<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGAS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 1997
Registration No. 333-20933
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM S-3
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________
OCCUSYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 75-2543036
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
3010 LBJ FREEWAY, SUITE 400
DALLAS, TEXAS 75234
(972) 484-2700
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
JOHN K. CARLYLE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
OCCUSYSTEMS, INC.
3010 LBJ FREEWAY, SUITE 400
DALLAS, TEXAS 75234
(972) 484-2700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all communications, including all communications
to the agent for service, should be sent to:
RICHARD A. PARR II JEFFREY A. CHAPMAN
EXECUTIVE VICE PRESIDENT VINSON & ELKINS L.L.P.
AND GENERAL COUNSEL 3700 TRAMMELL CROW CENTER
OCCUSYSTEMS, INC. 2001 ROSS AVENUE
3010 LBJ FREEWAY, SUITE 400 DALLAS, TEXAS 75201
DALLAS, TEXAS 75234
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
<PAGE>
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
<PAGE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
______________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
PROPOSED PROPOSED
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED AMOUNT MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED PRICE PER NOTE(1) OFFERING PRICE(1) REGISTRATION
<S> <C> <C> <C> <C>
FEE
6% Convertible Subordinated Notes due 2001 $97,750,000 100% $97,750,000 $29,622
Common Stock, par value $0.01 per share (2) (2) (2) None
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Such indeterminate number of shares of Common Stock as shall be issuable
upon conversion of the Notes being registered hereunder. No additional
consideration will be received for the Common Stock and therefore no
registration fee is required pursuant to Rule 457(i).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
********************************************************************************
* Information contained herein is subject to completion or amendment. A *
* Registration Statement relating to these securities has been filed with the *
* Securities and Exchange Commission. These securities may not be sold nor *
* may offers to buy be accepted prior to the time the Registration Statement *
* becomes effective. This Prospectus shall not constitute an offer to sell or *
* the solicitation of an offer to buy nor shall there be any sale of these *
* securities in any State in which such offer, solicitation or sale would be *
* unlawful prior to registration or qualification under the securities laws of *
* any such State. *
********************************************************************************
Subject to Completion, dated May 13, 1997
PROSPECTUS
$97,750,000
OCCUSYSTEMS, INC.
6% CONVERTIBLE SUBORDINATED NOTES DUE 2001
This Prospectus relates to the offering by the Selling Securityholders
(the "Selling Securityholders") of up to an aggregate of $97,750,000 of 6%
Convertible Subordinated Notes due 2001 (the "Notes") of OccuSystems, Inc., a
Delaware corporation ("OccuSystems" or the "Company"), and the 3,291,246 shares
of Common Stock, par value $.01 per share (the "Common Stock"), that are
issuable upon conversion of the Notes at the initial conversion price (the
"Conversion Price") of $29.70 per share (equivalent to a conversion rate of
33.67 shares per $1,000 principal amount of Notes), subject to adjustment in
certain events. The Notes will be convertible at the option of the holder into
shares of Common Stock at any time on or after the 90th day following the latest
date of initial issuance of the Notes and prior to the close of business on the
Stated Maturity of the Notes, unless previously redeemed or repurchased. See
"Description of Notes--Conversion Rights." The Notes offered hereby were
originally offered by the Company in an underwritten private placement.
Interest on the Notes is payable semi-annually on June 15 and December
15 of each year, commencing on June 15, 1997. The Notes are redeemable, in whole
or in part, at the option of the Company, at any time on or after December 15,
1999, at the redemption prices set forth herein, plus accrued and unpaid
interest and liquidated damages, if any, to the date of redemption. The Company
will be required to offer to purchase the Notes upon a Change of Control (as
defined) at 100% of the principal amount thereof, plus accrued and unpaid
interest and liquidated damages, if any, to the date of purchase. There can be
no assurance that the Company will have available financial resources necessary
to repurchase the Notes in such circumstances.
The Notes are unsecured, general obligations of the Company,
subordinated in right of payment to all existing and future Senior Indebtedness
(as defined) of the Company. The Indenture (as defined) will not restrict the
incurrence of Senior Indebtedness or other indebtedness by the Company and its
subsidiaries. At March 31, 1997, the Company had no Senior Indebtedness
outstanding. See "Description of Notes."
The Notes may be sold from time to time pursuant to this Prospectus by
the Selling Securityholders. The Notes may be sold by the Selling
Securityholders in ordinary brokerage transactions, in transactions in which
brokers solicit purchases, in negotiated transactions, or in a combination of
such methods of sale, at market prices prevailing at the time of sale, at prices
relating to such prevailing market prices or at negotiated prices. See "Plan of
Distribution." The distribution of the Notes is not subject to any underwriting
agreement. The Company will receive no part of the proceeds of sales from the
offering by the Selling Securityholders. All expenses of registration incurred
in connection with this offering are being borne by the Company, but all selling
and other expenses incurred by the Selling Securityholders will be borne by such
Selling Securityholders. None of the securities offered pursuant to this
Prospectus have been registered prior to the filing of the Registration
Statement of which this Prospectus is a part.
On May 12, 1997, the last reported sale price for the Company's Common
Stock on the Nasdaq National Market (where it trades under the symbol "OSYS")
was $23 1/8 per share.
SEE "RISK FACTORS" ON PAGE 3 FOR CERTAIN FACTORS RELEVANT TO AN
INVESTMENT IN THE NOTES.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________________
, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "SEC" or the "Commission"). Reports,
proxy statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, NW, Washington, D.C. 20549, and at the Commission's Regional
Offices at Seven World Trade Center, 13th Floor, New York, New York 10048 and
CitiCorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511. Copies of such material can be obtained by mail from the Public Reference
Section of the Commission at 450 West Fifth Street, NW, Washington, D.C. 20549,
at prescribed rates. The reports, proxy statements and other information may
also be obtained from the Web site that the Commission maintains at
http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the securities offered hereby. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain parts of which were omitted in accordance with the rules and regulations
of the Commission. For further information, reference is hereby made to the
Registration Statement. Any statements contained herein concerning the
provisions of any document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission are not necessarily complete, and in each
instance reference is made to the copy of such document so filed. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;
2. The Company's Current Report on Form 8-K dated January 2, 1996;
3. The Company's Current Report on Form 8-K/A dated March 14, 1996;
4. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996;
5. The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996;
6. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996;
7. The Company's Current Report on Form 8-K dated November 1, 1996;
8. The Company's Current Report on Form 8-K dated December 4, 1996;
9. The Company's Current Report on Form 8-K/A dated December 5, 1996;
10. The Company's Current Report on Form 8-K dated December 23, 1996;
and
11. The description of the Company's Common Stock contained in Item 1
of the Registration Statement on Form 8-A (File No. 0-24440) filed
with the Commission on April 4, 1995, including any amendment or
report filed for the purpose of updating such description filed
with the Commission pursuant to Section 13 of the Exchange Act.
12. The Company's Current Report on Form 8-K dated April 21, 1997.
2
<PAGE>
13. The Company's Current Report on Form 8-K dated May 13, 1997.
All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing such documents.
Any statement contained in this Prospectus or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained in this Prospectus or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
RISK FACTORS
Prospective investors should consider carefully the following factors,
together with the other information set forth in this Prospectus, in evaluating
an investment in the Notes.
DEPENDENCE ON FUTURE ACQUISITIONS AND JOINT VENTURES
The Company's growth in new and existing markets is dependent upon an
aggressive acquisition and joint venture strategy. The Company is in various
stages of negotiations to acquire practices from a number of prospective selling
groups. There can be no assurance that further suitable acquisition candidates
can be found, that acquisitions can be financed or consummated on favorable
terms or that such acquisitions, if completed, will be successful. In addition,
the Company anticipates that the Emerging Issues Task Force of the Financial
Accounting Standards Board will be evaluating certain matters relating to the
physician practice management industry, which the Company expects to include a
review of accounting for business combinations. The Company is unable to predict
the impact, if any, that this review may have on the Company's acquisition
strategy.
The Company has also entered into, and is in various stages of
negotiations to form, joint ventures to own and operate occupational healthcare
centers in selected markets. The Company's strategy is to form these joint
ventures with competitively positioned hospital management companies, hospital
systems and other healthcare providers. There can be no assurances that the
Company will continue to utilize joint ventures as part of its growth strategy,
that further suitable joint ventures can be formed or that such ventures will be
successful.
RAPID GROWTH OF THE COMPANY
Over the past five years, the Company has experienced rapid growth in
its business and in its staff, and the Company's future results could be
affected by its ability to manage growth and integrate acquisitions effectively.
UNCERTAINTIES RELATED TO CHANGING HEALTHCARE ENVIRONMENT
The healthcare industry has experienced substantial changes in recent
years. Although managed care has yet to become a major factor in occupational
healthcare, the Company anticipates that managed care programs, including case
rate and capitation plans, may play an increasing role in the delivery of
occupational healthcare services, and that competition in the occupational
healthcare industry may shift from individual practitioners to specialized
provider groups such as those managed by the Company, insurance companies,
health maintenance organizations ("HMOs") and other significant providers of
managed care products. To facilitate the Company's managed care strategy, the
Company is developing risk-sharing products for the workers' compensation
industry that will be marketed to employers, insurers
3
<PAGE>
and managed care organizations. No assurance can be given that the Company will
prosper in the changing healthcare environment or that the Company's strategy to
develop managed care programs will succeed in meeting employers' and workers'
occupational healthcare needs.
There have been numerous initiatives at the federal and state levels
for comprehensive reforms affecting the payment for and availability of
healthcare services. The Company believes that such initiatives will continue
during the foreseeable future. Aspects of certain of these reforms as proposed
in the past could, if adopted, adversely affect the Company.
GOVERNMENT REGULATION
The provision of healthcare services is heavily regulated at both the
state and federal levels. State and federal workers' compensation laws control
many aspects of providing medical services to the individuals covered by such
laws (including, in many cases, the amounts that may be charged for those
services). Approximately 60% of the Company's revenues in the year ended
December 31, 1996 were subject to state-mandated fee schedules prescribing
maximum reimbursable amounts for designated medical procedures. Although recent
changes in such fee schedules have not adversely affected the Company, there can
be no assurances that prospective changes will not have such an effect. State
laws generally prohibit anyone other than a licensed physician from engaging in
acts that constitute the practice of medicine and also prohibit physicians from
"splitting" their fees with other persons. The Company is also subject to
various other federal and state laws. Many of the applicable laws are enforced
by regulatory authorities with broad discretion to interpret the laws and
promulgate corresponding regulations, and violations of these laws and
regulations may result in substantial penalties. The Company believes that its
operations are in material compliance with currently applicable laws and
regulations. There can be no assurance, however, that a court or regulatory
authority will not determine that the Company's operations are not in compliance
with any applicable law or regulation or that any such determination will not
have a material adverse effect on the Company.
SUBORDINATION
The Notes are subordinated in right of payment to all existing and
future Senior Indebtedness, including OccuSystems, Inc.'s guarantee of
borrowings under the loan agreement (the "Loan Agreement") among OccuCenters,
Inc., a wholly- owned subsidiary of OccuSystems, Inc., as borrower, OccuSystems,
Inc., as guarantor, and Creditanstalt--Bankverein ("Creditanstalt"), and will be
structurally subordinated to all liabilities (including trade payables) of the
Company's subsidiaries. The Indenture will not restrict the incurrence of Senior
Indebtedness or other indebtedness by the Company or its subsidiaries. By reason
of such subordination, in the event of the insolvency, bankruptcy, liquidation,
reorganization, dissolution or winding up of the business of the Company, the
assets of the Company will be available to pay the amounts due on the Notes only
after all Senior Indebtedness has been paid in full and, therefore, there may
not be sufficient assets remaining to pay amounts due on any or all of the Notes
then outstanding. As of March 31, 1997, the Company had no Senior Indebtedness
outstanding. See "Description of Notes--Subordination."
The Company's ability to meet its cash obligations in the future will
be dependent upon the ability of its subsidiaries to make cash distributions to
the Company. The ability of its subsidiaries to make distributions to the
Company is and will continue to be restricted by, among other limitations,
applicable provisions of state law and contractual provisions (including a
guarantee by a wholly-owned subsidiary of the Company of certain indebtedness
issued by Concentra Development Corp.). The Indenture will not limit the ability
of the Company's subsidiaries to incur such restrictions in the future. The
right of the Company to participate in the assets of any subsidiary (and thus
the ability of holders of the Notes to benefit indirectly from such assets) is
generally subject to the prior claims of creditors, including trade creditors,
of that subsidiary except to the extent that the Company is recognized as a
creditor of such subsidiary, in which case the Company's claims would still be
subject to any security interest of other creditors of such subsidiary. The
Notes, therefore, will be structurally subordinated to creditors, including
trade creditors, of subsidiaries of the Company with respect to the assets of
the subsidiaries against which such creditors have a claim.
