<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to __________
Commission file number: 0-21428
OCCUPATIONAL HEALTH + REHABILITATION INC
(Exact name of registrant as specified in its charter)
Delaware 13-3464527
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
175 Derby Street, Suite 36
Hingham, Massachusetts 02043
(Address of principal executive offices)
(Zip code)
(617) 741-5175
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days.
Yes [X] No [_]
The number of shares outstanding of the registrant's Common Stock as of
April 30, 1997 was 1,571,979.
<PAGE>
OCCUPATIONAL HEALTH + REHABILITATION INC
Quarterly Report on Form 1O-Q
For the Quarter Ended March 31, 1997
TABLE OF CONTENTS
-----------------
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page No.
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Item 1. Financial Statements
<S> <C>
Consolidated Balance Sheets.............................................................3
Consolidated Statements of Operations...................................................4
Consolidated Statements of Cash Flows...................................................5
Notes to Consolidated Financial Statements..............................................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation.................................................7
PART II - OTHER INFORMATION
Item 2. Changes in Securities.......................................................................12
Item 6. Exhibits and Reports on Form 8-K............................................................13
Signatures.............................................................................................14
</TABLE>
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<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
- ------- --------------------
OCCUPATIONAL HEALTH + REHABILITATION INC
Consolidated Balance Sheets
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
------------------------------
ASSETS 1997 1996
----------- -----------
Current assets: (UNAUDITED)
<S> <C> <C>
Cash and cash equivalents:
Unrestricted.......................................... $ 5,929,553 $ 8,615,731
Restricted............................................ 320,000 345,320
Accounts receivable...................................... 2,434,946 1,702,415
Prepaid expenses......................................... 345,994 398,567
Due from related party................................... 254,249 226,328
Other assets............................................. 12,401 12,401
----------- -----------
Total current assets.............................. 9,297,143 11,300,762
Property and equipment, net................................... 1,523,963 1,119,338
Excess cost of net assets acquired, net....................... 4,067,188 2,849,158
Noncompetition agreements, net................................ 64,440 71,880
Organization costs, net....................................... 58,267 63,052
Deposits...................................................... 80,858 69,947
Other assets.................................................. 2,000 2,000
----------- -----------
Total assets...................................... $15,093,859 $15,476,137
=========== ===========
LIABILITIES, REDEEMABLE STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses.................... $ 1,121,481 $ 1,315,394
Current portion of obligations under capital leases...... 119,472 107,431
Current maturities of long-term debt..................... 449,157 425,166
Current portion of obligations under
noncompetition agreements........................... 320,969 316,938
Due to related party..................................... 292,508 289,844
----------- -----------
Total current liabilities......................... 2,303,587 2,454,773
Long-term debt, less current maturities....................... 1,030,384 686,613
Obligations under capital leases.............................. 64,695 58,715
Other long-term liabilities................................... 25,320
Obligation to issue common stock.............................. 500,000
----------- -----------
Total liabilities............................................. 3,398,666 3,725,421
Minority interest............................................. 10,996 (87,630)
Redeemable stock:
Redeemable convertible preferred stock,
Series A, $.001 par value ---
$8,500,002 liquidation value,
5,000,000 shares authorized, 1,416,667
shares issued and outstanding....................... 8,427,791 8,423,003
----------- -----------
Total redeemable stock............................ 8,427,791 8,423,003
Stockholders' equity:
Common stock, $.001 par value -- 10,000,000
shares authorized; issued and outstanding
1,571,979 and 1,471,477 shares in 1997 and 1996,
respectively......................................... 1,571 1,471
Additional paid-in capital............................... 10,596,049 10,096,149
Accumulated deficit...................................... (7,341,214) (6,682,277)
----------- -----------
Total stockholders' equity........................... 3,256,406 3,415,343
----------- ----------
Total liabilities, redeemable stock and
stockholders' equity.............................. $15,093,859 $15,476,137
=========== ===========
</TABLE>
See Accompanying Notes
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<PAGE>
OCCUPATIONAL HEALTH + REHABILITATION INC
Consolidated Statements of Operations
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1997 1996
---- ----
<S> <C> <C>
Net patient service revenue................................... $ 3,346,770 $ 1,936,596
Management fee income......................................... 78,397 39,124
Other income.................................................. 935 2,589
----------- -----------
Total revenue................................................. 3,426,102 1,978,309
Operating and administrative expenses......................... (4,063,665) (2,253,605)
Depreciation and amortization................................. (152,130) (100,028)
Interest expense.............................................. (51,633) (60,006)
Interest income............................................... 82,093
Minority interest in net loss of subsidiary................... 105,454 77,801
----------- -----------
Loss before income taxes...................................... (653,779) (357,529)
Income taxes.................................................. 0 0
----------- -----------
Net loss...................................................... $ (653,779) $ (357,529)
=========== ===========
Net loss available to common stock............................ $ (658,937) $ (357,529)
=========== ===========
Net loss per share............................................ $ (0.42) $ (0.53)
=========== ===========
Weighted average common shares................................ 1,566,396 681,387
=========== ===========
</TABLE>
See Accompanying Notes
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<PAGE>
OCCUPATIONAL HEALTH + REHABILITATION INC
Consolidated Statements of Cash Flows
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1997 1996
---------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss...................................................... $ (653,779) $ (357,529)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization....................... 152,130 100,028
Amortization of discount............................ 4,031 7,668
Minority interest in loss of subsidiary............. (105,454) (77,801)
Changes in operating assets and liabilities:
Accounts receivable............................ (732,531) (195,605)
Prepaid expenses and other current assets...... 52,573 (12,044)
Due from related party, net.................... (25,257) 150,109
Deposits and other noncurrent assets........... (10,911) 4,914
Accounts payable and accrued expenses.......... (193,913) (67,685)
----------- -----------
Net cash used in operating activities......................... (1,513,111) (447,945)
INVESTING ACTIVITIES:
Reduction of restricted cash.................................. 25,320
Refund of security deposit.................................... (25,320)
Property and equipment additions.............................. (130,593) (3,812)
Additions to goodwill......................................... (101,597) (63,273)
Cash paid for acquisitions.................................... (925,000)
----------- -----------
Net cash used in investing activities (1,157,190) (67,085)
FINANCING ACTIVITIES:
Proceeds from sale of stock, net.............................. (370) 625
Proceeds from line of credit and loans payable................ 300,000
Payments of long-term debt and other long-term obligations.... (32,107) (31,667)
Cash received by partnership.................................. 16,600
----------- -----------
Net cash (used in) provided by financing activities........... (15,877) 268,958
----------- -----------
Net decrease in cash and cash equivalents..................... (2,686,178) (246,072)
Cash and cash equivalents at beginning of period.............. 8,615,731 368,959
----------- -----------
Cash and cash equivalents at end of period.................... $ 5,929,553 $ 122,887
=========== ===========
</TABLE>
See Accompanying Notes
-5-
<PAGE>
OCCUPATIONAL HEALTH + REHABILITATION INC
Notes to Consolidated Financial Statements
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited interim financial statements of Occupational
Health + Rehabilitation Inc (the "Company") have been prepared in accordance
with the instructions to Form 10-Q and Rule 10.01 of Regulation S-X pertaining
to interim financial information and disclosures required by generally accepted
accounting principles. The interim financial statements presented herein reflect
all adjustments (consisting of normal recurring adjustments) which, in the
opinion of management, are considered necessary for a fair presentation of the
Company's financial condition as of March 31, 1997 and results of operations for
the three months ended March 31, 1997 and 1996. The results of operations for
the three months ended March 31, 1997 are not necessarily indicative of the
results that may be expected for a full year.
