sv3asr
As filed with the Securities and Exchange Commission on August 15, 2006
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Manor Care, Inc.
(Exact Name of Registrant as Specified in Its Charter)
|
|
|
Delaware
|
|
34-1687107 |
(State or Other Jurisdiction of
|
|
(I.R.S. Employer Identification Number) |
Incorporation or Organization) |
|
|
333 N. Summit Street
Toledo, Ohio 43604-2617
(419) 252-5500
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrants Principal Executive Offices)
See Table of Additional Co-Registrants Included in this Registration Statement
|
|
|
Richard A. Parr II, Esq.
|
|
Copy To: |
Vice President and General Counsel
|
|
Michael D. Levin, Esq. |
333 N. Summit Street
|
|
Latham & Watkins LLP |
Toledo, Ohio 43604-2617
|
|
233 S. Wacker Drive |
(419) 252-5500
|
|
Chicago, Illinois 60606 |
(Name, Address, Including Zip Code, and Telephone
|
|
(312) 876-7700 |
Number, Including Area Code, of Agent for Service) |
|
|
Approximate date of commencement of proposed sale to the public: From time to time after
this registration statement becomes effective.
If the only securities being registered on this Form are being offered pursuant to dividend or
interest reinvestment plans, please check the following box. o
If any of the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment plans, check the following box. x
If this Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same
offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities
Act, check the following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. o
If this Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with the Commission
pursuant to Rule 462(e) under the Securities Act, check the following box. x
If this Form is a post-effective amendment to a registration statement filed pursuant to
General Instruction I.D. filed to register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities Act, check the following box. o
Calculation of Registration Fee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposed Maximum |
|
|
Proposed Maximum |
|
|
|
|
|
Title of Each Class of Securities |
|
|
Amount to be |
|
|
Offering Price Per |
|
|
Aggregate Offering |
|
|
Amount of |
|
|
to be Registered |
|
|
Registered |
|
|
Security |
|
|
Price(1) |
|
|
Registration Fee |
|
|
2% Convertible Senior Notes due 2036 |
|
|
$250,000,000 |
|
|
100% |
|
|
$250,000,000 |
|
|
$26,750 |
|
|
Common Stock, par value $0.01 per share |
|
|
5,527,275 shares(2) |
|
|
|
|
|
|
|
|
|
|
|
Senior Guarantees |
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
|
(1) |
|
Equals the aggregate principal amount of notes being registered. Estimated solely for the
purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act
of 1933, as amended. |
|
(2) |
|
Represents the maximum number of shares of common stock issuable upon conversion of the notes
registered hereby at a conversion rate, corresponding to the maximum conversion rate, of
22.1091 shares of common stock for each $1,000 principal amount of notes. Pursuant to Rule
416 under the Securities Act, the registrants are also registering such indeterminate number
of shares of common stock as may be issued from time to time upon conversion of the notes as a
result of the anti-dilution provisions thereof. No additional consideration will be received
for the common stock, and therefore no registration fee is required pursuant to Rule 457(i)
under the Securities Act. |
|
(3) |
|
The notes are guaranteed by the guarantors named in the table of Additional Co-Registrants.
No separate consideration will be paid in respect of the guarantees pursuant to Rule 457(n) of
the Securities Act. |
Table of Additional Co-Registrants
|
|
|
|
|
|
|
(State or other jurisdiction of |
|
|
(Exact name of the co-registrant as specified in its charter) |
|
incorporation or organization) |
|
(I.R.S. Employer Identification No). |
|
|
|
|
|
AMERICAN HOSPITAL BUILDING CORPORATION
|
|
Delaware
|
|
52-0985621 |
|
|
|
|
|
AMERICAN REHABILITATION GROUP, INC.
|
|
Kentucky
|
|
61-1284533 |
|
|
|
|
|
AMERICANA HEALTHCARE CENTER OF PALOS TOWNSHIP, INC.
|
|
Illinois
|
|
53-1352950 |
|
|
|
|
|
AMERICANA HEALTHCARE CORPORATION OF GEORGIA
|
|
Georgia
|
|
37-1087694 |
|
|
|
|
|
ANCILLARY SERVICES MANAGEMENT, INC.
|
|
Ohio
|
|
34-163874 |
|
|
|
|
|
ANCILLARY SERVICES, LLC
|
|
Delaware
|
|
52-2166500 |
|
|
|
|
|
ANNANDALE ARDEN, LLC
|
|
Delaware
|
|
52-2111069 |
|
|
|
|
|
BAILY NURSING HOME, INC.
|
|
Pennsylvania
|
|
23-1674218 |
|
|
|
|
|
BAINBRIDGE ARDEN, LLC
|
|
Delaware
|
|
52-2098028 |
|
|
|
|
|
BATH ARDEN, LLC
|
|
Delaware
|
|
52-2099206 |
|
|
|
|
|
BINGHAM FARMS ARDEN, LLC
|
|
Delaware
|
|
52-2106495 |
|
|
|
|
|
BIRCHWOOD MANOR, INC.
|
|
Michigan
|
|
38-1719951 |
|
|
|
|
|
BOOTH LIMITED PARTNERSHIP
|
|
Florida
|
|
37-1080797 |
|
|
|
|
|
CANTERBURY VILLAGE, INC.
|
|
Michigan
|
|
38-2032536 |
|
|
|
|
|
CHARLES MANOR, INC.
|
|
Maryland
|
|
52-0902287 |
|
|
|
|
|
CHESAPEAKE MANOR, INC.
|
|
Maryland
|
|
52-0902288 |
|
|
|
|
|
CLAIRE BRIDGE OF ANDERSON, LLC
|
|
Delaware
|
|
39-1973297 |
|
|
|
|
|
CLAIRE BRIDGE OF AUSTIN, LLC
|
|
Delaware
|
|
39-1973318 |
|
|
|
|
|
CLAIRE BRIDGE OF KENWOOD, LLC
|
|
Delaware
|
|
39-1973322 |
|
|
|
|
|
CLAIRE BRIDGE OF SAN ANTONIO, LLC
|
|
Delaware
|
|
39-1973324 |
|
|
|
|
|
CLAIRE BRIDGE OF SUSQUEHANNA, LLC
|
|
Delaware
|
|
39-1973366 |
|
|
|
|
|
CLAIRE BRIDGE OF WARMINSTER, LLC
|
|
Delaware
|
|
39-1973327 |
|
|
|
|
|
COLEWOOD LIMITED PARTNERSHIP
|
|
Maryland
|
|
52-1335634 |
|
|
|
|
|
COLONIE ARDEN, LLC
|
|
Delaware
|
|
52-2130894 |
|
|
|
|
|
COMMONWEALTH PHYSICAL THERAPY AND REHABILITATION, INC.
|
|
Kentucky
|
|
61-1301414 |
|
|
|
|
|
CRESTVIEW HILLS ARDEN, LLC
|
|
Delaware
|
|
52-2092155 |
|
|
|
|
|
DEKALB HEALTHCARE CORPORATION
|
|
Delaware
|
|
37-1019112 |
|
|
|
|
|
|
|
(State or other jurisdiction of |
|
|
(Exact name of the co-registrant as specified in its charter) |
|
incorporation or organization) |
|
(I.R.S. Employer Identification No). |
|
|
|
|
|
DEVON MANOR CORPORATION
|
|
Pennsylvania
|
|
23-2093337 |
|
|
|
|
|
DISTCO, INC.
|
|
Maryland
|
|
52-0853907 |
|
|
|
|
|
DIVERSIFIED REHABILITATION SERVICES, INC.
|
|
Michigan
|
|
38-2690352 |
|
|
|
|
|
DONAHOE MANOR, INC.
|
|
Pennsylvania
|
|
25-1147049 |
|
|
|
|
|
EAST MICHIGAN CARE CORPORATION
|
|
Michigan
|
|
38-1747681 |
|
|
|
|
|
EXECUTIVE ADVERTISING, INC.
|
|
Maryland
|
|
52-0912751 |
|
|
|
|
|
EYE-Q NETWORK, INC.
|
|
Ohio
|
|
34-1760305 |
|
|
|
|
|
FIRST LOUISVILLE ARDEN, LLC
|
|
Delaware
|
|
52-2092159 |
|
|
|
|
|
FOUR SEASONS NURSING CENTERS, INC.
|
|
Delaware
|
|
73-0783484 |
|
|
|
|
|
FRESNO ARDEN, LLC
|
|
Delaware
|
|
52-2098630 |
|
|
|
|
|
GENEVA ARDEN, LLC
|
|
Delaware
|
|
52-2124930 |
|
|
|
|
|
GEORGIAN BLOOMFIELD, INC.
|
|
Michigan
|
|
38-1982410 |
|
|
|
|
|
GREENVIEW MANOR, INC.
|
|
Michigan
|
|
38-6062040 |
|
|
|
|
|
HANOVER ARDEN, LLC
|
|
Delaware
|
|
52-2098633 |
|
|
|
|
|
HCR HOME HEALTH CARE AND HOSPICE, INC.
|
|
Ohio
|
|
34-1787978 |
|
|
|
|
|
HCR INFORMATION CORPORATION
|
|
Ohio
|
|
31-1494764 |
|
|
|
|
|
HCR MANOR CARE SERVICES, INC. (f/k/a HEARTLAND CAREPARTNERS, INC.)
|
|
Ohio
|
|
34-1838217 |
|
|
|
|
|
HCR MANORCARE MEDICAL SERVICES OF FLORIDA, INC.
|
|
Florida
|
|
65-0666550 |
|
|
|
|
|
HCR PHYSICIAN MANAGEMENT SERVICES, INC.
|
|
Florida
|
|
58-2242001 |
|
|
|
|
|
HCR REHABILITATION CORP.
|
|
Ohio
|
|
34-1720345 |
|
|
|
|
|
HCRA OF TEXAS, INC.
|
|
Texas
|
|
74-2788668 |
|
|
|
|
|
HCRC INC.
|
|
Delaware
|
|
22-2784172 |
|
|
|
|
|
HEALTH CARE AND RETIREMENT CORPORATION OF AMERICA
|
|
Ohio
|
|
34-4402510 |
|
|
|
|
|
HEARTLAND CARE, LLC
|
|
Ohio
|
|
32-0091717 |
|
|
|
|
|
HEARTLAND EMPLOYMENT SERVICES, LLC
|
|
Ohio
|
|
34-1903270 |
|
|
|
|
|
HEARTLAND HOME CARE, INC.
|
|
Ohio
|
|
34-1787895 |
|
|
|
|
|
HEARTLAND HOME HEALTH CARE SERVICES, INC.
|
|
Ohio
|
|
34-1787967 |
|
|
|
|
|
HEARTLAND HOSPICE SERVICES, INC.
|
|
Ohio
|
|
34-1788398 |
|
|
|
|
|
|
|
(State or other jurisdiction of |
|
|
(Exact name of the co-registrant as specified in its charter) |
|
incorporation or organization) |
|
(I.R.S. Employer Identification No). |
|
|
|
|
|
HEARTLAND INFORMATION SERVICES, INC. (f/k/a HEARTLAND
MEDICAL INFORMATION SERVICES, INC.)
|
|
Ohio
|
|
31-1488831 |
|
|
|
|
|
HEARTLAND MANAGEMENT SERVICES, INC.
|
|
Ohio
|
|
34-1808700 |
|
|
|
|
|
HEARTLAND REHABILITATION SERVICES OF FLORIDA, INC.
|
|
Florida
|
|
59-2504386 |
|
|
|
|
|
HEARTLAND REHABILITATION SERVICES OF NEW JERSEY, INC. (f/k/a
HERBERT LASKIN, RPT JOHN MCKENZIE, RPT PHYSICAL THERAPY
PROFESSIONAL ASSOCIATES, INC.)
|
|
New Jersey
|
|
22-2137595 |
|
|
|
|
|
HEARTLAND REHABILITATION SERVICES OF VIRGINIA, INC.
(f/k/a BLUE RIDGE REHABILITATION SERVICES, INC.)
|
|
Virginia
|
|
54-1508699 |
|
|
|
|
|
HEARTLAND REHABILITATION SERVICES, INC.
|
|
Ohio
|
|
34-1280619 |
|
|
|
|
|
HEARTLAND SERVICES CORP.
|
|
Ohio
|
|
34-1760503 |
|
|
|
|
|
HEARTLAND THERAPY PROVIDER NETWORK, INC.
|
|
Delaware
|
|
37-1027432 |
|
|
|
|
|
HGCC OF ALLENTOWN, INC.
|
|
Tennessee
|
|
23-2244532 |
|
|
|
|
|
IN HOME HEALTH, INC.
|
|
Minnesota
|
|
41-1458213 |
|
|
|
|
|
INDUSTRIAL WASTES, INC.
|
|
Pennsylvania
|
|
25-1264509 |
|
|
|
|
|
IONIA MANOR, INC.
|
|
Michigan
|
|
38-1749970 |
|
|
|
|
|
JACKSONVILLE HEALTHCARE CORPORATION
|
|
Delaware
|
|
37-1069936 |
|
|
|
|
|
JEFFERSON ARDEN, LLC
|
|
Delaware
|
|
52-2111068 |
|
|
|
|
|
KENWOOD ARDEN, LLC
|
|
Delaware
|
|
52-2116657 |
|
|
|
|
|
KNOLLVIEW MANOR, INC.
|
|
Michigan
|
|
38-1724149 |
|
|
|
|
|
LEADER NURSING AND REHABILITATION CENTER OF BETHEL PARK, INC.
|
|
Delaware
|
|
52-1462046 |
|
|
|
|
|
LEADER NURSING AND REHABILITATION CENTER OF GLOUCESTER, INC.
|
|
Maryland
|
|
52-1352949 |
|
|
|
|
|
LEADER NURSING AND REHABILITATION CENTER OF SCOTT TOWNSHIP, INC.
|
|
Delaware
|
|
52-1462056 |
|
|
|
|
|
LEADER NURSING AND REHABILITATION CENTER OF VIRGINIA INC.
|
|
Virginia
|
|
52-1363206 |
|
|
|
|
|
LINCOLN HEALTH CARE, INC.
|
|
Ohio
|
|
34-1352822 |
|
|
|
|
|
LIVONIA ARDEN, LLC
|
|
Delaware
|
|
52-2104704 |
|
|
|
|
|
MANOR CARE AVIATION, INC.
|
|
Delaware
|
|
52-1462072 |
|
|
|
|
|
MANOR CARE OF AKRON, INC.
|
|
Ohio
|
|
52-0970447 |
|
|
|
|
|
MANOR CARE OF AMERICA, INC.
|
|
Delaware
|
|
52-1200376 |
|
|
|
|
|
|
|
(State or other jurisdiction of |
|
|
(Exact name of the co-registrant as specified in its charter) |
|
incorporation or organization) |
|
(I.R.S. Employer Identification No). |
|
|
|
|
|
MANOR CARE OF ARIZONA, INC.
|
|
Delaware
|
|
52-1751861 |
|
|
|
|
|
MANOR CARE OF ARLINGTON, INC.
|
|
Virginia
|
|
52-1067426 |
|
|
|
|
|
MANOR CARE OF CANTON, INC.
|
|
Ohio
|
|
52-1019576 |
|
|
|
|
|
MANOR CARE OF CHARLESTON, INC.
|
|
South Carolina
|
|
52-1187059 |
|
|
|
|
|
MANOR CARE OF CINCINNATI, INC.
|
|
Ohio
|
|
52-0943592 |
|
|
|
|
|
MANOR CARE OF COLUMBIA, INC.
|
|
South Carolina
|
|
52-0940578 |
|
|
|
|
|
MANOR CARE OF DARIEN, INC.
|
|
Connecticut
|
|
52-1934884 |
|
|
|
|
|
MANOR CARE OF DELAWARE COUNTY, INC.
|
|
Delaware
|
|
52-1916053 |
|
|
|
|
|
MANOR CARE OF FLORIDA, INC.
|
|
Florida
|
|
52-1479084 |
|
|
|
|
|
MANOR CARE OF HINSDALE, INC.
|
|
Illinois
|
|
52-0970446 |
|
|
|
|
|
MANOR CARE OF KANSAS, INC.
|
|
Delaware
|
|
52-1462071 |
|
|
|
|
|
MANOR CARE OF KINGSTON COURT, INC.
|
|
Pennsylvania
|
|
52-1314648 |
|
|
|
|
|
MANOR CARE OF LARGO, INC.
|
|
Maryland
|
|
52-1065213 |
|
|
|
|
|
MANOR CARE OF LEXINGTON, INC.
|
|
South Carolina
|
|
52-1048770 |
|
|
|
|
|
MANOR CARE OF MEADOW PARK, INC.
|
|
Washington
|
|
52-1339998 |
|
|
|
|
|
MANOR CARE OF MIAMISBURG, INC.
|
|
Delaware
|
|
52-1708219 |
|
|
|
|
|
MANOR CARE OF NORTH OLMSTED, INC.
|
|
Ohio
|
|
52-0970448 |
|
|
|
|
|
MANOR CARE OF PINEHURST, INC.
|
|
North Carolina
|
|
52-1069744 |
|
|
|
|
|
MANOR CARE OF ROLLING MEADOWS, INC.
|
|
Illinois
|
|
52-1077856 |
|
|
|
|
|
MANOR CARE OF ROSSVILLE, INC.
|
|
Maryland
|
|
52-1077857 |
|
|
|
|
|
MANOR CARE OF WILLOUGHBY, INC.
|
|
Ohio
|
|
52-0970449 |
|
|
|
|
|
MANOR CARE OF WILMINGTON, INC.
|
|
Delaware
|
|
52-1252362 |
|
|
|
|
|
MANOR CARE OF YORK (NORTH), INC.
|
|
Pennsylvania
|
|
52-1314645 |
|
|
|
|
|
MANOR CARE OF YORK (SOUTH), INC.
|
|
Pennsylvania
|
|
52-1314644 |
|
|
|
|
|
MANOR CARE SUPPLY COMPANY
|
|
Delaware
|
|
52-2055097 |
|
|
|
|
|
MANORCARE HEALTH SERVICES OF NORTHHAMPTON COUNTY, INC.
|
|
Pennsylvania
|
|
52-2004471 |
|
|
|
|
|
MANORCARE HEALTH SERVICES OF OKLAHOMA, INC.
|
|
Delaware
|
|
52-2055078 |
|
|
|
|
|
MANORCARE HEALTH SERVICES OF VIRGINIA, INC.
|
|
Delaware
|
|
52-2002773 |
|
|
|
|
|
|
|
(State or other jurisdiction of |
|
|
(Exact name of the co-registrant as specified in its charter) |
|
incorporation or organization) |
|
(I.R.S. Employer Identification No). |
|
|
|
|
|
MANORCARE HEALTH SERVICES, INC.
|
|
Delaware
|
|
52-0886946 |
|
|
|
|
|
MARINA VIEW MANOR, INC.
|
|
Wisconsin
|
|
39-1164707 |
|
|
|
|
|
MEDI-SPEECH SERVICE, INC.
|
|
Michigan
|
|
38-2343280 |
|
|
|
|
|
MEMPHIS ARDEN, LLC
|
|
Delaware
|
|
52-2098029 |
|
|
|
|
|
MILESTONE HEALTH SYSTEMS, INC.
|
|
Texas
|
|
75-2245197 |
|
|
|
|
|
MILESTONE HEALTHCARE, INC.
|
|
Delaware
|
|
75-2592398 |
|
|
|
|
|
MILESTONE REHABILITATION SERVICES, INC.
|
|
Texas
|
|
75-2190857 |
|
|
|
|
|
MILESTONE STAFFING SERVICES, INC.
|
|
Texas
|
|
74-2963093 |
|
|
|
|
|
MILESTONE THERAPY SERVICES, INC.
|
|
Texas
|
|
75-2406307 |
|
|
|
|
|
MNR FINANCE CORP.
|
|
Delaware
|
|
51-0348281 |
|
|
|
|
|
NAPA ARDEN, LLC
|
|
Delaware
|
|
52-2108866 |
|
|
|
|
|
PEAK REHABILITATION, INC.
|
|
Delaware
|
|
52-1833202 |
|
|
|
|
|
PERRYSBURG PHYSICAL THERAPY, INC.
|
|
Ohio
|
|
34-1363071 |
|
|
|
|
|
PNEUMATIC CONCRETE, INC.
|
|
Tennessee
|
|
62-0716951 |
|
|
|
|
|
PORTFOLIO ONE, INC.
|
|
New Jersey
|
|
22-1604502 |
|
|
|
|
|
REHABILITATION ADMINISTRATION CORPORATION
|
|
Kentucky
|
|
61-1295825 |
|
|
|
|
|
REINBOLT & BURKAM, INC.
|
|
Ohio
|
|
34-1479648 |
|
|
|
|
|
RICHARDS HEALTHCARE, INC.
|
|
Texas
|
|
76-0339241 |
|
|
|
|
|
RIDGEVIEW MANOR, INC.
|
|
Michigan
|
|
38-1734212 |
|
|
|
|
|
ROANOKE ARDEN, LLC
|
|
Delaware
|
|
52-2104706 |
|
|
|
|
|
ROLAND PARK NURSING CENTER, INC.
|
|
Maryland
|
|
52-1890169 |
|
|
|
|
|
RVA MANAGEMENT SERVICES, INC.
|
|
Ohio
|
|
34-1791517 |
|
|
|
|
|
SAN ANTONIO ARDEN, LLC
|
|
Delaware
|
|
52-2106496 |
|
|
|
|
|
SILVER SPRING WHEATON NURSING HOME, INC.
|
|
Maryland
|
|
53-0245649 |
|
|
|
|
|
SILVER SPRING ARDEN, LLC
|
|
Delaware
|
|
52-2107728 |
|
|
|
|
|
SPRINGHILL MANOR, INC.
|
|
Michigan
|
|
38-1890497 |
|
|
|
|
|
STEWALL CORPORATION
|
|
Maryland
|
|
52-0798475 |
|
|
|
|
|
STRATFORD MANOR, INC.
|
|
Virginia
|
|
52-0902020 |
|
|
|
|
|
STUTEX CORP.
|
|
Texas
|
|
52-0884091 |
|
|
|
|
|
|
|
(State or other jurisdiction of |
|
|
(Exact name of the co-registrant as specified in its charter) |
|
incorporation or organization) |
|
(I.R.S. Employer Identification No). |
|
|
|
|
|
SUN VALLEY MANOR, INC.
|
|
Michigan
|
|
38-1798425 |
|
|
|
|
|
SUSQUEHANNA ARDEN LLC
|
|
Delaware
|
|
52-2124933 |
|
|
|
|
|
TAMPA ARDEN, LLC
|
|
Delaware
|
|
52-2113270 |
|
|
|
|
|
THE NIGHTINGALE NURSING HOME, INC.
|
|
Pennsylvania
|
|
23-1719762 |
|
|
|
|
|
THERASPORT PHYSICAL THERAPY, INC.
|
|
Michigan
|
|
38-3324355 |
|
|
|
|
|
THREE RIVERS MANOR, INC.
|
|
Michigan
|
|
38-2479940 |
|
|
|
|
|
TOTALCARE CLINICAL LABORATORIES, INC.
|
|
Delaware
|
|
52-1740933 |
|
|
|
|
|
TUSCAWILLA ARDEN, LLC
|
|
Delaware
|
|
52-2092162 |
|
|
|
|
|
WALL ARDEN, LLC
|
|
Delaware
|
|
52-2098990 |
|
|
|
|
|
WARMINSTER ARDEN LLC
|
|
Delaware
|
|
52-2124931 |
|
|
|
|
|
WASHTENAW HILLS MANOR, INC.
|
|
Michigan
|
|
38-2686882 |
|
|
|
|
|
WHITEHALL MANOR, INC.
|
|
Michigan
|
|
38-2189772 |
|
|
|
|
|
WILLIAMSVILLE ARDEN, LLC
|
|
Delaware
|
|
52-2107735 |
PROSPECTUS
$250,000,000
Manor Care, Inc.
2% Convertible Senior Notes due 2036
Shares of Common Stock Issuable Upon Conversion of the Notes
On May 17, 2006, we issued and sold $250,000,000 aggregate principal amount of our 2%
Convertible Senior Notes due 2036 in a private offering. This prospectus will be used by selling
securityholders to resell the notes and the common stock issuable upon conversion of the notes.
Interest on the notes will accrue from May 17, 2006. Interest will be payable semiannually in
arrears on June 1 and December 1 of each year, beginning December 1, 2006. Commencing with the
six- month period beginning June 1, 2013, we may pay contingent interest to the holders of the
notes under certain circumstances and in amounts described in this prospectus. The notes will be subject to special United States federal income tax rules. For a discussion
of the special tax regulations governing contingent payment debt securities, see United States
Federal Income Tax Considerations.
Holders
may convert
their notes at their option at any time prior to the close of business on the trading day
immediately preceding the maturity date under the following circumstances:
|
|
|
if the average of the last reported sale prices of our common stock for the 20
trading days immediately prior to the conversion date is greater than or equal to 130%
of the conversion price per share of common stock on such conversion date; |
|
|
|
|
if the notes have been called for redemption; |
|
|
|
|
upon the occurrence of specified corporate transactions described in this prospectus; or |
|
|
|
|
if the credit ratings assigned to the notes decline to the levels described in this prospectus. |
Upon conversion, we will pay cash and shares of our common stock, if any, based on a daily
conversion value (as described herein) calculated on a proportionate basis for each day of the 20
trading-day cash settlement averaging period. The initial conversion rate will be 20.0992 shares
of our common stock per $1,000 principal amount of notes, equivalent to a conversion price of
approximately $49.75 per share of common stock. The conversion rate will be subject to adjustment
in some events but will not be adjusted for accrued interest. In addition, following certain
corporate transactions that occur prior to June 1, 2013 and that also constitute fundamental
changes, a holder who elects to convert its notes in connection with such corporate transactions
will be entitled to receive additional shares of common stock upon conversion in certain
circumstances. We will not receive any proceeds from the sale by the selling securityholders of
the notes or the common stock issuable upon conversion of the notes, if any. Other than selling
commissions and fees and stock transfer taxes, we will pay all expenses of the registration and
sale of the notes and the common stock, if any.
We may not redeem the notes before June 1, 2013. On or after that date, we may redeem all or
part of the notes for cash at 100% of the principal amount of the notes to be redeemed, plus
accrued and unpaid interest (including any contingent interest or additional interest) to, but
excluding, the redemption date.
Holders may require us to purchase all or a portion of their notes on June 1, 2013 at a price
equal to 100% of the principal amount of the notes to be purchased plus any accrued and unpaid
interest to, but excluding, the purchase date. We will pay cash for all notes so purchased. In
addition, if we experience specified types of fundamental changes, holders may require us to
purchase the notes at a price equal to 100% of the principal amount of the notes to be purchased
plus any accrued and unpaid interest (including any contingent interest or additional interest) to,
but excluding, the purchase date. We will pay cash for all notes so purchased.
The notes rank equally with all our existing and future senior debt and senior to all our
future subordinated debt. The notes will be guaranteed on a senior unsecured basis by all of our
subsidiaries that have guaranteed, or will in the future guarantee, obligations under our 6.25%
Senior Notes due 2013, our 2.125% Convertible Senior Notes due 2023, our 2.125% Convertible Senior
Notes due 2035 and our unsecured revolving credit facility. These guarantees are senior obligations
of our subsidiary guarantors. If we fail to make payments on the notes, our subsidiary guarantors
must make them instead.
The notes will not be listed on any securities exchange. Our common stock is listed on the New
York Stock Exchange under the symbol HCR. The last reported sale price of our common stock on the
New York Stock Exchange on August 14, 2006 was $51.89 per share.
You should carefully consider matters discussed under the caption See Risk Factors beginning on page 5.
Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is August 15, 2006
Table of Contents
Where You Can Find More Information
We file annual, quarterly and special reports, proxy statements, and other documents with
the Securities and Exchange Commission under the Securities Exchange Act of 1934. You may also
read and copy any document we file at the SEC public reference room located at 100 F. Street, N.E.,
Room 1580, Washington D.C. 20549. You may obtain information regarding the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other information regarding issuers that
file electronically with the SEC. Our SEC filings are available to the public at the SECs website
at http://www.sec.gov. These reports are also available through our website at
http://www.hcr-manorcare.com. The information on our website is not part of this prospectus.
In addition, because our common stock is listed on the New York Stock Exchange, you may read
our reports, proxy statements, and other documents at the offices of the New York Stock Exchange at
20 Broad Street, New York, New York 10005.
This prospectus is part of a registration statement on Form S-3 we have filed with the SEC
under the Securities Act of 1933, as amended. This prospectus does not contain all of the
information set forth in the registration statement. For further information about us and the
notes, you should refer to the registration statement. In this prospectus we summarize material
provisions of contracts and other documents to which we refer you. Since this prospectus may not
contain all of the information that you may find important, you should review the full text of
these documents. We have filed these documents as exhibits to our registration statement.
This prospectus incorporates important business and financial information about us that is not
included in or delivered with this prospectus. This information is available without charge to you
upon written or oral request. If you would like a copy of any of this information, please submit
your request to Manor Care, Inc., 333 N. Summit Street, Toledo, Ohio 43604-2617, Attention: Legal
Department, or call (419) 252-5500 and ask to speak to someone in our legal department.
i
Incorporation of Certain Documents by Reference
The SEC allows us to incorporate by reference certain documents, which means that we
can disclose important information to you by referring you to those documents. The information in
the documents incorporated by reference is considered to be part of this prospectus, and
information in documents that we file later with the SEC will automatically update and supersede
this information. We incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act:
|
|
|
Our annual report on Form 10-K for the fiscal year ended December 31, 2005, |
|
|
|
|
Our quarterly reports on Form 10-Q for the three months ended March 31, 2006 and June 30, 2006; and |
|
|
|
|
Our proxy statement for the annual stockholders meeting held on May 9, 2006, which we
filed with the SEC on April 7, 2006. |
We will provide to you, at no charge, a copy of the documents we incorporate by reference in
this prospectus. To request a copy of any or all of these documents, you should write or telephone
us at the following address and telephone number: Manor Care, Inc., 333 N. Summit Street, Toledo,
Ohio, 43604-2617, Attention: Legal Department. Our telephone number is: (419) 252-5500.
About This Prospectus
This prospectus is part of a registration statement that we filed with the Securities and
Exchange Commission using a shelf registration or continuous offering process. Under this shelf
registration process, selling securityholders may from time to time sell the securities described
in this prospectus in one or more offerings.
