<PAGE>
As filed with the Securities and Exchange Commission on July 22, 1997
Registration No. 333-28575
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------
PHYSICIANS RESOURCE GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0456864
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Three Lincoln Centre
5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240
(972) 982-8200
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
EMMETT E. MOORE
Chief Executive Officer
5430 LBJ Freeway
Suite 1540
Dallas, Texas 75240
(972) 982-8200
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
----------------
Copies to:
RICHARD J. D'AMICO JAMES S. RYAN, III
PHYSICIANS RESOURCE GROUP, INC. JACKSON & WALKER, L.L.P.
5430 LBJ Freeway 901 Main Street
Suite 1540 Suite 6000
Dallas, Texas 75240 Dallas, Texas 75202
----------------
Approximate date of commencement of proposed sale to the public: From time
to time 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, check the following box.[ ]
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 the securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
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
MAXIMUM
TITLE OF EACH PROPOSED MAXIMUM AGGREGATE AMOUNT OF
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE PRICE FEE
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
6% Convertible Subordinated Debentures due 2001 $125,000,000 100%(1) $125,000,000(1) $37,878.79
- -----------------------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value, including associated 5,418,851(2)(3) N/A N/A $ 1,475.50(4)
Rights to purchase Common Stock
- ------------------------------------------------------------------------------------------------------------------------------------
Total Registration Fee ---- ---- ---- $39,354.29(5)
====================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Includes (i) 5,000,000 shares of Common Stock initially issuable upon
conversion of the Debentures being registered hereunder, and (ii) 418,851
shares of Common Stock being sold by certain stockholders of the Company.
(3) Plus such additional indeterminate number of shares as may become issuable
upon conversion of the Debentures being registered hereunder by means of
adjustment in the conversion price.
(4) Pursuant to Rule 457(i), there is no filing fee with respect to the shares
of common stock issuable upon conversion of the Debentures because no
additional consideration will be received in connection with the exercise
of the conversion privilege. With respect to the 418,851 shares of common
stock offered hereby that are not issuable upon conversion of the
Debentures, pursuant to Rule 457(c), the registration fee has been
calculated based upon a price of $11.625 per share, the average of the high
and low prices reported on the NYSE on May 30, 1997.
(5) Such Registration Fee was previously paid in connection with the filing of
the Company's Registration Statement on Form S-3 (No. 333-28575) filed on
June 5, 1997.
------------------
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 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 JULY 22, 1997.
PROSPECTUS
PHYSICIANS RESOURCE GROUP, INC.
$125,000,000 PRINCIPLE AMOUNT OF 6% CONVERTIBLE
SUBORDINATED DEBENTURES DUE 2001
(INTEREST PAYABLE JUNE 1 AND DECEMBER 1)
5,418,851 SHARES OF COMMON STOCK
This prospectus relates to (i) $125,000,000 aggregate principle amount of
6% convertible subordinated debentures due 2001 (the "Debentures") of Physicians
Resource Group, Inc., a Delaware corporation ("PRG" or the "Company"), (ii)
5,000,000 shares of the common stock, par value $.01 per share (the "Common
Stock"), of the Company, which are initially issuable upon conversion of the
Debentures plus such additional indeterminate number of shares of Common Stock
as may become issuable upon conversion of the Debentures as a result of
adjustments to the conversion price (the "Conversion Shares"), and (iii) an
additional 418,851 shares of Common Stock (the "Additional Shares") being sold
by certain stockholders of the Company (the "Selling Stockholders"). The
Conversion Shares and the Additional Shares are collectively referred to herein
as the "Shares." The Debentures, the Conversion Shares and the Additional Shares
that are being registered hereby are to be offered for the account of the
holders thereof (the "Selling Securityholders"). The Debentures were acquired
from the Company by Smith Barney Inc., Alex. Brown & Sons Incorporated, Dillon
Read & Co., Inc., Salomon Brothers Inc and Volpe, Welty & Company (the "Initial
Purchasers") in December 1996 in connection with a private offering. See
"Description of Debentures." The Additional Shares were acquired from the
Company in connection with certain acquisition transactions consummated by the
Company.
The Debentures are convertible into Common Stock of the Company at any time
at or before maturity, unless previously redeemed, at a conversion price of
$25.00 per share, subject to adjustment in certain events. The Common Stock is
traded on the New York Stock Exchange ("NYSE") under the symbol PRG. On July 21,
1997, the closing price of the Common Stock on the NYSE was $8.25 per share.
The Debentures do not provide for a sinking fund. The Debentures are not
redeemable by the Company prior to December 6, 1999. Thereafter, the Debentures
are redeemable at the option of the Company, in whole or in part, at the
redemption prices set forth in this Prospectus, together with accrued interest.
Upon a Repurchase Event (as defined herein), each holder of Debentures shall
have the right, at the holder's option, to require the Company to repurchase
such holder's Debentures at a purchase price equal to 100% of the principal
amount thereof, plus accrued interest. See "Description of Debentures --Certain
Rights to Require Repurchase of Debentures."
The Debentures are unsecured obligations of the Company and are subordinate
to all present and future Senior Indebtedness (as defined herein) of the Company
and will be effectively subordinated to all indebtedness and liabilities of
subsidiaries of the Company. As of March 31, 1997, Senior Indebtedness was
approximately $20.5 million. The Indenture (as defined herein) does not restrict
the incurrence of any other indebtedness or liabilities by the Company or its
subsidiaries. See "Description of Debentures -- Subordination."
The Debentures have been designated for trading in the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") Market. For a
description of certain income tax consequences to holders of the Debentures, see
"Certain United States Federal Income Tax Consequences."
The Initial Purchasers have advised the Company that they intend to make a
market in the Debentures. The Initial Purchasers, however, are not obligated to
do so and any such market making may be discontinued at any time without notice,
in the sole discretion of the Initial Purchasers. No assurance can be given that
any market for the Debentures will develop or be maintained.
The Debentures and the Conversion Shares are being registered to permit
public secondary trading of the Debentures and, upon conversion, the underlying
Common Stock, by the holders thereof from time to time after the date of this
Prospectus. The Company has agreed, among other things, to bear all expenses
(other than underwriting discounts, selling commissions and fees and the
expenses of counsel and other advisors to the holders of the Debentures or the
underlying Common Stock) in connection with the registration and sale of the
Debentures and the Shares covered by this Prospectus.
The Company will not receive any of the proceeds from the sales of the
Debentures or the Shares by the Selling Securityholders. The Debentures and the
Shares may be offered in negotiated transactions or otherwise, at market prices
prevailing at the time of sale or at negotiated prices. In addition, the Shares
may be offered from time to time through ordinary brokerage transactions on the
NYSE. See "Plan of Distribution." The Selling Securityholders may be deemed to
be "Underwriters" as defined in the Securities Act of 1933, as amended (the
"Securities Act"). If any broker-dealers are used by the Selling
Securityholders, any commissions paid to broker-dealers and, if broker-dealers
purchase any Debentures or Shares as principals, any profits received by such
broker-dealers on the resale of the Debentures or Shares may be deemed to be
underwriting discounts or commissions under the Securities Act. In addition, any
profits realized by the Selling Securityholders may be deemed to be underwriting
commissions.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
----------------
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is , 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 "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
in Chicago, Illinois (Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60604) and New York, New York (7 World Trade Center,
13th Floor, New York, New York 10007). Copies of such material can also be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, shares
of the Common Stock are traded on the NYSE, and such reports, proxy statements
and other information may be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
This Prospectus, which constitutes part of a Registration Statement filed
by the Company with the Commission under the Securities Act (the "Registration
Statement"), omits certain of the information contained in the Registration
Statement. Reference is made to the Registration Statement and to the exhibits
thereto for further information with respect to the Company and the Common Stock
offered hereby. Copies of such Registration Statement are available from the
Commission. Statements contained herein concerning the provisions of documents
filed herewith as exhibits are necessarily summaries of such documents, and each
such statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission.
The Company's principal executive offices are located at Three Lincoln
Centre, 5430 LBJ Freeway, Suite 1540, Dallas, Texas, and its telephone number at
such address is (972) 982-8200.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed with the Commission by the
Company, are incorporated herein by reference and made a part hereof: (i)
Current Report on Form 8-K dated February 14, 1996 (as amended on Form 8-K/A
filed on April 12, 1996), (ii) Current Report on Form 8-K dated March 18, 1996,
(iii) Current Report on Form 8-K dated March 18, 1996, (iv) Current Report on
Form 8-K dated April 18, 1996 (as amended on Form 8-K/A filed on May 10, 1996),
(v) Current Report on Form 8-K dated June 30, 1996 (as amended on Form 8-K/A
filed on July 17, 1996), (vi) Current Report on Form 8-K dated August 13, 1996,
(vii) Current Report on Form 8-K dated August 30, 1996 (as amended on Form 8-K/A
filed on September 24, 1996), (viii) Current Report on Form 8-K dated August 30,
1996, (ix) Current Report on Form 8-K dated October 7, 1996 (as amended on Form
8-K/A filed on October 30, 1996), (x) Current Report on Form 8-K dated October
9, 1996 (as amended on Form 8-K/A filed on October 30, 1996), (xi) Current
Report on Form 8-K dated December 2, 1996, (xii) Annual Report on Form 10-K for
the year ended December 31, 1996; (xiii) definitive proxy statement, dated April
22, 1997, relating to the Company's Annual Meeting of Stockholders held on May
21, 1997; (xiv) Quarterly Report on Form 10-Q for the quarter ended March 31,
1997; (xv) Current Report on Form 8-K dated August 19, 1996, filed on April 1,
1997; (xvi) Current Report on Form 8-K dated May 15, 1997, filed on June 12,
1997; (xvii) Registration Statement on Form 8-A, dated May 5, 1995, and (xviii)
Registration Statement on Form 8-A dated April 18, 1996 (relating to rights to
purchase PRG preferred stock).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering to be made hereunder shall be deemed to
be incorporated by reference herein and to be a part hereof from the date of
filing thereof. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for all purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the documents incorporated herein or in the Registration
Statement by reference (other than exhibits and schedules thereto, unless such
exhibits or schedules are specifically incorporated by reference into the
information that this Prospectus incorporates). Written or telephonic requests
for copies should be directed to the Company's principal office: Physicians
Resource Group, Inc., Three Lincoln Centre, 5430 LBJ Freeway, Suite 1540,
Dallas, Texas 75240, (972) 982-8200.
3
<PAGE>
THE COMPANY
PRG was formed to provide physician practice management services to
ophthalmic and optometric practices and to develop integrated eye care networks.
PRG was incorporated on November 2, 1993 and until June 1995 had not conducted
any significant operations. On June 28, 1995, PRG consummated the initial
public offering (the "IPO") of its Common Stock and simultaneously exchanged
cash, shares of Common Stock and a note payable for certain assets and
liabilities of, and entered into service agreements ("Service Agreements") with,
ten ophthalmic and optometric practices (the "Founding Affiliated Practices"),
located in Arizona, Arkansas, California, Nevada, Ohio, Tennessee and Texas (the
"Reorganization").
PRG is the leading provider of physician practice management services to
ophthalmic and optometric practices and one of the nation's largest single-
specialty physician practice management companies. PRG develops integrated eye
care delivery systems through affiliations with locally prominent eye care
practices in selected geographic markets across the United States. PRG acquires
the operating assets of these practices (the "Affiliated Practices") and
develops the practices into comprehensive eye care networks by providing
management expertise, marketing, information systems, capital resources and
ancillary services such as surgery centers and optical dispensaries. As of May
15, 1997, PRG provided management services to 160 practices with 431
ophthalmologists and 231 optometrists at 407 locations in 24 states, owned or
operated 45 ambulatory (outpatient) surgery centers ("ASCs") and 178 optical
dispensaries and owned or leased 24 excimer lasers. PRG's principal offices are
located at Three Lincoln Centre, Suite 1540, 5430 LBJ Freeway, Dallas, Texas
75240 and its telephone number at that address is (972) 982-8200.
RISK FACTORS
In addition to the other information contained or incorporated by reference
in this Prospectus, prospective investors should consider carefully the factors
listed below before purchasing the Debentures or Common Stock offered hereby.
Prospective investors are cautioned that statements in this Prospectus
(including the documents incorporated by reference herein) that are not
descriptions of historical facts may be forward-looking statements. Such
statements reflect management's current views, are based on many assumptions and
are subject to risks and uncertainties. Actual results could differ materially
from those currently anticipated due to a number of factors, including, but not
limited to, those discussed below.
LIMITED OPERATING HISTORY AND INTEGRATION OF OPERATIONS
Prior to PRG's acquisition of the Founding Affiliated Practices in June
1995 pursuant to the Reorganization, PRG conducted no significant operations.
Since its formation, PRG has grown principally through acquisitions, a
substantial portion of which have been consummated since March 1996, and is
pursuing an aggressive growth strategy. If PRG is to realize the anticipated
benefits of acquisitions and any future acquisitions, the operations of these
entities must be integrated and combined effectively. The process of
integrating management services, administrative organizations, facilities,
management information systems and other aspects of operations, while managing a
larger and geographically expanded entity, presents a significant challenge to
the management of PRG. There can be no assurance that the integration process
will be successful or that the anticipated benefits of its business combinations
will be realized. The dedication of management resources to such integration
may detract attention from the day-to-day operations of PRG. The difficulties
of integration may be increased by the necessity of coordinating geographically
separated organizations, integrating personnel with disparate business
backgrounds and combining different corporate structures. There can be no
assurance that there will not be substantial unanticipated costs associated with
such activities or that there will not be other material adverse effects of
these integration efforts. Such efforts could materially reduce the earnings of
PRG. PRG has incurred approximately $12,000,000 in transaction costs in
connection with the acquisition of EyeCorp, Inc. ("EyeCorp") a privately held
physician practice management company devoted solely to eye care, and certain
other pooling of interests transactions. These transaction costs have been
recognized as an expense by the Company during 1996. These amounts include
legal, accounting, financial, advisory and other costs directly attributable to
negotiating and closing these transactions and do not reflect integration costs.
In addition, PRG has incurred approximately $5,761,000 in connection with
various other 1996 acquisitions that were accounted for as purchases, all of
which were capitalized and will be amortized in the future. There can be no
assurance that PRG will not incur additional charges in subsequent periods to
reflect costs associated with these transactions.
4
<PAGE>
ACQUISITION STRATEGY AND LIMITATION ON GROWTH
An integral part of PRG's business strategy is to increase its revenues,
earnings and market share through the acquisition of the assets of eye care
physician practice groups, management services organizations ("MSOs"), ASCs and
related businesses and the entry into management services relationships with
such groups. There can be no assurance that PRG will be able to acquire the
assets of, or profitably provide management services to, additional eye care
practices or successfully integrate such additional management services
relationships. In addition, there can be no assurance that the assets of eye
care practices acquired in the future, or the management services relationships
entered into in the future, will be beneficial to the successful implementation
of PRG's overall strategy, or that such assets and relationships will ultimately
produce returns that justify their related investment or implementation by PRG.
PRG's ability to expand is also dependent upon factors such as its ability
to (i) identify attractive and willing candidates for acquisition, (ii) adapt or
amend PRG's structure to comply with present or future state legal requirements
affecting PRG's arrangements with physician practice groups, including state
prohibitions on fee splitting, corporate practice of medicine and referrals to
facilities in which physicians have a financial interest, (iii) obtain
regulatory approval and certificates of need, where necessary, and comply with
licensing requirements applicable to physicians and facilities operated, and
services offered, by physicians and (iv) expand PRG's infrastructure and
management to accommodate expansion. There can be no assurance that PRG will be
able to achieve these objectives or its planned growth, that the assets of eye
care practice groups will continue to be available for acquisition by PRG, or
that the addition of such practice groups will be profitable.
PRG's expansion strategy also requires substantial capital investment.
Capital is needed not only for the acquisition of the assets of physician
practices, but also for their effective integration, operation and expansion and
for the addition of medical equipment and technology. PRG may finance future
acquisitions by using shares of Common Stock, or debt convertible into shares of
Common Stock, for all or a portion of the consideration to be paid. In the
event that the Common Stock does not maintain a sufficient valuation, or
potential acquisition candidates are unwilling to accept Common Stock as part of
the consideration for the sale of the assets of their businesses, PRG may be
required to utilize more of its cash resources, if available, in order to pursue
its acquisition program. If PRG does not have sufficient cash resources, its
growth could be limited and its existing operations impaired, unless it is able
to obtain additional capital through subsequent debt or equity financings.