2. Acquisitions and Joint Ventures
In January and March 1997, the Company consummated the purchase of two
physician practices, with an aggregate purchase consideration of $1,075,000,
payable in cash and notes. One note issued is convertible to common stock
subject to certain events. The Company has reserved 25,000 shares of common
stock in connection with this transaction. Additional purchase payments for the
physician practice acquisition may be required if certain objectives are
attained. In February and March 1997, the Company consummated two joint
ventures, with aggregate purchase consideration of $200,000 in cash and
contributed property with a valuation of $257,213. In both cases, the Company
has an equity interest equal to or in excess of 51% and controls the joint
venture through its majority control of the management committee.
3. Net Loss per Share
Net loss per share of common stock is computed by dividing net loss
available to common stock by the weighted average number of shares of common
stock outstanding during each period presented. The net loss available to common
stock reflects the accretion of preferred stock to its redemption value for the
three months ended March 31, 1997. The weighted average number of shares
outstanding for the three months ended March 31, 1997 and 1996 is based on the
number of the Company's shares of common stock and for the three months ended
March 31, 1996 assumes the retroactive conversion of the Company's Series 1 and
Series 2 preferred stock in connection with the Merger of the Company with Telor
Ophthalmic Pharmaceuticals, Inc. in June 1996. The effect of options and
warrants is not considered as it would be antidilutive.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share ("FAS No.128"), which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating primary earnings per share,
the dilutive effect of stock options will be excluded. FAS No. 128 is not
expected to have a material impact on primary earnings per share for the
quarters ended March 31, 1997 and 1996.
-6-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
- ------- ---------------------------------------------------------------
Results of Operations.
----------------------
Overview
- --------
The Company was organized in 1988 to develop ophthalmic pharmaceuticals. In
June 1996, Occupational Health + Rehabilitation Inc ("OH+R") merged with and
into (the "Merger") Telor Ophthalmic Pharmaceuticals, Inc. ("Telor"), with Telor
being the surviving corporation (the "Company"). In connection with the Merger,
the Company changed its name to "Occupational Health + Rehabilitation Inc" and
assumed the business of OH+R. The transaction was accounted for as a "reverse
acquisition" whereby OH+R was deemed to have acquired Telor for financial
reporting purposes. Consistent with the reverse acquisition accounting
treatment, historical financial statements for the Company for periods prior to
the date of the Merger are those of OH+R.
The Company is a physician practice management company specializing in
occupational health care. The Company develops and operates multidisciplinary
outpatient healthcare centers and provides on-site services to employers for the
prevention, treatment and management of work-related injuries and illnesses.
The Company operates the centers under management and submanagement agreements
with independently organized professional corporations or licensed satellite
clinics that practice exclusively through such centers.
The Company's operations have been funded primarily through venture capital
investments and the Merger. The Company's growth has resulted predominately
from the formation of joint ventures, acquisitions and development of businesses
principally engaged in occupational health care.
The following table sets forth, for the periods indicated, the relative
percentages which certain items in the Company's consolidated statements of
operations bear to total revenue. The following information should be read in
conjunction with the consolidated financial statements and notes thereto
included elsewhere in this report. Historical results and percentage
relationships are not necessarily indicative of the results that may be expected
for any future period.
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------
1997 1996
---- ----
<S> <C> <C>
Total revenue................................ 100.0% 100.0%
Operating and administrative expenses........ (118.6) (113.9)
Depreciation and amortization................ (4.4) (5.1)
Interest expense............................. (1.5) (3.0)
Interest income.............................. 2.4 0
Minority interest in net loss of subsidiary.. 3.1 3.9
------ -------
Loss before income taxes..................... (19.0) (18.1)
Income taxes................................. 0.0 0.0
------ -------
Net loss..................................... (19.0)% (18.1)%
====== =======
</TABLE>
-7-
<PAGE>
RESULTS OF OPERATIONS
---------------------
Three Months Ended March 31, 1997 and 1996
------------------------------------------
Revenue
Total revenue increased 73.2% to approximately $3,426,000 in the three
months ended March 31, 1997 from approximately $1,978,000 in the same three-
month period in 1996. Net patient service revenue increased 72.8% to
approximately $3,347,000 for the three months ended March 31, 1997 from
approximately $1,937,000 in the comparable period in 1996. Of the approximately
$1,410,000 increase in net patient service revenue during the three-month period
March 31, 1997 compared to the same period in 1996, approximately $830,000
(58.8%) was attributable to centers owned at the end of 1996 and $580,000
(41.2%) was attributable to centers acquired in 1997.
