principal amount of the applicable Global Note to be reduced accordingly
pursuant to Section 2.06(h) hereof, and the Company shall execute and the
Trustee shall authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iii) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the Depositary
and the Participant or Indirect Participant. The Trustee shall deliver such
Definitive Notes to the Persons in whose names such Notes are so registered.
Any Definitive Note issued in exchange for a beneficial interest pursuant to
this Section 2.06(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted Global
Notes. If any Holder of a Restricted Definitive Note proposes to transfer such
Restricted Definitive Notes to a Person who takes delivery thereof in the form
of a beneficial interest in a Restricted Global Note, then, upon receipt by the
Registrar of the following documentation:
(A) if such Restricted Definitive Note is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item (1) thereof;
(B) if such Restricted Definitive Note is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 903 or Rule 904 under
the Securities Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(C) if such Restricted Definitive Note is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act
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other than that listed in subparagraph (B) above, a certificate to the effect
set forth in Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3)(d) thereof; or
(D) if such Restricted Definitive Note is being transferred to the Company or
any of its Subsidiaries, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(b) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the 144A Global Note, in the case of clause (B) above, the
Regulation S Global Note, and in all other cases, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global
Notes. A Holder of a Restricted Definitive Note may exchange such Note for a
beneficial interest in an Unrestricted Global Note or transfer such Restricted
Definitive Note to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the Holder, in the case of
an exchange, or the transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a
Person participating in the distribution of the Exchange Notes or (3) a Person
who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration Statement in
accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the Registration Rights
Agreement;
(D) such transfer is effected pursuant to an effective registration statement
under the Securities Act and the transferor delivers a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item (3)(c)
thereof; or
(E) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to exchange such Notes
for a beneficial interest in the Unrestricted Global Note, a certificate from
such Holder in the form of Exhibit C hereto, including the certifications in
item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to transfer such Notes to a
Person who shall take delivery thereof in the form of a beneficial interest in
the Unrestricted Global Note, a certificate from such Holder in the form of
Exhibit B hereto, including the certifications in item (4) thereof,
and, in each such case set forth in this subparagraph (E), if the Registrar
or the Company so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar and the
Company to the effect that such exchange or transfer is in compliance with
the Securities Act and that the restrictions on transfer contained herein
and in
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the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted
Global Notes. A Holder of an Unrestricted Definitive Note may exchange such
Note for a beneficial interest in an Unrestricted Global Note or transfer such
Definitive Notes to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note at any time. Upon receipt of
a request for such an exchange or transfer, the Trustee shall cancel the
applicable Unrestricted Definitive Note and increase or cause to be increased
the aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(E) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name of
Persons who take delivery thereof in the form of a Restricted Definitive Note if
the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the Securities
Act, then the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the
transferor must deliver a certificate in the form of Exhibit B hereto, including
the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption from the
registration requirements of the Securities Act, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
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(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the Holder, in the case of
an exchange, or the transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a
Person participating in the distribution of the Exchange Notes or (3) a Person
who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf Registration Statement
in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Participating Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the Registration
Rights Agreement;
(D) such transfer is effected pursuant to an effective registration statement
under the Securities Act and the transferor delivers a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item (3)(c)
thereof; or
(E) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes to exchange
such Notes for an Unrestricted Definitive Note, a certificate from such Holder
in the form of Exhibit C hereto, including the certifications in item (1)(d)
thereof; or
(2) if the Holder of such Restricted Definitive Notes proposes to transfer
such Notes to a Person who shall take delivery thereof in the form of an
Unrestricted Definitive Note, a certificate from such Holder in the form of
Exhibit B hereto, including the certifications in item (4) thereof,
and, in each such case set forth in this subparagraph (E), if the
Registrar or the Company so requests, an Opinion of Counsel in form
reasonably acceptable to the Registrar and the Company to the effect that
such exchange or transfer is in compliance with the Securities Act and
that the restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain compliance
with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder
of Unrestricted Definitive Notes may transfer such Notes to a Person who takes
delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt
of a request to register such a transfer, the Registrar shall register the
Unrestricted Definitive Notes pursuant to the instructions from the Holder
thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not broker-
dealers, (y) they are not participating in a distribution of the
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Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the
Company, and accepted for exchange in the Exchange Offer and (ii) Definitive
Notes in an aggregate principal amount equal to the principal amount of the
Restricted Definitive Notes accepted for exchange in the Exchange Offer.
Concurrently with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and deliver to the Persons designated by the Holders of Definitive
Notes so accepted Definitive Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global Note and each
Definitive Note (and all Notes issued in exchange therefor or substitution
thereof) shall bear the legend in substantially the following form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY
OF SUCH EVIDENCE, IF ANY REQUIRED UNDER THIS INDENTURE PURSUANT TO WHICH
THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER
OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE
SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY (1) (a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR
(d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY
SO REQUESTS), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF
THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO THE COMPANY OR (3) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
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OTHER APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTION SET FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global Note or Definitive Note issued
pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii),
(e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Notes issued in exchange
therefor or substitution thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in substantially
the following form:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK,
NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THIS INDENTURE REFERRED TO ON THE REVERSE
HEREOF."
(iii) Regulation S Temporary Global Note Legend. The Regulation S Temporary
Global Note shall bear a legend in substantially the following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES,
ARE AS SPECIFIED IN THIS INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER
NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL
BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary
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at the direction of the Trustee to reflect such reduction; and if the beneficial
interest is being exchanged for or transferred to a Person who will take
delivery thereof in the form of a beneficial interest in another Global Note,
such other Global Note shall be increased accordingly and an endorsement shall
be made on such Global Note by the Trustee or by the Depositary at the direction
of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Global Notes and Definitive Notes
upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial interest in a
Global Note or to a Holder of a Definitive Note for any registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05
hereof).
(iii) The Registrar shall not be required to register the transfer of or
exchange any Note selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any registration of
transfer or exchange of Global Notes or Definitive Notes shall be the valid
obligations of the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Global Notes or Definitive Notes
surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the transfer
of or to exchange any Notes during a period beginning at the opening of business
15 days before the day of any selection of Notes for redemption under Section
3.02 hereof and ending at the close of business on the day of selection, (B) to
register the transfer of or to exchange any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part or (c) to register the transfer of or to exchange a Note between a record
date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of any Note,
the Trustee, any Agent and the Company may deem and treat the Person in whose
name any Note is registered as the absolute owner of such Note for the purpose
of receiving payment of principal of and interest on such Notes and for all
other purposes, and none of the Trustee, any Agent or the Company shall be
affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive Notes in
accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel required to be
submitted to the Registrar pursuant to this Section 2.06 to effect a
registration of transfer or exchange may be submitted by facsimile.
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SECTION 2.07. REPLACEMENT NOTES
If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee and the Company each receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon receipt of an Authentication Order, shall authenticate a replacement Note
if the requirements of this Indenture are met. If required by the Trustee or
the Company, an indemnity bond must be supplied by the Holder that is sufficient
in the judgment of the Trustee and the Company to protect the Company, the
Trustee, any Agent and any authenticating agent from any loss that any of them
may suffer if a Note is replaced. The Company may charge for its expenses in
replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
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SECTION 2.10. TEMPORARY NOTES
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it
has paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee
in writing of the amount of defaulted interest proposed to be paid on each Note
and the date of the proposed payment. The Company shall fix or cause to be
fixed each such special record date and payment date, provided that no such
special record date shall be less than 10 days prior to the related payment date
for such defaulted interest. At least 15 days before the special record date,
the Company (or, upon the written request of the Company, the Trustee in the
name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related payment date
and the amount of such interest to be paid.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
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SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED
If less than all of the Notes are to be redeemed at any time,
selection of Notes for redemption will be made by the Trustee in compliance with
the requirements of the principal national securities exchange, if any, on which
the Notes are listed, or, if the Notes are not so listed, on a pro rata basis,
by lot or by such method the Trustee shall deem fair and appropriate and
otherwise in accordance with applicable law; provided that no Notes of $1,000 or
less shall be redeemed in part. In the event of partial redemption by lot, the
particular Notes to be redeemed shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the redemption date by
the Trustee from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder of
Notes to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal amount
of such Note to be redeemed and that, after the redemption date upon surrender
of such Note, a new Note or Notes in principal amount equal to the unredeemed
portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying Agent to
collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant to
which the Notes called for redemption are being redeemed; and
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(h) that no representation is made as to the correctness or accuracy of the
CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price; provided, however, that the failure to
provide such notice shall not affect the liability of the Company to pay the
redemption price. A notice of redemption may not be conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
On or before 11:00 a.m. Eastern time, on the redemption date, the
Company shall deposit with the Trustee or with the Paying Agent money sufficient
to pay the redemption price of and accrued interest on all Notes to be redeemed
on that date. The Trustee or the Paying Agent shall promptly return to the
Company any money deposited with the Trustee or the Paying Agent by the Company
in excess of the amounts necessary to pay the redemption price of, and accrued
interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the Notes will not
be redeemable at the Company's option prior to April 1, 2003. Thereafter, the
Notes will be subject to redemption at any time at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages thereon to the
applicable
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redemption date, if redeemed during the twelve-month period beginning on April 1
of the years indicated below:
YEAR PERCENTAGE
---- ----------
2003..................................... 104.375%
2004..................................... 102.917%
2005..................................... 101.458%
2006 and thereafter...................... 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section 3.07, at any
time on or before April 1, 2001, the Company may redeem up to 35% of the
aggregate principal amount of Notes originally issued under this Indenture at a
redemption price of 108.75% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the redemption date,
with the net cash proceeds to the Company of one or more public offerings of
common stock; provided that at least $65.0 million in aggregate principal amount
of Notes remain outstanding immediately after the occurrence of such redemption
(excluding Notes held by the Company or any of its Subsidiaries); and provided,
further, that such redemption shall occur within 90 days of the date of the
closing of such public offering.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant to the
provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an Asset Sale Offer, it shall follow the procedures
specified below.
The Asset Sale Offer shall remain open for a period of at least 20
Business Days following its commencement (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
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Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.09 and
Section 4.10 hereof and the length of time the Asset Sale Offer shall remain
open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to accrue
interest;
(d) that, unless the Company defaults in making such payment, any Note accepted
for payment pursuant to the Asset Sale Offer shall cease to accrue interest
after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset Sale
Offer may only elect to have all of such Note purchased and may not elect to
have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any Asset Sale
Offer shall be required to surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note completed, or transfer by
book-entry transfer, to the Company, a depositary, if appointed by the Company,
or a Paying Agent at the address specified in the notice prior to the expiration
of the Offer Period;
(g) that Holders shall be entitled to withdraw their election if the Company,
the depositary or the Paying Agent, as the case may be, receives, not later than
the expiration of the Offer Period, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Note
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by Holders
exceeds the Offer Amount, the Company shall select the Notes to be purchased on
a pro rata basis (with such adjustments as may be deemed appropriate by the
Company so that only Notes in denominations of $1,000, or integral multiples
thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued new
Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee, upon written request from the Company shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount
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equal to any unpurchased portion of the Note surrendered. Any Note not so
accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Asset Sale Offer
on or prior to the Purchase Date. The Company shall comply with the requirements
of Rule 14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations are applicable in
connection with the repurchase of Notes in connection with an Asset Sale Offer
and, to the extent inconsistent with the provisions of this Indenture, such laws
and regulations shall govern.
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds (in New York, New York, or as otherwise specified by the Paying Agent) as
of 11:00 a.m. Eastern Time on the due date money deposited by the Company in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.
If an Event of Default has occurred and is continuing, the Company
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess
of the then applicable interest rate on the Notes to the extent lawful; it shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace period) at the same rate to the extent
lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
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The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the SEC, so long as
any Notes are outstanding, the Company shall furnish to the Trustee and the
Holders of Notes (i) all quarterly and annual financial information that would
be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
the Company were required to file such forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by the Company's
certified independent accountants and (ii) all current reports that would be
required to be filed with the SEC on Form 8-K if the Company were required to
file such reports, in each case, within the time periods specified in the SEC's
rules and regulations. In addition, following consummation of the Exchange
Offer, whether or not required by the rules and regulations of the SEC, the
Company shall file a copy of all such information and reports with the SEC for
public availability within the time periods specified in the SEC's rules and
regulations (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. The Company shall at all times comply with TIA (S) 314(a).
(b) For so long as any Notes remain outstanding, the Company and the Subsidiary
Guarantors shall furnish to the Holders and to prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company and each Subsidiary Guarantor (to the extent that such
Subsidiary Guarantor is so required under the TIA) shall deliver to the Trustee,
within 90 days after the end of each fiscal year, an Officers' Certificate
stating that a review of the activities of the Company and its Subsidiaries
during the preceding fiscal year has been made under the supervision of the
signing Officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions of this Indenture (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which he or she
may have knowledge and what action the Company is taking or proposes to take
with respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action the Company is taking
or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the American
Institute of Certified Public Accountants, the Officers' Certificate delivered
pursuant to Section 4.04(a) above shall be accompanied by a written statement of
the Company's independent public accountants (who shall be a firm of established
national reputation) that in making the examination necessary for certification
of such financial statements, nothing has come to their attention that would
lead them to believe that the Company has violated any provisions of Article 4
or Article 5 hereof or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants
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shall not be liable directly or indirectly to any Person for any failure to
obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding, deliver to
the Trustee, forthwith upon any Officer becoming aware of any Default or Event
of Default, an Officers' Certificate specifying such Default or Event of Default
and what action the Company is taking or proposes to take with respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company and each of the Subsidiary Guarantors covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of this Indenture;
and the Company and each of the Subsidiary Guarantors (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other similar payment or distribution on account of the Company's or any of
its Restricted Subsidiaries' Equity Interests (including, without limitation,
any payment in connection with any merger or consolidation involving the Company
or any of its Restricted Subsidiaries) or to the direct or indirect holders of
the Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or dividends or other
distributions payable to the Company or a Restricted Subsidiary of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation involving the
Company) any Equity Interests of the Company (other than any such Equity
Interests owned by the Company or any Wholly Owned Restricted Subsidiary of the
Company); (iii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
subordinated to the Notes, except a payment of interest or principal at Stated
Maturity; or (iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively referred
to as "Restricted Payments"), unless, at the time of and after giving effect to
such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
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(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of this Indenture (excluding Restricted
Payments permitted by clauses (ii), (iii) and (iv) of the next succeeding
paragraph), is less than the sum, without duplication, of (i) 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter
commencing after the date of this Indenture to the end of the Company's
most recently ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (ii) 100% of the aggregate net cash proceeds received by the
Company since the date of this Indenture as a contribution to its common
equity capital or from the issue or sale of Equity Interests of the Company
(other than Disqualified Stock) or from the issue or sale of Disqualified
Stock or debt securities of the Company that have been converted into such
Equity Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of the Company), plus
(iii) to the extent that any Restricted Investment that was made after the
date of this Indenture is sold for cash and Cash Equivalents or otherwise
liquidated or repaid for cash and Cash Equivalents, the lesser of (A) the
cash return of capital with respect to such Restricted Investment (less the
cost of disposition, if any) and (B) the initial amount of such Restricted
Investment, plus (iv) to the extent that any Unrestricted Subsidiary is
redesignated as a Restricted Subsidiary after the Issue Date not in
violation of this Indenture the lesser of (A) the fair market value of the
Investment of the Company and its Restricted Subsidiaries in such
Subsidiary as of the date of such redesignation or (B) such fair market
value as of the date on which such Subsidiary was originally designated as
an Unrestricted Subsidiary, plus (v) $15.0 million.
The foregoing provisions will not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of (x) the substantially
concurrent sale (other than to a Restricted Subsidiary of the Company) of, other
Equity Interests of the Company (other than any Disqualified Stock) or (y) a
substantially concurrent contribution of cash to the common equity of the
Company; provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement, defeasance or other
acquisition shall be excluded from clause (c) (ii) of the preceding paragraph;
(iii) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness; (iv) the payment of any dividend by a
Restricted Subsidiary of the Company to the holders of its common Equity
Interests on a pro rata basis; and (v) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company held
by any member of the Company's (or any of its Restricted Subsidiaries')
management (or any estate, heir or legatee of any such member); provided that
the aggregate price paid for all such purchased, redeemed, acquired or retired
Equity Interests shall not
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exceed $250,000 in any twelve-month period and no Default or Event of Default
shall have occurred and be continuing immediately after such transaction.
The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments or, at the
election of the Company Permitted Investments (if in compliance with such
definition) at the time of such designation and will reduce the amount available
for Restricted Payments under the first paragraph of this covenant or Permitted
Investments as applicable. All such outstanding Investments will be deemed to
constitute Investments in an amount equal to the fair market value of such
Investments at the time of such designation. Such designation will only be
permitted if such Restricted Payment or Permitted Investments, as applicable,
would be permitted at such time and if such Restricted Subsidiary otherwise
meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined by
the Board of Directors whose resolution with respect thereto shall be delivered
to the Trustee, such determination to be based upon an opinion or appraisal
issued by an accounting, appraisal or investment banking firm of national
standing if such fair market value exceeds $5.0 million. Not later than the date
of making any Restricted Payment, the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this Section
4.07 were computed, together with a copy of any fairness opinion or appraisal
required by this Indenture.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries. However, the foregoing
restrictions shall not apply to encumbrances or restrictions existing under or
by reason of (a) Existing Indebtedness as in effect on the date of this
Indenture, (b) this Indenture and the Notes, (c) applicable law, (d) any
instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such acquisition), which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so acquired,
provided that, in the case of Indebtedness, such Indebtedness was permitted by
the terms of this Indenture to be incurred, (e) customary non-assignment
provisions in leases and licenses entered into in the ordinary course of
business and consistent with past practices, (f) purchase money obligations for
property acquired in the ordinary course of business that impose restrictions of
the nature described in clause (iii) above on the property so acquired, (g) any
agreement
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for the sale of a Restricted Subsidiary or an asset that restricts distributions
by that Restricted Subsidiary or transfers of such asset pending its sale, (h)
Permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are no more
restrictive, taken as a whole, than those contained in the agreements governing
the Indebtedness being refinanced (whether or not such prior agreements remain
outstanding), (i) secured Indebtedness otherwise permitted to be incurred
pursuant to the provisions of Section 4.12 hereof that limit the right of the
debtor to dispose of the assets securing such Indebtedness, (j) customary
provisions in partnership agreements, limited liability company organizational
governance documents, joint venture agreements and other similar agreements
entered into in the ordinary course of business, (k) restrictions on cash or
other deposits or net worth imposed by customers under contracts entered into in
the ordinary course of business and (l) the Senior Credit Facility as in effect
from time to time, provided that the restrictions contained therein shall be no
more restrictive, taken as a whole, than those contained in the Senior Credit
Facility as in effect on the Issue Date.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and the
Company will not issue any Disqualified Stock and will not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company may incur Indebtedness (including Acquired Debt), or issue shares of
Disqualified Stock and the Subsidiary Guarantors may incur Indebtedness or issue
preferred stock if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock or preferred stock is issued
would have been at least 2.5 to 1, determined on a pro forma basis (including a
pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock or preferred stock had
been issued, as the case may be, at the beginning of such four-quarter period.
The foregoing provisions will not apply to the incurrence of any of
the following items of Indebtedness (collectively, "Permitted Debt"):
(i) the incurrence by the Company or the Subsidiary Guarantors of
Indebtedness (including letters of credit, with letters of credit being
deemed to have a principal amount equal to the maximum potential liability
of the Company and its Restricted Subsidiaries thereunder) under the Senior
Credit Facility; provided that the aggregate principal amount of all
Indebtedness (including letters of credit) outstanding under the Senior
Credit Facility after giving effect to such incurrence does not exceed an
amount equal to $100.0 million less the aggregate amount of all Net
Proceeds of Asset Sales applied to permanently repay any such Indebtedness
pursuant to Section 4.10 hereof;
(ii) the incurrence by the Company and its Restricted Subsidiaries of
the Existing Indebtedness;
(iii) the incurrence by the Company of Indebtedness represented by
the Notes and the Exchange Notes and the incurrence by the Subsidiary
Guarantors of Indebtedness represented by the Subsidiary Guarantees;
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(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business of the Company or such Subsidiary, in an aggregate principal
amount not to exceed $5.0 million at any time outstanding;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace Indebtedness
(other than intercompany Indebtedness) that is either the Existing
Indebtedness or was permitted by this Indenture to be incurred under the
first paragraph hereof or clauses (ii), (iii), (iv), (v) or (ix) of this
paragraph;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Restricted Subsidiaries; provided, however, that (i) if the
Company is the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect to the Notes and (ii)(A) any subsequent issuance or transfer of
Equity Interests that results in any such Indebtedness being held by a
Person other than the Company or a Restricted Subsidiary thereof and (B)
any sale or other transfer of any such Indebtedness to a Person that is not
either the Company or a Restricted Subsidiary thereof shall be deemed, in
each case, to constitute an incurrence of such Indebtedness by the Company
or such Restricted Subsidiary, as the case may be, that was not permitted
by this clause (vi);
(vii) the incurrence by the Company or a Subsidiary Guarantor of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of this Indenture to be outstanding;
(viii) the guarantee by the Company or any of the Subsidiary
Guarantors of Indebtedness of the Company or a Subsidiary Guarantor that
was permitted to be incurred by another provision of this Section 4.09;
(ix) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness in connection with the acquisition by the
Company or a Restricted Subsidiary of assets or a new Restricted
Subsidiary; provided that such Indebtedness was incurred by the prior owner
of such assets or such Restricted Subsidiary prior to such acquisition by
the Company or a Restricted Subsidiary and was not incurred in connection
with, or in contemplation of, such acquisition by the Company or a
Restricted Subsidiary; and provided further that the principal amount of
such Indebtedness does not exceed $5.0 million at any time outstanding;
(x) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any Indebtedness incurred pursuant to this clause (x), not to exceed $10.0
million; and
(xi) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an
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Unrestricted Subsidiary, such event shall be deemed to constitute an
incurrence of Indebtedness by a Restricted Subsidiary of the Company that
was not permitted by this clause (xi).
For purposes of determining compliance with this covenant, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (x) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this covenant. Accrual of interest, accretion or
amortization of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms, and the
payment of dividends on Disqualified Stock in the form of additional shares of
the same class of Disqualified Stock will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for purposes of this covenant;
provided, in each such case, that the amount thereof is included in Fixed
Charges of the Company as accrued.
SECTION 4.10. ASSET SALES
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash and
Cash Equivalents; provided that the amount of (x) any liabilities (as shown on
the Company's or such Restricted Subsidiary's most recent balance sheet), of the
Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any guarantee
thereof) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability and (y) any securities, notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are contemporaneously (subject to ordinary settlement periods)
converted by the Company or such Restricted Subsidiary into cash or Cash
Equivalents (to the extent of the cash and Cash Equivalents received), shall be
deemed to be cash for purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds, at its option, (a) to repay
Senior Debt of the Company or a Subsidiary Guarantor, (b) to the acquisition of
a majority of the assets of, or a majority of the Voting Stock of, another
Permitted Business, the making of a capital expenditure or the acquisition of
other long-term assets that are used or useful in a Permitted Business or (c) to
the acquisition by the Company or a Restricted Subsidiary of Equity Interests in
any Restricted Subsidiary of the Company, which Equity Interests are owned by a
Person other than the Company or an Affiliate of the Company. Pending the final
application of any such Net Proceeds, the Company may temporarily reduce
revolving credit borrowings or otherwise invest such Net Proceeds in any manner
that is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that
are not applied or invested as provided in the first sentence of this paragraph
will be deemed to constitute "Excess Proceeds." When the aggregate amount of
Excess Proceeds exceeds $5.0 million, the Company will be required to make an
offer to all Holders of Notes and all holders of other Indebtedness containing
provisions similar to those set forth in this Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets (an "Asset Sale
Offer") to purchase the maximum principal amount of Notes and such other
Indebtedness that may be purchased
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out of the Excess Proceeds, at an offer price in cash in an amount equal to 100%
of the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of purchase, in accordance with the
procedures set forth in this Indenture and such other Indebtedness. To the
extent that any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by this Indenture. If the aggregate principal amount of Notes and
such other Indebtedness tendered into such Asset Sale Offer surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes and such other Indebtedness to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero. Certain procedures regarding Asset Sale Offers are set forth in
Section 3.09 hereof.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the fairness
to the Holders of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing. Notwithstanding the foregoing, the following items shall not be deemed
to be Affiliate Transactions: (i) any employment agreement entered into by the
Company or any of its Restricted Subsidiaries in the ordinary course of business
and consistent with the past practice of the Company or such Restricted
Subsidiary; (ii) transactions between or among the Company and/or its Restricted
Subsidiaries; (iii) payment of reasonable directors fees to Persons who are not
otherwise Affiliates of the Company; and (iv) Restricted Payments (other than
Restricted Investments) that are permitted by Section 4.07 hereof and Permitted
Investments described in clause (g) of the definition thereof.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume or suffer to exist any Lien
securing Indebtedness or trade payables on any asset now owned or hereafter
acquired, or any income or profits therefrom or assign or convey any right to
receive income therefrom, except Permitted Liens, unless all payments due under
this Indenture and the Notes are secured on an equal and ratable basis with the
Indebtedness so secured until such time as such is no longer secured by a Lien;
provided that if such Indebtedness is by its terms expressly subordinated to the
Notes or any Subsidiary Guarantee, the Lien securing such Indebtedness shall be
subordinate and junior to the Lien securing the Notes and the Subsidiary
Guarantees with the same
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relative priority as such subordinate or junior Indebtedness shall have with
respect to the Notes and the Subsidiary Guarantees.
SECTION 4.13. BUSINESS ACTIVITIES.
The Company shall not, and shall not permit any Restricted Subsidiary
to, engage in any business other than Permitted Businesses, except to such
extent as would not be material to the Company and its Restricted Subsidiaries
taken as a whole.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
senior management of the Company shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of Control,
the Company shall mail a notice to each Holder stating: (1) that the Change of
Control Offer is being made pursuant to this Section 4.15 and that all Notes
tendered will be accepted for payment; (2) the purchase price and the purchase
date, which shall be no earlier than 30 days and no later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date"); (3) that any
Note not tendered will continue to accrue interest; (4) that, unless the Company
defaults in the payment of the Change of Control Payment, all Notes accepted for
payment pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Payment Date; (5) that Holders electing to have any
Notes purchased pursuant to a Change of Control Offer will be required to
surrender the Notes, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes completed, to the Paying Agent at the address
specified in the notice prior to the expiration of the Change of Control Payment
Offer; (6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the expiration of the Change of Control
Payment Offer, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of Notes delivered for purchase,
and a statement that such Holder is withdrawing his election to have the Notes
purchased; and (7) that Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof. The Company shall comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and
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regulations are applicable in connection with the repurchase of Notes in
connection with a Change of Control and, to the extent inconsistent with the
provisions of this Indenture, such laws and regulations shall govern.
(b) On the Change of Control Payment Date, the Company shall, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. Prior to complying
with the provisions of this Section 4.15, but in any event within 90 days
following a Change of Control, the Company shall either repay all outstanding
Senior Debt or obtain the requisite consents, if any, under all agreements
governing outstanding Senior Debt to permit the repurchase of Notes required by
this Section 4.15. The Company shall publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
(c) The Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Indenture applicable to a Change of Control Offer made by the Company
and purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
SECTION 4.16. LIMITATION ON OTHER SENIOR SUBORDINATED DEBT.
Neither the Company nor a Subsidiary Guarantor shall incur, or permit
to remain outstanding, any Indebtedness (including Acquired Debt and Permitted
Debt) other than the Notes or the Subsidiary Guarantee of such Subsidiary
Guarantor, as the case may be, that is subordinated in right of payment to any
Indebtedness, unless such Indebtedness is either (i) pari passu with the Notes
or the Subsidiary Guarantee of such Subsidiary Guarantor, as the case may be,
pursuant to subordination provisions (including related definitions)
substantially similar to those contained herein (which provide for the
subordination of such Indebtedness to substantially the same extent as the Notes
and the Subsidiary Guarantees are subordinated to Senior Debt), or (ii)
subordinated in right of payment to the Notes and the Subsidiary Guarantees, as
the case may be.
SECTION 4.17. SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company and its Restricted Subsidiaries may enter into a sale and leaseback
transaction if (i) the Company or such Restricted Subsidiary, as the case may
be, could have (a) incurred Indebtedness in an amount equal to the Attributable
Debt relating to such sale and leaseback transaction pursuant Section 4.09
hereof and (b) incurred a Lien to secure such Indebtedness pursuant to Section
4.12 hereof, (ii) the gross cash proceeds of such sale and leaseback transaction
are at least equal to the fair market value (which, if such proceeds exceed $1.0
million, shall be determined in good faith by the Board of Directors and set
forth in an Officers' Certificate delivered
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to the Trustee) of the property that is the subject of such sale and leaseback
transaction and (iii) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Company applies the proceeds of such
transaction in compliance with, Section 4.10 hereof.
SECTION 4.18. LIMITATION ON ISSUANCES AND SALES OF EQUITY INTERESTS
IN WHOLLY OWNED SUBSIDIARIES.
The Company (i) shall not, and shall not permit any Wholly Owned
Restricted Subsidiary of the Company to, transfer, convey, sell, lease or
otherwise dispose of any Equity Interests in any Wholly Owned Restricted
Subsidiary of the Company to any Person (other than the Company or a Wholly
Owned Restricted Subsidiary of the Company), unless (a) such transfer,
conveyance, sale, lease or other disposition is of all the Equity Interests in
such Wholly Owned Restricted Subsidiary and (b) the cash Net Proceeds from such
transfer, conveyance, sale, lease or other disposition are applied in accordance
with Section 4.10 hereof and (ii) will not permit any Wholly Owned Restricted
Subsidiary of the Company to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Company or a Wholly Owned Restricted
Subsidiary of the Company. For purposes of this Section 4.18, the grant of any
Lien permitted to be incurred under this Indenture (and any foreclosure thereon
conducted in a commercially reasonable manner) shall be deemed not to be a
transfer, conveyance, sale, lease or other disposition.
SECTION 4.19. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
SECTION 4.20. GUARANTEES OF CERTAIN INDEBTEDNESS
(i) The Company shall not permit any Restricted Subsidiary that is not
a Subsidiary Guarantor to incur, Guarantee or secure through the granting of
Liens the payment of any Indebtedness of the Company or any other Restricted
Subsidiary and (ii) the Company shall not and shall not permit any of its
Restricted Subsidiaries to pledge any intercompany notes representing
obligations of any of its Restricted Subsidiaries, to secure the payment of any
Indebtedness of the Company or any other Restricted Subsidiary, in each case
unless such Subsidiary, the Company and the Trustee execute and deliver a
supplemental indenture, substantially in the form of Exhibit F hereto,
evidencing such Subsidiary's Subsidiary Guarantee (providing for the
unconditional Guarantee by such Restricted Subsidiary, on a senior subordinated
basis, of the Notes).
Notwithstanding the foregoing, any Subsidiary Guarantee issued
pursuant to this Section 4.20 by any Restricted Subsidiary may provide by its
terms that it shall be automatically and unconditionally released upon the
release or discharge of the incurrence, Guarantee or grant of Lien which
required the issuance of such Subsidiary Guarantee under this Section 4.20
(other than a release or discharge by or as a result of payment under such
Guarantee); provided that such release shall be deemed to be an incurrence by
such Restricted Subsidiary of all its outstanding Indebtedness and Liens and
such release shall only be permitted if before and after giving pro forma effect
to such release (i) all such
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Indebtedness and such Liens would be permitted to be incurred by such Restricted
Subsidiary under this Indenture as of the time of such release and (ii) no
Default or Event of Default shall have occurred and is continuing.
SECTION 4.21. SUBSIDIARY GUARANTORS
The Company shall cause each wholly owned Restricted Subsidiary (other
than Not-for-Profit Subsidiaries) to become a Subsidiary Guarantor.
ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the
Registration Rights Agreement, the Notes and this Indenture pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee; (iii)
immediately after such transaction no Default or Event of Default exists; and
(iv) except in the case of a merger of the Company with or into a Wholly Owned
Restricted Subsidiary of the Company, the Company or the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company), or
to which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made (A) will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (B) will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, assignment, transfer, lease, conveyance or
other disposition, the provisions of this Indenture referring to the "Company"
shall refer instead to the successor corporation and not to the Company), and
may exercise every right and power of the Company under this Indenture with the
same effect as if such
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successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following constitutes an "Event of Default" :
(a) default for 30 days in the payment when due of interest on, or Liquidated
Damages with respect to, the Notes (whether or not prohibited by Article 10 of
this Indenture);
(b) default in payment when due of the principal of or premium, if any, on the
Notes (whether or not prohibited by Article 10 of this Indenture);
(c) failure by the Company or any of its Subsidiaries to comply with the
provisions of Sections 4.07, 4.09, 4.10 or 4.15 hereof;
(d) failure by the Company or any of its Restricted Subsidiaries for 60 days
after notice to comply with any of its other agreements in this Indenture or the
Notes;
(e) default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by the Company or any of its Restricted Subsidiaries (or the payment of
which is guaranteed by the Company or any of its Restricted Subsidiaries)
whether such Indebtedness or guarantee now exists, or is created after the date
of this Indenture, which default (i) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (ii) results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $5.0 million or more;
(f) failure by the Company or any of its Restricted Subsidiaries to pay final
judgments aggregating in excess of $5.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days;
(g) the Company or any of its Restricted Subsidiaries pursuant to or within the
meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
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(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due;
(h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any of its Restricted
Subsidiaries in an involuntary case;
(ii) appoints a Custodian of the Company or any of its Restricted
Subsidiaries or for all or substantially all of the property of the Company or
any of its Restricted Subsidiaries; or
(iii) orders the liquidation of the Company or any of its Restricted
Subsidiaries;
and the order or decree remains unstayed and in effect for 60 consecutive
days; or
(i) except as permitted by this Indenture, any Subsidiary Guarantee is held in
any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Subsidiary Guarantor, or any Person
acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its
obligations under its Subsidiary Guarantee.
SECTION 6.02. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from clause (g) or (h) of
Section 6.01 hereof, with respect to the Company, any Significant Restricted
Subsidiary or any group of Restricted Subsidiaries that, taken together, would
constitute a Significant Restricted Subsidiary, all outstanding Notes shall
become due and payable without further action or notice. Holders of the Notes
may not enforce this Indenture or the Notes except as provided in this
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Notes notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
In the event of a declaration of acceleration because an Event of
Default set forth in clause (e) of Section 6.01 hereof has occurred and is
continuing, such declaration of acceleration shall be automatically rescinded
and annulled if the event of default triggering such Event of Default pursuant
to clause (e) shall be remedied or cured or waived by the holders of the
relevant Indebtedness within 30 days after such event of default; provided that
no judgment or decree for the payment of the money due on the Notes has been
obtained by the Trustee as provided in this Indenture and (i) the annulment of
the acceleration of such Notes would not conflict with any judgment or decree of
a court of competent jurisdiction and (ii) all existing Events of Default,
except nonpayment of principal or interest on the Notes that became due solely
because of the acceleration of the Notes, have been cured or waived.
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In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of this Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to
April 1, 2003 by reason of any willful action (or inaction) taken (or not taken)
by or on behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to April 1, 2003, then to the extent permitted by
law, upon acceleration of the Notes, an additional premium shall also become and
be immediately due and payable in an amount, for each of the years beginning on
April 1 of the years set forth below, as set forth below (expressed as a
percentage of the aggregate principal amount of the Notes outstanding to the
date of payment that would otherwise be due but for the provisions of this
sentence):
YEAR PERCENTAGE
---- ----------
1998................................. 108.750%
1999................................. 107.875%
2000................................. 107.000%
2001................................. 106.125%
2002................................. 105.250%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive an existing Default or Event of Default and its consequences
hereunder except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes, or that may involve the
Trustee in personal liability.
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SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any
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custodian in any such judicial proceeding is hereby authorized by each Holder to
make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
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ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
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SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes, it
shall not be accountable for the Company's use of the proceeds from the Notes or
any money paid to the Company or upon the Company's direction under any
provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
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SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if
it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice
of the Default or Event of Default within 90 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium, if
any, or interest on any Note, the Trustee may withhold the notice if and so long
as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes. The
Trustee shall not be required to take notice or be deemed to have notice of any
Default or Event of Default hereunder (except failure by the Company to make any
payments to the Trustee required to be made hereunder) unless the Trustee is
specifically notified in writing of such Default or Event of Default by the
Company or by the Holders of 25% in aggregate principal amount of the Notes and,
in the absence of such notice, the Trustee may conclusively assume that no
Default or Event of Default has occurred and is continuing.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA (S) 313(a) (but if no
event described in TIA (S) 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA (S) 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders
of Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA (S) 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time agreed
upon compensation for its acceptance of this Indenture and services hereunder.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. If so agreed, such
expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture,
including the costs and expenses of enforcing this Indenture against the Company
(including this Section 7.07) and defending itself against any claim (whether
asserted by the Company or any Holder or any other person) or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense may be
attributable to its negligence or bad faith. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and
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expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged
from the trust hereby created by so notifying the Company. The Holders of Notes
of a majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief
is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its property;
or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company,
or the Holders of Notes of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note
who has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any
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court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has (or is wholly owned by an entity
having) a combined capital and surplus of at least $100 million as set forth in
its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA
(S) 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company and the Subsidiary
Guarantors shall, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, be deemed to have been discharged from their respective
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obligations with respect to all outstanding Notes on the date the conditions set
forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose,
Legal Defeasance means that the Company shall be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Notes, which
shall thereafter be deemed to be "outstanding" only for the purposes of Section
8.05 hereof and the other Sections of this Indenture referred to in (a) and (b)
below, and to have satisfied all its other obligations under such Notes and this
Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.04 hereof, and as more fully
set forth in such Section, payments in respect of the principal of, premium, if
any, and interest on such Notes when such payments are due, (b) the Company's
obligations with respect to such Notes under Article 2 and Section 4.02 hereof,
(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder
and the Company's obligations in connection therewith and (d) this Article
Eight. Subject to compliance with this Article Eight, the Company may exercise
its option under this Section 8.02 notwithstanding the prior exercise of its
option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company and the Subsidiary
Guarantors shall, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, be released from their respective obligations under the
covenants contained in Sections 4.03, 4.04, 4.05, 4.07 through 4.21, inclusive,
5.01, 6.01(c), (d) (e), (f), (g) and (h) (but with respect to (g) and (h), only
with respect to Restricted Subsidiaries) and 6.01(i) and Article 11 hereof with
respect to the outstanding Notes on and after the date the conditions set forth
in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the
Notes shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(c) through 6.01(i) hereof shall not constitute Events of Default
(except 6.01 (g) & (h) with respect to the Company).
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders of the Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination
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thereof, in such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal of,
premium, if any, and interest and Liquidated Damages on the outstanding Notes on
the stated maturity or on the applicable redemption date, as the case may be,
and the Company must specify whether the Notes are being defeased to maturity or
to a particular redemption date;
(b) in the case of an election under Section 8.02 hereof, the Company shall
have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company shall
have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing on the
date of such deposit (other than a Default or Event of Default resulting from
the borrowing of funds to be applied to such deposit) or insofar as Sections
6.01(g) or 6.01(h) hereof is concerned, at any time in the period ending on the
91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a breach
or violation of, or constitute a default under any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an opinion of counsel to
the effect that after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders of Notes over the other creditors of the Company with the
intent of defeating, hindering, delaying or defrauding creditors of the Company
or others; and
(h) the Company shall have delivered to the Trustee an Officers' Certificate
and an opinion of counsel, each stating that all conditions precedent provided
for relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.
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SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or non-callable Government Securities held by
it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, premium,
if any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as an
unsecured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, the City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United
States dollars or non-callable Government Securities in accordance with Section
8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee
or Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03
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hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, the
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture or
the Notes without the consent of any Holder of Notes:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's or any Subsidiary
Guarantors' obligations to Holders of the Notes by a successor to the Company
pursuant to Article 5 hereof or of a Subsidiary Guarantor's obligations by a
successor to the Subsidiary Guarantor pursuant to Section 11.04;
(d) to make any change that would provide any additional rights or benefits to
the Holders of the Notes or that does not adversely affect the legal rights
hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or maintain the
qualification of this Indenture under the TIA; or
(f) to reflect the release of any Subsidiary Guarantor from its Subsidiary
Guarantee pursuant to Section 11.05 or to add any Subsidiary as a Subsidiary
Guarantor pursuant to Section 4.20 or 4.21 or otherwise at the option of the
Company and such Subsidiary.
Upon the request of the Company accompanied by an Officers'
Certificate authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of such documents described in
Section 7.02 hereof as the Trustee may request, the Trustee shall join with the
Company and the Subsidiary Guarantors in the execution of any amended or
supplemental Indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be obligated to enter into such
amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and
the Trustee may amend or supplement this Indenture and the Notes may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding (including, without limitation,
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes), and any existing Default or Event of Default (other
than a Default or Event of Default in the payment of the principal of, premium,
if any, or interest on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including, without
limitation, consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the
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Notes). Section 2.08 hereof shall determine which Notes are considered to be
"outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid,
and upon receipt by the Trustee of the documents described in Section 7.02
hereof, the Trustee shall join with the Company in the execution of such amended
or supplemental Indenture unless such amended or supplemental Indenture directly
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of
Notes under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding voting as a single class may waive compliance in a particular
instance by the Company with any provision of this Indenture or the Notes.
However, without the consent of each Holder affected, an amendment or waiver
under this Section 9.02 may not (with respect to any Notes held by a non-
consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or alter
or waive any of the provisions with respect to the redemption of the Notes
(except as provided above with respect to Section 4.10 and 4.15 hereof);
(c) reduce the rate of or change the time for payment of interest on any Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
of the Notes and a waiver of the payment default that resulted from such
acceleration);
(e) make any Note payable in money other than that stated in the Notes;
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(f) make any change in the provisions of this Indenture relating to waivers of
past Defaults or the rights of Holders of Notes to receive payments of principal
of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other than a payment
required by one of the covenants described in Sections 4.10 or 4.15 hereof).
(h) release any Subsidiary Guarantor from any of its obligations under its
Subsidiary Guarantee or this Indenture, except in accordance with the terms
of this Indenture; or
(i) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.
Section 10.13 and 12.13 set forth certain additional limitations
on the ability of the Holders of a majority in principal amount of Notes to
amend certain provisions of this Indenture.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes
shall be set forth in an amended or supplemental Indenture that complies with
the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall, upon receipt
of an Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
In executing any amended or supplemental indenture, the Trustee shall be
entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
14.04 hereof, an Officers' Certificate and an Opinion of
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Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10.
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note agrees,
that the Indebtedness evidenced by the Notes is subordinated in right of
payment, to the extent and in the manner provided in this Article 10, to the
prior payment in full of all Senior Debt (whether outstanding on the date hereof
or hereafter created, incurred, assumed or guaranteed), and that the
subordination is for the benefit of the holders of Senior Debt.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property, in an assignment for the benefit of creditors or any marshalling of
the Company's assets and liabilities:
(1) holders of Senior Debt shall be entitled to receive payment
in full of all Obligations due in respect of such Senior Debt (including
interest after the commencement of any such proceeding at the rate specified in
the applicable Senior Debt) before Holders of the Notes shall be entitled to
receive any payment with respect to the Notes (except that Holders may receive
and retain (i) Permitted Junior Securities and (ii) payments and other
distributions made from any defeasance trust created pursuant to Section 8.01
hereof); and
(2) until all Obligations with respect to Senior Debt (as
provided in subsection (1) above) are paid in full, any distribution to which
Holders would be entitled but for this Article 10 shall be made to holders of
Senior Debt (except that Holders of Notes may receive and retain (i) Permitted
Junior Securities and (ii) payments and other distributions made from any
defeasance trust created pursuant to Section 8.01 hereof), as their interests
may appear.
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company may not make any payment or distribution to the
Trustee or any Holder in respect of Obligations with respect to the Notes and
may not acquire from the Trustee or any Holder any Notes for cash or property
(other than (i) Permitted Junior Securities and (ii) payments and other
distributions made from any defeasance trust created pursuant to Section 8.01
hereof) until all principal and other Obligations with respect to the Senior
Debt have been paid in full if:
(i) a default in the payment of any principal or other Obligations with
respect to Designated Senior Debt occurs and is continuing beyond any applicable
grace period in the agreement, indenture or other document governing such
Designated Senior Debt; or
(ii) a default, other than a payment default, on Designated Senior Debt occurs
and is continuing that then permits holders of the Designated Senior Debt to
accelerate its maturity and the Trustee receives a notice of the default (a
"Payment Blockage Notice") from a Person who may give it pursuant to Section
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10.11 hereof. If the Trustee receives any such Payment Blockage Notice, no
subsequent Payment Blockage Notice shall be effective for purposes of this
Section unless and until (i) at least 360 days shall have elapsed since the
effectiveness of the immediately prior Payment Blockage Notice and (ii) all
scheduled payments of principal, premium, if any, and interest on the Securities
that have come due have been paid in full in cash. No nonpayment default that
existed or was continuing on the date of delivery of any Payment Blockage Notice
to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice.
The Company may and shall resume payments on and distributions
in respect of the Notes and may acquire them upon the earlier of:
(1) the date upon which the default is cured or waived, or
(2) in the case of a default referred to in Section 10.03(ii)
hereof, 179 days after such Payment Blockage Notice is received if the
maturity of such Designated Senior Debt has not been accelerated, and if
this Article 10 otherwise permits the payment, distribution or acquisition
at the time of such payment or acquisition.
SECTION 10.04. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment
of any Obligations with respect to the Notes at a time when the Trustee or such
Holder, as applicable, has actual knowledge that such payment is prohibited by
Section 10.03 hereof, such payment shall be held by the Trustee or such Holder,
in trust for the benefit of, and shall be paid forthwith over and delivered,
upon written request, to, the holders of Senior Debt as their interests may
appear or their Representative under this Indenture or other agreement (if any)
pursuant to which Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to Senior Debt remaining unpaid to the extent necessary to pay such
Obligations in full in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt, and shall not be liable to any
such holders if the Trustee shall pay over or distribute to or on behalf of
Holders or the Company or any other Person money or assets to which any holders
of Senior Debt shall be entitled by virtue of this Article 10, except, subject
to Section 7.01, if such payment is made as a result of the willful misconduct
or negligence of the Trustee.
SECTION 10.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying
Agent of any facts known to the Company that would cause a payment of any
Obligations with respect to the Notes to
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violate this Article 10, but failure to give such notice shall not affect the
subordination of the Notes to the Senior Debt as provided in this Article 10.
SECTION 10.07. SUBROGATION.
After all Senior Debt is paid in full and until the Notes are
paid in full, Holders of Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Debt to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article 10 to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company on the Notes.
SECTION 10.08. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes
and holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay principal
of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of Notes and creditors
of the Company other than their rights in relation to holders of Senior Debt; or
(3) prevent the Trustee or any Holder of Notes from exercising
its available remedies upon a Default or Event of Default, subject to the rights
of holders and owners of Senior Debt to receive distributions and payments
otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal
of or interest on a Note on the due date, the failure is still a Default or
Event of Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any Holder or by the failure of the
Company or any Holder to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to
holders of Senior Debt, the distribution may be made and the notice given to
their Representative.
Upon any payment or distribution of assets of the Company
referred to in this Article 10, the Trustee and the Holders of Notes shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders of Notes for the purpose of ascertaining the Persons
entitled to participate in such distribution, the holders of the Senior Debt and
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other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold
Senior Debt with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof,
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination as provided
in this Article 10, and appoints the Trustee to act as such Holder's attorney-
in-fact for any and all such purposes. If the Trustee does not file a proper
proof of claim or proof of debt in the form required in any proceeding referred
to in Section 6.09 hereof at least 30 days before the expiration of the time to
file such claim, the Representatives of the Designated Senior Debt, including
debt under the Senior Credit Facility, are hereby authorized to file an
appropriate claim for and on behalf of the Holders of the Notes.
SECTION 10.13. AMENDMENTS.
Any amendment to the provisions of this Article 10 shall require
the consent of the holders of at least 75% in aggregate amount of Notes then
outstanding if such amendment would adversely affect the legal rights of
Holders.
ARTICLE 11.
SUBSIDIARY GUARANTEES
SECTION 11.01. GUARANTEE.
Subject to this Article 11, each of the Subsidiary Guarantors
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the obligations of the Company hereunder or thereunder,
that: (a) the principal of and interest on the Notes will be promptly paid in
full when due, whether at maturity, by acceleration, redemption or otherwise,
and interest on the overdue principal of and interest on the Notes, if any, if
lawful, and all other obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other obligations,
that
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same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Subsidiary Guarantors shall
be jointly and severally obligated to pay the same immediately. Each Subsidiary
Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.
The Subsidiary Guarantors hereby agree that their obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Subsidiary Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenants that this Subsidiary
Guarantee shall not be discharged except by complete performance of the
obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Subsidiary Guarantors or any custodian,
trustee, liquidator or other similar official acting in relation to either the
Company or the Subsidiary Guarantors, any amount paid by either to the Trustee
or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.
Each Subsidiary Guarantor agrees that it shall not be entitled
to any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Subsidiary Guarantor further agrees that, as between the
Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the guarantee obligations hereunder may be
accelerated as provided in Article 6 hereof for the purposes of this Subsidiary
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any declaration of acceleration of such obligations as provided in
Article 6 hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Subsidiary Guarantors for the purpose of
this Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to
seek contribution from any non-paying Subsidiary Guarantor so long as the
exercise of such right does not impair the rights of the Holders under the
Subsidiary Guarantee.
SECTION 11.02. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY.
Each Subsidiary Guarantor, and by its acceptance of Notes, each
Holder, hereby confirms that it is the intention of all such parties that the
Subsidiary Guarantee of such Subsidiary Guarantor not constitute a fraudulent
transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or
state law to the extent applicable to any Subsidiary Guarantee. To effectuate
the foregoing intention, the Trustee, the Holders and the Subsidiary Guarantors
hereby irrevocably agree that the obligations of such Subsidiary Guarantor under
its Subsidiary Guarantee and this Article 11 shall be limited to the maximum
amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Subsidiary Guarantor that are relevant
under such laws, and after giving effect to any collections from, rights to
receive contribution from or payments made by or on behalf of any other
Subsidiary
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Guarantor in respect of the obligations of such other Subsidiary Guarantor under
this Article 11, result in the obligations of such Subsidiary Guarantor under
its Subsidiary Guarantee not constituting a fraudulent transfer or conveyance.
SECTION 11.03. EXECUTION AND DELIVERY OF NOTATION OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 11.01,
each Subsidiary Guarantor hereby agrees that a notation of such Subsidiary
Guarantee substantially in the form included in Exhibit E shall be endorsed by
an Officer of such Subsidiary Guarantor on each Note authenticated and delivered
by the Trustee and that this Indenture shall be executed on behalf of such
Subsidiary Guarantor by its President or one of its Vice Presidents.
Each Subsidiary Guarantor hereby agrees that its Subsidiary
Guarantee set forth in Section 11.01 shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of the Subsidiary
Guarantors.
If required by Section 4.20 or Section 4.21 hereof, the Company
shall cause each such Subsidiary to execute supplemental indentures to this
Indenture in accordance with such Sections.
SECTION 11.04. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Subsidiary Guarantor may consolidate with or merge with or
into (whether or not such Subsidiary Guarantor is the surviving Person) another
Person whether or not affiliated with such Subsidiary Guarantor unless:
(a) subject to Section 11.05 hereof, the Person formed by or
surviving any such consolidation or merger (if other than a Subsidiary Guarantor
or the Company) unconditionally assumes all the obligations of such Subsidiary
Guarantor, pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee, under this Indenture and the Subsidiary Guarantee
on the terms set forth herein or therein; and
(b) immediately after giving effect to such transaction, no
Default or Event of Default exists.
In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor Person, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of the Subsidiary Guarantee and the due and punctual performance of all of the
covenants and conditions of this Indenture to be performed by the Subsidiary
Guarantor, such successor Person shall succeed to and be substituted for the
Subsidiary Guarantor with the same effect as if it had been named herein as a
Subsidiary Guarantor. Such successor Person thereupon may cause to be
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signed any or all of the notations of Subsidiary Guarantee to be endorsed upon
all of the Notes issuable hereunder which theretofore shall not have been signed
by such Subsidiary Guarantor and delivered to the Trustee. The Subsidiary
Guarantee of such Person shall in all respects have the same legal rank and
benefit as the Subsidiary Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Subsidiary
Guarantee had been issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and
notwithstanding clauses (a) and (b) above, nothing contained in this Indenture
or in any of the Notes shall prevent any consolidation or merger of a Subsidiary
Guarantor with or into the Company or another Subsidiary Guarantor, or shall
prevent any sale or conveyance of the property of a Subsidiary Guarantor as an
entirety or substantially as an entirety to the Company or another Subsidiary
Guarantor.
SECTION 11.05. RELEASES FOLLOWING SALE OF ASSETS.
In the event of a sale or other disposition of all of the assets
of any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a
sale or other disposition of all of the capital stock of any Subsidiary
Guarantor, then such Subsidiary Guarantor (in the event of a sale or other
disposition, by way of merger, consolidation or otherwise, of all of the capital
stock of such Subsidiary Guarantor) or the corporation acquiring the property
(in the event of a sale or other disposition of all or substantially all of the
assets of such Subsidiary Guarantor) will be released and relieved of any
obligations under its Subsidiary Guarantee; provided that the Net Proceeds of
such sale or other disposition are applied in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.10 hereof.
Upon delivery by the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made by
the Company in accordance with the applicable provisions of this Indenture,
including without limitation Section 4.10 hereof, the Trustee shall execute any
documents reasonably required in order to evidence the release of any Subsidiary
Guarantor from its obligations under its Subsidiary Guarantee.
Any Subsidiary Guarantor not released from its obligations under
its Subsidiary Guarantee shall remain liable for the full amount of principal of
and interest on the Notes and for the other obligations of any Subsidiary
Guarantor under this Indenture as provided in this Article 11.
ARTICLE 12.
SUBORDINATION OF SUBSIDIARY GUARANTEE
SECTION 12.01. AGREEMENT TO SUBORDINATE.
Each Subsidiary Guarantor agrees, and each Holder by accepting a
Note agrees, that all Obligations under the Subsidiary Guarantees shall be
subordinated in right of payment, to the extent and in the manner provided in
this Article 12, to the prior payment in full of all Senior Debt of such
Subsidiary Guarantor (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Debt of such Subsidiary Guarantor.
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SECTION 12.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of any Subsidiary Guarantor
in a liquidation or dissolution of such Subsidiary Guarantor or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to such
Subsidiary Guarantor or its property, in an assignment for the benefit of
creditors or any marshalling of such Subsidiary Guarantor's assets and
liabilities:
(1) holders of Senior Debt of such Subsidiary Guarantor shall be
entitled to receive payment in full of all Obligations due in respect of such
Senior Debt (including interest after the commencement of any such proceeding at
the rate specified in the applicable Senior Debt) before Holders shall be
entitled to receive any payment with respect to the respective Subsidiary
Guarantees (except that Holders may receive and retain (i) Permitted Junior
Securities and (ii) payments and other distributions made from any defeasance
trust created pursuant to Section 8.01 hereof); and
(2) until all Obligations with respect to Senior Debt (as
provided in subsection (1) above) are paid in full, any distribution to which
Holders would be entitled but for this Article 12 shall be made to holders of
Senior Debt (except that Holders may receive and retain (i) Permitted Junior
Securities and (ii) payments and other distributions made from any defeasance
trust created pursuant to Section 8.01 hereof), as their interests may appear.
SECTION 12.03. DEFAULT ON DESIGNATED SENIOR DEBT.
No Subsidiary Guarantor may make any payment or distribution to
the Trustee or any Holder in respect of Obligations with respect to the Notes
and may not acquire from the Trustee or any Holder any Notes for cash or
property (other than (i) Permitted Junior Securities and (ii) payments and other
distributions made from any defeasance trust created pursuant to Section 8.01
hereof) until all principal and other Obligations with respect to the Senior
Debt of such Subsidiary Guarantor have been paid in full if:
(i) a default in the payment of any principal or other Obligations with respect
to Designated Senior Debt of such Subsidiary Guarantor occurs and is continuing
beyond any applicable grace period in the agreement, indenture or other document
governing such Designated Senior Debt; or
(ii) a default, other than a payment default, on Designated Senior Debt of such
Subsidiary Guarantor occurs and is continuing that then permits holders of the
Designated Senior Debt to accelerate its maturity and the Trustee receives a
notice of the default (a "Payment Blockage Notice") from a Person who may give
it pursuant to Section 12.11 hereof. If the Trustee receives any such Payment
Blockage Notice, no subsequent Payment Blockage Notice shall be effective for
purposes of this Section unless and until (i) at least 360 days shall have
elapsed since the effectiveness of the immediately prior Payment Blockage Notice
and (ii) all scheduled payments of principal, premium, if any, and interest on
the Securities that have come due have been paid in full in cash. No nonpayment
default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice.
Each Subsidiary Guarantor may and shall resume payments on and
distributions in respect of the Subsidiary Guarantees and may acquire them upon
the earlier of:
(1) the date upon which the default is cured or waived, or
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(2) in the case of a default referred to in Section 12.03(ii)
hereof, 179 days after such Payment Blockage Notice is received if the
maturity of such Designated Senior Debt has not been accelerated, and if
this Article 12 otherwise permits the payment, distribution or acquisition
at the time of such payment or acquisition.
SECTION 12.04. ACCELERATION.
If payment of any Subsidiary Guarantee is accelerated because of
an Event of Default, the Subsidiary Guarantor shall promptly notify the
Representatives of Senior Debt of the acceleration.
SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment
of any Obligations with respect to a Subsidiary Guarantee at a time when the
Trustee or such Holder, as applicable, has actual knowledge that such payment is
prohibited by Section 12.03 hereof, such payment shall be held by the Trustee or
such Holder, in trust for the benefit of, and shall be paid forthwith over and
delivered, upon written request, to, the holders of Senior Debt of such
Subsidiary Guarantor as their interests may appear or their Representative under
this Indenture or other agreement (if any) pursuant to which Senior Debt may
have been issued, as their respective interests may appear, for application to
the payment of all Obligations with respect to Senior Debt of such Subsidiary
Guarantor remaining unpaid to the extent necessary to pay such Obligations in
full in accordance with their terms, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Debt of such Subsidiary
Guarantor.
With respect to the holders of Senior Debt of any Subsidiary
Guarantor, the Trustee undertakes to perform only such obligations on the part
of the Trustee as are specifically set forth in this Article 12, and no implied
covenants or obligations with respect to the holders of Senior Debt of such
Subsidiary Guarantor shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Debt of such Subsidiary Guarantor, and shall not be liable to any such holders
if the Trustee shall pay over or distribute to or on behalf of Holders or any
Subsidiary Guarantor or any other Person money or assets to which any holders of
Senior Debt shall be entitled by virtue of this Article 12, except, subject to
Section 7.01, if such payment is made as a result of the willful misconduct or
negligence of the Trustee.
SECTION 12.06. NOTICE BY SUBSIDIARY GUARANTOR.
Each Subsidiary Guarantor shall promptly notify the Trustee and
the Paying Agent of any facts known to such Subsidiary Guarantor that would
cause a payment of any Obligations with respect to its Subsidiary Guarantee to
violate this Article 12, but failure to give such notice shall not affect the
subordination of any Subsidiary Guarantee to the Senior Debt of such Subsidiary
Guarantor as provided in this Article 12.
SECTION 12.07. SUBROGATION.
After all Senior Debt of the Subsidiary Guarantors is paid in
full and until the Notes are paid in full, Holders of the Subsidiary Guarantees
shall be subrogated (equally and ratably with all other Indebtedness pari passu
with the Subsidiary Guarantor) to the rights of holders of Senior Debt of the
Subsidiary Guarantors to receive distributions applicable to Senior Debt of the
Subsidiary Guarantors to the extent that distributions otherwise payable to the
Holders of Notes have been applied to the payment
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of Senior Debt of the Subsidiary Guarantors. A distribution made under this
Article 12 to holders of Senior Debt of the Subsidiary Guarantors that otherwise
would have been made to Holders of the Subsidiary Guarantees is not, as between
the Subsidiary Guarantors and Holders, a payment by the Subsidiary Guarantors on
the Subsidiary Guarantees.
SECTION 12.08. RELATIVE RIGHTS.
This Article 12 defines the relative rights of Holders of the
Subsidiary Guarantees and holders of Senior Debt of the Subsidiary Guarantors.
Nothing in this Indenture shall:
(1) impair, as between the Subsidiary Guarantors and Holders of
the Subsidiary Guarantees, the obligation of the Subsidiary Guarantors, which is
absolute and unconditional, to pay principal of and interest on the Notes in
accordance with the term of the Subsidiary Guarantees;
(2) affect the relative rights of Holders of the Subsidiary
Guarantees and creditors of any Subsidiary Guarantor other than their rights in
relation to holders of Senior Debt; or
(3) prevent the Trustee or any Holder of the Subsidiary
Guarantees from exercising its available remedies upon a Default or Event of
Default, subject to the rights of holders and owners of Senior Debt to receive
distributions and payments otherwise payable to Holders of the Subsidiary
Guarantees.
If the Subsidiary Guarantors fails because of this Article 12 to
pay principal of or interest on a Note on the due date, the failure is still a
Default or Event of Default.
SECTION 12.09. SUBORDINATION MAY NOT BE IMPAIRED BY SUBSIDIARY GUARANTOR.
No right of any holder of Senior Debt of any Subsidiary
Guarantor to enforce the subordination of the Indebtedness evidenced by the
Subsidiary Guarantees shall be impaired by any act or failure to act by such
Subsidiary Guarantor or any Holder or by the failure of such Subsidiary
Guarantor or any Holder to comply with this Indenture.
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to
holders of Senior Debt of any Subsidiary Guarantor, the distribution may be made
and the notice given to their Representative.
Upon any payment or distribution of assets of any Subsidiary
Guarantor referred to in this Article 12, the Trustee and the Holders of the
Subsidiary Guarantees shall be entitled to rely upon any order or decree made by
any court of competent jurisdiction or upon any certificate of such
Representative or of the liquidating trustee or agent or other Person making any
distribution to the Trustee or to the Holders of the Subsidiary Guarantees for
the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt of any Subsidiary Guarantor and
other Indebtedness of the Company or any Subsidiary Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 12.
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SECTION 12.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 12 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes and the Subsidiary Guarantees, unless the Trustee
shall have received at its Corporate Trust Office at least five Business Days
prior to the date of such payment written notice of facts that would cause the
payment of any Obligations with respect to the Notes to violate this Article 12.
Only the Company, the Subsidiary Guarantors or a Representative may give the
notice. Nothing in this Article 12 shall impair the claims of, or payments to,
the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold
Senior Debt of any Subsidiary Guarantor with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights.
SECTION 12.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof,
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination as provided
in this Article 12, and appoints the Trustee to act as such Holder's attorney-
in-fact for any and all such purposes. If the Trustee does not file a proper
proof of claim or proof of debt in the form required in any proceeding referred
to in Section 6.09 hereof at least 30 days before the expiration of the time to
file such claim, the Representatives of the Designated Senior Debt, including
debt under the Senior Credit Facility, are hereby authorized to file an
appropriate claim for and on behalf of the Holders of the Notes.
SECTION 12.13. AMENDMENTS.
Any amendment to the provisions of this Article 12 shall require
the consent of the holders of at least 75% in aggregate amount of Notes then
outstanding if such amendment would adversely affect the legal rights of
Holders.
ARTICLE 13.
