AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON April 16, 2002.
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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US ONCOLOGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-1213501
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
Delaware AOR Holding Company of Indiana, Inc. 76-0498834
Delaware AOR Management Company of Alabama, Inc. 76-0606539
Delaware AOR Management Company of Arizona, Inc. 86-0780218
Delaware AOR Management Company of Central Florida, Inc. 76-0558493
Delaware AOR Management Company of Florida, Inc. 59-3348330
Delaware AOR Management Company of Indiana, Inc. 35-1918180
Delaware AOR Management Company of Missouri, Inc. 43-1697284
Delaware AOR Management Company of Nevada, Inc. 88-0349812
Delaware AOR Management Company of New York, Inc. 14-1786310
Delaware AOR Management Company of North Carolina, Inc. 56-1936937
Delaware AOR Management Company of Ohio, Inc. 31-1591423
Delaware AOR Management Company of Oklahoma, Inc. 73-1469947
Delaware AOR Management Company of Oregon, Inc. 93-1149262
Delaware AOR Management Company of Pennsylvania, Inc. 25-1763053
Delaware AOR Management Company of South Carolina, Inc. 57-1017928
Delaware AOR Management Company of Texas, Inc. 76-0502129
Delaware AOR Management Company of Virginia, Inc. 54-1768503
Indiana AOR of Indiana Management Partnership 76-0544500
Texas AOR of Texas Management Limited Partnership 76-0502127
Delaware AOR Real Estate, Inc. 76-0520140
Delaware AOR Synthetic Real Estate, Inc. 76-0556439
Delaware AORIP, Inc. 76-0498830
Delaware AORT Holding Company, Inc. 51-0378882
Delaware Greenville Radiation Care, Inc. 58-1944184
Texas Physician Reliance, L.P. 75-2767994
Delaware Physician Reliance Holdings, LLC 51-0406058
Texas Physician Reliance Network, Inc. 75-2495107
Texas PRN Physician Reliance, LLC 75-2767011
Delaware RMCC Cancer Center, Inc. 84-1214712
Texas TOPS Pharmacy Services, Inc. 75-2367741
Delaware US Oncology Corporate, Inc. 76-0473455
Texas US Oncology Research, Inc. 75-2650458
621999
(Primary Standard Industrial Classification Code Number)
16825 NORTHCHASE DRIVE, SUITE 1300
HOUSTON, TEXAS 77060
(832) 601-8766
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Except that the principal executive offices for each of the following
registrants are as set forth below:
AOR of Indiana Management Partnership AORIP, Inc.
1400 North Ritter Avenue, Suite 481 1209 Orange Street
Indianapolis, Indiana 46219
Wilmington, Delaware 19801
AORT Holding Company, Inc. Physician Reliance Holdings, LLC
1209 Orange Street 300 Delaware Avenue, Suite 900 9th
Wilmington, Delaware 19801 Floor--DE5403
Wilmington, Delaware 19801
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B. SCOTT AITKEN
ASSOCIATE GENERAL COUNSEL
US ONCOLOGY, INC.
16825 NORTHCHASE DRIVE, SUITE 1300
HOUSTON, TEXAS 77060
(832) 601-6178
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPY TO:
JOHN B. CLUTTERBUCK
ANDREWS & KURTH
MAYOR, DAY, CALDWELL & KEETON L.L.P.
700 LOUISIANA, SUITE 1900
HOUSTON, TEXAS 77002
(713) 225-7102
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable following the effectiveness of this registration statement.
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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. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
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TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE PRICE $175,000,000 FEE(/1/)(/2/)
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9 5/8% Senior
Subordinated
Notes due 2012 $175,000,000 100% $175,000,000 $16,100
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Guarantees of 9 5/8%
Senior Subordinated
Notes due 2012 -- -- -- --
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(1) Determined in accordance with Rule 457(f) promulgated under the Securities
Act of 1933, as amended.
(2) Pursuant to Rule 457(n) of the Securities Act, no separate registration
fee is payable for the guarantees.
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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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
THE INFORMATION IN THIS PROSPECTUS WILL BE AMENDED OR COMPLETED;
DATED April 16, 2002
PROSPECTUS
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US ONCOLOGY, INC.
OFFER TO EXCHANGE
ALL REGISTERED 9 5/8% SENIOR SUBORDINATED NOTES DUE 2012
FOR ALL OUTSTANDING 9 5/8% SENIOR SUBORDINATED NOTES DUE 2012
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 2002, UNLESS EXTENDED
Terms of the exchange offer:
.We are offering a total of $175 million of our registered 9 5/8% Senior
Subordinated Notes due 2012 for an equal amount of our outstanding 9 5/8%
Senior Subordinated Notes due 2012.
.We will exchange new notes for all outstanding old notes that are validly
tendered and not withdrawn prior to the expiration of the exchange offer.
.You may withdraw tenders of old notes at any time prior to the expiration of
the exchange offer.
.The exchange of old notes for new notes will not be a taxable transaction for
U.S. federal income tax purposes, but you should see the discussion under the
caption "United States federal tax considerations" on page 86 for more
information.
.We will not receive any cash proceeds from the exchange offer.
.The terms of the new notes are substantially identical to those of the
outstanding old notes, except that the transfer restrictions and registration
rights relating to the old notes do not apply to the new notes.
.The exchange offer is the initial offering of the new notes.
.There is no established trading market for the new notes or the old notes.
.We do not intend to apply for listing of the new notes on any national
securities exchange or for quotation through The Nasdaq Stock Market.
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SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF RISKS YOU SHOULD
CONSIDER.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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The date of this prospectus is , 2002
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Forward-looking statements
This prospectus and the documents incorporated herein by reference contain
forward-looking statements within the meaning of the U.S. federal securities
laws including:
(i) any statements contained herein or therein regarding the prospects for
our business or any of our services;
(ii) any statements preceded by, followed by or that include the words
"believes," "expects," "anticipates," "intends," "estimates," "plans"
or similar expressions; and
(iii) other statements contained herein or therein regarding matters that
are not historical facts.
Our business and results of operations are subject to risks and uncertainties,
many of which are beyond our ability to control or predict. Because of these
risks and uncertainties, actual results may differ materially from those
expressed or implied by forward-looking statements, and investors are
cautioned not to place undue reliance on such statements, which speak only as
of the date thereof.
In addition to the specific risk factors described in the section entitled
"Risk factors," important factors that could cause actual results to differ
materially include, but are not limited to:
(i) our success in implementing our proposed service line structure
described in this prospectus;
(ii) the degree to which practices currently managed by us convert to the
earnings model or the service line structure rather than terminate
their affiliation;
(iii) our ability to attract and retain additional physicians and practices
under the service line structure;
(iv) our ability to obtain financing;
(v) government regulations and enforcement;
(vi) reimbursement for health care services;
(vii) changes in cancer therapy or the manner in which cancer care is
delivered;
(viii) drug utilization;
(ix) our ability to create and maintain favorable relationships with
pharmaceutical companies and other suppliers; and
(x) the operations of affiliated practices.
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i
Prospectus summary
This summary highlights basic information about us, the exchange offer and the
new notes. You should read this entire prospectus carefully, including the
"Risk factors" section. As used in this prospectus, unless the context
otherwise requires, the terms "US Oncology", "we", "our" and "us" refer to US
Oncology, Inc. and its consolidated subsidiaries.
US ONCOLOGY, INC.
We are America's premier cancer care services company. We support the cancer
care community by providing oncology pharmaceutical management, outpatient
cancer center operations, cancer research and development, and practice
management services. Our 868 network physicians provide care to patients in
over 450 locations, including 77 outpatient cancer centers and 12 Positron
Emission Tomography (PET) installations, across 27 states. In 2001, we estimate
that our network physicians provided comprehensive care to over 500,000 cancer
patients, including approximately 200,000 new patients, representing
approximately 15% of the nation's newly diagnosed cancer cases.
Our network of affiliated practices treats more cancer patients than any other
for-profit cancer care organization in the world and our affiliated practices
enjoy significant leadership positions within several regional markets in the
nation. We have built a leading franchise within the cancer care market by
providing our network physicians with community-based access to advanced cancer
therapeutics, to state-of-the-art facilities and technologies, and to the
largest integrated cancer research platform in the country. We are not a
provider of medical services, but rather our affiliated practices offer
comprehensive and coordinated medical services to cancer patients, integrating
the specialties of medical and gynecologic oncology, hematology, radiation
oncology, diagnostic radiology and blood and marrow stem cell transplantation.
Our network's community-based focus allows our affiliated physicians to locally
provide the latest advances in therapies, research, and technology to patients,
often within a single outpatient setting. As a result, patients access the best
possible treatment with the least amount of disruption to their daily lives.
Our nationwide presence enables us to rapidly implement best practices and
share new discoveries with our affiliated practices. Furthermore, our network's
size affords competitive advantages in areas such as purchasing, information
systems, access to clinical research, and leading edge technology.
1
The exchange offer
Old Notes................... 9 5/8% Senior Subordinated Notes due 2012,
which were issued on February 1, 2002.
New Notes................... 9 5/8% Senior Subordinated Notes due 2012.
The terms of the new notes are substantially
identical to those terms of the outstanding
old notes, except that the transfer
restrictions and registration rights relating
to the old notes do not apply to the new
notes.
Exchange Offer.............. We are offering to exchange up to $175
million principal amount of our 9 5/8% Senior
Subordinated Notes due 2012 which have been
registered under the Securities Act for an
equal amount of our outstanding 9 5/8% Senior
Subordinated Notes due 2012, to satisfy our
obligations under the registration rights
agreement that we entered into when the old
notes were sold in transactions under Rule
144A and/or Regulation S under the Securities
Act.
Expiration Date; Tenders.... The exchange offer will expire at 5:00 p.m.,
New York City time, on ,
2002, unless extended. By tendering your old
notes, you represent to us that:
.any new notes you receive in the exchange offer
are being acquired by you in the ordinary course
of your business;
.at the time of commencement of the exchange
offer, neither you nor, to your knowledge,
anyone receiving new notes from you, has any
arrangement or understanding with any person to
participate in the distribution of the new
notes, as defined in the Securities Act, in
violation of the Securities Act;
.you are not our "affiliate" as defined in Rule
405 under the Securities Act, or if you are our
affiliate, you will comply with the applicable
registration and prospectus delivery
requirements of the Securities Act;
.if you are not a participating broker-dealer,
you are not engaged in, and do not intend to
engage in, a distribution of the new notes, as
defined in the Securities Act; and
.if you are a participating broker-dealer, you
will receive the new notes for your own account
in exchange for old notes that were acquired by
you as a result of your market-making or other
trading activities and that you will deliver a
prospectus in connection with any resale of the
new notes you receive. For further information
regarding resales of the new notes by
participating broker-dealers, see the discussion
below under the caption "Plan of distribution."
.you have full power and authority to transfer
the old notes for the new notes and that we will
acquire good and unencumbered title thereto free
and clear of any liens, restrictions, charges or
encumbrances and not subject to any adverse
claims.
2
Withdrawal; Non-Acceptance.. You may withdraw any old notes tendered in
the exchange offer at any time prior to 5:00
p.m., New York City time, on ,
2002. If we decide for any reason not to
accept any old notes tendered for exchange,
the old notes will be returned to the
registered holder at our expense promptly
after the expiration or termination of the
exchange offer. In the case of old notes
tendered by book-entry transfer into the
exchange agent's account at The Depository
Trust Company, any withdrawn or unaccepted
old notes will be credited to the tendering
holder's account at The Depository Trust
Company. For further information regarding
the withdrawal of tendered old notes, see
"The exchange offer -- Terms of the exchange
offer; period for tendering old notes" and
"-- Withdrawal rights."
Conditions to the Exchange The exchange offer is subject to customary
Offer....................... conditions, which we may waive. See the
discussion below under the caption "The
exchange offer -- Conditions to the exchange
offer" for more information regarding the
conditions to the exchange offer.
Procedures for Tendering Unless you comply with the procedures
Old Notes................... described below under the caption "The
exchange offer -- Guaranteed delivery
procedures," you must do one of the following
on or prior to the expiration of the exchange
offer to participate in the exchange offer:
.tender your old notes by sending the
certificates for your old notes, in proper form
for transfer, a properly completed and duly
executed letter of transmittal, with any
required signature guarantees, and all other
documents required by the letter of transmittal,
to JPMorgan Chase Bank, as exchange agent, at
one of the addresses listed below under the
caption "The exchange offer -- Exchange agent";
or
.tender your old notes by using the book-entry
transfer procedures described below and
transmitting a properly completed and duly
executed letter of transmittal, with any
required signature guarantees, or an agent's
message instead of the letter of transmittal, to
the exchange agent. In order for a book-entry
transfer to constitute a valid tender of your
old notes in the exchange offer, JPMorgan Chase
Bank, as exchange agent, must receive a
confirmation of book-entry transfer of your old
notes into the exchange agent's account at The
Depository Trust Company in accordance with The
Depository Trust Company's Automated Tender
Offer Program prior to the expiration of the
exchange offer.
For more information regarding the use of
book-entry transfer procedures, including a
description of the required agent's message,
see the discussion below under the caption
"The exchange offer -- Procedures for
tendering old notes" and "Book-entry
transfer."
Guaranteed Delivery If you are a registered holder of the old
Procedures.................. notes and wish to tender your old notes in
the exchange offer, but
.the old notes are not immediately available,
3
.time will not permit your old notes or other
required documents to reach the exchange agent
before the expiration of the exchange offer, or
.the procedure for book-entry transfer cannot be
completed prior to the expiration of the
exchange offer, then you may tender old notes by
following the procedures described below under
the caption "The exchange offer -- Guaranteed
delivery procedures."
Special Procedures for
Beneficial Owners...........
If you are a beneficial owner whose old notes
are registered in the name of a broker,
dealer, commercial bank, trust company or
other nominee and you wish to tender your old
notes in the exchange offer, you should
promptly contact the person in whose name the
old notes are registered and instruct that
person to tender on your behalf.
If you wish to tender in the exchange offer
on your own behalf, prior to completing and
executing the letter of transmittal and
delivering your old notes, you must either
make appropriate arrangements to register
ownership of the old notes in your name or
obtain a properly completed bond power from
the person in whose name the old notes are
registered.
United States Federal
Income Tax Consequences.....
The exchange of old notes for new notes in
the exchange offer will not be a taxable
transaction for United States federal income
tax purposes. See the discussion below under
the caption "United States federal tax
considerations" for more information
regarding the tax consequences to you of the
exchange offer.
Use of Proceeds............. We will not receive any cash proceeds from
the exchange offer.
Exchange Agent.............. JPMorgan Chase Bank is the exchange agent for
the exchange offer. You can find the
addresses and telephone number of the
exchange agent below under the caption "The
exchange offer-- Exchange agent."
Resales..................... Based on interpretation by the staff of the
Securities and Exchange Commission, as set
forth in no-action letters issued to third
parties, we believe that the new notes you
receive in the exchange offer may be offered
for resale, resold or otherwise transferred
without compliance with the registration and
prospectus delivery provisions of the
Securities Act. However, you will not be able
to freely transfer the new notes if:
.you are not acquiring the new notes in the
exchange offer in the ordinary course of your
business;
.you have an arrangement or understanding with
any person to participate in the distribution,
as defined in the Securities Act, of the new
notes you will receive in the exchange offer;
4
.you are our "affiliate," as defined in Rule 405
under the Securities Act; or
.you are a participating broker-dealer that
receives new notes for its own account in the
exchange offer for old notes that were acquired
as a result of market-making or other trading
activities.
If you fall within one of the exceptions
listed above, you must comply with the
registration and prospectus delivery
requirements of the Securities Act in
connection with any resale transaction
involving the new notes
CONSEQUENCES OF NOT EXCHANGING YOUR OLD NOTES
If you do not exchange your old notes in the exchange offer, your old notes
will continue to be subject to the restrictions on transfer described in the
legend on the certificate for your old notes. In general, you may offer or sell
your old notes only:
.if they are registered under the Securities Act and applicable state
securities laws;
.if they are offered or sold under an exemption from registration under the
Securities Act and applicable state securities laws; or
.if they are offered or sold in a transaction not subject to the Securities Act
and applicable state securities laws.
We do not currently intend to register the old notes under the Securities Act.
Under some circumstances, however, holders of the old notes, including holders
who are not permitted to participate in the exchange offer or who may not
freely resell new notes received in the exchange offer, may require us to file,
and cause to become effective, a shelf registration statement covering resales
of old notes by these holders. For more information regarding the consequences
of not tendering your old notes and our obligation to file a shelf registration
statement, see "The exchange offer -- Consequences of exchanging or failing to
exchange old notes" and "Exchange offer; registration rights."
SUMMARY DESCRIPTION OF THE NEW NOTES
The terms of the new notes and those of the outstanding old notes are
substantially identical, except that the transfer restrictions and registration
rights relating to the old notes do not apply to the new notes. In addition, if
.the registration statement of which this prospectus is a part is not declared
effective on or prior to July 1, 2002 or the exchange offer is not completed
on or prior to July 31, 2002,
.we are obligated to file a shelf registration statement and we fail to do so
prior to the later of (i) June 1, 2002 and (ii) 60 days after the obligation
arises, or
.if the shelf registration statement is not declared effective on or prior to
the date specified above or is declared effective but ceases to be effective,
then, we have agreed to pay liquidated damages in an amount equal to 0.25% per
annum of the principal amount of old notes for the first 90-day period
immediately following a default, increasing by an additional 0.25% per annum
with respect to each subsequent 90-day period up to a maximum of 1.00%.
5
The new notes
The summary below describes the principal terms of the new notes. Certain of
the terms and conditions described below are subject to important limitations
and exceptions. The "Description of the notes" section of this prospectus
contains a more detailed description of the terms and conditions of the new
notes.
Issuer...................... US Oncology, Inc.
Notes Offered............... We are offering $175,000,000 aggregate principal
amount of our 9 5/8% Senior Subordinated Notes
due 2012. The notes will be issued under an
indenture dated as of February 1, 2002.
Interest.................... The notes will accrue interest at the rate of 9
5/8% per year. Interest on the notes will be
payable semi-annually in arrears on each February
1 and August 1, commencing on August 1, 2002.
Maturity Date............... February 1, 2012
Guarantees.................. All of our current subsidiaries, with limited
exceptions, and certain of our future domestic
subsidiaries will guarantee the notes on a senior
subordinated basis. See "Description of the
notes."
Ranking..................... The notes will be unsecured senior subordinated
obligations and will be subordinated to all of
our existing and future senior debt. The notes
will rank equal in right of payment with all our
other existing and future senior subordinated
debt and will rank senior in right of payment to
all of our subordinated debt.
Our subsidiaries' guarantees with respect to the
notes will be general unsecured senior
subordinated obligations of such guarantor
subsidiaries and will be subordinated to all of
such guarantor subsidiaries' existing and future
senior debt. The guarantees will rank equal in
right of payment with any senior subordinated
indebtedness of the guarantor subsidiaries and
will rank senior in right of payment to such
guarantor subsidiaries' subordinated debt, if
any. Because the notes are subordinated, in the
event of bankruptcy, liquidation or dissolution,
or certain other events, including certain
defaults on senior debt, we may be prevented from
making payments on the notes. The term "senior
debt" is defined in the "Description of the
notes" section of this prospectus.
At December 31, 2001, after giving effect to the
offering of the old notes and the application of
the net proceeds for this offering as described
under "Description of other indebtedness--
Revolving credit facility," we and our guarantor
subsidiaries would have had approximately $5.4
million of senior debt outstanding on a
consolidated basis.
Optional Redemption......... We may redeem the notes, in whole or part, at any
time on or after February 1, 2007 at a redemption
price equal to 100% of the principal amount
thereof plus a premium declining
6
ratably to par by 2010 plus accrued and unpaid
interest and liquidated damages, if any. In
addition, at any time prior to February 1, 2005,
we may redeem up to 35% of the aggregate
principal amount of the notes and any additional
notes issued under the indenture with the net
cash proceeds of certain equity offerings at a
redemption price equal to 109.625% of the
principal amount thereof, plus accrued and unpaid
interest and liquidated damages, if any, provided
that:
.at least 65% of the aggregate principal amount
of the notes and any such additional notes
remain outstanding immediately after the
occurrence of such redemption; and
.such redemption occurs within 90 days of the
date of the initial receipt of the proceeds of
any such equity offering.
We may also redeem the notes on or prior to
February 1, 2007, in whole but not in part, upon
the occurrence of a change in control, at a
redemption price equal to 100% of the principal
amount thereof, plus accrued but unpaid interest,
plus a premium equal to the greater of (x) 1% or
(y) the present value of the redemption price at
February 1, 2007 and interest through February 1,
2007 minus the principal amount of such note.
For more information, see "Description of the
notes
-- Optional redemption -- Redemption upon a
Change of Control."
Change of Control........... Upon certain change of control events, each
holder of notes may require us to repurchase all
or a portion of their notes at a purchase price
equal to 101% of the principal amount thereof,
plus accrued and unpaid interest and liquidated
damages, if any. Our ability to repurchase the
notes upon a change of control event will be
limited by the terms of our debt agreements,
including our senior credit facilities. We cannot
assure you that we will have the financial
resources to repurchase the notes. See
"Description of the notes -- Change of control."
Certain Covenants........... The indenture governing the notes will contain
covenants that, among other things, will limit
our ability and the ability of our restricted
subsidiaries to:
.incur additional indebtedness;
.pay dividends on, redeem or repurchase our
capital stock;
.make investments;
.engage in transactions with affiliates;
.create certain liens; and
.consolidate, merge or transfer all or
substantially all our assets and the assets of
our subsidiaries on a consolidated basis.
These covenants are subject to important
exceptions and qualifications, which are
described in the "Description of the notes --
Certain covenants" section in this prospectus.
7
Absence of a Public Market
for the Notes..............
The notes will generally be freely transferable
(subject to certain restrictions discussed in
"Exchange offer; registration rights") but will
be a new issue of securities for which there will
not initially be a market. Accordingly, we cannot
assure you as to the development or liquidity of
any market for the notes or, if issued, the
exchange notes. The initial purchasers of the old
notes have advised us that they currently intend
to make a market for the notes as permitted by
applicable laws and regulations. However, they
are not obligated to do so and may discontinue
any such market making activities at any time
without notice. We expect that the notes will be
eligible for trading in the PORTAL market.
We will not receive any cash proceeds from the
exchange offer.
Use of Proceeds............. See "Risk factors" beginning on page 9 for a
Risk Factors................ discussion of factors you should carefully
consider before tendering your old notes in the
exchange offer.
8
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Risk factors
Our business, operations and financial condition are subject to various risks.
Some of these risks are described below, and you should take these risks into
account before tendering your old notes in the exchange offer. This section
does not describe all risks applicable to the exchange offer, our industry or
our business, and it is intended only as a summary of certain material factors.
Risks related to the exchange offer
Holders who fail to exchange their old notes will continue to be subject to
restrictions on transfer.
If you do not exchange your old notes for new notes in the exchange offer, you
will continue to be subject to the restrictions on transfer of your old notes
described in the legend on the certificates for your old notes. The
restrictions on transfer of your old notes arise because we issued the old
notes under exemptions from, or in transactions not subject to, the
registration requirements of the Securities Act and applicable state securities
laws. In general, you may only offer or sell the old notes if they are
registered under the Securities Act and applicable state securities laws, or
offered and sold under an exemption from these requirements. We do not plan to
register any sale of the old notes under the Securities Act. For further
information regarding the consequences of not tendering your old notes in the
exchange offer, see the discussions below under the captions "The exchange
offer -- Consequences of exchanging or failing to exchange old notes" and
"United States federal tax considerations."
We believe that the new notes issued in exchange for the old notes pursuant to
the exchange offer may be offered for resale, resold or otherwise transferred
by you without registering the new notes under the Securities Act or delivering
a prospectus so long as you (1) acquire the new notes in the ordinary course of
your business, (2) unless you are a broker dealer, you do not have any
arrangement or understanding with any person to participate in the distribution
of the new notes, and (3) are not one of our "affiliates," which is defined in
Rule 405 of the Securities Act. Our belief is based on interpretations by the
SEC's staff in no-action letters issued to third parties. Please note that the
SEC has not considered our exchange offer in the context of a no-action letter,
and the SEC's staff may not make a similar determination with respect to our
exchange offer.
Unless you are a broker-dealer, you must acknowledge that you are not engaged
in, and do not intend to engage in, a distribution of the new notes and that
you have no arrangement or understanding to participate in a distribution of
the new notes. If you are one of our affiliates, or you are engaged in, intend
to engage in or have any arrangement or understanding with respect to, the
distribution of new notes acquired in the exchange offer, you (1) should not
rely on our interpretations of the position of the SEC's staff and (2) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
If you are a broker-dealer and receive new notes for your own account pursuant
to the exchange offer, you must acknowledge that you will deliver a prospectus
in connection with any resale of the new notes. The letter of transmittal
states that by so acknowledging and by delivering a prospectus, you will not be
deemed to admit that you are an "underwriter" within the meaning of the
Securities Act. If you are a broker-dealer, you may use this prospectus, as it
may be amended or supplemented from time to time, in connection with the resale
of new notes received in exchange for old notes acquired by you as a result of
market-making or other trading activities. For a period of 180 days after the
expiration or termination of the exchange offer, we will make this prospectus
available to any broker-dealer for use in connection with any resale. See "Plan
of distribution."
In addition, you may offer or sell the new notes in certain jurisdictions only
if they have been registered or qualified for sale there, or any exemption from
registration or qualification is available and is complied with. Subject to the
limitations specified in the registration rights agreements relating to the
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old notes, we will register or qualify the new notes for offer or sale under
the securities laws of any jurisdictions that you reasonably request in
writing. Unless you request that the sale of the new notes be registered or
qualified in a jurisdiction, we currently do not intend to register or qualify
the sale of the new notes in any jurisdiction.
You may find it difficult to sell your notes.
There is no established trading market for the new notes or the old notes. We
do not intend to apply for listing of the new notes on any national securities
exchange or for quotation through The Nasdaq National Market. The liquidity of
any market for the new notes will depend upon the number of holders of the new
notes, our performance, the market for similar securities, the interest of
securities dealers in making a market in the new notes and other factors
relating to us. A liquid trading market may not develop for the new notes. In
addition, to the extent old notes are tendered and accepted in the exchange
offer, the trading market, if any, for the old notes would be adversely
affected.
You must comply with the exchange offer procedures in order to receive new,
freely tradable notes.
Subject to the conditions set forth under "The exchange offer -- Conditions to
the exchange offer," delivery of new notes in exchange for old notes tendered
and accepted for exchange pursuant to the exchange offer will be made only
after timely receipt by the exchange agent of the following:
.certificates for old notes or a book-entry confirmation of a book-entry
transfer of old notes into the exchange agent's account at The Depository
Trust Company, New York, New York as depository, in accordance with The
Depository Trust Company's Automated Tender Offer Program, including an
agent's message (as defined below) if the tendering holder does not deliver a
letter of transmittal,
.a completed signed letter of transmittal (or facsimile thereof), with any
required signature guarantees, or, in the case of a book-entry transfer, an
agent's message in lieu of the letter of transmittal, and
.any other documents required by the letter of transmittal.
Therefore, holders of old notes who would like to tender old notes in exchange
for new notes should be sure to allow enough time for the old notes to be
delivered on time. We are not required to notify you of defects or
irregularities in tenders of old notes for exchange. Old notes that are not
tendered or that are tendered but we do not accept for exchange will, following
consummation of the exchange offer, continue to be subject to the existing
transfer restrictions under the Securities Act and, upon consummation of the
exchange offer, certain registration and other rights under the registration
rights agreement will terminate. See "The exchange offer -- Procedures for
tendering old notes" and "The exchange offer -- Consequences of exchanging or
failing to exchange old notes."
Some holders who exchange their notes may be deemed to be underwriters.
If you exchange your old notes in the exchange offer for the purpose of
participating in a distribution of the new notes, you may be deemed to have
received restricted securities and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
Risks related to our business
Declining reimbursement for pharmaceutical products used by oncologists could
adversely affect us.
We cannot assure you that payments under state or federal government programs
will remain at levels comparable to present levels or will be sufficient to
cover the costs allocable to patients eligible for reimbursement pursuant to
these programs. We also cannot assure you that the services that we provide and
the facilities that we operate meet or will continue to meet the requirements
for participation in these programs.
There is a continued risk of declining reimbursement for pharmaceuticals used
by oncologists as a result of changes in reimbursement methodology. Currently,
Medicare and most Medicaid programs reimburse providers for oncology drugs
based on the Average Wholesale Price (AWP) of the drugs.
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AWP is determined by third-party information services using data furnished by
pharmaceutical companies. During 2000, the U.S. Department of Health and Human
Services announced its intention to change the basis of AWP, which would have
resulted in substantially lowered reimbursement from federal government
programs for chemotherapy agents and other pharmaceutical agents used by
oncologists, without any adjustment in reimbursement for services and other
costs related to chemotherapy. This would have resulted in oncologists
incurring losses for the administration of many chemotherapy treatments.
Although the federal government later stated that reimbursement levels for
pharmaceuticals used to treat cancer would not be reduced at that time, the
agency responsible for the Medicare program announced its belief that there is
still a need to modify its reimbursement scheme for pharmaceuticals. As a
result of congressional action, the General Accounting Office and Centers for
Medicaid and Medicare Services (CMS) conducted a comprehensive study to develop
a more accurate reimbursement methodology for outpatient cancer therapy
services. The study was completed and published in September of 2001, and the
agencies and Congress continue to discuss appropriate changes in reimbursement
in response to the study. It is not possible to assess the likely outcome of
any change in reimbursement for oncology services, particularly reimbursement
of pharmaceuticals, whether through federal agency initiatives or through the
calculation of AWP from information supplied by pharmaceutical companies. It is
possible that changes in reimbursement that are ultimately adopted or
implemented could have a material adverse effect on our operations and
financial condition, either directly in the case of our affiliated practices,
particularly those on the revenue model, or indirectly in the case of service
line customers as a result of decreased financial performance of such
customers.
If our affiliated practices terminate their agreements with us, we could be
seriously harmed.
Our practices may attempt to terminate their agreements with us. If any of our
larger practices were to succeed in such a termination, other than in
connection with a transition to the service line structure, we could be
seriously harmed. From time to time, we have disputes with physicians and
practices which could result in harmful changes to our relationship with them
or a termination of a service agreement if adversely determined. We are also
aware that some practices affiliated with other health care companies, although
they do not have a contractual right to do so, have attempted to end or
restructure their affiliations by arguing that their affiliations violate some
aspect of health care law. For example, some physicians have claimed that the
fee arrangements violate federal or state prohibitions on splitting fees with
physicians. If some of our network physicians or affiliated practices were able
to successfully make such arguments and terminate their affiliation with us,
there could be a materially adverse effect on us.
If a significant number of physicians leave our affiliated practices, we could
be seriously harmed.
Our affiliated practices usually enter into employment or non-competition
agreements with their physicians that provide some assurance to both the
practice and to us with respect to continuing revenues. We and our affiliated
practices try to maintain such contracts. However, if a significant number of
physicians terminate their relationships with our affiliated practices, we
could be seriously harmed.
Our affiliated practices may be unable to enforce non-competition provisions
with departed physicians.
Most of the employment agreements between the practices and their physicians
include a clause that prevents the physician from competing with the practice
for a period after termination of employment. We cannot predict whether a court
will enforce the non-competition covenants in the agreements. If practices are
unable to enforce the non-competition provisions of their employment
agreements, we could be seriously harmed.
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Our repositioning is placing significant stress on our network and on our
relationships with physicians.
Our repositioning is placing significant stress on our network and on our
relationships with physicians. Conversions to the service line structure and
the net income model require that the physicians devote significant time and
resources to learning about and assessing the value of our new models. In
addition, physicians may be anxious about taking part in a new and untested
business model for us. To the extent we are not successful in developing new
relationships and maintaining our current relationships with physicians because
of these additional pressures, our business and results of operations could be
harmed.
We may encounter difficulties in managing our network of affiliated practices.
We do not control the practice of medicine by the physicians or their
compliance with regulatory and other requirements directly applicable to
practices. At the same time, an affiliated practice may have difficulty in
effectively influencing the practices of its individual physicians. In
addition, we have only limited control over the business decisions of the
practices even under the PPM model. As a result, it is difficult to implement
standardized practices across the network, and this could have an adverse
effect on cost controls, regulatory compliance, our profitability and the
strength of our network.
Continued review of pharmaceutical companies and their pricing and marketing
practices could result in lowered reimbursement for pharmaceuticals.
Continued review of pharmaceutical companies by government payors could result
in lowered reimbursement for pharmaceuticals, which could harm us. As indicated
above, the federal government is reconsidering the manner in which health care
providers, including oncologists, are reimbursed for the pharmaceutical agents
they use to treat patients. In addition, we are aware of various investigations
and lawsuits filed against manufacturers of oncology drugs. These
investigations relate to the manner in which those companies report data used
in determining AWP and to marketing and other practices. As a result of these
investigations, a number of pharmaceutical manufacturers have entered into or
are discussing settlements with the government that could result in lower
reimbursement. Furthermore, possibly in response to such scrutiny, some
pharmaceutical manufacturers could alter AWP and pricing to reduce the margin
between reported AWP and the sales price of some oncology drugs. Any such
change could have an adverse effect on oncologists, which in turn could
adversely affect us. Finally, as a group purchasing organization that is a
significant purchaser of pharmaceutical agents paid for by government programs,
we and our network of affiliated practices could become involved in these
investigations or lawsuits, or may become a target of such pharmaceutical-
related scrutiny. Any of these events could have a material adverse effect on
us.
Our service fee arrangements with many of our affiliated practices subject us
to disproportionate economic risk.
Currently, each service agreement provides for payment to us of a service fee
plus reimbursement of all practice costs, and the economic arrangements in our
service agreements with affiliated practices fall into two principal
categories. Some of our agreements, known as the "earnings model" agreements,
provide that the service fee is a percentage of the practice's earnings before
income taxes. In others, known as "net revenue model" agreements, the fee
consists of a fixed fee, a percentage fee (in most states) of the practice's
net revenues and, if certain performance criteria are met, a performance fee.
Where the service agreement follows the net revenue model, the practice retains
a fixed portion of net revenue before any service fee (other than practice
operating costs) is paid to us. Under these net revenue agreements, therefore,
we disproportionately bear the economic impact of increasing or declining
margins. Our costs of operations have increased, primarily due to an increase
in expensive, single-source drugs and compensation and benefits, which has
resulted in a disproportionate decline in our operating margin, even as
practice profitability continues to grow. We are seeking to convert
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practices to the earnings model or the service line structure, which eliminates
this disproportionate economic risk. If we are not successful, then continuing
to provide services under the net revenue model agreements could have a
material adverse effect on us.