4
<PAGE>
RISKS INHERENT IN PROVISION OF MEDICAL SERVICES
The physician groups with which the Company is affiliated (the
"Physician Groups"), and certain employees of the Company, are involved in the
delivery of healthcare services to the public and, therefore, are exposed to the
risk of professional liability claims. Claims of this nature, if successful,
could result in substantial damage awards to the claimants which may exceed the
limits of any applicable insurance coverage. Insurance against losses related to
claims of this type can be expensive and varies widely from state to state. The
Company is indemnified under its management agreements with the Physician Groups
for claims against them, maintains liability insurance for itself and negotiates
liability insurance for the physicians in the Physician Groups. Successful
malpractice claims asserted against the Physician Groups or the Company,
however, could have a material adverse effect on the Company's financial
condition and profitability.
COMPETITION
The market to provide healthcare services within the workers'
compensation system is highly fragmented and competitive. The Company's primary
competitors have typically been independent physicians, hospital emergency
departments and hospital-owned or -affiliated medical facilities. The Company
believes that, due to the emergence of managed care, its competitors will
increasingly consist of specialized provider groups, insurance companies, HMOs
and other significant providers of managed care products. Many of the Company's
current and potential competitors are significantly larger and have greater
financial and marketing resources than the Company. There can be no assurance
that the Company will be able to compete effectively against those competitors
in the future.
LIMITATIONS ON REPURCHASE OF NOTES UPON CHANGE OF CONTROL
Upon the occurrence of a Change of Control, unless waived by holders
of in excess of two-thirds in aggregate principal amount of the then outstanding
Notes, each holder of Notes may require the Company to repurchase all or a
portion of such holder's Notes. If a Change of Control were to occur, there can
be no assurance that the Company would have sufficient financial resources, or
would be able to arrange financing, to pay the repurchase price for all Notes
tendered by holders thereof. In addition, the Company's repurchase of the Notes
as a result of a Change of Control may be prohibited or limited by, or create an
event of default under, the terms of agreements related to borrowings which the
Company may enter into from time to time, including the Loan Agreement and other
agreements relating to indebtedness. Failure of the Company to purchase tendered
Notes would constitute an Event of Default under the Indenture. See "Description
of Notes--Repurchase of Notes at the Option of the Holder Upon a Change of
Control."
DEPENDENCE UPON KEY PERSONNEL
The Company is dependent to a substantial extent upon the continuing
efforts and abilities of certain key management personnel. In addition, the
Company faces strong competition for experienced employees with technical
expertise in the workers' compensation and managed care areas. The Company has
obtained a "key man" life insurance policy on the life of John K. Carlyle, the
Company's Chief Executive Officer. This policy provides benefits of $1 million
upon the death of Mr. Carlyle and names the Company as sole beneficiary.
Nevertheless, the loss of, or the inability to attract, qualified employees
could have a material adverse effect on the Company's business.
VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock has been volatile and
may be volatile in the future. Future developments concerning the Company or its
competitors, including developments related to governmental regulations,
acquisitions, operating results and general market and economic conditions, may
have a significant impact on the market price of the Company's Common Stock.
5
<PAGE>
DIVIDEND POLICY AND RESTRICTIONS
The Company does not intend to pay cash dividends on the Common Stock
in the foreseeable future and anticipates that future earnings will be retained
to finance future operations and expansion. The Loan Agreement prohibits the
Company from paying dividends and making other distributions on its Common
Stock.
ANTI-TAKEOVER PROVISIONS
Certain provisions of the Company's Certificate of Incorporation and
certain provisions of the Delaware General Corporation Law may make it difficult
to change control of the Company and replace incumbent management. For example,
the Company's Certificate of Incorporation provides for a staggered Board of
Directors and permits the Board of Directors, without stockholder approval, to
issue additional shares of Common Stock or establish one or more series of
Preferred Stock having such number of shares, designations, relative voting
rights, dividend rates, liquidation and other rights, preferences and
limitations as the Board of Directors may determine.
In addition, the terms of certain indebtedness of the Company
(including the Notes) may require prepayment upon a change of control of the
Company and therefore may have an anti-takeover effect. See "Description of
Notes-Change of Control."
ABSENCE OF EXISTING MARKET FOR NOTES
The Notes constitute a new issue of securities. The Company has listed
the notes on the Nasdaq National Market. Donaldson, Lufkin & Jenrette Securities
Corporation, Alex. Brown & Sons Incorporated and Piper Jaffray Inc., the initial
purchasers of the Notes (the "Initial Purchasers"), informed the Company at the
time of such purchase that they may make a market in the Notes and the
underlying Common Stock. However, the Initial Purchasers are not obligated to
make such a market and may discontinue any market-making activities at any time
without notice.
Prior to the effectiveness of the Registration Statement, the Notes
were designated for trading in the Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL") market; however, the Notes sold hereunder
will no longer be eligible for trading through PORTAL, and no assurance can be
given that an active trading market for the Notes will develop on the Nasdaq
National Market or otherwise or, if such market develops, as to the liquidity or
sustainability of such market. If an active trading market does not develop or
is not maintained, holders of the Notes may experience difficulty in reselling,
or an inability to sell, the Notes. The Company may discontinue the listing of
the Notes on the Nasdaq National Market or otherwise at any time. If an active
public trading market develops for the Notes, future trading prices of the Notes
will depend on many factors, including, among other things, prevailing interest
rates, the Company's operating results and the market for similar securities.
Depending on such factors, the Notes may trade at a discount from their
principal amount.
RECENT DEVELOPMENTS
MERGER WITH CRA MANAGED CARE, INC.
On April 21, 1997, the Company executed an Agreement and Plan of
Reorganization (the "Merger Agreement") among the Company, CRA Managed Care,
Inc., a Massachusetts corporation ("CRA"), and Concentra Management Care, Inc.,
a Delaware corporation ("Concentra"), pursuant to which OccuSystems would merge
with and into Concentra (the "OccuSystems Merger") and a wholly-owned subsidiary
of Concentra would merge with and into CRA. Under the Merger Agreement, each
share of the Company's Common Stock will be exchanged for one share of common
stock in Concentra and each share of CRA's common stock, par value $.01 per
share, will be exchanged for 1.786 shares of common stock in Concentra.
Additionally, as a result of the OccuSystems Merger, Concentra will succeed to,
and assume by operation of law, all of the Company's obligations under the
Indenture and the Notes and the Notes will
6
<PAGE>
thereafter be convertible into shares of common stock of Concentra on the same
basis as they would have been convertible into Common Stock of the Company. The
consummation of the OccuSystems Merger will not constitute a Change of Control
under the Indenture.
1995 LONG TERM INCENTIVE PLAN
The Company intends to submit to its stockholders for approval at the
Company's 1997 annual meeting of stockholders a proposal to increase the number
of shares of Common Stock authorized for issuance under the Company's 1995 Long
Term Incentive Plan from 1,000,000 to 2,000,000.
DRCA MEDICAL CORPORATION ACQUISITION
Effective December 31, 1996, the Company agreed to acquire the
occupational medicine business of DRCA Medical Corporation ("DRCA") for $7.7
million in cash. DRCA operates four occupational healthcare centers and a mobile
testing service in Houston, Texas, and three centers in Little Rock, Arkansas, a
new market for the Company.
7
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, PRO MARCH 31,
----------------------- FORMA ------------------
1994 1995 1996 1996(1) 1996 1997
----- ---- ---- ------- ------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges (2)....... 1.0x 2.7x 5.8x 2.9x 3.0x 3.0x
</TABLE>
- ----------------
(1) The pro forma data give effect to the following pro forma adjustments as if
they had occurred on January 1, 1995: (a) consummation of the Company's
acquisitions (the "Recent Acquisitions") of Medical Plaza Industrial Clinic,
Corporate Health Services, Inc., Medical and Surgical Clinic Association,
P.A., Occupational Health Resources, Inc., Flagstaff Urgent Care, Deer Park
Clinic and Austin Regional Clinic; and (b) sale of the Notes and use of
proceeds therefrom. All of the Recent Acquisitions were effective on or
before July 1, 1996.
(2) Computed by dividing the sum of net earnings, before deducting provisions
for income taxes and fixed charges, by total fixed charges. Fixed charges
consist of interest on debt, including amortization of debt issuance costs,
and one-fourth of rent expense, estimated by management to be the interest
component of such rentals. The adjusted ratio of earnings to fixed charges
gives effect to the net change in interest expense resulting from the sale
of the principal amount of Notes and application of the estimated net
proceeds therefrom.
8
<PAGE>
DESCRIPTION OF NOTES
Set forth below is a summary of certain provisions of the Notes. The
Notes were issued pursuant to an indenture (the "Indenture") dated as of
December 24, 1996, by and between the Company and United States Trust Company of
New York, as trustee (the "Trustee"). The following summary of the Notes, the
Indenture and the Registration Rights Agreement (herein so called) among the
Company and the Initial Purchasers does not purport to be complete and is
subject to, and is qualified in its entirety by, reference to all of the
provisions of the Indenture and the Registration Rights Agreement, including the
definitions therein of certain terms. Copies of the Indenture and the
Registration Rights Agreement have been filed as exhibits to the Registration
Statement. Capitalized terms used herein without definition have the meanings
ascribed to them in the Indenture or the Registration Rights Agreement, as
appropriate. As used in this section, the "Company" refers to OccuSystems, Inc.,
exclusive of its subsidiaries. Wherever particular provisions or defined terms
of the Indenture (or the form of Note which is part thereof) or the Registration
Rights Agreement are referred to in this summary, such provisions or defined
terms are incorporated by reference as a part of the statements made and such
statements are qualified in their entirety by such reference. Certain
definitions of terms used in the following summary are set forth under "--
Certain Definitions" below.
GENERAL
The Notes are unsecured, subordinated, general obligations of the
Company, limited in aggregate principal amount to $97,750,000. The Notes are
subordinated in right of payment to all Senior Indebtedness of the Company, as
described under "--Subordination" below. The Notes have been issued only in
fully registered form, without coupons, in denominations of $1,000 and integral
multiples thereof.
The Notes will mature on December 15, 2001. The Notes bear interest at
the rate per annum stated on the cover page of this Prospectus from December 24,
1996 or from the most recent Interest Payment Date to which interest has been
paid or provided for, payable semiannually on June 15 and December 15 of each
year, commencing June 15, 1997, to the persons in whose names such Notes are
registered at the close of business on the June 1 or December 1 immediately
preceding such Interest Payment Date. Principal of, premium, if any, and
interest on, and liquidated damages with respect to, the Notes will be payable,
the Notes will be convertible and the Notes may be presented for registration of
offer or exchange, at the office or agency of the Company maintained for such
purpose, which office or agency shall be maintained in the Borough of Manhattan,
The City of New York (which initially will be the office of the Trustee).
Interest will be calculated on the basis of a 360-day year consisting of twelve
30-day months.
At the option of the Company, payment of interest and liquidated damages
may be made by check mailed to the Holders of the Notes at the addresses set
forth upon the registry books of the Company. No service charge will be made for
any registration of transfer or exchange of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Indenture does not contain any financial covenants or any
restrictions on the payment of dividends, the repurchase of securities of the
Company or the incurrence of Senior Indebtedness. The Indenture contains no
covenants or other provisions to afford protection to holders of Notes in the
event of a highly-leveraged transaction or a change of control of the Company,
except to the limited extent described under "--Repurchase of Notes at the
Option of the Holder Upon a Change of Control" below.
CONVERSION RIGHTS
Each Holder of Notes will have the right at any time on or after the 90th
day following the latest date of initial issuance of the Notes and prior to the
close of business on the Stated Maturity of the Notes, unless previously
redeemed or repurchased, at the Holder's option, to convert any portion of the
principal amount thereof that is an integral multiple of $1,000 into shares of
Common Stock at any time at the Conversion Price set forth on the cover page of
this Offering Memorandum (subject to adjustment as described below). The right
to convert a Note called for redemption or delivered for repurchase and not
withdrawn will terminate at the close of business on the Business Day,
respectively, immediately
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prior to the Redemption Date or Repurchase Date for such Note, unless the
Company subsequently fails to pay the applicable Redemption Price or Repurchase
Price, as the case may be.
In the case of any Note that has been converted after any Record Date,
but on or before the next Interest Payment Date, interest, the stated due date
of which is on such Interest Payment Date, shall be payable on such Interest
Payment Date notwithstanding such conversion, and such interest shall be paid to
the Holder of such Note who is a Holder on such Record Date. Any Note converted
after any Record Date but before the next Interest Payment Date must be
accompanied by payment of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of Notes being surrendered for
conversion; provided no such payment shall be required with respect to interest
payable on December 15, 1999. No fractional shares will be issued upon
conversion but, in lieu thereof, an appropriate amount will be paid in cash by
the Company based on the market price of Common Stock (determined in accordance
with the Indenture) at the close of business on the day of conversion. As a
result of the foregoing provisions, Holders that surrender Notes for conversion
on a date that is not an Interest Payment Date will not receive any interest for
the period from the Interest Payment Date next preceding the date of conversion
to the date of conversion or for any later period.