There can be no assurance that PRG will be able to obtain such financing or
that, if available, such financing will be on terms acceptable to PRG. The
Company's credit facilities require, under certain circumstances, the consent of
the Company's primary lender prior to the consummation of acquisitions, and
there can be no assurance the Company's primary lender will grant its consent
each time the solicitation of such consent is required. As a result, there can
be no assurance that PRG will be able to continue to implement its acquisition
strategy successfully.
RISKS RELATED TO INTANGIBLE ASSETS
As a result of PRG's various acquisition transactions, intangible assets of
approximately $372 million have been recorded on PRG's March 31, 1997 balance
sheet as a result of purchase accounting. Using an amortization period ranging
from seven to 40 years for intangibles, amortization expense relating to these
intangibles will be approximately $11.5 million per year. Purchases of
practices that result in the recognition of additional intangible assets would
cause amortization expense to further increase. A substantial portion of the
amortization generated by these intangible assets is not deductible for tax
purposes.
As practice asset acquisitions are made, PRG evaluates each acquisition
considering the practice's market position, reputation, profitability, and
geographical penetration, its position in the PRG provider network, the
collective experience of its executives and employees, its relationships with
its customers and affiliated physicians, the relationships between its
affiliated physicians and their patients and the specific Service Agreements
entered into with the Affiliated Practices. All of these factors contribute to
the purchase price paid for the acquisition and to the intangible created in the
purchase transaction. Generally, PRG management believes that these intangibles
will have a life of indefinite length.
At the time of or following each acquisition, PRG evaluates each
acquisition and establishes an appropriate amortization period based on the
underlying facts and circumstances. Subsequent to such initial evaluation, PRG
periodically reevaluates such facts and circumstances to determine if the
related intangible asset continues to be realizable and if the amortization
period continues to be appropriate. As the underlying facts and circumstances
5
<PAGE>
subsequent to the date of acquisition can change, there can be no assurance that
the value of such intangible assets will be realized by PRG. Although at
March 31, 1997, the net unamortized balance of intangible assets acquired and
anticipated to be acquired was not considered to be impaired, any future
determination that a significant impairment has occurred would require the
write-off of the impaired portion of unamortized intangible assets, which could
have a material adverse effect on the Company's results of operations.
GOVERNMENT REGULATION
Various state and federal laws regulate the relationships between providers
of health care services, physicians and other clinicians. These laws include
the fraud and abuse provisions of the Social Security Act, which include the
"anti-kickback" and "anti-referral" laws. The "anti-kickback" laws prohibit the
offering, payment, solicitation or receipt of any direct or indirect
remuneration for the referral of Medicare or Medicaid patients or for the
ordering or providing of Medicare or Medicaid covered services, items or
equipment. The "anti-referral" laws impose restrictions on physicians'
referrals for designated health services to entities with which they have
financial relationships. Violations of these laws may result in substantial
civil or criminal penalties for individuals or entities, including large civil
monetary penalties and exclusion from participation in the Medicare and Medicaid
programs. Such exclusion, if applied to the Affiliated Practices, could result
in significant loss of reimbursement. A determination of liability under any
such laws could have a material adverse effect on the Company's operations.
Several states, including states in which some Affiliated Practices are
located, have adopted laws similar to the "anti-kickback" and "anti-referral"
laws that cover patients in private programs as well as government programs.
The laws of many states also prohibit physicians from splitting fees with non-
physicians and prohibit non-physician entities from practicing medicine. These
laws vary from state to state and are enforced by the courts and by regulatory
authorities with material discretion. A determination of liability under any
such laws could have a material adverse effect on PRG.
Although PRG believes that its operations as described in this Prospectus
are in substantial compliance with existing applicable laws, PRG's business
operations have not been the subject of judicial or regulatory interpretation.
There can be no assurance that review of PRG's business by courts or regulatory
authorities will not result in determinations that could adversely affect the
operations of PRG or that the health care regulatory environment will not change
so as to restrict PRG's existing operations or their expansion. In addition,
the regulatory framework of certain jurisdictions may limit PRG's expansion
into, or ability to continue operations within, such jurisdictions if PRG is
unable to modify its operational structure to conform with such regulatory
framework. Any limitation on PRG's ability to expand could have a material
adverse effect on the Company's operations.
In addition to extensive existing government health care regulation, there
have been numerous initiatives on the federal and state levels for comprehensive
reforms affecting the payment for and availability of health care services. PRG
believes that such initiatives will continue during the foreseeable future.
Aspects of certain of these reforms as proposed in the past, such as further
reductions in Medicare and Medicaid payments and additional prohibitions on
physician ownership, directly or indirectly, of facilities to which they refer
patients, if adopted, could adversely affect PRG.
REIMBURSEMENT; TRENDS AND COST CONTAINMENT
PRG's revenues are derived principally from service fees paid to PRG by the
Affiliated Practices. Since the amount of service fees payable to the Company
is generally determined with reference to the revenues or earnings of the
Affiliated Practices, any reduction in the revenues of Affiliated Practices
could adversely affect the Company. A substantial portion of the revenues of
the Affiliated Practices are derived from government sponsored health care
programs (principally, the Medicare and Medicaid programs) or private third-
party payors. The health care industry is experiencing a trend toward cost
containment as government and private third-party payors seek to impose lower
reimbursement and utilization rates and negotiate reduced payment schedules with
service providers. PRG believes that these trends will continue to result in a
reduction from historical levels in per-patient revenue for such medical
practices. Further reductions in payments to physicians or other changes in
reimbursement for health care services would generally reduce the service fees
payable to PRG thereby reducing the Company's revenues. Unless PRG is otherwise
able to offset such payment reductions through cost containment, PRG's
profitability would also be reduced.
6
<PAGE>
Rates paid by private third-party payors are based on established
physician, ASC and hospital charges and are generally higher than Medicare
reimbursement rates. Any decrease in the relative number of patients covered by
private insurance could have a material adverse effect on PRG's results of
operations.
The federal government has implemented, through the Medicare program, a
resource-based relative value scale ("RBRVS") payment methodology for physician
services. This methodology went into effect in 1992 and was implemented during
a transition period in annual increments through December 31, 1995. RBRVS is a
fee schedule that, except for certain geographical and other adjustments, pays
similarly situated physicians the same amount for the same services. The RBRVS
is adjusted each year, and is subject to increases or decreases at the
discretion of Congress. To date, the implementation of RBRVS has reduced
payment rates for certain of the procedures historically provided by the
Affiliated Practices. RBRVS-type of payment systems have also been adopted by
certain private third-party payors and may become a predominant payment
methodology. Widerspread implementation of such programs would reduce payments
by private third-party payors and could indirectly reduce PRG's operating
margins to the extent that costs of providing management services related to
such procedures could not be proportionately reduced.
There can be no assurance that any or all of these reduced revenues and
operating margins could be offset by PRG through cost reductions, increased
volume, introduction of new procedures or otherwise.
RISKS ASSOCIATED WITH MANAGED CARE CONTRACTS
As an increasing percentage of patients are coming under the control of
managed care entities, PRG believes that its success will, in part, be dependent
upon PRG's ability to negotiate, on behalf of the Affiliated Practices,
contracts with health maintenance organizations ("HMOs"), employer groups and
other private third-party payors pursuant to which services will be provided on
a risk-sharing or capitated basis by some or all Affiliated Practices. Under
some of such agreements, the healthcare provider accepts a pre-determined amount
per patient per month in exchange for providing all necessary covered services
to the patients covered under the agreement. Such contracts pass much of the
financial risk of providing care, such as over-utilization, from the payor to
the provider. Such contracts, in general, result in greater predictability of
revenues, but greater unpredictability of expenses. Although PRG enters into
the managed care contracts, in many cases, the risks are passed on to the
affiliated practices. In the instances where PRG assumes the risks, PRG attempts
to develop rates that support the assumption of risk. There can be no assurance
that PRG will be able to negotiate, on behalf of its Affiliated Practices,
satisfactory arrangements on a risk-sharing or capitated basis. In addition, to
the extent that patients or enrollees covered by such contracts require more
frequent or extensive care than is anticipated, operating margins may be
reduced, or in the worst case, the revenues derived from such contracts may be
insufficient to cover the costs of the services provided. As a result,
Affiliated Practices may incur additional costs, which would reduce or eliminate
anticipated earnings under such contracts. Any such reduction or elimination of
earnings could have a material adverse affect on PRG's results of operations.
APPLICABILITY OF INSURANCE REGULATIONS
PRG, through its subsidiary The EyePA, Inc., enters into contracts with
licensed insurance companies, such as HMO's, whereby PRG assumes risks in
connection with providing medical services under capitation arrangements. To the
extent PRG, through its subsidiary, is in the business of insurance as a result
of entering into such risk sharing arrangements, it is subject to a variety of
regulatory and licensing requirements applicable to insurance companies or HMOs.
The HMO and insurance industries are highly regulated at the state level and are
highly competitive. There can be no assurance that developments in any of these
areas will not have an adverse effect on PRG's subsidiary.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
As of May 1, 1997, PRG had outstanding approximately 30.0 million shares of
Common Stock. Of such 30.0 million shares, (i) approximately 9.3 million shares
were registered in connection with two underwritten public offerings (which
included the sale of 1.5 million shares by certain selling stockholders); (ii)
the issuance of approximately 8.6 million shares (excluding shares subsequently
reacquired by the Company) was registered and such shares were issued in
connection with acquisitions (with the resale of a portion of such shares
contractually subject to the holding periods and volume limitations provided for
under Rule 144 of the Securities Act (as in effect from time to time)); (iii)
the issuance of approximately 1.5 million shares was not registered and such
shares were issued in acquisitions or prior to PRG's initial public offering,
but the resale of such shares has been registered (a portion of which shares has
already been resold); and (iv) the issuance of approximately 10.0 million shares
was not registered and such shares were issued in connection with acquisitions
or prior to PRG's initial public offering, and the holders of substantial
portions of such shares have certain registration rights.
The Company estimates that approximately 6.9 million of such shares became
eligible for sale under and in accordance with Rule 144, as currently in effect,
promulgated under the Securities Act (subject to the volume and manner of sale
restrictions of Rule 144) on April 29, 1997. As early as June 1997,
approximately 5,000,000 shares become eligible for sale pursuant to the terms of
certain stockholder agreements. In addition, as of January 1997, the Company
registered approximately 10 million shares under the Securities Act for issuance
in connection with future acquisitions.
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In general, shares whose issuance has been registered are freely tradeable
without restriction except to the extent held or acquired by affiliates of PRG
and shares whose issuance has not been registered may be resold publicly only in
future transactions registered under the Securities Act or in compliance with an
exemption from registration requirements of the Securities Act, including the
exemption provided by Rule 144 thereunder.
No prediction can be made as to the effect, if any, that the sale of shares
or the availability of shares for sale will have on the market price prevailing
from time to time. Nevertheless, sales of substantial amounts of the Common
Stock in the public market or the perception that such sales could occur could
adversely affect prevailing market prices and the ability of PRG to raise equity
capital in the future. See "Shares Eligible for Future Sale."
COMPETITION
PRG experiences competitive pressures for the acquisition of the assets of,
and the provision of management services to, additional practices and the
acquisition of MSOs. PRG knows of several private practice management companies
focused on eye care services. Several other practice management companies, both
publicly and privately held, that have established operating histories and, in
some instances, greater resources than PRG, are pursuing the acquisition of the
assets of other general and specialty medical, including eye care practices and
the management of such practices. Additionally, some hospitals, clinics, health
care companies, HMOs and insurance companies engage in activities similar to the
activities of these other practice management companies. There can be no
assurance that PRG will be able to compete effectively with such competitors for
the acquisition of, or affiliation with, eye care practices, that additional
competitors will not enter the market, that such competition will not make it
more difficult or expensive to acquire the assets of, and provide management
services to, eye care practices on terms beneficial to PRG or that competitive
pressures will not otherwise adversely affect the Company.
Affiliated Practices compete with numerous local eye care service
providers. PRG believes that changes in governmental and private reimbursement
policies and other factors have resulted in increased competition among
providers for the provision of medical services to consumers. There can be no
assurance that the Affiliated Practices will be able to compete effectively in
the markets that they serve. PRG believes that the cost, accessibility and
quality of services provided are the principal factors that affect competition.
There can be no assurance that the Affiliated Practices will be able to compete
effectively in the markets that they serve, which inability to compete could
adversely affect PRG.
Further, the Affiliated Practices will compete with other providers for
managed care contracts. PRG believes that trends toward managed care have
resulted, and will continue to result, in increased competition for such
contracts. Other practices and MSOs may have more experience than the
Affiliated Practices and PRG in obtaining such contracts. There can be no
assurance that PRG and the Affiliated Practices will be able to successfully
acquire sufficient managed care contracts to compete effectively in the markets
they serve, which inability to compete could adversely affect PRG.
POTENTIAL LIABILITY AND INSURANCE; LEGAL PROCEEDINGS
The provision of medical services entails an inherent risk of professional
malpractice and other similar claims. Generally, PRG only provides facilities
and administrative services in connection with the provision of its management
services to the Affiliated Practices; however, in states where the Company is
permitted under applicable regulations, PRG directly contracts with physicians
and optometrists for the provision of professional services. In all cases, PRG
does not control or direct the practice of medicine by physicians and does not
assume responsibility for compliance with certain regulatory and other
requirements directly applicable to physicians and physician groups. There can
be no assurance that claims, suits or complaints relating to services and
products provided by Affiliated Practices will not be asserted against PRG in
the future. Additionally, PRG owns and operates ASCs. A significant source of
potential liability would be claims of negligence on the part of health care
professionals under direct contract with the Company to provide professional
services or employed by the Affiliated Practices or in connection with surgeries
performed at the Company's ASCs and would be based on the Company's relationship
with the Affiliated Practices or ASCs. The Company could also be held liable
for negligence regardless of the relationship between the Company and the
Affiliated Practices if the Company were deemed negligent in selecting or
retaining health care professionals or otherwise in performing its management
services or operating ASCs.
PRG maintains insurance coverage that it believes is adequate both as to
risks and amounts. Such insurance extends to professional liability claims that
may be asserted against PRG directly or against employees of PRG that
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work on site at Affiliated Practice locations. In addition, pursuant to the
Service Agreements, the Affiliated Practices (or PRG on behalf of the Affiliated
Practices) are required to maintain professional liability insurance.
Nevertheless, there can be no assurance that successful malpractice or other
claims will not be asserted against the Affiliated Practices or PRG that exceed
applicable policy limits, which could have a material adverse effect on PRG.
PRG, in connection with the acquisition of the assets of certain of the
Affiliated Practices, typically succeeds to some or all of the liabilities of
the Affiliated Practices. Therefore, claims may be asserted against PRG for
events that occurred prior to the acquisition of the assets of certain of the
Affiliated Practices. PRG maintains insurance coverage related to those risks
that it believes is adequate both as to risks and amounts, although no assurance
can be provided that any successful claims will not exceed applicable policy
limits.
The availability and cost of professional liability insurance has been
affected by various factors, many of which are beyond the control of PRG and the
Affiliated Practices. There can be no assurance that liability insurance will
be available to PRG in the future at acceptable costs or that the future cost of
such insurance to PRG and the Affiliated Practices will not have an adverse
effect on PRG's operations.
ANTI-TAKEOVER CONSIDERATIONS
Certain provisions of the Company's Restated Certificate of Incorporation,
the Company's Bylaws and Delaware law could discourage potential acquisition
proposals, delay or prevent a change in control of the Company and,
consequently, limit the price that investors might be willing to pay in the
future for shares of the Common Stock. These provisions include a classified
Board of Directors, the inability to remove directors except for cause and the
ability to issue, without further stockholder approval, shares of preferred
stock with rights and privileges senior to the Common Stock. In addition, in
April 1996 the Company adopted a stockholder rights plan, which can have a
significant anti-takeover effect. The Company also is subject to Section 203 of
the Delaware General Corporation Law which, subject to certain exceptions,
prohibits a Delaware corporation from engaging in any of a broad range of
business combinations with an "interested stockholder" for a period of three
years following the date that such stockholder became an interested stockholder.
The Company's principal credit facilities require the Company to obtain the
consent of the lender following a change in PRG's senior management personnel,
and a "Change of Control" (as defined therein) constitutes an event of default
under each of the credit facilities. In the event of a Change in Control (as
defined in the Indenture), each holder of Debentures will have the right, at the
holder's option, to require the Company to repurchase all or a portion of such
holder's Debentures at a purchase price equal to 100% of the principal amount
thereof plus accrued interest to the Repurchase Date (as defined herein). See
"Description of Debentures." These provisions of the Company's credit
facilities and the Debentures could serve to impede or prevent a change of
control or have a depressive effect on the price of the Common Stock.
