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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QA
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 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 IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
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
November 3, 1997 was 1,579,479.
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OCCUPATIONAL HEALTH + REHABILITATION INC
QUARTERLY REPORT ON FORM 10-QA
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
TABLE OF CONTENTS
PART I --- FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets................................................ 3
Consolidated Statements of Operations...................................... 4
Consolidated Statements of Cash Flows...................................... 6
Notes to Consolidated Financial Statements................................. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................................ 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk................... 13
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.................................... 14
Item 6. Exhibits and Reports on Form 8-K............................................. 14
Signatures............................................................................ 15
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OCCUPATIONAL HEALTH + REHABILITATION INC
CONSOLIDATED BALANCE SHEETS
($ IN 000'S)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
ASSETS 1997 1996
------ ----------- -------------
Current assets: (Unaudited)
<S> <C> <C>
Cash and cash equivalents:
Unrestricted............................................................. $ 4,428 $ 8,616
Restricted............................................................... 345
Accounts receivable, net.................................................... 3,794 1,703
Prepaid expenses and other assets........................................... 438 411
Due from related party...................................................... 71 226
------- -------
Total current assets............................................. 8,731 11,301
Property and equipment, net...................................................... 1,494 1,119
Excess cost of net assets acquired, net.......................................... 4,452 2,849
Noncompetition agreements, net................................................... 45 72
Organization costs, net.......................................................... 108 63
Deposits and other assets........................................................ 91 72
------- -------
Total assets..................................................... $14,921 $15,476
======= =======
LIABILITIES, REDEEMABLE STOCK AND STOCKHOLDERS' EQUITY
------------------------------------------------------
Current liabilities:
Accounts payable and accrued expenses....................................... $ 1,809 $ 1,316
Current portion of long-term debt........................................... 548 849
Due to related party....................................................... 17 290
------- -------
Total current liabilities........................................ 2,374 2,455
Long-term debt, less current maturities.......................................... 1,172 746
Other long-term liabilities...................................................... 25
Obligation to issue common stock................................................. 500
------- -------
Total liabilities................................................................ 3,546 3,726
Minority interest................................................................ 116 (88)
Redeemable stock:
Redeemable convertible preferred stock, Series A, $.001 par value ---
$8,500,002 liquidation value, 1,666,667 shares authorized, 1,416,667
shares issued and outstanding............................................... 8,435 8,423
Stockholders' equity:
Preferred stock, $.001 par value - 3,333,333 shares authorized; none issued
and outstanding...............................................................
Common stock, $.001 par value -- 10,000,000 shares authorized; issued and
outstanding, 1,579,479 and 1,471,477 shares in 1997 and 1996, respectively.. 2 1
Additional paid-in capital.................................................... 10,618 10,096
Accumulated deficit........................................................... (7,796) (6,682)
------- -------
Total stockholders' equity.................................................... 2,824 3,415
------- -------
Total liabilities, redeemable stock and stockholders' equity............... $14,921 $15,476
======= =======
</TABLE>
See Accompanying Notes
3
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OCCUPATIONAL HEALTH + REHABILITATION INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, $ IN 000'S EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
----------------------------------
1997 1996
---------------- ----------------
<S> <C> <C>
Revenues:
Net patient service revenue...................... $ 4,913 $ 2,280
Management fees.................................. 135 48
Other............................................ 30
---------- ----------
5,048 2,358
---------- ----------
Expenses:
Operating and administrative..................... 5,254 2,801
Depreciation and amortization.................... 165 117
Interest......................................... 71 76
---------- ----------
5,490 2 994
---------- ----------
Nonoperating gains:
Interest income.................................. 94 45
Minority interest in net (gain) loss of
