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As filed with the Securities and Exchange Commission on January 2, 1997.
Registration No. ___________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
--------------------
PHYSICIANS RESOURCE GROUP, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 8099 76-0456864
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
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Three Lincoln Centre
5430 LBJ Freeway
Suite 1540
Dallas, Texas 75240
(214) 982-8200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Emmett E. Moore
Chief Executive Officer
Three Lincoln Centre
5430 LBJ Freeway
Suite 1540
Dallas, Texas 75240
(214) 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, Esq.
Three Lincoln Centre Jackson & Walker, L.L.P.
5430 LBJ Freeway 901 Main Street, Suite 6000
Suite 1540 Dallas, TX 75202
Dallas, Texas 75240
Approximate date of commencement of proposed sale to the public. From time to
time after the Registration Statement becomes effective.
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, check the following box: [X]
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
CALCULATION OF REGISTRATION FEE
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========================================================================================
Proposed
Maximum Proposed
Offering Maximum
Title of Each Amount to Price Aggregate Amount of
Class of Securities be Per Offering Registration
To Be Registered Registered Share(1) Price(1) Fee
- ----------------------------------------------------------------------------------------
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Common Stock, $.01 par
value, including
associated Rights to
purchase Common Stock... 10,000,000 shares $17.625 176,250,000 $53,410
========================================================================================
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(1) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(c), the offering price and registration fee are computed on
the basis of the average of the high and low prices of the Common Stock, as
listed on the New York Stock Exchange on December 31, 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 said Section 8(a),
may determine.
<PAGE>
PHYSICIANS RESOURCE GROUP, INC.
Cross Reference Sheet
Pursuant to Item 501(b) of Regulation S-K
Showing locations in Prospectus of
Information Required by the Items of Form S-4
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Item
No. Location in Prospectus Location in Prospectus
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A. - Information about the Transaction
1. Forepart of the Registration............... Facing Page; Outside Front Cover
Statement and Outside Front Cover.......... Page of Prospectus; Additional
Page of Prospectus......................... Information
2. Inside Front and Outside Back.............. Inside Front of Prospectus
Cover Pages of Prospectus
3. Summary Information, Risk.................. Prospectus Summary; The
Factors and Ratio of Earnings Company;
Risk Factors to Fixed Charges
4. Terms of the Transaction................... *
5. Pro Forma Financial Information............ *
6. Material Contracts with the Company........ *
Being Acquired
7. Additional Information Required for........ *
Reoffering by Persons and Parties
deemed to be Underwriters
8. Interests of Named Experts and............. *
Counsel
9. Disclosure of Commission Position on....... *
Indemnification for Securities Act
Liabilities
B. - Information about the Registrant
10. Information with Respect to the............ Outside Front Cover of Prospectus;
Registrant Prospectus Summary; The Company; Risk
Factors; Management's Discussion and
Analysis of Financial Condition and
Results of Operations; Business;
Management; Certain Transactions;
Principal Stockholders; Description of
Capital Stock; Shares Eligible for Future
Sale; Index to Financial Statements
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11. Incorporation of Certain Information....... Incorporation of Certain Documents
by Reference............................... by Reference
C.- Information about the Company being............... *
acquired
D.- Voting and Management Information................. *
- --------
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* Not Applicable
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 JANUARY 2, 1997
PROSPECTUS
10,000,000 Shares
PHYSICIANS RESOURCE GROUP, INC. LOGO
Common Stock
-----------------
This Prospectus covers the offer and sale of up to 10,000,000 shares of Common
Stock, par value $.01 per share (the "Common Stock"), of Physicians Resource
Group, Inc. (together with its wholly owned subsidiaries, the "Company" or
"PRG"), which the Company may issue from time to time in connection with the
future direct and indirect acquisitions of other businesses, properties or
securities in business combination transactions in accordance with Rule
415(a)(1)(viii) of Regulation C under the Securities Act of 1933, as amended
(the "Securities Act") or as otherwise permitted under the Securities Act.
The Company expects that the terms upon which it may issue the shares in
business combination transactions will be determined through negotiations with
the securityholders or principal owners of the businesses whose securities or
assets are to be acquired. It is expected that the shares that are issued will
be valued at prices reasonably related to market prices for the Common Stock
prevailing either at the time an acquisition agreement is executed or at the
time an acquisition is consummated.
This Prospectus will only be used in connection with the acquisition of
businesses, properties or securities in business combination transactions that
would be exempt from registration but for the issuance of Common Stock and the
possibility of integration with other transactions. This Prospectus will be
furnished to security holders of the business, properties or securities to be
acquired.
Persons receiving Common Stock in connection with the acquisitions will
ordinarily be required to agree to hold all or some portion of the Common Stock
for a period of up to two years after the date of such acquisition. See "Plan of
Distribution."
If an acquisition has a material financial effect upon the Company, a current
report on Form 8-K will be filed subsequent to the acquisition containing
financial and other information about the acquisition that would be material to
subsequent acquirors of Common Stock offered hereby, including pro forma
information for PRG and historical financial information about the company being
acquired. A current report on Form 8-K will also be filed when an acquisition
does not per se have a material effect upon the Company, but if aggregated with
other acquisitions since the date of the Company's most recent audited financial
statements, would have such a material effect.
If an acquisition of a business, properties or securities in a business
combination transaction is not exempt from registration even if integration is
not taken into account, then the offerees of Common Stock in such acquisition
will be furnished with copies of this Prospectus as amended by a post-effective
amendment to the Registration Statement on Form S-4 of which this Prospectus is
a part.
The Common Stock is listed on the NYSE under the symbol "PRG". Application
will be made to list the shares offered hereby on the NYSE. On December 31,
1996, the last reported sales price of the Common Stock on the NYSE was $17 5/8
per share.
All expenses of this offering (this "Offering") will be paid by the Company.
No underwriting discounts or commissions will be paid in connection with the
issuance of shares by PRG in business combination transactions, although
finder's fees may be paid with respect to specific acquisitions. Any person
receiving a finder's fee may be deemed to be an Underwriter within the meaning
of the Securities Act.
See "Risk Factors" beginning on page 4 for a discussion of certain
factors that should be considered by prospective purchasers of the Common Stock
offered hereby. 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.
January 2, 1997
<PAGE>
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in
its entirety by the more detailed information and financial statements,
including the notes thereto, appearing elsewhere in this Prospectus or
incorporated by reference herein. See "Risk Factors" for information that
should be carefully considered by prospective investors.
The Company
Physicians Resource Group, Inc. ("PRG" or the "Company") 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 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 November 30, 1996, PRG provided management services to 140
practices with 396 ophthalmologists and 216 optometrists at 388 locations in 24
states, owned or operated 45 ambulatory (outpatient) surgery centers ("ASCs")
and 169 optical dispensaries and owned or leased 21 excimer lasers.
Eye care services in the United States are delivered through a fragmented
system of local providers, including individual or small groups of
ophthalmologists, optometrists and opticians. Unlike most medical specialists,
eye care professionals generally do not depend on primary care physicians for
referrals; rather, referrals originate from other eye care professionals since
the optometrist or the ophthalmologist represents the primary patient contact
for the vast majority of eye care services. Based on a market study conducted
by Arthur D. Little (the "ADL Study"), PRG believes that the revenues generated
by eye care providers (ophthalmologists and optometrists) were in excess of $20
billion in 1994. According to the ADL Study, approximately 15,600
ophthalmologists and 28,200 optometrists were actively involved in patient care
in the United States in 1993. The ADL Study estimates that there are
approximately 1,500 ophthalmic groups of five or more practitioners.
Trends toward managed care in health care generally, and eye care
specifically, have placed small to midsize provider groups at a competitive
disadvantage because these practices typically have high operating costs
relative to revenue and lack the capital, information resources and management
expertise necessary to provide both high quality and cost-effective medical
care. To remain competitive, eye care providers are increasingly seeking to
affiliate with larger organizations that manage the non-medical aspects of eye
care practices and that can provide access to greater capital resources, more
efficient cost structures and better access to payors. PRG seeks to address
these demands for the practices to which it provides management services (the
"Affiliated Practices") through the implementation of its business strategy.
PRG's business strategy is focused on (i) developing comprehensive eye
care service networks in each of its markets, both in terms of service mix and
geographic coverage, primarily through acquisitions, (ii) enabling its
Affiliated Practices to provide efficient and cost-effective eye care services
resulting from economies of scale, purchasing discounts, facility consolidation
and improved personnel and information management and (iii) marketing the
capabilities of the Affiliated Practices and networks to both payors and
employers, particularly in the developing and expanding managed care
marketplace. PRG believes that by establishing integrated delivery networks,
Affiliated Practices are afforded significant opportunities for cross-referrals,
expanded service capabilities and volume contracting with payors.
Recent Acquisitions
On November 5, 1996, the Company acquired the assets of the eye care
division of EquiMed, Inc. ("EquiMed"), a publicly held multi-specialty physician
practice management company (the "EquiMed Acquisition"), and on November 22,
1996, the Company acquired American Ophthalmic Incorporated ("AOI"), a privately
held physician practice management company devoted solely to eye care (the "AOI
Merger"). PRG believes that the EquiMed Acquisition and the AOI Merger will
significantly strengthen PRG's competitive position while
2
<PAGE>
simultaneously expanding the Company's geographic coverage. As a result of the
EquiMed Acquisition and the AOI Merger, PRG added the assets of 39 practices
with 131 ophthalmologists and 65 optometrists at 126 locations in 17 states and
owns or operates 20 additional ASCs and 47 additional optical dispensaries and
owns or leases six additional excimer lasers. The EquiMed Acquisition and the
AOI Merger strengthen PRG's position in Arkansas, California, Florida, Illinois,
Kentucky, Missouri, Nevada, Ohio and Texas (including new entries into the San
Antonio and Austin markets) and provide new entry into Alabama, Iowa, Kansas,
Louisiana, New York, Oregon, Pennsylvania and Washington.
THE OFFERING
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Securities offered................. 10,000,000 shares of PRG Common Stock to be issued by PRG
in connection with the acquisition of businesses,
properties or securities in business combinations.
Shares to be outstanding after this
Offering......................... 40,382,076 shares of PRG Common Stock.
Transfer of Units.................. Persons acquiring shares of PRG Common Stock in business
combinations pursuant to this Offering ordinarily will be
required to agree to hold all or some portion of such shares
for a period of up to two years after the date of
acquisition unless the Company agrees to a shorter holding
period or agrees to waive such requirement in the future.
Listing............................ The shares of PRG Common Stock are listed on the NYSE.
Application will be made to list the shares of PRG Common
Stock offered hereby on the NYSE.
NYSE symbol........................ PRG
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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'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 in evaluating an investment in the shares of Common
Stock offered hereby. This Prospectus, other than the historical financial
information, includes forward-looking statements that involve risks and
uncertainties, including the Company's ability to successfully acquire the
assets of, service and integrate eye care providers, regulatory developments,
the ability to adapt to the managed care environment and the other risks
detailed 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, including the March 1996 merger (the
"EyeCorp Merger") with EyeCorp, Inc. ("EyeCorp"), a privately held physician
practice management company devoted solely to eye care, the 1996 Acquisitions
(as defined herein), the EquiMed Acquisition, the AOI Merger 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 and is incurring
certain transaction costs estimated at approximately $12 million in connection
with the EyeCorp Merger and certain other pooling of interests transactions.
These estimated transaction costs have been recognized as an expense by the
Company during the first nine months of 1996. These amounts are preliminary
estimates of 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 and is incurring significant
expenses in connection with the EquiMed Acquisition, the AOI Merger and the 1996
Acquisitions that were accounted for as purchases, the majority of which will be
capitalized and amortized in the future. There can be no assurance that PRG
will not incur additional charges in subsequent quarters to reflect costs
associated with these transactions.
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
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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 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 $364 million have been recorded on PRG's September 30,
1996 balance sheet as a result of purchase accounting (giving pro forma effect
to the EquiMed Acquisition, the AOI Merger and the acquisition of Melbourne Eye
Associates of Brevard, Inc. and Melbourne Eye Associates, P.A.). Using an
amortization period ranging from seven to 40 years for intangibles, amortization
expense relating to these intangibles will be approximately $11 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
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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
September 30, 1996, 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
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care services would have an adverse effect on PRG's operations unless PRG is
otherwise able to offset such payment reductions.
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. Wider-spread 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.
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.
Shares Eligible for Future Sale
PRG has a significant number of shares of Common Stock outstanding that were
not registered under the Securities Act upon issuance, but the holders of which
have certain registration rights. The Company also has a significant number of
shares of Common Stock outstanding that were registered under the Securities Act
upon issuance, the resale of which is contractually restricted. Additionally,
PRG has reserved for issuance 5,735,000 shares of Common Stock in connection
with the potential conversion of convertible subordinated debentures. Prior to
PRG's 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 PRG to
raise equity capital in the future.
The 10,000,000 shares of Common Stock registered with the Securities
and Exchange Commission (the "Commission") under the Securities Act in the
registration statement of which this Prospectus forms a part and issuable in
business combination transactions will generally be freely tradable by
nonaffiliates after their issuance,
7
<PAGE>
unless the sale thereof is contractually restricted. The purchasers of shares
of Common Stock in this offering will typically be required to execute an
agreement whereby such persons agree to hold all or a portion of such shares for
a period of up to two years after the date of acquisition. These agreements may
be modified by PRG in connection with any particular business combination.
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 he 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 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.
8
<PAGE>
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. 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.
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.
9
<PAGE>
RECENT DEVELOPMENTS
An integral part of the Company's strategy is growth through
acquisitions of high quality eye care practices in targeted geographic markets.
In accordance with this strategy, since its IPO, the Company has added a total
of over 130 new practices, 40 ASCs, 342 ophthalmologists, 192 optometrists and
17 excimer lasers in the acquisitions described below.
EquiMed Acquisition and AOI Merger
The Company acquired the assets of the eye care division of EquiMed, a
publicly held multi-specialty physician practice management company, on November
5, 1996 and acquired AOI, a privately held physician practice management company
devoted solely to eye care, on November 22, 1996. PRG believes that the EquiMed
Acquisition and the AOI Merger strengthen significantly PRG's competitive
position, particularly with respect to PRG's ability to consummate acquisitions
on favorable terms, while simultaneously expanding the Company's geographic
coverage, particularly in the southeastern region of the United States. PRG
also pursued the EquiMed Acquisition and the AOI Merger because PRG believed
that the acquisitions of EquiMed and AOI would result in greater operating
leverage and a substantial increase in its future acquisition opportunities.
The EquiMed Acquisition and the AOI Merger also yield a significant addition to
the number of ophthalmologists and optometrists affiliated with PRG, which PRG
believes enhances its overall strategy of efficient utilization of eye care
professionals.
As a result of the EquiMed Acquisition, PRG added the assets of 21
practices with 53 ophthalmologists and 36 optometrists at 52 locations in 13
states and owns or operates 10 additional ASCs and 32 additional optical
dispensaries and owns or leases four additional excimer lasers. The EquiMed
Acquisition strengthens PRG's presence in Arkansas, California, Illinois,
Kentucky, Missouri, and Ohio and represents the Company's entrance into Iowa,
Kansas, Louisiana, New York, Oregon, Pennsylvania and Washington. As a result
of the AOI Merger, PRG added the assets of 18 practices with 78 ophthalmologists
and 29 optometrists at 74 locations in six states and owns or operates 10
additional ASCs and 15 additional optical dispensaries and owns or leases two
additional excimer lasers. The AOI Merger strengthens PRG's position in
Florida, Nevada and Texas (representing the Company's entrance into the San
Antonio and Austin markets) and represents new entry into Alabama.
PRG acquired the assets of the eye care division of EquiMed in
exchange for approximately $55 million in cash, subject to adjustment to reflect
certain additional practice acquisitions meeting specified criteria with respect
to which EquiMed provides assistance, and $9.7 million in assumed indebtedness.
The aggregate consideration,paid by PRG in connection with the AOI Merger was
approximately $62 million in Common Stock and cash, and payment into escrow of
approximately $8.2 million, subject to release if AOI satisfies certain
acquisition criteria. PRG retired approximately $44.5 million in indebtedness
of AOI and assumed approximately $13.7 million in indebtedness of AOI upon
consummation of the AOI Merger.
EyeCorp Merger
In March 1996, PRG acquired EyeCorp, a privately held physician
practice management company devoted solely to eye care, in exchange for Common
Stock having a market value, at closing, of approximately $152 million. The
acquisition of EyeCorp, which provided management services to approximately 50
ophthalmic and optometric practices and five ASCs, increased PRG's penetration
in Arkansas, California, Ohio, Tennessee and Texas and afforded entry into
Illinois, Kentucky, Massachusetts, Mississippi and Missouri.
PRG pursued the EyeCorp Merger because PRG believed that the
combination with EyeCorp would provide PRG with a substantial presence in the
southeastern region of the United States and would result in greater operating
leverage and a substantial increase in its future acquisition opportunities. In
addition, the EyeCorp Merger resulted in a significant addition to the number of
optometrists affiliated with PRG, which PRG believes enhances its overall
strategy of efficient utilization of eye care professionals. Further, EyeCorp
had established, and PRG intends to promote and replicate in other markets, the
Retinal Center of Excellence, which substantially strengthens PRG's subspecialty
retina capabilities. Finally, the combination with EyeCorp resulted in the
acquisition of The EyePA,
10
<PAGE>
Inc., an independent practice association, which was formed by EyeCorp to
establish preferred provider networks composed of eye care professionals
offering quality controlled, comprehensive vision care services to enrollees in
various health insurance plans.
1996 Acquisitions
In addition to the EquiMed Acquisition, the AOI Merger and the EyeCorp
Merger, during the period from January 1, 1996 to October 31, 1996, the Company
acquired the assets of 44 practices and 18 ASCs (the "1996 Acquisitions") for
aggregate consideration of approximately $189 million, valued at closing, in
cash and Common Stock. The 1996 Acquisitions collectively strengthened PRG's
position in Houston, Las Vegas, Cincinnati and other markets and represented new
entry into the Dallas, Phoenix, Oklahoma, Florida, New Jersey and South Carolina
markets.
Offering of Convertible Subordinated Debentures
On December 11, 1996, PRG consummated an offering of $125,000,000
principal amount of 6% Convertible Subordinated Debentures due December 1, 2001
(the "Debentures"). The Debentures are convertible into shares of Common Stock
at a price of $25 per share and may be redeemed by the Company after December 6,
1999. The net proceeds to the Company from the sale of the Debentures will be
used to retire indebtedness and for general corporate purposes, including
acquisitions.
11
<PAGE>
Acquisition Program
Although PRG is continually considering acquisitions, the Company
currently has no binding or definitive agreements with respect to any material
future acquisition and no letters of intent with respect to any material future
acquisition.
The following table sets forth certain information as of November 30,
1996 regarding the Affiliated Practices. The "Eye Care Professionals" caption
in the table consists of ophthalmologists and optometrists.
<TABLE>
<CAPTION>
Affiliated Practices 1996 Acquisitions and EquiMed Acquisition
at IPO EyeCorp Merger and AOI Merger Total
-------------------------- -------------------------- -------------------------- --------------------------
Number Number Number Number
of Eye Care of Eye Care of Eye Care of Eye Care
State Offices Professionals Offices Professionals Offices Professionals Offices Professionals
- ---------------- --------- --------------- --------- --------------- --------- --------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alabama......... - - - - 14 11 14 11
Arizona......... 2 - 21 22 - - 23 22
Arkansas........ 5 5 1 1 1 3 7 9
California...... 17 37 9 23 9 20 35 80
Florida......... - - 19 44 29 49 48 93
Iowa............ - - - - 4 1 4 1
Illinois........ - - 19 19 4 8 23 27
Kansas.......... - - - - 1 2 1 2
Kentucky........ - - 3 6 3 4 6 10
Louisiana....... - - - - 17 22 17 22
Massachusetts... - - 1 3 - - 1 3
Mississippi..... - - 28 28 - - 28 28
Missouri........ - - 8 13 - - 8 13
Nevada.......... 4 2 7 13 4 11 15 26
New Jersey...... - - 1 1 - - 1 1
New York........ - - - - 8 24 8 24
Ohio............ 7 11 12 34 3 10 22 55
Oklahoma........ - - 3 7 - - 3 7
Oregon.......... - - - - 1 2 1 2
Pennsylvania.... - - - - 2 2 2 2
South Carolina.. - - 1 2 - - 1 2
Tennessee....... 3 8 34 60 - - 37 68
Texas........... 12 15 45 62 24 26 81 103
Washington...... - - - - 2 1 2 1
--------- --------------- --------- --------------- --------- --------------- --------- ---------------
TOTAL........ 50 78 212 338 126 196 388 612
========= =============== ========= =============== ========= =============== ========= ===============
</TABLE>
12
<PAGE>
PLAN OF DISTRIBUTION
The Company
This Prospectus covers the offer and sale of up to 10,000,000 shares
of PRG Common Stock which the Company may issue from time to time in connection
with the future direct and indirect acquisitions of other businesses, properties
or securities in business combination transactions in accordance with Rule
415(a)(1)(viii) of Regulation C under the Securities Act.
The Company expects that the terms upon which it may issue the shares
will be determined through negotiations with the securityholders or principal
owners of the businesses whose securities or assets are acquired. It is expected
that the shares that are issued will be valued at prices reasonably related to
market prices for the Common Stock prevailing either at the time an acquisition
agreement is executed or at the time an acquisition is consummated.
General
All expenses of this Offering will be paid by the Company. No
underwriting discounts or commissions will be paid in connection with the
issuance of shares by the Company in business combination transactions, although
finder's fees may be paid with respect to specific acquisitions. Any person
receiving a finder's fee may be deemed to be an Underwriter within the meaning
of the Securities Act.
The shares of PRG Common Stock offered hereunder will be listed on the
NYSE, but will be subject to certain contractual holding period requirements.
LEGAL MATTERS
The validity of the shares offered will be passed upon for the Company
by Jackson & Walker, L.L.P., Dallas, Texas.
EXPERTS
The financial statements of Physicians Resource Group, Inc. and
Subsidiaries as of December 31, 1995 and for the three year period then ended,
included in this Prospectus, have been audited by Arthur Andersen LLP,
independent public accountants, as stated in their report appearing herein.
The financial statements as of December 31, 1994 and 1995 and for the
period from inception (November 2, 1993) through December 31, 1993 and for the
years ended December 31 1994 and 1995 of Physicians Resource Group, Inc. and
Subsidiaries; 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, incorporated
13
<PAGE>
by reference in this Prospectus, have been audited by Arthur Andersen LLP,
independent public accountants, as stated in their 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.
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 for the year ended December 31, 1995, 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
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.
AVAILABLE INFORMATION
PRG is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith files reports,
proxy statements and other information with the Commission. These materials 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 at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, New York, New York
10048. Copies of these materials can also be obtained from the Commission at
prescribed rates by writing to the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission
and that is located at http://www.sec.gov. In addition, the Common Stock of the
Company is listed 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.
PRG has filed with the Commission a Registration Statement on Form S-4
with respect to the Common Stock offered hereby. This Prospectus constitutes
part of the Registration Statement and does not contain all the information
contained in the Registration Statement and exhibits and schedules thereto,
certain portions of which have been omitted in accordance with the rules and
regulations of the Commission. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement including the exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents of any contract or any other
document are not necessarily complete, and in each instance, reference is made
to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. All of these documents may be inspected without charge at the
addresses set forth in the preceding paragraph.
INCORPORATION BY REFERENCE
This Prospectus incorporates by reference the Company's (i) Annual
Report on Form 10-K for the fiscal year ended December 31, 1995, (ii) Proxy
Statement dated May 3, 1996, relating to the Annual Meeting of Stockholders held
on May 21, 1996, (iii) Quarterly Report on Form 10-Q for the quarter ended March
31, 1996, (iv) Quarterly Report on Form 10-Q for the quarter ended June 30,
1996, (v) Quarterly Report on Form 10-Q for the quarter ended September 30,
1996, (vi) Current Report on Form 8-K dated February 14, 1996 (as amended on
Form 8-K/A filed on April 12, 1996), (vii) Current Report on Form 8-K dated
March 18, 1996, (viii) Current
14
<PAGE>
Report on Form 8-K dated March 18, 1996, (ix) Current Report on Form 8-K dated
April 18, 1996 (as amended on Form 8-K/A filed on May 10, 1996), (x) Current
Report on Form 8-K dated June 30, 1996 (as amended on Form 8-K/A filed on July
17, 1996), (xi) Current Report on Form 8-K dated August 13, 1996, (xii) Current
Report on Form 8-K dated August 30, 1996 (as amended on Form 8-K/A filed on
September 24, 1996), (xiii) Current Report on Form 8-K dated August 30, 1996,
(xiv) Current Report on Form 8-K dated October 7, 1996 (as amended on Form 8-K/A
filed October 30, 1996), (xv) Current Report on Form 8-K dated October 9, 1996
(as amended on Form 8-K/A filed October 30, 1996), (xvi) Current Report on Form
8-K filed December 2, 1996, (xvii) the description of PRG's Common Stock
contained in PRG's Registration Statement on Form 8-A, dated May 5, 1995 and
(xviii) the description of rights to purchase PRG preferred stock contained in
PRG's Registration Statement on Form 8-A dated April 18, 1996 and all other
documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus shall be deemed to be
incorporated by reference into this Prospectus from the date of filing of such
documents.
Any statement contained in a document incorporated by reference in
this Prospectus will be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained in this Prospectus or in any
other subsequently filed document which is also incorporated by reference in
this Prospectus modifies or supersedes such statement. Any statement so
modified or superseded will not be deemed, except as modified or superseded, to
constitute a part of this Prospectus.
The information relating to PRG contained in this Prospectus does not
purport to be comprehensive and should be read together with the information in
the documents incorporated herein by reference.
The Company will provide, without charge, to each person, including a
beneficial owner, to whom a Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the information that has been
incorporated by reference in the Prospectus, excluding exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
the documents so incorporated. Requests for copies of such documents should be
addressed to the Company at its principal executive offices: Physicians Resource
Group, Inc., Three Lincoln Centre, 5430 LBJ Freeway, Suite 1540, Dallas, Texas
75240 (telephone (972) 982-8200).
15
<PAGE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON
STOCK OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY THE SHARES OF COMMON STOCK BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
Page
----
Prospectus Summary................................ 2
The Company....................................... 2
Risk Factors...................................... 4
Recent Developments............................... 10
Plan of Distribution.............................. 13
Legal Matters..................................... 13
Experts........................................... 13
Available Information............................. 14
Incorporation of Certain Documents by Reference... 14
10,000,000 SHARES
LOGO
COMMON STOCK
------------
PROSPECTUS
JANUARY 2, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The Company's Amended and Restated Bylaws provide that the Company shall, to
the fullest extent permitted by Section 145 of the DGCL, as amended from time to
time, indemnify all persons whom it may indemnify pursuant thereto.
Section 145 of the DGCL permits a corporation, under specified
circumstances, to indemnify its directors, officers, employees or agents against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by them in connection with any
action, suit or proceeding brought by third parties by reason of the fact that
they were or are directors, officers, employees or agents of the corporation, if
such directors, officers, employees or agents acted in good faith and in a
manner they 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
reason to believe their conduct was unlawful. In a derivative action, i.e., one
by or in the right of the corporation, indemnification may be made only for
expenses actually and reasonably incurred by directors, officers, employees or
agents in connection with the defense or settlement of an action or suit, and
only with respect to a matter as to which they shall have acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and only
to the extent that the court in which the action or suit was brought shall
determine upon application that the defendant directors, officers, employees or
agents are fairly and reasonably entitled to indemnity for such expenses despite
such adjudication of liability.
Article Eight of the Company's Restated Certificate of Incorporation, as
amended, provides that the Company's directors will not be personally liable to
the Company or its stockholders for monetary damages resulting from breaches of
their fiduciary duty as directors except for liability (a) for any breach of the
duty of loyalty to the Company or its stockholders, (b) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (c) under Section 174 of the DGCL or (d) for any transaction from which
the director derived an improper personal benefit.
Reference is made to Article VII, Section 8 of the Company's Amended and
Restated Bylaws, Exhibit 3.3 of this Registration Statement, which provides for
indemnification of directors and officers.
In April 1995, the Company entered into an indemnification agreement with
certain of its directors and director nominees, pursuant to which the Company
agreed to indemnify such persons for losses arising out of any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement of which this Prospectus forms a part.
The Company has procured insurance that purports to insure the Company's
directors and officers against certain liabilities incurred by them in the
discharge of their functions as directors and officers, with certain exceptions
including exceptions for liabilities arising from such directors' and officers'
own malfeasance.
II-1
<PAGE>
Item 21. Exhibits and Financial Statement Schedules. (a) Exhibits
Exhibit
Number Description
------ -----------
2.1 -- Agreement and Plan of Merger by and among Central Florida Eye
Associates, P.A., Ronald Case, M.D., Brian Renz, M.D., Teo Kulyk,
M.D., Jay Mulaney, M.D., PRG FL Acquisition Corporation, and
Physicians Resource Group, Inc. (8)
2.1 -- Agreement and Plan of Merger by and among Central Florida Eye
Associates, P.A., Ronald Case, M.D., Brian Renz, M.D., Teo Kulyk,
M.D., Jay Mulaney, M.D., PRG FL Acquisition Corporation, and
Physicians Resource Group, Inc. (8)
2.2 -- Agreement and Plan of Merger by and among G.C.R. Investors, Ronald
Case, M.D., Brian Renz, M.D., Jay Mulaney, M.D., PRG FL Partnership
I, and Physicians Resource Group, Inc. (8)
2.3 -- Agreement and Plan of Merger by and among Central Florida Eye
Associates, Partners, Ronald Case, M.D., Brian Renz, M.D., Teo
Kulyk, M.D., Jay Mulaney, M.D., PRG FL Partnership II, and
Physicians Resource Group, Inc. (8)
2.4 -- Agreement and Plan of Merger by and among South Texas Retina
Affiliates, Inc., South Texas Retina Consultants, L.L.P., Charles
H. Campbell, M.D., P.A., Charles H. Campbell, M.D., PRG TX
Acquisition Corp. I and Physicians Resource Group, Inc. (8)
2.5 -- Agreement and Plan of Merger, dated August 13, 1996, between PRG
Ohio III, Inc., Physicians Resource Group, Inc., Cincinnati Eye
Institute, Inc., John S. Cohen, M.D., James D. Faulkner, M.D.,
William J. Faulker, M.D., Robert C. Kersten, M.D., Richard S.
Kerstine, M.D., Robert H. Osher, M.D., Robert W. Nash, M.D.,
Michael R. Petersen, M.D., Gary A. Varley, M.D., Linda J., Greff,
M.D., Robert J. Cionni, M.D., Kevin T. Corcoran, O.D. and Corwin M.
Smith, M.D. (9)
2.6 -- Agreement and Plan of Reorganization, dated August 13, 1996,
between PRG HEA Acq. Corp., Physicians Resource Group, Inc.,
Houston Eye Associates, P.A., Malcom L. Mazow, M.D., Robert H.
Stewart, M.D., Robert B. Wilkins, M.D., Jeffrey D. Lanier, M.D.,
Michael A. Bloome, M.D., Paul C. Salmonsen, M.D., Richard L.
Kimbrough, M.D., Jack T. Holladay, M.D., Jeffrey B. Arnoult, M.D.,
William H. Quayle, M.D., John D. Goosey, M.D., John M. Lim, M.D.,
Kathryn H. Musgrove, M.D., Marsha F. Soechting, M.D. and Marc N.
Longo, M.D. (9)
2.7 -- Asset Purchase Agreement, dated August 13, 1996, between PRG Ohio
III, Inc., Physicians Resource Group, Inc. and CEI Realty
Associates, Ltd. (9)
2.8 -- Agreement and Plan of Merger, dated August 13, 1996 between PRG IV
Acq. Corp., Physicians Resource Group, Inc., Gregory L. Henderson
M.D., P.A. and Gregory L. Henderson, M. D. (9)
2.9 -- Agreement and Plan of Merger, dated August 13, 1996, between PRG IX
Acq. Corp., Physicians Resource Group, Inc., William Reynolds,
M.D., P.A. and William Reynolds, M.D. (9)
2.10 -- Agreement and Plan of Merger, dated August 12, 1996 between PRG II
Acq. Corp., Physicians Resource Group, Inc., Tampa Eye Clinic,
P.A., J. Burns Creighton, M.D., Ronald Seely, M.D., Lewis Lauring,
M.D., William Reynolds, M.D., David Leach, M.D., P.A. and Timothy
Lorenzen, M.D., P.A. (9)
II-2
<PAGE>
2.11 -- Agreement and Plan of Merger, dated August 13, 1996 between PRG XI
Acq. Corp, Physicians Resource Group, Inc., Timothy Lorenzen, M.D.,
P.A. and Timothy Lorenzen, M.D. (9)
2.12 -- Agreement and Plan of Merger, dated August 13, 1996, between PRG
VII Acq. Corp., Physicians Resource Group, Inc., Ronald Seely,
M.D., P.A. and Ronald Seely, M.D. (9)
2.13 -- Agreement and Plan of Merger, dated August 13, 1996, between PRG VI
Acq. Corp, Physicians Resource Group, Inc., J. Burns Creighton,
M.D., P.A., and J. Burns Creighton, M.D. (9)
2.14 -- Asset Purchase Agreement by and among EquiMed, Inc., PRG Georgia
and Physicians Resource Group, Inc., dated October 7, 1996. (10)
2.15 -- Agreement and Plan of Merger by and among American Ophthalmic
Incorporated, PRG Acquisition Corporation and Physicians Resource
Group, Inc., dated October 7, 1996. (10)
2.16 -- Share Exchange Agreement by and among PRG Florida XIII, Inc.,
Melbourne Eye Associates, P.A., William Broussard, Trustee U.T.D.
March 24, 1980, Micheal F. Corcoran, M.D., Trustee U.T.D. September
26, 1988, Andrew Zorbis, M.D., L. Neal Freeman, M.D., and Kaukwok
Frederick Ho, M.D., U.T.D. November 24, 1989 and Physicians
Resource Group, Inc. (11)
2.17 -- Agreement and Plan of Reorganization by and among Ophthalmological
Associates, Ltd., Morton R. Green, M.D., Kenneth O. Green, M.D.,
Stephen R. Waltman, M.D., PRG Gr Acq. Corp., and Physicians
Resource Group, Inc. (11)
2.18 -- Asset Purchase Agreement by and among Safford Surgi-Center,
Southwest Eye Associates, Ltd., James Holder, O.D., Sun Valley
Acquisition Corporation and Physicians Resource Group, Inc. (11)
2.19 -- Asset Purchase Agreement by and among SNW, Inc. James Holder, O.D.,
Clarice Holder, Jeffrey Woodward, Suzy Woodward, Sun Valley
Acquisition Corporation and Physicians Resource Group, Inc. (11)
2.20 -- Asset Purchase Agreement by and among Rechard D. Levin, M.D.,
P.S.C., Inc., Richard D. Levin, M.D., PRG Ohio, Inc. and Physicians
Resource Group, Inc. (11)
3.1 -- Second Restated Certificate of Incorporation of Physicians Resource
Group, Inc. (13)
3.2 -- Certificate of Designations, Preferences, Rights and Limitations of
Class A Preferred Stock of Physicians Resource Group, Inc. (1)
3.3 -- Third Amended and Restated Bylaws of Physicians Resource Group,
Inc. (4)
4.1 -- Form of Warrant Certificate. (1)
4.2 -- Rights Agreement dated as of April 19, 1996 between Physicians
Resource Group, Inc. and Chemical Mellon Shareholder Services(7)
4.3 -- Form of certificate evidencing ownership of Common Stock of
Physicians Resource Group, Inc. (1)
5.1 -- Opinion of Jackson & Walker, L.L.P. (13)
10.1 -- Physicians Resource Group, Inc. Amended and Restated 1995 Stock
Option Plan. (4)
10.2 -- Physicians Resource Group, Inc. 1995 Health Care Professionals
Stock Option Plan. (1)
II-3
<PAGE>
<TABLE>
<S> <C>
10.3 -- Employment Agreement between Physicians Resource Group, Inc. and Gregory L. Solomon. (1)
10.4 -- Employment Agreement between Physicians Resource Group, Inc. and Emmett E. Moore. (1)
10.5 -- Employment Agreement between Physicians Resource Group, Inc. and Richard M. Owen. (1)
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 Subisdiary, 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)
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. (3)
10.18 -- Subscription Agreement, dated June 30, 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. (4)
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C>
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. (5)
10.25 -- Loan Agreement dated as of January 8, 1996 between PRG and NationsBank of Tennessee, N.A.
("NationsBank"). (6)
10.26 -- Subordination Agreement dated as of December 28, 1995 by and among NationsBank, EyeCorp,
Eyecare Resource, Inc., the EyePA, Inc. and PRG. (4)
10.27 -- Reimbursement Agreement dated as of December 28, 1995 between EyeCorp and PRG. (6)
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. (4)
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. (4)
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. (4)
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. (4)
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. (13)
10.33 -- Form of Registration Rights Agreement, dated as of December 6, 1996, betweeen Physicians Resource
Group, Inc. and Smith Barney Inc., Alex. Brown & Sons Incorporated, Dillon, Reed & Co., Inc.
and Volpe Welty & Company. (13)
10.34 -- Form of Purchase Agreement dated as of December 6, 1996. (13)
21.1 -- Subsidiaries. (13)
23.1 -- Consent of Arthur Andersen LLP (13)
23.2 -- Consent of Ernst & Young LLP (13)
23.3 -- Consent of Ernst & Young LLP (13)
23.4 -- Consent of Wallingford, McDonald, Fox & Co., P.C. (13)
23.5 -- Consent of Jackson & Walker, L.L.P. (contained in its opinion filed as Exhibit 5.1). (13)
24.1 -- Power of Attorney (contained on the signature page of this registration statement).
______________________
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 quarterly report on Form 10-Q for the quarter ending
September 30, 1995, and incorporated herein by reference.
3) 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.
4) Previously filed as an exhibit to the Company's annual report on Form 10-K for the year ended
December 31, 1995, and incorporated herein by reference.
5) 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.
</TABLE>
II-5
<PAGE>
6) Previously filed as an exhibit to the Company's Registration Statement on
Form S-4 (No. 333-00230) and incorporated herein by reference.
7) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated April 19, 1996 and incorporated by reference herein.
8) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated July 1, 1996, and amended on July 17, 1996, and incorporated herein by
reference.
9) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated September 7, 1996, and amended on September 24, 1996, and incorporated
herein by reference.
10) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated October 7, 1996, and amended on October 30, 1996, and incorporated
herein by reference.
11) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated October 9, 1996, and amended on October 30, 1996, and incorporated
herein by reference.
12) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated August 30, 1996, and amended on November 13, 1996, and incorporated
herein by reference.
13) Filed herewith.
(b) Financial Statements Schedule - None
II-6
<PAGE>
Item 22. Undertakings.
The undersigned registrant hereby undertakes as follows:
(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;
(iii) 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;
(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.
(4) 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 provisions described in Item 14, or otherwise,
the registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payments by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-7
<PAGE>
(5) 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 Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(6) That prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons who
may be deemed underwriters, in addition to the information called for by
the other Items of the applicable form.
(7) That every prospectus (i) that is filed pursuant to paragraph (6)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes 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.
(8) To respond to requests for information that is incorporated by reference
into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form,
within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of
responding to the request.
(9) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement
when it became effective.
II-8
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below authorizes Emmett E. Moore, Richard
M. Owen and Richard J. D'Amico, and each of them, each of whom may act without
joinder of the other, to execute in the name of each such person who is then an
officer or director of the Registrant, and to file any amendments to this
Registration Statement necessary or advisable to enable the Registrant to comply
with the Securities Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission, in respect thereof, in
connection with the registration of the securities which are the subject of this
Registration Statement, which amendments may make such changes to such
Registration Statement as such attorney may deem appropriate.
SIGNATURE PAGE
Pursuant to the requirements of the Securities Act of 1933, as amended,
Physicians Resource Group, Inc. certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-4 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas,
on January 2, 1997.
PHYSICIANS RESOURCE GROUP, INC.
By: /s/ Richard J. D'Amico
-----------------------------------
Richard J. D'Amico
Senior Vice President, General Counsel
and Secretary
II-9
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated and on January 2, 1997.