This prospectus provides you with a general description of the securities that the selling
securityholders may offer. A selling securityholder may be required to provide you with a
prospectus supplement containing specific information about the selling securityholder and the
terms of the securities being offered. That prospectus supplement may include additional risk
factors or other special considerations applicable to those securities. A prospectus supplement
may also add, update or change information in this prospectus. If there is any inconsistency
between the information in this prospectus and any prospectus supplement, you should rely on the
information in that prospectus supplement. You should read both this prospectus and any prospectus
supplement together with the additional information described under the heading Where You Can Find
More Information.
Cautionary Note Regarding Forward-Looking Statements
This prospectus includes forward-looking statements. We have based these forward-looking
statements on our current expectations and projections about future events. We identify
forward-looking statements in this prospectus by using words or phrases such as anticipate,
believe, estimate, expect, intend, may be, objective, plan, predict, project,
will be and similar words or phrases, or the negative of those words or phrases.
These forward-looking statements are subject to numerous assumptions, risks and uncertainties.
Factors which may cause our actual results, performance or achievements to be materially different
from any future results, performance or achievements expressed or implied by us in those statements
include, among others, the following:
|
|
|
changes in the health care industry because of political and economic influences; |
|
|
|
|
changes in Medicare, Medicaid and certain private payors reimbursement levels or
coverage requirements; |
|
|
|
|
existing government regulations and changes in, or the failure to comply with,
governmental regulations or the interpretations thereof; |
|
|
|
|
changes in current trends in the cost and volume of patient-care related claims and
workers compensation |
ii
|
|
|
claims and in insurance costs related to such claims; |
|
|
|
|
the ability to attract and retain qualified personnel; |
|
|
|
|
our existing and future debt which may affect our ability to obtain financing in the
future or to comply with our debt covenants; |
|
|
|
|
our ability to maintain or increase our occupancy levels in our skilled nursing and
assisted living facilities; |
|
|
|
|
our ability to maintain or increase our revenues in our hospice and home health care
and rehabilitation businesses; |
|
|
|
|
our ability to control operating costs; |
|
|
|
|
integration of acquired businesses; |
|
|
|
|
changes in, or the failure to comply with, regulations governing the transmission and
privacy of health information; |
|
|
|
|
state regulation of the construction or expansion of health care providers; |
|
|
|
|
legislative proposals for health care reform; |
|
|
|
|
competition; |
|
|
|
|
the failure to comply with occupational health and safety regulations; |
|
|
|
|
the ability to enter into managed care provider arrangements on acceptable terms; |
|
|
|
|
litigation; |
|
|
|
|
a reduction in cash reserves and shareholders equity upon our repurchase of our stock; |
|
|
|
|
an increase in senior debt or reduction in cash flow upon our purchase or sale of assets; and |
|
|
|
|
conditions in the financial markets. |
Although we believe the expectations reflected in our forward-looking statements are based
upon reasonable assumptions, we can give no assurance that we will attain these expectations or
that any deviations will not be material. Except as otherwise required by the federal securities
laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to
any forward-looking statement contained in this report to reflect any change in our expectations
with regard thereto or any change in events, conditions or circumstances on which any such
statement is based.
iii
Prospectus Summary
This summary highlights the information contained elsewhere or incorporated by reference
into this prospectus. Because this is only a summary, it does not contain all of the information
that may be important to you. For a more complete understanding of this offering, we encourage you
to read this entire prospectus together with the documents incorporated by reference into this
prospectus.
In this prospectus, the Company, we, our, and us refer to Manor Care, Inc. With
respect to the descriptions of our business contained in this prospectus, such terms refer to Manor
Care, Inc. and our subsidiaries.
Our Company
We are a leading provider of long-term health care with one of the largest networks of
skilled nursing and assisted living facilities in the United States. We own or operate 341 high
quality long-term care facilities, which include skilled nursing and assisted living facilities, in
30 states, with 62% of our facilities located in Florida, Illinois, Michigan, Ohio and
Pennsylvania. We generated 85% of our total revenues for the year ended December 31, 2005 and 84%
of our total revenues for the six months ended June 30, 2006 from skilled nursing and assisted
living services. The balance of our revenues was derived from a broad range of ancillary health
care services, including subacute medical and rehabilitation care, hospice and home health care and
rehabilitation therapy. We provide these services through many of our long-term care facilities,
115 hospice or home health care offices and 94 outpatient therapy clinics. We believe we have a
favorable quality mix, or the percentage of our long-term care and rehabilitation revenues
generated by private pay and Medicare sources, of 71% for the year ended December 31, 2005 and 72%
for the six months ended June 30, 2006. We operate primarily under the respected ManorCare,
Heartland and Arden Courts names. Our common stock is traded on the New York Stock Exchange
under the symbol HCR.
Manor Care, Inc. is a Delaware corporation. Our principal executive offices are located at 333
North Summit Street, Toledo, Ohio 43604-2617 and our telephone number at that address is (419)
252-5500. Our website is located at www.hcr-manorcare.com. The information on our website is not
part of this prospectus.
1
The Offering
The following summary contains basic information about the notes and is not intended to
be complete. It does not contain all the information that is important to you. For a more complete
understanding of the notes, please refer to the section of this document entitled Description of
Notes. For purposes of the description of the notes included in this prospectus, references to
the Company, Issuer, us, we and our refer only to Manor Care, Inc. and do not include our
subsidiaries.
|
|
|
Issuer
|
|
Manor Care, Inc., a Delaware corporation. |
|
|
|
Securities
|
|
$250,000,000 principal amount of 2% Convertible Senior Notes
due 2036 and the common stock issuable upon conversion of the
notes. |
|
|
|
Maturity
|
|
June 1, 2036, unless earlier redeemed, repurchased or converted. |
|
|
|
Interest
|
|
2% per year on the principal amount, payable semiannually in
arrears on June 1 and December 1 of each year, beginning on
December 1, 2006. We will pay contingent interest if it becomes
payable as described below and elsewhere in this prospectus. |
|
|
|
Contingent Interest
|
|
We will pay contingent interest to the holders of notes during
any six-month period from June 1 to November 30 and from
December 1 to May 31, commencing with the six-month period
beginning June 1, 2013 if the average Note Price for the
Applicable Five Trading Day Period (each as defined in
Description of NotesContingent Interest) equals 120% or
more of the principal amount of such notes. The amount of
contingent interest payable per note in respect of any
six-month period will equal 0.125% of the average price of a
note for the selected five trading day reference period. |
|
|
|
Conversion Rights
|
|
Holders may convert their notes at any time prior to the close
of business on the trading day immediately preceding the
maturity date, in multiples of $1,000 principal amount, at the
option of the holder under the following circumstances: |
|
|
|
|
|
(i) if the average of the last reported sale prices of our
common stock for the 20 trading days immediately prior to the
conversion date is greater than or equal to 130% of the
conversion price per share of common stock on such conversion
date; |
|
|
|
|
|
(ii) if the notes have been called for redemption; |
|
|
|
|
|
(iii) upon the occurrence of specified corporate transactions
described under Description of NotesConversion Rights; or |
|
|
|
|
|
(iv) if the credit ratings assigned to the notes by Moodys
Investors Service, Inc. or Standard & Poors Ratings Services
are below Ba3 and BB, respectively, or the notes are no longer
rated by at least one of these ratings agencies. |
|
|
|
|
|
The initial conversion rate for the notes is 20.0992 shares per
$1,000 principal amount of notes (equal to an initial
conversion price of approximately $49.75 per share), subject to
adjustment. |
|
|
|
|
|
Upon conversion, we will pay cash and shares of our common
stock, if any, based on a daily conversion value (as described
herein) calculated on a proportionate basis for |
2
|
|
|
|
|
each day of the 20 trading-day cash settlement averaging period. See
Description of NotesConversion RightsPayment Upon Conversion. |
|
|
|
|
|
In addition, following certain corporate transactions that
occur prior to June 1, 2013 and that also constitute a
Fundamental Change (as defined in this prospectus), a holder
who elects to convert its notes in connection with such
corporate transactions will be entitled to receive additional
shares of common stock upon conversion in certain circumstances
or, in lieu thereof, we may, in connection with transactions
that constitute a public acquirer change of control, elect to
adjust the conversion rate and related conversion obligation so
that the notes are convertible into shares of the acquiring or
surviving company as described under Description of
NotesConversion RightsConversion Rate
AdjustmentsConversion After a Public Acquirer Change of
Control. |
|
|
|
|
|
You will not receive any additional cash payment or additional
shares representing accrued and unpaid interest and additional
interest, if any, upon conversion of a note, except in limited
circumstances. Instead, interest will be deemed paid by the
cash and shares, if any, of common stock issued to you upon
conversion. |
|
|
|
|
|
Notes called for redemption may be surrendered for conversion
prior to 5:00 p.m., New York City time, on the third trading
day immediately preceding the redemption date. |
|
|
|
Redemption at
Our Option
|
|
On or after June 1, 2013, we may redeem for cash all or part of
the notes, upon not less than 35 nor more than 60 days notice
before the redemption date by mail to the trustee, the paying
agent and each holder of notes, at 100% of the principal amount
of the notes to be redeemed, plus accrued and unpaid interest,
including any contingent interest or additional interest, to
but excluding the redemption date. |
|
|
|
Purchase of Notes by Us
at the Option of the Holder
|
|
You have the right to require us to purchase all or a portion
of your notes on June 1, 2013 (the purchase date). The
purchase price payable will be equal to 100% of the principal
amount of the notes to be purchased plus any accrued and unpaid
interest, including any contingent interest or additional
interest, to but excluding the purchase date. We will pay cash
for all notes so purchased. |
|
|
|
Fundamental Change
|
|
If we undergo a Fundamental Change (as defined in this
prospectus), you will have the option to require us to purchase
all or any portion of your notes. The Fundamental Change
purchase price will be 100% of the principal amount of the
notes to be purchased plus any accrued and unpaid interest,
including any additional interest, to but excluding the
Fundamental Change purchase date. We will pay cash for all
notes so purchased. |
|
|
|
Guarantees;
Elimination
|
|
The payments on the notes will be guaranteed by each of our
existing and future subsidiaries that have guaranteed, or will
in the future guarantee, our obligations under our 6.25% Senior
Notes due 2013 (the 2013 Notes), our 2.125% Convertible
Senior Notes due 2023 (the 2023 Notes), our 2.125%
Convertible Senior Notes due 2035 (the 2035 Notes) and our
revolving credit facility. The guarantees will be unsecured
senior indebtedness of our subsidiary guarantors. |
|
|
|
|
|
In the event the obligations of any subsidiary guarantor under
the 2013 Notes, the 2023 Notes, the 2035 Notes and our
revolving credit facility are terminated, such subsidiary
guarantor will also be released from its obligations under its
subsidiary guarantee. In the event any of our existing or
future subsidiaries guarantees any of our indebtedness, then
such subsidiary shall guarantee our indebtedness under the
notes. |
3
|
|
|
Ranking
|
|
The notes will rank equally in right of payment with all our
existing and future unsecured senior debt and are senior in
right of payment to all our future subordinated debt. The
indenture does not limit the amount of debt that we or our
subsidiaries may incur. The guarantees will rank equally in
right of payment with the existing and future unsecured senior
debt of our subsidiary guarantors and will be senior in right
of payment to the future subordinated debt of our subsidiary
guarantors. The notes and the guarantees will effectively rank
junior to any secured indebtedness of ours or the subsidiary
guarantors, to the extent of the value of the assets securing
such indebtedness. If the guarantees of the notes are
eliminated, the notes will be structurally junior to all
liabilities of our subsidiaries. |
|
|
|
U.S. Federal Income Tax Considerations
|
|
We and each holder agree in the
indenture to treat the notes as
contingent payment debt
instruments for U.S. federal
income tax purposes. As a
holder of notes, you will agree
to accrue original issue
discount on a constant yield to
maturity basis at a rate
comparable to the rate at which
we would borrow in a
noncontingent, nonconvertible
borrowing, which we have
determined to be 7.23%,
compounded semi-annually, even
though the notes will have a
lower stated yield to maturity.
Accordingly, a U.S. holder will
likely recognize taxable income
in each year significantly in
excess of interest payments
(whether fixed or contingent)
actually received in that year.
Additionally, a U.S. holder
will generally be required to
recognize ordinary income on
the gain, if any, realized on a
sale, exchange, conversion,
redemption or repurchase of the
notes. In computing such gain,
the amount realized by a U.S.
holder will include in the case
of a conversion, the amount of
cash and fair market value of
the shares received. The
application of the contingent
payment debt rules is
uncertain, and no ruling will
be obtained from the Internal
Revenue Service concerning the
application of these rules to
the notes. You should consult
your own tax advisor concerning
the tax consequences of owning
the notes. See United States
Federal Income Tax
Considerations. |
|
|
|
Use of Proceeds
|
|
We will not receive any of the proceeds from the sale by the
selling securityholders of the notes or common stock issuable
upon conversion of the notes. |
|
|
|
Book-Entry Form
|
|
The notes will be issued in book-entry form and will be
represented by permanent global certificates deposited with, or
on behalf of, The Depository Trust Company (DTC) and
registered in the name of a nominee of DTC. Beneficial
interests in any of the notes will be shown on, and transfers
will be effected only through, records maintained by DTC or its
nominee and any such interest may not be exchanged for
certificated securities, except in limited circumstances. |
|
|
|
Absence of a Public
Market for the Notes
|
|
There is currently no established market for the notes.
Accordingly, we cannot assure you as to the development or
liquidity of any market for the notes. We do not intend to
apply for a listing of the notes, on any securities or any
automated dealer quotation system. Our common stock is listed
on the New York Stock Exchange under the symbol HCR. |
Risk Factors
In evaluating an investment in the notes, prospective investors should carefully
consider, along with the other information set forth or incorporated by reference in this
prospectus, the specific factors set forth under Risk Factors for risk involved with an
investment in the notes.
Ratio of Earnings to Fixed Charges
The following table presents the Companys historical ratios of earnings to fixed charges
for the six months ended June 30, 2006 and 2005 and the five years in the period ended December 31,
2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, |
|
Year Ended December 31, |
|
|
2006 |
|
2005 |
|
2005 |
|
2004 |
|
2003 |
|
2002 |
|
2001 |
Ratio of earnings to
fixed charges (1) |
|
|
7.1x |
|
|
|
5.7x |
|
|
|
4.6x |
|
|
|
4.9x |
|
|
|
4.5x |
|
|
|
5.1x |
|
|
|
2.9x |
|
(1) |
|
Earnings in the ratio of earnings to fixed charges represent our income before income taxes
that have been adjusted to exclude (i) the effect of any fixed charges that reduced such
earnings and (ii) the undistributed income or losses of affiliates accounted for by the equity
method, except for losses of equity method affiliates for the year ended December 31, 2001,
whose debt was guaranteed by us. Fixed charges include interest expense, whether or not
classified as such in the earnings statement, as well as the portion of rental expense that is
estimated to represent the interest portion (28% to 40%). Interest expense includes
capitalized interest, interest on guaranteed debt of an equity method affiliate that is
incurring losses, and interest on our loans against the cash surrender value of corporate
owned life insurance (COLI). |
4
Risk Factors
Our business, operations and financial condition are subject to various risks. Some of
these risks are described below and in the documents incorporated by reference in this prospectus,
and you should carefully consider the following factors and other information contained and
incorporated by reference in this prospectus. This section does not describe all risks applicable
to us, our industry or our business, and it is intended only as a summary of certain material
factors.
Our indebtedness could adversely affect our financial health and make it more difficult for us to
fulfill our obligations under the notes.
At June 30, 2006 our total consolidated indebtedness was $965.3 million.
Our indebtedness could have important consequences to you. For example, it could potentially:
|
|
|
make it more difficult for us to satisfy our obligations with respect to the notes; |
|
|
|
|
increase our vulnerability to general adverse economic and industry conditions; |
|
|
|
|
require us to dedicate a substantial portion of our cash flow from operations to
payments on our indebtedness, thereby reducing the availability of our cash flow to fund
acquisitions, working capital, capital expenditures, dividends and other general corporate
purposes; |
|
|
|
|
limit, along with the financial and other restrictive covenants in our indebtedness,
our ability to borrow a significant amount of additional funds; |
|
|
|
|
limit, along with the financial and other restrictive covenants in our indebtedness,
our flexibility in planning for, or reacting to, changes in our business and the industry
in which we operate; |
|
|
|
|
place us at a competitive disadvantage compared to our competitors that may have less debt; and |
|
|
|
|
result in a downgrading of the investment grade rating of our debt by rating agencies. |
We may be able to incur additional indebtedness in the future which could intensify the risks
listed above. The indenture relating to the notes does not limit the amount of debt that we or our
subsidiaries may incur. For example, $347.0 million of our $400.0 million revolving credit facility
remains available for future borrowings, with $6.0 million outstanding and $47.0 million of
outstanding letters of credit.
Our business is conducted through our subsidiaries.
Our operations are conducted through our subsidiaries. As a result, we depend on dividends,
loans, advances, or payments from our subsidiaries to satisfy our financial obligations and make
payments to our investors. The ability of our subsidiaries to pay dividends and make other payments
to us is restricted by, among other things, applicable corporate and other laws and regulations as
well as, in the future, agreements to which our subsidiaries may be a party. Although the notes are
guaranteed by the subsidiary guarantors, each guarantee is subordinated to all secured debt of the
relevant subsidiary guarantor. In addition, not all of our subsidiaries are guarantors.
Not all of our subsidiaries are guarantors, assets of non-guarantor subsidiaries may not be
available to make payments on the notes and our subsidiary guarantees may be released in the future
if certain events occur.
Our existing and future subsidiaries that do not guarantee our obligations under the 2013
Notes, the 2023 Notes, the 2035 Notes or our revolving credit facility will also not be guarantors
of the notes. Payments on the notes are only required to be made by us and the subsidiary
guarantors. As a result, no payments are required to be made from assets of subsidiaries which do
not guarantee the notes unless those assets are transferred, by dividend or otherwise, to us or a
subsidiary guarantor.
5
In the event of a bankruptcy, liquidation or reorganization of any of the non-guarantor
subsidiaries, holders of their debt, including their trade creditors, will generally be entitled to
payment of their claims from the assets of those subsidiaries before any assets are made available
for distribution to us. For the year ended December 31, 2005 and the six months ended June 30,
2006, our non-guarantor subsidiaries represented less than 3% of our revenues, assets and income
before income taxes.
Each subsidiary guarantor that is released from its obligations under the 2013 Notes, the 2023
Notes, the 2035 Notes, the revolving credit facility, or any related guaranty will also be released
as a guarantor under the notes. Upon such release, the notes will effectively rank junior to all
liabilities of such subsidiary, whether or not such liabilities are secured or unsecured.
Although your notes are referred to as senior notes, and the subsidiary guarantees are senior
obligations of our subsidiaries, each will be effectively subordinated to our secured debt and any
secured liabilities of our subsidiaries.
The notes will effectively rank junior to any of our secured debt or any secured debt of our
subsidiaries, to the extent of the value of the assets securing that debt. In the event of our
bankruptcy, liquidation, reorganization or other winding up, our assets that secure secured debt
will be available to pay obligations on the notes only after that secured debt has been repaid in
full from these assets. We advise you that there may not be sufficient assets remaining to pay
amounts due on any or all the notes then outstanding. Similarly, the guarantees of the notes will
effectively rank junior to any secured debt of the applicable subsidiary, to the extent of the
value of the assets securing that debt. In addition to the guarantees of the 2013 Notes, the 2023
Notes, the 2035 Notes or the revolving credit facility, our subsidiaries had additional
indebtedness of $9.7 million as of June 30, 2006, substantially all of which was secured debt.
A change in control may adversely affect us or the notes.
Our revolving credit facility provides that certain change of control events with respect to
us will constitute a default and most of our outstanding notes include provisions requiring us to
repurchase such notes upon the occurrence of a change of control. In addition, future debt we incur
may limit our ability to repurchase the notes upon a Fundamental Change or require us to offer to
redeem that future debt upon a Fundamental Change. Moreover, if you or other investors in our notes
exercise the repurchase right for a Fundamental Change, it may cause a default under that debt,
even if the Fundamental Change itself does not cause a default, due to the financial effect of such
a purchase on us. Finally, if a Fundamental Change event occurs, we cannot assure you that we will
have enough funds to repurchase all the notes.
Furthermore, the Fundamental Change provisions including the provisions requiring the payment
of additional shares related to conversions in connection with a Fundamental Change, may in certain
circumstances make more difficult or discourage a takeover of our company and the removal of
incumbent management.
Our business and financial results depend on our ability to generate sufficient cash flows to
service our debt or refinance our debt on commercially reasonable terms.
Our ability to make payments on and to refinance our debt and to fund planned expenditures
depends on our ability to generate cash flow in the future. For example, for the year ending
December 31, 2006, we expect to spend between $135.0 million to $145.0 million on capital
expenditures, including new construction and systems development. During the first half of the
year, we spent $70.7 million on capital expenditures. To some extent, this ability is subject to
general economic, financial, competitive, legislative and regulatory factors and other factors that
are beyond our control. In addition, our ability to borrow funds under our revolving credit
facility will depend on our satisfying various covenants. These covenants, among other things:
|
|
|
limit our ability and the ability of certain subsidiaries to borrow and to place liens
on our assets or their assets; |
|
|
|
|
require us to comply with a fixed charge coverage ratio test and a leverage ratio test; |
6
|
|
|
limit our ability to merge with other parties or to sell all or substantially all of our assets; |
|
|
|
|
limit our ability to engage in other business activities or engage in transactions with affiliates; |
|
|
|
|
limit our and our subsidiaries ability to make certain acquisitions; and |
|
|
|
|
limit our ability to pay dividends and redeem capital stock. |
We cannot assure you that our business will generate cash flows from operations or that future
borrowings will be available to us under our revolving credit facility in an amount sufficient to
enable us to pay our debt or to fund our other liquidity needs.
Our inability to generate sufficient cash flow to service our debt would have a material
adverse effect on our business and results of operations.
We may make acquisitions that could subject us to a number of operating risks.
We anticipate that we may continue to make acquisitions of, investments in, and strategic
alliances with complementary businesses in order to enable us to add services for our core customer
base and for adjacent markets, and to expand each of our businesses geographically. However,
implementation of this strategy entails a number of risks, including:
|
|
|
inaccurate assessment of undisclosed liabilities; |
|
|
|
|
entry into markets in which we may have limited or no experience; |
|
|
|
|
diversion of managements attention from our core business; |
|
|
|
|
difficulties in assimilating the operations of an acquired business or in realizing
projected efficiencies and cost savings; |
|
|
|
|
increase in our indebtedness; and |
|
|
|
|
limitation in our ability to access additional capital when needed. |
Certain changes may be necessary to integrate the acquired businesses into our operations, to
assimilate many new employees and to implement reporting, monitoring, compliance and forecasting
procedures. Obtaining anticipated revenue synergies or cost reductions are also a risk in many
acquisitions.
We depend upon reimbursement by third-party payors.
Our revenues are derived from private and governmental third-party payors. In 2005, 39% of our
long-term care and rehabilitation revenues were derived from Medicare, 29% from Medicaid and 32%
from commercial insurers, managed care plans, workers compensation payors and other private pay
revenue sources. There are increasing pressures from many payors to control health care costs and
to reduce or limit increases in reimbursement rates for health care services. Governmental payment
programs are subject to statutory and regulatory changes, retroactive rate adjustments,
administrative or executive orders and government funding restrictions, all of which may materially
increase or decrease the rate of program payments to us for our services. In the past, we have
experienced a decrease in revenues primarily attributable to declines in government reimbursement
as a result of the Balanced Budget Act of 1997, or the Budget Act. Although certain rate reductions resulting from the Budget Act were
mitigated temporarily by federal legislation in 1999 and 2000, the Budget Act significantly changed
the method of payment under the Medicare and Medicaid programs for our services. On August 4, 2005,
CMS issued a final Medicare skilled nursing facility payment rule for the twelve months ended
September 30, 2006 that implemented refinements to the patient classification system and triggered
the expiration of the temporary payment add-on for certain high-acuity patients. Skilled nursing
facilities continued to be paid under the prior classification system from October 1, 2005 through
7
December 31, 2005, and the new classification system became effective on January 1, 2006. The final
rule also increased rates by 3.1% for the twelve-month period ended September 30, 2006. Therefore,
while Medicare payments to skilled nursing facilities were reduced by an estimated $1.02 billion
because of the expiration of the temporary payment add-ons, this reduction was more than offset by
a $510.0 million increase in payments resulting from the refined classification system and a $530.0
million increase resulting from updates to the payment rates in connection with the market basket
index. We previously expected our average Medicare rate to decrease $17 to $20 per day in the first
quarter of 2006 as a result of the expiration of the add-on payments and the new patient
classification refinements. Our average Medicare rate for the first half of 2006 was equal to our
fourth-quarter rate because of the continuing shift to higher-acuity and higher rate-category
patients. Additionally, on July 27, 2006, CMS announced a
Medicare market basket increase of 3.1% for federal fiscal year 2007, effective
October 1, 2006 for our skilled nursing facilities. While the
fiscal year 2007 Medicare skilled
nursing facility payment rates will not decrease overall payments to skilled nursing facilities,
future legislation or budget cuts in Medicare may be enacted by Congress and implemented by CMS.
Therefore, we cannot assure you that payments from governmental or private payors will remain at
levels comparable to present levels or will, in the future, be sufficient to cover the costs
allocable to patients eligible for reimbursement pursuant to such programs.
Due to budgetary shortfalls, many states are considering or have enacted cuts to their
Medicaid programs, including funding for our services. In the future, changes to Medicaid may
include reducing eligibility, eliminating optional services and transitioning Medicaid patients to
less care-intensive settings. In addition, a number of states use a
variety of funding mechanisms
including provider donation and tax programs as well as intergovernmental transfers to increase
federal Medicaid matching funds. Federal regulations permit states to use these funding sources
toward a states share of Medicaid expenditures if the state
program meets federal requirements, although the federal government
has taken steps in recent years to curtail the use of such funding
mechanisms. President Bushs proposed fiscal year 2007 budget also
recommends reducing the permissibility of provider taxes. The Department of Health and Human Services has established a Medicaid Commission to
advise Congress and the Departments Secretary on ways to modernize the Medicaid program so that it
can provide high-quality health care to its beneficiaries in a
financially sustainable manner. Some of the issues that could be considered by the Medicaid Commission
include changes in eligibility rules, benefits design, and delivery
of services; expanding the number of people covered with quality
care while recognizing budget constraints; reforming long-term care;
quality of care, choice, and beneficiary satisfaction; and program
administration. Further, the Deficit Reduction Act of 2005 includes several
provisions designed to reduce Medicaid program spending.
The health care industry reimbursement process is complex and can involve lengthy delays
between the time that revenue is recognized and the time that reimbursement amounts are settled. As
a result, the reimbursement process may affect our financial condition and results of operations.
In fact, we are subject to periodic audits by the Medicare and Medicaid programs, and the paying
agencies for these programs have various rights and remedies against us if they assert that we have
overcharged the programs or failed to comply with program requirements. These payment and
government agencies can reopen previously filed and reviewed cost reports and require us to repay
any overcharges, as well as make deductions from future amounts due to us. In the ordinary course
of business, we appeal the Medicare and Medicaid programs denial of costs claimed to seek recovery
of those denied costs. For example, we are currently appealing the Medicare fiscal intermediarys
incorrect adjustment of certain expenses on the former Manor Cares home office cost reports from
1997 to 1999, which required us to make a repayment of $34.1 million in 2005, an amount that is
recorded as a receivable on our balance sheet. Although we believe that we have strong arguments to
support why these amounts should be returned to us, there is no guarantee that we will be
successful in our appeal or that this process will be completed in an expeditious manner. A failure
of our appeal could lead to the establishment of reserves and the eventual write-off of the
receivables we have established. More generally, due to the complexity of the reimbursement
process, we could be subject to civil false claims assessments, fines, criminal penalties or
program exclusions as a result of review of program violations by the
Department of Justice or the
Office of Inspector General, Department of Health and Human Services. Private pay sources also
reserve rights to conduct audits and make monetary adjustments.
See Managements discussion and analysis of financial condition and results of
operationsResults of operationsOverview, appearing in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2005 for additional discussion of Medicare and Medicaid legislation.
8
If we fail to comply with extensive laws and government regulations, we could suffer penalties or
be required to make significant changes to our operations.
The health care industry, including our company, is required to comply with extensive and
complex laws and regulations at the federal, state and local government levels relating to, among
other things:
|
|
|
licensure and certification; |
|
|
|
|
adequacy and quality of health care services; |
|
|
|
|
qualifications of health care and support personnel; |
|
|
|
|
quality of medical equipment; |
|
|
|
|
confidentiality, maintenance and security issues associated with medical records and claims processing; |
|
|
|
|
relationships with physicians and other referral sources; |
|
|
|
|
operating policies and procedures; |
|
|
|
|
addition of facilities and services; and |
|
|
|
|
billing for services. |
Many of these laws and regulations are expansive, and we do not always have the benefit of
significant regulatory or judicial interpretation of these laws and regulations. In addition,
certain regulatory developments, such as revisions in the building code requirements for assisted
living and skilled nursing facilities, mandatory increases in scope and quality of care to be
offered to residents and revisions in licensing and certification standards, could have a material
adverse effect on us. In the future, different interpretations or enforcement of these laws and
regulations could subject our current or past practices to allegations of impropriety or illegality
or could require us to make changes in our facilities, equipment, personnel, services, capital
expenditure programs and operating expenses.
If we fail to comply with applicable laws and regulations, we could be subjected to
liabilities, including criminal penalties, civil penalties (including the loss of our licenses to
operate one or more of our facilities) and exclusion of one or more of our facilities from
participation in the Medicare, Medicaid and other federal and state health care programs.
Both federal and state government agencies have heightened and coordinated civil and criminal
enforcement efforts as part of numerous ongoing investigations of health care companies and, in
particular, skilled nursing facilities and hospice and home health care agencies. These
investigations relate to a wide variety of topics, including:
|
|
|
cost reporting and billing practices; |
|
|
|
|
quality of care; |
|
|
|
|
financial relationships with referral sources; and |
|
|
|
|
medical necessity of services provided. |
In addition, the Office of the Inspector General of the Department of Health and Human
Services and the Department of Justice have, from time to time, established national enforcement
initiatives that focus on specific billing practices or other suspected areas of abuse. As other
participants in the health care industry, we receive requests for information from governmental
agencies in connection with their regulatory or investigational authority. Moreover, health care
providers are also subject to qui tam whistleblower lawsuits and false claims provisions at
9
both the state and federal level. See BusinessRegulation and Licenses, appearing in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2005.