Operating and Administrative Expenses
Operating and administrative expenses increased 80.3% to approximately
$4,064,000 in the three months ended March 31, 1997 from approximately
$2,254,000 in the same three months in 1996. This increase was principally due
to the acquisition and development of additional centers. In addition, during
1996 as a function of its acquisition and development plans the Company added
several key corporate executives which it believes will facilitate managing and
developing the growth of the business. As a percentage of total revenues,
operating and administrative expenses were 118.6% for the three months ended
March 31, 1997 and 113.9% for the same period in 1996. The Company believes that
as additional acquisitions are completed, further leveraging of existing
management will occur, and, as a result, operating and other administrative
costs will decline as a percentage of total revenue.
Depreciation and Amortization
Depreciation and amortization expense increased 52.1% to approximately
$152,000 in the three months ended March 31, 1997 from approximately $100,000 in
the same three-month period in 1996. The increase occurred primarily as a
result of the Company having additional growth through center development and
acquisitions. As a percentage of total revenues, depreciation and amortization
was 4.4% in the first quarter of 1997 versus 5.1% in the first quarter of 1996.
Interest Expense
Interest expense decreased 14% to approximately $52,000 in three months
ended March 31, 1997 from approximately $60,000 in the same three-month period
in 1996. The decrease from 1996 to 1997 was due to the termination of an
agreement to sell receivables in January 1997. Additionally, the Company paid
down certain debt. As a percentage of total revenues, interest expense was 1.5%
in the first quarter of 1997, and 3% in the same quarter of 1996.
-8-
<PAGE>
Interest Income
Interest income is generated primarily from cash invested in highly liquid
funds with a maturity of three months or less. Interest income increased to
approximately $82,000 in the quarter ended March 31, 1997 from zero in the same
quarter of 1996. The increase was related to funds received through the Merger
and from the sale of preferred stock through a private placement.
Minority Interest
Minority interest represents the share of profit and losses of certain
investors in certain joint ventures with the Company. For the three months
ended March 31, 1997, the minority interest in net profit/losses of subsidiaries
increased by 35.5% to approximately $105,000 from approximately $78,000 in the
same three-month period in 1996. This increase is due to the Company's
ownership interest in the new joint ventures entered into in 1997.
Seasonality
The Company is subject to the natural seasonal swing that impacts the
various employers and employees it services. Although the Company hopes that as
it continues its growth and development efforts it may be able to anticipate the
effect of these swings and provide services aimed to ameliorate this impact,
there can be no assurance that it can completely alleviate the effects of
seasonality. Historically, the Company has noticed these impacts in portions of
the first and fourth quarters. Traditionally, net revenues are lower during
these periods since patient visits decrease due to the occurrence of plant
closings, vacations, holidays, a reduction in new employee hirings and the
impact of severe weather conditions in the Northeast. These activities also
cause a decrease in drug and alcohol testings, medical monitoring services and
pre-hire examinations. The Company has also noticed similar impacts during the
summer months, but typically to a lesser degree than during the first and fourth
quarters.
Liquidity and Capital Resources
Since inception, the Company's funding requirements have been met through a
combination of issuances of capital stock, long-term debt and other commitments,
the utilization of capital leases and loans to finance equipment purchases, the
sale of the certain accounts receivable and the creation of minority interests.
Net proceeds from the sale of capital stock have totaled approximately $14
million, including the Company's private placement of its Series A Convertible
Preferred Stock on November 6, 1996. The proceeds from the sale of this
preferred stock provided the Company with cash proceeds of approximately $8.4
million, net of expenses. The Company intends to use the funds in its expansion
effort and for working capital. The Company's principal sources of liquidity as
of March 31, 1997 consisted of (i) cash and cash equivalents aggregating $5.9
million and (ii) accounts receivable of $2.4 million.
-9-
<PAGE>
Net cash used in operating activities by the Company during the three
months ended March 31, 1997 was approximately $1,513,000 as compared to
approximately $448,000 for the comparable period in 1996. The primary uses of
cash during the three months ended March 31, 1997 were the funding of working
capital in centers that were acquired in 1996 and 1997 and for certain centers
where an accounts receivable financing agreement was terminated. The Company is
currently pursuing obtaining a working capital line of credit. Additional cash
was used to fund Company operating losses for certain centers for the three
months ended March 31, 1996 and 1997. These operating losses were offset by
non-cash expenses, such as depreciation and amortization, and by fluctuations in
working capital during the periods ended March 31, 1997 and 1996. Working
capital fluctuations have been primarily from increases in accounts receivable
and other current assets offset by increases in accounts payable and accrued
expenses.
The Company's investing activities for the three months ended March 31,
1997 included the purchase of two physician practices with an aggregate cash
outlay of $725,000. The Company also invested $200,000 in two joint ventures.
The Company has an equity interest equal to or in excess of 51% in both joint
ventures. Additional investing activities included the use of $102,000 and
$63,000 in the quarters ended March 31, 1997 and 1996, respectively, for costs
in excess of purchase price for certain acquisitions. Fixed asset additions
amounted to $131,000 for the period ended March 31, 1997 compared to $4,000 for
the same period in 1996.
For the three months ended March 31, 1997, the Company received
approximately $17,000 through a partnership contribution. For the three months
ended March 31, 1997, the Company used funds of approximately $32,000 for the
payment of long-term debt and other long-term obligations, which was consistent
with the same period in 1996.