<TABLE>
<CAPTION>
Signatures Title
---------- -----
<S> <C>
/s/ Emmett E. Moore Chairman of the Board of
------------------------------ Directors, Chief Executive Officer
Emmett E. Moore and President
(Principal Executive Officer)
/s/ Richard M. Owen Senior Vice President,
------------------------------ Chief Financial Officer and
Richard M. Owen Director
(Principal Financial Officer)
/s/ John N. Bingham Vice President, Controller and
------------------------------ Chief Accounting Officer
John N. Bingham (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, O.D. Director
------------------------------
Joe E. Ellis, O.D.
/s/ Charles D. Fritch. Director
------------------------------
Charles D. Fritch, M.D.
/s/ Richard A. Gilleland Director
------------------------------
Richard A. Gilleland
/s/ Bruce E. Herron, M.D. Director
------------------------------
Bruce E. Herron, M.D.
/s/ James E. McDonald, II Director
------------------------------
James E. McDonald, II, M.D.
</TABLE>
II-10
<PAGE>
<TABLE>
<S> <C>
/s/ David Meyer Director
------------------------------
David Meyer, M.D.
/s/ Joseph C. Noreika, M.D. Director
------------------------------
Joseph C. Noreika, M.D.
Director
------------------------------
James W. Rayner, M.D.
/s/ David M. Schneider Director
------------------------------
David M. Schneider, M.D.
/s/ Paul M. Shimoff Director
------------------------------
Paul M. Shimoff
/s/ Ronald L. Stanfa Director
------------------------------
Ronald L. Stanfa
Director
------------------------------
P. Harold Wallar, M.D.
Director
------------------------------
Kenneth C. Westfield, M.D.
</TABLE>
II-11
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits Page
- ------ ----------------------- ----
<C> <S> <C>
3.1 Second Restated Certificate of Incorporation
5.1 Opinion of Jackson & Walker, L.L.P.
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.
10.33 Form of Registration Rights Agreement, dated as of December 6,
1996, between Physicians Resource Group, Inc. and Smith Barney
Inc., Alex. Brown & Sons Incorporated, Dillon, Reed & Co. Inc.
and Volpe Welty & Company.
10.34 Form of Purchase Agreement dated as of December 6, 1996.
21.1 Subsidiaries.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Ernst & Young LLP
23.3 Consent of Ernst & Young LLP
23.4 Consent of Wallingford, McDonald, Fox & Co., P.C.
23.5 Consent of Jackson & Walker, L.L.P. (contained in its
opinion filed as Exhibit 5.1).
24.1 Power of Attorney (contained on the signature page of
this registration statement).
</TABLE>
II-12
<PAGE>
STATE OF DELAWARE EXHIBIT 3.1
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 10:00 AM 05/23/1996
960149793 - 2357759
SECOND RESTATED
CERTIFICATE OF INCORPORATION
OF
PHYSICIANS RESOURCE GROUP, INC.
UNDER SECTIONS 242 AND 245
OF THE
DELAWARE GENERAL CORPORATION LAW
Physicians Resource Group, Inc., a corporation under the laws of the State
of Delaware (the "Corporation"), does hereby certify as follows:
ARTICLE ONE
The name of the Corporation is Physicians Resource Group, Inc.
ARTICLE TWO
The original Certificate of Incorporation of the Corporation was filed with
Office of the Secretary of the State of Delaware on November 2, 1993. The
Restated Certificate of Incorporation of the Corporation was filed with the
Secretary of the State of Delaware on March 16, 1995.
ARTICLE THREE
The name under which the Corporation was originally incorporated was Teron
Enterprises, Inc.
ARTICLE FOUR
This Second Restated Certificate of Incorporation was duly adopted in
accordance with the provisions of Sections 242 and 245 of the Delaware General
Corporation Law.
ARTICLE FIVE
This Second Restated Certificate of Incorporation restates and integrates
previous provisions and also amends the provisions of the Corporation's Restated
Certificate of Incorporation.
<PAGE>
ARTICLE SIX
The text of the Second Restated Certificate of Incorporation of the
Corporation, as amended hereby, is hereby restated to read in its entirety as
follows:
FIRST. The name of the Corporation is Physicians Resource Group, Inc.
SECOND. The Corporation's registered office in the State of Delaware is
1209 Orange Street, Corporation Trust Center, in the City of Wilmington, County
of New Castle. The name and address of its registered agent is The Corporation
Trust Company, 1209 Orange Street, Wilmington, Delaware.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
FOURTH. The aggregate number of shares of capital stock that the
Corporation will have authority to issue is One Hundred and Ten Million
(110,000,000), One Hundred Million (100,000,000) of which will be shares of
Common Stock, having a par value of $0.01 per share, and Ten Million
(10,000,000) of which will be shares of preferred stock, having a par value of
$0.01 per share.
Preferred stock may be issued in one or more series as may be determined
from time to time by the Board of Directors. All shares of any one series of
preferred stock will be identical except as to the dates of issue and the dates
from which dividends on shares of the series issued on different dates will
cumulate, if cumulative. Authority is hereby expressly granted to the Board of
Directors to authorize the issuance of one or more series of preferred stock,
and to fix by resolution or resolutions providing for the issue of each such
series the voting powers, designations, preferences, and relative,
participating, optional, redemption, conversion, exchange or other special
rights, qualifications, limitations or restrictions of such series, and the
number of shares in each series, to the full extent now or hereafter permitted
by law.
FIFTH. No stockholder of the Corporation will, solely by reason of holding
shares of any class, have any preemptive or preferential right to purchase or
subscribe for any shares of the Corporation, now or hereafter to be authorized,
or any notes, debentures, bonds or other securities convertible into or carrying
warrants, rights or options to purchase shares of any class, now or hereafter to
be authorized, whether or not the issuance of any such shares or such notes,
debentures, bonds or other securities would adversely affect the dividend,
voting or any other rights of such stockholder. The Board of Directors may
authorize the issuance of, and the Corporation may issue, shares of any class of
the Corporation, or any notes, debentures, bonds or other securities convertible
into or carrying warrants, rights or options to purchase any such shares,
without offering any shares of any class to the existing holders of any class of
stock of the Corporation.
2
<PAGE>
SIXTH. At all meetings of stockholders, a quorum will be present if the
holders of a majority of the shares entitled to vote at the meeting are
represented at the meeting in person or by proxy.
SEVENTH. Stockholders of the Corporation will not have the right of
cumulative voting for the election of directors or for any other purpose.
EIGHTH. The Board of Directors is expressly authorized to alter, amend or
repeal the Bylaws of the Corporation or to adopt new Bylaws.
NINTH. The directors shall be classified, with respect to the time for
which they severally hold office, into three classes (Class A, Class B and Class
C), as nearly equal in number as possible, as determined by the Board of
Directors, one class to hold office initially for a term expiring at the annual
meeting of stockholders to be held in 1996, another class to hold office
initially for a term expiring at the annual meeting of stockholders to be held
in 1997 and another class to hold office for a term expiring at the annual
meeting of stockholders to be held in 1998, with members of each class to hold
office until whichever of the following occurs first; his or her successor is
elected and qualified, his or her resignation, his or her removal from office by
the stockholders or his or her death. At each annual meeting of stockholders of
the Corporation, the successors to the class of directors whose term expires at
the meeting shall be elected to hold office for a term expiring at the annual
meeting of stockholders held in the third year following the year of their
election.
TENTH. (a) The Corporation will, to the fullest extent permitted by the
Delaware General Corporation Law, as the same exists or may hereafter be
amended, indemnify any and all persons it has power to indemnify under such law
from and against any and all of the expenses, liabilities or other matters
referred to in or covered by such law. Such indemnification may be provided
pursuant to any Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his director or officer capacity
and as to action in another capacity while holding such office, will continue as
to a person who has ceased to be a director, officer, employee or agent, and
will inure to the benefit of the heirs, executors and administrators of such a
person.
(b) If a claim under the preceding paragraph (a) is not paid in full by the
Corporation within 30 days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant will be entitled to be paid also the expense of
prosecuting such claim. It will be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct that make it permissible under the laws of the
State of Delaware for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense will be on the Corporation.
Neither the failure
3
<PAGE>
of the Corporation (including its Board of Directors, independent legal counsel,
or its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the laws of
the State of Delaware nor an actual determination by the Corporation (including
its Board of Directors, independent legal counsel, or its stockholders) that the
claimant has not met such applicable standard of conduct, will be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.
ELEVENTH. To the fullest extent permitted by the laws of the State of
Delaware as the same exist or may hereafter be amended, a director of the
Corporation will not be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. Any repeal or
modification of this Article will not increase the personal liability of any
director of the Corporation for any act or occurrence taking place before such
repeal or modification, or adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
The provisions of this Article Thirteen shall not be deemed to limit or preclude
indemnification of a director by the Corporation for any liability of a director
that has not been eliminated by the provisions of this Article Thirteen.
IN WITNESS WHEREOF, Physicians Resource Group, Inc. has caused this
certificate to be signed by Emmett E. Moore, its President, and Richard J.
D'Amico, its Secretary, this 21st day of May, 1996.
PHYSICIANS RESOURCE GROUP, INC.
By: /s/ Emmett E. Moore
-------------------------------------
Emmett E. Moore, Chief Executive
Officer and President
ATTEST: /s/ Richard J. D'Amico
----------------------------------
Richard J. D'Amico, Secretary
4
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF JACKSON & WALKER, L.L.P. APPEARS HERE]
January 2, 1997
Physicians Resource Group, Inc.
5430 LBJ Freeway
3 Lincoln Centre
Suite 1540
Dallas, TX 75240
Re: Registration Statement on Form S-4 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 offering and sale of up
to 10,000,000 shares of the Company's Common Stock, par value $0.01 per share
(the "Shares"), which Shares will be issuable from time to time in connection
with the future direct and indirect acquisitions of other businesses, properties
or securities in business combination transactions by the Company (the
"Transactions"). A Registration Statement on Form S-4 (the "Registration
Statement"), covering the offering and sale of the Shares, will be filed with
the Securities and Exchange Commission (the "Commission") on January 2, 1997.
In reaching the conclusions expressed in this opinion, we have examined and
relied upon the originals or certified copies of all documents, certificates and
instruments as we have deemed necessary to the opinions expressed herein. In
making the foregoing examinations, we have assumed the genuineness of all
signatures on original documents, the authenticity of all documents submitted to
us as originals and the conformity to original documents of all copies submitted
to us.
Based solely upon the foregoing, subject to the comments hereinafter
stated, and limited in all respects to the laws of the State of Texas, the
General Corporation Law of the State of Delaware and the federal laws of the
United States of America, it is our opinion that the Shares, when issued in
connection with the Transactions, will be duly authorized, validly issued, fully
paid and nonassessable.
<PAGE>
Physicians Resource Group, Inc.
January 2, 1997
Page 2
You should be aware that we are not admitted to the practice of law in the
State of Delaware. Accordingly, any opinion herein as to the laws of the State
of Delaware is based solely upon the latest generally available compilation of
the statutes and case law of such state.
We hereby consent to the use of this opinion as an Exhibit to the
Registration Statement and to the use of our name in the Registration Statement
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
<PAGE>
EXHIBIT 10.32
- --------------------------------------------------------------------------------
PHYSICIANS RESOURCE GROUP, INC.
and
U.S. TRUST COMPANY OF NEW YORK, N.A.,
as Trustee
--------------------------
INDENTURE
Dated as of December 11, 1996
-------------------------
$143,750,000
6% Convertible Subordinated Debentures due 2001
- --------------------------------------------------------------------------------
<PAGE>
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
<S> <C> <C>
(S) 310 (a)(1).................................. 609
(a)(2) ........................................ 609
(a)(3) ........................................ Not Applicable
(a)(4) ........................................ Not Applicable
(a)(5) ........................................ 609
(b) ........................................ 608
(S) 311 (a)..................................... 613
(b) ........................................ 613
(S) 312 (a)..................................... 701
........................................ 702(a)
(b) ........................................ 702(b)
(c) ........................................ 702(c)
(S) 313 (a)..................................... 703(a)
(b) ........................................ 703(a)
(c) ........................................ 703(a)
(d) ........................................ 703(b)
(S) 314 (a)..................................... 704
(a)(4) ........................................ 1004
(b) ........................................ Not Applicable
(c)(1) ........................................ 102
(c)(2) ........................................ 102
(c)(3) ........................................ Not Applicable
(d) ........................................ Not Applicable
(e) ........................................ 102
(S) 315 (a)..................................... 601
(b) ........................................ 602
(c) ........................................ 601
(d) ........................................ 601
(e) ........................................ 514
(S) 316 (a)(1)(A)............................... 502
........................................ 512
(a)(1)(B) ........................................ 513
(a)(2) ........................................ Not Applicable
(b) ........................................ 508
(c) ........................................ 104(c)
(S) 317 (a)(1).................................. 503
(a)(2) ........................................ 504
(b) ........................................ 1003
(S) 318 (a)..................................... 107
</TABLE>
________________________
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
i
<PAGE>
TABLE OF CONTENTS/*/
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties................................................................... 1
Recitals of the Company................................................... 1
ARTICLE ONE
Definitions and Other Provisions
of General Application......................... 1
SECTION 101. Definitions........................................ 1
-----------
"Act"........................................................... 2
"Affiliate"..................................................... 2
"Authenticating Agent".......................................... 2
"Beneficial Owner".............................................. 2
"Board of Directors"............................................ 2
"Board Resolution".............................................. 2
"Business Day".................................................. 2
"Cedel"......................................................... 2
"Change in Control"............................................. 2
"Closing Date".................................................. 3
"Commission".................................................... 3
"Common Stock".................................................. 3
"Company"....................................................... 3
"Company Request" or "Company Order"............................ 3
"Corporate Trust Office"........................................ 3
"Corporation"................................................... 3
"Current Market Price".......................................... 3
"DTC"........................................................... 3
"Defaulted Interest"............................................ 3
"Definitive Security" or "Definitive Securities"................ 4
"Depositary".................................................... 4
"Euroclear"..................................................... 4
"Event of Default".............................................. 4
"Exchange Act".................................................. 4
"Global Security or "Global Securities"......................... 4
"Holder"........................................................ 4
"Indenture"..................................................... 4
"Initial Purchasers"............................................ 4
"Interest Payment Date"......................................... 4
</TABLE>
_______________________
/*/Note: This table of contents shall not, for any purposes, be deemed to be a
part of the Indenture.
ii
<PAGE>
<TABLE>
<S> <C>
"Maturity,"...................................................... 4
"Officers' Certificate".......................................... 4
"144A Global Security"........................................... 5
"Opinion of Counsel"............................................. 5
"Outstanding".................................................... 5
"Paying Agent"................................................... 6
"Person"......................................................... 6
"Predecessor Security"........................................... 6
"Purchase Agreement"............................................. 6
"Record Date".................................................... 6
"Redemption Date"................................................ 6
"Redemption Price"............................................... 6
"Registration Rights Agreement".................................. 6
"Regular Record Date"............................................ 6
"Regulation S"................................................... 6
"Regulation S Global Security"................................... 6
"Repurchase Date"................................................ 6
"Repurchase Event"............................................... 6
"Repurchase Price"............................................... 6
"Resale Restriction Termination Date"............................ 7
"Responsible Officer"............................................ 7
"Securities Custodian"........................................... 7
"Security Register" and "Security Registrar"..................... 7
"Senior Indebtedness"............................................ 7
"Shelf Registration Statement.................................... 8
"Special Record Date"............................................ 8
"Stated Maturity"................................................ 8
"Subsidiary"..................................................... 8
"Termination of Trading"......................................... 8
"Transfer Restricted Securities"................................. 8
"Trust Indenture Act"............................................ 8
"Trustee"........................................................ 8
"Vice President"................................................. 8
SECTION 102. Compliance Certificates and Opinions.................. 8
SECTION 103. Form of Documents Delivered to Trustee................ 9
SECTION 104. Acts of Holders; Record Dates......................... 10
SECTION 105. Notices, Etc., to Trustee and Company................. 11
SECTION 106. Notice to Holders; Waiver............................. 11
SECTION 107. Conflict with Trust Indenture Act..................... 12
SECTION 108. Effect of Headings and Table of Contents.............. 12
SECTION 109. Successors and Assigns................................ 12
SECTION 110. Separability Clause................................... 12
SECTION 111. Benefits of Indenture................................. 12
SECTION 112. Governing Law......................................... 13
SECTION 113. Legal Holidays........................................ 13
SECTION 114. No Security Interest Created.......................... 13
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 115. Limitation on Individual Liability.................... 13
ARTICLE TWO
Security Forms.................................. 14
SECTION 201. Forms Generally....................................... 14
SECTION 202. Form of Face of Security.............................. 15
SECTION 203. Form of Reverse of Global Securities and Definitive
Security.............................................. 19
SECTION 204. Form of Trustee's Certificate of Authentication....... 28
ARTICLE THREE
The Securities.................................. 29
SECTION 301. Title and Terms....................................... 29
SECTION 302. Denominations......................................... 30
SECTION 303. Execution, Authentication, Delivery and Dating........ 30
SECTION 304. Temporary Securities.................................. 30
SECTION 305. Registration, Registration of Transfer and
Exchange.............................................. 31
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities...... 40
SECTION 307. Payment of Interest; Interest Rights Preserved........ 41
SECTION 308. Persons Deemed Owners................................. 43
SECTION 309. Cancellation.......................................... 43
SECTION 310. Computation of Interest............................... 43
ARTICLE FOUR
Satisfaction and Discharge...................... 43
SECTION 401. Satisfaction and Discharge of Indenture............... 43
SECTION 402. Application of Trust Money............................ 45
SECTION 403. Reinstatement......................................... 45
ARTICLE FIVE
Remedies........................................ 45
SECTION 501. Events of Default..................................... 45
SECTION 502. Acceleration of Maturity; Rescission and
Annulment............................................. 48
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee............................................ 49
SECTION 504. Trustee May File Proofs of Claim...................... 50
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities............................................ 50
SECTION 506. Application of Money Collected........................ 51
SECTION 507. Limitation on Suits................................... 51
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert................... 52
SECTION 509. Restoration of Rights and Remedies.................... 52
SECTION 510. Rights and Remedies Cumulative........................ 52
SECTION 511. Delay or Omission Not Waiver.......................... 52
SECTION 512. Control by Holders.................................... 53
SECTION 513. Waiver of Past Defaults............................... 53
SECTION 514. Undertaking for Costs................................. 54
ARTICLE SIX
The Trustee .................................... 54
SECTION 601. Certain Duties and Responsibilities................... 54
SECTION 602. Notice of Defaults.................................... 55
SECTION 603. Certain Rights of Trustee............................. 55
SECTION 604. Not Responsible for Recitals or Issuance of
Securities............................................ 57
SECTION 605. May Hold Securities................................... 57
SECTION 606. Money Held in Trust................................... 57
SECTION 607. Compensation and Reimbursement........................ 57
SECTION 608. Disqualification; Conflicting Interests............... 58
SECTION 609. Corporate Trustee Required; Eligibility............... 59
SECTION 610. Resignation and Removal; Appointment of
Successor............................................. 59
SECTION 611. Acceptance of Appointment by Successor................ 60
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business.............................................. 61
SECTION 613. Preferential Collection of Claims Against Company..... 61
SECTION 614. Appointment of Authenticating Agent................... 61
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company............ 64
SECTION 701. Company to Furnish Trustee Names and Addresses
of Holders............................................ 64
SECTION 702. Preservation of Information; Communication to
Holders............................................... 64
SECTION 703. Reports by Trustee.................................... 64
SECTION 704. Reports by Company.................................... 65
SECTION 705. Rule 144A Information Requirement..................... 65
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease........... 65
SECTION 801. Company May Consolidate, Etc., Only on Certain
Terms................................................. 65
</TABLE>
v
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 802. Successor Substituted................................. 66
ARTICLE NINE
Supplemental Indentures......................... 67
SECTION 901. Supplemental Indentures Without Consent of
Holders............................................... 67
SECTION 902. Supplemental Indentures with Consent of Holders....... 67
SECTION 903. Execution of Supplemental Indentures.................. 68
SECTION 904. Effect of Supplemental Indentures..................... 69
SECTION 905. Conformity with Trust Indenture Act................... 69
SECTION 906. Reference in Securities to Supplemental Indentures.... 69
SECTION 907. Notice of Supplemental Indenture...................... 69
ARTICLE TEN
Covenants....................................... 69
SECTION 1001. Payment of Principal, Premium and Interest........... 69
SECTION 1002. Maintenance of Office or Agency...................... 69
SECTION 1003. Money for Security Payments to Be Held in Trust...... 70
SECTION 1004. Statement by Officers as to Default.................. 71
SECTION 1005. Existence............................................ 71
SECTION 1006. Waiver of Certain Covenants.......................... 72
ARTICLE ELEVEN
Redemption of Securities........................ 72
SECTION 1101. Right of Redemption.................................. 72
SECTION 1102. Applicability of Article............................. 72
SECTION 1103. Election to Redeem; Notice to Trustee................ 72
SECTION 1104. Selection by Trustee of Securities to be Redeemed.... 72
SECTION 1105. Notice of Redemption................................. 73
SECTION 1106. Deposit of Redemption Price.......................... 74
SECTION 1107. Securities Payable on Redemption Date................ 74
SECTION 1108. Securities Redeemed in Part.......................... 75
ARTICLE TWELVE
Subordination of Securities..................... 75
SECTION 1201. Securities Subordinated to Senior Indebtedness........ 75
SECTION 1202. Payment Over of Proceeds Upon Dissolution, Etc........ 75
SECTION 1203. Prior Payment to Senior Indebtedness upon
Acceleration of Securities............................ 76
SECTION 1204. No Payment When Senior Indebtedness in Default........ 77
SECTION 1205. Payment Permitted If No Default....................... 78
</TABLE>
vi
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 1206. Subrogation to Rights of Holders of Senior
Indebtedness.......................................... 78
SECTION 1207. Provisions Solely to Define Relative Rights........... 79
SECTION 1208. Trustee to Effectuate Subordination................... 79
SECTION 1209. No Waiver of Subordination Provisions................. 79
SECTION 1210. Notice to Trustee..................................... 80
SECTION 1211. Reliance on Judicial Order or Certificate of
Liquidating Agent..................................... 80
SECTION 1212. Trustee Not Fiduciary for Holders of Senior
Indebtedness.......................................... 81
SECTION 1213. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights...................... 81
SECTION 1214. Article Applicable to Paying Agents................... 81
SECTION 1215. Certain Conversions Deemed Payment.................... 81
SECTION 1216. No Suspension of Remedies............................. 82
ARTICLE THIRTEEN
Conversion of Securities........................ 82
SECTION 1301. Conversion Privilege and Conversion Price............ 82
SECTION 1302. Exercise of Conversion Privilege..................... 83
SECTION 1303. Fractions of Shares.................................. 83
SECTION 1304. Adjustment of Conversion Price....................... 84
SECTION 1305. Notice of Adjustments of Conversion Price............ 90
SECTION 1306. Notice of Certain Corporate Action................... 91
SECTION 1307. Company to Reserve Common Stock...................... 92
SECTION 1308. Taxes on Conversions................................. 92
SECTION 1309. Covenant as to Common Stock.......................... 92
SECTION 1310. Cancellation of Converted Securities................. 92
SECTION 1311. Provisions of Consolidation, Merger or Sale of
Assets............................................... 92
SECTION 1312. Trustee's Disclaimer................................. 93
ARTICLE FOURTEEN
Right to Require Repurchase..................... 94
SECTION 1401. Right to Require Repurchase.......................... 94
SECTION 1402. Notice; Method of Exercising Repurchase Right........ 94
SECTION 1403. Deposit of Repurchase Price.......................... 95
SECTION 1404. Securities Not Repurchased on Repurchase Date........ 95
SECTION 1405. Securities Repurchased in Part....................... 95
SECTION 1406. Certain Definitions.................................. 96
</TABLE>
vii
<PAGE>
INDENTURE, dated as of December 11, 1996 between PHYSICIANS RESOURCE
GROUP, INC., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal executive
offices at Three Lincoln Centre, Suite 1540, 5430 LBJ Freeway, Dallas, Texas
75240, and U.S. Trust Company of New York, N.A., a New York corporation, as
Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its 6%
Convertible Subordinated Debentures due 2001 (herein called the "Securities") of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions.
-----------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
<PAGE>
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required and permitted hereunder shall mean such accounting principles as
are generally accepted and accepted and adopted by the Company at the date
of this Indenture; and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms used in Articles Twelve, Thirteen and Fourteen are
defined in such Articles.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities.
The term "Beneficial Owner" is determined in accordance with Rule 13d-
3, promulgated by the Commission under the Exchange Act.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors or a duly authorized committee thereof and to be in full
force and effect on the date of such certification and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York
are authorized or obligated to close by law or executive order.
"Cedel" means Cedel Bank societe anonyme.
"Change in Control" has the meaning specified in Section 1406.
2
<PAGE>
"Closing Date" means December 11, 1996.
"Commission" means the Securities and Exchange Commission as from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Stock" includes any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding-up of the
Company and which is not subject to redemption by the Company. However, subject
to the provisions of Section 1311, shares issuable on conversion of Securities
shall include only shares of the class designated as Common Stock of the Company
at the date of this Indenture or shares of any class or classes resulting from
any reclassification or reclassifications thereof and which have no preference
in respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which are
not subject to redemption by the Company; provided, that if at any time there
--------
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President or
a Vice President, and by its Chief Financial Officer, Controller, Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the office of the Trustee in New York,
New York, which initially shall be 114 West 47th Street, New York, New York
10036, at which at any particular time its corporate trust business shall
principally be administered.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Current Market Price" has the meaning specified in Section 1304.
"DTC" has the meaning specified in Section 305.
"Defaulted Interest" has the meaning specified in Section 307.
3
<PAGE>
"Definitive Security" or "Definitive Securities" means a Security or
Securities that are in the form of the Security set forth in Sections 202 and
203 hereof, containing the legend specified for a Definitive Security and not
including the additional language referred to in footnote 1 or the additional
schedule referred to in footnote 2.
"Depositary" has the meaning specified in Section 305.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Global Security or "Global Securities" means a Security or Securities
in the form of the Security set forth in Sections 202, 203 and 204 hereof
containing the legend specified for a Global Security, the additional language
referred to in footnote 1 and the additional schedule referred to in footnote 2.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Initial Purchasers" means Smith Barney Inc., Alex. Brown & Sons
Incorporated, Dillon, Read & Co. Inc., Salomon Brothers Inc and Volpe, Welty &
Company.
"Interest Payment Date" means the Stated Maturity of an instalment of
interest on the Securities.
"Maturity," when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity thereof or by declaration of
acceleration, redemption or otherwise.
"Officers' Certificate" means a certificate, in form reasonably
satisfactory to the Trustee, signed by the Chairman of the Board, the Chief
Executive Officer, the President or a Vice President, and by the Chief Financial
Officer, Controller, Treasurer, the Secretary or an Assistant Secretary, of the
Company, and delivered to the Trustee.
4
<PAGE>
One of the officers signing an Officers' Certificate given pursuant to Section
1004 shall be the principal executive, financial or accounting officer of the
Company.
"144A Global Security" has the meaning specified in Section 201.
"Opinion of Counsel" means a written opinion, in form reasonably
satisfactory to the Trustee, of counsel, who may be counsel for or an employee
of the Company, and who shall be reasonably acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities, or portions thereof, for the payment or redemption
of which moneys in the necessary amount have been theretofore deposited
with the Trustee or any Paying Agent (other than the Company) in trust or
set aside and segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of such Securities; provided, that
--------
if such Securities, or portions thereof, are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned shall
be so disregarded. Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Securities and
that the pledgee is not the Company or any other obligor upon the Securities or
any Affiliate of the Company or of such other obligor.
5
<PAGE>
"Paying Agent" means any Person authorized by the Company to pay the
principal of and premium, if any, or interest on any Securities on behalf of the
Company.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Purchase Agreement" means that certain Purchase Agreement dated
December 6, 1996 between the Company and the Initial Purchasers.
"Record Date" means either a Regular Record Date or a Special Record
Date, as applicable.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture on the applicable Redemption Date.
"Registration Rights Agreement" means that certain Registration Rights
Agreement dated as of December 6, 1996 between the Company and the Initial
Purchasers.
"Regular Record Date", for the interest payable on any Interest
Payment Date means the May 15 or November 15 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act of 1933,
as amended.
"Regulation S Global Security" has the meaning specified in Section
201.
"Repurchase Date" has the meaning specified in Section 1401.
"Repurchase Event" has the meaning specified in Section 1406.
"Repurchase Price" has the meaning specified in Section 1401.
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"Resale Restriction Termination Date" means, with respect to any
Security, the date which is three years after the later of (i) the original
issue date of such Security and (ii) the last date on which the Company or any
Affiliate of the Company was the owner of such Security (or any Predecessor
Security).
"Responsible Officer" means, when used with respect to the Trustee,
the chairman of the Board of Directors, any vice chairman of the Board of
Directors, the chairman of the trust committee, the chairman of the executive
committee, any vice chairman of the executive committee, the president, any vice
president (whether or not designated by numbers or words added before or after
the title "vice president"), the cashier, the secretary, the treasurer, any
trust officer, any assistant trust officer, any assistant cashier, any assistant
secretary, any assistant treasurer, or any other officer or assistant officer of
the Trustee customarily performing functions similar to those performed by the
Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"Securities Custodian" means the Trustee, as custodian with respect to
the Securities in global form, or any successor entity thereto.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Senior Indebtedness" means the principal of and premium, if any, and
interest on (a) all secured indebtedness of the Company for money borrowed
(including any secured indebtedness under the Company's credit facilities
existing on the date of this Indenture 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 (i) is junior in right of payment
to the Debentures or (ii) ranks pari passu in right of payment with the
Debentures, and (b) any amendments, renewals, extensions, modifications,
refinancings and refundings 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 or 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. For purposes of this definition, "secured indebtedness"
includes, without limitation, indebtedness of the Company for money borrowed
that is secured by a lien
7
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on the outstanding capital stock or other equity interests in all or a
substantial portion of the Company's Subsidiaries.
"Shelf Registration Statement" means the Registration Statement with
respect to the Debentures and the Common Stock the Issuer is required to file
pursuant to the Registration Rights Agreement.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
instalment of interest thereon, means the date specified in such Security as the
fixed date on which the principal of such Security or such instalment of
interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
"Termination of Trading" has the meaning specified in Section 1406.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 305 hereof.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
-------- -------
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Vice President", when used with respect to the Company means any vice
president, whether or not designated by a number or a word or words added before
or after the title "vice president".
SECTION 102. Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each
8
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such certificate or opinion shall be given in the form of an Officers'
Certificate, if to be given by an officer of the Company, or an Opinion of
Counsel, if to be given by counsel, and shall comply with the requirements of
the Trust Indenture Act and any other requirement set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual or firm signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual or such
firm, he has or they have made such examination or investigation as is
necessary to enable him or them to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual
or such firm, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be certified by or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any Person may certify to
give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certification or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate of public officials or upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
-----------------------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders entitled to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. If not set by the Company prior to
the first solicitation of a Holder made by any Person in respect of any such
action, or, in the case of any such vote, prior to such vote, the record date
for any such action or vote shall be the 30th day (or, if later, the date of the
most recent list of Holders required to be provided pursuant to Section 701)
prior to such first solicitation or vote, as the case may be. With regard to any
record date, only the Holders on such date (or their duly designated proxies)
shall be entitled to give or take, or vote on, the relevant action.
Notwithstanding the foregoing, the Company shall not set a record date for, and
the provisions of this paragraph shall not apply with respect to, any Act by the
Holders pursuant to Section 501, 502 or 512.
(d) The ownership of Securities shall be proved by the Security
Register.
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(e) Any Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer therefor or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
(f) Without limiting the foregoing, a Holder entitled hereunder to
give or take any action hereunder with regard to any particular Security may do
so with regard to all or any part of the principal amount of such Security or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any different part of such principal amount.
SECTION 105. Notices, Etc., to Trustee and Company.
-------------------------------------
Any Act of Holders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Trust Administration, or at any other address previously furnished in
writing to the Holders and the Company by the Trustee; or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company,
addressed to it at the address of its principal executive offices specified
in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by the Company.
All such notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, registered or certified with postage prepaid, if
mailed; when answered back if telexed; when receipt acknowledged, if telecopied;
and the next Business Day after timely delivery to the courier, if sent by
nationally recognized overnight air courier guaranteeing next day delivery.
SECTION 106. Notice to Holders; Waiver.
-------------------------
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if made, given, furnished or filed in writing to each Holder affected by such
event, at his address as it appears in the Security Register, not later than the
latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
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<PAGE>
waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver. All
such notices and communications shall be deemed to have been duly given: at the
time delivered by hand, if personally delivered; five Business Days after being
deposited in the mail, registered or certified with postage prepaid, if mailed;
when answered back if telexed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by nationally
recognized overnight air courier guaranteeing next day delivery.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act or another provision that would be required
or deemed under such Act to be a part of and govern this Indenture if this
Indenture were subject thereto, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
SECTION 108. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Company and the
Trustee shall bind each of their respective successors and assigns, whether so
expressed or not.
SECTION 110. Separability Clause.
-------------------
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, the
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Holders of Securities and, with respect to Article Twelve, the holders of Senior
Indebtedness, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
SECTION 112. Governing Law.
-------------
This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of New York, but without regard to the
principles of conflicts of laws thereof.
SECTION 113. Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security or the last date on which a Holder has the right to
convert his Securities shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal and premium if any, or conversion of the Securities need not be made
on such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the Interest Payment Date or Redemption Date, or
at the Stated Maturity, or on such last day for conversion; provided, that no
--------
interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be, to the next succeeding
Business Day.
SECTION 114. No Security Interest Created.
----------------------------
Nothing in this Indenture or in the Securities, express or implied,
shall be construed to constitute a security interest under the Uniform
Commercial Code or similar legislation, as now or hereafter enacted and in
effect in any jurisdiction where property of the Company or its Subsidiaries is
or may be located.
SECTION 115. Limitation on Individual Liability.
----------------------------------
No recourse under or upon any obligation, covenant or agreement
contained in this Indenture or in any Security, or for any claim based thereon
or otherwise in respect thereof, shall be had against any incorporator,
shareholder, officer or director, as such, past, present or future, of the
Company or any successor corporation, either directly or through the Company,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Indenture and the obligations issued hereunder are solely
corporate obligations, and that no such personal liability whatever shall attach
to, or is or shall be incurred by, the incorporators, shareholders, officers or
directors, as such, of the Company or any successor Person, or any of them,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any Security or implied therefrom; and that any and all such personal
liability of every name and nature, either at common law or in equity or by
constitution or statute, of, and any and all such
13
<PAGE>
rights and claims against, every such incorporator, shareholder, officer or
director, as such, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations, covenants or agreements
contained in this Indenture or in any Security or implied therefrom, are hereby
expressly waived and released as a condition of, and as a consideration for, the
execution of this Indenture and the issuance of such Security.
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally.
---------------
The Securities and the Trustee's certificate of authentication shall
be in substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with any organizational document, any applicable law or with
the rules of any securities exchange on which the Securities are listed or as
may, consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities.
The Securities issued in definitive form shall be substantially in
the form set forth in Section 202 hereof.
Unless issued in definitive form, Securities issued and sold in
reliance on Rule 144A shall be issued in the form of one or more global
securities (the "144A Global Security"), the face of which shall be
substantially in the form set forth in Section 202 hereof and the reverse of
which shall be substantially in the form set forth in Section 203 hereof, which
144A Global Security shall be deposited on behalf of the holders of the
Securities represented thereby with the Trustee, as custodian for the
Depositary, and registered in the name of the nominee of the Depositary, duly
executed by the Company and authenticated as provided for herein.
Securities offered and sold outside the United States in reliance on
Regulation S shall be issued in the form of one or more global securities (the
"Regulation S Global Security"), the face of which shall be substantially in the
form set forth in Section 202 hereof and the reverse of which shall be
substantially in the form set forth in Section 203 hereof, which Regulation S
Global Security shall be deposited on behalf of the holders of the Securities
represented thereby with the Trustee, as custodian for the Depositary, and
registered in the name of a nominee of the Depositary, duly executed by the
Company and authenticated as provided herein, for credit to the accounts of the
respective depositaries for Euroclear and Cedel (or such other accounts as they
may direct). Prior to or on the 40th day after the later of the commencement of
the offering of the Securities and the Closing Date (the "Restricted Period"),
beneficial interests in
14
<PAGE>
the Regulation S Global Security may only be held through Chase Manhattan Bank
or Citibank, N.A., as operators of Euroclear or Cedel, respectively, or another
agent member of Euroclear and Cedel acting for and on behalf of them, unless
delivery is made though the 144A Global Security in accordance with the
certification requirements hereof. During the Restricted Period, interests in
the Regulation S Global Security may be exchanged for interests in the Rule 144A
Global Security or for Definitive Securities only in accordance with the
certification requirements described in Section 305 below.
Each Global Security shall represent such of the outstanding
Securities as shall be specified therein and each shall provide that it shall
represent the aggregate amount of outstanding Securities from time to time
endorsed thereon and that the aggregate amount of outstanding Securities
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Security to reflect the amount of any increase or decrease in the amount of
outstanding Securities represented thereby shall be made by the Trustee or the
Securities Custodian, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof.
The Definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods on steel engraved borders or may
be produced in any other manner permitted by the rules of any securities
exchange on which the Securities may be listed, all as determined by the
officers executing such Securities, as evidenced by their execution of such
Securities.
SECTION 202. Form of Face of Security.
------------------------
LEGENDS FOR GLOBAL SECURITY:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"),
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS
15
<PAGE>
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS (A)
TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) THAT IS AN INSTITUTIONAL INVESTOR AND THAT PRIOR TO SUCH TRANSFER FURNISHES
TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (WHICH
FORM OF LETTER CAN BE OBTAINED FROM THE TRUSTEE), (E) PURSUANT TO OFFERS AND
SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S
AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (C), (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH
OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
16
<PAGE>
APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE AND SUBJECT TO ANY APPLICABLE STATE SECURITIES LAWS. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE THEN HOLDER OF THIS SECURITY AFTER THE RESALE
RESTRICTION TERMINATION DATE.
LEGENDS FOR DEFINITIVE SECURITY:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS (A)
TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) THAT IS AN INSTITUTIONAL INVESTOR AND THAT PRIOR TO SUCH TRANSFER FURNISHES
TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (WHICH
FORM OF LETTER CAN BE OBTAINED FROM THE TRUSTEE), (E) PURSUANT TO OFFERS AND
SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S
17
<PAGE>
AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (C), (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH
OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE AND SUBJECT
TO ANY APPLICABLE STATE SECURITIES LAWS. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE THEN HOLDER OF THIS SECURITY AFTER THE RESALE RESTRICTION
TERMINATION DATE.
PHYSICIANS RESOURCE GROUP, INC.
6% Convertible Subordinated Debentures due 2001
No. ________ $___________
Physicians Resource Group, Inc., a corporation duly organized and
existing under the laws of the State of Delaware (herein called the "Company",
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
__________________________, or registered assigns, the principal sum of
________________ Dollars [OR SUCH GREATER OR LESSER AMOUNT AS INDICATED ON THE
SCHEDULE OF EXCHANGES OF SECURITIES ON THE REVERSE HEREOF]/1/ on December 1,
2001, and to pay interest thereon from the date of original issuance of
Securities pursuant to the Indenture or from and including the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on June 1 and December 1 in each year, commencing June 1, 1997 at
the rate of 6% per annum, until the principal hereof is paid or made available
for payment and promises to pay any liquidated damages which may be payable
pursuant to Section 4 of the Registration Rights Agreement on the Interest
Payment Dates. The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid
to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the May 15 or November 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture. Notice of a Special Record Date shall be given to Holders
__________________________
/1/ This phrase should be included only if the Security is issued in
global form.
18
<PAGE>
of Securities not less than 10 days prior to such Special Record Date. Payment
of the principal of and premium, if any, and interest on this Security will be
made (i) in respect of Securities held of record by the Depositary or its
nominee in same day funds on or prior to the respective payment dates and (ii)
in respect of Securities held of record by Holders other than the Depositary or
its nominee at the office or agency of the Company maintained for that purpose
pursuant to Section 1002 of the Indenture, in each case in such coin or currency
of the United States of America as of the time of payment is legal tender for
payment of public and private debts; provided, however, that at the option of
-------- -------
the Company payment of interest in respect of Securities held of record by
Holders other than the Depositary or its nominee may be made by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: _________________ PHYSICIANS RESOURCE GROUP, INC.
By _________________________
Attest:
________________________
SECTION 203. Form of Reverse of Global Securities and Definitive Security.