We are required to comply with laws governing the transmission and privacy of health information.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires us to comply
with standards for the exchange of health information within our company and with third parties,
such as payors, business associates and patients. These include standards for common health care
transactions, such as:
|
|
|
claims information, plan eligibility, payment information and the use of electronic signatures; |
|
|
|
|
unique identifiers for providers, employers, health plans and individuals; and |
|
|
|
|
security, privacy and enforcement. |
The Department of Health and Human Services has released final rules to implement a number of
these requirements, and several HIPAA initiatives have become effective, including privacy
protections, transaction standards, and security standards. If we fail to comply with these
standards, we could be subject to criminal penalties and civil sanctions.
State efforts to regulate the construction or expansion of health care providers could impair our
ability to expand our operations.
Some states require health care providers (including skilled nursing facilities, hospices,
home health agencies and assisted living facilities) to obtain prior approval, known as a
certificate of need (CON), for:
|
|
|
the purchase, construction or expansion of health care facilities; |
|
|
|
|
capital expenditures exceeding a prescribed amount; or |
|
|
|
|
changes in services or bed capacity. |
To the extent that we require a CON or other similar approvals to expand our operations,
either by acquiring facilities or expanding or providing new services or other changes, our
expansion could be adversely affected by the failure or inability to obtain the necessary
approvals, changes in the standards applicable to those approvals, and possible delays and expenses
associated with obtaining those approvals. We cannot assure you that we will be able to obtain CON
approval for all future projects requiring that approval.
Health care reform legislation may affect our business.
In recent years, there have been numerous initiatives on the federal and state levels for
comprehensive reforms affecting the payment for and availability of health care services. Aspects
of certain of these health care initiatives could adversely affect us, such as:
|
|
|
reductions in funding of the Medicare and Medicaid programs; |
|
|
|
|
potential changes in reimbursement regulations by the CMS; |
|
|
|
|
enhanced pressure to contain health care costs by Medicare, Medicaid and other payors; and |
|
|
|
|
greater state flexibility and additional operational requirements in the administration of Medicaid. |
There can be no assurance as to the ultimate content, timing or effect of any health care
reform legislation, nor is it possible at this time to estimate the impact of potential legislation
on us. That impact may be material to our financial condition or our results of operations.
10
We face national, regional and local competition.
Our nursing facilities compete primarily on a local and regional basis with many long-term
care providers, some of whom may own as few as a single nursing center. Our ability to compete
successfully varies from location to location depending on a number of factors, including the
number of competing centers in the local market, the types of services available, quality of care,
reputation, age and appearance of each center and the cost of care in each locality.
We also compete with a variety of other companies in providing assisted living services,
hospice and home health care services and rehabilitation therapy services. Given the relatively low
barriers to entry and continuing health care cost containment pressures in the assisted living
industry, we expect that the assisted living industry will become increasingly competitive in the
future. Increased competition in the future could limit our ability to attract and retain
residents, to maintain or increase resident service fees, or to expand our business.
Labor costs may increase with a potential shortage of qualified personnel.
A shortage of nurses or other trained personnel and general inflationary pressures have
required us to enhance our wage and benefits packages in order to compete for qualified personnel.
Labor costs accounted for 58.0% of the operating expenses of our long-term care segment for the
year ended December 31, 2005. This percentage is lower than prior years because of the increase in
provider assessments, some of which were retroactive to prior periods. Excluding prior-period
assessments, the percentage was 60.0%. Our long-term care wage rate increases during the same
period were 3.5%. We compete with other health care providers to attract and retain qualified or
skilled personnel. Because the skill levels required of and wages demanded by our caregivers,
particularly therapists, increases as we shift our patient base to higher-acuity patients, we may
face difficulty retaining those individuals. We also compete with various industries for lower-wage
employees. We have used and will continue to use, when needed, high-priced temporary help to
supplement staffing levels in certain markets with shortages of health care workers. If a shortage
of nurses or other health care workers occurs in all geographic areas in which we operate, it could
adversely affect our ability to attract and retain qualified personnel and could further increase
our operating costs.
Our operations are subject to occupational health and safety regulations.
We are subject to a wide variety of federal, state and local occupational health and safety
laws and regulations. The types of regulatory requirements faced by health care providers such as
us include:
|
|
|
air and water quality control requirements; |
|
|
|
|
occupational health and safety requirements (such as standards regarding blood-borne
pathogens and ergonomics) and waste management requirements; |
|
|
|
|
specific regulatory requirements applicable to asbestos, polychlorinated biphenyls and
radioactive substances; |
|
|
|
|
requirements for providing notice to employees and members of the public about
hazardous materials and wastes; and |
|
|
|
|
certain other requirements. |
If we fail to comply with these standards, we may be subject to sanctions and penalties.
We may be unable to reduce costs to offset decreases in our occupancy rates or other expenses
completely.
We depend on implementing adequate cost management initiatives in response to fluctuations in
levels of occupancy in our skilled nursing and assisted living facilities and in other sources of
income in order to maintain our current cash flow and earnings levels. Fluctuation in our occupancy
levels may become more common as we increase our emphasis on patients with shorter stays but higher
acuities. A decline in our occupancy rates could
11
result in decreased revenues. If we are unable to put in place corresponding adjustments in costs
in response to falls in census or other revenue shortfalls, we may be unable to prevent future
decreases in earnings. As a result, our financial condition and operating results may be adversely
affected.
The cost of general and professional liability claims may increase.
Patient care liability remains a serious industry-wide cost issue. The long-term care industry
received some assistance with the passage of tort reform measures in Florida, Ohio, Pennsylvania,
Texas and other states. Despite those reforms, if patient care claims significantly increase in
number and size, our future financial condition and operating results may be adversely affected.
We are subject to material litigation.
We are, and may in the future be, subject to litigation which, if determined adversely to us,
could have a material adverse effect on our business or financial condition. In addition, some of
the companies and businesses we have acquired have been subject to similar litigation. Pending,
threatened or future litigation, whether or not described in this prospectus or in the documents
incorporated by reference in this prospectus, could have a material adverse effect on our financial
condition or our results of operations. See Managements discussion and analysis of financial
condition and results of operations Commitments and contingencies appearing in our Annual Report
on Form 10-K for the fiscal year ended December 31, 2005 and Note 7 to our unaudited consolidated
financial statements appearing in our Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 2006.
Federal and state statutes allow courts, under specific circumstances, to void guarantees and
require holders of the notes to return payments received from us or our subsidiary guarantors.
Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws,
a guarantee could be voided, or claims in respect of a guarantee could be subordinated to all other
debts of that guarantor if, among other things, the guarantor, at the time it incurred the debt
evidenced by its guarantee:
|
|
|
issued the guarantee to delay, hinder or defraud present or future creditors; or |
|
|
|
|
received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee, |
and, at the time it issued the guarantee:
|
|
|
was insolvent or rendered insolvent by reason of such incurrence; |
|
|
|
|
was engaged or about to engage in a business or transaction for which the guarantors
remaining unencumbered assets constituted unreasonably small capital to carry on its
business; or |
|
|
|
|
intended to incur, or believed that it would incur, debts beyond its ability to pay the
debts as they mature. |
In addition, any payment by that guarantor pursuant to its guarantee could be voided and
required to be returned to the guarantor, or to a fund for the benefit of the creditors of the
guarantor.
The measures of insolvency for purposes of these fraudulent transfer laws will vary depending
upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred.
Generally, however, a guarantor would be considered insolvent if, at the time it incurred the debt:
|
|
|
the sum of its debts, including contingent liabilities, were greater than the fair
saleable value of all of its assets; |
|
|
|
|
the present fair saleable value of its assets were less than the amount that would be
required to pay its probable liability on its existing debts, including contingent
liabilities, as they become absolute and mature; or |
12
|
|
|
it could not pay its debts as they become due. |
We cannot be sure as to the standards that a court would use to determine whether or not the
subsidiary guarantors were solvent at the relevant time, or, regardless of the standard that the
court uses, that the issuance of the guarantee of the notes would not be voided or the guarantee of
the notes would not be subordinated to that subsidiary guarantors other debt.
If a case were to occur, any guarantee of the notes incurred by one or more of the subsidiary
guarantors could also be subject to the claim that, since the guarantee was incurred for our
benefit, and only indirectly for the benefit of the subsidiary guarantor, the obligations of the
applicable guarantor were incurred for less than fair consideration.
A court could thus void the obligations under the guarantee or subordinate the guarantee to
the applicable guarantors other debt or take other action detrimental to holders of the notes.
We may repurchase our stock and reduce cash reserves and shareholders equity that is available for
repayment of the notes.
We have repurchased, and expect to continue to repurchase, our stock in the open market or in
privately negotiated transactions. As of March 31, 2006, we had aggregate authority to repurchase
$400.0 million of our common stock and, as of the same date, we had $135.9 million of this amount
remaining. On May 10, 2006, we announced that our board of directors authorized us to repurchase an
additional $300.0 million of our common stock through December 31, 2007; the net proceeds from the
initial offering of the notes have been used to repurchase our stock pursuant to these
authorizations. Overall, we purchased 5.6 million shares during the second quarter of 2006 for
$265.6 million, including 2.0 million shares as part of an accelerated share repurchase agreement.
As of June 30, 2006, we had $170.3 million of the total authorized amount remaining. In the
future, we may purchase our stock with cash or other assets of Manor Care. These purchases may be
significant, and any purchase would reduce cash and shareholders equity that is available to pay
the notes.
We may purchase or sell assets that may increase senior debt or reduce cash flow.
We frequently purchase and sell assets. Purchases may reduce cash or increase senior debt. We
also sell assets, which may reduce our cash flow as earnings from sold operations are no longer
available.
Future sales of our common stock may depress our stock price.
Sales of a substantial number of shares of our common stock in the public market could depress
the market price of the notes, our common stock, or both, and impair our ability to raise capital
though the sale of additional equity securities. As of June 30, 2006, we held approximately 9.6
million shares of our common stock in reserve for future issuance to our employees, directors and
consultants pursuant to our stock option and restricted stock award programs.
We may issue additional equity securities, which would lead to dilution of our issued and
outstanding common stock.
The issuance of additional equity securities or securities convertible into equity securities
would result in dilution of existing stockholders equity interest in us. We are authorized to
issue, without stockholder approval, 5,000,000 shares of preferred stock, $0.01 par value per
share, in one or more series, which may give other stockholders dividend, conversion, voting, and
liquidation rights, among other rights, that may be superior to the rights of holders of our common
stock. Our board of directors has the authority to issue, without the vote or action of
stockholders, shares of preferred stock in one or more series, and has the ability to fix the
rights, preferences, privileges and restrictions of any such series. Any such series of preferred
stock could contain dividend rights, conversion rights, voting rights, terms of redemption,
redemption prices, liquidation preferences or other rights superior to the rights of holders of our
common stock. Our board of directors has no present intention of issuing any such preferred series,
but reserves the right to do so in the future. In addition, our authorized capital stock includes
up to 300,000,000 shares of common stock, $0.01 par value per share, of which 73,661,336 were
outstanding as of
13
July 31, 2006. We are also authorized to issue securities convertible in either common stock or
preferred stock without stockholder approval.
The market price of the notes could be significantly affected by the market price of our common
stock and other factors.
We expect that the market price of our notes will be significantly affected by the market
price of our common stock. This may result in greater volatility in the market price of the notes
than would be expected for nonconvertible debt securities. The market price of our common stock
will likely continue to fluctuate in response to factors including the factors discussed elsewhere
in Cautionary Note Regarding Forward-Looking Statements and in Risk Factors, many of which are
beyond our control.
The conditional conversion feature of the notes could result in your receiving less than the value
of our common stock into which a note would otherwise be convertible.
The notes are convertible into cash and shares of our common stock, if applicable, only if
specified conditions are met. If the specific conditions for conversion are not met, you will not
be able to convert your notes, and you may not be able to receive the value of the cash and common
stock into which the notes would otherwise be convertible.
Upon conversion of the notes, we will pay only cash in settlement of the principal amount or
conversion value thereof and we will settle any amounts in excess of principal in shares of our
common stock.
Generally, we will satisfy our conversion obligation to holders by paying only cash in
settlement of the lesser of the principal amount and the conversion value of the notes and by
delivering shares of our common stock in settlement of any and all conversion obligations in excess
of the principal amount of the notes. Accordingly, upon conversion of a note, holders might not
receive any shares of our common stock, or they might receive fewer shares of common stock relative
to the conversion value of the note. In addition, because of the settlement of a conversion of
notes in cash and shares of our common stock, if any, settlement will be delayed until at least the
23rd trading day following our receipt of the holders conversion notice. See Description of
NotesConversion RightsPayment Upon Conversion. Upon conversion of the notes, you may receive
less proceeds than expected because the value of our common stock may decline (or appreciate as
much as you may expect) between the day that you exercise your conversion right and the day the
conversion value of your notes is determined.
Our failure to convert the notes into cash or a combination of cash and common stock upon
exercise of a holders conversion right in accordance with the provisions of the indenture would
constitute a default under the indenture. In addition, a default under the indenture could lead to
a default under existing and future agreements governing our indebtedness. If, due to a default,
the repayment of related indebtedness were to be accelerated after any applicable notice or grace
periods, we may not have sufficient funds to repay such indebtedness and the notes.
The notes are not protected by restrictive covenants.
The indenture governing the notes does not contain any financial or operating covenants or
restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or
repurchase of securities by us or any of our subsidiaries. The indenture contains no covenants or
other provisions to afford protection to holders of the notes in the event of a Fundamental Change
involving Manor Care except to the extent described under Description of NotesFundamental Change
Permits Holders to Require Us to Purchase Notes, Description of NotesConversion
RightsConversion Rate AdjustmentsAdjustment to Shares Delivered Upon Conversion Upon Certain
Fundamental Changes and Description of NotesConversion RightsConversion Rate
AdjustmentsConversion After a Public Acquirer Change of Control.
14
The adjustment to the conversion rate for notes converted in connection with a specified corporate
transaction may not adequately compensate you for any lost value of your notes as a result of such
transaction.
If a specified corporate transaction that constitutes a fundamental change occurs prior to
June 1, 2013, under certain circumstances, we will increase the conversion rate by a number of
additional shares of our common stock for notes converted in connection with such specified
corporate transaction. The increase in the conversion rate will be determined based on the date on
which the specified corporate transaction becomes effective and the price paid per share of our
common stock in such transaction, as described below under Description of NotesConversion
Rights. The adjustment to the conversion rate for notes converted in connection with a specified
corporate transaction may not adequately compensate you for any lost value of your notes as a
result of such transaction. In addition, if the specified corporate transaction occurs after June
1, 2013 or if the price of our common stock in the transaction is greater than $110.00 per share or
less than $45.23 (in each case, subject to adjustment), no adjustment will be made to the
conversion rate. In addition, in no event will the total number of shares of common stock issuable
upon conversion as a result of this adjustment exceed 22.1091 per $1,000 principal amount of notes,
subject to adjustments in the same manner as the conversion rate as set forth under Description of
NotesConversion Rate Adjustments.
The conversion rate of the notes may not be adjusted for all dilutive events.
The conversion rate of the notes is subject to adjustment for certain events, including, but
not limited to, the issuance of stock dividends on our common stock, the issuance of certain rights
or warrants, subdivisions, combinations, distributions of capital stock, indebtedness, or assets,
cash dividends and certain issuer tender or exchange offers as described under Description of
NotesConversion RightsConversion Rate Adjustments. However, except for adjustments with
respect to the issuance of shares of our common stock as a dividend or distribution on shares of
our common stock, or share splits or share combinations, we will not need to make anti-dilution
adjustments as a result of which the conversion rate would exceed 22.1091 shares per $1,000
principal amount of notes. In addition, the conversion rate will not be adjusted for other events,
such as a third party tender or exchange offer or an issuance of common stock for cash, that may
adversely affect the trading price of the notes or the common stock. An event that adversely
affects the value of the notes may occur, and that event may not result in an adjustment to the
conversion rate.
We may not have the ability to raise the funds necessary to purchase the notes upon a Fundamental
Change or other purchase date, as required by the indenture governing the notes.
On June 1, 2013, holders of the notes may require us to purchase their notes for cash. In
addition, holders may also require us to purchase their notes upon a Fundamental Change as
described under Description of NotesFundamental Change Permits Holders to Require Us to Purchase
Notes. A Fundamental Change may also constitute an event of default, and result in the effective
acceleration of the maturity of our then-existing indebtedness, under another indenture or other
agreement. We cannot assure you that we would have sufficient financial resources, or would be able
to arrange financing, to pay the purchase price or Fundamental Change purchase price for the notes
tendered by the holders in cash. Failure by us to purchase the notes when required will result in
an event of default with respect to the notes.
Some significant restructuring transactions may not constitute a Fundamental Change, in which case
we would not be obligated to offer to repurchase the notes.
Upon the occurrence of a Fundamental Change, you have the right to require us to repurchase
your notes. However, the Fundamental Change provisions will not afford protection to holders of
notes in the event of certain transactions. For example, transactions such as leveraged
recapitalizations, refinancings, restructurings, or acquisitions initiated by us may not constitute
a Fundamental Change requiring us to repurchase the notes. In the event of any such transaction,
the holders would not have the right to require us to repurchase the notes, even though each of
these transactions could increase the amount of our indebtedness, or otherwise adversely affect our
capital structure or any credit ratings, thereby adversely affecting the holders of notes.
15
The trading market for the notes may be limited.
The notes are a new issue of securities for which there is currently no trading market. We do
not intend to list the notes on any national securities exchange or automated quotation system.
Accordingly, we cannot predict whether an active trading market for the notes will develop or be
sustained. If an active trading market for the notes fails to develop or be sustained, the trading
price for the notes could fall.
Moreover, even if an active trading market for the notes were to develop, the notes could
trade at prices that may be lower than the initial offering price of the notes. Future trading
prices of the notes will depend on many factors, including, among other things, prevailing interest
rate, our operating results, the price of our common stock and the market for similar securities.
Historically, the market for convertible debt has been subject to disruptions that have caused
volatility in prices. It is possible that the market for the notes will be subject to disruptions
which may have a negative effect on the holders of the notes, regardless of our prospects or
financial performance
You may have to pay taxes with respect to changes in the conversion rate of the notes.
The
conversion rate of the notes is subject to adjustment for some events arising from
stock splits and combinations, stock dividends, cash dividends and other actions by us that
modify our capital structure. If, for example, the conversion rate is adjusted as a result of a
distribution that is taxable to holders of our common stock, such as a cash dividend, you may be
required to include an amount in income for U.S. federal income tax purposes, notwithstanding the
fact that you do not receive an actual distribution. In addition, holders of the notes may, in
some circumstances, be deemed to have received a distribution subject to U.S. federal
withholding taxes (including backup withholding taxes or withholding taxes for payments to foreign
persons). If we pay withholding taxes on behalf of a holder, we may, at our option, set off such
payments against payments of cash and common stock on the notes. See the discussions under the
headings United States Federal Income Tax ConsiderationsConsequences to U.S.
HoldersConstructive dividends and United States Federal Income Tax
ConsiderationsConsequences to Non-U.S. HoldersDividends and constructive dividends for more
details.
You should consider the U.S. federal income tax consequences of owning the notes and the shares of
common stock issuable upon conversion of the notes.
We and each holder agree in the indenture to treat the notes as indebtedness that is subject
to United States Treasury regulations governing contingent payment debt instruments. The following
discussion assumes that the notes will be so treated, though we cannot assure you that the Internal
Revenue Service will not assert that the notes should be treated differently. Under the contingent
payment debt regulations, a holder will be required to include amounts in income, as original issue
discount, in advance of cash such holder receives on a note, and to accrue interest on a constant
yield to maturity basis at a rate comparable to the rate at which we would borrow in a fixed-rate,
noncontingent, nonconvertible borrowing, which we have determined to be 7.23%, even though the note
will have significantly lower stated rate of interest. A U.S. holder will recognize taxable income
significantly in excess of cash received while the notes are outstanding.
In addition, a U.S. holder will recognize ordinary income upon a sale, exchange, conversion,
redemption or repurchase of the notes at a gain. In computing such gain, the amount realized by a
U.S. holder will include, in the case of a conversion, the amount of cash and the fair market value
of shares received. Holders are urged to consult
16
their own tax advisors as to the U.S. federal, state and other tax consequences of acquiring,
owning and disposing of the notes and the shares of common stock issuable upon conversion of the
notes. For more information, see United States Federal Income Tax Considerations.
17
Use of Proceeds
The selling securityholders will receive all of the proceeds from the sale of the notes
and the common stock issuable upon conversion of the notes offered by this prospectus. We will not
receive any proceeds. See Selling Securityholders for a list of those persons or entities
receiving proceeds from the sale of the notes and the common stock issuable upon conversion of the
notes.
At June 30, 2006, we had received initial net proceeds of $244.6 million from the issuance of
the notes (after deducting transaction fees and expenses). We used the net proceeds from the
initial offering of the notes to purchase our common stock. See Description of Certain Other
Indebtedness and Preferred Stock.
18
Price Range of Common Stock and Dividends
Our common stock is quoted on the New York Stock Exchange under the symbol HCR. The
following table sets forth, for the periods indicated, the range of high and low sale prices for
our common stock. On August 14, 2006 the last reported sale
price of our common stock was $51.89 per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
|
|
|
|
price |
|
|
|
|
|
|
Low |
|
|
High |
|
|
Cash dividends |
|
|
Year ended 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
$ |
32.44 |
|
|
$ |
37.25 |
|
|
$ |
0.14 |
|
Second Quarter |
|
|
30.28 |
|
|
|
36.57 |
|
|
|
0.14 |
|
Third Quarter |
|
|
29.20 |
|
|
|
32.75 |
|
|
|
0.14 |
|
Fourth Quarter |
|
|
29.42 |
|
|
|
37.00 |
|
|
|
0.14 |
|
Year ended 2005 |
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
$ |
32.26 |
|
|
$ |
36.59 |
|
|
$ |
0.15 |
|
Second Quarter |
|
|
30.87 |
|
|
|
41.16 |
|
|
|
0.15 |
|
Third Quarter |
|
|
34.70 |
|
|
|
40.46 |
|
|
|
0.15 |
|
Fourth Quarter |
|
|
36.46 |
|
|
|
41.11 |
|
|
|
0.15 |
|
Year ended 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
$ |
38.26 |
|
|
$ |
44.89 |
|
|
$ |
0.16 |
|
Second Quarter |
|
|
41.95 |
|
|
|
47.52 |
|
|
|
0.16 |
|
Third Quarter (through August 14, 2006) |
|
|
46.37 |
|
|
|
52.60 |
|
|
|
0.16 |
|
|
As of July 31, 2006, we had approximately 2,200 stockholders of record. Approximately 93% of
our outstanding shares were registered in the name of DTC, or Cede & Co., which held these shares
on behalf of several hundred brokerage firms, banks and other financial institutions. We estimate
that the shares attributed to these financial institutions represent the interests of approximately
30,000 beneficial owners.
In July 2003, we declared our first quarterly dividend. In July 2006, our board of directors
declared a quarterly dividend of 16 cents per share of common stock. We intend to declare and pay
regular quarterly cash dividends; however, we cannot assure you that any dividend will be declared,
paid or increased in the future. Any decision to pay cash dividends in the future will be at the
discretion of our board of directors and will depend upon our financial conditions, operating
results, capital requirements and such other factors that our board of directors deems relevant.
19
Ratio of Earnings to Fixed Charges
The following table presents our historical ratios of earnings to fixed charges for the
six months ended June 30, 2006 and 2005 and the five years in the period ended December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
|
|
|
|
June 30, |
|
Year ended December 31, |
|
|
2006 |
|
2005 |
|
2005 |
|
2004 |
|
2003 |
|
2002 |
|
2001 |
|
Ratio of earnings to fixed charges(1) |
|
|
7.1x |
|
|
|
5.7x |
|
|
|
4.6x |
|
|
|
4.9x |
|
|
|
4.5x |
|
|
|
5.1x |
|
|
|
2.9x |
|
|
(1) |
|
Earnings in the ratio of earnings to fixed charges represent our income before income
taxes that have been adjusted to exclude (i) the effect of any fixed charges that reduced such
earnings and (ii) the undistributed income or losses of affiliates accounted for by the equity
method, except for losses of equity method affiliates for the year ended December 31, 2001,
whose debt was guaranteed by us. Fixed charges include interest expense, whether or not
classified as such in the earnings statement, as well as the portion of rental expense that is
estimated to represent the interest portion (28% to 40%). Interest expense includes
capitalized interest, interest on guaranteed debt of an equity method affiliate that is
incurring losses, and interest on our loans against the cash surrender value of corporate
owned life insurance (COLI). |
20
Description of Notes
The Company issued the notes under an indenture dated as of May 17, 2006 (the
indenture) among itself, the subsidiary guarantors and U.S. Bank National Association, as trustee
(the trustee). The terms of the notes include those expressly set forth in the indenture and
those made part of the indenture by reference to the Trust Indenture Act of 1939, as amended (the
Trust Indenture Act). The notes and the shares of common stock issuable upon conversion of the
notes and the subsidiary guarantees are covered by a registration rights agreement.
The following description is a summary of the material provisions of the notes and the
indenture and does not purport to be complete. This summary is subject to and is qualified by
reference to all the provisions of the notes and the indenture, including the definitions of
certain terms used in the indenture. We urge you to read the indenture because it, and not this
description, defines your rights as a holder of the notes.
You will find certain of the definitions of capitalized terms used in this description under
the heading Certain definitions. For purposes of this description, references to the Company,
we, our and us refer only to Manor Care, Inc. and not to its subsidiaries.
General
The Notes
The notes:
|
|
|
are general unsecured, senior obligations of the Company; |
|
|
|
|
are limited to an aggregate principal amount of $250.0 million; |
|
|
|
|
mature on June 1, 2036; |
|
|
|
|
were issued in denominations of $1,000 and integral multiples of $1,000; |
|
|
|
|
are represented by one or more registered notes in global form; |
|
|
|
|
rank equally in right of payment to any future unsecured senior Debt of the Company; and |
|
|
|
|
are unconditionally guaranteed on a senior basis by each Subsidiary of the Company that
has guaranteed the 2013 Notes, the 2023 Notes, the 2035 Notes and the revolving credit
facility (and any other facility constituting the Senior Credit Obligations). |
Subject to fulfillment of certain conditions and during the periods described below, the notes
may be converted initially at an initial conversion rate of 20.0992 shares of common stock per
$1,000 principal amount of notes (equivalent to a conversion price of approximately $49.75 per
share of common stock). The conversion rate is subject to adjustment if certain events occur. Upon
conversion of a note, we will pay cash and shares of common stock, if any, based upon a daily
conversion value calculated on a proportionate basis for each day in the 20 trading-day cash
settlement averaging period as described below under Conversion RightsPayment Upon Conversion.
You will not receive any separate cash payment for interest or additional interest, if any, accrued
and unpaid to the conversion date except under the limited circumstances described below.
Payments on the Notes; Paying Agent and Registrar
We will pay principal of certificated notes at the office or agency designated by the Company
in the Borough of Manhattan, The City of New York. We have initially designated a corporate trust
office of U.S. Bank National Association as our paying agent and registrar and its agency in New
York, New York as a place where notes may be presented for payment or for registration of transfer.
We may, however, change the paying agent or registrar without prior notice to the holders of the
notes, and the Company may act as paying agent or registrar. Interest (including contingent
interest and additional interest, if any), on certificated notes will be payable (i) to
21
holders having an aggregate principal amount of $5,000,000 or less, by check mailed to the holders
of these notes and (ii) to holders having an aggregate principal amount of more than $5,000,000,
either by check mailed to each holder or, upon application by a holder to the registrar not later
than the relevant record date, by wire transfer in immediately available funds to that holders
account within the United States, which application shall remain in effect until the Holder
notifies, in writing, the registrar to the contrary.
We will pay principal of and interest on (including any contingent interest or additional
interest), notes in global form registered in the name of or held by The Depository Trust Company
or its nominee in immediately available funds to The Depository Trust Company or its nominee, as
the case may be, as the registered holder of such global note.
Transfer and Exchange
A holder of notes may transfer or exchange notes at the office of the registrar in accordance
with the indenture. The registrar and the trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents. No service charge will be imposed by the
Company, the trustee or the registrar for any registration of transfer or exchange of notes, but
the Company may require a holder to pay a sum sufficient to cover any transfer tax or other similar
governmental charge required by law or permitted by the indenture. The Company is not required to
transfer or exchange any note selected for redemption or surrendered for conversion. Also, the
Company is not required to register any transfer or exchange of any note for a period of 15 days
before the mailing of a notice of redemption.
General
The registered holder of a note will be treated as the owner of it for all purposes.
The Company does not intend to list the notes on a national securities exchange or interdealer
quotation system.
The indenture does not limit the amount of debt which may be issued by the Company or its
Subsidiaries under the indenture or otherwise. The Company has issued, and may be permitted to
continue to issue, additional series of debt securities under the other indentures to which it is a
party, including the indenture, dated April 15, 2003, between the Company, the subsidiary
guarantors and National City Bank, as Trustee, relating to the 2013 Notes, the indentures, dated
April 15, 2003 and December 10, 2004, between the Company, the subsidiary guarantors and National
City Bank, as Trustee and the Company, the subsidiary guarantors and U.S. Bank National
Association, as Trustee, respectively, relating to the 2023 Notes, and the indenture, dated August
1, 2005, between the Company, the subsidiary guarantors and Wachovia Bank, National Association, as
Trustee, relating to the 2035 Notes.
Other than restrictions described under Fundamental Change Permits Holders to Require Us to
Purchase Notes and Consolidation, Merger and Sale of Assets below and except for the provisions
set forth under Conversion RightsConversion Rate AdjustmentsAdjustment to shares delivered
upon conversion upon certain Fundamental Changes and Conversion rights Conversion Rate
Adjustments Conversion After a Public Acquirer Change of Control, the indenture does not
contain any covenants or other provisions designed to afford holders of the notes protection in the
event of a highly leveraged transaction involving the Company or in the event of a decline in the
credit rating of the Company as the result of a takeover, recapitalization, highly leveraged
transaction or similar restructuring involving the Company that could adversely affect such
holders.