SATISFACTION AND DISCHARGE
SECTION 13.01. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company request cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
Notes, as expressly provided for in this Indenture) as to all outstanding Notes,
and the Trustee, at the expense of the Company, shall, upon payment of all
amounts due to the Trustee under Section 7.07 hereof, execute proper instruments
acknowledging satisfaction and discharge of this Indenture when
(a) either
(1) all Notes theretofore authenticated and delivered
(other than (i) Notes which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.07 hereof and (ii) Notes for
whose payment money or Government Securities have theretofore been
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deposited in trust with the Trustee or any Paying Agent or segregated and held
in trust by the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 2.04 hereof) have been delivered to the
Trustee for cancellation, or
(2) all such Notes not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their final Stated
Maturity within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the serving of notice of
redemption by the Trustee in the name, and at the expense, of the Company
and the Company, in the case of clause (2)(i), (2)(ii) or
(2)(iii) above, has irrevocably deposited or caused to be deposited with the
Trustee funds in an amount sufficient to pay and discharge the entire
Indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation, for principal of, premium, if any, and Liquidated Damages, if any,
on such Notes and interest to the date of such deposit (in the case of Notes
which have become due and payable) or to the final Stated Maturity or Redemption
Date, as the case may be, together with the Company order irrevocably directing
the Trustee to apply such funds to the payment thereof at maturity or
redemption, as the case may be;
(b) the Company has paid or caused to be paid all other sums
then due and payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, which, taken together, state that all
conditions precedent herein relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 7.07
hereof and, if the money shall have been deposited with the Trustee pursuant to
this Section, the obligations of the Trustee under Section 13.02 hereof and the
last paragraph of Section 2.04 hereof and the Trustee's right under Article 7
hereof shall survive.
SECTION 13.02. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 2.04
hereof, all money deposited with the Trustee pursuant to Section 13.01 hereof
shall be held in trust and applied by it, in accordance with the provisions of
the Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium and Liquidated Damages, if any) and interest for whose payment such
money has been deposited with the Trustee.
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ARTICLE 14.
MISCELLANEOUS
SECTION 14.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA (S) 318(c), the imposed duties shall
control.
SECTION 14.02. NOTICES.
Any notice or communication by the Company, any Subsidiary
Guarantor or the Trustee to the others is duly given if in writing and delivered
in Person or mailed by first class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier guaranteeing next day
delivery, to the others' address
If to the Company or any Subsidiary Guarantor:
Prime Medical Services, Inc.
1301 Capital of Texas Highway, Suite C-300
Austin, Texas 78746-6550
Telecopier No.: (512) 328-8510
Attention: Chief Financial Officer
If to the Trustee:
State Street Bank and Trust Company of Missouri, N.A.
One Metropolitan Square
211 North Broadway
Suite 3900
St. Louis, MO 63102
Telecopier No.: (314) 206-3054
Attention: Corporate Trust Administration
The Company or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail or by overnight air courier guaranteeing next day delivery to its
address shown on the register kept by the Registrar. Any notice or communication
shall also be so mailed to any Person described in TIA (S) 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other Holders.
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If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 14.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA (S) 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA (S) 312(c).
SECTION 14.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 14.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 14.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 14.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA
(S) 314(e) and shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
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SECTION 14.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
SECTION 14.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of
the Company or any Subsidiary Guarantor, or any Subsidiary Guarantor, as such,
shall have any liability for any obligations of the Company and the Subsidiary
Guarantors under the Notes, this Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of Notes by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes.
SECTION 14.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 14.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of the Company or its Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.
SECTION 14.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 14.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 14.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
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SECTION 14.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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<PAGE>
SIGNATURES
Dated as of March 27, 1998
PRIME MEDICAL SERVICES, INC.
By:
-------------------------------------
Name:
Title:
PRIME MEDICAL OPERATING, INC.
By:
-------------------------------------
Name:
Title:
PRIME MANAGEMENT, INC.
By:
-------------------------------------
Name:
Title:
PRIME CARDIAC REHABILITATION
SERVICES, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
PRIME DIAGNOSTIC SERVICES, INC.
By:
-------------------------------------
Name:
Title:
PRIME LITHOTRIPSY SERVICES, INC.
By:
-------------------------------------
Name:
Title:
PRIME KIDNEY STONE TREATMENT, INC.
By:
-------------------------------------
Name:
Title:
PRIME DIAGNOSTIC CORP. OF FLORIDA
By:
-------------------------------------
Name:
Title:
PRIME LITHOTRIPTER OPERATIONS, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
PRIME PRACTICE MANAGEMENT, INC.
By:
-------------------------------------
Name:
Title:
TEXAS LITHO, INC.
By:
-------------------------------------
Name:
Title:
R.R. LITHO, INC.
By:
-------------------------------------
Name:
Title:
OHIO LITHO, INC.
By:
-------------------------------------
Name:
Title:
ALABAMA RENTAL STONE INSTITUTE, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
SUN MEDICAL TECHNOLOGIES, INC.
By:
-------------------------------------
Name:
Title:
SUN ACQUISITION, INC.
By:
-------------------------------------
Name:
Title:
LITHOTRIPTERS, INC.
By:
-------------------------------------
Name:
Title:
PRIME MEDICAL MANAGEMENT, L.P.
By:
-------------------------------------
Name:
Title:
PROSTATHERAPIES, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
FASTSTART, INC.
By:
-------------------------------------
Name:
Title:
NATIONAL LITHOTRIPTERS ASSOCIATION, INC.
By:
-------------------------------------
Name:
Title:
MEDTECH INVESTMENTS, INC.
By:
-------------------------------------
Name:
Title:
EXECUTIVE MEDICAL ENTERPRISES, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A.
By:
---------------------------------------
Name: Robert A. Clasquin
Title: Assistant Vice President
<PAGE>
EXHIBIT A1
(Face of Note)
================================================================================
CUSIP/CINS ___________
8 3/4% [Series A] [Series B] Senior Subordinated Notes due 2008
No. ________ $ ________________
PRIME MEDICAL SERVICES, INC.
promises to pay to ____________________________________________________
or registered assigns,
the principal sum of _____________________________________________
Dollars on April 1, 2008.
INTEREST PAYMENT DATES: April 1 and October 1
RECORD DATES: March 15 and September 15
Dated: March 27, 1998
PRIME MEDICAL SERVICES, INC.
By: __________________________
Name:
Title:
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A.
as Trustee
By: ________________________
================================================================================
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<PAGE>
(Back of Note)
8 3/4% [Series A] [Series B] Senior Subordinated Notes due 2008
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND THIS NOTE MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE
DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO
WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION
UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(A) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (B) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (D) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
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COUNSEL IF THE COMPANY SO REQUESTS), SUBJECT TO THE RECEIPT BY THE
REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO
THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (2)
TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND,
IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH IN (A) ABOVE.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Prime Medical Services, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
8 3/4% per annum from March 27, 1998 until maturity and shall pay the Liquidated
Damages payable pursuant to the Registration Rights Agreement referred to below.
The Company will pay interest and Liquidated Damages semi-annually on April 1
and October 1 of each year, or if any such day is not a Business Day, on the
next succeeding Business Day (each an "Interest Payment Date"). Interest on the
Notes will accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from the date of issuance; provided that if there
is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be October 1, 1998. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the March 15 or
September 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest by wire transfer of immediately available funds to
the accounts specified by the Global Note Holder in New York, New York or as
otherwise specified by the Global Note Holder. With respect to Notes in
certificated form, the Company will make all payments of principal, premium, if
any, interest and Liquidated Damages, if any, by wire transfer of immediately
available funds to the accounts specified by the Holders thereof in New York,
New York or as otherwise specified by such Holders or, if no such account is
specified, by mailing a check to each such Holder's registered address. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
A1-3
<PAGE>
3. PAYING AGENT AND REGISTRAR. Initially, the Trustee under the
Indenture, will act as Paying Agent and Registrar. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company or any of
its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated
as of March 27, 1998 (as amended or supplemented from time to time, the
"Indenture") among the Company, the Subsidiary Guarantors and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $100.0 million
in aggregate principal amount, plus amounts, if any, issued to pay Liquidated
Damages on outstanding Notes as set forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this paragraph 5, the Notes shall not
be redeemable at the Company's option prior to April 1, 2003. Thereafter, the
Notes shall be subject to redemption at any time at the option of the Company,
in whole or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on April 1 of the years indicated below:
YEAR PERCENTAGE
---- ----------
2003..................................... 104.375%
2004..................................... 102.917%
2005..................................... 101.458%
2006 and thereafter...................... 100.000%
(b) Notwithstanding the provisions of clause (a) of this paragraph 5, at any
time on or before April 1, 2001, the Company may redeem up to 35% of the
aggregate principal amount of Notes originally issued under the Indenture at a
redemption price of 108.75% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the redemption date,
with the net proceeds to the Company of one or more public offerings of common
stock provided that at least $65.0 million in aggregate principal amount of
Notes remain outstanding immediately after the occurrence of such redemption
(excluding Notes held by the Company or any of its Subsidiaries) and provided,
further that such redemption occurs within 90 days of the date of the closing of
such public offering.
A1-4
<PAGE>
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of Notes
will have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of purchase
(the "Change of Control Payment"). Within 30 days following any Change of
Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
(b) Within 360 days after the receipt of any Net Proceeds from an
Asset Sale, the Company may apply such Net Proceeds, at its option, (a) to repay
Senior Debt of the Company or a Subsidiary Guarantor, (b) to the acquisition of
a majority of the assets of, or a majority of the Voting Stock of, another
Permitted Business, the making of a capital expenditure or the acquisition of
other long-term assets that are used or useful in a Permitted Business or (c) to
the acquisition by the Company or a Restricted Subsidiary of Equity Interests in
any Restricted Subsidiary of the Company, which Equity Interests are owned by a
Person other than the Company or an Affiliate of the Company. Pending the final
application of any such Net Proceeds, the Company may temporarily reduce
revolving credit borrowings or otherwise invest such Net Proceeds in any manner
that is not prohibited by the Indenture. Any Net Proceeds from Asset Sales that
are not applied or invested as provided in the first sentence of this paragraph
will be deemed to constitute "Excess Proceeds." When the aggregate amount of
Excess Proceeds exceeds $5.0 million, the Company will be required to make an
offer to all Holders of Notes and all holders of other Indebtedness containing
provisions similar to those set forth in the Indenture with respect to offers to
purchase or redeem with the proceeds of sales of assets (an "Asset Sale Offer")
to purchase the maximum principal amount of Notes and such other Indebtedness
that may be purchased out of the Excess Proceeds, at an offer price in cash in
an amount equal to 100% of the principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase, in
accordance with the procedures set forth in the Indenture and such other
Indebtedness. To the extent that any Excess Proceeds remain after consummation
of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose
not otherwise prohibited by the Indenture. If the aggregate principal amount of
Notes and such other Indebtedness tendered into such Asset Sale Offer
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes and such other Indebtedness to be purchased on a
pro rata basis. Upon completion of such offer to purchase, the amount of Excess
Proceeds shall be reset at zero.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption.
A1-5
<PAGE>
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Company and the Trustee may amend or supplement the Indenture and the Notes
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Notes then outstanding (including, without
limitation, consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes), and any existing Default or Event of
Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of the Indenture or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
(including, without limitation, consents obtained in connection with a tender
offer or exchange offer for, or purchase of, the Notes). Without the consent of
any Holder of Notes, the Indenture or the Notes may be amended or supplemented
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's or any Subsidiary Guarantor's obligations to Holders
of the Notes in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act or to
reflect the release of any Subsidiary Guarantor from its Subsidiary Guarantee
pursuant to Section 11.05 of the Indenture or to add any Subsidiary as a
Subsidiary Guarantor pursuant to the Indenture.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default
for 30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Notes; (ii) default in payment when due of the principal of or
premium, if any, on the Notes; (iii) failure by the Company or any of its
Subsidiaries to comply with the provisions of Section 4.07, 4.09, 4.10 or 4.15
of the Indenture; (iv) failure by the Company or any of its Restricted
Subsidiaries for 60 days after notice to comply with any of its other agreements
in the Indenture or the Notes; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of the Indenture, which default (a) is
caused by a failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (b) results in
the acceleration of such Indebtedness prior to its express maturity and, in each
case, the
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principal amount of any such Indebtedness, together with the principal amount of
any other such Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $5.0 million or more; (vi)
failure by the Company or any of its Restricted Subsidiaries to pay final
judgments aggregating in excess of $5.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; (vii) except as permitted by the
Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to
be unenforceable or invalid or shall cease for any reason to be in full force
and effect or any Subsidiary Guarantor, or any Person acting on behalf of any
Subsidiary Guarantor, shall deny or disaffirm its obligations under its
Subsidiary Guarantee; and (viii) certain events of bankruptcy or insolvency with
respect to the Company or any of its Restricted Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Restricted Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Restricted Subsidiary, all outstanding
Notes will become due and payable without further action or notice. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company or any Subsidiary Guarantor, as
such, shall not have any liability for any obligations of the Company and the
Subsidiary Guarantors under the Notes or the Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of March 27, 1998 between the Company and the parties named
on the signature pages thereof (the "Registration Rights Agreement").
A1-7
<PAGE>
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Prime Medical Services, Inc.
1301 Capital of Texas Highway
Suite C-300
Austin, Texas 78746-6550
Attention: Chief Financial Officer
A1-8
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
and irrevocably appoint
--------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
----------------------
Your Signature:
---------------------------
(Sign exactly as your name appears on the
face of this Note)
SIGNATURE GUARANTEE.
A1-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.15 of the Indenture, state the amount you elect to
have purchased: $________
Date: Your Signature:
-------- --------------------------------
(Sign exactly as your name appears on the Note)
Tax Identification No:
-------------------------
Signature Guarantee.
A1-10
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of increase of
decrease in in Principal this Global Note Signature of
Principal Amount Amount following such authorized officer
of of decrease of Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ---------------- ---------------- ------------------ ------------------ --------------------
<S> <C> <C> <C> <C>
</TABLE>
A1-11
<PAGE>
EXHIBIT A2
(Face of Regulation S Temporary Global Note)
================================================================================
CUSIP/CINS ___________
8 3/4% [Series A] [Series B] Senior Subordinated Notes due 2008
No. ___________ $ ___________________
PRIME MEDICAL SERVICES, INC.
promises to pay to _________________________________________________
or registered assigns,
the principal sum of __________________________________________
Dollars on April 1, 2008.
INTEREST PAYMENT DATES: April 1 and October 1
RECORD DATES: March 15 and September 15
Dated: MARCH 27, 1998
PRIME MEDICAL SERVICES, INC.
By: ________________________________
Name:
Title:
This is one of the Temporary Regulation S
Global Notes referred to in the
within-mentioned Indenture:
State Street Bank and Trust Company of Missouri, N.A.
as Trustee
By: __________________________
================================================================================
A2-1
<PAGE>
(Back of Regulation S Temporary Global Note)
8 3/4% [Series A] [Series B] Senior Subordinated Notes due 2008
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES,
ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER
NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL
BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND THIS NOTE MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE
DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO
WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION
UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN A TRANSACTION
A2-2
<PAGE>
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), SUBJECT TO
THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN
OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH
THE SECURITIES ACT, (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE
RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Prime Medical Services, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
8 3/4% per annum from March 27, 1998 until maturity and shall pay the Liquidated
Damages payable pursuant to the Registration Rights Agreement referred to below.
The Company will pay interest and Liquidated Damages semi-annually on April 1
and October 1 of each year, or if any such day is not a Business Day, on the
next succeeding Business Day (each an "Interest Payment Date"). Interest on the
Notes will accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from the date of issuance; provided that if there
is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be October 1, 1998. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the March 15 or
September 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest by wire transfer of immediately available funds to
the accounts specified by the Global Note Holder in New York, New York or as
otherwise specified by the Global Note Holder. With respect to Notes in
certificated form, the Company will make all payments of principal, premium, if
any, interest and Liquidated Damages, if any, by wire
A2-3
<PAGE>
transfer of immediately available funds to the accounts specified by the Holders
thereof in New York, New York or as otherwise specified by such Holders or, if
no such account is specified, by mailing a check to each such Holder's
registered address. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, the Trustee under the
Indenture, will act as Paying Agent and Registrar. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company or any of
its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated
as of March 27, 1998 (as amended or supplemented from time to time, the
"Indenture") among the Company, the Subsidiary Guarantors and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $100.0 million
in aggregate principal amount, plus amounts, if any, issued to pay Liquidated
Damages on outstanding Notes as set forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this paragraph 5, the Notes shall not
be redeemable at the Company's option prior to April 1, 2003. Thereafter, the
Notes shall be subject to redemption at any time at the option of the Company,
in whole or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on April 1 of the years indicated below:
YEAR PERCENTAGE
---- ----------
2003..................................... 104.375%
2004..................................... 102.917%
2005..................................... 101.458%
2006 and thereafter...................... 100.000%
(b) Notwithstanding the provisions of clause (a) of this paragraph 5, at any
time on or before April 1, 2001, the Company may redeem up to 35% of the
aggregate principal amount of Notes originally issued under the Indenture at a
redemption price of 108.75% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the redemption date,
with the net proceeds to the Company of one or more public offerings of common
stock provided that at least $65.0 million in aggregate principal amount of
Notes remain outstanding immediately after the occurrence of such redemption
(excluding Notes held by the Company or any of its Subsidiaries) and provided,
further that such redemption occurs within 90 days of the date of the closing of
such public offering.
A2-4
<PAGE>
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of Notes
will have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of purchase
(the "Change of Control Payment"). Within 30 days following any Change of
Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
(b) Within 360 days after the receipt of any Net Proceeds from an
Asset Sale, the Company may apply such Net Proceeds, at its option, (a) to repay
Senior Debt of the Company or a Subsidiary Guarantor, (b) to the acquisition of
a majority of the assets of, or a majority of the Voting Stock of, another
Permitted Business, the making of a capital expenditure or the acquisition of
other long-term assets that are used or useful in a Permitted Business or (c) to
the acquisition by the Company or a Restricted Subsidiary of Equity Interests in
any Restricted Subsidiary of the Company, which Equity Interests are owned by a
Person other than the Company or an Affiliate of the Company. Pending the final
application of any such Net Proceeds, the Company may temporarily reduce
revolving credit borrowings or otherwise invest such Net Proceeds in any manner
that is not prohibited by the Indenture. Any Net Proceeds from Asset Sales that
are not applied or invested as provided in the first sentence of this paragraph
will be deemed to constitute "Excess Proceeds." When the aggregate amount of
Excess Proceeds exceeds $5.0 million, the Company will be required to make an
offer to all Holders of Notes and all holders of other Indebtedness containing
provisions similar to those set forth in the Indenture with respect to offers to
purchase or redeem with the proceeds of sales of assets (an "Asset Sale Offer")
to purchase the maximum principal amount of Notes and such other Indebtedness
that may be purchased out of the Excess Proceeds, at an offer price in cash in
an amount equal to 100% of the principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase, in
accordance with the procedures set forth in the Indenture and such other
Indebtedness. To the extent that any Excess Proceeds remain after consummation
of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose
not otherwise prohibited by the Indenture. If the aggregate principal amount of
Notes and such other Indebtedness tendered into such Asset Sale Offer
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes and such other Indebtedness to be purchased on a
pro rata basis. Upon completion of such offer to purchase, the amount of Excess
Proceeds shall be reset at zero.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption.
A2-5
<PAGE>
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Company and the Trustee may amend or supplement the Indenture and the Notes
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Notes then outstanding (including, without
limitation, consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes), and any existing Default or Event of
Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of the Indenture or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
(including, without limitation, consents obtained in connection with a tender
offer or exchange offer for, or purchase of, the Notes). Without the consent of
any Holder of Notes, the Indenture or the Notes may be amended or supplemented
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's or any Subsidiary Guarantor's obligations to Holders
of the Notes in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act or to
reflect the release of any Subsidiary Guarantor from its Subsidiary Guarantee
pursuant to Section 11.05 of the Indenture or to add any Subsidiary as a
Subsidiary Guarantor pursuant to the Indenture.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default
for 30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Notes; (ii) default in payment when due of the principal of or
premium, if any, on the Notes; (iii) failure by the Company or any of its
Subsidiaries to comply with the provisions of Section 4.07, 4.09, 4.10 or 4.15
of the Indenture; (iv) failure by the Company or any of its Restricted
Subsidiaries for 60 days after notice to comply with any of its other agreements
in the Indenture or the Notes; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of the Indenture, which default (a) is
caused by a failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (b) results in
the acceleration of such Indebtedness prior to its express maturity and, in each
case, the
A2-6
<PAGE>
principal amount of any such Indebtedness, together with the principal amount of
any other such Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $5.0 million or more; (vi)
failure by the Company or any of its Restricted Subsidiaries to pay final
judgments aggregating in excess of $5.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; (vii) except as permitted by the
Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to
be unenforceable or invalid or shall cease for any reason to be in full force
and effect or any Subsidiary Guarantor, or any Person acting on behalf of any
Subsidiary Guarantor, shall deny or disaffirm its obligations under its
Subsidiary Guarantee; and (viii) certain events of bankruptcy or insolvency with
respect to the Company or any of its Restricted Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Restricted Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Restricted Subsidiary, all outstanding
Notes will become due and payable without further action or notice. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company or any Subsidiary Guarantor, as
such, shall not have any liability for any obligations of the Company and the
Subsidiary Guarantors under the Notes or the Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of March 27, 1998 between the Company and the parties named
on the signature pages thereof (the "Registration Rights Agreement").
A2-7
<PAGE>
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Prime Medical Services, Inc.
1301 Capital of Texas Highway
Suite C-300
Austin, Texas 78746-6550
Attention: Chief Financial Officer
A2-8
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
and irrevocably appoint
--------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
------------------
Your Signature:
---------------------------
(Sign exactly as your name appears on the
face of this Note)
SIGNATURE GUARANTEE.
A2-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.15 of the Indenture, state the amount you elect to
have purchased: $________
Date: Your Signature:
-------------------- -------------------------------
(Sign exactly as your name appears on the Note)
Tax Identification No:
------------------------
Signature Guarantee.
A2-10
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary
Global Note for an interest in another Global Note, or of other Restricted
Global Notes for an interest in this Regulation S Temporary Global Note, have
been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of increase of this
decrease in in Principal Global Note Signature of
Principal Amount Amount following such authorized officer
of of decrease of Trustee or
Date of Exchange this Global Note this Global Note (or increase) Note Custodian
- ---------------- ---------------- ------------------- ---------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
A2-11
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Prime Medical Services, Inc.
1301 Capital of Texas Highway
Suite C-300
Austin, Texas 78746-2892
State Street Bank and Trust Company of Missouri, N.A.
One Metropolitan Square
211 North Broadway-Suite 3900
St. Louis, MO 63102
Re: 8 3/4% Senior Subordinated Notes due 2008 of Prime Medical Services, Inc.
-------------------------------------------------------------------------
Reference is hereby made to the Indenture, dated as of March 27, 1998
(as amended or supplemented from time to time, (the "Indenture"), among Prime
Medical Services, Inc., as issuer (the "Company"), the Subsidiary Guarantors
parties thereto and State Street Bank and Trust Company of Missouri, N.A., as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to __________ (the "Transferee"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that (i) the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, in a transaction meeting
the requirements of Rule 144A and such Transfer is in compliance with any
applicable blue sky securities laws of any state of the United States, (ii) the
Transferor and each person acting on behalf of the Transferor reasonably believe
that such Person and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A and (iii) the Transferor has advised such Person
that the Transferor may rely on the exemption from registration provisions of
the Securities Act provided by Rule 144A. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the 144A Global
Note and/or the Definitive Note and in the Indenture and the Securities Act.
B-1
<PAGE>
2. CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
TEMPORARY REGULATION S GLOBAL NOTE, THE REGULATION S GLOBAL NOTE OR A DEFINITIVE
NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and
in accordance with Rule 903 or Rule 904 under the Securities Act and,
accordingly, the Transferor hereby further certifies that (i) the Transfer is
not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows
that the transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements of
Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or for the account or benefit of a U.S. Person (other than
an Initial Purchaser) and, if the Transferee is a dealer (as defined in Section
2(12) of the Securities Act), or is a person receiving a selling concession, fee
or other remuneration in respect of the Notes sold, the Transferor or person
acting on behalf of the Transferor has sent to the Transferee the notice
required by Rule 903(c)(2)(iv) or 904(c)(1)(ii), whichever is applicable. Upon
consummation of the proposed transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on Transfer enumerated in the Private Placement
Legend printed on the Regulation S Global Note, the Temporary Regulation S
Global Note and/or the Definitive Note and in the Indenture and the Securities
Act.
3. CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION
OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is
being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive Notes
and pursuant to and in accordance with the Securities Act and any applicable
blue sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) such Transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;
or
(b) such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A,
B-2
<PAGE>
Rule 144 or Rule 904, and the Transferor hereby further certifies that it has
not engaged in any general solicitation within the meaning of Regulation D under
the Securities Act and the Transfer complies with the transfer restrictions
applicable to beneficial interests in a Restricted Global Note or Restricted
Definitive Notes and the requirements of the exemption claimed, which
certification is supported by (1) a certificate executed by the Transferee in
the form of Exhibit D to the Indenture and (2) an Opinion of Counsel provided by
the Transferor or the Transferee (a copy of which the Transferor has attached to
this certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the IAI Global Note and/or the Definitive Notes and
in the Indenture and the Securities Act.
4. Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(b) CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
B-3
<PAGE>
--------------------------------
[Insert Name of Transferor]
By:
-----------------------------
Name:
Title:
Dated:
---------------, --------
B-4
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) a beneficial interest in the:
(i) 144A Global Note (CUSIP _________), or
(ii) Regulation S Global Note (CUSIP _________), or
(iii) IAI Global Note (CUSIP ________); or
(b) a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) a beneficial interest in the:
(i) 144A Global Note (CUSIP________), or
(ii) Regulation S Global Note (CUSIP ________), or
(iii) IAI Global Note (CUSIP________); or
(iv) Unrestricted Global Note (CUSIP ________); or
(b) a Restricted Definitive Note; or
(c) an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-5
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Prime Medical Services, Inc.
1301 Capital of Texas Highway
Suite C-300
Austin, Texas 78746-6550
State Street Bank and Trust Company of Missouri, N.A.
One Metropolitan Square
211 North Broadway-Suite 3900
St. Louis, MO 63102
Re: 8 3/4% Senior Subordinated Notes due 2008 of Prime Medical Services, Inc.
-------------------------------------------------------------------------
(CUSIP______________)
Reference is hereby made to the Indenture, dated as of March 27, 1998
(the "Indenture"), between Prime Medical Services, Inc., as issuer (the
"Company"), and State Street Bank and Trust Company of Missouri, N.A., as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
____________, (the "Owner") owns and proposes to exchange the Note[s]
or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE
(a) CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(b) CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i)
C-1
<PAGE>
the Definitive Note is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Definitive Note is
being acquired in compliance with any applicable blue sky securities laws of any
state of the United States.
(c) CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner's
Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES
(a) CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
-----------------------------------
[Insert Name of Owner]
By:
-----------------------------------
C-2
<PAGE>
Name:
Title:
Dated:
----------------,----
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Prime Medical Services, Inc.
1301 Capital of Texas Highway
Suite C-300
Austin, Texas 78746-8510
State Street Bank and Trust Company of Missouri, N.A.
One Metropolitan Square
211 North Broadway-Suite 3900
St. Louis, MO 63102
Re: 8 3/4% Senior Subordinated Notes due 2008 of Prime Medical Services, Inc.
-------------------------------------------------------------------------
Reference is hereby made to the Indenture, dated as of March 27, 1998
(the "Indenture"), between Prime Medical Services, Inc., as issuer (the
"Company"), and State Street Bank and Trust Company of Missouri, N.A., as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) a beneficial interest in a Global Note, or
(b) a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (c) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has
D-1
<PAGE>
furnished on its behalf by a U.S. broker-dealer) to you and to the Company a
signed letter substantially in the form of this letter and an Opinion of Counsel
in form reasonably acceptable to the Company to the effect that such transfer is
in compliance with the Securities Act, (D) outside the United States in
accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant
to the provisions of Rule 144(k) under the Securities Act or (F) pursuant to an
effective registration statement under the Securities Act, and we further agree
to provide to any person purchasing the Definitive Note or beneficial interest
in a Global Note from us in a transaction meeting the requirements of clauses
(A) through (D) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by
us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion and as to which we have authority to make, and do make,
the statements contained in this letter.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
------------------------------------------
[Insert Name of Accredited Investor]
By:
---------------------------------------
Name:
Title:
Dated:
------------------, ----
D-2
<PAGE>
EXHIBIT E
FORM OF NOTATION OF GUARANTEE
For value received, each Subsidiary Guarantor (which term includes any
successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and subject
to the provisions in the Indenture dated as of March 27, 1998 (as amended or
supplemented form time to time, (the "Indenture") among Prime Medical Services,
Inc., the Subsidiary Guarantors and State Street Bank and Trust Company of
Missouri, N.A., as trustee (the "Trustee"), (a) the due and punctual payment of
the principal of, premium, if any, and interest on the Notes (as defined in the
Indenture), whether at maturity, by acceleration, redemption or otherwise, the
due and punctual payment of interest on overdue principal and premium, and, to
the extent permitted by law, interest, and the due and punctual performance of
all other obligations of the Company to the Holders or the Trustee all in
accordance with the terms of the Indenture and (b) in case of any extension of
time of payment or renewal of any Notes or any of such other obligations, that
the same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. The obligations of the Subsidiary Guarantors to the
Holders of Notes and to the Trustee pursuant to the Subsidiary Guarantee and the
Indenture are expressly set forth in Article 11 of the Indenture and reference
is hereby made to the Indenture for the precise terms of the Subsidiary
Guarantee. The Subsidiary Guarantee may be released or limited under certain
circumstances. Each Holder of a Note, by accepting the same, agrees to and
shall be bound by such provisions. The Subsidiary Guarantee shall not be valid
or obligatory for any purpose until the certificate of authentication of the
Note upon which this Subsidiary Guarantee is endorsed shall have been executed
by the Trustee by the manual signature of one of its authorized signatories.
[SUBSIDIARY GUARANTORS]
By:
--------------------------------
Name:
Title:
E-1
<PAGE>
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS
Supplemental Indenture (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guaranteeing Subsidiary"),
Prime Medical Services, Inc. (or its permitted successor), a Delaware
corporation (the "Company"), and [___________________], as trustee under the
Indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (as amended and supplmented to the date hereof, (the
"Indenture"), dated as of March 27, 1998 providing for the issuance of an
aggregate principal amount of up to $100.0 million of 8% Senior Subordinated
Notes due 2008 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth in the Indetnure (the "Subsidiary
Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees
to be bound by the terms of the Indenture as a Subsidiary Guarantor and agrees
to be subject to the provisions of the Indenture applicable to Subsidiary
Guarantors as though originally a signatory and party to the Indenture.
3. EXECUTION AND DELIVERY. The Guaranteeing Subsidiary agrees that
the Subsidiary Guarantees shall remain in full force and effect notwithstanding
any failure to endorse on each Note a notation of such Subsidiary Guarantee.
4. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Subsidiary Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of the
Notes by accepting a
F-1
<PAGE>
Note waives and releases all such liability. The waiver and release are part of
the consideration for issuance of the Notes.
5. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
6. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
7. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
8. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
F-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated:
---------------, ----
[Guaranteeing Subsidiary]
By:
---------------------------------
Name:
Title:
Prime Medical Services, Inc.
By:
---------------------------------
Name:
Title:
[ ]
-------------------------
as Trustee
By:
------------------------------
Name:
Title:
<PAGE>
EXHIBIT (4)(b)
EXECUTION COPY
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of March 27, 1998
by and among
Prime Medical Services, Inc.
The Subsidiary Guarantors Signatories Hereto
and
NationsBanc Montgomery Securities LLC
Donaldson, Lufkin & Jenrette
Securities Corporation
Prudential Securities Incorporated
J.C. Bradford & Co.
- --------------------------------------------------------------------------------
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 27, 1998, by and among Prime Medical Services, Inc., a Delaware
corporation (the "Company"), the Subsidiary Guarantors signatories hereto (each
a "Subsidiary Guarantor" and, collectively, the "Subsidiary Guarantors"), and
NationsBanc Montgomery Securities LLC, Donaldson, Lufkin & Jenrette Securities
Corporation, Prudential Securities Incorporated and J.C. Bradford & Co. (each an
"Initial Purchaser" and, collectively, the "Initial Purchasers"), each of whom
has agreed to purchase the Company's 8 3/4% Senior Subordinated Notes due 2008
(the "Senior Subordinated Notes") pursuant to the Purchase Agreement (as defined
below).