The Company expects that its principal use of funds in the near future will
be in connection with acquisitions, working capital requirements, debt
repayments and purchases of property and equipment. The Company expects that
the cash received as the result of the Merger, proceeds received upon the sale
of 1,416,667 shares of its Series A Convertible Preferred Stock, and cash
generated from operations will be adequate to provide working capital
requirements and to fund debt maturities and to finance any necessary capital
expenditures through December 31, 1997. However, the Company believes that the
level of financial resources available to it is an important competitive factor
and may seek additional financing prior to the end of that period. The Company
will consider raising additional capital on an on-going basis as market factors
and its needs suggest, which additional capital may be necessary to fund
acquisitions by the Company. Although subject to the satisfaction of various
conditions prior to May 6, 1997, the Company could sell additional shares of its
Series A Convertible Preferred Stock to the original purchasers thereof for
gross proceeds to the Company of $1,500,000, the Company has elected not to
pursue this action.
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<PAGE>
Important Factors Regarding Forward-Looking Statements
Statements contained in the Quarterly Report on Form 10-Q, including in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," contain forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act, which statements
are intended to be subject to the "safe-harbor" provisions of the Private
Securities Litigation Reform Act of 1995. The forward-looking statements are
based on management's current expectations and are subject to many risks and
uncertainties, which could cause actual results to differ materially from such
statements. Such statements include statements regarding the Company's
objective to develop a comprehensive regional network of occupational healthcare
centers providing integrated services through multi-disciplinary teams. Among
the risks and uncertainties that will affect the Company's actual results in
achieving this objective are locating and identifying suitable acquisition
candidates, the ability to consummate acquisitions on favorable terms, the
success of such acquisitions, if completed, the cost and delays inherent in
managing growth, the ability to attract and retain qualified professionals and
other employees to expand and complement the Company's services, the
availability of sufficient financing and the attractiveness of the Company's
capital stock to finance acquisitions, strategies pursued by competitors, the
restrictions imposed by government regulation, changes in the industry resulting
from changes in workers' compensation laws and regulations and in the healthcare
environment generally and other risks described in this Quarterly Report on Form
10-Q and this Company's other filings with the Securities and Exchange
Commission.
-11-
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities
- ------- ---------------------
During the fiscal quarter ended March 31, 1997, the Company issued the
following securities without registration under the Securities Act of 1933, as
amended (the "Securities Act"):
(i) On January 6, 1997, the Company issued 100,502 shares of its Common
Stock, valued at a price of $4.975 per share, to Argosy Health, L.P. in
connection with the purchase by the Company of certain assets of Argosy Health,
L.P. on September 11, 1996 and in reliance upon the exemption from the
registration requirements of the Securities Act under Section 4(2) of the
Securities Act and Rule 506 of Regulation D promulgated thereunder.
(ii) On March 4, 1997, the Company issued a convertible subordinated note ,
convertible into 25,000 shares of the Company's Common Stock valued at the price
of $10.00 per share, to Business Health Management, P.C. in connection with the
purchase by the Company of certain assets of Business Health Management, P.C.
and in reliance upon the exemption from the registration requirements of the
Securities Act under Section 4(2) of the Securities Act and Rule 506 of
Regulation D promulgated thereunder.
In claiming the exemption under Section 4(2), the Company relied in part on
the following facts: (1) each of the purchasers represented that such purchaser
(a) had the requisite knowledge and experience in financial and business matters
to evaluate the merits and risk of an investment in the Company; (b) was able to
bear the economic risk of an investment in the Company; (c) had access to or was
furnished with the kinds of information that registration under the Securities
Act would have provided; and (d) acquired the shares for the purchaser's own
account in a transaction not involving any general solicitation or general
advertising, and not with a view to the distribution thereof; and (2) a
restrictive legend was placed on each certificate or other instrument evidencing
the shares.
-12-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
a. Exhibits
--------
10.01 Registration Rights Agreement between the Company and Business
Health Management, P.C. dated as of March 4, 1997.*
11.01 Statement re Computation of Per Share Earnings.*
27.01 Financial Data Schedule.*
*Filed herewith
The Company agrees to furnish to the Commission a copy of any instrument
evidencing long-term debt which is not otherwise required to be filed.
b. Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter ended March 31, 1997.
-13-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OCCUPATIONAL HEALTH + REHABILITATION INC
Date: May 13, 1997 By: /s/ John C. Garbarino
-------------------------------------
John C. Garbarino
President and Chief Executive Officer
(principal executive officer)
By: /s/ Richard P. Quinlan
-------------------------------------
Richard P. Quinlan
Chief Financial Officer, Treasurer,
Secretary and General Counsel
(principal financial officer)
-14-
<PAGE>
Exhibit Index
Exhibit No. Description
- ----------- -----------
10.01 Registration Rights Agreement between the Company and Business
Health Management, P.C. dated as of March 4, 1997.
11.01 Statement re Computation of Per Share Earnings.
27.01 Financial Data Schedule.
<PAGE>
EXHIBIT NO. 10.01
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement"), dated as of March 4,
1997, by and between Occupational Health + Rehabilitation Inc, a Delaware
corporation (the "Company"), and Business Health Management, P.C. (the
"Holder").
WHEREAS, the Company and the Holder are entering into this Agreement to
provide for the registration of certain shares of the Company's common stock
which the Holder may acquire upon the conversion of that certain Convertible
Subordinated Note (the "Note") in the original principal amount of $250,000
dated as of the date hereof from the Company to the Holder issued pursuant to
the terms of the Asset Purchase Agreement (the "Purchase Agreement") between
such parties dated as of the date hereof;
NOW, THEREFORE, in consideration of the terms and conditions as set forth
herein, the Company covenants and agrees with the Holder as follows:
1. Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission, or any
------------
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Common Stock, $.001 par value, of the
--------------
Company, as constituted as of the date of this Agreement.
"Conversion Shares" shall mean the shares of Common Stock issued or
-------------------
issuable upon conversion of the Note.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
--------------
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Holder" shall mean the person who is the then record owner of
--------
Restricted Stock.
"Registration Expenses" shall mean the expenses so described in
-----------------------
Section 6.
"Restricted Stock" shall mean the Conversion Shares, excluding shares
------------------
which have been (a) registered under the Securities Act pursuant to an effective
registration statement filed thereunder and disposed of in accordance with the
registration statement covering them or (b) publicly sold pursuant to Rule 144
under the Securities Act.