The Conversion Price will be subject to adjustment in certain events,
including (a) any payment of a dividend (or other distribution) payable in
Common Stock on any class of Capital Stock of the Company, (b) any issuance to
all holders of Common Stock of rights, options or warrants entitling them to
subscribe for or purchase Common Stock at less than the then current market
price of Common Stock (determined in accordance with the Indenture), provided,
however, that if such rights, options or warrants are only exercisable upon the
occurrence of certain triggering events, then the Conversion Price will not be
adjusted until such triggering events occur, (c) certain subdivisions,
combinations or reclassifications of Common Stock, (d) any distribution to all
holders of Common Stock of evidences of indebtedness, shares of Capital Stock
other than Common Stock, cash or other assets (including securities, but
excluding those dividends, rights, options, warrants and distributions referred
to above and excluding dividends and distributions paid exclusively in cash and
in mergers and consolidations to which the third succeeding paragraph applies),
(e) any distribution consisting exclusively of cash (excluding any cash portion
of distributions referred to in (d) above, or cash distributed upon a merger or
consolidation to which the third succeeding paragraph applies) to all holders of
Common Stock in an aggregate amount that, combined together with (i) all other
such all-cash distributions made within the then preceding 12 months in respect
of which no adjustment has been made and (ii) any cash and the fair market value
of other consideration paid or payable in respect of any tender or exchange
offer by the Company or any of its subsidiaries for Common Stock concluded
within the preceding 12 months in respect of which no adjustment has been made,
exceeds 15% of the Company's market capitalization (defined as being the product
of the then current market price of the Common Stock times the number of shares
of Common Stock then outstanding) on the record date of such distribution, and
(f) the completion of a tender or exchange offer made by the Company or any of
its subsidiaries for Common Stock that involves an aggregate consideration that,
together with (i) any cash and other consideration payable in a tender or
exchange offer by the Company or any of its subsidiaries for Common Stock
expiring within the 12 months preceding the expiration of such tender or
exchange offer in respect of which no adjustment has been made and (ii) the
aggregate amount of any such all-cash distributions referred to in (e) above to
all holders of Common Stock within the 12 months preceding the expiration of
such tender or exchange offer in respect of which no adjustments have been made,
exceeds 15% of the Company's market capitalization on the expiration of such
tender offer. No adjustment of the Conversion Price will be required to be made
until the cumulative adjustments amount to 1.0% or more of the Conversion Price
as last adjusted.
In the event of a taxable distribution to holders of Common Stock (or
other transaction) which results in any adjustment of the Conversion Price, the
Holders of Notes may, in certain circumstances, be deemed to have received a
distribution subject to United States federal income tax as a dividend; in
certain other circumstances, the absence of such an adjustment may result in a
taxable dividend to the holders of Common Stock.
The Company, from time to time and to the extent permitted by law, may
reduce the Conversion Price by any amount for any period of at least 20 Business
Days, in which case the Company shall give at least 15 days notice of such
reduction, if the Board of Directors has made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive. The Company may, at its option, make such reductions in the
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Conversion Price, in addition to those set forth above, as the Board of
Directors deems advisable to avoid or diminish any income tax to holders of
Common Stock resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for United States federal
income tax purposes. See "Certain Federal Income Tax Consequences."
In case of any consolidation or merger of the Company with or into
another Person or any merger of another Person with or into the Company (with
certain exceptions), or in case of any sale, transfer or conveyance of all or
substantially all of the assets of the Company, each Note then outstanding will,
without the consent of any Holder of Notes, become convertible only into the
kind and amount of securities, cash and other property receivable upon such
consolidation, merger, sale, transfer or conveyance by a holder of the number of
shares of Common Stock into which such Note was convertible immediately prior
thereto, after giving effect to any adjustment event, who failed to exercise any
rights of election and received per share the kind and amount received per share
by a plurality of non-electing shares.
The Company will cause all registrations with, and will obtain any
approvals by, any governmental authority under any Federal or state law of the
United States that may be required in connection with the conversion of the
Notes into Common Stock.
EFFECT OF THE MERGER AGREEMENT ON CONVERSION RIGHTS
Upon consummation of the Merger Agreement, the Notes will be convertible
into shares of common stock of Concentra on the same basis as they would have
been convertible into shares of Common Stock of the Company.
SUBORDINATION
The Notes are general, unsecured obligations of the Company, subordinated
in right of payment to all existing and future Senior Indebtedness of the
Company. The Notes are structurally subordinated in right of payment to all
liabilities (including trade payables) of the Company's subsidiaries. At March
31, 1997, on a pro forma basis after giving effect to the sale of the Notes and
the use of the proceeds therefrom, the Company would have had no Senior
Indebtedness outstanding. The Indenture does not restrict the incurrence of
Senior Indebtedness or other indebtedness by the Company or its subsidiaries or
the ability of the Company to transfer assets or business operations to its
subsidiaries, subject to the provisions described under "--Repurchase of Notes
at the Option of the Holder Upon a Change of Control" and "--Limitation on
Merger, Sale or Consolidation" below.
The Indenture provides that no payment may be made by the Company on
account of the principal of, premium, if any, interest on, or liquidated damages
with respect to, the Notes, or to acquire any of the Notes (including
repurchases of Notes at the option of the Holder) for cash or property (other
than Junior Securities), or on account of the redemption provisions of the
Notes, (i) upon the maturity of any Senior Indebtedness of the Company by lapse
of time, acceleration (unless waived) or otherwise, unless and until all
principal of, premium, if any, and interest on such Senior Indebtedness are
first paid in full (or such payment is duly provided for), or (ii) in the event
of default in the payment of any principal of, premium, if any, or interest on
any Senior Indebtedness of the Company when it becomes due and payable, whether
at maturity or at a date fixed for prepayment or by declaration or otherwise (a
"Payment Default"), unless and until such Payment Default has been cured or
waived or otherwise has ceased to exist. The payment of cash, property or
securities (other than Junior Securities) upon conversion of a Note will
constitute payment on a Note and therefore will be subject to the subordination
provisions in the Indenture.
Upon (i) the happening of an event of default (other than a Payment
Default) that permits, or would permit with (a) the passage of time, (b) the
giving of notice, (c) the making of any payment of the Notes then required to be
made or (d) any combination thereof (collectively, a "Non-Payment Default"), the
holders of Senior Indebtedness having a principal amount then outstanding in
excess of $3 million (or with respect to which Senior Indebtedness the holders
are obligated to lend in excess of $3 million principal amount) or their
representative immediately to accelerate its maturity and (ii) written notice of
such Non-Payment Default given to the Company and the Trustee by the holders of
an aggregate of at least $3 million outstanding principal amount (or commitments
to lend up to $3 million in Senior Indebtedness) of such Senior Indebtedness or
their representative (a "Payment Notice"), then, unless and until such Non-
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Payment Default has been cured or waived or otherwise has ceased to exist, no
payment (by setoff or otherwise) may be made by or on behalf of the Company on
account of the principal of, premium, if any, interest on, or liquidated damages
with respect to, the Notes, or to acquire or repurchase any of the Notes for
cash or property, or on account of the redemption provisions of the Notes, in
any such case other than payments made with Junior Securities. Notwithstanding
the foregoing, unless (i) the Senior Indebtedness in respect of which such Non-
Payment Default exists has been declared due and payable in its entirety within
179 days after the Payment Notice is delivered as set forth above (the "Payment
Blockage Period"), and (ii) such declaration has not been rescinded or waived,
at the end of the Payment Blockage Period, the Company shall be required to pay
all sums not paid to the Holders of the Notes during the Payment Blockage Period
due to the foregoing prohibitions and to resume all other payments as and when
due on the Notes. Not more than one Payment Notice may be given in any
consecutive 365-day period, irrespective of the number of defaults with respect
to Senior Indebtedness during such period. However, if any Payment Notice within
such 365-day period is given by or on behalf of any holders of Senior
Indebtedness other than under the Loan Agreement, the agent under the Loan
Agreement may give another Payment Notice within such period. In no event,
however, may the total number of days during which any Payment Blockage Period
or Payment Blockage Periods are in effect exceed 179 days in the aggregate
during any consecutive 365-day period.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company (other than Junior Securities) shall be
received by the Trustee or the Holders at a time when such payment or
distribution is prohibited by the foregoing provisions, such payment or
distribution shall be held in trust for the benefit of the holders of Senior
Indebtedness of the Company, and shall be paid or delivered by the Trustee or
such Holders, as the case may be, to the holders of the Senior Indebtedness of
the Company remaining unpaid or unprovided for or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Indebtedness of the Company
may have been issued, ratably according to the aggregate amounts remaining
unpaid on account of the Senior Indebtedness of the Company held or represented
by each, for application to the payment of all Senior Indebtedness of the
Company remaining unpaid, to the extent necessary to pay or to provide for the
payment of all such Senior Indebtedness in full after giving effect to any
concurrent payment or distribution, or provision therefor, to the holders of
such Senior Indebtedness.
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a
similar proceeding or upon assignment for the benefit of creditors or any
marshaling of assets or liabilities (i) the holders of all Senior Indebtedness
of the Company will first be entitled to receive payment in full (or have such
payment duly provided for) before the Holders are entitled to receive any
payment on account of the principal of, premium, if any, interest on, and
liquidated damages with respect to, the Notes (other than Junior Securities) and
(ii) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than Junior
Securities) to which the Holders or the Trustee on behalf of the Holders would
be entitled (by setoff or otherwise), except for the subordination provisions
contained in the Indenture, will be paid by the liquidating trustee or agent or
other person making such a payment or distribution directly to the holders of
Senior Indebtedness of the Company or their representative to the extent
necessary to make payment in full of all such Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution, or
provision therefor, to the holders of such Senior Indebtedness.
No provision contained in the Indenture or the Notes will affect the
obligation of the Company, which is absolute and unconditional, to pay, when
due, principal of, premium, if any, interest on, and liquidated damages with
respect, to the Notes. The subordination provisions of the Indenture and the
Notes will not prevent the occurrence of any Default or Event of Default under
the Indenture or limit the rights of the Trustee or any Holder, subject to the
preceding paragraphs, to pursue any other rights or remedies with respect to the
Notes.
As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or an assignment for the benefit of the creditors of the Company or
any of its subsidiaries or a marshalling of assets or liabilities of the Company
and its subsidiaries, Holders of Notes may receive ratably less than other
creditors.
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The Company's ability to meet its cash obligations in the future will be
dependent upon the ability of its subsidiaries to make cash distributions to the
Company. The ability of its subsidiaries to make distributions to the Company is
and will continue to be restricted by, among other limitations, applicable
provisions of state law and contractual provisions. The Indenture will not limit
the ability of the Company's subsidiaries to incur such restrictions in the
future. The right of the Company to participate in the assets of any subsidiary
(and thus the ability of holders of the Notes to benefit indirectly from such
assets) is generally subject to the prior claims of creditors, including trade
creditors, of that subsidiary except to the extent that the Company is
recognized as a creditor of such subsidiary, in which case the Company's claims
would still be subject to any security interest of other creditors of such
subsidiary. The Notes, therefore, will be structurally subordinated to
creditors, including trade creditors, of subsidiaries of the Company with
respect to the assets of the subsidiaries against which such creditors have a
claim.
REDEMPTION AT THE COMPANY'S OPTION
The Notes will not be subject to redemption prior to December 15, 1999
and will be redeemable thereafter at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days' notice to each Holder, at the
following redemption prices (expressed as percentages of the principal amount)
if redeemed during the 12-month period commencing December 15 of the years
indicated below, in each case (subject to the right of Holders of record on a
Record Date to receive interest due on an Interest Payment Date that is on or
prior to such Redemption Date) together with accrued and unpaid interest and
liquidated damages, if any, to, but excluding, the Redemption Date:
YEAR PERCENTAGE
---- ----------
1999............. 102.4%
2000............. 101.2
In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a pro rata basis, by lot or in such other
manner it deems appropriate and fair. The Notes may be redeemed in part in
multiples of $1,000 only.
The Notes will not have the benefit of any sinking fund.
Notice of any redemption will be sent, by first-class mail, at least 30 days
and not more than 60 days prior to the date fixed for redemption, to the Holder
of each Note to be redeemed to such Holder's last address as then shown upon the
registry books of the Registrar. The notice of redemption must state the
Redemption Date, the Redemption Price and the amount of accrued interest and
liquidated damages, if any, to be paid. Any notice that relates to a Note to be
redeemed in part only must state the portion of the principal amount equal to
the unredeemed portion thereof and must state that on and after the Redemption
Date, upon surrender of such Note, a new Note or Notes in principal amount equal
to the unredeemed portion thereof will be issued. On and after the Redemption
Date, interest will cease to accrue on the Notes or portions thereof called for
redemption, unless the Company defaults in its obligations with respect thereto.
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL
The Indenture provides that in the event that a Change of Control has
occurred, each Holder of Notes will have the right, at such Holder's option,
pursuant to an irrevocable and unconditional (except as set forth below) offer
by the Company (the "Repurchase Offer"), to require the Company to repurchase
all or any part of such Holder's Notes (provided that the principal amount of
such Notes must be $1,000 or an integral multiple thereof) on the date (the
"Repurchase Date") that is no later than 50 Business Days after the occurrence
of such Change of Control at a cash price (the "Repurchase Price") equal to 100%
of the principal amount thereof, together with accrued and unpaid interest and
liquidated damages, if any, to (but excluding) the Repurchase Date. The
Repurchase Offer shall be made within 25 Business Days following a Change of
Control and shall remain open for 20 Business Days following its commencement
except to the extent that a longer period is required by applicable law (the
"Repurchase Offer Period"). Upon expiration of the Repurchase Offer Period, the
Company shall purchase all Notes tendered in response to the Repurchase Offer.