subsidiaries................................... 52 63
Gain on disposition of investment................ 217 ----
---------- ----------
363 108
---------- ----------
Net loss before taxes............................ (79) (528)
Income taxes.......................................... ---- ----
---------- ----------
Net loss......................................... (79) (528)
========== ==========
Net loss available to common stock.................... $ (83) $ (528)
========== ==========
Net loss per share.................................... $ (0.05) $ (0.36)
========== ==========
Weighted average commons shares....................... 1,576,952 1,469,432
========== ==========
</TABLE>
See Accompanying Notes
4
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OCCUPATIONAL HEALTH + REHABILITATION INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, $ IN 000'S EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------
1997 1996
---------------- ---------------
<S> <C> <C>
Revenues:
Net patient service revenue.................... $ 12,965 $ 6,289
Management fees................................ 361 129
Other.......................................... 3 30
---------- ----------
13,329 6,448
---------- ----------
Expenses:
Operating and administrative.................... 14,417 7,364
Depreciation and amortization................... 500 317
Interest........................................ 190 206
---------- ----------
15,107 7,887
---------- ----------
Nonoperating gains:
Interest income................................. 266 56
Minority interest in net loss of subsidiaries... 194 194
Gain on disposition of investment............... 217 0
---------- ----------
677 250
---------- ----------
Net loss before taxes........................... (1,101) (1,189)
Income taxes...................................... 0 0
---------- ----------
Net loss........................................ (1,101) (1,189)
---------- ----------
Net loss available to common stock................ $ (1,114) $ (1,189)
========== ==========
Net loss per share................................ $(0.71) $(1.17)
========== ==========
Weighted average commons shares................... 1,571,814 1,014,848
========== ==========
</TABLE>
See Accompanying Notes
5
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OCCUPATIONAL HEALTH + REHABILITATION INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, $ IN 000'S)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------
1997 1996
---------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss...................................................... $(1,101) $(1,189)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization............................. 500 317
Amortization of discount.................................. 7 20
Gain on disposition of investment......................... (217)
Minority interest in net loss of subsidiary............... (194) (194)
Changes in operating assets and liabilities:..............
Accounts receivable..................................... (2,036) (630)
Prepaid expenses and other current assets............... (27) 19
Due from related party, net............................. 179 411
Deposits and other noncurrent assets.................... (19) 16
Accounts payable and accrued expenses................... 473 (546)
Other long term liabilities............................. 25
------- ------
Net cash used in operating activities......................... (2,435) (1,751)
INVESTING ACTIVITIES:
Reduction of restricted cash.................................. 345
Refund of security deposit.................................... (25)
Property and equipment additions.............................. (386) (23)
Additions to goodwill and other intangible assets............. (321) (311)
Cash paid for acquisitions.................................... (1,175) 3,678
------- -------
Net cash (used in) provided by investing activities........... (1,562) 3,344
------- -------
FINANCING ACTIVITIES:
Investment costs associated with the sale of preferred stock.. 8
Proceeds from line of credit and loans payable................ 344 500
Payments of long-term debt and other long-term obligations.... (552) (710)
Cash received by partnership.................................. 17
------- -------
Net cash used in financing activities........................ (191) (202)
------- -------
Net (decrease)/increase in cash and cash equivalents.......... (4,188) 1,391
Cash and cash equivalents at beginning of period.............. 8,616 369
------- -------
Cash and cash equivalents at end of period.................... $ 4,428 $ 1,760
======= =======
</TABLE>
See Accompanying Notes
6
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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 September 30, 1997 and results of operations for the
three and nine months ended September 30, 1997 and 1996. The results of
operations for the nine months ended September 30, 1997 are not necessarily
indicative of the results that may be expected for a full year.
2. 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 September 30, 1997 and for the nine months ended September 30,
1997. The weighted average number of shares outstanding for the three months
ended September 30, 1997 and 1996 and for the nine months ended September 30,
1997 and 1996 is based on the number of the Company's shares of common stock and
for the three and nine months ended September 30, 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 three
months ended September 30, 1997 and 1996 or for the nine months ended September
30, 1997 and 1996.