Increased governmental regulation could adversely affect our operating results
or financial condition.
The health care industry is highly regulated and there can be no assurance that
the regulatory environment in which we operate will not change significantly
and adversely in the future. State and federal governments have increasingly
undertaken efforts to control growing health care costs through legislation,
regulation and voluntary agreements with medical care providers and
pharmaceutical companies. If future government cost containment efforts limit
the profits that can be derived on new drugs, then profit margins on
pharmaceutical products could decrease and clinical research spending on
pharmaceutical products may also decrease, which could decrease the business
opportunities available to us and affect our results of operations and
financial condition.
Our pharmaceutical segment is subject to the operating and security standards
of the Food and Drug Administration (the "FDA"), the United States Drug
Enforcement Administration, various state boards of pharmacy and comparable
agencies. Such standards affect the prescribing of pharmaceuticals (including
certain controlled substances), operating of pharmacies (including nuclear
pharmacies), and packaging of pharmaceuticals. Complying with those standards,
especially as they change from time to time, could be extremely costly for us
and could limit the manner in which we implement this segment.
The laws of many states prohibit unlicensed, non-physician-owned entities or
corporations (such as US Oncology) from performing medical services, or in
certain instances, prohibit physicians from splitting fees with non-physicians,
including US Oncology. We do not believe that we engage in the unlicensed
practice of medicine or the delivery of medical services in any state, and are
not licensed to practice medicine in states which permit such licensure. In
many jurisdictions, however, the laws restricting the corporate practice of
medicine and fee-splitting have been subject to limited judicial and regulatory
interpretation and, therefore, there is no assurance that upon review some of
our activities would not be found to be in violation of such laws. If such a
claim were successfully asserted against us, we could be subject to civil and
criminal penalties, the imposition of which could have a material adverse
effect on our operations, cash flows and financial condition.
In general, regulation and scrutiny of health care providers and related
companies are increasing. In addition, we may be adversely affected by aspects
of some other health care proposals, including cutbacks in Medicare and
Medicaid programs, containment of health care costs on an interim basis by
means that could include a freeze on rates paid to health care providers,
greater flexibility to the states in the administration of Medicaid, and
developments in federal and state health information requirements, including
the standardization of electronic transmission of some administrative and
financial information.
The current regulatory environment in the health care industry continues to
negatively impact us.
Because of the complexity and uncertainty of the regulations that govern
companies and individuals in the health care sector, we expend significant
resources in our comprehensive compliance program. In addition, the government
is empowered to investigate all business activities of health care companies,
including lawful ones, and exerts considerable leverage in such investigations
as a result of the significant penalties that may apply in the event of any
violation of health care law. Furthermore, government programs often are
administered and enforced by multiple agencies and entities that may themselves
have differing interpretations of health care regulations, and enforcement
authorities have taken the position that complying with specific instructions
of such entities may not, by itself, be determinative of the lawfulness of any
actions. Because of these factors and the high cost of defending
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or addressing any investigation or allegation regarding health care law
violations, we must from time to time forego business opportunities that we
believe to be lawful, if there is a possibility that such activities could be
perceived or later interpreted as inappropriate or unlawful or could invite
government investigation.
Loss of revenues or a decrease in income of our affiliated practices could
adversely affect our results of operations.
Our revenue currently depends on revenue generated by affiliated practices.
Loss of revenue by the practices could seriously harm us. It is possible that
our affiliated practices will not be able to maintain successful medical
practices. In addition, under our current service agreements and under the
outpatient cancer center operations service line, the fees payable to us depend
upon the profitability of the practices. Even under those service agreements
where the service fee is based on the revenues of the practices, and not on
their earnings, a priority of payments provision mandates that we will be paid
last. Any failure by the practices to contain costs effectively will adversely
impact our results of operations in those areas. Because we do not control the
manner in which our practices conduct their medical practice (including drug
utilization), our ability to control costs related to the provision of medical
care is limited. Furthermore, the affiliated practices face competition from
several sources, including solo practitioners, single- and multi-specialty
practices, hospitals and managed care organizations. Although we are offering
our affiliated practices the option of converting to the service line
structure, which would eliminate our direct risk related to practice
profitability with respect to medical oncology, we have limited ability to
discontinue or alter our service arrangements with practices, even where
continuing to manage such practices under existing arrangements is economically
detrimental to us.
Our business could be adversely affected if relations with any of our
significant pharmaceutical suppliers are terminated or modified.
Our ability to purchase pharmaceuticals, or to expand the scope of
pharmaceuticals purchased, from a particular supplier is largely dependent upon
such supplier's assessment of the value of our network. To the extent that our
transition to the service line structure causes pharmaceutical suppliers to
perceive our network as less valuable, our relationships with such suppliers
could be harmed. Our inability to purchase pharmaceuticals from any of our
significant suppliers could have a material adverse effect on our business,
results of operations and financial condition because many suppliers own
exclusive patent rights and are the sole manufacturers of certain
pharmaceuticals. If we were unable to purchase patented products from any such
supplier on favorable terms or at all, we could be required to purchase such
products from other distributors on less favorable terms, and our profit margin
on such products could be eliminated.
Our development of new cancer centers could be delayed or result in serious
liabilities, and the centers may not be profitable.
The development of integrated cancer centers is subject to a number of risks,
including obtaining regulatory approval, delays that often accompany
construction of facilities and environmental liabilities that arise from
operating cancer centers. Any failure or delay in successfully building and
operating integrated cancer centers or in avoiding liabilities from operations
could seriously harm us. In addition, new cancer centers may incur significant
operating losses during their initial operations, which could materially
adversely affect our operating results, cash flows and financial condition.
We rely on the ability of our affiliated practices to grow and expand.
We rely on the ability of our affiliated practices to grow and expand. Our
affiliated practices may encounter difficulties attracting additional
physicians and expanding their operations. The failure of practices to expand
their patient base and increase revenues could harm us.
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We operate in a highly competitive industry.
We may have existing competitors, as well as a number of potential new
competitors, that have greater name recognition and significantly greater
financial, technical and marketing resources than we do. This may permit our
competitors to devote greater resources than we can to the development and
promotion of their services. These competitors may also undertake more far-
reaching marketing campaigns, adopt more aggressive pricing policies and make
more attractive offers to existing and potential employees. In addition,
implementation of our service line structure will bring us into competition
with numerous additional competitors, including specialty pharmacy companies,
medical facilities operators and a variety of clinical research entities.
We also expect our competitors to develop strategic relationships with
providers, pharmaceutical companies and payors, which could result in increased
competition. The introduction of new and enhanced services, acquisitions,
industry consolidation and the development of strategic relationships by our
competitors could cause price competition, a decline in sales or a loss of
market acceptance of our services, or make our services less attractive. In
addition, in developing cancer centers, we compete with a number of tax-exempt
non-profit organizations that can finance acquisitions and capital expenditures
on a tax-exempt basis or receive charitable contributions unavailable to us.
With respect to research activities, the contract research organization
industry is fragmented, with several hundred small limited-service providers
and several large full-service contract research organizations with global
operations. We compete against large contract research organizations that may
have access to more financial resources than we do.
We expect that industry forces will have an impact on us and our competitors.
In recent years, the health care industry has undergone significant changes
driven by various efforts to reduce costs, including national health care
reform, trends toward managed care, limits in Medicare coverage and
reimbursement levels, consolidation of health care services companies and
collective purchasing arrangements by office-based health care practitioners.
The changes in our industry have caused greater competition among us and
similar businesses. Our inability to predict accurately, or react competitively
to, changes in the health care industry could adversely affect our operating
results. We cannot assure you that we will be able to compete successfully
against current or future competitors or that competitive pressures will not
have a material adverse effect on our business, financial condition and results
of operations.
Our success depends on our ability to attract and retain highly qualified
technical staff and other key personnel, and we may not be able to hire enough
qualified personnel to meet our hiring needs.
Our ability to offer and maintain high quality service is dependent upon our
ability to attract and maintain arrangements with qualified professional and
technical staff, and with executives on our management team. There is a high
level of competition for such skilled personnel among other health care
providers, research and academic institutions, government entities and other
organizations. We cannot assure you that our contractual arrangements with such
staff can be maintained on terms advantageous to us. In addition, if one or
more members of our management team become unable or unwilling to continue in
their present positions, we could also be harmed.
Our failure to remain technologically competitive could adversely affect our
business.
Rapid technological advancements have been made in the radiation oncology and
diagnostic imaging industry. Although we believe that our equipment and
software can generally be upgraded as necessary, the development of new
technologies or refinements of existing technologies might make existing
equipment technologically obsolete. If such obsolescence were to occur, then we
may be compelled to incur significant costs to replace or modify the equipment,
which could have a material adverse effect
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on our financial condition, results of operations and cash flow. In addition,
some of our cancer centers compete against local centers which may contain more
advanced imaging or radiation therapy equipment or provide additional
technologies. Our performance is dependent upon physician and patient
confidence in the superiority of our technology and equipment over those of our
competitors.
Advances in other cancer treatment methods, such as chemotherapy, surgery and
immunotherapy, or in cancer prevention techniques, could reduce demand or
eliminate the need for the radiation therapy services provided at the cancer
centers we operate. The development and commercialization of new radiation
therapy technologies could have a material adverse effect on our business,
operating results and financial condition.
We may be unable to satisfy our additional financial needs.
Continuing to expand our lines of business in accordance with our business
growth plan and expected capital needs will require substantial capital
resources. Operation of the cancer centers will require recurring capital
expenditures for renovation, expansion and the purchase of costly medical
equipment and technology. It is likely that our capital needs in the next
several years will exceed the capital generated from our operations. Thus, we
may wish to incur additional debt or issue additional debt or equity securities
from time to time. Capital available for health care companies, whether raised
through the issuance of debt or equity securities, has recently been quite
limited and may continue to be difficult to obtain. Consequently, we may be
unable to obtain sufficient financing on terms satisfactory to us or at all. If
additional funds are raised through the incurrence of debt, then we may become
subject to restrictions on our operations and finances.
Our working capital could be impacted by delays in reimbursement for services.
The health care industry is characterized by delays that typically range from
three to six months between when services are provided and when the
reimbursement or payment for these services is received. Under our existing
service agreements and the new cancer center operations service line, our
working capital is dependent on such collections. This makes working capital
management, including prompt and diligent billing and collection, an important
factor in our results of operations and liquidity in those areas. We cannot
assure you that trends in the industry will not further extend the collection
period and negatively impact our working capital.
We may be unsuccessful at negotiating contracts with third-party payors on
behalf of our practices, which could result in lower operating margins.
We are responsible for negotiating payor contracts on behalf of our network
physicians under the PPM model and will also be responsible for such
contracting activities for radiation oncologists and diagnostic radiologists
under the cancer center operations service line. Commercial payors, such as
managed care organizations and traditional indemnity insurers, are increasingly
requesting fee structures and other arrangements that require health care
providers to assume all or a portion of the financial risk of providing care.
The lowering of reimbursement rates, increasing review of bills for services
and negotiating for reduced contract rates could have a material adverse effect
on our results of operations and liquidity with respect to our existing service
agreements and cancer center operations under the service line structure.
Loss of revenue by our affiliated practices caused by the cost containment
efforts of third-party payors could harm us.
Physician practices typically bill third-party payors for the health care
services provided to their patients. Third-party payors such as private
insurance plans and commercial managed care plans negotiate the prices charged
for medical services and supplies in order to lower the cost of the health
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care services and products they pay for, thus increasing their own profits.
Third-party payors also try to influence legislation to lower costs. Third-
party payors can also deny reimbursement for medical services and supplies by
stating that they believe a treatment was not appropriate, and these
reimbursement denials are difficult to appeal or reverse. Our affiliated
practices also derive a significant portion of their revenues from governmental
programs. Reimbursement by governmental programs generally is not subject to
negotiation and is established by governmental regulation. In addition,
Medicare reimbursement rates for services our network physicians provide (other
than for chemotherapy agents or lab services) declined effective April 1, 2002
as a result of the application of a statutory formula designed to link growth
in government health care spending to growth in the economy generally. There is
a risk that other payors could reduce rates of reimbursement to match this
decline. Our management fees under the PPM model, as well as our operating fees
for cancer center operations under the service line structure, are dependent on
the financial performance of the practices and would be adversely affected by a
reduction in reimbursement. In addition, to the extent oncologists, as our
customers, are impacted adversely by reduced reimbursement levels, our business
could be harmed generally.
We face the risk of qui tam litigation relating to regulations governing
billing for medical services.
We are currently aware of various qui tam lawsuits in which we and/or our
subsidiaries or affiliated practices are named as defendants. Because qui tam
lawsuits are filed under seal, we could be named in other such suits of which
we are not aware. In addition, as the federal government intensifies its focus
on billing, reimbursement and other health care regulatory areas, private
individuals are also bringing more qui tam lawsuits because of the potential
financial rewards for such individuals. For the past several years, the number
of qui tam suits filed against health care companies and the aggregate amount
of recoveries under such suits have increased significantly. This trend
increases the risk that we may become subject to additional qui tam lawsuits.
Although we believe that our operations comply with law and intend to
vigorously defend ourselves against allegations of wrongdoing, the costs of
addressing such suits, as well as the amount of any recovery in the event of a
finding of wrongdoing on our part, could be significant. The existence of qui
tam litigation involving us may also strain our relationships with
pharmaceutical suppliers or our network physicians, particularly those
physicians or practices named in such suits. Furthermore, our involvement in
those qui tam lawsuits, and the uncertainty such suits create, may adversely
affect our ability to raise capital.
Our services could give rise to liability from clinical trial participants and
the parties with whom we contract.
In connection with clinical research programs, we provide several services that
are involved in bringing new drugs to market, which is time consuming and
expensive. Such clinical research involves the testing of new drugs on human
volunteers. The provision of medical services entails an inherent risk of
professional malpractice and other similar claims. If we do not perform our
services to contractual or regulatory standards, the clinical trial process and
the participants in such trials could be adversely affected. Clinical research
involves the inherent risk of liability for personal injury or death to
patients resulting from, among other things, unforeseen adverse side effects or
improper administration of the new drugs by physicians. In certain cases, these
patients are already seriously ill and are at risk of further illness or death.
These events would create a risk of liability to us from either the
pharmaceutical companies with which we contract or the study participants.
We also contract with physicians to serve as investigators in conducting
clinical trials. Third parties could possibly claim that we should be held
liable for losses arising from any professional malpractice of the
investigators with whom we contract or in the event of personal injury to or
death of persons for the medical care rendered by third-party investigators,
and we would vigorously defend any such claims. Nonetheless it is possible that
we could be held liable for such types of losses.
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We could be subject to malpractice claims and other harmful lawsuits not fully
covered by insurance.
We could also be implicated in claims related to medical services provided by
our network physicians. We cannot assure you that claims, suits or complaints
relating to services delivered by a network physician will not be assessed
against us in the future. In addition, because network physicians prescribe and
dispense pharmaceuticals and we will maintain pharmacy operations, we and our
network physicians could be subject to product liability claims.
Although we maintain insurance believed to be adequate both as to risks and
amounts, there can be no assurance that any claim asserted against us for
professional or other liability will be covered by, or will not exceed the
coverage limits of, such insurance. The availability and cost of professional
liability insurance varies widely from state to state and is affected by
various factors, many of which are beyond our control. There can be no
assurance that we will be able to maintain insurance in the future at a cost
that is acceptable to us, or at all. Therefore, successful malpractice,
regulatory or product liability claims asserted against us that are not fully
covered by insurance could have a material adverse effect on our operating
results. During February 2002, PHICO Insurance Company, which had been our and
our affiliated practices' primary malpractice insurer, was placed in
liquidation. Although state guaranty associations provide some coverage for
insured claims in the event of insurer insolvency, if we or our affiliated
practices are unable to receive sufficient coverage as a result of the
insolvency, we could be harmed.
Proposed and final confidentiality laws and regulations may create a risk of
liability, increase the cost of our business or limit our service offerings.
The confidentiality of patient-specific information and the circumstances under
which such records may be released for inclusion in our databases or used in
other aspects of our business are subject to substantial governmental
regulation. Legislation governing the possession, use and dissemination of
medical information and other personal health information has been proposed or
adopted at both the federal and state levels. Such regulations may require us
to implement new security measures, which may require substantial expenditures
or limit our ability to offer some of our products or services, thereby
negatively impacting the business opportunities available to us. A risk of
civil or criminal liability exists if we are found to be responsible for any
violation of applicable laws, regulations or duties relating to the use,
privacy or security of health information.
On December 28, 2000, the Secretary of the Department of Health and Human
Services issued the final rule on Standards for Privacy of Individually
Identifiable Health Information to implement the privacy requirements for the
Health Insurance Portability and Accountability Act of 1996. These regulations
generally impose standards for covered entities transmitting or maintaining
protected data in an electronic, paper or oral form with respect to the rights
of individuals who are the subject of protected health information. They also
establish limitations on and procedures for the exercise of those individuals'
rights and the uses and disclosures of protected health information. Such
regulations could inhibit third-party processors in using, transmitting or
disclosing health data (even if the data has been de-identified) for purposes
other than facilitating payment or performing other clearinghouse functions,
which would restrict our ability to obtain and use data in our services. In
addition, these regulations could require us to establish uniform
specifications for obtaining de-identified data so that de-identified data
obtained from different sources could be aggregated. While the impact of
developments in legislation, regulations or the demands of third-party
processors is difficult to predict, each could materially adversely affect our
business.
Risks related to the strategic repositioning
If we cannot effectively market and implement the service line structure, it
would materially and adversely affect our business and results of operations.
Because the service line structure is an untested business model, we cannot
assure you that it will attain broad market acceptance or that we will be able
to effectively market it to, and implement it for, new
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18
Risk factors
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practices outside of our existing network on terms acceptable to us or at all.
We will incur significant costs to attract and negotiate such arrangements and
to develop our infrastructure in advance of revenues being produced by such
arrangements. Delays or failures to effectively market the service lines to new
practices and implement service line operations with them could harm us. In
addition, non-competition covenants in our existing service agreements with
practices may limit our ability to offer the service line structure to other
practices within markets that we already serve.
Under the service line structure, we anticipate a decline in operating cash
flow, which could harm us.
If practices currently managed by us terminate their existing service
agreements with us and we instead provide services to them under the service
line structure, we expect to generate less operating cash flow than we
currently do with respect to most such practices. Such reduction in cash flow
could materially adversely affect us and our results of operations.
Each conversion of an affiliated practice to the service line structure could
represent a significant reduction in our cash flow. In addition, conversions to
the earnings model may adversely impact cash flow. We cannot be sure how many
practices will convert and the timing of such conversions. Although we have
some control over the timing, we cannot assure you when these conversions will
occur. As a result, during the transition, our cash flow may be subject to
unpredictable fluctuations.
The nature of our receivables will change with respect to the oncology
pharmaceutical management service line.
Currently, our accounts receivable consist principally of payments that we bill
and collect from third party payors on behalf of our affiliated practices.
Under the pharmaceutical management service line, we will instead bill and
collect payments from the practices. We have no experience in billing and
collecting from affiliated practices. The practices will have responsibility
for billing and collecting from third party payors with respect to the drugs.
If we are not successful in billing and collecting from affiliated practices or
if such practices are not successful in managing their billing and collections
from third-party payors, we may have decreased cash flow from pharmaceutical
sales.
Under the service line structure, our agreements with affiliated practices will
have shorter terms than our existing agreements, and we will have less input
with respect to the business operations of the practices.
Currently, we provide management services to practices under long-term
agreements that generally have 40-year terms and that are not terminable except
under specified circumstances. These agreements allow us to be the exclusive
provider of management services, including each of the services contemplated
under the service line structure, to each of the practices. In addition, under
those agreements, the practices are required to bind their physicians to
specified employment terms and restrictive covenants. Under the service line
structure, our agreements with affiliated practices will have shorter terms,
between five to fifteen years, and may be terminable in the event of certain
performance deficiencies based on market standards. A number of the other input
mechanisms that we currently have with respect to affiliated practices will
also be eliminated. This loss of input may increase the extent to which
affiliated practices may change their internal composition to our detriment and
may result in arrangements that are easier for individual physicians and
practices to exit, exposing us to increased competition from other firms,
especially in the pharmacy management sector. Departure of a significant number
of physicians or practices from participation in our service line structure
could harm us.
If we are not successful in transitioning our existing affiliated practices
that wish to move to the new service line structure, our business and results
of operations could be harmed.
As part of the implementation of the service line structure, we intend to offer
to our existing affiliated practices the ability to terminate their existing
service agreements, purchase their medical oncology operating assets from us,
and adopt the service line structure. While we believe that the service line
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19
Risk factors
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structure will be attractive to our existing network and that the transition
will be desirable, we do not have the unilateral right to cause the termination
of existing service agreements and the related transition to our service line
structure. We intend to continue to manage practices that do not wish to adopt
the service line structure, which will prevent us from realizing certain of the
operating efficiencies that could be gained from a complete transition to the
service line structure. Transitioning those affiliated practices that wish to
adopt the service line structure also entails significant implementation and
execution risk, including returning to the affiliated practices certain
operating functions such as information technology, employee benefits,
insurance and other local management functions. A failure to successfully
implement this transition may create significant management distractions and
otherwise limit the success of the service line structure. For these reasons,
failure to successfully transition currently affiliated practices that wish to
move to the service line structure could harm us.
In order to adopt the service line structure, our existing affiliated practices
will require substantial capital resources. Although we are attempting to
facilitate the financing by negotiating with a single source for all practices
that wish to transition, there is no assurance that the practices will be
successful in implementing new financing arrangements. Failure of the practices
to obtain financing would adversely affect our ability to transition to the
service line structure and could materially and adversely affect our business
and results of operations.
Although we expect to complete the transition of affiliated practices that wish
to adopt the structure within 18 months, the process of negotiating with those
practices as to the termination of service agreements and the signing of new
agreements could take longer than anticipated. In addition, we could face
unanticipated difficulties in transitioning the practices, including system
conversion problems, lawsuits and other logistical hurdles, and also be subject
to duplicative costs during the transition process.
Under the service line structure, we will significantly increase our ownership
and operation of licensed pharmacies, which will subject us to various new
state and federal regulations.
Our pharmaceutical segment is subject to the laws and regulations of the Food
and Drug Administration (the "FDA"), the United States Drug Enforcement
Administration, various state boards of pharmacy and comparable agencies. Such
laws, regulations and regulatory interpretations affect the prescribing of
pharmaceuticals, purchasing, storing and dispensing of controlled substances,
operating of pharmacies (including nuclear pharmacies), and packaging of
pharmaceuticals. Violations of any of these laws and regulations could result
in various penalties, including suspension or revocation of our licenses or
registrations or monetary fees. As a health care provider, we will, under the
service line structure, subject our affiliated physicians to the federal "Stark
Self-Referral Laws," which prohibit a referral to an entity in which the
physician or the physician's family member has an ownership interest or
compensation relationship if the referral is for any of a list of "designated
health services." Further, while the PPM model currently subjects us to
scrutiny under the federal Medicare and Medicaid anti-kickback law, that
provides criminal penalties for individuals or entities participating in the
Medicare or Medicaid programs that knowingly and willfully offer, pay, solicit
or receive remuneration in order to induce referrals for items or services
reimbursed under such programs, the law will apply to the service line
structure in additional ways as a result of our becoming a pharmacy provider.
Complying with those standards, especially as they change from time to time,
could be extremely costly for us and could limit the manner in which we
implement the service line structure. In addition, we cannot assure you that we
will be successful in obtaining all necessary pharmaceutical licenses in a
timely manner or at all.
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Risk factors
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Risks related to the new notes
We now have increased outstanding indebtedness following the offering of the
old notes.
As of December 31, 2001, we had approximately $172.9 million of outstanding
indebtedness (including the current portion of long-term debt and excluding
obligations to trade creditors). Outstanding indebtedness was approximately 20%
of our total capitalization. See "Capitalization." The degree to which we are
leveraged could have important consequences to you, including:
.a substantial portion of our cash flow from operations will be required to be
dedicated to interest and principal payments and may not be available for
operations, working capital, capital expenditures, expansion, acquisitions or
general corporate or other purposes;
.our ability to obtain additional financing in the future may be impaired;
.we may be more highly leveraged than our competitors, which may place us at a
competitive disadvantage;
.our flexibility in planning for, or reacting to, changes in our business and
industry may be limited; and
.our degree of leverage may make us more vulnerable in the event of a downturn
in our business or in our industry or the economy in general.
In addition, the indenture and our new revolving credit facility will impose
significant operating and financial restrictions on us. These restrictions may
limit our ability to generate cash in the future.
We cannot assure you that our business will generate sufficient cash flow from
operations or that future borrowings will be available to us under credit
facilities in an amount sufficient to enable us to pay our debt, including the
new notes, or to fund our other liquidity needs. We may need to refinance all
or a portion of our debt, including the new notes, on or before maturity, and
such refinancing may be prohibited or costly under the terms of the new notes.
We cannot assure you that we would be able to refinance any of our debt,
including any credit facilities and the new notes, on commercially reasonable
terms or at all.
The new notes and the guarantees are subordinated obligations.
The new notes are subordinate in right of payment to all of our current and
future senior indebtedness. Senior indebtedness includes indebtedness under our
bank credit facilities and all of our other indebtedness that is not expressly
made subordinate to, or equal in right of payment to, the new notes. The
guarantees will be subordinated to all of the guarantors' existing and future
senior debt. Subject to certain limitations in the indenture, we may incur
additional indebtedness in the future, including senior indebtedness. By reason
of the subordination of the new notes, in the event of our insolvency,
bankruptcy, liquidation, reorganization, dissolution or winding up of our
business or upon default in payment with respect to any of our senior
indebtedness, or an event of default with respect to such indebtedness
resulting in the acceleration thereof, our assets will be available to pay the
amounts due on the new notes only after all of our senior indebtedness has been
paid in full. In these cases, we and the guarantors may not have sufficient
funds to pay all of our creditors, and holders of the new notes may receive
less, ratably, than the holders of senior debt. See "Description of the notes
- -- Subordination of notes." Furthermore, under certain circumstances, no cash
payments with respect to the new notes may be made for a period of up to 180
days (during each period of 360 days) if a non-payment default exists with
respect to designated senior debt. At December 31, 2001, after giving effect to
the offering of the old notes and the application of the net proceeds for such
offering and borrowings under our new revolving credit facility as described
under "Description of other indebtedness--Revolving credit facility," we and
our guarantor subsidiaries had $5.4 million of senior debt outstanding on a
consolidated basis.
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21
Risk factors
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There is no public market for the new notes and their transferability is
restricted.
The new notes have not been registered under the Securities Act or under any
state securities law. There is no existing market for the new notes and there
can be no assurance as to the liquidity of any market that may develop for the
new notes, a holder's ability to sell the new notes or the price at which the
holder may be able to sell the new notes. Further, the trading prices of the
new notes will depend on many factors, including, among other things,
prevailing interest rates, our operating results, our ability to complete the
offer to exchange the old notes for the new notes and the market for similar
securities. Historically, the market for non-investment grade debt has been
subject to disruptions that have caused volatility in prices. It is possible
that the market for the new notes will be subject to disruptions. Any
disruptions may have a negative effect on noteholders, regardless of our
prospects and financial performance.
We may not be able to satisfy our obligations to holders of the new notes upon
a change of control.
Upon the occurrence of a "Change in Control," as defined in the indenture, you
will have the right to require us to purchase the new notes at a price equal to
101% of the principal amount, together with any accrued and unpaid interest and
liquidated damages, if any, to the date of purchase. Our failure to purchase,
or give notice of purchase of, the new notes would be a default under the
indenture, which would in turn be a default under the new notes.
The guarantees may be voided under specific legal circumstances.
The new notes will be guaranteed by all of our existing and certain of our
future domestic subsidiaries. The guarantees may be subject to review under
U.S. federal bankruptcy law and comparable provisions of state fraudulent
conveyance laws if a bankruptcy or reorganization case or lawsuit is commenced
by or on behalf of our or one of a guarantor's unpaid creditors. Under these
laws, if a court were to find in such a bankruptcy or reorganization case or
lawsuit that, at the time any guarantor issued a guarantee of the new notes,
the guarantor:
.incurred the guarantee of the new notes with the intent of hindering, delaying
or defrauding current or future creditors;
.was a defendant in an action for money damages, or had a judgment for money
damages docketed against it if, in either case, after final judgment, the
judgment is unsatisfied; or
.received less than reasonably equivalent value or fair considerations for
incurring the guarantee of the new notes, and such guarantor (a) was insolvent
or was rendered insolvent by reason of issuing the guarantee, (b) was engaged,
or about to engage, in a business or transaction for which its remaining
assets constituted unreasonably small capital to carry on its business; or (c)
intended to incur, or believed that it would incur, debts beyond its ability
to pay as such debts matured (as all of the foregoing terms are defined in or
interpreted under the relevant fraudulent transfer or conveyance statutes),
then such a court could void the guarantee of such guarantor or subordinate the
amounts owing under such guarantee to such guarantor's presently existing or
future debt or take other actions detrimental to you.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the law of the jurisdiction that is being applied in any
such proceeding. Generally, a company would be considered insolvent if, at any
time it incurred the debt or issued the guarantee, either:
.the sum of its debts (including contingent liabilities) was greater than its
assets, at fair valuation; or
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22
Risk factors
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.the present fair saleable value of its assets was less than the amount
required to pay the probable liability on its total existing debts and
liabilities (including contingent liabilities) as they become absolute and
matured.
If the guarantees of the new notes were challenged, we cannot be sure as to the
standard that a court would use to determine whether any of our guarantors was
solvent at the relevant time. If such a case were to occur, the guarantee could
also be subject to the claim that, since the guarantee was incurred for the
benefit of US Oncology, Inc. and only indirectly for the benefit of the
guarantor, the obligations of the applicable guarantor were incurred for less
than fair consideration. If a guarantor were also found to be insolvent, a
court could thus void the obligations under the guarantee, subordinate the
guarantee to the applicable guarantor's other debt or take other action
detrimental to the holders of the new notes. If a guarantee is voided as a
fraudulent conveyance or found to be unenforceable for any other reason, you
will not have a claim against that guarantor and will only be a creditor of US
Oncology, Inc. or any guarantor whose obligation was not set aside or found to
be unenforceable.
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23
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Use of proceeds
We will not receive any proceeds from the exchange offer. In consideration for
issuing the new notes as contemplated in this prospectus, we will receive in
exchange outstanding old notes in like principal amount. We will cancel all old
notes surrendered in exchange for new notes in the exchange offer.
Ratios of earnings to fixed charges
The following table sets forth our ratios of adjusted earnings and earnings to
fixed charges for the periods shown:
Years ended December 31,
--------------------------
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
Adjusted Earnings/Fixed Charges(1)................... 4.0x 4.5x 3.5x 2.6x 2.8x
Earnings/Fixed Charges(2)............................ 0.7x 2.2x 1.3x (1.6)x 1.0x
(1) The ratio of adjusted earnings to fixed charges was calculated by dividing
(i) earnings before income taxes, fixed charges and impairment,
restructuring and other costs, bad debt expense and gain on investment in
common stock by (ii) fixed charges which consist of interest expense
incurred, including amortization of debt expense and discount, and one-
third of rental expense, which approximates the interest portion of rental
expense.
(2) The ratio of earnings to fixed charges was calculated by dividing (i)
earnings by (ii) fixed charges which consist of interest expense incurred,
including amortization of debt expense and discount, and one-third of
rental expense, which approximates the interest portion of rental expense.
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24
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Capitalization
This table sets forth our consolidated capitalization at December 31, 2001:
.on an historical basis;
.on an as adjusted basis to reflect the sale of the old notes and the
application of the net proceeds from the offering of the old notes to repay
outstanding indebtedness.
Unaudited
December 31, 2001
----------------------
As Adjusted
for the
(dollars in thousands) Actual Note Offering
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Cash and equivalents.................................... $ 20,017 $ 75,715(1)
======== ========
Current portion of long-term debt....................... 44,040 24,040
-------- --------
Long-term obligations, net of current portion:
Long-term bank debt................................... 0 0
8.42% Senior Secured Notes due 2006................... 80,000 --
Subordinated notes payable to physicians.............. 46,131 46,131
Existing notes payable................................ 2,695 2,695
9 5/8% Senior Subordinated Notes...................... -- 175,000
-------- --------
Total long-term obligations......................... 128,826 223,826
Stockholders' equity:
Total stockholders' equity.......................... 676,768 676,768
-------- --------
Total capitalization.............................. $849,634 $924,634
======== ========
- --------
(1) Reflects receipt of $55,698 of net cash proceeds. No amounts were
outstanding under bank credit facilities at the closing of the old notes.
Concurrently with the offering of the old notes, we terminated our existing
bank facility and entered into a new revolving credit facility. See
"Description of other indebtedness--Revolving credit facility."
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25
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The exchange offer
Terms of the exchange offer; period for tendering old notes
On February 1, 2002, we issued an aggregate principal amount of $175 million of
our 9 5/8% Senior Subordinated Notes due 2012, that were not registered under
the Securities Act in an offering under Rule 144A and/or Regulation S of the
Securities Act. The old notes were issued and the new notes will be issued,
under an indenture relating to the notes, dated February 1, 2002, by and among
us and JPMorgan Chase Bank, as trustee. We sold the old notes to UBS Warburg
LLC, Deutsche Banc Alex. Brown Inc. and First Union Securities, Inc. as the
initial purchasers, under a purchase agreement, dated February 1, 2002, by and
between the initial purchasers and us. When we sold the old notes to the
initial purchasers, we also signed a registration rights agreement in which we
agreed to exchange all the issued and outstanding old notes for a like
principal amount of our new notes. The terms of the new notes are substantially
identical to those of the outstanding old notes, except that the transfer
restrictions and registration rights relating to the old notes do not apply to
the new notes.
Subject to the terms and conditions set forth in this prospectus and in the
letter of transmittal, we are offering to exchange up to $175 million in
aggregate principal amount of our registered 9 5/8% Senior Subordinated Notes
due 2012, for an equal amount of our outstanding 9 5/8% Senior Subordinated
Notes due 2012.