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If required by applicable law, the Repurchase Date and the Repurchase Offer
Period may be extended as so required; however, if so extended, it shall
nevertheless constitute an Event of Default if the Repurchase Date does not
occur within 60 Business Days of the Change of Control.
On or before the Repurchase Date, the Company will (i) accept for payment
Notes or portions thereof properly tendered pursuant to the Repurchase Offer,
(ii) deposit with the Paying Agent cash sufficient to pay the Repurchase Price
(together with accrued and unpaid interest and liquidated damages, if any) of
all Notes so tendered and (iii) deliver to the Trustee the Notes so accepted,
together with an Officers' Certificate listing the Notes or portions thereof
being purchased by the Company. The Paying Agent will promptly mail to the
Holders of Notes so accepted payment in an amount equal to the Repurchase Price
(together with accrued and unpaid interest and liquidated damages, if any), and
the Trustee will promptly authenticate and mail or deliver to such Holders a new
Note or Notes equal in principal amount to any unpurchased portion of the Notes
surrendered. Any Notes not so accepted will be promptly mailed or delivered by
the Company to the Holder thereof. The Company will publicly announce the
results of the Repurchase Offer on or as soon as practicable after the
Repurchase Date.
The phrase "all or substantially all" of the assets of the Company, as
included in the definition of Change of Control, is likely to be interpreted by
reference to applicable state law at the relevant time, and will be dependent on
the facts and circumstances existing at such time. As a result, there may be a
degree of uncertainty in ascertaining whether a sale or transfer of "all or
substantially all" of the assets of the Company has occurred.
The Change of Control purchase feature of the Notes may make more difficult or
discourage a takeover of the Company, and, thus, the removal of incumbent
management. The Change of Control purchase feature resulted from negotiations
between the Company and the Initial Purchasers.
The provisions of the Indenture relating to a Change of Control may not afford
the Holders protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger, spin-off or similar transaction that may
adversely affect Holders, if such transaction does not constitute a Change of
Control. Moreover, certain events with respect to the Company which may involve
an actual change of control of the Company may not constitute a Change of
Control for purposes of the Indenture.
The Company may not have sufficient financial resources available to fulfill
its obligation to repurchase the Notes upon a Change of Control or to repurchase
other debt securities of the Company or its subsidiaries providing similar
rights to the holders thereof. The right to require the Company to repurchase
Notes as a result of the occurrence of a Change of Control could create an event
of default under Senior Indebtedness as a result of which any repurchase could,
absent a waiver, be blocked by the subordination provision of the Notes. Failure
of the Company to repurchase the Notes when required would result in an Event of
Default with respect to the Notes whether or not such repurchase is permitted by
the subordination provisions. Any such default may, in turn, cause a default
under Senior Indebtedness of the Company. Moreover, the Change of Control may
cause an event of default under Senior Indebtedness of the Company. As a result,
in each case, any repurchase of the Notes could, absent a waiver, be blocked by
the subordination provisions of the Notes. See "--Subordination" above.
Except as described herein, no modification of the Indenture regarding the
provisions on repurchase at the option of any Holder of a Note upon a Change of
Control is permissible without the consent of the Holder of the Note so
affected. In the event of a Change of Control, if Holders of in excess of two-
thirds of the outstanding aggregate principal amount of the Notes so determine
at any time following the occurrence of such Change of Control and before the
close of business on the Business Day immediately preceding the Repurchase Date,
such event shall not be treated as a Change of Control for purposes of the
Indenture. In such event, (i) the Company shall not be required to make the
Repurchase Offer, (ii) to the extent the Repurchase Offer has already been made,
such Repurchase Offer shall be deemed revoked, and (iii) to the extent any Notes
have been tendered in response to any such revoked Repurchase Offer, such tender
shall be rescinded and the Notes so tendered shall be promptly returned to the
Holders thereof. For purposes of any such determination by the Holders of the
outstanding Notes, Notes held by the Company or an Affiliate of the Company
(including any Person that would become an Affiliate of the Company (or its
successor) as a consequence
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of the event or series of events that otherwise would be treated as a Change of
Control for purposes of the Indenture) shall be disregarded.
To the extent applicable, the Company will comply with the provisions of Rule
13e-4 or any other tender offer rules, and will file a Schedule 13E-4 or any
other schedule required under such rules, in connection with any offer by the
Company to repurchase Notes at the option of the Holders upon a Change of
Control.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indenture provides that the Company may not, directly or indirectly,
consolidate with or merge with or into another person or sell, lease, convey or
transfer all or substantially all of its assets (other than to its wholly-owned
subsidiaries), whether in a single transaction or a series of related
transactions, to another Person or group of affiliated Persons, unless (i)
either (a) in the case of a merger or consolidation the Company is the surviving
entity or (b) the resulting, surviving or transferee entity is a corporation
organized under the laws of the United States, any state thereof or the District
of Columbia and expressly assumes by supplemental indenture all of the
obligations of the Company in connection with the Notes and the Indenture; and
(ii) no Default or Event of Default shall exist or shall occur immediately after
giving effect to such transaction.
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of the Company in accordance with the foregoing, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made, shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under the Indenture with the
same effect as if such successor corporation had been named therein as the
Company, and the Company will be released from its obligations under the
Indenture and the Notes, except as to any obligations that arise from or as a
result of such transaction.
REPORTS
Whether or not the Company is subject to the reporting requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Company shall deliver to the Trustee, within 15 days after it is or
would have been required to file such with the SEC, annual and quarterly
consolidated financial statements substantially equivalent to financial
statements that would have been included in reports filed with the SEC if the
Company were subject to the requirements of Section 13 or 15 (d) of the Exchange
Act, including, with respect to annual information only, a report thereon by the
Company's certified independent public accountants as such would be required in
such reports to the SEC and, in each case, together with a management's
discussion and analysis of financial condition and results of operations as such
would be so required.
EVENTS OF DEFAULT AND REMEDIES
The Indenture defines an Event of Default as (i) the failure by the Company to
pay any installment of interest on, or liquidated damages with respect to, the
Notes as and when due and payable and the continuance of any such failure for 30
days, (ii) the failure by the Company to pay all or any part of the principal
of, or premium, if any on the Notes when and as the same become due and payable
at maturity, redemption, by acceleration or otherwise, including, without
limitation, pursuant to any Repurchase Offer or otherwise, (iii) the failure of
the Company to perform any conversion of Notes required under the Indenture and
the continuance of any such failure for 30 days, (iv) the failure by the Company
to observe or perform any other covenant or agreement contained in the Notes or
the Indenture and subject to certain exceptions, the continuance of such failure
for a period of 60 days after written notice is given to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Notes outstanding, (v) certain events of
bankruptcy, insolvency or reorganization in respect of the Company or any of its
Significant Subsidiaries (as defined), (vi) failure of the Company or any
Significant Subsidiary to make any payment at maturity, including any applicable
grace period, in respect of Indebtedness (other than nonrecourse obligations) in
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an amount in excess of $10 million and continuance of such failure for 30 days
after written notice is given to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in aggregate principal amount of
Notes outstanding, (vii) default by the Company or any Significant Subsidiary
with respect to any Indebtedness (other than non-recourse obligations), which
default results in the acceleration of Indebtedness in an amount in excess of
$10 million without such Indebtedness having been discharged or such
acceleration having been rescinded or annulled for 30 days after written notice
is given to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of Notes outstanding and
(vii) final unsatisfied judgments not covered by insurance aggregating in excess
of $10 million, at any one time rendered against the Company or any of its
Significant Subsidiaries and not stayed, bonded or discharged within 60 days.
The Indenture provides that if a default occurs and is continuing, the Trustee
must, within 90 days after the occurrence of such default, give to the Holders
notice of such default, but the Trustee shall be protected in withholding such
notice if it in good faith determines that the withholding of such notice is in
the best interest of the Holders, except in the case of a default in the payment
of the principal of, premium, if any, or interest on or liquidated damages with
respect to, any of the Notes when due or in the payment of any redemption or
repurchase obligation.
The Indenture provides that if an Event of Default occurs and is continuing
(other than an Event of Default specified in clause (v) above with respect to
the Company), then in every such case, unless the principal of all of the Notes
shall have already become due and payable, either the Trustee or the Holders of
25% in aggregate principal amount of the Notes then outstanding, by notice in
writing to the Company (and to the Trustee if given by Holders) (an
"Acceleration Notice"), may declare all principal and accrued interest and
liquidated damages, if any, thereon to be due and payable immediately. If an
Event of Default specified in clause (v) above with respect to the Company
occurs, all principal and accrued interest and liquidated damages, if any, will
be immediately due and payable on all outstanding Notes without any declaration
or other act on the part of the Trustee or the Holders. The Holders of no less
than a majority in aggregate principal amount of Notes generally are authorized
to rescind such acceleration if all existing Events of Default, other than the
non-payment of the principal of, premium, if any, and interest on, and
liquidated damages with respect to, the Notes that have become due solely by
such acceleration, have been cured or waived.
Prior to the declaration of acceleration of the maturity of the Notes, the
Holders of a majority in principal amount of the Notes at the time outstanding
may waive on behalf of all the Holders any default, except a default in the
payment of principal of or interest on, or liquidated damages with respect to,
any Note not yet cured, or a default with respect to any covenant or provision
that cannot be modified or amended without the consent of the Holder of each
outstanding Note affected. Subject to the provisions of the Indenture relating
to the duties of the Trustee, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request, order
or direction of any of the Holders, unless such Holders have offered to the
Trustee reasonable security or indemnity. Subject to all provisions of the
Indenture and applicable law, the Holders of a majority in aggregate principal
amount of the Notes at the time outstanding will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee.
The Indenture provides that no Holder may pursue any remedy under the
Indenture, except for a default in the payment of principal, premium, if any, or
interest or liquidated damages, if any, on the Notes, unless the Holder gives to
the Trustee written notice of a continuing Event of Default, the Holders of at
least 25% in principal amount of the outstanding Notes make a written request to
the Trustee to pursue the remedy, such Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense, the Trustee
does not comply with the request within 60 days after receipt of the request and
the offer of indemnity, and the Trustee shall not have received a contrary
direction from the Holders of a majority in principal amount of the outstanding
Notes.
AMENDMENTS AND SUPPLEMENTS
The Indenture contains provisions permitting the Company and the Trustee to
enter into a supplemental indenture for certain limited purposes without the
consent of the Holders. With the consent of the Holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding, the
Company and the Trustee are permitted to amend or supplement the Indenture or
any supplemental indenture or modify the rights of the Holders; provided, that
16
<PAGE>
no such modification may, without the consent of each Holder affected thereby:
(i) change the Stated Maturity of any Note or reduce the principal amount
thereof or the rate (or extend the time for payment) of interest thereon or any
premium payable upon the redemption thereof, or change the place of payment
where, or the coin or currency in which, any Note or any premium or the interest
thereon is payable, or impair the right to institute suit for the conversion of
any Note or the enforcement of any such payment on or after the due date thereof
(including, in the case of redemption, on or after the Redemption Date), or
reduce the Repurchase Price, or alter the Repurchase Offer (other than as set
forth herein) or redemption provisions in a manner adverse to the Holders, or
(ii) reduce the percentage in principal amount of the outstanding Notes, the
consent of whose Holders is required for any such amendment, supplemental
indenture or waiver provided for in the Indenture, or (iii) adversely affect the
right of such Holder to convert Notes. A supplemental indenture entered into in
compliance with the "Limitation on Merger, Sale or Consolidation" covenant would
not require the consent of the Noteholders.
NO PERSONAL LIABILITY OF STOCKHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES
The Indenture provides that no stockholder, employee, officer or director, as
such, past, present or future of the Company or any successor corporation shall
have any personal liability in respect of the obligations of the Company under
the Indenture or the Notes by reason of his, her or its status as such
stockholder, employee, officer or director.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange the Notes in accordance with the Indenture.
The Company or Trustee may require a Holder, among other things, to furnish
appropriate endorsements, legal opinions and transfer documents, and to pay any
taxes and fees required by law or permitted by the Indenture. The Company is not
required to transfer or exchange any Notes selected for redemption. Also, the
Company is not required to transfer or exchange any Notes for a period of 15
days before (i) the mailing of a notice of an offer to repurchase as a result of
a Change of Control or (ii) a selection of Notes to be redeemed.
The registered holder of a Note may be treated as the owner of it for all
purposes.
BOOK-ENTRY, DELIVERY AND FORM
Notes initially held by "qualified institutional buyers," as defined in Rule
144A under the Securities Act ("QIBs"), are evidenced by one or more global
Notes (the "144A Global Note") which were deposited on the date of the closing
of the sale of the Notes to the Initial Purchasers (the "Closing Date") with, or
on behalf of, The Depository Trust Company, New York, New York (the
"Depositary") and registered in the name of Cede & Co. ("Cede") as the
Depositary's nominee. Notes held by persons who acquired such Notes in
compliance with Regulation S under the Securities Act (a "Non-U.S. Person") were
initially evidenced by one or more global Notes (the "Regulation S Global
Note"), which was deposited on the Closing Date with, or on behalf of, the
Depositary and registered in the name of Cede as the Depositary's nominee, for
the accounts of the Euroclear System ("Euroclear") and Cedel, S.A. ("Cedel").
