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Pursuant to Rule 424b(3)
Registration Numbers: 33-44329, 33-86920, 33-80571
PROSPECTUS
SMT HEALTH SERVICES INC.
190,450 WARRANTS
This Prospectus relates to an aggregate offering of up to 190,450 warrants
(the "Warrants") to purchase common stock, par value $.01 per share (the
"Common Stock"), of SMT Health Services Inc., a Delaware corporation ("SMT" or
the "Company"). Of the Warrants offered hereby, 92,450 of such Warrants are
being offered by the former Limited Partners of Shared MRI-1, L.P. and Shared
MRI-3, L.P., Pennsylvania limited partnerships (the "L.P. Holders"), and
96,000 Warrants (the "Stratton Warrants") may be offered by Daniel Porush and
Jordan Belfort (the "Stratton Transferees") having exercised a unit purchase
option (the "Option") originally held by Stratton Oakmont Inc. ("Stratton")
which was subsequently transferred to the Stratton Transferees; and 2,000
Warrants may be offered by Jeff D. Bergman, Chairman, Chief Executive Officer
and President of the Company. The L.P. Holders, the Stratton Transferees and
Mr. Bergman are referred to herein as the "Selling Stockholders." See "Selling
Stockholders." The Warrants (other than the Stratton Warrants held by the
Stratton Transferees) are redeemable by the Company in certain events. Each
Warrant, entitles the holder thereof to purchase 1.1235 shares of Common Stock
for $7.00, subject to adjustment in certain events, at any time until 5:00
p.m., Eastern Time, on March 4, 1997, unless previously redeemed by the
Company.
The Warrants and the Common Stock are traded on the Nasdaq National Market
under the symbols SHEDW and SHED, respectively. The closing sale price, as
quoted in the National Market for the Warrants was $2.5625 per Warrant on
January 17, 1997, and for the Common Stock was $8.5625 per share on January
17, 1997.
The Company will not receive any of the proceeds from the sale of the
Warrants by the Selling Stockholders. Expenses of this offering, estimated at
$45,000, are payable by the Company. See "Plan of Distribution."
Reference is hereby made to and prospective investors should consider the
concurrent offering of the Company's Common Stock through which substantially
all of the Common Stock beneficially owned by the Company's directors and
executive officers is registered for sale. Such offering is being made through
a separate prospectus which is available from the Company on request. See "The
Company."
The Warrants offered hereby are speculative and involve a substantial degree
of risk. Prospective investors should carefully consider the factors set forth
under "Risk Factors."
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THIS OFFERING TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR ANY
OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO PURCHASE ANY WARRANTS OTHER THAN THOSE TO WHICH IT
RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO PURCHASE BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH
PERSON TO MAKE SUCH AN OFFER OR SOLICITATION. 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
TIME SUBSEQUENT TO THE DATE HEREOF.
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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.
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The date of this Prospectus is January 27, 1997.
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AVAILABLE INFORMATION
SMT is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information can be
inspected and copied at the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511, and Seven World Trade Center, 13th Floor, New
York, New York 10048. Copies of the reports and other information can be
obtained from the Public Reference Section of the Commission, Washington, D.C.
20549, at prescribed rates.
SMT has filed with the Commission a Registration Statement under the
Securities Act of 1933, as amended, with respect to the Securities offered by
this Prospectus. As permitted by the rules and regulations of the Commission,
this Prospectus does not contain all of the information set forth in the
Registration Statement. For further information about SMT and the Securities
offered hereby, reference is made to the Registration Statement and to the
financial statements, exhibits and schedules filed therewith. The statements
contained in this Prospectus about the contents of any contract or other
document referred to are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. Copies of each such document may be obtained
from the Commission at its principal office in Washington, D.C., upon payment
of the charges prescribed by the Commission. Electronic registration
statements made through the Electronic Data Gathering, Analysis, and Retrieval
system are publically available through the Commission's Web site
(http://www.sec.gov).
INCORPORATION BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act are incorporated herein by reference: (a) Annual Report on
Form 10-K for the fiscal year ended December 31, 1995, as amended by Amendment
No. 1 thereto; (b) Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1996, as amended by Amendment No. 1 thereto; (c) Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30, 1996; (d) Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30, 1996; (e) Proxy Statement
dated March 28, 1996; and (f) the description of the Company's Common Stock
and Warrants contained in the registration statement on Form 8-A.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of this
offering shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the respective date of filing of each such
document. 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 this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the documents incorporated by reference herein, other than certain exhibits to
such documents. Requests for such documents should be directed to David A.
Zynn, Chief Financial Officer, SMT Health Services Inc., 10521 Perry Highway,
Wexford, Pennsylvania 15090. The Company's telephone number is (412) 933-3300.
The Company's Form 10-K, Form 10-Qs and press releases are available at the
Company's Web site (http://www.smthealth.com).
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RISK FACTORS
The purchase of the Securities being offered hereby involves a high degree
of risk and substantial dilution. Prospective investors should carefully
consider, among other matters, the following risks and other factors before
making a decision to purchase the Securities.
SIGNIFICANT LEVERAGE AND REPAYMENT OBLIGATIONS
The Company's business is highly capital intensive. The Company has financed
the acquisition of all of its Mobile Magnetic Resonance Imaging ("MRI")
equipment through capital leases and loans and as a result is highly
leveraged. At December 31, 1995, the Company's total liabilities were
approximately $17.9 million and its capital was approximately $5.4 million. At
December 31, 1996, the Company's total liabilities were approximately $28.3
million and its capital was approximately $11.4 million. The Company is
therefore subject to the risks associated with such substantial leverage,
including the risk that cash flow may not be adequate to make required
payments on indebtedness. A decrease in equipment utilization arising from,
among other things, cancellation or nonrenewal of contracts, equipment
malfunctions, the inability to effect prompt and timely repairs to equipment
or a reduction in demand for the Company's equipment or services could
materially and adversely affect the Company's ability to service its
indebtedness.