7
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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
-----------------
September 30,
-------------
1997 1996
---- ----
<S> <C> <C>
Total revenue........................................................... 100.0% 100.0%
Operating and administrative expenses................................... (104.1) (118.8)
Depreciation and amortization........................................... (3.3) (5.0)
Interest expense........................................................ (1.4) (3.2)
Interest income......................................................... 1.9 1.9
Minority interest in net loss of subsidiary............................. 1.1 2.7
Gain on disposition of investment....................................... 4.3 ---
------ ------
Net loss................................................................ ( 1.5)% (22.4)%
======= ======
<CAPTION>
Nine Months Ended
-----------------
September 30,
-------------
1997 1996
---- ----
<S> <C> <C>
Total revenue........................................................... 100.0% 100.0%
Operating and administrative expenses................................... (108.2) (114.2)
Depreciation and amortization........................................... (3.8) (4.9)
Interest expense........................................................ (1.4) (3.2)
Interest income......................................................... 2.0 0.9
Minority interest in net loss of subsidiary............................. 1.4 3.0
Gain on disposition of investment....................................... 1.7 ---
------ ------
Net loss................................................................ (8.3)% (18.4)%
====== ======
</TABLE>
8
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
- ----------------------------------------------
Revenue
Total revenue increased 114.1% to approximately $5,048,000 in the three
months ended September 30, 1997 from approximately $2,358,000 in the same three-
month period in 1996. Net patient service revenue increased 115.5% to
approximately $4,913,000 for the three months ended September 30,1997 from
approximately $2,280,000 in the comparable period in 1996. Of the approximately
$2,633,000 increase in net patient service revenue during the three-month period
ended September 30, 1997 compared to the same period in 1996, approximately
$849,000 (32.2%) was attributable to centers owned at the end of 1996 and
$1,784,000 (67.8%) was attributable to centers acquired in 1997.
Operating and Administrative Expenses
Operating and administrative expenses increased 87.6% to approximately
$5,254,000 in the three months ended September 30, 1997 from approximately
$2,801,000 in the same three months in 1996. This increase was principally due
to the acquisition and development of additional centers. As a percentage of
total revenues, operating and administrative expenses declined approximately
14.7% to 104.1% for the three months ended September 30, 1997 as compared to
118.8% 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 continue
to decline as a percentage of total revenue.
Depreciation and Amortization
Depreciation and amortization expense increased 41.0% to approximately
$165,000 in the three months ended September 30, 1997 from approximately
$117,000 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 3.3% in the third quarter of 1997 versus 5.0% in the third
quarter of 1996.
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 108.9%
to approximately $94,000 in the quarter ended September 30, 1997 from $45,000 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 losses of certain investors in
certain joint ventures with the Company. For the three months ended September
30, 1997, the minority interest in net losses of subsidiaries amounted to
$52,000 versus $63,000 for the three months ended September 30, 1996.
9
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Gain on Disposition of Investment
The Gain on Disposition of Investment relates to the restructuring of one
of the Company's joint ventures. In connection with such restructuring, the
ownership of the joint venture changed where by the Company assumed an
additional 24% ownership interest in such joint venture. Through this
transaction, each party in the joint venture forgave outstanding indebtedness.
Additionally, certain assets associated with one of the joint venture sites were
purchased by one of the Company's partners in consideration for the forgiveness
of the Company's note payable to its partner of approximately $536,000 and cash
of approximately $56,000. This restructuring resulted in the gain on disposition
of $217,000 to the Company.
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
- ---------------------------------------------
Revenue
Total revenue increased 106.8% to approximately $13,329.000 in the nine
months ended September 30, 1997 from approximately $6,448,000 in the same nine-
month period in 1996. Net patient service revenue increased 106.2% to
approximately $12,965,000 for the nine months ended September 30, 1997 from
approximately $6,289,000 in the comparable period in 1996. Of the approximately
$6,676,000 increase in net patient service revenue during the nine-month period
ended September 30, 1997 compared to the same period in 1996, approximately
$2,699,000 (40.4%) was attributable to centers owned at the end of 1996 and
$3,977,000 (59.6%) was attributable to centers acquired in 1997.
Operating and Administrative Expenses
Operating and administrative expenses increased 95.8% to approximately
$14,417,000 in the nine months ended September 30, 1997 from approximately
$7,364,000 in the same nine months in 1996. This increase was principally due
to the acquisition and development of additional centers. As a percentage of
total revenues, however, operating and administrative expenses declined by
approximately 6% to 108.2% for the nine months ended September 30, 1997 from
114.2% 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 continue
to decline as a percentage of total revenue.
Depreciation and Amortization
Depreciation and amortization expense increased 57.8% to approximately
$500,000 in the nine months ended September 30, 1997 from approximately $317,000
in the same nine-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 3.8% for the nine-months ended September 30, 1997 versus 4.9% for the prior
years nine month period.