Interest
The notes will bear interest at a rate of 2% per year. Interest on the notes will accrue from
May 17, 2006. Interest will be payable semiannually in arrears on June 1 and December 1 of each
year, beginning December 1, 2006.
22
Interest will be paid to the person in whose name a note is registered at the close of
business on May 15 or November 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 composed of
twelve 30-day months.
In addition, we will pay contingent interest under the circumstances described in
"Contingent Interest below.
Contingent Interest
Subject to the accrual and record date provisions described below, we will pay contingent
interest to the holders of notes during any six-month period from June 1 to November 30 and from
December 1 to May 31, commencing with the six-month period beginning June 1, 2013, if the average
Note Price (as defined below) for the Applicable Five Trading Day Period (as defined below) equals
120% or more of the principal amount of such notes. We will pay contingent interest only in cash.
Applicable Five Trading Day Period means the five trading days ending on the second trading day
immediately preceding the first day of the relevant six-month period.
The amount of contingent interest payable per note in respect of any six-month period will
equal 0.125% of the average Note Price for the Applicable Five Trading Day Period.
Contingent interest, if any, will accrue from June 1 or December 1, as applicable, and will be
payable on the next succeeding December 1 or June 1 interest payment date, as the case may be.
Contingent interest will be paid to the person in whose name a note is registered at the close of
business on November 15 or May 15, as the case may be, immediately preceding the relevant interest
payment date on which contingent interest is payable. For information on your obligation to accrue
original issue discount on your notes, see United States Federal Income Tax
Considerations.
For financial accounting purposes, our obligation to pay contingent interest on the notes will
constitute an embedded derivative, the initial value of which is not material to our consolidated
financial position. Any material changes in its value will be reflected in our future income
statements in accordance with Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities.
Trading day means a day on which our common stock
|
|
|
is not suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business, and |
|
|
|
|
has traded at least once on the national or regional securities exchange or association
or over-the-counter market that is the primary market for the trading of the common stock. |
The Note Price on any date of determination means the average of the secondary market bid
quotations per note obtained by the bid agent for $10.0 million principal amount of notes at
approximately 4:00 p.m., New York City time, on such determination date from three unaffiliated
securities dealers we select, provided that if:
|
|
|
at least three such bids are not obtained by the bid agent, or |
|
|
|
|
in our reasonable judgment, the bid quotations are not indicative of the secondary
market value of the notes, |
then the Note Price will equal (a) the then applicable conversion rate of the notes multiplied by
(b) the average last reported sale price (as defined under Conversion Rights) of our common
stock for the last five trading days ending on such determination date.
The bid agent will initially be the trustee. We may change the bid agent, but the bid agent
will not be our affiliate. The bid agent will solicit bids from securities dealers that we believe
are willing to bid for the notes. Upon determination of the actual number of shares of our common
stock to be paid upon determination that holders will be entitled to receive contingent interest
for an interest period, we will disseminate a press release through Dow Jones & Company, Inc.,
Bloomberg Business News containing this information or publish the information on our website or
through such other public medium as we may use at that time.
23
Ranking
The notes will be general unsecured obligations of the Company that rank senior in right of
payment to all future Debt that is expressly subordinated in right of payment to the notes. The
notes will rank equally in right of payment with all existing and future liabilities of the Company
that are not so subordinated. The notes will effectively rank junior to any secured indebtedness of
the Company and similarly the Subsidiary Guarantees will rank junior to any secured indebtedness of
the Subsidiary Guarantors, in each case to the extent of the value of the assets securing such
indebtedness. In the event of bankruptcy, liquidation, reorganization or other winding up of the
Company, the assets of the Company that secure secured Debt will be available to pay obligations on
the notes only after all Debt under such secured Debt has been repaid in full from such assets. We
advise you that there may not be sufficient assets remaining to pay amounts due on any or all the
notes then outstanding. The guarantees of the notes will have a similar ranking with respect to
secured and unsecured senior Debt of the Subsidiary Guarantors as the notes do with respect to
secured and unsecured senior Debt of the Company as well as with respect to any unsecured
obligations expressly subordinated in right of payment to the guarantees.
For the year ended December 31, 2005 and for the six months ended June 30, 2006, our
non-guarantor subsidiaries represented less than 3% of our revenues, assets and income before
income taxes.
At June 30, 2006 our total consolidated indebtedness was $965.3 million.
In addition to the guarantees of indebtedness under the revolving credit facility, the 2013
Notes, the 2023 Notes, and the 2035 Notes, Subsidiaries of the Company had additional indebtedness
of $9.7 million as of June 30, 2006, consisting of industrial revenue bonds and other liabilities,
substantially all of which was secured. Each Subsidiary Guarantee of the notes will be effectively
subordinated to all secured Debt of the relevant Subsidiary Guarantor to the extent of the value of
the assets securing such Debt. As of June 30, 2006, substantially all of the Companys Subsidiary
Debt was secured, excluding the guarantees of the notes discussed above. The ability of our
Subsidiaries to pay dividends and make other payments to us is also restricted by, among other
things, applicable corporate and other laws and regulations as well as agreements to which our
Subsidiaries may become a party. We may not be able to comply with the provision of the notes that
provides that upon a Fundamental Change each holder may require us to repurchase all or a portion
of the notes.
Subsidiary Guarantees
The Subsidiary Guarantors will, jointly and severally, unconditionally guarantee the Companys
payment obligations under the notes. Each Subsidiary Guarantee will rank equally in right of
payment with all existing and future liabilities of Subsidiary Guarantors that are not
subordinated. Each Subsidiary Guarantee will effectively rank junior to any secured indebtedness of
its respective Subsidiary Guarantor to the extent of the value of the assets securing such
indebtedness. The Subsidiary Guarantees with respect to a note will automatically terminate
immediately prior to such notes conversion.
The obligations of each Subsidiary Guarantor under its Subsidiary Guarantee will be limited as
necessary to prevent that Subsidiary Guarantee from constituting a fraudulent conveyance or
fraudulent transfer under applicable law.
In the event a Subsidiary Guarantor is sold or disposed of (whether by merger, consolidation,
the sale of its Capital Stock or the sale of all or substantially all of its assets (other than by
lease)) and whether or not the Subsidiary Guarantor is the surviving corporation in such
transaction to a Person which is not the Company or a Subsidiary of the Company, then each such
Subsidiary Guarantor will be released from obligations under its Subsidiary Guarantee if all the
obligations of such Subsidiary Guarantor under the revolving credit facility, the 2013 Notes, the
2023 Notes, the 2035 Notes and related documentation terminate upon consummation of such
transaction.
24
Optional Redemption
No sinking fund is provided for the notes. Prior to June 1, 2013, the notes will not be
redeemable. On or after June 1, 2013, we may redeem for cash all or part of the notes at any time,
upon not less than 35 nor more than 60 days notice before the redemption date by mail to the
trustee, the paying agent and each holder of notes, for a price equal to 100% of the principal
amount of the notes to be redeemed plus any accrued and unpaid interest, including any contingent
interest or additional interest, to but excluding the redemption date.
If we decide to redeem fewer than all of the outstanding notes, the trustee will select the
notes to be redeemed (in principal amounts of $1,000 or integral multiples thereof) by lot, or on a
pro rata basis or by another method the trustee considers fair and appropriate.
If the trustee selects a portion of your note for partial redemption and you convert a portion
of the same note, the converted portion will be deemed to be from the portion selected for
redemption.
In the event of any redemption in part, we will not be required to:
|
|
|
issue, register the transfer of or exchange any note during a period of 15 days before
the mailing of the redemption notice; or |
|
|
|
|
register the transfer of or exchange any note so selected for redemption, in whole or
in part, except the unredeemed portion of any note being redeemed in part. |
Conversion Rights
General
Subject to the conditions described under the headings Conversion Upon Satisfaction of Sale
Price Condition, Conversion Upon Redemption, Conversion Upon Specified Corporate
Transactions, Conversion Upon Credit Ratings Event and Conversion Rate Adjustments,
holders may convert each of their notes initially at an initial conversion rate of 20.0992 shares
of common stock per $1,000 principal amount of notes (equivalent to a conversion price of
approximately $49.75 per share of common stock) at any time prior to the close of business on the
trading day immediately preceding the maturity date, June 1, 2036. Upon conversion of a note, we
will pay cash and shares of our common stock, if any, based on a Daily Conversion Value (as defined
below) calculated on a proportionate basis for each day of the 20 trading-day Cash Settlement
Averaging Period (as defined below), all as set forth below under Payment Upon Conversion. The
trustee will initially act as the conversion agent.
The conversion rate and the equivalent conversion price in effect at any given time are
referred to as the applicable conversion rate and the applicable conversion price,
respectively, and will be subject to adjustment as described below. A holder may convert fewer than
all of such holders notes so long as the notes converted are an integral multiple of $1,000
principal amount.
Upon conversion, you will not receive any separate cash payment for accrued and unpaid
interest and contingent interest or additional interest, if any, unless such conversion occurs
between a regular record date and the interest payment date to which it relates. We will not issue
fractional shares of our common stock upon conversion of notes. Instead, we will pay cash in lieu
of fractional shares based on the last reported sale price of the common stock on the trading day
prior to the conversion date. Our delivery to you of cash or a combination of cash and the full
number of shares of our common stock, if applicable, together with any cash payment for any
fractional share, into which a note is convertible, will be deemed to satisfy our obligation to
pay:
|
|
|
the principal amount of the note; and |
|
|
|
|
accrued and unpaid interest and contingent interest or additional interest, if any, to,
but not including, the conversion date. |
25
As a result, accrued and unpaid interest and contingent interest or additional interest, if
any, to, but not including, the conversion date will be deemed to be paid in full rather than
cancelled, extinguished or forfeited.
Notwithstanding the preceding paragraph, if notes are converted after 5:00 p.m., New York City
time, on a record date, holders of such notes at 5:00 p.m., New York City time, on the record date
will receive the interest and contingent interest or additional interest, if any, payable on such
notes on the corresponding interest payment date notwithstanding the conversion. Notes, upon
surrender for conversion during the period from 5:00 p.m., New York City time, on any regular
record date to 9:00 a.m., New York City time, on the immediately following interest payment date,
must be accompanied by funds equal to the amount of interest and contingent interest or additional
interest, if any, payable on the notes so converted; provided that no such payment need be made:
|
|
|
if we have specified a redemption date that is after a record date and on or prior to
the corresponding interest payment date; |
|
|
|
|
if we have specified a Fundamental Change purchase date (as defined below) that is
after a record date and on or prior to the corresponding interest payment date; or |
|
|
|
|
to the extent of any overdue interest, if any overdue interest exists at the time of
conversion with respect to such note. |
If a holder converts notes, we will pay any documentary, stamp or similar issue or transfer
tax due on the issue of any shares of our common stock upon the conversion, unless the tax is due
because the holder requests any shares to be issued in a name other than the holders name, in
which case the holder will pay that tax.
Holders may surrender their notes for conversion into cash and shares of our common stock, if
any, prior to 5:00 p.m., New York City time, on the trading day immediately preceding the maturity
date under the following circumstances:
Conversion Upon Satisfaction of Sale Price Condition
A holder may surrender any of its notes for conversion if the average of the last reported
sale prices of our common stock for the 20 trading days immediately prior to the conversion date is
greater than or equal to 130% of the conversion price per share of common stock on such conversion
date.
The last reported sale price of our common stock on any date means the closing sale price
per share (or if no closing sale price is reported, the average of the bid and ask prices or, if
more than one in either case, the average of the average bid and the average asked prices) on that
date as reported in composite transactions for the principal U.S. securities exchange on which our
common stock is traded or, if our common stock is not listed on a U.S. national or regional
securities exchange, as reported by the Nasdaq National Market.
If our common stock is not listed for trading on a United States national or regional
securities exchange and not reported by the Nasdaq National Market on the relevant date, the last
reported sale price will be the last quoted bid price for our common stock in the over-the-counter
market on the relevant date as reported by the National Quotation Bureau or similar organization.
If our common stock is not so quoted, the last reported sale price will be the average of
the mid-point of the last bid and ask prices for our common stock on the relevant date from each of
at least three nationally recognized independent investment banking firms selected by us for this
purpose.
Conversion Upon Notice of Redemption
If we call any or all of the notes for redemption, holders may convert notes that have been so
called for redemption at any time prior to the close of business on the third trading day prior to
the redemption date, even if the notes are not otherwise convertible at such time.
26
Conversion Upon Specified Corporate Transactions
If we elect to:
|
|
|
distribute to all or substantially all holders of our common stock certain rights
entitling them to purchase, for a period expiring within 60 days after the date of the
distribution, shares of our common stock at less than the last reported sale price of a
share of our common stock at the time of the distribution; or |
|
|
|
|
distribute to all or substantially all holders of our common stock our assets, debt
securities or certain rights to purchase our securities, which distribution has a per share
value as determined by our board of directors exceeding 10% of the last reported sale price
of our common stock on the day preceding the declaration date for such distribution, |
we must notify the holders of the notes at least 20 business days prior to the ex-dividend date for
such distribution. Once we have given such notice, holders may surrender their notes for conversion
at any time until the earlier of 5:00 p.m., New York City time, on the business day immediately
prior to the ex-dividend date or our announcement that such distribution will not take place, even
if the notes are not otherwise convertible at such time. The ex-dividend date is the first date
upon which a sale of the common stock does not automatically transfer the right to receive the
relevant dividend from the seller of the common stock to its buyer.
In addition, if we are party to a consolidation, merger or binding share exchange pursuant to
which our common stock would be converted into cash or property other than securities, a holder may
surrender notes for conversion at any time from and after the actual effective date of the
transaction until 30 calendar days after the actual effective date of such transaction, or in the
case of a consolidation, merger, share exchange or transfer also constituting a Fundamental Change
(without giving effect to the 105% Exception), a holder may surrender notes for conversion at any
time from and after the actual effective date of the transaction until the repurchase date
corresponding to such Fundamental Change. In addition, you may surrender all or a portion of your
notes for conversion if a Fundamental Change of the type described in clauses (1) and (5) of the
definition of Fundamental Change occurs. In such event, you may surrender notes for conversion at
any time beginning on the actual effective date of such Fundamental Change until and including the
date which is 30 calendar days after the actual effective date of such transaction or if, later,
until the purchase date corresponding to such Fundamental Change.
If we engage in certain reclassifications of our common stock or are a party to a
consolidation, merger, binding share exchange or transfer of all or substantially all of our assets
pursuant to which our common stock is converted into cash, securities or other property, then at
the effective time of the transaction, the right to convert a note into common stock will be
changed into a right to convert it into the kind and amount of cash, securities or other property
which the holder would have received if the holder had converted its notes immediately prior to the
transaction, except as provided below under Conversion After a Public Acquirer Change of
Control. If we engage in any transaction described in the preceding sentence, the conversion rate
will not be adjusted except in the case of certain public acquirer change of control transactions.
If the transaction also constitutes a Fundamental Change, as defined below, a holder can require us
to purchase all or a portion of its notes as described below under Fundamental Change Permits
Holders to Require Us to Purchase Notes.
Conversion Upon Credit Ratings Event
A holder may convert notes into our common stock at any time after the credit ratings assigned
to the notes by Moodys Investors Service, Inc. or Standard & Poors Ratings Services are lower
than Ba3 and BB, respectively, or the notes are no longer rated by at least one of these ratings
services.
Conversion Procedures
If you hold a beneficial interest in a global note, to convert you must comply with DTCs
procedures for converting a beneficial interest in a global note and, if required, pay funds equal
to interest payable on the next interest payment date to which you are not entitled and, if
required, pay all taxes or duties, if any.
27
If you hold a certificated note, to convert you must:
|
|
|
complete and manually sign the conversion notice on the back of the note, or a
facsimile of the conversion notice; |
|
|
|
|
deliver the conversion notice, which is irrevocable, and the note to the conversion agent; |
|
|
|
|
if required, furnish appropriate endorsements and transfer documents; |
|
|
|
|
if required, pay all transfer or similar taxes; and |
|
|
|
|
if required, pay funds equal to interest payable on the next interest payment date to
which you are not entitled. |
The date you comply with these requirements is the conversion date under the indenture.
If a holder has already delivered a purchase notice as described under either Purchase of
Notes By Us at the Option of the Holder or Fundamental Change Permits Holders to Require Us to
Purchase Notes with respect to a note, the holder may not surrender that note for conversion until
the holder has withdrawn the notice in accordance with the indenture.
Payment Upon Conversion
Upon conversion, we will deliver to holders in respect of each $1,000 principal amount of
notes being converted a Settlement Amount equal to the sum of the Daily Settlement Amount for
each of the twenty trading days during the Cash Settlement Averaging Period.
The Cash Settlement Averaging Period with respect to any note means the 20 consecutive
trading-day period beginning on and including the second trading day after you deliver your
conversion notice to the conversion agent, except that with respect to any notice of conversion
received after the date of issuance of a notice of redemption as described under Optional
Redemption, the Cash Settlement Averaging Period means the 20 consecutive trading days beginning
on and including the twenty-third scheduled trading day prior to the applicable redemption date.
Daily Settlement Amount, for each of the twenty trading days during the Cash Settlement
Averaging Period, shall consist of:
|
|
|
cash equal to the lesser of $50 and the Daily Conversion Value; and |
|
|
|
|
to the extent the Daily Conversion Value exceeds $50, a number of shares equal to, (A)
the difference between the Daily Conversion Value and $50, divided by (B) the last reported
sale price of our common stock for such day. |
Daily Conversion Value means, for each of the 20 consecutive trading days during the Cash
Settlement Averaging Period, one-twentieth (1/20) of the product of (1) the applicable conversion
rate and (2) the last reported sale prices of our common stock (or the consideration into which our
common stock has been converted in connection with certain corporate transactions) on such day.
Trading day means a day during which (i) trading in our common stock generally occurs, (ii)
there is no Market Disruption Event and (iii) a closing sale price for our common stock is provided
on the New York Stock Exchange or, if our common stock is not listed on the New York Stock
Exchange, on the principal other U.S. national or regional securities exchange on which our common
stock is then listed or, if our common stock is not listed on a U.S. national or regional
securities exchange, on the principal other market on which our common stock is then traded.
Market Disruption Event means the occurrence or existence during the one-half hour period
ending on the scheduled close of trading on any trading day for our common stock of any material
suspension or limitation
28
imposed on trading (by reason of movements in price exceeding limits permitted by the stock
exchange or otherwise) in our common stock or in any options, contracts or future contracts
relating to our common stock.
We will deliver the Settlement Amount to converting holders on the third business day
immediately following the last day of the Cash Settlement Averaging Period.
We will deliver cash in lieu of any fractional shares of common stock issuable in connection
with payment of the Settlement Amount.
Conversion Rate Adjustments
The conversion rate will be adjusted as described below, except that we will not make any
adjustments to the conversion rate if holders of the notes participate, as a result of holding the
notes, in any of the transactions described below without having to convert their notes.
(1) If we issue shares of our common stock as a dividend or distribution on shares of our common
stock, or if we effect a share split or share combination, the conversion rate will be adjusted
based on the following formula:
where,
CR(0) = the conversion rate in effect immediately prior to such event
CR = the conversion rate in effect immediately after such event
OS(0) = the number of shares of our common stock outstanding immediately prior to such event
OS = the number of shares of our common stock outstanding immediately after such event
(2) If we issue to all or substantially all holders of our common stock any rights or warrants
entitling them for a period of not more than 60 calendar days to subscribe for or purchase shares
of our common stock, at a price per share less than the last reported sale price of our common
stock on the business day immediately preceding the date of announcement of such issuance, the
conversion rate will be adjusted based on the following formula (provided that the conversion rate
will be readjusted to the extent that such rights or warrants are not exercised prior to their
expiration):
|
|
|
|
CR = CR(0) × |
|
OS(0) + X |
|
|
|
|
|
|
|
OS(0) + Y |
|
where,
CR(0) = the conversion rate in effect immediately prior to such event
CR = the conversion rate in effect immediately after such event
OS(0) = the number of shares of our common stock outstanding immediately prior to such event
X = the total number of shares of our common stock issuable pursuant to such rights
Y = the number of shares of our common stock equal to the aggregate price payable to exercise such
rights divided by the average of the last reported sale prices of our common stock over the ten
consecutive trading-day period ending on the business day immediately preceding the record date for
the issuance of such rights
29
(3) If we distribute shares of our capital stock, evidences of our indebtedness or other assets or
property of ours to all or substantially all holders of our common stock, excluding:
|
|
|
dividends or distributions and rights or warrants referred to in clause (1) or (2) above; and |
|
|
|
|
dividends or distributions paid exclusively in cash; |
then the conversion rate will be adjusted based on the following formula:
|
|
|
|
CR = CR(0) × |
|
SP(0) |
|
|
|
|
|
|
|
SP(0) - FMV |
|
where,
CR(0) = the conversion rate in effect immediately prior to such distribution
CR = the conversion rate in effect immediately after such distribution
SP(0) = the average of the last reported sale prices of our common stock over the ten consecutive
trading-day period ending on the business day immediately preceding the record date for such
distribution
FMV = the fair market value (as determined by our board of directors) of the shares of capital
stock, evidences of indebtedness, assets or property distributed with respect to each outstanding
share of our common stock on the record date for such distribution
With respect to an adjustment pursuant to this clause (3) where there has been a payment of a
dividend or other distribution on our common stock or shares of capital stock of any class or
series, or similar equity interest, of or relating to a subsidiary or other business unit, which we
refer to as a spin-off, the conversion rate in effect immediately before 5:00 p.m., New York City
time, on the record date fixed for determination of shareholders entitled to receive the
distribution will be increased based on the following formula:
|
|
|
|
CR = CR(0) × |
|
FMV(0) + MP(0) |
|
|
|
|
|
|
|
MP(0) |
|
where,
CR(0) = the conversion rate in effect immediately prior to such distribution
CR = the conversion rate in effect immediately after such distribution
FMV(0) = the average of the last reported sale prices of the capital stock or similar equity
interest distributed to holders of our common stock applicable to one share of our common stock
over the first ten consecutive trading-day period after the effective date of the spin-off
MP(0) = the average of the last reported sale prices of our common stock over the first ten
consecutive trading-day period after the effective date of the spin-off
The adjustment to the conversion rate under the preceding paragraph will occur on the tenth
trading day from, and including, the effective date of the spin-off.
(4) If any cash dividend or distribution made to all or substantially all holders of our common
stock during any quarterly fiscal period is in an aggregate amount that, together with other cash
dividends or distributions made during such quarterly fiscal period (the Current Dividend Rate),
does not equal $0.16 per share (appropriately adjusted from time to time for any share dividends
on, or subdivisions of, our common stock) (the Initial Dividend Rate), the conversion rate will
be adjusted based on the following formulas:
30
(a) if the Current Dividend Rate is greater than the Initial Dividend Rate, the conversion rate
shall be adjusted based on the following formula:
|
|
|
|
CR = CR(0) × |
|
SP(0) |
|
|
|
|
|
|
|
SP(0) - C |
|
where,
CR(0) = the conversion rate in effect immediately prior to the record date for such distribution
CR = the conversion rate in effect immediately after the record date for such distribution
SP(0) = the last reported sale price of our common stock on the trading day immediately preceding
the ex-dividend date for such distribution;
C = the amount in cash per share we distribute to holders of our common stock in excess of $0.16
(appropriately adjusted from time to time for any share dividends on, or subdivisions of, our
common stock)
(b) if the Current Dividend Rate is less than the Initial Dividend Rate, the conversion rate shall
be adjusted based on the following formula:
|
|
|
|
CR = CR(0) × |
|
SP(0) |
|
|
|
|
|
|
|
SP(0) + C |
|
where,
CR(0) = the conversion rate in effect immediately prior to the record date for such distribution
CR = the conversion rate in effect immediately after the record date for such distribution
SP(0) = the last reported sale price of our common stock on the trading day immediately preceding
the ex-dividend date for such distribution
C = the amount in cash per share we distribute to holders of our common stock that is below $0.16
(appropriately adjusted from time to time for any share dividends on, or subdivisions of, our
common stock)
(5) If we or any of our subsidiaries makes a payment in respect of a tender offer or exchange offer
for our common stock, to the extent that the cash and value of any other consideration included in
the payment per share of common stock exceeds the last reported sale price of our common stock on
the trading day next succeeding the last date on which tenders or exchanges may be made pursuant to
such tender or exchange offer, the conversion rate will be increased based on the following
formula:
|
|
|
|
CR = CR(0) × |
|
AC + (SP × OS) |
|
|
|
|
|
|
|
OS(0) × SP |
|
where,
CR(0) = the conversion rate in effect on the date such tender or exchange offer expires
CR = the conversion rate in effect on the day next succeeding the date such tender or exchange
offer expires
AC = the aggregate value of all cash and any other consideration (as determined by our board of
directors) paid or payable for shares purchased in such tender or exchange offer
OS(0) = the number of shares of our common stock outstanding immediately prior to the date such
tender or exchange offer expires
31
OS = the number of shares of our common stock outstanding immediately after the date such tender
or exchange offer expires
SP = the average of the last reported sale prices of our common stock over the ten consecutive
trading-day period commencing on the trading day next succeeding the date such tender or exchange
offer expires
If, however, the application of the foregoing formulas (other than the formulas set forth in
clause (4)(b)) would result in a decrease in the conversion rate, no adjustment to the conversion
rate will be made.
Notwithstanding the foregoing, in no event will an adjustment to the conversion rate pursuant
to clauses (2) through (5) above result in a conversion rate that exceeds 22.1091 shares per $1,000
principal amount of notes.
Except as stated herein, we will not adjust the conversion rate for the issuance of shares of
our common stock or any securities convertible into or exchangeable for shares of our common stock
or the right to purchase shares of our common stock or such convertible or exchangeable securities.
In the event of:
|
|
|
any reclassification of our common stock; or |
|
|
|
|
a consolidation, merger or combination involving us; or |
|
|
|
|
a sale or conveyance to another person of all or substantially all of our property and
assets, in which holders of our outstanding common stock would be entitled to receive cash,
securities or other property for their shares of common stock, you will generally be
entitled thereafter to convert your notes into the same type (and in the same proportion)
of consideration received by holders of our common stock immediately prior to one of these
types of event, except as provided below under Conversion After a Public Acquirer Change
of Control. |
We are permitted to increase the conversion rate of the notes by any amount for a period of at
least 20 days if our board of directors determines that such increase would be in our best
interest. We may also (but are not required to) increase the conversion rate to avoid or diminish
income tax to holders of our common stock or rights to purchase shares of our common stock in
connection with a dividend or distribution of shares (or rights to acquire shares) or similar
event.
A holder may, in some circumstances, including the distribution of cash dividends to holders
of our shares of common stock, be deemed to have received a distribution or dividend subject to
U.S. federal income tax as a result of an adjustment or the nonoccurrence of an adjustment to the
conversion rate. For a discussion of the U.S. federal income tax treatment of an adjustment to the
conversion rate, see United States Federal Income Tax Considerations.
If we make a distribution to holders of our common stock and the applicable conversion rate is
increased, this increase may be deemed to be the receipt of taxable income by holders of the notes
and may result in withholding taxes for holders (including backup withholding taxes or withholding
taxes on payments to foreign persons). Because this deemed income would not give rise to any cash
from which any applicable withholding tax could be satisfied, if we pay withholding taxes on behalf
of a holder, we may, at our option, set-off such payments against payments of cash and common stock
on the notes. See the discussions under the headings United States Federal Income Tax
ConsiderationsConsequences to U.S. holders Constructive dividends and United States
Federal Income Tax ConsiderationsConsequences to Non-U.S. HoldersDividends and constructive
dividends for more details.
To the extent that we have a rights plan in effect upon conversion of the notes into common
stock, you will receive, in addition to the common stock, the rights under the rights plan, unless
prior to any conversion, the rights have separated from the common stock, in which case the
conversion rate will be adjusted at the time of separation as if we distributed to all holders of
our common stock, shares of our capital stock, evidences of indebtedness or
32
assets as described in clause (3) above, subject to readjustment in the event of the expiration,
termination or redemption of such rights.
The applicable conversion rate will not be adjusted:
|
|
|
upon the issuance of any shares of our common stock pursuant to any present or future
plan providing for the reinvestment of dividends or interest payable on our securities and
the investment of additional optional amounts in shares of our common stock under any plan; |
|
|
|
|
upon the issuance of any shares of our common stock or options or rights to purchase
those shares pursuant to any present or future employee, director or consultant benefit
plan or program of or assumed by us or any of our subsidiaries; |
|
|
|
|
upon the issuance of any shares of our common stock pursuant to any option, warrant,
right or exercisable, exchangeable or convertible security not described in the preceding
bullet and outstanding as of the date the notes were first issued; |
|
|
|
|
for a change in the par value of the common stock; or |
|
|
|
|
for accrued and unpaid interest and contingent interest or additional interest, if any. |
Adjustments to the applicable conversion rate will be calculated to the nearest 1/10,000th of
a share. We will not be required to make an adjustment in the conversion rate unless the adjustment
would require a change of at least 1% in the conversion rate. However, we will carry forward any
adjustments that are less than 1% of the conversion rate and make such carried forward adjustments,
regardless of whether aggregate adjustment is less than 1% within one year of the first such
adjustment carried forward, upon redemption, upon a Fundamental Change or upon maturity. Except as
described above in this section, we will not adjust the conversion rate.
Adjustment to Shares Delivered Upon Conversion Upon Certain Fundamental Changes
If you elect to convert your notes in connection with a specified corporate transaction that
occurs prior to June 1, 2013, and the corporate transaction also constitutes a Fundamental Change
(as defined under Fundamental Change Permits Holders to Require Us to Purchase Notes, but
without giving effect to the 105% Exception), in certain circumstances, the conversion rate will be
increased by an additional number of shares of common stock (the additional shares) as described
below, subject to our option to adjust the conversion rate and the related conversion obligation as
described under Conversion After a Public Acquirer Change of Control. Any conversion occurring
at a time when the notes would be convertible in light of the expected or actual occurrence of a
Fundamental Change will be deemed to have occurred in connection with such Fundamental Change
notwithstanding the fact that a note may then be convertible because another condition to
conversion has been satisfied.