LEVERAGE
The Company's indebtedness is significant in relation to its stockholders'
equity. As of March 31, 1997, such debt accounted for approximately 33% of the
Company's total capitalization.
SUBORDINATION OF DEBENTURES
The Debentures are subordinate in right of payment to all current and
future Senior Indebtedness of the Company. Senior Indebtedness includes all
secured indebtedness of the Company, whether existing on or created or incurred
after the date of the issuance of the Debentures, that is not made subordinate
to or pari passu with the Debentures by the instrument creating the
indebtedness. At March 31, 1997, the aggregate amount of Senior Indebtedness
outstanding and the aggregate amount of indebtedness and other liabilities of
the Company and its subsidiaries to which the Debentures are effectively
subordinated was approximately $20.5 million. The Indenture does not limit the
amount of additional indebtedness, including Senior Indebtedness, which the
Company can create, incur, assume or guarantee. By reason of such subordination
of the Debentures, in the event of insolvency, bankruptcy, liquidation,
reorganization, dissolution or winding up of the business of the Company or upon
default in payment with respect to any Senior Indebtedness of the Company or an
event of default with respect to such indebtedness resulting in the acceleration
thereof, the assets of the Company will be available to pay the amounts due on
the Debentures only after all Senior Indebtedness of the Company has been paid
in full. In addition, holders of the Debentures are effectively subordinated to
the claims of creditors of the Company's subsidiaries. In the event of the
insolvency, bankruptcy, liquidation, reorganization, dissolution or winding up
of the business of any
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subsidiary of the Company, creditors of such subsidiary generally will have the
right to be paid in full before any distribution is made to the Company or the
holders of the Debentures. See "Description of Debentures."
LIMITATIONS ON REPURCHASE UPON A REPURCHASE EVENT
In the event of a Repurchase Event (as defined herein), which includes a
Change in Control and a Termination of Trading (each as defined herein), each
holder of the Debentures will have the right, at the holder's option, to require
the Company to repurchase all or a portion of such holder's Debentures at a
purchase price equal to 100% of the principal amount thereof plus accrued
interest to the Repurchase Date (as defined herein). The Company's ability to
repurchase the Debentures upon a Repurchase Event may be limited by the terms of
the Company's Senior Indebtedness and the subordination provisions of the
Indenture. Further, the ability of the Company to repurchase Debentures upon a
Repurchase Event will be dependent on the availability of sufficient funds and
compliance with applicable securities laws. Accordingly, there can be no
assurance that the Company will be able to repurchase the Debentures upon a
Repurchase Event. The term "Repurchase Event" is limited to certain specified
transactions and may not include other events that might adversely affect the
financial condition of the Company or result in a downgrade of the credit rating
(if any) of the Debentures nor would the requirement that the Company offer to
repurchase the Debentures upon a Repurchase Event necessarily afford holders of
the Debentures protection in the event of a highly leveraged reorganization,
merger or similar transaction involving the Company. See "Description of
Debentures."
ABSENCE OF PUBLIC MARKET
There is no existing public market for the Debentures and there can be no
assurance as to the liquidity of any markets that may develop for the
Debentures, the ability of the holders to sell their Debentures or the price at
which holders of the Debentures may be able to sell their Debentures. Future
trading prices of the Debentures will depend on many factors, including, among
other things, prevailing interest rates, the Company's operating results, the
price of the Common Stock and the market for similar securities. The Initial
Purchasers have informed the Company that the Initial Purchasers intend to make
a market in the Debentures; however, the Initial Purchasers are not obligated to
do so, and any such market making activity may be terminated at any time without
notice to the holders of the Debentures. See "Description of Debentures --
Registration Rights; Liquidated Damages." Prior to the resale thereof pursuant
to this Prospectus, each of the Debentures was eligible for trading in Private
Offerings, Resales and Trading through the PORTAL Market. Debentures sold
pursuant to this Prospectus will no longer be eligible for trading in the PORTAL
Market. The Company does not intend to apply for listing of the Debentures on
any securities exchange.
POSSIBLE VOLATILITY OF STOCK PRICE
The market price of the Common Stock could be subject to significant
fluctuations in response to various factors and events, including variations in
the Company's earnings results, changes in earnings estimates by securities
analysts, publicity regarding the Company, its competitors, the physician
practice management industry or the health care industry generally, new statutes
or regulations or changes in the interpretation of existing statutes or
regulations affecting the health care industry in general or the physician
practice management industry specifically, changes in the reimbursement
practices or policies of third-party payors, sales of substantial amounts of
Common Stock in the public market or the perception that such sales could occur
and other factors. In addition, in recent years, the stock market and, in
particular, the physician practice management segment and the health care
industry, has experienced broad price and volume fluctuations that often have
been unrelated to the operating performance of particular companies. These
market fluctuations also may adversely affect the market price of the shares of
Common Stock.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Debentures
or the shares of Common Stock offered hereby.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for each of the periods
indicated is as follows:
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Year Ended December 31 Three Months Ended March 31
- ---------------------------- ---------------------------
1993 1994 1995 1996 1996 1997
- ---- ---- ---- ---- ---- ----
7.19x 3.07x 1.57x 2.57x (A) 2.35x
- -----------------
(A) Earnings were insufficient to cover fixed charges in the three month period
ended March 31, 1996 by $5.162 million.
The ratio of earnings to fixed charges is computed by dividing fixed
charges into earnings from continuing operations before income taxes, minority
interests and extraordinary items plus fixed charges. Fixed charges consist of
interest expense, amortization of financing costs and the estimated interest
component of rent expense.
DESCRIPTION OF DEBENTURES
The Debentures are issued under an indenture dated as of December 11, 1996
(the "Indenture") between the Company and U.S. Trust Company of New York, N.A.,
as trustee (the "Trustee"). The following summaries of certain provisions of
the Indenture do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all of the provisions of the
Indenture, including the definition therein of certain terms. Wherever
particular sections or defined terms of the Indenture are referred to, such
sections or defined terms are incorporated herein by reference.
GENERAL
The Debentures are unsecured obligations of the Company, equal to
$125,000,000 in aggregate principal amount and mature on December 1, 2001. The
Debentures bear interest at the rate per annum shown on the front cover of this
Prospectus from the date of original issuance of Debentures pursuant to the
Indenture, or from the most recent Interest Payment Date to which interest has
been paid or provided for, payable semi-annually on June 1 and December 1 of
each year, commencing June 1, 1997, to the Person in whose name the Debenture
(or any predecessor Debenture) is registered at the close of business on the
preceding May 15 or November 15, as the case may be. Interest on the Debentures
is paid on the basis of a 360-day year of 12 30-day months.
Principal of, and premium, if any, and interest on, the Debentures is
payable (i) in respect of Debentures held of record by the Depositary Trust
Company, New York, New York ("DTC") or its nominee in same day funds on or prior
to the payment dates with respect to such amounts and (ii) in respect of
Debentures held of record by holders other than DTC or its nominee at the office
of the Trustee in New York, New York, and the Debentures may be surrendered for
transfer, exchange or conversion at the office of the Trustee in New York, New
York. In addition, with respect to Debentures held of record by holders other
than DTC or its nominee, payment of interest may be made at the option of the
Company by check mailed to the address of the persons entitled thereto as it
appears in the Register for the Debentures on the Regular Record Date for such
interest.
The Debentures were issued only in registered form, without coupons and in
denominations of $1,000 or any integral multiple thereof. No service charge
will be made for any transfer or exchange of the Debentures, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge and any other expenses (including the fees and expenses of the Trustee)
payable in connection therewith. The Company is not required (i) to issue,
register the transfer of or exchange any Debentures during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption and ending at the close of business on the day of such mailing, or
(ii) to register the transfer of or exchange any Debenture selected for
redemption in whole or in part, except the unredeemed portion of Debentures
being redeemed in part.
All monies paid by the Company to the Trustee or any Paying Agent for the
payment of principal of and premium and interest on any Debenture that remain
unclaimed for two years after such principal, premium or interest become due and
payable may be repaid to the Company. Thereafter, the Holder of such Debenture
may, as an unsecured general creditor, look only to the Company for payment
thereof.
The Indenture does not contain any provisions that would provide protection
to Holders of the Debentures against a sudden and dramatic decline in credit
quality of the Company resulting from any takeover, recapitalization or similar
restructuring, except as described below under "Certain Rights to Require
Repurchase of Debentures."
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CONVERSION RIGHTS
The Debentures are convertible into Common Stock at any time prior to
redemption or final maturity, initially at the conversion price of $25.00 per
share. The right to convert Debentures that have been called for redemption
will terminate at the close of business on the second business day preceding the
Redemption Date. See "Optional Redemption" below.
The conversion price is subject to adjustment upon the occurrence of any of
the following events: (i) the subdivision, combination or reclassification of
outstanding shares of Common Stock; (ii) the payment in shares of Common Stock
of a dividend or distribution on any class of capital stock of the Company;
(iii) the issuance of rights or warrants to all holders of Common Stock
entitling them to acquire shares of Common Stock at a price per share less than
the Current Market Price; (iv) the distribution to holders of Common Stock of
shares of capital stock other than Common Stock, evidences of indebtedness, cash
or assets (including securities, but excluding dividends or distributions paid
exclusively in cash and dividends, distributions, rights and warrants referred
to above); (v) a distribution consisting exclusively of cash (excluding any cash
distributions referred to in (iv) above) to all holders of Common Stock in an
aggregate amount that, together with (A) all other cash distributions (excluding
any cash distributions referred to in (iv) above) made within the 12 months
preceding such distribution and (B) any cash and the fair market value of other
consideration payable in respect of any tender offer by the Company or a
subsidiary of the Company for the Common Stock consummated within the 12 months
preceding such distribution, exceeds 12.5% of the Company's market
capitalization (being the product of the Current Market Price times the number
of shares of Common Stock then outstanding) on the date fixed for determining
the stockholders entitled to such distribution; and (vi) the consummation of a
tender offer made by the Company or any subsidiary of the Company for the Common
Stock which involves an aggregate consideration that, together with (X) any cash
and other consideration payable in respect of any tender offer by the Company or
a subsidiary of the Company for the Common Stock consummated within the 12
months preceding the consummation of such tender offer and (Y) the aggregate
amount of all cash distributions (excluding any cash distributions referred to
in (iv) above) to all holders of the Common Stock within the 12 months preceding
the consummation of such tender offer, exceeds 12.5% of the Company's market
capitalization at the date of consummation of such tender offer. No adjustment
of the conversion price is required to be made until cumulative adjustments
amount to at least one percent of the conversion price, as last adjusted. Any
adjustment that would otherwise be required to be made is carried forward and
taken into account in any subsequent adjustment.
In addition to the foregoing adjustments, the Company is permitted to
reduce the conversion price as it considers to be advisable in order that any
event treated for federal income tax purposes as a dividend of stock or stock
rights will not be taxable to the holders of the Common Stock or, if that is not
possible, to diminish any income taxes that are otherwise payable because of
such event. In the case of any consolidation or merger of the Company with any
other corporation (other than one in which no change is made in the Common
Stock), or any sale or transfer of all or substantially all of the assets of the
Company, the Holder of any Debenture then outstanding will, with certain
exceptions, have the right thereafter to convert such Debenture only into the
kind and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of
Common Stock into which such Debenture might have been converted immediately
prior to such consolidation, merger, sale or transfer; and adjustments will be
provided for events subsequent thereto that are as nearly equivalent as
practical to the conversion price adjustments described above.
Fractional shares of Common Stock will not be issued upon conversion, but,
in lieu thereof, the Company will pay a cash adjustment based upon the then
Closing Price at the close of business on the day of conversion. If any
Debentures are surrendered for conversion during the period from the close of
business on any Regular Record Date through and including the next succeeding
Interest Payment Date (except any such Debentures called for redemption), such
Debentures when surrendered for conversion must be accompanied by payment in New
York Clearing House Funds or other funds acceptable to the Company, of an amount
equal to the interest thereon which the registered Holder on such Regular Date
is to receive. Except as described in the preceding sentence, no interest will
be payable by the Company on converted Debentures with respect to any Interest
Payment Date subsequent to the date of conversion. No other payment or
adjustment for interest or dividends is to be made upon conversion.
SUBORDINATION
The payment of the principal of and premium, if any, and interest on the
Debentures is, to the extent set forth in the Indenture, be subordinated in
right of payment to the prior payment in full of all Senior Indebtedness.
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If there is a payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshalling of assets or any bankruptcy, insolvency or similar
proceedings of the Company, the holders of all Senior Indebtedness will be
entitled to receive payment in full of all amounts due or to become due thereon
or provision for such payment in money or money's worth before the Holders of
the Debentures will be entitled to receive any payment in respect of the
principal of or premium, if any, or interest on the Debentures. In the event of
the acceleration of the Maturity of the Debentures, the holders of all Senior
Indebtedness will first be entitled to receive payment in full in cash of all
amounts due thereon or provision for such payment in money or money's worth
before the Holders of the Debentures will be entitled to receive any payment for
the principal of or premium, if any, or interest on the Debentures and upon any
such event the Holders shall be prohibited for a period of 180 days thereafter
from making any bankruptcy filing with respect to the Company or, to the extent
permitted by law, from filing suit to enforce their rights under the Indenture.
No payments on account of principal of or premium, if any, or interest on the
Debentures or on account of the purchase or acquisition of Debentures may be
made if there has occurred and is continuing a default in any payment with
respect to Senior Indebtedness, any acceleration of the maturity or any Senior
Indebtedness or if any judicial proceeding is pending with respect to any such
default and for a period of 180 days after any such occurrence the Holders shall
be prohibited from making any bankruptcy filing with respect to the Company or,
to the extent permitted by law, from filing suit to enforce their rights under
the Indenture.
Senior Indebtedness ("Senior Indebtedness") is defined in the Indenture as
the principal of and premium, if any, and interest on (i) all secured
indebtedness of the Company for money borrowed (including any secured
indebtedness under the Company's Credit Facilities and any predecessor or
successor thereto), whether outstanding on the date of execution of the
Indenture or thereafter created, incurred or assumed, except any such other
indebtedness that by the terms of the instrument or instruments by which such
indebtedness was created or incurred expressly provides that it (a) is junior in
right of payment to the Debentures or (b) ranks pari passu in right of payment
with the Debentures, and (ii) any amendments, renewals, extensions,
modifications, refinancings and refundings of any of the foregoing. For the
purposes of this definition, "indebtedness for money borrowed" when used with
respect to the Company means (i) any obligation of, or any obligation guaranteed
by, the Company for the repayment of borrowed money (including without
limitation fees, penalties and other obligations in respect thereof), whether or
not evidenced by bonds, debentures, notes or other written instruments, (ii) any
deferred payment obligation of, or any such obligation guaranteed by, the
Company for the payment of the purchase price of property or assets evidenced by
a note or similar instrument and (iii) any obligation of, or any such obligation
guaranteed by, the Company for the payment of rent or other amounts under a
lease of property or assets which obligation is required to be classified and
accounted for as a capitalized lease on the balance sheet of the Company under
generally accepted accounting principles.
The Debentures are obligations exclusively of the Company. The operations
of the Company are currently conducted principally through subsidiaries, which
are separate and distinct legal entities and have no obligation, contingent or
otherwise, to pay any amounts due pursuant to the Debentures or to make any
funds available therefor, whether by dividends, loans or other payments. In
addition, the payment of dividends and certain loans and advances to the Company
by such subsidiaries may be subject to certain statutory or contractual
restrictions, are contingent upon the earnings of such subsidiaries and are
subject to various business considerations.
The Debentures will be effectively subordinated to all indebtedness and
other liabilities and commitments (including trade payables and lease
obligations) of the Company's subsidiaries. Any right of the Company to receive
assets of any such subsidiary upon the liquidation or reorganization of any such
subsidiary (and the consequent right of the Holders of the Debentures to
participate in those assets) will be effectively subordinated to the claims of
that subsidiary's creditors, except to the extent that the Company is itself
recognized as a creditor of such subsidiary, in which case the claims of the
Company would still be subordinate to any security in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by the
Company.
The Indenture does not limit or prohibit the incurrence of Senior
Indebtedness or the incurrence of indebtedness, liabilities and commitments of
the Company's subsidiaries. At March 31, 1997, the aggregate amount of Senior
Indebtedness to which the Debentures are subordinated was approximately $20.5
million. The Company also expects to incur Senior Indebtedness from time to
time in the future.
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OPTIONAL REDEMPTION
The Debentures will be redeemable, at the Company's option, in whole or
from time to time in part, at any time on or after December 6, 1999, upon not
less than 15 nor more than 60 days' notice mailed to each Holder of Debentures
to be redeemed at its address appearing in the Security Register and prior to
Maturity at the following Redemption Prices (expressed as percentages of the
principal amount) plus accrued interest to the Redemption Date (subject to the
right of Holders of record on the relevant Regular Record Date to receive
interest due on an Interest Payment Date that is on or prior to the Redemption
Date).