The Company's monthly payments on its capital leases and other long-term
debt were approximately $680,000 as of December 31, 1996. Total payments under
the Company's capital lease obligations and other long-term debt may equal or
exceed minimum revenues receivable under the Company's service contracts if
such contracts are not renewed by healthcare providers, if receivables are not
collected by the Company on a timely basis or if the number of scans or other
services performed fails to meet expected levels. In such case, the Company
would be unable to meet its debt service obligations, and would be in default
under its various loan and lease agreements.
As of December 31, 1995, the Company's current assets were approximately
$5.6 million and its current liabilities were approximately $5.2 million,
resulting in a working capital surplus of approximately $400,000. At December
31, 1996, the Company's current assets were approximately $7.7 million and its
current liabilities were approximately $7.4 million, resulting in a working
capital surplus of $300,000. Of such liabilities, approximately $4.4 million
and $6.3 million represented the current portion of long-term debt and capital
lease obligations as of December 31, 1995 and 1996, respectively. There can be
no assurance that the Company's revenues will continue to be sufficient to
satisfy the increased lease payments or that such favorable terms will be
available in the future.
EQUIPMENT MAINTENANCE, SERVICE AND DAMAGE
All of the diagnostic imaging equipment utilized by the Company is
technologically sophisticated and complex, requires regular service and is
subject to unpredictable malfunctions and breakdowns. The Company contracts
with, and relies upon, the equipment manufacturer to provide maintenance
services on a prompt and timely basis. Because diagnostic imaging equipment is
technologically sophisticated, it is uncertain whether and how quickly others
could provide maintenance services if the equipment manufacturers were unable
or unwilling to do so. Consequently, the Company's business might be adversely
affected if the manufacturers stopped providing maintenance services.
Substantially all of the Company's tangible assets consist of diagnostic
imaging equipment, including primarily specially designed mobile MRI units.
Generally, a mobile unit is moved several times a week from one location to
another, and there is always a risk that a traffic accident or automotive
breakdown will occur while the equipment is in transit. Although the Company's
equipment is insured against the risks of damage in an accident, and the
Company is insured for business interruptions resulting from any damage to
such equipment for the period required to repair or replace the equipment, it
may not be possible to repair damaged equipment
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so that it will achieve its original level of performance. Substitute or
replacement equipment may be unavailable and the quality of the potential
replacement equipment unknown. In addition, there is no assurance that the
Company would receive sufficient insurance proceeds following any damage to
its equipment to fully compensate it for the losses resulting from such damage
or receive business interruption insurance proceeds to compensate for lost
business.
REIMBURSEMENT OF HEALTHCARE COSTS
The Company receives payment directly from healthcare providers, rather than
from private insurers, other third party payors or governmental entities, for
its mobile MRI units. The Company's mobile service contracts with its
customers provide that the Company must be paid within 30 days of providing
its services and are not conditioned upon the receipt of payment by the
healthcare provider. Under current reimbursement regulations, the Company is
unable to bill the insurer or the patient directly for services provided for
hospital inpatients or outpatients. Payment to healthcare providers by third
party payors for the Company's diagnostic services depends substantially upon
such payors' reimbursement policies. Consequently, those policies have a
direct effect on healthcare providers' ability to pay for the Company's
services and the Company's level of charges. Mounting concerns about rising
healthcare costs may cause more restrictive reimbursement policies to be
implemented in the future. Restrictions on reimbursements to healthcare
providers may affect such providers' ability to pay for the services offered
by the Company and could indirectly adversely affect the Company's financial
performance.
OTHER REIMBURSEMENT MATTERS
Many insurance companies, employers and other payors are increasing their
use of managed care plans such as health maintenance organizations ("HMOs")
and preferred provider organizations ("PPOs") as a means of controlling their
healthcare costs. In addition to contracting with selected healthcare
providers to provide healthcare services, often at a discount or on a
capitation basis, such plans engage in strict utilization review activities to
more closely control the utilization of services by their subscribers. There
can be no assurance that the increased use of managed care plans in the
Company's service areas will not affect its level of charges or the demand for
its services.
Numerous changes have been made in governmental and commercial insurance
programs in recent years in an effort to reduce the extent to which these
third-party payors absorb increases in medical costs. Some third-party payors
have also experienced difficulties in meeting their payment obligations
whether on a timely basis or otherwise. In addition, a number of bills
proposing to regulate, control or alter the methods of financing and
delivering healthcare, including proposals for a national health insurance
program, have been discussed and introduced in Congress and various state
legislatures. Further, Congress has proposed Medicare/Medicaid Reform which
would limit increases in governmental healthcare expenditures. The effect of
any of these proposals or changes by existing insurers in their reimbursement
methodologies on the healthcare industry and the Company cannot be determined
at this time.
AVAILABILITY OF EQUIPMENT FINANCING; TIMELY DELIVERY OF EQUIPMENT
Future acquisitions of equipment will be made pursuant to capital and
operating leases or purchase financing. The Company recently has begun to
utilize working capital of $200,000 to $300,000 per unit to fund initial down
payments on MRI equipment purchases, financing the balance of $1.5 million to
$1.6 million with leases or loans, depending upon the type, features and
options of the diagnostic imaging equipment leased. The Company's ability to
expand is, therefore, tied to the availability of lease or purchase financing.
Although the Company has in the past been able to procure lease and purchase
financing, there can be no assurance that lenders or equipment leasing
companies will continue to enter into leases or purchase financing with the
Company.
The timely delivery of mobile MRI equipment is outside the control of the
Company and significant delays in delivery may materially and adversely affect
the Company. Such delays could arise from, among other things, manufacturer
and delivery delays.
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GOVERNMENT REGULATION
General. The provision of diagnostic imaging services and billing for such
services is subject to a number of federal, state and local laws, regulations
and rules, some of which are very complex. Although the Company believes that
it is currently in compliance with applicable laws, regulations and rules,
some such laws are broadly written and subject to little or no interpretation
by courts or administrative authorities. Hence, there can be no assurance that
a third party or governmental agency will not contend that certain aspects of
the Company's operations or procedures are not in compliance with such laws,
regulations or rules or that state agencies or courts would interpret such
laws, regulations and rules in the Company's favor. The sanctions for failure
to comply with such laws, regulations or rules could be denial of the right to
conduct business, significant fines and/or criminal penalties. The Federal
Health Insurance Portability and Accountability Act, enacted in August 1996,
expanded the civil and criminal sanctions for violations of such laws and
provided for increased governmental and private enforcement programs.