------------------------------------------------------------
This Security is one of a duly authorized issue of Securities of the
Company designated as its 6% Convertible Subordinated Debentures due 2001
(herein called the "Securities"), limited in aggregate principal amount to
$143,750,000 (including Securities issuable pursuant to the Initial Purchasers'
over-allotment option, as provided for in the Purchase Agreement dated December
6, 1996 between the Company and the Initial Purchasers), issued and to be issued
under an Indenture, dated as of December 11, 1996 (herein called the
"Indenture"), between the Company and U.S. Trust Company of New York, N.A., as
Trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights,
19
<PAGE>
limitations of rights, duties and immunities thereunder of the Company, the
Trustee, the holders of Senior Indebtedness and the Holders of the Securities
and of the terms upon which the Securities are, and are to be, authenticated and
delivered.
Subject to and upon compliance with the provisions of the Indenture,
the Holder of this Security is entitled, at his option, at any time after the
60th day following the date of original issuance of Securities pursuant to the
Indenture and on or before the close of business on December 1, 2001 or in case
this Security or a portion hereof is called for redemption, then in respect of
this Security or such portion hereof until and including, but (unless the
Company defaults in making the payment due upon redemption) not after, the close
of business on the second business day preceding the Redemption Date, to convert
this Security (or any portion of the principal amount hereof which is $1,000 or
an integral multiple thereof), at the principal amount hereof, or of such
portion, into fully paid and non-assessable shares (calculated as to each
conversion to the nearest 1/100th of a share) of Common Stock at a conversion
price equal to $25.00 principal amount for each share of Common Stock (or at the
current adjusted conversion price if an adjustment has been made as provided in
the Indenture) by surrender of this Security, duly endorsed or assigned to the
Company or in blank, to the Company at its office or agency maintained for that
purpose pursuant to Section 1002 of the Indenture, accompanied by written notice
to the Company in the form provided in this Security (or such other notice as is
acceptable to the Company) that the Holder hereof elects to convert this
Security, or if less than the entire principal amount hereof is to be converted,
the portion hereof to be converted, and, in case such surrender shall be made
during the period from the opening of business on any Regular Record Date next
preceding any Interest Payment Date to the close of business on such Interest
Payment Date (unless this Security or the portion thereof being converted has
been called for redemption), also accompanied by payment in New York Clearing
House funds, or other funds acceptable to the Company of an amount equal to the
interest payable on such Interest Payment Date on the principal amount of this
Security then being converted. Subject to the aforesaid requirement for payment
and, in the case of a conversion after the Regular Record Date next preceding
any Interest Payment Date and on or before such Interest Payment Date, to the
right of the Holder of this Security (or any Predecessor Security) of record at
such Regular Record Date to receive an instalment of interest (with certain
exceptions provided in the Indenture), no payment or adjustment is to be made
upon conversion on account of any interest accrued hereon or on account of any
dividends on the Common Stock issued upon conversion. No fractional shares or
scrip representing fractions of shares will be issued on conversion, but instead
of any fractional share the Company shall pay a cash adjustment as provided in
the Indenture. The conversion price is subject to adjustment as provided in the
Indenture. In addition, the Indenture provides that in case of certain
consolidations or mergers to which the Company is a party or the sale or
transfer of all or substantially all of the assets of the Company, the Indenture
shall be amended, without the consent of any Holders of Securities, so that this
Security, if then outstanding, will be convertible thereafter, during the period
this Security shall be convertible as specified above, only into the kind and
amount of securities, cash and other property receivable upon the consolidation,
merger, sale or transfer by a holder of the number of shares of Common Stock
into which this Security might have been
20
<PAGE>
converted immediately prior to such consolidation, merger, sale or transfer
(assuming such holder of Common Stock failed to exercise any rights of election
and received per share the kind and amount received per share by a plurality of
non-electing shares).
The Securities are subject to redemption upon not less than 15 and not
more than 60 days' notice by mail, at any time on or after December 6, 1999, as
a whole or in part, at the election of the Company, at the Redemption Prices set
forth below (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:
<TABLE>
<CAPTION>
Redemption
Year Price
---- -----------
<S> <C>
1999........ 102.40%
2000........ 101.20%
</TABLE>
In certain circumstances involving the occurrence of a Repurchase
Event (as defined in the Indenture), the Holder hereof shall have the right to
require the Company to repurchase this Security at 100% of the principal amount
hereof, together with accrued interest to the Repurchase Date, but interest
installments whose Stated Maturity is on or prior to such Repurchase Date will
be payable to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant Record Dates
referred to on the face hereof, all as provided in the Indenture.
In the event of redemption or conversion of this Security in part
only, a new Security or Securities for the unredeemed or unconverted portion
hereof will be issued in the name of the Holder hereof upon the cancellation
hereof.
The indebtedness evidenced by this Security is, in all respects,
subordinate and subject in right of payment to the prior payment in full of all
Senior Indebtedness, and this Security is issued subject to the provisions of
the Indenture with respect thereto. Each Holder of this Security, by accepting
the same, (a) agrees to and shall be bound by such provisions, (b) authorizes
and directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination so provided, and (c) appoints the
Trustee his attorney-in-fact for any and all such purposes.
If an Event of Default shall occur and be continuing, the principal of
all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
21
<PAGE>
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of not
less than a majority in aggregate principal amount of the Securities at the time
Outstanding, and, under certain limited circumstances, by the Company and the
Trustee without the consent of the Holders. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all the Securities, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed or to convert this Security as provided in the
Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Securities are issuable only in fully registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities are exchangeable for a like aggregate principal amount of Securities
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of transfer
or exchange except as provided in the Indenture, and the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, except as
22
<PAGE>
provided in this Security, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture. The Company will
furnish to any Holder upon written request and without charge a copy of the
Indenture and/or the Registration Rights Agreement.
23
<PAGE>
[FORM OF CONVERSION NOTICE]
TO PHYSICIANS RESOURCE GROUP, INC.
The undersigned registered owner of this Security hereby irrevocably
exercises the option to convert this Security, or the portion hereof (which
is $1,000 or a multiple thereof) designated below, into shares of Common
Stock in accordance with the terms of the Indenture referred to in this
Security, and directs that the shares issuable and deliverable upon the
conversion, together with any check in payment for a fractional share and
any Security representing any unconverted principal amount hereof, be
issued and delivered to the registered owner hereof unless a different name
has been provided below. If this Notice is being delivered on a date after
the close of business on a Regular Record Date and prior to the close of
business on the related Interest Payment Date, this Notice is accompanied
by payment in New York Clearing House funds, or other funds acceptable to
the Company, of an amount equal to the interest payable on such Interest
Payment Date on the principal of this Security to be converted (unless this
Security has been called for redemption). If shares or any portion of this
Security not converted are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto. Any amount required to be paid by the undersigned on
account of interest accompanies this Security.
Dated: _________________________
_________________________
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or a
member firm of a national stock
exchange if shares of Common Stock
are to be delivered, or Securities to
be issued, other than to and in the
name of the registered owner.
______________________________
Signature Guarantee
Fill in for registration of shares of
Common Stock if they are to be delivered,
or Securities if they are to be issued,
other than to and in the name of the
registered owner:
______________________________
(Name)
______________________________
(Street Address)
24
<PAGE>
______________________________
(City, State and zip code)
(Please print name and address)
Register: _____ Common Stock
_____ Securities
(Check appropriate line(s)).
Principal amount to be converted (if less
than all):
$__________,000
_______________________
Social Security or other Taxpayer
Identification Number of owner
25
<PAGE>
[ASSIGNMENT FORM]
If you the holder want to assign this Security, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Security to
________________________________________________________________________________
(Insert assignee's social security or tax ID number)____________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code) and irrevocably appoint
________________________________________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
________________________________________________________________________________
Date: ________________________ Your signature: _________________________________
(Sign exactly as your name
appears on the face of this
Security)
Signature Guarantee:____________________________________________________________
26
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you wish to have this Security purchased by the Company pursuant
to Section 1401 of the Indenture, check the Box: [_]
If you wish to have a portion of this Security (which is $1,000 or an
integral multiple thereof) purchased by the Company pursuant to Section 1401 of
the Indenture, state the amount you wish to have purchased:
$____________________
Date: ___________________ Your Signature(s): _______________________
Tax Identification No.: _______________________
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee: ____________________________________
27
<PAGE>
[FORM OF SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES/2/]
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Signature of
decrease in increase in Amount of this authorized
Principal Principal Global Security signatory of
Amount of Amount of following such Trustee or
Date of this Global this Global decrease (or Securities
Exchange Security Security increase) Custodian
-------- -------- -------- --------- ---------
<S> <C> <C> <C> <C>
1.
2.
3.
4.
5.
</TABLE>
SECTION 204. Form of Trustee's Certificate of Authentication.
-----------------------------------------------
The Trustee's certificate of authentication shall be in substantially
the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
U.S. TRUST COMPANY OF NEW YORK,
N.A.
as Trustee
By ____________________________
Authorized Signatory
________________________
/2/ This Schedule should be included only if the Security is issued in global
form.
28
<PAGE>
ARTICLE THREE
The Securities
SECTION 301. Title and Terms.
---------------
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $143,750,000
(including $18,750,000 aggregate principal amount of Securities that may be sold
to the Initial Purchasers by the Company upon exercise of the over-allotment
option granted pursuant to the Purchase Agreement), except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities pursuant to Section 304, 305, 306, 906,
1108, 1302 or 1405.
The Securities shall be known and designated as the "6% Convertible
Subordinated Debentures due 2001" of the Company. Their Stated Maturity shall
be December 1, 2001 and they shall bear interest at the rate of 6% per annum,
from the date of original issuance of Securities pursuant to this Indenture or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, as the case may be, payable semi-annually on June 1 and
December 1, commencing June 1, 1997, until the principal thereof is paid or made
available for payment.
The principal of and premium, if any, and interest on the Securities
shall be payable (i) in respect of Securities held of record by the Depositary
or its nominee in same day funds on or prior to the respective payment dates and
(ii) in respect of Securities held of record by Holders other than the
Depositary or its nominee at the office or agency of the Company maintained for
such purpose pursuant to Section 1002; provided, however, that at the option of
-------- -------
the Company payment of interest to Holders of record other than the Depositary
may be made by check mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register.
The Securities shall be subject to the transfer restrictions set
forth in Section 305.
The Securities shall be redeemable as provided in Article Eleven.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article Twelve.
The Securities shall be convertible as provided in Article Thirteen.
The Securities shall be subject to repurchase at the option of the
Holder as provided in Article Fourteen.
29
<PAGE>
SECTION 302. Denominations.
-------------
The Securities shall be issuable only in fully registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Chief Executive Officer, its President, its Chief
Financial Officer or one of its Vice Presidents, under its corporate seal or a
facsimile thereof reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Securities
may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall either at one time or from time to time pursuant
to such instructions as may be described therein authenticate and deliver such
Securities as in this Indenture provided and not otherwise. Such Company Order
shall specify the amount of Securities to be authenticated and the date on which
the original issue of Securities is to be authenticated, and shall certify that
all conditions precedent to the issuance of such Securities contained in this
Indenture have been complied with. The aggregate principal amount of Securities
Outstanding at any time may not exceed the amount set forth above except as
provided in Section 306.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of the Indenture. The Trustee may appoint an Authenticating Agent
pursuant to the terms of Section 614.
SECTION 304. Temporary Securities.
--------------------
Pending the preparation of Definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise
30
<PAGE>
produced, in any authorized denomination, substantially of the tenor of the
Definitive Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of such
Securities. Every such temporary Security shall be executed by the Company and
shall be authenticated and delivered by the Trustee upon the same conditions and
in substantially the same manner, and with the same effect, as the Definitive
Security or Securities in lieu of which it is issued.
If temporary Securities are issued, the Company will cause Definitive
Securities to be prepared without unreasonable delay. After the preparation of
Definitive Securities, the temporary Securities shall be exchangeable for
Definitive Securities upon surrender of the temporary Securities at any office
or agency of the Company designated pursuant to Section 1002, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor one or more Definitive Securities of a like
principal amount of authorized denominations. Until so exchanged the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as Definitive Securities.
SECTION 305. Registration, Registration of Transfer and Exchange.
---------------------------------------------------
(a) The Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the register maintained in such office and in any
other office or agency designated pursuant to Section 1002 being herein
sometimes collectively referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall provide
for the registration of Securities and of transfers of Securities. The Trustee
is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided. At all reasonable
times the Security Register shall be open for inspection by the Company.
The Company initially appoints The Depository Trust Company ("DTC") to
act as depositary (the "Depositary") with respect to the Global Security(ies).
The Company initially appoints the Trustee to act as Securities
Custodian with respect to the Global Security(ies).
(b) With respect to the transfer and exchange of Definitive
Securities, when Definitive Securities are presented to the Security Registrar
with the request (x) to register the transfer of the Definitive Securities or
(y) to exchange such Definitive Securities for an equal principal amount of
Definitive Securities of other authorized denominations, the Security Registrar
shall register the transfer or make the exchange as requested if its
requirements for such transactions are met; provided, however, that the
-------- -------
Definitive Securities presented or surrendered for register of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Security Registrar
duly
31
<PAGE>
executed by the Holder thereof or by its attorney, duly authorized in
writing; and
(ii) shall, in the case of Transfer Restricted
Securities that are Definitive Securities, be accompanied by the
following additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Security Registrar by a Holder for registration
in the name of such Holder, without transfer, a certification
from such Holder to that effect (in substantially the form of
Exhibit A hereto); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) in reliance on Rule 144A
under the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 or Regulation S under
the Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that
effect (in substantially the form of Exhibit A hereto) and, in
the case of a transfer in accordance with Rule 144A, Rule 144 or
Regulation S under the Securities Act, an Opinion of Counsel
reasonably acceptable to the Company and to the Security
Registrar to the effect that such transfer is in compliance with
the Securities Act; or
(C) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a certification
to that effect (in substantially the form of Exhibit A hereto)
and an Opinion of Counsel reasonably acceptable to the Company
and to the Security Registrar to the effect that such transfer is
in compliance with the Securities Act.
(c) The following restrictions apply to any transfer of a Definitive
Security for a beneficial interest in a 144A Global Security. A Definitive
Security may not be exchanged for a beneficial interest in a 144A Global
Security except until and upon satisfaction of the requirements set forth below.
Upon receipt by the Trustee of a Definitive Security, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory to the
Trustee, together with:
(i) if such Definitive Security is a Transfer
Restricted Security, certification, substantially in the form of
Exhibit A hereto, that such Definitive Security is being transferred
to a "qualified institutional buyer" (as defined in Rule 144A under
the Securities Act) in accordance with Rule 144A and an Opinion of
Counsel reasonably acceptable to the
32
<PAGE>
Company and to the Security Registrar to the effect that such transfer
is in compliance with the Securities Act; and
(ii) whether or not such Definitive Security is a
Transfer Restricted Security, written instructions directing the
Trustee to make, or to direct the Securities Custodian to make, an
endorsement on the 144A Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the 144A
Global Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of Securities represented by the 144A Global Security
to be increased accordingly. If no 144A Global Securities are then outstanding,
the Company shall execute and, upon receipt of an authentication order in the
form of a Company Order in accordance with Section 303, the Trustee shall
authenticate a new 144A Global Security in the appropriate principal amount.
(d) The following restrictions apply to any transfer of a Definitive
Security for a beneficial interest in a Regulation S Global Security. A
Definitive Security may not be exchanged for a beneficial interest in a
Regulation S Global Security except until and upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer
Restricted Security, certification, substantially in the form of
Exhibit A hereto, that such Definitive Security is being transferred
in accordance with Regulation S and an Opinion of Counsel reasonably
acceptable to the Company and to the Security Registrar to the effect
that such transfer is in compliance with the Securities Act; and
(ii) whether or not such Definitive Security is a
Transfer Restricted Security, written instructions directing the
Trustee to make, or to direct the Securities Custodian to make, an
endorsement on the Regulation S Global Security to reflect an increase
in the aggregate principal amount of the Securities represented by the
Regulation S Global Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of Securities represented by the Regulation S Global
Security to be increased accordingly. If no Regulation S Global Securities are
then outstanding, the Company shall execute and, upon receipt of an
authentication order in the form of a Company Order in
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<PAGE>
accordance with Section 303, the Trustee shall authenticate a new Regulation S
Global Security in the appropriate principal amount.
(e) The transfer and exchange of Global Securities or beneficial
interests therein shall be effected through the Depositary, in accordance with
this Indenture (including the restrictions on transfer set forth herein) and the
procedures of the Depositary therefor.
(f) With respect to the transfer of a beneficial interest in a 144A
Global Security or a Regulation S Global Security for a Definitive Security:
(i) Any person having a beneficial interest in a 144A
Global Security or a Regulation S Global Security may upon request
exchange such beneficial interest for a Definitive Security. Upon
receipt by the Trustee of written instructions or such other form of
instructions as is customary for the Depositary or its nominee on
behalf of any person having a beneficial interest in a 144A Global
Security or a Regulation S Global Security constituting a Transfer
Restricted Security only, and receipt by the Trustee of the following
additional information and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being transferred to the
person designated by the Depositary as being the beneficial
owner, a certification from such person to that effect (in
substantially the form of Exhibit A hereto); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under
the Securities Act) in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the Securities Act
or pursuant to an effective registration statement under the
Securities Act, a certification to that effect from the
transferor (in substantially the form of Exhibit A hereto) and,
in the case of a transfer in accordance with Rule 144A, Rule 144
or Regulation S under the Securities Act, an Opinion of Counsel
reasonably acceptable to the Company and to the Security
Registrar to the effect that such transfer is in compliance with
the Securities Act; or
(C) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements
of the Securities Act, a certification to that effect from the
transferee or transferor (in substantially the form of Exhibit A
hereto) and an Opinion of Counsel from the transferee or
transferor reasonably acceptable to the Company and to the
34
<PAGE>
Security Registrar to the effect that such transfer is in
compliance with the Securities Act,
then the Trustee or the Securities Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Securities Custodian, the aggregate principal
amount of the Global Security to be reduced and, following such reduction, the
Company will execute and, upon receipt of an authentication order in the form of
a Company Order in accordance with Section 303, the Trustee will authenticate
and deliver to the transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a
beneficial interest in a 144A Global Security or a Regulation S Global
Security pursuant to this Section 305 shall be registered in such
names and in such authorized denominations as the Depositary, pursuant
to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver such Definitive
Securities to the persons in whose names such Securities are so
registered.
(g) With respect to the transfer of a beneficial interest in a
Regulation S Global Security for a beneficial interest in a 144A Global
Security, any person having a beneficial interest in a Regulation S Global
Security may upon request exchange such beneficial interest for an interest in a
144A Global Security. Upon receipt by the Trustee of written instructions or
such other form of instructions as is customary for the Depositary or its
nominee on behalf of any person having a beneficial interest in a Regulation S
Global Security constituting a Transfer Restricted Security only, and receipt by
the Trustee of the following additional information and documents (all of which
may be submitted by facsimile):
(i) instructions given in accordance with the procedures of
Euroclear or Cedel, the Depositary and the Securities Custodian, as
the case may be, from or on behalf of a beneficial owner of an
interest in the Regulations S Global Security directing the Trustee,
as transfer agent, to credit or cause to be credited a beneficial
interest in the 144A Global Security in an amount equal to the
beneficial interest in the Regulation S Global Security to be
exchanged or transferred,
(ii) a written order given in accordance with the procedures of
Euroclear or Cedel, the Depositary and the Securities Custodian, as
the case may be, containing information regarding the account with the
Depositary to be credited with such increase and the name of such
account, and
(iii) a certification from the transferor (in substantially the
form of Exhibit A hereto) to the effect that such beneficial interest
is being transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with Rule 144A
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<PAGE>
under the Securities Act and an Opinion of Counsel reasonably
acceptable to the Company and to the Security Registrar to the effect
that such transfer is in compliance with the Securities Act,
then the Trustee, as transfer agent, shall promptly deliver appropriate
instructions to the Depositary, its nominee, or the custodian for the
Depositary, as the case may be, to reduce or reflect on its records a reduction
of the Regulation S Global Security by the aggregate principal amount of the
beneficial interest in such Regulation S Global Security to be exchanged or
transferred, and the Trustee, as transfer agent, shall promptly deliver
appropriate instructions to the Depositary, its nominee, or the custodian for
the Depositary, as the case may be, concurrently with such reduction, increase
or reflect on its records an increase of the principal amount of the 144A Global
Security by the aggregate principal amount of the beneficial interest in the
Regulation S Global Security to be so exchanged or transferred, and to credit or
cause to be credited to the account of the person specified in such instructions
a beneficial interest in the 144A Global Security equal to the reduction in the
principal amount of the Regulation S Global Security.
(h) With respect to the transfer of a beneficial interest in a 144A
Global Security for a beneficial interest in a Regulation S Global Security, any
person having a beneficial interest in a 144A Global Security may upon request
exchange such beneficial interest for an interest in a Regulation S Global
Security. Upon receipt by the Trustee of written instructions or such other form
of instructions as is customary for the Depositary or its nominee on behalf of
any person having a beneficial interest in a 144A Global Security constituting a
Transfer Restricted Security only, and receipt by the Trustee of the following
additional information and documents (all of which may be submitted by
facsimile):
(i) instructions given in accordance with the procedures of
the Depositary and the Securities Custodian, as the case may be, from
or on behalf of a holder of a beneficial interest in the 144A Global
Security, directing the Trustee, as transfer agent, to credit or cause
to be credited a beneficial interest in the Regulation S Global
Security in an amount equal to the beneficial interest in the 144A
Global Security to be exchanged or transferred,
(ii) a written order given in accordance with the procedures of
the Depositary and the Securities Custodian, as the case may be,
containing information regarding the Euroclear or Cedel account to be
credited with such increase and the name of such account, and
(iii) a certification from the transferor (in substantially the
form of Exhibit A hereto) to the effect that such beneficial interest
is being transferred in accordance with Regulation S and an Opinion of
Counsel reasonably acceptable to the Company and to the Security
Registrar to the effect that such transfer is in compliance with the
Securities Act,
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<PAGE>
then the Trustee, as transfer agent, shall promptly deliver appropriate
instructions to the Depositary, its nominee, or the custodian for the
Depositary, as the case may be, to reduce or reflect on its records a reduction
of the 144A Global Security by the aggregate principal amount of the beneficial
interest in such 144A Global Security to be so exchanged or transferred from the
relevant participant, and the Trustee, as transfer agent, shall promptly deliver
appropriate instructions to the Depositary, its nominee, or the custodian for
the Depositary, as the case may be, concurrently with such reduction, to
increase or reflect on its records an increase of the principal amount of such
Regulation S Global Security by the aggregate principal amount of the beneficial
interest in such 144A Global Security to be so exchanged or transferred, and to
credit or cause to be credited to the account of the person specified in such
instructions (who shall be Morgan Guaranty Trust Company of New York, Brussels
office, as operator of Euroclear or Cedel or another agent member of Euroclear
or Cedel, or both, as the case may be, acting for and on behalf of them) a
beneficial interest in such Regulation S Global Security equal to the reduction
in the principal amount of such 144A Global Security.
(i) Notwithstanding any other provisions of this Indenture (other than
the provisions set forth in subsection (j) of this Section 305), a Global
Security may not be transferred as a whole except by the Depositary to a nominee
of the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(j) The following relates to the authentication of Definitive
Securities in absence of the Depositary. If at any time: (i) the Depositary
for the Securities notifies the Company that the Depositary is unwilling or
unable to continue as Depositary for the Global Securities and a successor
Depositary for the Global Securities is not appointed by the Company within 90
days after delivery of such notice; or (ii) the Company, at its sole discretion,
notifies the Trustee in writing that it elects to cause the issuance of
Definitive Securities under this Indenture, then the Company will execute, and
the Trustee, upon receipt of a Company Order in accordance with Section 303
requesting the authentication and delivery of Definitive Securities, will
authenticate and deliver Definitive Securities, in an aggregate principal amount
equal to the principal amount of the Global Securities, in exchange for such
Global Securities.
(k) (i) Except as permitted by the following paragraph (ii), each
Security certificate evidencing the Global Securities and the Definitive
Securities (and all Securities issued in exchange therefor or substitution
thereof) shall bear a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH
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REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS
(A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON THE HOLDER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT
IS AN INSTITUTIONAL INVESTOR AND THAT PRIOR TO SUCH TRANSFER FURNISHES TO
THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY
EVIDENCED HEREBY (WHICH FORM OF LETTER CAN BE OBTAINED FROM THE TRUSTEE),
(E) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C), (D), (E)
OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE
FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE AND
SUBJECT TO ANY APPLICABLE STATE SECURITIES LAWS. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE THEN HOLDER OF THIS SECURITY AFTER THE
RESALE RESTRICTION TERMINATION DATE.
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(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Security) pursuant to Rule 144 under the Securities Act or an
effective registration statement under the Securities Act (including
the Shelf Registration Statement):
(A) in the case of any Transfer Restricted Security that is
a Definitive Security, the Security Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security for
a Definitive Security that does not bear the legend set forth
above and rescind any restriction on the transfer of such
Transfer Restricted Security; provided, however, that with
-------- -------
respect to a transfer made in reliance upon Rule 144 or an
effective registration statement, the Holders thereof shall
certify in writing to the Security Registrar that such request is
being made pursuant to Rule 144 or an effective registration
statement (such Certification to be substantially in the form of
Exhibit A hereto) and, in the case of a transfer made in reliance
upon Rule 144, shall be accompanied by an Opinion of Counsel
reasonably acceptable to the Company and to the Security
Registrar to the effect that such transfer is in compliance with
the Securities Act; and
(B) any such Transfer Restricted Security represented by a
Global Security shall not be subject to the provisions set forth
in (i) above (such sales or transfers being subject only to the
provisions of Section 305(e) hereof); provided, however, that
-------- -------
with respect to any request for an exchange of a Transfer
Restricted Security that is represented by a Global Security for
a Definitive Security that does not bear a legend, which request
is made in reliance upon Rule 144 or an effective registration
statement, the Holder thereof shall certify in writing to the
Security Registrar that such request is being made pursuant to
Rule 144 or an effective registration statement (such
certification to be substantially in the form of Exhibit A
hereto) and, in the case of a transfer made in reliance upon Rule
144, shall be accompanied by an Opinion of Counsel reasonably
acceptable to the Company and to the Security Registrar to the
effect that such transfer is in compliance with the Securities
Act.
(l) At such time as all beneficial interests in a Global Security
have either been exchanged for Definitive Securities, redeemed, repurchased or
cancelled, such Global Security shall be returned to or retained and cancelled
by the Trustee. At any time prior to such cancellation, if any beneficial
interest in a Global Security is exchanged for Definitive Securities, redeemed,
repurchased or cancelled, the principal amount of Securities represented by such
Global Security shall be reduced and an
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<PAGE>
endorsement shall be made on such Global Security, by the Trustee or the
Securities Custodian, at the direction of the Trustee, to reflect such
reduction.
(m) All Definitive Securities and Global Securities issued upon any
registration of transfer or exchange of Definitive Securities or Global
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Definitive
Securities or Global Securities surrendered upon such registration of transfer
or exchange.
To permit registrations of transfer and exchanges, the Company shall
execute and the Trustee shall authenticate Definitive Securities and Global
Securities at the Security Registrar's request.
No service charge to a Holder shall be made for any registration of
transfer or exchange of Securities except as provided in Section 306. The
Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Securities, other than exchanges pursuant to Section
304, 906, 1108 or 1302 not involving any transfer.
The Company or the Security Registrar shall not be required (i) to
issue, register the transfer of or exchange any Security during a period
beginning at the opening of business 15 days before the day of the mailing of a
notice of redemption of Securities selected for redemption under Section 1104
and ending at the close of business on the day of such mailing, or (ii) to
register the transfer of or exchange any Definitive Security or beneficial
interest in any Global Security so selected for redemption in whole or in part,
except the unredeemed portion of any Definitive Security being redeemed in part.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
------------------------------------------------
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of like tenor and principal amount and bearing a number not contemporaneously
outstanding. The Trustee may charge the Company for the Trustee's expenses in
replacing such Security.
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In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
----------------------------------------------
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest. Payment
of interest will be made (i) in respect of Securities held by the Depositary or
its nominee, in same day funds on or prior to the respective Interest Payment
Dates and (ii) in respect of Securities held of record by Holders other than the
Depositary or its nominee, at the office of the Trustee in New York, New York or
at such other office or agency of the Company as it shall maintain for that
purpose pursuant to Section 1002, provided, however, that, at the option of the
-------- -------
Company, interest on any Security held of record by Holders other than the
Depositary or its nominee may be paid by mailing checks to the addresses of the
Holders thereof as such addresses appear in the Securities Register.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted
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Interest proposed to be paid on each Security and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this Clause provided.
Thereupon the Trustee shall fix a Special Record Date for the payment of
such Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to each
Holder at his address as it appears in the Security Register, not less than
10 days prior to such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor having been
so mailed, such Defaulted Interest shall be paid to the Persons in whose
names the Securities (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall
no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
In the case of any Security which is converted after any Regular
Record Date and on or prior to the next succeeding Interest Payment Date (other
than any Security whose Maturity is prior to such Interest Payment Date),
interest whose Stated Maturity is on such Interest Payment Date shall be payable
on such Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on such Regular Record Date provided,
--------
however, that Securities so surrendered for conversion shall (except in the case
- -------
of Securities or portions thereof called for redemption) be accompanied by
payment in New York Clearing House funds or other funds acceptable to the
Company of an amount equal to the interest payable on such Interest Payment Date
on the principal amount being surrendered for conversion. Except as otherwise
expressly
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<PAGE>
provided in the immediately preceding sentence, in the case of any Security
which is converted, interest whose Stated Maturity is after the date of
conversion of such Security shall not be payable.
SECTION 308. Persons Deemed Owners.
---------------------
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and premium, if
any, and (subject to Section 307) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 309. Cancellation.
------------
All Securities surrendered for payment, redemption, registration of
transfer, exchange or conversion shall, if surrendered to any Person other than
the Trustee, be delivered to the Trustee and shall be promptly canceled by it.
The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly canceled by the Trustee. No Securities shall be authenticated
in lieu of or in exchange for any Securities canceled as provided in this
Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of as directed by a Company
Order.
SECTION 310. Computation of Interest.
-----------------------
Interest on the Securities shall be computed on the basis of a 360-
day year of twelve 30-day months.
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall upon Company Request cease to be of further
effect (except as expressly provided for in this Article Four), and the Trustee,
at the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
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(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 306 and
(ii) Securities for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company, or
(iv) are delivered to the Trustee for Conversion in
accordance with Article Thirteen,
and the Company, in the case of (i), (ii), (iii) or (iv) above, has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose an amount in cash sufficient
(without consideration of any investment of such cash) to pay and
discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation for principal and premium,
if any, and interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be; provided that
--------
the Trustee shall have been irrevocably instructed to apply such
amount to said payments with respect to the Securities;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
following rights or obligations under the Securities and this Indenture shall
survive until otherwise terminated or discharged hereunder: (a) Article
Thirteen, Article Fourteen and
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the Company's obligations under Sections 304, 305, 306, 1002 and 1003, in each
case with respect to any Securities described in subclause (B) of Clause (1) of
this Section, (b) this Article Four, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder, including the obligations of the Company to
the Trustee under Section 607, and the obligations of the Trustee to any
Authenticating Agent under Section 614 and (d) if money shall have been
deposited with the Trustee pursuant to subclause (B) of Clause (1) of this
Section, the rights of Holders of any Securities described in subclause (B) of
Clause (1) of this Section to receive, solely from the trust fund described in
such subclause (B), payments in respect of the principal of, and premium (if
any) and interest on, such Securities when such payment are due.
SECTION 402. Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and premium, if
any, and interest for whose payment such money has been deposited with the
Trustee. All moneys deposited with the Trustee pursuant to Section 401 (and
held by it or any Paying Agent) for the payment of Securities subsequently
converted shall be returned to the Company upon Company Request.
SECTION 403. Reinstatement.
-------------
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article Four by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article Four until such time as the Trustee or Paying Agent is
permitted to apply all money held in trust with respect to the Securities;
provided, however, that if the Company makes any payment of principal of or any
- -------- -------
premium or interest on any Security following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of the
Securities to receive such payment from the money so held in trust.
ARTICLE FIVE
Remedies
SECTION 501. Events of Default.
-----------------
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Twelve or be voluntary or
involuntary or be effected by
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operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body);
(1) default in the payment of the principal of or premium, if
any, on any Security at its Maturity, whether or not such payment is
prohibited by the provisions of Article Twelve; or
(2) default in the payment of any interest upon any Security
when it becomes due and payable, whether or not such payment is
prohibited by the provisions of Article Twelve, and continuance of
such default for a period of 30 days; or
(3) failure to provide timely notice of a Repurchase Event as
required in accordance with the provisions of Article Fourteen; or
(4) default in the payment of the Repurchase Price in respect of
any Security on the Repurchase Date therefor in accordance with the
provisions of Article Fourteen, whether or not such payment is
prohibited by the provisions of Article Twelve; or
(5) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere
in this Section specifically dealt with), and continuance of such
default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(6) default under one or more bonds, debentures, notes or other
evidences of indebtedness for money borrowed by the Company or any
Subsidiary or under one or more mortgages, indentures or 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, 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
$10,000,000 when due and payable after the expiration of any
applicable grace period with respect thereto or shall have resulted in
indebtedness in excess of $10,000,000 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, by registered or
certified mail, to the Company by the Trustee or to the Company and
the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities a written notice specifying such default and
requiring the
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Company to cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled and stating that such notice
is a "Notice of Default" hereunder; or
(7) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company or any
Subsidiary in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or (B) a decree or order adjudging the Company or any
Subsidiary a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Subsidiary under
any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Subsidiary or of any substantial part
of its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or
any such other decree or order unstayed and in effect for a period of
90 consecutive days; or
(8) the commencement by the Company or any Subsidiary of a
voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief in
respect of the Company or any Subsidiary in an involuntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement
of any bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking reorganization
or relief under any applicable Federal or State law, or the consent by
it to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or any
Subsidiary or of any substantial part of its property, or the making
by it of a general assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally
as they become due, or the taking of corporate action by the Company
or any Subsidiary in furtherance of any such action.
Upon receipt by the Trustee of any Notice of Default pursuant to
this Section 501, a record date shall automatically and without any other action
by any Person be set for the purpose of determining the Holders of Outstanding
Securities entitled to join in such Notice of Default, which record date shall
be the close of business on the day the Trustee receives such Notice of Default.
The Holders of Outstanding Securities on such record date (or their duly
appointed agents), and only such Persons, shall be entitled to join in such
Notice of Default, whether or not such Holders remain Holders after such record
date: provided, that unless such Notice of Default shall have become effective
--------
by virtue of the Holders of the requisite principal amount of Outstanding
Securities on such record date (or their duly appointed agents) having joined
therein on
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or prior to the 90th day after such record date, such Notice of Default shall
automatically and without any action by any Person be canceled and of no further
force or effect.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default (other than as specified in subparagraph (7) or
(8) of Section 501) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal of all the Securities to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal plus
any interest accrued on the securities to the date of declaration shall become
immediately due and payable. If an Event of Default specified in subparagraph
(7) or (8) of Section 501 occurs and is continuing, then the principal of,
premium, if any, and accrued and unpaid interest, if any, on all of the
Securities shall ipso facto become and be immediately due and payable without
---- -----
any declaration or other act on the part of the Trustee or any Holder of
Securities.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a majority
in principal amount of the Outstanding Securities, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of and premium, if any, on any Securities
which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities,
and
(D) all sums paid or advanced by the Trustee and each
predecessor Trustee, their respective agents and counsel hereunder and
the reasonable compensation, expenses, disbursements and advances of
the Trustee and each predecessor Trustee, their respective agents and
counsel;
and
(2) all Events of Default, other than the nonpayment of the principal
of, premium, if any, and interest on the Securities that has become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 513.
48
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No such rescission and waiver shall affect any subsequent default or impair any
right consequent thereon.
Upon receipt by the Trustee of any declaration of acceleration, or any
rescission and annulment of any such declaration, pursuant to this Section 502,
a record date shall automatically and without any other action by any Person be
set for the purpose of determining the Holders of Outstanding Securities
entitled to join in such declaration, or rescission and annulment, as the case
may be, which record date shall be the close of business on the day the Trustee
receives such declaration, or rescission and annulment, as the case may be. The
Holders of Outstanding Securities on such record date (or their duly appointed
agents), and only such Persons, shall be entitled to join in such declaration,
or rescission and annulment, as the case may be, whether or not such Holders
remain Holders after such record date; provided, that unless such declaration,
--------
or rescission and annulment, as the case may be, shall have become effective by
virtue of Holders of the requisite principal amount of Outstanding Securities on
such record date (or their duly appointed agents) having joined therein on or
prior to the 90th day after such record date, such declaration, or rescission
and annulment, as the case may be, shall automatically and without any action by
any Person be canceled and of no further force or effect.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
---------------------------------------------------------------
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of or premium, if
any, on any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and premium, if any, and interest, and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal and premium, if any, and on any overdue interest, at the rate
borne by the Securities, and, in addition thereto, such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee and
each predecessor Trustee, their respective agents and counsel, and any other
amounts due the Trustee or any predecessor Trustee under Section 607.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid and may
prosecute any such proceeding to judgment or final decree, and may enforce the
same against the Company (or any other obligor upon the Securities) and collect
the moneys adjudged or decreed
49
<PAGE>
to be payable in the manner provided by law out of the property of the Company
(or any other obligor upon the Securities), wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
--------------------------------
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have the claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it and
each predecessor Trustee for the reasonable compensation, expenses,
disbursements and advances of the Trustee and each predecessor Trustee and their
respective agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding; provided,
--------
however, that the Trustee may, on behalf of the Holders, vote for the election
- -------
of a trustee in bankruptcy or similar official and may be a member of the
Creditors' Committee.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
-----------------------------------------------------------
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee and each predecessor Trustee and their
respective agents and counsel, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
50
<PAGE>
SECTION 506. Application of Money Collected.
------------------------------
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or premium, if
any, or interest, upon presentation of the Securities and the notation thereon
of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: Subject to Article Twelve, to the holders of Senior
Indebtedness;
SECOND: To payment of all amounts due the Trustee under Section 607;
THIRD: To the payment of the amounts then due and unpaid for
principal of and premium, if any, and interest on the Securities in respect
of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal and premium, if
any, and interest, respectively; and
FOURTH: The balance, if any, to the Company or any other Person or
Persons determined to be entitled thereto.
SECTION 507. Limitation on Suits.
-------------------
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity satisfactory to it against the costs, expenses and liabilities to
be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities;
51
<PAGE>
it being understood and intended that no one or more holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest and to Convert.
------------------------
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and premium, if any, and (subject to Section
307) interest on such Security on the respective Stated Maturities expressed in
such Security (or, in the case of redemption, on the Redemption Date or, in the
case of a repurchase pursuant to Article Fourteen, on the Repurchase Date) and
to convert such Security in accordance with Article Thirteen and to institute
suit for the enforcement of any such payment and right to convert, and such
rights shall not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in Section 306, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence
52
<PAGE>
therein. Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 512. Control by Holders.
------------------
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee; provided, that
--------
(1) such direction shall not be in conflict with any rule of law or
with this Indenture; and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and
(3) subject to the provisions of Section 601, the Trustee shall have
the right to decline to follow any such direction if the Trustee in good
faith shall determine that the action so directed would involve the Trustee
in personal liability or would be unduly prejudicial to Holders not joining
in such direction.
Upon receipt by the Trustee of any such direction, a record date shall
automatically and without any other action by any Person be set for the purpose
of determining the Holders of Outstanding Securities entitled to join in such
direction, which record date shall be the close of business on the day the
Trustee receives such direction. The Holders of Outstanding Securities on such
record date (or their duly appointed agents), and only such Persons, shall be
entitled to join in such direction, whether or not such Holders remain Holders
after such record date; provided, that unless such direction shall have become
--------
effective by virtue of Holders of the requisite principal amount of Outstanding
Securities on such record date (or their duly appointed agents) having joined
therein on or prior to the 90th day after such record date, such direction shall
automatically and without any action by any Person be canceled and of no further
force or effect.
SECTION 513. Waiver of Past Defaults.
-----------------------
The Holders of not less than a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities waive
any past default hereunder and its consequences, except a default
(1) in the payment of the principal of or premium, if any, or
interest on any Security, or
53
<PAGE>
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided, that neither this Section nor the Trust Indenture Act
--------
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company, in any suit instituted
by the Trustee, a suit by a Holder pursuant to Section 508, or a suit by a
Holder or Holders of more than 10% in principal amount of the outstanding
Securities.