This Agreement is made pursuant to the Purchase Agreement, dated March 24,
1998 (the "Purchase Agreement"), by and among the Company, the Subsidiary
Guarantors and the Initial Purchasers. In order to induce the Initial
Purchasers to purchase the Senior Subordinated Notes, the Company has agreed to
provide the registration rights set forth in this Agreement. The execution and
delivery of this Agreement is a condition to the obligations of the Initial
Purchasers set forth in Section 7 of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
Business Day: Any day except a Saturday, Sunday or other day in the
City of New York, or in the city of the corporate trust office of the Trustee,
on which banks are authorized to close.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Broker-Dealer Transfer Restricted Securities: New Senior Subordinated
Notes that are acquired by a Broker-Dealer in the Exchange Offer in exchange for
Senior Subordinated Notes that such Broker-Dealer acquired for its own account
as a result of market making activities or other trading activities (other than
Senior Subordinated Notes acquired directly from the Company or any of its
affiliates).
Certificated Securities: As defined in the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and declaration of
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the New Senior Subordinated Notes to be issued in the Exchange
Offer, (b) the maintenance of such Registration Statement continuously effective
and the keeping of the Exchange Offer open for a period not less than the
minimum period required pursuant to Section 3(b) hereof and (c) the delivery by
the Company to the Registrar under the Indenture of New Senior Subordinated
Notes in the same aggregate principal amount as the aggregate principal amount
of Senior Subordinated Notes tendered by Holders thereof pursuant to the
Exchange Offer.
1
<PAGE>
Damages Payment Date: With respect to the Senior Subordinated Notes, each
Interest Payment Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Company under the Act of the New
Senior Subordinated Notes pursuant to the Exchange Offer Registration Statement
pursuant to which the Company shall offer the Holders of all outstanding
Transfer Restricted Securities the opportunity to exchange all such outstanding
Transfer Restricted Securities for New Senior Subordinated Notes in an aggregate
principal amount equal to the aggregate principal amount of the Transfer
Restricted Securities tendered in such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers propose
to sell the Senior Subordinated Notes to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act, and to certain
"accredited investors," as such term is defined in Rule 501(a)(1), (2), (3), (5)
and (7) of Regulation D under the Act.
Global Noteholder: As defined in the Indenture.
Holders: As defined in Section 2 hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture, dated the Closing Date, among the Company, the
Subsidiary Guarantors and State Street Bank and Trust Company of Missouri, N.A.,
as trustee (the "Trustee"), pursuant to which the Notes are to be issued, as
such Indenture is amended or supplemented from time to time in accordance with
the terms thereof.
Interest Payment Date: As defined in the Indenture and the Notes.
Liquidated Damages: As defined in Section 5.
NASD: National Association of Securities Dealers, Inc.
New Senior Subordinated Notes: The Company's new 8 3/4% Senior
Subordinated Notes due 2008 to be issued pursuant to the Indenture (i) in the
Exchange Offer or (ii) upon the request of any Holder of Senior Subordinated
Notes covered by a Shelf Registration Statement, in exchange for such Senior
Subordinated Notes.
Notes: The Senior Subordinated Notes and the New Senior Subordinated
Notes.
Person: An individual, partnership, corporation, trust, unincorporated
organization, or a government or agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration
2
<PAGE>
Statement is declared effective, as amended or supplemented by any prospectus
supplement and by all other amendments thereto, including post-effective
amendments, and all material incorporated by reference into such Prospectus.
Record Holder: With respect to any Damages Payment Date, each Person who
is a Holder of Notes on the record date with respect to the Interest Payment
Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company and the
Subsidiary Guarantors relating to (a) an offering of New Senior Subordinated
Notes pursuant to an Exchange Offer or (b) the registration for resale of
Transfer Restricted Securities pursuant to the Shelf Registration Statement, in
each case, (i) which is filed pursuant to the provisions of this Agreement and
(ii) including the Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits and material
incorporated by reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur of
(a) the date on which such Note is exchanged in the Exchange Offer and is
entitled to be resold to the public by the Holder thereof without complying with
the prospectus delivery requirements of the Act, (b) the date on which such Note
has been disposed of in accordance with a Shelf Registration Statement, (c) the
date on which such Note is disposed of by a Broker-Dealer pursuant to the "Plan
of Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein) or (d) the date on
which such Note is distributed to the public pursuant to Rule 144 under the Act.
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law or Commission policy (after the procedures set forth in Section 6(a)(i)
below have been complied with), the Company and the Subsidiary Guarantors shall
(i) cause to be filed with the Commission as soon as practicable after the
Closing Date, but in no event later than 45 days after the Closing Date, the
Exchange Offer Registration
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Statement, (ii) use its best efforts to cause such Exchange Offer Registration
Statement to become effective on or prior to 150 days after the Closing Date,
(iii) in connection with the foregoing, (A) file all pre-effective amendments to
such Exchange Offer Registration Statement as may be necessary in order to cause
such Exchange Offer Registration Statement to become effective, (B) file, if
applicable, a post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Act and (C) cause all necessary
filings, if any, in connection with the registration and qualification of the
New Senior Subordinated Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer Registration
Statement shall be on the appropriate form permitting registration of the New
Senior Subordinated Notes to be offered in exchange for the Senior Subordinated
Notes that are Transfer Restricted Securities and to permit sales of
Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers as
contemplated by Section 3(c) below.
(b) The Company and the Subsidiary Guarantors shall use their respective
best efforts to cause the Exchange Offer Registration Statement to be effective
continuously, and shall keep the Exchange Offer open for a period of not less
than the minimum period required under applicable federal and state securities
laws to Consummate the Exchange Offer; provided, however, that in no event shall
such period be less than 20 Business Days after the Exchange Offer Registration
Statement has been declared effective. The Company and the Subsidiary
Guarantors shall cause the Exchange Offer to comply with all applicable federal
and state securities laws. No securities other than the Notes shall be included
in the Exchange Offer Registration Statement. The Company and the Subsidiary
Guarantors shall use their respective best efforts to cause the Exchange Offer
to be Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
Business Days thereafter.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Senior Subordinated Notes that are
Transfer Restricted Securities and that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Senior Subordinated Notes (other than Transfer
Restricted Securities acquired directly from the Company or any Affiliate of the
Company) pursuant to the Exchange Offer; however, such Broker-Dealer may be
deemed to be an "underwriter" within the meaning of the Act and must, therefore,
deliver a prospectus meeting the requirements of the Act in connection with its
initial sale of each New Senior Subordinated Note received by such Broker-Dealer
in the Exchange Offer, which prospectus delivery requirement may be satisfied by
the delivery by such Broker-Dealer of the Prospectus contained in the Exchange
Offer Registration Statement. Such "Plan of Distribution" section shall also
contain all other information with respect to such sales of Broker-Dealer
Transfer Restricted Securities by Restricted Broker-Dealers that the Commission
may require in order to permit such sales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Notes held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy after the date of this Agreement.
The Company and the Subsidiary Guarantors shall use their respective best
efforts to keep the Exchange Offer Registration Statement continuously
effective, supplemented and amended as required by the provisions of Section
6(c) below to the extent necessary to ensure that it is available for sales of
Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers, and
to ensure that such Registration Statement conforms with the requirements of
this Agreement, the Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period (the "Delivery Period")
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ending on the later of (i) 90 days from the date on which the Exchange Offer
Registration Statement is declared effective and (ii) the date on which a
Restricted Broker-Dealer is no longer required to deliver a Prospectus in
connection with market-making or other trading activities.
The Company and the Subsidiary Guarantors shall promptly provide
sufficient copies of the latest version of such Prospectus to such Restricted
Broker-Dealers promptly upon request at any time during the Delivery Period in
order to facilitate such sales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
Exchange Offer Registration Statement with respect to the New Senior
Subordinated Notes because the Exchange Offer is not permitted by applicable law
or Commission policy (after the procedures set forth in Section 6(a)(i) below
have been complied with) or (ii) if any Holder of Transfer Restricted Securities
shall notify the Company within 20 days following the Consummation of the
Exchange Offer that (A) such Holder was prohibited by law or Commission policy
from participating in the Exchange Offer or (B) such Holder may not resell the
New Senior Subordinated Notes acquired by it in the Exchange Offer to the public
without delivering a prospectus and the Prospectus contained in the Exchange
Offer Registration Statement is not appropriate or available for such resales by
such Holder or (C) such Holder is a Broker-Dealer and holds Senior Subordinated
Notes acquired directly from the Company or an affiliate of the Company, then
the Company and the Subsidiary Guarantors shall (x) cause to be filed on or
prior to 45 days after the date on which the Company determines that it is not
required to file the Exchange Offer Registration Statement pursuant to clause
(i) above or 45 days after the date on which the Company receives the notice
specified in clause (ii) above a shelf registration statement pursuant to Rule
415 under the Act (which may be an amendment to the Exchange Offer Registration
Statement (in either event, the "Shelf Registration Statement")), relating to
all Transfer Restricted Securities the Holders of which shall have provided the
information required pursuant to Section 4(b) hereof, and shall (y) use their
respective best efforts to cause such Shelf Registration Statement to become
effective on or prior to 150 days after the date on which the Company becomes
obligated to file such Shelf Registration Statement. If, after the Company has
filed an Exchange Offer Registration Statement which satisfies the requirements
of Section 3(a) above, the Company is required to file and make effective a
Shelf Registration Statement solely because the Exchange Offer shall not be
permitted under applicable federal law, then the filing of the Exchange Offer
Registration Statement shall be deemed to satisfy the requirements of clause (x)
above. Such an event shall have no effect on the requirements of clause (y)
above. The Company and the Subsidiary Guarantors shall use their respective
best efforts to keep the Shelf Registration Statement discussed in this Section
4(a) continuously effective, supplemented and amended as required by and subject
to the provisions of Sections 6(b) and (c) hereof to the extent necessary to
ensure that it is available for sales of Transfer Restricted Securities by the
Holders thereof entitled to the benefit of this Section 4(a), and to ensure that
it conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of at least two years (or a shorter period that will terminate when all
the Transfer Restricted Securities covered by such Shelf Registration Statement
have been sold pursuant to such Shelf Registration Statement) (as extended
pursuant to Section 6(c)(i)) following the date on which such Shelf Registration
Statement first becomes effective under the Act.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder
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furnishes to the Company in writing, within 15 days after receipt of a request
therefor, such information specified in item 507 of Regulation S-K under the Act
or that the Company may reasonably request for use in connection with any Shelf
Registration Statement or Prospectus or preliminary Prospectus included therein.
No Holder of Transfer Restricted Securities shall be entitled to Liquidated
Damages pursuant to Section 5 hereof unless and until such Holder shall have
provided all such information. Each Holder as to which any Shelf Registration
Statement is being effected agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the date specified for such filing in this
Agreement, (ii) any such Registration Statement has not been declared effective
by the Commission on or prior to the date specified for such effectiveness in
this Agreement, (iii) the Exchange Offer has not been Consummated within 30
Business Days after the Exchange Offer Registration Statement is first declared
effective by the Commission or (iv) any Registration Statement required by this
Agreement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose without being succeeded
promptly by a post-effective amendment to such Registration Statement that cures
such failure and that is itself declared effective as soon as practicable (each
such event referred to in clauses (i) through (iv), a "Registration Default"),
then the Company and the Subsidiary Guarantors hereby jointly and severally
agree to pay, in the aggregate liquidated damages (the "Liquidated Damages") to
each Holder of Transfer Restricted Securities with respect to the first 90-day
period immediately following the occurrence of such Registration Default, in an
amount equal to $.05 per week per $1,000 principal amount of Transfer Restricted
Securities held by such Holder for each week or portion thereof that the
Registration Default continues. The amount of the Liquidated Damages shall
increase by an additional $.05 per week per $1,000 in principal amount of
Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
Liquidated Damages of $.50 per week per $1,000 principal amount of Transfer
Restricted Securities. Notwithstanding anything to the contrary set forth
herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (i) above, (2)
upon the effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (ii) above, (3)
upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon
the filing of a post-effective amendment to the Registration Statement or an
additional Registration Statement that causes the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement) to again be
declared effective or made usable in the case of (iv) above, the Liquidated
Damages payable with respect to the Transfer Restricted Securities as a result
of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued Liquidated Damages shall be paid to the Global Note Holder by
wire transfer of immediately available funds or by federal funds check and to
Holders of Certificated Securities wire transfer to the accounts specified by
such Holders or by mailing checks to their registered addresses on each Damages
Payment Date. All obligations of the Company and the Subsidiary Guarantors set
forth in the preceding paragraph that are outstanding with respect to any
Transfer Restricted Security at the time such security ceases to be a Transfer
Restricted Security shall survive until such time as all such obligations with
respect to such security shall have been satisfied in full.
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SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company and the Subsidiary Guarantors shall comply with all
applicable provisions of Section 6(c) below, shall use their respective best
efforts to effect such exchange and to permit the sale of Broker-Dealer Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof, and shall comply with all of the following
provisions:
(i) If, following the date hereof there has been published a change in
Commission policy with respect to exchange offers such as the Exchange Offer,
such that in the reasonable opinion of counsel to the Company there is a
substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company and the Subsidiary Guarantors hereby
agree to seek a no-action letter or other favorable decision from the
Commission allowing the Company and the Subsidiary Guarantors to Consummate
an Exchange Offer for such Senior Subordinated Notes. The Company and the
Subsidiary Guarantors hereby agree to pursue the issuance of such a decision
to the Commission staff level but shall not be required to take commercially
unreasonable action to effect a change of Commission policy. In connection
with the foregoing, the Company and the Subsidiary Guarantors hereby agree to
take all commercially reasonable actions as are requested by the Commission
or otherwise required in connection with the issuance of such decision,
including without limitation (A) participating in telephonic conferences with
the Commission, (B) delivering to the Commission staff an analysis prepared
by counsel to the Company setting forth the legal bases, if any, upon which
such counsel has concluded that such an Exchange Offer should be permitted
and (C) diligently pursuing a resolution (which need not be favorable) by the
Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation of the Exchange Offer, a written representation to the Company
and the Subsidiary Guarantors (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement) to the
effect that (A) it is not an affiliate of the Company, (B) it is not engaged
in, and does not intend to engage in, and has no arrangement or understanding
with any person to participate in, a distribution of the New Senior
Subordinated Notes to be issued in the Exchange Offer and (C) it is acquiring
the New Senior Subordinated Notes in its ordinary course of business. Each
Holder hereby acknowledges and agrees that any Broker-Dealer and any such
Holder using the Exchange Offer to participate in a distribution of the
securities to be acquired in the Exchange Offer (1) could not under
Commission policy as in effect on the date of this Agreement rely on the
position of the Commission enunciated in Morgan Stanley and Co., Inc.
(available June 5, 1991) and Exxon Capital Holdings Corporation (available
May 13, 1988), as interpreted in the Commission's letter to Shearman &
Sterling dated July 2, 1993, and similar no-action letters (including, if
applicable, any no-action letter obtained pursuant to clause (i) above), and
(2) must comply with the registration and prospectus delivery requirements of
the Act in connection with a secondary resale transaction and that such a
secondary resale transaction must be covered by an effective registration
statement containing the selling security holder information required by Item
507 or 508, as applicable, of Regulation S-K if the resales are of New Senior
Subordinated Notes obtained by such Holder in exchange for Senior
Subordinated Notes acquired by such Holder directly from the Company or an
affiliate thereof.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Subsidiary Guarantors shall provide a
supplemental letter to the Commission (A) stating that the
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Company and the Subsidiary Guarantors are registering the Exchange Offer in
reliance on the position of the Commission enunciated in Exxon Capital
Holdings Corporation (available May 13, 1988), Morgan Stanley and Co., Inc.
(available June 5, 1991) and, if applicable, any no-action letter obtained
pursuant to clause (i) above, (B) including a representation that neither the
Company nor any Subsidiary Guarantor has entered into any arrangement or
understanding with any Person to distribute the New Senior Subordinated Notes
to be received in the Exchange Offer and that, to the best of the Company's
and each Subsidiary Guarantor's information and belief, each Holder
participating in the Exchange Offer is acquiring the New Senior Subordinated
Notes in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of the New
Senior Subordinated Notes received in the Exchange Offer and (C) any other
undertaking or representation required by the Commission as set forth in any
no-action letter obtained pursuant to clause (i) above.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company and the Subsidiary Guarantors shall comply
with all the provisions of Section 6(c) below and shall use their respective
best efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (as indicated in the information furnished to
the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company
and the Subsidiary Guarantors will prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof within the time periods and otherwise in accordance with
the provisions hereof.
(c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement to permit the sale or resale
of Transfer Restricted Securities (including, without limitation, any Exchange
Offer Registration Statement and the related Prospectus, to the extent that the
same are required to be available to permit sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers), the Company and the
Subsidiary Guarantors shall:
(i) use their respective best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this Agreement, as
applicable. Upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain a
material misstatement or omission or (B) not to be effective and usable for
resale of Transfer Restricted Securities during the period required by this
Agreement, the Company and the Subsidiary Guarantors shall file promptly an
appropriate amendment to such Registration Statement, (1) in the case of
clause (A), correcting any such misstatement or omission, and (2) in the case
of clauses (A) and (B), use their respective best efforts to cause such
amendment to be declared effective and such Registration Statement and the
related Prospectus to become usable for their intended purpose(s) as soon as
practicable thereafter.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, or such shorter period as will terminate when
all Transfer Restricted Securities covered by such Registration Statement
have been sold; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule
424 under the Act, and to comply fully with Rules 424, 430A and 462, as
applicable, under the Act in a timely manner; and comply with the provisions
of the Act with respect to the disposition of all securities covered by such
Registration Statement during the applicable period
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in accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or supplement to the
Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders promptly
and, if requested by such Persons, confirm such advice in writing, (A) when
the Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to any Registration Statement or any
post-effective amendment thereto, when the same has become effective, (B) of
any request by the Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional information
relating thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the Act or
of the suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any jurisdiction,
or the initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document incorporated
by reference therein untrue, or that requires the making of any additions to
or changes in the Registration Statement in order to make the statements
therein not misleading, or that requires the making of any additions to or
changes in the Prospectus in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. If at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Transfer Restricted
Securities under state securities or Blue Sky laws, the Company and the
Subsidiary Guarantors shall use their respective best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(iv) furnish to the Initial Purchaser(s), each selling Holder named
in any Registration Statement or Prospectus, upon request, and each of the
underwriter(s) in connection with such sale, if any, before filing with the
Commission, copies of any Registration Statement or any Prospectus included
therein or any amendments or supplements to any such Registration Statement
or Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review and comment of such Holders and underwriter(s) in
connection with such sale, if any, for a period of at least five Business
Days, and the Company will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such Registration Statement
or Prospectus (including all such documents incorporated by reference) to
which the selling Holders of the Transfer Restricted Securities covered by
such Registration Statement or the underwriter(s) in connection with such
sale, if any, shall reasonably object in writing within five Business Days
after the receipt thereof specifying with particularity the misstatement,
omission or other deficiency forming the basis of the objection. A selling
Holder or underwriter, if any, shall be deemed to have reasonably objected to
such filing if such Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains a material
misstatement or omission or fails to comply with the applicable requirements
of the Act;
(v) as promptly as practicable prior to the filing of any document
that is to be incorporated by reference into a Registration Statement or
Prospectus, provide copies of such document to the selling Holders, if
requested, and to the underwriter(s) in connection with such sale, if any,
make the Company's and the Subsidiary Guarantors' representatives available
for discussion of such document and other customary due diligence matters,
and include such information in such document prior to the filing thereof as
such selling Holders or underwriter(s), if any, reasonably may request;
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(vi) subject to having received reasonable confidentiality
assurance, make available at reasonable times for inspection by the selling
Holders, any managing underwriter participating in any disposition pursuant
to such Registration Statement and any attorney or accountant retained by
such selling Holders or any of such underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Company and the
Subsidiary Guarantors and cause the Company's and the Subsidiary Guarantors'
officers, directors and employees to supply all information reasonably
requested by any such Holder, underwriter, attorney or accountant in
connection with such Registration Statement or any post-effective amendment
thereto subsequent to the filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the underwriter(s) in
connection with such sale, if any, promptly include in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective amendment
if necessary, such information as such selling Holders and underwriter(s), if
any, may reasonably request to have included therein, including, without
limitation, information relating to the "Plan of Distribution" of the
Transfer Restricted Securities, information with respect to the principal
amount of Transfer Restricted Securities being sold to such underwriter(s),
the purchase price being paid therefor and any other terms of the offering of
the Transfer Restricted Securities to be sold in such offering; and make all
required filings of such Prospectus supplement or post-effective amendment as
soon as practicable after the Company is notified of the matters to be
included in such Prospectus supplement or post-effective amendment;
(viii) furnish to each selling Holder, if requested, and each of the
underwriter(s) in connection with such sale, if any, without charge, at least
one copy of the Registration Statement, as first filed with the Commission,
and of each amendment thereto, including all documents incorporated by
reference therein and all exhibits (including exhibits incorporated therein
by reference);
(ix) deliver to each selling Holder and each of the underwriter(s),
if any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; the Company and the Subsidiary Guarantors
hereby consent to the use (in accordance with law) of the Prospectus and any
amendment or supplement thereto by each of the selling Holders and each of
the underwriter(s), if any, in connection with the offering and the sale of
the Transfer Restricted Securities covered by the Prospectus or any amendment
or supplement thereto;
(x) enter into such agreements (including an underwriting
agreement) and make such reasonable and customary representations and
warranties and take all such other actions in connection therewith in order
to expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any Registration Statement contemplated by this
Agreement as may be reasonably requested by any Holder of Transfer Restricted
Securities or underwriter in connection with any sale or resale pursuant to
any Registration Statement contemplated by this Agreement, and in such
connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an Underwritten Registration, the Company
and the Subsidiary Guarantors shall:
(A) furnish (or in the case of paragraphs (2) and (3), use its best
efforts to furnish) to each selling Holder and each underwriter, if any,
in such substance and scope as they may reasonably request and as are
customarily made by issuers to underwriters in primary underwritten
offerings, upon the date of the Consummation of the Exchange Offer and, if
applicable, upon
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the effectiveness of the Shelf Registration Statement and to each
Restricted Broker-Dealer upon Consummation of the Exchange Offer:
(1) a certificate, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration Statement,
as the case may be, signed on behalf of the Company and each Subsidiary
Guarantor by (x) the President or any Vice President and (y) a
principal financial or accounting officer of the Company and such
Subsidiary Guarantor, confirming, as of the date thereof, the matters
set forth in paragraphs (b) through (d) of Section 7 of the Purchase
Agreement and such other similar matters as the Holders, underwriter(s)
and/or Restricted Broker Dealers may reasonably request;
(2) an opinion, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration Statement,
as the case may be, of counsel for the Company and the Subsidiary
Guarantors covering matters similar to those set forth in paragraph (g)
of Section 7 of the Purchase Agreement and such other matter as the
Holders, underwriters and/or Restricted Broker Dealers may reasonably
request, and
(3) a customary comfort letter, dated as of the date of
effectiveness of the Shelf Registration Statement or the date of
Consummation of the Exchange Offer, as the case may be, from the
Company's independent accountants, in the customary form and covering
matters of the type customarily covered in comfort letters to
underwriters in connection with primary underwritten offerings, and
affirming the matters set forth in the comfort letters delivered
pursuant to Section 7 of the Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in the underwriting
agreement, if any, in connection with any sale or resale pursuant to any
Shelf Registration Statement the indemnification provisions and procedures
of Section 8 hereof with respect to all parties to be indemnified pursuant
to said Section; and
(C) deliver such other documents and certificates as may be reasonably
requested by the selling Holders, the underwriter(s), if any, and
Restricted Broker Dealers, if any, to evidence compliance with clause (A)
above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company and the
Subsidiary Guarantors pursuant to this clause (x), if any.
If at any time the representations and warranties of the Company and the
Subsidiary Guarantors contemplated in (A)(1) above cease to be true and
correct, the Company and the Subsidiary Guarantors shall so advise the
underwriter(s), if any, the selling Holders and each Restricted Broker-Dealer
promptly and if reasonably requested by such Persons, shall confirm such
advice in writing;
(xi) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the underwriter(s), if any, and their
respective counsel in connection with the registration and qualification of
the Transfer Restricted Securities under the securities or Blue Sky laws of
such jurisdictions as the selling Holders or underwriter(s), if any, may
request and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Transfer Restricted
Securities covered by the applicable Registration Statement; provided,
however, that neither the Company nor any Subsidiary Guarantor shall be
required to register or qualify as a foreign corporation where it is not now
so qualified or to take any action that would subject it to the service of
process in suits or to taxation, other than as to matters and transactions
relating to the
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Registration Statement, in any jurisdiction where it is not now so subject;
(xii) issue, upon the request of any Holder of Senior Subordinated
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, New Senior Subordinated Notes having an aggregate principal amount
equal to the aggregate principal amount of Senior Subordinated Notes
surrendered to the Company by such Holder in exchange therefor or being sold
by such Holder; such New Senior Subordinated Notes to be registered in the
name of such Holder or in the name of the purchaser(s) of such Notes, as the
case may be; in return, the Senior Subordinated Notes held by such Holder
shall be surrendered to the Company for cancellation;
(xiii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the selling Holders and the underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and to register such Transfer Restricted Securities in
such denominations and such names as the Holders or the underwriter(s), if
any, may request at least two Business Days prior to such sale of Transfer
Restricted Securities;
(xiv) use their respective best efforts to cause the Transfer
Restricted Securities covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriter(s), if
any, to consummate the disposition of such Transfer Restricted Securities,
subject to the proviso contained in clause (xi) above;
(xv) subject to Section 6(c)(i), if any fact or event contemplated
by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(xvi) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture
with printed certificates for the Transfer Restricted Securities which are in
a form eligible for deposit with the Depository Trust Company;
(xvii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use their respective reasonable best efforts to cause such
Registration Statement to become effective and approved by such governmental
agencies or authorities as may be necessary to enable the Holders selling
Transfer Restricted Securities to consummate the disposition of such Transfer
Restricted Securities;
(xviii) otherwise use their respective best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable Registration
Statement, as soon as practicable, a consolidated earnings statement meeting
the requirements of Rule 158 (which need not be audited) covering a
twelve-month period
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<PAGE>
beginning after the effective date of the Registration Statement (as such
term is defined in paragraph (c) of Rule 158 under the Act);
(xix) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by this
Agreement and, in connection therewith, cooperate with the Trustee and the
Holders of Notes to effect such changes to the Indenture as may be required
for such Indenture to be so qualified in accordance with the terms of the
TIA; and execute and use its best efforts to cause the Trustee to execute,
all documents that may be required to effect such changes and all other forms
and documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner; and
(xx) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of any notice from the Company
of the existence of any fact of the kind described in Section 6(c)(iii)(D)
hereof, such Holder will forthwith discontinue disposition of Transfer
Restricted Securities pursuant to the applicable Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(c)(xv) hereof, or until it is advised in writing by
the Company that the use of the Prospectus may be resumed, and has received
copies of any additional or supplemental filings that are incorporated by
reference in the Prospectus (the "Advice"). If so directed by the Company, each
Holder will deliver to the Company (at the Company's expense) all copies, other
than permanent file copies then in such Holder's possession, of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of either such notice. In the event the Company shall give any such
notice, the time period regarding the effectiveness of such Registration
Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 6(c)(iii)(D) hereof to and including
the date when each selling Holder covered by such Registration Statement shall
have received the copies of the supplemented or amended Prospectus contemplated
by Section 6(c)(xv) hereof or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Subsidiary Guarantors'
performance of or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses (including
filings made by any Initial Purchaser or Holder with the NASD (and, if
applicable, the fees and expenses of any "qualified independent underwriter")
and its counsel that may be required by the rules and regulations of the NASD);
(ii) all fees and expenses of compliance with federal securities and state Blue
Sky or securities laws; (iii) all expenses of printing (including printing
certificates for the New Senior Subordinated Notes to be issued in the Exchange
Offer and printing of Prospectuses), messenger and delivery services and
telephone; (iv) all fees and disbursements of counsel for the Company, and the
Subsidiary Guarantors and counsel for the Holders of Transfer Restricted
Securities (provided that one such firm shall be agreed upon by the Holders of
Transfer Restricted Securities and, provided further, that the Company shall not
be responsible for the fees and disbursements of counsel for the Holders of
Transfer Restricted Securities or the Initial Purchasers incurred in connection
with the transactions contemplated by Section 3 hereof); (v) all application and
filing fees in connection with listing the Notes on a national securities
exchange or automated quotation system pursuant to the requirements hereof; and
13
<PAGE>
(vi) all fees and disbursements of independent certified public accountants of
the Company and the Subsidiary Guarantors (including the expenses of any special
audit and comfort letters required by or incident to such performance).
The Company will, in any event, bear its and the Subsidiary Guarantors'
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expenses
of any annual audit and the fees and expenses of any Person (other than the
Initial Purchasers), including special experts, retained by the Company or the
Subsidiary Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Subsidiary
Guarantors will reimburse the Purchasers and the Holders of Transfer Restricted
Securities being tendered in the Exchange Offer and/or resold pursuant to the
"Plan of Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration Statement is being
prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Subsidiary Guarantors, jointly and severally,
agree to indemnify and hold harmless (i) each Holder and (ii) each person, if
any, who controls (within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act) any Holder (any of the persons referred to in this clause (ii)
being hereinafter referred to as a "controlling person") and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any Holder or any controlling person (any person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "Indemnified Holder"), to the
fullest extent lawful, from and against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or other Federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, preliminary prospectus or Prospectus
(or any amendment or supplement thereto), or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein in the light of the circumstances under which they were
made, not misleading, and agree to reimburse each such Indemnified Holder, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company and the Subsidiary
Guarantors will not be liable in any such case to any Indemnified Holder to the
extent that any such loss, claim, damage, liability or action arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission relating to such Holder made in any Registration Statement,
preliminary prospectus or Prospectus, or in any amendment thereof or supplement
thereto, in reliance upon and in conformity with written information furnished
to the Company and the Subsidiary Guarantors by or on behalf of such Holder
specifically for inclusion therein; provided, further, that this indemnity
agreement with respect to any Registration Statement, preliminary prospectus, or
Prospectus (or any amendment or supplement thereto) shall not inure to the
benefit of any Holder of Transfer Restricted Securities from whom the person
asserting any such losses, claims, liabilities, damages or expenses purchased
Notes pursuant to such Registration Statement, preliminary prospectus, or
Prospectus (or any amendment or supplement thereto), or any controlling person
of such Holder, if a copy of the Prospectus (as so amended or supplemented) was
not
14
<PAGE>
sent or given by or on behalf of such Holder to such person and if the
Prospectus (as so amended or supplemented) would have corrected the defect
giving rise to such losses, claims, liabilities, damages or expenses.
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Company and the Subsidiary
Guarantors, and their respective directors, officers, and any person controlling
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company, and the respective officers, directors, partners, employees,
representatives and agents of each such person, to the same extent as the
foregoing indemnity from the Company and the Subsidiary Guarantors to each of
the Indemnified Holders, but only (i) with reference to written information
relating to such Holder furnished in writing by such Holder expressly for use in
any Registration Statement or (ii) if a copy of the prospectus (as amended or
supplemented) was not sent or given by or on behalf of the Holder. This
indemnity agreement will be in addition to any liability which any Holder may
otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof,
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however that such counsel shall be
reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified parties shall have the right to employ not
more than one separate counsel, and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the use of
counsel chosen by the indemnifying party to represent any indemnified party
would, in the written opinion of legal counsel to the indemnified party, present
such counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have been informed in
writing by legal counsel that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of the institution
of such action or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, the Company, the
15
<PAGE>
Subsidiary Guarantors and each Holder of Transfer Restricted Securities agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and the Subsidiary
Guarantors and one or more of the Holders may be subject in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Subsidiary Guarantors and by the Holders from the sale of Transfer Restricted
Securities; provided, however, that in no case shall any Holder be responsible
for any amount in excess of the amount by which the total received by such
Holder with respect to its sale of Transfer Restricted Securities pursuant to a
Registration Statement exceeds (i) the amount paid by such Holder for Transfer
Restricted Securities and (ii) the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
the Subsidiary Guarantors and the Holders shall contribute in such proportion as
is appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Subsidiary Guarantors and of the Holder in
connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by the Company and the Subsidiary Guarantors or
the Holders. The Company and the Subsidiary Guarantors and the Holders agree
that it would not be just and equitable if contribution were determined by pro
rata allocation or any other method of allocation that does not take account of
the equitable considerations referred to above. Notwithstanding the provisions
of this paragraph (d), no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who controls a
Holder within the meaning of either the Securities Act or the Exchange Act and
each director, officer, employee and agent of a Holder shall have the same
rights to contribution as such Holder, and each person who controls the Company
and the Subsidiary Guarantors within the meaning of either the Securities Act or
the Exchange Act and each partner, officer, director, employee and agent of the
Company and the Subsidiary Guarantors shall have the same rights to contribution
as the Company and the Subsidiary Guarantors, subject in each case to the
applicable terms and conditions of this paragraph (d).