Additionally, an increase in the complexity or substantive requirements of
such laws, regulations or rules could adversely affect the Company's business.
Certificate of Need. Several states in which the Company operates have
certificate of need ("CON") laws and regulations that control and regulate the
establishment of healthcare facilities and services and the acquisition and
operation by hospitals and other providers of major equipment such as MRI
units and other diagnostic imaging equipment. In several states in which the
Company operates, a hospital or the Company may need a CON before the Company
can provide its diagnostic imaging services. CON regulations could inhibit the
expansion of the Company's business. Pennsylvania's CON law expired in
December 1996 and a new CON law was not enacted. It is not known whether the
Pennsylvania legislature will adopt a new CON law.
Practice of Medicine. The establishment, marketing and operation of the
diagnostic imaging units are subject to laws prohibiting the practice of
medicine by non-physicians. The Company's employees provide only the technical
services relating to the diagnostic procedures (under the supervision of
licensed physicians) and the related non-medical administrative support
services. Professional medical services, such as the reading of the diagnostic
imaging studies and related diagnosis, are separately provided by licensed
physicians. The Company does not employ any physicians to provide medical
services. There can be no assurance, however, that state authorities or courts
will not determine that the Company's services and/or relationships with
providers constitute the unauthorized practice of medicine by the Company.
Fraud and Abuse Laws. The Social Security Act and certain provisions of
state law provide civil and criminal penalties for persons who knowingly and
willfully solicit, pay, offer or receive any remuneration, directly or
indirectly, as an inducement to make a referral of a patient for services or
items for which payment may be made under the Medicare or Medicaid programs.
Often termed "fraud and abuse" or "anti-kickback" laws, the provisions have
been broadly interpreted by the courts.
The Office of Inspector General of the Department of Health and Human
Services ("HHS") has issued regulations specifying certain business
arrangements and payment practices involving providers or other entities, such
as the Company, which will not be considered prohibited activities. Commonly
termed "safe harbor regulations," the regulations set forth certain standards
which, if satisfied, will ensure that the arrangement will not be subject to
criminal prosecution or civil sanctions under the fraud and abuse laws.
Failure to satisfy the safe harbors in and of itself does not render an
arrangement illegal. The Company believes it is in compliance with the safe
harbor regulations applicable to its current operations.
One principal focus of the fraud and abuse laws has been on arrangements in
which profit distributions are made by a partnership or other business venture
for health-related items or services to investors who make or are otherwise in
a position to influence referrals of Medicare or Medicaid patients to the
venture. Where such arrangements exist, a question is raised as to whether the
profit distributions are illegal payments in exchange for referrals. Certain
safe harbors set forth criteria which, if met, will insure that investors in
business ventures for health-related items or services will not be subject to
scrutiny under the fraud and abuse laws.
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One safe harbor protects profit distributions to investors made by publicly
traded companies with tangible assets of more than $50 million. At present,
the Company does not satisfy the asset threshold for protection under this
safe harbor.
Another safe harbor covers investment interests in small entities. The
conditions for compliance with this safe harbor include, among other things,
requirements that no more than 40% of the investment interests of each class
of investments in the entity may be held by persons who are in a position to
make or influence referrals (including hospitals and physicians), furnish
items or services to the entity or otherwise generate business for the entity,
so-called "tainted investors," and that no more than 40% of the entity's gross
revenues may come from referrals, items or services furnished or business
otherwise generated by "tainted investors." Unless a large percentage of the
Company's Common Stock or Warrants are held by "tainted investors," it would
appear that investments in the Company will fall within the safe harbor for
investment interests.
None of the Company's mobile MRI activities are carried out through
partnerships or other ventures with hospitals, physicians or other third
parties. There can be no assurance that enforcement agencies or courts will
determine that any existing arrangements comply with all applicable laws and
regulations.
Other Patient Referral Restrictions. Pennsylvania, as well as other states
in which the Company operates, prohibits the referral of Medicaid patients for
services or items by a provider in which the referring physician has an
ownership interest. Certain states do not restrict patient referrals but do
require the disclosure to a patient by the referring physician of a financial
interest in a facility or vendor to which the patient is being referred for
services or items.
Stark II. The Omnibus Budget Reconciliation Act of 1993 enacted new federal
anti-referral legislation, more commonly known as "Stark II" after its prime
sponsor, Rep. Fortney "Pete" Stark (D. Calif.). Effective January 1, 1995,
Stark II bans referrals by physicians of Medicare and Medicaid patients to
entities for certain designated health services, including MRI services, if a
physician or immediate family member has a prohibited financial relationship
with the entity providing the service. A financial relationship is generally
defined as an ownership or investment interest in or compensation arrangement
with the entity, subject to certain exceptions. Penalties include nonpayment
for services rendered pursuant to a prohibited referral, civil money penalties
and fines and possible exclusion from the Medicare and Medicaid programs. The
Company believes it is currently in compliance with the requirements of Stark
II. However, there can be no assurance that enforcement agencies or courts
will determine that existing arrangements comply with all applicable laws and
regulations.
NEED FOR ADDITIONAL FINANCING
The Company expects that its current cash balances, future cash flows
anticipated to be generated from operations, proceeds from the anticipated
warrant exercises and currently available equipment financing arrangements
will be sufficient to fund the Company's operations for the foreseeable
future. This estimate is based on certain assumptions, including the
maintenance of expenses and cash flows from operations at historical levels.
There can be no assurance that these assumptions will be realized or that a
sufficient level of equipment utilization will be attained to fund operations
after the stated period. The failure to achieve these assumptions may decrease
the period of time for which the Company estimates that these funds will be
sufficient.
RELIANCE ON KEY PERSONNEL
The Company's success depends in large part upon a number of key management
personnel and technical employees. The loss of the services of one or more of
its management personnel, in particular Jeff D. Bergman, Daniel Dickman, David
Spindler and David Zynn, could have a material adverse effect on the Company.