The number of additional shares by which the conversion rate will be increased will be
determined by reference to the table below, based on the date on which the Fundamental Change
occurs or becomes effective (the effective date) and the price (the stock price) paid per share
of our common stock in the Fundamental Change. If holders of our common stock receive only cash in
the Fundamental Change, the stock price shall be the cash amount paid per share. Otherwise, the
stock price shall be the average of the last reported sale prices of our common stock over the five
trading-day period ending on the trading day preceding the effective date of the Fundamental
Change.
The stock prices set forth in the first row of the table below (i.e., column headers) will be
adjusted as of any date on which the conversion rate of the notes is otherwise adjusted. The
adjusted stock prices will equal the stock prices applicable immediately prior to such adjustment,
multiplied by a fraction, the numerator of which is the conversion rate immediately prior to the
adjustment giving rise to the stock price adjustment and the denominator of which is the conversion
rate as so adjusted. The number of additional shares will be adjusted in the same manner as the
conversion rate as set forth under Conversion Rate Adjustments.
33
The following table sets forth the stock price and the number of additional shares to be
received per $1,000 principal amount of notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock price |
|
Effective Date |
|
$45.23 |
|
|
$50.00 |
|
|
$55.00 |
|
|
$60.00 |
|
|
$ 65.00 |
|
|
$ 70.00 |
|
|
$ 75.00 |
|
|
$ 80.00 |
|
|
$ 85.00 |
|
|
$ 90.00 |
|
|
$ 95.00 |
|
|
$100.00 |
|
|
$105.00 |
|
|
$110.00 |
|
|
June 1, 2006 |
|
|
2.0099 |
|
|
|
1.4368 |
|
|
|
0.9796 |
|
|
|
0.6763 |
|
|
|
0.4700 |
|
|
|
0.3273 |
|
|
|
0.2273 |
|
|
|
0.1561 |
|
|
|
0.1049 |
|
|
|
0.0679 |
|
|
|
0.0412 |
|
|
|
0.0219 |
|
|
|
0.0081 |
|
|
|
0.0000 |
|
June 1, 2007 |
|
|
2.0099 |
|
|
|
1.4407 |
|
|
|
0.9667 |
|
|
|
0.6559 |
|
|
|
0.4479 |
|
|
|
0.3069 |
|
|
|
0.2093 |
|
|
|
0.1411 |
|
|
|
0.0930 |
|
|
|
0.0586 |
|
|
|
0.0341 |
|
|
|
0.0167 |
|
|
|
0.0043 |
|
|
|
0.0000 |
|
June 1, 2008 |
|
|
2.0099 |
|
|
|
1.4146 |
|
|
|
0.9172 |
|
|
|
0.5996 |
|
|
|
0.3943 |
|
|
|
0.2594 |
|
|
|
0.1698 |
|
|
|
0.1094 |
|
|
|
0.0684 |
|
|
|
0.0400 |
|
|
|
0.0205 |
|
|
|
0.0071 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
June 1, 2009 |
|
|
2.0099 |
|
|
|
1.3953 |
|
|
|
0.8705 |
|
|
|
0.5458 |
|
|
|
0.3439 |
|
|
|
0.2177 |
|
|
|
0.1376 |
|
|
|
0.0848 |
|
|
|
0.0502 |
|
|
|
0.0274 |
|
|
|
0.0119 |
|
|
|
0.0016 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
June 1, 2010 |
|
|
2.0099 |
|
|
|
1.3365 |
|
|
|
0.7851 |
|
|
|
0.4616 |
|
|
|
0.2716 |
|
|
|
0.1602 |
|
|
|
0.0940 |
|
|
|
0.0536 |
|
|
|
0.0286 |
|
|
|
0.0128 |
|
|
|
0.0025 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
June 1, 2011 |
|
|
2.0099 |
|
|
|
1.2215 |
|
|
|
0.6521 |
|
|
|
0.3453 |
|
|
|
0.1843 |
|
|
|
0.1005 |
|
|
|
0.0562 |
|
|
|
0.0318 |
|
|
|
0.0175 |
|
|
|
0.0085 |
|
|
|
0.0026 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
June 1, 2012 |
|
|
2.0099 |
|
|
|
0.9568 |
|
|
|
0.3812 |
|
|
|
0.1394 |
|
|
|
0.0503 |
|
|
|
0.0199 |
|
|
|
0.0093 |
|
|
|
0.0046 |
|
|
|
0.0017 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
June 1, 2013 |
|
|
2.0099 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
|
|
0.0000 |
|
|
The exact stock prices and effective dates may not be set forth in the table above, in
which case:
|
|
|
If the stock price is between two stock price amounts in the table or the effective
date is between two effective dates in the table, the number of additional shares will be
determined by a straight-line interpolation between the number of additional shares set
forth for the higher and lower stock price amounts and the two dates, as applicable, based
on a 365-day year. |
|
|
|
|
If the stock price is greater than $110.00 per share (subject to adjustment), no
additional shares will be issued upon conversion. |
|
|
|
|
If the stock price is less than $45.23 per share (subject to adjustment), no additional
shares will be issued upon conversion. |
Notwithstanding the foregoing, in no event will the total number of shares of common stock
issuable upon conversion exceed 22.1091 per $1,000 principal amount of notes, subject to
adjustments in the same manner as the conversion rate as set forth under Conversion Rate
Adjustments.
Conversion After a Public Acquirer Change of Control
Notwithstanding the foregoing, in the case of a Fundamental Change constituting a public
acquirer change of control (as defined below), we may, in lieu of issuing additional shares upon
conversion as described in Adjustment to Shares Delivered Upon Conversion Upon Certain
Fundamental Changes above, elect to adjust the conversion rate and the related conversion
obligation such that from and after the effective date of such public acquirer change of control,
holders of the notes will be entitled to convert their notes (subject to the satisfaction of the
conditions to conversion described under Conversion Rights) into a number of shares of public
acquirer common stock (as defined below), still subject to the arrangements for payment upon
conversion otherwise applicable, by adjusting the conversion rate in effect immediately before the
public acquirer change of control by a fraction:
|
|
|
the numerator of which will be (i) in the case of a share exchange, consolidation,
merger or binding share exchange pursuant to which our common stock is converted into cash,
securities or other property, the average value of all cash and any other consideration (as
determined by our board of directors) paid or payable per share of common stock or (ii) in
the case of any other public acquirer change of control, the average of the last reported
sale prices of our common stock for the five consecutive trading days prior to but
excluding the effective date of such public acquirer change of control, and |
|
|
|
|
the denominator of which will be the average of the last reported sale prices of the
public acquirer common stock for the five consecutive trading days commencing on the
trading day next succeeding the effective date of such public acquirer change of control. |
A public acquirer change of control means a Fundamental Change in which the acquirer has a
class of common stock traded on a U.S. national securities exchange or quoted on The NASDAQ
National Market or which will be so traded or quoted when issued or exchanged in connection with
such Fundamental Change (the public acquirer common stock). If an acquirer does not itself have a
class of common stock satisfying the foregoing requirement, it will be deemed to have public
acquirer common stock if a corporation that directly or indirectly
34
owns at least a majority of the acquirer has a class of common stock satisfying the foregoing
requirement, in such case, all references to public acquirer common stock shall refer to such class
of common stock. Majority owned for these purposes means having beneficial ownership (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the Exchange Act)) of more
than 50% of the total voting power of all shares of the respective entitys capital stock that are
entitled to vote generally in the election of directors.
Upon a public acquirer change of control, if we so elect, holders may convert their notes
(subject to the satisfaction of the conditions to conversion described under Conversion Rights
above) at the adjusted conversion rate described in the second preceding paragraph but will not be
entitled to receive additional shares upon conversion as described under Adjustment to Shares
Delivered Upon Conversion Upon Certain Fundamental Changes. We are required to notify holders of
our election in our notice to holders of such transaction. In addition, upon a public acquirer
change of control, in lieu of converting notes, the holder can, subject to certain conditions,
require us to repurchase all or a portion of its notes as described below.
Purchase of Notes by Us at the Option of the Holder
Holders have the right to require us to purchase the notes on June 1, 2013 (the purchase
date). We will be required to purchase any outstanding notes for which a holder delivers a written
purchase notice to the paying agent. This notice must be delivered during the period beginning at
any time from the opening of business on the date that is 20 business days prior to the purchase
date until the close of business on the fifth business day prior to the purchase date. If the
purchase notice is given and withdrawn during such period, we will not be obligated to purchase the
related notes. Our purchase obligation will be subject to some additional conditions as described
in the indenture. Also, our ability to satisfy our purchase obligations may be affected by the
factors described in Risk Factors under the caption We may not have the ability to raise the
funds necessary to purchase the notes upon a Fundamental Change or other purchase date, as required
by the indenture governing the notes.
The purchase price payable will be equal to 100% of the principal amount of the notes to be
purchased plus any accrued and unpaid interest, including any contingent interest or additional
interest, to such purchase date. Any notes purchased by us will be paid for in cash.
On or before the 20th business day prior to each purchase date, we will provide to the
trustee, the paying agent and to all holders of the notes at their addresses shown in the register
of the registrar, and to beneficial owners as required by applicable law, a notice stating, among
other things:
|
|
|
the last date on which a holder may exercise the repurchase right; |
|
|
|
|
the repurchase price; |
|
|
|
|
the name and address of the paying agent; and |
|
|
|
|
the procedures that holders must follow to require us to repurchase their notes. |
Simultaneously with providing such notice, we will publish a notice containing this
information in a newspaper of general circulation in The City of New York or publish the
information on our website or through such other public medium as we may use at that time.
A notice electing to require us to purchase your notes must state:
|
|
|
if certificated notes have been issued, the certificate numbers of the notes, or if not
certificated, your notice must comply with appropriate DTC procedures; |
|
|
|
|
the portion of the principal amount of notes to be purchased, in integral multiples of
$1,000; and |
|
|
|
|
that the notes are to be purchased by us pursuant to the applicable provisions of the
notes and the indenture. |
35
No notes may be purchased at the option of holders if there has occurred and is continuing an
event of default other than an event of default that is cured by the payment of the purchase price
of the notes.
You may withdraw any purchase notice in whole or in part by a written notice of withdrawal
delivered to the paying agent prior to the close of business on the business day prior to the
purchase date. The notice of withdrawal must state:
|
|
|
the principal amount of the withdrawn notes; |
|
|
|
|
if certificated notes have been issued, the certificate numbers of the withdrawn notes,
or if not certificated, your notice must comply with appropriate DTC procedures; and |
|
|
|
|
the principal amount, if any, which remains subject to the purchase notice. |
You must either effect book-entry transfer or deliver the notes, together with necessary
endorsements, to the office of the paying agent after delivery of the purchase notice to receive
payment of the purchase price. You will receive payment promptly following the later of the
purchase date or the time of book-entry transfer or the delivery of the notes. If the paying agent
holds money sufficient to pay the purchase price of the notes on the business day following the
purchase date, then:
|
|
|
the notes will cease to be outstanding and interest, including any contingent interest
or additional interest, will cease to accrue (whether or not book-entry transfer of the
notes is made or whether or not the note is delivered to the paying agent); and |
|
|
|
|
all other rights of the holder will terminate (other than the right to receive the
purchase price and previously accrued and unpaid interest and contingent interest or
additional interest upon delivery or transfer of the notes). |
Fundamental Change Permits Holders to Require Us to Purchase Notes
If a Fundamental Change (as defined below in this section) occurs at any time, you will have
the right, at your option, to require us to purchase any or all of your notes, or any portion of
the principal amount thereof, that is equal to $1,000 or an integral multiple of $1,000. The price
we are required to pay is equal to 100% of the principal amount of the notes to be purchased plus
accrued and unpaid interest, including any contingent interest or additional interest, to but
excluding the Fundamental Change purchase date (unless the Fundamental Change purchase date is
between a regular record date and the interest payment date to which it relates). Any notes
purchased by us will be paid for in cash.
A Fundamental Change will be deemed to have occurred at the time after the notes are
originally issued that any of the following occurs
(1) a person or group within the meaning of Section 13(d) of the Exchange Act other than us,
our Subsidiaries or our or their employee benefit plans, files a Schedule TO or any schedule,
form or report under the Exchange Act disclosing that such person or group has become the direct
or indirect ultimate beneficial owner, as defined in Rule 13d-3 under the Exchange Act, of our
common equity representing more than 50% of the voting power of our common equity;
(2) consummation of any share exchange, consolidation or merger of us pursuant to which our
common stock will be converted into cash, securities or other property or any sale, lease or
other transfer in one transaction or a series of transactions of all or substantially all of the
consolidated assets of us and our Subsidiaries, taken as a whole, to any person other than one
of our Subsidiaries; provided, however, that a transaction where the holders of more than 50% of
all classes of our common equity immediately prior to such transaction own, directly or
indirectly, more than 50% of all classes of common equity of the continuing or surviving
corporation or transferee immediately after such event shall not be a Fundamental Change;
(3) continuing directors cease to constitute at least a majority of our board of directors;
36
(4) the stockholders of the Company approve any plan or proposal for the liquidation or
dissolution of the Company; or
(5) our common stock ceases to be listed on a national securities exchange or quoted on the
Nasdaq National Market or another established automated over-the-counter trading market in the
United States.
A Fundamental Change will not be deemed to have occurred, however, if either
(1) the last reported sale price per share of our common stock for any five trading days within
the period of 10 consecutive trading days ending immediately before the later of the Fundamental
Change or the announcement thereof, equals or exceeds 105% of the conversion price per share of
common stock in effect on each of those trading days (this clause being referred to as the 105%
Exception), or
(2) at least 90% of the consideration, excluding cash payments for fractional shares, in the
transaction or transactions constituting the Fundamental Change consists of shares of common
stock with full voting rights traded on a national securities exchange or quoted on the Nasdaq
National Market or which will be so traded or quoted when issued or exchanged in connection with
a Fundamental Change (these securities being referred to as publicly traded securities) and as
a result of this transaction or transactions the notes become convertible into such publicly
traded securities, excluding cash payments for fractional shares.
Continuing director means a director who either was a member of our board of directors on the
date of this prospectus or who becomes a director of the Company subsequent to that date and whose
election, appointment or nomination for election by our stockholders, is duly approved by a
majority of the continuing directors on the board of directors of the Company at the time of such
approval, either by a specific vote or by approval of the proxy statement issued by the Company on
behalf of the entire board of directors of the Company in which such individual is named as nominee
for director.
On or before the 20th day after the occurrence of a Fundamental Change, we will provide to all
holders of the notes and the trustee and paying agent a notice of the occurrence of the Fundamental
Change and of the resulting purchase right. Such notice shall state, among other things:
|
|
|
the events causing a Fundamental Change; |
|
|
|
|
the date of the Fundamental Change; |
|
|
|
|
the last date on which a holder may exercise the repurchase right; |
|
|
|
|
the Fundamental Change purchase price; |
|
|
|
|
the Fundamental Change purchase date; |
|
|
|
|
the name and address of the paying agent and the conversion agent, if applicable; |
|
|
|
|
if applicable, the applicable conversion rate and any adjustments to the applicable conversion rate; |
|
|
|
|
if applicable, that the notes with respect to which a Fundamental Change purchase
notice has been delivered by a holder may be converted only if the holder withdraws the
Fundamental Change purchase notice in accordance with the terms of the indenture; and |
|
|
|
|
the procedures that holders must follow to require us to purchase their notes. |
Simultaneously with providing such notice, we will publish a notice containing this
information in a newspaper of general circulation in The City of New York or publish the
information on our website or through such other public medium as we may use at that time.
37
To exercise the purchase right, you must deliver, on or before the 35th day after the date of
our notice of a Fundamental Change, subject to extension to comply with applicable law, the notes
to be purchased, duly endorsed for transfer, together with a written purchase notice and the form
entitled Form of Fundamental Change Purchase Notice on the reverse side of the notes duly
completed, to the paying agent. Your purchase notice must state:
|
|
|
if certificated, the certificate numbers of your notes to be delivered for purchase; |
|
|
|
|
the portion of the principal amount of notes to be purchased, which must be $1,000 or
an integral multiple thereof; and |
|
|
|
|
that the notes are to be purchased by us pursuant to the applicable provisions of the
notes and the indenture. |
You may withdraw any purchase notice (in whole or in part) by a written notice of withdrawal
delivered to the paying agent prior to the close of business on the business day prior to the
Fundamental Change purchase date. The notice of withdrawal shall state:
|
|
|
the principal amount of the withdrawn notes; |
|
|
|
|
if certificated notes have been issued, the certificate numbers of the withdrawn notes,
or if not certificated, your notice must comply with appropriate DTC procedures; and |
|
|
|
|
the principal amount, if any, which remains subject to the purchase notice. |
We will be required to purchase the notes no later than 35 business days after the date of our
notice of the occurrence of the relevant Fundamental Change subject to extension to comply with
applicable law. You will receive payment of the Fundamental Change purchase price promptly
following the later of the Fundamental Change purchase date or the time of book-entry transfer or
the delivery of the notes. If the paying agent holds money or securities sufficient to pay the
Fundamental Change purchase price of the notes on the business day following the Fundamental Change
purchase date, then:
|
|
|
the notes will cease to be outstanding and interest, including any contingent interest
or additional interest, if any, will cease to accrue (whether or not book-entry transfer of
the notes is made or whether or not the note is delivered to the paying agent); and |
|
|
|
|
all other rights of the holder will terminate (other than the right to receive the
Fundamental Change purchase price and previously accrued and unpaid interest (including any
contingent interest or additional interest) upon delivery or transfer of the notes). |
The purchase rights of the holders could discourage a potential acquirer of us. The
Fundamental Change purchase feature, however, is not the result of managements knowledge of any
specific effort to obtain control of us by any means or part of a plan by management to adopt a
series of anti-takeover provisions.
The term Fundamental Change is limited to specified transactions and may not include other
events that might adversely affect our financial condition. In addition, the requirement that we
offer to purchase the notes upon a Fundamental Change may not protect holders in the event of a
highly leveraged transaction, reorganization, merger or similar transaction involving us.
No notes may be purchased at the option of holders upon a Fundamental Change if there has
occurred and is continuing an event of default other than an event of default that is cured by the
payment of the Fundamental Change purchase price of the notes.
The definition of Fundamental Change includes a phrase relating to the conveyance, transfer,
sale, lease or disposition of all or substantially all of our consolidated assets. There is no
precise, established definition of the phrase substantially all under applicable law.
Accordingly, the ability of a holder of the notes to require us to purchase its notes as a result
of the conveyance, transfer, sale, lease or other disposition of less than all of our assets may be
uncertain.
38
If a Fundamental Change were to occur, we may not have enough funds to pay the Fundamental
Change purchase price. See Risk Factors under the caption We may not have the ability to raise
the funds necessary to purchase the notes upon a Fundamental Change or other purchase date, as
required by the indenture governing the notes. If we fail to purchase the notes when required
following a Fundamental Change, we will be in default under the indenture. In addition, we have,
and may in the future incur, other indebtedness with similar change in control provisions
permitting our holders to accelerate or to require us to purchase our indebtedness upon the
occurrence of similar events or on some specific dates.
Consolidation, Merger and Sale of Assets
The indenture provides that the Company shall not consolidate with or merge with or into, or
convey, transfer or lease all or substantially all of its properties and assets to, another Person,
unless (i) the resulting, surviving or transferee Person (if not the Company) is a Person organized
and existing under the laws of the United States of America, any State thereof or the District of
Columbia, and such entity (if not the Company) expressly assumes by supplemental indenture all the
obligations of the Company under the notes, the indenture and, to the extent then still operative,
the registration rights agreement; and (ii) immediately after giving effect to such transaction, no
Default has occurred and is continuing under the indenture. Upon any such consolidation, merger or
transfer, the resulting, surviving or transferee Person shall succeed to, and may exercise every
right and power of, the Company under the indenture.
Although these types of transactions are permitted under the indenture, certain of the
foregoing transactions could constitute a Fundamental Change (as defined above) permitting each
holder to require us to purchase the notes of such holder as described above.
Future Subsidiary Guarantors
After May 17, 2006, we will cause each new Subsidiary (other than a Subsidiary that does not
guarantee obligations under the Senior Credit Obligations, the 2013 Notes, the 2023 Notes or the
2035 Notes) created or acquired by us or one or more of our Subsidiaries to execute and deliver to
the trustee a Subsidiary Guarantee pursuant to which such Subsidiary Guarantor will unconditionally
guarantee, on a joint and several basis, the full and prompt payment of the principal of and
interest (including contingent interest and additional interest, if any) on the notes on a senior
basis; provided that a Subsidiary Guarantee from any Subsidiary will be released upon the release
of such Subsidiary from any liability under (x) the indentures relating to the 2013 Notes, the
2023 Notes, the 2035 Notes or any related guarantee or similar obligation and (y) any Senior Credit
Obligations and any guarantee or similar obligation in respect thereof; provided that such release
of a Subsidiary Guarantor will not occur in the event that Subsidiary Guarantor is required to
deliver a guarantee in accordance with the paragraph below and then will only be released in
accordance with the paragraph below.
We will not permit any Subsidiary to guarantee the payment of our Debt unless:
(1) the Subsidiary simultaneously executes and delivers a supplemental indenture to the
indenture providing for a guarantee of payment of the notes by the Subsidiary;
(2) the Subsidiary waives and will not in any manner whatsoever claim or take the benefit or
advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against
us or any Subsidiary as a result of any payment by the Subsidiary under its Subsidiary
Guarantee; and
(3) the Subsidiary delivers to the trustee an opinion of counsel to the effect that (a) the
Subsidiary Guarantee of the notes has been duly executed and authorized and (b) the Subsidiary
Guarantee of the notes constitutes a valid, binding and enforceable obligation of the
Subsidiary; however, the enforceability of the Subsidiary Guarantee may be limited by
bankruptcy, insolvency or similar laws, including, without limitation, all laws relating to
fraudulent transfers, and except insofar as enforcement thereof is subject to general principles
of equity; provided that such Subsidiary Guarantee will be released upon the release of the
Subsidiary from liability in respect of our guarantees of Debt; and, provided, further, that any
release of a Subsidiary Guarantee under the
39
preceding provision will not impair the rights of the holders to receive Subsidiary Guarantees
of the notes in accordance with this paragraph in the event our future Debt is Guaranteed by the
Subsidiary.
Events of Default
Each of the following is an Event of Default:
(1) default in any payment of interest, including any contingent interest or additional interest
(as required by the registration rights agreement) on any note when due and payable and the
default continues for a period of 30 days;
(2) default in the payment of principal of any note when due and payable at its Stated Maturity,
upon optional redemption, upon required repurchase, upon declaration or otherwise;
(3) failure by the Company to comply with its obligation to convert the notes into cash or a
combination of cash and common stock, as applicable, upon exercise of a holders conversion
right and such failure continues for a period of five days;
(4) failure by the Company to comply with its obligations under Consolidation, Merger and Sale
of Assets;
(5) failure by the Company for 60 days after written notice from the trustee or the holders of
at least 25% in principal amount of the notes then outstanding has been received to comply with
any of its other agreements contained in the notes or indenture;
(6) default by the Company or any Subsidiary in the payment of the principal or interest on any
mortgage, agreement or other instrument under which there may be outstanding, or by which there
may be secured or evidenced any Debt for money borrowed (other than Non-Recourse Debt of a
Non-Recourse Subsidiary) in excess of $20.0 million in the aggregate of the Company and/or any
Subsidiary, whether such Debt now exists or shall hereafter be created resulting in such Debt
becoming or being declared due and payable, and such acceleration shall not have been rescinded
or annulled within 10 days after written notice of such acceleration has been received by the
Company or such Subsidiary;
(7) certain events of bankruptcy, insolvency, or reorganization of the Company (the bankruptcy
provisions); or
(8) a final judgment for the payment of $20.0 million or more rendered against the Company or
any Subsidiary, which judgment is not fully covered by insurance or not discharged or stayed
within 90 days after (i) the date on which the right to appeal thereof has expired if no such
appeal has commenced, or (ii) the date on which all rights to appeal have been extinguished.
If an Event of Default occurs and is continuing, the trustee by notice to the Company, or the
holders of at least 25% in principal amount of the outstanding notes by notice to the Company and
the trustee, may, and the trustee at the request of such holders shall, declare 100% of the
principal of and accrued and unpaid interest, including additional interest, if any, on all the
notes to be due and payable. Upon such a declaration, such principal and accrued and unpaid
interest, including any contingent interest or additional interest will be due and payable
immediately. The holders of a majority in principal amount of the outstanding notes may waive all
past defaults (except with respect to nonpayment of principal or interest, including any contingent
interest or additional interest) and rescind any such acceleration with respect to the notes and
its consequences if (1) rescission would not conflict with any judgment or decree of a court of
competent jurisdiction and (2) all existing Events of Default, other than the nonpayment of the
principal of and interest, including any contingent interest or additional interest, on the notes
that have become due solely by such declaration of acceleration, have been cured or waived.
Subject to the provisions of the indenture relating to the duties of the trustee, if an Event
of Default occurs and is continuing, the trustee will be under no obligation to exercise any of the
rights or powers under the indenture at the request or direction of any of the holders unless such
holders have offered to the trustee indemnity or security reasonably satisfactory to it against any
loss, liability or expense. Except to enforce the right to receive payment of
40
principal or interest, including any contingent interest or additional interest, when due, no
holder may pursue any remedy with respect to the indenture or the notes unless:
(1) such holder has previously given the trustee notice that an Event of Default is continuing;
(2) holders of at least 25% in principal amount of the outstanding notes have requested the
trustee to pursue the remedy;
(3) such holders have offered the trustee security or indemnity reasonably satisfactory to it
against any loss, liability or expense;
(4) the trustee has not complied with such request within 60 days after the receipt of the
request and the offer of security or indemnity; and
(5) the holders of a majority in principal amount of the outstanding notes have not given the
trustee a direction that, in the opinion of the trustee, is inconsistent with such request
within such 60-day period.
Subject to certain restrictions, the holders of a majority in principal amount of the
outstanding notes are given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or of exercising any trust or power conferred on
the trustee. The Indenture provides that in the event an Event of Default has occurred and is
continuing, the trustee will be required in the exercise of its powers to use the degree of care
that a prudent person would use in the conduct of its own affairs. The trustee, however, may refuse
to follow any direction that conflicts with law or the indenture or that the trustee determines is
unduly prejudicial to the rights of any other holder or that would involve the trustee in personal
liability. Prior to taking any action under the indenture, the trustee will be entitled to
indemnification satisfactory to it in its sole discretion against all losses and expenses caused by
taking or not taking such action.
The indenture provides that if a Default occurs and is continuing and is known to the trustee,
the trustee must mail to each holder notice of the Default within 90 days after it occurs. Except
in the case of a Default in the payment of principal of or interest on any note, the trustee may
withhold notice if and so long as a committee of trust officers of the trustee in good faith
determines that withholding notice is in the interests of the holders. In addition, the Company is
required to deliver to the trustee, within 120 days after the end of each fiscal year, a
certificate indicating whether the signers thereof know of any Default that occurred during the
previous year. The Company also is required to deliver to the trustee, within 30 days after the
occurrence thereof, written notice of any events which would constitute certain Defaults, their
status and what action the Company is taking or proposes to take in respect thereof.
Modification and Amendment
Subject to certain exceptions, the indenture or the notes may be amended with the consent of
the holders of at least a majority in principal amount of the notes then outstanding (including
without limitation, consents obtained in connection with a purchase of, or tender offer or exchange
offer for, notes) and, subject to certain exceptions, any past default or compliance with any
provisions may be waived with the consent of the holders of a majority in principal amount of the
notes then outstanding (including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, notes). However, without the consent of each
holder of an outstanding note affected, no amendment may, among other things:
(1) reduce the amount of notes whose holders must consent to an amendment;
(2) reduce the rate of or extend the stated time for payment of interest, including contingent
interest or additional interest, on any note;
(3) reduce the principal of or extend the Stated Maturity of any note;
(4) make any change that adversely affects the conversion rights of any notes;
41
(5) reduce the redemption price, the purchase price or Fundamental Change purchase price of any
note or amend or modify in any manner adverse to the holders of notes the Companys obligation
to make such payments, whether through an amendment or waiver of provisions in the covenants,
definitions or otherwise;
(6) make any note payable in money other than that stated in the note or, other than in
accordance with the provisions of the indenture, eliminate any existing Guarantee of the notes;
(7) impair the right of any holder to receive payment of principal of and interest, including
contingent interest or additional interest, on such holders notes on or after the due dates
therefor or to institute suit for the enforcement of any payment on or with respect to such
holders notes; or
(8) make any change in the amendment provisions which require each holders consent or in the
waiver provisions.
Without the consent of any holder, the Company and the trustee may amend the indenture to:
(1) cure any ambiguity, omission, defect or inconsistency;
(2) provide for the assumption by a successor corporation, partnership, trust or limited
liability company of the obligations of the Company under the indenture;
(3) provide for uncertificated notes in addition to or in place of certificated notes (provided
that the uncertificated notes are issued in registered form for purposes of Section 163(f) of
the Code, or in a manner such that the uncertificated notes are described in Section
163(f)(2)(B) of the Code);
(4) add guarantees with respect to the notes;
(5) secure the notes;
(6) add to the covenants of the Company for the benefit of the holders or surrender any right or
power conferred upon the Company;
(7) make any change that does not materially adversely affect the rights of any holder; or
(8) comply with any requirement of the Commission in connection with the qualification of the
indenture under the Trust Indenture Act.
The consent of the holders is not necessary under the indenture to approve the particular form
of any proposed amendment. It is sufficient if such consent approves the substance of the proposed
amendment. After an amendment under the indenture becomes effective, the Company is required to
mail to the holders a notice briefly describing such amendment. However, the failure to give such
notice to all the holders, or any defect in the notice, will not impair or affect the validity of
the amendment.
Discharge
We may satisfy and discharge our obligations under the indenture by delivering to the
securities registrar for cancellation all outstanding notes or by depositing with the trustee or
delivering to the holders, as applicable, after the notes have become due and payable, whether at
stated maturity, or any redemption date, or any purchase date, or upon conversion or otherwise,
cash or shares of common stock (solely to satisfy outstanding conversions, if applicable)
sufficient to pay all of the outstanding notes and paying all other sums payable under the
indenture by us. Such discharge is subject to terms contained in the indenture.