SECTION 9. RULE 144A
The Company and each Subsidiary Guarantor hereby agrees with each Holder,
for so long as any Transfer Restricted Securities remain outstanding and during
any period in which the Company is not subject to Section 13 or 15(d) of the
Securities Exchange Act, to make available, upon request of any Holder of
Transfer Restricted Securities, to any Holder or beneficial owner of Transfer
Restricted Securities in connection with any sale thereof and any prospective
purchaser of such Transfer Restricted Securities designated by such Holder or
beneficial owner, the information required by Rule 144A(d)(4) under the Act in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144A.
SECTION 10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in customary underwriting arrangements entered
into in connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, and other documents required under the terms
of such underwriting arrangements.
16
<PAGE>
SECTION 11. SELECTION OF UNDERWRITERS
For any Underwritten Offering, the investment banker or investment bankers
and manager or managers for any Underwritten Offering that will administer such
offering will be selected by the Holders of a majority in aggregate principal
amount of the Transfer Restricted Securities included in such offering;
provided, that such investment bankers and managers must be reasonably
satisfactory to the Company. Such investment bankers and managers are referred
to herein as the "underwriters."
SECTION 12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to exercise all
rights provided herein, in the Indenture, the Purchase Agreement or granted by
law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. The Company and the
Subsidiary Guarantors agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by them of the
provisions of this Agreement and hereby agree to waive the defense in any action
for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any Subsidiary
Guarantor will, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
Except as described on Schedule 12, neither the Company nor any Subsidiary
Guarantor has previously entered into any agreement granting any registration
rights with respect to its securities to any Person. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's and the Subsidiary
Guarantors' securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Notes. Neither the Company nor any
Subsidiary Guarantor will take any action, or voluntarily permit any change to
occur, with respect to the Notes that would materially and adversely affect the
ability of the Holders to Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 12(d)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities. Notwithstanding the foregoing, a waiver or consent to
departure from the provisions hereof that relates exclusively to the rights of
Holders whose securities are being tendered pursuant to the Exchange Offer and
that does not affect directly or indirectly the rights of other Holders whose
securities are not being tendered pursuant to such Exchange Offer may be given
by the Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities subject to such Exchange Offer.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
17
<PAGE>
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company or the Subsidiary Guarantors:
Prime Medical Services, Inc.
1301 Capital of Texas Highway
Suite C-300
Austin, Texas 78746-6550
Telecopier No.: (512) 328-8510
Attention: Cheryl Williams
With a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1900 Frost Bank Plaza
816 Congress Avenue
Austin, Texas 78701
Telecopier No.: (512) 499-6290
Attention: Timothy L. LaFrey
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities; provided, however, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities directly from such Holder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and
18
<PAGE>
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement, together with the Purchase
Agreement, Indenture and the Notes, is intended by the parties as a final
expression of their agreement and is intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
19
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PRIME MEDICAL SERVICES, INC.
By:
-------------------------------------
Name:
Title:
PRIME MEDICAL OPERATING, INC.
By:
-------------------------------------
Name:
Title:
PRIME MANAGEMENT, INC.
By:
-------------------------------------
Name:
Title:
PRIME CARDIAC REHABILITATION SERVICES, INC.
By:
-------------------------------------
Name:
Title:
PRIME DIAGNOSTIC SERVICES, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
PRIME LITHOTRIPSY SERVICES, INC.
By:
-------------------------------------
Name:
Title:
PRIME KIDNEY STONE TREATMENT, INC.
By:
-------------------------------------
Name:
Title:
PRIME DIAGNOSTIC CORP. OF FLORIDA
By:
-------------------------------------
Name:
Title:
PRIME LITHOTRIPTER OPERATIONS, INC.
By:
-------------------------------------
Name:
Title:
PRIME PRACTICE MANAGEMENT, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
TEXAS LITHO, INC.
By:
-------------------------------------
Name:
Title:
R.R. LITHO, INC.
By:
-------------------------------------
Name:
Title:
OHIO LITHO, INC.
By:
-------------------------------------
Name:
Title:
ALABAMA RENTAL STONE INSTITUTE, INC.
By:
-------------------------------------
Name:
Title:
SUN MEDICAL TECHNOLOGIES, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
SUN ACQUISITION, INC.
By:
-------------------------------------
Name:
Title:
LITHOTRIPTERS, INC.
By:
-------------------------------------
Name:
Title:
PRIME MEDICAL MANAGEMENT, L.P.
By:
-------------------------------------
Name:
Title:
PROSTATHERAPIES, INC.
By:
-------------------------------------
Name:
Title:
FASTSTART, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
NATIONAL LITHOTRIPTERS ASSOCIATION, INC.
By:
-------------------------------------
Name:
Title:
MEDTECH INVESTMENTS, INC.
By:
-------------------------------------
Name:
Title:
EXECUTIVE MEDICAL ENTERPRISES, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first above
written.
NATIONSBANC MONTGOMERY SECURITIES LLC
By:
-----------------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
-----------------------------------
Name:
Title:
PRUDENTIAL SECURITIES INCORPORATED
By:
-----------------------------------
Name:
Title:
J.C. BRADFORD & CO.
By:
-----------------------------------
Name:
Title:
<PAGE>
EXHIBIT 5
[AKIN, GUMP, STRAUSS, HAUER & FELD L.L.P. LETTERHEAD]
, 1998
Prime Medical Services, Inc.
1301 Capital of Texas Highway, Suite C-300
Austin, TX 78746
Ladies and Gentlemen:
We have acted as counsel for Prime Medical Services, Inc., a Delaware
corporation (the "Company"), in connection with the proposed offer by the
Company to exchange (the "Exchange Offer") all outstanding 8 3/4% Senior
Subordinated Notes Due 2008 ($100 million principal amount outstanding) (the
"Outstanding Notes") for 8 3/4% Senior Subordinated Notes Due 2008 ($100 million
principal amount) (the "Exchange Notes"). The Outstanding Notes have been, and
the Exchange Notes will be, issued pursuant to an Indenture dated as of March
27, 1998, between the Company and State Street Bank and Trust Company of
Missouri, National Association, as trustee (the "Trustee").
The law covered by the opinions expressed herein is limited in all respects
to the Federal laws of the United States, the laws of the State of Texas and the
Delaware General Corporation Law. You should be aware that we are not admitted
to practice law in the State of Delaware and the opinion herein as to the
Delaware General Corporation Law is based solely on the latest unofficial
compilation thereof available to us. This firm is a registered limited liability
partnership organized under the laws of the State of Texas.
We have examined the Indenture and the form of Exchange Notes, which are
filed as Exhibit 4(a) to the Registration Statement, the Registration Statement
on form S-4 to which this opinion is attached as an exhibit, filed by the
Company with the Securities and Exchange Commission, for the registration of the
Exchange Notes under the Securities Act of 1933 (the Registration Statement as
amended at the time it becomes effective being referred to as the "Registration
Statement") and such corporate records of the Company, certificates of public
officials and such other documents as we have deemed necessary or appropriate
for the purpose of this opinion.
<PAGE>
Based upon such examination and review, we are of the opinion that the
Exchange Notes proposed to be issued by the Company pursuant to the Exchange
Offer have been duly authorized for issuance and, subject to the Registration
Statement becoming effective under the Securities Act of 1933, and to compliance
with any applicable state securities laws, the Exchange Notes when issued,
delivered by the Company, authenticated by the Trustee and delivered and sold in
accordance with the Indenture, will be valid and binding obligations of the
Company.
The opinion expressed herein as to the valid, binding and enforceable
nature of the Exchange Notes is subject to the exceptions that (i) enforcement
may be limited by bankruptcy, insolvency (including without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally, and (ii) enforcement is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law). In addition, the foregoing
opinion is subject to the qualifications that certain remedial, waiver and other
similar provisions of the Indenture may not be enforceable in whole or in part
under the Delaware General Corporation Law or the Federal laws of the United
States, but such provisions do not void the Indenture or frustrate the basic
purpose thereof, and subject to the other qualifications set forth in this
opinion, the Indenture contains adequate provisions for the practical
realization of the rights and benefits afforded thereby, except for the economic
consequences of any judicial, administrative or other delay or procedure which
may be imposed by applicable federal and state law, rules, regulations and court
decisions and by constitutional requirements in and of the States of Delaware or
Texas or the United States. In addition, we express no opinion as to (i) the
enforceability of any provisions contained in the Indenture purporting to waive
the benefits of any stay, extension or usury law or waive any rights under any
applicable statutes or rules thereafter enacted or promulgated or (ii) the
validity, legally binding effect or enforceability of any provision of any
agreement that requires or relates to payment of any interest at a rate or in an
amount which a court would determine in the circumstances under applicable law
to be commercially unreasonable or a penalty or a forfeiture. In addition, the
rights to indemnification contained in the Indenture may be limited by Federal,
Texas or Delaware laws or the policies underlying such laws.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to the firm under "Legal Matters" in
the Prospectus forming a part of the Registration Statement.
Sincerely,
/s/ AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
<PAGE>
EXHIBIT (10)
EXECUTION COPY
PRIME MEDICAL SERVICES, INC.
$100,000,000
8 3/4% SENIOR SUBORDINATED NOTES DUE 2008
PURCHASE AGREEMENT
March 24, 1998
NationsBanc Montgomery Securities LLC
Donaldson, Lufkin & Jenrette Securities Corporation
Prudential Securities Incorporated
J.C. Bradford & Co.
c/o NationsBanc Montgomery Securities LLC
901 Main Street, 66th Floor
Dallas, Texas 75202-3714
Ladies and Gentlemen:
Prime Medical Services, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to you (the "Initial Purchasers")
$100,000,000 in aggregate principal amount of its 8 3/4% Senior Subordinated
Notes due 2008 (the "Notes"). The Notes will be fully and unconditionally
guaranteed (the "Subsidiary Guarantees" and, collectively with the Notes, the
"Securities") on an unsecured senior subordinated basis, jointly and
severally, by each domestic subsidiary of the Company listed on the signature
page hereto (the "Subsidiary Guarantors" and, together with the Company, the
"Issuers"). The Securities are to be issued pursuant to an indenture, to be
dated as of March 27, 1998 (the "Indenture"), by and among the Company, the
Subsidiary Guarantors and State Street Bank and Trust Company of Missouri,
N.A. (the "Trustee"). As used in this Agreement, references to the "Issuers"
shall mean the Company and the Subsidiary Guarantors.
The sale of the Securities to the Initial Purchasers will be made
without registration of the Securities under the Securities Act of 1933, as
amended (the "Securities Act"), in reliance upon exemptions from the
registration requirements of the Securities Act. You have advised the Issuers
that you will offer and sell the Securities purchased by you hereunder in
accordance with Section 3 hereof as soon as you deem advisable.
In connection with the sale of the Securities, the Issuers have
prepared a preliminary offering memorandum, dated March 4, 1998 (the
"Preliminary Memorandum") and a final offering memorandum, dated March 24,
1998, 1998 (the "Final Memorandum"). Each of the Preliminary Memorandum and
the Final Memorandum sets forth certain information concerning the Issuers and
the Securities. The Issuers hereby confirm that they have authorized the use
of the Preliminary Memorandum and the Final Memorandum, and any amendment or
supplement thereto, in connection with the offer and
<PAGE>
sale of the Securities by the Initial Purchasers in the manner and to the
persons contemplated herein and therein. Unless stated to the contrary, all
references herein to the Final Memorandum are to the Final Memorandum at the
time of execution and delivery of this Agreement (the "Execution Time") and
are not meant to include any amendment or supplement, or any information
incorporated by reference therein, subsequent to the Execution Time.
The Initial Purchasers and certain of their direct and indirect
transferees will be entitled to the benefits of the Registration Rights
Agreement, substantially in the form attached hereto as Exhibit A (the
"Registration Rights Agreement"), pursuant to which the Issuers will agree to
use their best efforts to commence an offer to exchange the Securities for 8%
Senior Subordinated Notes due 2008 (the "Exchange Securities") that have been
registered under the Securities Act, that do not accrue Liquidated Damages (as
defined in the Registration Rights Agreement), and that otherwise are
identical in all respects to the Securities, or to cause a shelf registration
statement to become effective under the Securities Act relating to the resale
of the Securities by the holder thereof and to remain effective for the period
designated in the Registration Rights Agreement.
1. REPRESENTATIONS AND WARRANTIES. The Issuers jointly and severally
represent and warrant to each Initial Purchaser as follows:
(a) The Preliminary Memorandum, at the date thereof, did not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Final Memorandum, at the date
hereof, does not, and at the Closing Date (as defined below) will not (and any
amendment or supplement thereto, at the date thereof and at the Closing Date,
will not), contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however that
the Issuers make no representation or warranty as to the information relating to
the Initial Purchasers contained in or omitted from the Preliminary Memorandum
or the Final Memorandum, or any amendment or supplement thereto, in reliance
upon and in conformity with information furnished in writing to the Issuers by
or on behalf of the Initial Purchasers specifically for inclusion therein.
(b) Neither the Issuers, nor any of their "Affiliates" (as defined in
Rule 501(b) of Regulation D under the Securities Act ("Regulation D")), nor any
person acting on their behalf has, directly or indirectly, made offers or sales
of any security, or solicited offers to buy any security, under circumstances
that would require the registration of the Securities under the Securities Act.
Neither the Issuers, nor any of their Affiliates, nor any person acting on their
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behalf has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with any offer or sale of the
Securities, provided, that the Issuers make no representation in this sentence
regarding the Initial Purchasers, their affiliates or any person acting on their
behalf. The Securities satisfy the eligibility requirements of Rule 144A(d)(3)
under the Securities Act. The Final Memorandum and each amendment or supplement
thereto, as of its date, contains the information specified in Rule 144A(d)(4)
under the Securities Act. The Issuers have been advised by the National
Association of Securities Dealers, Inc. Private Offerings, Resales and Trading
through the Automated Linkages Market ("PORTAL") that the Securities have been
designated PORTAL eligible securities in accordance with the rules and
regulations of the National Association of Securities Dealers, Inc.
(c) None of the Issuers nor any of their respective affiliates or any
person acting on its or their behalf (other than the Initial Purchasers or their
respective affiliates, as to whom the Issuers make no representation) has
engaged or will engage in any directed selling efforts within the meaning of
Regulation S under the Securities Act ("Regulation S") with respect to the
Securities. The Securities offered and sold in reliance on Regulation S have
been and will be offered and sold only in offshore transactions. The sale of
the Securities pursuant to Regulation S is not part of a plan or scheme to evade
the registration provisions of the Securities Act. No registration under the
Securities Act of the Securities is required for the sale of the Securities to
the Initial Purchasers as contemplated hereby or for the Exempt Resales (as
defined below) assuming the accuracy of, and compliance with, the Initial
Purchasers' representations, warranties and agreements set forth in this
Agreement. The Securities sold pursuant to Regulation S will initially be
represented by a temporary global security as required by Rule 903 of Regulation
S.
(d) None of the Issuers is, or will be after giving effect to the
offering and sale of the Securities and the application of the proceeds
therefrom as described in the Final Memorandum, an "investment company" within
the meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act").
(e) Assuming (i) that the representations and warranties and covenants
of the Initial Purchasers contained in Section 3 hereof are true and correct and
(ii) that the Initial Purchasers comply with their agreements contained in this
Agreement, (A) registration under the Securities Act of the Securities or
qualification of the Indenture under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), is not required in connection with the offer and
sale of the Securities to the Initial Purchasers in the manner contemplated by
the Final Memorandum and this Agreement and (B) initial resales of the
Securities by the Initial Purchasers on the terms and in the manner set forth in
the Final Memorandum and Section 3 hereof will be exempt from the registration
requirements of the Securities Act.
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(f) Since the respective dates as of which information is given in the
Preliminary Memorandum and the Final Memorandum, except as otherwise stated
therein, (i) there has been no material adverse change in the condition
(financial or otherwise), results of operations, affairs or business prospects
of the Company and its subsidiaries considered as a whole, whether or not
arising in the ordinary course of business and (ii) there have been no material
transactions entered into by the Company or any of its subsidiaries that are
material to the Company and its subsidiaries considered as a whole
(collectively, a "Material Adverse Change").
(g) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the state of its incorporation
with corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Preliminary Memorandum and the Final
Memorandum; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which the
conduct of its business requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not, singly or in
the aggregate, reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), results of operations, affairs or business
prospects of the Company and its subsidiaries considered as a whole (a "Material
Adverse Effect").
(h) All of the issued and outstanding capital stock of the Company at
September 30, 1997, was as set forth in the "Actual" column under the caption
"Capitalization" in the Preliminary Memorandum and the Final Memorandum. All of
the outstanding shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. Attached as Schedule A
hereto is a complete and accurate list of each subsidiary of the Company. Each
of the subsidiaries of the Company has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction of its
organization, has the requisite power and authority to own, lease and operate
its properties and conduct its business as described in the Preliminary
Memorandum and the Final Memorandum and is duly qualified as a foreign
organization to transact business and is in good standing in each jurisdiction
in which the conduct of its business requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not,
singly or in the aggregate, reasonably be expected to have a Material Adverse
Effect. All of the issued and outstanding capital stock, other voting
securities or membership interests of each subsidiary has been duly authorized
and validly issued and is fully paid and nonassessable, and, except as described
in the Preliminary Memorandum and the Final Memorandum, all shares of capital
stock, other voting securities or membership interests of each subsidiary that
are owned by the Company, directly or through subsidiaries, are owned free and
clear of any mortgage, pledge, lien, encumbrance, claim or equity.
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(i) This Agreement has been duly authorized, executed and delivered by
the Issuers and constitutes the valid and binding agreement of the Issuers,
enforceable against the Issuers in accordance with its terms, except that (i)
enforcement thereof may be subject to (A) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws now or hereafter
in effect relating to or affecting creditors' rights generally and (B) general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law) and (ii) the enforceability of any
indemnification or contribution provisions thereof may be limited under
applicable securities laws or the public policies underlying such laws.
(j) The Notes have been duly authorized by the Company, and, when
executed and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Initial Purchasers in accordance with this
Agreement, will constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, and will be
entitled to the benefits of the Indenture, except that enforcement thereof may
be subject to (A) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
(k) The Subsidiary Guarantees set forth in the Indenture have been
duly authorized by each Subsidiary Guarantor and when the Indenture has been
duly executed and delivered by the Issuers and the Trustee and the Notes have
been executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers in accordance
with this Agreement, the Subsidiary Guarantees will constitute the valid and
binding obligation of the Subsidiary Guarantors enforceable against the
Subsidiary Guarantors in accordance with their terms and will be entitled to the
benefits of the Indenture except that enforcement thereof may be subject to (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law).
(l) The Indenture has been duly authorized by the Issuers. When the
Securities are delivered and paid for pursuant to this Agreement on the Closing
Date, the Indenture will have been duly executed and delivered by the Issuers
and, assuming the due execution and delivery thereof by the Trustee, will
constitute a valid and binding agreement of the Issuers, enforceable against the
Issuers in accordance with its terms, except that enforcement thereof may be
subject to (A) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is
5
<PAGE>
considered in a proceeding in equity or at law).
(m) The Exchange Securities have been duly authorized and, when duly
executed, authenticated, issued and delivered, will be validly issued and
outstanding, and will constitute the valid and binding obligations of the
Issuers, entitled to the benefits of the Indenture and enforceable against the
Issuers in accordance with their terms, except that enforcement thereof may be
subject to (A) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
(n) The Registration Rights Agreement has been duly authorized by the
Issuers, and when duly executed and delivered by the Issuers (assuming the due
execution and delivery by the Initial Purchasers), will constitute a valid and
binding agreement of the Issuers, enforceable against the Issuers in accordance
with its terms except that (i) enforcement thereof may be subject to (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law) and
(ii) the enforceability of any indemnification or contribution provisions
thereof may be limited under applicable securities laws or the public policies
underlying such laws.
(o) The execution, delivery and performance of this Agreement, the
Indenture and the Registration Rights Agreement by the Issuers, and the
consummation of the transactions contemplated hereby and thereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which either the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the properties or assets of the
Company or any of its subsidiaries are subject, nor will such actions result in
any violation of the provisions of the charter, by-laws or other constituent
documents of the Company or any of its subsidiaries or any statute to which they
may be subject or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its subsidiaries
or any of their properties or assets (except to the extent any such conflict,
breach, violation or default, singly or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect); and except for such consents,
approvals, authorizations, orders, filings, registrations or qualifications (i)
as may be required under applicable state securities and Blue Sky laws in
connection with the purchase and distribution of the Securities by the Initial
Purchasers, (ii) as set forth in the Registration Rights Agreement or (iii) the
absence or failure of which, singly or in the aggregate, would not
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<PAGE>
have a Material Adverse Effect, no consent, approval, authorization or order of,
or filing or registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this Agreement, the
Indenture and the Registration Rights Agreement by the Issuers, the consummation
of the transactions contemplated hereby and thereby, and the issuance and sale
of the Securities and Exchange Securities by the Issuers.
(p) Neither the Company nor any of its subsidiaries is in breach or
violation of any of the terms or provisions of any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the properties or assets of the Company
or any of its subsidiaries are subject, nor is the Company or any of its
subsidiaries in violation of the provisions of its respective charter, by-laws
or other constituent documents, or, to the Company's knowledge, any statute or
any judgment, order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company, any of its subsidiaries or any of
their properties or assets (except to the extent any such conflict, breach,
violation or default is cured at or prior to the Closing Date and within the
grace period applicable thereto or would not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect).
(q) As of the Closing Date, the Securities and the Indenture will
conform in all material respects to the descriptions thereof contained in the
Final Memorandum. As of the Closing Date, the provisions of the Registration
Rights Agreement, to the extent that such provisions are summarized in the Final
Memorandum, will conform in all material respects to the descriptions thereof
contained in the Final Memorandum.
(r) Except as set forth in the Registration Rights Agreement, there
are no contracts, agreements or understandings between the Company or any of its
subsidiaries and any person granting such person the right to require the
Company or any of its subsidiaries to file a registration statement under the
Securities Act with respect to any securities owned or to be owned by such
person or to require the Company or any of its subsidiaries to include such
securities in any securities being registered pursuant to any registration
statement filed by the Company or any of its subsidiaries under the Securities
Act.
(s) Except as set forth in the Preliminary Memorandum and the Final
Memorandum, there is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending or, to the
knowledge of the Issuers, threatened against or affecting the Company or any of
its subsidiaries, which would reasonably be expected to result in a Material
Adverse Change or, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect or materially and adversely affect the offering of the
Securities.
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(t) The Company and each of its subsidiaries has good and indefeasible
title in fee simple to all real property and good and indefeasible title to all
personal property owned by it and necessary in the conduct of the business of
the Company or such subsidiary, in each case free and clear of all liens,
encumbrances and defects except (i) such as are referred to in the Final
Memorandum or (ii) such as do not materially and adversely affect the value of
such property to the Company or such subsidiary, and do not interfere with the
use made and proposed to be made of such property by the Company or such
subsidiary to an extent that such interference would, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect. All leases
to which the Company or any of its subsidiaries is a party are valid and
binding, and no default has occurred or is continuing thereunder, except for
such matters which could not, singly or in the aggregate, reasonably be expected
to have a Material Adverse Effect or materially and adversely affect the
offering of the Securities, and the Company and its subsidiaries enjoy peaceful
and undisturbed possession under all such leases to which any of them is a party
as lessee (with such exceptions as do not interfere with the use made by the
Company or such subsidiary to an extent that such interference would reasonably
be expected to have a Material Adverse Effect). The Company and its
subsidiaries possess adequate certificates, authorizations or permits issued by
the appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, and except as set forth
in the Final Memorandum, neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authority or permit which proceedings would, singly or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
(u) Each of KPMG Peat Marwick LLP and Arthur Andersen LLP, who have
certified certain financial statements of the Company and its subsidiaries
included in the Final Memorandum, are independent public accountants within the
meaning of the Securities Act and the rules and regulations thereunder. The
financial statements included in the Preliminary Memorandum and the Final
Memorandum present fairly in all material respects the consolidated financial
position of (i) the Company and its subsidiaries, on a consolidated basis, and
(ii) Lithotripters, Inc. ("Lithotripters"), in each case as at the dates
indicated and the results of their respective operations and the changes in
their consolidated financial position for the periods specified; said financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis during the periods involved, except as
indicated therein, and comply as to form in all material respects with the
requirements applicable to such financial statements included in registration
statements under the Securities Act. The Company and each of its subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting
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principles and to maintain asset accountability; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
The pro forma financial statements included in the Preliminary
Memorandum and the Final Memorandum have been prepared on a basis consistent
with the historical financial statements of the Company and its subsidiaries
and give effect to the assumptions used in the preparation thereof on a
reasonable basis and in good faith and present fairly in all material respects
the historical and proposed transactions contemplated by the Preliminary
Memorandum and the Final Memorandum; and such pro forma financial statements
comply as to form in all material respects with the requirements applicable to
pro forma financial statements included in registration statements on Form S-1
under the Securities Act. The other pro forma financial and statistical
information and data included in the Preliminary Memorandum and the Final
Memorandum are, in all material respects, fairly presented and prepared on a
basis consistent with the pro forma financial statements.
The historical and pro forma financial statements included in the
Preliminary Memorandum and the Final Memorandum constitute all of the
financial statements that would be required to be included in a registration
statement filed by the Issuers on Form S-1 under the Securities Act.
(v) Neither the Company nor any of its subsidiaries is now or, after
giving effect to the issuance of the Securities, and the application of the
proceeds thereof, will be (i) insolvent, (ii) left with unreasonably small
capital with which to engage in its anticipated businesses or (iii) incurring
debts beyond its ability to pay such debts as they become due.
(w) Except as set forth in the Final Memorandum, and except as would
not reasonably be expected to have a Material Adverse Effect, the Company and
its subsidiaries own, or otherwise possess the right to use, all patents,
trademarks, service marks, trade names and copyrights, all applications and
registrations for each of the foregoing, and all other proprietary rights and
confidential information used in the conduct of their respective businesses as
currently conducted; and neither the Company nor any of its subsidiaries has
received any notice or is otherwise aware, of any infringement of or conflict
with the rights of any third party with respect to any of the foregoing which,
singly or in the aggregate, would reasonably be expected to have a Material
Adverse Effect.
(x) The Company and its subsidiaries are (i) in compliance with any
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and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(y) No labor problem or disturbance with the employees of the Company
or any of its subsidiaries exists or, to the knowledge of the Issuers, is
threatened which, singly or in the aggregate, would reasonably be expected to
have a Material Adverse Effect.
(z) Except as set forth in the Final Memorandum, neither the Company
nor any of its subsidiaries, nor, to any Issuers' knowledge, any director,
officer, agent, employee, stockholder or other person, in any such case, acting
on behalf of the Company or any of its subsidiaries, has used any corporate
funds during the last five years for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; made any
unlawful payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or made any bribe, payoff, influence
payment, kickback or other payment that is unlawful.
(aa) Neither the Company nor any of its subsidiaries has taken, and
none of them will take, any action that would cause this Agreement or the
issuance or sale of the Securities and Exchange Securities to violate Regulation
G, T, U or X of the Board of Governors of the Federal Reserve System.
(ab) The Company and its subsidiaries have complied with all
provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of
Florida) relating to doing business with the Government of Cuba or with persons
or affiliates located in Cuba.
(ac) Other than as set forth on Schedule B hereto, neither the Company
nor any subsidiary is a party to any contract or agreement that would be
required to be filed with the Commission as an exhibit to a registration
statement on Form S-1 pursuant to entries (2), (4) and (10) of the Exhibit Table
of Item 601 of Regulation S-K under the Securities Act.
(ad) No Issuer or Affiliate of any Issuer has sold, offered for sale
or solicited offers to buy or otherwise negotiated in respect of any security
(as defined in the
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Securities Act) in a transaction would require the registration under the
Securities Act of the Securities.
(ae) Neither the Company nor any subsidiary is a "public utility" or
a "holding company" within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
2. PURCHASE AND SALE. On the basis of the representations and warranties
contained in, and subject to the terms and conditions of, this Agreement, the
Issuers agree to sell to the Initial Purchasers and each of the Initial
Purchasers agrees to purchase the aggregate principal amount of Securities set
forth opposite its name as shown in Schedule C hereto, at a purchase price equal
to 99.5% of the principal amount thereof.
The Issuers shall not be obligated to deliver any of the Securities
to be delivered except upon payment for all the Securities to be purchased as
provided herein.
3. SALE AND RESALE OF THE SECURITIES BY THE INITIAL PURCHASER. Each
of the Initial Purchasers represents and warrants to the Issuers and agrees
that:
(a) It, its affiliates and any person acting on its or their behalf
will offer the Securities to be purchased hereunder for resale only upon the
terms and conditions set forth in this Agreement and in the Final Memorandum.
(b) It, its affiliates and any person acting on its or their behalf
(i) will not solicit offers for, or offer or sell, the Securities by means of
any form of general solicitation or general advertising within the meaning of
Regulation D or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act, and (ii) will solicit offers for the Notes
only from, and will offer, sell or deliver (the "Exempt Resales") the
Securities, as part of its initial offering, only to the following persons (each
an "Eligible Purchaser") (A) persons whom such Initial Purchaser reasonably
believes to be qualified institutional buyers ("QIBs") as defined in Rule 144A
under the Securities Act, as such rule may be amended from time to time ("Rule
144A") or, if any such person is buying for one or more institutional accounts
for which such person is acting as fiduciary or agent, only when such person has
represented to such Initial Purchaser that each such account is a QIB, to whom
notice has been given that such sale or delivery is being made in reliance on
Rule 144A and (B) persons who are not U.S. persons (as defined in Regulation S)
outside the United States in offshore transactions in reliance on Regulation S.
(c) With respect to Securities sold in reliance on Regulation S, (i)
neither such Initial Purchaser nor any of its affiliates nor anyone acting on
its behalf has offered
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or sold, or will offer or sell, any Securities by means of any directed selling
efforts (as defined in Rule 902 of Regulation S) in the United States, (ii) at
or prior to confirmation of all sales of Securities made in reliance on
Regulation S, it will have sent to each distributor, dealer or person receiving
a selling concession, fee or other remuneration that purchases the Securities
from it during the restricted period a confirmation or notice to substantially
the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered or
sold within the United States or to, or for the account or benefit of, U.S.
persons (i) as part of a distribution thereof at any time or (ii) otherwise
until 40 days after the later of the date of the commencement of the
offering and the closing date, except in either case in accordance with an
exemption from or in a transaction not subject to the Securities Act.
Terms used above have the meanings given them by Regulation S."
The sale of the Securities to non-U.S. persons in offshore transactions is not
part of a plan or scheme to avoid the registration requirements of the
Securities Act.
(d) (i) It has not solicited, and will not solicit, offers to purchase
any of the Securities from, (ii) it has not sold, and will not sell, any of the
Securities to, and (iii) it has not distributed, and will not distribute, the
Preliminary Memorandum or the Final Memorandum to, any person or entity in any
jurisdiction outside of the United States except, in each case, in compliance in
all material respects with all applicable laws of such jurisdiction. For
purposes of this Agreement, "United States" means the United States of America,
its territories, its possessions (including the Commonwealth of Puerto Rico),
and other areas subject to its jurisdiction.