This prospectus and the enclosed letter of transmittal constitute an offer to
exchange new notes for all of the issued and outstanding old notes. This
exchange offer is being extended to all holders of the old notes. As of the
date of this prospectus, $175 million aggregate principal amount of 9 5/8%
Senior Subordinated Notes due 2012 are outstanding. This prospectus and the
enclosed letter of transmittal are first being sent on or about ,
2002, to all holders of old notes known to us. Subject to the conditions listed
below, we will accept for exchange all old notes which are properly tendered on
or prior to the expiration of the exchange offer and not withdrawn as permitted
below. The exchange offer will expire at 5:00 p.m., New York City time, on
, 2002. However, if we, in our sole discretion, extend the period
of time during which the exchange offer is open, the exchange offer will expire
at the latest time and date to which we extend the exchange offer. Our
obligation to accept old notes for exchange in the exchange offer is subject to
the conditions listed below under the caption " -- Conditions to the exchange
offer."
We expressly reserve the right, at any time and from time to time, to extend
the period of time during which the exchange offer is open, and thereby delay
acceptance for exchange of any old notes. If we elect to extend the period of
time during which the exchange offer is open, we will give you oral or written
notice of the extension and delay, as described below. During any extension of
the exchange offer, all old notes previously tendered and not withdrawn will
remain subject to the exchange offer and may be accepted for exchange by us. We
will return to the registered holder, at our expense, any old notes not
accepted for exchange as promptly as practicable after the expiration or
termination of the exchange offer. In the case of an extension, we will issue a
press release or other public announcement no later than a.m., New York
City time, on the next business day after the previously scheduled expiration
of the exchange offer.
We expressly reserve the right to amend or terminate the exchange offer, and
not to accept for exchange any old notes not previously accepted for exchange
if any of the events described below under the caption " -- Conditions to the
exchange offer" should occur. We will give you oral or written notice of any
amendment, termination or non-acceptance as promptly as practicable.
Following completion of the exchange offer, we may, in our sole discretion,
commence one or more additional exchange offers to those old note holders who
did not exchange their old notes for new notes. The terms of these additional
exchange offers may differ from those applicable to this exchange offer. We may
use this prospectus, as amended or supplemented from time to time, in
connection with any additional exchange offers. These additional exchange
offers will take place from time to time until all outstanding old notes have
been exchanged for new
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26
The exchange offer
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notes, subject to the terms and conditions contained in the prospectus and
letter of transmittal we will distribute in connection with the additional
exchange offers.
Procedures for tendering old notes
Old notes tendered in the exchange offer must be in denominations of $1,000
principal amount and any integral multiple thereof.
When you tender your old notes, and we accept the old notes, this will
constitute a binding agreement between you and us subject to the terms and
conditions set forth in this prospectus and the enclosed letter of transmittal.
Unless you comply with the procedures described below under the caption " --
Guaranteed delivery procedures," you must do one of the following on or prior
to the expiration of the exchange offer to participate in the exchange offer:
.tender your old notes by sending the certificates for your old notes, in
proper form for transfer, a properly completed and duly executed letter of
transmittal, with any required signature guarantees, and all other documents
required by the letter of transmittal, to JPMorgan Chase Bank, as exchange
agent, at one of the addresses listed below under the caption " -- Exchange
agent"; or
.tender your old notes by using the book-entry procedures described below under
the caption " -- Book-entry transfer" and transmitting a properly completed
and duly executed letter of transmittal, with any required signature
guarantees, or an agent's message instead of the letter of transmittal, to
JPMorgan Chase Bank, as exchange agent, at one of the addresses listed below
under the caption " -- Exchange agent."
In order for a book-entry transfer to constitute a valid tender of your old
notes in the exchange offer, the exchange agent must receive a confirmation of
book-entry transfer of your old notes into the exchange agent's account at The
Depository Trust Company in accordance with The Depository Trust Company's
Automated Tender Offer Program prior to the expiration of the exchange offer.
The term "agent's message" means a message, transmitted by The Depository Trust
Company and received by the exchange agent and forming a part of the book-entry
confirmation, which states that The Depository Trust Company has received an
express acknowledgment from you that you have received and have agreed to be
bound by the letter of transmittal. If you use this procedure, we may enforce
the letter of transmittal against you.
THE METHOD OF DELIVERY OF CERTIFICATES FOR OLD NOTES, LETTERS OF TRANSMITTAL,
AGENT'S MESSAGES AND ALL OTHER REQUIRED DOCUMENTS IS AT YOUR ELECTION. IF YOU
DELIVER YOUR OLD NOTES BY MAIL, WE RECOMMEND REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME
TO ASSURE TIMELY DELIVERY. DO NOT SEND CERTIFICATES FOR OLD NOTES, LETTERS OF
TRANSMITTAL OR AGENT'S MESSAGES TO US.
Signatures on a letter of transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless you are either a registered old note holder
and have not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the letter of transmittal or you are
exchanging old notes for the account of an eligible guarantor institution. An
eligible guarantor institution means:
.Banks (as defined in Section 3(a) of the Federal Deposit Insurance Act);
.Brokers, dealers, municipal securities dealers, municipal securities brokers,
government securities dealers and government securities brokers (as defined in
the Securities Exchange Act of 1934, as amended (the "Exchange Act"));
.Credit unions (as defined in Section 19B(1)(A) of the Federal Reserve Act);
.National securities exchanges, registered securities associations and clearing
agencies (as these terms are defined in the Exchange Act); and
.Savings associations (as defined in Section 3(b) of the Federal Deposit
Insurance Act).
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The exchange offer
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If signatures on a letter of transmittal or a notice of withdrawal are required
to be guaranteed, the guarantor must be an eligible guarantor institution. If
you plan to sign the letter of transmittal but you are not the registered
holder of the old notes -- which term, for this purpose, includes any
participant in The Depository Trust Company's system whose name appears on a
security position listing as the owner of the old notes -- you must have the
old notes signed by the registered holder of the old notes and that signature
must be guaranteed by an eligible guarantor institution. You may also send a
separate instrument of transfer or exchange signed by the registered holder and
guaranteed by an eligible guarantor institution, but that instrument must be in
a form satisfactory to us in our sole discretion. In addition, if a person or
persons other than the registered holder or holders of old notes signs the
letter of transmittal, certificates for the old notes must be endorsed or
accompanied by appropriate bond powers, in either case signed exactly as the
name or names of the registered holder or holders that appear on the
certificates for old notes.
All questions as to the validity, form, eligibility -- including time of
receipt -- and acceptance of old notes tendered for exchange will be determined
by us in our sole discretion. Our determination will be final and binding. We
reserve the absolute right to reject any and all tenders of old notes
improperly tendered or to not accept any old notes, the acceptance of which
might be unlawful as determined by us or our counsel. We also reserve the
absolute right to waive any defects or irregularities or conditions of the
exchange offer as to any old notes either before or after the expiration of the
exchange offer -- including the right to waive the ineligibility of any holder
who seeks to tender old notes in the exchange offer. Our interpretation of the
terms and conditions of the exchange offer as to any particular old notes
either before or after the expiration of the exchange offer -- including the
terms and conditions of the letter of transmittal and the accompanying
instructions -- will be final and binding. Unless waived, any defects or
irregularities in connection with tenders of old notes for exchange must be
cured within a reasonable period of time, as determined by us. Neither we,
JPMorgan Chase Bank, as exchange agent, nor any other person has any duty to
give notification of any defect or irregularity with respect to any tender of
old notes for exchange, nor will we have any liability for failure to give this
notification.
If you are a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation, or act in a similar fiduciary or representative
capacity, and wish to sign the letter of transmittal or any certificates for
old notes or bond powers, you must indicate your status when signing. If you
are acting in any of these capacities, you must submit proper evidence
satisfactory to us of your authority to so act unless we waive this
requirement.
By tendering your old notes, you represent to us:
.that any new notes you receive in the exchange offer are being acquired by you
in the ordinary course of your business;
.that at the time of the commencement of the exchange offer, you do not have
any arrangement or understanding with any person to participate in a
distribution of the new notes, as defined in the Securities Act, in violation
of the Securities Act;
.that you are not our "affiliate" as defined in Rule 405 under the Securities
Act, or if you are our affiliate, you will comply with the applicable
registration and prospectus delivery requirements of the Securities Act;
.if you are not a participating broker-dealer, that you are not engaged in, and
do not intend to engage in, a distribution of the new notes, as defined in the
Securities Act; and
.if you are a participating broker-dealer, that you will receive the new notes
for your own account in exchange for old notes that were acquired by you as a
result of your market-making or other trading activities and that you will
deliver a prospectus in connection with any resale of the new notes you
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28
The exchange offer
- --------------------------------------------------------------------------------
receive. As used in this prospectus, a "participating broker-dealer" is a
broker-dealer that receives new notes for its own account in exchange for old
notes that it acquired as a result of market-making or other trading
activities. The SEC has taken the position that participating broker-dealers
may fulfill their prospectus delivery requirements with respect to resales of
the new notes -- other than a resale of an unsold allotment from the original
sale of the old notes -- by delivering this prospectus to prospective
purchasers. For further information regarding participating broker-dealers and
the prospectus delivery requirement, see "Plan of distribution."
Acceptance of old notes for exchange; delivery of new notes
Upon satisfaction or waiver of all of the conditions to the exchange offer, we
will accept, promptly after the expiration of the exchange offer, all old notes
properly tendered and will issue the new notes promptly after the acceptance of
the old notes. For purposes of the exchange offer, we will be deemed to have
accepted properly tendered old notes for exchange when, as and if we have given
oral or written notice of acceptance to JPMorgan Chase Bank, as exchange agent,
with written confirmation of any oral notice to be given promptly after any
oral notice.
For each outstanding note accepted for exchange in the exchange offer, the
holder of the old note will receive a new note having a principal amount at
maturity equal to that of the surrendered old note. Interest on the new note
will accrue:
.from the later of the last date to which interest was paid on the old note
surrendered in the exchange for the new note or if the old note is surrendered
for exchange on a date in a period which includes the record date for an
interest payment date to occur on or after the date of the exchange and as to
which interest will be paid, the date to which interest will be paid on such
interest payment date; or
.if no interest has been paid on the old note, from and including February 1,
2002.
Payments of interest, if any, on old notes that were exchanged for new notes
will be made on each February 1 and August 1 during which the new notes are
outstanding to the person who, at the close of business on the record date next
preceding the interest payment date, is the registered holder of the old notes
if the record date occurs prior to the exchange, or is the registered holder of
the new notes if the record date occurs on or after the date of the exchange,
even if the old notes are cancelled after the record date and on or before the
interest payment date.
In addition, if
.the registration statement of which this prospectus is a part is not declared
effective on or prior to July 1, 2002 or the exchange offer is not completed
on or prior to July 31, 2002,
.we are obligated to file a shelf registration statement and we fail to do so
prior to the later of (i) June 1, 2002 and (ii) 60 days after the obligation
arises, or
.if the shelf registration statement is not declared effected on or prior to
the date specified above or is declared effective but ceases to be effective,
(each a "Registration Default") then we agree to pay each holder of transfer
restricted securities affected thereby liquidated damages in an amount equal to
0.25% per annum of the principal amount of the old notes held by such holder
for the first 90-day period immediately following the occurrence of a
Registration Default, increasing by an additional 0.25% per annum with respect
to each subsequent 90-day period up to a maximum of 1.00% per annum thereafter,
from and including the date on which any such Registration Default shall occur.
We shall not be required to pay liquidated damages for more than one
Registration Default at any given time. Following the earlier of the cure of
all Registration
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Defaults or the date on which the notes otherwise become freely transferable by
holders other than affiliates of the Company without further registration under
the Securities Act, the accrual of liquidated damages will cease. For further
information regarding liquidated damages and registration rights, see "Exchange
offer; registration rights."
In all cases, the issuance of new notes in exchange for old notes will be made
only after JPMorgan Chase Bank, as exchange agent, timely receives either
certificates for all physically tendered old notes, in proper form for
transfer, or a book-entry confirmation of transfer of the old notes into the
exchange agent's account at The Depository Trust Company, as the case may be, a
properly completed and duly executed letter of transmittal, with any required
signature guarantees, and all other required documents or, in the case of a
book-entry confirmation, a properly completed and duly executed letter of
transmittal, with any required signature guarantees, or an agent's message
instead of the letter of transmittal. If for any reason we do not accept any
tendered old notes or if old notes are submitted for a greater principal amount
than the holder desires to exchange, we will return the unaccepted or non-
exchanged old notes without expense to the registered holder. In the case of
old notes tendered by book-entry transfer into the exchange agent's account at
The Depository Trust Company by using the book-entry procedures described
below, the unaccepted or non-exchanged old notes will be credited to an account
maintained with The Depository Trust Company. Any old notes to be returned to
the holder will be returned as promptly as practicable after the expiration or
termination of the exchange offer.
Book-entry transfer
The Notes will be represented by one or more global notes in definitive form
(the "Global Notes"). The Global Notes will be deposited on the Issue Date
with, or on behalf of, DTC and registered in the name of Cede & Co., as nominee
of DTC (such nominee being referred to herein as the "Global Note Holder"). DTC
will maintain the Notes in denominations of $1,000 and integral multiples
thereof through its book-entry facilities.
DTC has advised the Issuer as follows:
DTC is a limited-purpose trust company that was created to hold securities for
its participating organizations, including Euroclear and Clearstream
(collectively, the "Participants" or the "Depositary's Participants"), and to
facilitate the clearance and settlement of transactions in these securities
between Participants through electronic book-entry changes in accounts of its
Participants. The Depositary's Participants include securities brokers and
dealers (including the initial purchasers), banks and trust companies, clearing
corporations and certain other organizations. Access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust companies
(collectively, the "Indirect Participants" or the "Depositary's Indirect
Participants") that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. Persons who are not Participants
may beneficially own securities held by or on behalf of DTC only through the
Depositary's Participants or the Depositary's Indirect Participants. Pursuant
to procedures established by DTC, ownership of the Notes will be shown on, and
the transfer of ownership thereof will be effected only through, records
maintained by DTC (with respect to the interests of the Depositary's
Participants) and the records of the Depositary's Participants (with respect to
the interests of the Depositary's Indirect Participants).
The laws of some states require that certain persons take physical delivery in
definitive form of securities that they own. Consequently, the ability to
transfer the Notes will be limited to such extent.
So long as the Global Note Holder is the registered owner of any Notes, the
Global Note Holder will be considered the sole Holder of outstanding Notes
represented by such Global Notes under the Indenture. No beneficial owner of an
interest in the Global Notes will be able to transfer that interest except in
accordance with DTC's applicable procedures, in addition to those provided for
under the
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The exchange offer
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Indenture. Except as provided below, owners of Notes will not be entitled to
have Notes registered in their names and will not be considered the owners or
holders thereof under the Indenture for any purpose, including with respect to
the giving of any directions, instructions or approvals to the Trustee
thereunder. None of the Issuer, the Guarantors or the Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of Notes by DTC, or for maintaining, supervising or
reviewing any records of DTC relating to such Notes.
Payments in respect of the principal of, premium, if any, and interest on any
Notes registered in the name of a Global Note Holder on the applicable record
date will be payable by the Trustee to or at the direction of such Global Note
Holder in its capacity as the registered holder under the Indenture. Under the
terms of the Indenture, the Issuer and the Trustee may treat the persons in
whose names any Notes, including the Global Notes, are registered as the owners
thereof for the purpose of receiving such payments and for any and all other
purposes whatsoever. Consequently, neither the Issuer or the Trustee has or
will have any responsibility or liability for the payment of such amounts to
beneficial owners of Notes (including principal, premium, if any, and
interest). The Issuer believes, however, that it is currently the policy of DTC
to immediately credit the accounts of the relevant Participants with such
payments, in amounts proportionate to their respective beneficial interests in
the relevant security as shown on the records of DTC. Payments by the
Depositary's Participants and the Depositary's Indirect Participants to the
beneficial owners of Notes will be governed by standing instructions and
customary practice and will be the responsibility of the Depositary's
Participants or the Depositary's Indirect Participants.
Transfers between the Depository's Participants will be effected in the
ordinary way in accordance with DTC rules.
We expect that DTC will take any action permitted to be taken by a holder of
old notes, including the presentation of old notes for exchange as described
below, only at the direction of one or more Participants to whose account with
DTC interests in the Global Notes are credited and only in respect of such
portion of the aggregate principal amount of old notes as to which such
Participant or Participants has or have given such direction.
Subject to certain conditions, any person having a beneficial interest in the
Global Notes may, upon request to the Trustee and confirmation of such
beneficial interest by the Depositary or its Participants or Indirect
Participants, exchange such beneficial interest for Notes in definitive form.
Upon any such issuance, the Trustee is required to register such Notes in the
name of and cause the same to be delivered to, such person or persons (or the
nominee of any thereof). Such Notes would be issued in fully registered form.
In addition, if (1) DTC notifies the Issuer in writing that DTC is no longer
willing or able to act as a depositary and the Issuer is unable to locate a
qualified successor within 90 days or (2) the Issuer, at its option, notifies
the Trustee in writing that it elects to cause the issuance of Notes in
definitive form under the Indenture, then, upon surrender by the relevant
Global Note Holder of its Global Note, Notes in such form will be issued to
each person that such Global Note Holder and DTC identifies as being the
beneficial owner of the related Notes.
Neither the Issuer nor the Trustee will be liable for any delay by the Global
Note Holder or DTC in identifying the beneficial owners of Notes and the Issuer
and the Trustee may conclusively rely on, and will be protected in relying on,
instructions from the Global Note Holder or DTC for all purposes.
Guaranteed delivery procedures
If you are a registered holder of the old notes and wish to tender your old
notes, but
.the certificates for the old notes are not immediately available,
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The exchange offer
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.time will not permit your certificates for the old notes or other required
documents to reach JPMorgan Chase Bank, as exchange agent, before the
expiration of the exchange offer, or
.the procedure for book-entry transfer cannot be completed before the
expiration of the exchange offer,
then you may effect a tender of your old notes if:
.the tender is made through an eligible guarantor institution;
.prior to the expiration of the exchange offer, the exchange agent receives
from an eligible guarantor institution a properly completed and duly executed
notice of guaranteed delivery, substantially in the form we have provided,
setting forth your name and address, and the amount of old notes you are
tendering and stating that the tender is being made by notice of guaranteed
delivery. These documents may be sent by overnight courier, registered or
certified mail or facsimile transmission. If you elect to use this procedure,
you must also guarantee that within three New York Stock Exchange, Inc.
trading days after the date of execution of the notice of guaranteed delivery,
the certificates for all physically tendered old notes, in proper form for
transfer, or a book-entry confirmation of transfer of the old notes into the
exchange agent's account at The Depository Trust Company, as the case may be,
a properly completed and duly executed letter of transmittal, with any
required signature guarantees, and all other required documents or, in the
case of a book-entry confirmation, a properly completed and duly executed
letter of transmittal, with any required signature guarantees, or an agent's
message instead of the letter of transmittal, will be deposited by the
eligible guarantor institution with the exchange agent; and
.the exchange agent receives the certificates for all physically tendered old
notes, in proper form for transfer, or a book-entry confirmation of transfer
of the old notes into the exchange agent's account at The Depository Trust
Company, as the case may be, a properly completed and duly executed letter of
transmittal, with any required signature guarantees, and all other required
documents or, in the case of a book-entry confirmation, a properly completed
and duly executed letter of transmittal, with any required signature
guarantees, or an agent's message instead of the letter of transmittal, in
each case, within three New York Stock Exchange, Inc. trading days after the
date of execution of the notice of guaranteed delivery.
Withdrawal rights
You may withdraw tenders of old notes at any time prior to the expiration of
the exchange offer.
For a withdrawal to be effective, a written notice of withdrawal must be
received by JPMorgan Chase Bank, as exchange agent, prior to the expiration of
the exchange offer at one of the addresses listed below under the caption " --
Exchange agent." Any notice of withdrawal must specify the name of the person
who tendered the old notes to be withdrawn, identify the old notes to be
withdrawn, including the principal amount of the old notes, and, where
certificates for old notes have been transmitted, specify the name in which the
old notes are registered, if different from that of the withdrawing holder. If
certificates for old notes have been delivered or otherwise identified to the
exchange agent, then, prior to the release of the certificates, the withdrawing
holder must also submit the serial numbers of the particular certificates to be
withdrawn and a signed notice of withdrawal with signatures guaranteed by an
eligible guarantor institution unless the holder is an eligible guarantor
institution. If old notes have been tendered using the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at The Depository Trust Company to be credited with the
withdrawn old notes and otherwise comply with the procedures of the book-entry
transfer facility. All questions as to the validity, form and eligibility --
including time of receipt -- of these notices will be determined by us. Our
determination will be final and binding. Any old notes so
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The exchange offer
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withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the exchange offer. Any old notes which have been tendered for
exchange but which are not exchanged for any reason will be returned to the
registered holder without cost to that holder as soon as practicable after
withdrawal, non-acceptance of tender or termination of the exchange offer. In
the case of old notes tendered by book-entry transfer into the exchange agent's
account at The Depository Trust Company by using the book-entry transfer
procedures described above, any withdrawn or unaccepted old notes will be
credited to the tendering holder's account at The Depository Trust Company.
Properly withdrawn old notes may be retendered at any time on or prior to the
expiration of the exchange offer by following one of the procedures described
above under " -- Procedures for tendering old notes."
Conditions to the exchange offer
Notwithstanding any other provision of the exchange offer, we will not be
required to accept any old notes for exchange or to issue any new notes in
exchange for old notes, and we may terminate or amend the exchange offer if, at
any time before the acceptance of the old notes for exchange or the exchange of
new notes for old notes, any of the following events occurs:
.the exchange offer is determined to violate any applicable law or any
applicable interpretation of the staff of the SEC;
.an action or proceeding is pending or threatened in any court or by any
governmental agency that might materially impair our ability to proceed with
the exchange offer;
.any material adverse development occurs in any existing legal action or
proceeding involving us;
.we do not receive any governmental approval we deem necessary for the
completion of the exchange offer; or
.any of the conditions precedent to our obligations under the registration
rights agreement are not fulfilled.
These conditions are for our benefit only and we may assert them regardless of
the circumstances giving rise to any condition. We may also waive any condition
in whole or in part at any time in our sole discretion. Our failure at any time
to exercise any of the foregoing rights will not constitute a waiver of that
right and each right is an ongoing right that we may assert at any time.
In addition, we will not accept any old notes for exchange or issue any new
notes in exchange for old notes, if at the time a stop order is threatened or
in effect which relates to:
.the registration statement of which this prospectus forms a part; or
.the qualification under the Trust Indenture Act of 1939 of the indenture under
which the old notes were issued and the new notes will be issued.
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The exchange offer
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Exchange agent
We have appointed JPMorgan Chase Bank as the exchange agent for the exchange
offer. All completed letters of transmittal and agent's messages should be
directed to the exchange agent at one of the addresses listed below.
By Regular or By Facsimile: By Overnight Courier or
Certified Mail: (Eligible Guarantor Hand:
Institutions Only)
JPMorgan Chase Bank JPMorgan Chase Bank
Attention: Frank Ivins JPMorgan Chase Bank Attention: Frank Ivins
2001 Bryan Street, Attention: Frank Ivins 2001 Bryan Street, 10th
10th Floor 2001 Bryan Street, 10th Floor
Dallas, Texas 75201 Floor Dallas, Texas 75201
Dallas, Texas 75201
Fax: (214) 468-6092
To Confirm by Telephone
or for Information call:
JPMorgan Chase Bank
Attention: Frank Ivins
2001 Bryan Street, 10th Floor
Dallas, Texas 75201
Phone: (214) 468-6464
Questions and requests for assistance, requests for additional copies of this
prospectus or the letter of transmittal, agent's messages and requests for
notices of guaranteed delivery should be directed to the Company at the
following address:
US Oncology, Inc.
Attention: B. Scott Aitken
16825 Northchase Drive, Suite 1300
Houston, Texas 77060
Phone: (832) 601-6178
Fax: (832) 601-6678
Delivery of a letter of transmittal or agent's message to an address other than
the address listed above or transmission of instructions by facsimile other
than as set forth above is not valid delivery of the letter of transmittal or
agent's message.
Fees and expenses
The principal solicitation is being made by mail by JPMorgan Chase Bank, as
exchange agent. We will pay the exchange agent customary fees for its services,
reimburse the exchange agent for its reasonable out-of-pocket expenses incurred
in connection with the provision of these services and pay other registration
expenses, including fees and expenses of the trustee under the indenture
relating to the notes, filing fees, blue sky fees and printing and distribution
expenses. We will not make any payment to brokers, dealers or others soliciting
acceptances of the exchange offer.
Additional solicitation may be made by telephone, facsimile or in person by our
and our affiliates' officers and regular employees and by persons so engaged by
the exchange agent.
Transfer taxes
You will not be obligated to pay any transfer taxes in connection with the
tender of old notes in the exchange offer unless you instruct us to register
new notes in the name of, or request that old notes not tendered or not
accepted in the exchange offer be returned to, a person other than the
registered tendering holder. In those cases, you will be responsible for the
payment of any applicable transfer tax.
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The exchange offer
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Consequences of exchanging or failing to exchange old notes
If you do not exchange your old notes for new notes in the exchange offer, your
old notes will continue to be subject to the provisions of the indenture
relating to the notes regarding transfer and exchange of the old notes and the
restrictions on transfer of the old notes described in the legend on your
certificates. These transfer restrictions are required because the old notes
were issued under an exemption from, or in transactions not subject to, the
registration requirements of the Securities Act and applicable state securities
laws. In general, the old notes may not be offered or sold, unless registered
under the Securities Act, except under an exemption from, or in a transaction
not subject to, the Securities Act and applicable state securities laws. We do
not plan to register the old notes under the Securities Act. Based on
interpretations by the staff of the SEC, as set forth in no-action letters
issued to third parties, we believe that the new notes you receive in the
exchange offer may be offered for resale, resold or otherwise transferred
without compliance with the registration and prospectus delivery provisions of
the Securities Act. However, you will not be able to freely transfer the new
notes if:
.you are not acquiring the new notes in the exchange offer in the ordinary
course of your business;
.you have an arrangement or understanding with any person to participate in the
distribution of the new notes, as defined in the Securities Act, you will
receive in the exchange offer;
.you are our "affiliate," as defined in Rule 405 under the Securities Act; or
.you are a participating broker-dealer.
We do not intend to request the SEC to consider, and the SEC has not
considered, the exchange offer in the context of a similar no-action letter. As
a result, we cannot guarantee that the staff of the SEC would make a similar
determination with respect to the exchange offer as in the circumstances
described in the no-action letters discussed above. Each holder, other than a
broker-dealer, must acknowledge that it is not engaged in, and does not intend
to engage in, a distribution of new notes and has no arrangement or
understanding to participate in a distribution of new notes. If you are our
affiliate, are engaged in or intend to engage in a distribution of the new
notes or have any arrangement or understanding with respect to the distribution
of the new notes you will receive in the exchange offer, you
.may not rely on the applicable interpretations of the staff of the SEC and
.must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction involving the new
notes. If you are a participating broker-dealer, you must acknowledge that you
will deliver a prospectus in connection with any resale of the new notes. In
addition, to comply with state securities laws, you may not offer or sell the
new notes in any state unless they have been registered or qualified for sale
in that state or an exemption from registration or qualification is available
and is complied with. The offer and sale of the new notes is generally exempt
from registration or qualification under state securities laws. We do not plan
to register or qualify the sale of the new notes in any state where an
exemption from registration or qualification is required and not available.
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35
Description of other indebtedness
- --------------------------------------------------------------------------------
Revolving credit facility
Concurrently with the offering of the old notes we entered into a loan
agreement and revolving credit facility effective as of February 1, 2002. Under
the terms of the revolving credit facility, the amounts available for borrowing
until February 1, 2007 are currently $100.0 million. Proceeds of loans may be
used to provide working capital or for other general business uses.
Borrowings under the revolving credit facility are secured by capital stock of
our subsidiaries and substantially all our tangible and intangible assets. At
our option, funds may be borrowed at the alternative base rate plus an amount
determined under a defined formula or the London Interbank Offered Rate (LIBOR)
plus an amount determined under a defined formula. The alternative base rate is
the higher of (i) First Union National Bank's ("First Union") prime rate or
(ii) the overnight federal funds rate plus 1/2%. Interest on amounts
outstanding under alternative base rate loans is due quarterly while interest
on LIBOR related loans is due at the end of each applicable interest period or
quarterly, if earlier.
We are subject to restrictive covenants under the revolving credit facility,
including the maintenance of certain financial ratios. The agreement limits
certain activities such as incurrence of additional indebtedness, sales of
assets, investments, capital expenditures, mergers and consolidations and the
payment of dividends.
Master lease facility
We are currently party to a $72.0 million master operating lease relating to
our cancer centers, the amendment of which was a condition to the closing of
the offering of the old notes. Under that agreement the lessor (which is a
single-purpose entity unaffiliated with us) purchases and has title to the
properties for the cancer centers, pays for construction and development costs
and thereafter leases the cancer centers to us under an operating lease. The
initial term of the lease is for five years ending June 2004, and it may be
renewed upon approval by the lessor. Funds are advanced to the lessor by a
group of lenders and our lease payments service the lessor's debt in this
regard. We provide the lessor with substantial residual value guarantees at the
end of the lease term and have purchase options on the leased property at its
original cost.
As of December 31, 2001, advances under the master lease agreement were $72.0
million. No additional advances are available.
The synthetic lease was entered into in December 1997 and matures in June 2004.
As of December 31, 2001, we had $72.0 million outstanding under the synthetic
lease facility, and no further amounts are available under that facility. The
annual lease cost of the synthetic lease is approximately $3.1 million, based
on interest rates in effect as of December 31, 2001. At December 31, 2001, the
lessor under the synthetic lease held real estate assets (based on original
acquisition and construction costs) of approximately $59.2 million and
equipment of approximately $12.8 million (based on original acquisition costs)
at nineteen locations. On February 1, 2002, we amended and restated our
synthetic lease agreement primarily to replace certain lenders.
The lease is renewable in one-year increments, but only with consent of the
financial institutions that are parties thereto. In the event the lease is not
renewed at maturity, or is earlier terminated for various reasons, we must
either purchase the properties under the lease for the total amount outstanding
or market the properties to third parties. If we sell the properties to third
parties, we have guaranteed a residual value of at lease 85% of the total
amount outstanding for the properties. If the properties were sold to a third
party at a price such that we were required to make a residual value guarantee
payment, such amount would be recognized as an expense in our statement of
operations.
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36
Description of other indebtedness
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A synthetic lease is a form of lease financing that qualifies for operating
lease accounting treatment and under accounting principles generally accepted
in the United States ("GAAP") is not reflected on our balance sheet. Thus, the
obligations are not recorded as debt and the underlying properties and
equipment are not recorded as assets on our balance sheet. Our rental payments
(which approximate interest amounts under the synthetic lease financing) are
treated as operating rent commitments, and are excluded from our aggregate debt
maturities.
On February 27, 2002, the Financial Standards Accounting Board determined that
synthetic lease properties meeting certain criteria would be required to be
recognized as assets with a corresponding liability effective January 1, 2003.
Our synthetic lease meets these criteria. The determination is not final and is
subject to additional rule-making procedures, but assuming the determination
becomes a formal accounting pronouncement and assuming we do not alter our
arrangement to maintain off-balance-sheet treatment under the new rules, we
would expect to recognize $72.0 million in additional property and equipment
with a corresponding liability on our balance sheet as of January 1, 2003.
If we were to purchase all of the properties currently covered by the lease or
if changes in accounting rules or treatment of the lease were to require us to
reflect the properties on our balance sheet and income statement, the impact to
the consolidated financial statements would be as follows.
. Property and equipment would increase by $72.0 million (the purchase
price for the assets subject to the lease);
. Assuming the purchase of the properties were financed through borrowing,
or in the event the existing arrangement were required to be
characterized as debt, indebtedness would increase by $72.0 million; and
. Depreciation would increase by approximately $3.6 million per year as a
result of the assets being owned by us.
Acquiring the properties would require us to borrow additional funds and would
likely reduce the amount we could borrow for other purposes.
There are additional risks associated with the synthetic lease arrangement. A
deterioration in our financial condition that would cause an event of default
under the synthetic lease facility, including a default on material
indebtedness, would give the parties under the synthetic lease the right to
terminate that lease, and we would be obligated to purchase or remarket the
properties. In such an event, we may not be able to obtain sufficient financing
to purchase the properties. In addition, changes in future operating decisions
or changes in the fair market values of underlying leased properties or the
associated rentals could result in significant charges or acceleration of
charges in our statement of operations for leasehold abandonments or residual
value guarantees. Because the synthetic lease payment floats with a referenced
interest rate, we are also exposed to interest rate, we are also exposed to
interest rate risk under the synthetic lease. A 1% increase in the referenced
rate would result in an increase in lease payment of $720,000 annually.
Existing notes payable to physicians
At December 31, 2001, we had outstanding approximately $70 million in
subordinated notes and notes payable (including current portion), all of which
were issued to physicians with whom we entered long-term management service
agreements. The notes payable bear interest payable annually at rates ranging
from 5.3% to 10% and mature between 2002 and 2005. The subordinated notes were
issued in substantially the same form in several different series and bear
interest at 7% per annum due in installments through 2007, and they are
subordinated to senior bank debt and certain other debt, including the notes
being offered by this prospectus. If we fail to make payments under the
subordinated notes, the respective affiliated practices can terminate the
related service agreement.
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37
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Description of the notes
As used below in this "Description of the notes" section, the term "Notes"
means the new notes and the term "Issuer" means US Oncology, Inc., a Delaware
corporation, and its successors, but not any of its subsidiaries. The old notes
were issued and the Notes will be issued under an Indenture, dated as of
February 1, 2002 (the "Indenture"), among the Issuer, the Guarantors and JP
Morgan Chase Bank, as trustee (the "Trustee"). The terms of the Notes include
those set forth in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act. You may obtain a copy of the Indenture
from the Issuer at its address set forth elsewhere in this prospectus.
The following is a summary of the material terms and provisions of the Notes.
The following summary does not purport to be a complete description of the
Notes and is subject to the detailed provisions of, and qualified in its
entirety by reference to, the Indenture. You can find definitions of certain
terms used in this description under the heading " -- Certain definitions."
Principal, maturity and interest
The Notes will mature on February 1, 2012. The Notes will bear interest at the
rate of 9 5/8% per year, payable on February 1 and August 1 of each year,
commencing on August 1, 2002, to Holders of record at the close of business on
January 15 or July 15, as the case may be, immediately preceding the relevant
interest payment date. Interest on the Notes will be computed on the basis of a
360-day year of twelve 30-day months. During any period during which an Event
of Default shall have occurred and be continuing, default interest on the Notes
will accrue at a rate of 2% per annum in excess of the rate of interest
otherwise accruing on the Notes.
The Notes will be issued in registered form, without coupons, and in
denominations of $1,000 and integral multiples of $1,000.