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities.
-----------------------------------
The duties and responsibilities of the Trustee shall be as provided by
this Indenture and the Trust Indenture Act for securities issued pursuant to
indentures qualified thereunder. Except as otherwise provided herein,
notwithstanding the foregoing, no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability or risk in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity satisfactory
to it against such risk or liability is not reasonably assured to it. Whether
or not therein expressly so provided, every provision of this Indenture relating
to the conduct or affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section. The Trustee shall
not be liable (x) for any error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Trustee, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts or (y) with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the holders of not less than a majority in
aggregate principal amount of the Securities at the time Outstanding relating to
the time,
54
<PAGE>
method and place of conducting any proceeding or any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under this
Indenture. Prior to the occurrence of an Event of Default and after the curing
or waiving of all Events of Default which may have occurred: (i) the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Indenture and in the Trust Indenture Act, and the Trustee shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Indenture and in the Trust Indenture Act, and no
implied covenants or obligations shall be read in to this Indenture against the
Trustee; and (ii) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions therein, upon any statements, certificates or
opinions furnished to the Trustee and conforming to the requirements of this
Indenture and believed by the Trustee to be genuine and to have been signed or
presented by the proper party or parties; but in the case of any such
statements, certificates or options which by any provisions hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or not they conform on their
face to the requirements of this Indenture. If a default or an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in its
exercise thereof as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
SECTION 602. Notice of Defaults.
------------------
The Trustee shall give the Holders notice of any default hereunder
known to it as and to the extent provided by the Trust Indenture Act; provided,
--------
however, that in the case of any default of the character specified in Section
- -------
501(5), no such notice to Holders shall be given until at least 30 days after
the occurrence thereof; and provided, further, that, except in the case of a
-------- -------
default in payment of principal of, premium, if any, or interest on any
Securities, the Trustee may withhold notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders of Securities. For the purpose of this Section,
the term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default.
SECTION 603. Certain Rights of Trustee.
-------------------------
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
55
<PAGE>
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity satisfactory
to it against the costs, expenses and liabilities which might be incurred
by it in compliance with such request or direction;
(f) before the Trustee acts or refrains from acting with respect to
any matter contemplated by this Indenture, it may require an Officers'
Certificate or an Opinion of Counsel, which shall conform to the provisions
of Section 102, and the Trustee shall be protected and shall not be liable
for any action it takes or omits to take in good faith and without gross
negligence in reliance on such certificate or opinion;
(g) the Trustee shall not be required to give any bond or surety in
respect of the performance of its power and duties hereunder;
(h) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney; and
(i) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
56
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SECTION 604. Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The statements and recitals contained herein and in the Securities and
in any other document in connection with the sale of the Securities, except the
Trustee's certificate of authentication, shall be taken as the statements of the
Company, and the Trustee and any Authenticating Agent assume no responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. The Trustee and any
Authenticating Agent shall not be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
-------------------
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Company or any Affiliate of the Company
with the same rights it would have if it were not Trustee, Authenticating Agent,
Paying Agent, Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
-------------------
Money held by the Trustee or any Paying Agent in trust hereunder need
not be segregated from other funds except to the extent required by law. The
Trustee or any Paying Agent shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Company.
SECTION 607. Compensation and Reimbursement.
------------------------------
The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (including its services as
Security Registrar or Paying Agent, if so appointed by the Company) as may
be mutually agreed upon in writing by the Company and the Trustee (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee and each predecessor Trustee promptly upon its request for all
reasonable expenses, disbursements and advances incurred or made by or on
behalf of it in connection with the performance of its duties under any
provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel and all other persons
not regularly in its employ) except to the extent any such expense,
disbursement or advance may be attributable to its negligence or bad faith;
and
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(3) to indemnify the Trustee and each predecessor Trustee (each an
"indemnitee") for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out
of or in connection with the acceptance or administration of this Indenture
or the trusts hereunder and its duties hereunder (including its services as
Security Registrar or Paying Agent, if so appointed by the Company),
including enforcement of this Indenture (including Section 607) and
including the costs and expenses of defending itself against or
investigating any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The Company shall
defend any claim or threatened claim asserted against an indemnitee for
which it may seek indemnity, and the indemnitee shall cooperate in the
defense unless, in the reasonable opinion of the indemnitee's counsel, the
indemnitee has an interest adverse to the Issuer or a potential conflict of
interest exists between the indemnitee and the Company, in which case the
indemnitee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel; provided that the Company
--------
shall only be responsible for the reasonable fees and expenses of one law
firm (in addition to local counsel) in any one action or separate
substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, such law firm to be designated
by the indemnitee.
As security for the performance of the obligations of the Company
under this Section 607, the Trustee shall have a lien prior to the Securities
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the benefit of the Holders of particular Securities, and
the Securities are hereby subordinated to such prior lien. The obligations of
the Company under this Section to compensate and indemnify the Trustee and any
predecessor Trustee and to pay or reimburse the Trustee and any predecessor
Trustee for expenses, disbursements and advances, and any other amounts due the
Trustee or any predecessor Trustee under Section 607, shall constitute an
additional obligation hereunder and shall survive the satisfaction and discharge
of this Indenture.
When the Trustee or any predecessor Trustee incurs expenses or renders
services in connection with the performance of its obligations hereunder
(including its services as Security Registrar or Paying Agent, if so appointed
by the Company) after an Event of Default specified in Section 501(7) or (8)
occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under ny applicable bankruptcy, insolvency
or other similar federal or state law to the extent provided in Section
503(b)(5) of Title 11 of the United States Code, as now or hereafter in effect.
SECTION 608. Disqualification; Conflicting Interests.
---------------------------------------
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to
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the extent and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder which shall be a
Person that (i) is eligible pursuant to the Trust Indenture Act to act as such,
(ii) has (or, in the case of a corporation included in a bank holding company
system, whose related bank holding company has) a combined capital and surplus
of at least $50,000,000 and (iii) has a Corporate Trust Office in the Borough of
Manhattan, The City of New York, or a designated agent. If such Person
publishes reports of conditions at least annually, pursuant to law or to the
requirements of a Federal or state supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such Person
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
required by Section 611 shall not have been delivered to the resigning Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
(c) The Trustee may be removed at any time by an Act of the Holders
of a majority in principal amount of the Outstanding Securities delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after
written request therefor by the Company or by any Holder who has been
a bona fide Holder of a Security for the last six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or
by any such Holder, or
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(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee and
such successor Trustee shall comply with the applicable requirements of Section
611. If, within one year after such resignation, removal or incapability, or
the occurrence of such vacancy, a successor Trustee shall be appointed by Act of
the Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611 become the successor Trustee and
supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 611, any Holder who has been a
bona fide Holder of a Security for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders in the
manner provided in Section 106. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
--------------------------------------
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee,
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the Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any corporation into which the Trustee may be merged or converted or
with it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Company.
-------------------------------------------------
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 614. Appointment of Authenticating Agent.
-----------------------------------
The Trustee may appoint an Authenticating Agent or Agents acceptable
to and at the expense of the Company which shall be authorized to act on behalf
of the Trustee to authenticate Securities issued upon original issue and upon
exchange, registration of transfer, partial conversion or partial redemption or
pursuant to Section 306, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a Person organized and doing
business under the laws of the United States of America, any State thereof or
the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said
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supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section.
Any Person into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which such Authenticating Agent shall be
a party, or any Person succeeding to the corporate agency or corporate trust
business of an Authenticating Agent, shall continue to be an Authenticating
Agent, provided such Person shall be otherwise eligible under this Section,
without the execution or filing of any paper or any further act on the part of
the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail notice of such
appointment by first-class mail, postage prepaid, to all Holders as their names
and addresses appear in the Security Register. Any successor Authenticating
Agent upon acceptance of its appointment under this Section shall become vested
with all the rights, powers and duties of its predecessor hereunder, with like
effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible to act as such under the
provisions of this Section.
Any Authenticating Agent by the acceptance of its appointment shall be
deemed to have represented to the Trustee that it is eligible for appointment as
Authenticating Agent under this Section and to have agreed with the Trustee
that: it will perform and carry out the duties of an Authenticating Agent as
herein set forth, including among other things the duties to authenticate
Securities when presented to it in connection with the original issuance and
with exchanges, registrations of transfer or redemptions or conversions thereof
or pursuant to Section 306; it will keep and maintain, and furnish to the
Trustee from time to time as requested by the Trustee, appropriate records of
all transactions carried out by it as Authenticating Agent and will furnish the
Trustee such other information and reports as the Trustee may reasonably
require; and it will notify the Trustee promptly if it shall cease to be
eligible to act as Authenticating Agent in accordance with the provisions of
this Section. Any Authenticating Agent by the acceptance of its appointment
shall be deemed to have agreed with the Trustee to indemnify the Trustee against
any loss, liability or expense incurred by the Trustee and to defend any claim
asserted against the Trustee by reason of any acts or failures to act of such
Authenticating Agent, but such Authenticating Agent shall have no liability for
any action taken by it in accordance with the specific written direction of the
Trustee.
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The Trustee shall not be liable for any act or any failure of the
Authenticating Agent to perform any duty either required herein or authorized
herein to be performed by such person in accordance with this Indenture.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.
If an appointment is made pursuant to this Section, the Securities may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities described in the within-mentioned
Indenture.
_____________________________________,
As Trustee
By ________________________________
As Authenticating Agent
By _____________________________
Authorized Officer
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ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
---------------------------------------------------------
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished.
Notwithstanding the foregoing, so long as the Trustee is the Security Registrar,
no such list shall be required to be furnished.
SECTION 702. Preservation of Information; Communication to Holders.
-----------------------------------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the
names and addresses of Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and
the corresponding rights and duties of the Trustee, shall be as provided by
the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason
of any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act or otherwise in accordance with this
Indenture.
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SECTION 703. Reports by Trustee.
------------------
(a) Not later than 60 days following each May 15, the Trustee shall
transmit to Holders such reports concerning the Trustee and its actions
under this Indenture as may be required pursuant to the Trust Indenture Act
at the times and in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange
upon which the Securities are listed, with the Commission and with the
Company. The Company will notify the Trustee when the Securities are listed
on any stock exchange.
SECTION 704. Reports by Company.
------------------
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided, that any such
--------
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
SECTION 705. Rule 144A Information Requirement.
---------------------------------
If at any time prior to the Resale Restriction Termination Date the
Company is no longer subject to Section 13 or 15(d) of the Exchange Act, the
Company will furnish to the Holders or beneficial holders of the Securities and
prospective purchasers of the Securities designated by the Holders of the
Securities, upon their request, information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act until the earlier of (i) the date on
which the Securities and the underlying Common Stock are registered under the
Securities Act or (ii) the Resale Restriction Termination Date.
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
----------------------------------------------------
The Company shall 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, and the Company shall not permit any Person to
consolidate with or merge into the Company, unless:
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(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease all or substantially all of its
properties and assets to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, all or substantially
all of the properties and assets of the Company shall be a corporation,
partnership or trust, shall be organized and validly existing under the
laws of the United States of America, any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee,
the due and punctual payment of the principal of and premium, if any, and
interest on all the Securities and the performance or observance of every
covenant of this Indenture on the part of the Company to be performed or
observed and shall have provided for conversion rights in accordance with
Section 1311;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing;
(3) such consolidation, merger, conveyance, transfer or lease does
not adversely affect the validity or enforceability of the Securities; and
(4) the Company or the successor Person has delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a supplemental
indenture is required in connection with such transaction, such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been
complied with.
SECTION 802. Successor Substituted.
---------------------
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of all or
substantially all of the properties and assets of the Company in accordance with
Section 801, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in the case
of a transfer by lease, the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Securities.
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ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders.
--------------------------------------------------
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to cause this Indenture to be qualified under the Trust Indenture
Act; or
(2) to 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 Securities; or
(3) to add to the covenants of the Company for the benefit of the
Holders or an additional Event of Default, or to surrender any right or
power conferred herein or in the Securities upon the Company; or
(4) to secure the Securities; or
(5) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Section 1311; or
(6) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities; or
(7) to cure any ambiguity, to correct or supplement any provision
herein or in the Securities which may be defective or inconsistent with any
other provision herein or in the Securities, or to make any other
provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this
Indenture; provided, that such action pursuant to this Clause (7) shall not
--------
adversely affect the interests of the Holders in any material respect and
the Trustee may rely upon an Opinion of Counsel to that effect.
SECTION 902. Supplemental Indentures with Consent of Holders.
-----------------------------------------------
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
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provided, however, that no such supplemental indenture shall, without the
- -------- -------
consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the place of payment where, or the coin or
currency in which, any Security or any premium or interest thereon is
payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or adversely affect the right
to convert any Security as provided in Article Thirteen (except as
permitted by Section 901(5)), or modify the provisions of Article Fourteen,
or the provisions of this Indenture with respect to the subordination of
the Securities, in a manner adverse to the Holders, or
(2) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture,
or
(3) modify any of the provisions of this Section, Section 513 or
Section 1006, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby; provided, however, that this Clause shall not be deemed to require
-------- -------
the consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section and Section 1006, or the
deletion of this proviso, in accordance with the requirements of Section
901(6).
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which adversely affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise.
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SECTION 904. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and (at the specific direction of the Company) authenticated and
delivered by the Trustee in exchange for Outstanding Securities.
SECTION 907. Notice of Supplemental Indenture.
--------------------------------
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to Section 902, the Company shall transmit to
the Holders a notice setting forth the substance of such supplemental indenture.
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and Interest.
------------------------------------------
The Company will duly and punctually pay the principal of and premium,
if any, and interest on the Securities in accordance with the terms of the
Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
-------------------------------
The Company will maintain in New York, New York an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer, where Securities may be
surrendered for exchange or conversion and where notices and demands to or upon
the Company in
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respect of the Securities and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change in the
location, of any such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
- -------- -------
relieve the Company of its obligation to maintain an office or agency in New
York, New York for such purposes. The Company will give prompt written notice
to the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
SECTION 1003. Money for Security Payments to Be Held in Trust.
-----------------------------------------------
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of and premium, if any, or interest
on any of the Securities, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal and premium, if
any, or interest so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, on
or prior to 11:00 a.m. (New York City time) on each due date of the principal of
and premium, if any, or interest on any Securities, deposit with a Paying Agent
a sum in same day funds sufficient to pay the principal and any premium and
interest so becoming due, such sum to be held as provided by the Trust Indenture
Act, and (unless such Paying Agent is the Trustee) the Company will promptly
notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee or the
Company to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will (i) comply with the provisions of the Trust
Indenture Act and this Indenture applicable to it as a Paying Agent and hold all
sums held by it for the payment of principal of or any premium or interest on
the Securities in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided; (ii) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment in respect of
the Securities; and (iii) at any time during the continuance of any default by
the Company (or any other obligor upon the Securities) in the making of any
payment in respect of the Securities, upon the written request of the Trustee,
forthwith pay to the
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Trustee all sums held in trust by such Paying Agent for payment in respect of
the Securities, and account for any funds disbursed.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of and premium, if
any, or interest on any Security and remaining unclaimed for two years after
such principal and premium, if any, or interest has become due and payable shall
be paid to the Company on Company Request, or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
-------- -------
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in New York, New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 1004. Statement by Officers as to Default.
-----------------------------------
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
SECTION 1005. Existence.
---------
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises and the existence, rights (charter
and statutory) and franchises of each Subsidiary; provided, however, that the
-------- -------
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
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SECTION 1006. Waiver of Certain Covenants.
---------------------------
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Section 1005, if before the time for such
compliance the Holders of at least a majority in principal amount of the
Outstanding Securities shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
in respect of any such covenant or condition shall remain in full force and
effect.
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Right of Redemption.
-------------------
The Securities may be redeemed at the election of the Company, in
whole or from time to time in part, at any time on or after December 6, 1999, at
the Redemption Prices specified in the form of Security hereinbefore set forth,
together with accrued interest, to the Redemption Date.
SECTION 1102. Applicability of Article.
------------------------
Redemption of Securities at the election of the Company as permitted
by any provision of this Indenture shall be made in accordance with such
provision and this Article.
SECTION 1103. Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any Securities pursuant to
Section 1101 shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company of less than all the Securities, the
Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter period shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and of the principal amount of Securities to
be redeemed. In case of any redemption at the election of the Company of all of
the Securities, the Company shall, at least 45 days prior to the Redemption Date
fixed by the Company (unless a shorter period shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date.
SECTION 1104. Selection by Trustee of Securities to be Redeemed.
-------------------------------------------------
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by lot
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or pro rata or by such other method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $1,000 or any integral multiple thereof) of the principal amount of
Securities of a denomination larger than $1,000.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed (so
far as may be) to be the portion selected for redemption. Securities which have
been converted during a selection of Securities to be redeemed shall be treated
by the Trustee as Outstanding for the purpose of such selection. In any case
where more than one Security is registered in the same name, the Trustee in its
discretion may treat the aggregate principal amount so registered as if it were
represented by one Security.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 1105. Notice of Redemption.
--------------------
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 15 nor more than 60 days prior to the Redemption
Date, to the Trustee and to each Holder of Securities to be redeemed, at his
address appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the Outstanding Securities are to be redeemed,
the identification (and, in the case of partial redemption of any
Securities, the principal amounts) of the particular Securities to be
redeemed,
(d) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and that (unless the
Company shall default in payment of the Redemption Price) interest thereon
will cease to accrue on and after said date,
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(e) the conversion price, the date on which the right to convert the
Securities to be redeemed will terminate and the place or places where such
Securities may be surrendered for conversion, and
(f) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request received
by the Trustee at least 25 days prior to the Redemption Date, by the Trustee in
the name and at the expense of the Company.
SECTION 1106. Deposit of Redemption Price.
---------------------------
At or prior to 9:00 a.m. (New York City time) on any Redemption Date,
the Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1003) an amount of money in same day funds sufficient to pay
the Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, all the Securities or portions thereof which
are to be redeemed on that date other than any Securities called for redemption
on that date which have been converted prior to the date of such deposit.
If any Security called for redemption is converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held in
trust for the redemption of such Security shall (subject to any right of the
Holder of such Security or any Predecessor Security to receive interest as
provided in the last paragraph of Section 307) be paid to the Company upon
Company Request or, if then held by the Company, shall be discharged from such
trust.
SECTION 1107. Securities Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that installments of interest whose
-------- -------
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their terms and
the provisions of Section 307.
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If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and premium, if any, shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Security.
SECTION 1108. Securities Redeemed in Part.
---------------------------
Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Company maintained for that purpose pursuant to
Section 1002 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Security without service charge, a new
Security or Securities, of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
ARTICLE TWELVE
Subordination of Securities
SECTION 1201. Securities Subordinated to Senior Indebtedness.
----------------------------------------------
The Company covenants and agrees, and each Holder of a Security, by
his acceptance thereof, likewise covenants and agrees, that, at all times and in
all respects, the indebtedness represented by the Securities and the payment of
the principal of and premium, if any, and interest on each and all of the
Securities are hereby expressly made subordinate and subject in right of payment
to the prior payment in full of all Senior Indebtedness.
SECTION 1202. Payment Over of Proceeds Upon Dissolution, Etc.
----------------------------------------------
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding, relative to the Company or to its creditors, as such, or to a
substantial part of its assets, or (b) any proceeding for the liquidation,
dissolution or other winding up of the Company, whether voluntary or involuntary
and whether or not involving insolvency or bankruptcy, or (c) any general
assignment for the benefits of creditors or any other marshalling of assets and
liabilities of the Company, then and in any such event the holders of Senior
Indebtedness shall be entitled to receive payment in full of all amounts due or
to become due on or in respect of all Senior Indebtedness; or provision shall be
made for such payment in money or money's worth, before the Holders of the
Securities are entitled to receive any payment or distribution of any kind or
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character, whether in cash, property or securities, on account of principal of
or premium, if any, or interest on the Securities, and to that end the holders
of Senior Indebtedness shall be entitled to receive, for application to the
payment thereof, any payment or distribution of any kind or character, whether
in cash, property or securities, including any such payment or distribution
which may be payable or deliverable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the Securities,
which may be payable or deliverable in respect of the Securities in any such
case, proceeding, dissolution, liquidation or other winding up or event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the payment of any
other indebtedness of the Company being subordinated to the payment of the
Securities, before all Senior Indebtedness is paid in full or payment thereof
provided for, and if such fact shall, at or prior to the time of such payment or
distribution, have been made known to the Trustee or such Holder, as the case
may be, then and in such event such payment or distribution shall be paid over
or delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person making payment or
distribution of assets of the Company for application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include securities of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, which are subordinated
in right of payment to all Senior Indebtedness which may at the time be
outstanding to substantially the same extent as, or to a greater extent than,
the Securities are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the conveyance
or transfer of its properties and assets substantially as an entirety to another
Person upon the terms and conditions set forth in Article Eight shall not be
deemed a dissolution, winding up, liquidation, reorganization, general
assignment for the benefit of creditors or marshalling of assets and liabilities
of the Company for the purposes of this Section if the Person formed by such
consolidation or into which the Company is merged or which acquires by
conveyance or transfer such properties and assets substantially as an entirety,
as the case may be, shall, as a part of such consolidation, merger, conveyance
or transfer, comply with the conditions set forth in Article Eight.
SECTION 1203. Prior Payment to Senior Indebtedness upon Acceleration of
---------------------------------------------------------
Securities.
----------
In the event that any Securities are declared due and payable before
their Stated Maturity, then and in such event the holders of Senior Indebtedness
outstanding at the time such Securities so become due and payable shall be
entitled to receive payment in full of all amounts due on or in respect of such
Senior Indebtedness, or provision shall be made for such payment in money or
money's worth, before the
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Holders of the Securities are entitled to receive any payment (including any
payment which may be payable by reason of the payment of any other indebtedness
of the Company being subordinated to the payment of the Securities) by the
Company on account of the principal of or premium, if any, or interest on the
Securities or on account of the purchase or other acquisition of Securities, and
upon any such event the Holders of the Securities shall, to the extent permitted
by law, be prohibited for a period of 180 days thereafter from making any
bankruptcy filing with respect to the Company or from filing suit to enforce
their rights under this Indenture (provided, however, that if the acceleration
-------- -------
of Securities is rescinded or annulled prior to the expiration of such 180-day
period, such prohibition shall terminate on such earlier date as the
acceleration of such Securities is rescinded or annulled).
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or such Holder, as the
case may be, then and in such event such payment shall be paid over the
delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 1202 would be applicable.
SECTION 1204. No Payment When Senior Indebtedness in Default.
----------------------------------------------
(a) In the event and during the continuation of any default in the
payment of principal of or premium, if any, or interest on any Senior
Indebtedness beyond any applicable grace period with respect thereto, or in the
event that any event of default with respect to any Senior Indebtedness shall
have occurred and be continuing and shall have resulted in such Senior
Indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, unless and until such
event of default shall have been cured or waived or shall have ceased to exist
and such acceleration shall have been rescinded or annulled, or (b) in the event
any judicial proceeding shall be pending with respect to any such default in
payment or event of default, then no payment (including any payment which may be
payable by reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Securities) shall be made by the Company on
account of the principal of or premium, if any, or interest on the Securities or
on account of the purchase or other acquisition of Securities, and for a period
of 180 days after any such occurrence the Holders shall, to the extent permitted
by law, be prohibited from making any bankruptcy filing with respect to the
Company or from filing suit to enforce their rights under this Indenture
(provided, however, that if any such default is cured, waived or shall otherwise
- --------- -------
cease to exist, or such proceeding shall be terminated, prior to the expiration
of such 180-day period, as shall be acknowledged in writing by the holder(s) of
a majority in interest of the Senior Indebtedness with respect to which such
default or proceeding relates, then such prohibition shall terminate on such
earlier date as such default is cured, waived or otherwise ceases to exist or
such proceeding is terminated).
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In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or such Holder, as the
case may be, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 1202 would be applicable.
SECTION 1205. Payment Permitted If No Default.
-------------------------------
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Company, at any time except during
the pendency of any case, proceeding, dissolution, liquidation or other winding
up, general assignment for the benefit of creditors or other marshalling of
assets and liabilities of the Company referred to in Section 1202 or under the
conditions described in Section 1203 or 1204, from making payments at any time
of principal of and premium, if any, or interest on the Securities, or (b) the
application by the Trustee of any money deposited with it hereunder to the
payment of or on account of the principal of and premium, if any, or interest on
the Securities or the retention of such payment by the Holders, if, at the time
of such application by the Trustee, it did not have knowledge that such payment
would have been prohibited by the provisions of this Article.
SECTION 1206. Subrogation to Rights of Holders of Senior Indebtedness.
-------------------------------------------------------
Subject to the payment in full of all amounts due on or in respect of
Senior Indebtedness, the Holders of the Securities shall be subrogated to the
extent of the payments or distributions made to the holders of such Senior
Indebtedness pursuant to the provisions of this Article (equally and ratably
with the holders of all indebtedness of the Company which by its express terms
is subordinated to other indebtedness of the Company to substantially the same
extent as the Securities are subordinated and is entitled to like rights of
subrogation) to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of and premium, if any, and Interest on
the Securities shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior Indebtedness of any cash,
property or securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article, and no payments
over pursuant to the provisions of this Article to the holders of Senior
Indebtedness by Holders of the Securities or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Indebtedness and the Holders
of the Securities, be deemed to be a payment or distribution by the Company to
or on account of the Senior Indebtedness.
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SECTION 1207. Provisions Solely to Define Relative Rights.
-------------------------------------------
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Securities, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders of
the Securities the principal of and premium, if any, and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company or the
Holders of the Securities and creditors of the Company other than the holders of
Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article of the
holders of Senior Indebtedness to receive cash, property and securities
otherwise payable or deliverable to the Trustee or such Holder.
SECTION 1208. Trustee to Effectuate Subordination.
-----------------------------------
Each holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 1209. No Waiver of Subordination Provisions.
-------------------------------------
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness, or otherwise amend or supplement in any manner
Senior Indebtedness or any instrument evidencing the same or any agreement under
which Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
of Senior Indebtedness;
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and (iv) exercise or refrain from exercising any rights against the Company and
any other Person.
SECTION 1210. Notice to Trustee.
-----------------
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities. Notwithstanding the provisions
of this Article or any other provision of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee therefor; and,
prior to the receipt of any such written notice, the Trustee, subject to the
provisions of Section 601, shall be entitled in all respects to assume that no
such facts exist; provided, however, that if the Trustee shall not have received
-------- -------
the notice provided for in this Section at least four Business Days prior to the
date upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of and premium, if
any, or interest on any Security), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purpose for which such money was
received and shall not be affected by any notice to the contrary which may be
received by it within four Business Days prior to such date.
Subject to the provisions of Section 601, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
SECTION 1211. Reliance on Judicial Order or Certificate of Liquidating Agent.
--------------------------------------------------------------
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 601, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
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delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 1212. Trustee Not Fiduciary for Holders of Senior Indebtedness.
--------------------------------------------------------
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall in good faith mistakenly pay over or distribute to Holders of Securities
or to the Company or to any other Person cash, property or securities to which
holders of Senior Indebtedness shall be entitled by virtue of this Article or
otherwise. With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Article against the Trustee.
SECTION 1213. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
---------------------------------------------------
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607.
SECTION 1214. Article Applicable to Paying Agents.
-----------------------------------
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided,
--------
however, that Section 1213 shall not apply to the Company or any Affiliate of
- -------
the Company if it or such Affiliate acts as Paying Agent.
SECTION 1215. Certain Conversions Deemed Payment.
----------------------------------
For the purposes of this Article only, (1) the issuance and delivery
of junior securities upon conversion of Securities in accordance with Article
Thirteen shall not be deemed to constitute a payment or distribution on account
of the principal of or premium or interest on Securities or on account of the
purchase or other acquisition of Securities, and (2) the payment, issuance or
delivery of cash, property or securities
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(other than junior securities) upon conversion of a Security shall be deemed to
constitute payment on account of the principal of such Security. For the
purposes of this Section, the term "junior securities" means (a) shares of any
class of capital stock of the Company and (b) securities of the Company which
are subordinated in right of payment to all Senior Indebtedness which may be
outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is intended to or
shall impair, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, the right, which is absolute and
unconditional, of the Holder of any Security to convert such Security in
accordance with Article Thirteen.
SECTION 1216. No Suspension of Remedies.
-------------------------
Nothing contained in this Article shall limit the right of the Trustee
or the Holders of the Securities to take any action to accelerate the maturity
of the Securities pursuant to the provisions described under Article Five and as
set forth in this Indenture or to pursue any rights or remedies hereunder or
under applicable law, subject to the rights, if any, under this Article of the
holders, from time to time, of Senior Indebtedness to receive the cash, property
or securities receivable upon the exercise of such rights or remedies.
ARTICLE THIRTEEN
Conversion of Securities
SECTION 1301. Conversion Privilege and Conversion Price.
-----------------------------------------
Subject to and upon compliance with the provisions of this Article, at
the option of the Holder thereof, any Security or any portion of the principal
amount thereof which equals $1,000 or any integral multiple thereof may be
converted at any time after the 60th day following the date of original issuance
of Securities under this Indenture at the principal amount thereof, or of such
portion thereof, into fully paid and nonassessable shares (calculated as to each
conversion to the nearest 1/100 of a share) of Common Stock, at the conversion
price, determined as hereinafter provided, in effect at the time of conversion.
Such conversion right shall expire at the close of business on December 1, 2001.
In case a Security or portion thereof is called for redemption, such conversion
right in respect of the Security or portion so called shall expire at the close
of business on the second business day preceding the applicable Redemption Date,
unless the Company defaults in making the payment due upon redemption.
The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "conversion price") shall be initially $25.00 per
share of Common Stock. The conversion price shall be adjusted in certain
instances as provided in paragraphs (a), (b), (c), (d), (e), (f) and (i) of
Section 1304.
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SECTION 1302. Exercise of Conversion Privilege.
--------------------------------
In order to exercise the conversion privilege, the Holder of any
Security shall surrender such Security, duly endorsed or assigned to the Company
or in blank, at any office or agency of the Company maintained pursuant to
Section 1002, accompanied by written notice to the Company in the form provided
in the Security (or such other notice as is acceptable to the Company) at such
office or agency that the Holder elects to convert such Security or, if less
than the entire principal amount thereof is to be converted, the portion thereof
to be converted. Securities surrendered for conversion during the period from
the opening of business on any Regular Record Date next preceding any Interest
Payment Date to the close of business on such Interest Payment Date shall
(except in the case of Securities or portions thereof which have been called for
redemption) be accompanied by payment in New York Clearing House funds or other
funds acceptable to the Company of an amount equal to the interest payable on
such Interest Payment Date on the principal amount being surrendered for
conversion. Except as provided in the immediately preceding sentence and subject
to the fourth paragraph of Section 307, no payment or adjustment shall be made
upon any conversion on account of any interest accrued on the Securities
surrendered for conversion or on account of any dividends on the Common Stock
issued upon conversion.
Securities shall be deemed to have been converted immediately prior to
the close of business on the day of surrender of such Securities for conversion
in accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or Persons
entitled to receive the Common Stock issuable upon conversion shall be treated
for all purposes of the record holder or holders of such Common Stock as and
after such time. As promptly as practicable on or after the conversion date,
the Company shall issue and shall deliver at such office or agency a certificate
or certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in Section 1303.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in aggregate principal amount equal to
the unconverted portion of the principal amount of such Security.
SECTION 1303. Fractions of Shares.
-------------------
No fractional share of Common Stock shall be issued upon conversion of
Securities. If more than one Security shall be surrendered for conversion at
one time by the same Holder, the number of full shares which shall be issuable
upon conversion thereof shall be computed on the basis of the aggregate
principal amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be issuable upon conversion of any Security or Securities (or
specified portions thereof), the Company shall pay a cash adjustment in
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respect of such fraction in an amount equal to the same fraction of the Closing
Price (as hereinafter defined) at the close of business on the day of conversion
(or, if such day is not a Trading Day (as hereafter defined), on the Trading Day
immediately preceding such day).
SECTION 1304. Adjustment of Conversion Price.
------------------------------
(a) In case the Company shall pay or make a dividend or other
distribution on the Common Stock exclusively in Common Stock or shall pay or
make a dividend or other distribution on any other class of capital stock of the
Company which dividend or distribution includes Common Stock, the conversion
price in effect at the opening of business on the day following the date fixed
for the determination of shareholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such conversion price by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day following
the date fixed for such determination. For the purpose of this paragraph (a),
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company. The Company shall not pay any
dividend or make any distribution on shares of Common Stock held in the treasury
of the Company.
(b) Subject to paragraph (g) of this Section, in case the Company
shall pay or make a dividend or other distribution on the Common Stock
consisting exclusively of, or shall otherwise issue to all holders of the Common
Stock, rights or warrants entitling the holders thereof to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price (determined as provided in paragraph (h) of this Section) on the
date fixed for the determination of shareholders entitled to receive such rights
or warrants, the conversion price in effect at the opening of business on the
day following the date fixed for such determination shall be reduced by
multiplying such conversion price by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase at such
Current Market Price and the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such reduction to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (b), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company. The Company shall not issue any rights or warrants in
respect of shares of Common Stock held in the treasury of the Company.
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(c) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the conversion price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and, conversely,
in case outstanding shares of Common Stock shall be combined into a smaller
number of shares of Common Stock, the conversion price in effect at the opening
of business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which subdivision or combination becomes
effective.
(d) Subject to the last sentence of this paragraph (d) and to
paragraph (g) of this Section, in case the Company shall, by dividend or
otherwise, distribute to all holders of the Common Stock evidences of its
indebtedness, shares of any class of its capital stock, cash or other assets
(including securities, but excluding any rights or warrants referred to in
paragraph (b) of this Section, excluding any dividend or distribution paid
exclusively in cash and excluding any dividend or distribution referred to in
paragraph (a) of this Section), the conversion price shall be reduced by
multiplying the conversion price in effect immediately prior to the close of
business on the date fixed for the determination of shareholders entitled to
such distribution by a fraction of which the numerator shall be the Current
Market Price (determined as provided in paragraph (h) of this Section) on such
date less the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) on such
date of the portion of the evidences of indebtedness, shares of capital stock,
cash and other assets to be distributed applicable to one share of Common Stock
and the denominator shall be such Current Market Price, such reduction to become
effective immediately prior to the opening of business on the day following such
date. If the Board of Directors determines the fair market value of any
distribution for purposes of this paragraph (d) by reference to the actual or
when-issued trading market for any securities comprising part or all of such
distribution, it must in doing so consider the prices in such market over the
same period used in computing the Current Market Price pursuant to paragraph (h)
of this Section, to the extent possible. For purposes of this paragraph (d),
any dividend or distribution that includes shares of Common Stock, rights or
warrants to subscribe for or purchase shares of Common Stock or securities
convertible into or exchangeable for shares of Common Stock shall be deemed to
be (x) a dividend or distribution of the evidences of indebtedness, cash, assets
or shares of capital stock other than such shares of Common Stock, such rights
or warrants or such convertible or exchangeable securities (making any
conversion price reduction required by this paragraph (d)) immediately followed
by (y) in the case of such shares of Common Stock or such rights or warrants, a
dividend or distribution thereof (making any further conversion price reduction
required by paragraph (a) and (b) of this Section, except any shares of Common
Stock included in such dividend or distribution shall not be deemed "outstanding
at the close of business on the date fixed for such determination" within the
meaning of paragraph (a) of this Section), or (z) in the case of such
convertible or exchangeable securities, a dividend or distribution of the number
of shares of Common Stock as would then be issuable upon the conversion or
exchange thereof, whether or not
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the conversion or exchange of such securities is subject to any conditions
(making any further conversion price reduction required by paragraph (a) of this
Section, except the shares deemed to constitute such dividend or distribution
shall not be deemed "outstanding at the close of business on the date fixed for
such determination" within the meaning of paragraph (a) of this Section).
(e) In case the Company shall, by dividend or otherwise, at any time
distribute to all holders of the Common Stock cash (excluding any cash that is
distributed as part of a distribution referred to in paragraph (d) of this
Section or in connection with a transaction to which Section 1311 applies) in an
aggregate amount that, together with (A) the aggregate amount of any other
distributions to all holders of the Common Stock made exclusively in cash within
the 12 months preceding the date fixed for the determination of shareholders
entitled to such distribution and in respect of which no conversion price
adjustment pursuant to this paragraph (e) has been made previously and (B) the
aggregate of any cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) as of such date of determination of consideration payable in respect
of any tender offer by the Company or a Subsidiary for all or any portion of the
Common Stock consummated within the 12 months preceding such date of
determination and in respect of which no conversion price adjustment pursuant to
paragraph (f) of this Section has been made previously, exceeds the greater of
(I) 12.5% of the product of the Current Market Price (determined as provided in
paragraph (h) of this Section) on such date of determination times the number of
shares of Common Stock outstanding on such date or (II) the Company's retained
earnings on the date fixed for determining the stockholders entitled to such
distribution, the conversion price shall be reduced by multiplying the
conversion price in effect immediately prior to the close of business on such
date of determination by a fraction of which the numerator shall be the Current
Market Price (determined as provided in paragraph (h) of this Section) on such
date less the amount of cash to be distributed at such time applicable to one
share of Common Stock and the denominator shall be such Current Market Price,
such reduction to become effective immediately prior to the opening of business
on the day after such date.
(f) In case a tender offer made by the Company or any Subsidiary for
all or any portion of the Common Stock shall be consummated and such tender
offer shall involve an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) as of the last time (the "Expiration Time")
that tenders may be made pursuant to such tender offer (as it shall have been
amended) that, together with (A) the aggregate of the cash plus the fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) as of the Expiration Time of the
other consideration paid in respect of any other tender offer by the Company or
a Subsidiary for all or any portion of the Common Stock consummated within the
12 months preceding the Expiration Time and in respect of which no conversion
price adjustment pursuant to this paragraph (f) has been made previously and (B)
the aggregate amount of any distributions to all holders of the Common Stock
made exclusively in cash within the 12 months preceding the Expiration
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Time and in respect of which no conversion price adjustment pursuant to
paragraph (e) of this Section has been made previously, exceeds the greater of
(I) 12.5% of the product of the Current Market Price (determined as provided in
paragraph (h) of this Section) immediately prior to the Expiration Time times
the number of shares of Common Stock outstanding (including any tendered shares)
at the Expiration Time or (II) the Company's retained earnings as of the
Expiration Time, the conversion price shall be reduced by multiplying the
conversion price in effect immediately prior to the Expiration Time by a
fraction of which the numerator shall be (x) the product of the Current Market
Price (determined as provided in paragraph (h) of this Section) immediately
prior to the Expiration Time times the number of shares of Common Stock
outstanding (including any tendered shares at the Expiration Time minus (y) the
fair market value (determined as aforesaid) of the aggregate consideration
payable to shareholders upon consummation of such tender offer and the
denominator shall be the product of (A) such Current Market Price times (B) such
number of outstanding shares at the Expiration Time minus the number of shares
accepted for payment in such tender offer (the "Purchased Shares"), such
reduction to become effective immediately prior to the opening of business on
the day following the Expiration Time; provided, that if the number of Purchased
--------
Shares or the aggregate consideration payable therefor have not been finally
determined by such opening of business, the adjustment required by this
paragraph (f) shall, pending such final determination, be made based upon the
preliminarily announced results of such tender offer, and, after such final
determination shall have been made, the adjustment required by this paragraph
(f) shall be made based upon the number of Purchased Shares and the aggregate
consideration payable therefor as so finally determined.
(g) The reclassification of Common Stock into securities which
include securities other than Common Stock (other than any reclassification upon
a consolidation or merger to which Section 1311 applies) shall be deemed to
involve (i) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such reclassification shall
be deemed to be "the date fixed for the determination of shareholders entitled
to such distribution" within the meaning of paragraph (d) of this Section), and
(ii) a subdivision or combination, as the case may be, of the number of shares
of Common Stock outstanding immediately prior to such reclassification into the
number of shares of Common Stock outstanding immediately thereafter (and the
effective date of such reclassification shall be deemed to be "the day upon
which such subdivision becomes effective" or "the day upon which such
combination becomes effective", as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of paragraph
(c) of this Section).