-1-
<PAGE>
"Securities Act" shall mean the Securities Act of 1933, as amended, or
----------------
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
2. Restrictive Legend. Each certificate representing the Restricted
------------------
Stock shall bear a legend stating in substance:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE AVAILABILITY
OF AN EXEMPTION FROM REGISTRATION UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
A certificate shall not be required to bear such legend if in the opinion
of counsel satisfactory to the Company, the securities represented thereby may
be publicly sold without registration under the Securities Act.
3. Notice of Proposed Transfer. Prior to any proposed transfer of any
---------------------------
Restricted Stock (other than under the circumstances described in Section 4),
the Holder thereof shall give written notice to the Company of its intention to
effect such transfer. Each such notice shall describe the manner of the
proposed transfer and, if requested by the Company, shall be accompanied by an
opinion of counsel satisfactory to the Company to the effect that the proposed
transfer may be effected without registration under the Securities Act,
whereupon the Holder of such stock shall be entitled to transfer such stock in
accordance with the terms of its notice; provided, however, that no such opinion
-------- -------
of counsel shall be required for a distribution by a partnership to its partners
of such stock in respect of such interest. Each certificate for shares of
Restricted Stock transferred as above provided shall bear the legend set forth
in Section 2, except that such certificate shall not bear such legend if (i)
such transfer is in accordance with the provisions of Rule 144 (or any other
rule permitting public sale without registration under the Securities Act) or
(ii) the opinion of counsel referred to above is to the further effect that the
transferee and any subsequent transferee (other than an affiliate of the
Company) would be entitled to transfer such securities in a public sale without
registration under the Securities Act. The restrictions provided for in this
Section 3 shall not apply to securities which are not required to bear the
legend prescribed by Section 2 in accordance with the provisions of that
Section.
4. Incidental Registration. If the Company at any time proposes to
-----------------------
register any of its securities under the Securities Act for sale to the public,
whether for its own account or for the account of other securityholders or both
(except with respect to registration statements on Forms S-4, S-8 or another
form not available for registering the Restricted Stock for sale to the public),
each such time the Company will give written notice to all Holders of
outstanding Restricted Stock of its intention to do so. Upon the written
request of any such Holder received by the Company within 30 days of the giving
of any such notice by the Company to register any of such Holder's Restricted
Stock (which request shall state the intended method of disposition thereof),
the
-2-
<PAGE>
Company will use its reasonable best efforts to cause the Restricted Stock as to
which registration shall have been so requested to be included in the securities
to be covered by the registration statement proposed to be filed by the Company,
all to the extent requisite to permit the sale or other disposition by the
Holder (in accordance with such Holder's written request) of such Restricted
Stock so registered. In the event that any registration pursuant to this Section
4 shall be, in whole or in part, an underwritten public offering of Common
Stock, the number of shares of Restricted Stock to be included in such an
underwriting shall be such number of shares that the managing underwriter shall
be of the opinion would not adversely affect the marketing of the securities to
be sold by the Company or the requesting party therein or as otherwise advisable
and subject, in any case, to any superior rights of others to have their shares
included in such registration.
5. Registration Procedures. If and whenever the Company is required by
-----------------------
the provisions of Section 4 to use its reasonable best efforts to effect the
registration of any shares of Restricted Stock under the Securities Act, the
Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement with
respect to such securities and use its reasonable best efforts to cause such
registration statement to become and remain effective for the period of the
distribution contemplated thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for the period
specified in paragraph (a) above and comply with the provisions of the
Securities Act with respect to the disposition of all Restricted Stock covered
by such registration statement in accordance with the sellers' intended method
of disposition set forth in such registration statement for such period;
(c) furnish to each seller of Restricted Stock and to each underwriter such
number of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus) as such persons reasonably may
request in order to facilitate the public sale or other disposition of the
Restricted Stock covered by such registration statement;
(d) use its reasonable best efforts to register or qualify the Restricted
Stock covered by such registration statement under the securities or "blue sky"
laws of such jurisdictions as the sellers of Restricted Stock or, in the case of
an underwritten public offering, the managing underwriter reasonably shall
request, provided, however, that the Company shall not for any such purpose be
-------- -------
required to qualify generally to transact business as a foreign corporation in
any jurisdiction where it is not so qualified or to consent to general service
of process in any such jurisdiction;
(e) use its reasonable best efforts to list the Restricted Stock covered by
such registration statement with any securities exchange on which the Common
Stock is then listed;
(f) immediately notify each seller of Restricted Stock and each underwriter
under such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event of which the Company has knowledge as
-3-
<PAGE>
a result of which the prospectus contained in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
(g) if the offering is underwritten and at the request of any seller of
Restricted Stock as provided herein, use its reasonable best efforts to furnish
on the date that Restricted Stock is delivered to the underwriters for sale
pursuant to such registration: (i) an opinion dated such date of counsel
representing the Company for the purposes of such registration, addressed to the
underwriters and to such seller, stating that such registration statement has
become effective under the Securities Act and that (A) to the knowledge of such
counsel, no stop order suspending the effectiveness thereof has been issued and
no proceedings for that purpose have been instituted or are pending or
threatened under the Securities Act, (B) the registration statement, the related
prospectus and each amendment or supplement thereof comply as to form in all
material respects with the requirements of the Securities Act (except that such
counsel need not express any opinion as to financial statements, schedules and
other financial or statistical information contained therein) and (C) to such
other effects as reasonably may be requested by counsel for the underwriters or
by such seller or its counsel and (ii) a letter dated such date from the
independent public accountants retained by the Company, addressed to the
underwriters and to such seller, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion of
such accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to the
period ending no more than five business days prior to the date of such letter)
with respect to such registration as such underwriters reasonably may request;
and
(h) make available for inspection by each seller of Restricted Stock, any
underwriter participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by such seller
or underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement.
For purposes of Section 5(a) and 5(b), the period of distribution of
Restricted Stock included therein shall be deemed to extend until the first to
occur of (i) each underwriter's completion of the distribution of all
securities purchased by it, and (ii) one hundred twenty (120) days.