Beneficial interests in the Regulation S Global Note may only be held through
Euroclear or Cedel, and any resale or transfer of such interests to U.S. persons
shall only be permitted as described below. The 144A Global Note and the
Regulation S Global Note are hereinafter collectively referred to as the "Global
Note". Except as set forth below, the Global Note may be transferred, in whole
or in part, only to another nominee of the Depositary or to a successor of the
Depositary or its nominee.
QIBs may hold their interests in the 144A Global Note directly through the
Depositary if such holder is a participant in the Depositary, or indirectly
through organizations which are participants in the Depositary (the
"Participants"). Transfers between Participants will be effected in the ordinary
way in accordance with the Depositary's rules and will be settled in Federal
funds.
17
<PAGE>
Non-U.S. Persons may hold their interest in the Regulation S Global Note
directly through Cedel or Euroclear, or indirectly through organizations that
are participants in Cedel or Euroclear. Cedel and Euroclear will hold interests
in the Regulation S Global Note on behalf of their participants through the
Depositary. Transfers between participants in Euroclear and Cedel will be
effected in the ordinary way in accordance with their respective rules and
operating procedures.
Notes that were originally issued to or transferred to institutional
"accredited investors," as defined in Rule 501(a) (1), (2), (3) or (7) under the
Securities Act, who were not QIBs or Non-U.S. Persons or to any other persons
who were not QIBs or Non-U.S. Persons were issued in the form of registered
definitive securities ("Certificated Notes"). Upon the transfer to a QIB or Non-
U.S. Person of Certificated Notes, such Certificated Notes will, unless the
Global Note has previously been exchanged for Certificated Notes, be exchanged
for an interest in the Global Note representing the principal amount of Notes
being transferred.
The Depositary has advised the Company that it is a limited-purpose trust
company that was created to hold securities for its participating
organizations (collectively, the "Participants") and to facilitate the
clearance and settlement of transactions in such securities between
Participants through electronic book-entry changes in accounts of its
Participants (including Euroclear and Cedel). The Depositary's Participants
include securities brokers and dealers (including the Initial Purchasers),
banks and trust companies, clearing corporations and certain other
organizations. Access to the Depositary's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively,
"Indirect Participants") that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly. QIBs may
elect to hold Notes purchased by them through the Depositary. QIBs who are not
Participants may beneficially own securities held by or on behalf of the
Depositary only through Participants or Indirect Participants. Persons that
are not QIBs or Non-U.S. Persons may not hold Notes through the Depositary.
Pursuant to procedures established by the Depositary, (i) upon deposit of
the Global Notes, the Depositary credited the accounts of Participants
designated by the Initial Purchasers with an interest in the Global Note and
(ii) ownership of the Notes evidenced by the Global Note are shown on, and the
transfer of ownership thereof will be effected only through, records
maintained by the Depositary (with respect to the interests of Participants),
the Participants and the Indirect Participants. The laws of some states
require that certain persons take physical delivery in definitive form of
securities that they own and that security interests in negotiable instruments
can only be perfected by delivery of certificates representing the
instruments. Consequently, the ability to transfer Notes evidenced by the
Global Note will be limited to such extent. For certain other restrictions on
the transferability of the Notes, see "Notice to Investors."
So long as the Depositary or its nominee is the registered owner of a Note,
the Depositary or such nominee, as the case may be, will be considered the
sole owner or holder of the Notes represented by the Global Note for all
purposes under the Indenture. Except as provided below, owners of beneficial
interests in a Global Note will not be entitled to have Notes represented by
such Global Note registered in their names, will not receive or be entitled to
receive physical delivery of Certificated Notes, and will not be considered
the owners or holders thereof under the Indenture for any purpose, including
with respect to the giving of any directions, instructions or approvals to the
Trustee thereunder. As a result, the ability of a person having a beneficial
interest in Notes represented by a Global Note to pledge such interest to
persons or entities that do not participate in the Depositary's system, or to
otherwise take actions with respect to such interest, may be affected by the
lack of a physical certificate evidencing such interest.
Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of Notes by the Depositary, or for maintaining, supervising or
reviewing any records of the Depositary relating to such Notes.
Payments with respect to the principal of, premium, if any, interest on, and
liquidated damages with respect to, any Note represented by a Global Note
registered in the name of the Depositary or its nominee on the applicable record
date will be payable by the Trustee to or at the direction of the Depositary or
its nominee in its capacity as the registered Holder of the Global Note
representing such Notes under the Indenture. Under the terms of the Indenture,
18
<PAGE>
the Company and the Trustee may treat the persons in whose names the Notes,
including the Global Notes, are registered as the owners thereof for the purpose
of receiving such payments and for any and all other purposes whatsoever.
Consequently, neither the Company nor the Trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial owners
of Notes (including, principal, premium, if any, interest, or liquidated damages
with respect thereto), or to immediately credit the accounts of the relevant
Participants with such payment, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the Global Note as shown
on the records of the Depositary. Payments by the Participants and the Indirect
Participants to the beneficial owners of Notes will be governed by standing
instructions and customary practice and will be the responsibility of the
Participants or the Indirect Participants.
Holders who desire to convert their Notes into Common Stock pursuant to the
terms of the Notes should contact their brokers or other Participants or
Indirect Participants to obtain information on procedures, including proper
forms and cut-off times, for submitting such requests.
If (i) the Company notifies the Trustee in writing that the Depositary is no
longer willing or able to act as a depositary and the Company is unable to
locate a qualified successor within 90 days or (ii) the Company, at its
option, notifies the Trustee in writing that it elects to cause the issuance
of Notes in definitive form under the Indenture, then, upon surrender by the
Depositary of the Global Notes, Certificated Notes will be issued to each
person that the Depositary identifies as the beneficial owner of the Notes
represented by Global Notes. In addition, subject to certain conditions, any
person having a beneficial interest in a Global Note may, upon request to the
Trustee, exchange such beneficial interest for Notes in the form of
Certificated Notes. Upon any such issuance, the Trustee is required to
register such Certificated Notes in the name of such person or persons (or the
nominee of any thereof), and cause the same to be delivered thereto.
Neither the Company nor the Trustee shall be liable for any delay by the
Depositary or any Participant or Indirect Participant in identifying the
beneficial owners of the Notes, and the Company and the Trustee may
conclusively rely on, and shall be protected in relying on, instructions from
the Depositary for all purposes (including with respect to the registration
and delivery, and the respective principal amounts, of the Notes to be
issued).
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<PAGE>
CERTAIN DEFINITIONS
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which banking institutions in New York, New York are authorized
or obligated by law or executive order to close.
"Capitalized Lease Obligation" means, as to any Person, the obligation of such
Person to pay rent or other amounts under a lease to which such Person is a
party that is required to be classified and accounted for as a capital lease
obligation under GAAP.
"Capital Stock" means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"Change of Control" means (i) an event or series of events as a result of
which any "person" or "group" (as such terms are used in Sections 13(d)(3) and
14(d) of the Exchange Act) (excluding the Company or any wholly-owned subsidiary
thereof) is or becomes, directly or indirectly, the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, whether or not
applicable) of more than 50% of the combined voting power of the then
outstanding securities entitled to vote generally in elections of directors,
managers or trustees, as applicable, of the Company or any successor entity
("Voting Stock"), (ii) the completion of any consolidation with or merger of the
Company into any other Person, or conveyance, transfer or lease by the Company
of all or substantially all of its assets to any Person, or any merger of any
other Person into the Company in a single transaction or series of related
transactions, and, in the case of any such transaction or series of related
transactions, the outstanding Common Stock of the Company is changed or
exchanged as a result, unless the stockholders of the Company immediately before
such transaction own, directly or indirectly, immediately following such
transaction, at least a majority of the combined voting power of the outstanding
voting securities of the Person resulting from such transaction in substantially
the same proportion as their ownership of the Voting Stock immediately before
such transaction, or (iii) such time as the Continuing Directors (as defined) do
not constitute a majority of the Board of Directors of the Company (or, if
applicable, a successor corporation to the Company); provided that a Change of
Control shall not be deemed to have occurred if either (x) the last sale price
of the Common Stock for any five trading days during the 10 trading days
immediately preceding the Change of Control is at least equal to 105% of the
Conversion Price in effect on such day, or (y) with respect to a merger or
consolidation otherwise constituting a Change of Control described in clause
(ii) above, at least 90% of the consideration in such transaction or
transactions consists of common stock or securities convertible into common
stock that are, or upon issuance will be, traded on a United States national
securities exchange or approved for quotation on the Nasdaq National Market.
"Continuing Director" means at any date a member of the Company's Board of
Directors (i) who was a member of such board on the date of initial issuance of
the Notes or (ii) who was nominated or elected by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election or whose election to the Company's Board of Directors was recommended
or endorsed by at least a majority of the directors who were Continuing
Directors at the time of such nomination or election.
"Disqualified Capital Stock" means, with respect to the Company, Capital Stock
of the Company that, by its terms or by the terms of any security into which it
is convertible, exercisable or exchangeable, is, or upon the happening of an
event or the passage of time would be, required to be redeemed or repurchased
(including at the option of the holder thereof) by the Company, in whole or in
part, on or prior to the Stated Maturity of the Notes, provided that only the
portion of such Capital Stock which is so convertible, exercisable, exchangeable
or redeemable or subject to repurchase prior to such Stated Maturity shall be
deemed to be Disqualified Capital Stock.
"Indebtedness" of any person means, without duplication, (a) all liabilities
and obligations, contingent or otherwise, of any such person, (i) in respect of
borrowed money (whether or not the lender has recourse to all or any portion of
the assets of such person), (ii) evidenced by credit or loan agreements, bonds,
notes, debentures or similar instruments (including, without limitation, notes
or similar instruments given in connection with the acquisition or any business,
properties or assets of any kind), (iii) evidenced by bankers' acceptances or
similar instruments issued or accepted by
20
<PAGE>
banks, (iv) for the payment of money relating to a Capitalized Lease Obligation,
or (v) evidenced by a letter of credit or a reimbursement obligation of such
person with respect to any letter of credit; (b) all obligations of such person
issued or assumed as the deferred purchase price of property or services (but
excluding trade accounts payable or accrued liabilities arising in the ordinary
course of business); (c) all net obligations of such person under Interest Swap
and Hedging Obligations; (d) all liabilities of others of the kind described in
the preceding clauses (a), (b) or (c) that such person has guaranteed or that is
otherwise its legal liability, or which is secured by a lien on property of such
person, and all obligations to purchase, redeem or acquire any Capital Stock;
and (e) any and all deferrals, renewals, extensions, modifications,
replacements, restatements, refinancings and refundings (whether direct or
indirect) of, or any indebtedness or obligation issued in exchange for, any
liability of the kind described in any of the preceding clauses (a), (b), (c) or
(d), or this clause (e), whether or not between or among the same parties.
"Interest Swap and Hedging Obligations" means the obligations of any Person
under any interest rate protection agreement, interest rate future agreement,
interest rate option agreement, interest rate swap agreement, interest rate cap
agreement or other interest rate hedge agreement, interest rate collar agreement
or other similar agreement or arrangement to which such Person is a party or
beneficiary.
"Junior Securities" means any Qualified Capital Stock (as defined) and any
Indebtedness of the Company that is fully subordinated in right of payment to
the Notes and has no scheduled installment of principal due, by redemption,
sinking fund payment or otherwise, on or prior to the Stated Maturity of the
Notes.
"Loan Agreement" means the Amended and Restated Loan and Security Agreement,
dated as of January 3, 1995, among OccuCenters, Inc., the Company, the lenders
from time to time party thereto and Creditanstalt-Bankverein, as agent for the
lenders thereunder, as the same may from time to time be amended, modified,
supplemented, restated, renewed, refunded, restructured, refinanced, replaced or
extended, in whole or in part, whether with same or different agents or lenders
thereunder.
"Qualified Capital Stock" means any Capital Stock of the Company that is not
Disqualified Capital Stock.
"Senior Indebtedness" means all obligations of the Company to pay the
principal of, premium, if any, interest (including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowable as a claim in any such
proceeding) and rent payable on or in connection with, and all fees, costs,
expenses and other amounts accrued or due on or in connection with, any
Indebtedness of the Company, whether outstanding on the date of the Indenture or
thereafter created, incurred, assumed, guaranteed or in effect guaranteed by the
Company, unless the instrument creating or evidencing such Indebtedness provides
that such Indebtedness is not senior or superior in right of payment to the
Notes or which is pari passu with, or subordinated to, the Notes; provided that
in no event shall Senior Indebtedness include (a) Indebtedness of the Company
owed or owing to any subsidiary of the Company or any officer, director or
employee of the Company or any subsidiary of the Company, (b) Indebtedness
representing or with respect to any account payable or other accrued current
liability or obligation incurred in the ordinary course of business in
connection with the obtaining of materials or services or (c) any liability for
taxes owed or owing by the Company or any subsidiary of the Company.
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" of the Company within the meaning of Rule 1.02(w) of Regulation S-X
promulgated by the Commission as in effect as of the date of the Indenture.
"Stated Maturity," when used with respect to any Note, means December 15, 2001.