Calculations in Respect of Notes
Except as otherwise provided above, we will be responsible for making all calculations called
for under the notes. These calculations include, but are not limited to, determinations of the last
reported sale prices of our
42
common stock, accrued interest payable on the notes and the conversion rate of the notes. We will
make all these calculations in good faith and, absent manifest error, our calculations will be
final and binding on holders of notes. We will provide a schedule of our calculations to each of
the trustee and the conversion agent, and each of the trustee and conversion agent is entitled to
rely conclusively upon the accuracy of our calculations without independent verification. The
trustee will forward our calculations to any holder of notes upon the request of that holder.
Trustee
U.S. Bank National Association is the trustee, security registrar, paying agent and conversion
agent.
Governing Law
The indenture provides that it and the notes are governed by, and construed in accordance
with, the laws of the State of New York.
Certain Definitions
2013 Notes means the Companys 6.25% Senior Notes Due 2013.
2023 Notes means the Companys 2.125% Convertible Senior Notes Due 2023.
2035 Notes means the Companys 2.125% Convertible Senior Notes Due 2035.
Debt means, with respect to any Person on any date of determination (without duplication):
(1) the principal of and premium (if any) in respect of indebtedness of such Person for
borrowed money;
(2) the principal of and premium (if any) in respect of obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments;
(3) the principal component of all obligations of such Person in respect of letters of
credit, bankers acceptances or other similar instruments (including reimbursement
obligations with respect thereto except to the extent such reimbursement obligation
relates to a trade payable and such obligation is satisfied within 30 days of
Incurrence);
(4) the principal component of all obligations of such Person to pay the deferred and
unpaid purchase price of property (except trade payables), which purchase price is due
more than six months after the date of placing such property in service or taking
delivery and title thereto;
(5) capitalized lease obligations and all attributable debt of such Person; and
(6) the principal component of Debt of other Persons to the extent guaranteed by such
Person.
The amount of Debt of any Person at any date will be the outstanding balance at such date of
all unconditional obligations as described above and the maximum liability, upon the occurrence of
the contingency giving rise to the obligation, of any contingent obligations at such date.
Default means any event which is, or after notice or passage of time or both would be, an
Event of Default.
Issue Date means May 17, 2006.
Non-Recourse Debt means Debt or that portion of Debt (i) as to which neither the Company nor
its Subsidiaries (other than a Non-Recourse Subsidiary) (A) provides credit support (including any
undertaking,
43
agreement or instrument which would constitute Debt), (B) is directly or indirectly liable or (C)
constitute the lender and (ii) in respect of which a default (including any rights which the
holders thereof may have to take enforcement action against a Non-Recourse Subsidiary) would not
permit (upon notice, lapse of time or both) any holder of any other Debt of the Company or its
Subsidiaries (including any Non-Recourse Subsidiary) to declare a default on such other Debt or
cause a payment thereof to be accelerated or payable prior to its Stated Maturity.
Non-Recourse Subsidiary means a Subsidiary which (i) has not acquired any assets (other than
cash) directly or indirectly from the Company or any Subsidiary, (ii) only owns assets acquired
after the Issue Date or assets acquired prior to the date such entity becomes a Subsidiary and
(iii) has no Debt other than Non-Recourse Debt.
Person means any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, limited liability company, government or
any agency or political subdivision hereof or any other entity.
Senior Credit Obligations means, with respect to the Company, one or more debt facilities
(including, without limitation, Revolving Credit Agreement dated as of May 27, 2005, among the
Company, certain subsidiaries of the Company, JP Morgan Chase Bank, N.A., as Administrative Agent,
Bank of America, N.A., as Syndication Agent, SunTrust Bank, UBS Securities LLC, and Merrill Lynch
Bank USA, as Documentation Agents, and J.P. Morgan Securities Inc., as Sole Lead Arranger and Sole
Book Manager and the lenders parties thereto from time to time, as may be amended or modified from
time to time) or commercial paper facilities with banks or other institutional lenders providing
for revolving credit loans, term loans or letters of credit, in each case, as amended, restated,
modified, renewed, refunded, replaced or refinanced in whole or in part from time to time (and
whether or not with the original administrative agent and lenders or another administrative agent
or agents or other lenders and whether provided under any other credit or other agreement or
indenture).
Stated Maturity means, with respect to any security, the date specified in such security as
the fixed date on which the payment of principal of such security is due and payable, including
pursuant to any mandatory redemption provision, but shall not include any contingent obligations to
repay, redeem or repurchase any such principal prior to the date originally scheduled for the
payment thereof.
Subsidiary of the Company means (i) a corporation a majority of whose capital stock with
voting power, under ordinary circumstances, to elect directors is at the time, directly or
indirectly, owned by the Company, by the Company and one or more Subsidiaries of the Company or by
one or more Subsidiaries of the Company or (ii) any other Person (other than a corporation) in
which the Company, one or more Subsidiaries of the Company or the Company and one or more
Subsidiaries of the Company, directly or indirectly, at the date of determination thereof, has
greater than a 50% ownership interest.
44
Description of Certain Other Indebtedness and Preferred Stock Obligations
Revolving Credit Facility
On May 27, 2005, we entered into a five-year $300.0 million unsecured revolving credit
facility with a group of lenders, with an uncommitted option to increase the facility by up to an
additional $100.0 million. On June 22, 2006, we amended the revolving credit facility by increasing
the size of the facility to $400.0 million, with an uncommitted option to increase the facility by
up to an additional $100.0 million. The credit facility is intended to provide financing for
general corporate purposes, including working capital, capital expenditures and permitted
acquisitions. As of June 30, 2006, $347.0 million of our $400.0 million revolving credit facility
remains available for future borrowings, with $6.0 million outstanding and $47.0 million of
outstanding letters of credit.
Guarantees
Our obligations under the revolving credit facility are guaranteed by substantially all of our
subsidiaries. All guarantees are guarantees of payment and not of collection.
The commitments under the revolving credit facility expire on June 22, 2011.
Interest
Loans under the revolving credit facility bear interest at variable rates which reflect, at
our option, (i) the higher of the Federal Funds Rate as published by the Federal Reserve Bank plus
one half of 1% or the prime rate as announced by the agent bank from time to time; and (ii) an
applicable margin over Eurodollar indices, which ranges from 0.275 to 0.500% per annum, depending
on our leverage ratio, as defined in the revolving credit facility. We also have the option to
request that lenders under the facility advance loans on a competitive bid basis. Competitive
borrowings will bear interest at market rates prevailing at the time of borrowing on either a fixed
rate or floating rate basis, at our option. The credit facility also provides for a fee on the
total average daily amounts of the commitments under the facility, ranging from 0.075 to 0.125% per
annum, depending on our leverage ratio. In addition to direct borrowings, the revolving credit
facility includes a letter of credit subfacility that may be used to support the issuance of up to
$125.0 million of letters of credit. Usage of the letter credit subfacility reduces amounts
available for borrowing under the revolving credit facility.
Letter of Credit Fees
Letter of credit fees will be equal to the applicable margin for LIBOR loans on a per annum
basis plus a fronting fee of 0.125% per annum to be paid to the letter of credit issuing lender for
its own account. Fees will be calculated on the aggregate stated amount for each letter of credit
for the stated duration thereof.
Covenants
The credit facility contains various covenants, which, among other things:
|
|
|
limit our ability and the ability of certain subsidiaries to borrow and to place liens
on our assets or their assets; |
|
|
|
|
require us to comply with a fixed charge coverage ratio test and a leverage ratio test; |
|
|
|
|
limit our ability to merge with other parties or to sell all or substantially all of our assets; |
|
|
|
|
limit our ability to engage in other business activities or engage in transactions with affiliates; |
|
|
|
|
limit our and our subsidiaries ability to make certain acquisitions; and |
|
|
|
|
limit our ability to pay dividends and redeem capital stock. |
45
Events of Default
The revolving credit facility contains events of default that are usual and customary in
credit facilities of this type, including:
|
|
|
non-payment of principal, interest, fees or other amounts; |
|
|
|
|
violation of covenants (with cure periods as applicable); |
|
|
|
|
material inaccuracy of representations and warranties; |
|
|
|
|
cross-default to other material agreements and indebtedness; |
|
|
|
|
bankruptcy and other insolvency events; |
|
|
|
|
material judgments; |
|
|
|
|
ERISA matters; |
|
|
|
|
actual or asserted invalidity of any loan documentation (including any guarantee); |
|
|
|
|
loss of licenses; and |
|
|
|
|
change of control. |
Stock Repurchases
As of March 31, 2006, we had aggregate authority to repurchase $400.0 million of our
common stock and, as of the same date, we had $135.9 million of this amount remaining. On May 10,
2006, we announced that our board of directors authorized us to repurchase an additional $300.0
million of our common stock through December 31, 2007. The net proceeds from the initial offering
of the notes have been used to repurchase our stock pursuant to these authorizations. Overall, we
purchased an additional 5.6 million shares during the second quarter of 2006 for $265.6 million,
including 2.0 million shares as part of an accelerated share repurchase agreement. As of June 30,
2006, we had $170.3 million of the total authorized amount remaining. We may use the shares for
internal stock option and 401(k) matching programs and for other uses, such as possible future
acquisitions.
Senior Notes
6.25% Senior Notes due 2013
In April 2003, we issued $200.0 million principal amount of 2013 Notes. In August 2003, we
registered identical senior notes with the SEC that were exchanged for the 2013 Notes originally
issued in April 2003. The notes are redeemable, at our option, at any time at a price equal to the
greater of (a) 100% of their principal amount or (b) the sum of the present values of the remaining
scheduled payments of principal and interest, discounted by an applicable treasury rate plus 50
basis points, plus accrued interest to the redemption date. In addition, holders of 2013 Notes may
require us to purchase all or a portion of their notes upon a change of control at a purchase price
of 101% plus accrued and unpaid interest. Interest on the 2013 Notes is payable semi-annually in
May and November.
2.125% Convertible Senior Notes due 2023
In April 2003, we issued $100.0 million principal amount of 2023 Notes. Interest on the 2023
Notes is payable semi-annually in April and October. The interest rate payable on the 2023 Notes
increased to 2.625% effective from August 30, 2003 through December 31, 2008.
46
We may not redeem the 2023 Notes before April 15, 2010. On or after April 15, 2010, we may
redeem the 2023 Notes for a price equal to 100% of the principal amount thereof plus accrued and
unpaid interest, including any contingent interest, to but excluding the redemption date. Starting
with the six-month period beginning April 15, 2010, we may be obligated to pay contingent interest
to the holders of the 2023 Notes under certain circumstances. Holders of the 2023 Notes may convert
their notes into shares of our common stock prior to the stated maturity at their option only under
the following circumstances:
|
|
|
if the average of the last reported sales price of our common stock for the 20 trading
days immediately prior to the conversion date is greater than or equal to 120% of the
conversion price per share of common stock on such conversion date; |
|
|
|
|
if the 2023 Notes have been called for redemption; |
|
|
|
|
upon the occurrence of specified corporate transactions; and |
|
|
|
|
if the credit ratings assigned to the notes decline to certain levels. |
The applicable conversion price under the 2023 Notes is $31.12, which is subject to adjustment
in certain circumstances.
Holders of 2023 Notes may require us to purchase all or a portion of their notes at a purchase
price of 100% plus accrued and unpaid interest on April 15, 2008, April 15, 2010, April 15, 2013
and April 15, 2018. In addition, holders of 2023 Notes may require us to purchase all or a portion
of their notes upon a fundamental change at a purchase price of 100% plus accrued and unpaid
interest. We may elect to satisfy future repurchases of the 2023 Notes, in whole or in part,
subject to certain conditions, in shares of our common stock instead of in cash.
In November 2004, we commenced an offer to exchange the 2023 Notes (Old 2023 Notes) for
substantially similar notes with additional provisions that allow us to pay cash for the principal
amount of the notes due upon conversion (New 2023 Notes). These terms reduce the number of shares
of common stock that we must issue upon conversion. In December 2004, we exchanged $93.4 million
principal amount of Old 2023 Notes for $93.4 million principal amount of New 2023 Notes. $6.6
million principal amount of Old 2023 Notes remains outstanding. We are required to pay the purchase
price to holders of New 2023 Notes in cash upon redemption on certain dates or in connection with
certain events.
2.125% Convertible Senior Notes due 2035
In August 2005, we issued $400.0 million principal amount of 2035 Notes. Interest on the 2035
Notes is payable semi-annually in February and August. The 2035 Notes bear interest at a rate of
2.125% per year until August 1, 2010 and at a rate of 1.875% per year thereafter.
We may not redeem the 2035 Notes before August 1, 2010. On or after August 1, 2010, we may
redeem the 2035 Notes for a price equal to 100% of the principal amount thereof plus accrued and
unpaid interest, including any additional interest, to but excluding the redemption date. Holders
of the 2035 Notes may convert their notes into shares of our common stock prior to the stated
maturity at their option only under the following circumstances:
|
|
|
if the average of the last reported sales price of our common stock for the 20 trading
days immediately prior to the conversion date is greater than or equal to 120% of the
conversion price per share of common stock on such conversion date; |
|
|
|
|
if the 2035 Notes have been called for redemption; |
|
|
|
|
upon the occurrence of specified corporate transactions; and |
|
|
|
|
if the credit ratings assigned to the notes decline to certain levels. |
47
The applicable conversion price under the 2035 Notes is $44.75, which is subject to adjustment
in certain circumstances.
Holders of 2035 Notes may require us to purchase all or a portion of their notes at a purchase
price of 100% plus accrued and unpaid interest on August 1, 2010, August 1, 2015, August 1, 2020,
August 1, 2025 and August 1, 2030. In addition, holders of 2035 Notes may require us to purchase
all or a portion of their notes upon a fundamental change at a purchase price of 100% plus accrued
and unpaid interest. We may elect to satisfy future repurchases of the 2035 Notes, in whole or in
part, subject to certain conditions, in shares of our common stock instead of in cash.
Senior Note Guarantees
The 2013 Notes, 2023 Notes and 2035 Notes are guaranteed by substantially all of our
subsidiaries. All of the subsidiaries that guarantee the 2013 Notes, 2023 Notes and 2035 Notes are
wholly owned by us. The guarantees are full and unconditional and joint and several, and the
non-guarantor subsidiaries are minor.
48
Description of Capital Stock
Our authorized capital stock consists of 300,000,000 shares of common stock, $0.01 par
value per share, and 5,000,000 shares of preferred stock, $0.01 par value per share. The following
summary of our common stock and preferred stock is not complete and may not contain all the
information you should consider before investing in the notes or common stock. This description is
subject to and qualified in its entirety by provisions of our certificate of incorporation as
amended and our amended and restated bylaws, which are incorporated by reference into this
prospectus, and by provisions of applicable Delaware law.
Common Stock
As
of July 31, 2006 there were 73,661,336 shares of common stock outstanding and held of
record by approximately 2,200 stockholders. Holders of common stock are entitled to one vote for
each share held on all matters submitted to a vote of stockholders and do not have cumulative
voting rights. Prior to May 2004, our board of directors was divided into three classes. Directors
held office for staggered terms of three years. One of the three classes was elected each year to
succeed the directors whose terms were expiring. At our 2004 annual stockholders meeting, the
stockholders approved an amendment to our Certificate of Incorporation which eliminated our
classified board prospectively. Holders of common stock are entitled to receive any dividends that
may be declared by our board of directors ratably out of funds legally available for that purpose.
If we are liquidated, dissolved or wound-up, holders of common stock are entitled to receive
ratably our net assets available for distribution after the payment of, or adequate provisions for,
all of our debts and other liabilities, subject to prior and superior rights of holders of
preferred stock. Holders of common stock have no preemptive, subscription, redemption, sinking fund
or conversion rights. All of our outstanding shares of common stock have been validly issued and
fully paid and are nonassessable. The rights of the holders of common stock will be subject to, and
may be adversely affected by, the rights of the holders of preferred stock, if any.
Preferred Stock
As of June 30, 2006, there were no shares of preferred stock outstanding. Our certificate of
incorporation as amended authorizes the issuance of up to 5,000,000 shares of preferred stock, in
one or more series and with such rights, preferences, privileges and restrictions, including voting
rights, redemption provisions (including sinking fund provisions), dividend rights, dividend rates,
liquidation rates, liquidation preferences and conversion rights, as our board of directors may
determine without further action by the holders of common stock.
Delaware Anti-Takeover Law
Section 203 of the Delaware General Corporation Law prohibits certain business combination
transactions between a Delaware corporation and any interested stockholder owning 15% or more of
the corporations outstanding voting stock for a period of three years after the date on which the
stockholder became an interest stockholder, unless:
|
|
|
the board of directors approves, prior to the date, either the proposed business
combination or the proposed acquisition of stock which resulted in the stockholder becoming
an interested stockholder; |
|
|
|
|
upon consummation of the transaction in which the stockholder becomes an interested
stockholder, the interested stockholder owned at least 85% of the those shares of the
voting stock of the corporation which are not held by the directors, officers or certain
employee stock plans; or |
|
|
|
|
on or subsequent to the date on which the stockholder became an interested stockholder,
the business combination with the interested stockholder is approved by the board of
directors and also approved at a stockholders meeting by the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the corporations voting stock
other than shares held by the interested stockholder. |
Under Delaware law, a business combination includes a merger, asset sale or other
transaction resulting in a financial benefit to the interest stockholder.
49
Transfer Agent and Registrar
The transfer agent and registrar of our common stock is National City Bank.
50
United States Federal Income Tax Considerations
The following discussion summarizes the material U.S. federal income tax considerations
relevant to the purchase, ownership and disposition of the notes and common stock into which the
notes are convertible, but is not a complete analysis of all potential tax considerations relating
thereto. This discussion is based upon the provisions of the Internal Revenue Code of 1986, as
amended (the Code), Treasury Regulations promulgated thereunder, administrative rulings and
judicial decisions, all as of the date hereof. These authorities may be changed, possibly
retroactively, so as to result in U.S. federal income tax consequences different from those set
forth below. We have not sought any ruling from the Internal Revenue Service (IRS) with respect
to the statements made and the conclusions reached in the following summary, and there can be no
assurance that the IRS will agree with such statements and conclusions.
This discussion is limited to holders who hold the notes and the common stock into which such notes are
convertible as capital assets. This discussion also does not address the tax considerations arising
under the laws of any foreign, state or local jurisdiction. In addition, this discussion does not
address tax considerations applicable to an investors particular circumstances or to investors
that may be subject to special tax rules, including, without limitation:
|
|
|
partnerships or other pass-through entities or investors in such entities; |
|
|
|
|
banks, insurance companies or other financial institutions; |
|
|
|
|
persons subject to U.S. federal estate, gift or alternative minimum tax arising from
the purchase, ownership or disposition of the notes; |
|
|
|
|
tax-exempt organizations; |
|
|
|
|
dealers in securities or currencies; |
|
|
|
|
traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; |
|
|
|
|
foreign persons or entities (except to the extent specifically set forth below); |
|
|
|
|
persons that own, or are deemed to own, more than 5% of our Company (except to the
extent specifically set forth below); |
|
|
|
|
former citizens or long-term residents of the United States; |
|
|
|
|
U.S. holders (as defined below) whose functional currency is not the U.S. dollar; |
|
|
|
|
persons who hold the notes as a position in a hedging transaction, straddle,
conversion transaction or other risk reduction transaction; or |
|
|
|
|
persons deemed to sell the notes or common stock under the constructive sale provisions
of the Code. |
If a holder is an entity treated as a partnership for U.S. federal income tax purposes, the
tax treatment of each partner of such partnership will generally depend upon the status of the
partner and upon the activities of the partnership. A holder that is a partnership, and partners in
such partnerships, should consult their own tax advisors regarding the tax consequences of the
purchase, ownership and disposition of the notes and common stock.
This summary of U.S. federal income tax considerations is for general information only and
is not tax advice. You are urged to consult your tax advisors with respect to the application of
the U.S. federal income tax laws to your particular situation, as well as any tax consequences of
the purchase, ownership and disposition of the notes and common stock arising under the federal
estate or gift tax rules or under the laws of any state, local, foreign or other taxing
jurisdiction or under any applicable tax treaty.
51
Classification of the Notes
Under the indenture governing the notes, we and each holder of the notes will agree, for U.S.
federal income tax purposes, to treat the notes as indebtedness that is subject to the regulations
governing contingent payment debt instruments (the Contingent Debt Regulations) in the manner
described below. The remainder of this discussion assumes that the notes will be so treated and
does not address any possible differing treatment of the notes. The IRS has issued a revenue ruling
with respect to instruments similar to the notes and this ruling
supports some aspects of the
treatment described below. However, the application of the Contingent Debt Regulations to
instruments such as the notes remains uncertain in several other respects, and no rulings have been
sought from the IRS or a court with respect to any of the tax consequences discussed below.
Accordingly, no assurance can be given that the IRS or a court will agree with the treatment
described herein. Any differing treatment could affect the amount, timing and character of income,
gain or loss in respect of an investment in the notes. In particular, a holder might be required to
accrue original issue discount at a lower rate, might not recognize income, gain or loss upon
conversion of the notes to common stock, and might recognize capital gain or loss upon a taxable
disposition of the notes.
Consequences to U.S. Holders
The following is a summary of material U.S. federal income tax consequences that will
apply to you if you are a U.S. holder of the notes or common stock, but is not a complete analysis
of all the potential tax considerations relating thereto. A summary
of tax consequences to non-U.S.
holders of the notes or common stock are described under Consequences to Non-U.S. Holders
below. The term U.S. holder means a beneficial owner of a note or common stock who or that is:
|
|
|
an individual citizen or resident of the United States; |
|
|
|
|
a corporation or other entity taxable as a corporation for U.S. federal income tax
purposes created or organized in the United States or under the laws of the United States,
any state thereof, or the District of Columbia; |
|
|
|
|
an estate, the income of which is subject to U.S. federal income taxation regardless of
its source; or |
|
|
|
|
a trust that (1) is subject to the primary supervision of a U.S. court and one or more
U.S. persons have the authority to control all substantial decisions of the trust or (2)
has a valid election in effect under applicable Treasury Regulations to be treated as a
U.S. person. |
Accrual of interest
Under the Contingent Debt Regulations, actual cash payments on the notes (including payments
of contingent interest), if any, will not be reported separately as taxable income, but will be
taken into account under such regulations. As discussed more fully below, the effect of the
Contingent Debt Regulations will be to:
|
|
|
require you, regardless of your usual method of tax accounting, to use the accrual
method with respect to the notes; |
|
|
|
|
require you to accrue and include in taxable income each year original issue discount
at the comparable yield (as described below) which will be substantially in excess of
interest payments actually received by you; and |
|
|
|
|
generally result in ordinary rather than capital treatment of any gain, and to some
extent loss, on the sale, exchange, repurchase or redemption of the notes. |
Subject
to the adjustments described below under Adjustments to
interest accruals on the notes, you will be required to accrue an amount of ordinary interest income as original issue
discount for U.S. federal income tax purposes, for each accrual period prior to and including the
maturity date of the note that equals:
52
|
|
|
the product of (i) the adjusted issue price (as defined below) of the notes as of the
beginning of the accrual period and (ii) the comparable yield to maturity (as defined
below) of the notes, adjusted for the length of the accrual period; |
|
|
|
|
divided by the number of days in the accrual period; and |
|
|
|
|
multiplied by the number of days during the accrual period that you held the notes. |
The issue price of a note will be the first price at which a substantial amount of the notes
is sold to the public, excluding sales to bond houses, brokers or similar persons or organizations
acting in the capacity of underwriters, placement agents or wholesalers. The adjusted issue price
of a note will be its issue price increased by any original issue discount previously accrued,
determined without regard to any adjustments to original issue discount accruals described below,
and decreased by the projected amounts of any payments previously scheduled to be made with respect
to the notes.
Under the Contingent Debt Regulations, you will be required to include original issue discount
in income each year, regardless of your usual method of tax accounting, based on the comparable
yield of the notes. We have determined the comparable yield of the notes based on the rate, as of
the initial issue date, at which we would issue a fixed rate nonconvertible debt instrument with no
contingent payments but with terms and conditions similar to the notes. Accordingly, we have
determined that the comparable yield is an annual rate of 7.23%, compounded semi-annually.
We are required to furnish to you the comparable yield and, solely for U.S. federal income tax
purposes, a projected payment schedule that includes the stated noncontingent cash interest
payments, if any, on the notes and estimates of the amount and timing of contingent interest
payments and payment upon maturity on the notes taking into account the fair market value of the
common stock that might be paid upon a conversion of the notes. You may obtain the projected
payment schedule by submitting a written request for it to us at the address set forth in
Prospectus Summary. By purchasing the notes, you agree in the indenture to be bound by our
determination of the comparable yield and projected payment schedule. For U.S. federal income tax
purposes, you must use the comparable yield and the schedule of projected payments in determining
your original issue discount accruals, and the adjustments thereto described below, in respect of
the notes.
The comparable yield and the projected payment schedule are not provided for any purpose other
than the determination of your original issue discount and adjustments thereof in respect of the
notes for U.S. federal income tax purposes and do not constitute a projection or representation
regarding the actual amount of the payments on a note.
53
Adjustments to interest accruals on the notes
If the actual contingent payments made on the notes differ from the projected contingent
payments, adjustments will be made with respect to the difference. If, during any taxable year, you
receive actual contingent payments with respect to the notes for that taxable year that in the
aggregate exceed the total amount of projected contingent payments for such taxable year, you will
incur a positive adjustment equal to the amount of such excess. Such positive adjustment will be
treated as additional original issue discount in such taxable year. For these purposes, the
payments in a taxable year include the fair market value of property received in that year,
including the fair market value of our common stock received upon a conversion. If you receive in a
taxable year actual contingent payments that in the aggregate are less than the amount of projected
contingent payments for such taxable year, you will incur a negative adjustment equal to the amount
of such deficit. A negative adjustment will be treated as follows:
|
|
|
first, a negative adjustment will reduce the amount of original issue discount required
to be accrued in the current year; |
|
|
|
|
second, any negative adjustments that exceed the amount of original issue discount
accrued in the current year will be treated as ordinary loss to the extent of your total
prior original issue discount inclusions with respect to the notes, reduced to the extent
such prior original issue discount was offset by prior negative adjustments; and |
|
|
|
|
third, any excess negative adjustments will be carried forward to offset future
interest income with respect to the notes or to reduce the amount realized on a sale,
exchange, conversion, redemption or retirement of the notes. |
If you acquired a note at a discount or premium to its adjusted issue price on your
acquisition date, you must, upon acquiring the note, reasonably allocate the difference between
your tax basis and the adjusted issue price to daily portions of interest or projected payments
over the remaining term of the note. You should consult your tax advisor regarding these
allocations.
If your tax basis were greater than the adjusted issue price of your note on your acquisition date,
the amount of the difference allocated to a daily portion of interest or to a projected payment is
treated as a negative adjustment on the date the daily portion accrues or the payment is made. On
the date of the adjustment, your adjusted basis in your note is reduced by the amount treated as a
negative adjustment.
If your tax basis were less than the adjusted issue price of your note on your acquisition date,
the amount of the difference allocated to a daily portion of interest or to a projected payment is
treated as a positive adjustment on the date the daily portion accrues or the payment is made. On
the date of the adjustment, your adjusted basis in your note is increased by the amount treated as
a positive adjustment.
Sale, exchange, conversion or redemption of the notes
Upon the sale, exchange, repurchase or redemption of a note, as well as upon a conversion of a
note, you generally will recognize gain or loss equal to the difference between your amount
realized and your adjusted tax basis in the note. As a holder of a note, you agree that under the
Contingent Debt Regulations, the amount realized will include the fair market value of our common
stock that you receive on the conversion as a contingent payment. Such gain on a note generally
will be treated as interest income. Loss from the disposition of a note will be treated as ordinary
loss to the extent of your prior net original issue discount inclusions with respect to the notes.
Any loss in excess of that amount will be treated as capital loss, which will be long-term if the
notes were held for more than one year. The deductibility of capital losses is subject to
limitations.
Special rules apply in determining the tax basis of a note. Your adjusted tax basis in a note
is generally equal to your original purchase price for the note, increased by original issue
discount (determined without regard to any adjustments to interest
accruals described above other than any positive or negative
adjustments to reflect discount (which increase basis) or premium
(which decrease basis), respectively, to the adjusted issued price,
if any) you
previously accrued on the note, and reduced by the projected amount of any payments previously
scheduled to be made on the note.
Under this treatment, your tax basis in the common stock received upon conversion of a note
will equal the then current fair market value of such common stock. Your holding period for our
common stock will commence on the day after conversion.
Constructive dividends
Holders
of convertible debt instruments such as the notes may, in some circumstances, be
deemed to have received distributions of stock if the conversion price of such instruments is
adjusted. However, adjustments to the conversion price made pursuant to a bona fide reasonable
adjustment formula which has the effect of preventing the dilution of the interest of the holders
of the debt instruments will generally not be deemed to result in a constructive distribution of
stock. Some of the possible adjustments provided in the notes (including, without limitation,
adjustments in respect of cash dividends to our stockholders) may not qualify as being pursuant to
a bona fide reasonable adjustment formula. If such adjustments are made, you will be deemed to have
received constructive distributions includible in your income in the manner described under
Dividends below even though you have not received any cash or property as a result of such
adjustments. In some circumstances, the failure to provide for
54
such an adjustment may also result in a constructive distribution to you. Any deemed distributions
will be taxable as a dividend, return of capital, or capital gain in accordance with the earnings
and profits rules under the Code. It is not clear whether a constructive dividend deemed paid to a
U.S. holder would be eligible for the preferential rates of U.S.
federal income tax applicable to qualified dividend income. It is also unclear whether corporate holders would be
entitled to claim the dividends received deduction with respect to any such constructive dividends.
Because a constructive dividend deemed received by a U.S. holder would not give rise to any cash
from which any applicable withholding tax could be satisfied, if we pay backup withholding taxes on
behalf of a U.S. holder (because such U.S. holder failed to establish an exemption from backup
withholding), we may, at our option, set off any such payment against payments of cash and common
stock payable on the notes.
Dividends
If you convert your note into common stock, distributions, if any, made on our common stock
generally will be included in your income as ordinary dividend income to the extent of our current
and accumulated earnings and profits. With respect to eligible noncorporate taxpayers, for taxable
years beginning before January 1, 2011, such dividends are generally taxed at the lower applicable
capital gains rates, provided specified holding period requirements are satisfied and such holder has
not taken such dividends into account as investment income under Section 163(d)(4)(B) of the Code.