An aggregate principal amount of Notes equal to $175.0 million is being offered
in exchange for the old notes. The Issuer may issue additional Notes having
identical terms and conditions to the Notes being issued in the exchange offer
(the "Additional Notes"), subject to compliance with the "Limitations on
additional indebtedness" covenant described below. Any Additional Notes will be
part of the same issue as the Notes being issued in this exchange offer and
will vote on all matters as one class with the Notes being issued in this
offering, including, without limitation, waivers, amendments, redemptions and
offers to purchase. For purposes of this "Description of the notes," except for
the covenant described under " -- Certain covenants -- Limitations on
additional indebtedness," references to the Notes include Additional Notes, if
any.
Methods of receiving payments on the notes
If a Holder holding not less than one million dollars ($1,000,000) of Notes has
given wire transfer instructions to the Issuer at least ten Business Days prior
to the applicable payment date, the Issuer will make all payments on such
Holder's Notes in accordance with those instructions. Otherwise, payments on
the Notes will be made at the office or agency of the paying agent (the "Paying
Agent") and registrar (the "Registrar") for the Notes within the City and State
of New York unless, with respect to any such other Holders, the Issuer elects
to make interest payments by check mailed to the Holders at their addresses set
forth in the register of Holders.
Subordination of notes
The payment of all Obligations on or relating to the Notes will be subordinated
in right of payment, to the extent and in the manner described in this
subsection, to the prior payment in full in cash or Cash
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Description of the notes
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Equivalents of all Obligations due in respect of Senior Debt of the Issuer,
including all Obligations with respect to the Credit Agreement, whether
outstanding on the Issue Date or incurred after that date.
The holders of Senior Debt will be entitled to receive payment in full in cash
or Cash Equivalents of all Obligations due in respect of Senior Debt before the
Holders of Notes will be entitled to receive any payment or distribution of any
kind or character with respect to any Obligations on or relating to the Notes
(other than Permitted Junior Securities) in the event of any distribution to
creditors of the Issuer:
.in a total or partial liquidation, dissolution or winding up of the Issuer;
.in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Issuer or its assets;
.in an assignment for the benefit of creditors; or
.in any marshalling of the Issuer's assets and liabilities.
In addition, the Issuer may not make any payment or distribution of any kind or
character with respect to any Obligations on or relating to the Notes or
acquire any Notes for cash or assets or otherwise (other than, in either case,
Permitted Junior Securities or from any defeasance trust created pursuant to
the Indenture), if:
.a payment default on any Senior Debt occurs and is continuing; or
.any other default occurs and is continuing on Designated Senior Debt that
permits holders of the Designated Senior Debt to accelerate its maturity and
each of the Issuer and the Trustee receives a notice of such default (a
"Payment Blockage Notice") from the Representative of any Designated Senior
Debt.
Acquisitions of the Notes may, and payments on and distributions with respect
to any Obligations on or with respect to the Notes may and shall, be resumed:
.in the case of a payment default on any Senior Debt, upon the date on which
all payment defaults are cured or waived or the Senior Debt is discharged or
paid in full; and
.in case of a nonpayment default on any Designated Senior Debt, the earliest of
(1) the date on which all such nonpayment defaults are cured or waived, (2)
179 days after the date on which the applicable Payment Blockage Notice is
received by the Trustee or (3) the date on which the Trustee receives notice
from the Representative for such Designated Senior Debt rescinding the Payment
Blockage Notice, unless, in each case, the maturity of any Designated Senior
Debt has been accelerated and such acceleration has not been rescinded or
annulled.
No new Payment Blockage Notice may be delivered unless and until 360 days have
elapsed since the effectiveness of the immediately prior Payment Blockage
Notice.
No nonpayment default that existed or was continuing on the date of delivery of
any Payment Blockage Notice to the Trustee shall be, or be made, the basis for
a subsequent Payment Blockage Notice unless such default shall have been cured
or waived for a period of not less than 90 consecutive days. Any subsequent
action or any breach of any financial covenants for a period ending after the
date of delivery of the initial Payment Blockage Notice that in either case
would give rise to a default pursuant to any provisions under which a default
previously existed or was continuing will constitute a new default for this
purpose and will permit a new Payment Blockage Notice.
Notwithstanding anything to the contrary, payments and distributions made from
the trust established pursuant to the provisions described under " -- Legal
defeasance and covenant defeasance" will be permitted and will not be
subordinated so long as the payments into the trust were made in accordance
with the requirements described under " -- Legal defeasance and covenant
defeasance" and did not violate the subordination provisions when they were
made.
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Description of the notes
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The Issuer must promptly notify holders of Senior Debt if payment of the Notes
is accelerated because of an Event of Default (as defined under " -- Events of
default").
As a result of the subordination provisions described above in the event of a
bankruptcy, liquidation or reorganization of the Issuer, Holders of the Notes
may recover less ratably than creditors of the Issuer who are holders of Senior
Debt. See "Risk factors -- Risks related to the new notes -- The notes and the
guarantees are subordinated obligations."
As of December 31, 2001, assuming the offering of the old notes and related
transactions had occurred on that date, the Issuer and the Guarantors would
have had without duplication approximately $5.4 million aggregate principal
amount of Senior Debt and Guarantor Senior Debt outstanding. The Issuer
currently has $100.0 million of undrawn borrowings available under the Credit
Agreement.
Subordination of guarantees
Each guarantee will be subordinated to Guarantor Senior Debt on the same basis
as the Notes are subordinated to Senior Debt.
Note guarantees
The Issuer's obligations under the Notes and the Indenture will be jointly and
severally guaranteed (the "Note Guarantees") by each Restricted Subsidiary as
of the Issue Date.
Subsidiaries that are joint ventures with hospitals in Aurora, Colorado;
Austin, Texas; Beaumont, Texas; Eugene, Oregon and Kirksville, Missouri with
respect to cancer centers in those markets will be designated as Unrestricted
Subsidiaries on the Issue Date. Since the Issuer holds all of its assets and
conducts all of its operations through subsidiaries and since the subsidiaries
that will not be Guarantors are a minor component of the consolidated company,
no separate financial statements or information have been included for the
Guarantors. Any Unrestricted Subsidiaries will not be Guarantors and Foreign
Subsidiaries formed or acquired after the Issue Date will not be required to be
Guarantors. In the event of a bankruptcy, liquidation or reorganization of any
non-guarantor Subsidiaries, those non-guarantor Subsidiaries will pay the
holders of their debts and their trade creditors before they will be able to
distribute any of their assets to the Issuer.
As of the date of the Indenture, all of our Subsidiaries except those
designated as Unrestricted Subsidiaries as described above will be "Restricted
Subsidiaries" and "Guarantors." However, under the circumstances described
below under the subheading " -- Certain covenants -- Limitations on Designation
of Unrestricted Subsidiaries," the Issuer will be permitted to designate some
of its Subsidiaries as "Unrestricted Subsidiaries." The effect of designating a
Subsidiary as an "Unrestricted Subsidiary" will be:
.an Unrestricted Subsidiary will not be subject to many of the restrictive
covenants in the Indenture;
.a Subsidiary that has previously been a Guarantor and that is designated an
Unrestricted Subsidiary will be released from its Note Guarantee; and
.the assets, income, cash flow and other financial results of an Unrestricted
Subsidiary will not be consolidated with those of the Issuer for purposes of
calculating compliance with the restrictive covenants contained in the
Indenture except to the extent of the amount of dividends or other
distributions actually paid to the Issuer or any of the Restricted
Subsidiaries in cash by such Unrestricted Subsidiary.
The obligations of each Guarantor under its Note Guarantee will be limited to
the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Subsidiary Guarantor (including, without limitation,
any guarantees under the Credit Agreement permitted under clause (1) of " --
Certain covenants -- Limitations on Additional Indebtedness") and after giving
effect to any collections from or payments made by or on behalf of any other
Subsidiary Guarantor in respect of the
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40
Description of the notes
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obligations of such other Subsidiary Guarantor under its Note Guarantee or
pursuant to its contribution obligations under the Indenture, result in the
obligations of such Subsidiary Guarantor under its Note Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. Each Subsidiary Guarantor that makes a payment for distribution
under its Note Guarantee is entitled to a contribution from each other
Subsidiary Guarantor in a pro rata amount based on adjusted net assets of each
Guarantor.
In the event of a sale or other disposition of all of the assets of any
Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a sale
or other disposition of all of the Equity Interests of any Guarantor then held
by the Issuer and the Restricted Subsidiaries, then that Guarantor will
automatically be released and relieved of any obligations under its Note
Guarantee and any obligations related thereto; provided that the Net Available
Proceeds of such sale or other disposition are applied in accordance with the
applicable provisions of the Indenture, to the extent required thereby. See
" -- Certain covenants -- Limitations on Asset Sales." In addition, the
Indenture provides that any Subsidiary Guarantor that is designated as an
Unrestricted Subsidiary or that otherwise ceases to be a Restricted Subsidiary,
in each case in accordance with the provisions of the Indenture, will be
automatically released from its Note Guarantee upon effectiveness of such
designation or when it first ceases to be a Restricted Subsidiary, as the case
may be.
Optional redemption
Except as set forth below, the Notes may not be redeemed prior to February 1,
2007. Thereafter, the Issuer, at its option, may redeem the Notes, in whole or
in part, at any time or from time to time at the redemption prices (expressed
as percentages of principal amount) set forth below, together with accrued and
unpaid interest thereon, and Additional Interest, if any, to the redemption
date, if redeemed during the 12-month period commencing on February 1 of the
years indicated:
Optional
Redemption
Year Price
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2007................................................................. 104.813%
2008................................................................. 103.208%
2009................................................................. 101.604%
2010 and thereafter.................................................. 100.000%
Redemption with Proceeds from Equity Offerings
At any time on or prior to February 1, 2005, the Issuer may redeem in the
aggregate up to 35% of the aggregate principal amount of the Notes issued under
the Indenture with the net cash proceeds of one or more Qualified Equity
Offerings at a redemption price equal to 109.625% of the principal amount of
the Notes to be redeemed, plus accrued and unpaid interest thereon, if any, to
the date of redemption; provided that (1) at least 65% of the aggregate
principal amount of Notes issued under the Indenture remains outstanding
immediately after the occurrence of any such redemption and (2) the applicable
redemption occurs within 90 days of the initial receipt of the proceeds in
immediately available funds of any such Qualified Equity Offering.
Redemption upon a Change of Control
At any time on or prior to February 1, 2007, the Notes may also be redeemed, in
whole but not in part, at the option of the Issuer upon the occurrence of a
Change of Control, notice of which is sent no later than 30 days after the
occurrence of such Change of Control by notice mailed by first-class mail to
each Holder's registered address, at a redemption price equal to 100% of the
principal amount thereof plus the Applicable Premium as of, and accrued but
unpaid interest, if any, to, the date of redemption (the "Change of Control
Redemption Date").
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41
Description of the notes
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"Applicable Premium" means, with respect to a Note at any Change of Control
Redemption Date, the greater of:
(1) 1.0% of the principal amount of such Note; or
(2) the excess of
(a)the present value at such time of:
(x)the redemption price of such Note at February 1, 2007 (such
redemption price being described under " -- Optional redemption"),
plus
(y)all required interest payments (excluding accrued but unpaid
interest) due on such Note through February 1, 2007,
computed using a discount rate equal to the Treasury Rate plus 25 basis
points, over
(b)the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the Change of Control Redemption
Date of United States Treasury securities with a constant maturity (as compiled
and published in the most recent Federal Reserve Statistical Release H.15(519)
which has become publicly available at least two Business Days prior to the
Change of Control Redemption Date (or, if such Statistical Release is no longer
published, any publicly available source or similar market data)) most nearly
equal to the period from the Change of Control Redemption Date to February 1,
2007, provided, however, that if the period from the Change of Control
Redemption Date to February 1, 2007 is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
Treasury securities for which such yields are given, except that if the period
from the Change of Control Redemption Date to February 1, 2007 is less than one
year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
Selection and notice of redemption
In the event that less than all of the Notes are to be redeemed at any time
pursuant to an optional redemption, selection of the Notes for redemption will
be made by the Trustee in compliance with the requirements of the principal
national securities exchange, if any, on which the Notes are listed or, if the
Notes are not then listed on a national security exchange, on a pro rata basis,
by lot or by such method as the Trustee shall deem fair and appropriate;
provided, however, that no Notes of a principal amount of $1,000 or less shall
be redeemed in part. In addition, if a partial redemption is made pursuant to
the provisions described in the second paragraph under " -- Optional redemption
- -- redemption with proceeds from equity offerings," selection of the Notes or
portions thereof for redemption shall be made by the Trustee only on a pro rata
basis or on as nearly a pro rata basis as is practicable (subject to the
procedures of The Depository Trust Company), unless that method is otherwise
prohibited.
Notice of redemption will be mailed by first-class mail at least 30 but not
more than 60 days before the date of redemption to each Holder of Notes to be
redeemed at its address as it appears in the register. If any Note is to be
redeemed in part only, the notice of redemption that relates to that Note will
state the portion of the principal amount of the Note to be redeemed. A new
Note in a principal amount equal to the unredeemed portion of the Note will be
issued in the name of the Holder of the Note upon cancellation of the original
Note. On and after the date of redemption, interest will cease to accrue on
Notes or portions thereof called for redemption so long as and to the extent
the Issuer has deposited with the paying agent for the Notes funds in
satisfaction of the redemption price (including accrued and unpaid interest on
the Notes to be redeemed) pursuant to the Indenture.
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Description of the notes
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Change of control
Upon the occurrence of any Change of Control unless the Issuer has exercised
its option to redeem the Notes in accordance with the requirements described
under " -- Optional redemption -- Redemption upon a change of control," each
Holder will have the right to require that the Issuer purchase that Holder's
Notes for a cash price (the "Change of Control Purchase Price") equal to 101%
of the principal amount of the Notes to be purchased, plus accrued and unpaid
interest thereon, if any, to the date of purchase.
Within 30 days following any Change of Control, the Issuer will mail, or caused
to be mailed, to the Holders a notice:
(1) describing the transaction or transactions that constitute the Change of
Control;
(2) offering to purchase, pursuant to the procedures required by the Indenture
and described in the notice (a "Change of Control Offer"), on a date
specified in the notice (which shall be a Business Day not earlier than 30
days nor later than 60 days from the date the notice is mailed) and for the
Change of Control Purchase Price, all Notes properly tendered by such
Holder pursuant to such Change of Control Offer; and
(3) describing the procedures that Holders must follow to accept the Change of
Control Offer. The Change of Control Offer is required to remain open for
at least 20 Business Days or for such longer period as is required by law.
The Issuer will publicly announce the results of the Change of Control Offer on
or as soon as practicable after the date of purchase.
The agreements governing the Issuer's outstanding Senior Debt currently
prohibit it from purchasing any Notes, and also provide that some change of
control events with respect to the Issuer would constitute a default under
these agreements. Any future credit agreements or other agreements relating to
Senior Debt to which the Issuer becomes a party may contain similar
restrictions and provisions. In the event a Change of Control occurs at a time
when the Issuer is prohibited from purchasing Notes, the Issuer could seek the
consent of our senior lenders to the purchase of Notes or could attempt to
refinance the borrowings that contain the prohibition. If the Issuer does not
obtain a consent or repay the borrowings, the Issuer will remain prohibited
from purchasing Notes. In that case, the Issuer's failure to purchase tendered
Notes would constitute an Event of Default under the Indenture which, in turn,
would now and would likely in the future constitute a default under the Senior
Debt. In these circumstances, the subordination provisions in the Indenture
would likely restrict payments to the Holders of Notes.
The provisions described above that require the Issuer to make a Change of
Control Offer following a Change of Control will be applicable regardless of
whether any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the Holders of the Notes to require that the
Issuer purchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
The Issuer's obligation to make a Change of Control Offer will be satisfied if
a third party makes the Change of Control Offer in the manner and at the times
and otherwise in compliance in all material respects with the requirements
applicable to a Change of Control Offer made by the Issuer and purchases all
Notes properly tendered and not withdrawn under the Change of Control Offer.
With respect to any disposition of assets, the phrase "all or substantially
all" as used in the Indenture (including as set forth under " -- Certain
covenants -- Limitations on Mergers, Consolidations, etc." below) varies
according to the facts and circumstances of the subject transaction, has no
clearly
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Description of the notes
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established meaning under New York law (which governs the Indenture) and is
subject to judicial interpretation. Accordingly, in certain circumstances there
may be a degree of uncertainty in ascertaining whether a particular transaction
would involve a disposition of "all or substantially all" of the assets of the
Issuer, and therefore it may be unclear as to whether a Change of Control has
occurred and whether the Holders have the right to require the Issuer to
purchase Notes.
The Issuer will comply with applicable tender offer rules, including the
requirements of Rule 14e-l under the Exchange Act and any other applicable laws
and regulations in connection with the purchase of Notes pursuant to a Change
of Control Offer. To the extent that the provisions of any securities laws or
regulations conflict with the "Change of Control" provisions of the Indenture,
the Issuer shall comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under the "Change of
Control" provisions of the Indenture by virtue of such compliance.
The Issuer may at any time and from time to time acquire Notes by means other
than a redemption, whether pursuant to an issuer tender offer, open market
purchase or otherwise, so long as the acquisition does not otherwise violate
the terms of any covenant in the Indenture including those described in " --
Certain covenants" (or any of our other material agreements).
Certain covenants
The Indenture will contain, among others, the following covenants:
Limitations on Additional Indebtedness
The Issuer will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, incur any Indebtedness; provided that the Issuer, any Guarantor
or any Accounts Receivable Entity may incur additional Indebtedness if, after
giving effect thereto, the Consolidated Interest Coverage Ratio would be at
least 2.25 to 1.00 (the "Coverage Ratio Exception").
Notwithstanding the above, each of the following shall be permitted (the
"Permitted Indebtedness"):
(1) Indebtedness of the Issuer or any Guarantor under the Credit Agreement,
any synthetic lease financing and/or any Permitted Receivables Financings
(including permitted refinancings thereof pursuant to clause (11) of this
paragraph) in an aggregate amount at any time outstanding not to exceed
the greater of (x) $175.0 million less the aggregate amount of Net
Available Proceeds applied to repayments of term loans under the Credit
Agreement in accordance with the covenant described under " -- Limitations
on assets sales" or (y) 70% of the net book value of the accounts
receivable of the Issuer and the Restricted Subsidiaries including those
receivables transferred, sold or assigned pursuant to a Permitted
Receivables Financing;
(2) Indebtedness of the Issuer, any Restricted Subsidiary or any Accounts
Receivable Entity represented by Permitted Receivables Financings in an
amount not to exceed the greater of (x) $100 million or (y) the net book
value of the receivables of the Issuer, the Restricted Subsidiaries or
Accounts Receivable Entities sold, transferred or securing such
Indebtedness;
(3) the Notes and the Note Guarantees issued on the Issue Date;
(4) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent
outstanding on the Issue Date (other than Indebtedness referred to in
clauses (1) and (3) above, and after giving effect to the use of proceeds
of the old notes);
(5) Indebtedness under Hedging Obligations; provided that (a) such Hedging
Obligations relate to payment obligations on Indebtedness otherwise
permitted to be incurred by this covenant, and (b) the notional principal
amount of such Hedging Obligations at the time incurred does not exceed
105% of the principal amount of the Indebtedness to which such Hedging
Obligations relate;
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Description of the notes
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(6) Indebtedness of the Issuer owed to a Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary owed to the Issuer or any other
Restricted Subsidiary; provided, however, that upon any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness
being owed to any Person other than the Issuer or a Restricted Subsidiary,
the Issuer or such Restricted Subsidiary, as applicable, shall be deemed
to have incurred Indebtedness not permitted by this clause (6);
(7) Indebtedness in respect of bid, performance or surety bonds issued for the
account of the Issuer or any Restricted Subsidiary in the ordinary course
of business or any appeal bonds issued for the account of the Issuer or
any Restricted Subsidiary, including guarantees or obligations of the
Issuer or any Restricted Subsidiary with respect to letters of credit
supporting such bid, performance or surety obligations (in each case other
than for an obligation for money borrowed), and Indebtedness evidenced by
letters of credit issued in the ordinary course of business of the Issuer
to secure workers' compensation and other insurance coverage;
(8) Purchase Money Indebtedness incurred by the Issuer or any Restricted
Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount
not to exceed at any time outstanding $50.0 million;
(9) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except
in the case of daylight overdrafts) drawn against insufficient funds in
the ordinary course of business; provided, however, that such Indebtedness
is extinguished within five Business Days of incurrence;
(10) Indebtedness arising in connection with endorsement of instruments for
deposit in the ordinary course of business;
(11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to
the Coverage Ratio Exception or clause (1) (with respect to Permitted
Receivable Financings and any synthetic lease financing only), (2), (3) or
(4) above or this clause (11);
(12) any guarantee by the Issuer or any Guarantor of Indebtedness under any of
the foregoing clauses (1) through (11) above or (13) below; and
(13) other Indebtedness of the Issuer or any Restricted Subsidiary in an
aggregate amount not to exceed $25.0 million at any time outstanding.
For purposes of determining compliance with this covenant, in the event that an
item of Indebtedness meets the criteria of more than one of the categories of
Permitted Indebtedness described in clauses (1) through (13) above or is
entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer
shall, in its sole discretion on the date of its incurrence and from time to
time, classify such item of Indebtedness and may divide and classify such
Indebtedness in more than one of the types of Indebtedness described, except
that Indebtedness incurred under the Credit Agreement on the Issue Date shall
be deemed to have been incurred under clause (1) above.
Limitations on Layering Indebtedness
The Issuer will not, and will not permit any Guarantor to, directly or
indirectly, incur or suffer to exist any Indebtedness that is or purports to be
by its terms (or by the terms of any agreement governing such Indebtedness)
senior to the Notes or the Note Guarantee of such Guarantor, as the case may
be, and subordinated to any other Indebtedness of the Issuer or of such
Guarantor, as the case may be.
Limitations on Restricted Payments
The Issuer will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, make any Restricted Payment if at the time of such Restricted
Payment:
(1) a Default shall have occurred and be continuing or shall occur as a
consequence thereof;
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Description of the notes
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(2) the Issuer cannot incur $1.00 of additional Indebtedness pursuant to the
Coverage Ratio Exception; or
(3) the amount of such Restricted Payment, when added to the aggregate amount
of all other Restricted Payments made after the Issue Date (other than
Restricted Payments made pursuant to clause (2), (3), (5) or (9) of the
next paragraph), exceeds the sum (the "Restricted Payments Basket") of
(without duplication):
(a) 50% of Consolidated Net Income for the period (taken as one accounting
period) commencing on the first day of the first full fiscal quarter
commencing after the Issue Date to and including the last day of the
fiscal quarter ended immediately prior to the date of such calculation
for which consolidated financial statements are available (or, if such
Consolidated Net Income shall be a deficit, minus 100% of such
aggregate deficit), plus
(b) 100% of the aggregate net cash proceeds received by the Issuer either
(x) as contributions to the common equity of the Issuer after the Issue
Date or (y) from the issuance and sale of Qualified Equity Interests
after the Issue Date (including any net cash proceeds received in
connection with any conversion or exchange of Indebtedness of the
Issuer or any Restricted Subsidiary or Disqualified Equity Interests of
the Issuer), other than any such proceeds which are used to redeem
Notes in accordance with the second paragraph under " -- Optional
redemption -- Redemption with proceeds from equity offerings," plus
(c) the aggregate amount by which Indebtedness (other than any Subordinated
Indebtedness) of the Issuer or any Restricted Subsidiary is reduced on
the Issuer's balance sheet upon the conversion or exchange (other than
by a Subsidiary of the Issuer) subsequent to the Issue Date into
Qualified Equity Interests (less the amount of any cash, or the fair
value of assets, distributed by the Issuer or any Restricted Subsidiary
upon such conversion or exchange), plus
(d) in the case of the disposition or repayment of or return on any
Investment that was treated as a Restricted Payment made after the
Issue Date, an amount (to the extent not included in the computation of
Consolidated Net Income) equal to the lesser of (i) the return of
capital (including dividends, interest and distributions of a type not
included in Consolidated Net Income of the Issuer and profits on sale)
with respect to such Investment and (ii) the amount of such Investment
that was treated as a Restricted Payment, in either case, less the cost
of the disposition of such Investment, if any, and net of taxes, plus
(e) upon a Redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary, the lesser of (i) the Fair Market Value of the Issuer's
proportionate interest in such Subsidiary immediately following such
Redesignation, and (ii) the aggregate amount of the Issuer's
Investments (other than Permitted Investments) in such Subsidiary to
the extent such Investments reduced the amount available for subsequent
Restricted Payments under this clause (3) and were not previously
repaid or otherwise reduced in a manner that increased the Restricted
Payment Basket.
The foregoing provisions will not prohibit:
(1) the payment by the Issuer or any Restricted Subsidiary of any dividend
within 60 days after the date of declaration thereof, if on the date of
declaration the payment would have complied with the provisions of the
Indenture (and such payment shall be deemed to have been paid on such date
of declaration for purposes of any calculation required in clause (3) of
the immediately preceding paragraph);
(2) the purchase, redemption or other acquisition or retirement of any Equity
Interests of the Issuer or any Restricted Subsidiary in exchange for, or
out of the proceeds of the substantially concurrent issuance and sale of,
Qualified Equity Interests;
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Description of the notes
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(3) the purchase, redemption, repayment, defeasance or other acquisition of
Subordinated Indebtedness of the Issuer or any Restricted Subsidiary (a) in
exchange for, or out of the proceeds of the substantially concurrent
issuance and sale of, Qualified Equity Interests or (b) in exchange for, or
out of the proceeds of the substantially concurrent incurrence of,
Refinancing Indebtedness permitted to be incurred under the "Limitations on
additional indebtedness" covenant and the other terms of the Indenture;
(4) the purchase, redemption or retirement of Equity Interests of the Issuer
held by officers, directors or employees or former officers, directors or
employees of the Issuer or any of its Restricted Subsidiaries (or their
transferees, estates or beneficiaries under their estates), upon or after
their death, disability, retirement, severance or termination of employment
or service; provided that the aggregate cash consideration paid for all
such redemptions shall not exceed $3.0 million during any calendar year
(with unused amounts in any calendar year being usable, without
duplication, in subsequent calendar years);
(5) repurchases, acquisitions or retirements of Equity Interests deemed to
occur upon, or intended to be used to satisfy issuances of Equity Interests
upon, the exercise of stock options or similar rights issued under employee
benefit plans;
(6) acquisitions or retirements of Equity Interests of the Issuer with a Fair
Market Value at the time of acquisition or retirement, as the case may be,
in the aggregate not to exceed $15.0 million received as consideration with
respect to a sale of assets to any physician practice in connection with
the termination of a Management Services Agreement in effect on the Issue
Date;
(7) the redemption or repurchase of common stock of the Issuer from holders
thereof who beneficially own in the aggregate less than one percent (1%) of
the outstanding common stock (other than officers, directors or employees
of the Issuer or any of its Restricted Subsidiaries whose Equity Interests
are redeemed or repurchased in accordance with clause (4) of this
paragraph) within two years from the Issue Date so long as the aggregate
amount of payments for all such redemptions or repurchases under this
clause (7) does not exceed $1.0 million;
(8) the purchase, defeasance or other acquisition or retirement for value of
any Subordinated Indebtedness upon a Change of Control of the Issuer, to
the extent required by any agreement pursuant to which such Subordinated
Indebtedness was issued, but only if the Issuer has complied with the
provisions described under "Change of control" or at its option under
"Optional redemption -- Redemption upon a change of control"; and
(9) additional Restricted Payments not exceed $35.0 million in the aggregate.
provided that (a) in the case of any Restricted Payment pursuant to clause (3),
(6), (7), (8) or (9) above, no Default shall have occurred and be continuing or
occur as a consequence thereof and (b) no issuance and sale of Qualified Equity
Interests pursuant to clause (2) or (3) above shall increase the Restricted
Payments Basket in clause (3) of the first paragraph of this covenant.
For purposes of determining compliance with the provisions of this covenant, in
the event that any payment or other action meets the criteria of more than one
of the categories of Permitted Investments and/or Restricted Payments permitted
by the Indenture, the Issuer, in its sole discretion, may order and classify
all or any portion of such Permitted Investments and/or Restricted Payments on
the date of their incurrence in any manner that then complies with the
Indenture and/or from time to time may reorder and reclassify all or any
portion of any item of Permitted Investments and/or Restricted Payments in any
manner that complies with the Indenture at the date of any such reordering or
reclassification and, in each case, the Issuer shall be entitled, at its
option, to divide and classify or reclassify any item of Permitted Investments
and/or Restricted Payments in more than one of the types of Permitted
Investments and/or Restricted Payments permitted under the Indenture in any
manner that complies with the Indenture at the time of such division and
classification or reclassification.
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Limitations on Dividend and Other Restrictions Affecting Restricted
Subsidiaries
The Issuer will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or consensual restriction on the ability
of any Restricted Subsidiary to:
(a) pay dividends or make any other distributions on or in respect of its
Equity Interests to the Issuer or any of its Restricted Subsidiaries;
(b) make loans or advances to or pay any Indebtedness or other obligation owed
to the Issuer or any other Restricted Subsidiary; or
(c) transfer any of its assets to the Issuer or any other Restricted
Subsidiary;
except for:
(1) encumbrances or restrictions existing under or by reason of applicable
law;
(2) encumbrances or restrictions existing under the Indenture, the Notes
and the Note Guarantees;
(3) non-assignment provisions of any contract, lease or license entered
into in the ordinary course of business or of any Capitalized Lease
Obligation;
(4) encumbrances or restrictions existing under agreements existing on the
date of the Indenture (including, without limitation, the Credit
Agreement) as in effect on that date;
(5) restrictions on the transfer of assets subject to any Lien permitted
under the Indenture imposed by the holder of such Lien (including
those imposed by purchasers in connection with any Permitted
Receivables Financings) or the exercise of or right to exercise,
customary remedies with respect to such assets;
(6) restrictions on the transfer of capital stock or other assets imposed
under any agreement to sell or otherwise dispose of such assets
permitted under the Indenture to any Person pending the closing of
such sale;
(7) any encumbrance or restrictions under any instrument governing
Acquired Indebtedness, which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person,
other than the Person or the properties or assets of the Person so
acquired;
(8) any other agreement governing Indebtedness entered into after the
Issue Date that contains encumbrances and restrictions that are not,
in the good faith judgment of the Board of Directors, materially more
restrictive with respect to any Restricted Subsidiary than those in
effect on the Issue Date with respect to that Restricted Subsidiary
pursuant to agreements in effect on the Issue Date;
(9) customary provisions in partnership agreements, limited liability
company organizational governance documents, joint venture agreements
and other similar agreements entered into in the course of healthcare-
related businesses that restrict the transfer of ownership interests
in or assets of such partnership, limited liability company, joint
venture or similar Person;
(10) Purchase Money Indebtedness incurred in compliance with the covenant
described under
" -- Limitations on additional indebtedness" that imposes restrictions
of the nature described in clause (c) above on the assets acquired;
(11) any encumbrance or restrictions under any instrument governing
Indebtedness of a Restricted Subsidiary that is a Foreign Subsidiary,
which encumbrance or restriction is not applicable to any Persons, or
the properties or assets of any Persons, other than Restricted
Subsidiaries that are Foreign Subsidiaries;
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(12) any agreement, instrument or Lien placing encumbrances or restrictions
applicable only to an Accounts Receivable Entity; and
(13) any encumbrances or restrictions imposed by any amendments,
extensions, renewals, increases, refinancings, refundings,
replacements or substitutions of the contracts, instruments or
obligations referred to in clauses (1) through (12) above; provided
that any such amendment, extension, renewal, increase, refinancing,
refunding, replacement or substitution is, in the good faith judgment
of the Issuer's Board of Directors, no more materially restrictive,
taken as a whole, with respect to such encumbrances and restrictions
than those prior to such amendment, extension, renewal, increase,
refinancing, refunding, replacement or substitution.
Limitations on Transactions with Affiliates
The Issuer will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, in one transaction or a series of related transactions, sell,
lease, transfer or otherwise dispose of any of its assets to, or purchase any
assets from, or enter into any contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (an "Affiliate
Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable to the
Issuer or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction at such time on an arm's-length
basis by the Issuer or such Restricted Subsidiary from a Person that is not
an Affiliate of the Issuer or such Restricted Subsidiary; and
(2) the Issuer delivers to the Trustee:
(a) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $10.0 million, an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (1)
above and a Secretary's Certificate which sets forth and authenticates
a resolution that has been adopted by the Independent Directors
approving such Affiliate Transaction; and
(b) with respect to any Affiliate Transaction involving aggregate
consideration of $25.0 million or more, the certificates described in
the preceding clause (a) and a written opinion as to the fairness of
such Affiliate Transaction to the Issuer or such Restricted Subsidiary
from a financial point of view issued by an Independent Financial
Advisor.
The foregoing restrictions shall not apply to:
(1) transactions exclusively between or among (a) the Issuer and one or more
Restricted Subsidiaries or (b) Restricted Subsidiaries; provided, in each
case, that no Affiliate of the Issuer (other than another Restricted
Subsidiary) owns Equity Interests of any such Restricted Subsidiary;
(2) employment contracts, "know-how" agreements, compensation (including stay-
on and incentive bonus) arrangements and loans to officers and employees,
in each case in the form existing on the Issue Date or representing one or
more amendments, modifications, restatements, supplements, extensions,
renewals, refinancings, refunds or replacements thereof on terms not
materially less favorable to the Issuer or Restricted Subsidiary, as
applicable, than those contained in such contracts, agreements,
arrangements or loans in the form existing as of the Issue Date;
(3) indemnities of officers, directors and employees of the Issuer or any of
its Subsidiaries permitted by its certificate of incorporation, bylaws or
statutory provisions;
(4) other director, officer and employee compensation (including bonuses) and
other benefits (including retirement, health, stock option and other
incentive or benefit plans) and indemnification arrangements, in each case
approved by the Independent Directors;
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Description of the notes
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(5) the entering into of a tax sharing agreement, or payments pursuant
thereto, between the Issuer and/or one or more Subsidiaries, on the one
hand, and any other Person with which the Issuer or such Subsidiaries are
required or permitted to file a consolidated tax return or with which the
Issuer or such Subsidiaries are part of a consolidated group for tax
purposes, on the other hand, which payments by the Issuer and the
Restricted Subsidiaries are not in excess of the tax liabilities that
would have been payable by them on a stand-alone basis;
(6) loans and advances permitted by clause (3) of the definition of "Permitted
Investments";
(7) Restricted Payments of the type described in clause (1), (2), (3) or (4)
of the definition of "Restricted Payment" and which are made in accordance
with the covenant described under
" -- Limitations on restricted payments";
(8) any transaction with an Affiliate where the only consideration paid by the
Issuer or any Restricted Subsidiary is Qualified Equity Interests;
(9) any other issuance or sale of Qualified Equity Interests;
(10) transactions in connection with Permitted Receivables Financings; or
(11) any agreement as disclosed in the Prospectus as in effect on the Issue
Date or any extensions or renewals thereof.