10
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Interest Expense
Interest expense decreased 7.8% to approximately $190,000 during the nine
months ended September 30, 1997 from approximately $206,000 in the same nine-
month period in 1996. The decrease from 1996 to 1997 was primarily due to the
termination of an agreement to sell patient receivables in January 1997.
Additionally, the Company paid down certain debt. As a percentage of total
revenues, interest expense was 1.4% in the nine months ended September 30, of
1997, and 3.2% in the same period of 1996.
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 $266,000 in the nine months ended September 30, 1997 from $56,000
in the same period 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 losses of certain investors in
certain joint ventures with the Company. For the nine months ended September 30,
1997 and 1996, the minority interest in net losses of subsidiaries amounted to
approximately $194,000.
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 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 September
30, 1997 consisted of (i) cash and cash equivalents aggregating approximately
$4.4 million and (ii) accounts receivable of approximately $3.8 million.
11
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Net cash used in operating activities by the Company during the nine months
ended September 30, 1997 was approximately $2,435,000 as compared to
approximately $1,751,000 for the comparable period in 1996. The primary uses of
cash during the nine months ended September 30, 1997 were the funding of working
capital in centers that were acquired in 1996 and 1997, for certain centers
where an accounts receivable financing agreement was terminated and for expenses
relating to opening a new location during the fourth quarter of 1997.
Additional cash was used to fund Company operating losses for certain centers
for the nine months ended September 30, 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 September 30, 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 nine months ended September 30,
1997 included the purchase of three physician practices with an aggregate cash
outlay of $1,175,000. 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 $321,000 and
$311,000 in the periods ended September 30, 1997 and 1996, respectively, for
costs in excess of purchase price for certain acquisitions. Fixed asset
additions amounted to $386,000 for the period ended September 30, 1997 compared
to $23,000 for the same period in 1996. Fixed asset additions for 1997 included
renovations and equipment relating to a new center as well as the purchase of
computer equipment across Company sites and other improvements in management
information systems. During the nine months ended September 30, 1997,
approximately $320,000 of cash that had been pledged for certain letters of
credit was released. In addition, a security deposit of $25,000 in connection
with a certain sublease agreement was returned.
For the nine months ended September 30, 1997, the Company received
approximately $344,000 from interest bearing working capital loans from joint
venture partners and approximately $17,000 through a partnership contribution.
For the nine months ended September 30, 1997, the Company used funds of
approximately $552,000 for the payment of long-term debt and other long-term
obligations, compared to approximately $710,000 for the same period in 1996.
The Company expects that its principal use of funds in the near future will be
in connection with acquisitions and the formation of joint venture entities,
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. Thus, the Company will seek, and is currently
involved in active negotiations concerning 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.
12
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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
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
13
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PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the fiscal quarter ended September 30, 1997, the Company issued the
following securities without registration under the Securities Act of 1933, as
amended (the "Securities Act"):
(1) On August 1, 1997, the Company issued 7,500 shares of its Common Stock,
valued at a price of $3.00 per share, to New England Occupational Health
Services, P.C. in connection with the purchase by the Company of certain
assets of New England Occupational Health Services, P.C. on August 1, 1997 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.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
10.01 Registration Rights Agreement between the Company and New England
Occupational Health Services, P.C. dated as of August 1, 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 September 30,
1997.
14
<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
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)
Date: March 27, 1997
15
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
--- -----------
<C> <S>
10.01 Registration Rights Agreement between the Company and New England
Occupational Health Services, P.C. dated as of August 1, 1997.
11.01 Statement re Computation of Per Share Earnings.
27.01 Financial Data Schedule.
</TABLE>
<PAGE>
EXHIBIT 10.01
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement"), dated as of August 1,
1997, by and between Occupational Health + Rehabilitation Inc, a Delaware
corporation (the "Company"), and New England Occupational Health Services, 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 has acquired pursuant to the terms of the Asset Purchase
Agreement (the "Purchase Agreement") by and among the Company, the Holder and
William B. Patterson, M.D., M.P.H. between such parties dated as of August 1,
1997;
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.
"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 Shares (as hereinafter defined),
----------------
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.
"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.
"Shares" shall mean the shares of Common Stock issued pursuant to the
------
terms of the Purchase Agreement.