If redeemed during the 12-month period beginning December 1, in the year
indicated (December 6, in the case of 1999), the redemption price shall be:
Redemption
Year Price
------ -----------
1999...................... 102.40%
2000...................... 101.20
No sinking fund is provided for the Debentures.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company will not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, or permit any Person to consolidate with or merge into the
Company or convey, transfer or lease its properties substantially as an entirety
to the Company, unless (i) if applicable, the Person formed by such
consolidation or into which the Company is merged or the Person or corporation
which acquires the properties and assets of the Company substantially as an
entirety is a corporation, partnership or trust organized and validly existing
under the laws of the United States or any state thereof or the District of
Columbia and expressly assumes payment of the principal of and premium, if any,
and interest on the Debentures and performance and observance of each obligation
of the Company under the Indenture, (ii) after consummating such consolidation,
merger, transfer or lease, no Default or Event of Default will occur and be
continuing, (iii) such consolidation, merger or acquisition does not adversely
affect the validity or enforceability of the Debentures and (iv) the Company has
delivered to the Trustee an Officer's Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, conveyance, transfer or lease
complies with the provisions of the Indenture.
CERTAIN RIGHTS TO REQUIRE REPURCHASE OF DEBENTURES
In the event of any Repurchase Event (as defined herein) occurring after
the date of issuance of the Debentures and on or prior to Maturity, each Holder
of Debentures will have the right, at the Holder's option, to require the
Company to repurchase all or any part of the Holder's Debentures on the date
(the "Repurchase Date") that is 30 days after the date the Company gives notice
of the Repurchase Event as described below at a price (the "Repurchase Price")
equal to 100% of the principal amount thereof, together with accrued and unpaid
interest to the Repurchase Date. On or prior to the Repurchase Date, the
Company shall deposit with the Trustee or a Paying Agent an amount of money
sufficient to pay the Repurchase Price of the Debentures which are to be repaid
on or promptly following the Repurchase Date.
Failure by the Company to provide timely notice of a Repurchase Event, as
provided for below, or to repurchase the Debentures when required under the
preceding paragraph will result in an Event of Default under the Indenture
whether or not such repurchase is permitted by the subordination provisions of
the Indenture.
On or before the 15th day after the occurrence of a Repurchase Event, the
Company is obligated to mail to all Holders of Debentures a notice of the
occurrence of such Repurchase Event and identifying the Repurchase Date, the
date by which the repurchase right must be exercised, the Repurchase Price for
Debentures and the procedures which the Holder must follow to exercise this
right. To exercise the repurchase right, the Holder of a Debenture must
deliver, on or before the close of business on the Repurchase Date, written
notice to the Company (or an agent designated by the Company for such purpose)
and to the Trustee of the Holder's exercise of such right, together with the
certificates evidencing the Debentures with respect to which the right is being
exercised, duly endorsed for transfer.
14
<PAGE>
A "Repurchase Event" shall have occurred upon the occurrence of a Change in
Control or a Termination of Trading (each as defined below).
A "Change in Control" shall occur when (i) all or substantially all of the
Company's assets are sold as an entirety to any person or related group of
persons; (ii) there shall be consummated any consolidation or merger of the
Company (a) in which the Company is not the continuing or surviving corporation
(other than a consolidation or merger with a wholly owned subsidiary of the
Company in which all shares of Common Stock outstanding immediately prior to the
effectiveness thereof are changed into or exchanged for the same consideration)
or (b) pursuant to which the Common Stock would be converted into cash,
securities or other property, in each case other than a consolidation or merger
of the Company in which the holders of the Common Stock immediately prior to the
consolidation or merger have, directly or indirectly, at least a majority of the
total voting power of all classes of capital stock entitled to vote generally in
the election of directors of the continuing or surviving corporation immediately
after such consolidation or merger in substantially the same proportion as their
ownership of Common Stock immediately before such transaction; (iii) any person,
or any persons acting together which would constitute a "group" for purposes of
Section 13(d) of the Exchange Act, together with any affiliates thereof, shall
beneficially own (as defined in Rule 13d-3 under the Exchange Act) at least 50%
of the total voting power of all classes of capital stock of the Company
entitled to vote generally in the election of directors of the Company; (iv) at
any time during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the stockholders of the Company was approved by
a vote of 66 2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office; or (v) the
Company is liquidated or dissolved or adopts a plan of liquidation or
dissolution.
A "Termination of Trading" shall occur if the Common Stock (or other common
stock into which the Debentures are then convertible) is neither listed for
trading on a U.S. national securities exchange nor approved for trading on an
established automated over-the-counter trading market in the United States.
The right to require the Company to repurchase Debentures as a result of
the occurrence of a Repurchase Event could create an event of default under
Senior Indebtedness of the Company, as a result of which any repurchase could,
absent a waiver, be blocked by the subordination provisions of the Debentures.
See "Subordination." Failure by the Company to repurchase the Debentures when
required will result in an Event of Default with respect to the Debentures
whether or not such repurchase is permitted by the subordination provisions.
The Company's ability to pay cash to the Holders of Debentures upon a repurchase
may be limited by certain financial covenants contained in the Company's Senior
Indebtedness.
In the event a Repurchase Event occurs and the Holders exercise their
rights to require the Company to repurchase Debentures, the Company intends to
comply with applicable tender offer rules under the Exchange Act, including
Rules 13e-4 and 14e-1, as then in effect, with respect to any such purchase.
The foregoing provisions would not necessarily afford Holders of the
Debentures protection in the event of highly leveraged or other transactions
involving the Company that may adversely affect Holders. In addition, the
foregoing provisions may discourage open market purchases of the Common Stock or
a non-negotiated tender or exchange offer for such stock and, accordingly, may
limit a stockholder's ability to realize a premium over the market price of the
Common Stock in connection with any such transaction.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to the
Debentures: (i) default in the payment of principal of or any premium on any
Debenture when due (even if such payment is prohibited by the subordination
provisions of the Indenture); (ii) default in the payment of any interest on any
Debenture when due, which default continues for 30 days (even if such payment is
prohibited by the subordination provisions of the Indenture); (iii) failure to
provide timely notice of a Repurchase Event as required by the Indenture; (iv)
default in the payment of the Repurchase Price in respect of any Debenture on
the Repurchase Date therefor (even if such payment is prohibited by the
subordination provisions of the Indenture); (v) default in the performance of
any other covenant of the Company in the Indenture which continues for 60 days
after written notice as provided in the Indenture; (vi) default under one or
more bonds, debentures, notes or other evidences of indebtedness for money
borrowed by the Company or any subsidiary of the Company or under one or more
mortgages, indentures or
15
<PAGE>
instruments under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Company or any subsidiary
of the Company, whether such indebtedness now exists or shall hereafter be
created, which default individually or in the aggregate shall constitute a
failure to pay the principal of indebtedness in excess of $10 million when due
and payable after the expiration of any applicable grace period with respect
thereto or shall have resulted in indebtedness in excess of $10 million becoming
or being declared due and payable prior to the date on which it would otherwise
have become due and payable, without such indebtedness having been discharged,
or such acceleration having been rescinded or annulled, within a period of 30
days after there shall have been 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 Outstanding Debentures a written notice specifying such default
and requiring the Company to cause such indebtedness to be discharged or cause
such acceleration to be rescinded or annulled; and (vii) certain events in
bankruptcy, insolvency or reorganization of the Company or any subsidiary of the
Company.
If an Event of Default with respect to the Debentures shall occur and be
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Debentures then outstanding may declare the
principal of and premium, if any, on all such Debentures to be due and payable
immediately, but if the Company cures all Events of Default (except the
nonpayment of interest on, premium, if any, and principal of any Debentures) and
certain other conditions are met, such declaration may, be canceled and past
defaults may be waived by the holders of a majority in principal amount of
Outstanding Debentures. If an Event of Default shall occur as a result of an
event of bankruptcy, insolvency or reorganization of the Company or any
subsidiary of the Company, the aggregate principal amount of the Debentures
shall automatically become due and payable. The Company is required to furnish
to the Trustee annually a statement as to the performance by the Company of
certain of its obligations under the Indenture and as to any default in such
performance. The Indenture provides that the Trustee may withhold notice to the
Holders of the Debentures of any continuing default (except in the payment of
the principal of or premium, if any, or interest on any Debentures) if the
Trustee considers it in the interest of Holders of the Debentures to do so.
MODIFICATION, AMENDMENTS AND WAIVERS
Modifications and amendments of the Indenture may be made by the Company
and the Trustee without the consent of the Holders to: (i) cause the Indenture
to be qualified under the Trust Indenture Act; (ii) evidence the succession of
another Person to the Company and the assumption by any such successor of the
covenants of the Company herein and in the Debentures; (iii) add to the
covenants of the Company for the benefit of the Holders or an additional Event
of Default, or surrender any right or power conferred upon the Company; (iv)
secure the Debentures; (v) make provision with respect to the conversion rights
of Holders in the event of a consolidation, merger or sale of assets involving
the Company, as required by the Indenture, (vi) evidence and provide for the
acceptance of appointment by a successor Trustee with respect to the Debentures;
or (vii) cure any ambiguity, correct or supplement any provision which may be
defective or inconsistent with any other provision, or make any other provisions
with respect to matters or questions arising under the Indenture which shall not
be inconsistent with the provisions of the Indenture, provided, however, that no
such modifications or amendment may adversely affect the interest of Holders in
any material respect.
SATISFACTION AND DISCHARGE
The Company may discharge its obligations under the Indenture while
Debentures remain Outstanding if (i) all Outstanding Debentures will become due
and payable at their scheduled maturity within one year or (ii) all Outstanding
Debentures are scheduled for redemption within one year, and in either case the
Company has deposited with the Trustee an amount sufficient to pay and discharge
all Outstanding Debentures on the date of their scheduled maturity or the
scheduled date of redemption.
FORM
Global Debenture, Book-Entry Form. Debentures are issuable in fully
registered form, without coupons, in denominations of $1,000 principal amount
and multiples thereof. Debentures sold by the Selling Securityholders pursuant
to the Registration Statement of which this Prospectus forms a part will be
represented by a global Debenture (the "Registered Global Debenture"), except as
set forth below under "certificate Debentures." The Registered Global Debenture
will be deposited with, or on behalf of, DTC and registered in the name of Cede
&
16
<PAGE>
Co. ("Cede") as DTC's nominee. Beneficial interests in the Registered Global
Debenture will be exchangeable for definitive certificated Debentures only in
accordance with the terms of the Indenture.
Purchasers of the Debentures offered hereby may hold their interests in the
Registered Global Debenture directly through DTC or indirectly through
organizations that are participants in DTC (the "Participants"). Transfers
between Participants will be effected in the ordinary way in accordance with DTC
rules and will be settled in same day funds.
Persons who are not Participants may beneficially own interests in the
Registered Global Debenture held by DTC only through Participants or certain
banks, brokers, dealers, trust companies and other parties that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants"). So long as Cede, as the nominee of DTC,
is the registered owner of the Registered Global Debenture, Cede for all
purposes will be considered the sole holder of the Registered Global Debenture.
Except as provided below, owners of beneficial interests in the Registered
Global Debenture will not be entitled to have certificates registered in their
names, will not receive or be entitled to receive physical delivery of
certificates in definitive form, and will not be considered the holders thereof.
Payment of interest on and the redemption price of the Registered Global
Debenture will be made to Cede, the nominee for DTC, as the registered owner of
the Registered Global Debenture by wire transfer of immediately available funds
on each interest payment date or the redemption date, as the case may be.
Neither the Company, the Trustee nor any payment agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Registered
Global Debenture or for maintaining, supervision or reviewing any records
relating to such beneficial ownership interests.
The Company has been informed by DTC that, with respect to any payment of
interest on, or the redemption price of, the Registered Global Debenture, DTC's
practice is to credit participants' accounts on the payment date therefor with
payments in amounts proportionate to their respective beneficial interests in
the principal amount represented by the Registered Global Debenture as shown on
the records of DTC, unless DTC has reason to believe that it will not receive
payment on such payment date. Payments by Participants to owners of beneficial
interests in the principal amount represented by the Registered Global Debenture
held through such Participants will be the responsibility of such Participants,
as is now the case with securities held for the accounts of customers registered
in "street name."
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having a beneficial interest in the principal amount represented by the
Registered Global Debenture to pledge such interest to persons or entities that
do not participate in the DTC system, or otherwise take actions in respect of
such interest, may be affected by the lack of a physical certificate evidencing
such interest.
Neither the Company nor the Trustee (or any registrar, paying agent or
conversion agent under the Indenture) will have any responsibility for the
performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations. DTC has advised the Company that it will take any action permitted
to be taken by a holder of Debentures (including, without limitation, the
presentation of Debentures for exchange as described below), only at the
direction of one or more Participants to whose account with DTC interests in the
Registered Global Debenture are credited, and only in respect of the principal
amount of the Debentures represented by the Registered Global Debenture as to
which such Participant or Participants has or have given such direction.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entry
changes to the accounts of its Participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, bank, trust companies and clearing corporations and may include certain
other organizations. Certain of such Participants (or their representatives),
together with other entities, own DTC. Indirect access to the DTC system is
available to others such as banks, brokers, dealers and trust companies that
clear through, or maintain a custodial relationship with, a Participant, either
directly or indirectly.
17
<PAGE>
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Registered Global Debenture among Participants, it
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. If DTC is at any time
unwilling or unable to continue as depositary and a successor depositary is not
appointed by the Company within 90 days, the Company will cause Debentures to be
issued in definitive form in exchange for the Registered Global Debenture.
Certificated Debentures. Holders of Debentures may request that certificated
Debentures be issued in lieu of, or in exchange for, Debentures represented by
the Registered Global Debenture. Furthermore, certificated Debentures may be
issued in exchange for Debentures represented by the Registered Global Debenture
if no successor depositary is appointed by the Company as set forth above under
"Global Debenture, Book-Entry Form."
PAYMENTS OF PRINCIPAL AND INTEREST
The Indenture will require that payments in respect of the Debentures
(including principal, premium, if any, and interest) held of record by DTC
(including Debentures evidenced by the Global Debentures) be made in same day
funds. Payments in respect of the Debentures held of record by holders other
than DTC may, at the option of the Company, be made by check and mailed to such
holders of record as shown on the register for the Debentures.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
Pursuant to the Registration Rights Agreement between the Company and the
Initial Purchasers, the Company has filed with the Commission a registration
statement (the "Shelf Registration Statement") on Form S-3, of which this
Prospectus forms a part, to cover resales of Transfer Restricted Securities (as
defined below) by the holders thereof who satisfied certain conditions relating
to the provision of information in connection with the Shelf Registration
Statement. Notwithstanding the foregoing, the Company will be permitted to
prohibit offers and sales of Transfer Restricted Securities pursuant to the
Shelf Registration Statement under certain circumstances and subject to certain
conditions (any period during which offers and sales are prohibited being
referred to as a "Suspension Period"). "Transfer Restricted Securities" means
each Debenture and any underlying share of Common Stock until the date on which
such Debenture or underlying share of Common Stock has been effectively
registered under the Securities Act and disposed of in accordance with the Shelf
Registration Statement, the date on which such Debenture or underlying share of
Common Stock is distributed to the public pursuant to Rule 144 under the
Securities Act or the date on which such Debenture or share of Common Stock may
be sold or transferred pursuant to Rule 144(k) (or any similar provisions then
in force).
The Registration Rights Agreement provides that if the Shelf Registration
Statement shall cease to be effective (without being succeeded immediately by an
additional registration statement filed and declared effective) or usable for
the offer and sale of Transfer Restricted Securities for a period of time
(including any Suspension Period) which shall exceed 60 days in the aggregate in
any of the one-year periods ending on the first, second and third anniversaries
of the Closing Date (30 days in the case of the one year period ending on the
first anniversary of the Closing Date), or which shall exceed 30 days in any
calendar quarter within any of such one-year periods (each such event a
"Registration Default"), the Company will pay liquidated damages to each Holder
of Transfer Restricted Securities. The amount of liquidated damages payable
during any period during which a Registration Default shall have occurred and be
continuing is that amount which is equal to one-quarter of one percent (25 basis
points) per annum per $1,000 principal amount or $0.01 per week per share of
Common Stock (subject to adjustment in the event of stock splits, stock
recombinations, stock dividends and the like) constituting Transfer Restricted
Securities for each 90-day period or part thereof until the applicable
registration statement is filed and the applicable registration statement is
declared effective, or the Shelf Registration Statement again becomes effective
or usable, as the case may be, up to a maximum amount of liquidated damages of
$0.25 per week per $1,000 principal amount of Debentures or $0.05 per week per
share (subject to adjustment as set forth above) of Common Stock constituting
Transfer Restricted Securities. All accrued liquidated damages shall be paid to
holders of Debentures by wire transfer of immediately available funds or by
federal funds check by the Company on each Damages Payment Date (as defined in
the Registration Rights Agreement). Following the cure of a Registration
Default, liquidated damages will cease to accrue with respect to such
Registration Default.