Limitations on Liens
The Issuer shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create, incur, assume or permit or suffer to exist any
Lien of any nature whatsoever against (other than Permitted Liens) any assets
of the Issuer or any Guarantor (including Equity Interests of a Restricted
Subsidiary), whether owned at the Issue Date or thereafter acquired, or any
proceeds therefrom, or assign or otherwise convey any right to receive income
or profits therefrom, unless contemporaneously therewith either:
(1) in the case of any Lien securing an obligation that ranks pari passu with
the Notes or a Note Guarantee, effective provision is made to secure the
Notes or such Note Guarantee, as the case may be, at least equally and
ratably with or prior to such obligation with a Lien on the same
collateral; and
(2) in the case of any Lien securing an obligation that is subordinated in
right of payment to the Notes or a Note Guarantee, effective provision is
made to secure the Notes or such Note Guarantee, as the case may be, with a
Lien on the same collateral that is prior to the Lien securing such
subordinated obligation,
in each case, for so long as such obligation is secured by such Lien.
Limitations on Asset Sales
The Issuer will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, consummate any Asset Sale unless:
(1) the Issuer or such Restricted Subsidiary receives consideration at the time
of such Asset Sale at least equal to the Fair Market Value of the assets
included in such Asset Sale provided, however, that with respect to PPM
Asset Sales, the Issuer receives consideration at the time of such PPM
Asset Sale at least equal to the lesser of (i) the Fair Market Value of
such assets or (ii) the net book value of such assets excluding any write
downs or reductions in net book value after December 31, 2001 other than as
a result of normal course depreciation and amortization or casualty or
destruction; and
(2) at least 75% of the total consideration received in such Asset Sale or
series of related Asset Sales consists of cash or Cash Equivalents.
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Description of the notes
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For purposes of clause (2), the following shall be deemed to be cash:
(a) the amount (without duplication) of any Indebtedness of the Issuer or such
Restricted Subsidiary that is expressly assumed by the transferee in such
Asset Sale and with respect to which the Issuer or such Restricted
Subsidiary, as the case may be, is released by the holder of such
Indebtedness,
(b) the amount of any obligations received from such transferee that is to be
paid to the Issuer or such Restricted Subsidiary in cash within 30 days,
(c) the Fair Market Value of any assets (other than securities) received by
the Issuer or any Restricted Subsidiary to be used by it in the Permitted
Business, and
(d) with respect to the sale of assets to any physician practice in connection
with the termination of a Management Services Agreement as in effect on
the Issue Date, (x) the face amount of any Indebtedness of the Issuer
cancelled or retired as consideration to the Issuer or a Restricted
Subsidiary in any such sale and (y) Equity Interests of the Issuer with a
Fair Market Value at the time of the applicable sale not to exceed $15.0
million in the aggregate.
If at any time any non-cash consideration received by the Issuer or any
Restricted Subsidiary of the Issuer, as the case may be, in connection with
any Asset Sale is repaid or converted into or sold or otherwise disposed of
for cash (other than interest received with respect to any such non-cash
consideration), then the date of such repayment, conversion or disposition
shall be deemed to constitute the date of consummation of an Asset Sale
hereunder and the Net Available Proceeds thereof shall be applied in
accordance with this covenant.
If the Issuer or any Restricted Subsidiary engages in an Asset Sale, the
Issuer or such Restricted Subsidiary shall be permitted, no later than 180
days following the consummation thereof, to apply all or any of the Net
Available Proceeds therefrom to:
(1) repay any Senior Debt or Guarantor Senior Debt (without any permanent
reduction in any contract related thereto except as required in clause (1)
of the second paragraph under
" -- Limitations on additional indebtedness") or Indebtedness of a
Restricted Subsidiary that is a Foreign Subsidiary; and/or
(2) invest all or any part of the Net Available Proceeds thereof in the
purchase of assets (other than securities) to be used by the Issuer or any
Restricted Subsidiary in the Permitted Business; and
(3) with respect to the Net Available Proceeds from PPM Asset Sales, up to
$75.0 million prior to February 1, 2005 can be used by the Issuer or any
Restricted Subsidiary for working capital needs and other general
corporate purposes.
The amount of Net Available Proceeds not applied or invested as provided in
this paragraph will constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds equals or exceeds $10.0 million,
the Issuer will be required to make an offer to purchase from all Holders and,
if applicable, redeem (or make an offer to do so) any Pari Passu Indebtedness
the provisions of which require the Issuer or a Guarantor to redeem such
Indebtedness with the proceeds from any Asset Sales (or offer to do so), in an
aggregate principal amount of Notes and such Pari Passu Indebtedness equal to
the amount of such Excess Proceeds as follows:
(1) the Issuer will (a) make an offer to purchase (a "Net Proceeds Offer") to
all Holders in accordance with the procedures set forth in the Indenture,
and (b) purchase, redeem or prepay (or make an offer to do so) any such
other Pari Passu Indebtedness, pro rata in proportion to the respective
principal amounts of the Notes and such other Indebtedness required to be
purchased, redeemed or prepaid, the maximum principal amount of Notes and
Pari Passu Indebtedness that may be
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Description of the notes
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purchased, redeemed or prepaid out of the amount (the "Payment Amount") of
such Excess Proceeds;
(2) the offer price for the Notes will be payable in cash in an amount equal to
100% of the principal amount of the Notes tendered pursuant to a Net
Proceeds Offer, plus accrued and unpaid interest thereon, if any, to the
date such Net Proceeds Offer is consummated (the "Offered Price"), in
accordance with the procedures set forth in the Indenture and the
redemption price for such Pari Passu Indebtedness (the "Pari Passu
Indebtedness Price") shall be as set forth in the related documentation
governing such Indebtedness;
(3) if the aggregate Offered Price of Notes validly tendered and not withdrawn
by Holders thereof exceeds the pro rata portion of the Payment Amount
allocable to the Notes, Notes to be purchased will be selected on a pro
rata basis or nearly as pro rata as practicable, provided that no Notes of
a principal amount of $1,000 or less shall be purchased, redeemed or
prepaid in part; and
(4) upon completion of such Net Proceeds Offer in accordance with the foregoing
provisions, the amount of Excess Proceeds with respect to which such Net
Proceeds Offer was made shall be deemed to be zero.
To the extent that the sum of the aggregate Offered Price of Notes tendered
pursuant to a Net Proceeds Offer and the aggregate Pari Passu Indebtedness
Price paid to the holders of such Pari Passu Indebtedness is less than the
Payment Amount relating thereto (such shortfall constituting a "Net Proceeds
Deficiency"), the Issuer may use the Net Proceeds Deficiency, or a portion
thereof, for general corporate and working capital purposes, subject to the
provisions of the Indenture.
To the extent required thereby, the Issuer will comply with applicable tender
offer rules, including the requirements of Rule 14e-1 under the Exchange Act
and any other applicable laws and regulations in connection with the purchase
of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of
any securities laws or regulations conflict with the "Limitations on Asset
Sales" provisions of the Indenture, the Issuer shall comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the "Limitations on Asset Sales" provisions of the Indenture
by virtue of this compliance.
Notwithstanding the foregoing, in the event that the Issuer consummates an
Asset Sale that results in a Change of Control, the provisions of this covenant
will be deemed to be satisfied and complied with in the event the Issuer makes
a Change of Control Offer pursuant to, and otherwise complying with, the
covenant described under " -- Change of control" or at its option under
"Optional redemption
- -- Redemption upon a change of control."
Limitations on Designation of Unrestricted Subsidiaries
After the initial Issue Date the Issuer may designate any Subsidiary of the
Issuer as an "Unrestricted Subsidiary" under the Indenture (a "Designation")
only if:
(1) no Default shall have occurred and be continuing after giving effect to
such Designation; and
(2) the Issuer would be permitted to make, at the time of such Designation, (a)
an Investment (including a Permitted Investment) or (b) an Investment
pursuant to the first paragraph of
" -- Limitations on restricted payments" above, in either case, in an amount
(the "Designation Amount") equal to the Fair Market Value of the Issuer's
and the Restricted Subsidiaries' proportionate interest in such Subsidiary
on such date.
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Description of the notes
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No Subsidiary shall be Designated as an "Unrestricted Subsidiary" unless such
Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or understanding with
the Issuer or any Restricted Subsidiary unless the terms of the agreement,
contract, arrangement or understanding are no less favorable to the Issuer
or the Restricted Subsidiary than those that might be obtained at the time
from Persons who are not Affiliates unless permitted under the provisions
of the Indenture described under " -- Limitations on transactions with
affiliates; and
(3) is a Person with respect to which neither the Issuer nor any Restricted
Subsidiary has any direct or indirect obligation (a) to subscribe for
additional Equity Interests or (b) to maintain or preserve the Person's
financial condition or to cause the Person to achieve any specified levels
of operating results.
If, at any time, any Unrestricted Subsidiary fails to meet the preceding
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of
the Subsidiary and any Liens on assets of such Subsidiary shall be deemed to be
incurred by a Restricted Subsidiary as of such date and, if the Indebtedness is
not permitted to be incurred under the covenant described under " --
Limitations on additional indebtedness" or the Lien is not permitted under the
covenant described under " -- Limitations on liens," the Issuer shall be in
default of the applicable covenant.
The Issuer may redesignate an Unrestricted Subsidiary as a Restricted
Subsidiary (a "Redesignation") only if:
(1) no Event of Default shall have occurred and be continuing after giving
effect to such Redesignation; and
(2) all Liens, Indebtedness and Investments of such Unrestricted Subsidiary
outstanding immediately following such Redesignation would, if incurred or
made at such time, have been permitted to be incurred or made for all
purposes of the Indenture.
All Designations and Redesignations must be evidenced by resolutions of the
Board of Directors of the Issuer, delivered to the Trustee certifying
compliance with the foregoing provisions.
Limitations on the Issuance or Sale of Equity Interests of Restricted
Subsidiaries
The Issuer will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, sell or issue any Equity Interests of any Restricted Subsidiary
that is not a Guarantor or an Accounts Receivable Entity except (1) to the
Issuer, a Restricted Subsidiary or the minority stockholders of any Restricted
Subsidiary, on a pro rata basis, (2) to the extent such Equity Interests
represent directors' qualifying shares or shares required by applicable law to
be held by a Person other than the Issuer or a Wholly-Owned Restricted
Subsidiary, or (3) if after giving effect thereto, such Restricted Subsidiary
no longer qualifies as such and the sale is not otherwise prohibited by the
Indenture. The sale of all the Equity Interests of any Restricted Subsidiary is
permitted by this covenant but is subject to the limitations described under "
- -- Limitations on asset sales."
Limitations on Mergers, Consolidations, Etc.
The Issuer will not, directly or indirectly, in a single transaction or a
series of related transactions, consolidate or merge with or into (other than a
merger with a Wholly-Owned Restricted Subsidiary solely for the purpose of
changing the Issuer's jurisdiction of incorporation to another State of the
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United States), or sell, lease, transfer, convey or otherwise dispose of or
assign all or substantially all of the assets of the Issuer and the Restricted
Subsidiaries (taken as a whole) unless, in either case:
(1) (a) either:
(A) the Issuer will be the surviving or continuing Person; or
(B) the Person formed by or surviving such consolidation or merger or to
which such sale, lease, conveyance or other disposition shall be made
(or, in the case of a Plan of Liquidation, any Person to which assets
are transferred) (collectively, the "Successor") is a corporation
organized and existing under the laws of any State of the United States
of America or the District of Columbia, and the Successor expressly
assumes, by supplemental indenture in form and substance satisfactory
to the Trustee, all of the obligations of the Issuer under the Notes,
the Indenture and the Registration Rights Agreement;
(b) immediately prior to and immediately after giving effect to such
transaction and the assumption of the obligations as set forth in
clause (1)(a)(B) above and the incurrence of any Indebtedness to be
incurred by the Issuer or the Restricted Subsidiaries in connection
therewith, no Default shall have occurred and be continuing; and
(c) except in the case of the consolidation or merger of any Restricted
Subsidiary with or into the Issuer, immediately after and giving effect
to such transaction and the assumption of the obligations set forth in
clause (1)(a)(B) above and the incurrence of any Indebtedness to be
incurred in connection therewith, and the use of any net proceeds
therefrom on a pro forma basis, (a) the Consolidated Net Worth of the
Issuer or the Successor, as the case may be, would be at least equal to
the Consolidated Net Worth of the Issuer immediately prior to such
transaction and (b) the Issuer or the Successor, as the case may be,
could incur $1.00 of additional Indebtedness pursuant to the Coverage
Ratio Exception; or
(2) in the case of any such consolidation, merger, sale, lease, transfer,
conveyance or other disposition or assignment which will result in a Change
of Control, the Issuer mails a notice of redemption prior to or within two
Business Days after consummation of such transaction pursuant to and
otherwise in compliance with the requirements set forth under, " --
Optional redemption
-- Redemption upon a change of control."
For purposes of this covenant, any Indebtedness of the Successor which was not
Indebtedness of the Issuer or any Restricted Subsidiary immediately prior to
the transaction shall be deemed to have been incurred at the time of such
transaction.
Except as provided under " -- Note guarantees," no Guarantor may consolidate
with or merge with or into another Person (other than the Issuer or another
Guarantor), whether or not affiliated with such Guarantor, unless:
(1) either:
(a) such Guarantor will be the surviving or continuing Person; or
(b) the Person formed by or surviving any such consolidation or merger
assumes, by supplemental indenture in form and substance satisfactory
to the Trustee, all of the obligations of such Guarantor under the Note
Guarantee of such Guarantor, the Indenture and the Registration Rights
Agreement; and
(2) immediately after giving effect to such transaction, no Default shall have
occurred and be continuing.
Provided that this covenant will be deemed to have been complied with in the
event the Issuer complies with the provisions of " -- Limitations on asset
sales."
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For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries, the Equity Interests of which constitute all or substantially all
of the properties and assets of the Issuer, will be deemed to be the transfer
of all or substantially all of the properties and assets of the Issuer.
Upon any consolidation, combination or merger of the Issuer or a Guarantor, or
any transfer of all or substantially all of the assets of the Issuer in
accordance with the foregoing, in which the Issuer or such Guarantor is not the
continuing obligor under the Notes or its Note Guarantee, the surviving entity
formed by such consolidation or into which the Issuer or such Guarantor is
merged or to which the conveyance, lease or transfer is made will succeed to,
and be substituted for, and may exercise every right and power of, the Issuer
or such Guarantor under the Indenture, the Notes and the Note Guarantees, as
applicable, with the same effect as if such surviving entity had been named
therein as the Issuer or such Guarantor and, except in the case of a
conveyance, transfer or lease, the Issuer or such Guarantor, as the case may
be, will be released from the obligation to pay the principal of and interest
on the Notes or in respect of its Note Guarantee, as the case may be, and all
of the Issuer's or such Guarantor's other obligations and covenants under the
Notes, the Indenture and its Note Guarantee, if applicable.
Notwithstanding the foregoing, any Guarantor may merge into the Issuer or
another Guarantor.
Additional Note Guarantees
If, after the Issue Date, (a) the Issuer or any Restricted Subsidiary shall
acquire or create another Subsidiary (other than in any case a Subsidiary (x)
that is a Foreign Subsidiary, (y) that has been designated an Unrestricted
Subsidiary or (z) that is an Accounts Receivable Entity) that has assets and
businesses with a Fair Market Value in excess of $1.0 million or (b) any
Unrestricted Subsidiary that is not a Foreign Subsidiary or an Accounts
Receivable Entity is redesignated a Restricted Subsidiary, then, in each such
case, the Issuer shall cause such Restricted Subsidiary to:
(1) execute and deliver to the Trustee (a) a supplemental indenture in form and
substance satisfactory to the Trustee pursuant to which such Restricted
Subsidiary shall unconditionally guarantee all of the Issuer's obligations
under the Notes and the Indenture in accordance with the terms of the Note
Guarantee and (b) a notation of guarantee in respect of its Note Guarantee;
and
(2) deliver to the Trustee an opinion of counsel that such supplemental
indenture (a) has been duly authorized, executed and delivered by such
Restricted Subsidiary and (b) constitutes a valid and legally binding
obligation of such Restricted Subsidiary in accordance with its terms,
subject to customary exceptions.
Conduct of Business
The Issuer will not, and will not permit any Restricted Subsidiary to, engage
in any business other than the Permitted Business.
Reports
Whether or not required by the SEC, so long as any Notes are outstanding, the
Issuer will furnish to the Holders of Notes, within the time periods specified
in the SEC's rules and regulations:
(1) all quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K if the Issuer
were required to file these Forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with
respect to the annual information only, a report on the annual financial
statements by the Issuer's certified independent accountants; and
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(2) all current reports that would be required to be filed with the SEC on Form
8-K if the Issuer were required to file these reports.
In addition, whether or not required by the SEC, the Issuer will file a copy of
all of the information and reports referred to in clauses (1) and (2) above
with the SEC for public availability within the time periods specified in the
SEC's rules and regulations (unless the SEC will not accept the filing) and
make the information available to securities analysts and prospective investors
upon request. The Issuer and the Guarantors have agreed that, for so long as
any Notes remain outstanding, the Issuer will furnish to the Holders and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
Events of default
Each of the following is an "Event of Default":
(1) failure by the Issuer to pay interest on any of the Notes when it becomes
due and payable and the continuance of any such failure for 30 days
(whether or not such payment is prohibited by the subordination provisions
of the Indenture);
(2) failure by the Issuer to pay the principal on any of the Notes when it
becomes due and payable, whether at stated maturity, upon any redemption
date as to which notice has been given to the Holders in accordance with
the terms of the Indenture, upon purchase, upon acceleration or otherwise
(whether or not such payment is prohibited by the subordination provisions
of the Indenture);
(3) failure by the Issuer to comply with any of its agreements or covenants
described above under
" -- Certain covenants -- Limitations on Mergers, Consolidations, etc.," or
in respect of its obligations to make a Change of Control Offer as described
above under " -- Change of control" or " -- Optional redemption --
Redemption upon a change of control" (whether or not such payment is
prohibited by the subordination provisions of the Indenture) and continuance
of this failure for 30 days;
(4) failure by the Issuer to comply with any other agreement or covenant in the
Indenture and continuance of this failure for 45 days after notice of the
failure has been given to the Issuer by the Trustee or by the Holders of at
least 25% of the aggregate principal amount of the Notes then outstanding;
(5) default under any mortgage, indenture or other instrument or agreement
under which there may be issued or by which there may be secured or
evidenced Indebtedness of the Issuer or any Restricted Subsidiary, whether
such Indebtedness now exists or is incurred after the Issue Date, which
default:
(a)is caused by a failure to pay when due principal on such Indebtedness
within the applicable express grace period,
(b)results in the acceleration of such Indebtedness prior to its express
final maturity or
(c)results in the commencement of judicial proceedings to foreclose upon,
or to exercise remedies under applicable law or applicable security
documents to take ownership of, the assets securing such Indebtedness,
and
in each case, the principal amount of such Indebtedness, together with any
other Indebtedness with respect to which an event described in clause (a), (b)
or (c) has occurred and is continuing, aggregates $20.0 million or more and
that such default, acceleration or failure to pay is not rescinded, waived,
extended or cured within 30 days after such default, acceleration or failure to
pay;
(6) one or more final judgments or orders that exceed $15.0 million in the
aggregate (net of amounts covered by insurance or bonded) for the payment
of money have been entered by a court or courts
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of competent jurisdiction against the Issuer or any Restricted Subsidiary
and such judgment or judgments have not been satisfied, paid, discharged,
stayed, annulled or rescinded within 60 days of being entered (or such
longer period as may be permitted for timely appeal under applicable law);
(7) the Issuer or any Significant Subsidiary pursuant to or within the meaning
of any Bankruptcy Law:
(a) commences a voluntary case,
(b)consents to the entry of an order for relief against it in an
involuntary case,
(c) consents to the appointment of a Custodian of it or for all or
substantially all of its assets, or
(d) makes a general assignment for the benefit of its creditors;
(8) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(a) is for relief against the Issuer or any Significant Subsidiary as
debtor in an involuntary case,
(b) appoints a Custodian of the Issuer or any Significant Subsidiary or a
Custodian for all or substantially all of the assets of the Issuer or
any Significant Subsidiary, or
(c) orders the liquidation of the Issuer or any Significant Subsidiary,
and the order or decree remains unstayed and in effect for 60 days; or
(9) any Note Guarantee of any Significant Subsidiary ceases to be in full force
and effect (other than in accordance with the terms of such Note Guarantee
and the Indenture) or is declared in a final judicial proceeding null and
void and unenforceable or found to be invalid or any Guarantor denies its
liability under its Note Guarantee (other than by reason of release of a
Guarantor from its Note Guarantee in accordance with the terms of the
Indenture and the Note Guarantee).
If an Event of Default (other than an Event of Default specified in clause (7)
or (8) above with respect to the Issuer), shall have occurred and be continuing
under the Indenture, the Trustee, by written notice to the Issuer, or the
Holders of at least 25% in aggregate principal amount of the Notes then
outstanding by written notice to the Issuer and the Trustee, may declare all
amounts owing under the Notes to be due and payable immediately. Upon such
declaration of acceleration, the aggregate principal of and accrued and unpaid
interest on the outstanding Notes shall immediately become due and payable;
provided, however, that after such acceleration, but before a judgment or
decree based on acceleration, the Holders of a majority in aggregate principal
amount of such outstanding Notes may, under certain circumstances, rescind and
annul such acceleration if all Events of Default, other than the nonpayment of
accelerated principal and interest, have been cured or waived as provided in
the Indenture. If an Event of Default specified in clause (7) or (8) with
respect to the Issuer occurs, all outstanding Notes shall become due and
payable without any further action or notice.
The Trustee shall, within 30 days after the occurrence of any Default with
respect to the Notes, give the Holders notice of all uncured Defaults
thereunder known to it; provided, however, that, except in the case of an Event
of Default in payment with respect to the Notes or a Default in complying with
" -- Certain covenants -- Limitations on Mergers, Consolidations, etc.," the
Trustee shall be protected in withholding such notice if and so long as a
committee of its trust officers in good faith determines that the withholding
of such notice is in the interest of the Holders.
The Issuer may cure a Default or Event of Default by designating a Restricted
Subsidiary as an Unrestricted Subsidiary in compliance with the covenant
described under "--Limitation on designation of unrestricted subsidiaries," if
the circumstances giving rise to such Default or Event of Default would not
have constituted a Default or Event of Default had such Restricted Subsidiary
been an Unrestricted Subsidiary during the relevant period of such
circumstances.
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No Holder will have any right to institute any proceeding with respect to the
Indenture or for any remedy thereunder, unless the Trustee:
(1) has failed to act for a period of 60 days after receiving written notice of
a continuing Event of Default by such Holder and a request to act by
Holders of at least 25% in aggregate principal amount of Notes outstanding;
(2) has been furnished indemnity satisfactory to it in its reasonable judgment;
and
(3) has not received from the Holders of a majority in aggregate principal
amount of the outstanding Notes a direction inconsistent with such request.
However, such limitations do not apply to a suit instituted by a Holder of any
Note for enforcement of payment of the principal of or interest on such Note on
or after the due date therefor (after giving effect to the grace period
specified in clause (1) of the first paragraph of this " -- Events of default"
section).
The Issuer is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture and, promptly upon any Officer of the Issuer
becoming aware of any Default, a statement specifying such Default and what
action the Issuer is taking or proposes to take with respect thereto.
Legal defeasance and covenant defeasance
The Issuer may, at its option and at any time, elect to have its obligations
and the obligations of the Guarantors discharged with respect to the
outstanding Notes ("Legal Defeasance"). Legal Defeasance means that the Issuer
and the Guarantors shall be deemed to have paid and discharged the entire
indebtedness represented by the Notes and the Note Guarantees, and the
Indenture shall cease to be of further effect as to all outstanding Notes and
Note Guarantees, except as to
(1) rights of Holders to receive payments in respect of the principal of and
interest on the Notes when such payments are due from the trust funds
referred to below,
(2) the Issuer's obligations with respect to the Notes concerning issuing
temporary Notes, registration of Notes, mutilated, destroyed, lost or
stolen Notes, and the maintenance of an office or agency for payment and
holding such payments in trust,
(3) the rights, powers, trust, duties, and immunities of the Trustee, and the
Issuer's obligation in connection therewith, and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Issuer may, at its option and at any time, elect to have its
obligations and the obligations of the Guarantors released with respect to most
of the covenants under the Indenture, except as described otherwise in the
Indenture ("Covenant Defeasance"), and thereafter any omission to comply with
such obligations shall not constitute a Default. In the event Covenant
Defeasance occurs, certain Events of Default (not including non-payment and,
solely for a period of 91 days following the deposit referred to in clause (1)
of the next paragraph, bankruptcy, receivership, rehabilitation and insolvency
events) will no longer apply. Covenant Defeasance will not be effective until
such bankruptcy, receivership, rehabilitation and insolvency events no longer
apply. The Issuer may exercise its Legal Defeasance option regardless of
whether it previously exercised Covenant Defeasance.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Issuer must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders, United States legal tender, U.S. Government
Obligations or a combination thereof, in such amounts as will be sufficient
(without reinvestment) in the opinion of a nationally recognized firm of
independent
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public accountants selected by the Issuer, to pay the principal of and
interest on the Notes on the stated date for payment or on the applicable
redemption date of the principal or installment of principal of or interest
on the Notes, and the Holders must have a valid, perfected, exclusive
security interest in such trust,
(2) in the case of Legal Defeasance, the Issuer shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable
to the Trustee confirming that:
(a) the Issuer has received from, or there has been published by the
Internal Revenue Service, a ruling, or
(b) since the date of the Indenture, there has been a change in the
applicable United States federal income tax law,
in either case to the effect that, and based thereon this opinion of counsel
shall confirm that, the Holders will not recognize income, gain or loss for
United States federal income tax purposes as a result of the Legal Defeasance
and will be subject to United States federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
Legal Defeasance had not occurred,
(3) in the case of Covenant Defeasance, the Issuer shall have delivered to the
Trustee an opinion of counsel reasonably acceptable to the Trustee
confirming that the Holders will not recognize gain or loss for United
States federal income tax purposes as a result of such Covenant Defeasance
and will be subject to United States federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if the Covenant Defeasance had not occurred,
(4) no Event of Default shall have occurred and be continuing on the date of
such deposit (other than a Default resulting from the borrowing of funds
to be applied to such deposit and the grant of any Lien securing such
borrowing),
(5) the Legal Defeasance or Covenant Defeasance shall not result in a breach
or violation of, or constitute a default under any other material
agreement or instrument to which the Issuer or any of its Subsidiaries is
a party or by which the Issuer or any Guarantor is bound (other than a
Default resulting from the borrowing of funds to be contemporaneously
applied to such deposit and the grant of any Lien securing such
borrowing),
(6) the Issuer shall have delivered to the Trustee an Officers' Certificate
stating that the deposit was not made by it with the intent of preferring
the Holders over any other of its creditors or with the intent of
defeating, hindering, delaying or defrauding any other of its creditors or
others, and
(7) the Issuer shall have delivered to the Trustee an Officers' Certificate
and an opinion or opinions of counsel, each stating that the conditions
provided for in, in the case of the Officers' Certificate, clauses (1)
through (6) and, in the case of the opinions of counsel, clauses (1) (with
respect to the validity and perfection of the security interest), (2)
and/or (3) and (5) of this paragraph have been complied with.
If the funds deposited with the Trustee to effect Covenant Defeasance are
insufficient and the Issuer does not cure such insufficiency to pay the
principal of and interest on the Notes when due, then the Issuer's obligations
and the obligations of Guarantors under the Indenture will be revived and from
and after such revival no such defeasance will be deemed to have occurred.
Before or after a deposit, the Issuer may make arrangements satisfactory to
the Trustee for the redemption of Notes at a future date in accordance with
the provisions set forth under " -- Optional redemption."
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Satisfaction and discharge
The Indenture, the Notes and the Note Guarantees will be discharged and will
cease to be of further effect (except as to rights of registration of transfer
or exchange of Notes which expressly provide that such rights shall survive
until all Notes have been canceled) as to all outstanding Notes when either:
(1) all the Notes that have been authenticated and delivered (except lost,
stolen or destroyed Notes which have been replaced or paid and Notes for
whose payment money has been deposited in trust or segregated and held in
trust by the Issuer and thereafter repaid to the Issuer or discharged from
this trust) have been delivered to the Trustee for cancellation, or
(2)(a) all Notes not delivered to the Trustee for cancellation otherwise have
become due and payable or have been called for redemption pursuant to
the provisions described under " -- Optional redemption," and
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name of the Issuer and the Issuer has
irrevocably deposited or caused to be deposited with the Trustee trust
funds in trust in an amount of money sufficient to pay and discharge the
entire indebtedness (including all principal and accrued interest to the
date of deposit on the Notes not theretofore delivered to the Trustee
for cancellation,
(b) the Issuer has paid all sums then due and payable by it under the
Indenture,
(c) the Issuer has delivered irrevocable instructions to the Trustee to
apply the deposited money toward the payment of the Notes at maturity
or on the date of redemption, as the case may be, and
(d) the Holders have a valid, perfected, exclusive security interest in the
money so deposited.
In addition, the Issuer must deliver an Officers' Certificate and an opinion of
counsel collectively stating that all conditions precedent to satisfaction and
discharge have been complied with.
Transfer and exchange
A Holder will be able to register the transfer of or exchange Notes only in
accordance with the provisions of the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents (each in a form satisfactory to the Issuer and the Registrar) and to
pay any taxes and fees required by law or permitted by the Indenture. Without
the prior consent of the Issuer, the Registrar is not required (1) to issue or
register the transfer of or exchange any Note selected for redemption, (2) to
issue or register the transfer of or exchange any Note for a period of 15 days
before a selection of Notes to be redeemed or (3) to register the transfer or
exchange of a Note between a record date and the next succeeding interest
payment date.
The Notes will be issued in registered form and the registered Holder of any
Note will be treated as the owner of such Note for all purposes.
Amendment, supplement and waiver
Subject to certain exceptions, the Indenture or the Notes may be amended or
supplemented with the consent (which may include consents obtained in
connection with a tender offer or exchange offer for Notes) of the Holders of
at least a majority in aggregate principal amount of the Notes then
outstanding, and any existing Default or Event of Default under, or compliance
(before or after the time for such compliance) with any provision of, the
Indenture may be waived (other than any continuing Default in the payment of
the principal or interest on the Notes) with the consent (which may include
consents obtained in connection with a tender offer or exchange offer for
Notes) of the Holders of a majority in aggregate principal amount of the Notes
then outstanding; provided that:
(a) after the occurrence of a Change of Control, no such amendment may, without
the consent of the Holders of two-thirds in aggregate principal amount of
Notes then outstanding, amend the
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obligation of the Issuer under the heading " -- Change of control" or the
related definitions that could materially adversely affect the rights of
such Holders; and
(b) without the consent of each Holder affected, the Issuer and the Trustee may
not:
(1) change the maturity of any Note;
(2) reduce the amount or extend the due date of any scheduled payment of
interest on or principal of the Notes;
(3) reduce any premium payable upon optional redemption of the Notes,
change the date on which any Notes are subject to redemption after
notice of such redemption date has been given to such Holders or
otherwise alter the provisions with respect to the redemption of the
Notes in a manner that adversely affects the Holders in any material
respect;
(4) make any Note payable in money or currency other than that stated in
the Notes;
(5) modify or change any provision of the Indenture or the related
definitions affecting the subordination of the Notes or any Note
Guarantee in a manner that adversely affects the Holders in any
material respect; or
(6) reduce the percentage of Holders necessary to consent to an amendment
or waiver to the Indenture or the Notes;
(7) modify or change any provisions of the Indenture or the related
definitions that impairs the rights of Holders to receive payments of
principal of or interest on the Notes;
(8) release any Guarantor that is a Significant Subsidiary from any of its
obligations under its Note Guarantee or the Indenture, except as
permitted by the Indenture; or
(9) make any change in these amendment and waiver provisions.
Notwithstanding the foregoing, the Issuer and the Trustee may amend or
supplement the Indenture, the Note Guarantees or the Notes without the consent
of any Holder to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Issuer's or any Guarantor's obligations to
the Holders in the case of a merger or acquisition or other succession, to
release any Guarantor from any of its obligations under its Note Guarantee or
the Indenture (to the extent permitted by the Indenture), to evidence the
acceptance of the appointment of a successor Trustee, to make any change that
does not materially adversely affect the rights of the Holders or, in the case
of the Indenture, to qualify or maintain the qualification of the Indenture
under or otherwise comply with the Trust Indenture Act. In connection with any
amendment, supplement or waiver, the Issuer may, but shall not be obligated
to, offer any Holder who consents to such amendment, supplement or waiver, or
to all Holders, consideration for such Holder's consent to such amendment,
supplement or waiver.
No personal liability of directors, officers, employees and stockholders
No director, officer, employee, incorporator or stockholder or Affiliates,
past, present and future of the Issuer or any Guarantor will have any
liability under the Notes or the Indenture or for any obligations of the
Issuer under the Notes or the Indenture or of any Guarantor under its Note
Guarantee or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes and the Note Guarantees.
Concerning the trustee
JP Morgan Chase Bank is the Trustee under the Indenture and has been appointed
by the Issuer as Registrar and Paying Agent with regard to the Notes. The
Indenture contains certain limitations on the rights of the Trustee, should it
become a creditor of the Issuer, to obtain payment of claims in certain
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cases, or to realize on certain assets received in respect of any such claim as
security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest (as defined in
the Indenture), it must eliminate such conflict or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that, in case an Event of Default
occurs and is continuing, the Trustee will be required, in the exercise of its
power, to use the same degree of care and skill of a prudent person in similar
circumstances in the conduct of his own affairs. Subject to such provisions,
the Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request of any Holder, unless such Holder shall have
offered to the Trustee reasonable security or indemnity satisfactory to the
Trustee.
Governing law
The Indenture, the Notes and the Note Guarantees will be governed by, and
construed in accordance with, the laws of the State of New York.
Certain definitions
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms.
"Accounts Receivable Entity" means any Person, including, without limitation, a
Subsidiary of the Issuer, whose operations consist solely of owning and/or
selling accounts receivable and related assets of the Issuer and its
Subsidiaries and engaging in other activities in connection with transactions
that are Permitted Receivables Financings.