<PAGE>
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 security holders 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 Company will use its reasonable best efforts to cause the Restricted Stock
as to
-2-
<PAGE>
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;
-3-
<PAGE>
(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 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.
-4-
<PAGE>
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 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.
-5-
<PAGE>
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 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
-6-
<PAGE>
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 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
-7-
<PAGE>
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 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.
-8-
<PAGE>
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.
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.
-9-
<PAGE>
(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: 43 Harrison Street
Newton Highlands, MA 02161
Attn: William B. Patterson, M.D., M.P.H.
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 Commonwealth of Massachusetts, 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.
-10-
<PAGE>
(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 if the Company would be required to make public disclosure of
information, the disclosure of which at such time could reasonably be expected
to have a material adverse effect upon the Company's business.
(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 was 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.
-11-
<PAGE>
(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.
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
President and Chief Executive Officer
NEW ENGLAND OCCUPATIONAL
HEALTH SERVICES, P.C.
By: /s/ William B. Patterson
----------------------------------------
William B. Patterson, M.D., M.P.H.
Its President
-12-
<PAGE>
EXHIBIT NO. 11.01
OCCUPATIONAL HEALTH + REHABILITATION INC
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Quarter Ended September 30 Year-to-Date September 30
------------------------------------------------------------------------------------------------------
1997 1996 1997 1996
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY
Weighted average common
stock outstanding during
the period............... 1,576,952 1,469,432 1,571,814 1,014,848
----------- ---------- ----------- -----------
Total..................... 1,576,952 1,469,432 1,571,814 1,014,848
=========== ========== =========== ===========
Net loss.................. $ (79,000) $ (528,000) $(1,101,000) $(1,189,000)
Less: Accretion of
preferred stock
redemption
value.................... (3,868) 0 (12,894) 0
----------- ---------- ----------- -----------
Net loss available to
common stock............. $ ( 82,868) $ (528,000) $(1,113,894) $(1,189,000)
=========== ========== =========== ===========
Net loss per share........ $ (0.05) $ (0.36) $ (0.71) $ (1.17)
=========== ========== =========== ===========
FULLY DILUTED..............
Weighted average common stock
outstanding during
the period............... 1,576,952 1,469,432 1,571,814 1,014,848
Plus: Incremental shares
from assumed conversions
Series A preferred stock. 1,416,667 0 1,416,667 0
Convertible subordinated
debt.................... 25,000 0 19,322 0
----------- ---------- ----------- -----------
Adjusted weighted average
shares................... 3, 018,619 1,469,432 3,007,803 1,014,848
=========== ========== =========== ===========
Net loss.................. $ (82,868) $ (528,000) $(1,113,894) $(1,189,000)
Interest expense on
convertible subordinated
debt..................... 3,125 0 7,292 0
----------- ---------- ----------- -----------
Adjusted net loss
available to common stock $ (79,743) $ (528,000) $(1,106,602) $(1,189,000)
=========== ========== =========== ===========
Net loss per share........ $ (0.03) $ (0.36) $ (0.37) $ (1.17)
=========== ========== =========== ===========
</TABLE>
NOTES: THE EFFECT OF OPTIONS AND WARRANTS IS NOT CONSIDERED AS IT WOULD BE
ANTIDILUTIVE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> SEP-30-1997 SEP-30-1996
<CASH> 4,428 8,961
<SECURITIES> 0 0
<RECEIVABLES> 3,794 1,703
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 8,731 11,301
<PP&E> 2,251 1,992
<DEPRECIATION> 757 873
<TOTAL-ASSETS> 14,921 15,476
<CURRENT-LIABILITIES> 2,374 2,455
<BONDS> 0 0
8,435 8,423
0 0
<COMMON> 2 1
<OTHER-SE> 2,822 3,414
<TOTAL-LIABILITY-AND-EQUITY> 14,921 15,476
<SALES> 12,965 6,289
<TOTAL-REVENUES> 13,329 6,448
<CGS> 14,417 7,364
<TOTAL-COSTS> 14,917 7,681
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 190 206
<INCOME-PRETAX> (1,101) (1,189)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,101) (1,189)
<EPS-PRIMARY> (0.71) (1.17)
<EPS-DILUTED> (0.37) (1.17)
</TABLE>