The Company has key man life insurance covering Messrs. Bergman, Dickman,
Spindler and Zynn.
The ability of the Company to attract and retain qualified technicians to
operate the diagnostic imaging equipment is crucial to the operations of the
Company. Such technicians are in short supply and are typically
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attracted to nonmobile facilities which provide predictable locations and work
schedules. In contrast, mobile facilities provide very unpredictable work
schedules and constantly changing locations which may not be attractive to a
large portion of technicians. Therefore, the Company may experience some
difficulty finding qualified technicians for its mobile MRI units. The Company
believes its future success will depend in part on its ability to attract and
retain highly skilled employees. To date, the Company has been able to attract
sufficient technicians, although there can be no assurance that this will
continue in the future.
TECHNOLOGICAL CHANGE AND OBSOLESCENCE
The Company's services require the use of state-of-the-art medical
diagnostic equipment that has been characterized by rapid technological
advances. Although the Company believes that the equipment it provides can be
upgraded to maintain its state-of-the-art character, the development of new
technologies or refinements of existing ones might make the Company's existing
equipment technologically or economically obsolete, or cause a reduction in
the value of, or reduce the need for, the Company's equipment. Diagnostic
imaging equipment is currently manufactured by numerous companies. Competition
among manufacturers for a greater share of the diagnostic imaging equipment
market may have the effect of generating greater technological advances in the
capacity of this new equipment. Consequently, the obsolescence of the
Company's equipment may be accelerated. Although the Company is aware of no
substantial technological change, should such change occur there can be no
assurance that the Company will be able to acquire the new or improved
equipment which may be required to service its customers.
OTHER REQUIREMENTS CONCERNING LICENSING, PERMITS AND APPROVALS
Most states do not currently license MRI providers such as the Company.
Hospitals with which the Company has contracted are subject to a variety of
regulations and standards of state licensing and other authorities and
accrediting bodies such as the Joint Commission for the Accreditation of
Healthcare Organizations ("JCAHO"). As an outside vendor, the Company may be
required to comply with such regulations and standards to enable the hospitals
with which it has contracted to maintain their permits, approvals and
accreditations.
During January 1997, the Company received Accreditation with Commendation
from JCAHO.
There can be no assurance that future changes in the laws and regulations
relating to the delivery of healthcare items and services may require the
Company or any venture involving the Company to obtain and maintain certain
governmental approvals for continued operations. It is not possible to predict
the effect of such changes in the law on the Company at this time.
For the most part, the Company's employees need not have special licenses.
Drivers of trucks must have certain special driving licenses. MRI technicians
are not required to have licenses in any of the states in which the Company
does business. However, many states are holding discussions to require such
licensing and to require continuing education. The Company believes that any
such licensing requirement would not have any adverse impact on the Company.
COMPETITION
The healthcare industry in general, and the market for diagnostic imaging
services in particular, is highly competitive. Certain competitors operate
fixed-site centers and mobile units in the Company's current service area.
Some competitors may have financial resources substantially greater than those
of the Company which may give them advantages in negotiating equipment
acquisitions and responding quickly to new demand or new technology. In
addition, hospitals, private clinics and radiology practices in the Company's
service area have in-house equipment which competes with the Company. MRI also
competes with less expensive diagnostic imaging devices and procedures which
may provide similar information to the physician. Existing healthcare
providers who are currently customers of the Company may purchase diagnostic
imaging equipment if the cost of such equipment decreases or if their volume
of patients increases to the point where it becomes cost-effective to own and
operate their own equipment.
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INSURANCE
The Company carries workers' compensation insurance, comprehensive and
general liability insurance, business interruption, fire and allied perils
coverage in amounts deemed adequate by the Company. The Company requires that
its healthcare customers maintain professional liability insurance and the
Company maintains its own professional liability policy. There can be no
assurance that claims will not exceed the amounts of insurance coverage, that
the cost for such coverage will not increase to the extent that the Company
will be forced to self-insure a substantial portion of this risk, or that such
coverage will not be reduced or become unavailable.
CONTROL OF COMPANY
The Company's officers and directors as a group beneficially own
approximately 27.8% of the Company's Common Stock and are able to exert
considerable influence over the affairs and policies of the Company.
DIVIDENDS
The Company has not paid, and does not anticipate paying in the foreseeable
future, cash dividends on its Common Stock.
On July 10, 1995, the Company paid a 5% stock dividend to all holders of
record of its Common Stock as of June 30, 1995.
On January 14, 1997, the Company paid a 7% stock dividend to all holders of
record of its Common Stock as of January 10, 1997.
CURRENT PROSPECTUS AND STATE REGISTRATION REQUIRED TO EXERCISE WARRANTS;
POSSIBLE REDEMPTION OF WARRANTS
Holders of the Warrants will be able to exercise them only if a current
prospectus relating to the Common Stock underlying the Warrants is then in
effect and only if such Common Stock is qualified for sale or exempt from
qualification under the applicable securities laws of the states in which the
various holders of Warrants reside. Although the Company will use its best
efforts to maintain the effectiveness of a current prospectus covering the
Common Stock underlying the Warrants, there can be no assurance that the
Company will be able to do so. The Company will be unable to issue Common
Stock to those persons desiring to exercise their warrants if a current
prospectus covering the Common Stock issuable upon the exercise of the
Warrants is not kept effective or if such Common Stock is not qualified or
exempt from qualification in the states in which the holders of the Warrants
reside. In November 1995, the Company's securities began to trade on the
Nasdaq National Market, and accordingly there may be exemptions available in
substantially all of the states. The Warrants (other than the 107,856 Warrants
held by the Stratton Transferees) are subject to redemption by the Company at
any time prior to their expiration date of March 4, 1997, at $.05 per warrant
on 30 days' prior written notice if the closing bid price of the Common Stock
shall have averaged in excess of $8.91 per share (subject to adjustment) for
20 consecutive business days ending within 5 days of the date on which notice
of redemption is given. If the Warrants are redeemed, the warrant holders will
lose their right to exercise the Warrants except during such 30-day redemption
period. Redemption of the Warrants could force the holders to exercise the
Warrants at a time when it may be disadvantageous for the holders to do so or
to sell the Warrants at the then market value of the Warrants at the time of
redemption.