"Acquired Indebtedness" means (1) with respect to any Person that becomes a
Restricted Subsidiary after the Issue Date, Indebtedness of such Person and its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary
that was not incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary and (2) with respect to the Issuer or any
Restricted Subsidiary, any Indebtedness of a Person (other than the Issuer or a
Restricted Subsidiary) existing at the time such Person is merged or
consolidated with or into or becomes a subsidiary of, the Issuer or a
Restricted Subsidiary, or Indebtedness expressly assumed by the Issuer or any
Restricted Subsidiary in connection with the acquisition of an asset or assets
from another Person, which Indebtedness was not, in any case, incurred by such
other Person in connection with, or in contemplation of, such merger or
acquisition.
"Additional Interest" has the meaning set forth in the Registration Rights
Agreement.
"Affiliate" of any Person means any other Person which directly or indirectly
controls or is controlled by, or is under direct or indirect common control
with, the referent Person. For purposes of the covenant described under " --
Certain covenants -- Limitations on Transactions with Affiliates," Affiliates
shall be deemed to include, with respect to any Person, any other Person (1)
which beneficially owns or holds, directly or indirectly, 10% or more of any
class of the Voting Stock of the referent Person, (2) of which 10% or more of
the Voting Stock is beneficially owned or held, directly or indirectly, by the
referent Person or (3) with respect to an individual, any immediate family
member of such Person; provided, however, that the entering into of a
Management Services Agreement by any Person shall not, in and of itself, deem
such Person to be an Affiliate for purposes of this definition. For purposes of
this definition, "control" of a Person shall mean 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.
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"amend" means to amend, supplement, extend, restate, amend and restate or
otherwise modify; and "amendment" shall have a correlative meaning.
"asset" means any asset or property.
"Asset Acquisition" means
(1) an Investment by the Issuer or any Restricted Subsidiary of the Issuer in
any other Person if, as a result of such Investment, such Person shall
become a Restricted Subsidiary of the Issuer, or shall be merged with or
into the Issuer or any Restricted Subsidiary of the Issuer, or
(2) the acquisition by the Issuer or any Restricted Subsidiary of the Issuer of
all or substantially all of the assets of any other Person or any division
or line of business of any other Person.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease, assignment
or other disposition by the Issuer or any Restricted Subsidiary to any Person
other than the Issuer or any Restricted Subsidiary (including by means of a
Sale and Leaseback Transaction or a merger or consolidation) (collectively, for
purposes of this definition, a "transfer"), in one transaction or a series of
related transactions, of any assets of the Issuer or any of its Restricted
Subsidiaries other than in the ordinary course of business. For purposes of
this definition, the term "Asset Sale" shall not include:
(1) transfers of cash or Cash Equivalents;
(2) transfers of assets (including Equity Interests) that are governed by, and
made in accordance with, the provisions described under " -- Certain
covenants -- Limitations on Mergers, Consolidations, etc.";
(3) Permitted Investments and Restricted Payments and other transfers of
assets permitted under the covenant described under " -- Certain covenants
-- Limitations on Restricted Payments";
(4) the creation or realization of any Permitted Lien;
(5) sales of accounts receivable and related assets in connection with a
Permitted Receivables Financing made in accordance with the covenant
described under " -- Certain covenants
-- Limitations on Additional Indebtedness";
(6) transfers of damaged, worn-out or obsolete equipment or assets that, in
the Issuer's reasonable judgment, are no longer used or useful in the
business of the Issuer or its Restricted Subsidiaries;
(7) the disposition, sale or transfer of the capital stock of any Unrestricted
Subsidiary;
(8) any surrender or waiver of contract rights or the settlement, release or
surrender of contract, tort or other claim of any kind;
(9) any non-exclusive license not involving a substantial portion of the
business of the Issuer and the Restricted Subsidiaries taken as a whole;
(10) any transfer or series of related transfers that, but for this clause,
would be Asset Sales, if after giving effect to such transfers, the
aggregate Fair Market Value of the assets transferred in such transaction
or any such series of related transactions does not exceed $2.5 million;
and
(11) the granting of Liens permitted under the covenant " -- Limitations on
liens."
"Attributable Indebtedness", when used with respect to any Sale and Leaseback
Transaction, means, as at the time of determination, the present value
(discounted at the interest rate implicit in the lease, compounded semi-
annually) of the total obligations of the lessee for rental payments during the
remaining term of the lease included in any such Sale and Leaseback Transaction
after excluding all amounts required to be paid on account of maintenance and
repairs, insurance, taxes, assessments, water utilities and similar charges.
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"Bankruptcy Law" means Title 11 of the United States Code, as amended, or any
similar federal or state law for the relief of debtors.
"Board of Directors" means, with respect to any Person, the board of directors
or comparable governing body of such Person.
"Business Day" means a day other than a Saturday, Sunday or other day on which
banking institutions in the State of New York are authorized or required by law
or executive order to close.
"Capitalized Lease" means a lease required to be capitalized for financial
reporting purposes in accordance with GAAP.
"Capitalized Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under a Capitalized Lease, and the amount
of such obligation shall be the capitalized amount thereof on the balance sheet
of such Person determined in accordance with GAAP.
"Cash Equivalents" means:
(1) marketable obligations with a maturity of 360 days or less issued or
directly and fully guaranteed or insured by the United States of America or
any agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof);
(2) demand and time deposits and certificates of deposit or acceptances with a
maturity of 180 days or less of any financial institution that is a member
of the Federal Reserve System having combined capital and surplus and
undivided profits of not less than $500 million and is assigned at least a
"B" rating by Thomson Financial BankWatch;
(3) commercial paper maturing no more than 180 days from the date of creation
thereof issued by a corporation that is not the Issuer or an Affiliate of
the Issuer, and is organized under the laws of any State of the United
States of America or the District of Columbia and rated at least A-1 by S&P
or at least P-1 by Moody's;
(4) repurchase obligations with a term of not more than ten days for underlying
securities of the types described in clause (1) above entered into with any
commercial bank meeting the specifications of clause (2) above; and
(5) investments in money market or other mutual funds substantially all of
whose assets comprise securities of the types described in clauses (1)
through (4) above; provided, however, that for the purpose of clause (5) of
the definition of "Permitted Investments" only, investments in mutual funds
all of whose assets are comprised of securities of the type described in
clauses (1) through (4) above, but which in the case of clause (1) may have
maturities of up to 762 days and in the case of clause (3) may have
maturities of up to 397 days.
"Change of Control" means the occurrence of any of the following events:
(1) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act) (other than the Permitted Holders) is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that for purposes of this clause that person or group shall be
deemed to have "beneficial ownership" of all securities that any such
person or group has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of
Voting Stock representing more than 50% of the voting power of the total
outstanding Voting Stock of the Issuer;
(2) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Issuer
(together with any new directors whose election to such Board of Directors
or whose nomination for election by the stockholders of the Issuer was
approved by a vote of the majority of the directors of the Issuer then
still in office who were either
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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 Issuer;
(3) (a) all or substantially all of the assets of the Issuer and the Restricted
Subsidiaries, taken as a whole, are sold or otherwise transferred to any
Person other than a Wholly-Owned Restricted Subsidiary or (b) the Issuer
consolidates or merges with or into another Person or any Person
consolidates or merges with or into the Issuer, in either case under this
clause (3), in one transaction or a series of related transactions in which
immediately after the consummation thereof Persons owning Voting Stock
representing in the aggregate a majority of the total voting power of the
Voting Stock of the Issuer immediately prior to such consummation do not
own Voting Stock representing a majority of the total voting power of the
Voting Stock of the Issuer or the surviving or transferee Person; or
(4) the Issuer shall adopt a Plan of Liquidation or dissolution or any such
plan shall be approved by the stockholders of the Issuer;
provided that if in connection with a merger, consolidation or sale of all or
substantially all of the assets of the Issuer a shareholder agreement, voting
agreement or similar agreement is entered into containing customary terms with
respect to voting or tendering shares in support of such transaction (or
opposing alternative transactions), then a "Change of Control" shall not be
deemed to have occurred by reason of any such agreement.
"Consolidated Amortization Expense" for any period means the amortization
expense of the Issuer and the Restricted Subsidiaries for such period
(including amortization of goodwill and other intangibles), determined on a
consolidated basis in accordance with GAAP.
"Consolidated Cash Flow" for any period means, without duplication, the sum of
the amounts for such period of
(1) Consolidated Net Income for such Person for such period, plus
(2) in each case only to the extent (and in the same proportion) deducted in
determining Consolidated Net Income and with respect to the portion of
Consolidated Net Income attributable to any Restricted Subsidiary only if a
corresponding amount would be permitted at the date of determination to be
distributed to the Issuer by such Restricted Subsidiary without prior
approval (that has not been obtained), pursuant to the terms of its charter
and all agreements, instruments, judgments, decrees, orders, statutes,
rules and governmental regulations applicable to such Restricted Subsidiary
or their respective stockholders,
(a) Consolidated Income Tax Expense,
(b) Consolidated Amortization Expense (but only to the extent not included
in Consolidated Interest Expense),
(c) Consolidated Depreciation Expense,
(d) Consolidated Interest Expense, and
(e) all other non-cash items reducing the Consolidated Net Income
(excluding any non-cash charge that results in an accrual of a reserve
for cash charges in any future period) for such period,
in each case determined on a consolidated basis in accordance with GAAP, minus
(3) the aggregate amount of all non-cash items, determined on a consolidated
basis, to the extent such items increased Consolidated Net Income for such
period.
"Consolidated Depreciation Expense" for any period means the depreciation
expense of the Issuer and the Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
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"Consolidated Income Tax Expense" for any period means the provision for taxes
of the Issuer and the Restricted Subsidiaries, determined on a consolidated
basis in accordance with GAAP.
"Consolidated Interest Coverage Ratio" means the ratio of Consolidated Cash
Flow during the most recent four consecutive full fiscal quarters for which
financial statements are available (the "Four-Quarter Period") ending on or
prior to the date of the transaction giving rise to the need to calculate the
Consolidated Interest Coverage Ratio (the "Transaction Date") to Consolidated
Interest Expense for the Four-Quarter Period. For purposes of this definition,
Consolidated Cash Flow and Consolidated Interest Expense shall be calculated
after giving effect on a pro forma basis for the period of such calculation to:
(1) the incurrence of any Indebtedness or the issuance of any Preferred Stock
of the Issuer, any Restricted Subsidiary and any Accounts Receivable Entity
(and the application of the proceeds thereof) and any repayment of other
Indebtedness or redemption of other Preferred Stock (and the application of
the proceeds therefrom) (other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital
purposes pursuant to any revolving credit arrangement) occurring during the
Four-Quarter Period or at any time subsequent to the last day of the Four-
Quarter Period and on or prior to the Transaction Date, as if such
incurrence, repayment, issuance or redemption, as the case may be (and the
application of the proceeds thereof), occurred on the first day of the
Four-Quarter Period; and
(2) any Asset Sale or other disposition or Asset Acquisition (including,
without limitation, any Asset Acquisition giving rise to the need to make
such calculation as a result of the Issuer or any Restricted Subsidiary
(including any Person who becomes a Restricted Subsidiary as a result of
such Asset Acquisition) incurring Acquired Indebtedness and also including
any Consolidated Cash Flow (including any pro forma expense and cost
reductions calculated on a basis consistent with Regulation S-X under the
Exchange Act) associated with any such Asset Acquisition) occurring during
the Four-Quarter Period or at any time subsequent to the last day of the
Four-Quarter Period and on or prior to the Transaction Date, as if such
Asset Sale or Asset Acquisition or other disposition (including the
incurrence of, or assumption or liability for, any such Indebtedness or
Acquired Indebtedness) occurred on the first day of the Four-Quarter
Period.
If the Issuer or any Restricted Subsidiary directly or indirectly guarantees
Indebtedness of a third Person, the preceding sentence shall give effect to the
incurrence of such guaranteed Indebtedness as if the Issuer or such Restricted
Subsidiary had directly incurred or otherwise assumed such guaranteed
Indebtedness.
In calculating Consolidated Interest Expense for purposes of determining the
denominator (but not the numerator) of this Consolidated Interest Coverage
Ratio:
(1) interest on outstanding Indebtedness determined on a fluctuating basis as
of the Transaction Date and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per annum equal
to the rate of interest on this Indebtedness in effect on the Transaction
Date;
(2) if interest on any Indebtedness actually incurred on the Transaction Date
may optionally be determined at an interest rate based upon a factor of a
prime or similar rate, a eurocurrency interbank offered rate, or other
rates, then the interest rate in effect on the Transaction Date will be
deemed to have been in effect during the Four-Quarter Period; and
(3) notwithstanding clause (1) or (2) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is covered
by agreements relating to Hedging Obligations, shall be deemed to accrue at
the rate per annum resulting after giving effect to the operation of these
agreements.
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"Consolidated Interest Expense" for any period means the sum, without
duplication, of the total interest expense of the Issuer and the Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP and including without duplication,
(1) imputed interest on Capitalized Lease Obligations and Attributable
Indebtedness,
(2) commissions, discounts and other fees and charges owed with respect to
letters of credit securing financial obligations, bankers' acceptance
financing and receivables financings,
(3) the net costs associated with Hedging Obligations,
(4) amortization of debt issuance costs, debt discount or premium and other
financing fees and expenses, except those incurred in connection with the
Notes or the Credit Agreement,
(5) the interest portion of any deferred payment obligations,
(6) all other non-cash interest expense,
(7) capitalized interest,
(8) all dividend payments on any series of Disqualified Equity Interests of
the Issuer or any Preferred Stock of any Restricted Subsidiary,
(9) all interest payable with respect to discontinued operations,
(10) all interest on any Indebtedness of any other Person guaranteed by the
Issuer or any Restricted Subsidiary, and
(11) imputed interest related to Permitted Receivables Financings during such
period as determined in accordance with GAAP.
"Consolidated Net Income" for any period means the net income (or loss) of the
Issuer and the Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded from the calculation of such net income (to the extent otherwise
included therein), without duplication:
(1) the net income (or loss) of any Person (other than a Restricted Subsidiary)
in which any Person other than the Issuer and the Restricted Subsidiaries
has an ownership interest, except to the extent that cash in an amount
equal to any such income has actually been received by the Issuer or any
Guarantor during such period;
(2) except to the extent includable in the consolidated net income of the
Issuer pursuant to the foregoing clause (1), the net income (or loss) of
any Person that accrued prior to the date that (a) such Person becomes a
Restricted Subsidiary or is merged into or consolidated with the Issuer or
any Restricted Subsidiary or (b) the assets of such Person are acquired by
the Issuer or any Restricted Subsidiary;
(3) the net income of any Restricted Subsidiary during such period to the
extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of that income is not permitted
by operation of the terms of its respective charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary during such period, except that
the Issuer's equity in a net loss of any such Restricted Subsidiary for
such period shall be included in determining Consolidated Net Income;
(4) for the purposes of calculating the Restricted Payments Basket only, in the
case of a successor to the Issuer by consolidation, merger or transfer of
its assets, any income (or loss) of the successor prior to such merger,
consolidation or transfer of assets;
(5) other than for purposes of calculating the Restricted Payments Basket, any
gain (or loss), together with any related provisions for taxes on any such
gain (or the tax effect of any such loss), realized
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during such period by the Issuer or any Restricted Subsidiary upon (a) the
acquisition of any securities, or the extinguishment of any Indebtedness, of
the Issuer or any Restricted Subsidiary or (b) any Asset Sale by the Issuer
or any Restricted Subsidiary;
(6) other than for purposes of calculating the Restricted Payments Basket, any
extraordinary gain (or extraordinary loss), together with any related
provision for taxes on any such extraordinary gain (or the tax effect of
any such extraordinary loss), realized by the Issuer or any Restricted
Subsidiary during such period; and
(7) prior to February 1, 2005, any non-recurring charges resulting from write-
offs of intangible assets, asset impairments and/or (i) non-cash
reorganization and restructuring costs in connection with the termination
of service agreements with affiliated physicians (and sales of related
assets) and/or (ii) cash reorganization and restructuring costs in
connection with the termination of service agreements with affiliated
physicians (and sales of related assets) and the repositioning, including
costs associated with the offering of the old notes and the repayment of
existing debt, in an aggregate amount not to exceed $60.0 million.
In addition, any return of capital with respect to an Investment that increased
the Restricted Payments Basket pursuant to clause (3)(d) of the first paragraph
under " -- Certain covenants -- Limitations on Restricted Payments" or
decreased the amount of Investments outstanding pursuant to clause (3), (14),
(16) or (18) of the definition of "Permitted Investments" shall be excluded
from Consolidated Net Income for purposes of calculating the Restricted
Payments Basket.
"Consolidated Net Worth" means, with respect to any Person as of any date, the
consolidated stockholders' equity (including preferred stock) of such Person
and its Restricted Subsidiaries, determined on a consolidated basis in
accordance with GAAP, less (without duplication) (1) any amounts thereof
attributable to Disqualified Equity Interests of such Person or its
Subsidiaries or any amount attributable to Unrestricted Subsidiaries and (2)
all write-ups (other than write-ups resulting from foreign currency
translations and write-ups of assets of a going concern business made in
accordance with GAAP after the acquisition of such business) subsequent to the
Issue Date in the book value of any asset owned by such Person or a Subsidiary
of such Person.
"Coverage Ratio Exception" has the meaning set forth in the proviso in the
first paragraph of the covenant described under " -- Certain covenants --
Limitations on Additional Indebtedness."
"Credit Agreement" means the Credit Agreement dated as of February 1, 2002 by
and among the Issuer, as Borrower, First Union National Bank, as administrative
agent, UBS Warburg LLC, as syndication agent, GE Healthcare Financial Services,
as documentation agent, and the other lenders named therein, including any
notes, guarantees, collateral and security documents, instruments and
agreements executed in connection therewith (including Hedging Obligations
related to the Indebtedness incurred thereunder), and in each case as amended,
extended, replaced or refinanced from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring
(including increasing the amount of borrowings or other Indebtedness
outstanding or available to be borrowed thereunder) all or any portion of the
Indebtedness under such agreement, and any successor or replacement agreement
or agreements with the same or any other agent(s), creditor(s), lender(s) or
group of creditors or lenders.
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"Default" means (1) any Event of Default or (2) any event, act or condition
that, after notice or the passage of time or both, would be an Event of
Default.
"Designated Senior Debt" means (1) Senior Debt Indebtedness under or in respect
of the Credit Agreement and (2) any other Indebtedness constituting Senior Debt
which, at the time of determination, has an aggregate principal amount (or an
Outstanding Receivables Financing Amount in
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the case of any Permitted Receivables Financings) of at least $10.0 million and
in the case of clause (2), is specifically designated in the instrument
evidencing such Senior Debt as "Designated Senior Debt."
"Designation" has the meaning given to this term in the covenant described
under " -- Certain covenants -- Limitations on Designation of Unrestricted
Subsidiaries."
"Designation Amount" has the meaning given to this term in the covenant
described under " -- Certain covenants -- Limitations on Designation of
Unrestricted Subsidiaries."
"Disqualified Equity Interests" of any Person means any Equity Interests of
such Person that, by its terms, or by the terms of any related agreement or of
any security into which it is convertible, puttable or exchangeable, is, or
upon the happening of any event or the passage of time would be, required to be
redeemed by such Person, whether or not at the option of the holder thereof, or
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, in whole or in part, on or prior to the date which is 91 days after
the final maturity date of the Notes; provided, however, that any class of
Equity Interests of such Person that, by its terms, authorizes such Person to
satisfy in full its obligations with respect to the payment of dividends or
upon maturity, redemption (pursuant to a sinking fund or otherwise) or
repurchase thereof or otherwise by the delivery of Equity Interests that are
not Disqualified Equity Interests, and that is not convertible, puttable or
exchangeable for Disqualified Equity Interests or Indebtedness, will not be
deemed to be Disqualified Equity Interests so long as such Person satisfies its
obligations with respect thereto solely by the delivery of Equity Interests
that are not Disqualified Equity Interests; provided, further, that any Equity
Interests that would not constitute Disqualified Equity Interests but for
provisions thereof giving holders thereof (or the holders of any security into
or for which such Equity Interests is convertible, exchangeable or exercisable)
the right to require the Issuer to redeem such Equity Interests upon the
occurrence of a Change of Control occurring prior to the final maturity date of
the Notes shall not constitute Disqualified Equity Interests if the change in
control provisions applicable to such Equity Interests are no more favorable to
such holders than the provisions described under the caption " -- Change of
control" and such Equity Interests specifically provide that the Issuer will
not redeem any such Equity Interests pursuant to such provisions prior to the
Issuer's purchase of the Notes as required pursuant to the provisions described
under the caption " -- Change of control."
"Equity Interests" of any Person means (1) any and all shares or other equity
interests or participations, however designated (including common stock,
preferred stock, limited liability company interests and partnership
interests), in such Person and (2) all rights to purchase, warrants or options
(whether or not currently exercisable), participations or other equivalents of
or interests in (however designated) such shares or other interests in such
Person.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any asset, the price (after taking
into account any liabilities relating to such assets) that would be negotiated
in an arm's-length transaction for cash between a willing seller and a willing
and able buyer, neither of which is under any compulsion to complete the
transaction, as such price is determined in good faith by the Board of
Directors of the Issuer or a duly authorized committee thereof, as evidenced by
a resolution of such Board or committee; provided, however, for purposes of
calculating the Fair Market Value of assets sold in PPM Asset Sales, no value
shall be assigned to the management agreements being canceled and for purposes
of calculating the Fair Market Value of the consideration received in such
sales, no value shall be assigned to the newly executed service agreements.
"Foreign Subsidiary" means any Subsidiary of the Issuer which (i) is not
organized under the laws of (x) the United States or any state thereof or (y)
the District of Columbia and (ii) conducts substantially all of its business
operations outside the United States of America.
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"GAAP" means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting profession
of the United States, as in effect from time to time.
"guarantee" means a direct or indirect guarantee (other than by endorsement of
negotiable instruments for collection) by any Person of any Indebtedness of any
other Person and includes any obligation, direct or indirect, contingent or
otherwise, of such Person: (1) to purchase or pay (or advance or supply funds
for the purchase or payment of) Indebtedness of such other Person (whether
arising by virtue of partnership arrangements, or by agreements to keep-well,
to purchase assets, goods, securities or services (unless such purchase
arrangements are on arm's-length terms and are entered into in the ordinary
course of business), to take-or-pay, or to maintain financial statement
conditions or otherwise); or (2) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part). The
amount of any guarantee of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations in respect of which such
guarantee is made and the maximum liability of such other Person for any such
contingent obligations in respect of which such guarantee is made at such date.
"guarantee," when used as a verb, and "guaranteed" have correlative meanings.
"Guarantor" means each Restricted Subsidiary of the Issuer on the Issue Date,
and each other Person that is required to become a Guarantor by the terms of
the Indenture after the Issue Date, in each case, until such Person is released
from its Note Guarantee.
"Guarantor Senior Debt" means, with respect to any Guarantor, the principal of,
premium, if any, and interest (including any interest accruing subsequent to
the filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an allowed
claim under applicable law) on any Indebtedness of such Guarantor, together
with all interest, fees, indemnities and other obligations and other amounts
owing in respect thereof, whether outstanding on the Issue Date or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes.
Without limiting the generality of the foregoing, "Guarantor Senior Debt" shall
also include the principal of, premium, if any, interest (including any
interest accruing subsequent to the filing of a petition of bankruptcy at the
rate provided for in the documentation with respect thereto, whether or not
such interest is an allowed claim under applicable law) and other obligations
on, and all other amounts owing in respect of:
(1) all monetary obligations of every nature of such Guarantor under, or with
respect to, the Credit Agreement, including, without limitation,
obligations to pay principal and interest, reimbursement obligations under
letters of credit, fees, expenses and indemnities (and guarantees thereof);
and
(2) all Hedging Obligations in respect of the Credit Agreement;
in each case whether outstanding on the Issue Date or thereafter incurred.
Notwithstanding the foregoing, "Guarantor Senior Debt" shall not include:
(1) any Indebtedness of such Guarantor to the Issuer or any of its
Subsidiaries;
(2) Indebtedness to, or guaranteed on behalf of, any director, officer or
employee of the Issuer or any of its Subsidiaries;
(3) obligations to trade creditors in connection with obtaining goods,
materials or services;
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(4) Indebtedness represented by Disqualified Equity Interests;
(5) any liability for taxes owed or owing by such Guarantor;
(6) that portion of any Indebtedness incurred in violation of the "Limitations
on additional indebtedness" covenant (but, as to any such obligation, no
such violation shall be deemed to exist for purposes of this clause (6) if
the holder(s) of such obligation or their representative shall have
received an officers' certificate of such Guarantor to the effect that the
incurrence of such Indebtedness does not (or, in the case of revolving
credit indebtedness, that the incurrence of the entire committed amount
thereof at the date on which the initial borrowing thereunder is made would
not) violate such provisions of the Indenture);
(7) Indebtedness which, when incurred and without respect to any election under
Section 1111(b) of Title 11, United States Code, is without recourse to
such Guarantor; and
(8) any Indebtedness which is, by its express terms, subordinated in right of
payment to any other Indebtedness of such Guarantor.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any interest rate swap agreement, interest rate collar agreement,
interest rate floor agreement or other similar agreement or arrangement
designed to protect such Person against fluctuations in interest rates, in each
case entered into for bona fide hedging purposes and not for the purpose of
speculation.
"Holder" means any registered holder, from time to time, of the Notes.
"incur" means, with respect to any Indebtedness or Obligation, incur, create,
issue, assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to such Indebtedness or Obligation;
provided that (1) the Indebtedness of a Person existing at the time such Person
became a Restricted Subsidiary shall be deemed to have been incurred by such
Restricted Subsidiary at such time and (2) neither the accrual of interest nor
the accretion of original issue discount shall be deemed to be an incurrence of
Indebtedness.
"Indebtedness" of any Person at any date means, without duplication:
(1) all liabilities, contingent or otherwise, of such Person for borrowed
money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof);
(2) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(3) all obligations of such Person in respect of letters of credit or other
similar instruments (or reimbursement obligations with respect thereto);
(4) all obligations of such Person to pay the deferred and unpaid purchase
price of property or services, except trade payables and accrued expenses
incurred by such Person in the ordinary course of business in connection
with obtaining goods, materials or services;
(5) the maximum fixed redemption or repurchase price of all Disqualified
Equity Interests of such Person;
(6) all Capitalized Lease Obligations of such Person;
(7) all Indebtedness of others secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person;
(8) all Indebtedness of others guaranteed by such Person to the extent of such
guarantee; provided that Indebtedness of the Issuer or its Subsidiaries
that is guaranteed by the Issuer or the Issuer's Subsidiaries shall only
be counted once in the calculation of the amount of Indebtedness of the
Issuer and its Subsidiaries on a consolidated basis;
(9) all Attributable Indebtedness;
(10) to the extent not otherwise included in this definition, Hedging
Obligations of such Person;
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(11) all obligations of such Person under conditional sale or other title
retention agreements relating to assets purchased by such Person; and
(12) all obligations under Permitted Receivables Financings, the amount of
Indebtedness represented thereby to be deemed to equal the Outstanding
Receivables Financing Amount.
Any Indebtedness which is incurred at a discount to the principal amount at
maturity thereof shall be deemed to have been incurred at the accreted value
thereof at the date of issuance in accordance with GAAP. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above, the maximum liability
of such Person for any such contingent obligations at such date and, in the
case of clause (7), the lesser of (a) the Fair Market Value of any asset
subject to a Lien securing the Indebtedness of others on the date that the Lien
attaches and (b) the amount of the Indebtedness secured thereby. For purposes
of clause (5), the "maximum fixed redemption or repurchase price" of any
Disqualified Equity Interests that do not have a fixed redemption or repurchase
price shall be calculated in accordance with the terms of such Disqualified
Equity Interests as if such Disqualified Equity Interests were redeemed or
repurchased on any date on which an amount of Indebtedness outstanding shall be
required to be determined pursuant to the Indenture.
"Independent Director" means a director of the Issuer who
(1) is independent with respect to the transaction at issue; and
(2) does not have any material financial interest in the Issuer (other than as
a result of holding securities of the Issuer).
"Independent Financial Advisor" means an accounting, appraisal or investment
banking firm of nationally recognized standing that is, in the reasonable
judgment of the Issuer's Board of Directors, qualified to perform the task for
which it has been engaged and disinterested and independent with respect to the
Issuer.
"interest" means, with respect to the Notes, interest and Additional Interest,
if any, on the Notes.
"Investments" of any Person means:
(1) all direct or indirect investments by such Person in any other Person in
the form of loans, advances or capital contributions or other credit
extensions constituting Indebtedness of such other Person, and any
guarantee of Indebtedness of any other Person (excluding commissions,
travel and similar advances to officers and employees, made in the ordinary
course of business) and extensions of credit or other advances to customers
or other Persons on commercially reasonable terms in accordance with normal
trade practices or otherwise in the ordinary course of business;
(2) all purchases (or other acquisitions for consideration) by such Person of
Indebtedness, Equity Interests or other securities of any other Person;
(3) all other items that would be classified as investments (including
purchases of assets outside the ordinary course of business) on a balance
sheet of such Person prepared in accordance with GAAP; and
(4) the Designation of any Subsidiary as an Unrestricted Subsidiary.
Except as otherwise expressly specified in this definition, the amount of any
Investment (other than an Investment made in cash) shall be the Fair Market
Value thereof on the date such Investment is made. The amount of Investment
pursuant to clause (4) shall be the Designation Amount determined in accordance
with the covenant described under " -- Certain covenants -- Limitations on
Designation of Unrestricted Subsidiaries." If the Issuer or any Restricted
Subsidiary sells or otherwise disposes of any
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Equity Interests of any direct or indirect Restricted Subsidiary such that,
after giving effect to any such sale or disposition, such Person is no longer a
Restricted Subsidiary, the Issuer shall be deemed to have made an Investment on
the date of any such sale or other disposition equal to the Fair Market Value
of the Equity Interests of and all other Investments in such Restricted
Subsidiary not sold or disposed of, which amount shall be determined by the
Board of Directors. The acquisition by the Issuer or any Restricted Subsidiary
of a Person that holds an Investment in a third Person other than a third
Person invested in by an Unrestriced Subsidiary shall be deemed to be an
Investment by the Issuer or such Restricted Subsidiary in the third Person in
an amount equal to the Fair Market Value of the Investment held by the acquired
Person in the third Person. Notwithstanding the foregoing, purchases or
redemptions of Equity Interests of the Issuer shall be deemed not to be
Investments.
"Issue Date" means the date on which the Notes are originally issued.
"Lien" means, with respect to any asset, any mortgage, deed of trust, lien
(statutory or other), pledge, lease, easement, restriction, covenant, charge,
security interest or other encumbrance of any kind or nature in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law, including any conditional sale or other title retention agreement, and any
lease in the nature thereof, any option or other agreement to sell, and any
filing of, or agreement to give, any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction (other than
cautionary filings in respect of operating leases).
"Management Services Agreements" means the management services agreements of
the Issuer and its Restricted Subsidiaries, whether now existing or hereafter
acquired or arising, together with any and all extensions, modifications,
amendments, renewals, substitutions or replacements thereof.
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Net Available Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents, net of
(1) brokerage commissions and other fees and expenses (including fees and
expenses of legal counsel, accountants and investment banks) of such Asset
Sale;
(2) provisions for taxes payable as a result of such Asset Sale (after taking
into account any available tax credits or deductions and any tax sharing
arrangements);
(3) amounts required to be paid to any Person (other than the Issuer or any
Restricted Subsidiary) owning a beneficial interest in the assets subject
to the Asset Sale or having a Lien thereon;
(4) payments of unassumed liabilities (not constituting Indebtedness) relating
to the assets sold at the time of, or within 30 days after the date of,
such Asset Sale; and
(5) appropriate amounts to be provided by the Issuer or any Restricted
Subsidiary, as the case may be, (i) for post-closing adjustments, tune-ups
or revaluations or (ii) as a reserve required in accordance with GAAP
against any liabilities associated with such Asset Sale and retained by the
Issuer or any Restricted Subsidiary, as the case may be, after such Asset
Sale, including pensions and other postemployment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as
reflected in an Officers' Certificate delivered to the Trustee; provided,
however, that any amounts remaining after adjustments, revaluations or
liquidations of such reserves shall constitute Net Available Proceeds.
"Non-Recourse Debt" means Indebtedness of an Unrestricted Subsidiary:
(1) as to which neither the Issuer nor any Restricted Subsidiary (a) provides
credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness), other
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than any pledge of the Equity Interest of any Unrestricted Subsidiary, (b)
is directly or indirectly liable as a guarantor or otherwise, other than in
the case of both of the foregoing clauses (a) and (b), a non-recourse
guarantee to support a pledge of the Equity Interests of any Unrestricted
Subsidiary, or (c) constitutes the lender; and
(2) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder of
any other Indebtedness (other than the Notes) of the Issuer or any
Restricted Subsidiary to declare a default on the other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity.
"Obligation" means any principal, interest, penalties, fees, indemnification,
reimbursements, costs, expenses, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means any of the following of the Issuer: the Chairman of the Board
of Directors, the Chief Executive Officer, the Chief Financial Officer, the
President, any Vice President, the Treasurer or the Secretary.
"Officers' Certificate" means a certificate signed by two Officers.
"Outstanding Receivables Financing Amount" means the greater of (x) 85% of the
net book value of the aggregate amount of receivables sold or financed
pursuant to a Permitted Receivables Financing that remain uncollected at any
one time and (y) 100% of the obligations secured by such receivables exclusive
of yield or interest earned in such investments.
"Pari Passu Indebtedness" means any Indebtedness of the Issuer or any
Guarantor that ranks pari passu as to payment with the Notes or the Note
Guarantees, as applicable.
"Permitted Business" means the businesses engaged in by the Issuer and its
Subsidiaries on the Issue Date as described in this Prospectus and businesses
that are reasonably related thereto or reasonable extensions thereof.
"Permitted Holders" means Welsh, Carson, Anderson & Stowe and Oak Hill Capital
Management and investment vehicles controlled by such entities formed solely
for the purpose of investing in securities.