Rights or warrants issued by the Company to all holders of the Common
Stock entitling the holders thereof to subscribe for or purchase shares of
Common Stock (either initially or under certain circumstances), which rights or
warrants (i) are deemed to be transferred with such shares of Common Stock, (ii)
are not exercisable and (iii) are also issued in respect of future issuances of
Common Stock, in each case in clauses (i) through (iii) until the occurrence of
a specified event or events ("Trigger Event"), shall for purposes of this
Section 1304 not be deemed issued until the occurrence of the
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earliest Trigger Event. If any such rights or warrants, including any such
existing rights or warrants distributed prior to the date of this Indenture are
subject to subsequent events, upon the occurrence of each of which such rights
or warrants shall become exercisable to purchase different securities, evidences
of indebtedness or other assets, then the occurrence of each such event shall be
deemed to be such date of issuance and record date with respect to new rights or
warrants (and a termination or expiration of the existing rights or warrants
without exercise by the holder thereof). In addition, in the event of any
distribution (or deemed distribution) of rights or warrants, or any Trigger
Event with respect thereto, that was counted for purposes of calculating a
distribution amount for which an adjustment to the Conversion Price under this
Section 1304 was made, (1) in the case of any such rights or warrant which shall
all have been redeemed or repurchased without exercise by any holders thereof,
the Conversion Price shall be readjusted upon such final redemption or
repurchase to give effect to such distribution or Trigger Event, as the case may
be, as though it were a cash distribution, equal to the per share redemption or
repurchase price received by a holder or holders of Common Stock with respect to
such rights or warrants (assuming such holder had retained such rights or
warrants), made to all holders of Common Stock as of the date of such redemption
or repurchase, and (2) in the case of such rights or warrants which shall have
expired or been terminated without exercise by any holders thereof, the
Conversion Price shall be readjusted as if such rights and warrants had not been
issued.
Notwithstanding any other provision of this Section 1304 to the
contrary, rights, warrants, evidences of indebtedness, other securities, cash or
other assets (including, without limitation, any rights distributed pursuant to
any stockholder rights plan) shall be deemed not to have been distributed for
purposes of this Section 1304 if the Company makes proper provision so that each
holder of Securities who converts a Security (or any portion thereof) after the
date fixed for determination of stockholders entitled to receive such
distribution shall be entitled to receive upon such conversion, in addition to
the shares of Common Stock issuable upon such conversions, the amount and kind
of such distributions that such holder would have been entitled to receive if
such holder had, immediately prior to such determination date, converted such
Security into Common Stock.
(h) For the purpose of any computation under this paragraph and
paragraphs (b), (d) and (e) of this Section, the current market price per share
of Common Stock (the "Current Market Price") on any date shall be deemed to be
the average of the daily Closing Prices for the 5 consecutive Trading Days
selected by the Company commencing not more than 20 Trading Days before, and
ending not later than, the date in question; provided, however, that (i) if the
-------- -------
"ex" date for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the conversion price pursuant to
paragraph (a), (b), (c), (d), (e) or (f) above occurs on or after the 20th
Trading Day prior to the date in question and prior to the "ex" date for the
issuance or distribution requiring such computation, the Closing Price for each
Trading Day prior to the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the same fraction by which the conversion
price is so required to be adjusted as a result of such other event, (ii) if the
"ex" date for any event (other than the
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issuance or distribution requiring such computation) that requires an adjustment
to the conversion price pursuant to paragraph (a), (b), (c), (d), (e) or (f)
above occurs on or after the "ex" date for the issuance or distribution
requiring such computation and on or prior to the date in question, the Closing
Price for each Trading Day on and after the "ex" date for such other event shall
be adjusted by multiplying such Closing Price by the reciprocal of the fraction
by which the conversion price is so required to be adjusted as a result of such
other event, and (iii) if the "ex" date for the issuance or distribution
requiring such computation is on or prior to the date in question, after taking
into account any adjustment required pursuant to clause (ii) of this proviso,
the Closing Price for each Trading Day on or after such "ex" date shall be
adjusted by adding thereto the amount of any cash and the fair market value on
the date in question (as determined by the Board of Directors in a manner
consistent with any determination of such value for purposes of paragraph (d) or
(e) of this Section, whose determination shall be conclusive and described in a
Board Resolution) of the evidences of indebtedness, shares of capital stock or
assets being distributed applicable to one share of Common Stock as of the close
of business on the day before such "ex" date. For the purpose of any computation
under paragraph (f) of this Section, the Current Market Price on any date shall
be deemed to be the average of the daily Closing Prices for the 5 consecutive
Trading Days selected by the Company commencing on or after the latest (the
"Commencement Date") of (i) the date 20 Trading Days before the date in
question, (ii) the date of commencement of the tender offer requiring such
computation and (iii) the date of the last amendment, if any, of such tender
offer involving a change in the maximum number of shares for which tenders are
sought or a change in the consideration offered, and ending not later than the
Expiration Time of such tender offer; provided, however, that if the "ex" date
-------- -------
for any event (other than the tender offer requiring such computation) that
requires an adjustment to the conversion price pursuant to paragraph (a), (b),
(c), (d), (e) or (f) above occurs on or after the Commencement Date and prior to
the Expiration Time for the tender offer requiring such computation, the Closing
Price for each Trading Day prior to the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the same fraction by which the
conversion price is so required to be adjusted as a result of such other event.
The closing price for any Trading Day (the "Closing Price") shall be the last
reported sales price regular way or, in case no such reported sale takes place
on such day, the average of the reported closing bid and asked prices regular
way, in either case on the New York Stock Exchange or, if the Common Stock is
not listed or admitted to trading on such exchange, on the principal national
securities exchange on which the Common Stock is listed or admitted to trading
or, if not listed or admitted to trading on any national securities exchange, on
the Nasdaq Stock Market's National Market or, if the Common Stock is not listed
or admitted to trading on any national securities exchange or quoted on such
National Market, the average of the closing bid and asked prices in the over-
the-counter market as furnished by any New York Stock Exchange member firm
selected from time to time by the Company for that purpose. For purposes of
this paragraph, the term "Trading Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday, other than any day on which securities are generally not
traded on the applicable securities exchange or in the applicable securities
market and the term "'ex' date," (i) when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades regular way
on the relevant exchange or in the relevant
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market from which the Closing Prices were obtained without the right to receive
such issuance or distribution, (ii) when used with respect to any subdivision or
combination of shares of Common Stock, means the first date on which the Common
Stock trades regular way on such exchange or in such market after the time at
which such subdivision or combination becomes effective, and (iii) when used
with respect to any tender offer means the first date on which the Common Stock
trades regular way on such exchange or in such market after the last time that
tenders may be made pursuant to such tender offer (as it shall have been
amended).
(i) The Company may make such reductions in the conversion price, in
addition to those required by paragraphs (a), (b), (c), (d), (e) and (f) of this
Section, as it considers to be advisable (as evidenced by a Board Resolution) in
order that any event treated for federal income tax purposes as a dividend of
stock or stock rights shall not be taxable to the recipients or, if that is not
possible, to diminish any income taxes that are otherwise payable because of
such event.
(j) No adjustment in the conversion price shall be required unless
such adjustment (plus any other adjustments not previously made by reason of
this paragraph (j)) would require an increase or decrease of at least 1% in the
conversion price; provided, however, that any adjustments which by reason of
-------- -------
this paragraph (j) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
(k) Notwithstanding any other provision of this Section 1304, no
adjustment to the conversion price shall reduce the conversion price below the
then par value per share of the Common Stock, and any such purported adjustment
shall instead reduce the conversion price to such par value. The Company hereby
covenants not to take any action to increase the par value per share of the
Common Stock.
SECTION 1305. Notice of Adjustments of Conversion Price.
-----------------------------------------
Whenever the conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price in
accordance with Section 1304 and shall prepare an Officers' Certificate
signed by the Treasurer of the Company setting forth the adjusted
conversion price and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall forthwith be filed (with a
copy to the Trustee) at each office or agency maintained for the purpose of
conversion of Securities pursuant to Section 1002; and
(b) a notice stating that the conversion price has been adjusted and
setting forth the adjusted conversion price shall forthwith be prepared,
and as soon as practicable after it is prepared, such notice shall be
mailed by the Company to all Holders at their last addresses as they shall
appear in the Security Register.
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SECTION 1306. Notice of Certain Corporate Action.
----------------------------------
In case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an amount that would require a conversion price
adjustment pursuant to paragraph (e) of Section 1304; or
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any other rights (excluding shares of
capital stock or option for capital stock issued pursuant to a benefit plan
for employees, officers or directors of the Company); or
(c) of any reclassification of the Common Stock (other than a
subdivision or combination of the outstanding shares of Common Stock), or
of any consolidation, merger or share exchange to which the Company is a
party and for which approval of any stockholders of the Company is
required, or of the sale or transfer of all or substantially all of the
assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company or any Subsidiary shall commence a tender offer for
all or a portion of the outstanding shares of Common Stock (or shall amend
any such tender offer to change the maximum number of shares being sought
or the amount or type of consideration being offered therefor);
then the Company shall cause to be filed at each office or agency maintained
pursuant to Section 1002, and shall cause to be mailed to all Holders at their
last addresses as they shall appear in the Security Register, at least 21 days
(or 11 days in any case specified in clause (a), (b) or (e) above) prior to the
applicable record, effective or expiration date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or granting of rights or warrants, or, if a record is not
to be taken, the date as of which the holders of Common Stock of record who will
be entitled to such dividend, distribution, rights or warrants are to be
determined, (y) the date on which such reclassification, consolidation, merger,
share exchange, sale, transfer, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up, or (z) the date on which such tender
offer commenced, the date on which such tender offer is scheduled to expire
unless extended, the consideration offered and the other material terms thereof
(or the material terms of any amendment thereto). Neither the failure to give
any such notice nor any
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defect therein shall affect the legality or validity of any action described in
clauses (a) through (e) of this Section 1306.
SECTION 1307. Company to Reserve Common Stock.
-------------------------------
The Company shall at all times reserve and keep available, free from
preemptive rights, out of the authorized but unissued Common Stock or out of the
Common Stock held in treasury, for the purpose of effecting the conversion of
Securities, the full number of shares of Common Stock then issuable upon the
conversion of all outstanding Securities. Shares of Common Stock issuable upon
conversion of outstanding Securities shall be issued out of the Common Stock
held in Treasury to the extent available.
SECTION 1308. Taxes on Conversions.
--------------------
The Company will pay any and all taxes that may be payable in respect
of the issue or delivery of shares of Common Stock on conversion of Securities
pursuant hereto. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that of the Holder of
the Security or Securities to be converted, and no such issue or delivery shall
be made unless and until the Person requesting such issue has paid to the
Company the amount of any such tax, or has established to the satisfaction of
the Company that such tax has been paid.
SECTION 1309. Covenant as to Common Stock.
---------------------------
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Securities will upon issue be fully paid and
nonassessable and, except as provided in Section 1308, the Company will pay all
taxes, liens and charges with respect to the issue thereof.
SECTION 1310. Cancellation of Converted Securities.
------------------------------------
All Securities delivered for conversion shall be delivered to the
Trustee to be canceled by or at the direction of the Trustee, which shall
dispose of the same as provided in Section 309.
SECTION 1311. Provisions of Consolidation, Merger or Sale of Assets.
-----------------------------------------------------
In case of any consolidation of the Company with, or merger of the
Company into, any other Person, any merger of another Person into the Company
(other than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock) or any sale or
transfer of all or substantially all of the assets of the Company, the Person
formed by such consolidation or resulting from such merger or which acquires
such assets, as the case may be, shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of
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each Security then Outstanding shall have the right thereafter, during the
period such Security shall be convertible as specified in Section 1301, to
convert such Security only into the kind and amount of securities, cash and
other property, if any, receivable upon such consolidation, merger, sale or
transfer by a holder of the number of shares of Common Stock into which such
Security might have been converted immediately prior to such consolidation,
merger, sale or transfer, assuming such holder of Common Stock (i) is not a
Person with which the Company consolidated or into which the Company merged or
which merged into the Company or to which such sale or transfer was made, as the
case may be (a "Constituent Person"), or an Affiliate of a Constituent Person
and (ii) failed to exercise his rights of election, if any, as to the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer (provided that if the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer is not the same for each share of Common Stock held immediately
prior to such consolidation, merger, sale or transfer by other than a
Constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("nonelecting share"), then for the
purpose of this Section the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer by each
nonelecting share shall be deemed to be the kind and amount so receivable per
share by a plurality of the nonelecting shares). Such supplemental indenture
shall provide for adjustments which, for events subsequent to the effective date
of such supplemental indenture, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article. The above
provisions of this Section shall similarly apply to successive consolidations,
mergers, sales or transfers.
SECTION 1312. Trustee's Disclaimer.
--------------------
The Trustee has no duty to determine when an adjustment under this
Article Thirteen should be made, how it should be made or what such adjustment
should be, but may accept as conclusive evidence of the correctness of any such
adjustment, and shall be protected in relying upon, the Officers' Certificate
with respect thereto which the Company is obligated to file with the Trustee
pursuant to Section 1305. The Trustee makes no representation as to the
validity or value of any securities or assets issued upon conversion of
Securities, and the Trustee shall not be responsible for the Company's failure
to comply with any provisions of this Article Thirteen.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 1311, but may accept as conclusive evidence of the
correctness thereof, and shall be protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 1311.
93
<PAGE>
ARTICLE FOURTEEN
Right to Require Repurchase
SECTION 1401. Right to Require Repurchase.
---------------------------
In the event that there shall occur a Repurchase Event (as defined in
Section 1406), then each Holder shall have the right, at such Holder's option,
to require the Company to purchase, and upon the exercise of such right, the
Company shall, subject to the provisions of Section 1203, purchase, all or any
part of such Holder's Securities on the date (the "Repurchase Date") that is 30
days after the date the Company gives notice of the Repurchase Event as
contemplated in Section 1402(a) at a price (the "Repurchase Price") equal to
100% of the principal amount thereof, together with accrued and unpaid interest
to the Repurchase Date.
SECTION 1402. Notice; Method of Exercising Repurchase Right.
---------------------------------------------
(a) On or before the 15th day after the occurrence of a Repurchase
Event, the Company, or at the request of the Company received by the Trustee at
least 40 days prior to the Repurchase Date, the Trustee (in the name and at the
expense of the Company), shall give notice of the occurrence of the Repurchase
Event and of the repurchase right set forth herein arising as a result thereof
by first-class mail, postage prepaid, to the Trustee and to each Holder of the
Securities at such Holder's address appearing in the Security Register. The
Company shall also deliver a copy of such notice of a repurchase right to the
Trustee.
Each notice of a repurchase right shall state:
(1) the event constituting the Repurchase Event and the date
thereof,
(2) the Repurchase Date,
(3) the date by which the repurchase right must be exercised,
(4) the Repurchase Price, and
(5) the instructions a Holder must follow to exercise a repurchase
right.
No failure of the Company to give the foregoing notice shall limit any
Holder's right to exercise a repurchase right. The Trustee shall have no
affirmative obligation to determine if there shall have occurred a Repurchase
Event.
(b) To exercise a repurchase right, a Holder shall deliver to the
Company (or an agent designated by the Company for such purpose in the notice
referred to in (a) above) and to the Trustee on or before the close of business
on the Repurchase
94
<PAGE>
Date (i) written notice of the Holder's exercise of such right, which notice
shall set forth the name of the Holder, the principal amount of the Security or
Securities (or portion of a Security) to be repurchased, and a statement that an
election to exercise the repurchased right is being made thereby, and (ii) the
Security or Securities with respect to which the repurchase right is being
exercised, duly endorsed for transfer to the Company. Such written notice shall
be irrevocable. If the Repurchase Date falls between any Regular Record Date and
the next succeeding Interest Payment Date, Securities to be repurchased must be
accompanied by payment from the Holder of an amount equal to the interest
thereon which the registered Holder thereof is to receive on such Interest
Payment Date.
In the event a repurchase right shall be exercised in accordance with
the terms hereof, the Company shall on the Repurchase Date pay or cause to be
paid in cash to the Holder thereof the Repurchase Price of the Security or
Securities as to which the repurchase right had been exercised. In the event
that a repurchase right is exercised with respect to less than the entire
principal amount of a surrendered Security, the Company shall execute and
deliver to the Trustee and the Trustee shall authenticate for issuance in the
name of the Holder a new Security or Securities in the aggregate principal
amount of the unrepurchased portion of such surrendered security.
SECTION 1403. Deposit of Repurchase Price.
---------------------------
On or prior to the Repurchase Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money in same day funds sufficient to pay the Repurchase Price of the Securities
which are to be repaid on the Repurchase Date.
SECTION 1404. Securities Not Repurchased on Repurchase Date.
---------------------------------------------
If any Security surrendered for repurchase shall not be so paid on the
Repurchase Date, the principal shall, until paid, bear interest to the extent
permitted by applicable law from the Repurchase Date at the rate per annum borne
by such Security.
SECTION 1405. Securities Repurchased in Part.
------------------------------
Any Security which is to be repurchased only in part shall be
surrendered at any office or agency of the Company designated for that purpose
pursuant to Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of any authorized denomination as requested
by such Holder, in aggregate principal amount equal to and in exchange for the
unrepurchased portion of the principal of the Security so surrendered.
95
<PAGE>
SECTION 1406. Certain Definitions.
-------------------
For purposes of this Article:
(a) A "Repurchase Event" shall have occurred upon the occurrence of a
Change in Control or Termination of Trading after the date of this
Indenture and on or prior to December 1, 2001.
(b) 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 (other than a
Permitted Holder);
(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
(a "Group"), 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; or
(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 % 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
96
<PAGE>
(v) the Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution.
(c) A "Termination of Trading" shall occur if the Common Stock (or
other common stock into which the Securities 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.
_____________________________
This instrument may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
PHYSICIANS RESOURCE GROUP, INC.
By /s/ Mark P. Kingston
--------------------
Name: Mark P. Kingston
Title: Senior Vice President
Attest:
/s/ Richard J. D'Amico
- ----------------------
Richard J. D'Amico
Secretary
U.S. TRUST COMPANY OF NEW YORK,
N.A.
as Trustee
By /s/ Patricia Stermer
--------------------
Name: PATRICIA STERMER
Title: ASSISTANT VICE PRESIDENT
Attest:
[SIGNATURE ILLEGIBLE]
- ---------------------
97
<PAGE>
State of Texas )
) ss.
County of Dallas )
On the 10th day of December, 1996, before me personally came Mark P.
Kingston, to me known, who, being by me duly sworn, did depose and say that he
is Senior Vice President of Physicians Resource Group, Inc., one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he signed his name thereto by like
authority.
[NOTARY SEAL /S/ Melanie Matney
APPEARS HERE] --------------------------------
)
) ss.:
)
On the 10th day of December, 1996, before me personally came Patricia
Stermer, to me known, who, being by me duly sworn, did depose and say that she
is Assistant Vice President of U.S. Trust Company of New York, N.A., a New York
corporation, described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such seal; that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
DENISE P. LOPEZ
[NOTARY SEAL APPEARS HERE]
--------------------------
98
<PAGE>
EXHIBIT A
------- -
[FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER
OF SECURITIES]
CERTIFICATE FOR EXCHANGE OR TRANSFER
Re: 6% Convertible Subordinated Debentures due 2001
This Certificate relates to $_________ principal amount of Securities
held in *____________ book-entry or *____________ definitive form by _________
(the "Transferor").
The Transferor*:
[_] has requested the Trustee by written order to deliver in exchange for
its beneficial interest in a Global Security held by the Depositary a Security
or Securities in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Security (or the portion thereof indicated above); or
[_] has requested the Trustee by written order to deliver in exchange for
its Security or Securities a beneficial interest in a Global Security held by
the Depositary in a principal amount equal to the aggregate principal amount of
such Security or Securities; or
[_] has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with such request and in respect of each such security,
the Transferor does hereby certify to the Company and the Trustee that
Transferor is familiar with the Indenture relating to the above captioned
Debentures and, as provided in Section 305 of such Indenture, the transfer of
this Security does not require registration under the Securities Act (as defined
below) because*:
[_] Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 305(b)(ii)(A) or Section
305(f)(i)(A) of the Indenture).
[_] Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act")) in reliance on Rule 144A or pursuant to an exemption
from registration in accordance with Regulation S under the Securities Act (in
satisfaction of Section 305(b)(ii)(B), Section 305(c)(i), Section 305(d)(i),
Section 305(f)(i)(B), Section 305(g)(iii)
__________________________
* Check applicable box.
A-1
<PAGE>
or Section 305(h)(iii) of the Indenture). An opinion of counsel to the effect
that such transfer does not require registration under the Securities Act
accompanies this Certificate (in satisfaction of Section 305(b)(ii)(B), Section
305(c)(i), Section 305(d)(i), Section 305(f)(i)(B), Section 305(g)(iii) or
Section 305(h)(iii) of the Indenture).
[_] Such Security is being transferred in accordance with Rule 144 under
the Securities Act, or pursuant to an effective registration statement under the
Securities Act (in satisfaction of Section 305(b)(ii)(B), Section 305(f)(i)(B)
or Section 305(k)(ii) of the Indenture). If such Security is being transferred
in accordance with Rule 144 under the Securities Act, an opinion of counsel to
the effect that such transfer does not require registration under the Securities
Act accompanies this Certificate (in satisfaction of Section 305(b)(ii)(B),
Section 305(f)(i)(B) or Section 305(k)(ii) of the Indenture).
[_] Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144A, 144 or Regulation S under the Securities Act. An opinion
of counsel to the effect that such transfer does not require registration under
the Securities Act accompanies this Certificate (in satisfaction of Section
305(b)(ii)(C) or Section 305(f)(i)(C) of the Indenture).
You are entitled to rely upon this certificate and you are irrevocably
authorized to produce this certificate or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect to
the matters covered hereby.
_______________________________________
[INSERT NAME OF TRANSFEROR]
By: ___________________________________
Date: _______________________
A-2
<PAGE>
EXHIBIT 10.33
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as December 6, 1996
relating to
$125,000,000 in Aggregate Principal Amount
of 6% Convertible Senior Subordinated
Debentures due 2001
by and between
Physicians Resource Group, Inc.
and
Smith Barney Inc.,
Alex. Brown & Sons Incorporated,
Dillon, Read & Co. Inc.,
Salomon Brothers Inc,
and
Volpe Welty & Company,
as Initial Purchasers
<PAGE>
This Registration Rights Agreement (the "Agreement") is made and
entered into as of December 6, 1996, by and between Physicians Resource Group,
Inc., a Delaware corporation (the "Company") and Smith Barney Inc., Alex. Brown
& Sons Incorporated, Dillon, Read & Co. Inc., Salomon Brothers Inc and Volpe
Welty & Company (the "Initial Purchasers"), who will purchase $125,000,000 in
aggregate principal amount of 6% Convertible Subordinated Debentures due 2001
(the "Debentures") of the Company (excluding up to an additional $18,750,000
aggregate principal that may be purchased by the Initial Purchasers pursuant to
their over-allotment option) pursuant to the Purchase Agreement dated December
6, 1996 (the "Purchase Agreement"), between the Company and the Initial
Purchasers. In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company has agreed to provide the registration rights
set forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers set forth in the Purchase
Agreement. All defined terms used but not defined herein shall have the
meanings ascribed to them in the Indenture (as defined herein).
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall
have the following meanings:
Act: The Securities Act of 1933, as amended.
Closing Date: The date on which all the Debentures are first sold
by the Company to the Initial Purchasers pursuant to the Purchase Agreement.
Commission: The Securities and Exchange Commission.
Common Stock: The Common Stock, par value $.01 per share, of the
Company.
Damages Payment Date: With respect to the Debentures or the Common
Stock, as applicable, each Interest Payment Date as defined in the Indenture.
Effectiveness Target Date: As defined in Section 4.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exempt Resales: The transactions in which the Initial Purchasers
propose to sell the Debentures to (i) certain "qualified institutional buyers"
(as such term is defined in Rule 144A under the Act), (ii) to certain persons in
offshore transactions in reliance on Regulation S under the Act and (iii) to a
limited number of "accredited investors" as defined in Rule 501(a)(1), (2), (3)
or (7).
Holders: As defined in Section 2(b) hereof.
Indenture: The Indenture, to be dated as of December 11, 1996,
among the Company and U.S. Trust Company of New York, N.A., as trustee (the
"Trustee"), pursuant to which the Debentures are to be issued, as such Indenture
is amended or supplemented from time to time in accordance with the terms
thereof.
Interest PaymentDate: As defined in the Indenture.
NASD: National Association of Securities Dealers, Inc.
<PAGE>
Offering Memorandum: The Offering Memorandum, dated December 6,
1996, and all amendments and supplements thereto, relating to the Debentures and
prepared by the Company pursuant to the Purchase Agreement.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
Preliminary Prospectus: As defined in Section 3(g).
Prospectus: The prospectus included in the Shelf Registration
Statement, as amended or supplemented by any Prospectus Supplement with respect
to the terms of the offering of any portion of the Transfer Restricted
Securities (as defined herein) covered by the Shelf Registration Statement and
by all other amendments and supplements to the prospectus, including post-
effective amendments, and all material which may be incorporated by reference
into such prospectus.
Prospectus Supplement: As defined in Section 5(b).
Record Holder: (i) With respect to any Damages Payment Date
relating to the Debentures, each Person who is registered on the books of the
Registrar as the holder of Debentures on the record date with respect to the
Interest Payment Date on which such Damages Payment Date shall occur and (ii)
with respect to any Damages Payment Date relating to the Common Stock, each
Person who is a holder of record of such Common Stock fifteen days prior to the
Damages Payment Date.
Registration Expenses: As defined in Section 6(a).
Shelf Registration Statement: As defined in Section 3(a) hereof.
TIA: The Trust Indenture Act of 1939, as amended (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Debenture and share of Common
Stock of the Company issuable upon conversion of a Debenture, until each such
Debenture or share (i) has been effectively registered under the Securities Act
and disposed of in accordance with the Shelf Registration Statement covering it,
(ii) is distributed to the public pursuant to Rule 144 or (iii) may be sold or
transferred pursuant to Rule 144(k) (or any similar provisions then in force)
under the Securities Act or otherwise.
Underwriter: Any underwriter, placement agent, selling broker,
dealer manager, qualified independent underwriter or similar securities industry
professional.
Underwritten Registration or Underwritten Offering: An offering in
which securities of the Company are sold to an Underwriter or with the
assistance of such Underwriter for reoffering to the public on a firm commitment
or best efforts basis.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to
the benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is
deemed to be a holder of Transfer Restricted Securities (each, a "Holder")
whenever such Person owns Transfer Restricted Securities.
2
<PAGE>
SECTION 3. SHELF REGISTRATION
(a) The Company shall cause to be filed with the Commission on
or prior to 180 days after the Closing Date, a shelf registration statement
pursuant to Rule 415 under the Act (as may then be amended) (the "Shelf
Registration Statement") on Form S-1 or Form S-3, if the use of such form is
then available and as determined by the Company, to cover resales of Transfer
Restricted Securities by the Holders thereof who satisfy certain conditions
relating to the provision of information in connection with the Shelf
Registration Statement. In order for their Transfer Restricted Securities to be
included in the Shelf Registration Statement, the Holders of such Transfer
Restricted Securities shall have provided the representations required pursuant
to Section 3(g) hereof. The Company shall use its reasonable best efforts to
cause such Shelf Registration Statement to be declared effective by the
Commission on or prior to 225 days after the Closing Date. The Company shall use
its reasonable best efforts to keep such Shelf Registration Statement
continuously effective for a period ending three years from the effective date
thereof or such shorter period that will terminate when each of the Transfer
Restricted Securities covered by the Shelf Registration Statement shall cease to
be a Transfer Restricted Security. The Company further agrees to use its
reasonable best efforts to prevent the happening of any event that would cause
the Shelf Registration Statement to contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or to be not effective and usable
for resale of the Transfer Restricted Securities during the period that such
Shelf Registration Statement is required to be effective and usable.
Upon the occurrence of any event that would cause the Shelf
Registration Statement (i) to contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading or (ii) to be not effective and usable for
resale of Transfer Restricted Securities during the period that such Shelf
Registration Statement is required to be effective and usable, the Company shall
as promptly as practicable file an amendment to the Shelf Registration
Statement, in the case of clause (i), correcting any such misstatement or
omission, and in the case of either clause (i) or (ii), use its best efforts to
cause such amendment to be declared effective and such Shelf Registration
Statement to become usable as soon as practicable thereafter.
Notwithstanding anything to the contrary in this Section 3, subject
to compliance with Sections 4 and 5(b), if applicable, the Company may prohibit
offers and sales of Transfer Restricted Securities pursuant to the Shelf
Registration Statement at any time if (A) (i) it is in possession of material
non-public information, (ii) the Board of Directors of the Company or the
Executive Committee thereof determines (based on advice of counsel) that such
prohibition is necessary in order to avoid a requirement to disclose such
material non-public information and (iii) the Board of Directors of the Company
or the Executive Committee thereof determines in good faith that disclosure of
such material non-public information would not be in the best interests of the
Company and its shareholders or (B) the Company has made a public announcement
relating to an acquisition or business combination transaction including the
Company and/or one or more of its subsidiaries (i) that is material to the
Company and its subsidiaries taken as a whole and (ii) the Board of Directors of
the Company or the Executive Committee thereof determines in good faith that
offers and sales of Transfer Restricted Securities pursuant to the Shelf
Registration Statement prior to the consummation of such transaction (or such
earlier date as the Board of Directors or the Executive Committee thereof shall
determine) is not in the best interests of the Company and its shareholders (the
period during which any such prohibition of offers and sales of Transfer
Restricted Securities pursuant to the Shelf Registration Statement is in effect
pursuant to clause (A) or (B) of this subparagraph (a) is referred to herein as
a "Suspension Period"). A Suspension Period shall commence on and include the
date on which the Company provides written notice to Holders of Transfer
Restricted Securities covered by the Shelf Registration Statement that offers
and sales of Transfer Restricted Securities cannot be made thereunder in
accordance with this Section 3 and shall end on the date on which each Holder of
Transfer Restricted Securities covered by the Shelf Registration Statement
either receives copies of a Prospectus Supplement contemplated by Section 5(b)
or is advised in writing by the Company that
3
<PAGE>
offers and sales of Transfer Restricted Securities pursuant to the Shelf
Registration Statement and use of the Prospectus may be resumed.
(b) None of the Company nor any of its security holders (other
than the Holders of Transfer Restricted Securities in such capacity and other
shareholders having registration rights permitting them to participate therein,
as disclosed in the Offering Memorandum) shall have the right to include any of
the Company's securities in the Shelf Registration Statement.
(c) If the Holders of a majority of the outstanding Transfer
Restricted Securities so elect (with holders of Common Stock constituting
Transfer Restricted Securities being deemed to be Holders of the aggregate
principal amount of Debentures converted into such Common Stock for purposes of
such calculation), an offering of Transfer Restricted Securities pursuant to the
Shelf Registration Statement may be effected in the form of an Underwritten
Offering. The Holders of the Transfer Restricted Securities to be registered
shall pay all underwriting discounts and commissions of such Underwriters.
(d) If any of the Transfer Restricted Securities covered by the
Shelf Registration Statement are to be sold in an Underwritten Offering, the
Underwriter(s) that will administer the offering will be selected by the Holders
of a majority of the outstanding Transfer Restricted Securities (with holders of
Common Stock constituting Transfer Restricted Securities being deemed to be
Holders of the aggregate principal amount of Debentures converted into such
Common Stock for purposes of such calculation); provided, however, that such
Underwriter(s) shall be reasonably satisfactory to the Company.
(e) Each Holder whose Transfer Restricted Securities are covered
by a Shelf Registration Statement filed pursuant to this Section 3 agrees, upon
the request of the Underwriter(s) in any Underwritten Offering, not to effect
any sale or distribution of securities of the Company of the same class as the
securities included in such Shelf Registration Statement, for a period of up to
90 days beginning on the date any such Underwritten Offering made pursuant to
such Shelf Registration Statement commences, to the extent timely notified in
writing by such Underwriter(s).
(f) The Company agrees not to effect any public or private
offer, sale or distribution of Securities of the same quality and nature as the
Transfer Restricted Securities to be registered in an Underwritten Offering
during the 90-day period beginning on the date any such Underwritten Offering
made pursuant to the Shelf Registration Statement commences, to the extent
timely notified in writing by the Underwriter(s) (except as part of such
registration, if permitted, or pursuant to registrations on Forms S-4 or S-8 or
any successor form to such Forms), unless the Underwriter(s) shall consent in
writing to a shorter period of time; provided, however, that any such agreement
shall permit (A) the issuance by the Company of any shares of Common Stock
issued to employees of the Company or to any other eligible person pursuant to
any employee stock option plan, stock ownership plan, stock bonus plan or stock
compensation plan of the Company in effect on the date of such Underwritten
Offering, (B) the issuance by the Company of Common Stock upon the conversion of
securities, or the exercise of options or warrants, outstanding at the date of
such Underwritten Offering and (C) the issuance by the Company of not less than
4.5 million shares of Common Stock during such 90-day period in connection with
acquistions, at least 450,000 of which shares issued in accordance with this
clause (C) may be freely tradeable during such 90-day period.
(g) No Holder of Transfer Restricted Securities may include any
of its Transfer Restricted Securities in any Shelf Registration Statement
pursuant to this Agreement unless such Holder furnishes to the Company in
writing, within 10 business days after receipt of a request therefor, such
information as the Company may reasonably request for use in connection with any
Shelf Registration Statement or Prospectus or preliminary Prospectus (a
"Preliminary Prospectus") included therein.
4
<PAGE>
SECTION 4. LIQUIDATED DAMAGES
(a) If (i) the Shelf Registration Statement is not filed with
the Commission on or prior to 180 days after the Closing Date, (ii) the Shelf
Registration Statement has not been declared effective by the Commission within
225 days after the Closing Date (the "Effectiveness Target Date"), or (iii) the
Shelf Registration Statement is filed and declared effective but shall
thereafter cease to be effective (without being succeeded immediately by an
additional registration statement filed and declared effective) or useable for
resale 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 or 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 referred to in clauses (i) through (iii), a "Registration
Default"), the Company will pay liquidated damages to each Holder of Transfer
Restricted Securities who has complied with such Holder's obligations under this
Agreement. 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 of Debentures 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 subsequent 90-day period 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. The Company shall notify the Trustee and the Initial Purchasers
within three business days after each and every date on which a Registration
Default occurs. All accrued liquidated damages shall be paid to Record Holders
by wire transfer of immediately available funds or by federal funds check by the
Company on each Damages Payment Date. Following the cure of all Registration
Defaults, liquidated damages will cease to accrue with respect to such
Registration Default.
All of the Company's obligations set forth in the preceding
paragraph which are outstanding with respect to any Transfer Restricted Security
at the time such security ceases to be a Transfer Restricted Security shall
survive until such time as all such obligations with respect to such security
shall have been satisfied in full.
The parties hereto agree that the liquidated damages provided in
this Section 4 constitute a reasonable estimate of the damages that will be
incurred by Holders of Transfer Restricted Securities by reason of the failure
of the Shelf Registration Statement to be filed, declared effective or to remain
effective, as the case may be.
SECTION 5. REGISTRATION PROCEDURES
In connection with the Shelf Registration Statement, the Company
will use its best efforts to effect such registration to permit the sale of the
Transfer Restricted Securities being sold in accordance with the intended method
or methods of distribution or disposition thereof, and pursuant thereto the
Company will as expeditiously as possible after the Closing Date:
(a) on or prior to the date 180 days after the Closing Date,
prepare and file with the Commission a Shelf Registration Statement relating to
the registration on Form S-1 or Form S-3, if the use of such form is then
available and as determined by the Company, for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof and shall include all financial statements required to be
included or incorporated by reference therein; cooperate and assist in any
filings required to be made with the NASD and use its reasonable best efforts to
cause such Shelf Registration Statement to become effective and approved by such
governmental agencies or authorities as
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<PAGE>
may be necessary to enable the selling Holders to consummate the disposition of
such Transfer Restricted Securities; provided, however, that before filing a
Shelf Registration Statement or any Prospectus, or any amendments or supplements
thereto, the Company will furnish to the Initial Purchasers, the Holders and the
Underwriter(s), if any, copies of all such documents proposed to be filed
(except that the Company shall not be required to furnish any exhibits to such
documents, including those incorporated by reference, unless so requested by an
Initial Purchaser, Holder or Underwriter in writing), and the Company will not
file any Shelf Registration Statement or amendment thereto or any Prospectus or
any supplement thereto to which (i) the Initial Purchasers or the
Underwriter(s), if any, shall reasonably object or (ii) if there are no
Underwriters, the Initial Purchasers or the Holders of a majority of the
outstanding Transfer Restricted Securities shall reasonably object (with holders
of Common Stock constituting Transfer Restricted Securities being deemed to be
Holders of the aggregate principal amount of Debentures converted into such
Common Stock for purposes of such calculation), in each such case within five
business days after the receipt thereof. An Initial Purchaser, Holder or
Underwriter, if any, shall be deemed to have reasonably objected to such filing
if the Shelf Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading which misstatement or
omission is specifically identified to the Company in writing within such five
business days;
(b) prepare and file with the Commission such amendments and
post-effective amendments to the Shelf Registration Statement as may be
necessary to keep the Shelf Registration Statement effective for the applicable
period set forth in Section 3(a) hereof; cause the Prospectus to be supplemented
by any required supplement thereto (a "Prospectus Supplement"), and as so
supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully
with the applicable provisions of Rules 424 and 430A under the Act in a timely
manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Shelf Registration Statement
during the applicable period in accordance with the intended method or methods
of distribution by the sellers thereof set forth in such Shelf Registration
Statement, Prospectus or Prospectus Supplement;
(c) if requested by the Holders of Transfer Restricted
Securities, or if the Transfer Restricted Securities are being sold in an
Underwritten Offering, the Underwriter(s) of such Underwritten Offering,
promptly incorporate in the Prospectus, any Prospectus Supplement or post-
effective amendment to the Shelf Registration Statement such information as the
Underwriters and/or the Holders of Transfer Restricted Securities being sold
agree should be included therein relating to the plan of distribution of the
Transfer Restricted Securities, including, without limitation, information with
respect to the principal amount of Debentures and/or the number of shares of
Common Stock being sold to such Underwriter(s), the purchase price being paid
therefor and any other terms with respect to the offering of the Transfer
Restricted Securities to be sold in such offering; and make all required filings
of such Prospectus, Prospectus Supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be incorporated in
such Prospectus, Prospectus Supplement or post-effective amendment;
(d) advise the Initial Purchasers, the Underwriter(s), if any,
and selling Holders promptly and, if requested by such Persons, to confirm such
advice in writing, (i) when the Prospectus or any Prospectus Supplement or post-
effective amendment to the Shelf Registration Statement has been filed, and,
with respect to the Shelf Registration Statement or any post-effective amendment
thereto, when the same has become effective, (ii) of any request by the
Commission for amendments to the Shelf Registration Statement or amendments or
supplements to the Prospectus or for additional information relating thereto,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Shelf Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, (iv) if at any
time the representations and warranties of the Company contemplated by paragraph
(l)(i) below cease to be true and correct, and (v) of the existence of any fact
and the happening of any event that makes any statement of a material fact made
in the Shelf Registration Statement, the Prospectus, any amendment or supplement
thereto, or any document
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<PAGE>
incorporated by reference therein untrue, or that requires the making of any
additions to or changes in the Shelf Registration Statement or the Prospectus in
order to make the statements therein not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the Shelf
Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or
Blue Sky laws, the Company shall use their reasonable best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(e) furnish to each Initial Purchaser, each Holder and each of
the Underwriter(s), if any, without charge, at least one copy of the Shelf
Registration Statement, as first filed with the Commission, and of each
amendment thereto (excluding documents incorporated by reference therein and
exhibits thereto unless requested by such Initial Purchaser, Holder or
Underwriter);
(f) deliver to each Initial Purchaser, each selling Holder and
each of the Underwriter(s), if any, without charge, as many copies of any
Preliminary Prospectus and the Prospectus and any amendments or supplements
thereto as such Persons may reasonably request; the Company consents to the use
of any Preliminary Prospectus and the Prospectus and any amendments or
supplements thereto by each of the selling Holders and each of the
Underwriter(s), if any, in connection with the public offering and the sale of
the Transfer Restricted Securities covered by any Preliminary Prospectus and the
Prospectus or any amendments or supplements thereto;
(g) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the Underwriter(s), if any, and
their respective counsel in connection with the registration and qualification
of the Transfer Restricted Securities under the securities or Blue Sky laws of
such jurisdictions as the selling Holders or Underwriter(s) may request and do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdiction of the Transfer Restricted Securities covered
by the Shelf Registration Statement; provided, however, that the Company shall
not be required (i) to register or qualify as a foreign corporation where it is
not now so qualified or (ii) to take any action that would subject it to the
service of process in suits, other than as to matters and transactions relating
to the Shelf Registration Statement, in any jurisdiction where it is not now so
subject;
(h) cooperate with the selling Holders and the Underwriter(s),
if any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and enable such Transfer Restricted Securities to be in
such denominations and registered in such names as the Holders or the
Underwriter(s), if any, may request at least two business days prior to any sale
of Transfer Restricted Securities;
(i) use its best efforts to cause the Transfer Restricted
Securities covered by the Shelf Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof or the Underwriter(s), if any, to
consummate the disposition of such Transfer Restricted Securities, subject to
the proviso contained in clause (g) above;
(j) if any fact or event contemplated by clause (d)(v) above
shall exist or have occurred, prepare a post-effective amendment or supplement
to the Shelf Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of Transfer Restricted Securities, the
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading;
(k) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Shelf Registration Statement
and provide the Trustee under the Indenture and/or the
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transfer agent for the Common Stock with certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with the
Depository Trust Company;
(l) enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith as may
reasonably be required in order to expedite or facilitate the disposition of the
Transfer Restricted Securities pursuant to the Shelf Registration Agreement, in
connection with an Underwritten Registration, and (i) make such representations
and warranties to the Holders and the Underwriter(s), in form, substance and
scope as they may reasonably request and as are customarily made by issuers to
Underwriters in primary Underwritten Offerings and covering matters including,
but not limited to, those set forth in the Purchase Agreement; (ii) obtain
opinions of counsel for the Company and updates thereof in customary form and
covering matters reasonably requested by the Underwriter(s) of the type
customarily covered in legal opinions to Underwriters in connection with primary
Underwritten Offerings addressed to each selling Holder and the Underwriter
requesting the same and covering the matters as may be reasonably requested by
such Holders and Underwriters; (iii) obtain "cold comfort" letters and updates
thereof from the Company's independent certified public accountants addressed to
the selling Holders of Transfer Restricted Securities and the Underwriters
requesting the same, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters to Underwriters in
connection with primary Underwritten Offerings; (iv) set forth in full or
incorporate by reference in the underwriting agreement the indemnification
provisions and procedures of Section 7 hereof with respect to all parties to be
indemnified pursuant to said Section; and (v) deliver such documents and
certificates as may be reasonably requested by the Holders of the Transfer
Restricted Securities being sold or the Underwriter(s) of such Underwritten
Offering to evidence compliance with clause (i) above and with any customary
conditions contained in the underwriting agreement entered into by the Company
pursuant to this clause (l). The above shall be done at or prior to each closing
under such underwriting agreement, as and to the extent required thereunder;
(m) make available at reasonable times and in a reasonable
manner for inspection by a representative of the Holders of the Transfer
Restricted Securities, any Underwriter participating in any disposition pursuant
to such Shelf Registration Statement, and any attorney or accountant retained by
such selling Holders or any of the Underwriters, all financial and other
records, pertinent corporate documents and properties of the Company and cause
the Company's officers, directors and employees to supply all information
reasonably requested by any such Holder, Underwriter, attorney or accountant in
connection with such Shelf Registration Statement prior to its effectiveness,
provided, however, that such representatives, attorneys or accountants shall
agree to keep confidential (which agreement shall be confirmed in writing in
advance to the Company if the Company shall so request) all information, records
or documents made available to such persons which are not otherwise available to
the general public unless disclosure of such records, information or documents
is required by court or administrative order (of which the Company shall have
been given prior notice and an opportunity to defend) after the exhaustion of
all appeals therefrom, and to use such information obtained pursuant to this
provision only in connection with the transaction for which such information was
obtained, and not for any other purpose;
(n) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make generally available
to its security holders, as soon as practicable, a consolidated earnings
statement, which consolidated earnings statement shall satisfy the provisions of
Section 11(a) of the Act, for the twelve-month period (i) commencing at the end
of any fiscal quarter in which Transfer Restricted Securities are sold to
Underwriters in a firm commitment or best efforts Underwritten Offering or (ii)
if not sold to Underwriters in such an offering, beginning with the first month
of the Company's first fiscal quarter commencing after the effective date of the
Shelf Registration Statement;
(o) cause the Indenture to be qualified under the TIA, and, in
connection therewith, cooperate with the Trustee and the Holders to effect such
changes to the Indenture as may be required for such Indenture to be so
qualified in accordance with the terms of the TIA; and execute and use its best
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<PAGE>
efforts to cause the Trustee to execute, all documents as may be required to
effect such changes and all other forms and documents required to be filed with
the Commission to enable such Indenture to be so qualified in a timely manner;
(p) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Shelf Registration Statement at the
earliest possible moment;
(q) cause all Transfer Restricted Securities covered by the
Shelf Registration Statement to be listed on each securities exchange or
quotation system on which similar securities issued by the Company are then
listed if requested by the Holders of a majority of the outstanding Transfer
Restricted Securities (with holders of Common Stock constituting Transfer
Restricted Securities being deemed to be Holders of the aggregate principal
amount of Debentures converted into such Common Stock for purposes of such
calculation) or the Underwriters, if any; cause the Debentures covered by the
Shelf Registration Statement to be rated with the appropriate rating agencies,
if so requested by the Holders of a majority in aggregate principal amount of
such Debentures or the Underwriters; and
(r) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
Underwriter (including any "qualified independent Underwriter" that is required
to be retained in accordance with the rules and regulations of the NASD).