"Subsidiary" with respect to any person, means (i) a corporation a majority of
whose Capital Stock with voting power normally entitled to vote in the election
of directors is at the time, directly or indirectly, owned by such person, by
such person and one or more Subsidiaries of such person or by one or more
Subsidiaries of such person, (ii) a partnership in which such person or a
Subsidiary of such person is, at the time, a general partner and owns alone or
together with one or more Subsidiaries of such person a majority of the
partnership interests, or (iii) any other person (other than a corporation) in
which such person, one or more Subsidiaries of such person, or such person and
one or
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<PAGE>
more Subsidiaries of such person, directly or indirectly, at the date of
determination thereof, has at least a majority ownership interest.
22
<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth the name of each Selling Securityholder and
relationship, if any, with the Company and (i) the amount of Notes owned by each
Selling Securityholder as of March 27, 1997 (assuming no Notes have been sold
under this Prospectus as of such date), (ii) the maximum amount of Notes which
may be offered for the account of such Selling Securityholder under this
Prospectus, (iii) the amount of Common Stock owned by each Selling
Securityholder as of March 27, 1997, and (iv) the maximum amount of Common Stock
which may be offered for the account of such Selling Securityholder under this
Prospectus.
<TABLE>
<CAPTION>
Principal Principal Common Stock
Name of Selling Amount of Amount of Notes Owned Prior to Common Stock
Securityholder Notes Owned Offered Hereby Offering Offered Hereby
- -------------------------------------- ------------ --------------- -------------- --------------
<S> <C> <C> <C> <C>
Baron Asset Fund...................... $ 500,000 $ 500,000 16,835 16,835
Bear Stearns Securities Corp.......... 3,950,000 3,950,000 132,997 132,997
CFW-C., L.P........................... 6,000,000 6,000,000 202,020 202,020
CM Converts Fund...................... 350,000 350,000 11,785 11,785
Commonwealth Life Insurance -
(TEAMSTERS/ Camden Non-
Enhanced)........................... 2,250,000 2,250,000 75,758 75,758
Commonwealth Life Insurance -
Stock TRAC (TEAMSTERS I)............ 2,250,000 2,250,000 75,758 75,758
(The) David and Lura Lovell
Foundation.......................... 100,000 100,000 3,367 3,367
Deutsche Bank, AG London.............. 8,150,000 8,150,000 274,411 274,411
Deutsche Morgan Grenfell Arbitrage,
ltd................................. 375,000 375,000 12,626 12,626
Dillon, Read & Co. Inc................ 150,000 150,000 5,051 5,051
Donaldson Lufkin & Jenrette
Securities Corp...................... 6,045,000 6,045,000 203,535 203,535
Glen Eagles Fund L.P.................. 500,000 500,000 16,835 16,835
Hick Investment, L.P.................. 500,000 500,000 16,835 16,835
Intermarket Fund S.A.................. 1,000,000 1,000,000 33,670 33,670
Laterman Strategies 90's LLC.......... 250,000 250,000 8,418 8,418
LDG Limited Fund...................... 250,000 250,000 8,418 8,418
Lincoln Investment Management,
Inc................................. 6,595,000 6,595,000 222,054 222,054
Lincoln National Convertible
Securities Fund..................... 1,855,000 1,855,000 62,458 62,458
Lincoln National Life Insurance....... 4,740,000 4,740,000 159,596 159,596
Stephen Lovell........................ 100,000 100,000 3,367 3,367
Lovell Family GST Exempt Trust........ 100,000 100,000 3,367 3,367
Lovell Family Limited Partnership..... 500,000 500,000 16,835 16,835
Lura M. Lovell Trust.................. 500,000 500,000 16,835 16,835
Mainstay Convertible Fund............. 5,000,000 5,000,000 168,350 168,350
Massachusetts Mutual Life Insurance
Company............................. 870,000 870,000 29,293 29,293
MassMutual Corporate Investors........ 415,000 415,000 13,973 13,973
MassMutual Corporate Value Partners
Limited............................. 695,000 695,000 23,401 23,401
MassMutual High Yield Partners
LLC................................. 820,000 820,000 27,609 27,609
Merrill Lynch Capital Markets Plc..... 3,600,000 3,600,000 121,212 121,212
</TABLE>
23
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Merrill Lynch Pierce Fenner & Smith
Inc................................. 1,700,000 1,700,000 57,239 57,239
Millennium Trading Co., L.P........... 2,000,000 2,000,000 67,340 67,340
Ann L. Moushey........................ 100,000 100,000 3,367 3,367
Off-Shore Strategies, LTD............. 750,000 750,000 25,253 25,253
Palladin Partners, L.P................ 500,000 500,000 16,835 16,835
Public Institute for Social Security
(PIFSS)............................. 1,000,000 1,000,000 33,670 33,670
Ramius Fund, L.P...................... 500,000 500,000 16,835 16,835
Robertson Stephens & Co., L.L.P....... 500,000 500,000 16,835 16,835
Societe Generale Securities
Corporation......................... 1,000,000 1,000,000 33,670 33,670
Swiss Bank Corporation-London
Branch
c/o SBC Warburg Inc................. 1,000,000 1,000,000 33,670 33,670
The TCW Group, Inc.................... 7,230,000 7,230,000 243,434 243,434
TQA Arbitrage Fund, L.P............... 1,000,000 1,000,000 33,670 33,670
TQA Leverage Fund, L.P................ 250,000 250,000 8,418 8,418
TQA Vantage Fund, Ltd................. 1,000,000 1,000,000 33,670 33,670
Trust FBO Sharon Kerr Klinger......... 50,000 50,000 1,684 1,684
Trust FBO Paul S. Kerr III............ 50,000 50,000 1,684 1,684
United National Life Insurance........ 95,000 95,000 3,199 3,199
Walker Art Center..................... 300,000 300,000 10,101 10,101
Weirton Trust......................... 510,000 510,000 17,172 17,172
----------- ----------- --------- ---------
Subtotal............................ $77,945,000 $77,945,000 2,624,415 2,624,415
Unnamed holders of Notes or any
future transferees, pledgees,
doneees or successors of or from
any such unnamed holders(3)......... $19,805,000 $19,805,000 666,831 666,831
----------- ----------- --------- ---------
Total............................... $97,750,000 $97,750,000 3,291,246 3,291,246
=========== =========== ========= =========
</TABLE>
- ------------------
(1) Comprises the shares of Common Stock into which the Notes held by
such Selling Securityholder are convertible at the initial conversion rate.
The Conversion Rate and the number of shares of Common Stock issuable upon
conversion of the Notes are subject to adjustment under certain circumstances.
See "Description of Notes --Conversion Rights." Accordingly, the number of
shares of Common Stock issuable upon conversion of the Notes may increase or
decrease from time to time.
(2) Assumes conversion into Common Stock of the full amount of Notes
held by the Selling Securityholder at the initial conversion rate and the
offering of such shares by such Selling Securityholder pursuant to this
Prospectus. The Conversion Rate and the number of shares of Common Stock
issuable upon conversion of the Notes is subject to adjustment under certain
circumstances. See "Description of Notes -- Conversion Rights." Accordingly,
the number of shares of Common Stock issuable upon conversion of the Notes may
increase or decrease from time to time. Fractional shares will not be issued
upon conversion of the Notes; rather, cash will be paid in lieu of fractional
shares, if any.
(3) No such holder may offer Notes pursuant to this Prospectus until
such holder is included as a Selling Securityholder in a supplement to this
Prospectus in according with the Registration Rights Agreement (as defined).
(4) Assumes that the unnamed holders of Notes or any future transferees,
pledgees, donees or successors of or from any such unnamed holder do not
beneficially own any Common Stock other than the Common Stock issuable upon
conversion of the Notes at the initial conversion rate.
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<PAGE>
Because the Selling Securityholders may, pursuant to this Prospectus,
offer all or some portion of the Notes and Common Stock they presently hold or,
with respect to Common Stock, have the right to acquire upon conversion of such
Notes, no estimate can be given as to the amount of the Notes and Common Stock
that will be held by the Selling Securityholders upon termination of any such
sales. In addition, the Selling Securityholders identified above may have sold,
transferred or otherwise disposed of all or a portion of their Notes and Common
Stock since the date on which they provided the information regarding their
Notes and Common Stock, in transactions exempt from the registration
requirements of the Securities Act. See "Plan of Distribution."
Only Selling Securityholders identified above who beneficially own the
Notes and Common Stock set forth opposite each such Selling Securityholder's
name in the foregoing table on the effective date of the Registration Statement
may sell such Notes and Common Stock pursuant to this Prospectus. The Company
may from time to time, in accordance with the Registration Rights Agreement,
include additional Selling Securityholders in supplements to this Prospectus.
The Company will pay the expenses of registering the Notes and Common
Stock being sold hereunder.
25
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain material United States federal
income and estate tax considerations relating to the purchase, ownership and
disposition of the Notes and of Common Stock into which Notes may be converted,
but does not purport to be a complete analysis of all the potential tax
considerations relating thereto. This summary is based on the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), the applicable Treasury
Regulations promulgated or proposed thereunder ("Treasury Regulations"),
judicial authority and current administrative rulings and practice, all of which
are subject to change, possibly on a retroactive basis. This summary deals only
with holders that will hold Notes and Common Stock into which Notes may be
converted as "capital assets" (within the meaning of Section 1221) and does not
address tax considerations applicable to investors that may be subject to
special tax rules, such as banks, tax-exempt organizations, insurance companies,
dealers in securities or currencies, persons that will hold Notes as a position
in a hedging transaction, "straddle" or "conversion transaction" for tax
purposes, or persons that have a "functional currency" other than the U.S.
dollar. The Company has not sought any ruling from the Internal Revenue Service
with respect to the statements made and the conclusions reached in the following
summary, and there can be no assurance that the Internal Revenue Service will
agree with such statements and conclusions. INVESTORS CONSIDERING THE PURCHASE
OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION
OF THE UNITED STATES FEDERAL INCOME AND ESTATE TAX LAWS TO THEIR PARTICULAR
SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE,
LOCAL OR FOREIGN TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
UNITED STATES HOLDERS
As used herein, the term "United States Holder" means the beneficial
owner of a Note or Common Stock that for United States federal income tax
purposes is (i) a citizen or resident of the United States, (ii) treated as a
domestic corporation or domestic partnership, or (iii) an estate or trust that
is subject to United States federal income taxation on a net income basis in
respect of the Notes or Common Stock. For taxable years beginning after
December 31, 1996, a trust will be a "United States Holder" of a Note only if
the trust is subject to the supervision of a court within the United States and
the control of a United States fiduciary as described in Section 7701(a)(30) of
the Code.
PAYMENT OF INTEREST
Interest on a Note generally will be includable in the income of a United
States Holder as ordinary income at the time such interest is received or
accrued, in accordance with such Holder's method of accounting for United States
federal income tax purposes. The Notes will not have original issue discount.
AMORTIZABLE BOND PREMIUM
If a United States Holder of a Note acquires the Note at a cost that is
in excess of the amount payable at maturity (which, under certain proposed
Treasury Regulations, will be determined by reference to an earlier call date if
the call price would increase a United States Holder's yield on the Note), the
United States Holder may elect under Section 171 of the Code to amortize the
excess cost (as an offset to interest income) on a constant interest rate basis
over the term of such Note. If the United States Holder makes an election to
amortize bond premium, the tax basis of all of such United States Holder's Notes
will be reduced by the allowable bond premium amortization. The amortization
election would apply to all debt instruments held or subsequently acquired by
the electing purchaser and cannot be revoked without permission from the
Service. On conversion of a Note into shares of Common Stock, no additional
amortization of any bond premium would be allowed, and any remaining premium
would be added to the United States Holder's basis in the Common Stock received.
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MARKET DISCOUNT
Investors acquiring Notes pursuant to this Prospectus should consider
that the resale of those Notes may be adversely affected by the market discount
provisions of Sections 1276 through 1278 of the Code. Except as described
below, gain recognized on the disposition of a Note that has accrued market
discount will be treated as ordinary income, and not capital gain, to the extent
of the accrued market discount. "Market discount" is defined generally as the
excess, if any, of (i) the principal amount of the Note over (ii) the tax basis
of the Note in the hands of the United States Holder immediately after its
acquisition.
Under a de minimis exception, there is no market discount if the excess
of the principal amount of the obligation over the United States Holder's tax
basis in the obligation is less than 0.25% of the principal amount multiplied by
the number of complete years after the acquisition date to the obligation's date
of maturity. Unless the United States Holder elects otherwise, the accrued
market discount generally would be the amount calculated by multiplying the
market discount by a fraction, the numerator of which is the number of days the
obligation has been held by the United States Holder and the denominator of
which is the number of days after the United States Holder's acquisition of the
obligation up to and including its maturity date.
If a United States Holder of a Note acquired with market discount
disposes of such Note in any transaction other than a sale, exchange or
involuntary conversion, such United States Holder will be deemed to have
realized an amount equal to the fair market value of the Note and will be
required to recognize as ordinary income any accrued market discount. See the
discussion below under "--Sale, Exchange or Redemption of the Notes" for the tax
consequences of a sale or exchange. A partial principal payment (if any) on a
Note will be includable as ordinary income upon receipt to the extent of any
accrued market discount thereon. Any accrued market discount not previously
taken into income prior to a conversion of a Note into shares of Common Stock,
however, should (under Treasury Regulations not yet issued) carry over to the
Common Stock received on conversion and be treated as ordinary income upon a
subsequent disposition of such Common Stock, to the extent of any gain
recognized on such disposition. A United States Holder of a Note acquired at a
market discount also may be required to defer the deduction of all or a portion
of the interest on any indebtedness incurred or maintained to purchase or carry
the Note until it is disposed of in a taxable transaction.