"Permitted Investment" means:
(1) Investments by the Issuer or any Restricted Subsidiary in (a) any
Restricted Subsidiary or (b) in any Person that is or will become
immediately after such Investment or substantially concurrent with such
Investment a Restricted Subsidiary or that will merge or consolidate or
liquidate into the Issuer or a Restricted Subsidiary;
(2) Investments in the Issuer by any Restricted Subsidiary;
(3) loans and advances to directors, employees and officers of the Issuer and
the Restricted Subsidiaries for bona fide business purposes and to
purchase Equity Interests of the Issuer not in excess of $3.0 million at
any one time outstanding;
(4) Hedging Obligations incurred pursuant to clause (5) of the second
paragraph under the covenant described under " -- Certain covenants --
Limitations on Additional Indebtedness";
(5) Cash Equivalents;
(6) receivables owing to the Issuer or any Restricted Subsidiary payable or
dischargeable in accordance with customary trade terms; provided,
however, that such trade terms may include
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such concessionary trade terms as the Issuer or any such Restricted
Subsidiary deems reasonable under the circumstances;
(7) to the extent disclosed in this Prospectus, Investments existing on the
Issue Date or made pursuant to legally binding written agreements in
existence on such date;
(8) Investments received as consideration for the settlement of any
litigation, arbitration or dispute in partial or full satisfaction of
such claim or dispute;
(9) Investments in securities of trade creditors or customers received
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers;
(10) Investments made by the Issuer or any Restricted Subsidiary as a result
of consideration received in connection with an Asset Sale made in
compliance with the covenant described under " -- Certain covenants --
Limitations on Asset Sales" or the disposition of any asset not
constituting an Asset Sale;
(11) lease, utility and other similar deposits in the ordinary course of
business;
(12) Investments made by the Issuer or a Restricted Subsidiary for
consideration consisting only of Qualified Equity Interests of the
Issuer;
(13) stock, obligations or securities received in settlement of debts created
in the ordinary course of business and owing to the Issuer or any
Restricted Subsidiary or in satisfaction of judgments;
(14) Investments in Permitted Joint Ventures in an aggregate amount
outstanding at any one time not to exceed the greater of (a) $20.0
million or (b) 3% of Total Tangible Assets (with each Investment being
valued as of the date made and without regard to subsequent changes in
value);
(15) Investments in Accounts Receivables Entities;
(16) other Investments in an aggregate amount not to exceed $20.0 million at
any one time outstanding (with each Investment being valued as of the
date made and without regard to subsequent changes in value;
(17) prepaid expenses, negotiable instruments held for collection and lease,
utility and workers' compensation, performance or similar deposits
incurred in the ordinary course of business; and
(18) loans by Physician Reliance Network, Inc. to affiliated physician groups
in an aggregate amount outstanding at any one time not to exceed $10.0
million.
The amount of Investments outstanding at any time pursuant to clause (14),
(16) or (18) above shall be deemed to be reduced:
(a) upon the disposition or repayment of or return on any Investment made
pursuant to clause (14), (16) or (18) above, by an amount equal to the
return of capital (including dividends, interest and distributions)
with respect to such Investment to the Issuer or any Restricted
Subsidiary (to the extent not included in the computation of
Consolidated Net Income and profits on sale), less the cost of the
disposition of such Investment, if any, and net of taxes; and
(b) upon a Redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary, by an amount equal to the lesser of (x) the Fair Market
Value of the Issuer's proportionate interest in such Subsidiary
immediately following such Redesignation, and (y) the aggregate amount
of Investments in such Subsidiary that increased (and did not
previously decrease) the amount of Investments outstanding pursuant to
clause (14), (16) or (18) above.
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"Permitted Joint Venture" means a Person (i) that owns, leases, operates or
services a hospital or other health-care provider for the purpose of
developing, operating, conducting or marketing a Permitted Business and (ii) of
which the Issuer or any Restricted Subsidiary owns a 30% or greater equity
interest.
"Permitted Junior Securities" means:
(1) Equity Interests in the Issuer; or
(2) debt securities that are subordinated to (a) all Senior Debt of the Issuer
or Guarantor Senior Debt of the applicable Guarantor, as the case may be,
and (b) any debt securities issued in exchange for Senior Debt or Guarantor
Senior Debt, as the case may be, to substantially the same extent as, or to
a greater extent than, the Notes and the Note Guarantees are subordinated
to Senior Debt and Guarantor Senior Debt, respectively, under the
Indenture.
"Permitted Liens" means the following types of Liens:
(1) Liens for taxes, assessments or governmental charges or claims either (a)
not delinquent or remain payable without penalty or (b) contested in good
faith by appropriate proceedings and as to which the Issuer or the
Restricted Subsidiaries shall have set aside on its books such reserves as
may be required pursuant to GAAP;
(2) statutory, contractual or common law Liens of landlords and Liens of
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and
other Liens imposed by law incurred in the ordinary course of business for
sums not yet delinquent or being contested in good faith;
(3) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, contracts,
progress payments or completion or performance and return-of-money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money);
(4) Liens upon specific items of inventory, equipment or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(5) attachment or judgment Liens not giving rise to an Event of Default so
long as any appropriate legal proceedings which may have been duly
initiated for the review of such judgment have not been finally terminated
or the period within which the proceedings may be initiated has not
expired;
(6) easements, rights-of-way, zoning restrictions and other similar charges,
restrictions, encumbrances or irregularities in respect of real property
or immaterial imperfections of title which are customary or do not, in the
aggregate, impair in any material respect the ordinary conduct of the
business of the Issuer and the Restricted Subsidiaries taken as a whole;
(7) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other assets relating to
such letters of credit and products and proceeds thereof;
(8) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements of the Issuer
or any Restricted Subsidiary, including rights of offset and setoff;
(9) bankers' Liens, rights of setoff and other similar Liens existing solely
with respect to cash and Cash Equivalents on deposit in one or more of
accounts maintained by the Issuer or any
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Restricted Subsidiary, in each case granted in the ordinary course of
business in favor of the bank or banks with which such accounts are
maintained, securing amounts owing to such bank with respect to cash
management and operating account arrangements, including those involving
pooled accounts and netting arrangements; provided that in no case shall
any such Liens secure (either directly or indirectly) the repayment of any
Indebtedness;
(10) leases or subleases granted to others that do not materially interfere
with the ordinary course of business of the Issuer or any Restricted
Subsidiary;
(11) Liens arising from filing Uniform Commercial Code financing statements
regarding leases;
(12) Liens securing all of the Notes and Liens securing any Note Guarantee;
(13) Liens securing Senior Debt or Guarantor Senior Debt and all obligations
related thereto;
(14) Liens existing on the Issue Date securing Indebtedness outstanding on the
Issue Date;
(15) Liens in favor of the Issuer or a Restricted Subsidiary;
(16) Liens securing Indebtedness and other obligations under the Credit
Agreement;
(17) Liens securing Purchase Money Indebtedness and all obligations related
thereto;
(18) Liens securing Acquired Indebtedness permitted to be incurred under the
Indenture and all obligations related thereto; provided that the Liens do
not extend to assets not subject to such Lien at the time of acquisition
(other than improvements thereon) and are no more favorable to the
lienholders than those securing such Acquired Indebtedness prior to the
incurrence of such Acquired Indebtedness by the Issuer or a Restricted
Subsidiary;
(19) Liens on assets of a Person existing at the time such Person is acquired
or merged with or into or consolidated with the Issuer or any such
Restricted Subsidiary (and not created in anticipation or contemplation
thereof);
(20) Liens to secure Refinancing Indebtedness of Indebtedness secured by Liens
referred to in the foregoing clauses (13), (14), (16), (17) and (18);
provided that in the case of clauses (14), (17), and (18) such Liens do
not extend to any additional assets (other than improvements thereon and
replacements thereof);
(21) Liens to secure Attributable Indebtedness; provided that any such Lien
shall not extend to or cover any assets of the Issuer or any Restricted
Subsidiary other than the assets which are the subject of the Sale and
Leaseback Transaction in which the Attributable Indebtedness is incurred;
(22) those encumbrances and restrictions referred to in clauses (3), (6) and
(9) under " -- Limitations on dividend and other restrictions affecting
restricted subsidiaries";
(23) Liens consisting of rights of first refusal or options to purchase
ownership interest in any asset, property, Person or Equity Interest, in
each case, if not issued in connection with the incurrence of
Indebtedness or as credit support for Indebtedness or Disqualified Equity
Interests;
(24) Liens on the securities of any Unrestricted Subsidiary that secure the
Indebtedness of the Unrestricted Subsidiary;
(25) zoning restrictions, licenses, restrictions on the use of real property
or other minor irregularities;
(26) Liens incurred in connection with Permitted Receivables Financings; and
(27) Liens incurred in connection with any synthetic lease financing.
"Permitted Receivables Financing" means any sale, conveyance or other transfer
by the Issuer or any Restricted Subsidiary of accounts receivable and related
assets or any pledge of such accounts receivable (or an interest therein in
each case that is part of a receivables financing transaction).
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"Person" means any individual, corporation, partnership, limited liability
company, joint venture, incorporated or unincorporated association, joint-stock
company, trust, unincorporated organization or government or other agency or
political subdivision thereof or other entity of any kind.
"Plan of Liquidation" with respect to any Person, means a plan that provides
for, contemplates or the effectuation of which is preceded or accompanied by
(whether or not substantially contemporaneously, in phases or otherwise): (1)
the sale, lease, conveyance or other disposition of all or substantially all of
the assets of such Person otherwise than as an entirety or substantially as an
entirety; and (2) the distribution of all or substantially all of the proceeds
of such sale, lease, conveyance or other disposition of all or substantially
all of the remaining assets of such Person to holders of Equity Interests of
such Person.
"PPM Asset Sales" means sales of assets to physician practice management
entities or to physicians affiliated with physician practice management
entities in connection with the termination or modification of the Management
Services Agreement in effect on the Issue Date with such physician practice
management entities or such affiliated physicians.
"Preferred Stock" means, with respect to any Person, any and all preferred or
preference stock or other equity interests (however designated) of such Person
whether now outstanding or issued after the Issue Date.
"principal" means, with respect to the Notes, the principal of the Notes.
"Prospectus" means the prospectus related to the sale of the Notes dated ,
2002.
"Purchase Money Indebtedness" means Indebtedness, including Capitalized Lease
Obligations, of the Issuer or any Restricted Subsidiary incurred for the
purpose of financing all or any part of the purchase price or construction cost
(including property renovated, developed or otherwise improved) of property,
plant or equipment used in the business of the Issuer or any Restricted
Subsidiary or the cost of installation, construction or improvement thereof;
provided, however, that (1) the amount of such Indebtedness shall not exceed
such purchase price or cost, (2) such Indebtedness shall not be secured by any
asset other than the specified asset being financed or, in the case of real
property or fixtures, including additions and improvements, the real property
to which such asset is attached and equipment, intangibles and rents
customarily encumbered in connection therewith and (3) such Indebtedness shall
be incurred within 360 days after such acquisition of such asset by the Issuer
or such Restricted Subsidiary or such installation, renovation, development,
construction or improvement or the commencement of full operation of the
property.
"Qualified Equity Interests" means Equity Interests of the Issuer other than
Disqualified Equity Interests; provided that such Equity Interests shall not be
deemed Qualified Equity Interests to the extent sold or owed to a Subsidiary of
the Issuer or financed, directly or indirectly, using funds (1) borrowed from
the Issuer or any Subsidiary of the Issuer until and to the extent such
borrowing is repaid or (2) contributed, extended, guaranteed or advanced by the
Issuer or any Subsidiary of the Issuer (including, without limitation, in
respect of any employee stock ownership or benefit plan).
"Qualified Equity Offering" means the issuance and sale of Qualified Equity
Interests of the Issuer to any Person other than a Subsidiary of the Issuer.
"redeem" means to redeem, repurchase, purchase, defease, retire, discharge or
otherwise acquire or retire for value; and "redemption" shall have a
correlative meaning.
"Redesignation" has the meaning given to such term in the covenant described
under " -- Certain Covenants -- Limitations on Designation of Unrestricted
Subsidiaries."
"refinance" means to refinance, repay, prepay, replace, renew or refund.
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"Refinancing Indebtedness" means Indebtedness of the Issuer or a Restricted
Subsidiary issued in exchange for, or the proceeds from the issuance and sale
or disbursement of which are used substantially concurrently to redeem,
refinance, defease or refund (collectively "repay") in whole or in part, or
constituting an amendment of, any Indebtedness of the Issuer or such Restricted
Subsidiary (the "Refinanced Indebtedness") in a principal amount not in excess
of the principal amount (or accreted value, if applicable) of the Refinanced
Indebtedness so repaid or amended (plus the amount of any prepayment premiums
and other reasonable expenses incurred in connection therewith) (or, if such
Refinancing Indebtedness refinances Indebtedness under a revolving credit
facility or other agreement providing a commitment for subsequent borrowings,
with a maximum commitment not to exceed the maximum commitment under such
revolving credit facility or other agreement); provided that:
(1) the Refinancing Indebtedness is the obligation of the same Person as that
of the Refinanced Indebtedness, the Issuer and/or one or more Guarantors;
(2) if the Refinanced Indebtedness was subordinated to or pari passu with the
Notes or the Note Guarantees, as the case may be, then such Refinancing
Indebtedness, by its terms, is expressly pari passu with (in the case of
Refinanced Indebtedness that was pari passu with) or subordinate in right
of payment to (in the case of Refinanced Indebtedness that was subordinated
to) the Notes or the Note Guarantees, as the case may be, at least to the
same extent in all material respects as the Refinanced Indebtedness;
(3) the Refinancing Indebtedness is scheduled to mature either (a) no earlier
than the Refinanced Indebtedness being repaid or amended or (b) after the
maturity date of the Notes; and
(4) the portion, if any, of the Refinancing Indebtedness that is scheduled to
mature on or prior to the maturity date of the Notes has a Weighted Average
Life to Maturity at the time such Refinancing Indebtedness is incurred that
is equal to or greater than the Weighted Average Life to Maturity of the
portion of the Refinanced Indebtedness being repaid or amended that is
scheduled to mature on or prior to the maturity date of the Notes.
"Representative" means any agent or representative in respect of any Designated
Senior Debt; provided that if, and for so long as, any Designated Senior Debt
lacks such representative, then the Representative for such Designated Senior
Debt shall at all times constitute the holder or holders of a majority in
outstanding principal amount of such Designated Senior Debt.
"Restricted Payment" means any of the following:
(1) the declaration or payment of any dividend or any other distribution on
Equity Interests (excluding, for the avoidance of doubt, payment of
principal and interest on any debt security that is convertible or
exchangeable for capital stock) of the Issuer or any Restricted Subsidiary
or any payment made to the direct or indirect holders (in their capacities
a such) of any such Equity Interests of the Issuer or any Restricted
Subsidiary, including, without limitation, any payment in connection with
any merger or consolidation involving the Issuer but excluding (a)
dividends or distributions payable solely in Qualified Equity Interests and
(b) in the case of Restricted Subsidiaries, dividends or distributions
payable to the Issuer or to a Restricted Subsidiary and pro rata dividends
or distributions payable to minority stockholders of any Restricted
Subsidiary;
(2) the purchase or redemption of any Equity Interests of the Issuer or any
Restricted Subsidiary, including, without limitation, any payment in
connection with any merger or consolidation involving the Issuer but
excluding any such Equity Interests held by the Issuer or any Restricted
Subsidiary and pro rata purchases or redemptions of any Equity Interest
held by minority stockholders of any Restricted Subsidiary;
(3) any Investment other than a Permitted Investment;
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(4) any redemption prior to the scheduled maturity or prior to any scheduled
repayment of principal or sinking fund payment, as the case may be, in
respect of Subordinated Indebtedness, other than the redemption of the
subordinated physician notes in connection with conversions of physician
management practice entities and/or physicians affiliated with such
physician management practice entities to the service line structure or
from the net revenue model to the earnings model or the termination of a
Management Services Agreement as in effect on the Issue Date; or
(5) payment in lieu of fractional shares not to exceed $1.0 million.
"Restricted Payments Basket" has the meaning given to such term in the first
paragraph of the covenant described under " -- Certain covenants -- Limitations
on Restricted Payments."
"Restricted Subsidiary" means any Subsidiary of the Issuer other than an
Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Services, a division of the McGraw-Hill
Companies, Inc., and its successors.
"Sale and Leaseback Transactions" means with respect to any Person an
arrangement with any bank, insurance company or other lender or investor or to
which such lender or investor is a party, providing for the leasing by such
Person of any asset of such Person which has been or is being sold or
transferred by such Person to such lender or investor or to any Person to whom
funds have been or are to be advanced by such lender or investor on the
security of such asset.
"SEC" means the United States Securities and Exchange Commission.
"Secretary's Certificate" means a certificate signed by the Secretary of the
Issuer.
"Securities Act" means the U.S. Securities Act of 1933, as amended.
"Senior Debt" means the principal of, premium, if any, and interest (including
any interest accruing subsequent to the filing of a petition of bankruptcy at
the rate provided for in the documentation with respect thereto, whether or not
such interest is an allowed claim under applicable law) on any Indebtedness of
the Issuer, together with all interest, fees, indemnitees and other obligations
and other amounts owing in respect thereof, whether outstanding on the Issue
Date or thereafter created, incurred or assumed, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Notes.
Without limiting the generality of the foregoing, "Senior Debt" shall also
include the principal of, premium, if any, interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) and other obligations on,
and all other amounts owing in respect of:
(1) all monetary obligations of every nature under, or with respect to, the
Credit Agreement, including, without limitation, obligations to pay
principal and interest, reimbursement obligations under letters of credit,
fees, expenses and indemnities (and guarantees thereof); and
(2) all Hedging Obligations in respect of the Credit Agreement;
in each case whether outstanding on the Issue Date or thereafter incurred.
Notwithstanding the foregoing, "Senior Debt" shall not include:
(1) any Indebtedness of the Issuer to the Issuer or any of its Subsidiaries;
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(2) Indebtedness to, or guaranteed on behalf of, any director, officer or
employee of the Issuer or any of its Subsidiaries;
(3) obligations to trade creditors in connection with obtaining goods,
materials or services;
(4) Indebtedness represented by Disqualified Equity Interests;
(5) any liability for taxes owed or owing by the Issuer;
(6) that portion of any Indebtedness incurred in violation of the "Limitations
on additional indebtedness" covenant (but, as to any such obligation, no
such violation shall be deemed to exist for purposes of this clause (6) if
the holder(s) of such obligation or their representative shall have
received an Officers' Certificate of the Issuer to the effect that the
incurrence of such Indebtedness does not (or, in the case of revolving
credit indebtedness, that the incurrence of the entire committed amount
thereof at the date on which the initial borrowing thereunder is made would
not) violate such provisions of the Indenture);
(7) Indebtedness which, when incurred and without respect to any election under
Section 1111(b) of Title 11, United States Code, is without recourse to the
Issuer; and
(8) any Indebtedness which is, by its express terms or by express agreement,
subordinated in right of payment to any other Indebtedness of the Issuer.
"Significant Subsidiary" means (1) any Restricted Subsidiary that would be a
"significant subsidiary" as defined in Regulation S-X promulgated pursuant to
the Securities Act as such Regulation is in effect on the Issue Date and (2)
any Restricted Subsidiary that, when aggregated with all other Restricted
Subsidiaries that are not otherwise Significant Subsidiaries and as to which
any event described in clause (7) or (8) under " -- Events of default" has
occurred and is continuing, would constitute a Significant Subsidiary under
clause (1) of this definition.
"Subordinated Indebtedness" means Indebtedness of the Issuer or any Guarantor
that is subordinated in right of payment to the Notes or the Note Guarantees,
respectively.
"Subsidiary" means, with respect to any Person:
(1) any corporation, limited liability company, association or other business
entity of which more than 50% of the total voting power of the Equity
Interests entitled (without regard to the occurrence of any contingency) to
vote in the election of the Board of Directors thereof are at the time
owned or controlled, directly or indirectly, by such Person or one or more
of the other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b) the
only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
Unless otherwise specified, "Subsidiary" refers to a Subsidiary of the Issuer.
"Total Tangible Assets" means, as of any date, the total amount of tangible
assets of the Issuer and the Restricted Subsidiaries on a consolidated basis
determined in accordance with GAAP at the end of the fiscal quarter immediately
preceding such date.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Unrestricted Subsidiary" means (1) any Subsidiary that at the time of
determination shall be designated an Unrestricted Subsidiary by the Board of
Directors of the Issuer in accordance with the covenant described under " --
Certain covenants -- Limitations on Designation of Unrestricted Subsidiaries"
and (2) any Subsidiary of an Unrestricted Subsidiary.
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"U.S. Government Obligations" means direct non-callable obligations of, or
obligations guaranteed by, the United States of America for the payment of
which guarantee or obligations the full faith and credit of the United States
is pledged.
"Voting Stock" with respect to any Person, means securities of any class of
Equity Interests of such Person entitling the holders thereof (whether at all
times or only so long as no senior class of stock or other relevant equity
interest has voting power by reason of any contingency) to vote in the election
of members of the Board of Directors of such Person.
"Weighted Average Life to Maturity" when applied to any Indebtedness at any
date, means the number of years obtained by dividing (1) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment by (2) the then outstanding
principal amount of such Indebtedness.
"Wholly-Owned Restricted Subsidiary" means a Restricted Subsidiary of which
100% of the Equity Interests (except for directors' qualifying shares or
certain minority interests owned by other Persons solely due to local law
requirements that there be more than one stockholder, but which interest is not
in excess of what is required for such purpose) are owned directly by the
Issuer or through one or more Wholly-Owned Restricted Subsidiaries.
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Exchange offer; registration rights
For purposes of this "Exchange offer; registration rights" section, we refer to
the old notes as the "Notes" and the new notes as the "Exchange Notes."
The Issuer and the Guarantors entered into a registration rights agreement (the
"Registration Rights Agreement") with the initial purchaser, for the benefit of
the Holders, pursuant to which the Issuer and the Guarantors will, at their
cost:
.no later than the date (the "Filing Deadline Date") that is 90 days after the
Issue Date file a registration statement (the "Exchange Offer Registration
Statement") with the SEC with respect to a registered exchange offer (the
"Registered Exchange Offer") to exchange the Notes for Exchange Notes having
terms identical in all material respects to the Notes (except that the
Exchange Notes would not contain terms with respect to transfer restrictions
or Additional Interest (as defined)); and
.use their commercially reasonable best efforts to cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act
within 150 days after the Issue Date and consummate the Exchange Offer within
180 days after the Issue Date.
Upon the effectiveness of the Exchange Offer Registration Statement, the Issuer
will offer the Exchange Notes in exchange for surrender of the Notes. The
Issuer will keep the Registered Exchange Offer open for not less than 30 days
(or longer if required by applicable law) after the date notice of the
Registered Exchange Offer is mailed to the Holders. For each Note surrendered
to the Issuer pursuant to the Registered Exchange Offer, the Holder of such
Note will receive an Exchange Note having a principal amount equal to that of
the surrendered Note. Under existing SEC interpretations, the Exchange Notes
and the related guarantees will be freely transferable by Holders other than
affiliates of the Issuer after the Registered Exchange Offer without further
registration under the Securities Act.
Each Holder that wishes to exchange its Notes for Exchange Notes will be
required to represent that, among other things:
.any Exchange Notes to be received by it will be acquired in the ordinary
course of its business,
.it has no arrangement or understanding with any person to participate in the
distribution (within the meaning of the Securities Act) of the Exchange Notes
in violation of the provisions of the Securities Act,
.it is not an "affiliate" of the Issuer or any Guarantor, as defined in Rule
405 under the Securities Act, or if it is an affiliate, it will comply with
the registration and prospectus delivery requirements of the Securities Act to
the extent applicable,
.if such Holder is not a broker-dealer, it is not engaged in, and does not
intend to engage in, a distribution of Exchange Notes, and
.if such holder is a broker-dealer (a "Participating Broker-Dealer") that will
receive Exchange Notes for its own account in exchange for Notes acquired as a
result of market-making or other trading activities, it will deliver a
prospectus in connection with any resale of such Exchange Notes.
Under similar SEC interpretations, Participating Broker-Dealers may fulfill
their prospectus delivery requirements with respect to Exchange Notes (other
than a resale of an unsold allotment from the original sale of the Notes) with
the prospectus contained in the Exchange Offer Registration Statement. Under
the Registration Rights Agreement, if requested by a Participating Broker-
Dealer, the Issuer and the Guarantors are required to use their commercially
reasonable best efforts to keep the Exchange Offer Registration Statement
continuously effective for a period of at least 180 days after the date on
which such statement is declared effective to satisfy their prospectus delivery
requirements.
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Exchange offer; registration rights
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In the event that:
.applicable law or interpretations of the staff of the SEC do not permit the
Issuer and the Guarantors to effect such a Registered Exchange Offer,
.for any other reason the Registered Exchange Offer is not consummated within
180 days of the Issue Date,
.any Holder is prohibited by law or SEC policy from participating in the
Registered Exchange Offer or does not receive Exchange Notes that may be sold
without restriction (other than due solely to the status of such Holder as an
affiliate of the Issuer or any Guarantor), or
.the initial purchaser so requests with respect to Notes that have, or that are
reasonably likely to be determined to have, the status of unsold allotments in
an initial distribution,
then the Issuer and the Guarantors will, at their cost, (a) as promptly as
practicable, file a registration statement (the "Shelf Registration Statement")
covering resales of the Notes or the Exchange Notes, as the case may be, from
time to time, (b) use their commercially reasonable best efforts to cause the
Shelf Registration Statement to be declared effective under the Securities Act
and (c) keep the Shelf Registration Statement effective two years from the
Issue Date or such shorter period ending when all Notes and/or Exchange Notes
covered by the Shelf Registration Statement have been sold in the manner set
forth and as contemplated in the Shelf Registration Statement. The Issuer will,
in the event a Shelf Registration Statement is filed, among other things,
provide to each Holder for which such Shelf Registration Statement was filed
copies of the prospectus which is a part of the Shelf Registration Statement,
notify each such Holder when the Shelf Registration Statement has become
effective and take certain other actions as are required to permit unrestricted
resales of the Notes or the Exchange Notes, as the case may be. A Holder
selling Notes or Exchange Notes pursuant to the Shelf Registration Statement
generally would be required to be named as a selling security holder in the
related prospectus and to deliver a prospectus to purchasers, will be subject
to certain of the civil liability provisions under the Securities Act in
connection with such sales and will be bound by the provisions of the
Registration Rights Agreement which are applicable to such Holder (including
certain indemnification obligations). In addition, each Holder of the Notes or
Exchange Notes to be registered under the Shelf Registration Statement will be
required to deliver information to be used in connection with the Shelf
Registration Statement within the time period set forth in the Registration
Rights Agreement in order to have such Holder's Notes or Exchange Notes
included in the Shelf Registration Statement and to benefit from the provisions
regarding Additional Interest set forth in the following paragraph.
If:
.on or prior to the 90th day following the Issue Date, the Exchange Offer
Registration Statement is not filed with the SEC,
.on or prior to the 150th day after the Issue Date, the Exchange Offer
Registration Statement is not declared effective,
.on or prior to the 180th day after the Issue Date, the Registered Exchange
Offer is not consummated and thereafter the Shelf Registration Statement is
not declared effective within the time period required by the Registration
Rights Agreement, or
.the Shelf Registration Statement is required to be filed but is not declared
effective within the time period required by the Registration Rights Agreement
or is declared effective but thereafter ceases to be effective (subject to
certain exceptions),
(each such event referred to in the clauses above, a "Registration Default"),
liquidated damages in the form of additional cash interest ("Additional
Interest") will accrue on the affected Notes and the affected Exchange Notes,
as applicable. The rate of Additional Interest will be 0.25% per annum for
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Exchange offer; registration rights
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the first 90-day period immediately following the occurrence of a Registration
Default, increasing by an additional 0.25% per annum with respect to each
subsequent 90-day period up to a maximum amount of additional interest of 1.00%
per annum, from and including the date on which any such Registration Default
shall occur to, but excluding, the earlier of (1) the date on which all
Registration Defaults have been cured or (2) the date on which all the Notes
and Exchange Notes otherwise become freely transferable by Holders other than
affiliates of the Issuer without further registration under the Securities Act.
Notwithstanding the foregoing, (1) the amount of Additional Interest payable
shall not increase because more than one Registration Default has occurred and
is pending and (2) a Holder of Notes or Exchange Notes who is not entitled to
the benefits of the Shelf Registration Statement (i.e., such Holder has not
elected to include information) shall not be entitled to Additional Interest
with respect to a Registration Default that pertains to the Shelf Registration
Statement. Such interest is payable in addition to any other interest payable
from time to time with respect to the Notes and the Exchange Notes in cash on
each interest payment date to the holders of record for such interest payment
date.
Under certain circumstances the Issuer and the Guarantors may delay the filing
or the effectiveness of the Exchange Offer Registration Statement or the Shelf
Registration Statement and shall not be required to maintain the effectiveness
thereof or amend or supplement the Exchange Offer Registration Statement or the
Shelf Registration for a period of up to 60 days during any 12-month period.
Any delay period will not alter the obligations of the Issuer to pay Additional
Interest with respect to a Registration Default.
This summary of certain provisions of the Registration Rights Agreement does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of the Registration Rights Agreement, a
copy of which is available upon request to the Issuer at its address set forth
elsewhere in this prospectus.
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United States federal tax considerations
The following is a discussion of the material U.S. federal tax consequences
applicable to the exchange of the old notes for new notes in the exchange offer
and the ownership and disposition of the new notes. Unless otherwise stated,
this discussion is limited to the tax consequences to those persons who
exchange the old notes for new notes and who hold the new notes as capital
assets under Section 1221 of the Internal Revenue Code. The discussion does not
address specific tax consequences that may be relevant to particular persons
including, for example, financial institutions, broker-dealers, insurance
companies, tax-exempt organizations, U.S. expatriates and persons in special
situations, such as those who hold notes as part of a straddle, hedge,
conversion transaction, or other integrated investment. This discussion does
not address the tax consequences to persons that have a "functional currency"
other than the U.S. dollar. In addition, this discussion does not address U.S.
federal alternative minimum tax consequences or any aspect of state, local or
foreign taxation. This discussion is based upon current U.S. federal income tax
laws, regulations, rulings and judicial decisions, all of which are subject to
change, possibly with retroactive effect.
Holders of the old notes are urged to consult their own tax advisors concerning
the specific U.S. federal income tax consequences to them of exchanging the old
notes for new notes and owning and disposing of the new notes, as well as the
application of state, local and foreign income and other tax laws.
Tax consequences of the exchange offer
The exchange of old notes for new notes pursuant to the exchange offer will not
be a taxable event for United States federal income tax purposes. U.S. holders
and non-U.S. holders will not recognize any taxable gain or loss as a result of
the exchange and will have the same tax basis and holding period in the new
notes as they had in the old notes immediately before the exchange.
Tax consequences to U.S. holders
For purposes of this discussion, you are a "U.S. holder" if you are a
beneficial owner of a note and are a U.S. citizen or resident, a corporation
created or organized in or under the laws of the U.S. or of any political
subdivision thereof, an estate, the income of which is subject to U.S. federal
income taxation regardless of its source, or a trust if a U.S. court is able to
exercise primary supervision over its administration and one or more U.S.
persons have the authority to control all of its substantial decisions.
If a partnership holds notes, the tax treatment of a partner will generally
depend on the status of the partner and on the activities of the partnership.
Partners of partnerships holding notes should consult their tax advisors.
Taxation of Interest. If you are a U.S. holder, interest on your notes
generally will be taxable as ordinary interest income at the time it is accrued
or received in accordance with your regular method of tax accounting. Special
rules governing the treatment of market discount and amortizable premium are
described below.
Under certain circumstances described elsewhere in this prospectus, we will be
required to pay additional amounts on the notes if we fail to comply with our
obligations under the registration rights agreement. We believe the contingency
that we will pay these additional amounts is "remote and incidental" within the
meaning of the applicable Treasury regulations. On that basis, we believe the
possibility that these additional amounts may be paid should not be taken into
account in computing original issue discount. These additional amounts, if
paid, should be taxable to you as ordinary income
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United States federal tax considerations
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at the time the amounts are accrued or received in accordance with your regular
method of tax
accounting. It is possible, however, that the Internal Revenue Service may take
a different position, in which case the timing and amount of income recognition
relating to the additional amounts you may receive on the notes may be
different.
Market Discount. A U.S. holder who purchases a note at a discount may be
subject to the "market discount" rules of the Internal Revenue Code. These
rules provide, in part, that gain on the sale or other disposition of a note
and partial principal payments on a note are treated as ordinary income to the
extent of accrued market discount. The market discount rules also provide for
deferral of interest deductions with respect to debt incurred to purchase or
carry a note that has market discount.
Amortizable Premium. A U.S. holder, who purchases a note at a premium over the
sum of all amounts payable thereafter on the note that are treated as stated
redemption price at maturity, may elect to offset the premium against interest
income over the remaining term of the note in accordance with the "premium
amortization" provisions of the Internal Revenue Code.
Sale, Exchange or Retirement of the Notes. Upon the sale, exchange or
retirement of a note you generally will recognize gain or loss equal to the
difference between the amount realized on the sale, exchange or retirement
(less any portion allocable to accrued and unpaid interest which will be
taxable as ordinary income) and your adjusted tax basis in the note. Your
adjusted tax basis in a note generally will be the purchase price of the note,
increased by the amount of any market discount previously included in your
gross income with respect to the note, decreased by any amortized premium and
any principal payments you receive.
The gain or loss you recognize on the sale, exchange or retirement of the notes
generally will be capital gain or loss (except to the extent the gain
represents market discount on the note not previously included in gross income,
to which extent the gain would be treated as ordinary income). The gain or loss
will be long-term capital gain or loss if you have held the notes for more than
one year. Long-term capital gains of individuals, estates and trusts currently
are subject to a maximum federal tax rate of 20%, or 18% if you have held the
notes for more than five years. The deductibility of capital losses is subject
to limitation.
Tax consequences to non-U.S. holders
A "non-U.S. holder" is a beneficial owner of a note that is, for U.S. federal
income tax purposes, a nonresident alien individual, or a foreign corporation,
estate or trust that is not a U.S. holder.
If a partnership holds notes, the tax treatment of a partner will generally
depend on the status of the partner and on the activities of the partnership.
Partners of partnerships holding notes should consult their tax advisors.
Taxation of Interest. If you are a non-U.S. holder, you generally will not be
subject to U.S. federal income or withholding tax on interest paid on the notes
so long as that interest is not effectively connected with your conduct of a
trade or business within the U.S., and, in the case of the withholding tax:
.you do not actually or constructively own 10% or more of the total combined
voting power of all classes of our stock entitled to vote;
.you are not a "controlled foreign corporation" with respect to which we are a
"related person" within the meaning of the Internal Revenue Code; and
.either (A) you certify to us or our payment agent, under penalties of perjury,
that you are not a U.S. person and provide your name and address on IRS Form
W-8BEN (or a suitable substitute form), or
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United States federal tax considerations
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(B) a financial institution that holds customers' securities in the ordinary
course of its trade or business and holds the note on behalf of a non-U.S.
holder, certifies under penalties of perjury that IRS Form W-8BEN (or a
suitable substitute form) has been received from the beneficial owner and
provides a copy of the form to us or our payment agent.