SHARES ELIGIBLE FOR FUTURE SALE
As of the date hereof, there were 3,847,328 shares of Common Stock issued
and outstanding, excluding 1,733,881 shares issuable by the Company upon
exercise of the Warrants, (which includes 107,856 shares of Common Stock
issuable to certain Stratton Transferees upon exercise of the Stratton
Warrants) and 750,012 shares issuable to certain officers and directors upon
exercise of options and rights held by them. Of such
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3,847,328 shares of Common Stock, 1,550,430 shares of Common Stock were sold
in the IPO, 1,224,574 shares were sold by certain selling stockholders
pursuant to registration statements under the Securities Act of 1933, as
amended (the "Securities Act"), 497,775 shares were issued pursuant to the
exercise of options under registration statements under the Securities Act and
75,501 shares were issued pursuant to the exercise of warrants under
registration statements under the Securities Act. The remaining 499,048 shares
of Common Stock are "restricted securities" (as that term is defined under
Rule 144 promulgated under the Securities Act) held by two (2) persons. The
Company believes that all but 85,600 of such shares have been held for at
least two years and may be sold in accordance with Rule 144. The sale, or
availability for sale, of substantial amounts of Common Stock in the public
market, or any additional offering of Common Stock, could adversely affect the
prevailing market price of the Common Stock and could impair the Company's
ability to raise additional capital through the sale of its equity securities.
SALE OF DISCONTINUED OPERATIONS
As previously disclosed in the Company's public filings, the Company
implemented a plan which it believed would lead to the divestiture of its
outpatient healthcare centers during 1994. On October 31, 1994, the Company
sold substantially all of the assets of its radiation therapy center located
in Auburn, Washington, for a total sale price of approximately $1.3 million.
The sale of the center did not result in a gain or loss and resulted in cash
proceeds to the Company of $400,000. The Company remains obligated on
approximately $300,000 of capital leases as of December 31, 1996. The buyer
has agreed to use its best efforts to have the Company released from these
leases and has secured its obligations to the Company to perform these leases
through a pledge of certain assets in favor of the Company.
On June 30, 1995, the Company completed the sale of substantially all of the
assets of its remaining outpatient healthcare center, Airport Regional Imaging
Center, located in Coraopolis, Pennsylvania, as well as its sixty percent
ownership and general partner interests in all of its cardiac care centers to
Cardiac Fitness Inc., or an affiliate thereof, for a total sale price of
approximately $600,000, including cash and net trade receivables of
approximately $500,000 and a note of $100,000. Although the buyer assumed all
future operating liabilities of the healthcare center, the Company remains
obligated on approximately $600,000 of capital leases as of December 31, 1996.
The buyer has agreed to use its best efforts to have the Company released from
these leases and has secured its obligations to the Company to perform these
leases through a pledge of stock and certain assets in favor of the Company.
The sale of the healthcare center, which had previously been treated as a
discontinued operation, did not result in a gain or loss. The sale of the
sixty-percent ownership and general partnership interests in the cardiac care
centers which were treated as continuing operations, resulted in an
approximate $50,000 pre-tax gain which was recorded in the second quarter of
1995.
---------------------
Although it will have no legal obligation to do so, any underwriter
participating in this offering may, from time to time, act as a market maker
or otherwise effect transactions in the Company's securities. Such
underwriter, or other underwriters participating in the offering, if any, may
be dominating influences in the market for the Warrants. The price and
liquidity of the Warrants may be affected by the degree, if any, of such
underwriter participation in the market. Such activities, if commenced, may be
discontinued at any time or from time to time and may require the Company to
establish new market makers.
9
<PAGE>
THE COMPANY
The Company is primarily engaged in the business of operating mobile MRI
units. MRI involves the use of high strength magnetic fields and radio waves
to produce cross-sectional images of the anatomy. MRI facilitates the
diagnosis in the early stages of disease without the need for exploratory
surgery or other invasive procedures. MRI has become a preferred diagnostic
tool of the medical profession because it is non-invasive and its images are
generally better defined and more precise than those produced by other
diagnostic imaging tests, without the use of harmful ionizing radiation, such
as that produced by computed axial tomography ("CAT") scans and standard x-
rays.
The Company provides mobile MRI services to healthcare providers, which
consist primarily of small and medium size hospitals. Including a new MRI unit
acquired in February 1996, the purchase of two new units from another mobile
provider in March 1996, and the addition of four new units late in the third
quarter or early in the fourth quarter of 1996, the Company currently operates
eighteen mobile MRI units which service healthcare providers located in
Pennsylvania, North Carolina, West Virginia, Ohio, Virginia, South Carolina
and Kentucky. The MRI equipment is transported in specially designed vans that
are driven to the healthcare provider's facility where the imaging occurs. The
healthcare provider pays the Company on a per scan basis for the use of the
equipment. The healthcare providers utilizing the Company's services have a
need for MRI services, but do not own their own equipment due to insufficient
patient volume to justify a full-time fixed MRI unit, the high cost of owning
and operating such equipment, the lack of expertise in this highly specialized
field or due to regulatory constraints.
The Company was formed in November 1991 to merge with Shared Medical
Technologies, Inc., a Pennsylvania corporation incorporated in 1987 ("Old
SMT") and Shared MRI-4, Inc., a Pennsylvania corporation ("MRI-4"), and to
acquire substantially all of the assets and assume substantially all of the
liabilities of Shared MRI-1, L.P., a Pennsylvania limited partnership ("MRI-
1") and Shared MRI-3, L.P., a Pennsylvania limited partnership ("MRI-3") (Old
SMT, MRI-4, MRI-1 and MRI-3 are collectively referred to as the "SMT Group"),
each of which leased one, and in the case of Old SMT, two, mobile MRI units
(the "Consolidation"). As of November 1991, all of the four entities
comprising the SMT Group were owned or controlled by Jeff D. Bergman and
Daniel Dickman, who are holders of 554,440 shares, or approximately 14%, of
the Company's outstanding Common Stock. Messrs. Bergman and Dickman in the
aggregate are beneficial owners of an additional 400,287 shares through rights
to acquire the Company's Common Stock. The assets of MRI-1 and MRI-3 were
acquired by the Company in exchange for an aggregate of $1,300,000 in notes
(the "LP Notes"), the assumption of approximately $2,600,000 of liabilities of
the partnerships (primarily relating to the capital leases for the MRI
equipment) and 99,950 Warrants. In March 1992, the LP Notes were redeemed
utilizing a portion of the net proceeds of the IPO.