Distributions in excess of our current and accumulated earnings and profits will be treated as a
return of capital to the extent of your adjusted tax basis in the common stock and thereafter as
capital gain from the sale or exchange of such common stock. Dividends received by a corporate U.S.
holder may be eligible for a dividends received deduction, subject to applicable limitations.
Sale, exchange or redemption of common stock
Upon the sale, exchange or redemption of our common stock, you generally will recognize
capital gain or loss equal to the difference between (i) the amount of cash and the fair market
value of any property received upon the sale or exchange and (ii) your adjusted tax basis in the
common stock. Such capital gain or loss will be long-term capital gain or loss if your holding
period in the common stock is more than one year at the time of the sale, exchange or redemption.
Long-term capital gains recognized by eligible noncorporate U.S. holders, including individuals,
will generally be subject to a reduced rate of U.S. federal income tax. Your adjusted tax basis and
holding period in common stock received upon conversion of a note are determined as discussed above
under Sale, exchange, conversion or redemption of the notes. The deductibility of capital
losses is subject to limitations.
Possible effect of the change in conversion consideration after a change in control
In
some situations, we may provide for adjustments to the notes upon changes in control.
Depending on the circumstances, such an adjustment could result in a deemed taxable exchange to a
holder and the modified note could be treated as newly issued at that time, potentially resulting
in the recognition of taxable gain or loss.
Backup withholding and information reporting
We are required to furnish to the record holders of the notes and common stock, other than
corporations and other exempt holders, and to the IRS, information with respect to interest paid on
the notes, dividends paid on the common stock and proceeds received from a disposition of the notes
or shares of common stock pursuant to a conversion, redemption or repurchase.
You may be subject to backup withholding with respect to interest paid on the notes, dividends
paid on the common stock or with respect to proceeds received from a disposition of the notes or
shares of common stock. Some holders (including, among others,
corporations) are generally not subject to backup withholding. You will be subject to
backup withholding if you are not otherwise exempt and you
|
|
|
fail to furnish your taxpayer identification number (TIN), which, for an individual,
is ordinarily his or her social security number; |
|
|
|
|
furnish an incorrect TIN; |
55
|
|
|
are notified by the IRS that you have failed to properly report payments of interest or dividends; or |
|
|
|
|
fail to certify, under penalties of perjury, that you have furnished a correct TIN and
that the IRS has not notified you that you are subject to backup withholding. |
Backup withholding is not an additional tax but, rather, is a method of tax collection. You
generally will be entitled to credit any amounts withheld under the backup withholding rules
against your U.S. federal income tax liability provided that the required information is furnished
to the IRS in a timely manner.
Consequences to Non-U.S. Holders
The following is a summary of material U.S. federal income tax consequences that will
apply to you if you are a non-U.S. holder of the notes or common stock, but is not a complete
analysis of all the potential tax considerations relating thereto. For purposes of this discussion,
a non-U.S. holder means a beneficial owner of notes or common stock that is a nonresident alien
individual or corporation, trust or estate who or that is not a U.S. holder. Special rules may
apply to many non-U.S. holders such as controlled foreign corporations, passive foreign
investment companies, corporations that accumulate earnings to avoid federal income tax or, in
some circumstances, individuals who are U.S. expatriates. Consequently, non-U.S. holders should
consult their tax advisors to determine the U.S. federal, state, local and other tax consequences
that may be relevant to them.
In general, subject to the discussion below concerning backup withholding:
Payments of interest
You will not be subject to the 30% U.S. federal withholding tax with respect to payments of
interest on the notes (including amounts treated as interest described above under Consequences
to U.S. Holders) provided that:
|
|
|
interest paid on the note is not effectively connected with your conduct of a trade or
business in the United States; |
|
|
|
|
you do not own, actually or constructively, 10% or more of the total combined voting
power of all classes of our stock entitled to vote within the meaning of Section 871(h)(3)
of the Code; |
|
|
|
|
you are not a controlled foreign corporation with respect to which we are, directly
or indirectly, a related person; |
|
|
|
|
you are not a bank whose receipt of interest (including original issue discount) on a
note is described in Section 881(c)(3)(A) of the Code; |
|
|
|
|
our notes and common stock are actively traded within the meaning of Section
871(h)(4)(C)(v)(l) and we are not a United States real property holding corporation; and |
|
|
|
|
you provide your name and address, and certify, under penalties of perjury, that you
are not a U.S. person (which certification may be made on an IRS Form W-8BEN (or successor
form)), or you hold your notes through specified intermediaries, and you and the
intermediaries satisfy the certification requirements of applicable Treasury Regulations. |
Special certification rules apply to non-U.S. holders that are pass-through entities rather
than corporations or individuals. Prospective investors should consult their tax advisors regarding
the certification requirements for non-U.S. holders.
If you cannot satisfy the requirements described above, you will be subject to the 30% U.S.
federal withholding tax with respect to payments of interest on a note, unless you provide us with
a properly executed (1) IRS Form W-8BEN (or successor form) claiming an exemption from or reduction
in withholding under the benefit
56
of an applicable U.S. income tax treaty or (2) IRS Form W-8ECI (or successor form) stating that
interest paid on the note is not subject to withholding tax because it is effectively connected
with the conduct of a U.S. trade or business.
If you are engaged in a trade or business in the United States and interest on a note is
effectively connected with your conduct of that trade or business, you will be subject to U.S.
federal income tax on that interest on a net income basis (although you will be exempt from the 30%
withholding tax, provided the certification requirements described above are satisfied) in the same
manner as if you were a U.S. person as defined under the Code. In addition, if you are a foreign
corporation, you may be subject to a branch profits tax equal to 30% (or lower rate as may be
prescribed under an applicable U.S. income tax treaty) of your earnings and profits for the taxable
year, subject to adjustments, that are effectively connected with your conduct of a trade or
business in the United States. For this purpose, interest (including original issue discount) will
be included in your earnings and profits.
Sale, exchange, redemption or other taxable disposition of the notes or common stock
Any gain realized by you on the sale, exchange, redemption, conversion or other taxable
disposition of a note will generally be treated as interest income generally subject to the rules
described above under Payments of interest. If such gain which is treated as interest income
does not qualify for the portfolio interest exemption discussed above under Payments of Interest,
even if the payor of the proceeds from the sale, exchange, redemption, conversion or other taxable
disposition does not withhold on such gain, you generally will have an obligation under U.S.
federal income tax laws to file a U.S. federal income tax return and pay applicable withholding
taxes.
Any gain realized by you on the sale, exchange or other taxable disposition of our common
stock generally will not be subject to U.S. federal income tax unless:
|
|
|
the gain is effectively connected with your conduct of a U.S. trade or business; |
|
|
|
|
you are an individual who is present in the United States for 183 days or more in the
taxable year of disposition, and applicable conditions are met; or |
|
|
|
|
we are or have been a United States real property holding corporation for U.S.
federal income tax purposes at any time during the shorter of the five-year period ending
on the date of disposition or the period that you held our common stock. |
If your gain is described in the first bullet point above, you generally will be subject to
U.S. federal income tax on the net gain derived from the sale, and if you are a corporation, then
any such effectively connected gain received by you may also be
subject to the branch profits tax at a 30% rate (or such lower rate as may be prescribed under an
applicable U.S. income tax treaty). If you are an individual described in the second bullet point
above, you will be subject to a flat 30% U.S. federal income tax on the gain derived from the sale,
which may be offset by U.S. source capital losses, even though you are not considered a resident of
the United States. Such holders are urged to consult their tax advisers regarding the tax
consequences of the acquisition, ownership and disposition of the common stock.
We do not believe that we are currently, and do not anticipate becoming, a United States real
property holding corporation. Even if we were, or were to become, a United States real property
holding corporation, no adverse tax consequences would apply to you upon a disposition of common
stock if you hold, directly and indirectly, at all times during the applicable period, five percent
or less of our common stock, provided that our common stock was regularly traded on an established
securities market.
Dividends and constructive dividends
In general, dividends, if any, received by you with respect to our common stock (and any
deemed distributions resulting from some adjustments, or failures to
make some adjustments,
to the conversion price of the notes, see Consequences to U.S. HoldersConstructive dividends
above) will be subject to withholding of U.S. federal income tax at a 30% rate, unless such rate is
reduced by an applicable U.S. income tax treaty. Dividends that are effectively connected with your
conduct of a trade or business in the United States are generally subject to
57
U.S. federal income tax on a net income basis and are exempt from the 30% withholding tax (assuming
compliance with applicable certification requirements). Any such effectively connected dividends
received by a non-U.S. holder that is a corporation may also be
subject to the branch profits tax at a 30% rate or such lower rate as may be prescribed under an
applicable U.S. income tax treaty. In the case of dividend distributions resulting from
adjustments, or failures to make adjustments, to the conversion price of the notes, the indenture
provides that because such dividend distribution will not give rise to any cash from which any
applicable withholding tax can be satisfied, we may set-off any such withholding tax against
payments of cash and common stock on the notes.
In order to claim the benefit of a U.S. income tax treaty or to claim exemption from
withholding because dividends paid to you on our common stock are effectively connected with your
conduct of a trade or business in the United States, you must provide a properly executed IRS Form
W-8BEN for treaty benefits or W-8ECI for effectively connected income (or such successor form as
the IRS designates), prior to the payment of dividends. These forms must be periodically updated.
You may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for
refund.
Backup withholding and information reporting
If you are a non-U.S. holder, in general, you will not be subject to backup withholding and
information reporting with respect to payments that we make to you (including interest, dividends
and proceeds received from a disposition of the notes or common stock pursuant to a conversion,
redemption or repurchase) provided that we do not have actual knowledge or reason to know that you
are a United States person and you have given us the statement described above under
Consequences to Non-U.S. HoldersPayments of interest. In addition, you will not be subject to
backup withholding or information reporting with respect to the proceeds of the sale of a note or a
share of common stock within the United States or conducted through
specified U.S.-related financial
intermediaries, if the payor receives the statement described above under Payments of interest
and does not have actual knowledge or reason to know that you are a United States person, as
defined under the Code, or you otherwise establish an exemption. However, we may be required to
report annually to the IRS and to you the amount of, and the tax withheld with respect to, any
interest or dividends paid to you, regardless of whether any tax was actually withheld. Copies of
these information returns may also be made available under the provisions of a specific treaty or
agreement to the tax authorities of the country in which you reside.
You generally will be entitled to credit any amounts withheld under the backup withholding
rules against your U.S. federal income tax liability provided that the required information is
furnished to the IRS in a timely manner.
58
Selling Securityholders
The notes were originally issued by Manor Care and sold by the initial purchasers of the
notes in a transaction exempt from the registration requirements of the Securities Act of 1933 to
persons reasonably believed by the initial purchasers to be qualified institutional buyers as
defined by Rule 144A under the Securities Act of 1933. Selling securityholders, including their
transferees, pledgees or donees or their successors, may from time to time offer and sell pursuant
to this prospectus any or all of the notes and shares of common stock into which the notes are
convertible.
The following table sets forth information, as of August 14, 2006, with respect to the selling
securityholders and the principal amounts of notes beneficially owned by each selling
securityholder that may be offered pursuant to this prospectus. The information is based on
information provided by or on behalf of the selling securityholders. The selling securityholders
may offer all, some or none of the notes or the common stock into which the notes are convertible.
Because the selling securityholders may offer all or some portion of the notes or the common stock,
we cannot estimate the amount of the notes or the common stock that will be held by the selling
securityholders upon termination of any of these sales. In addition, the selling securityholders
identified below may have sold, transferred or otherwise disposed of all or a portion of their
notes since the date on which they provided the information regarding their notes in transactions
exempt from the registration requirements of the Securities Act of 1933. The percentage of notes
outstanding beneficially owned by each selling securityholder is based on $250,000,000 aggregate
principal amount of notes outstanding.
The number of shares of common stock issuable upon conversion of the notes shown in the table
below assumes conversion of the full amount of notes held by each selling securityholder at a
maximum conversion rate of 20.0992 shares per $1,000 principal amount of notes and a cash payment
in lieu of any fractional shares. This conversion price is subject to adjustment in certain events.
Accordingly, the number of conversion shares may increase or decrease from time to time.
Information concerning other selling securityholders will be set forth in prospectus supplements
from time to time, if required. The number of shares of common stock owned by the other selling
securityholders or any future transferee from any such holder assumes that they do not beneficially
own any common stock other than common stock into which the notes are convertible.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal Amount of |
|
|
|
|
|
|
Percentage of |
|
|
|
|
|
Notes Beneficially |
|
|
Percentage of |
|
Common |
|
Common |
|
|
|
Owned and Offered |
|
|
Notes |
|
Stock |
|
Stock Offered |
|
Name |
|
Hereby |
|
|
Outstanding |
|
Outstanding(1) |
|
Hereby(2) |
|
Alexandra Global Master Fund Ltd. |
|
$ |
10,000,000 |
|
|
|
4.00 |
% |
|
|
0.30 |
% |
|
|
221,091 |
|
Aristeia International Limited |
|
$ |
8,800,000 |
|
|
|
3.52 |
% |
|
|
0.26 |
% |
|
|
194,560 |
|
Aristeia Partners LP |
|
$ |
1,200,000 |
|
|
|
0.48 |
% |
|
|
0.04 |
% |
|
|
26,531 |
|
Basso Fund Ltd. |
|
$ |
600,000 |
|
|
|
0.24 |
% |
|
|
0.02 |
% |
|
|
13,265 |
|
Basso Holdings Ltd. |
|
$ |
7,800,000 |
|
|
|
3.12 |
% |
|
|
0.23 |
% |
|
|
172,451 |
|
Basso Multi-Strategy Holding Fund Ltd. |
|
$ |
1,600,000 |
|
|
|
0.64 |
% |
|
|
0.05 |
% |
|
|
35,375 |
|
Black Diamond Convertible Offshore LDC |
|
$ |
1,200,000 |
|
|
|
0.48 |
% |
|
|
0.04 |
% |
|
|
26,531 |
|
Black Diamond Offshore Ltd. |
|
$ |
754,000 |
|
|
|
0.30 |
% |
|
|
0.02 |
% |
|
|
16,670 |
|
Canadian Imperial Holdings, Inc. |
|
$ |
15,000,000 |
|
|
|
6.00 |
% |
|
|
0.45 |
% |
|
|
331,637 |
|
Citadel Equity Fund Ltd. |
|
$ |
44,000,000 |
|
|
|
17.60 |
% |
|
|
1.30 |
% |
|
|
972,800 |
|
Columbia Convertible Securities Fund |
|
$ |
2,990,000 |
|
|
|
1.20 |
% |
|
|
0.09 |
% |
|
|
66,106 |
|
Convertible Securities Fund |
|
$ |
10,000 |
|
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
221 |
|
Cowen and Company LLC |
|
$ |
300,000 |
|
|
|
0.12 |
% |
|
|
0.01 |
% |
|
|
6,633 |
|
Double Black Diamond Offshore LDC |
|
$ |
4,046,000 |
|
|
|
1.62 |
% |
|
|
0.12 |
% |
|
|
89,453 |
|
Froley Revy Alternative Strategies |
|
$ |
500,000 |
|
|
|
0.20 |
% |
|
|
0.02 |
% |
|
|
11,055 |
|
HBMC LLC |
|
$ |
2,000,000 |
|
|
|
0.80 |
% |
|
|
0.06 |
% |
|
|
44,218 |
|
Highbridge International LLC |
|
$ |
22,500,000 |
|
|
|
9.00 |
% |
|
|
0.67 |
% |
|
|
497,455 |
|
Institutional Benchmark Series (Master
Feeder) Limited in Respect of Electra
Series c/o Quattro Fund |
|
$ |
400,000 |
|
|
|
0.16 |
% |
|
|
0.01 |
% |
|
|
8,844 |
|
KBC Convertibles MAC28 Limited |
|
$ |
2,500,000 |
|
|
|
1.00 |
% |
|
|
0.08 |
% |
|
|
55,273 |
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal Amount of |
|
|
|
|
|
|
Percentage of |
|
|
|
|
|
Notes Beneficially |
|
|
Percentage of |
|
Common |
|
Common |
|
|
|
Owned and Offered |
|
|
Notes |
|
Stock |
|
Stock Offered |
|
Name |
|
Hereby |
|
|
Outstanding |
|
Outstanding(1) |
|
Hereby(2) |
|
KBC Diversified Fund, A Segregated
Portfolio of KBC Diversified Fund, SPC |
|
$ |
5,000,000 |
|
|
|
2.00 |
% |
|
|
0.15 |
% |
|
|
110,546 |
|
KBC Financial Products (Cayman Islands)
Ltd. |
|
$ |
15,000,000 |
|
|
|
6.00 |
% |
|
|
0.45 |
% |
|
|
331,637 |
|
KBC Financial Products USA Inc. |
|
$ |
2,500,000 |
|
|
|
1.00 |
% |
|
|
0.08 |
% |
|
|
55,273 |
|
Linden Capital LP |
|
$ |
22,000,000 |
|
|
|
8.80 |
% |
|
|
0.66 |
% |
|
|
486,400 |
|
Partners Group Alternative Strategies
PCC Limited, Red Delta Cell, c/o
Quattro Fund |
|
$ |
400,000 |
|
|
|
0.16 |
% |
|
|
0.01 |
% |
|
|
8,844 |
|
Polygon Global Opportunities Master Fund |
|
$ |
17,500,000 |
|
|
|
7.00 |
% |
|
|
0.52 |
% |
|
|
386,909 |
|
Quattro Fund Ltd. |
|
$ |
6,400,000 |
|
|
|
2.56 |
% |
|
|
0.19 |
% |
|
|
141,498 |
|
Quattro Multistrategy Masterfund LP |
|
$ |
800,000 |
|
|
|
0.32 |
% |
|
|
0.02 |
% |
|
|
17,687 |
|
Rhythm Fund, Ltd. |
|
$ |
5,000,000 |
|
|
|
2.00 |
% |
|
|
0.15 |
% |
|
|
110,546 |
|
Satellite Convertible Arbitrage Master
Fund, LLC |
|
$ |
2,000,000 |
|
|
|
0.80 |
% |
|
|
0.06 |
% |
|
|
44,218 |
|
UBS Securities LLC |
|
$ |
6,000,000 |
|
|
|
2.40 |
% |
|
|
0.18 |
% |
|
|
132,655 |
|
Vicis Capital Master Fund |
|
$ |
6,000,000 |
|
|
|
2.40 |
% |
|
|
0.18 |
% |
|
|
132,655 |
|
Wachovia Capital Markets LLC |
|
$ |
2,000,000 |
|
|
|
0.80 |
% |
|
|
0.06 |
% |
|
|
44,218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total(3) |
|
$ |
216,800,000 |
|
|
|
86.24 |
% |
|
|
6.48 |
% |
|
|
4,793,253 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Calculated based on 73,661,336 shares
of our common stock outstanding as of July 31, 2006. In calculating this amount for each holder,
we treated as outstanding the number of shares of our common stock issuable upon conversion of all
that holders notes, but we did not
assume conversion of any other holders notes. |
|
(2) |
|
Represents the maximum number of shares of our common stock issuable upon conversion of all of the holders notes, based on the maximum
conversion rate of 22.1091 shares of our common stock per $1,000 principal amount at maturity of the notes. This conversion rate is
subject to adjustment, however, as described under Description of Notes Conversion Rights Conversion Rate Adjustments. As a result,
the maximum number of shares of our common stock issuable upon conversion of the notes may increase or decrease in the future. |
|
(3) |
|
Because certain of the selling securityholders may have sold, transferred or otherwise disposed of all or a portion of their notes in
transactions exempt from the registration requirements of the Securities Act since the date on which they provided the information presented
in this table, this prospectus may not reflect the exact principal amount of notes held by each selling securityholder on the date of this
prospectus. The maximum aggregate principal amount of notes that may be sold pursuant to this prospectus will not exceed $250,000,000. |
60
Plan of Distribution
The selling securityholders and their successors, which term includes their transferees,
pledgees or donees or their successors may sell the notes and the common stock issuable upon
conversion of the notes directly to purchasers or through underwriters, broker-dealers or agents,
who may receive compensation in the form of discounts, concessions or commissions from the selling
securityholders or the purchasers. These discounts, concessions or commissions as to any particular
underwriter, broker-dealer or agent may be in excess of those customary in the types of
transactions involved.
The common stock may be sold in one or more transactions at:
|
|
|
fixed prices; |
|
|
|
|
prevailing market prices at the time of sale; |
|
|
|
|
prices related to the prevailing market prices; |
|
|
|
|
varying prices determined at the time of sale; or |
|
|
|
|
negotiated prices. |
These sales may be effected in transactions:
|
|
|
on any national securities exchange or quotation service on which our
common stock may be listed or quoted at the time of sale; |
|
|
|
|
in the over-the-counter market; |
|
|
|
|
otherwise than on such exchanges or services or in the over-the-counter market; |
|
|
|
|
through the writing of options, whether the options are listed on an
options exchange or otherwise; or |
|
|
|
|
through the settlement of short sales. |
These transactions may include block transactions or crosses. Crosses are transactions in
which the same broker acts as agent on both sides of the trade.
In connection with the sale of the notes and the common stock issuable upon conversion of the
notes or otherwise, the selling securityholders may enter into hedging transactions with
broker-dealers or other financial institutions. These broker-dealers or financial institutions may
in turn engage in short sales of the common stock in the course of hedging the positions they
assume with selling securityholders. The selling securityholders may also sell the notes and the
common stock issuable upon conversion of the notes short and deliver these securities to close out
such short positions, or loan or pledge the notes or the common stock issuable upon conversion of
the notes to broker-dealers that in turn may sell these securities.
The aggregate proceeds to the selling securityholders from the sale of the notes or the common
stock issuable upon conversion of the notes offered by them hereby will be the purchase price of
the notes or the common stock less discounts and commissions, if any. Each of the selling
securityholders reserves the right to accept and, together with their agents from time to time, to
reject, in whole or in part, any proposed purchase of common stock to be made directly or through
agents. We will not receive any of the proceeds from this offering.
Our outstanding common stock is listed for trading on the New York Stock Exchange. We do not
intend to list the notes for trading on any national securities exchange or on the Nasdaq National
Market and can give no assurance about the development of any trading market for the notes.
61
In order to comply with the securities laws of some states, if applicable, the notes and the
common stock issuable upon conversion of the notes may be sold in these jurisdictions only through
registered or licensed brokers or dealers.
The selling securityholders and any broker-dealers or agents that participate in the sale of
the notes and the common stock issuable upon conversion of the notes may be deemed to be
underwriters within the meaning of Section 2(11) of the Securities Act of 1933. Profits on the
sale of the notes and the common stock issuable upon conversion of the notes by selling
securityholders and any discounts, commissions or concessions received by any broker-dealers or
agents might be deemed to be underwriting discounts and commissions under the Securities Act of
1933. Selling securityholders who are deemed to be underwriters within the meaning of Section
2(11) of the Securities Act of 1933 will be subject to the prospectus delivery requirements of the
Securities Act of 1933. To the extent the selling securityholders may be deemed to be
underwriters, they may be subject to statutory liabilities, including, but not limited to,
Sections 11, 12 and 17 of the Securities Act of 1933.
The selling securityholders and any other person participating in a distribution will be
subject to applicable provisions of the Securities Exchange Act of 1934 and the rules and
regulations thereunder. Regulation M of the Securities Exchange Act of 1934 may limit the timing of
purchases and sales of any of the securities by the selling securityholders and any other person.
In addition, Regulation M may restrict the ability of any person engaged in the distribution of the
securities to engage in market-making activities with respect to the particular securities being
distributed for a period of up to five business days before the distribution.
To our knowledge, there are currently no plans, arrangements or understandings between any
selling securityholder and any underwriter, broker-dealer or agent regarding the sale of the common
stock by the selling securityholders.
A selling securityholder may decide not to sell any notes or the common stock issuable upon
conversion of the notes described in this prospectus. We cannot assure holders that any selling
securityholder will use this prospectus to sell any or all of the notes or the common stock
issuable upon conversion of the notes. Any securities covered by this prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act of 1933 may be sold under Rule 144 or
Rule 144A rather than pursuant to this prospectus. In addition, a selling securityholder may
transfer, devise or gift the notes and the common stock issuable upon conversion of the notes by
other means not described in this prospectus.
With respect to a particular offering of the notes and the common stock issuable upon
conversion of the notes, to the extent required, an accompanying prospectus supplement or, if
appropriate, a post-effective amendment to the registration statement of which this prospectus is a
part will be prepared and will set forth the following information:
|
|
|
the specific notes or common stock to be offered and sold; |
|
|
|
|
the names of the selling securityholders; |
|
|
|
|
the respective purchase prices and public offering prices and other material terms of the
offering; |
|
|
|
|
the names of any participating agents, broker-dealers or underwriters; and |
|
|
|
|
any applicable commissions, discounts, concessions and other items
constituting, compensation from the selling securityholders. |
We entered into the registration rights agreement for the benefit of holders of the notes to
register their notes and the common stock issuable upon conversion of the notes under applicable
federal and state securities laws under certain circumstances and at certain times. The
registration rights agreement provides that the selling securityholders and we will indemnify each
other and our respective directors, officers and controlling persons against specific liabilities
in connection with the offer and sale of the notes and the common stock issuable upon conversion of
the notes, including liabilities under the Securities Act of 1933, or will be entitled to
contribution in connection with those liabilities. We will pay all of our expenses and specified
expenses incurred by the selling
62
securityholders incidental to the registration, offering and sale of the notes and the common stock
issuable upon conversion of the notes to the public, but each selling securityholder will be
responsible for payment of commissions, concessions, fees and discounts of underwriters,
broker-dealers and agents.
Validity of Securities
The validity of the notes and the shares of our common stock issuable upon conversion of
the notes have been passed upon for us by Latham & Watkins LLP, Chicago, Illinois, and Richard A.
Parr II, Esq., Vice President, General Counsel and Secretary of the Company.
Experts
Ernst & Young LLP, independent registered public accounting firm, has audited our
consolidated financial statements and schedule included in our Annual Report on Form 10-K for the
year ended December 31, 2005, and managements assessment of the effectiveness of our internal
control over financial reporting as of December 31, 2005, as set forth in their reports, thereon
incorporated by reference herein. Our financial statements and schedule and managements assessment
are incorporated by reference in reliance upon Ernst & Young LLPs reports, given on their
authority as experts in accounting and auditing.
63
Manor Care, Inc.
$250,000,000
2% Convertible Senior Notes due 2036
Shares of Common Stock Issuable Upon Conversion of the Notes
PROSPECTUS
August 15, 2006
64
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be paid in connection with the distribution of the securities being registered
are as set forth in the following table:
|
|
|
|
|
|
|
Securities and Exchange Commission Fee |
|
|
$ |
26,750.00 |
|
NYSE Additional Listing Fee |
|
|
$ |
5,000.00 |
|
*Legal Fees and Expenses |
|
|
$ |
80,000.00 |
|
*Accounting Fees and Expenses |
|
|
$ |
12,500.00 |
|
*Printing Expenses |
|
|
$ |
35,000.00 |
|
*Miscellaneous |
|
|
$ |
40,750.00 |
|
|
|
|
|
|
Total |
|
|
$ |
200,000.00 |
|
|
|
|
|
|
|
|
* |
|
Estimated
We will bear each of the expenses in the above table. |
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 102(b)(7) of the Delaware General Corporation Law (DGCL) grants corporations the
right to limit or eliminate the personal liability of their directors in certain circumstances in
accordance with provisions therein set forth. Article VIII of the Manor Care Certificate of
Incorporation contains a provision eliminating or limiting director liability to Manor Care and its
stockholders for monetary damages arising from acts or omissions in the directors capacity as a
director. The provision does not, however, eliminate or limit the personal liability of a director
(i) for any breach of such directors duty of loyalty to Manor Care or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under the Delaware statutory provision making directors personally liable, under a
negligence standard, for unlawful dividends or unlawful stock purchases or redemptions, or (iv) for
any transaction from which the director derived an improper personal benefit. This provision offers
persons who serve on the board of directors of Manor Care protection against awards of monetary
damages resulting from breaches of their duty of care (except as indicated above). As a result of
this provision, the ability of Manor Care or a stockholder thereof to successfully prosecute an
action against a director for a breach of his duty of care is limited. However, the provision does
not affect the availability of equitable remedies such as an injunction or rescission based upon a
directors breach of his duty of care. The SEC has taken the position that the provision will have
no effect on claims arising under the Federal securities laws.
Section 145 of the DGCL grants corporations the right to indemnify their directors, officers,
employees and agents in accordance with the provisions therein set forth. Article VIII of the Manor
Care Certificate of Incorporation and Article 3, Section 14 of the Manor Care Bylaws provide for
mandatory indemnification rights, subject to limited exceptions, to any director, officer,
employee, or agent of Manor Care who, by reason of the fact that he or she is a director, officer,
employee, or agent of Manor Care, is involved in a legal proceeding of any nature. Such
indemnification rights include reimbursement for expenses incurred by such director, officer,
employee, or agent in advance of the final disposition of such proceeding in accordance with the
applicable provisions of the DGCL.
Manor Care has entered into agreements with all of its directors and its executive officers
pursuant to which Manor Care has agreed to indemnify such directors and executive officers against
liability incurred by them by reason of their services as a director or executive officer to the
fullest extent allowable under applicable law.