The Company has agreed to use its best efforts to cause the Shelf
Registration Statement to be effective for a period of three years from the
effective date thereof or such shorter period that will terminate when each of
the Transfer Restricted Securities covered by the Registration Statement ceases
to be a Transfer Restricted Security.
18
<PAGE>
The foregoing summary of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, the provisions of the Registration Rights
Agreement.
GOVERNING LAW
The Indenture and Debentures are, and shall be, governed by and construed
in accordance with the laws of the State of New York, without giving effect to
such state's conflicts of laws principles.
INFORMATION CONCERNING THE TRUSTEE
The Company and its subsidiaries may maintain deposit accounts and conduct
other banking transactions with the Trustee in the ordinary course of business.
ABSENCE OF PUBLIC MARKET; TRANSFER RESTRICTIONS
There is no existing public market for the Debentures and there can be no
assurance as to the liquidity of any markets that may develop for the
Debentures, the ability of the holders to sell their Debentures or at what price
holders of the Debentures will be able to sell their Debentures. Future trading
prices of the Debentures will depend upon many factors including, among other
things, prevailing interest rates, the Company's operating results, the price of
the Common Stock and the market for similar securities. The Initial Purchasers
have informed the Company that they intend to make a market in the Debentures;
however, the Initial Purchasers are not obligated to do so and any such market
making activity may be terminated at any time without notice to the holders of
the Debentures. Prior to the resale thereof pursuant to this Prospectus, each
of the Debentures was eligible for trading in Private Offerings, Resales and
Trading through the PORTAL Market. Debentures sold pursuant to this Prospectus
will no longer be eligible for trading in the PORTAL Market. The Company does
not intend to apply for listing of the Debentures on any securities exchange.
SELLING SECURITYHOLDERS
Set forth below are the names of each Selling Securityholder, the nature of
any position, office, or other material relationship that the Selling
Securityholder has had within the past three years with the Company or any of
its predecessors or affiliates, the number of shares of Common Stock owned as of
May 23, 1997, by each Selling Securityholder, the number of shares of Common
Stock or principal amount of Debentures that may be offered and sold by such
Selling Securityholder pursuant to this Prospectus and the number of shares of
Common Stock and (if one percent or more) the percentage of Common Stock to be
owned by each Selling Securityholder upon completion of the offering if all such
shares and Debentures are sold. Any or all of the Debentures or shares of
Common Stock listed below may be offered for sale by the Selling Securityholders
from time to time.
<TABLE>
<CAPTION>
Conversion
Principal Amount Shares Percentage of
of Debentures Percentage of or Additional Common Stock
Beneficially Owned Debentures Shares That May Outstanding Prior
Name That May Be Sold(1) Outstanding Be Sold to Offering
---- ------------------ ----------- --------------- ----------------
<S> <C> <C> <C> <C>
Bankers Trust for 1,800,000 1.4% 72,000 *
Lincoln National
Convertible
Securities Fund
Bankers Trust for 5,040,000 4.0 201,600 *
Lincoln National
Life Insurance
Cincinnati Insurance 2,500,000 2.0 100,000 *
Company, a wholly-
owned subsidiary of
Cincinnati's
Financial
Corporation
Dean Witter Income 2,000,000 1.6 80,000 *
Builder Fund and
Dean Witter Variable
Income Builder Fund
(held by Cede & Co.
as nominee for the
Depository Trust
Company)
Guardian Pension 300,000 * 12,000 *
Trust
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Conversion
Principal Amount Shares Percentage of
of Debentures Percentage of or Additional Common Stock
Beneficially Owned Debentures Shares That May Outstanding Prior
Name That May Be Sold(1) Outstanding Be Sold to Offering
---- ------------------ ----------- --------------- ----------------
<S> <C> <C> <C> <C>
Guardian Life 6,200,000 5.0 248,000 *
Insurance Co.
of America
Mac & Co., nominee 250,000 * 10,000 *
for Mellon Trust,
N.A., for Foundation
Account No. 1
Mellon Bank for 565,000 * 22,600 *
Weirton Trust
Motors Insurance 2,565,000 2.1 102,600 *
Corporation(2)
Norwest Bank for 350,000 * 14,000 *
Walker Art Center
PNC Bank for United 95,000 * 3,800 *
National Life
Insurance
Salomon Brothers 7,435,000 5.9 297,400 *
Inc(4)
State Street Bank 3,000,000 2.4 120,000 *
for Froley, Revy
Investment Co., Inc.
for SAIF Corporation
The Kaufman Fund, 45,000,000 36.0 1,800,000 5.7%
Inc.(3)
The Northwestern 6,000,000 4.8 240,000 *
Mutual Life Insurance
Company (held by Cede
& Co. as nominee for
the Depository
Trust Company)
Jeffery B. Arnoult, --- --- 31,916(5) *
M.D.
Michael A. --- --- 29,948(6) *
Bloome, M.D.
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Conversion
Principal Amount Shares Percentage of
of Debentures Percentage of or Additional Common Stock
Beneficially Owned Debentures Shares That May Outstanding Prior
Name That May Be Sold(1) Outstanding Be Sold to Offering
---- ------------------ ----------- --------------- ----------------
<S> <C> <C> <C> <C>
John D. Goosey, --- --- 30,157(7) *
M.D.
Jack T. Holladay, --- --- 23,875(8) *
M.D.
Richard L. --- --- 48,293(9) *
Kimbrough, M.D.
Jeffrey D. Lanier, --- --- 25,466(10) *
M.D.
John M. Lim, --- --- 22,660(11) *
M.D.
Marc N. Longo, --- --- 6,283(12) *
M.D.
Malcolm L. --- --- 23,623(13) *
Mazow, M.D.
Kathryn H. --- --- 9,759(14) *
Musgrove, M.D.
William H. --- --- 30,827(15) *
Quayle, M.D.
Paul C. --- --- 37,194(16) *
Salmonsen, M.D.
Marsha F. --- --- 6,534(17) *
Soechting, M.D.
Robert H. Stewart, --- --- 59,351(18) *
M.D.
Robert B. Wilkins, --- --- 28,817(19) *
M.D.
Ron Burgener --- --- 4,148(20) *
</TABLE>
/*/Less than 1%
(1) Selling Securityholders as of July 22, 1997, do not include holders of
$41.9 million aggregate principal amount of Debentures Convertible into
1,676,000 shares of Common Stock) that have not complied with the conditions to
being included as Selling Securityholders and are not entitled to offer or sell
their securities by means of this Prospectus until they are included as Selling
Securityholders in a supplement hereto.
(2) Voting and dispositive power is shared with General Motors Investment
Management Corporation ("GMIMCO"), a wholly-owned subsidiary of General Motors
Corporation. In addition to the $2,565,000 in principal amount of debentures,
GMIMCO manages 965,400 shares of Common Stock.
(3) Beneficial owner of an additional 757,000 shares of Common Stock.
(4) An Initial Purchaser.
(5) Beneficially owns 31,916 additional shares of Common Stock.
(6) Beneficially owns no additional shares of Common Stock.
(7) Beneficially owns 30,157 additional shares of Common Stock.
(8) Beneficially owns 23,874 additional shares of Common Stock.
(9) Beneficially owns 48,293 additional shares of Common Stock.
(10) Beneficially owns 25,466 additional shares of Common Stock.
(11) Beneficially owns 22,659 additional shares of Common Stock.
(12) Beneficially owns 6,282 additional shares of Common Stock.
(13) Beneficially owns 23,623 additional shares of Common Stock.
(14) Beneficially owns no additional shares of Common Stock.
(15) Beneficially owns no additional shares of Common Stock.
(16) Beneficially owns 7,193 additional shares of Common Stock.
(17) Beneficially owns 6,534 additional shares of Common Stock.
(18) Beneficially owns no additional shares of Common Stock.
(19) Beneficially owns 28,817 additional shares of Common Stock.
(20) Beneficially owns 5,148 additional shares of Common Stock.
The table above reflects information furnished to the Company by the
Depository Trust Company ("DTC") and by or on behalf of the Selling
Securityholders. Changed in that information and information respecting
additional Selling Securityholders will be included in supplements hereto when
necessary.
PLAN OF DISTRIBUTION
The Debentures and the Shares are being registered to permit public
secondary trading of such securities by the holders thereof from time to time
after the date of this Prospectus. The Company has agreed, among other things,
to bear all expenses (other than underwriting discounts, selling commissions and
fees and expenses of counsel and other advisors to holders of the Debentures and
the Shares) in connection with the registration and sale of the Debentures and
the Shares covered by this Prospectus.
The Company will not receive any of the proceeds from the offering of
Debentures and the Shares by the Selling Securityholders. The Company has been
advised by the Selling Securityholders that the Selling Securityholders may sell
all or a portion of the Debentures and Shares beneficially owned by them and
offered hereby from time to time on any exchange on which the securities are
listed on terms to be determined at the times of such sales. The Selling
Securityholders may also make private sales directly or through a broker or
brokers. Alternatively, any of the Selling Securityholders may from time to
time offer the Debentures or shares of Common Stock beneficially owned by them
through underwriters, dealers or agents, who may receive compensation in the
form of underwriting discounts, commissions or concessions from the Selling
Securityholders and the purchasers
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<PAGE>
of the Debentures or shares or Common Stock from whom they may act as agent.
The aggregate proceeds to the Selling Securityholders from the sale of the
Debentures of shares or Common Stock offered by them hereby will be the purchase
price of such Debentures or shares of Common Stock less discounts and
commissions, if any.
The Debentures and the Shares may be sold from time to time in one or more
transactions at fixed offering prices, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices. Such prices will
be determined by the holders of such securities or by agreement between such
holders and underwriters or dealers who may receive fees or commissions in
connection therewith.
The outstanding Common Stock is listed for trading on the NYSE and the
Shares have been approved for listing on the NYSE. The Initial Purchasers have
advised the Company that they are making and currently intend to continue making
a market in the Debentures; however, they are not obligated to do so and any
such market-making may be discontinued at any time without notice, in the sole
discretion of the Initial Purchasers. The Company does not intend to apply for
listing of the Debentures on any securities exchange. Accordingly, no assurance
can be given as to the development of liquidity of any trading market that may
develop for the Debentures. See "Risk Factors -- Absence of Prior Market."
In order to comply with the securities laws of certain states, if
applicable, the Debentures and Shares will be sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
states the Debentures and Shares may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption from
the registration or qualification requirement is available and is complied with.
The Selling Securityholders and any broker and any broker-dealers, agents
or underwriters that participate with the Selling Securityholders in the
distribution of the Debentures or the Shares may be deemed to be "underwriters"
within the meaning of the Securities Act, in which event any commissions
received by such broker-dealers, agents or underwriters any profit on the resale
of the Debentures or the Shares purchased by them may be deemed to be
underwriting commissions or discounts 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 is no
assurance that any Selling Securityholder will sell any or all of the Debentures
or Shares described herein, and any Selling Securityholder may transfer, devise
or gift such securities by other means not described herein.
The Debentures were originally sold to Smith Barney Inc. Alex. Brown & Sons
Incorporated, Dillon Read & Co., Inc., Salomon Brothers Inc and Volpe, Welty &
Company, the Initial Purchasers, in December 1996 in a private placement. The
Company agreed to indemnify and hold the Initial Purchasers harmless against
certain liabilities under the Securities Act that could arise in connection with
the sale of the Debentures by the Initial Purchasers. The Company and the
Selling Securityholders are obligated to indemnify each other against certain
liabilities arising under the Securities Act.
The Company will use its best efforts to cause the Registration Statement
to which this Prospectus relates to remain effective for a period of three years
from the effective date thereof, or until the Shelf Registration Statement is no
longer required for transfer of the Debentures or the underlying Common Stock.
The Company is permitted to suspend the use of this Prospectus in connection
with the sales of Debentures and Shares by holders upon the happening of an
event or if there exists any fact that makes any statement of material fact made
in this Prospectus untrue or that requires the making of additions to or changes
in the Prospectus in order to make the statements herein not misleading until
such time as the Company advises the Selling Securityholders that use of the
Prospectus may be resumed, in which case the period of time during which the
Company is required to maintain the effectiveness of the Shelf Registration
Statement shall be extended. Expenses of preparing and filing the Registration
Statement and all post-effective amendments will be borne by the Company.
SHARES ELIGIBLE FOR FUTURE SALE
As of May 1, 1997, PRG had outstanding approximately 30.0 million shares of
Common Stock. Of such 30.0 million shares, (i) approximately 9.3 million shares
were registered in connection with two underwritten public offerings (which
included the sale of 1.5 million shares by certain selling stockholders; (ii)
the issuance of approximately 8.6 million shares (excluding shares subsequently
reacquired by the Company) was registered and such shares were issued in
connection with acquisitions (with the resale of a portion of such shares
contractually
22
<PAGE>
subject to the holding periods and volume limitations provided for under Rule
144 of the Securities Act (as in effect from time to time)); (iii) the issuance
of approximately 1.5 million shares was not registered and such shares were
issued in acquisitions or prior to PRG's initial public offering, but the resale
of such shares has been registered (a portion of which shares has already been
resold); and (iv) the issuance of approximately 10.0 million shares was not
registered and such shares were issued in connection with acquisitions or prior
to PRG's initial public offering, and the holders of substantial portions of
such shares have certain registration rights.
The Company estimates that approximately 6.9 million of such shares became
eligible for sale under and in accordance with Rule 144, as currently in effect,
promulgated under the Securities Act (subject to the volume and manner of sale
restrictions of Rule 144) on April 29, 1997. As early as June 1997,
approximately 5,000,000 shares became eligible for sale pursuant to the terms of
certain stockholder agreements. In addition, as of January 1997, the Company
registered approximately 10 million shares under the Securities Act for issuance
in connection with future acquisitions.
In general, shares whose issuance has been registered are freely tradeable
without restriction except to the extent held or acquired by affiliates of PRG
and shares whose issuance has not been registered may be resold publicly only in
future transactions registered under the Securities Act or in compliance with an
exemption from registration requirements of the Securities Act, including the
exemption provided by Rule 144 thereunder.
As of May 1, 1997, PRG had outstanding options to purchase up to
approximately 3.4 million shares of Common Stock (and has reserved for issuance
options to purchase approximately an additional 175,000 shares of Common Stock
upon the designation of optionees by certain third-parties) under the Amended
and Restated 1995 Stock Option Plan, the 1995 Health Care Professionals Stock
Option Plan and the EyeCorp, Inc. 1995 Incentive and Non-Qualified Stock Option
Plan, collectively. PRG has registered the shares issuable upon exercise of
options granted under such option plans and such shares will be eligible for
resale in the public market upon exercise. PRG also has reserved for issuance
1,000,000 shares of Common Stock under its Employee Stock Purchase Plan, none of
which have been issued. PRG has registered the shares issuable under such plan
and such shares will be eligible for resale in the public market upon issuance.
Additionally, PRG has a warrant outstanding for the purchase of 40,000 shares of
Common Stock at $13.00 per share. Upon issuance and satisfaction of the
applicable holding period, such shares will be eligible for resale subject to
the volume and certain other limitations of Rule 144 promulgated under the
Securities Act.
In general, under Rule 144 as currently in effect, if one year has elapsed
since the later of the date of the acquisition of restricted shares of Common
Stock from PRG or any affiliate of PRG, the acquiror or subsequent holder
thereof may sell, within any three-month period, a number of shares that does
not exceed the greater of 1% of the then-outstanding shares of Common Stock or
the average weekly trading volume of the Common Stock on all exchanges and/or
reported through the automated quotation system of a registered securities
association during the four calendar weeks preceding the date on which notice of
the sale is filed with the Commission. Sales under Rule 144 are also subject to
certain manner of sale provisions, notice requirements and the availability of
current public information about PRG. If two years have elapsed since the later
of the date of acquisition of restricted shares of Common Stock from PRG or any
affiliate of PRG and the acquiror or subsequent holder thereof is deemed not to
have been an affiliate of PRG at any time during the 90 days preceding a sale,
such person will be entitled to sell such shares under Rule 144(k) without
regard to the limitations described above. The foregoing summary of Rule 144 is
not intended to be a complete description thereof. The Commission has proposed
certain amendments to Rule 144 that would, among other things, eliminate the
manner of sale requirements and revise the notice provisions of that rule. The
SEC has also solicited comments on other possible changes to Rule 144, including
possible revisions to the one- and two-year holding periods and the volume
limitations referred to above.