In connection with each registration hereunder, the sellers of Restricted
Stock will furnish to the Company in writing such information with respect to
themselves and the proposed distribution by them as reasonably shall be
necessary in order to assure compliance with federal and applicable state
securities laws.
In connection with each registration pursuant to Section 4 covering an
underwritten public offering, the Company and each seller agree to enter into a
written agreement with the managing
-4-
<PAGE>
underwriter selected in the manner herein provided in such form and containing
such provisions as are customary in the securities business for such an
arrangement between such underwriter and companies of the Company's size and
investment stature.
No Holder of shares of Restricted Stock included in a registration
statement shall (until further notice) effect sales thereof after receipt of
telegraphic or written notice from the Company to suspend sales to permit the
Company to correct or update a registration statement or prospectus; but the
obligations of the Company with respect to maintaining any registration
statement current and effective shall be extended by a period of days equal to
the period such suspension is in effect unless (i) such extension would result
in the Company's inability to use the financial statements in the registration
statement as initially filed and (ii) such correction or update did not result
from the Company's acts or failures to act.
At the end of the period during which the Company is obligated to keep the
registration statement current and effective as described above (and any
extensions thereof required by the preceding sentence), the Holders of shares of
Restricted Stock included in the registration statement shall discontinue sales
of shares pursuant to such registration statement upon receipt of notice from
the Company of its intention to remove from registration the shares covered by
such registration statement which remain unsold, and such Holders shall notify
the Company of the number of shares registered which remain unsold immediately
upon receipt of such notice from the Company.
6. Expenses. All expenses incurred by the Company in complying with
--------
Section 4 including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel to the Company and
independent public accountants for the Company, fees and expenses (including
counsel fees) incurred in connection with complying with state securities or
"blue sky" laws, fees of the National Association of Securities Dealers, Inc.,
transfer taxes, fees of transfer agents and registrars, costs of insurance,
shall be borne by the Company, except that all expenses, fees and disbursements
of any counsel retained by the Holders (to be paid pro rata according to the
quantity of the securities registered by the Holders who retained such counsel,
or as shall be otherwise agreed by such Holders) and all underwriting discounts
and commissions for securities registered for sale by them shall be borne by the
Holders of the securities registered pursuant to such registration, pro rata
according to the quantity of their securities so registered.
7. Indemnification and Contribution.
--------------------------------
(a) To the extent permitted by law, in the event of a registration of any
of the Restricted Stock under the Securities Act pursuant to Section 4, the
Company will indemnify and hold harmless each seller of such Restricted Stock
thereunder, each underwriter of such Restricted Stock thereunder and each other
person, if any, who controls such seller or underwriter within the meaning of
the Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such seller, underwriter or controlling person may become
subject under the Securities Act 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 any material fact
contained in any registration statement under which such Restricted Stock was
registered under the
-5-
<PAGE>
Securities Act pursuant to Section 4, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, 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 not misleading in the light of the circumstances in which they were
made, or arise out of any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company and relating to
action or inaction required of the Company in connection with such registration
and will reimburse each such seller, each such underwriter and each such
controlling person 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 will not be liable in
-------- -------
any such case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by any such seller, any such underwriter or any such controlling
person in writing specifically for use in such registration statement or
prospectus, and except that the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any such untrue statement or alleged
untrue statement or omission or alleged omission made in the preliminary
prospectus but eliminated or remedied in the amended prospectus on file with the
Commission at the time the registration statement becomes effective or in the
amended prospectus filed with the Commission pursuant to Rule 424(b) or in the
prospectus subject to completion and term sheet under Rule 434 of the Securities
Act, which together meet the requirements of Section 10(a) of the Securities Act
(the "Final Prospectus"), such indemnity agreement shall not inure to the
benefit of any such seller, any such underwriter or any such controlling person,
if a copy of the Final Prospectus was not furnished to the person or entity
asserting the loss, liability, claim or damage at or prior to the time such
furnishing is required by the Securities Act; provided, further, that this
-------- -------
indemnity shall not be deemed to relieve any underwriter of any of its due
diligence obligations.
(b) To the extent permitted by law, in the event of a registration of any
of the Restricted Stock under the Securities Act pursuant to Section 4, each
seller of such Restricted Stock thereunder, severally and not jointly, will
indemnify and hold harmless the Company, each person, if any, who controls the
Company within the meaning of the Securities Act, each officer of the Company
who signs the registration statement, each director of the Company, each
underwriter and each person who controls any underwriter within the meaning of
the Securities Act, against all losses, claims, damages or liabilities, joint or
several, to which the Company or such officer, director, underwriter or
controlling person may become subject under the Securities Act 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 any material fact contained in any registration statement under
which such Restricted Stock was registered under the Securities Act pursuant to
Section 4, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, 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 not misleading in the
light of the circumstances in which they were made, and will reimburse the
Company and each such officer, director, underwriter or controlling person 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 such seller will be liable hereunder in any such case if
- -------- -------
and only to the extent that any such loss, claim, damage or
-6-
<PAGE>
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in reliance upon and in
conformity with information pertaining to such seller furnished in writing to
the Company by such seller specifically for use in such registration statement
or prospectus, and provided, further, that the foregoing indemnity
-------- -------
agreement is subject to the condition that, insofar as it relates to any
such untrue statement or alleged untrue statement or omission or alleged
omission made in the preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the Commission at the time the registration
statement becomes effective or in the Final Prospectus, such indemnity agreement
shall not inure to the benefit of the Company, any controlling person or any
underwriter, if a copy of the Final Prospectus was not furnished to the person
or entity asserting the loss, liability, claim or damage at or prior to the time
such furnishing is required by the Securities Act; provided, further, that this
-------- -------
indemnity shall not be deemed to relieve any underwriter of any of
its due diligence obligations; and provided, further, that
-------- -------
in no event shall any indemnity by a seller under this Section 7(b) exceed the
gross proceeds from the offering received by such seller.