If these conditions are not satisfied, then interest paid on the notes will be
subject to U.S. withholding tax at a rate of 30% unless that rate is reduced or
eliminated pursuant to an applicable tax treaty and you provide us with a
properly completed and executed IRS Form W-8 BEN (or a suitable substitute
form).
Sale, Exchange or Retirement of the Notes. Any gain you recognize on the sale,
exchange, retirement or other taxable disposition of a note generally will be
exempt from U.S. federal income and withholding tax unless:
.the gain is effectively connected with your conduct of a trade or business
within the U.S.; or
.if you are an individual, you are present in the U.S. for 183 days or more
during the taxable year of such disposition and certain other conditions are
present.
Effectively Connected Income. If the interest, gain or other income you
recognize on a note is effectively connected with your conduct of a trade or
business within the U.S., you will be exempt from the withholding tax
previously discussed if you provide us with a properly completed and executed
IRS Form W-8 ECI (or a suitable substitute form), but generally will be subject
to U.S. federal income tax on the interest, gain or other income at regular
federal income tax rates. In addition to regular U.S. federal income tax,
corporations may be subject to a branch profits tax equal to 30% of their
effectively connected earnings and profits, as adjusted for specific items,
unless they qualify for a lower rate under an applicable tax treaty.
Federal Estate Taxes. A note held by an individual who at the time of death is
not a citizen or resident of the U.S. will not be subject to U.S. federal
estate tax as a result of the individual's death, provided that the individual
does not actually or constructively own 10% or more of the total combined
voting power of all classes of our stock entitled to vote and that the interest
accrued on the notes was not effectively connected with that holder's conduct
of a trade or business within the U.S.
Information reporting and backup withholding
We will, where required, report to you and to the Internal Revenue Service the
amount of any interest paid on the notes in each calendar year and the amounts
of tax withheld, if any, with respect to those payments. A noncorporate U.S.
holder may be subject to information reporting and to backup withholding with
respect to payments of interest made on a note, or proceeds of the disposition
of a note before maturity, unless the U.S. holder provides a correct taxpayer
identification number or proof of an applicable exemption and otherwise
complies with applicable requirements of the information reporting and backup
withholding rules. The backup withholding tax rate is currently 30%. Pursuant
to the Economic Growth and Tax Relief Reconciliation Act of 2001, the backup
withholding rate will be gradually reduced each year until 2006, when the
backup withholding rate will be 28%. After December 31, 2010, the backup
withholding tax rate will be increased to 31%.
In the case of payments of interest to non-U.S. holders, current Treasury
regulations provide that the backup withholding tax and certain information
reporting requirements will not apply to payments with respect to which either
the non-U.S. holder certifies as to its non-U.S. holder status under penalties
of perjury as described above or an exemption has otherwise been established,
provided that neither we nor our payment agent has actual knowledge that the
holder is a U.S. person or that the conditions of any other exemption are not
in fact satisfied.
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United States federal tax considerations
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Information reporting and backup withholding requirements will apply, however,
to the gross proceeds paid to a non-U.S. holder on the disposition of the notes
by or through a U.S. office of a U.S. or foreign broker, unless the non-U.S.
holder establishes that it qualifies for an exemption. Information reporting
requirements, but not backup withholding, will apply to payment of the proceeds
of a disposition of the notes by or through a foreign office of a U.S. broker
or foreign brokers with certain types of relationships to the U.S. unless the
broker has documentary evidence in its file that the holder of the notes is not
a U.S. person and the broker has no actual knowledge to the contrary, or the
holder establishes that it qualifies for an exemption. Neither information
reporting nor backup withholding generally will apply to payment of the
proceeds of a disposition of the notes by or through a foreign office of a
foreign broker not subject to the preceding sentence.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against the holder's U.S.
federal income tax liability, provided that the required information is
furnished to the Internal Revenue Service. Copies of the information returns
reporting interest and withholding also may be made available to the tax
authorities in the country in which a non-U.S. holder is a resident under the
provisions of an applicable income tax treaty or other agreement.
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Plan of distribution
Each broker-dealer that receives new notes for its own account in the exchange
offer must acknowledge that it will deliver a prospectus in connection with any
resale of the new notes. This prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection with resales of
new notes received in exchange for old notes where the old notes were acquired
as a result of market-making activities or other trading activities.
We will not receive any proceeds from any sale of new notes by broker-dealers.
New notes received by broker-dealers for their own account in the exchange
offer may be sold from time to time in one or more transactions in the over-
the-counter market, in negotiated transactions, through the writing of options
on the new notes or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or negotiated prices. Any resale of the new notes may be made directly
to purchasers or to or through brokers or dealers who may receive compensation
in the form of commissions or concessions from any such broker-dealer and/or
the purchasers of any such new notes. Any broker-dealer that resells new notes
that were received by it for its own account in the exchange offer and any
broker or dealer that participates in a distribution of the new notes may be
deemed to be an "underwriter" within the meaning of the Securities Act. Any
profit on any resale of new notes and any commissions or concessions received
by any persons deemed to be underwriters may be deemed to be underwriting
compensation under the Securities Act. The enclosed letter of transmittal
states that by acknowledging that it will deliver and be delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the closing of the exchange offer, we will
promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the letter of transmittal. We have agreed to pay all expenses incident to
the exchange offer other than underwriting discounts or commissions and will
indemnify the holders of the old notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
Following completion of the exchange offer, we may, in our sole discretion,
commence one or more additional exchange offers to holders of old notes who did
not exchange their old notes for new notes in the exchange offer on terms which
may differ from those contained in the prospectus and the enclosed letter of
transmittal. This prospectus, as it may be amended or supplemented from time to
time, may be used by us in connection with any additional exchange offers.
These additional exchange offers may take place from time to time until all
outstanding old notes have been exchanged for new notes, subject to the terms
and conditions in the prospectus and letter of transmittal distributed by us in
connection with these additional exchange offers.
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Legal matters
The validity of the new notes will be passed upon for us by Andrews & Kurth,
Mayor, Day, Caldwell & Keeton L.L.P., Houston, Texas.
Experts
The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K for the year ended December 31, 2001, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
Documents incorporated by reference
We are incorporating the following documents by reference into this prospectus.
The information in these documents is considered a part of this prospectus, and
documents filed later with the SEC will update and supercede this information.
Annual Report on Form 10-K for the year ended December 31, 2001
Proxy Statement relating to our 2002 Annual Meeting of Stockholders
We are also incorporating by reference any additional reports that we file with
the SEC between the date of this prospectus and the termination of the exchange
offer.
You may request a copy of our filings by writing or telephoning us at the
following address:
US Oncology, Inc.
Attention: Phillip H. Watts -- Vice President and General Counsel
16825 Northchase Blvd., Suite 1300
Houston, Texas 77060
(832) 601-8766.
Descriptions in this prospectus, including those contained in the documents
incorporated by reference, of contracts and other documents are not necessarily
complete and, in each instance, reference is made to the copies of these
contracts and documents filed as exhibits to the documents incorporated by
reference in this prospectus.
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Where you can find more information
We file with the SEC annual, quarterly and special reports, proxy statements
and other information required by the Securities Exchange Act of 1934, as
amended. You may read and copy any document we file at the following SEC public
reference rooms:
Judiciary Plaza Citicorp Center
450 Fifth Street, N.W. 500 West Madison Street
Room 1024 Suite 1400
Washington, D.C. 20549 Chicago, IL 60661
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available from the SEC's web site at:
http://www.sec.gov. Copies of these reports, proxy statements and other
information also can be inspected at the following address:
The Nasdaq Stock Market
Reports Section
1735 K Street
Washington, D.C. 20006
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We have not authorized any dealer, salesperson or other person to give any
information or to make any representations to you other than the information
contained in this prospectus. You must not rely on unauthorized information or
representations.
This prospectus does not offer to sell or solicit an offer to buy any of these
new notes in any jurisdiction where, or to any person whom, it is unlawful to
make such offer or solicitation.
The information contained in this prospectus is current only as of the date on
the cover page. We do not imply that there has been no change in the
information contained in this prospectus or in our affairs since that date by
delivering this prospectus.
----------------
Table of Contents
Page
Prospectus summary.......................................................... 1
Risk factors................................................................ 9
Use of proceeds............................................................. 24
Ratio of earnings to fixed charges.......................................... 24
Capitalization.............................................................. 25
The exchange offer.......................................................... 26
Description of other indebtedness........................................... 36
Description of the notes.................................................... 38
Exchange offer; registration rights......................................... 83
United States federal tax considerations.................................... 86
Plan of distribution........................................................ 90
Legal matters............................................................... 91
Experts..................................................................... 91
Documents incorporated by reference......................................... 91
Where you can find more information......................................... 92
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US ONCOLOGY, INC.
[US ONCOLOGY LOGO]
OFFER TO EXCHANGE
all registered 9 5/8% Senior Subordinated Notes due 2012 for all outstanding 9
5/8% Senior Subordinated Notes due 2012
----------------------
PROSPECTUS
, 2002
----------------------
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PART II
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Information not required in the prospectus
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
US Oncology, Inc. is empowered by Section 145 of the General Corporation Law of
Delaware, subject to the procedures and limitations stated therein, to
indemnify any person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with any threatened, pending or completed action, suit or
proceeding in which such person is made a party by reason of such person being
or having been a director, officer, employee or agent of US Oncology, Inc. The
statute provides that indemnification pursuant to its provisions is not
exclusive of other rights of indemnification to which a person may be entitled
under any by-law, agreement, vote of stockholders or disinterested directors,
or otherwise. The By-laws of US Oncology, Inc. provide for indemnification by
it of its directors and officers to the fullest extent permitted by the General
Corporation Law of Delaware. In addition, US Oncology, Inc. has entered into
indemnity agreements with its directors and certain officers providing for,
among other things, the indemnification of and the advancing of expenses to
such individuals to the fullest extent permitted by law, and, to the extent
insurance is maintained, for the continued coverage of such individuals.
Policies of insurance are maintained by US Oncology, Inc. under which its
directors and officers are insured, within the limits and subject to the
limitations of the policies, against certain expenses in connection with the
defense of actions, suits or proceedings, and certain liabilities which might
be imposed as a result of such actions, suits or proceedings, to which they are
parties by reason of being or having been such directors or officers.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
The following instruments and documents are included as Exhibits to this
Registration Statement.
- ----------
EXHIBIT
NUMBER EXHIBIT
------- -------
3.1(a) Certificate of Incorporation of AOR Holding Company of Indiana, Inc.
3.1(b) Bylaws of AOR Holding Company of Indiana, Inc.
3.2(a) Certificate of Incorporation of AOR Management Company of Alabama,
Inc.
3.2(b) Bylaws of AOR Management Company of Alabama, Inc.
3.3(a) Certificate of Incorporation of AOR Management Company of Arizona,
Inc.
3.3(b) Bylaws of AOR Management Company of Arizona, Inc.
3.4(a) Certificate of Incorporation of AOR Management Company of Central
Florida, Inc.
3.4(b) Bylaws of AOR Management Company of Central Florida, Inc.
3.5(a) Certificate of Incorporation of AOR Management Company of Florida,
Inc.
3.5(b) Bylaws of AOR Management Company of Florida, Inc.
3.6(a) Certificate of Incorporation of AOR Management Company of Indiana,
Inc.
3.6(b) Bylaws of AOR Management Company of Indiana, Inc.
3.7(a) Certificate of Incorporation of AOR Management Company of Missouri,
Inc.
3.7(b) Bylaws of AOR Management Company of Missouri, Inc.
3.8(a) Certificate of Incorporation of AOR Management Company of Nevada, Inc.
3.8(b) Bylaws of AOR Management Company of Nevada, Inc.
3.9(a) Certificate of Incorporation of AOR Management Company of New York,
Inc.
3.9(b) Bylaws of AOR Management Company of New York, Inc.
3.10(a) Certificate of Incorporation of AOR Management Company of North
Carolina, Inc.
- --------------------------------------------------------------------------------
I-1
Information not required in the prospectus
- --------------------------------------------------------------------------------
EXHIBIT
NUMBER EXHIBIT
------- -------
3.10(b) Bylaws of AOR Management Company of North Carolina, Inc.
3.11(a) Certificate of Incorporation of AOR Management Company of Ohio, Inc.
3.11(b) Bylaws of AOR Management Company of Ohio, Inc.
3.12(a) Certificate of Incorporation of AOR Management Company of Oklahoma,
Inc.
3.12(b) Bylaws of AOR Management Company of Oklahoma, Inc.
3.13(a) Certificate of Incorporation of AOR Management Company of Oregon, Inc.
3.13(b) Bylaws of AOR Management Company of Oregon, Inc.
3.14(a) Certificate of Incorporation of AOR Management Company of
Pennsylvania, Inc.
3.14(b) Bylaws of AOR Management Company of Pennsylvania, Inc.
3.15(a) Certificate of Incorporation of AOR Management Company of South
Carolina, Inc.
3.15(b) Bylaws of AOR Management Company of South Carolina, Inc.
3.16(a) Certificate of Incorporation of AOR Management Company of Texas, Inc.
3.16(b) Bylaws of AOR Management Company of Texas, Inc.
3.17(a) Certificate of Incorporation of AOR Management Company of Virginia,
Inc.
3.17(b) Bylaws of AOR Management Company of Virginia, Inc.
3.18 Partnership Agreement of AOR of Indiana Management Partnership
3.19(a) Certificate of Limited Partnership of AOR of Texas Management Limited
Partnership
3.19(b) Agreement of Limited Partnership of AOR of Texas Management Limited
Partnership
3.20(a) Certificate of Incorporation of AOR Real Estate, Inc.
3.20(b) Bylaws of AOR Real Estate, Inc.
3.21(a) Certificate of Incorporation of AOR Synthetic Real Estate, Inc.
3.21(b) Bylaws of AOR Synthetic Real Estate, Inc.
3.22(a) Certificate of Incorporation of AORIP, Inc.
3.22(b) Bylaws of AORIP, Inc.
3.23(a) Certificate of Incorporation of AORT Holding Company, Inc.
3.23(b) Bylaws of AORT Holding Company, Inc.
3.24(a) Certificate of Incorporation of Greenville Radiation Care, Inc.
3.24(b) Bylaws of Greenville Radiation Care, Inc.
3.25(a) Certificate of Limited Partnership of Physician Reliance, L.P.
3.25(b) Partnership Agreement of Physician Reliance, L.P.
3.26(a) Certificate of Formation of Physician Reliance Holdings, LLC, as
amended
3.26(b) Limited Liability Company Agreement of Physician Reliance Holdings,
LLC
3.27(a) Articles of Incorporation of Physician Reliance Network, Inc., as
amended
3.27(b) Bylaws of Physician Reliance Network, Inc.
3.28(a) Articles of Organization of PRN Physician Reliance, LLC
3.28(b) Regulations of PRN Physician Reliance, LLC
3.29(a) Certificate of Incorporation of RMCC Cancer Center, Inc., as amended
3.29(b) Bylaws of RMCC Cancer Center, Inc.
3.30(a) Articles of Incorporation of TOPS Pharmacy Services, Inc., as amended
3.30(b) Bylaws of TOPS Pharmacy Services, Inc.
3.31(a) Certificate of Incorporation of US Oncology Corporate, Inc., as
amended
3.31(b) Bylaws of US Oncology Corporate, Inc.
3.32(a) Articles of Incorporation of US Oncology Research, Inc., as amended
3.32(b) Bylaws of US Oncology Research, Inc.
4.1 Indenture, dated as of February 1, 2002, between the registrant and
JPMorgan Chase Bank, as trustee, including form of 9 5/8% Senior
Subordinated Note due 2012 (filed as Exhibit 3 to the Company's Form
8-K filed February 5, 2002 and incorporated herein by reference).
- --------------------------------------------------------------------------------
I-2
Information not required in the prospectus
- --------------------------------------------------------------------------------
EXHIBIT
NUMBER EXHIBIT
------- -------
4.2 Registration Rights Agreement, dated February 1, 2002, by and among
the registrant and UBS Warburg LLC, and other parties listed therein,
as Initial Purchasers (filed as Exhibit 4 to the Company's Form 8-K
filed February 5, 2002 and incorporated herein by reference).
4.3 Form of 9 5/8% Senior Subordinated Note due 2012 (included in Exhibit
4.1).
5.1 Opinion of Andrews & Kurth, Mayor, Day, Caldwell & Keeton L.L.P., as
to the validity of the new notes.
10.1 Purchase Agreement between registrant and the parties listed therein,
dated January 25, 2002 (filed as Exhibit 2 to the Company's Form 8-K
filed February 5, 2002 and incorporated herein by reference).
12.1 Statement regarding computation of ratios.
23.1 Consent of PricewaterhouseCoopers LLP.
24.1 Power of Attorney (included on signature pages).
25.1 Statement of Eligibility of JPMorgan Chase Bank, as trustee, on Form
T-1 with respect to the issuance of 9 5/8% Senior Subordinated Notes
due 2012, by the registrant to the Indenture between the registrant
and JPMorgan Chase Bank, as trustee.
99.1 Form of Letter of Transmittal.
99.2 Form of Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
99.3 Form of Notice of Guaranteed Delivery.
99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
99.5 Form of Letter to Clients.
99.6 Form of Exchange Agent Agreement.
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a) that, for purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section 13(a)
or 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.
(b) to respond to requests for information that is incorporated by reference
into the prospectus pursuant to Item 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.
(c) 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.
- --------------------------------------------------------------------------------
I-3
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Registration Statement on Form S-4 to be signed on its behalf
by the undersigned, thereunto duly authorized, on this 15th day of April, 2002.
US ONCOLOGY, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Chief Financial
Officer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and
directors of the Registrant hereby constitutes and appoints R. Dale Ross, Bruce
D. Broussard and Phillip H. Watts (with full power to each of them to act
alone) his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any or all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as he himself might or could do, if personally present,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or their substitute or substitutes, may lawfully do or cause to be
done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross Chairman of the Board, Chief Executive
- ------------------------------------- Officer, Director (Principal Executive
R. Dale Ross Officer)
/s/ Lloyd K. Everson, M.D. Vice Chairman of the Board, Director
- -------------------------------------
Lloyd K. Everson, M.D.
/s/ Bruce D. Broussard Chief Financial Officer (Principal
- ------------------------------------- Financial Officer and Accounting
Bruce D. Broussard Officer)
/s/ Stephen E. Jones, M.D. Director
- -------------------------------------
Stephen E. Jones, M.D.
/s/ Robert A. Ortenzio Director
- -------------------------------------
Robert A. Ortenzio
- --------------------------------------------------------------------------------
I-4
Power of attorney
- --------------------------------------------------------------------------------
Signatures Title
/s/ J. Taylor Crandall Director
- -------------------------------------
J. Taylor Crandall
/s/ James E. Dalton Director
- -------------------------------------
James E. Dalton
/s/ Burton S. Schwartz, M.D. Director
- -------------------------------------
Burton S. Schwartz, M.D.
/s/ Russell L. Carson Director
- -------------------------------------
Russell L. Carson
/s/ Richard B. Mayor Director
- -------------------------------------
Richard B. Mayor
/s/ Boone Powell, Jr. Director
- -------------------------------------
Boone Powell, Jr.
- --------------------------------------------------------------------------------
I-5
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Holding Company
of Indiana, Inc. has duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, on this
15th day of April, 2002.
AOR HOLDING COMPANY OF INDIANA, INC.
/s/ Bruce D. Broussard
By______________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-6
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Management
Company of Alabama, Inc. has duly caused this Registration Statement on Form S-
4 to be signed on its behalf by the undersigned, thereunto duly authorized, on
this 15th day of April, 2002.
AOR MANAGEMENT COMPANY OF
ALABAMA, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-7
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Management
Company of Arizona, Inc. has duly caused this Registration Statement on Form S-
4 to be signed on its behalf by the undersigned, thereunto duly authorized, on
this 15th day of April, 2002.
AOR MANAGEMENT COMPANY OF
ARIZONA, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-8
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Management
Company of Central Florida, Inc. has duly caused this Registration Statement on
Form S-4 to be signed on its behalf by the undersigned, thereunto duly
authorized, on this 15th day of April, 2002.
AOR MANAGEMENT COMPANY OF
CENTRAL FLORIDA, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-9
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Management
Company of Florida, Inc. has duly caused this Registration Statement on Form S-
4 to be signed on its behalf by the undersigned, thereunto duly authorized, on
this 15th day of April, 2002.
AOR MANAGEMENT COMPANY OF
FLORIDA, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-10
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Management
Company of Indiana, Inc. has duly caused this Registration Statement on Form S-
4 to be signed on its behalf by the undersigned, thereunto duly authorized, on
this 15th day of April, 2002.
AOR MANAGEMENT COMPANY OF
INDIANA, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-11
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Management
Company of Missouri, Inc. has duly caused this Registration Statement on Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized,
on this 15th day of April, 2002.
AOR MANAGEMENT COMPANY OF
MISSOURI, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-12
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Management
Company of Nevada, Inc. has duly caused this Registration Statement on Form S-4
to be signed on its behalf by the undersigned, thereunto duly authorized, on
this 15th day of April, 2002.
AOR MANAGEMENT COMPANY OF
NEVADA, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-13
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Management
Company of New York, Inc. has duly caused this Registration Statement on Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized,
on this 15th day of April, 2002.
AOR MANAGEMENT COMPANY OF
NEW YORK, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-14
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Management
Company of North Carolina, Inc. has duly caused this Registration Statement on
Form S-4 to be signed on its behalf by the undersigned, thereunto duly
authorized, on this 15th day of April, 2002.
AOR MANAGEMENT COMPANY OF
NORTH CAROLINA, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-15
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Management
Company of Ohio, Inc. has duly caused this Registration Statement on Form S-4
to be signed on its behalf by the undersigned, thereunto duly authorized, on
this 15th day of April, 2002.
AOR MANAGEMENT COMPANY OF OHIO, INC.
/s/ Bruce D. Broussard
By________________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-16
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Management
Company of Oklahoma, Inc. has duly caused this Registration Statement on Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized,
on this 15th day of April, 2002.
AOR MANAGEMENT COMPANY OF
OKLAHOMA, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-17
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Management
Company of Oregon, Inc. has duly caused this Registration Statement on Form S-4
to be signed on its behalf by the undersigned, thereunto duly authorized, on
this 15th day of April, 2002.
AOR MANAGEMENT COMPANY OF
OREGON, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-18
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Management
Company of Pennsylvania, Inc. has duly caused this Registration Statement on
Form S-4 to be signed on its behalf by the undersigned, thereunto duly
authorized, on this 15th day of April, 2002.
AOR MANAGEMENT COMPANY OF
PENNSYLVANIA, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-19
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Management
Company of South Carolina, Inc. has duly caused this Registration Statement on
Form S-4 to be signed on its behalf by the undersigned, thereunto duly
authorized, on this 15th day of April, 2002.
AOR MANAGEMENT COMPANY OF
SOUTH CAROLINA, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-20
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Management
Company of Texas, Inc. has duly caused this Registration Statement on Form S-4
to be signed on its behalf by the undersigned, thereunto duly authorized, on
this 15th day of April, 2002.
AOR MANAGEMENT COMPANY OF
TEXAS, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-21
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Management
Company of Virginia, Inc. has duly caused this Registration Statement on Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized,
on this 15th day of April, 2002.
AOR MANAGEMENT COMPANY OF
VIRGINIA, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-22
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR of Indiana
Management Partnership has duly caused this Registration Statement on Form S-4
to be signed on its behalf by the undersigned, thereunto duly authorized, on
this 15th day of April, 2002.
AOR OF INDIANA MANAGEMENT
PARTNERSHIP
By: AOR Management Company of
Indiana, Inc., partner
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
By: AOR Holding Company of Indiana,
Inc., partner
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director of each partner
- ------------------------------------- (Principal Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director of each partner
Bruce D. Broussard (Principal Financial Officer and
Accounting Officer)
- --------------------------------------------------------------------------------
I-23
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR of Texas
Management Limited Partnership has duly caused this Registration Statement on
Form S-4 to be signed on its behalf by the undersigned, thereunto duly
authorized, on this 15th day of April, 2002.
AOR OF TEXAS MANAGEMENT
LIMITED PARTNERSHIP
By: AOR Management Company of Texas,
Inc., its general partner
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director of General
- ------------------------------------- Partner (Principal Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director of General Partner
Bruce D. Broussard (Principal Financial Officer and
Accounting Officer)
- --------------------------------------------------------------------------------
I-24
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Real Estate,
Inc. has duly caused this Registration Statement on Form S-4 to be signed on
its behalf by the undersigned, thereunto duly authorized, on this 15th day of
April, 2002.
AOR REAL ESTATE, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-25
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AOR Synthetic Real
Estate, Inc. has duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, on this
15th day of April, 2002.
AOR SYNTHETIC REAL ESTATE, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-26
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AORIP, Inc. has
duly caused this Registration Statement on Form S-4 to be signed on its behalf
by the undersigned, thereunto duly authorized, on this 15th day of April, 2002.
AORIP, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-27
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, AORT Holding
Company, Inc. has duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, on this
15th day of April, 2002.
AORT HOLDING COMPANY, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-28
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, Greenville
Radiation Care, Inc. has duly caused this Registration Statement on Form S-4 to
be signed on its behalf by the undersigned, thereunto duly authorized, on this
15th day of April, 2002.
GREENVILLE RADIATION CARE, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-29
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, Physician Reliance,
L.P. has duly caused this Registration Statement on Form S-4 to be signed on
its behalf by the undersigned, thereunto duly authorized, on this 15th day of
April, 2002.
PHYSICIAN RELIANCE, L.P.
By: PRN Physician Reliance, LLC, its
general partner
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director of General
- ------------------------------------- Partner (Principal Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director of General Partner
Bruce D. Broussard (Principal Financial Officer and
Accounting Officer)
- --------------------------------------------------------------------------------
I-30
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, Physician Reliance
Holdings, LLC has duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, on this
15th day of April, 2002.
PHYSICIAN RELIANCE HOLDINGS, LLC
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-31
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, Physician Reliance
Network, Inc. has duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, on this
15th day of April, 2002.
PHYSICIAN RELIANCE NETWORK, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-32
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, PRN Physician
Reliance, LLC has duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, on this
15th day of April, 2002.
PRN PHYSICIAN RELIANCE, LLC
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-33
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, RMCC Cancer Center,
Inc. has duly caused this Registration Statement on Form S-4 to be signed on
its behalf by the undersigned, thereunto duly authorized, on this 15th day of
April, 2002.
RMCC CANCER CENTER, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-34
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, TOPS Pharmacy
Services, Inc. has duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, on this
15th day of April, 2002.
TOPS PHARMACY SERVICES, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-35
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, US Oncology
Corporate, Inc. has duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, on this
15th day of April, 2002.
US ONCOLOGY CORPORATE, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-36
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, US Oncology
Research, Inc. has duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, on this
15th day of April, 2002.
US ONCOLOGY RESEARCH, INC.
/s/ Bruce D. Broussard
By___________________________________
Bruce D. Broussard Vice President,
Secretary and Treasurer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Phillip H.
Watts his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any and all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on April 15, 2002.
Signatures Title
/s/ R. Dale Ross President and Director (Principal
- ------------------------------------- Executive Officer)
R. Dale Ross
/s/ Bruce D. Broussard Vice President, Secretary, Treasurer
- ------------------------------------- and Director (Principal Financial
Bruce D. Broussard Officer and Accounting Officer)
- --------------------------------------------------------------------------------
I-37
- --------------------------------------------------------------------------------
Index to exhibits
EXHIBIT
NUMBER EXHIBIT
------- -------
3.1(a) Certificate of Incorporation of AOR Holding Company of Indiana, Inc.
3.1(b) Bylaws of AOR Holding Company of Indiana, Inc.
3.2(a) Certificate of Incorporation of AOR Management Company of Alabama,
Inc.
3.2(b) Bylaws of AOR Management Company of Alabama, Inc.
3.3(a) Certificate of Incorporation of AOR Management Company of Arizona,
Inc.
3.3(b) Bylaws of AOR Management Company of Arizona, Inc.
3.4(a) Certificate of Incorporation of AOR Management Company of Central
Florida, Inc.
3.4(b) Bylaws of AOR Management Company of Central Florida, Inc.
3.5(a) Certificate of Incorporation of AOR Management Company of Florida,
Inc.
3.5(b) Bylaws of AOR Management Company of Florida, Inc.
3.6(a) Certificate of Incorporation of AOR Management Company of Indiana,
Inc.
3.6(b) Bylaws of AOR Management Company of Indiana, Inc.
3.7(a) Certificate of Incorporation of AOR Management Company of Missouri,
Inc.
3.7(b) Bylaws of AOR Management Company of Missouri, Inc.
3.8(a) Certificate of Incorporation of AOR Management Company of Nevada, Inc.
3.8(b) Bylaws of AOR Management Company of Nevada, Inc.
3.9(a) Certificate of Incorporation of AOR Management Company of New York,
Inc.
3.9(b) Bylaws of AOR Management Company of New York, Inc.
3.10(a) Certificate of Incorporation of AOR Management Company of North
Carolina, Inc.
3.10(b) Bylaws of AOR Management Company of North Carolina, Inc.
3.11(a) Certificate of Incorporation of AOR Management Company of Ohio, Inc.
3.11(b) Bylaws of AOR Management Company of Ohio, Inc.
3.12(a) Certificate of Incorporation of AOR Management Company of Oklahoma,
Inc.
3.12(b) Bylaws of AOR Management Company of Oklahoma, Inc.
3.13(a) Certificate of Incorporation of AOR Management Company of Oregon, Inc.
3.13(b) Bylaws of AOR Management Company of Oregon, Inc.
3.14(a) Certificate of Incorporation of AOR Management Company of
Pennsylvania, Inc.
3.14(b) Bylaws of AOR Management Company of Pennsylvania, Inc.
3.15(a) Certificate of Incorporation of AOR Management Company of South
Carolina, Inc.
3.15(b) Bylaws of AOR Management Company of South Carolina, Inc.
3.16(a) Certificate of Incorporation of AOR Management Company of Texas, Inc.
3.16(b) Bylaws of AOR Management Company of Texas, Inc.
3.17(a) Certificate of Incorporation of AOR Management Company of Virginia,
Inc.
3.17(b) Bylaws of AOR Management Company of Virginia, Inc.
3.18 Partnership Agreement of AOR of Indiana Management Partnership
3.19(a) Certificate of Limited Partnership of AOR of Texas Management Limited
Partnership
3.19(b) Agreement of Limited Partnership of AOR of Texas Management Limited
Partnership
3.20(a) Certificate of Incorporation of AOR Real Estate, Inc.
3.20(b) Bylaws of AOR Real Estate, Inc.
3.21(a) Certificate of Incorporation of AOR Synthetic Real Estate, Inc.
3.21(b) Bylaws of AOR Synthetic Real Estate, Inc.
3.22(a) Certificate of Incorporation of AORIP, Inc.
3.22(b) Bylaws of AORIP, Inc.
3.23(a) Certificate of Incorporation of AORT Holding Company, Inc.
3.23(b) Bylaws of AORT Holding Company, Inc.
3.24(a) Certificate of Incorporation of Greenville Radiation Care, Inc.
3.24(b) Bylaws of Greenville Radiation Care, Inc.
- --------------------------------------------------------------------------------
Index to exhibits
- --------------------------------------------------------------------------------
EXHIBIT
NUMBER EXHIBIT
------- -------
3.25(a) Certificate of Limited Partnership of Physician Reliance, L.P.
3.25(b) Partnership Agreement of Physician Reliance, L.P.
3.26(a) Certificate of Formation of Physician Reliance Holdings, LLC, as
amended
3.26(b) Limited Liability Company Agreement of Physician Reliance Holdings,
LLC
3.27(a) Articles of Incorporation of Physician Reliance Network, Inc., as
amended
3.27(b) Bylaws of Physician Reliance Network, Inc.
3.28(a) Articles of Organization of PRN Physician Reliance, LLC
3.28(b) Regulations of PRN Physician Reliance, LLC
3.29(a) Certificate of Incorporation of RMCC Cancer Center, Inc., as amended
3.29(b) Bylaws of RMCC Cancer Center, Inc.
3.30(a) Articles of Incorporation of TOPS Pharmacy Services, Inc., as amended
3.30(b) Bylaws of TOPS Pharmacy Services, Inc.
3.31(a) Certificate of Incorporation of US Oncology Corporate, Inc., as
amended
3.31(b) Bylaws of US Oncology Corporate, Inc.
3.32(a) Articles of Incorporation of US Oncology Research, Inc., as amended
3.32(b) Bylaws of US Oncology Research, Inc.
4.1 Indenture, dated as of February 1, 2002, between the registrant and
JPMorgan Chase Bank, as trustee, including form of 9 5/8% Senior
Subordinated Note due 2012 (filed as Exhibit 3 to the Company's Form
8-K filed February 5, 2002 and incorporated herein by reference).
4.2 Registration Rights Agreement, dated February 1, 2002, by and among
the registrant and UBS Warburg LLC, and other parties listed therein,
as Initial Purchasers (filed as Exhibit 4 to the Company's Form 8-K
filed February 5, 2002 and incorporated herein by reference).
4.3 Form of 9 5/8% Senior Subordinated Note due 2012 (included in Exhibit
4.1).
5.1 Opinion of Andrews & Kurth, Mayor, Day, Caldwell & Keeton L.L.P., as
to the validity of the new notes.
10.1 Purchase Agreement between registrant and the parties listed therein,
dated January 25, 2002 (filed as Exhibit 2 to the Company's Form 8-K
filed February 5, 2002 and incorporated herein by reference).
12.1 Statement regarding computation of ratios.
23.1 Consent of PricewaterhouseCoopers LLP.
24.1 Power of Attorney (included on signature pages).
25.1 Statement of Eligibility of JPMorgan Chase Bank, as trustee, on Form
T-1 with respect to the issuance of 9 5/8% Senior Subordinated Notes
due 2012, by the registrant to the Indenture between the registrant
and JPMorgan Chase Bank, as trustee.
99.1 Form of Letter of Transmittal.
99.2 Form of Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
99.3 Form of Notice of Guaranteed Delivery.
99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
99.5 Form of Letter to Clients.
99.6 Form of Exchange Agreement.
- --------------------------------------------------------------------------------