A United States Holder of a Note acquired at a market discount may elect
to include the market discount in income as it accrues. This election would
apply to all market discount obligations as acquired by the electing United
States Holder on or after the first day of the first year to which the election
applies. The election may be revoked only with the consent of the Service. If
a United States Holder of a Note elects to include market discount in income
currently, the rules discussed above regarding (i) ordinary income recognition
resulting from a sale and certain other disposition transactions and (ii)
deferral of interest deductions would not apply.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES
Upon the sale, exchange or redemption of a Note, subject to the market
discount rules discussed above, a United States Holder generally will recognize
capital gain or loss equal to the difference between (i) the amount of cash
proceeds and the fair market value of any property received on the sale,
exchange or redemption (except to the extent such amount is attributable to
accrued interest income not previously recognized by such Holder, which is
taxable as ordinary income) and (ii) such Holder's adjusted tax basis in the
Note. A United States Holder's adjusted tax basis in a Note generally will
equal the cost of the Note to such Holder, less any principal payments received
by such Holder. Such capital gain or loss will be long-term capital gain or loss
if the United States Holder's holding period in the Note is more than one year
at the time of sale, exchange or redemption.
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CONVERSION OF THE NOTES
A United States Holder generally will not recognize any income, gain or
loss upon conversion of a Note into Common Stock, except with respect to cash
received in lieu of a fractional share of Common Stock. Such Holder's tax basis
in the Common Stock received on conversion of a Note will be the same as such
Holder's adjusted tax basis in the Note at the time of conversion (reduced by
any basis allocable to a fractional share interest), and the holding period for
the Common Stock received on conversion will generally include the holding
period of the Note converted.
Cash received in lieu of a fractional share of Common Stock upon
conversion should be treated as a payment in exchange for the fractional share
of Common Stock. Accordingly, the receipt of cash in lieu of a fractional share
of Common Stock generally should result in capital gain or loss (measured by the
difference between the cash received for the fractional share and the United
States Holder's adjusted tax basis in the fractional share).
DIVIDENDS
The amount of any distribution by the Company in respect of the Common
Stock will be equal to the amount of cash and the fair market value, on the date
of distribution, of any property distributed. Generally, distributions will be
treated as a dividend, subject to tax as ordinary income, to the extent of the
Company's current or accumulated earnings and profits, then as a tax-free return
of capital to the extent of the Holder's tax basis in the Common Stock and
thereafter as gain from the sale of exchange of such stock.
In general, a dividend distribution to a corporate United States Holder
will qualify for the 70% dividends received deduction if the Holder owns less
than 20% of the voting power and value of the Company's stock (other than any
non-voting, non-convertible, non-participating preferred stock). A corporate
United States Holder that owns 20% or more of the voting power and value of the
Company's stock (other than any non-voting, non-convertible, non- participating
preferred stock) generally will qualify for an 80% dividends received deduction.
The dividends received deduction is subject, however, to certain holding period,
taxable income and other limitations.
If at any time (i) the Company makes a distribution of cash or property
to its stockholders or purchases Common Stock and such distribution or purchase
would be taxable to such stockholders as a dividend for United States federal
income tax purposes (e.g., distributions of evidences of indebtedness or assets
of the Company, but generally not stock dividends or rights to subscribe for
Common Stock) and, pursuant to the antidilution provisions of the Indenture, the
conversion price of the Notes is decreased, or (ii) the conversion price of the
Notes is decreased at the discretion of the Company, such decrease in conversion
price may be deemed to be the payment of a taxable dividend to United States
Holders of Notes (pursuant to Section 305 of the Code). Such Holders of Notes
could therefore have taxable income as a result of an event pursuant to which
they received no cash or property.
SALE OF COMMON STOCK
Upon the sale or exchange of Common Stock, a United States Holder
generally will recognize capital gain or loss equal to the difference between
(i) the amount of cash and the fair market value of any property received upon
the sale or exchange and (ii) such Holder's adjusted tax basis in the Common
Stock. Such capital gain or loss will be long-term if the United States
Holder's holding period in the Common Stock is more than one year at the time of
the sale or exchange. A United States Holder's basis and holding period in
Common Stock received upon conversion of a Note are determined as discussed
above under "--Conversion of the Notes".
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INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
In general, information reporting requirements will apply to payments of
principal, if any, and interest on a Note, payments of dividends on Common
Stock, payments of the proceeds of the sale of a Note and payments of the
proceeds of the sale of Common Stock to certain noncorporate United States
Holders. The payor will be required to withhold backup withholding tax at the
rate of 31% if (a) the payee fails to furnish a taxpayer identification number
("TIN) to the payor or establish an exemption from backup withholding, (b) the
IRS notifies the payor that the TIN furnished by the payee is incorrect, (c)
there has been a notified payee underreporting with respect to interest,
dividends or original issue discount described in Section 3406(c)of the Code or
(d) there has been a failure of the payee to certify under the penalty of
perjury that the payee is not subject to backup withholding under the Code. Any
amounts withheld under the backup withholding rules from a payment to a United
States Holder will be allowed as a credit against such Holder's United States
federal income tax and may entitle the Holder to a refund, provided that the
required information is furnished to the IRS.
NON-UNITED STATES HOLDERS
As used herein, the term "Non-United States Holder" means any beneficial
owner of a Note or Common Stock that is not a United States Holder.
PAYMENT OF INTEREST
Generally, interest income of a Non-United States Holder that is not
effectively connected with a United States trade or business will be subject to
a withholding tax at a 30% rate (or, if applicable, a lower treaty rate).
However, interest paid on a Note by the Company or any Paying Agent to a Non-
United States Holder will qualify for the "portfolio interest exemption" and
therefore will not be subject to United States federal income tax or withholding
tax, provided that such interest income is not effectively connected with a
United States trade or business of the Non-United States Holder and provided
that the Non-United States Holder (i) does not actually or constructively own
(pursuant to the conversion feature of the Notes or otherwise) 10% or more of
the combined voting power of all classes of stock of the Company entitled to
vote, (ii) is not a controlled foreign corporation related to the Company
actually or constructively through stock ownership, (iii) is not a bank which
acquired the Notes in consideration for an extension of credit made pursuant to
a loan agreement entered into in the ordinary course of business and (iv) either
(a) provides a Form W-8 (or a suitable substitute form) signed under penalties
of perjury that includes its name and address and certifies as to its non-United
States status in compliance with applicable law and regulations, or (b) a
securities clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business holds the
Note and provides a statement to the Company or its agent under penalties of
perjury in which it certifies that such a Form W-8 (or a suitable substitute)
has been received by it from the Non-United States Holder or qualifying
intermediary and furnishes the Company or its agent with a copy thereof.
Proposed Treasury Regulations would provide alternative methods for
satisfying the certification requirement described in clause (iv) above. The
proposed Treasury Regulations also would require, in the case of Notes held by a
foreign partnership, that (i) the certification described in clause (iv) above
be provided by the partners rather than by the foreign partnership and (ii) the
partnership provide certain information, including a United States taxpayer
identification number. A look-through rule would apply in the case of tiered
partnerships. The proposed Treasury Regulations are proposed to be effective
for payments made after December 31, 1997. There can be no assurance that the
proposed Treasury Regulations will be adopted or as to the provisions that they
will include if and when adopted in temporary or final form.
Except to the extent that an applicable treaty otherwise provides, a Non-
United States Holder generally will be taxed in the same manner as a United
States Holder with respect to interest if the interest income is effectively
connected with a United States trade or business of the Non-United States
Holder. Effectively connected interest received by a corporate Non-United
States Holder may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate (or, if applicable, a lower treaty rate).
Even though such effectively connected interest is subject to
29
<PAGE>
income tax, and may be subject to the branch profits tax, it is not subject to
withholding tax if the Holder delivers a properly executed IRS Form 4224 to the
payor.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES
A Non-United States Holder of a Note will generally not be subject to
United States federal income tax or withholding tax on any gain realized on the
sale, exchange or redemption of the Note (including the receipt of cash in lieu
of fractional shares upon conversion of a Note into Common Stock) unless (1) the
gain is effectively connected with a United States trade or business of the Non-
United States Holder, (2) in the case of a Non-United States Holder who is an
individual, such Holder is present in the United States for a period or periods
aggregating 183 days or more during the taxable year of the disposition or (3)
the Holder is subject to tax pursuant to the provisions of the Code applicable
to certain United States expatriates.
CONVERSION OF THE NOTES
In general, no United States federal income tax or withholding tax will
be imposed upon the conversion of a Note into Common Stock by a Non-United
States Holder except with respect to the receipt of cash in lieu of fractional
shares by Non-United States Holders upon conversion of a Note where any of the
conditions described above under "Non-United States Holders--Sale, Exchange or
Redemption of the Notes" is satisfied.
SALE OR EXCHANGE OF COMMON STOCK
A Non-United States Holder generally will not be subject to United States
federal income tax or withholding tax on the sale or exchange of Common Stock
unless any of the conditions described above under "Non-United States Holders--
Sale, Exchange or Redemption of the Notes" is satisfied.
DIVIDENDS
Distributions by the Company with respect to the Common Stock that are
treated as Dividends paid (or deemed paid), as described above under "United
States Holders--Dividends" to a Non-United States Holder (excluding dividends
that are effectively connected with the conduct of a trade or business in the
United States by such Holder and are taxable as described below) will be subject
to United States federal withholding tax at a 30% rate (or lower rate provided
under any applicable income tax treaty). Except to the extent that an
applicable tax treaty otherwise provides, a Non-United States Holder will be
taxed in the same manner as a United States Holder on dividends paid (or deemed
paid) that are effectively connected with the conduct of a trade or business in
the United States by the Non-United States Holder. If such Non-United States
Holder is a foreign corporation, it may also be subject to a United States
branch profits tax on such effectively connected income at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty. Even though
such effectively connected dividends are subject to income tax, and may be
subject to the branch profits tax, they will not be subject to U.S. withholding
tax if the Holder delivers IRS Form 4224 to the payor.
Under current United States Treasury regulations, dividends paid to an
address in a foreign country are presumed to be paid to a resident of that
country (unless the payor has knowledge to the contrary) for purposes of the
withholding discussed above and, under the current interpretation of the
Treasury Regulations, for purposes of determining the applicability of a tax
treaty rate. Under Treasury Regulations that are proposed to be effective for
distributions after 1997, however, a non-U.S. holder of Common Stock who wishes
to claim the benefit of an applicable treaty rate would be required to satisfy
applicable certification requirements. In addition, under the proposed Treasury
Regulations, in the case of common stock held by a foreign partnership, the
certification requirement would generally be applied to the partners of the
partnership and the partnership would be required to provide certain
information, including a United States taxpayer identification number. The
proposed Treasury Regulations also provide look-through rules for tiered
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<PAGE>
partnerships. It is not certain whether, or in what form, the proposed Treasury
Regulations will be adopted as final regulations.
DEATH OF A NON-UNITED STATES HOLDER
A Note held by an individual who is not a citizen or resident of the
United States at the time of death will not be includable in the decedent's
gross estate for United States estate tax purposes, provided that such Holder or
beneficial owner did not at the time of death actually or constructively own 10%
or more of the combined voting power of all classes of stock of the Company
entitled to vote, and provided that, at the time of death, payments with respect
to such Note would not have been effectively connected with the conduct by such
Non-United States Holder of a trade or business within the United States.
Common Stock actually or beneficially held (other than through a foreign
corporation) by a Non-United States Holder at the time of his or her death (or
previously transferred subject to certain retained rights or powers) will be
subject to United States federal estate tax unless otherwise provided by an
applicable estate tax treaty.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
United States information reporting requirements and backup withholding
tax will not apply to payments on a Note to a Non-United States Holder if the
statement described in "Non-United States Holders--Payment of Interest" is duly
provided by such Holder, provided that the payor does not have actual knowledge
that the Holder is a United States person.
Information reporting requirements and backup withholding tax will not
apply to any payment of the proceeds of the sale of a Note or any payment of the
proceeds of the sale of Common Stock effected outside the United States by a
foreign office of a "broker" (as defined in applicable Treasury Regulations),
unless such broker is (i) a United States person, (ii) a foreign person that
derives 50% or more of its gross income for certain periods from the conduct of
a trade or business in the United States or (iii) a controlled foreign
corporation for United States federal income tax purposes. Payment of the
proceeds of any such sale effected outside the United States by a foreign office
of any broker that is described in (i), (ii) or (iii) of the preceding sentence
will not be subject to backup withholding tax, but will be subject to
information reporting requirements unless such broker has documentary evidence
in its records that the beneficial owner is a Non-United States Holder and
certain other conditions are met, or the beneficial owner otherwise establishes
an exemption. Payment of the proceeds of any such sale to or through the United
States office of a broker is subject to information reporting and backup
withholding requirements, unless the beneficial owner of the Note provides the
statement described in "Non-United States Holders-- Payment of Interest" or
otherwise establishes an exemption.