In March 1992, the Company effectuated an underwritten initial public
offering (the "IPO") of Units, each Unit consisting of one share of Common
Stock and one Warrant to purchase a share of Common Stock for $7.00
(subsequently adjusted to purchase 1.1235 shares of Common Stock for $7.00 as
a result of a 5% and 7% stock dividend). The Units traded on Nasdaq from March
4, 1992, until October 15, 1992. On October 16, 1992 (the "Separation Date"),
the Common Stock and Warrants began to trade separately on Nasdaq under the
symbols "SHED" and "SHEDW," respectively, and the Units were delisted from
trading on Nasdaq.
During November 1995, the Company's Common Stock and warrants began to trade
on the Nasdaq National Market under the symbols SHED and SHEDW, respectively.
The Company's executive offices are located at 10521 Perry Highway, Wexford,
Pennsylvania 15090, and its telephone number is (412) 933-3300. Unless the
context requires otherwise, with respect to events occurring prior to the
Consolidation, the "Company" may refer to one or more of the entities
comprising the SMT Group.
10
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Warrants offered hereby by the Selling Stockholders.
SELLING STOCKHOLDERS
The 107,856 Warrants offered by certain Stratton Transferees are available
as a result of the exercise of the Option which was issued in the IPO to
Stratton as underwriter of the IPO. The Option was exercisable for 120,000
Units, each Unit consisting of 1.05 shares of Common Stock and one Warrant to
purchase 1.05 shares of Common Stock. The Option was exercisable until March
4, 1997 and entitled Stratton to purchase each unit at an exercise price equal
to $5.94, subject to adjustment in certain events. Stratton subsequently
transferred the Option to the Stratton Transferees, who exercised the Option
resulting in net proceeds to the Company of approximately $719,000. Certain of
the Stratton Transferees are Selling Stockholders offering 107,856 Warrants
offered hereby. The 2,247 Warrants that may be re-offered hereby by Mr.
Bergman were acquired in open market transactions.
For a description of the manner in which the Warrants offered by the L.P.
Holders were acquired by the Selling Stockholders, see "The Company."
See the disclosure following this table for information regarding any
position, office or material relationship that each of the Selling
Stockholders has had with the Company during the past three years.
11
<PAGE>
The following table sets forth information with respect to the beneficial
ownership of Warrants by the Selling Stockholders as of the close of business
on January 17, 1997, all of which may be offered from time to time hereby. As
of the date of this Prospectus, assuming the sale by each of the Selling
Stockholders of all of the Warrants listed below, the Company believes that
none of such Selling Stockholders would beneficially own any Warrants.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
--------------------------------------
NAME OF SELLING STOCKHOLDER NUMBER OF WARRANTS PERCENTAGE OF CLASS
--------------------------- ------------------ -------------------
<S> <C> <C>
Jeff D. Bergman 2,000 *
c/o SMT Health Services Inc.
10521 Perry Highway
Wexford, Pennsylvania 15090
Daniel Porush 30,000 1.8
100 Rodeo Drive
Syosset, New York 11791
Jordan Belfort 66,000 4.0
5 Pin Oak Court
Old Brookville, New York 11545
L.P. Holders:
Joseph A. Hardy, Jr. 12,000 *
111 Oakwood Road
McMurray, Pennsylvania 15317
James M. Wills, MD 6,000 *
211 Fairview Avenue
Beckley, West Virginia 25801
Dr. Henry Higman 3,000 *
176 Topsfield Road
Pittsburgh, Pennsylvania 15241
Frank A. Getting 3,000 *
U.S. Cleaning Custodian FBO IRA
R.D. #1 Box 564
Boyerstown, Pennsylvania 19512
Dominic W. Dileo, M.D. 3,000 *
Spring Creek Cardio-Medical Assoc.
Inc.
Profit Sharing Plan & Trust
Agreement
6 Spring Creek Lane
Uniontown, Pennsylvania 15401
Richard M. Thompson, M.D. 3,000 *
22 Tanager Place
Beckley, West Virginia 25801
Jane B. Lewis 3,000 *
1320 Governor's Drive
Corsicana, Texas 75110
Waldo Porter 3,000 *
1150 Fox Chapel Road
Pittsburgh, Pennsylvania 15238
George A. Hackett 3,000 *
1585 Oakleaf Lane
Pittsburgh, Pennsylvania 15237
</TABLE>
- --------
* Less than 1%.
12
<PAGE>
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
--------------------------------------
NAME OF SELLING STOCKHOLDER NUMBER OF WARRANTS PERCENTAGE OF CLASS
--------------------------- ------------------ -------------------
<S> <C> <C>
Mrs. H.F. Contractor 2,350 *
2301 Colony Court
Pittsburgh, Pennsylvania 15237
Kenneth J. Yablonski 2,350 *
28 Woodside Drive
Washington, Pennsylvania 15301
Jay B. Kovan/Juliet B. Sutherlan 2,350 *
488 Ridgewood Road
Maplewood, New Jersey 07040
Gordon E. Banks, M.D. 1,500 *
Falk Clinic Neurology
3601 Fifth Avenue
Pittsburgh, Pennsylvania 15241
Bujaky, Koeler, Libson & Assoc. 1,500 *
206 Siebert Road
Pittsburgh, Pennsylvania 15237
Ralph Arnold 1,500 *
9147 Lancelot Drive
Pittsburgh, Pennsylvania 15237
Helen E. Simpson 1,500 *
3530 Simen Avenue
Pittsburgh, Pennsylvania 15212
Raymond Lindsay Lilly Jr., M.D. 1,500 *
Route 66, Box 99-C
Daniels, West Virginia 25832
Robert S. Koehler 1,500 *
412 Santa Rosa Lane
Pittsburgh, Pennsylvania 15237
Geoffrey G. Wright 1,500 *
138 Vernon Drive
Pittsburgh, Pennsylvania 15228
Frank P. Wolber 1,500 *
4517 W. Brightview Avenue
Pittsburgh, Pennsylvania 15227
D. Leet Shields 1,500 *
436 Beaver Road
Pittsburgh, Pennsylvania 15143
Robert C. Farmer, M.D. 1,175 *
P.O. Box 882
Connellsville, Pennsylvania
15425
Peter Gabriel, M.D. 1,175 *
8 Adams Lane
Uniontown, Pennsylvania 15401
</TABLE>
- --------
* Less than 1%.