Prior to the IPO there had been no market for the Common Stock, and no
prediction can be made as to the effect, if any, that the sale of shares or the
availability of shares for sale will have on the market price prevailing from
time to time. Nevertheless, sales of substantial amounts of the Common Stock in
the public market could adversely affect prevailing market prices and the
ability of the Company to raise equity capital in the future.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summarizes certain income tax considerations relevant to
holders of the Debentures. The summary is based on current provisions of the
Internal Revenue Code of 1986 (the "Code"), Treasury regulations thereunder,
administrative rulings and court decisions, all of which are subject to change
(possibly retroactively).
23
<PAGE>
The summary does not address state, local, or foreign tax consequences, nor does
it discuss federal income tax consequences to categories of purchasers subject
to special rules, such as tax-exempt organizations, insurance companies,
financial institutions, dealers in stocks and securities or persons who hold the
Debentures or Common Stock in connection with a straddle. The summary assumes
that the holders will hold the Debentures, or the shares of Common Stock
received upon conversion of the Debentures, for investment purposes only. The
Company does not intend to request a ruling from the Internal Revenue Service
(the "IRS") regarding any of the federal income tax matters discussed in this
summary. Accordingly, before making an investment decision, prospective
purchasers are urged to consult their own tax advisors as to the federal income
and other tax consequences of the purchase, ownership and disposition of the
Debentures, including the conversion of Debentures into Common Stock.
For the purpose of this discussion, a "Non-U.S. Holder" refers to any
holder who is not a U.S. Holder. The term "U.S. Holder" means a citizen or
resident of the United States, a corporation or partnership created or organized
in the United States or any state thereof, or an estate or trust, the income of
which is includible in income for United States income tax purposes regardless
of its source.
OWNERSHIP OF THE DEBENTURES BY U.S. HOLDERS
Interest on Debentures. The stated interest on a Debenture will be taxable
to a holder as ordinary income at the time interest is paid or accrued in
accordance with the holder's method of accounting for federal income tax
purposes. The Company expects that the Debentures will not be issued with
original issue discount ("OID") within the meaning of the Code.
Constructive Dividend. Certain corporate transactions, such as
distributions of assets to holders of Common Stock, may cause a deemed
distribution to the holders of the Debentures if the conversion price or
conversion ratio of the Debentures is adjusted to reflect such corporate
transaction. The deemed distributions to the holders of the Debentures may be
taxable as a dividend to the extent of the Company's earnings and profits, a
return of capital or capital gain. See "Dividends on Shares of Common Stock"
below.
Sale or Exchange of Debentures or Shares of Common Stock. A holder of
Debentures will generally recognize gain or loss on the sale, redemption,
retirement or other disposition of the Debentures. The gain or loss will
generally be equal to the difference between (i) the amount of cash and the fair
market value of any other property received by the holder (excluding any amount
that represents accrued interest, which will be taxable as such) and (ii) the
holder's adjusted tax basis in the Debentures. Generally, a holder's adjusted
tax basis in the Debentures will equal (i) the holder's cost of the Debentures,
plus (ii) the amount of market discount taken into income, if any, less (iii)
the amount of bond premium amortized by the holder, if any. A holder of Common
Stock will generally recognize gain or loss upon the sale, exchange, redemption
or other disposition of the Common Stock. The gain or loss will generally be
equal to the difference between (i) the amount of cash and the fair market value
of any other property received by the Common Stockholder and (ii) the holder's
adjusted tax basis in the Common Stock. Subject to the market discount rules
discussed below, gain or loss recognized by a holder will generally be long-term
capital gain or loss if the Debentures or Common Stock are held as capital
assets for a period in excess of one year.
Conversion of Debentures. A holder of Debentures will not recognize gain
or loss upon the conversion of the Debentures into shares of Common Stock of the
Company. The holder's adjusted tax basis in the shares of Common Stock will be
equal to the holder's adjusted tax basis in the Debentures at the time of the
conversion, less any portion allocable to cash received in lieu of a fractional
share. Generally, the holding period of the shares of Common Stock received by
the holder upon conversion of Debentures includes the period of time the
Debentures were held prior to the conversion by the holder.
Cash received in lieu of a fractional share of Common Stock may be treated
as a payment in exchange for such fractional share rather than as a dividend.
Generally, gain or loss recognized on the receipt of cash paid in lieu of such
fractional shares will equal the difference between the amount of cash received
and the holder's adjusted tax basis allocable to the fractional shares.
Market Discount. If a Debenture is acquired by a subsequent purchaser at a
"market discount", some or all of the gain realized upon a disposition or
payment upon the Debenture's maturity may be treated as ordinary income.
Subject to a de minimus exception, "market discount" with respect to a Debenture
will be equal to the excess of (i) the stated redemption price at maturity of
the Debenture over (ii) the holder's tax basis in the
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<PAGE>
Debenture immediately after acquisition. The amount of market discount treated
as having accrued will be determined either on a ratable basis, or, if the
holder so elects, on a constant interest method. Upon any subsequent
disposition of the Debenture (other than in connection with certain
nonrecognition transactions, e.g., the conversion to Common Stock), the lesser
of (i) gain on the disposition or (ii) the market discount that accrued while
the Debenture was held by the subsequent holder will be treated as ordinary
interest income at the time of the disposition. A holder may elect to include
market discount in income currently in lieu of including accrued market discount
in income at the time of disposition. A holder of a Debenture acquired at a
market discount may be required to defer the deduction of a portion of the
interest expense on any indebtedness incurred or maintained to purchase or carry
the Debenture until the Debenture is disposed of in a taxable transaction,
unless the holder elects to include accrued market discount in income currently.
If a holder acquires a Debenture at a market discount and receives Common Stock
upon conversion of the Debenture, the amount of accrued market discount with
respect to the converted Debenture through the date of conversion will be
treated as ordinary income upon the disposition of the Common Stock.
Amortizable Bond Premium. If a subsequent purchaser of a Debenture
purchases it at a cost that is in excess of the amount payable on maturity, the
excess cost may be treated as "amortizable bond premium" that is allocated among
the interest payments on the Debenture using a constant interest rate method
over the Debenture's remaining term. The amount allocated to each interest
payment would be applied against and offset a portion of the income from such
interest payment, with a corresponding reduction in the holder's basis. The
interest offset would be available only if an election under Section 171 of the
Code is made or is in effect and if the acquired Debenture is held as a capital
asset. The election would apply to all debt instruments held or subsequently
acquired by the electing holder on or after the first day of the first taxable
year to which the election applies and may not be revoked without the consent of
the IRS. However, Proposed Treasury regulations under Section 171 of the Code
provide that the present value of the conversion feature of the Debenture must
be subtracted from the cost of the Debenture in determining the amount of any
amortizable bond premium.
Dividends on Shares of Common Stock. Distributions on shares of Common
Stock will constitute dividends for federal income tax purposes to the extent of
current or accumulated earnings and profits of the Company. To the extent that
a holder receives a distribution on Common Stock that would otherwise constitute
a dividend but exceeds current and accumulated earnings and profits of the
Company, such distribution will be treated first as a non-taxable return of
capital reducing the holder's adjusted tax basis in the Common Stock. Any
distribution in excess of the holder's adjusted tax basis in the Common Stock
will be treated as capital gain. Dividends paid to holders that are United
States corporations may qualify for the dividends-received deduction.
OWNERSHIP OF THE DEBENTURES BY NON-U.S. HOLDERS
Interest on Debentures. Generally, interest paid on the Debentures to a
Non-U.S. Holder will not be subject to federal income tax if: (i) such interest
is not effectively connected with the conduct of a trade or business within the
United States by the Non-U.S. Holder; (ii) the Non-U.S. Holder does not actually
or constructively own 10% or more of the total voting power of all classes of
stock of the Company entitled to vote and is not a controlled foreign
corporation with respect to which the Company is a "related person" within the
meaning of the Code, and (iii) the beneficial owner, under penalty of perjury,
certifies that the owner is not a U.S. Holder and provides the owner's name and
address. If certain requirements are satisfied, the certification described in
paragraph (iii) above may be provided by a securities clearing organization, a
bank, or other financial institution that holds customers' securities in the
ordinary course of its trade or business. For this purpose, the holder of
Debentures would be deemed to own the Common Stock into which it could be
converted. A holder that is not exempt from tax under these rules will be
subject to federal income tax withholding at a rate of 30% unless the interest
is effectively connected with the conduct of a United States trade or business,
in which case the interest will be subject to the federal income tax on net
income that applies to U.S. Holders generally. Non-U.S. Holders should consult
applicable income tax treaties, which may provide different rules.
Sales or Exchanges of Debentures or Shares of Common Stock. A Non-U.S.
Holder generally will not be subject to federal income tax on gain recognized
upon the sale or other disposition of Debentures or Common Stock received upon
conversion thereof unless (i) the gain is effectively connected with the conduct
of a trade or business within the United States by the Non-U.S. Holder, or (ii)
in the case of a Non-U.S. Holder who is a nonresident alien individual and holds
the Common Stock as a capital asset, such holder is present in the United States
for 183 or more days in the taxable year and certain other circumstances are
present. If the Company is a "United States real property holding corporation,"
a Non-U.S. Holder may be subject to federal income tax with respect to gain
25
<PAGE>
on such disposition as if it were effectively connected with a United States
trade or business and the amount realized will be subject to withholding at the
rate of 10%. The amount withheld pursuant to these rules will be creditable
against such Non-U.S. Holder's federal income tax liability and may entitle the
Non-U.S. Holder to a refund upon furnishing the required information to the IRS.
Non-U.S. Holders should consult applicable income tax treaties, which may
provide different rules.
Conversion of Debentures. A Non-U.S. Holder generally will not be subject
to federal income tax on the conversion of a Debenture into shares of Common
Stock. To the extent a Non-U.S. Holder receives cash in lieu of a fractional
share on conversion, such cash may give rise to gain that would be subject to
the foregoing rules with respect to the sale or exchange of a Debenture or
Common Stock.
Dividends on Shares of Common Stock. Generally, any distribution on shares
of Common Stock to a Non U.S. Holder will be subject to federal income tax
withholding at a rate of 30% unless the dividend is effectively connected with
the conduct of trade or business within the United States by the Non-U.S.
Holder, in which case the dividend will be subject to the federal income tax on
net income that applies to U.S. Holders generally (and, with respect to
corporate holders and under certain circumstances, the branch profits tax).
Non-U.S. Holders should consult any applicable income tax treaties, which may
provide for a lower withholding or other rules different from those described
above. A Non-U.S. Holder may be required to satisfy certain certification
requirements in order to claim a reduction of or exemption from withholding
under the foregoing rules.
INFORMATION REPORTING AND BACKUP WITHHOLDING
U.S. Holders. Information reporting and backup withholding may apply to
payments of interest or dividends on or the proceeds from the sale or other
disposition of the Debentures or shares of Common Stock made by the Company with
respect to certain non-corporate U.S. Holders. Such U.S. Holders generally will
be subject to backup withholding at a rate of 31% unless the recipient of such
payment supplies a taxpayer identification number, certified under a penalty of
perjury, as well as certain other information, or otherwise establishes, in the
manner prescribed by law, an exemption from backup withholding. Any amount
withheld under backup withholding is allowable as a credit against the U.S.
Holder's federal income tax, upon furnishing the required information.
Non-U.S. Holders. Generally, information reporting and backup withholding
of federal income tax at a rate of 31% may apply to payments of principal,
interest and premium (if any) to Non-U.S. Holders if the payee fails to certify
that the holder is a Non-U.S. Holder or if the Company or its paying agent has
actual knowledge that the payee is a U.S. Holder. The 31% backup withholding
tax generally will not apply to dividends paid to Non-U.S. Holders outside the
United States that are subject to 30% withholding discussed above or that are
subject to a tax treaty that reduces such withholding.
The payment of the proceeds on the disposition of Debentures or shares of
Common Stock to or through the United States office of a United States or
foreign broker will be subject to information reporting and backup withholding,
unless the owner provides the certification described above or otherwise
establishes an exemption. The proceeds of the disposition by a Non-U.S. Holder
of Debentures or shares of Common Stock to or through a foreign office of a
broker will not be subject to backup withholding. However, if such broker is a
U.S. person, a controlled foreign corporation for federal income tax purposes or
a foreign person 50% or more of whose gross income from all sources for certain
periods is from activities that are effectively connected with a United States
trade or business, information reporting will apply unless such broker has
documentary evidence in its files of the owner's foreign status and has no
actual knowledge to the contrary or unless the owner otherwise establishes an
exemption. Both backup withholding and information reporting will apply to the
proceeds from such dispositions if the broker has actual knowledge that the
payee is a U.S. Holder.
LEGAL MATTERS
Certain legal matters with respect to the legality of the Debentures and
the validity of the Shares offered hereby will be passed upon for PRG by Jackson
& Walker, L.L.P., Dallas, Texas.
EXPERTS
The financial statements of Physicians Resource Group, Inc. and
Subsidiaries as of December 31, 1996 and for the three year period then ended,
incorporated by reference in this Prospectus, have been audited by Arthur
26
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Andersen LLP, independent public accountants, as set forth in their report. In
this report, that firm states that with respect to EyeCorp, its opinion is based
on the report of other independent public accountants, namely Coopers & Lybrand
LLP. The financial statements referred to above have been incorporated by
reference herein in reliance upon the authority of those firms as experts in
giving said reports.
The financial statements as of December 31, 1994 and for the year then
ended of Physicians Resource Group, Inc.-- Selected Acquisition Practices; as of
December 31, 1994 and 1995 and for the two years then ended of Barnet Dulaney
Eye Center; as of December 31, 1995 and for the year then ended of Physicians
Resource Group, Inc.-- Certain Acquisition Practices; as of December 31, 1994
and 1995 and for the two years then ended of Central Florida Eye Associates,
P.A. and affiliates; as of December 31, 1995 and for the year then ended of
South Texas Retina Consultants, P.A. and affiliates; as of December 31, 1995 and
for the year then ended of The Edward Yavitz Eye Center, Ltd.; as of December
31, 1995 and for the year then ended of Key Whitman/Milauskas; as of December
31, 1994 and 1995 and for the two years then ended of Cincinnati Eye Institute,
Inc.; as of December 31, 1995 and for the year then ended of Gregory L.
Henderson, M.D., P.A.; as of December 31, 1995 and for the year then ended of
Tampa Eye Clinic, P.A.; as of December 31, 1995 and for the year then ended of
The Eye Institute of West Florida, P.A. and Douglas G. Johnson, O.D., P.A.; as
of December 31, 1995 and for the year then ended of Melbourne Eye Associates of
Brevard, Inc. and Melbourne Eye Associates, P.A.; as of December 31, 1995 and
for the year ended of Frederick A. Hauber, M.D., P.A. and Health Dynamics
Specialties, Inc.; as of December 31, 1995 and for the year then ended of
Ophthalmological Associates, Ltd.; as of December 31, 1995 and for the year then
ended of Stuart J. Kaufman, M.D., P.A.; as of December 31, 1995 and for the year
then ended of Physicians Resource Group, Inc.-- Sundry Acquisition Practices;
as of December 31, 1996 and for the year then ended of West Suburban Eye
Associates, Ltd.; as of December 31, 1996 and for the year then ended of Eye
Associates, S.C. and Excimer Laser Associates Ltd., incorporated by reference in
this Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as stated in their reports with respect thereto, and are
incorporated by reference herein upon the authority of said firm as experts in
giving said reports.
The financial statements of Houston Eye Associates as of December 31, 1994
and 1995 and for the two years then ended, incorporated by reference in this
Prospectus, have been audited by Wallingford, McDonald, Fox & Co., P.C.,
independent public accountants as stated in their report with respect thereto,
and are incorporated by reference herein upon the authority of said firm as
experts in giving said reports.
The consolidated financial statements of EquiVision, Inc. as of December
31, 1994 and 1995 and for each of the three years in the period ended December
31, 1995 appearing in Physicians Resource Group, Inc.'s Current Report on Form
8-K/A dated October 7, 1996, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
The consolidated financial statements of American Ophthalmic, Inc. as of
December 31, 1994 and 1995 and for each of the three years in the period ended
December 31, 1995 appearing in Physicians Resource Group, Inc.'s Current Report
on Form 8-K/A dated October 7, 1996, as amended on October 30, 1996, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such financial
statements referred to above are incorporated herein by reference in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
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================================================================================
No dealer, salesman or any other person has been authorized to give any
information or to make any representations not contained in this Prospectus and,
if given or made, such information or representations must not be relied upon.