If paid to an address outside the United States, dividends on Common
Stock held by a Non-United States Holder will generally not be subject to the
information reporting and backup withholding requirements described in this
section. However, under the proposed Treasury Regulations, dividend payments
will be subject to information reporting and backup withholding unless
applicable certification requirements are satisfied. See the discussion above
with respect to rules applicable to foreign partnerships under the proposed
Treasury Regulations.
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THE COMPANY
Under Section 279 of the Code, interest paid or incurred by a corporation
with respect to certain convertible, subordinated indebtedness that is utilized
to provide consideration for the acquisition of stock in another corporation (or
a substantial portion of the assets of another corporation) is not deductible
for federal income tax purposes to the extent interest on such "corporate
acquisition indebtedness" as defined in Section 279 exceeds $5 million per year,
reduced by the interest paid on certain other indebtedness that does not
constitute "corporate acquisition indebtedness" for purposes of Section 279, but
is used to fund corporate acquisitions. The Notes may constitute "corporate
acquisition indebtedness" for purposes of Section 279 of the Code, which could
result in all or a portion of the interest payments under the Notes not being
deductible for federal income tax purposes. Although there can be no assurance,
the Company does not anticipate that any significant portion of the interest
deductions with respect to the Notes will be disallowed pursuant to Section 279.
PLAN OF DISTRIBUTION
The Notes were issued to the Selling Securityholders in connection with
an underwritten private placement and are convertible into Common Stock as
described in "Description of Notes--Conversion Rights." The Company entered
into the Registration Rights Agreement with the Initial Purchasers for the
benefit of holders of the Notes to register their Notes and such Common Stock
under the Securities Act under certain circumstances and at certain times. The
Registration Rights Agreement provides for cross-indemnification of the Selling
Securityholders and the Company for losses, claims, damages, liabilities and
expenses arising, under certain circumstances, out of the registration of the
Notes and such Common Stock.
The Notes and such Common Stock may be sold from time to time by the
Selling Securityholders. The Selling Securityholders may from time to time sell
all or a portion of the Notes and such Common Stock in transactions on the
Nasdaq National Market, in the over-the-counter market, in negotiated
transactions, or a combination of such methods of sale, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Notes and such Common Stock may be sold
directly or through underwriters or broker-dealers. If the Notes or shares of
Common Stock are sold through underwriters or broker-dealers, the Selling
Securityholders may pay underwriting discounts or brokerage commissions and
charges. The methods by which the Notes and such Common Stock may be sold
include (i) a block trade in which the broker or dealer so engaged will attempt
to sell the securities as agent but may position and resell a portion of the
block as principal to facilitate the transaction, (ii) purchases by a broker or
dealer as principal and resale by such broker or dealer for its own account
pursuant to this Prospectus, (iii) exchange distributions and/or secondary
distributions in accordance with the rules of the Nasdaq National Market, (iv)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers, and (v) privately negotiated transactions.
Pursuant to the provisions of the Registration Rights Agreement, the
Company will pay the costs and expenses incident to its registration and
qualification of the Notes and Common Stock offered hereby, including
registration and filing fees. In addition, the Company has agreed to indemnify
the Selling Securityholders against certain liabilities, including liabilities
arising under the Securities Act.
The Selling Securityholders and any underwriter or broker-dealer
participating in the distribution of the Notes and Common Stock may be deemed to
be "underwriters" within the meaning of the Securities Act, and any profits,
discounts, commissions or concessions paid or allowed to any such underwriter or
broker-dealer may be deemed to be underwriting discounts and commissions under
the Securities Act. The Selling Securityholders may indemnify any broker-dealer
that participates in transactions involving the sale of Notes and Common Stock
against certain liabilities, including liabilities under the Securities Act.
In addition, any securities covered by this Prospectus that qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than pursuant to this Prospectus. There can be no
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assurance that any Selling Securityholder will sell any or all of the Notes or
Common Stock described herein, and any Selling Securityholder may transfer,
devise or gift such securities by other means not described herein.
LEGAL MATTERS
The validity of the Notes and Common Stock offered hereby will be passed
upon by Vinson & Elkins L.L.P., Dallas, Texas.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1994 and 1995, and for each of the three years in the period ended December 31,
1995, incorporated by reference in this Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in giving said reports.
The combined financial statements of Prizm Environmental & Occupational
Health, Inc. incorporated by reference in this Prospectus have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated herein by reference in
reliance upon the authority of said firm as experts in giving said reports.
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================================================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, ANY SELLING SECURITYHOLDER OR UNDERWRITER. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
_____________________
TABLE OF CONTENTS
PAGE
----
Available Information.................... 2
Incorporation of Certain Information
by Reference........................... 2
Risk Factors............................. 3
Recent Developments...................... 6
Ratio of Earnings to Fixed Charges....... 8
Description of Notes..................... 9
Selling Securityholders.................. 23
Certain Federal Income Tax Consequences.. 26
Plan of Distribution..................... 32
Legal Matters............................ 33
Experts.................................. 33
================================================================================
================================================================================
$97,750,000
OCCUSYSTEMS, INC.
6% CONVERTIBLE SUBORDINATED NOTES
DUE 2001
____________
PROSPECTUS
____________
, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses payable by the Registrant in connection with
the registration of the Notes and Common Stock offered hereby are as follows:
SEC Registration Fee...................... $ 29,622
Nasdaq National Market System Filing Fee.. 17,500
Legal Fees and Expenses................... 35,000
Accounting Fees and Expenses.............. 35,000
Fees and Expenses of Transfer Agent....... 10,000
Miscellaneous Expenses.................... 5,000
--------
Total.................................... $132,122
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Tenth of the Certificate of Incorporation of the Registrant
provides that the Registrant shall indemnify its officers and directors to the
maximum extent allowed by the Delaware General Corporation Law. Pursuant to
Section 145 of the Delaware General Corporation Law, the Registrant generally
has the power to indemnify its present and former directors and officers against
expenses and liabilities incurred by them in connection with any suit to which
they are, or are threatened to be made, a party by reason of their serving in
those positions so long as they acted in good faith and in a manner they
reasonably believed to be in, or not opposed to, the best interests of the
Registrant, and with respect to any criminal action, so long as they had no
reasonable cause to believe their conduct was unlawful. With respect to suits
by or in the right of the Registrant, however, indemnification is generally
limited to attorneys' fees and other expenses and is not available if the person
is adjudged to be liable to the Registrant, unless the court determines that
indemnification is appropriate. The statute expressly provides that the power
to indemnify authorized thereby is not exclusive of any rights granted under any
bylaw, agreement, vote of stockholders or disinterested directors, or otherwise.
The Registrant also has the power to purchase and maintain insurance for its
directors and officers. Additionally, Article Tenth of the Certificate of
Incorporation provides that, in the event that an officer or director files suit
against the Registrant seeking indemnification of liabilities or expenses
incurred, the burden will be on the Registrant to prove that the indemnification
would not be permitted under the Delaware General Corporation Law.
The preceding discussion of the Registrant's Certificate of Incorporation and
Section 145 of the Delaware General Corporation Law is not intended to be
exhaustive and is qualified in its entirety by the Certificate of Incorporation
and Section 145 of the Delaware General Corporation Law.
The Registrant has entered into indemnity agreements with the Registrant's
directors and officers. Pursuant to such agreements, the Registrant will, to
the extent permitted by applicable law, indemnify such persons against all
expenses, judgments, fines and penalties incurred in connection with the defense
or settlement of any actions brought against them by reason of the fact that
they were directors or officers of the Registrant or assumed certain
responsibilities at the direction of the Registrant.
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBITS
NUMBER DESCRIPTION OF EXHIBITS
- -------- -----------------------
1.1* -- Purchase Agreement dated December 24, 1996 among the Registrant,
Donaldson, Lufkin & Jenrette Securities Corporation, Alex. Brown &
Sons Incorporated and Piper Jaffray, Inc.
4.1* -- Indenture dated as of December 24, 1996, between the Registrant and
United States Trust Company of New York, as Trustee.
4.2* -- Registration Rights Agreement dated as of December 24, 1996, among
the Registrant and Donaldson, Lufkin & Jenrette Securities
Corporation, Alex. Brown & Sons Incorporated and Piper Jaffray Inc.
5.1* -- Opinion of Vinson & Elkins L.L.P.
10.1* -- Form of Amendment to Employment Agreement of John K. Carlyle.
10.2* -- Amendment to Employment Agreement of Daniel J.Thomas.
10.3* -- Amendment to Employment Agreement of Richard A. Parr II.
10.4* -- Amendment to Employment Agreement of James M. Greenwood.
10.5* -- Amendment to Employment Agreement of W. Thomas Fogarty, M.D.
11.1* -- Statement regarding computation of per share earnings (filed with
the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996, which is incorporated herein by reference).
12.1* -- Statements regarding computation of ratios.
23.1* -- Consent of Vinson & Elkins L.L.P. (set forth in Exhibit 5.1).
23.2* -- Consent of Arthur Andersen LLP, Independent Auditors.
24.1* -- Powers of Attorney (set forth on signature page).
25.1 -- Form T-1.
- -----------------
* Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required in Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Pre-
Effective Amendment No. 1 to the Registration Statement (File No. 333-29033) to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Dallas, State of Texas, on the 13th day of May, 1997.
OCCUSYSTEMS, INC.
By: /s/ James M. Greenwood
-----------------------
James M. Greenwood
Senior Vice President, Chief Financial
Officer and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Pre-
Effective Amendment No. 1 to the Registration Statement (File No. 333-20933) has
been signed below by the following persons in the capacities indicated on the
13th day of May, 1997.
SIGNATURE CAPACITY DATE
- ---------------------------- ----------------------------------- ------------
/s/ John K. Carlyle* Chairman of the Board and Chief May 13, 1997
- ---------------------------- Executive Officer (Principal
John K. Carlyle Executive Officer); Director
/s/ James M. Greenwood Senior Vice President, Chief May 13, 1997
- ---------------------------- Financial Officer and Treasurer
James M. Greenwood (Principal Financial and Accounting
Officer)
/s/ Daniel J. Thomas* President and Chief Operating May 13, 1997
- ---------------------------- Officer; Director
Daniel J. Thomas
/s/ Richard D. Rehm, M.D.* Director May 13, 1997
- ----------------------------
Richard D. Rehm, M.D.
Director
- ----------------------------
Robert W. O'Leary
/s/ Paul B. Queally* Director May 13, 1997
- ----------------------------
Paul B. Queally
/s/ Stephen A. George, M.D.* Director May 13, 1997
- ----------------------------
Stephen A. George, M.D.
/s/ Robert A. Ortenzio* Director May 13, 1997
- ----------------------------
Robert A. Ortenzio
* The undersigned, by signing his name hereto, does sign and execute this Pre-
Effective Amendment No. 1 to the Registration Statement (File No. 333-20933)
pursuant to the Powers of Attorney executed on behalf of the above-named
officers and directors and previously filed.
/s/ James M. Greenwood
------------------------------
James M. Greenwood
Attorney-in-Fact
<PAGE>
EXHIBIT 25.1
FORM T-1
==============================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
__________________
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
__________________
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
__________________
Occu Systems,Inc.
(Exact name of obligor as specified in its charter)
Delaware 75-2543036
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
3010 LBJ Freeway, Suite 400
Dallas, TX 75234
(Address of principal executive offices) (Zip Code)
__________________
6% Convertible Subordinated Notes due 2001
(Title of the indenture securities)
==============================================
<PAGE>
- 2 -
GENERAL
1. GENERAL INFORMATION
-------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR
-----------------------------
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
Occu Systems, Inc. currently is not in default under any of its outstanding
securities for which United States Trust Company of New York is Trustee.
Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and
15 of Form T-1 are not required under General Instruction B.
16. LIST OF EXHIBITS
----------------
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to Form
T-1 filed on September 15, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE>
- 3 -
16. LIST OF EXHIBITS
----------------
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to Form
T-1 filed on September 15, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
- ----
As of January 31, 1997, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
__________________
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 31st day
of January, 1997.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ MARGARET CIESMELEWSKI
-------------------------------
Margaret Ciesmelewski
Assistant Vice President
<PAGE>
EXHIBIT T-1.6
-------------
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /s/Gerard F. Ganey
-----------------------------------
Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
SEPTEMBER 30, 1996
------------------
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C>
Cash and Due from Banks $ 38,257
Short-Term Investments 82,377
Securities, Available for Sale 861,975
Loans 1,404,930
Less: Allowance for Credit Losses 13,048
----------
Net Loans 1,391,882
Premises and Equipment 60,012
Other Assets 133,673
----------
TOTAL ASSETS $2,568,176
==========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 466,849
Interest Bearing 1,433,894
----------
Total Deposits 1,900,743
Short-Term Credit Facilities 369,045
Accounts Payable and Accrued Liabilities 143,604
----------
TOTAL LIABILITIES $2,413,392
==========
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 42,394
Retained Earnings 98,402
Unrealized Gains (Losses) on Securities
Available for Sale, Net of Taxes (1,007)
----------
TOTAL STOCKHOLDER'S EQUITY 154,784
----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $2,568,176
==========
</TABLE>
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkman, SVP & Controller
October 24, 1996