Each Holder as to which any Shelf Registration Statement is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make the information previously furnished to the
Company by such Holder not materially misleading or necessary to cause such
Shelf Registration Statement not to omit a material fact with respect to such
Holder necessary in order to make the statements therein not misleading.
Each Holder agrees by acquisition of such Transfer Restricted
Securities that, upon receipt of any notice from the Company of the existence of
any fact of the kind described in Section 5(d)(v) hereof, such Holder will
forthwith discontinue disposition of Transfer Restricted Securities until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(j) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings with respect to the
Prospectus. If so directed by the Company, each Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such Transfer
Restricted Securities current at the time of receipt of such notice. In the
event Company shall give any such notice, the time period regarding the
effectiveness of the Shelf Registration Statement set forth in Section 3(a)
hereof shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to Section 5(d)(v)
hereof to and including the date when each selling Holder covered by such Shelf
Registration Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by Section 5(j) hereof or shall have received
the Advice.
SECTION 6. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or
compliance with this Agreement (the "Registration Expenses") will be borne by
the Company, regardless of whether a Shelf Registration Statement becomes
effective, including without limitation:
(i) all registration and filing fees and expenses (including
filings made with the NASD);
(ii) fees and expenses of compliance with federal securities or
state blue sky laws;
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(iii) expenses of printing (including, without limitation,
expenses of printing or engraving certificates for the Transfer Restricted
Securities in a form eligible for deposit with Depository Trust Company and
of printing the Prospectus and any Preliminary Prospectus), messenger and
delivery services and telephone;
(iv) reasonable fees and disbursements of counsel for the Company
and for the Holders of the Transfer Restricted Securities (subject to the
provisions of Section 6(b) hereof);
(v) fees and disbursements of all independent certified public
accountants of the Company (including the expenses of any special audit and
"cold comfort" letters required by or incidental to the preparation and
filing of a Shelf Registration Statement and Prospectus and the disposition
of Transfer Restricted Securities);
(vi) fees and expenses associated with any NASD filing required
to be made in connection with the Shelf Registration Statement, including,
if applicable, the fees and expenses of any "qualified independent
Underwriter" (and its counsel) that is required to be retained in
accordance with the rules and regulations of the NASD; and
(vii) fees and expenses of listing the Transfer Restricted
Securities on any securities exchange or quotation system in accordance
with Section 5(q) hereof.
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, rating agency fees and the fees and expenses of any Person, including
special experts, retained by the Company. The Holders of Transfer Restricted
Securities shall bear the expense of any broker's commission or Underwriter's
discount or commission.
(b) In connection with the Shelf Registration Statement, the
Company will reimburse the Holders of Transfer Restricted Securities being
registered pursuant to such Shelf Registration Statement for the reasonable fees
and disbursements of not more than one counsel chosen by the Holders of a
majority of the outstanding Transfer Restricted Securities (with holders of
Common Stock constituting Transfer Restricted Securities being deemed to be
Holders of the aggregate principal amount of Debentures converted into such
Common Stock for purposes of such calculation).
Notwithstanding the provisions of this Section 6(b), each Holder of
Transfer Restricted Securities shall pay all Registration Expenses to the extent
required by applicable law.
SECTION 7. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each
of the Initial Purchasers, (ii) each Holder, (iii) each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any of the Initial Purchasers or any Holder (any of the persons
referred to in this clause (iii) being hereinafter referred to as a "controlling
person") and (iv) the respective officers, directors, partners, employees,
representatives and agents of any of the Initial Purchasers or any Holder or any
controlling person (any person referred to in clause (i), (ii), (iii) or (iv)
may hereinafter be referred to as a "Non-Company Indemnitee"), to the fullest
extent lawful, from and against any and all losses, claims, damages, liabilities
and judgments caused by any untrue statement or alleged untrue statement of a
material fact contained in the Shelf Registration Statement, Prospectus or
Preliminary Prospectus (or any amendments or supplements thereto), including any
document incorporated by reference therein, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except, with respect to
any Non-Company Indemnitee, insofar as such losses, claims, damages, liabilities
or judgments (1) are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information
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furnished in writing to the Company by such Non-Company Indemnitee expressly for
use therein or (2) with respect to any Preliminary Prospectus, result from the
fact that such Non-Company Indemnity sold Transfer Restricted Securities to a
person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the final Prospectus, as amended or
supplemented, if the Company shall have previously furnished copies thereof to
such Non-Company Indemnitee in accordance with this Agreement and the final
Prospectus, as amended or supplemented, would have corrected such untrue
statement or omission.
(b) In case any action shall be brought against any Non-Company
Indemnitee, based upon the Shelf Registration Statement, Prospectus, or
Preliminary Prospectus (or any amendments or supplements thereto), and with
respect to which indemnity may be sought against the Company, such Non-Company
Indemnitee shall promptly notify the Company in writing and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses; provided, however, that the omission so to notify the
Company shall not relieve the Company from any liability that it may have to any
Non-Company Indemnitee (except to the extent that the Company is materially
prejudiced or otherwise forfeits substantive rights or defenses by reason of
such failure). Such Non-Company Indemnitee shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of counsel shall be paid by such Non-Company Indemnitee,
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the Company, (ii) the Company shall have failed to
assume the defense and employ counsel or (iii) the named parties to any such
action (including any impleaded parties) include both such Non-Company
Indemnitee and the Company and it would be inappropriate for the same counsel to
represent such Non-Company Indemnitee and the Company (in which case the Company
shall not have the right to assume the defense of such action on behalf of such
Non-Company Indemnitee, it being understood, however, that the Company shall
not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
the Non-Company Indemnitees, which firm shall be designated in writing by the
Non-Company Indemnitees and whose fees and expenses reasonably incurred shall be
reimbursed as they are incurred). The Company shall not be liable for any
settlement of any such action effected without the written consent of the
Company, but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Non-Company Indemnitee from and
against any amounts payable pursuant to such written consent in connection with
such settlement. Notwithstanding the immediately preceding sentence, if in any
case where the fees and expenses of counsel are at the expense of the Company
and a Non-Company Indemnitee shall have requested the Company to reimburse such
Non-Company Indemnitee for such fees and expenses of counsel as incurred, the
Company agrees that it shall be liable for any settlement of any action effected
without its written consent if (i) each settlement is entered into more than 30
business days after the receipt by the Company of the aforesaid request and (ii)
the Company shall have failed to reimburse such Non-Company Indemnitee in
accordance with such request for reimbursement prior to the date of such
settlement. The Company shall not, without the prior written consent of such
Non-Company Indemnitee, effect any settlement of any pending or threatened
proceeding in respect of which such Non-Company Indemnitee is or could have been
a party and indemnity could have been sought hereunder by such Non-Company
Indemnitee, unless such settlement includes an unconditional release of such
Non-Company Indemnitee from all liability on claims that are the subject matter
of such proceeding.
(c) Each Holder of Transfer Restricted Securities agrees to
indemnify and hold harmless (i) the Company, (ii) each of the Initial
Purchasers, (iii) each other Holder, (iv) any person controlling (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company,
any of the Initial Purchasers and each other Holder and (v) the respective
officers, directors, partners, employees, representatives and agents of each of
the parties referred to in clauses (i), (ii), (iii) and (iv), to the same extent
as the foregoing indemnity from the Company to each of the Non-Company
Indemnitees, but only with respect to information relating to such Holder that
was furnished in writing by such Holder expressly for use in the Shelf
Registration Statement (or any amendment or supplement thereto). In no
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event shall the liability of any selling Holder hereunder be greater in amount
than the dollar amount of the proceeds received by such Holder upon the sales of
the Transfer Restricted Securities giving rise to such indemnification
obligation.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to herein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments in such proportion as is appropriate to
reflect the relative fault of the indemnifying party, on the one hand, and the
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party, on the one hand, and the indemnified party, on
the other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
indemnifying party, on the one hand, or the indemnified party, on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, each of the Initial Purchasers and each Holder of
Transfer Restricted Securities agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The losses, claims, damages, liabilities or judgments of an indemnified party
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim prior to the indemnifying party's
assumption of the defense thereof or subsequent thereto to the extent permitted
by the second sentence of Section 7(b) hereof. Notwithstanding the provisions of
this Section 7, none of the Holders shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the total amount received
by such Holder with respect to the sale of Transfer Restricted Securities
exceeds the amount of any damages which such Holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 7(d) are several in
proportion to the respective principal amount of Notes held by each of the
Holders hereunder and not joint.
SECTION 8. RULE 144A
The Company hereby agrees with each Holder, for so long as any of
the Debentures or shares of Common Stock that are Transfer Restricted Securities
remain outstanding and during any such period in which the Company is not
subject to Section 13 or 15(d) of the Exchange Act, to make available to any
Initial Purchaser or any beneficial owner of the Debentures or shares of such
Common Stock in connection with any sale thereof and any prospective purchaser
of such Debentures or Common Stock from such Initial Purchaser or beneficial
owner, the information required by Rule 144A(d)(4) under the Act in order to
permit resales of such Transfer Restricted Securities pursuant to Rule 144A.
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SECTION 9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Offering hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements, (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements and (c) furnishes the Company in writing information in accordance
with Section 3(g) and agrees to indemnify and hold harmless the Company, its
directors, its officers who sign the Registration Statement and any person
controlling the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act to the extent contemplated by Section 7(c).
SECTION 10. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
Underwriter(s) that will administer the offering will be selected by the Holders
of the Transfer Restricted Securities included in such offering in the manner
specified in Section 3(c); provided, however, that such Underwriters must be
reasonably satisfactory to the Company.
SECTION 11. MISCELLANEOUS
(a) Remedies. Each Holder of Transfer Restricted Securities, in
--------
addition to being entitled to exercise all rights provided herein, and as
provided in the Purchase Agreement and granted by law, including recovery of
damages, will be entitled to specific performance of such Holder's rights under
this Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or
--------------------------
after the date of this Agreement enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders of
Transfer Restricted Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders of Transfer Restricted
Securities hereunder do not in any way conflict with and are not inconsistent
with the rights granted to the holders of the Company's securities under any
other agreements. It is acknowledged that, as disclosed in the Offering
Memorandum, certain holders of the Company's outstanding shares of Common Stock
have the right to have resales of such shares of Common Stock included in the
Shelf Registration Statement.
(c) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of a majority of the outstanding Transfer Restricted Securities affected by such
amendment, modification, supplement, waiver or departure (with holders of Common
Stock constituting Transfer Restricted Securities being deemed to be Holders of
the aggregate principal amount of Debentures converted into such Common Stock
for purposes of such calculation). Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders of Transfer Restricted Securities whose securities are being
sold pursuant to such Shelf Registration Statement and that does not directly or
indirectly affect the rights of other Holders of Transfer Restricted Securities
shall be valid only with the written consent of Holders of at least 66-2/3% of
the Transfer Restricted Securities being sold, in each case calculated in
accordance with the provisions of Section 3(c).
13
<PAGE>
(d) Notices. All notices and other communications provided for
-------
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier, or
air courier guaranteeing overnight delivery:
(i) if to a Holder of Transfer Restricted Securities, at
the address set forth on the records of the Registrar under the Indenture,
with a copy to the Registrar; and
(ii) if to the Company or an Initial Purchaser, initially
at its address set forth in the Purchase Agreement and thereafter at such
other address, notice of which is given in accordance with the provisions
of this Section.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and on
the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder of Transfer Restricted Securities unless
and to the extent such successor or assign acquired Transfer Restricted
Securities from such Holder; and provided further that nothing herein shall be
deemed to permit any assignment, transfer or any disposition of Transfer
Restricted Securities in violation of the terms of the Purchase Agreement. If
any transferee of any Holder shall acquire Transfer Restricted Securities, in
any manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement and by
taking and holding such Transfer Restricted Securities such person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement and such Person shall be entitled to
receive the benefits hereof.
(f) Counterparts. This Agreement may be executed in any number
------------
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICTS OF LAW RULES THEREOF.
(i) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement together with the other
----------------
Operative Documents (as defined in the Purchase Agreement) is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties
14
<PAGE>
or undertakings, other than those set forth or referred to herein with respect
to the registration rights granted by the Company with respect to the securities
sold pursuant to the Purchase Agreement. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
15
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
PHYSICIANS RESOURCE GROUP, INC.
By: /s/ Richard D'Amico
---------------------
Name: Richard D'Amico
Title: Secretary
SMITH BARNEY INC.
ALEX. BROWN & SONS INCORPORATED
DILLON, READ & CO. INC.
SALOMON BROTHERS INC
VOLPE WELTY & COMPANY
BY: SMITH BARNEY INC.
By: /s/ Benjamin D. Lorello
-----------------------
Name: BENJAMIN D. LORELLO
Title: MANAOINO DIRECTOR
16
<PAGE>
EXHIBIT 10.34
$125,000,000
PHYSICIANS RESOURCE GROUP, INC.
6% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2001
PURCHASE AGREEMENT
------------------
December 6, 1996
Smith Barney Inc.
Alex. Brown & Sons Incorporated
Dillon, Read & Co. Inc.
Salomon Brothers Inc
Volpe, Welty & Company
As Initial Purchasers
c/o Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Physicians Resource Group, Inc., a Delaware corporation (the
"Company"), proposes, upon the terms and conditions set forth herein, to issue
and sell to you, as the initial purchasers (the "Initial Purchasers"),
$125,000,000 aggregate principal amount of its 6% Convertible Subordinated
Debentures due 2001 (the "Firm Debentures"). The Company also proposes, upon
the terms and conditions set forth herein, to issue and sell to the Initial
Purchasers up to an additional $18,750,000 aggregate principal amount of its 6%
Convertible Subordinated Debentures due 2001 (the "Additional Debentures"). The
Firm Debentures and the Additional Debentures are hereinafter collectively
referred to as the "Debentures." The Debentures will be issued pursuant to the
provisions of an Indenture, to be 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 Company's common stock, $.01 par value, is
hereinafter referred to as the "Common Stock."
The Company wishes to confirm as follows its agreement with the
Initial Purchasers in connection with the purchase and resale of the Debentures.
1. Preliminary Offering Memorandum and Offering Memorandum. The
Debentures will be offered and sold to the Initial Purchasers without
registration under the Securities Act of 1933, as amended (the "Act"), in
reliance on an exemption pursuant to Section 4(2) under the Act. The Company has
prepared a preliminary offering memorandum, dated November 21, 1996 (the
"Preliminary Offering Memorandum"), and an offering memorandum, dated December
6, 1996 (the "Offering Memorandum"), setting forth information regarding the
Company and the Debentures. Any references herein to the Preliminary Offering
Memorandum and the Offering Memorandum shall be deemed to include all amendments
and supplements thereto and any documents filed under the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Securities and
Exchange Commission (the "Commission") thereunder (collectively, the "Exchange
Act") which are incorporated by reference therein. As used herein, the term
"Incorporated Documents" means the documents which at the time are incorporated
by reference in the Preliminary Offering Memorandum, the Offering Memorandum or
any amendment or supplement thereto. The Company hereby confirms that it has
authorized the use of the Preliminary Offering
<PAGE>
Memorandum and the Offering Memorandum in connection with the offering and
resale of the Debentures by the Initial Purchasers.
The Company understands that the Initial Purchasers propose to make
offers and sales (the "Exempt Resales") of the Debentures purchased by the
Initial Purchasers hereunder only on the terms and in the manner set forth in
the Offering Memorandum and Section 2 hereof, as soon as the Initial Purchasers
deem advisable after this Agreement has been executed and delivered, (i) to
persons whom the Initial Purchasers reasonably believe to be qualified
institutional buyers ("Qualified Institutional Buyers") as defined in Rule 144A
under the Act, as such rule may be amended from time to time ("Rule 144A"), in
transactions under Rule 144A, (ii) to a limited number of other "accredited
investors" (as defined in Rule 501(a)(1), (2), (3), or (7) under the Act) that
are institutional investors (the "Institutional Accredited Investors") and that
agree to comply with the transfer restrictions set forth in the letter
containing certain representations and agreements substantially in the form
attached hereto as Exhibit A, and (iii) outside the United States to non-U.S.
---------
persons in offshore transactions in reliance upon Regulation S (as those terms
are defined in Regulation S under the Act) ("Regulation S") under the Act (such
persons specified in clauses (i), (ii) and (iii) being referred to herein as the
"Eligible Purchasers"). As used herein the terms "offshore transactions,"
"United States" and "U.S. persons" have the meaning given them in Regulation S.
It is understood and acknowledged that upon original issuance thereof,
and until such time as the Debentures (and all securities issued in exchange
therefor, in substitution thereof or upon conversion thereof (including the
Common Stock)) have been (i) effectively registered under the Act and disposed
of in accordance with an effective registration statement under the Act, (ii)
distributed to the public pursuant to Rule 144 or (ii) sold or transferred
pursuant to Rule 144(k) under the Act (or any similar provisions then in force)
or otherwise, any certificate representing such securities shall bear the
following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT'), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS (A)
TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT)
THAT IS AN INSTITUTIONAL INVESTOR AND THAT PRIOR TO SUCH TRANSFER, FURNISHES TO
U.S. TRUST COMPANY OF NEW YORK, N.A. OR CHASE MELLON SHAREHOLDER SERVICES,
L.L.C. A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (WHICH
FORM OF LETTER CAN BE OBTAINED FROM U.S. TRUST COMPANY OF NEW YORK, N.A. OR
CHASE MELLON SHAREHOLDER
2
<PAGE>
SERVICES, L.L.C.), (E) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT SUBJECT TO THE COMPANY'S, U.S.
TRUST COMPANY OF NEW YORK, N.A.'S,AND CHASE MELLON SHAREHOLDER SERVICES,
L.L.C.'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES
(C), (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH
OF THE FOREGOING CASES PROVIDED THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO U.S.
TRUST COMPANY OF NEW YORK, N.A. AND CHASE MELLON SHAREHOLDER SERVICES, L.L.C.
AND SUBJECT TO ANY APPLICABLE STATE SECURITIES LAWS. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF THE THEN HOLDER OF THIS SECURITY AFTER THE RESALE
RESTRICTION TERMINATION DATE.
It is also understood and acknowledged that holders (including
subsequent transferees) of the Debentures and, if such Debentures are
subsequently converted into Common Stock, the Common Stock, will have the
registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement"), to be dated the date hereof, in substantially
the form of Exhibit B hereto, for so long as such Debentures and Common Stock
---------
constitute "Transfer Restricted Securities" (as defined in the Registration
Rights Agreement). Pursuant to the Registration Rights Agreement, the Company
will agree (i) to file with the Commission under the circumstances set forth
therein, a registration statement on the appropriate form under the Act relating
to the resale of the Debentures and the Common Stock by certain holders thereof
from time to time in accordance with the methods of distribution set forth in
such registration statement and Rule 415 under the Act (the "Shelf Registration
Statement") and (ii) to use its best efforts to cause such Shelf Registration
Statement to be declared effective. This Agreement, the Indenture and the
Registration Rights Agreement are hereinafter referred to collectively as the
"Operative Documents."
Capitalized terms used herein without definition have the respective
meanings specified therefor in the Indenture or the Offering Memorandum.
2. Agreements to Sell, Purchase and Resell. (a) The Company hereby
agrees, subject to all the terms and conditions set forth herein, to issue and
sell to each Initial Purchaser and, upon the basis of the representations,
warranties and agreements of the Company herein contained and subject to all the
terms and conditions set forth herein, each Initial Purchaser agrees to purchase
from the Company, at a purchase price of 97.50% of the principal amount thereof,
the principal amount of Firm Debentures set forth opposite the name of such
Initial Purchaser in Schedule I hereto.
(b) The Company also agrees, subject to all the terms and conditions
set forth herein, to sell to the Initial Purchasers, and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, the Initial Purchasers
shall have the right to purchase from the Company pursuant to an option (the
"over-allotment option") which may be exercised at any time and from time to
time prior to 9:00 P.M., New York City time, on the 30th day after the date of
the Offering Memorandum (or, if such 30th day shall be a Saturday or Sunday or a
holiday, on the next business day thereafter when the New York Stock Exchange is
open for trading), up to $18,750,000 principal amount of Additional Debentures
at the same purchase price as the Firm Debentures, plus accrued interest, if
any, from the date of issuance of the Firm Debentures to the date of delivery
and payment. Upon any exercise of the over-allotment option, each Initial
Purchaser, severally and not jointly, agrees to purchase that principal amount
of Additional Debentures which bears the same proportion to the aggregate
principal amount of Additional Debentures to be purchased by the Initial
Purchasers as the principal amount of Firm Debentures set forth opposite the
name of such Initial Purchaser bears to the aggregate principal amount of Firm
Debentures.
3
<PAGE>
(c) The Initial Purchasers have advised the Company that they propose
to offer the Debentures for sale upon the terms and conditions set forth in this
Agreement and in the Offering Memorandum. Each Initial Purchaser hereby
represents and warrants to the Company that such Initial Purchaser (i) is a
Qualified Institutional Buyer within the meaning of Rule 144A and is purchasing
the Debentures pursuant to a private sale exempt from registration under the Act
and is not purchasing the Debentures with a view to or for offer or sale in
connection with any distribution that would be in violation of foreign or U.S.
federal or state securities laws, (ii) will not solicit offers for, or offer or
sell, the Debentures by means of any form of general solicitation or general
advertising or in any manner involving a public offering within the meaning of
Section 4(2) of the Act, and (iii) has solicited and will solicit offers for the
Debentures only from, and has offered and will offer, sell or deliver the
Debentures as part of its initial offering, only to (A) persons whom the Initial
Purchasers reasonably believe to be Qualified Institutional Buyers, or if any
such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented to
the Initial Purchaser that each such account is a Qualified Institutional Buyer,
to whom notice has been given that such sale or delivery is being made in
reliance on Rule 144A, in each case, in transactions under Rule 144A, (B) to
Institutional Accredited Investors, and (C) outside the United States to certain
persons in offshore transactions in reliance on Regulation S. The Initial
Purchasers have advised the Company that they will offer the Debentures to
Eligible Purchasers at a price initially equal to 100% of the principal amount
thereof, plus accrued interest, if any, from the date of issuance of the Firm
Debentures. Such price may be changed by the Initial Purchasers at any time
thereafter without notice.
(d) The Initial Purchasers represent and warrant that they (i) have
not offered or sold and prior to the date that is six months after the closing
date with respect to the Offering will not offer or sell any Debentures to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which will not involve an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995
(the "Regulations"); (ii) have complied with and will comply with all applicable
provisions of the Financial Services Act of 1986 and the Regulations with
respect to anything done by it in relation to the Debentures in, from, or
otherwise involving the United Kingdom; and (iii) have only issued or passed on
and will only issue or pass on to any person in the United Kingdom any document
received by it in connection with the offer of the Debentures if that person is
of a kind described in Article 11(3) of the Financial Services Act of 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on.
(e) The Initial Purchasers represent and warrant that they have
offered and sold the Debentures and agree that they will offer and sell the
Debentures (i) as part of their distribution at any time, and (ii) otherwise
until 40 days after the later of the commencement of the offering of the
Debentures and the Closing Date, only in accordance with Rule 903 of Regulation
S or as otherwise permitted pursuant to paragraph (c) above. Accordingly, the
Initial Purchasers represent and agree that none of such Initial Purchasers,
their affiliates nor any persons acting on their behalf have engaged or will
engage in any directed selling efforts (as defined in Regulation S under the
Act) with respect to the Debentures, and they have complied and will comply with
the offering restrictions requirement of Regulation S. Such Initial Purchasers
agree that, at or prior to confirmation of the sale of Debentures to non-U.S.
persons (as defined in Regulation S under the Act) other than a sale pursuant to
Rule 144A, they will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Debentures from
such Initial Purchasers during the restricted period a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered
under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), and may not be offered and sold
within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40
days after the later of the commencement of
4
<PAGE>
the offering and the closing date, except in either
case in accordance with Regulation S (or Rule 144A)
under the Securities Act. Terms used above have the
meaning given to them by Regulation S."
The Initial Purchasers understand that the Company and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Sections
7(c) and 7(d) hereof, counsel to the Company and counsel to the Initial
Purchasers, will rely upon the accuracy and truth of the foregoing
representations and agreements and the Initial Purchasers hereby consent to such
reliance.
3. Delivery of the Debentures and Payment Therefor. Delivery to the
Initial Purchasers of and payment for the Firm Debentures shall be made at the
office of Smith Barney Inc., 388 Greenwich Street, New York, NY 10013, at 10:00
A.M., New York City time, on December 11, 1996 (the "Closing Date"). The place
of closing for the Firm Debentures and the Closing Date may be varied by
agreement between the Initial Purchasers and the Company.
Delivery to the Initial Purchasers of and payment for any Additional
Debentures to be purchased by the Initial Purchasers shall be made at the
aforementioned office of Smith Barney Inc. at such time on such date (the
"Option Closing Date"), which may be the same as the Closing Date but shall in
no event be earlier than the Closing Date nor earlier than two nor later than
ten business days after the giving of the notice hereinafter referred to, as
shall be specified in a written notice from the Initial Purchasers to the
Company of the Initial Purchasers' determination to purchase the principal
amount of Additional Debentures specified in such notice. The place of closing
for any Additional Debentures and the Option Closing Date for such Additional
Debentures may be varied by agreement between the Initial Purchasers and the
Company.
The Firm Debentures and any Additional Debentures which the Initial
Purchasers may elect to purchase will be delivered to the Initial Purchasers
against payment of the purchase price therefor in immediately available funds.
Debentures being sold by the Initial Purchasers in Exempt Resales to Qualified
Institutional Buyers in reliance on Rule 144A will be initially evidenced by one
or more global securities, and will be registered in the name of Cede & Co.
("Cede") as nominee of The Depository Trust Company ("DTC"). Debentures being
sold by the Initial Purchasers in Exempt Resales to certain persons in offshore
transactions in reliance on Regulation S will be initially evidenced by one or
more global securities which will be deposited with, or on behalf of DTC, and
registered in the name of Cede as DTC's nominee, for the account of Morgan
Guaranty Trust Company of New York, Brussels office, as operator of the
Euroclear System and Cedel, S.A. The Debentures to be delivered to the Initial
Purchasers shall be made available to the Initial Purchasers in New York City
for inspection and packaging not later than 9:30 a.m., New York City time, on
the business day next preceding the Closing Date or the Option Closing Date, as
the case may be.
4. Agreements of the Company. The Company agrees with the Initial
Purchasers as follows:
(a) The Company will advise the Initial Purchasers promptly and, if
requested by them, will confirm such advice in writing, within the period of
time referred to in paragraph (e) below, of any material change in the Company's
business, financial condition or results of operations, or of the happening of
any event which makes any statement of a material fact made in the Offering
Memorandum (as then amended or supplemented) untrue or which requires the making
of any additions to or changes in the Offering Memorandum (as then amended or
supplemented) in order to make the statements therein not misleading, or of the
necessity to amend or supplement the Offering Memorandum (as then amended or
supplemented) to comply with any law.
5
<PAGE>
(b) The Company will furnish to the Initial Purchasers, without
charge, as of the date of the Offering Memorandum, such number of copies of the
Offering Memorandum (as then amended or supplemented) as they may reasonably
request.
(c) The Company will not make any amendment or supplement to the
Preliminary Offering Memorandum or to the Offering Memorandum of which the
Initial Purchasers shall not previously have been advised or to which they shall
reasonably object after being so advised or file any document which upon filing
becomes an Incorporated Document, without delivering a copy of such document to
the Initial Purchasers, prior to such filing.
(d) Prior to the execution and delivery of this Agreement, the
Company has delivered or will deliver to the Initial Purchasers, without charge,
in such quantities as the Initial Purchasers shall have requested or may
hereafter request, copies of the Preliminary Offering Memorandum. The Company
consents to the use, in accordance with the securities or Blue Sky laws of the
jurisdictions in which the Debentures are offered by the Initial Purchasers and
by dealers, prior to the date of the Offering Memorandum, of each Preliminary
Offering Memorandum so furnished by the Company. The Company consents to the use
of the Offering Memorandum (and of any amendment or supplement thereto) in
accordance with the securities or Blue Sky laws of the jurisdictions in which
the Debentures are offered by the Initial Purchasers and by all dealers to whom
Debentures may be sold, in connection with the offering and sale of the
Debentures.
(e) If, at any time prior to completion of the distribution of the
Debentures by the Initial Purchasers to Eligible Purchasers, any event shall
occur that in the judgment of the Company or in the opinion of counsel for the
Initial Purchasers is required to be set forth in the Offering Memorandum (as
then amended or supplemented) or should be set forth in the Offering Memorandum
(as then amended or supplemented) in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
it is necessary to supplement or amend the Offering Memorandum, or to file under
the Exchange Act any document which upon filing becomes an Incorporated
Document, to comply with any law, the Company will forthwith prepare an
appropriate supplement or amendment thereto or such document, and will
expeditiously furnish to the Initial Purchasers and dealers a reasonable number
of copies thereof. In the event that the Company and the Initial Purchasers
agree that the Offering Memorandum should be amended or supplemented, or that a
document should be filed under the Exchange Act which upon filing becomes an
Incorporated Document, the Company, if requested by the Initial Purchasers, will
promptly issue a press release announcing or disclosing the matters to be
covered by the proposed amendment or supplement or such document.
(f) The Company will cooperate with the Initial Purchasers and with
its counsel in connection with the registration or qualification of the
Debentures and the Common Stock issuable upon conversion of the Debentures for
offering and sale by the Initial Purchasers and by dealers under the securities
or Blue Sky laws of such jurisdictions as the Initial Purchasers may designate
and will file such consents to service of process or other documents necessary
or appropriate in order to effect such qualification; provided that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would subject it to
service of process in suits, other than those arising out of the offering or
sale of the Debentures, in any jurisdiction where it is not now so subject.
(g) So long as any of the Debentures are outstanding, the Company
will furnish to the Initial Purchasers (i) as soon as available, a copy of each
report of the Company mailed to stockholders or filed with the Commission or the
New York Stock Exchange, Inc. (the "NYSE") (excluding listing applications), and
(ii) from time to time, such other information concerning the Company as the
Initial Purchasers may reasonably request.
(h) If this Agreement shall terminate or shall be terminated after
execution and delivery pursuant to any provisions hereof (otherwise than
pursuant to Section 10 hereof or by notice given
6
<PAGE>
by the Initial Purchasers terminating this Agreement pursuant to Section 9 or
Section 11 hereof) or if this Agreement shall be terminated by the Initial
Purchasers because of any failure or refusal on the part of the Company to
comply with the terms or fulfill any of the conditions of this Agreement, the
Company agrees to reimburse the Initial Purchasers for all out-of-pocket
expenses (including reasonable fees and expenses of its counsel) incurred by it
in connection herewith.
(i) The Company will apply the net proceeds from the sale of the
Debentures to be sold by it hereunder substantially in accordance with the
description set forth in the Offering Memorandum.
(j) Except as provided in this Agreement, the Company will not sell,
contract to sell or otherwise dispose of any Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or grant any
options or warrants to purchase Common Stock, for a period of 90 days after the
date of the Offering Memorandum (the "90-Day Lockup Period"), without the prior
written consent of Smith Barney Inc., except that the Company may issue up to
4.5 million shares of Common Stock ("Acquisition Shares") during the 90-Day
Lockup Period in connection with acquisitions so long as no more than 450,000 of
such Acquisition Shares are issued to purchasers who have not agreed to be bound
by a lockup letter substantially in the form attached hereto as Exhibit C and,
---------
if more than 450,000 Acquisition Shares are issued, so long as the purchasers of
such additional Acquisition Shares agree to be bound by such lockup letter and
such Acquisition Shares bear a legend to such effect. The Company further
agrees for the express benefit of the Initial Purchasers that it will not waive
any provision of any registration rights agreement, stockholders agreement or
any Reorganization Agreement (as defined in that certain Underwriting Agreement,
dated June 23, 1995, between the Company and Smith Barney Inc. and Volpe, Welty
& Company, as representatives of the several underwriters named therein), in
each case relating to any restriction imposed on the subsequent transfer or
other disposition of shares of Common Stock and will enforce any such provision
so as to limit the transfer or other disposition of shares of the Common Stock
during the 90-Day Lockup Period.
(k) The Company has furnished or will furnish to the Initial
Purchasers "lock-up" letters, in form and substance satisfactory to the Initial
Purchasers, signed by each of its current directors and executive officers for
the 90-Day Lockup Period.
(l) Except as stated in this Agreement, the Preliminary Offering
Memorandum and the Offering Memorandum, the Company has not taken, nor will it
take, directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Debentures to facilitate the sale or resale of the Debentures. Except as
permitted by the Act, the Company will not distribute any offering material in
connection with the Exempt Resales.
(m) The Company will use its reasonable best efforts to cause the
Debentures to be eligible for trading on The PORTAL Market.
(n) From and after the Closing Date, so long as any of the Debentures
are outstanding during any period in which the Company is not subject to Section
13 or 15(d) of the Exchange Act, the Company will furnish to holders of the
Debentures and prospective purchasers of Debentures designated by such holders,
upon request of such holders or such prospective purchasers, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Act to permit
compliance with Rule 144A in connection with resale of the Debentures.
(o) The Company agrees not to sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Debentures in a manner that would
require the registration under the Act of the sale to the Initial Purchasers or
the Eligible Purchasers of the Debentures.
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(p) The Company agrees to comply with all of the terms and conditions
of the Registration Rights Agreement, and all agreements set forth in the
representation letters of the Company to DTC relating to the approval of the
Debentures by DTC for "book entry" transfer.
(q) The Company agrees that prior to any registration of the
Debentures pursuant to the Registration Rights Agreement, or at such earlier
time as may be so required, the Indenture shall be qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act"), and will cause to be entered
into any necessary supplemental indentures in connection therewith.
5. Representations and Warranties of the Company. The Company
represents and warrants to the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and Offering Memorandum with
respect to the Debentures have been prepared by the Company for use by the
Initial Purchasers in connection with the Exempt Resales. No order or decree
preventing the use of the Preliminary Offering Memorandum or the Offering
Memorandum or any amendment or supplement thereto, or any order asserting that
the transactions contemplated by this Agreement are subject to the registration
requirements of the Act has been issued and no proceeding for that purpose has
commenced or is pending or, to the knowledge of the Company, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum
as of their respective dates and the Offering Memorandum as of the Closing Date,
did not or will not at any such times contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein in light of the circumstances under which they
are made not misleading, except that this representation and warranty does not
apply to statements in or omissions from the Preliminary Offering Memorandum and
Offering Memorandum made in reliance upon and in conformity with information
relating to the Initial Purchasers furnished to the Company in writing by or on
behalf of the Initial Purchasers expressly for use therein.
(c) The Incorporated Documents heretofore filed were filed in a
timely manner and, when they were filed (or, if any amendment with respect to
any such document was filed, when such document was filed), conformed in all
material respects to the requirements of the Exchange Act and did not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
and any further Incorporated Documents will, when so filed, be filed in a timely
manner and conform in all material respects to the requirements of the Exchange
Act and will not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(d) The Indenture has been duly and validly authorized by the Company
and, upon its execution, delivery and performance by the Company and assuming
due authorization, execution, delivery and performance by the Trustee, will be a
valid and binding agreement of the Company, enforceable in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally and by general
equitable principles, and the Indenture conforms in all material respects to the
description thereof in the Offering Memorandum; no qualification of the
Indenture under the 1939 Act is required in connection with the offer and sale
of the Debentures contemplated hereby or in connection with the Exempt Resales.