(e) Unless prohibited by applicable law, (i) it will furnish to each
person to whom it offers any Securities, a copy of the Preliminary Memorandum
(as amended or supplemented) or Final Memorandum or (unless delivery of such
Preliminary Memorandum is required by applicable law) shall inform each such
person that a copy of such Preliminary Memorandum or the Final Memorandum will
be available upon request and (ii) it will furnish to each person to whom it
sells Securities a copy of the Final Memorandum (as then amended or supplemented
by applicable law) and shall inform each such person that a copy of such Final
Memorandum will be available upon request.
(f) The information set forth under the caption "Plan of Distribution"
in the Preliminary Memorandum and in the Final Memorandum was furnished to the
Company by and on behalf of the Initial Purchasers for use in connection with
the preparation of the Preliminary Memorandum and the Final Memorandum and is
correct in all material respects.
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4. DELIVERY OF AND PAYMENT FOR THE NOTES. Delivery of and payment
for the Securities shall be made at the office of Latham & Watkins, 885 Third
Avenue, New York, New York at 9:00 A.M., New York City time, on March 27, 1998,
or at such other date or place as shall be determined by agreement between the
Initial Purchasers and the Company. This date and time are sometimes referred
to as the "Closing Date." On the Closing Date, the Issuers shall deliver or
cause to be delivered the Securities to the Initial Purchasers for the account
of the Initial Purchasers against payment to or upon the order of the Company of
the purchase price by wire transfer in federal (immediately available same-day)
funds. Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation of
the Initial Purchasers hereunder. Upon delivery, the Securities shall be in
definitive fully registered form and registered in the name of Cede & Co., as
nominee of the Depository Trust Company ("DTC"), or such other name or names and
in such denominations as the Initial Purchasers shall request in writing not
less than one business day prior to the Closing Date. For the purpose of
expediting the checking and packaging of the Securities, the Issuers shall make
the Securities available for inspection by the Initial Purchasers in New York,
New York, not later than 5:00 P.M., New York City time, on the business day
prior to the Closing Date.
5. FURTHER AGREEMENTS OF THE ISSUERS. The Issuers jointly and
severally agree with each Initial Purchaser as set forth below in this Section
5:
(a) The Issuers will furnish to the Initial Purchasers, without
charge, as many copies of the Final Memorandum and any supplements and
amendments thereto as they may reasonably request.
(b) Prior to making any amendment or supplement to the Preliminary
Memorandum or the Final Memorandum, the Issuers shall furnish a copy thereof to
the Initial Purchasers and counsel to the Initial Purchasers and will not effect
any such amendment or supplement to which the Initial Purchasers shall
reasonably object by written notice to the Company after a reasonable period to
review.
(c) If, at any time prior to completion of the initial distribution of
the Securities by the Initial Purchasers, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel for the
Initial Purchasers or counsel for the Issuers, to amend or supplement the Final
Memorandum in order that the Final Memorandum will not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein not misleading in light of the circumstances
existing at the time it is delivered to a purchaser, or if it is necessary to
amend or supplement the Final Memorandum to comply with applicable law, the
Issuers will promptly prepare such amendment or supplement as may be necessary
to correct such untrue statement or omission or so that the Final Memorandum,
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as so amended or supplemented, will comply with applicable law and furnish to
the Initial Purchasers such number of copies of such amendment or supplement as
they may reasonably request. Each Initial Purchaser agrees upon receipt of
written notice from the Issuers to suspend use of the Final Memorandum until the
Issuers have amended or supplemented the Final Memorandum.
(d) Except during any period in which the Issuers are subject to
Section 13 or 15(d) of the Exchange Act of 1934, as amended (the "Exchange
Act"), and are in compliance with the filing requirements of the Exchange Act,
the Issuers will furnish to holders of the Securities and prospective purchasers
of Securities designated by such holders, upon request of such holders or such
prospective purchasers, the information, if any, required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act.
(e) So long as the Securities and Exchange Securities are outstanding,
the Issuers will furnish to the Initial Purchasers copies of any annual reports,
quarterly reports and current reports filed with the Securities and Exchange
Commission ("SEC") on Forms 10-K, 10-Q and 8-K, or such other similar forms as
may be designated by the SEC, and such other documents, reports and information
as shall be furnished by the Issuers to the Trustee or to the holders of the
Securities and Exchange Securities pursuant to the Indenture.
(f) The Issuers will use their best efforts to qualify the Securities
for sale under the securities or Blue Sky laws of such jurisdictions as the
Initial Purchasers reasonably designate and to continue such qualifications in
effect so long as reasonably required for the distribution of the Securities.
Notwithstanding the foregoing, the Issuers shall not be obligated to qualify as
a foreign corporation in any jurisdiction in which they are not so qualified or
to file a general consent to service of process or to subject themselves to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise subject.
(g) The Issuers will use their best efforts to permit the Securities
to be designated PORTAL securities in accordance with the rules and regulations
adopted by the National Association of Securities Dealers, Inc. relating to
trading in the PORTAL market and to permit the Securities to be eligible for
clearance and settlement through DTC.
(h) Except following the effectiveness of any Registration Statement
(as defined in the Registration Rights Agreement) and except for such offers as
may be made as a result of, or subsequent to, filing such Registration Statement
or amendments thereto prior to the effectiveness thereof, the Issuers will not,
and will cause their affiliates not to, solicit any offer to buy or offer to
sell the Securities by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner
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involving a public offering within the meaning of Section 4(2) of the Securities
Act.
(i) The Company will apply the net proceeds from the sale of the
Securities as set forth in the Final Memorandum.
(j) The Issuers will take such steps as shall be necessary to ensure
that neither the Company nor any of its subsidiaries shall become (i) an
"investment company" within the meaning of the Investment Company Act, or (ii) a
"holding company" or a "subsidiary company" or an "affiliate" of a holding
company within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
(k) The Company and its subsidiaries will not, and will cause their
affiliates not to, take any action that would require the registration under the
Securities Act of the Securities (other than pursuant to the Registration Rights
Agreement) including, without limitation, (i) engaging in any directed selling
efforts (within the meaning of Regulation S) during any applicable restricted
period or (ii) offering any other securities in a manner that would be
integrated with the transactions contemplated hereby.
(l) Prior to the consummation of the Exchange Offer or the
effectiveness of an applicable shelf registration statement if, in the
reasonable judgment of the Initial Purchasers, the Initial Purchasers or any of
their affiliates are required to deliver an offering memorandum in connection
with sales of, or market-making activities with respect to, the Securities, (A)
the Issuers will periodically amend or supplement the Final Memorandum so that
the information contained in the Final Memorandum complies with the requirements
of Rule 144A of the Securities Act, (B) the Issuers will amend or supplement the
Final Memorandum when necessary to reflect any material changes in the
information provided therein so that the Final Memorandum will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances existing
as of the date the Final Memorandum is so delivered, not misleading and (C) the
Issuers will provide the Initial Purchasers with copies of each such amended or
supplemented Final Memorandum, as the Initial Purchasers may reasonably request.
The Issuers hereby expressly acknowledge that the indemnification and
contribution provisions of Section 8 hereof are specifically applicable and
relate to each offering memorandum, registration statement, prospectus,
amendment or supplement referred to in this Section 5(l).
(m) The Issuers will use commercially reasonable best efforts to
satisfy the closing conditions set forth in Section 7 hereof.
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6. EXPENSES. The Issuers, jointly and severally, agree to pay (a)
the costs incident to the authorization, issuance, sale and delivery of the
Securities and Exchange Securities and any issue or stamp taxes payable in that
connection; (b) the costs incident to the preparation and printing of the
Preliminary Memorandum, the Final Memorandum and any amendments, supplements and
exhibits thereto; (c) the costs of distributing the Preliminary Memorandum, the
Final Memorandum and any amendment or supplement thereto; (d) the fees and
expenses of qualifying the Securities and Exchange Securities under the
securities laws of the several jurisdictions as provided in Section 5(f) and of
preparing, printing and distributing a Blue Sky Memorandum (including reasonable
related fees and expenses of counsel to the Initial Purchasers); (e) the cost of
printing the Securities and the Exchange Securities; (f) the fees and expenses
of the Trustee and any agent of the Trustee and, if required by the Trustee, the
fees and disbursements of any counsel for the Trustee in connection with the
Indenture and the Securities and Exchange Securities; (g) any fees paid to
rating agencies in connection with the rating of the Securities and Exchange
Securities; (h) the costs and expenses of DTC and its nominee, including its
book-entry system; (i) all expenses and listing fees incurred in connection with
the application for quotation of the Securities on the PORTAL market; and (j)
all other costs and expenses incident to the performance of the obligations of
the Issuers under this Agreement. Except as specifically provided in Section
6(d) and Section 10 hereof, the Initial Purchasers shall pay their own costs and
expenses, including, without limitation, the fees and disbursements of their
counsel.
7. CONDITIONS OF INITIAL PURCHASER'S OBLIGATIONS. The obligations of
the Initial Purchasers to purchase the Securities shall be subject to the
accuracy in all material respects of the representations and warranties on the
part of the Issuers contained herein at the Execution Time and the Closing Date,
to the accuracy in all material respects of the statements of the Issuers made
in any certificates of the Issuers pursuant to the provisions hereof, to the
performance by the Issuers of their obligations hereunder in all material
respects and to the following additional conditions:
(a) The Initial Purchasers shall not have discovered and disclosed to
the Company on or prior to the Closing Date that the Final Memorandum or any
amendment or supplement thereto contains an untrue statement of a fact which, in
the opinion of Latham & Watkins, counsel for the Initial Purchasers, is material
or omits to state a fact which, in the opinion of such counsel, is material and
is necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(b) The Final Memorandum shall have been printed and copies
distributed to the Initial Purchasers as soon as practicable but in no event
later than two Business Days following the date of this Agreement or at such
later date and time as to which the Initial
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<PAGE>
Purchasers may agree, and no stop order suspending the qualification or
exemption from qualification of the Securities in any jurisdiction referred to
in Section 5(f) shall have been issued and no proceeding for that purpose shall
have been commenced or shall be pending or threatened.
(c) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental agency
which would, as of the Closing Date, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect; no action, suit or proceeding shall
have been commenced and be pending against or affecting or, to the knowledge of
the Company, threatened against, the Company or any of its subsidiaries before
any court or arbitrator or any governmental body, agency or official that,
singly or in the aggregate, would reasonably be expected to result in a Material
Adverse Effect; and no stop order shall have been issued by the SEC or any
governmental agency of any jurisdiction referred to in Section 5(f) preventing
the use of the Final Memorandum, or any amendment or supplement thereto, or
which would reasonably be expected to have a Material Adverse Effect.
(d) Since the dates as of which information is given in the Final
Memorandum and other than as set forth in the Final Memorandum, (i) there shall
not have been any Material Adverse Change, or any development that is reasonably
likely to result in a Material Adverse Change, or any material change in the
long-term debt, or material increase in the short-term debt, from that set forth
in the Final Memorandum; (ii) no dividend or distribution of any kind shall have
been declared, paid or made by the Company on any class of its capital stock;
(iii) the Company and its subsidiaries shall not have incurred any liabilities
or obligations, direct or contingent, that are material, individually or in the
aggregate, to the Company and its subsidiaries, taken as a whole, and that are
required to be disclosed on a balance sheet or notes thereto in accordance with
generally accepted accounting principles and are not disclosed on the latest
balance sheet or notes thereto included in the Final Memorandum.
(e) The Initial Purchasers shall have received a certificate, dated
the Closing Date, signed on behalf of the Company by (i) Dr. Joseph Jenkins,
Chief Executive Officer and (ii) Cheryl Williams, Chief Financial Officer,
confirming that (A) such officers have participated in conferences with other
officers and representatives of the Issuers, representatives of the independent
public accountants of the Issuers and representatives of counsel to the Issuers
at which the contents of the Final Memorandum and related matters were discussed
and (B) the matters set forth in paragraphs (b), (c) and (d) of this Section 7
are true and correct as of the Closing Date.
(f) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Securities, the Exchange
Securities, the
17
<PAGE>
Indenture, the Registration Rights Agreement, the Final Memorandum and all other
legal matters relating to this Agreement and the transactions contemplated
hereby and thereby, shall be reasonably satisfactory in all material respects to
counsel for the Initial Purchasers, and the Issuers shall have furnished to such
counsel all documents and information that they may reasonably request to enable
them to pass upon such matters.
(g) Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel for the Issuers
incorporated in Delaware, New York and Texas, shall have furnished to the
Initial Purchasers its written opinion (containing customary limitations and
approvals that shall be reasonably satisfactory in all material respects to the
Initial Purchasers' counsel), addressed to the Initial Purchasers and dated the
Closing Date, substantially in the form of Exhibit B attached hereto.
(h) Womble Carlyle Sandridge & Rice, counsel for Lithotripters, shall
have furnished to the Initial Purchasers its written opinion, addressed to the
Initial Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially in the form of Exhibit C
attached hereto.
(i) The Initial Purchasers shall have received opinions of counsel for
the Subsidiary Guarantors organized in the states of Nevada, New Jersey, Alabama
and California, addressed to the Initial Purchasers and dated the Closing Date,
in form and substance reasonably satisfactory to the Initial Purchasers,
substantially in the form of Exhibit D hereto.
(j) You shall have received on the Closing Date an opinion of Latham &
Watkins, counsel for the Initial Purchasers, dated the Closing Date and
addressed to you, in form and substance reasonably satisfactory to you.
(k) The Issuers and the Trustee shall have entered into the Indenture
and the Initial Purchasers shall have received copies, conformed as executed,
thereof.
(l) The Issuers and the Initial Purchasers shall have entered into the
Registration Rights Agreement and the Initial Purchasers shall have received
executed counterparts.
(m) At the Execution Time and at the Closing Date, KPMG Peat Marwick
LLP and Arthur Andersen LLP shall have furnished to the Initial Purchasers a
letter or letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance reasonably satisfactory to the Initial
Purchasers, confirming that they are independent accountants within the meaning
of the Securities Act and the Exchange Act and the applicable rules and
regulations thereunder and Rule 101 of the Code of Professional Conduct of the
American Institute of Certified Public Accountants (the "AICPA") and otherwise
reasonably
18
<PAGE>
satisfactory in form and substance to the Initial Purchasers and their counsel.
(n) (i) The Company and its subsidiaries shall not have sustained
since the date of the latest financial statements included in the Final
Memorandum losses or interferences with their businesses, taken as a whole, from
fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Final Memorandum and (ii)
since such date there shall not have been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company or its subsidiaries, taken as a whole, otherwise than as set forth
or contemplated in the Final Memorandum, the effect of which, in any such case
described in clause (i) or (ii), is, in the reasonable judgment of the Initial
Purchasers, so material and adverse as to make it impracticable or inadvisable
to proceed with the offering or the delivery of the Securities being delivered
on the Closing Date on the terms and in the manner contemplated herein and in
the Final Memorandum.
(o) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or The NASDAQ Stock Market's National
Market or in the over-the-counter market shall have been suspended or materially
limited, or minimum prices shall have been established on such exchange by the
SEC, or by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or Texas or New York State authorities, (iii) the United
States shall have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there shall have been a
declaration of a national emergency or war by the United States or (iv) there
shall have occurred such a material adverse change in general economic,
political or financial conditions (or the effect of international conditions on
the financial markets in the United States shall be such) as to make it, in the
reasonable judgment of the Initial Purchasers, impracticable or inadvisable to
proceed with the offering or delivery of the Securities being delivered on the
Closing Date on the terms and in the manner contemplated herein and in the Final
Memorandum.
(p) As of the Closing Date, no "nationally recognized statistical
rating organization" as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act (i) will have imposed (or will have informed the
Company or any Subsidiary Guarantor that it is considering imposing) any
condition (financial or otherwise) on the Company's or any Subsidiary
Guarantor's retaining any rating assigned to the Company or any Subsidiary
Guarantor, any securities of the Company or any Subsidiary Guarantor or (ii)
will have indicated
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to the Company or any Subsidiary Guarantor that it is considering (a) the
downgrading, suspension, or withdrawal of, or any review for a possible change
that does not indicate the direction of the possible change in, any rating so
assigned or (b) any change in the outlook for any rating of the Company, any
Subsidiary Guarantor or any securities of the Company or any Subsidiary
Guarantor.
(q) Latham & Watkins shall have been furnished with such documents, in
addition to those set forth above, as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in this
Section 7 and in order to evidence the accuracy, completeness or satisfaction in
all material respects of any of the representations, warranties or conditions
herein contained.
(r) Prior to the Closing Date, the Issuers shall have furnished to the
Initial Purchasers such further information, certificates and documents as the
Initial Purchasers may reasonably request.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Initial Purchasers.
8. INDEMNIFICATION AND CONTRIBUTION. (a) The Issuers jointly and
severally agree to indemnify and hold harmless the Initial Purchasers, the
directors, officers, employees and agents (including, without limitation,
attorneys) of the Initial Purchasers and each person who controls any Initial
Purchaser within the meaning of either the Securities Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Preliminary
Memorandum, the Final Memorandum or any information provided by the Issuers to
any holder or prospective purchaser of Notes pursuant to Section 5(e), or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agree to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Issuers will not be liable in any such case to any such indemnified party to the
extent that any such loss, claim, damage, liability or action arises
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out of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission relating to such Initial Purchaser made in the
Preliminary Memorandum or the Final Memorandum, or in any amendment thereof or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Issuers by or on behalf of any Initial Purchaser specifically
for inclusion therein; provided, that the indemnification contained in this
paragraph (a) with respect to the Preliminary Memorandum shall not inure to the
benefit of the Initial Purchasers (or to the benefit of any person controlling
the Initial Purchasers) on account of any such loss, claim, damage, liability or
expense arising from the sale of the Securities by the Initial Purchasers to any
person if a copy of the Final Memorandum shall not have been delivered or sent
to such person and each untrue statement of a material fact contained in, and
each omission or alleged omission of a material fact from, such Preliminary
Memorandum was corrected in the Final Memorandum and it shall have been
determined that any Initial Purchaser and each person, if any, who controls such
Initial Purchaser would not have incurred such losses, claims, damages,
liabilities and expenses had the Final Memorandum been delivered or sent. The
foregoing indemnity agreement shall be in addition to any liability which the
Company may otherwise have.
(b) Each Initial Purchaser agrees severally and not jointly to
indemnify and hold harmless the Issuers, their directors, officers, employees
and agents (including, without limitation, attorneys), and each person who
controls the Issuers within the meaning of either the Securities Act or the
Exchange Act, to the same extent as the foregoing indemnity from the Issuers to
each Initial Purchaser, but only with reference to written information relating
to such Initial Purchaser furnished to the Issuers by or on behalf of the
Initial Purchaser specifically for inclusion in the Preliminary Memorandum or
the Final Memorandum (or in any amendment or supplement thereto). This
indemnity agreement will be in addition to any liability which any Initial
Purchaser may otherwise have. The Issuers and the Initial Purchasers
acknowledge that the statements set forth in the last paragraph of the cover
page and under the heading "Plan of Distribution" in the Preliminary Memorandum
and the Final Memorandum constitute the only information furnished in writing by
or on behalf of the Initial Purchasers for inclusion in the Preliminary
Memorandum or the Final Memorandum (or any amendment or supplement thereto).
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof,
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the loss or
forfeiture by the indemnifying party of substantial rights and defenses and (ii)
will not, in any event, relieve the indemnifying party from any obligations to
any indemnified party other than
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the indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ not more than one separate
counsel, and the indemnifying party shall bear the reasonable fees, costs and
expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent any indemnified party would, in the opinion of
legal counsel to the indemnified party, present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have been informed in writing by legal counsel that
there may be legal defenses available to it and/or other indemnified parties
which are different from or additional to those available to the indemnifying
party, (iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Issuers and the Initial Purchasers agree
to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the Issuers
and one or more of the Initial Purchasers may be subject in such proportion as
is appropriate to reflect the relative benefits received by the Issuers and by
the Initial Purchasers from the offering of the Securities; provided, however,
that in no case shall any Initial Purchaser be responsible for any amount in
excess of the purchase discount, commission and fees applicable to the
Securities purchased by such Initial Purchaser hereunder. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the Issuers and the Initial Purchasers shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
22
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fault of the Issuers and of the Initial Purchaser in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Issuers shall be
deemed to be equal to the total net proceeds from the offering (before deducting
expenses), and benefits received by the Initial Purchasers shall be deemed to be
equal to the total purchase discounts, commissions and fees received by the
Initial Purchasers from the Issuers in connection with the purchase of the
Securities hereunder. Relative fault shall be determined by reference to
whether any alleged untrue statement or omission relates to information provided
by the Issuers or the Initial Purchasers. The Issuers and the Initial
Purchasers agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation that does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 8,
each person who controls an Initial Purchaser within the meaning of either the
Securities Act or the Exchange Act and each director, officer, employee and
agent of an Initial Purchaser shall have the same rights to contribution as such
Initial Purchaser, and each person who controls the Issuers within the meaning
of either the Securities Act or the Exchange Act and each partner, officer,
director, employee and agent of the Issuers shall have the same rights to
contribution as the Issuers, subject in each case to the applicable terms and
conditions of this paragraph (d).
9. TERMINATION. The obligations of the Initial Purchasers hereunder
may be terminated by the Initial Purchasers by notice given to and received by
the Company prior to delivery of and payment for the Securities if, prior to
that time, any of the events described in Sections 7(n) or 7(o) shall have
occurred or if the Initial Purchasers shall decline to purchase the Securities
for any reason permitted under this Agreement.
10. REIMBURSEMENT OF INITIAL PURCHASER'S EXPENSES. If (a) the
Issuers shall fail to tender the Securities for delivery to the Initial
Purchasers otherwise than for any reason permitted under this Agreement or (b)
the Initial Purchasers shall decline to purchase the Securities for any reason
permitted under this Agreement, the Issuers shall reimburse the Initial
Purchasers for the reasonable fees and expenses of their counsel and for such
other reasonable out-of-pocket expenses as shall have been incurred by them in
connection with this Agreement and the proposed purchase of the Securities, and
upon demand the Issuers shall pay the full amount thereof to the Initial
Purchasers.
11. DEFAULT BY AN INITIAL PURCHASER. If any one or more of the
several Initial Purchasers shall fail or refuse to purchase Securities (the
"Default Securities") that it or they have agreed to purchase hereunder on the
Closing Date, and the aggregate principal amount of Default
23
<PAGE>
Securities which such defaulting Initial Purchaser or Initial Purchasers agreed
but failed or refused to purchase does not exceed 10% of the aggregate principal
amount of the Securities to be purchased on such date, each non-defaulting
Initial Purchaser shall be obligated to purchase an aggregate amount of the
Default Securities equal to the proportion that the aggregate principal amount
of Securities set forth opposite its name on Schedule C bears to the aggregate
principal amount of Securities set forth opposite the names of all such
non-defaulting Initial Purchasers. No action taken pursuant to this Section 11
shall relieve any defaulting Initial Purchaser from liability in respect of any
default of such Initial Purchaser under this Agreement.
12. NOTICES, ETC. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by mail,
telex or facsimile transmission to NationsBanc Montgomery Securities LLC, 901
Main Street, 66th Floor, Dallas, Texas 75202-3714, Attention: Giffen Weinmann,
with a copy to Latham & Watkins, 885 Third Avenue, New York, New York 10022,
Attention: Kirk A. Davenport;
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the Final
Memorandum, Attention: Cheryl Williams, with a copy to Akin, Gump, Strauss,
Hauer & Feld, L.L.P., 1900 Frost Bank Plaza, 816 Congress Avenue, Austin, Texas
78701, Attention: Timothy L. LaFrey.
Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof. The Issuers shall be entitled to act and rely
upon any request, consent, notice or agreement given or made on behalf of the
Initial Purchasers.
13. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, the Issuers
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Issuers contained
in this Agreement shall also be deemed to be for the benefit of directors,
officers, employees and agents (including, without limitation, attorneys) of the
Initial Purchasers and the person or persons, if any, who control an Initial
Purchasers within the meaning of Section 15 of the Securities Act and (B) the
indemnity agreement of the Initial Purchasers contained in Section 8(b) of this
Agreement shall be deemed to be for the benefit of directors of the Issuers,
officers, employees and agents (including, without limitation, attorneys) of the
Issuers and any person controlling any of the Issuers within the meaning of
Section 15 of the Securities Act. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 12, any legal or equitable right, remedy or claim under or in
24
<PAGE>
respect of this Agreement or any provision contained herein.
14. SURVIVAL. The respective indemnities, representations,
warranties and agreements of the Issuers and the Initial Purchasers contained in
this Agreement or made by or on behalf on them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Securities and
shall remain in full force and effect, regardless of any investigation made by
or on behalf of any of them or any person controlling any of them.
15. DEFINITION OF "BUSINESS DAY." For purposes of this Agreement,
"business day" means each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which banking institutions in The City of New York, New York are
authorized or obligated by law, executive order or regulation to close.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
[Signature page follows]
25
<PAGE>
If the foregoing correctly sets forth the agreement between the
Issuers and the Initial Purchaser, please indicate your acceptance in the
space provided for that purpose below.
Very truly yours,
PRIME MEDICAL SERVICES, INC.
By:
---------------------------------------
Name:
Title:
PRIME MEDICAL OPERATING, INC.
By:
---------------------------------------
Name:
Title:
PRIME MANAGEMENT, INC.
By:
---------------------------------------
Name:
Title:
PRIME CARDIAC REHABILITATION SERVICES, INC.
By:
---------------------------------------
Name:
Title:
<PAGE>
PRIME DIAGNOSTIC SERVICES, INC.
By:
--------------------------------------
Name:
Title:
PRIME LITHOTRIPSY SERVICES, INC.
By:
--------------------------------------
Name:
Title:
PRIME KIDNEY STONE TREATMENT, INC.
By:
--------------------------------------
Name:
Title:
PRIME DIAGNOSTIC CORP. OF FLORIDA
By:
--------------------------------------
Name:
Title:
PRIME LITHOTRIPTER OPERATIONS, INC.
By:
--------------------------------------
Name:
Title:
<PAGE>
PRIME PRACTICE MANAGEMENT, INC.
By:
--------------------------------------
Name:
Title:
TEXAS LITHO, INC.
By:
--------------------------------------
Name:
Title:
R.R. LITHO, INC.
By:
--------------------------------------
Name:
Title:
OHIO LITHO, INC.
By:
--------------------------------------
Name:
Title:
ALABAMA RENTAL STONE INSTITUTE, INC.
By:
--------------------------------------
Name:
Title:
<PAGE>
SUN MEDICAL TECHNOLOGIES, INC.
By:
--------------------------------------
Name:
Title:
SUN ACQUISITION, INC.
By:
--------------------------------------
Name:
Title:
LITHOTRIPTERS, INC.
By:
--------------------------------------
Name:
Title:
PRIME MEDICAL MANAGEMENT, L.P.
By:
--------------------------------------
Name:
Title:
PROSTATHERAPIES, INC.
By:
--------------------------------------
Name:
Title:
<PAGE>
FASTSTART, INC.
By:
-------------------------------------
Name:
Title:
NATIONAL LITHOTRIPTERS ASSOCIATION, INC.
By:
-------------------------------------
Name:
Title:
MEDTECH INVESTMENTS, INC.
By:
-------------------------------------
Name:
Title:
EXECUTIVE MEDICAL ENTERPRISES, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
NATIONSBANC MONTGOMERY SECURITIES LLC
By:
---------------------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
---------------------------------------
Name:
Title:
PRUDENTIAL SECURITIES INCORPORATED
By:
---------------------------------------
Name:
Title:
J. C. BRADFORD & CO.
By:
---------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
Registration Rights Agreement
<PAGE>
EXHIBIT B
Form of Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
<PAGE>
EXHIBIT C
Form of Opinion of Womble Carlyle Sandridge & Rice
<PAGE>
EXHIBIT D
Form of Local Counsel Opinion
<PAGE>
SCHEDULE A
Subsidiaries
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation or Organization
---- ---------------------------------------------
<S> <C>
Alabama Renal Stone Institute, Inc. Alabama
Executive Medical Enterprises, Inc. Delaware
FastStart, Inc. North Carolina
Lithotripters, Inc. North Carolina
MedTech Investments, Inc. North Carolina
National Lithotripters Association, Inc. North Carolina
Ohio Litho, Inc. Delaware
Prime Cardiac Rehabilitation Services, Inc. Delaware
Prime Diagnostic Corp. of Florida Delaware
Prime Diagnostic Services, Inc. Delaware
Prime Kidney Stone Treatment, Inc. New Jersey
Prime Lithotripsy Services, Inc. New York
Prime Lithotripter Operations, Inc. New York
Prime Management, Inc. Nevada
Prime Medical Management, L.P. Delaware
Prime Medical Operating, Inc. Delaware
Prime Practice Management, Inc. New York
Prostatherapies, Inc. Delaware
R.R. Litho, Inc. Texas
Sun Acquisition, Inc. California
Sun Medical Technologies, Inc. California
Texas Litho, Inc. Delaware
</TABLE>
<PAGE>
SCHEDULE B
MATERIAL CONTRACTS
1. Prime Medical Services, Inc. 1993 Stock Option Plan
2. First Amendment to the Prime Medical Services, Inc. 1993 Stock Option Plan
3. Second Amendment to the Prime Medical Services, Inc. 1993 Stock Option Plan
4. Rights Agreement dated October 18, 1993 between Prime Medical Services,
Inc. and American Stock Transfer and Trust Company
5. Form of Indemnification Agreement dated October 11, 1993 between Prime
Medical Services, Inc. and certain of its officers and directors
6. Partnership Agreement of Metro Atlanta Stonebusters, G.P.
7. Management Agreement dated July 28, 1994 between the Alabama Renal Stone
Institute, Inc. and Alabama Kidney Stone Foundation, Inc.
8. Asset Purchase Agreement dated August 30, 1994 between Prime Lithotripter
Operations, Inc. and Alabama Lithotripsy Joint Venture
9. Asset Purchase Agreement dated August 30, 1994 between Prime Lithotripter
Operations, Inc. and Baptist Medical Center-Montclair
10. Promissory Note dated August 30, 1994 issued by Prime Lithotripter
Operations, Inc. to Baptist Medical Center-Montclair
11. Management Agreement dated August 30, 1994 between Prime Lithotripter
Operations, Inc. and Alabama Lithotripsy Associates, Inc.
12. Security Agreement dated August 30, 1994 between Prime Lithotripter
Operations, Inc. and Baptist Medical Center-Montclair
13. Amended and Restated Joint Venture Agreement dated April, 1989 between
Prime Diagnostic Imaging Services, Inc. and The Shasta Diagnostic Imaging
Medical Group
<PAGE>
14. Loan Agreement dated November 28, 1994 between Prime Medical Services,
Inc., The First National Bank of Boston, NationsBank of Texas, N.A. and The
First National Bank of Boston, as agent
15. First Amendment to Loan Agreement dated August 17, 1995 between Prime
Medical Services, Inc. and The First National Bank of Boston, as agent
16. Amended and Restated Loan Agreement dated April 26, 1996 between Prime
Medical Services, Inc., The First National Bank of Boston, NationsBank of
Texas, N.A. and The First National Bank of Boston, as agent
17. Second Amended and Restated Loan Agreement between Prime Medical Services,
Inc., The First National Bank of Boston, N.A. and NationsBank of Texas,
N.A., as agent
18. Promissory Note dated March 31, 1997 issued by Prime Medical Services, Inc.
to NationsBank of Texas, N.A., as agent
19. Promissory Note dated March 31, 1997 issued by Prime Medical Services, Inc.
to NationsBank of Texas, N.A.
20. Promissory Note dated March 31, 1997 issued by Prime Medical Services, Inc.
to NationsBank of Texas, N.A., as agent
21. Operating Agreement for Southern California Stone Center, L.L.C.
22. Lease Agreement dated July 1, 1995 between Kidney Stone Center of South
Florida, L.C. and Madorsky and Pinon Kidney Stone Center of South Florida,
P.A.
23. Employment Agreement dated October 27, 1995 between Prime Medical Services,
Inc. and Stan D. Johnson
24. Employment Agreement dated May 1, 1996 between Prime Medical Services, Inc.
and Joseph Jenkins, M.D., J.D.