13
<PAGE>
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
--------------------------------------
NAME OF SELLING STOCKHOLDER NUMBER OF WARRANTS PERCENTAGE OF CLASS
--------------------------- ------------------ -------------------
<S> <C> <C>
Richard A. Cook 1,175 *
132 Southwood Drive
Uniontown, Pennsylvania 15401
Oscar M. Reinmuth, M.D. 1,175 *
6104 Kentucky Avenue
Pittsburgh, Pennsylvania 15206
Ceasar N. Noche, M.D. 1,175 *
136 Belmont Circle
Uniontown, Pennsylvania 15401
Ernst Braun, M.D. 1,175 *
30 Mont View Street
Uniontown, Pennsylvania 15401
Thomas M. Persico, D.M.D. 1,175 *
6th Street & Donner Avenue
Monessen, Pennsylvania 15062
Thomas M. Persico, D.M.D. (Trust) 1,175 *
Guarantee & Trust Co.
TTEE FBO Thomas M. Persico
c/o Parker/Hunter
600 Grant Street
Pittsburgh, Pennsylvania 15219
Robert R. Buchman, M.D. 1,175 *
2878 Fernwald Road
Pittsburgh, Pennsylvania 15217
Mallard T. George D.D.S. 1,175 *
80 Belmont Circle
Uniontown, Pennsylvania 15401
Walter E. Smith, M.D. 1,175 *
Suite 200, 6393 Penn Avenue
Pittsburgh, Pennsylvania 15206
Charles P. Yezbak Jr., D.D.S. 1,175 *
56 Stockton Avenue
Uniontown, Pennsylvania 15401
Ms. Paula Ducoeur 1,175 *
901 5th Street
Charleroi, Pennsylvania 15022
Peter P. Tanzer, M.D. 1,175 *
1155 Shady Avenue
Pittsburgh, Pennsylvania 15232
K.Y. Ou/C.D. Young (MD's) 1,175 *
7405 Irvine Street
Pittsburgh, Pennsylvania 15218
All Other L.P. Holders (18 persons) 15,275 *
</TABLE>
- --------
*Less than 1%.
14
<PAGE>
The following sets forth information regarding any position, office or
material relationship that each of the Selling Stockholders has had with the
Company during the past three years.
Mr. Bergman (Chairman, Chief Executive Officer and President of the Company)
owns a one-third equity interest in a partnership, Shared Mobile Enterprises
("SME"), which leased and subleased to the Company certain tractors for the
transportation of mobile MRI units. Mr. Dickman (Chief Operating Officer and a
director of the Company) also owns a one-third interest in SME. SME received a
lease payment of approximately $2,500 per month plus reimbursement of expenses
from the Company for each tractor. At December 31, 1993, 1994 and as of June
30, 1995, the Company was leasing ten, ten and eleven tractors, respectively,
from SME. During 1993, 1994 and 1995, lease payments to SME were approximately
$258,000, $257,000 and $180,000, respectively. The Company believes that the
terms of its leases with SME were as favorable, in all material respects, as
might have been obtained from an unaffiliated third party.
Effective July 1, 1995, SME released the Company from its obligations under
ten long term subleases in exchange for the issuance to SME of 120,000
unregistered shares of Common Stock valued at $3 per share, the weighted
average closing price for the stock for the prior thirty trading days. The
Company received an opinion from an independent financial advisor that the
transaction was fair to the Company and its stockholders. At the same time,
with the concurrence of the third party leasing company, the Company assumed
SME's obligations under its original lease and modified that lease by (1)
extending the lease term by one additional year and (2) adding one additional
truck cab to the schedule of leased property with a corresponding increase in
base rental payments. The $360,000 value of the shares represents the present
value of the excess of the sublease payments over the original lease payments.
The Company has capitalized the $360,000 and is amortizing this prepaid rent
over a period which approximates the lease term.
The Company entered into a three-year employment agreement commencing on
July 1, 1996 with each of Jeff D. Bergman and Daniel Dickman and a two-year
employment agreement commencing on October 1, 1996 with each of David Spindler
and David A. Zynn pursuant to which Mr. Bergman agreed to serve as the
Chairman of the Board, President and Chief Executive Officer of the Company,
Mr. Dickman as the Executive Vice President and Chief Operating Officer, Mr.
Spindler as Senior Vice President of Operations and Marketing and Mr. Zynn as
Treasurer, Assistant Secretary and Chief Financial Officer, at an annual base
salary of not less than $240,000, $240,000, $140,000 and $125,000,
respectively. Each of the employment agreements automatically extends for an
additional three months on each quarterly anniversary. The employment
agreements provide that if the employee is terminated other than for "cause"
or if such employee terminates for "good reason," the employee shall be
entitled to a continuation of full salary and bonus compensation for a period
equal to the remainder of the term. If the employee is terminated for "cause"
or if the employee terminates "without good reason," the employee shall only
be entitled to accrued salary and other accrued benefits prior to the date of
termination. Mr. Bergman's and Mr. Dickman's agreements each provide that if
an employee is terminated after a change in control of the Company, such
employee can elect to receive a lump sum payment of three times salary, bonus
and certain other amounts and continuation of certain benefits in lieu of
continued compensation for the remainder of the term. Mr. Spindler's and Mr.