(c) Promptly after receipt by an indemnified party hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party other than under this Section 7 and shall only relieve it
from any liability which it may have to such indemnified party under this
Section 7 if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 7 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected, provided,
--------
however, that, if the defendants in any such action include both the indemnified
- -------
party and the indemnifying party and counsel to the indemnified party shall have
reasonably concluded that there are reasonable defenses available to the
indemnified party which are different from or additional to those available to
the indemnifying party or if the interests of the indemnified party reasonably
may be deemed to conflict with the interests of the indemnifying party, the
indemnified party shall have the right to select a separate counsel and to
assume such legal defenses and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the indemnifying party as
incurred. No indemnifying party, in the defense of any such claim or
litigation, shall, except with the consent of each indemnified party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any Holder of
Restricted Stock exercising rights under
-7-
<PAGE>
this Agreement, or any controlling person of any such Holder, makes a claim for
indemnification pursuant to this Section 7 but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 7 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of any such
selling Holder or any such controlling person in circumstances for which
indemnification is provided under this Section 7; then, and in each such case,
the Company and such Holder will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from
others) in such proportion so that such Holder is responsible for the portion
represented by the percentage that the public offering price of its Restricted
Stock offered by the registration statement bears to the public offering price
of all securities offered by such registration statement, and the Company is
responsible for the remaining portion; provided, however, that, in any such
-------- -------
case, (A) no such Holder will be required to contribute any amount in excess of
the public offering price of all such Restricted Stock offered by it pursuant to
such registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
8. Changes in Common Stock. If, and as often as, there is any change in
-----------------------
the Common Stock by way of a stock split, stock dividend, combination or
reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof so that the rights and privileges granted hereby shall
continue with respect to the Common Stock as so changed.
9. Rule 144 Reporting. With a view to making available the benefits of
------------------
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Stock to the public without registration, the Company
agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) use its reasonable best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to each Holder of Restricted Stock forthwith upon request a
written statement by the Company as to its compliance with the reporting
requirements of such Rule 144 and of the Securities Act and the Exchange Act, a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents so filed by the Company as such Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing such Holder to sell any Restricted Stock without
registration.
The Company shall not be required to effect a registration pursuant to
Section 4 hereof for any Holder desiring to participate in such registration who
may then dispose of all of its shares of Restricted Stock pursuant to Rule 144
within the three-month period following such proposed registration.
-8-
<PAGE>
10. Miscellaneous.
-------------
(a) All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto (including without
limitation transferees of any of the shares of Restricted Stock), whether so
expressed or not, provided, however, that registration rights conferred herein
-------- -------
on the Holders of shares of Restricted Stock shall only inure to the benefit of
a transferee of shares of Restricted Stock if such transferee, in the Company's
reasonable judgment, is not a competitor of the Company, and (i) there is
transferred to such transferee at least 20% of the total shares of Restricted
Stock originally issued to the direct or indirect transferor of such transferee
by the Company or (ii) such transfer is made in connection with the distribution
by a Holder to such Holder's beneficial owners (including, without limitation,
to partners of a general or limited partnership, shareholders of a corporation
and beneficiaries of a trust) of securities of the Holder or to the partners or
employees of the Holder, provided that at the Company's request, one person
shall be designated by such transferees as their agent for purposes of their
rights hereunder and the provision of a notice by the Company to such agent in
accordance with the provisions hereof shall be deemed compliance with such
provisions for all such beneficial owners, partners and employees, and following
such request by the Company, the Company shall have no obligation under said
provisions with respect to such transferees until it shall have been notified of
the name and address of such agent.
(b) Each Holder agrees that it will provide notice to the Company of any
transfer or assignment of its rights or interests hereunder. Any failure by the
Company to fulfill a covenant or obligation hereunder which is the direct result
of a failure by a Holder to provide such notice shall not be deemed to be a
breach of any covenant or obligation hereunder.
Nothing in this Agreement shall be construed to create any rights or
obligations except among the parties hereto and their respective and permitted
successors and assigns, and no person or entity shall be regarded as a third-
party beneficiary of this Agreement.
Except as provided in Section 10(a) above, all notices, requests, consents
and other communications hereunder shall be in writing, shall be addressed to
the receiving party's address set forth below or to such other address as a
party may designate by notice hereunder, and shall be either (i) delivered by
hand, (ii) sent by overnight courier, with a receipt obtained or (iii) sent by
registered or certified mail, return receipt requested, postage prepaid.
If to the Company: Occupational Health + Rehabilitation Inc
175 Derby Street, Suite 36
Hingham, MA 02043-5048
Attn: John C. Garbarino, President and
Chief Executive Officer
If to the Holder: Business Health Management, P.C.
c/o Benjamin H. Hoffman
15 Grove Street
Beverly, MA 01915
-9-
<PAGE>
All notices, requests, consents and other communications hereunder shall be
deemed to have been given (i) if by hand, at the time of the delivery thereof to
the receiving party at the address of such party set forth above, (ii) if sent
by overnight courier, on the next business day following the day such notice is
delivered to the courier service, or (iii) if sent by registered or certified
mail, on the 5th business day following the day such mailing is made.
(c) This Agreement shall be governed and construed in accordance with the
law of the State of New Hampshire, without giving effect to the conflict of laws
principles thereof.
(d) This Agreement may be amended or modified, and any provision hereof may
be waived in whole or in part, but only by the written consent of the Company
and the holders of at least two-thirds of the aggregate number of outstanding
shares of Restricted Stock held of record by the Holders or their permitted
successors and assigns. This Agreement may be terminated by written agreement
of the Company and the holders of at least two-thirds of the aggregate number of
outstanding shares of Restricted Stock held of record by the Holders or their
permitted successors and assigns.
(e) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(f) Except as otherwise expressly provided herein, the obligations of the
Company to register shares of Restricted Stock under Section 4 as provided
herein shall terminate on the third anniversary of the date of this Agreement.