25. Employment Agreement dated April 1, 1997 between Prime Medical Services,
Inc. and William Walsh
<PAGE>
26. Stock Purchase Agreement dated April 26, 1996 between Prime Medical
Services, Inc.; Lithotripters, Inc.; William R. Jordan, M.D.; Franklin S.
Clark, M.D.; Dan A. Myers, M.D.; Thomas B. Mobley, M.D.; Thomas R. Jordan;
Anthony E. Rand; Estate of H. Edward Rietze, III; Phillip J. Gallina;
Joseph Jenkins, M.D.; William B. Grine, M.D.; and W. Alan Terry
27. Registration Rights Agreement dated April 26, 1996 between Prime Medical
Services, Inc.; Lithotripters, Inc.; William R. Jordan, M.D.; Franklin S.
Clark, M.D.; Dan A. Myers, M.D.; Thomas B. Mobley, M.D.; Thomas R. Jordan;
Anthony E. Rand; Estate of H. Edward Rietze, III; Phillip J. Gallina;
Joseph Jenkins, M.D.; William B. Grine, M.D.; and W. Alan Terry
28. Partnership Interest Purchase Agreement dated May 1, 1997 among Prime
Lithotripter Operations, Inc., Tenn-Ga Stone Group Two, L. P., NGST, Inc.
and all the shareholders of NGST, Inc.
29. Stock Purchase Agreement dated June 1, 1997 between Sun Medical
Technologies, Inc. and Executive Medical Enterprises, Inc.
30. Contribution Agreement dated October 8, 1997 between Prime Medical
Services, Inc. and AK Associates
31. Employment Agreement dated October 8, 1997 by and between Lawrence Sodomire
and AK Associates, L.L.C.
32. Employment Agreement dated October 8, 1997 by and between Robert Bachman
and AK Associates, L.L.C.
<PAGE>
SCHEDULE C
PRIME MEDICAL SERVICES, INC.
Initial Purchaser Amount
----------------- ------
NationsBanc Montgomery Securities LLC .......................$ 35,000,000.00
Donaldson, Lufkin & Jenrette Securities Corporation .........$ 35,000,000.00
Prudential Securities Incorporated ..........................$ 18,888,889.00
J.C. Bradford & Co. .........................................$ 11,111,111.00
Total ..................................................$100,000,000.00
===============
<PAGE>
EXHIBIT 12
RATIO OF EARNINGS TO FIXED CHARGES
YEAR ENDED DECEMBER 31,
1993 1994 1995 1996 1997
----------------------------------------
(in thousands)
Income before income taxes
and after minority interest 2,749 5,051 8,090 10,957 20,651
Undistributed equity income - (122) (299) - (408)
Minority interest income of
subsidiaries with fixed charges - - - 7,000 6,074
----------------------------------------
Adjusted earnings 2,749 4,929 7,791 17,957 26,317
----------------------------------------
Interest on debt 544 902 1,231 5,977 7,477
Debt issuance costs - - - 2,735 360
----------------------------------------
Total fixed charges 544 902 1,231 8,712 7,837
----------------------------------------
Total available earnings before
fixed charges 3,293 5,831 9,022 26,669 34,154
Ratio 6.1 6.5 7.3 3.1 4.4
<PAGE>
EXHIBIT 23(b)
INDEPENDENT AUDITORS CONSENT
The Board of Directors
Prime Medical Services, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Austin, Texas
May 4, 1998
<PAGE>
EXHIBIT 23(c)
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated March 1, 1996, on
the consolidated financial statements of Lithotripters, Inc. as of December 31,
1995, 1994 and 1993, and for the years then ended included in Prime Medical
Services, Inc.'s Form 8-K/A dated June 4, 1996, and to all references to our
firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Raleigh, North Carolina
May 4, 1998
<PAGE>
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2)__
STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A.
(Exact name of trustee as specified in its charter)
U.S. national bank 43-1745664
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
127 West 10th Street, Kansas City, Missouri 64105
(Address of principal executive offices) (Zip Code)
Susan James, Vice President
State Street Bank and Trust Company of Missouri, N.A.
211 North Broadway, Suite 3900
St. Louis, Missouri 63102
(Name, address and telephone number of agent for service)
--------
PRIME MEDICAL SERVICES, INC.
(Exact name of obligor as specified in its charter)
Delaware 74-2652727
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1301 Capital of Texas Highway, Suite C-300
Austin, Texas 78746-6550
(Address of principal executive offices) (Zip Code)
--------
Senior Subordinated Notes, 8.75% Due 4/1/2008
(Title of indenture securities)
<PAGE>
GENERAL
ITEM 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
Comptroller of the Currency of the United States, Washington, D.C.
Item 2. Affiliations with Obligor.
If the Obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee or of its parent,
State Street Bank and Trust Company.
(See note on page 2.)
Item 3. through Item 15. Not applicable.
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of
eligibility.
1. A copy of the articles of association of the trustee as now in
effect.
A copy of the articles of association of the Trustee, as now in
effect, is attached hereto as Exhibit 1 and made a part hereof.
2. A copy of the certificate of authority of the trustee to
commence business, if not contained in the articles of association.
A copy of the certificate of the Comptroller of the Currently
authorizing the trustee to commence the business of banking as a
national banking association is attached hereto as Exhibit 2 and made
a par hereof.
3. A copy of the authorization of the trustee to exercise corporate
trust powers, if such authorization is not contained in the documents
specified in paragraph (1) or (2), above.
A copy of the certificate of the Comptroller of the Currency
dated September 15, 1995 authorizing the trustee to exercise corporate
trust powers is attached hereto as Exhibit 3 and made a part hereof.
4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.
A copy of the existing amended and restated by-laws of the
trustee is attached hereto as Exhibit 4.
1
<PAGE>
5. A copy of each indenture referred to in Item 4. if the obligor is
in default.
Not applicable.
6. The consents of United States institutional trustees required by
Section 321(b) of the Act.
The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining authority.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility and
Qualification which relates to matters peculiarly within the knowledge of the
obligor or any underwriter for the obligor, the trustee has relied upon
information furnished to it by the obligor and the underwriters, and the trustee
disclaims responsibility for the accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company of Missouri N.A., a
national banking association existing under the laws of the United States
of America, has duly caused this statement of eligibility and qualification to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of St. Louis and the State of Missouri, on the 14th day of April, 1998.
STATE STREET BANK AND TRUST COMPANY
OF MISSOURI, N.A.
By: /s/ ROBERT A. CLASQUIN
------------------------------------
Robert A. Clasquin
Assistant Vice President
<PAGE>
EXHIBIT 1
ARTICLES OF ASSOCIATION
OF
STATE STREET BANK AND TRUST COMPANY OF MISSOURI,
NATIONAL ASSOCIATION
For the purpose of organizing an Association to carry on the business
of a limited purpose trust company under the laws of the United States, the
undersigned do enter into the following Articles of Association:
FIRST. The title of this Association shall be State Street Bank and
Trust Company of Missouri, National Association.
SECOND. The Main Office of the Association shall be in the City of
Kansas City, County of Jackson, State of Missouri. The business of the
Association will be limited to the operations of a national trust company and
to support activities incidental thereto. The Association will not expand or
alter its business beyond that stated in this Article Second without the prior
approval of the Comptroller of the Currency.
THIRD. The Board of Directors of this Association shall consist of
not less than five nor more than twenty-five shareholders, the exact number to
be fixed and determined from time to time by resolution of a majority of the
full Board of Directors or by resolution of the shareholders at any annual or
special meeting thereof. Each Director, during the full term of his or her
directorship, shall own a minimum of $1,000 aggregate par value of stock of this
Association or a minimum par, market value or equity interest of $1,000 of stock
in the bank holding company controlling this Association.
Any vacancy in the Board of Directors may be filled by action of the
Board of Directors; provided, however, that a majority of the full Board of
Directors may not increase the number of Directors to a number which: (1)
exceeds by more than two the number of Directors last elected by shareholders
where the number was 15 or less; and (2) exceeds by more than four the number of
Directors last elected by shareholders where the number was 16 or more, but in
no event shall the number of directors exceed 25.
Terms of Directors, including Directors selected to fill vacancies,
shall expire at the next regular meeting of shareholders at which Directors are
elected, unless the Directors resign or are removed from office. Despite the
expiration of a Director's term, the Director shall continue to serve until his
or her successor is elected and qualifies or until there is a decrease in the
number of Directors and his or her position is eliminated.
FOURTH. There shall be an annual meeting of the shareholders to
elect Directors and transact whatever other business may be brought before the
meeting. It shall be held at the main office or any other convenient place as
the Board of Directors may designate, on the day of each year specified
therefore in the By-laws, but if no election is held on that day, it may be held
on any subsequent day according to such lawful rules as may be prescribed by the
Board of Directors.
Nominations for election to the Board of Directors may be made by the
Board of Directors or by any shareholder of any outstanding class of capital
stock of this Association entitled to vote for election of Directors.
Nominations other than those made by or on behalf of the existing management
shall be made in writing and be delivered or mailed to the president of this
Association and to the Comptroller of the Currency, Washington, D.C., not less
than 14 days nor more than 50 days prior to any meeting of shareholders called
for the election of Directors; provided, however, that if less than 21 days
notice of the meeting is given to the shareholders, such nominations shall be
mailed or delivered to the president of this Association and to the Comptroller
of the Currency not later than the close of business on the seventh day
following the day on which the notice of meeting was mailed. Such notification
shall contain the following information to the extent known to the notifying
shareholder: the name and address of each proposed nominee; the principal
occupation of each proposed nominee; the total number of shares of capital
stock of this Association that will be voted for each proposed nominee; the
name and residence address of the notifying shareholder; and the number of
shares of capital stock of this Association owned by the notifying shareholder.
Nominations not made in accordance herewith may, in his or her discretion, be
disregarded by the chairperson of the meeting, and upon his or her
instructions, the vote tellers may disregard all votes cast for each such
nominee.
<PAGE>
FIFTH. The authorized amount of capital stock of this Association
shall be 1,000,000 shares of common stock of the par value of one dollar ($1)
each; but said capital stock may be increased or decreased from time to time,
in accordance with the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of this
Association shall have any preemptive or preferential right of subscription to
any shares of any class of stock of this Association, whether now or hereafter
authorized, or to any obligations convertible into stock of this Association,
issued, or sold, nor any right of subscription to any thereof other than such,
if any, as the Board of Directors, in its discretion may from time to time
determine and at such price as the Board of Directors may from time to time fix.
Transfers of the Association's capital stock are subject to the prior
approval of a federal depository institution regulatory agency. If no other
agency approval is required, the Comptroller of the Currency's approval
shall be obtained prior to the transfers. In such cases where the Comptroller
of the Currency approval is required, the Comptroller of the Currency will
apply the definitions and standards set forth in the Change in Bank Control
Act and the Comptroller of the Currency's implementing regulation
(12 U.S.C. 1817(j) and 12 C.F.R. 5.50) to ownership changes in the Association.
This Association, at any time and from time to time, may authorize and
issue debt obligations, whether or not subordinated, without the approval of the
shareholders.
-2-
<PAGE>
SIXTH. The Board of Directors shall appoint one of its members
President of this Association, who shall be Chairperson of the Board, unless the
Board appoints another director to be the Chairperson. The Board of Directors
shall have the power to appoint one or more Vice Presidents; and to appoint a
Cashier and such other officers and employees as may be required to transact the
business of this Association.
The Board of Directors shall have the power to define the duties of
the officers and employees of this Association; to fix the salaries to be paid
to the officers and employees; to dismiss officers and employees; to require
bonds from officers and employees and to fix the penalty thereof; to regulate
the manner in which any increase of the capital of this Association shall be
made; to manage and administer the business and affairs of this Association; to
make all By-laws that it may be lawful for the Board of Directors to make; and
generally to do and perform all acts that it may be legal for a Board of
Directors to do and perform.
SEVENTH. The Board of Directors shall have the power to change the
location of the main office to any other place within the limits of the City of
Kansas City, without the approval of the shareholders, and shall have the power
to establish or change the location of any branch or branches of this
Association to any other location, without the approval of the shareholders.
EIGHTH. The corporate existence of this Association shall continue
until terminated in accordance with the laws of the United States.
NINTH. The Board of Directors of this Association, or any
shareholder owning, in the aggregate, not less than ten percent of the stock of
this Association, may call a special meeting of shareholders at any time.
Unless otherwise provided by the laws of the United States, a notice of the
time, place, and purpose of every annual and special meeting of the
shareholders shall be given by first-class mail, postage prepaid, mailed at
least ten days prior to the date of such meeting to each shareholder of record
at his address as shown upon the books of this Association.
- 3 -
<PAGE>
TENTH. This Association shall to the fullest extent legally
permissible indemnify each person who is or was a director, officer, employee or
other agent of this Association and each person who is or was serving at the
request of this Association as a director, trustee, officer, employee or other
agent of another organization or of any partnership, joint venture, trust,
employee benefit plan or other enterprise or organization against all
liabilities, costs and expenses, including but not limited to amounts paid in
satisfaction of judgments, in settlement or as fines and penalties, and counsel
fees and disbursements, reasonably incurred by him in connection with the
defense or disposition of or otherwise in connection with or resulting from any
action, suit or other proceeding, whether civil, criminal, administrative or
investigative, before any court or administrative or legislative or
investigative body, in which he may be or may have been involved as a party or
otherwise or with which he may be or may have been threatened, while in office
or thereafter, by reason of his being or having been such a director, officer,
employee, agent or trustee, or by reason of any action taken or not taken in any
such capacity, except with respect to any matter as to which he shall have been
finally adjudicated by a court of competent jurisdiction not to have acted in
good faith in the reasonable belief that his action was in the best interests of
the corporation (any person serving another organization in one or more of the
indicated capacities at the request of this Association who shall not have been
adjudicated in any proceeding not to have acted in good faith in the reasonable
belief that his action was in the best interest of such other organization shall
be deemed so to have acted in good faith with respect to the National Trust
Company) or to the extent that such matter relates to service with respect to an
employee benefit plan, in the best interest of the participants or beneficiaries
of such employee benefit plan. Expenses, including but not limited to counsel
fees and disbursements, so incurred by any such person in defending any such
action, suit or proceeding, shall be paid from time to time by this Association
in advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of the person indemnified to repay the
amounts so paid if it shall ultimately be determined that indemnification of
such expenses is not authorized hereunder.
As to any matter disposed of by settlement by any such person,
pursuant to a consent decree or otherwise, no such indemnification either for
the amount of such settlement or for any other expenses shall be provided unless
such settlement shall be approved as in the best interests of the National Trust
Company, after notice that it involves such indemnification, (a) by a vote of a
majority of the disinterested directors then in office (even though the
disinterested directors be less than a quorum), or (b) by any disinterested
person or persons to whom the question may be referred by vote of a majority of
such disinterested directors, or (c) by vote of the holders of a majority of the
outstanding stock at the time entitled to vote for directors, voting as a single
class, exclusive of any stock owned by any interested person, or
- 4 -
<PAGE>
(d) by any disinterested person or persons to whom the question may be referred
by vote of the holders of a majority of such stock. No such approval shall
prevent the recovery from any such director, officer, employee, agent or trustee
of any amounts paid to him or on his behalf as indemnification in accordance
with the preceding sentence if such person is subsequently adjudicated by a
court of competent jurisdiction not to have acted in good faith in the
reasonable belief that his action was in the best interests of this Association.
The right of indemnification hereby provided shall not be exclusive of or affect
any other rights to which any director, officer, employee, agent or trustee may
be entitled or which may lawfully be granted to him. As used herein, the terms
"director", "officer", "employee", "agent", and "trustee", include their
respective executors, administrators and other legal representatives, an
"interested" person is one against whom the action, suit or other proceeding in
question or another action, suit or other proceeding on the same or similar
grounds is then or had been pending or threatened, and a "disinterested" person
is a person against whom no such action, suit or other proceeding is then or had
been pending or threatened. By action of the board of directors, notwithstanding
any interest of the directors in such action, this Association may purchase and
maintain insurance, in such amounts as the board of directors may from time to
time deem appropriate, on behalf of any person who is or was a director,
officer, employee or other agent of this Association, or is or was serving at
the request of this Association as a director, trustee, officer, employee or
other agent of another organization or of any partnership, joint venture, trust,
employee benefit plan or other enterprise or organization against any liability
incurred by him in any such capacity, or arising out of his status as such,
whether or not this Association would have the power to indemnify him against
such liability.
Nothing contained in this Article Tenth shall be construed to (i)
allow the indemnification of or insurance coverage for a director, trustee,
officer, employee or agent of this Association against expenses, penalties or
other payments incurred in an administrative action instituted by an appropriate
bank regulatory agency which results in a final order assessing civil money
penalties or requires the payments of money to the Association, or (ii) exceed
the provisions of Massachusetts General Laws, chapter 156B, section 67, as in
effect from time to time.
ELEVENTH. These Articles of Association may be amended at any regular
or special meeting of the shareholders by the affirmative vote of the holders of
a majority of the stock of this Association, unless the vote of the holders of a
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount.
TWELFTH. This Association may be a partner in any business or
enterprise which this Association would have power to conduct by itself.
- 5 -
<PAGE>
IN WITNESS WHEREOF, we have hereunto set our hands this 27th day of
April, 1995.
/s/ MARSHALL N. CARTER
----------------------
Marshall N. Carter
/s/ DAVID A. SPINA
----------------------
David A. Spina
/s/ A. EDWARD ALLINSON
----------------------
A. Edward Allinson
/s/ RONALD E. LOGUE
----------------------
Ronald E. Logue
/s/ JOHN R. TOWERS
----------------------
John R. Towers
- 6 -
<PAGE>
EXHIBIT 2
[COMPTROLLER OF THE CURRENCY TREASURY DEPARTMENT LOGO]
Washington, D.C.
WHEREAS, satisfactory evidence has been presented to the Comptroller
of the Currency that STATE STREET BANK AND TRUST COMPANY OF MISSOURI, NATIONAL
ASSOCIATION located in KANSAS CITY State of MISSOURI has complied with all
provisions of the statutes of the United States required to be complied with
before being authorized to commence the business of banking as a National
Banking Association;
NOW, THEREFORE, I hereby certify that the above-named association is
authorized to commence the business of banking as a National Banking
Association.
IN TESTIMONY WHEREOF, witness my signature and seal of
office this FIFTEENTH day of SEPTEMBER 1995.
/s/ DAVID A. BOMGAARS
-----------------------------------------
District Administrator
Comptroller of the Currency
Charter No. 22874
<PAGE>
EXHIBIT 3
[LOGO]
Comptroller of the Currency
Administrator of National Banks
Northeastern District
1114 Avenue of the Americas, Suite 3900
New York, New York 10036
TRUST PERMIT
WHEREAS, STATE STREET BANK AND TRUST COMPANY OF MISSOURI, NATIONAL
ASSOCIATION, located in KANSAS CITY, state of MISSOURI, being a National
Banking Association, organized under the statutes of the United States,
has made application for authority to act as fiduciary;
AND WHEREAS, applicable provisions of the statutes of the United States
authorize the grant of such authority;
NOW THEREFORE, I hereby certify that the said association is authorized to act
in all fiduciary capacities permitted by such statutes.
IN TESTIMONY WHEREOF, witness my signature and seal of Office this 15TH day of
SEPTEMBER, 1995.
CHARTER NO. 22874
/s/ DAVID A. BOMGAARS
---------------------------------
David A. Bomgaars
District Administrator
**OCC SEAL**
<PAGE>
EXHIBIT 4
STATE STREET BANK AND TRUST COMPANY OF MISSOURI,
NATIONAL ASSOCIATION
AMENDED AND RESTATED
BY-LAWS
ARTICLE I
Meetings of Shareholders
Section 1.1 Annual Meeting. The regular annual meeting of the
shareholders to elect directors and transact whatever other business may
properly come before the meeting, shall be held at the Main Office of the
National Trust Company, in the City of Kansas City, State of Missouri or such
other places as the Board of Directors may designate, at 10 o'clock, on the
fourth Wednesday of April of each year. Notice of such meeting shall be mailed,
postage prepaid, at least ten days prior to the date thereof, addressed to each
shareholder at his/her address appearing on the books of the National Trust
Company. If for any cause, an election of directors is not made on that day, the
Board of Directors shall order the election to be held on some subsequent day,
as soon thereafter as practicable, according to the provisions of law; and
notice thereof shall be given in the manner herein provided for the annual
meeting.
Section 1.2. Special Meetings. Except as otherwise specifically
provided by statute, special meetings of the shareholders may be called for any
purpose at any time by the Board of Directors or by any shareholder owning, in
the aggregate, not less than 10 percent of the stock of the National Trust
Company. Every such special meeting, unless otherwise provided by law, shall be
called by mailing, postage prepaid, not less than ten days prior to the date
fixed for such meeting, to each shareholder at his address appearing on the
books of the National Trust Company a notice stating the purpose of the meeting.
Section 1.3. Nominations for Director. Nominations for election to the
Board of Directors may be made by the Board of Directors or by any shareholder
of any outstanding class of capital stock of the National Trust Company entitled
to vote for the election of directors. Nominations, other than those made by or
on behalf of the existing management of the National Trust Company, shall be
made in writing and shall be delivered or mailed to the President of the
National Trust Company and to the Comptroller of the Currency, Washington, D.C.,
not less than 14 days nor more than 50 days prior to any meeting of shareholders
called for the election of directors, provided however, that if less than 21
days' notice of the meeting is given to shareholders, such nomination shall be
mailed or delivered to the President of the National Trust Company and to the
Comptroller of the Currency not later than the close of business on the seventh
day following the day on which the notice of meeting was mailed. Such
notification shall contain the following information to the extent known to the
notifying shareholder:
(a) the name and address of each proposed nominee; (b) the principal
occupation of each proposed nominee; (c) the total number of shares of capital
stock of the National Trust Company that will be voted for each proposed
nominee; (d) the name and residence address of the notifying shareholder; and
(e) the number of shares of capital stock of the National Trust Company owned by
the notifying shareholder. Nominations not made in accordance herewith may, in
his/her discretion, be disregarded by the Chairperson of the meeting, and upon
his/her instructions, the vote tellers may disregard all votes cast for each
such nominee.
Section l.4. Proxies. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing, but no officer or employee
of this National Trust Company shall act as proxy. Proxies shall be valid only
for one meeting, to be specified therein, and any adjournments of such meeting.
Proxies shall be dated and shall be filed with the records of the meeting.
Section 1.5. Quorum. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, unless otherwise provided by law; but less than a quorum may
adjourn any meeting, from time to time, and the meeting may be held, as
<PAGE>
adjourned, without further notice. A majority of the votes cast shall decide
every question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
ARTICLE II
Directors
Section 2.1. Board of Directors. The Board of Directors shall have the
power to manage and administer the business and affairs of the National Trust
Company. Except as expressly limited by law, all corporate powers of the
National Trust Company shall be vested in and may be exercised by the Board of
Directors.
Section 2.2. Number. the Board of Directors shall consist of not less
than five nor more than twenty-five shareholders, the exact number within such
minimum and maximum limits to be fixed and determined from time to time by
resolution of a majority of the full Board or by resolution of the shareholders
at any meeting thereof.
Section 2.3. Organization Meeting. The Cashier, upon receiving the
results of any election, shall notify the directors-elect of their election and
of the time at which they are required to meet at the Main Office of the
National Trust Company to organize the new Board and elect and appoint officers
of the National Trust Company for the succeeding year. Such meeting shall be
held on the day of the election or as soon thereafter as practicable, and, in
any event, within thirty days thereof. If, at the time fixed for such meeting,
there shall not be a quorum present, the Directors present may adjourn the
meeting, from time to time, until a quorum is obtained.
-2-
<PAGE>
Section 2.4. Regular Meetings. Regular Meetings of the Board of
Directors shall be held, without notice, at least once in each quarter on such
days and at such hours as the Directors may from time to time determine. When
any regular meeting of the Board falls upon a holiday, the meeting shall be held
on the next banking business day unless the Board shall designate some other
day. (Amended 1/1/97)
Section 2.5. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board of the National Trust
Company, or at the request of three or more directors. Each member of the Board
of Directors shall be given notice stating the time and place, by telegram,
letter, or in person, of each such special meeting.
Section 2.6. Quorum. A majority of the directors shall constitute a
quorum at any meeting, except when otherwise provided by law; but a less number
may adjourn any meeting, from time to time, and the meeting may be held, as
adjourned, without further notice.
Section 2.7. Vacancies. When any vacancy occurs among the directors,
the remaining members of the Board, in accordance with the laws of the United
States, may appoint a director to fill such vacancy at any regular meeting of
the Board, or at a special meeting called for that purpose in conformance with
Section 2.2 of this Article.
Section 2.8. Action Without a Meeting. Any action required or
permitted to be taken at any meeting of the Directors may be taken without a
meeting if all the Directors consent to the action in writing and the written
consents are filed with the records of the meetings of the Directors. Such
consents shall be treated for all purposes as a vote at a meeting.
Section 2.9. Meeting by Telecommunications. Members of the Board of
Directors or any committee elected thereby may participate in a meeting of such
Board or committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in a meeting can hear each
other at the time and participation by such means shall constitute presence in
person at the meeting.
ARTICLE III
Committees of the Board
Section 3.1. Investment Committee. There shall be an Investment
Committee composed of not less than two Directors, appointed by the Board
annually or more often. The Investment Committee shall have the power to insure
adherence to Investment Policy, to recommend amendments thereto, to purchase and
sell securities, to exercise authority regarding investments and to exercise,
when the Board is not in session, all other powers of the Board regarding
investment securities that may be lawfully delegated. The Investment Committee
shall keep minutes of its meetings, and such minutes shall be submitted at the
next regular meeting of the Board of Directors at which a quorum is present, and
any action taken by the Board with respect thereto shall be entered in the
minutes of the Board.
-3-
<PAGE>
Section 3.2. Examining Committee. There shall be an Examining
Committee composed of not less than two directors, exclusive of any active
officers, appointed by the Board annually or more often, whose duty it shall be
to make an examination at least once during each calendar year into the affairs
of the National Trust Company or cause suitable examinations to be made by
auditors responsible only to the Board of Directors and to report the result of
such examination in writing to the Board at the next regular meeting thereafter.
Such report shall state whether the National Trust Company is in a sound
condition, and whether adequate internal controls and procedures are being
maintained shall recommend to the Board of Directors such changes in the manner
of conducting the affairs of the National Trust Company as shall be deemed
advisable. (Amended 8/5/97)
Section 3.3. Other Committees. The Board of Directors may appoint,
from time to time, from its own members, other committees of one or more
persons, for such purposes and with such powers as the Board may determine.
However, a committee may not authorize distribution of assets or dividends;
approve action required to be approved by shareholders; fill vacancies on the
board of directors or any of its committees; amend articles of association;
adopt, amend or repeal by-laws; or authorize or approve issuance or sale or
contract for sale of shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares.
ARTICLE IV
Officers and Employees
Section 4.1. Chairperson of the Board. The Board of Directors shall
appoint one of its members to be Chairperson of the Board to serve at its
pleasure. Such person shall preside at all meetings of the Board of Directors.
The Chairperson of the Board shall supervise the carrying out of the policies
adopted or approved by the Board; shall have general executive powers, as well
as the specific powers conferred by these Bylaws; and shall also have and may
exercise such further powers and duties as from time to time may be conferred
upon, or assigned by the Board of Directors.
Section 4.2. President. The Board of Directors shall appoint one of
its members to be President of the National Trust Company. In the absence of the
Chairperson, the President shall preside at any meeting of the Board. The
President shall have general executive powers, and shall have and may exercise
any and all other powers and duties pertaining by law, regulations, or practice,
to the Office of President, or imposed by these Bylaws. The President shall also
have and may exercise such further powers and duties as from time to time may be
conferred, or assigned by the Board of Directors.
Section 4.3. Vice President. The Board of Directors may appoint one or
more Vice Presidents. Each Vice President shall have such powers and duties as
may be assigned by the Board of Directors. One Vice President shall be
designated by the Board of Directors, in the absence of the President, to
perform all the duties of the President.
-4-
<PAGE>
Section 4.4. Secretary. The Board of Directors shall appoint a
Secretary, Cashier, or other designated officer who shall be Secretary of the
Board and of the National Trust Company, and shall keep accurate minutes of all
meetings. The Secretary shall attend to the giving of all notices required by
these Bylaws to be given; shall be custodian of the corporate seal, records,
documents and papers of the National Trust Company; shall provide for the
keeping of proper records of all transactions of the National Trust Company;
shall have and may exercise any and all other powers and duties pertaining by
law, regulation or practice, to the Office of Cashier, or imposed by these
Bylaws; and shall also perform such other duties as may be assigned from time to
time, by the Board of Directors.
Section 4.5. Other Officers. The Board of Directors may appoint one or
more Executive Vice Presidents, Senior Vice Presidents, Assistant Vice
Presidents, one or more Assistant Secretaries, one or more Assistant Cashiers,
one or more Managers and Assistant Managers of offices and such other officers
and attorneys in fact as from time to time may appear to the Board of Directors
to be required or desirable to transact the business of the National Trust
Company. Such officers shall respectively exercise such powers and perform such
duties as pertain to the several offices, or as may be conferred upon, or
assigned to, them by the Board of Directors, the Chairperson of the Board, or
the President. The Board of Directors may authorize an officer to appoint one or
more officers or assistant officers.
Section 4.6. Tenure of Office. The President and all other officers
shall hold office for the current year for which the Board was elected, unless
they shall resign, become disqualified, or be removed; and any vacancy occurring
in the Office of President shall be filled promptly by the Board of Directors.
Section 4.7. Resignation. An officer may resign at any time by
delivering notice to the National Trust Company. A resignation is effective when
the notice is given unless the notice specifies a later effective date.
ARTICLE V
Fiduciary Activities
Section 5.1. Trust Department. There shall be a department of the
National Trust Company known as the Trust Department that shall perform the
fiduciary responsibilities of the National Trust Company.
Section 5.2. Trust Officer. There shall be a Trust Officer of this
National Trust Company whose duties shall be to manage, supervise and direct all
the activities of the Trust Department. Such persons shall do or cause to be
done all things necessary or proper in carrying on the business of the Trust
Department according to provisions of law and applicable regulations; and shall
act pursuant to opinion of counsel where such opinion is deemed necessary.
Opinions of counsel shall be retained on file in connection with all important
matters pertaining to fiduciary activities. The Trust Officer shall be
responsible for all assets and documents held by the National Trust Company in
connection with fiduciary matters.
-5-
<PAGE>
The Board of Directors may appoint other trust officers of the Trust
Department, as it may deem necessary, with such duties as may be assigned.
Section 5.3. Trust Investment Committee. There shall be a Trust
Investment Committee of this National Trust Company composed of not less than
two members, who shall be capable and experienced officers or directors of the
National Trust Company. All investments of funds held in a fiduciary capacity
shall be made, retained or disposed of only with the approval of the Trust
Investment Committee, and the Committee shall keep minutes of all its meetings,
showing the disposition of all matters considered and passed upon by it. The
Committee shall, promptly after the acceptance of an account for which the
National Trust Company has investment responsibilities, review the assets
thereof, to determine the advisability of retaining or disposing of such assets.
The Committee shall conduct a similar review at least once during each calendar
year thereafter and within 15 months of the last such review. A report of all
such reviews, together with the action taken as a result thereof, shall be noted
in the minutes of the Committee.
Section 5.4. Trust Audit Committee. The Board of Directors shall
appoint a committee of not less than two directors, exclusive of any active
officer of the National Trust Company, which shall, at least once during each
calendar year make suitable audits of the Trust Department or cause suitable
audits to be made by auditors responsible only to the Board of Directors, and at
such time shall ascertain whether the Department has been administered according
to law, Part 9 of the Regulations of the Comptroller of the Currency, and sound
fiduciary principles. (Amended 8/5/97)
Section 5.5. Fiduciary Files. There shall be maintained in the Trust
Department files all fiduciary records necessary to assure that its fiduciary
responsibilities have been properly undertaken and discharged.
Section 5.6. Trust Investments. Funds held in a fiduciary capacity
shall be invested according to the instrument establishing the fiduciary
relationship and local law. Where such instrument does not specify the character
and class of investments to be made and does not vest in the National Trust
Company a discretion in the matter, funds held pursuant to such instrument shall
be invested in investments in which corporate fiduciaries may invest under local
law.