This Prospectus does not constitute an offer to sell or the solicitation of any
offer to buy andy of the securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make such offer in such jurisdiction. Neither
the delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implications that information contained herein is
correct as of any time subsequent to the date hereof or that there has been no
change in the affairs of the Company since that date.
-------------
TABLE OF CONTENTS
Page
----
Available Information................................................ 3
Incorporation of Certain Documents by Reference...................... 3
The Company.......................................................... 4
Risk Factors......................................................... 4
Use of Proceeds...................................................... 10
Ratio of Earnings to Fixed Charges................................... 10
Description of Debentures............................................ 11
Selling Securityholders.............................................. 19
Plan of Distribution................................................. 21
Shares Eligible for Future Sale...................................... 22
Certain United States Federal Income Tax Consequences................ 23
Legal Matters........................................................ 26
Experts.............................................................. 26
PHYSICIANS RESOURCE GROUP,
INC.
PROSPECTUS
, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
-------------------------------------------
The following table itemizes the expenses incurred by the Company in
connection with the offering. All amounts are estimated except for the
Registration Fee.
Registration Fees................ $ 39,354.29
NYSE Listing Fee................. 20,125.00
Accounting Fees and Expenses..... 30,000.00
Legal Fees and Expenses.......... 30,000.00
Printing and Engraving Expenses.. 30,000.00
Miscellaneous.................... 10,520.71
-----------
Total............................ $160.000.00
===========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
-----------------------------------------
Section 145(a) of the General Corporation Law of the State of Delaware (the
"DGCL") provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 145(b) of the DGCL states that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 145(c) of the DGCL provides that to the extent that a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to
II-1
<PAGE>
in subsections (a) and (b) of Section 145, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
Section 145(d) of the DGCL states that any indemnification under subsections
(a) and (b) of Section 145 (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
subsections (a) and (b). Such determination shall be made (1) by the board of
directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
Section 145(e) of the DGCL provides that expenses (including attorneys'
fees) incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in Section 145.
Such expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
Section 145(f) of the DGCL states that the indemnification and advancement
of expenses provided by, or granted pursuant to, the other subsections of
Section 145 shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office.
Section 145(g) of the DGCL provides that a corporation shall have the power
to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under the
provisions of Section 145.
Section 145(j) of the DGCL states that the indemnification and advancement
of expenses provided by, or granted pursuant to, Section 145 shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent, and shall inure to the
benefit of the heirs, executors and administrators of such a person.
Reference is made to Article Ten of the Registrant's Second Restated
Certificate of Incorporation, which provides for indemnification of directors
and officers.
Reference is made to the Registrant's Third Amended and Restated Bylaws,
which provide for indemnification of directors and officers.
In addition, the Registrant has entered into Indemnity Agreements with
certain of its directors and executive officers.
The Registrant has procured insurance that purports (i) to insure it against
certain costs of indemnification that may be incurred by it pursuant to the
provisions referred to above or otherwise and (ii) to insure the directors and
officers of the Registrant against certain liabilities incurred by them in the
discharge of their functions as directors and officers except for liabilities
arising from their own malfeasance.
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<PAGE>
ITEM 16. EXHIBITS.
--------
The following is a list of all exhibits filed as a part of this Registration
Statement on Form S--3, including those incorporated herein by reference.
Exhibit
Number Description of Exhibit
- ------ ----------------------
4.1 -- Second Restated Certificate of Incorporation of Physicians Resource
Group, Inc.(10)
4.2 -- Certificate of Designations, Preferences, Rights and Limitations of
Class A Preferred Stock of Physicians Resource Group, Inc.(1)
4.3 -- Third Amended and Restated Bylaws of Physicians Resource Group,
Inc.(5)
4.4 -- Form of Warrant Certificate.(1)
4.5 -- Form of certificate evidencing ownership of common stock of Physicians
Resource Group, Inc.(1)
4.6 -- Rights Agreement dated as of April 19, 1996 between Physicians
Resource Group, Inc. and Chemical Mellon Shareholder Services.(9)
5.1 -- Opinion of Jackson & Walker, L.L.P.(16)
10.1 -- Physicians Resource Group, Inc. Amended and Restated 1995 Stock Option
Plan.(5)(7)
10.2 -- Physicians Resource Group, Inc. 1995 Health Care Professionals Stock
Option Plan.(1)
10.3 -- Employment Agreement between Physicians Resource Group, Inc. and
Gregory L. Solomon.(1)(7)
10.4 -- Employment Agreement between Physicians Resource Group, Inc. and
Emmett E. Moore.(1)(7)
10.5 -- Employment Agreement between Physicians Resource Group, Inc. and
Richard M. Owen.(1)(7)
10.6 -- Form of Indemnification Agreement for certain Directors.(1)
10.7 -- Form of Service Agreement by and between Physicians Resource Group,
Inc., Physicians Resource Group Subsidiary, Inc. and TPZ, Inc. d/b/a/
Eye Care of Medina, Inc.(1)
10.8 -- Form of Service Agreement by and between Physicians Resource Group,
Inc., its wholly-owned subsidiary and The Eye Clinic of Texas.(1)
10.9 -- Form of Service Agreement by and between Physicians Resource Group,
Inc., its wholly-owned subsidiary and David M. Schneider, M.D.,
Inc.(1)
10.10 -- Form of Service Agreement by and between Physicians Resource Group,
Inc., its wholly-owned subsidiary and Texas Eye Institute Assoc.(1)
10.11 -- Form of Service Agreement by and between Physicians Resource Group
Subsidiary, Inc., its wholly-owned subsidiary and McDonald Eye
Associates, P.A.(1)
II-3
<PAGE>
10.12 -- Form of Service Agreement by and between Physicians Resource Group,
Inc., its wholly-owned subsidiary and Michael A. Minadeo, M.D.,
P.A.(1)
10.13 -- Form of Service Agreement by and between Physicians Resource Group,
Inc., its wholly-owned subsidiary and Southern Nevada Eye Clinic,
Inc., Kenneth C. Westfield, M.D., Ltd. and Nevada Institute of
Ambulatory Surgery, Inc.(1)
10.14 -- Form of Service Agreement by and between Physicians Resource Group,
Inc., its wholly-owned subsidiary and Eye Clinic, P.C.(1)
10.15 -- Form of Service Agreement by and between Superior Eye Care, Inc. and
Charles D. Fritch, M.D., Inc.(1)
10.16 -- Form of Service Agreement by and among Pacific Vision Services, Inc.
and Loma Linda Ophthalmology Medical Group, Inc., Inland Eye Institute
Medical Group, Inc. and T.E.S.C., Inc.(1)
10.17 -- First Amendment to Service Agreement by and among Physicians Resource
Group, Inc., as successor by merger to Pacific Vision Services, Inc.,
Loma Linda Ophthalmology Medical Group, Inc., Inland Eye Institute
Medical Group, Inc. and T.E.S.C., Inc. dated August 9, 1995.(4)
10.18 -- Subscription Agreement, dated March 31, 1995 between Notre Capital
Ventures, Ltd. and Physicians Resource Group, Inc.(1)
10.19 -- Form of Registration Rights Agreement.(1)
10.20 -- Form of Registration Rights Agreement.(1)
10.21 -- Form of Registration Rights and Stockholders Agreement.(1)
10.22 -- Form of Registration Rights Agreement dated as of March 7, 1996, by
and among Physicians Resource Group, Inc. and the former stockholders
of EyeCorp, Inc.(5)
10.23 -- Form of Option Agreement between Physicians Resource Group, James A.
Price, M.D., Ben F. House, M.D., Bruce E. Herron, M.D. and Mark R.
Bateman, M.D.(1)
10.24 -- Separation and Mutual Release Agreement between Gregory Solomon and
Physicians Resource Group.(6)(7)
10.25 -- Loan Agreement dated as of January 8, 1996 between PRG and NationsBank
of Tennessee, N.A. ("NationsBank").(2)
10.26 -- Subordination Agreement dated as of December 28, 1995 by and among
NationsBank, EyeCorp, Eyecare Resource, Inc., the EyePA, Inc. and
PRG.(2)
10.27 -- Reimbursement Agreement dated as of December 28, 1995 between EyeCorp
and PRG.(2)
10.28 -- Service Agreement dated as of February 23, 1994, by and between
EyeCorp, Inc., the Vitreoretinal Foundation and David Meyer, M.D.,
John E. Linn, M.D., John D. Armstrong, M.D., John L. Elfervig, M.D.
and Thomas A. Browning, M.D.(5)(8)
II-4
<PAGE>
10.29 -- Amendment to Service Agreement, dated March 8, 1996, by and between
the Vitreoretinal Foundation, David Meyer, M.D., John E. Linn, M.D.,
John D. Armstrong, M.D., John L. Elfervig, M.D. and Thomas A.
Browning, M.D. and EyeCorp, Inc.(5)
10.30 -- Second Amendment to Service Agreement dated as of February 23, 1994,
by and between EyeCorp, Inc., the Vitreoretinal Foundation and David
Meyer, M.D., John E. Linn, M.D., John D. Armstrong, M.D., John L.
Elfervig, M.D. and Thomas A. Browning, M.D.(5)
10.31 -- Loan and Security Agreement dated as of December 28, 1995 among
EyeCorp, Inc., EyeCare Resource, Inc. The EyePA, Inc. and NationsBank
of Tennessee, N.A.(5)
10.32 -- Form of Indenture, dated as of December 11, 1996, between Physicians
Resource Group, Inc. and U.S. Trust Company of New York, N.A.(10)
10.33 -- Form of Registration Rights Agreement, dated as of December 6, 1996,
between Physicians Resource Group, Inc., and Smith Barney, Inc., Alex
Brown & Sons Incorporated, Soloman Brothers, Dillon Reed & Co., Inc.
and Volpe Welty & Company.(10)
10.34 -- Form of Purchase Agreement dated as of December 6, 1996.(10)
10.35 -- Loan Agreement for $90,000,000 Revolving Credit Loan dated March 14,
1997, between Physician Resource Group, Inc. and NationsBank of
Tennessee, N.A. Agent the Banks Signatory Hereto.(19)
10.36 -- Physicians Resource Group, Inc. Employee Stock Purchase Plan.(11)
10.37 -- Employment Agreement between Physicians Resource Group, Inc. and Mark
Kingston.(7)
10.38 -- Employment Agreement between Physicians Resource Group, Inc. and
Richard D'Amico.(7)
10.39 -- Employment Agreement between Physicians Resource Group, Inc. and
Jonathan Bond.(7)
10.40 -- Employment Agreement between Physicians Resource Group, Inc. and
Daniel Chambers.(7)
10.41 -- Physicians Resource Group, Inc. 401(k) Plan (17)
12.1 -- Statement regarding computation of ratio of earnings to fixed
charges.(18)
21.1 -- Subsidiaries.(5)
23.1 -- Consent of Arthur Andersen LLP.(16)
23.2 -- Consent of Coopers & Lybrand.(16)
23.3 -- Consent of Wallingford, McDonald, Fox & Co., P.C.(16)
23.4 -- Consent of Ernst & Young LLP (Atlanta).(16)
23.5 -- Consent of Ernst & Young LLP (Orlando).(16)
23.6 -- Consent of Jackson & Walker, L.L.P. (contained in Exhibit 5.1)
24.1 -- Power of Attorney.(18)
25.1 -- Statement of eligibility of trustee.(18)
- --------------
II-5
<PAGE>
(1) Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (No. 33-91440) and incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Registration Statement on
Form S-4 (No. 333-00230) and incorporated herein by reference.
(3) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated February 14, 1996 and incorporated herein by reference.
(4) Previously filed as an exhibit to the Company's quarterly report on Form
10-Q for the quarter ending June 30, 1995, and incorporated herein by
reference.
(5) Previously filed as an exhibit to the Company's annual report on Form 10-K
for the year ending December 31, 1995, and incorporated herein by
reference.
(6) Previously filed as an exhibit to the Company's quarterly report on Form
10-Q for the quarter ending September 30, 1995, and incorporated by
reference.
(7) Management contract or compensatory plan or arrangement, which is being
identified as such pursuant to Item 14(a)3 of Form 10-K.
(8) Schedules and similar attachments to this Exhibit have not been filed
herewith, but the nature of their contents is described in the body of this
Exhibit. The Company agrees to furnish a copy of any such omitted
schedules and attachments to the Commission upon request.
(9) Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (no.333-3852) and incorporated herein by reference.
(10) Previously filed as an exhibit to the Company's Registration Statement on
Form S-4 (333-19185) and incorporated herein by reference.
(11) Previously filed as an exhibit to the Company's Registration Statement on
Form S-8 (No. 333-15547) and incorporated herein by reference.
(12) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated October 7, 1996 and incorporated herein by reference.
(13) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated June 30, 1996, and incorporated herein by reference.
(14) Previously filed as an amendment to the Company's Current Report on Form
8-K dated August 30, 1996, and incorporated herein by reference.
(15) Previously filed as an amendment to the Company's Current Report on Form
8-K dated October 19, 1996, and incorporated herein by reference.
(16) Filed herewith.
(17) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated May 15, 1997, and incorporated herein by reference.
(18) Previously filed.
(19) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ending December 31, 1996, and incorporated herein by
reference.
II-6
<PAGE>
ITEM 17. UNDERTAKINGS.
------------
(a) 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 by section 10(a)(3) of the
Securities Act;
(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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective 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 (a)(1)(i) and (a)(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 Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act 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 Commission such indemnification is
against public policy as expressed in the Act 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
II-7
<PAGE>
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 to Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Dallas, State of Texas on the 22nd day of July, 1997.
PHYSICIANS RESOURCE GROUP, INC.
By: /s/ Richard J. D'Amico *
------------------------------------
Name: Richard J. D'Amico,
Executive Vice President, Chief
Administrative Officer and Secretary
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the indicated capacities
on July 22, 1997.
Signatures Title
---------- -----
/s/ Emmett E. Moore * Chairman of the Board of
------------------------------ Directors and Chief Executive
Emmett E. Moore Officer
(Principal Executive Officer)
/s/ Richard M. Owen * President and Director
------------------------------
Richard M. Owen
Senior Vice President and
------------------------------ Chief Accounting Officer
David D. Real (Principal Financial Officer)
/s/ Randall Simpson * Vice President, Controller and
------------------------------ Chief Accounting Officer
Randall Simpson (Principal Accounting Officer)
/s/ Alan C. Baum * Director
------------------------------
Alan C. Baum, M.D.
/s/ Lucius E. Burch, III * Director
------------------------------
Lucius E. Burch, III
/s/ Joe E. Ellis * Director
------------------------------
Joe E. Ellis, O.D.
Director
------------------------------
Charles D. Fritch, M.D.
/s/ Richard A. Gilleland * Director
------------------------------
Richard A. Gilleland
/s/ Bruce E. Herron * Director
------------------------------
Bruce E. Herron, M.D.
/s/ James E. McDonald * Director
------------------------------
James E. McDonald, II, M.D.
Director
------------------------------
David Meyer, M.D.
<PAGE>
/s/ Joseph C. Noreika * Director
------------------------------
Joseph C. Noreika, M.D.
/s/ James W. Rayner * Director
------------------------------
James W. Rayner, M.D.
/s/ David M. Schneider * Director
------------------------------
David M. Schneider, M.D.
/s/ Paul M. Shimoff * Director
------------------------------
Paul M. Shimoff
Director
------------------------------
Ronald L. Stanfa
/s/ P. Harold Wallar * Director
------------------------------
P. Harold Wallar, M.D.
/s/ Kenneth C. Westfield * Director
------------------------------
Kenneth C. Westfield, M.D.