(e) The Debentures have been duly authorized by the Company and, when
executed by the Company and authenticated by the Trustee in accordance with the
Indenture and delivered to the Initial Purchasers against payment therefor in
accordance with the terms hereof, will have been validly issued and delivered,
and will constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable in accordance with their terms, except
as enforcement thereof may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights
8
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generally and by general equitable principles, and the Debentures will conform
in all material respects to the description thereof in the Offering Memorandum.
(f) All the outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable and
are free of any preemptive or similar rights and were issued and sold in
compliance with all applicable federal and state securities laws; the shares of
Common Stock issuable upon conversion of the Debentures have been duly
authorized and reserved for issuance and, when delivered upon conversion of the
Debentures, will be validly issued, fully paid and nonassessable and free of any
preemptive or similar rights; The authorized capital stock of the Company
conforms in all material respects to the description thereof in the Offering
Memorandum and the authorized and outstanding capital stock of the company is as
set forth under the caption "Capitalization" in the Offering Memorandum."
(g) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify does not have a material adverse effect on the condition
(financial or other), business, properties, net worth or results of operations
of the Company and the Subsidiaries (as hereinafter defined), taken as a whole
(a "Material Adverse Effect").
(h) The subsidiaries listed on Schedule II hereto constitute all of
the Company's subsidiaries (as defined in the Act). Such subsidiaries are
referred to herein individually as a "Subsidiary" and collectively as the
"Subsidiaries." Each Subsidiary that is a corporation (a "Corporate Subsidiary")
has been duly organized, is validly existing and in good standing in the
jurisdiction of its incorporation; each Subsidiary that is a limited liability
company (a "LLC Subsidiary") has been duly organized and is validly existing
under the laws in the jurisdiction of its organization; each Subsidiary that is
a partnership (a "Partnership Subsidiary") has been duly organized and is an
existing partnership under the laws of the jurisdiction of its organization.
Each Subsidiary has full corporate, limited liability company, or partnership,
as the case may be, power and authority to own, lease and operate its properties
and to conduct its business as described in the Offering Memorandum. Each
Corporate Subsidiary and LLC Subsidiary is duly registered and each Subsidiary
is qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify does not have a Material Adverse Effect. All the
outstanding shares of capital stock of each of the Corporate Subsidiaries have
been duly authorized and validly issued, are fully paid and nonassessable, and
are owned by the Company directly, or indirectly through one of the other
Subsidiaries, free and clear of any lien, adverse claim, security interest,
equity, or other encumbrance, except as disclosed in the Offering Memorandum or
on Schedule II hereto; all the outstanding membership interests in the LLC
Subsidiaries have been duly authorized and validly issued and such interests are
owned by the Company directly, or indirectly through one of the other
Subsidiaries, free and clear of any lien, adverse claim, security interest,
equity or other encumbrance, except as disclosed in the Offering Memorandum or
on Schedule II hereto; and all the outstanding partnership interests in the
Partnership Subsidiaries are owned by the Company directly, or indirectly
through one of the other Subsidiaries, free and clear of any lien, adverse
claim, security interest, equity or other encumbrance, except as disclosed in
the Offering Memorandum or on Schedule II hereto.
(i) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or to which
any of their respective properties, is subject, that are not disclosed in the
Offering Memorandum which, if adversely decided, could have a Material Adverse
Effect, or materially affect the issuance of the Debentures or the consummation
of the transactions contemplated by the Operative Documents. There are no
agreements, contracts, indentures, leases or other instruments that
9
<PAGE>
would be required to be described in the Offering Memorandum if it were a
prospectus included in a registration statement on Form S-3 under the Act but
are not described as required, or that are required to be filed as an exhibit to
any Incorporated Document that are not so described or filed as required. The
descriptions of the terms of any such contracts or documents contained in the
Offering Memorandum are correct and complete in all material respects.
(j) Neither the Company nor any of the Subsidiaries is (i) in
violation of its certificate or articles of incorporation or by-laws or other
organizational documents, or of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of the
Subsidiaries or of any decree of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries, except where any such
violation or violations in the aggregate would not have a Material Adverse
Effect, or (ii) in default in any material respect in the performance of any
obligation, agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any material agreement, indenture, lease or
other instrument to which the Company or any of the Subsidiaries is a party or
by which any of them or any of their respective properties may be bound, except
where such default does not and will not, individually or in the aggregate, have
a Material Adverse Effect.
(k) Neither the issuance, offer, sale or delivery of the Debentures,
the issuance of Common Stock upon conversion of the Debentures, the execution,
delivery or performance of this Agreement, the Indenture or the Registration
Rights Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby or thereby (i) requires any consent, approval,
authorization or other order of, or registration or filing with, any court,
regulatory body, administrative agency or other governmental body, agency or
official (except such as may be required in connection with the registration
under the Act of the Debentures and the Common Stock in accordance with the
Registration Rights Agreement, the qualification of the Indenture under the 1939
Act and except for compliance with the securities or Blue Sky laws of various
jurisdictions) or conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the certificate or articles of
incorporation or bylaws, or other organizational documents, of the Company or
any of the Subsidiaries or (ii) conflicts or will conflict with or constitutes
or will constitute a breach of, or a default under, any agreement, indenture,
lease or other instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their respective properties may be
bound, any statute, law, regulation or filing or judgment, injunction, order or
decree applicable to the Company or any of the Subsidiaries or any of their
respective properties, or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject, except where such conflict,
default or lien (other than in the case of a conflict or default under the
certificate or articles of incorporation or bylaws), individually or in the
aggregate, does and would not have a Material Adverse Effect.
(l) The accountants, Arthur Andersen LLP, Ernst & Young LLP,
Wallingford, McDonald, Fox & Co., P.C. and Coopers and Lybrand LLP, who each
have certified or shall certify the financial statements included as part of the
Offering Memorandum (or any amendment or supplement thereto), are, to the best
of the Company's knowledge, independent public accountants under Rule 101 of the
AICPA'a Code of Professional Conduct, and its interpretation and rulings.
(m) The financial statements (historical and pro forma), together
with related schedules and notes forming part of the Offering Memorandum (and
any amendment or supplement thereto), and the financial information of the
acquired companies or companies the acquisition of which is probable
("Acquisition Companies") included in the Offering Memorandum (and any amendment
or supplement thereto), present fairly the consolidated financial position,
results of operations and changes in financial position of the Company, the
Subsidiaries and the Acquisition Companies, as the case may be, on the basis
stated in the Offering Memorandum at the respective dates or for the respective
periods to which they apply; such statements and related schedules and notes
have been prepared in accordance with
10
<PAGE>
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein and all adjustments necessary for
a fair presentation of results for such periods have been made; the pro forma
financial information and the assumptions used in preparing such information,
and the related notes and schedules included or incorporated by reference in the
Offering Memorandum have been prepared in accordance with the requirements of
the Act (including Articles II, III and XI of Regulation S-X) applicable to a
prospectus included in a registration statement on Form S-3 and have been
computed on this basis described therein. The assumptions used in preparation of
the pro forma financial statements and other pro forma financial information
included in the Offering Memorandum are reasonable, and the other financial and
statistical information and data set forth in or incorporated by reference in
the Offering Memorandum (and any amendment or supplement thereto) is accurately
presented and prepared on a basis consistent with such financial statements and
the books and records of the Company, the Subsidiaries and the Acquisition
Companies, as the case may be.
(n) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement and the Registration
Rights Agreement; the execution and delivery of, and the performance by the
Company of its obligations under, this Agreement and the Registration Rights
Agreement have been duly and validly authorized by the Company, and this
Agreement and the Registration Rights Agreement have been duly executed and
delivered by the Company and constitute the valid and legally binding agreements
of the Company, enforceable against the Company in accordance with their terms,
except as the enforcement hereof and thereof may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally and subject to the applicability of general equitable principles, and
except as rights to indemnity and contribution hereunder and thereunder may be
limited by Federal or state securities laws.
(o) Except as disclosed in the Offering Memorandum (or any amendment
or supplement thereto), subsequent to the date as of which such information is
given in the Offering Memorandum (or any amendment or supplement thereto),
neither the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is or would be material to the Company and the
Subsidiaries, taken as a whole, and there has not been any change in the capital
stock, or material increase in the short-term or long-term debt, of the Company
or any of the Subsidiaries, or any material adverse change, or any development
involving or which could reasonably be expected to involve a prospective
material adverse change, in the condition (financial or other), business, net
worth or results of operations of the Company and the Subsidiaries, taken as a
whole.
(p) Each of the Company and the Subsidiaries has good and marketable
title to all property (real and personal) described in the Offering Memorandum
as being owned by it, free and clear of all liens, claims, security interests or
other encumbrances except such as are (i) not materially important or
significant in relation to the Company and the Subsidiaries, taken as a whole,
or (ii) described in the Offering Memorandum or in a document filed as an
exhibit to an Incorporated Document, and all the property described in the
Offering Memorandum as being held under lease by the Company and each Subsidiary
is held by such entity under valid, subsisting and enforceable leases.
(q) Except as permitted by the Act, the Company has not distributed
and, prior to the later to occur of (i) the Closing Date or the Option Closing
Date, if any, and (ii) completion of the distribution of the Debentures, will
not distribute any offering material in connection with the offering and sale of
the Debentures other than the Preliminary Offering Memorandum and Offering
Memorandum.
(r) The Company and each of the Subsidiaries have such permits,
licenses, franchises, certificates and authorizations of governmental or
regulatory authorities ("Permits"), as are necessary to own their respective
properties and to conduct their respective businesses in the manner now being
conducted and as described in the Offering Memorandum or in an Incorporated
Document, subject to such qualifications as may be set forth in the Offering
Memorandum, except where the failure to have any such Permit would not have a
material adverse effect on the condition (financial or other), business,
11
<PAGE>
properties, net worth, results of operations or prospects of the Company and the
Subsidiaries taken as a whole; the Company and each of the Subsidiaries have
each fulfilled and performed all of their respective material obligations with
respect to such Permits, and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the holder of any such Permit,
subject in each case to such qualification as may be set forth in the Offering
Memorandum; and, except as described in the Offering Memorandum, such Permits
contain no restrictions that are materially burdensome to the Company or any of
the Subsidiaries.
(s) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(t) To the Company's knowledge, neither the Company nor any of its
Subsidiaries, nor any employee or agent of the Company or any Subsidiary has
made any payment of funds of the Company or any Subsidiary or received or
retained any funds in violation of any law, rule or regulation, which payment,
receipt or retention of funds is of a character that would be required to be
disclosed in the Offering Memorandum if it were in a prospectus included in a
registration statement.
(u) There are no material Medicare or Medicaid recoupment or
recoupments of any third-party payor being sought, requested or claimed, or to
the Company's knowledge, threatened against the Company or any of the
Subsidiaries.
(v) The Company and each Subsidiary is in material compliance with
all applicable Federal, state and local environmental laws and regulations
including, without limitation, those applicable to emissions to the environment,
waste management and waste disposal (collectively, the "Environmental Laws"),
and to the Company's knowledge under current law, there are no existing
circumstances that would prevent, interfere with, or materially increase the
cost of such compliance in the future.
(w) Except as set forth in the Offering Memorandum, there is no
material claim under any Environmental Law, including common law, pending or, to
the Company's knowledge, threatened against the Company or any of the
Subsidiaries (an "Environmental Claim") and, to the Company's best knowledge,
under applicable law, there are no past or present actions, activities,
circumstances, events or incidents, including, without limitation, releases of
any material into the environment that would reasonably be expected to form the
basis of any material claim against the Company or any of the Subsidiaries.
(x) Except as described in the Offering Memorandum, no holder of any
security of the Company (other than holders of the Debentures and holders of
shares of Common Stock received upon conversion thereof) has any right to have
any Common Stock or other securities of the Company included in the Shelf
Registration Statement or to request or demand registration of shares of Common
Stock or any other security of the Company because of the consummation of the
transactions contemplated by this Agreement or the Registration Rights
Agreement. Except as described in the Offering Memorandum and the Registration
Rights Agreement, no person has the right, contractual or otherwise, to cause
the Company to sell or otherwise issue to them, or to permit them to underwrite
the sale of, any of the Debentures. Except as described in or contemplated by
the Offering Memorandum, there are no outstanding options, warrants or other
rights calling for the issuance of, and, there are no commitments, plans or
arrangements to issue, any shares of capital stock of the Company or any
security convertible into or exchangeable or exercisable for capital stock of
the Company.
12
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(y) The Company and the Subsidiaries own or possess all patents,
trademarks, trademark registrations, service marks, service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Offering Memorandum as being owned by any of them or necessary
for the conduct of their respective businesses, and the Company is not aware of
any claim to the contrary or any challenge by any other person to the rights of
the Company and the Subsidiaries with respect to the foregoing.
(z) The Company is not now, and after sale of the Debentures to be
sold by it hereunder and application of the net proceeds from such sale as
described in the Offering Memorandum under the caption "Use of Proceeds" will
not be, an "investment company" within the meaning of the Investment Company Act
of 1940, as amended.
(aa) Based upon the assumptions and subject to the qualifications set
forth therein, the statements made in the Offering Memorandum under the caption
"Certain United States Federal Income Tax Consequences" accurately summarize the
material United States federal income tax consequences of the ownership,
conversion and disposition of the Debentures for United States holders who
acquire Debentures on original issue and who hold Debentures as "capital assets"
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended.
(ab) The Company and each of the Subsidiaries have filed all tax
returns required to be filed or have filed for and have obtained extensions. All
tax returns filed by the Company and the Subsidiaries are complete and correct,
and neither the Company nor any of the Subsidiaries is in default in the payment
of any taxes which are payable pursuant to said returns or any assessments with
respect thereto. There have been no tax deficiencies asserted and, to the best
knowledge of the Company, no tax deficiency might be reasonably asserted or
threatened against the Company or any of the Subsidiaries that could,
individually or in the aggregate, have a Material Adverse Effect.
(ac) Except as otherwise disclosed in the Offering Memorandum, neither
the execution, delivery or performance of any agreement by the Company and, as
applicable, the Subsidiaries to acquire, merge into or consolidate with any
natural person, corporation, division of a corporation, partnership, trust,
joint venture, association, company or unincorporated corporation existing on
the date hereof (the "Acquisition Agreements") nor the consummation by the
Company and, as applicable, the Subsidiaries of the transactions contemplated
thereby (i) requires or required any consent, approval, authorization or other
order of, or registration with, any court, regulatory body, administrative
agency or other governmental body, agency or official (except such as have been
obtained by the Company or the Subsidiaries in a timely fashion) or conflicted,
conflicts or will conflict with or constituted, constitutes or will constitute a
breach of, or a default under the certificate or articles of incorporation or
bylaws, or other organizational documents, of the Company or any of the
Subsidiaries or (ii) conflicted, conflicts or will conflict with or constituted,
constitutes or will constitute a material breach of, or a material default
under, any agreement, indenture, lease or other instrument to which the Company
or any of the Subsidiaries is a party or by which any of them or any of their
respective properties may be bound, or violates or will violate any statute,
law, regulation or filing or judgment, injunction, order or decree applicable to
the Company or any of the Subsidiaries or any of their respective properties, or
will result in the creation or imposition of any lien, charge or incumbrance
upon any property or assets of the Company or any of the Subsidiaries pursuant
to the terms of any agreement or instrument to which any of them is a party or
by which any of them may be bound or to which any of the property or assets of
any of them is subject.
(ad) To the best knowledge of the Company, and except as to any of the
following that, individually or in the aggregate would not have a material
adverse effect on the condition (financial or other), business, properties, net
worth or results of operations of the Company and the Subsidiaries taken as a
whole (i) there are no legal or governmental proceedings pending or threatened
against the Affiliated Practices (as defined in the Offering Memorandum) or
those ophthalmic and optometric practices which, upon completion of the
transactions contemplated by the Acquisition Agreements, will become Affiliated
Practices (together with the Affiliated Practices, the "Practices"); (ii) none
of the Practices is in
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<PAGE>
violation of its certificate or articles of incorporation or bylaws, or other
organizational documents, or of any law, ordinance, administrative or
governmental rule or regulation applicable to the Practices or of any decree of
any court or governmental agency or body having jurisdiction over the Practices
or in default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any agreement, indenture, lease or other instrument to which the Company or
any of the Subsidiaries is a party or by which any of their respective
properties may be bound, (iii) each Practice has such Permits as are necessary
to own such Practice's properties and to conduct such Practice's business in the
manner described in the Offering Memorandum, subject to such qualifications as
may be set forth in the Offering Memorandum; each Practice has fulfilled and
performed all its obligations with respect to such Permits, and no event has
occurred which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other impairment of the rights of the
holder of any such Permit, subject in each case to such qualifications as may be
set forth in the Offering Memorandum; and, except as described in the Offering
Memorandum, none of such Permits contains any restriction that is burdensome to
such Practice; and (iv) there are no Medicare or Medicaid recoupment or
recoupments of any third-party payor being sought, requested, claimed or
threatened against any of the Practices.
(ae) When the Debentures are issued and delivered pursuant to this
Agreement, such Debentures will not be of the same class (within the meaning of
Rule 144A(d)(3) under the Act) as any security of the Company that is listed on
a national securities exchange registered under Section 6 of the Exchange Act or
that is quoted in a United States automated interdealer quotation system.
(af) After giving effect to the intended use of proceeds from the
offering of the Debentures as described in the Offering Memorandum under the
caption "Use of Proceeds," the Debentures do not constitute "corporate
acquisition indebtedness" within the meaning of Section 279 of the Internal
Revenue Code.
(ag) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D ("Regulation D") under the Act) of the Company has directly, or
through any agent (provided that no representation is made as to the Initial
Purchasers or any person acting on their behalf), (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any security (as
defined in the Act) which is or will be integrated with the offering and sale of
the Debentures in a manner that would require the registration of the Debentures
under the Act or (ii) engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offering
of the Debentures.
(ah) The Company is not required to deliver the information specified
in Rule 144A(d)(4) in connection with the offering and resale of the Debentures
by the Initial Purchasers.
(ai) Assuming (i) that the representations and warranties in Section 2
hereof are true, (ii) the Initial Purchasers comply with the covenants set forth
in Section 2 hereof and (iii) that each person to whom the Initial Purchasers
offer, sell or deliver the Debentures is a Qualified Institutional Buyer, an
Institutional Accredited Investor or a person other than a U.S. person outside
the United States in reliance on Regulation S under the Act, the purchase and
sale of the Debentures pursuant hereto (including the Initial Purchasers'
proposed offering of the Debentures on the terms and in the manner set forth in
the Offering Memorandum and Section 2 hereof) is exempt from the registration
requirements of the Act. None of the Company, its Subsidiaries or affiliates or
any person acting on its or their behalf (provided that no representation is
made as to the Initial Purchasers or any person acting on their behalf) has
engaged in any directed selling efforts (as that term is defined in Regulation
S) with respect to the Debentures and the Company, its Subsidiaries and each
person acting on their behalf (provided that no representation is made as to the
Initial Purchasers or any person acting on their behalf) have complied with the
offering restrictions requirement of Regulation S.
(aj) The execution and delivery of this Agreement, the other Operative
Documents and the sale of the Debentures to the Initial Purchasers or by the
Initial Purchasers to Eligible Purchasers
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will not involve any prohibited transaction within the meaning of Section 406 of
ERISA or Section 4975 of the Code. The representation made by the Company in the
preceding sentence is made in reliance upon and subject to the accuracy of, and
compliance with, the representations and covenants made or deemed made by the
Eligible Purchasers as set forth in the Offering Memorandum under the section
entitled "Notice to Investors."
(ak) The Company is not required to obtain stockholder consent or
approval pursuant to the rules of the NYSE or any other securities exchange or
trading facility in connection with the offering and sale of the Debentures.
6. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Initial Purchaser and each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in the Preliminary Offering Memorandum or Offering
Memorandum or in any amendment or supplement thereto, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information relating to such Initial
Purchaser furnished in writing to the Company by or on behalf of any Initial
Purchaser expressly for use in connection therewith; provided, however, that the
indemnification contained in this paragraph (a) with respect to the Preliminary
Offering Memorandum shall not inure to the benefit of any Initial Purchaser (or
to the benefit of any person controlling any Initial Purchaser) on account of
any such loss, claim, damage, liability or expense arising from the sale of the
Debentures by such Initial Purchaser to any person if the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in the Preliminary Offering Memorandum was corrected in the Offering
Memorandum and such Initial Purchaser sold Debentures to that person without
sending or giving at or prior to the written confirmation of such sale, a copy
of the Offering Memorandum (as then amended or supplemented) if the Company has
previously furnished sufficient copies thereof to the several Initial
Purchasers. The foregoing indemnity agreement shall be in addition to any
liability which the Company may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Initial Purchaser or any person controlling any Initial Purchaser in respect of
which indemnity may be sought against the Company, such Initial Purchaser or
such controlling person shall promptly notify the Company and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses; provided, however, that the omission so to notify the
Company shall not relieve the Company from any liability that it may have to any
Initial Purchaser (except to the extent that the Company is materially
prejudiced or otherwise forfeits substantive rights or defenses by reason of
such failure). Such Initial Purchaser or any such controlling person shall have
the right to employ separate counsel in any such action, suit or proceeding and
to participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Initial Purchaser or such controlling person
unless (i) the Company has agreed in writing to pay such fees and expenses, (ii)
the Company has failed to assume the defense and employ counsel, or (iii) the
named parties to any such action, suit or proceeding (including any impleaded
parties) include both such Initial Purchaser or such controlling person and the
Company and representation of the Company by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or not
such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the Company shall not
have the right to assume the defense of such action, suit or proceeding on
behalf of such Initial Purchaser or such controlling person). It is understood,
however, that the Company shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
all
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such Initial Purchasers and controlling persons not having actual or potential
differing interests with the Initial Purchasers or among themselves, which firm
shall be designated in writing by Smith Barney Inc., and that all such
reasonable fees and expenses shall be reimbursed as they are incurred. The
Company shall not be liable for any settlement of any such action, suit or
proceeding effected without its written consent, but if settled with such
written consent, or if there be a final judgment for the plaintiff in any such
action, suit or proceeding, the Company agrees to indemnify and hold harmless
any Initial Purchaser, to the extent provided in paragraph (a), and any such
controlling person from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(c) Each Initial Purchaser agrees to indemnify and hold harmless the
Company, and its directors and officers, and any person who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act to
the same extent as the indemnity from the Company to each Initial Purchaser set
forth in paragraph (a) hereof, but only with respect to information relating to
such Initial Purchaser furnished in writing by or on behalf of such Initial
Purchaser expressly for use in the Preliminary Offering Memorandum or Offering
Memorandum or any amendment or supplement thereto. If any action, suit or
proceeding shall be brought against the Company, any of its directors or
officers, or any such controlling person based on the Preliminary Offering
Memorandum or Offering Memorandum, or any amendment or supplement thereto, and
in respect of which indemnity may be sought against any Initial Purchaser
pursuant to this paragraph (c), such Initial Purchaser shall have the rights and
duties given to the Company by paragraph (b) above (except that if the Company
shall have assumed the defense thereof such Initial Purchaser shall not be
required to do so, but may employ separate counsel therein and participate in
the defense thereof, but the fees and expenses of such counsel shall be at such
Initial Purchaser's expense), and the Company, its directors and officers, and
any such controlling person shall have the rights and duties given to the
Initial Purchasers by paragraph (b) above. The foregoing indemnity agreement
shall be in addition to any liability which the Initial Purchasers may otherwise
have.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Initial Purchasers on the other hand from the
offering of the Debentures, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Initial
Purchasers on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Initial Purchasers on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the total discounts
and commissions received by the Initial Purchasers, in each case as set forth in
the table on the cover page of the Offering Memorandum; provided that, in the
event that the Initial Purchasers shall have purchased any Additional Debentures
hereunder, any determination of the relative benefits received by the Company or
the Initial Purchasers from the offering of the Debentures shall include the net
proceeds (before deducting expenses) received by the Company, and the discounts
and commissions received by the Initial Purchasers, from the sale of such
Additional Debentures, in each case computed on the basis of the respective
amounts set forth in the notes to the table on the cover page of the Offering
Memorandum. The relative fault of the Company on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or by the Initial Purchasers on the
other hand and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
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(e) The Company and the Initial Purchasers agree that it would not be
just and equitable if contribution pursuant to this Section 6 were determined by
a pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 6, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price of the Debentures sold by it to Eligible Purchasers
exceeds the amount of any damages which such Initial Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute pursuant to
this Section 6 are several in proportion to the respective numbers of Firm
Debentures set forth opposite their names in Schedule I hereto and not joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 6 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Initial Purchaser or any person
controlling any Initial Purchaser, the Company, its directors or officers or any
person controlling the Company, (ii) acceptance of any Debentures and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
any Initial Purchaser or any person controlling any Initial Purchaser, or to the
Company, its directors or officers or any person controlling the Company, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 6.
7. Conditions of the Initial Purchasers' Obligations. The several
obligations of the Initial Purchasers to purchase the Firm Debentures hereunder
are subject to the following conditions:
(a) At the time of execution of this Agreement and on the Closing
Date, no order or decree preventing the use of the Offering Memorandum or any
amendment or supplement thereto, or any order asserting that the transactions
contemplated by this Agreement are subject to the registration requirements of
the Act shall have been issued and no proceedings for that purpose shall have
been commenced or shall be pending or, to the knowledge of the Company, be
contemplated. No stop order suspending the sale of the Debentures in any
jurisdiction designated by the Initial Purchasers shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending or,
to the knowledge of the Company, shall be contemplated.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change, in or affecting the business, financial condition or results of
operations of the Company or the Subsidiaries not contemplated by the Offering
Memorandum, which in the opinion of the Initial Purchasers, would materially
adversely affect the market for the Debentures, or (ii) any event or development
relating to or involving the Company or any officer or director of the Company
which makes any statement made in the Offering Memorandum untrue or which, in
the opinion of the Company and its counsel or the Initial Purchasers and their
counsel, requires the making of any addition to or change in the Offering
Memorandum in order to state a material fact
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<PAGE>
required by any law to be stated therein or necessary in order to make the
statements therein not misleading, if amending or supplementing the Offering
Memorandum to reflect such event or development would, in the opinion of the
Initial Purchasers, materially adversely affect the market for the Debentures.
(c) The Initial Purchasers shall have received on the Closing Date an
opinion of Jackson & Walker, L.L.P., counsel for the Company, dated the Closing
Date and addressed to the Initial Purchasers, to the effect that:
(i) The Incorporated Documents (except for the financial
statements and the notes thereto and the schedules and other financial and
statistical data included therein, as to which such counsel need not express any
opinion) comply as to form in all material respects with the requirements of the
Exchange Act;
(ii) The Company is a corporation duly incorporated and
validly existing in good standing under the laws of the State of Delaware with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Offering Memorandum (and any
amendment or supplement thereto), and is duly registered and qualified to
conduct its business and is in good standing in each jurisdiction or place where
the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure to so register or
qualify does not have a Material Adverse Effect;
(iii) All of the Company's Subsidiaries, including the
Corporate Subsidiaries, LLC Subsidiaries and Partnership Subsidiaries, that
would be required to be listed as an exhibit pursuant to Item 601(b)(21) of
Regulation S-K are referred to herein individually as a "Material Subsidiary"
and collectively as the "Material Subsidiaries." Each Material Subsidiary that
is a corporation has been duly organized and is validly existing in good
standing under the laws of the jurisdiction of its organization; each Material
Subsidiary that is a limited liability company is duly organized and validly
existing under the laws in the jurisdiction of its organization; and each
Material Subsidiary that is a partnership has been duly organized and is an
existing partnership under the laws of the jurisdiction of its organization.
Each Material Subsidiary has full corporate, limited liability company, or
partnership, as the case may be, power and authority to own, lease, and operate
its properties and to conduct its business as described in the Offering
Memorandum (and any amendment or supplement thereto); all the outstanding shares
of capital stock of each of the Material Subsidiaries that is a corporation have
been duly authorized and validly issued, are fully paid and nonassessable, and
are owned by the Company directly, or indirectly through one of the other
Subsidiaries, free and clear of any perfected security interest, or, to the best
knowledge of such counsel after reasonable inquiry, any other security interest,
lien, adverse claim, equity or other encumbrance, except as described in the
Offering Memorandum or on Schedule II hereto; all the outstanding membership
interests in the Material Subsidiaries that are limited liability companies have
been duly authorized and validly issued and such interests are owned by the
Company directly, or indirectly through one of the other Subsidiaries, free and
clear of any lien, adverse claim, security interest, equity or other
encumbrance, except as disclosed in the Offering Memorandum or on Schedule II
hereto; and all the outstanding partnership interests in the Material
Subsidiaries are owned by the Company directly, or indirectly through one of the
other Subsidiaries free and clear of any lien, adverse claim, security interest,
equity or other encumbrances, except as disclosed in the Offering Memorandum or
on Schedule II hereto.
(iv) The Company has all necessary corporate power and
authority to execute and deliver this Agreement and the Registration Rights
Agreement and to issue, sell and deliver the Debentures to be sold by it to the
Initial Purchasers as provided herein, and this Agreement and the Registration
Rights Agreement have each been duly authorized, executed and delivered by the
Company and each constitutes a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as enforcement of rights to
indemnity and contribution under each agreement may be limited by Federal or
state securities laws or principles of public policy and except to the extent
that enforceability of each agreement is subject to (i) applicable bankruptcy,
fraudulent conveyance, insolvency, reorganization,
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moratorium or other similar laws now or hereafter in effect affecting creditors'
rights generally and (ii) general principles of equity;
(v) The Indenture has been duly and validly authorized,
executed and delivered by the Company and, assuming due authorization, execution
and delivery by the Trustee, is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as enforcement of rights to
indemnity and contribution thereunder may be limited by Federal or state
securities laws or principles of public policy and except to the extent that
enforceability thereof is subject to (i) applicable bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting creditors' rights generally and (ii) general
principles of equity (including, without limitation, standards of materiality,
good faith, fair dealing and reasonableness) whether such principles are
considered in a proceeding at law or in equity;
(vi) The Debentures have been duly and validly authorized by
the Company and when executed by the Company in accordance with the Indenture
and, assuming due authentication of the Debentures by the Trustee, upon delivery
to the Initial Purchasers against payment therefor in accordance with the terms
hereof, will have been validly issued and delivered, and will constitute valid
and binding obligations of the Company entitled to the benefits of the
Indenture, except to the extent that enforceability thereof is subject to (i)
applicable bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect affecting creditors'
rights generally and (ii) general principles of equity (including, without
limitation, standards of materiality, good faith, fair dealing and
reasonableness), whether such principles are considered in a proceeding at law
or in equity;
(vii) The shares of Common Stock issuable upon conversion of
the Debentures have been duly authorized and reserved for issuance and, when
issued and delivered upon conversion of the Debentures, in accordance with the
terms thereof, will be validly issued, fully paid and nonassessable and will be
free of any preemptive, or to the best knowledge of such counsel after
reasonable inquiry, similar rights ;
(viii) The authorized and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the Offering
Memorandum; and the authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof contained in
the Offering Memorandum under the caption "Description of Capital Stock";
(ix) All the shares of capital stock of the Company
outstanding prior to the issuance of the Debentures to be issued and sold by the
Company hereunder have been duly authorized and validly issued and are fully
paid and nonassessable;
(x) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency, or official is required on the part of the
Company (except as have been obtained under the Exchange Act, or such as may be
required under state securities or Blue Sky laws governing the purchase and
distribution of the Debentures, or such as may be required to qualify the
Indenture under the 1939 Act, and such as may be required in connection with the
performance by the Company of its obligations under the Registration Rights
Agreement, as to which counsel need not express any opinion) for the valid
issuance and sale of the Debentures to the Initial Purchasers as contemplated by
this Agreement;
(xi) Neither the offer, sale or delivery of the Debentures,
nor the issuance of Common Stock upon conversion of the Debentures in accordance
with the terms of the Debentures, nor the execution, delivery or performance by
the Company of this Agreement, the Registration Rights Agreement or the
Indenture, nor compliance by the Company with the provisions hereof or thereof,
nor consummation by the Company of the transactions contemplated hereby or
thereby, (A) conflicts or will conflict with or constitutes or will constitute a
breach of, or a default under the certificate or articles of incorporation or
bylaws or other organizational documents of the Company or any of the Material
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Subsidiaries or any agreement, indenture, lease or other instrument to which the
Company or any of the Subsidiaries is a party or by which any of them or any of
their respective properties is bound that is an exhibit to any Incorporated
Document or is known to such counsel after reasonable inquiry, or (B) will
result in the creation or imposition of any material lien, charge or encumbrance
upon any property or assets of the Company or any of the Subsidiaries, nor will
any such action result in any violation of any existing law, or any regulation,
ruling (assuming compliance with all applicable state securities and Blue Sky
laws and, in the case of the Registration Rights Agreement, the Act, the
Exchange Act and the 1939 Act), judgment, injunction, order or decree known to
such counsel, and applicable to the Company, the Subsidiaries or any of their
respective properties;
(xii) To the best knowledge of such counsel, (A) other than as
described or contemplated in the Offering Memorandum (or any supplement
thereto), there are no legal or governmental proceedings pending or threatened
against the Company or any of the Subsidiaries, or to which the Company or any
of the Subsidiaries, or any of their property, are subject, which are of the
type that would be required to be described in any of the Incorporated Documents
and (B) there are no agreements, contracts, indentures, leases or other
instruments, that are of the type that would be required to be described in the
Offering Memorandum if it were a prospectus included in a registration statement
on Form S-3 under the Act but are not described would be as required, or that
are required to be filed as an exhibit to any of the Incorporated Documents that
are not so filed as required;
(xiii) No registration of the Debentures under the Act nor
qualification of the Indenture under the 1939 Act is required for the sale of
the Debentures to the Initial Purchasers as contemplated in this Agreement or
for the Exempt Resales (assuming (A) that all representations and warranties
made by the Initial Purchasers and the Company in this Agreement and in the
Offering Memorandum are true, correct and accurate (including but not limited to
the representations by the Initial Purchasers and the Company regarding the
absence of general solicitation in connection with the Exempt Resales and
regarding offers and sales outside the United States in reliance on Regulation
S), (B) the Initial Purchasers comply with all of the covenants set forth in
this Agreement (including but not limited to the covenants set forth in Section
2 hereof), (C) none of the Company, its Subsidiaries and each person acting on
its or their behalf have complied with the offering restrictions requirements of
Regulation S, (D) that each person to whom the Initial Purchasers offer, sell or
deliver the Debentures in the Exempt Resales is (x) a Qualified Institutional
Buyer, (y) an Institutional Accredited Investor or (z) a person other than a
U.S. person outside the United States in reliance on Regulation S under the Act,
and (E) that the representations made by each person to whom Debentures are sold
in reliance on Rule 144A or Regulation S are true, correct and accurate);
(xiv) To the best knowledge of such counsel after reasonable
inquiry, neither the Company, nor any of the Subsidiaries is in violation of any
law, ordinance, administrative or governmental rule or regulation applicable to
the Company, or any of the Subsidiaries, or of any decree of any court or
governmental agency or body having jurisdiction over the Company, or any of the
Subsidiaries, the effect of which could have a Material Adverse Effect on the
Company and the Subsidiaries, taken as a whole;
(xv) The statements in the Offering Memorandum, insofar as
they are descriptions of contracts, agreements or other legal documents, or
refer to statements of law or legal conclusions, are accurate and present fairly
the information shown;
(xvi) Except as disclosed in the Offering Memorandum or
permitted pursuant to this Agreement, such counsel does not know of any
outstanding option, warrant or other right calling for the issuance of, and such
counsel does not know of any commitment, plan or arrangement to issue, any share
of capital stock of the Company or any security convertible into or exchangeable
or exercisable for capital stock of the Company; and, except as described in the
Offering Memorandum, such counsel does not know of any holder of any security of
the Company (except for holders of the Debentures and the Common Stock issuable
upon conversion thereof) or any other person who has the right, contractual or
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otherwise, to cause the Company to sell or otherwise issue to them, or to permit
them to underwrite the sale of, any of the Debentures or the right to have any
Common Stock or other securities of the Company included in the Shelf
Registration Statement or the right, as a result of the consummation of the
transactions contemplated by the Operative Documents, to require registration
under the Act of any shares of Common Stock or other securities of the Company;
(xvii) To the knowledge of such counsel, the Company, and each
Subsidiary, is in material compliance with all Environmental Laws and there are
no circumstances that would prevent or materially interfere with such compliance
in the future;
(xviii) Except as set forth in the Offering Memorandum, to the
knowledge of such counsel, there is no material Environmental Claim pending
against the Company, or the Subsidiaries, and there are no past or present
actions, activities, circumstances, events or incidents, including, without
limitation, releases of any material into the environment that could form the
basis of any Environmental Claim against the Company, or the Subsidiaries;
(xix) To the best knowledge of such counsel after reasonable
inquiry, neither the Company nor any of the Subsidiaries is in violation in any
material respect of its respective certificate or articles of incorporation or
bylaws, or other organizational documents, or is in default in the performance
of any material obligation, agreement or condition contained in any bond,
debenture, note or other evidence of indebtedness, except as may be disclosed in
the Offering Memorandum;
(xx) Neither the execution, delivery or performance of the
Acquisition Agreements, compliance by the Company and the Subsidiaries with the
provisions thereof nor consummation by the Company and the Subsidiaries of the
transactions contemplated thereby conflicted, conflicts or will conflict with or
constituted, constitutes or will constitute a breach of, or a default under, the
certificates or articles of incorporation or bylaws or other organizational
documents of the Company or any of the Subsidiaries or any agreement, indenture,
lease or other instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their respective properties is bound
that is an exhibit to an Incorporated Document or is known to such counsel after
reasonable inquiry (except where appropriate waivers or consents thereto have
heretofore been obtained by the Company), or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of the Subsidiaries, nor will any such action result in any
violation of any existing law, regulation, ruling, judgment, injunction, order
or decree known to such counsel after reasonable inquiry, applicable to the
Company, the Subsidiaries or any of their respective properties;
(xxi) When the Debentures are issued and delivered pursuant to
this Agreement, such Debentures will not be of the same class (within the
meaning of Rule 144A(d)(3) under the Act) as any security of the Company that is
listed on a national securities exchange registered under Section 6 of the
Exchange Act or that is quoted in a United States automated interdealer
quotation system;
(xxii) The Company is not required to deliver the information
specified in Rule 144A(d)(4) in connection with the offering and resale of the
Debentures by the Initial Purchasers; and
(xxiii) Based upon the assumptions and subject to the
qualifications set forth therein, the statements made in the Offering Memorandum
under the caption "Certain United States Federal Income Tax Consequences"
accurately summarize the material United States federal income tax consequences
of the ownership, conversion and disposition of the Debentures for United States
holders who acquire Debentures on original issue and who hold Debentures as
"capital assets" within the meaning of Section 1221 of the Internal Revenue Code
of 1986, as amended;
(xxiv) The Company is not required to obtain stockholder consent
or approval pursuant to the rules of the NYSE in connection with the issuance,
offering and resale of the Debentures.
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In addition, such counsel shall state that, although such counsel has
not undertaken, except as otherwise indicated in their opinion, to determine
independently, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements in the Offering Memorandum, such
counsel has participated in the preparation of the Offering Memorandum,
including review and discussion of the content thereof, and nothing has come to
the attention of such counsel that has caused it to believe that the Offering
Memorandum, as of its date, and as of the Closing Date or the Option Closing
Date, as the case may be, contained an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or that any amendment or supplement to the Offering
Memorandum, as of its date, and as of the Closing Date or the Option Closing
Date, as the case may be, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading (it being understood that such counsel need express no
opinion with respect to the financial statements and the notes thereto and the
schedules and other financial and statistical data included or incorporated by
reference in the Offering Memorandum).
In rendering their opinion as aforesaid, counsel may rely, as to
factual matters, upon certificates of officers of the Company attached to such
opinion, and may rely upon an opinion or opinions, each dated the Closing Date
or the Option Closing Date, as the case may be, of other counsel retained by
them or the Company as to laws of any jurisdiction other than the United States
or the corporation law of the State of Delaware; provided, that, (1) each such
local counsel is acceptable to the Initial Purchasers, (2) such reliance is
expressly authorized by each opinion so relied upon and a copy of each such
opinion is delivered to the Initial Purchasers and is, in form and substance,
satisfactory to them and counsel of the Initial Purchasers and (3) counsel shall
state in their opinion that they believe that they and the Initial Purchasers
are justified in relying thereon.