ARTICLE VI
Stock and Stock Certificates
Section 6.1 Transfers. Shares of stock shall be transferable on the
books of the National Trust Company, and a transfer book shall be kept in which
all transfers of stock shall be recorded. Every person becoming a shareholder by
such transfer shall, in proportion to his shares, succeed to all rights of the
prior holder of such shares.
-6-
<PAGE>
Section 6.2. Stock Certificates. Certificates of stock shall bear the
signature of the President (which may be engraved, printed or impressed), and
shall be signed manually or by facsimile process by the Secretary, Assistant
Secretary, Cashier, Assistant Cashier, or any other officer appointed by the
Board of Directors for that purpose, to be known as an Authorized Officer, and
the seal of the National Trust Company shall be engraved thereon. Each
certificate shall recite on its face that the stock represented thereby is
transferable only upon the books of the National Trust Company properly
endorsed.
ARTICLE VII
Corporate Seal
The President, the Cashier, the Secretary or any Assistant Cashier or
Assistant Secretary, or other officer thereunto designated by the Board of
Directors, shall have authority to affix the corporate seal to any document
requiring such seal, and to attest the same. Such seal shall be substantially in
the following form:
ARTICLE VIII
Miscellaneous Provisions
Section 8.1. Fiscal Year. The Fiscal Year of the National Trust
Company shall be the calendar year.
Section 8.2. Execution of Instruments. All agreements, indentures,
mortgages, deeds, conveyances, transfers, certificates, declarations, receipts,
discharges, releases, satisfactions, settlements, petitions, schedules,
accounts, affidavits, bonds, undertakings, proxies and other instruments or
documents may be signed, executed, acknowledged, verified, delivered or accepted
in behalf of the National Trust Company by the Chairperson of the Board, or the
President, or any Executive Vice President, or any Vice President, or the
Secretary, or the Cashier. Any such instruments may also be executed,
acknowledged, verified, delivered or accepted in behalf of the National Trust
Company in such other manner and by such other officers as the Board of
Directors may from time to time direct. The provisions of this Section 8.2. are
supplementary to any other provision of these Bylaws.
Section 8.3. Records. The Articles of Association, the By-laws and the
proceedings of all meetings of the shareholders, the Board of Directors, and
standing committees of the Board, shall be recorded in appropriate minute books
provided for the purpose. The minutes of each meeting shall be signed by the
Secretary, Cashier or other Officer appointed to act as Secretary of the
meeting.
-7-
<PAGE>
ARTICLE IX
By-laws
Section 9.1. Inspection. A copy of the By-laws, with all amendments
thereto, shall at all times be kept in a convenient place at the Main Office of
the National Trust Company, and shall be open for inspection to all
shareholders, during banking hours.
Section 9.2. Amendments. The By-laws may be amended, altered or
repealed, at any regular meeting of the Board of Directors, by a vote of a
majority of the total number of the Directors.
-8-
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by Prime
Medical Services, Inc. of its Senior Subordinated Notes, 8.75% Due 4/1/2008 and
its 7 1/8% Notes Due 2007, we hereby consent that reports of examination by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
OF MISSOURI N.A.
By: /s/ ROBERT A. CLASQUIN
-------------------------------------
Robert A. Clasquin
Assistant Vice President
Dated: April 14, 1998
<PAGE>
STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A.
CONSOLIDATED STATEMENT OF CONDITION
FEB-98
ASSETS 1998 1997
------------ ------------
Cash and Due from Bank $ 703,340 $ 414,485
Total Investment Securities 292,500 292,500
Total Premises and Equipment 11,171 0
Accrued Income Receivable 246,874 170,046
Other Assets 0 0
Goodwill Net 8,362,411 8,647,287
---------- ----------
TOTAL ASSETS $9,616,297 $9,524,318
---------- ----------
LIABILITIES
Accrued Tax and Other (295,235) (375,233)
Unearned Revenue 206,427 289,013
---------- ----------
TOTAL LIABILITIES $ (88,808) $ (86,221)
---------- ----------
STOCKHOLDERS EQUITY
Common Stock 500,000 500,000
Paid in Surplus 9,250,000 9,250,000
Retained Earning (44,894) (139,461)
---------- ----------
TOTAL STOCKHOLDERS EQUITY $9,705,106 $9,610,539
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $9,616,297 $9,524,318
========== ==========
<PAGE>
EXHIBIT 99.1
FORM OF
LETTER OF TRANSMITTAL
PRIME MEDICAL SERVICES, INC.
OFFER TO EXCHANGE 8 3/4% SENIOR NOTES DUE 2008,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
FOR
8 3/4% SENIOR NOTES DUE 2008
PURSUANT TO THE PROSPECTUS DATED
__________ __, 1998
--------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., E.S.T., ON __________, 1998, UNLESS THE OFFER IS EXTENDED
--------------------
Deliver to
State Street Bank and Trust Company of Missouri, National Association
(the "Exchange Agent")
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED BY OVERNIGHT COURIER OR HAND:
MAIL:
State Street Bank and Trust Company of Missouri, State Street Bank and Trust Company of Missouri,
National Association National Association
Corporate Trust Window Corporate Trust Window
Two International Place, Fourth Floor Two International Place, Fourth Floor
Boston, MA 02110 Boston, MA 02110
</TABLE>
BY FACSIMILE TRANSMISSION
(FOR ELIGIBLE INSTITUTIONS ONLY):
(617) 664-5290
Attention: Corporate Trust Window
Confirm by Telephone: (617) 664-5587
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONES LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
The undersigned hereby acknowledges receipt of the Prospectus dated
_________ __, 1998 (the "Prospectus") of Prime Medical Services, Inc., a
Delaware corporation (the "Company"), and this Letter of Transmittal, which
together constitute the Company's offer (the "Exchange Offer") to exchange up to
an aggregate principal amount of $100,000,000 of its 8 3/4% Senior Notes due
2008 (the "Exchange Notes," which have been registered under the Securities Act,
pursuant to a Registration Statement of which the Prospectus is a part), for a
like principal amount of its outstanding 8 3/4% Senior Notes due 2008 (the
"Outstanding Notes" and together with the
<PAGE>
Exchange Notes, the "Notes"). Capitalized terms used but not defined herein have
the meaning given to them in the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS RELATING TO THE PROCEDURE FOR TENDERING AND REQUESTS FOR ADDITIONAL
COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE
EXCHANGE AGENT. QUESTIONS RELATING TO THE EXCHANGE OFFER AND REQUESTS FOR
ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF
TRANSMITTAL MAY BE DIRECTED TO THE COMPANY.
This Letter of Transmittal is to be completed by a holder of Outstanding
Notes if (i) certificates are to be forwarded herewith, (ii) delivery of
Outstanding Notes is to be made by book-entry transfer to an account maintained
by the Exchange Agent at The Depository Trust Company ("DTC"), pursuant to the
procedures set forth in "The Exchange Offer Procedures for Tendering" in the
Prospectus or (iii) tender of the Outstanding Notes is to be made according to
the guaranteed delivery procedures described in the Prospectus under the caption
"The Exchange Offer Guaranteed Delivery Procedures." See Instruction 2. Delivery
of documents to a book-entry transfer facility does not constitute delivery to
the Exchange Agent. It is understood that participants in DTC's book-entry
system will, in accordance with DTC's Automated Tender Offer Program procedures
and in lieu of physical delivery to the Exchange Agent of a Letter of
Transmittal, electronically acknowledge receipt of, and agreement to be bound
by, the terms of this Letter of Transmittal.
Unless the context otherwise requires, the term "holder" as used herein
with respect to the Exchange Offer means any person in whose name Outstanding
Notes are registered on the books of the Company or any other person who has
obtained a properly completed bond power from the registered holder. The
undersigned has completed, executed and delivered this Letter of Transmittal to
indicate the action the undersigned desires to take with respect to the Exchange
Offer. Holders who wish to tender their Outstanding Notes must complete this
Letter of Transmittal in its entirety.
Listed below are the Outstanding Notes to which this Letter of Transmittal
relates. If the space provided below is inadequate, the certificate numbers and
principal amounts should be listed on a separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
DESCRIPTION OF OUTSTANDING NOTES TENDERED HEREBY
- -------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Principal
Holder(s) Amount Principal
Exactly as Name(s) Appear(s) on Notes Certificate Represented by Amount
(Please fill in) Numbers* Outstanding Notes Tendered**
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Total
- -------------------------------------------------------------------------------------------------
* Need not be completed if Outstanding Notes are being tendered by book-entry transfer.
** Unless otherwise indicated, the holder will be deemed to have tendered the full aggregate
principal amount represented by such Outstanding Notes. All tenders must be in integral
multiples of $1,000.
- --------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
[ ] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH A BOOK-
ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
---------------------------------------------
Account Number
------------------------------------------------------------
Transaction Code Number
---------------------------------------------------
Holders whose Notes are not immediately available or who cannot deliver their
Notes and all other documents required hereby to the Exchange Agent on or prior
to the Expiration Date must tender their Notes according to the guaranteed
delivery procedure set forth in the Prospectus under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures." See Instruction 2.
[ ] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
-------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
------------------------
Name of Eligible Institution that Guaranteed Delivery
---------------------
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number
------------------------------------------------------------
Transaction Code Number
---------------------------------------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name
----------------------------------------------------------------------
Address
-------------------------------------------------------------------
3
<PAGE>
SPECIAL REGISTRATION INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 5) (See Instruction 5)
To be completed ONLY if the Exchange To be completed ONLY if the Exchange
Notes are to be issued in the name of Notes are to be sent to someone other
someone other than the undersigned. than the undersigned, or to the
Issue Exchange Note to: undersigned at an address other than
that shown under "Description of Notes
Tendered Hereby."
Name(s): Name(s):
------------------------------- --------------------------------
(Please Type or Print) (Please Type or Print)
- --------------------------------------- ----------------------------------------
(Please Type or Print) (Please Type or Print)
Address: Address:
------------------------------- --------------------------------
- --------------------------------------- ----------------------------------------
(Including Zip Code) (Including Zip Code)
- ---------------------------------------
(Tax Identification or
Social Security No.)
[ ] Credit unexchanged Outstanding
Notes and/or Exchange Notes
delivered by book-entry transfer
to the Book-Entry Transfer
Facility account set forth below.
- ---------------------------------------
(Book Entry Transfer Facility
Account Number, if applicable)
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES FOR
OUTSTANDING NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS
OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
4
<PAGE>
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of the
Outstanding Notes indicated above. Subject to, and effective upon, the
acceptance for exchange of such Outstanding Notes tendered hereby, the
undersigned hereby exchanges, sells, assigns and transfers to, or upon the order
of, the Company all right, title and interest in and to such Outstanding Notes
as are being tendered hereby, including all rights to accrued and unpaid
interest thereon as of the Expiration Date. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent its true and lawful agent and
attorney-in-fact with full power of substitution (with full knowledge that said
Exchange Agent acts as the agent of the Company in connection with the Exchange
Offer) to cause the Outstanding Notes to be assigned, sold, transferred and
exchanged. The Power of Attorney granted in this paragraph shall be deemed
irrevocable from and after the Expiration Date and coupled with an interest.
The undersigned represents and warrants that it has full power and
authority to tender, sell, exchange, assign and transfer the Outstanding Notes
and to acquire Exchange Notes issuable upon the exchange of such tendered
Outstanding Notes, and that when the same are accepted for exchange, the Company
will acquire good and unencumbered title to the tendered Outstanding Notes, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claim.
The undersigned represents to the Company that (i) the Exchange Notes
acquired pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the person receiving such Exchange Notes, whether or not
such person is the undersigned, (ii) neither the undersigned nor any such other
person is engaged in, or intends to engage in, or has an arrangement or
understanding with any person to participate in the distribution (within the
meaning of the Securities Act) of such Exchange Notes, (iii) if the undersigned
or the person receiving the Exchange Notes covered hereby is (a) participating
in the Exchange Offer for the purpose of distributing the Exchange Notes or (b)
a broker-dealer that is receiving the Exchange Notes for its own account in
exchange for Outstanding Notes that were acquired as a result of market-making
activities or other trading activities, the undersigned or such person will
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction of the acquired
Exchange Notes (however, such compliance by a broker-dealer shall not constitute
an admission by such broker-dealer that it is an "underwriter") and (iv) neither
the undersigned nor the person receiving the Exchange Note covered hereby is an
affiliate (as defined under Rule 405 of the Securities Act) of the Company, or,
if the undersigned or any such other person is an affiliate of the Company,
whether as a result of tendering in the Exchange Offer or otherwise, the
undersigned understands and acknowledges that such Exchange Notes may not be
offered for resale, resold or otherwise transferred by the undersigned or such
other person without registration under the Securities Act or an exemption
therefrom. The undersigned and any such other person acknowledge that, if they
are participating in the Exchange Offer for the purpose of distributing the
Exchange Notes, (i) they cannot rely on the position of the staff of the
Securities and Exchange Commission enunciated in Exxon Capital Holdings
Corporation (available April 13, 1989) or similar no-action letters and, in the
absence of an exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with the
resale transaction and (ii) failure to comply with such requirements in such
instance could result in the undersigned or any such other person incurring
liability under the Securities Act for which such persons are not indemnified by
the Company.
The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company to
be necessary or desirable to complete the exchange, sale, assignment and
transfer of tendered Outstanding Notes or transfer ownership of such Outstanding
Notes on the account books maintained by a Book-Entry Transfer Facility. The
undersigned further agrees that acceptance of any tendered Outstanding Notes by
the Company and the issuance of Exchange Notes in exchange therefor shall
constitute performance in full by the Company of its obligations under the
Registration Rights Agreement and that the Company shall have no further
obligations or liabilities thereunder for the registration of the Outstanding
Notes or the Exchange Notes.
5
<PAGE>
The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange Offer." The undersigned recognizes
that as a result of these conditions (which may be waived, in whole or in part,
by the Company), as more particularly set forth in the Prospectus, the Company
may not be required to exchange any of the Outstanding Notes tendered hereby
and, in such event, the Outstanding Notes not exchanged will be returned to the
undersigned at the address shown below the signature of the undersigned.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors,
assigns, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned. Tendered Outstanding Notes may be withdrawn
at any time prior to the Expiration Date only in accordance with the terms set
forth in the Prospectus under the caption "The Exchange Offer Withdrawal of
Tenders."
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the Exchange Notes (and, if applicable,
substitute certificates representing Outstanding Notes for any Outstanding Notes
not exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Outstanding Notes, please credit the account indicated above
maintained at the Book-Entry Transfer Facility. Similarly, unless otherwise
indicated under the box entitled "Special Delivery Instructions" below, please
send the Exchange Notes (and, if applicable, substitute certificates
representing Outstanding Notes for any Outstanding Notes not exchanged) to the
undersigned at the address shown above in the box entitled "Description of
Outstanding Notes."
IF OUTSTANDING NOTES ARE SURRENDERED BY HOLDER(S) THAT HAVE COMPLETED
EITHER THE BOX ENTITLED "SPECIAL REGISTRATION INSTRUCTIONS" OR THE BOX ENTITLED
"SPECIAL DELIVERY INSTRUCTIONS" IN THIS LETTER OF TRANSMITTAL, SIGNATURE(S) ON
THIS LETTER OF TRANSMITTAL MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION (SEE
INSTRUCTION 4).
6
<PAGE>
================================================================================
REGISTERED HOLDER(S) OF NOTES SIGN HERE
(In addition complete Substitute Form W-9 Below)
X
-------------------------------------------------------------------------------
X
-------------------------------------------------------------------------------
(Signature(s) of Registered Holder(s))
Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Notes or on a security position listing as the owner of the Notes or by
person(s) authorized to become registered holder(s) by properly completed bond
powers transmitted herewith. If signature is by attorney-in-fact, trustee,
executor, administrator, guardian, officer of a corporation or other person
acting in a fiduciary capacity, please provide the following information (please
print or type):
Name and Capacity (full title):
-------------------------------------------------
Address: (including zip):
-------------------------------------------------------
Area Code and Telephone Number:
-------------------------------------------------
Dated:
----------------------------------
SIGNATURE GUARANTEE
(If required -- See Instruction 4)
Authorized Signature:
-----------------------------------------------------------
(Signature of Representative of Signature Guarantor)
Name and Title:
-----------------------------------------------------------------
Name of Firm:
-------------------------------------------------------------------
Area Code and Telephone Number: :
-----------------------------------------------
(Please print or type)
Dated:
----------------------------------
================================================================================
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES.
All physically delivered Outstanding Notes or any confirmation of a book-entry
transfer to the Exchange Agent's account at a Book-Entry Transfer Facility of
Outstanding Notes tendered by book-entry transfer, as well as a properly
completed and duly executed copy of this Letter of Transmittal or facsimile
thereof, and any other documents required by this Letter of Transmittal, must be
received by the Exchange Agent at any of its addresses set forth herein on or
prior to the Expiration Date (as defined in the Prospectus). THE METHOD OF
DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OUTSTANDING NOTES AND ANY OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER, AND EXCEPT AS
OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL, IT IS SUGGESTED
THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, BE USED.
No alternative, conditional, irregular or contingent tenders will be accepted.
All tendering Holders, by execution of this Letter of Transmittal (or facsimile
thereof), shall waive any right to receive notice of the acceptance of the
Outstanding Notes for exchange.
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH HEREIN, OR INSTRUCTIONS VIA A
FACSIMILE NUMBER OTHER THAN THE ONES SET FORTH HEREIN, WILL NOT CONSTITUTE A
VALID DELIVERY.
2. GUARANTEED DELIVERY PROCEDURES.
Holders who wish to tender their Outstanding Notes and (i) whose Outstanding
Notes are not immediately available, (ii) who cannot deliver their Outstanding
Notes, the Letter of Transmittal or any other required documents to the Exchange
Agent or (iii) who cannot complete the procedures for book-entry transfer, prior
to the Expiration Date, may effect a tender if:
(a) the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent
in the United States or otherwise an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible
Institution");
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the certificate
number(s) of such Outstanding Notes and the principal amount of
Outstanding Notes tendered, stating that the tender is being made thereby
and guaranteeing that, within five Nasdaq Stock Market trading days after
the Expiration Date, the Letter of Transmittal (or facsimile thereof),
together with the certificates representing the Outstanding Notes (or a
confirmation of book-entry transfer of such Outstanding Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility) and any
other documents required by the Letter of Transmittal, will be deposited
by the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or facsimile
thereof), as well as the certificates representing all tendered
Outstanding Notes in proper form for transfer (or a confirmation of book-
entry transfer of such Outstanding Notes into the Exchange Agent's account
at the Book-Entry Transfer Facility) and all other documents required by
the Letter of Transmittal, are received by the Exchange Agent within five
Nasdaq Stock Market trading days after the Expiration Date.
8
<PAGE>
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Outstanding Notes according to the
guaranteed delivery procedures set forth above. Any holder who wishes to tender
Outstanding Notes pursuant to the guaranteed delivery procedures described above
must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery
relating to such Outstanding Notes prior to the Expiration Date. Failure to
complete the guaranteed delivery procedures outlined above will not, of itself,
affect the validity or effect a revocation of any Letter of Transmittal form
properly completed and executed by a Holder who attempted to use the guaranteed
delivery procedures.
3. PARTIAL TENDERS; WITHDRAWALS.
If less than the entire principal amount of Outstanding Notes evidenced by a
submitted certificate is tendered, the tendering holder should fill in the
principal amount tendered in the column entitled "Principal Amount Tendered" of
the box entitled "Description of Notes Tendered Hereby." A newly issued
Outstanding Note for the principal amount of Outstanding Notes submitted but not
tendered will be sent to such holder as soon as practicable after the Expiration
Date. All Outstanding Notes delivered to the Exchange Agent will be deemed to
have been tendered in full unless otherwise indicated. Tenders of Outstanding
Notes will be accepted only in integral multiples of $1,000.
Outstanding Notes tendered pursuant to the Exchange Offer may be withdrawn at
any time prior to 5:00 p.m. New York City time, on the Expiration Date, after
which tenders of Outstanding Notes are irrevocable. To be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Exchange Agent. Any such notice of withdrawal must (i) specify
the name of the person having deposited the Outstanding Notes to be withdrawn
(the "Depositor"), (ii) identify the Outstanding Notes to be withdrawn
(including the certificate number(s) and principal amount of such Outstanding
Notes, or, in the case of Outstanding Notes transferred by book-entry transfer,
the name and number of the account at the Book-Entry Transfer Facility to be
credited), (iii) be signed by the Holder in the same manner as the original
signature on this Letter of Transmittal (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
Trustee with respect to the Outstanding Notes register the transfer of such
Outstanding Notes into the name of the person withdrawing the tender, (iv)
specify the name in which any such Outstanding Notes are to be registered, if
different from that of the Depositor and (v) if applicable because the
Outstanding Notes have been tendered pursuant to book-entry procedures, specify
the name and number of the participant's account at DTC to be credited, if
different from that of the Depositor. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company, whose determination shall be final and binding on all parties. Any
Outstanding Notes so withdrawn will be deemed not to have been validly tendered
for purposes of the Exchange Offer and no Exchange Notes will be issued with
respect thereto unless the Outstanding Notes so withdrawn are validly
retendered. Any Outstanding Notes that have been tendered but not accepted for
exchange, will be returned to the Holder thereof without cost to such Holder as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Outstanding Notes may be retendered by
following one of the procedures described above under "Procedures for Tendering"
at any time prior to the Expiration Date.
4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder(s) of the Outstanding Notes tendered hereby, the signature
must correspond with the name(s) as written on the face of the certificates
without alteration or enlargement or any change whatsoever. If this Letter of
Transmittal is signed by a participant in the Book-Entry Transfer Facility, the
signature must correspond with the name as it appears on the security position
listing as the holder of the Outstanding Notes.
If any of the Outstanding Notes tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If a number of Outstanding Notes registered in different names are tendered,
it will be necessary to complete, sign and submit as many separate copies of
this Letter of Transmittal as there are different registrations of Outstanding
Notes.
9
<PAGE>
Signatures on this Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution unless the
Outstanding Notes tendered hereby are tendered (i) by a registered Holder who
has not completed the box entitled "Special Registration Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution.
If this Letter of Transmittal is signed by the registered Holder or Holders of
Outstanding Notes (which term, for the purposes described herein, shall include
a participant in the Book-Entry Transfer Facility whose name appears on a
security listing as the holder of the Outstanding Notes) listed and tendered
hereby, no endorsements of the tendered Outstanding Notes or separate written
instruments of transfer or exchange are required. In any other case, the
registered Holder (or acting Holder) must either properly endorse the
Outstanding Notes or transmit properly completed bond powers with this Letter of
Transmittal (in either case, executed exactly as the name(s) of the registered
Holder(s) appear(s) on the Outstanding Notes, and, with respect to a participant
in the Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of Outstanding Notes, exactly as the name of the
participant appears on such security position listing), with the signature on
the Outstanding Notes or bond power guaranteed by an Eligible Institution
(except where the Outstanding Notes are tendered for the account of an Eligible
Institution).
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS.
Tendering Holders should indicate, in the applicable box, the name and address
(or account at the Book-Entry Transfer Facility) in which the Exchange Notes or
substitute Outstanding Notes for principal amounts not tendered or not accepted
for exchange are to be issued (or deposited), if different from the names and
addresses or accounts of the person signing this Letter of Transmittal. In the
case of issuance in a different name, the employer identification number or
social security number of the person named must also be indicated and the
tendering Holder should complete the applicable box.
If no instructions are given, the Exchange Notes (and any Outstanding Notes
not tendered or not accepted) will be issued in the name of and sent to the
acting Holder of the Outstanding Notes or deposited at such Holder's account at
the Book-Entry Transfer Facility.
6. TRANSFER TAXES.
The Company shall pay all transfer taxes, if any, applicable to the transfer
and exchange of Outstanding Notes to it or its order pursuant to the Exchange
Offer. If a transfer tax is imposed for any other reason other than the transfer
and exchange of Outstanding Notes to the Company or its order pursuant to the
Exchange Offer, the amount of any such transfer taxes (whether imposed on the
registered Holder or any other person) will be payable by the tendering Holder.
If satisfactory evidence of payment of such taxes or exception therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly to
such tendering Holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the Outstanding Notes listed in this Letter of
Transmittal.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive, in whole or in part, any of
the conditions to the Exchange Offer set forth in the Prospectus.
10
<PAGE>
8. MUTILATED, LOST, STOLEN OR DESTROYED NOTES.
Any holder whose Outstanding Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering as well as requests for
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent at the address and telephone number(s) set forth
above. In addition, all questions relating to the Exchange Offer, as well as
requests for assistance or additional copies of the Prospectus and this Letter
of Transmittal, may be directed to the Company at 1301 Capital of Texas Highway,
Suite C-300, Austin, Texas 78746, Attention: Chief Financial Officer (telephone:
(512) 328-2892).
10. VALIDITY AND FORM.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of Outstanding Notes tendered for exchange
will be determined by the Company in its sole discretion, which determination
shall be final and binding. The Company reserves the absolute right to reject
any and all tenders of any Outstanding Notes not properly tendered and to reject
any Outstanding Notes the Company's acceptance of which might, in the judgment
of the Company or its counsel, be unlawful. The Company also reserves the
absolute right at its sole discretion to waive any defects or irregularities or
conditions of the Exchange Offer as to any particular Outstanding Notes either
before or after the Expiration Date (including the right to waive the
ineligibility of any holder who seeks to tender Outstanding Notes in the
Exchange Offer). The interpretation of the terms and conditions of the Exchange
Offer as to any Outstanding Notes either before or after the Expiration Date
(including the Letter of Transmittal and the instructions thereto) by the
Company shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Outstanding Notes for exchange must
be cured within such period of time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to give
notification of any defects or irregularities with respect to any tender of
Outstanding Notes for exchange, nor shall any of them incur any liability for
failure to give such notification. Tenders of the Outstanding Notes will not be
deemed to have been made until such irregularities have been cured or waived.
Any Outstanding Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering Holders, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering Outstanding Notes is required
to provide the Exchange Agent with such holder's correct TIN on Substitute Form
W-9 below. If such Holder is an individual, the TIN is the Holder's social
security number. The Certificate of Awaiting Taxpayer Identification Number
should be completed if the tendering Holder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future. If the
Exchange Agent is not provided with the correct TIN, the Holder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such Holder with respect to tendered Outstanding Notes may be
subject to backup withholding.
Certain Holders (including, among others, all corporations and certain foreign
individuals and foreign entities) are not subject to these backup withholding
and reporting requirements. In order for such a Holder to qualify as an exempt
recipient, that holder must submit to the Exchange Agent a properly completed
Internal Revenue Service Form W-8, signed under penalties of perjury, attesting
to that Holder's exempt status. Such forms can be obtained from the Exchange
Agent.
If backup withholding applies, the Exchange Agent is required to withhold 31%
of any amounts otherwise payable to the Holder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
11
<PAGE>
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a Holder with
respect to Outstanding Notes tendered for exchange, the Holder is required to
notify the Exchange Agent of his or her correct TIN by completing the form
herein certifying that the TIN provided on Substitute Form W-9 is correct (or
that such Holder is awaiting a TIN) and that (i) such Holder has not been
notified by the Internal Revenue Service that he or she is subject to backup
withholding as a result of failure to report all interest or dividends or (ii)
the Internal Revenue Service has notified such Holder that he or she is no
longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
Each Holder is required to give the Exchange Agent the social security number
or employer identification number of the record Holder(s) of the Outstanding
Notes. If Outstanding Notes are in more than one name or are not in the name of
the actual Holder, consult the instructions on Internal Revenue Service Form W-
9, which may be obtained from the Exchange Agent, for additional guidance on
which number to report.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
If the tendering holder has not been issued a TIN and has applied for a number
or intends to apply for a number in the near future, write "Applied For" in the
space for the TIN on Substitute Form W-9, sign and date the form and the
Certificate of Awaiting Taxpayer Identification Number and return them to the
Exchange Agent. If such certificate is completed and the Exchange Agent is not
provided with the TIN within 60 days, the Exchange Agent will withhold 31% of
all payments made thereafter until a TIN is provided to the Exchange Agent.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE THEREOF
(TOGETHER WITH OUTSTANDING NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL
OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY
THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
12
<PAGE>
Name (if joint names, list first and circle the
name of the person or entity whose number
you enter in Part 1 below. See instructions if
your name has changed.)
---------------------------------------------------
Address
---------------------------------------------------
SUBSTITUTE City, State and Zip Code
---------------------------------------------------
Form W-9 List account number(s) here (optional)
---------------------------------------------------
Department of the Treasury Part 1 - PLEASE PROVIDE YOUR | Social Security
Internal Revenue Service TAXPAYER IDENTIFICATION | Number or TIN
NUMBER ("TIN") IN THE BOX AT |
RIGHT AND CERTIFY BY SIGNING |
AND DATING BELOW |
---------------------------------------------------
Payer's Request for Part 2 - Check the box if you are NOT subject to
Taxpayer backup withholding under the provisions of section
Identification 3408(a)(1)(C) of the Internal Revenue Code because
Number (TIN) (1) you have not been notified that you are subject
to backup withholding as a result of failure to
report all interest of dividends or (2) the
Internal Revenue Service has notified you that you
are no longer subject to backup withholding.
---------------------------------------------------
CERTIFICATION - UNDER THE PENALTIES OF |
PERJURY, I CERTIFY THAT THE INFORMATION | Part 3 -
PROVIDED ON THIS FORM IS TRUE, CORRECT |
AND COMPLETE. |
| Awaiting
| TIN [ ]
SIGNATURE DATE |
------------ ------------- |
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NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
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<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer.
Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-
0000. Employer identification numbers have nine digits separated by only one
hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
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FOR THIS TYPE OF ACCOUNT: GIVE THE FOR THIS TYPE OF ACCOUNT: GIVE THE EMPLOYER
SOCIAL SECURITY IDENTIFICATION
NUMBER OF NUMBER OF
- ---------------------------------------------------------------- ---------------------------------------------------------------
<S> <C> <C> <C>
1. An individual's account. The individual 9. A valid trust, estate, or pension The legal entity (Do
trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself
is not designated in
the account
title.)(5)
2. Two or more individuals (joint The actual owner of the 10. Corporate account The corporation
account) account or, if combined
funds, any one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of the 11. Religious, charitable, or The organization
account or, if joint educational organization account
funds, either person(1)
4. Custodian account of a minor The minor (2) 12. Partnership account held in the name The partnership
(Uniform Gift to Minors Act) of the business
5. Adult and minor (joint account) The adult or, if the minor 13. Association, club, or other The organization
is the only contributor, tax-exempt organization
the minor(1)
6. Account in the name of guardian or The ward, minor, or 14. A broker or registered nominee The broker or nominee
committee for a designated ward, incompetent person(3)
minor, or incompetent person
7. a The usual revocable savings The grantor-trustee(1) 15. Account with the Department of The public entity
trust account (grantor is also The actual owner(1) Agriculture in the name of a public
trustee) entity (such as a State or local
b So-called trust account that government, school, district, or
is not a legal or valid trust prison) that receives agricultural
under State law program payments
8. Sole proprietorship account The owner (4)
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</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circled the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
14
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
PAGE 2
Obtaining A Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(6)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a)
. An exempt charitable remainder trust under section 664, or a non-exempt
trust described in section 4947.
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
. A future commission merchant registered with the Commodity Futures
Trading Commission.
. A middleman known in the investment community as A nominee or listed in
the most recent publication of the American Society of Corporate
Secretaries, Inc. Nominee List.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600
or more and is paid in the course of the payer's trade or business and
you have not provided your correct taxpayer identification number to the
payer.
. Payments of tax-exempt interest (including exempt-in-interest dividends
under section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Mortgage interest paid to the payer.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details see section 6041, 6041A(a), 6042, 6044, 6045, 6049,
6050A, and 6050N and their regulations.
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes and to help verify the accuracy of your return. Payers must be given
the numbers whether or not recipients are required to file tax returns. Payers
must generally withhold 31% of taxable interest, dividend, and certain other
payments to a payee who does not furnish a taxpayer identification number to a
payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
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