* By: /s/ Richard J. D'Amico
------------------------------------
Richard J. D'Amico
Individually and as
Attorney-in-Fact
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
- ------ ----------------------
4.1 -- Second Restated Certificate of Incorporation of Physicians Resource
Group, Inc.(10)
4.2 -- Certificate of Designations, Preferences, Rights and Limitations of
Class A Preferred Stock of Physicians Resource Group, Inc.(1)
4.3 -- Third Amended and Restated Bylaws of Physicians Resource Group,
Inc.(5)
4.4 -- Form of Warrant Certificate.(1)
4.5 -- Form of certificate evidencing ownership of common stock of Physicians
Resource Group, Inc.(1)
4.6 -- Rights Agreement dated as of April 19, 1996 between Physicians
Resource Group, Inc. and Chemical Mellon Shareholder Services.(9)
5.1 -- Opinion of Jackson & Walker, L.L.P.(16)
10.1 -- Physicians Resource Group, Inc. Amended and Restated 1995 Stock Option
Plan.(5)(7)
10.2 -- Physicians Resource Group, Inc. 1995 Health Care Professionals Stock
Option Plan.(1)
10.3 -- Employment Agreement between Physicians Resource Group, Inc. and
Gregory L. Solomon.(1)(7)
10.4 -- Employment Agreement between Physicians Resource Group, Inc. and
Emmett E. Moore.(1)(7)
10.5 -- Employment Agreement between Physicians Resource Group, Inc. and
Richard M. Owen.(1)(7)
10.6 -- Form of Indemnification Agreement for certain Directors.(1)
10.7 -- Form of Service Agreement by and between Physicians Resource Group,
Inc., Physicians Resource Group Subsidiary, Inc. and TPZ, Inc. d/b/a/
Eye Care of Medina, Inc.(1)
10.8 -- Form of Service Agreement by and between Physicians Resource Group,
Inc., its wholly-owned subsidiary and The Eye Clinic of Texas.(1)
10.9 -- Form of Service Agreement by and between Physicians Resource Group,
Inc., its wholly-owned subsidiary and David M. Schneider, M.D.,
Inc.(1)
10.10 -- Form of Service Agreement by and between Physicians Resource Group,
Inc., its wholly-owned subsidiary and Texas Eye Institute Assoc.(1)
10.11 -- Form of Service Agreement by and between Physicians Resource Group
Subsidiary, Inc., its wholly-owned subsidiary and McDonald Eye
Associates, P.A.(1)
<PAGE>
10.12 -- Form of Service Agreement by and between Physicians Resource Group,
Inc., its wholly-owned subsidiary and Michael A. Minadeo, M.D.,
P.A.(1)
10.13 -- Form of Service Agreement by and between Physicians Resource Group,
Inc., its wholly-owned subsidiary and Southern Nevada Eye Clinic,
Inc., Kenneth C. Westfield, M.D., Ltd. and Nevada Institute of
Ambulatory Surgery, Inc.(1)
10.14 -- Form of Service Agreement by and between Physicians Resource Group,
Inc., its wholly-owned subsidiary and Eye Clinic, P.C.(1)
10.15 -- Form of Service Agreement by and between Superior Eye Care, Inc. and
Charles D. Fritch, M.D., Inc.(1)
10.16 -- Form of Service Agreement by and among Pacific Vision Services, Inc.
and Loma Linda Ophthalmology Medical Group, Inc., Inland Eye Institute
Medical Group, Inc. and T.E.S.C., Inc.(1)
10.17 -- First Amendment to Service Agreement by and among Physicians Resource
Group, Inc., as successor by merger to Pacific Vision Services, Inc.,
Loma Linda Ophthalmology Medical Group, Inc., Inland Eye Institute
Medical Group, Inc. and T.E.S.C., Inc. dated August 9, 1995.(4)
10.18 -- Subscription Agreement, dated March 31, 1995 between Notre Capital
Ventures, Ltd. and Physicians Resource Group, Inc.(1)
10.19 -- Form of Registration Rights Agreement.(1)
10.20 -- Form of Registration Rights Agreement.(1)
10.21 -- Form of Registration Rights and Stockholders Agreement.(1)
10.22 -- Form of Registration Rights Agreement dated as of March 7, 1996, by
and among Physicians Resource Group, Inc. and the former stockholders
of EyeCorp, Inc.(5)
10.23 -- Form of Option Agreement between Physicians Resource Group, James A.
Price, M.D., Ben F. House, M.D., Bruce E. Herron, M.D. and Mark R.
Bateman, M.D.(1)
10.24 -- Separation and Mutual Release Agreement between Gregory Solomon and
Physicians Resource Group.(6)(7)
10.25 -- Loan Agreement dated as of January 8, 1996 between PRG and NationsBank
of Tennessee, N.A. ("NationsBank").(2)
10.26 -- Subordination Agreement dated as of December 28, 1995 by and among
NationsBank, EyeCorp, Eyecare Resource, Inc., the EyePA, Inc. and
PRG.(2)
10.27 -- Reimbursement Agreement dated as of December 28, 1995 between EyeCorp
and PRG.(2)
10.28 -- Service Agreement dated as of February 23, 1994, by and between
EyeCorp, Inc., the Vitreoretinal Foundation and David Meyer, M.D.,
John E. Linn, M.D., John D. Armstrong, M.D., John L. Elfervig, M.D.
and Thomas A. Browning, M.D.(5)(8)
10.29 -- Amendment to Service Agreement, dated March 8, 1996, by and between
the Vitreoretinal Foundation, David Meyer, M.D., John E. Linn, M.D.,
John D. Armstrong, M.D., John L. Elfervig, M.D. and Thomas A.
Browning, M.D. and EyeCorp, Inc.(5)
<PAGE>
10.30 -- Second Amendment to Service Agreement dated as of February 23, 1994,
by and between EyeCorp, Inc., the Vitreoretinal Foundation and David
Meyer, M.D., John E. Linn, M.D., John D. Armstrong, M.D., John L.
Elfervig, M.D. and Thomas A. Browning, M.D.(5)
10.31 -- Loan and Security Agreement dated as of December 28, 1995 among
EyeCorp, Inc., EyeCare Resource, Inc. The EyePA, Inc. and NationsBank
of Tennessee, N.A.(5)
10.32 -- Form of Indenture, dated as of December 11, 1996, between Physicians
Resource Group, Inc. and U.S. Trust Company of New York, N.A.(10)
10.33 -- Form of Registration Rights Agreement, dated as of December 6, 1996,
between Physicians Resource Group, Inc., and Smith Barney, Inc., Alex
Brown & Sons Incorporated, Soloman Brothers, Dillon Reed & Co., Inc.
and Volpe Welty & Company.(10)
10.34 -- Form of Purchase Agreement dated as of December 6, 1996.(10)
10.35 -- Loan Agreement for $90,000,000 Revolving Credit Loan dated March 14,
1997, between Physician Resource Group, Inc. and NationsBank of
Tennessee, N.A. Agent the Banks Signatory Hereto.(19)
10.36 -- Physicians Resource Group, Inc. Employee Stock Purchase Plan.(11)
10.37 -- Employment Agreement between Physicians Resource Group, Inc. and Mark
Kingston.(7)
10.38 -- Employment Agreement between Physicians Resource Group, Inc. and
Richard D'Amico.(7)
10.39 -- Employment Agreement between Physicians Resource Group, Inc. and
Jonathan Bond.(7)
10.40 -- Employment Agreement between Physicians Resource Group, Inc. and
Daniel Chambers.(7)
10.41 -- Physicians Resource Group, Inc. 401(k) Plan (17)
12.1 -- Statement regarding computation of ratio of earnings to fixed
charges.(18)
21.1 -- Subsidiaries.(5)
23.1 -- Consent of Arthur Andersen LLP.(16)
23.2 -- Consent of Coopers & Lybrand.(16)
23.3 -- Consent of Wallingford, McDonald, Fox & Co., P.C.(16)
23.4 -- Consent of Ernst & Young LLP (Atlanta).(16)
23.5 -- Consent of Ernst & Young LLP (Orlando).(16)
23.6 -- Consent of Jackson & Walker, L.L.P. (contained in Exhibit 5.1)
24.1 -- Power of Attorney.(18)
25.1 -- Statement of eligibility of trustee.(18)
- --------------
(1) Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (No. 33-91440) and incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Registration Statement on
Form S-4 (No. 333-00230) and incorporated herein by reference.
(3) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated February 14, 1996 and incorporated herein by reference.
<PAGE>
(4) Previously filed as an exhibit to the Company's quarterly report on Form
10-Q for the quarter ending June 30, 1995, and incorporated herein by
reference.
(5) Previously filed as an exhibit to the Company's annual report on Form 10-K
for the year ending December 31, 1995, and incorporated herein by
reference.
(6) Previously filed as an exhibit to the Company's quarterly report on Form
10-Q for the quarter ending September 30, 1995, and incorporated by
reference.
(7) Management contract or compensatory plan or arrangement, which is being
identified as such pursuant to Item 14(a)3 of Form 10-K.
(8) Schedules and similar attachments to this Exhibit have not been filed
herewith, but the nature of their contents is described in the body of this
Exhibit. The Company agrees to furnish a copy of any such omitted
schedules and attachments to the Commission upon request.
(9) Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (no.333-3852) and incorporated herein by reference.
(10) Previously filed as an exhibit to the Company's Registration Statement on
Form S-4 (333-19185) and incorporated herein by reference.
(11) Previously filed as an exhibit to the Company's Registration Statement on
Form S-8 (No. 333-15547) and incorporated herein by reference.
(12) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated October 7, 1996 and incorporated herein by reference.
(13) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated June 30, 1996, and incorporated herein by reference.
(14) Previously filed as an amendment to the Company's Current Report on Form
8-K dated August 30, 1996, and incorporated herein by reference.
(15) Previously filed as an amendment to the Company's Current Report on Form
8-K dated October 19, 1996, and incorporated herein by reference.
(16) Filed herewith.
(17) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated May 15, 1997, and incorporated herein by reference.
(18) Previously filed.
(19) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ending December 31, 1996, and incorporated herein by
reference.
<PAGE>
EXHIBIT 5.1
July 22, 1997
Physicians Resource Group, Inc.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1540
Dallas, TX 75240
Re: Registration Statement on Form S-3 of Physicians Resource Group, Inc.
Gentlemen:
We are acting as counsel for Physicians Resource Group, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of the offer and sale of up to
$125,000,000 of 6% Convertible Subordinated Debentures due 2001 (the
"Debentures"), the shares of the Company's Common Stock, par value $.01 per
share, issuable on conversion thereof (the "Conversion Shares"), and an
additional 418,851 shares of Common Stock (the "Additional Shares"), to be sold
from time to time by the selling securityholders listed in a Registration
Statement on Forms S-3, which we understand is expected to be filed with the
Securities and Exchange Commission (the "Commission") on or about the date
hereof (as amended, the "Registration Statement").
In reaching the conclusions expressed in this opinion we have examined and
relied on such documents, corporate records and other instruments, including the
Indenture (the "Indenture") dated as of December 11, 1996 between the Company
and U.S. Trust Company of New York, N.A. as trustee relating to the Debentures,
certificates of public officials and certificates of officers of the Company,
and made such further investigation and inquiry as we have deemed necessary to
reach the opinions expressed herein. In making the foregoing examinations, we
have assumed the genuineness of all signatures on original documents, the
authenticity, accuracy and completeness of all documents submitted to us as
originals and the conformity to original documents of all copies submitted to
us.
<PAGE>
Based solely upon the foregoing, subject to the comments and exceptions
hereinafter stated, it is our opinion that:
1. The Debentures have been validly issued and constitute valid and
binding obligations of the Company entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms, except as such
enforcement is subject to (i) any applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or other laws
relating to or affecting creditors' rights generally and (ii) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
2. The Conversion Shares have been duly authorized and reserved for
issuance on conversion of the Debentures and when certificates representing the
Conversion Shares have been duly executed, countersigned, registered and
delivered in accordance with the terms of the Debentures and the Indenture on
conversion of the Debentures, the Conversion Shares will be duly authorized,
validly issued, fully paid and non-assessable.
3. The Additional Shares are, and when sold by the selling securityholders
will be, validly issued, fully paid and nonassessable.
We express no opinion as to the laws of any jurisdiction other than the
General Corporation Law of the State of Delaware, the federal laws of the United
States of America, and the contract law of the State of New York, in each case
as in effect on the date hereof.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to our firm therein under the
caption "Legal Matters." In giving this consent, we do not admit that we come
within the category of persons whose consent is required under Section 7 of the
Act or the rules and regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ Jackson & Walker, L.L.P.
<PAGE>
EXHIBIT 23.1
Consent of Arthur Andersen LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports, dated September 6,
1996, on our audit of the financial statements of Physicians Resource Group,
Inc.; November 21, 1995, on our audit of Physicians Resource Group, Inc. -
Selected Acquisition Practices; March 8, 1996, on our audit of Barnet Dulaney
Eye Center, P.L.L.C.; dated April 12, 1996, on our audit of the combined
financial statements of Physicians Resource Group, Inc. - Certain Acquisition
Practices; dated April 12, 1996, on our audit of the combined financial
statements of Key Whitman/Milauskas; dated July 12, 1996, on our audit of the
financial statements of Central Florida Eye Associates, P.A. and affiliates;
dated July 12, 1996, on our audit of the financial statements of South Texas
Retina Consultants, P.A. and affiliates; dated July 12, 1996 on our audit of the
financial statements of Edward Yavitz Eye Center, Ltd.; dated August 9, 1996, on
our audit of the combined financial statements of Physicians Resource Group,
Inc. - Sundry Acquisition Practices; dated September 4, 1996, on our audit of
the combined financial statements of Cincinnati Eye Institute, Inc. and
Affiliate; dated September 6, 1996, on our audit of the financial statements of
Tampa Eye Clinic, P.A.; dated September 6, 1996, on our audit of the combined
financial statements of The Eye Institute of West Florida, P.A. and Douglas G.
Johnson, O.D., P.A.; dated September 3, 1996 on our audit of the financial
statements of Gregory L. Henderson, M.D., P.A.; dated October 16, 1996 on our
audit of the combined financial statements of Melbourne Eye Associates of
Brevard, Inc. and Melbourne Eye Associates, P.A.; dated October 29, 1996, on our
audit of the combined financial statements of Frederick A. Hauber, M.D., P.A.
and Health Dynamics Specialties, Inc.; dated October 28, 1996, on our audit of
the financial statements of Ophthalmological Associates, Ltd.; dated October 28,
1996, on our audit of the financial statements of Stuart J. Kaufman, M.D., P.A.;
dated March 24, 1997, on our audit of the financial statements of Physicians
Resource Group, Inc.; dated February 26, 1997, on our audit of the financial
statements of West Suburban Eye Associates, Ltd.; dated January 23, 1997, on our
audit of the financial statements of Eye Associates, S.C. and Excimer Laser
Associates, Ltd. and to all references to our firm included in this registration
statement.
/s/ Arthur Andersen LLP
Dallas, Texas
July 22, 1997
<PAGE>
EXHIBIT 23.2
Consent of Independent Accountants
We consent to the reference in the Pre-Effective Amendment No. 1 to registration
statement on Form S-3 (File No. 333-28575) dated July 22, 1997 of Physicians
Resource Group, Inc. of our report dated April 5, 1996, except as to paragraph 4
of note 5 for which the date is April 18, 1996, on our audits of the financial
statements of EyeCorp, Inc. as of December 31, 1995 and 1994 and for the two
years in the period ended December 31, 1995.
Coopers & Lybrand L.L.P.
Memphis, Tennessee
July 22, 1997
<PAGE>
EXHIBIT 23.3
Consent of Wallingford, McDonald, Fox & Co., P.C.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As the independent public accountants for Houston Eye Associates, we agree to
the incorporation by reference in this Pre-Effective Amendment No. 1 to the
Registration Statement on Form S-3 (No. 333-28575) of Physicians Resource Group,
Inc. of our report dated September 5, 1996 on our audit of the financial
statements of Houston Eye Associates for the years ended December 31, 1995 and
1994.
/s/ Wallingford, McDonald, Fox & Co., P.C.
Houston, Texas
July 21, 1997
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in Amendment No. 1 to this Registration Statement on
Form S-3 and related Prospectus of Physicians Resource Group, Inc. for the
registration of $125,000,000 principal amount 6% Convertible Subordinated
Debentures due 2001 and shares of its common stock of our report dated March 1,
1996, with respect to the consolidated financial statements of EquiVision, Inc.
included in Physicians Resource Group, Inc.'s Current Report on Form 8-K/A dated
October 7, 1996 filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Atlanta, Georgia
July 21, 1997
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Pre-Effective Amendment No. 1 of the Registration Statement (Form S-3 No. 333-
28575) and related Prospectus of Physicians Resource Group, Inc. for the
registration of $125,000,000 principal amount of 6% Convertible Subordinated
Debentures due 2001 and 5,418,851 shares of common stock and to the
incorporation by reference therein of our report dated March 22, 1996, except
for the third paragraph of Note 7 and Note 15, as to which the date is October
24, 1996, with respect to the consolidated financial statements of American
Ophthalmic, Inc. included in Physicians Resource Group, Inc.'s Current Report on
Form 8-K/A dated October 7, 1996 (as amended on October 30, 1996), filed with
the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Orlando, Florida
July 21, 1997