Zynn's agreements each provide that if such employee is terminated after a
change in control of the Company, such employee shall receive a lump sum
payment of two times salary and continuation of certain benefits. Each of the
agreements contains a noncompete provision which generally restricts the
employee from competing with the Company in the same geographic proximity for
a two year period. Each of the agreements provide for annual profit sharing
with other executive level employees of a bonus pool consisting of 15% of the
Company's consolidated income before taxes, determined in accordance with
generally accepted accounting principles for financial reporting purposes. Mr.
Bergman, Mr. Dickman, Mr. Spindler and Mr. Zynn received approximately
$133,500, $133,500, $41,000 and $45,000, respectively, pursuant to the bonus
pool for services rendered in 1996.
Stratton was the underwriter of the Company's initial public offering. In
connection with the initial public offering, Stratton received underwriting
commission of $690,000, an expense allowance of $207,000, and certain
indemnifications.
15
<PAGE>
As additional compensation in connection with the initial public offering,
the Company granted to Stratton the Option which covered 120,000 units, each
unit consisted of 1.05 shares of Common Stock and one Company Warrant to
purchase 1.05 shares of Common Stock. The Option was exercisable until March
4, 1997 and entitled Stratton to purchase each unit at an exercise price equal
to $5.94, subject to adjustment in certain events. Stratton subsequently
transferred the Option to the Stratton Transferees, who exercised the Option
resulting in net proceeds to the Company of approximately $719,000. Certain of
the Stratton Transferees are Selling Stockholders offering 107,856 of the
shares offered hereby.
On August 9, 1995, the Company adopted the 1995 Director Warrant Plan (the
"Plan") pursuant to which eligible directors received unregistered warrants to
purchase Common Stock. The Plan allows for issuance of warrants to purchase up
to 700,000 shares of Common Stock.
On August 9, 1995, warrants to purchase up to 500,000 shares of Common Stock
at an initial exercise price of $3.875, the closing price of the Company's
stock on the date of issue, were issued to five directors including Mr.
Bergman. Separately, unregistered warrants to purchase 114,500 shares of
Common Stock at an initial exercise price of $4.01 were also issued to an
outside director, who is also a consultant to the Company, who was ineligible
to participate in the Plan. During May 1996, such outside director exercised
the 114,500 Warrants and sold 114,500 shares of Common Stock. The Company
received cash proceeds of approximately $459,000 related to the exercise of
such Warrants.
During January 1997, the Company's three outside consultants each exercised
25,000 Director Warrants and sold 26,750 shares of Common Stock (after
adjustment for the 7% stock dividend in January 1997).
Pursuant to the 1995 Director Warrant Plan, the Director Warrants have been
recapitalized to reflect the 7% Common Stock dividend in January 1997.
Accordingly, each outstanding Director Warrant now entitles the holder to
purchase 1.07 shares of Common Stock of the Company for $3.875. As of January
17, 1997, 425,000 Director Warrants to purchase 454,750 shares of Common Stock
of the Company were outstanding.
PLAN OF DISTRIBUTION
The Company has been advised that the Warrants offered by the Selling
Stockholders may from time to time be offered and sold by the Selling
Stockholders to or through underwriters, through one or more agents or dealers
or directly to purchasers. The distribution of the Warrants may be effected
from time to time in one or more transactions at a fixed price or prices,
which may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. The
Company has been further advised that offers to purchase Warrants may be
solicited directly by the Selling Stockholders or by agents designated by the
Selling Stockholders from time to time.
If sold through agents, the Warrants may be sold from time to time by means
of (i) ordinary brokers' transactions, (ii) block transactions (which may
involve crosses) in accordance with the rules of any stock exchange or trading
system on which the Warrants are admitted for trading privileges (the
"Markets"), in which such an agent may attempt to sell the Warrants as agent
but may position and resell all or a portion of the blocks as principal, (iii)
"fixed price offerings" off the Markets (as described below) or (iv) any
combination of such methods of sale, in each case at market prices prevailing
at the time of sale in the case of transactions on the Markets and at prices
related to prevailing market prices or negotiated prices in the case of
transactions off the Markets. In connection therewith, distributors' or
sellers' commissions may be paid or allowed. If an agent purchases Warrants as
principal, such stock may be resold by any of the methods of sale described
above.
From time to time an agent may conduct a "fixed price offering" of Warrants
off the Markets. In such case, such agent would purchase a block of Warrants
from the Selling Stockholders and would form a group of selected dealers to
participate in the resale of the shares.
16
<PAGE>
If a dealer is utilized in the sale of Warrants, the Selling Stockholders
may sell such Warrants to the dealer as principal. The dealer may then resell
such Warrants to the public at varying prices determined by such dealer at the
time of resale.
In connection with the sale of Warrants, underwriters or agents may receive
compensation from the Selling Stockholders or from purchasers of Warrants for
whom they may act as agents in the form of discounts, concessions or
commissions. Underwriters or agents may sell Warrants to or through dealers,
and such dealers may receive compensation in the form of discounts,
concessions or commission from the underwriters or agents and/or commissions
from the purchasers for whom they may act as agents. Underwriters, agents and
dealers that participate in the distribution of Warrants may be deemed to be
underwriters, and any discounts or commissions received by them from the
Selling Stockholders and any profit on the resale of Warrants by them may be
deemed to be underwriting discounts and commissions, under the Securities Act
of 1933, as amended ("Securities Act").
Under agreements which may be entered into by the Company and the Selling
Stockholders, underwriters and agents who participate in the distribution of
Warrants may be entitled to indemnification by the Selling Stockholders and
the Company against certain civil liabilities, including liabilities under the
federal securities laws, or to contribution by the Selling Stockholders and
the Company to payments which such underwriters or agents may be required to
make in respect thereof. Underwriters, agents and dealers may engage in
transactions with or perform services for the Selling Stockholders and/or the
Company in the ordinary course of business.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this Prospectus by reference from the Company's Annual Report
on Form 10-K, as amended by Amendment No. 1 thereto, as of and for the years
ended December 31, 1995 and December 31, 1994, have been audited by KPMG Peat
Marwick LLP; and for the year ended December 31, 1993 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their respective
reports which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firms given upon their
authority as experts in accounting and auditing.
Certain legal matters with respect to the Warrants offered hereby have been
passed upon for the Company by Buchanan Ingersoll Professional Corporation.
17