(d) The Initial Purchasers shall have received on the Closing Date an
opinion of Dewey Ballantine, counsel for the Initial Purchasers, dated the
Closing Date, and addressed to the Initial Purchasers, with respect to the
matters referred to in clauses (i), (iv), (v), (vi), (vii) and (xiii) of the
foregoing paragraph (c), and the penultimate paragraph of the foregoing
paragraph (c) and such other related matters as the Initial Purchasers may
request.
(e) The Initial Purchasers shall have received letters addressed to
the Initial Purchasers, and dated the date hereof from Arthur Andersen LLP,
Ernst & Young LLP, Wallingford McDonald, Fox & Co., P.C. and Coopers and Lybrand
LLP, independent certified public accountants, and a letter dated the Closing
Date from Arthur Andersen LLP, substantially in the forms heretofore approved by
the Initial Purchasers.
(f)(i) There shall not have been any material change in the capital
stock of the Company nor any material increase in the short-term or long-term
debt of the Company (other than in the ordinary course of business) from that
set forth or contemplated in the Offering Memorandum (or any amendment or
supplement thereto); (ii) there shall not have been, since the respective dates
as of which information is given in the Offering Memorandum (or any amendment or
supplement thereto), except as may otherwise be stated in the Offering
Memorandum (or any amendment or supplement thereto), any material adverse change
in the condition (financial or other), business, net worth or results of
operations of the Company and the Subsidiaries, taken as a whole; (iii) the
Company and the Subsidiaries shall not have any liabilities or obligations,
direct or contingent (whether or not in the ordinary course of business), that
are material to the Company and the Subsidiaries, taken as a whole, other than
those reflected in the Offering Memorandum (or any amendment or supplement
thereto); and (iv) all the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
on and as of the date hereof and on and as of the Closing Date as if made on and
as of the Closing Date, and the Initial Purchasers shall have received a
certificate, dated the Closing Date and signed by the chief executive officer
and the chief financial officer of the Company (or such other officers as are
acceptable to the Initial Purchasers), to the effect set forth in this Section
7(f) and in Section 7(g) hereof.
22
<PAGE>
(g) The Company shall not have failed in any material respect at or
prior to the Closing Date to have performed or complied with any of its
agreements herein contained and required to be performed or complied with by it
hereunder at or prior to the Closing Date.
(h) The Initial Purchasers shall have received a certificate dated the
Closing Date signed by the chief financial officer of the Company substantially
in the form approved by the Initial Purchasers, respecting the Company's
compliance with the financial covenants set forth in its credit agreements (the
"Credit Agreements") with NationsBank of Tennessee, N.A.
(i) There shall not have been any announcement by any "nationally
recognized statistical rating organization," as defined for purposes of Rule
436(g) under the Act, that (i) it is downgrading its rating assigned to any
class of securities of the Company, or (ii) it is reviewing its ratings assigned
to any class of securities of the Company with a view to possible downgrading,
or with negative implications, or direction not determined.
(j) The Debentures shall have been designated for trading on PORTAL.
(k) The Company shall have executed and delivered the Indenture and
the Registration Rights Agreement.
(l) The Company shall have received at or prior to the Closing Date
the requisite written consent of NationsBank of Tennessee, N.A. with respect to
the Credit Agreements to the consummation by the Company of the transactions
contemplated by the Operative Documents and the Offering Memorandum.
(m) The Company shall have furnished or caused to be furnished to the
Initial Purchasers such further certificates and documents as the Initial
Purchasers shall have reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Initial Purchasers and counsel for the
Initial Purchasers.
Any certificate or document signed by any officer of the Company and
delivered to the Initial Purchasers, or to counsel for the Initial Purchasers,
shall be deemed a representation and warranty by the Company to the Initial
Purchasers as to the statements made therein.
The obligations of the Initial Purchasers to purchase any Additional
Debentures hereunder are subject to the satisfaction on and as of any Option
Closing Date of the conditions set forth in this Section 7, except that, if any
Option Closing Date is other than the Closing Date, the certificates, opinions
and letters referred to in paragraphs (c) through (f) and paragraphs (h) and (m)
shall be dated the Option Closing Date in question and the opinion called for by
paragraphs (c) and (d) shall be revised to reflect the sale of Additional
Debentures.
8. Expenses. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction of the
Offering Memorandum (including financial statements thereto), and each amendment
or supplement thereto; (ii) the printing (or reproduction) and delivery
(including postage, air freight charges and charges for counting and packaging)
of such copies of the Offering Memorandum, the Preliminary Offering Memorandum,
the Incorporated Documents, and all amendments or supplements to any of them as
may be reasonably requested for use in connection with the offering and sale of
the Debentures; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Debentures, including any stamp taxes in
connection with the original issuance and sale of the Debentures; (iv) the
printing (or reproduction) and delivery of this Agreement, the preliminary and
supplemental Blue Sky Memoranda and all other agreements or documents printed
(or reproduced) and delivered in connection
23
<PAGE>
with the offering of the Debentures; (v) the application for designation of the
Debentures on PORTAL; (vi) the registration of the Common Stock and the listing
of the shares of Common Stock issuable upon conversion of the Debentures on the
NYSE; (vii) the qualification of the Debentures and the shares of Common Stock
issuable upon conversion of the Debentures for offer and sale under the
securities or Blue Sky laws of the several states as provided in Section 4(f)
hereof (including the reasonable fees and expenses and disbursements of counsel
for the Initial Purchasers relating to the preparation, printing or
reproduction, and delivery of the preliminary and supplemental Blue Sky
Memoranda and such qualification); (viii) the transportation and other expenses
incurred by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Debentures; (ix) the performance
by the Company of its obligations under the Registration Rights Agreement; and
(x) the fees and expenses of the Company's accountants and the fees and expenses
of counsel (including local and special counsel) for the Company.
9. Effective Date of Agreement. This Agreement shall become
effective upon the execution and delivery hereof by all the parties hereto.
Until such time as this Agreement shall have become effective, it may be
terminated by the Company, by notifying the Initial Purchasers, or by the
Initial Purchasers, by notifying the Company.
Any notice under this Section 9 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
10. Default by an Initial Purchaser. If any one or more of the
Initial Purchasers shall fail or refuse to purchase the Debentures which it is
obligated to purchase on the Closing Date, and arrangements satisfactory to the
non-defaulting Initial Purchasers or by another party or parties satisfactory to
the non-defaulting Initial Purchasers and the Company for the purchase of such
Debentures by the non-defaulting Initial Purchasers and the Company are not made
within thirty-six (36) hours after such default, this Agreement shall terminate
without liability on the part of the non-defaulting Initial Purchasers or the
Company. In any such case which does not result in termination of this
Agreement, either the non-defaulting Initial Purchasers or the Company shall
have the right to postpone the Closing Date, but in no event for longer than
seven (7) days, in order that the required changes, if any, in the Offering
Memorandum or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve the defaulting Initial Purchasers
from liability in respect of such default under this Agreement. The term
"Initial Purchaser" as used in this Agreement includes, for all purposes of this
Agreement, any party not identified in this Agreement who purchases Debentures
which a defaulting Initial Purchaser is obligated, but fails or refuses to
purchase.
11. Termination of Agreement. This Agreement shall be subject to
termination in the absolute discretion of the Initial Purchasers, without
liability on the part of the Initial Purchasers to the Company, by notice to the
Company, if prior to the Closing Date or any Option Closing Date (if different
from the Closing Date and then only as to the Additional Debentures), as the
case may be, (i) trading in securities generally on the New York Stock Exchange,
American Stock Exchange or The Nasdaq Stock Market's National Market shall have
been suspended or materially limited, (ii) a general moratorium on commercial
banking activities in New York shall have been declared by either federal or
state authorities, or (iii) there shall have occurred any outbreak or escalation
of hostilities or other international or domestic calamity, crisis or change in
political, financial or economic conditions, the effect of which on the
financial markets of the United States is such as to make it, in the judgment of
the Initial Purchasers, impracticable or inadvisable to commence or continue the
offering of the Debentures on the terms set forth on the cover page of the
Offering Memorandum or to enforce contracts for the resale of the Debentures by
the Initial Purchasers. Notice of such termination may be given to the Company
by telegram, telecopy or telephone and shall be subsequently confirmed by
letter.
12. Information Furnished by the Initial Purchasers. The statements
set forth in the stabilization legend on the inside front cover, the last
paragraph on the cover page and in the third, fourth and fifth paragraphs under
the caption "Plan of Distribution" in the Preliminary Offering Memorandum
24
<PAGE>
and Offering Memorandum, constitute the only information furnished by or on
behalf of the Initial Purchasers, as such information is referred to in Sections
5(b) and 6 hereof.
13. Miscellaneous. Except as otherwise provided in Sections 4, 9 and
11 hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at Three Lincoln Center, Suite 1540, 5430 LBJ Freeway, Dallas, Texas
75240, Attention: Richard J. D'Amico, Senior Vice President or (ii) if to the
Initial Purchasers, to Smith Barney Inc., 388 Greenwich Street, New York, NY
10013, Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
Initial Purchasers, the Company, its directors, its officers and the controlling
persons referred to in Section 6 hereof and their respective successors and
assigns, to the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from the Initial Purchasers of any of the Debentures
in his status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York without giving
effect to the choice of laws or conflict of laws principles thereof.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
25
<PAGE>
Please confirm that the foregoing correctly sets forth the
agreement between the Company and the Initial Purchasers.
Very truly yours,
Physicians Resource Group, Inc.
By: /s/ Richard D'Amico
----------------------
Confirmed as of the date first
above mentioned.
Smith Barney Inc.
Alex. Brown & Sons Incorporated
Dillon, Read & Co. Inc.
Salomon Brothers Inc
Volpe, Welty & Company
By: Smith Barney Inc.
By:/s/ Benjamin D. Lorello
-----------------------
MANAGING DIRECTOR
26
<PAGE>
SCHEDULE I
PHYSICIANS RESOURCE GROUP, INC.
<TABLE>
<CAPTION>
Principal Amount
Initial Purchaser of Firm Debentures
- ----------------- ------------------
<S> <C>
Smith Barney Inc.................... $62,500,000
Alex. Brown & Sons Incorporated..... 21,250,000
Dillon, Read & Co. Inc.............. 18,750,000
Salomon Brothers Inc................ 18,750,000
Volpe, Welty & Company.............. 3,750,000
------------
Total $125,000,000
============
</TABLE>
<PAGE>
SCHEDULE II
CORPORATIONS:
1. EyeCorp, Inc.
2. The EyePA, Inc.
3. Eyecare Resource, Inc.
4. Johnny Justice, Inc.
5. Rivergate Anesthesia, Inc.
6. Rivergate Surgical Center, Inc.
7. Creve Coeur Surgery Center, Inc.*
8. PRG Acquisition Corporation
9. PRG Arizona, Inc.
10. Mohave Surgery Center, Inc.*
11. PRG Arizona II, Inc.
12. PRG Arkansas, Inc.
13. PRG California, Inc.
14. PRG California I, Inc.
15. PRG California II, Inc.
16. PRG California III, Inc.
17. PRG California IV, Inc.
18. Superior Eye Care, Inc.
19. PRG Florida, Inc.
20. PRG Florida I, Inc.
21. PRG Florida II, Inc.
22. PRG Florida III, Inc.
23. PRG Florida IV, Inc.
24. PRG Florida V, Inc.
25. PRG Florida VI, Inc.
26. PRG Florida VII, Inc.
27. PRG Florida VIII, Inc.
28. PRG Florida IX, Inc.
29. PRG Florida X, Inc.
30. PRG Florida XI, Inc.
31. PRG Florida XII, Inc.
32. Melbourne Eye Associates, Inc.
33. Melbourne Eye Associates of Brevard, Inc.
34. PRG Georgia, Inc.
35. PRG Illinois, Inc.
36. PRG Illinois I, Inc.
37. PRG Illinois II, Inc.
38. PRG Illinois III, Inc.
39. PRG Kentucky, Inc.
40. PRG Nevada, Inc.
41. PRG Nevada, I, Inc.
42. PRG Nevada II, Inc.
<PAGE>
43. PRG Nevada III, Inc.
44. PRG New Jersey, Inc.
45. PRG North Carolina, Inc.
46. PRG Ohio, Inc.
47. PRG Ohio, II, Inc.
48. PRG Ohio III, Inc.
49. PRG Ohio IV, Inc.
50. PRG Ohio V, Inc.
51. PRG Oklahoma, Inc.
52. PRG Oklahoma I, Inc.
53. PRG South Carolina, Inc.
54. PRG Tennessee, Inc.
55. PRG Tennessee I, Inc.
56. PRG Tennessee II, Inc.
57. PRG Tennessee III, Inc.
58. Van Dyck Ambulatory Surgery Center, Inc.*
59. Sun Valley Acquisition Corporation
60. Texas PRG, Inc.
61. Texas PRG I, Inc.
62. Texas PRG II, Inc.
63. Texas PRG III, Inc.
64. Texas PRG IV, Inc.
65. Texas PRG V, Inc.
66. Texas PRG VI, Inc.
67. Texas PRG VII, Inc.
68. Texas PRG VIII, Inc.
69. Texas PRG IX, Inc.
60. Texas PRG X, Inc.
71. Texas PRG XI, Inc.
72. Texas PRG XII, Inc.
73. Texas PRG XIII, Inc.
74. Texas PRG XIV, Inc.
75. Texas PRG XV, Inc.
76. Texas PRG XVI, Inc.
77. Physicians Resource Group Investments, Inc.
78. Physicians Resource Group Realty, Inc.
79. PRG Realty II, Inc.
80. PRG Payroll, Inc.
81. American Ophthalmic, Inc.
82. Fort Lauderdale Eye Institute, Inc., d/b/a Ft. Lauderdale Eye Institute
83. American Surgery Centers of South Florida, Inc.
84. American Surgery Centers of Sarasota, Inc.
85. American Ophthalmic of Coral Gables, Inc., d/b/a The Gables Eye Institute
86. American Surgery Centers of Coral Gables, Inc., d/b/a American Surgery
Centers of Coral Gables, d/b/a The Gables Eye Surgical Center
87. American Ophthalmic of Central Florida, Inc., d/b/a Guber Eye Center
<PAGE>
88. Central Florida Eye Surgery Associates, Inc, d/b/a Magruder Eye
Institute, d/b/a Eye Foundation
89. AOI Network, Inc.
90. American Ophthalmic of Tallahassee, Inc., d/b/a Tallahassee Laser &
Cataract Institute
91. American Surgery Centers of Tallahassee, Inc.
92. American Ophthalmic of Lake County, Inc., d/b/a Lake Eye Associates
93. American Ophthalmic of Miami, Inc., d/b/a Eye Institute of South Florida
94. American Ophthalmic of Texas, Inc., d/b/a Texan Eye Center, d/b/a Eye
Care Austin
95. American Ophthalmic of San Antonio, Inc., d/b/a South Texas Family Eye
Centers, d/b/a Southwest Eye Clinic
96. American Surgery Centers of San Antonio, Inc.
97. American Ophthalmic of Southeast Texas, Inc., d/b/a Eye Institute of San
Antonio
98. American Surgery Centers of Temple, Inc.
99. American Ophthalmic of Temple, Inc., d/b/a Eye Center of Central Texas
100. AOI Surgery Centers of Charleston, Inc.
101. American Ophthalmic of Alabama Inc., d/b/a Eye Institute of the South,
previously d/b/a Eye Center of the South
102. American Surgery Centers of Alabama, Inc.
103. American Ophthalmic of Dothan, Inc., d/b/a Southeast Eye Clinic
104. Glendale Eye, Inc., d/b/a Glendale Eye Medical Group
105. American Surgery Centers of Glendale, Inc.
106. American Ophthalmic of Los Angeles, Inc., d/b/a Tri County Eye Institute
107. American Ophthalmic of Nevada, Inc., d/b/a Shearing Eye Institute
108. American Ophthalmic of Reno, Inc., d/b/a Nevada Medical Eye Center
109. American Ophthalmic of Las Vegas, Inc., d/b/a Ophthalmic Associates
110. American Surgery Centers of Las vegas, Inc.
111. Vision International, Inc., a/k/a VI, Inc. *
LIMITED PARTNERSHIPS:
1. Eye Surgery Center of the Desert, Ltd. *
2. PRG Ohio, L.P.
3. Ambulatory Eye Surgery Center of Louisiana Limited Partnership *
4. Eye Surgery Center of Central Illinois Limited Partnership *
5. American Surgery Centers of Alabama, Ltd., d/b/a American Surgery Center *
6. American Surgery Centers of Glendale, Ltd. *
7. Center for Advanced Eye Surgery, Ltd., d/b/a Center for Advanced Eye
Surgery *
8. American Surgery Center of South Florida, Ltd., d/b/a Foundation for
Advanced Eye Care *
9. American Surgery Centers of Coral Gables, Ltd. *
10. American Surgery Centers of Tallahassee, Ltd.
11. American Surgery Centers of Las Vegas, Ltd., d/b/a Sahara-Lindell Surgery
Center *
12. American Surgery Centers of South Texas, Ltd., previously d/b/a South
Texas Institute of Eye Surgery *
13. Central Texas Day Surgery Center, Ltd., d/b/a Central Texas Day Surgery
Center
14. AOI Surgery Centers of Charleston, Ltd.
<PAGE>
15. Vision International Refractive Surgery Limited Partnership *
16. Vision International Limited Partnership *
17. Vision International Florida I, Limited Partnership *
18. Vision International North Carolina I, Limited Partnership *
GENERAL PARTNERSHIPS:
1. G.C.R. Investors
2. Central Florida Eye Associates
3. Manatee Ophthalmic Joint Venture *
LIMITED LIABILITY COMPANIES:
1. Ophthalmic Laser Center, L.L.C. *
2. Lebec, L.C. *
NOTE: * - subsidiary is not wholly owned subsidiary of PRG or a PRG
subsidiary
<PAGE>
EXHIBIT A
FORM OF LETTER TO BE DELIVERED BY INSTITUTIONAL ACCREDITED INVESTORS
--------------------------------------------------------------------
Physicians Resource Group. Inc.
Three Lincoln Center, Suite 1540
5430 LBJ Freeway
Dallas, TX 75240
Smith Barney Inc.
Alex. Brown & Sons Incorporated
Dillon, Read & Co. Inc.
Salomon Brothers Inc
Volpe, Welty & Company
As Initial Purchasers
c/o Smith Barney Inc.
388 Greenwich Street
New York, NY 10013
Gentlemen:
We are delivering this letter in connection with an offering of 6%
Convertible Subordinated Debentures due 2001 (the "Debentures"), which are
convertible into shares of the Common Stock, $0.01 par value (the "Common
Stock"), of Physicians Resource Group, Inc. (the "Company"), all as described in
the Offering Memorandum (the "Offering Memorandum") relating to the offering.
We hereby confirm that:
(i) we are an institution that is an "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act of
1933, as amended (the "Securities Act"), or an entity in which all of the
equity owners are accredited investors within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act (an "Institutional
Accredited Investor");
(ii)(A) any purchase of Debentures by us will be for our own account
or for the account of one or more other Institutional Accredited Investors
or as fiduciary for the account of one or more trusts, each of which is an
"accredited investor" within the meaning of Rule 501(a)(7) under the
Securities Act and for each of which we exercise sole investment discretion
or (B) we are a "bank," within the meaning of Section 3(a)(2) of the
Securities Act, or a "savings and loan association" or other institution
described in Section 3(a)(5)(A) of the Securities Act that is acquiring
Debentures as fiduciary for the account of one or more institutions for
which we exercise sole investment discretion;
(iii) in the event that we purchase any Debentures, we will acquire
Debentures having a minimum principal amount of not less than $100,000 for
our own account or for any separate account for which we are acting;
(iv) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of
purchasing the Debentures;
(v) we are not acquiring Debentures with a view to distribution
thereof or with any present intention of offering or selling Debentures or
the Common Stock issuable upon conversion thereof, except as permitted
below; provided that the disposition of our property and property of any
accounts for which we are acting as fiduciary shall remain at all times
within our control; and
(vi) we have received a copy of the Offering Memorandum and
acknowledge that we have had access to such financial and other
information, and have been afforded the opportunity to ask such questions
of representatives of the Company and receive answers thereto, as we deem
necessary in connection with our decision to purchase Debentures.
<PAGE>
We understand that the Debentures are being offered in a transaction not
involving any public offering within the United States within the meaning of the
Securities Act and any applicable state securities laws and that the Debentures
and the shares of Common Stock issuable upon conversion thereof have not been
registered under such laws, and we agree, on our own behalf and on behalf of
each account for which we acquire any Debentures, that if in the future we
decide to resell or otherwise transfer such Debentures or the Common Stock
issuable upon conversion thereof, such Debentures or Common Stock may be resold
or otherwise transferred only (a) to the Company, or any of its subsidiaries or
(b) pursuant to a registration statement which has been declared effective under
the Securities Act or (c) for so long as the Debentures are eligible for resale
pursuant to Rule 144A under the Securities Act, to a person the holder
reasonably believes is a "qualified institutional buyer" within the meaning of
Rule 144A under the Securities Act ("QIB") that purchases for its own account or
for the account of a QIB and to whom notice is given that the transfer is being
made in reliance on Rule 144A, (d) to an Institutional Accredited Investor that,
prior to such transfer, furnishes to the transfer agent or registrar for such
securities a signed letter containing certain representations and agreements
relating to the restrictions on transfer of such securities (the form of which
letter can be obtained from such transfer agent or registrar), (e) pursuant to
offers and sales to non-U.S. persons that occur outside the United States within
the meaning of Regulation S under the Securities Act, or (f) pursuant to any
other available exemption from the registration requirements of the Securities
Act, subject in each of the foregoing cases to any requirement of law that the
disposition of its property or the property of such investor account or accounts
be at all times within its or their control and subject to any applicable
securities laws. We further agree to provide any person purchasing from us any
of the Debentures or the Common Stock issuable upon conversion thereof other
than pursuant to clause (b) above a notice advising such purchaser that resales
of such securities are restricted as stated herein. We understand that the
registrar and transfer agent for the Debentures and the Common Stock will not be
required to accept for registration of transfer any Debentures or any shares of
Common Stock issued upon conversion of the Debentures except upon presentation
of evidence satisfactory to the Company that the foregoing restrictions on
transfer have been complied with. We further understand that any Debentures and
any certificates representing Common Stock will be in the form of definitive
physical certificates and that such certificates will bear a legend reflecting
the substance of this paragraph other than certificates representing Common
Stock transferred pursuant to clause (b) above.
We acknowledge that the Company, others and you will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
______________________________
(Name of Purchaser)
______________________________
By:
Name:
Title:
Address:
<PAGE>
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
-----------------------------
<PAGE>
EXHIBIT C
LOCK-UP AGREEMENT
-----------------
<PAGE>
EXHIBIT C
PHYSICIANS RESOURCE GROUP, INC.
LOCK-UP AGREEMENT
, 1996
SMITH BARNEY INC.
ALEX, BROWN & SONS, INCORPORATED
DILLON, READ & CO. INC.
SALOMON BROTHERS INC
VOLPE, WELTY & COMPANY
c/o Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
The undersigned has been advised that Smith Barney Inc., Alex Brown & Sons
Incorporated, Dillon, Read & Co. Inc., Salomon Brothers Inc and Volpe, Welty &
Company (collectively, the "Initial Purchasers") propose to enter into a
Purchase Agreement with Physicians Resource Group, Inc., a Delaware corporation
(the "Company"), with respect to the offering (the "Offering") of the
Convertible Subordinated Debentures, due 2001, of the Company (the
"Debentures"). In consideration of the Initial Purchasers' agreement to purchase
the Debentures and to participate in the Offering, and for other good and
valuable consideration, the undersigned hereby irrevocably agrees that the
undersigned will not, directly or indirectly, without the prior written consent
of Smith Barney Inc.,(i) for a period of 90 days after the date of the Offering
Memorandum relating to the Offering sell, offer to sell, solicit an offer to
buy, contract to sell, pledge, grant any option for the sale of, or otherwise
transfer or dispose of, or cause the transfer or disposition of, any of the
common stock, par value $.01 per share, of the Company ("Common Stock") or any
securities convertible into or exchangeable or exercisable for Common Stock or
(ii) in connection with the Offering and for 90 days after the date of the
Offering Memorandum relating thereto exercise any registration rights, whether
held by the undersigned on the date hereof or hereafter acquired, with respect
to any Common Stock or any securities convertible into or exchangeable or
exercisable for any Common Stock. Prior to the expiration of such 90-day period,
the undersigned will not announce or disclose any intention to do anything after
the expiration of such 90-day period, the undersigned will not announce or
disclose any intention to do anything after the expiration of such period which
the undersigned is prohibited, as provided in the preceding sentence, from doing
such period.
The undersigned agrees that the provisions of this agreement shall be
binding also upon the successors, assigns, heirs and personal representatives of
the undersigned.
In furtherance of the foregoing, the Company and ChaseMellon Shareholder
Services, L.L.C., the Company's transfer agent and registrar, are hereby
authorized to decline to make any transfer of securities if such transfer would
constitute a violation or breach of this agreement.
Very truly yours,
___________________________________
Signature
___________________________________
Printed Name
<PAGE>
Exhibit 21.1
PHYSICIANS RESOURCE GROUP, INCORPORATED
SUBSIDIARY LIST
1. PRG Holdings, Inc. (General partner of Physicians Resource Group, Ltd.)
------------------
Incorporated: Nevada
2. Physicians Resource Group Investments, Inc. (Limited partner of Physicians
-------------------------------------------
Resource Group, Ltd.)
Incorporated: Delaware
3. Physicians Resource Group, Ltd.
-------------------------------
Incorporated: Texas Limited Partnership
4. Physicians Resource Group Realty, Inc. (Partner of Florida real estate
--------------------------------------
partnerships)
Incorporated: Delaware
5. PRG Realty II, Inc. (Partner of Florida real estate partnerships)
-------------------
Incorporated: Delaware
6. Eyecorp, Inc.
-------------
Incorporated: Tennessee
7. The EyePA, Inc. (subsidiary of EyeCorp, Inc.)
---------------
Incorporated: Tennessee
8. Eyecare Resource, Inc. (subsidiary of EyeCorp, Inc.)
----------------------
Incorporated: Tennessee
9. Johnny Justice, Inc. (subsidiary of EyeCorp, Inc.)
--------------------
Incorporated: Tennessee
10. Rivergate Anesthesia, Inc. (subsidiary of EyeCorp, Inc.)
--------------------------
Incorporated: Tennessee
11. Rivergate Surgical Center, Inc. (subsidiary of EyeCorp, Inc.)
-------------------------------
Incorporated: Tennessee
12. Creve Coeur Surgery Center, Inc. (subsidiary of EyeCorp, Inc.)
--------------------------------
Incorporated: Missouri
13. American Ophthalmic, Inc.
-------------------------
Incorporated: Florida
14. American Ophthalmic of Alabama, Inc. (subsidiary of American Ophthalmic,
------------------------------------
Inc.)
Incorporated: Alabama
15. American Ophthalmic of Dothan, Inc. (subsidiary of American Ophthalmic,
-----------------------------------
Inc.)
Incorporated:Alabama
1
<PAGE>
16. American Ophthalmic of Las Vegas, Inc. (subsidiary of American Ophthalmic,
--------------------------------------
Inc.)
Incorporated: Nevada
17. American Ophthalmic of Nevada, Inc. (subsidiary of American Ophthalmic,
-----------------------------------
Inc.)
Incorporated: Nevada
18. American Ophthalmic of Reno, Inc. (subsidiary of American Ophthalmic, Inc.)
---------------------------------
Incorporated: Nevada
19. American Ophthalmic of Texas, Inc. (subsidiary of American Ophthalmic,
----------------------------------
Inc.)
Incorporated: Texas
20. American Ophthalmic of San Antonio, Inc. (subsidiary of American
----------------------------------------
Ophthalmic, Inc.)
Incorporated: Texas
21. American Ophthalmic of Southeast Texas, Inc. (subsidiary of American
--------------------------------------------
Ophthalmic, Inc.)
Incorporated: Texas
22. American Ophthalmic of Temple, Inc. (subsidiary of American Ophthalmic,
-----------------------------------
Inc.)
Incorporated: Texas
23. American Ophthalmic of Central Florida, Inc. (subsidiary of American
--------------------------------------------
Ophthalmic, Inc.)
Incorporated: Florida
24. American Ophthalmic of Coral Gables, Inc. (subsidiary of American
-----------------------------------------
Ophthalmic, Inc.)
Incorporated: Florida
25. American Ophthalmic of Tallahassee, Inc. (subsidiary of American
----------------------------------------
Ophthalmic, Inc.)
Incorporated: Florida
26. Central Florida Eye Surgery Associates, Inc. (subsidiary of American
--------------------------------------------
Ophthalmic, Inc.)
Incorporated: Florida
27. Fort Lauderdale Eye Institute, Inc. (subsidiary of American Ophthalmic,
-----------------------------------
Inc.)
Incorporated: Florida
28. AOI Network, Inc. (subsidiary of American Ophthalmic, Inc.)
-----------------
Incorporated: Florida
29. Glendale Eye Inc. (subsidiary of American Ophthalmic, Inc.)
-----------------
Incorporated: California
30. VI, Inc. (75% subsidiary of American Ophthalmic, Inc.)
--------
Incorporated: Delaware
31. American Surgery Centers of Alabama, Ltd. (partnership affiliation of
-----------------------------------------
American Ophthalmic, Inc.)
Incorporated: Alabama
32. American Surgery Centers of Alabama, Inc. (subsidiary of American
-----------------------------------------
Ophthalmic, Inc.)
Incorporated: Alabama
2
<PAGE>
33. American Surgery Centers of Glendale, Ltd. (partnership affiliation of
------------------------------------------
American Ophthalmic, Inc.)
Incorporated: California
34. American Surgery Centers of Glendale, Inc. (subsidiary of American
------------------------------------------
Ophthalmic, Inc.)
Incorporated: California
35. Center for Advanced Eye Surgery, Ltd. (partnership affiliation of American
-------------------------------------
Ophthalmic, Inc.)
Incorporated: Florida
36. American Surgery Centers of Sarasota, Inc. (subsidiary of American
------------------------------------------
Ophthalmic, Inc.)
Incorporated: Florida
37. Manatee Ophthalmic Joint Venture (partnership affiliation of American
--------------------------------
Ophthalmic, Inc.)
Incorporated: Florida
38. American Surgery Centers of South Florida, Ltd. (partnership affiliation of
-----------------------------------------------
American Ophthalmic, Inc.)
Incorporated: Florida
39. American Surgery Center of South Florida, Inc. (subsidiary of American
----------------------------------------------
Ophthalmic, Inc.)
Incorporated: Florida
40. American Surgery Centers of Coral Gables, Ltd. (partnership affiliation of
----------------------------------------------
American Ophthalmic, Inc.)
Incorporated: Florida
41. American Surgery Centers of Coral Gables, Inc. (subsidiary of American
----------------------------------------------
Ophthalmic, Inc.)
Incorporated: Florida
42. American Surgery Centers of Tallahassee, Ltd. (partnership affiliation of
---------------------------------------------
American Ophthalmic, Inc.)
Incorporated: Florida
43. American Surgery Centers of Tallahassee, Inc. (subsidiary of American
---------------------------------------------
Ophthalmic, Inc.)
Incorporated: Florida
44. American Surgery Centers of Las Vegas, Ltd. (partnership affiliation of
-------------------------------------------
American Ophthalmic, Inc.)
Incorporated: Nevada limited partnership
45. American Surgery Center of Las Vegas, Inc. (subsidiary of American
------------------------------------------
Ophthalmic, Inc.)
Incorporated: Nevada
46. American Surgery Centers of South Texas, Ltd. (partnership affiliation of
---------------------------------------------
American Ophthalmic, Inc.)
Incorporated: Texas limited partnership
47. American Surgery Centers of San Antonio, Inc. (subsidiary of American
---------------------------------------------
Ophthalmic, Inc.)
Incorporated: Texas
48. Central Texas Day Surgery Center, Ltd. (partnership affiliation of American
--------------------------------------
Ophthalmic, Inc.)
Incorporated: Texas limited partnership
49. American Surgery Centers of Temple, Inc. (subsidiary of American
----------------------------------------
Ophthalmic, Inc.)
Incorporated: Texas
3
<PAGE>
50. AOI Surgery Centers of Charleston, Ltd.
---------------------------------------
Incorporated: West Virginia limited partnership
51. AOI Surgery Centers of Charleston, Inc.
---------------------------------------
Incorporated: West Virginia
52. VI, Inc. (subsidiary of American Ophthalmic, Inc.)
--------
Incorporated: Delaware
53. Vision International Refractive Surgery Limited Partnership (partnership
-----------------------------------------------------------
affiliation of American Ophthalmic, Inc.)
Incorporated: Delaware limited partnership
54. VI, Limited Partnership (partnership affiliation of American Ophthalmic,
-----------------------
Inc.)
Incorporated: Delaware limited partnership
55. Vision International Limited Partnership - Florida I (subsidiary of
----------------------------------------------------
American Ophthalmic, Inc.)
Incorporated: Delaware limited partnership
56. Vision International Limited Partnership - Missouri I (partnership
-----------------------------------------------------
affiliation of American Ophthalmic, Inc.)
Incorporated: Delaware limited partnership
57. Vision International Limited Partnership - North Carolina I (partnership
-----------------------------------------------------------
affiliation of American Ophthalmic, Inc.)
Incorporated: Delaware limited partnership
ARIZONA
- -------
58. PRG Arizona, Inc.
-----------------
Incorporated: Arizona
59. Mohave Surgery Center, Inc.
---------------------------
Incorporated: Arizona
60. PRG Arizona II, Inc.
--------------------
Incorporated: Delaware
ARKANSAS
- --------
61. PRG Arkansas, Inc.
------------------
Incorporated: Delaware
CALIFORNIA
- ----------
62. Eye Surgery Center of the Desert, Ltd.
--------------------------------------
Incorporated: California limited partnership
63. PRG California, Inc.
--------------------
Incorporated: Delaware
64. PRG California I, Inc.
----------------------
Incorporated: Delaware
4
<PAGE>
65. PRG California II, Inc.
-----------------------
Incorporated: Delaware
66. PRG California III, Inc.
------------------------
Incorporated: Delaware
67. PRG California IV, Inc.
-----------------------
Incorporated: California
68. Superior Eye Care, Inc.
-----------------------
Incorporated: California
FLORIDA
- -------
69. PRG Florida, Inc.
-----------------
Incorporated: Florida
70. G.C.R. Investors
----------------
Incorporated: Florida
71. Central Florida Eye Associates
------------------------------
Incorporated: Florida
72. PRG Florida I, Inc.
-------------------
Incorporated: Florida
73. PRG Florida II, Inc.
--------------------
Incorporated: Florida
74. PRG Florida III, Inc.
---------------------
Incorporated: Florida
75. PRG Florida IV, Inc.
--------------------
Incorporated: Florida
76. PRG Florida V, Inc.
-------------------
Incorporated: Florida
77. PRG Florida VI, Inc.
--------------------
Incorporated: Florida
78. PRG Florida VII, Inc.
---------------------
Incorporated: Florida
79. PRG Florida VIII, Inc.
----------------------
Incorporated: Florida
80. PRG Florida IX, Inc.
--------------------
Incorporated: Florida
81. PRG Florida X, Inc.
-------------------
Incorporated: Florida
5
<PAGE>
82. PRG Florida XI, Inc.
--------------------
Incorporated: Florida
83. PRG Florida XII, Inc.
---------------------
Incorporated: Delaware
84. Melbourne Eye Associates, Inc. (Subsidiary of PRG Florida XII, Inc.)
------------------------------
Incorporated: Florida
85. Melbourne Eye Associates of Brevard, Inc. (Subsidiary of PRG Florida XII,
-----------------------------------------
Inc.)
Incorporated: Florida
GEORGIA
- -------
86. PRG Georgia, Inc.
-----------------
Incorporated: Delaware
ILLINOIS
- --------
87. PRG Illinois I, Inc.
--------------------
Incorporated: Illinois
88. PRG Illinois II, Inc.
---------------------
Incorporated: Illinois
89. PRG Illinois III, Inc.
----------------------
Incorporated: Illinois
KENTUCKY
- --------
90. PRG Kentucky, Inc.
------------------
Incorporated: Kentucky
NEVADA
- ------
91. PRG Nevada, Inc.
----------------
Incorporated: Delaware
92. PRG Nevada I, Inc.
------------------
Incorporated: Nevada
93. PRG Nevada II, Inc.
-------------------
Incorporated: Nevada
94. PRG Nevada III, Inc.
--------------------
Incorporated: Nevada
6
<PAGE>
NEW JERSEY
- ----------
95. PRG New Jersey, Inc.
--------------------
Incorporated: Delaware
NORTH CAROLINA
- --------------
96. PRG North Carolina, Inc.
------------------------
Incorporated: North Carolina
OHIO
- ----
97. PRG Ohio, Inc.
--------------
Incorporated: Delaware
98. PRG Ohio II, Inc.
-----------------
Incorporated: Ohio
99. PRG Ohio III, Inc.
------------------
Incorporated: Ohio
100. PRG Ohio, L.P.
--------------
Incorporated: Limited partnership
101. PRG Ohio IV, Inc.
-----------------
Incorporated: Delaware
102. PRG Ohio V, Inc.
----------------
Incorporated: Ohio
OKLAHOMA
- --------
103. PRG Oklahoma, Inc.
------------------
Incorporated: Oklahoma
104. PRG Oklahoma I, Inc.
--------------------
Incorporated: Delaware
SOUTH CAROLINA
- --------------
105. PRG South Carolina, Inc.
------------------------
Incorporated: South Carolina
TENNESSEE
- ---------
106. PRG Tennessee, Inc.
-------------------
Incorporated: Delaware
7
<PAGE>
107. PRG Tennessee I, Inc.
---------------------
Incorporated: Tennessee
108. PRG Tennessee II, Inc.
----------------------
Incorporated: Delaware
109. PRG Tennessee III, Inc.
-----------------------
Incorporated: Tennessee
110. Van Dyck Ambulatory Surgery Center, Inc.
----------------------------------------
Incorporated: Tennessee
TEXAS
- -----
111. Ophthalmic Laser Center, L.L.C.
-------------------------------
Incorporated: Texas
112. Sun Valley Acquisition Corporation
----------------------------------
Incorporated: Texas
113. Texas PRG, Inc.
---------------
Incorporated: Delaware
114. Texas PRG I, Inc.
-----------------
Incorporated: Delaware
115. Texas PRG II, Inc.
------------------
Incorporated: Delaware
116. Texas PRG III, Inc.
-------------------
Incorporated: Delaware
117. Texas PRG IV, Inc.
------------------
Incorporated: Delaware
118. Texas PRG V, Inc.
-----------------
Incorporated: Delaware
119. Texas PRG VI, Inc.
------------------
Incorporated: Delaware
120. Texas PRG VII, Inc.
-------------------
Incorporated: Delaware
121. Texas PRG VIII, Inc.
--------------------
Incorporated: Delaware
122. Texas PRG IX, Inc.
------------------
Incorporated: Texas
8
<PAGE>
123. Texas PRG X, Inc.
-----------------
Incorporated: Texas
124. Texas PRG XI, Inc.
------------------
Incorporated: Texas
125. Texas PRG XII, Inc.
-------------------
Incorporated: Texas
126. Texas PRG XIII, Inc.
--------------------
Incorporated: Texas
127. Texas PRG XIV, Inc.
-------------------
Incorporated: Texas
128. Texas PRG XV, Inc.
------------------
Incorporated: Texas
129. Texas PRG XVI, Inc.
-------------------
Incorporated: Texas
9
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We agree 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.; March 18, 1996, on our audit of Physicians
Resource Group, Inc. and Subsidiaries; 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.
/s/ ARTHUR ANDERSEN LLP
Dallas, Texas
December 31, 1996
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in this Registration Statement on Form S-4 and
related Prospectus of Physicians Resource Group, Inc. for the registration of
10,000,000 shares of its common stock 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 of
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
December 31, 1996
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the incorporation by reference in this Registration Statement on Form S-4 and
related Prospectus of Physicians Resource Group, Inc. for the registration of
10,000,000 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
Atlanta, Georgia
December 31, 1996
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As the independent public accountants for Houston Eye Associates, we agree to
the incorporation by reference in this Prospectus dated December 16, 1996 of
Physicians Resource Group, Inc. and Subsidiaries 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
December 31, 1996