(g) If requested by the underwriter or underwriters for an underwritten
public offering of securities of the Company which offering is by the Company,
each Holder of Restricted Stock who is a party to this Agreement (including,
without limitation, a successor or permitted assignee of a party) shall agree
not to sell, make any short sale of, loan, grant any option for the purchase of,
or otherwise dispose of any shares of Restricted Stock or any other shares of
Common Stock (other than shares being registered in such offering), without the
consent of such underwriter or underwriters, for a period of not more than 90
days following the effective date of the registration statement relating to such
offering (unless in any event such underwriter or underwriters shall, based on
then current market conditions, agree to a shorter period), provided, however,
with respect to each such offering, that all persons entitled to registration
rights in such offering who are not parties to this Agreement, all other persons
selling shares of Common Stock in such offering and all executive officers of
the Company shall also have agreed to be bound by provisions pertaining to the
sale of their shares of Common Stock following such offering which provisions
are substantially similar to the provisions binding upon the Holders of
Restricted Stock obligated under this Agreement with respect to the sale of
their shares following such offering.
(h) The Company shall be permitted to require any Holders requesting
registration under Section 4 to delay any request for registration or to cease
sales under any effective registration statement if the Company is then
contemplating a transaction that could reasonably be expected to be adversely
affected or the Company would be required to make public disclosure of
information, the disclosure of which at such time could reasonably be expected
to cause a material adverse effect upon the Company's business.
-10-
<PAGE>
(i) If any provision of this Agreement shall be held to be illegal, invalid
or unenforceable, such illegality, invalidity or unenforceability shall attach
only to such provision and shall not in any manner affect or render illegal,
invalid or unenforceable any other provision of this Agreement, and this
Agreement shall be carried out as if any such illegal, invalid or unenforceable
provision were not contained herein.
In the event that any court of competent jurisdiction shall determine that
any provision, or any portion thereof, contained in this Agreement shall be
unreasonable or unenforceable in any respect, then such provision shall be
deemed limited to the extent that such court deems it reasonable and
enforceable, and as so limited shall remain in full force and effect.
(j) The headings and captions of the various subdivisions of this Agreement
are for convenience of reference only and shall in no way modify, or affect the
meaning or construction of any of the terms or provisions hereof.
11. Entire Agreement. This Agreement embodies the entire agreement and
----------------
understanding among the parties hereto with respect to the subject matter hereof
and supersedes all prior oral or written agreements and understandings related
to the subject matter hereof.
[Remainder of page intentionally left blank]
30262_2C.DOC
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereof have caused this Registration Rights
Agreement to be executed under seal as of the date first above written.
OCCUPATIONAL HEALTH + REHABILITATION INC
By: /s/ John C. Garbarino
---------------------
John C. Garbarino
Its President and Chief Executive Officer
BUSINESS HEALTH MANAGEMENT, P.C.
By: /s/ Benjamin H. Hoffman
-----------------------
Benjamin H. Hoffman
Its President
-12-
<PAGE>
EXHIBIT NO. 11.01
OCCUPATIONAL HEALTH + REHABILITATION INC
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Quarter Ended March 31 Year-to-Date March 31
---------------------------------------------------------------------------------------
1997 1996 1997 1996
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY
Weighted average common stock
outstanding during the period 1,566,396 681,387 1,566,396 681,387
---------- --------- ---------- ---------
Total 1,566,396 681,387 1,566,396 681,387
========== ========= ========== =========
Net loss $ (653,779) $(357,529) $ (653,779) $(357,529)
Less: Accretion of preferred stock to
redemption value (5,158) 0 (5,158) 0
---------- --------- ---------- ---------
Net loss available to common stock $ (658,937) $(357,529) $ (658,937) $(357,529)
========== ========= ========== =========
Net loss per share $(0.42) $(0.53) $(0.42) $(0.53)
========== ========= ========== =========
FULLY DILUTED
Weighted average common stock
outstanding during the period 1,566,396 681,387 1,566,396 681,387
Plus: Incremental shares from assumed
conversions
Series A preferred stock 1,416,667 0 1,416,667 0
Convertible subordinated debt 7,778 0 7,778 0
---------- --------- ---------- ---------
Adjusted weighted average shares 2,990,841 681,387 2,990,841 681,387
========== ========= ========== =========
Net loss $ (653,779) $(357,529) $ (653,779) $(357,529)
Interest expense on convertible
subordinated debt 1,041 0 1,041 0
---------- --------- ---------- ---------
Net loss available to common
stock $ (652,738) $(357,529) $ (652,738) $(357,529)
========== ========= ========== =========
Loss per share - fully diluted $(0.22) $(0.53) $(0.22) $(0.53)
========== ========= ========== =========
</TABLE>
NOTES: THE EFFECT OF OPTIONS AND WARRANTS IS NOT CONSIDERED
AS IT WOULD BE ANTIDILUTIVE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> MAR-31-1997 MAR-31-1996
<CASH> 6,249,553 8,961,051
<SECURITIES> 0 0
<RECEIVABLES> 2,434,946 1,702,415
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 9,297,143 11,300,762
<PP&E> 2,158,337 1,992,155
<DEPRECIATION> 634,374 872,817
<TOTAL-ASSETS> 15,093,859 15,476,137
<CURRENT-LIABILITIES> 2,303,587 2,454,773
<BONDS> 0 0
0 0
0 0
<COMMON> 1,571 1,471
<OTHER-SE> 19,023,840 18,519,152
<TOTAL-LIABILITY-AND-EQUITY> 15,093,859 15,476,137
<SALES> 3,346,770 1,936,596
<TOTAL-REVENUES> 3,426,102 1,978,309
<CGS> 4,063,665 2,253,605
<TOTAL-COSTS> 4,063,665 2,253,605
<OTHER-EXPENSES> (105,454) (77,801)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 51,633 60,006
<INCOME-PRETAX> (653,779) (357,529)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (653,779) (357,529)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (653,779) (357,529)
<EPS-PRIMARY> (.42) (.53)
<EPS-DILUTED> (.22) (.53)
</TABLE>