II-1
ITEM 16. EXHIBITS
INDEX
|
|
|
3.1
|
|
Certificate of Incorporation including all amendments (filed as exhibit 3.1 to
Manor Care, Inc.s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004
and incorporated herein by reference) |
|
|
|
3.2
|
|
Amended and Restated By-laws of Manor Care, Inc. (filed as exhibit 3.1 to Manor
Care, Inc.s Form 8-K filed February 7, 2005 and incorporated herein by reference) |
|
|
|
4.1
|
|
Indenture, dated as of May 17, 2006, among Manor Care, Inc., the subsidiary
guarantors as named therein and U.S. Bank National Association, as trustee (filed as
exhibit 4.1 to Manor Care, Inc.s Form 8-K filed May 17, 2006 and incorporated herein
by reference) |
|
|
|
4.2
|
|
Form of 2% Convertible Senior Note due 2036 (filed as exhibit 4.2 to Manor
Care, Inc.s Form 8-K filed May 17, 2006 and incorporated herein by reference) |
|
|
|
4.3
|
|
Registration Rights Agreement, dated as of May 17, 2006, among Manor Care, Inc,
the guarantors as named therein and the initial purchasers named therein (filed as
exhibit 4.3 to Manor Care, Inc.s Form 8-K filed May 17, 2006 and incorporated herein
by reference) |
|
|
|
4.4
|
|
Certificate of Incorporation including all amendments (see Exhibit 3.1) |
|
|
|
4.5
|
|
Amended and Restated By-laws of Manor Care, Inc. (see Exhibit 3.2) |
|
|
|
4.6
|
|
Specimen certificate representing the Common Stock of Manor Care, Inc. (filed as
exhibit 4.6 to Manor Care, Inc.s Form S-3 filed October 18, 2005 and incorporated
herein by reference) |
|
|
|
*5.1
|
|
Opinion of Latham & Watkins LLP |
|
|
|
*5.2
|
|
Opinion of Richard A. Parr II, Esq. |
|
|
|
*12.1
|
|
Statement regarding Computation of Ratios |
|
|
|
*23.1
|
|
Consent of Ernst & Young LLP |
|
|
|
*23.2
|
|
Consent of Latham & Watkins LLP (included in Exhibit 5.1) |
|
|
|
*23.3
|
|
Consent of Richard A. Parr II, Esq. (included in Exhibit 5.2) |
|
|
|
*24.1
|
|
Power of Attorney of the Company |
|
|
|
*24.2
|
|
Power of Attorney of the Guarantors |
|
|
|
*25.1
|
|
Statement of Eligibility of Trustee on Form T-1 |
II-2
ITEM 17. UNDERTAKINGS
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933, as amended (the Securities Act);
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20 percent change in the maximum aggregate offering price set forth in the
Calculation of Registration Fee table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any material
change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this
section do not apply if the registration statement is on Form S-3 or Form F-3 and the
information required to be included in a post-effective amendment by those paragraphs is
contained in reports filed with or furnished to the Commission by the undersigned
registrants pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement, or is contained in a form
of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act, each
such post-effective amendment shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to
any purchaser:
(i) If the registrants are relying on Rule 430B:
(A) Each prospectus filed by the registrants pursuant to Rule 424(b)(3) shall be deemed
to be part of the registration statement as of the date the filed prospectus was deemed part
of and included in the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7)
as part of a registration statement in reliance on Rule 430B relating to an offering
pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information
required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and
included in the registration statement as of the earlier of the date such form of prospectus
is first used after effectiveness or the date of the first contract of sale of securities in
the offering described in the prospectus. As provided in Rule 430B, for liability purposes
of the issuer and any person that is at that date an underwriter, such date shall be deemed
to be a new effective date of the registration statement relating to the securities in the
registration statement to which that prospectus relates, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof. Provided,
however, that no statement made in a registration statement or prospectus that is part of
the registration statement or made in a document incorporated or deemed
II-3
incorporated by reference into the registration statement or prospectus that is part of
the registration statement will, as to a purchaser with a time of contract of sale prior to
such effective date, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in any such
document immediately prior to such effective date.
(ii) If the registrants are subject to Rule 430C, each prospectus filed pursuant to
Rule 424(b) as part of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses filed in reliance on
Rule 430A, shall be deemed to be part of and included in the registration statement as of
the date it is first used after effectiveness. Provided, however, that no statement made in
a registration statement or prospectus that is part of the registration statement or made in
a document incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such first use, supersede or modify any statement that was made
in the registration statement or prospectus that was part of the registration statement or
made in any such document immediately prior to such date of first use.
(b) The undersigned registrants hereby undertake that, for purposes of determining any
liability under the Securities Act of 1933, each filing of each registrants annual report pursuant
to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plans 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.
(c) The undersigned registrants hereby undertake to deliver or cause to be delivered with the
prospectus, to each person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934;
and, where interim financial information required to be presented by Article 3 of Regulation S-X is
not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the
prospectus is sent or given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
(d) Insofar as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the registrants pursuant to the
foregoing provisions, or otherwise, the registrants have been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification against such liabilities
(other than the payment by the registrants of expenses incurred or paid by a director, officer or
controlling person of the registrants in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that
it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3
and has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Toledo, State of Ohio, on date set forth below.
|
|
|
|
|
|
Manor Care, Inc.
|
|
|
By: |
/s/
Richard A. Parr |
|
|
|
Richard A. Parr |
|
|
|
Vice President, General Counsel and Secretary |
|
|
DATE: August 15, 2006
S-1
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 August 15, 2006.
|
|
|
|
|
SIGNATURE |
|
TITLE |
|
|
|
|
|
|
|
*
|
|
|
|
|
Mary Taylor Behrens |
|
Director
|
|
|
*
|
|
|
|
|
Steven M. Cavanaugh |
|
Vice President and
Chief Financial Officer
(Principal Financial Officer) |
|
|
*
|
|
|
|
|
Joseph F. Damico |
|
Director |
|
|
*
|
|
|
|
|
William H. Longfield |
|
Director |
|
|
*
|
|
|
|
|
Spencer C. Moler |
|
Vice President and Controller (Principal
Accounting Officer) |
|
|
*
|
|
|
|
|
Paul A. Ormond |
|
President and Chief Executive Officer
(Principal Executive Officer);
Chairman of the Board; Director |
|
|
*
|
|
|
|
|
John T. Schwieters |
|
Director |
|
|
*
|
|
|
|
|
Richard C. Tuttle |
|
Director |
|
|
*
|
|
|
|
|
M. Keith Weikel |
|
Senior Executive Vice President and
Chief Operating Officer; Director |
|
|
*
|
|
|
|
|
Gail R. Wilensky |
|
Director |
|
|
*
|
|
|
|
|
Thomas L. Young |
|
Director |
|
|
|
|
|
* |
|
Richard A. Parr, by signing his name hereto, does hereby sign this document on behalf of each
of the above-named officers and/or directors of the Company pursuant to powers of attorney
duly executed by such persons. |
|
|
|
|
|
|
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Richard A. Parr, Attorney-in-fact |
|
|
|
|
|
|
S-2
Group 1 Co-Registrants
Pursuant to the requirements of the Securities Act of 1933, the Group 1 Co-Registrants
listed below certify that they have reasonable grounds to believe that they meet all of the
requirements for filing on Form S-3 and have duly caused this registration statement to be signed
on their behalf by the undersigned, thereunto duly authorized, in the City of Toledo, State of
Ohio, on August 15, 2006.
|
|
|
|
|
|
HCR INFORMATION CORPORATION
HCR REHABILITATION CORP.
HCRC INC.
HEALTH CARE AND RETIREMENT
CORPORATION OF AMERICA
HEARTLAND REHABILITATION SERVICES, INC.
HCR HOME HEALTH CARE AND HOSPICE, INC.
MANOR CARE OF AMERICA, INC.
MANORCARE HEALTH SERVICES, INC.
|
|
|
By: |
/s/
Richard A. Parr |
|
|
|
Name: |
Richard A. Parr |
|
|
|
Title: |
Attorney-in-fact of the above-referenced
Group 1 Co-Registrants |
|
|
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities indicated on August 15, 2006.
|
|
|
SIGNATURE |
|
TITLE |
|
|
|
*
Paul A. Ormond |
|
Chairman, President & Chief Executive Officer
(Principal Executive Officer) |
*
Steven M. Cavanaugh |
|
Vice President, Chief Financial
Officer & Assistant Secretary
(Principal Financial and Accounting Officer) |
*
Spencer C. Moler |
|
Vice President, Controller & Assistant Secretary
(Principal Accounting Officer) |
*
Paul A. Ormond |
|
Director |
*
Stephen L. Guillard |
|
Director |
*
M. Keith Weikel |
|
Director |
S-3
|
|
|
* |
|
Richard A. Parr, by signing his name hereto, does hereby sign this document on behalf of each
of the above-named officers and/or directors of the Group 1 Co-Registrants pursuant to powers
of attorney duly executed by such persons. |
|
|
|
|
|
|
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Richard A. Parr, Attorney-in-fact for the Group 1 |
|
|
|
Co-Registrants |
|
|
S-4
Group 2 Co-Registrants
Pursuant to the requirements of the Securities Act of 1933, the Group 2 Co-Registrants
listed below certify that they have reasonable grounds to believe that they meet all of the
requirements for filing on Form S-3 and have duly caused this registration statement to be signed
on their behalf by the undersigned, thereunto duly authorized, in the City of Toledo, State of
Ohio, on August 15, 2006.
AMERICAN HOSPITAL BUILDING CORPORATION
AMERICANA HEALTHCARE CENTER OF PALOS
TOWNSHIP, INC.
AMERICANA HEALTHCARE CORPORATION OF
GEORGIA
AMERICAN REHABILITATION GROUP, INC.
ANCILLARY SERVICES MANAGEMENT, INC.
BAILY NURSING HOME, INC.
BIRCHWOOD MANOR, INC.
CANTERBURY VILLAGE, INC.
CHARLES MANOR, INC.
CHESAPEAKE MANOR, INC.
COMMONWEALTH PHYSICAL THERAPY AND
REHABILITATION, INC.
DEKALB HEALTHCARE CORPORATION
DEVON MANOR CORPORATION
DISTCO, INC.
DIVERSIFIED REHABILITATION SERVICES, INC.
DONAHOE MANOR, INC.
EAST MICHIGAN CARE CORPORATION
EXECUTIVE ADVERTISING, INC.
EYE-Q NETWORK, INC.
FOUR SEASONS NURSING CENTERS, INC.
GEORGIAN BLOOMFIELD, INC.
GREENVIEW MANOR, INC.
HCR MANORCARE MEDICAL SERVICES OF
FLORIDA, INC.
HCR PHYSICIAN MANAGEMENT SERVICES, INC.
HCRA OF TEXAS, INC.
HCR MANORCARE SERVICES, INC. (f/k/a
HEARTLAND CAREPARTNERS, INC.)
HEARTLAND INFORMATION SERVICES, INC. (f/k/a
HEARTLAND MEDICAL INFORMATION SERVICES,
INC.)
HEARTLAND HOME CARE, INC.
HEARTLAND HOME HEALTH CARE SERVICES, INC.
HEARTLAND HOSPICE SERVICES, INC.
HEARTLAND MANAGEMENT SERVICES, INC.
HEARTLAND REHABILITATION SERVICES OF
FLORIDA, INC.
HEARTLAND REHABILITATION SERVICES OF NEW
JERSEY, INC. (f/k/a HERBERT LASKIN, RPT JOHN
MCKENZIE, RPT PHYSICAL THERAPY
PROFESSIONAL ASSOCIATES, INC.)
HEARTLAND REHABILITATION SERVICES
OF VIRGINIA, INC. (f/k/a BLUE RIDGE
REHABILITATION SERVICES, INC.)
HEARTLAND SERVICES CORP.
HEARTLAND THERAPY PROVIDER NETWORK, INC.
HGCC OF ALLENTOWN, INC.
INDUSTRIAL WASTES, INC.
IONIA MANOR, INC.
JACKSONVILLE HEALTHCARE CORPORATION
KNOLLVIEW MANOR, INC.
LEADER NURSING AND REHABILITATION CENTER
OF BETHEL PARK, INC.
LEADER NURSING AND REHABILITATION CENTER
OF GLOUCESTER, INC.
LEADER NURSING AND REHABILITATION CENTER
OF SCOTT TOWNSHIP, INC.
LEADER NURSING AND REHABILITATION CENTER
OF VIRGINIA INC.
LINCOLN HEALTH CARE, INC.
MANOR CARE AVIATION, INC.
MANOR CARE OF AKRON, INC.
MANOR CARE OF ARIZONA, INC.
MANOR CARE OF ARLINGTON, INC.
MANOR CARE OF CANTON, INC.
S-5
MANOR CARE OF CHARLESTON, INC.
MANOR CARE OF CINCINNATI, INC.
MANOR CARE OF COLUMBIA, INC.
MANOR CARE OF DARIEN, INC.
MANOR CARE OF DELAWARE COUNTY, INC.
MANOR CARE OF FLORIDA, INC.
MANOR CARE OF HINSDALE, INC.
MANOR CARE OF KANSAS, INC.
MANOR CARE OF KINGSTON COURT, INC.
MANOR CARE OF LARGO, INC.
MANOR CARE OF LEXINGTON, INC.
MANOR CARE OF MEADOW PARK, INC.
MANOR CARE OF MIAMISBURG, INC.
MANOR CARE OF NORTH OLMSTED, INC.
MANOR CARE OF PINEHURST, INC.
MANOR CARE OF ROLLING MEADOWS, INC.
MANOR CARE OF ROSSVILLE, INC.
MANOR CARE OF WILLOUGHBY, INC.
MANOR CARE OF WILMINGTON, INC.
MANOR CARE OF YORK (NORTH), INC.
MANOR CARE OF YORK (SOUTH), INC.
MANOR CARE SUPPLY COMPANY
MANORCARE HEALTH SERVICES OF
NORTHHAMPTON COUNTY, INC.
MANORCARE HEALTH SERVICES OF OKLAHOMA,
INC.
MANORCARE HEALTH SERVICES OF VIRGINIA,
INC.
MARINA VIEW MANOR, INC.
MEDI-SPEECH SERVICE, INC.
MILESTONE HEALTH SYSTEMS, INC.
MILESTONE HEALTHCARE, INC.
MILESTONE STAFFING SERVICES, INC.
MILESTONE THERAPY SERVICES, INC.
PEAK REHABILITATION, INC.
PERRYSBURG
PHYSICAL THERAPY, INC.
PNEUMATIC CONCRETE, INC.
PORTFOLIO ONE, INC.
REHABILITATION ADMINISTRATION
CORPORATION
REINBOLT & BURKAM, INC.
RICHARDS HEALTHCARE, INC.
RIDGEVIEW MANOR, INC.
ROLAND PARK NURSING CENTER, INC.
RVA MANAGEMENT SERVICES, INC.
SILVER SPRING WHEATON NURSING HOME, INC.
SPRINGHILL MANOR, INC.
STEWALL CORPORATION
STRATFORD MANOR, INC.
STUTEX CORP.
SUN VALLEY MANOR, INC.
THE NIGHTINGALE NURSING HOME, INC.
THERASPORT PHYSICAL THERAPY, INC.
THREE RIVERS MANOR, INC.
TOTALCARE CLINICAL LABORATORIES, INC.
WASHTENAW HILLS MANOR, INC.
WHITEHALL MANOR, INC.
S-6
|
|
|
|
|
|
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Name: |
Richard A. Parr |
|
|
|
Title: |
Attorney-in-fact of each of the above-referenced
Group 2 Co-Registrants |
|
|
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities indicated on August 15, 2006.
|
|
|
SIGNATURE |
|
TITLE |
|
|
|
*
Paul A. Ormond |
|
Chairman, President & Chief Executive Officer
(Principal Executive Officer) |
*
Steven M. Cavanaugh |
|
Vice President, Chief Financial
Officer & Assistant Secretary
(Principal Financial and Accounting Officer) |
*
Spencer C. Moler |
|
Vice President, Controller, & Assistant Secretary
(Principal Accounting Officer) |
*
Matthew S. Kang |
|
Sole Director |
|
|
|
* |
|
Richard A. Parr, by signing his name hereto, does hereby sign this document individually and
on behalf of each of the above-named officers and/or directors of the Group 2 Co-Registrants
pursuant to powers of attorney duly executed by such persons. |
|
|
|
|
|
|
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Richard A. Parr, Individually and as Attorney-in- |
|
|
|
fact for the Group 2
Co-Registrants |
|
|
S-7
Group 3 Co-Registrant
Pursuant to the requirements of the Securities Act of 1933, the Group 3 Co-Registrant
listed below certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Toledo, State of Ohio, on
August 15, 2006.
|
|
|
|
|
|
MILESTONE REHABILITATION SERVICES, INC.
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Name: |
Richard A. Parr |
|
|
|
Title: |
Attorney-in-fact of the above-referenced
Group 3 Co-Registrant |
|
|
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities indicated on August 15, 2006.
|
|
|
SIGNATURE |
|
TITLE |
|
|
|
*
Paul A. Ormond |
|
Chairman, President & Chief Executive Officer
(Principal Executive Officer) |
*
Steven M. Cavanaugh |
|
Vice President, Chief Financial
Officer & Assistant Secretary
(Principal Financial and Accounting Officer) |
*
Spencer C. Moler |
|
Vice President, Controller, Assistant Treasurer
& Assistant Secretary
(Principal Accounting Officer) |
*
Richard A. Parr |
|
Sole Director |
|
|
|
* |
|
Richard A. Parr, by signing his name hereto, does hereby sign this document individually and
on behalf of each of the above-named officers and/or directors of the Group 3 Co-Registrant
pursuant to powers of attorney duly executed by such persons. |
|
|
|
|
|
|
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Richard A. Parr, Individually and as Attorney-in- |
|
|
|
fact of the Group 3
Co-Registrant |
|
|
S-8
Group 4 Co-Registrant
Pursuant to the requirements of the Securities Act of 1933, the Group 4 Co-Registrant
listed below certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Toledo, State of Ohio, on
August 15, 2006.
|
|
|
|
|
|
MNR FINANCE CORP.
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Name: |
Richard A. Parr |
|
|
|
Title: |
Attorney-in-fact of the above-referenced
Group 4 Co-Registrant |
|
|
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities indicated on August 15, 2006.
|
|
|
SIGNATURE |
|
TITLE |
|
|
|
*
Paul A. Ormond |
|
Chairman, President & Chief Executive Officer
(Principal Executive Officer) |
*
Steven M. Cavanaugh |
|
Vice President, Chief Financial
Officer & Assistant Secretary
(Principal Financial and Accounting Officer) |
*
Spencer C. Moler |
|
Vice President, Controller, Assistant Treasurer
& Assistant Secretary
(Principal Accounting Officer) |
*
Paul A. Ormond |
|
Director |
*
Matthew S. Kang |
|
Director |
*
Jeffrey K. Simpson |
|
Director |
|
|
|
* |
|
Richard A. Parr, by signing his name hereto, does hereby sign this document individually and
on behalf of each of the above-named officers and/or directors of the Group 4 Co-Registrant
pursuant to powers of attorney duly executed by such persons. |
|
|
|
|
|
|
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Richard A. Parr, Individually and as Attorney-in- |
|
|
|
fact of the Group 4
Co-Registrant |
|
|
S-9
Group 5 Co-Registrants
Pursuant to the requirements of the Securities Act of 1933, the Group 5 Co-Registrants
listed below certify that they have reasonable grounds to believe that they meet all of the
requirements for filing on Form S-3 and have duly caused this registration statement to be signed
on their behalf by the undersigned, thereunto duly authorized, in the City of Toledo, State of
Ohio, on August 15, 2006.
ANNANDALE ARDEN, LLC
BAINBRIDGE ARDEN, LLC
BINGHAM FARMS ARDEN, LLC
COLONIE ARDEN, LLC
CRESTVIEW HILLS ARDEN, LLC
FIRST LOUISVILLE ARDEN, LLC
GENEVA ARDEN, LLC
HANOVER ARDEN, LLC
JEFFERSON ARDEN, LLC
KENWOOD ARDEN, LLC
LIVONIA ARDEN, LLC
MEMPHIS ARDEN, LLC
NAPA ARDEN, LLC
ROANOKE ARDEN, LLC
SAN ANTONIO ARDEN, LLC
SILVER SPRING ARDEN, LLC
SUSQUEHANNA ARDEN LLC
TAMPA ARDEN, LLC
WALL ARDEN, LLC
WARMINSTER ARDEN LLC
WILLIAMSVILLE ARDEN, LLC
|
|
|
|
|
|
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Name: |
Richard A. Parr |
|
|
|
Title: |
Attorney-in-fact of each of the above-
referenced Group 5 Co-Registrants |
|
|
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities indicated on August 15, 2006
|
|
|
SIGNATURE |
|
TITLE |
|
|
|
*
Paul A. Ormond |
|
Chairman, President & Chief Executive Officer
(Principal Executive Officer) |
*
Steven M. Cavanaugh |
|
Vice President, Chief Financial
Officer & Assistant Secretary
(Principal Financial and Accounting Officer) |
*
Spencer C. Moler |
|
Vice President, Controller, Assistant Treasurer
& Assistant Secretary
(Principal Accounting Officer) |
*
Paul A. Ormond |
|
Director of Manor Care of America, Inc., Sole
Member of each of the above-referenced limited
liability companies |
*
Stephen L. Guillard |
|
Director of Manor Care of America, Inc., Sole
Member of each of the above-referenced limited
liability companies |
S-10
|
|
|
|
|
|
*
M. Keith Weikel |
|
Director of Manor Care of America, Inc., Sole
Member of each of the above-referenced limited
liability companies |
|
|
|
* |
|
Richard A. Parr, by signing his name hereto, does hereby sign this document individually and
on behalf of each of the above-named officers and/or directors of the Group 5 Co-Registrants
pursuant to powers of attorney duly executed by such persons. |
|
|
|
|
|
|
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Richard A. Parr, Individually and as Attorney-in- |
|
|
|
fact of the Group 5 Co-Registrants |
|
|
S-11
Group 6 Co-Registrants
Pursuant to the requirements of the Securities Act of 1933, the Group 6 Co-Registrants
listed below certify that they have reasonable grounds to believe that they meet all of the
requirements for filing on Form S-3 and have duly caused this registration statement to be signed
on their behalf by the undersigned, thereunto duly authorized, in the City of Toledo, State of
Ohio, on August 15, 2006.
BATH ARDEN, LLC
CLAIRE BRIDGE OF ANDERSON, LLC
CLAIRE BRIDGE OF AUSTIN, LLC
CLAIRE BRIDGE OF KENWOOD, LLC
CLAIRE BRIDGE OF SAN ANTONIO, LLC
CLAIRE BRIDGE OF SUSQUEHANNA, LLC
CLAIRE BRIDGE OF WARMINSTER, LLC
FRESNO ARDEN, LLC
TUSCAWILLA ARDEN, LLC
|
|
|
|
|
|
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Name: |
Richard A. Parr |
|
|
|
Title: |
Attorney-in-fact of each of the
above-referenced Group 6
Co-Registrants |
|
|
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities indicated on August 15, 2006.
|
|
|
SIGNATURE |
|
TITLE |
|
|
|
*
Paul A. Ormond |
|
Chairman, President & Chief Executive Officer
(Principal Executive Officer) |
*
Steven M. Cavanaugh |
|
Vice President, Chief Financial
Officer & Assistant Secretary
(Principal Financial and Accounting Officer) |
*
Spencer C. Moler |
|
Vice President, Controller, Assistant Treasurer
& Assistant Secretary
(Principal Accounting Officer) |
*
Paul A. Ormond |
|
Director of ManorCare Health Services, Inc.,
Sole Member of each of the above-referenced
limited liability companies |
*
Stephen L. Guillard |
|
Director of ManorCare Health Services, Inc.,
Sole Member of each of the above-referenced
limited liability companies |
*
M. Keith Weikel |
|
Director of ManorCare Health Services, Inc.
Sole Member of each of the above-referenced
limited liability companies |
S-12
|
|
|
* |
|
Richard A. Parr, by signing his name hereto, does hereby sign this document individually and
on behalf of each of the above-named officers and/or directors of the Group 6 Co-Registrants
pursuant to powers of attorney duly executed by such persons. |
|
|
|
|
|
|
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Richard A. Parr, Individually and as Attorney-in- |
|
|
|
fact of the Group 6 Co-Registrants |
|
|
S-13
Group 7 Co-Registrant
Pursuant to the requirements of the Securities Act of 1933, the Group 7 Co-Registrant
listed below certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Toledo, State of Ohio, on
August 15, 2006
|
|
|
|
|
|
ANCILLARY SERVICES, LLC
|
|
|
By: |
/s/ Richard
A. Parr |
|
|
|
Name: |
Richard A. Parr |
|
|
|
Title: |
Attorney-in-fact of the above- referenced
Group 7 Co-Registrant |
|
|
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities indicated on August 15, 2006
|
|
|
SIGNATURE |
|
TITLE |
|
|
|
*
Paul A. Ormond |
|
Chairman, President & Chief Executive Officer
(Principal Executive Officer) |
*
Steven M. Cavanaugh |
|
Vice President, Chief Financial
Officer & Assistant Secretary
(Principal Financial and Accounting Officer) |
*
Spencer C. Moler |
|
Vice President, Controller, Assistant Treasurer
& Assistant Secretary
(Principal Accounting Officer) |
*
Paul A. Ormond |
|
Director of Heartland Rehabilitation Services,
Inc., Sole Member of the above-referenced
limited liability company |
*
Stephen L. Guillard |
|
Director of Heartland Rehabilitation Services,
Inc., Sole Member of the above-referenced
limited liability company |
*
M. Keith Weikel |
|
Director of Heartland Rehabilitation Services,
Inc., Sole Member of the above-referenced
limited liability company |
|
|
|
* |
|
Richard A. Parr, by signing his name hereto, does hereby sign this document individually and
on behalf of each of the above-named officers and/or directors of the Group 7 Co-Registrant
pursuant to powers of attorney duly executed by such persons. |
|
|
|
|
|
|
|
|
|
By: |
/s/ Richard
A. Parr |
|
|
|
Richard A. Parr, Individually and as Attorney-in- |
|
|
|
fact of the Group 7
Co-Registrant |
|
|
S-14
Group 8 Co-Registrant
Pursuant to the requirements of the Securities Act of 1933, the Group 8 Co-Registrant
listed below certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Toledo, State of Ohio, on
August 15, 2006.
|
|
|
|
|
|
IN HOME HEALTH, INC.
|
|
|
By: |
/s/ Richard
A. Parr |
|
|
|
Name: |
Richard A. Parr |
|
|
|
Title: |
Attorney-in-fact of the above-referenced
Group 8 Co-Registrant |
|
|
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities indicated on August 15, 2006.
|
|
|
SIGNATURE |
|
TITLE |
|
|
|
*
Paul A. Ormond |
|
Chairman, President & Chief Executive Officer
(Principal Executive Officer) |
*
Steven M. Cavanaugh |
|
Vice President, Chief Financial
Officer & Assistant Secretary
(Principal Financial and Accounting Officer) |
*
Paul A. Ormond |
|
Director |
*
Stephen L. Guillard |
|
Director |
*
M. Keith Weikel |
|
Director |
|
|
|
* |
|
Richard A. Parr, by signing his name hereto, does hereby sign this document individually and
on behalf of each of the above-named officers and/or directors of the Group 8 Co-Registrant
pursuant to powers of attorney duly executed by such persons. |
|
|
|
|
|
|
|
|
|
By: |
/s/ Richard
A. Parr |
|
|
|
Richard A. Parr, Individually and as Attorney-in- |
|
|
|
fact of the Group 8
Co-Registrant |
|
|
S-15
Group 9 Co-Registrant
Pursuant to the requirements of the Securities Act of 1933, the Group 9 Co-Registrant
listed below certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Toledo, State of Ohio, on
August 15, 2006.
|
|
|
|
|
|
BOOTH LIMITED PARTNERSHIP
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Name: |
Richard A. Parr |
|
|
|
Title: |
Attorney-in-fact of the above-
referenced Group 9 Co-Registrant |
|
|
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities indicated on August 15, 2006.
|
|
|
SIGNATURE |
|
TITLE |
|
|
|
*
Paul A. Ormond |
|
Chairman, President & Chief Executive Officer
(Principal Executive Officer) |
*
Steven M. Cavanaugh |
|
Vice President, Chief Financial
Officer & Assistant Secretary
(Principal Financial Officer) |
*
Spencer C. Moler |
|
Vice President, Controller, Assistant Treasurer
& Assistant Secretary
(Principal Accounting Officer) |
*
Matthew S. Kang |
|
Vice President, Treasurer and Sole Director
of Jacksonville Healthcare Corporation, General
Partner of the above-referenced limited partnership |
|
|
|
* |
|
Richard A. Parr, by signing his name hereto, does hereby sign this document individually and
on behalf of each of the above-named officers and/or directors of the Group 9 Co-Registrant
pursuant to powers of attorney duly executed by such persons. |
|
|
|
|
|
|
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Richard A. Parr, Individually and as Attorney-in- |
|
|
|
fact of the Group 9 Co-Registrant |
|
|
S-16
Group 10 Co-Registrant
Pursuant to the requirements of the Securities Act of 1933, the Group 10 Co-Registrant
listed below certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Toledo, State of Ohio, on
August 15, 2006.
|
|
|
|
|
|
COLEWOOD LIMITED PARTNERSHIP
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Name: |
Richard A. Parr |
|
|
|
Title: |
Attorney-in-fact of the above-
referenced Group 10 Co-Registrant |
|
|
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities indicated on August 15, 2006.
|
|
|
SIGNATURE |
|
TITLE |
|
|
|
*
Paul A. Ormond |
|
Chairman, President & Chief Executive Officer
(Principal Executive Officer) |
*
Steven M. Cavanaugh |
|
Vice President, Chief Financial
Officer & Assistant Secretary
(Principal Financial and Accounting Officer) |
*
Spencer C. Moler |
|
Vice President, Controller, Assistant Treasurer
& Assistant Secretary
(Principal Accounting Officer) |
*
Matthew S. Kang |
|
Vice President, Treasurer and Sole Director
of American Hospital Building Corporation, General
Partner of the above-referenced limited partnership |
|
|
|
* |
|
Richard A. Parr, by signing his name hereto, does hereby sign this document individually and
on behalf of each of the above-named officers and/or directors of the Group 10 Co-Registrant
pursuant to powers of attorney duly executed by such persons. |
|
|
|
|
|
|
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Richard A. Parr, Individually and as Attorney-in- |
|
|
|
fact of the Group 10
Co-Registrant |
|
|
S-17
Group 11 Co-Registrant
Pursuant to the requirements of the Securities Act of 1933, the Group 11 Co-Registrant
listed below certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Toledo, State of Ohio, on
August 15, 2006.
|
|
|
|
|
|
HEARTLAND EMPLOYMENT SERVICES, LLC
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Name: |
Richard A. Parr |
|
|
|
Title: |
Attorney-in-fact of each of the
above-referenced Group 11
Co-Registrants |
|
|
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities indicated on August 15, 2006
|
|
|
SIGNATURE |
|
TITLE |
|
|
|
*
Paul A. Ormond |
|
Chairman, President & Chief Executive Officer
(Principal Executive Officer) |
*
Steven M. Cavanaugh |
|
Vice President, Chief Financial
Officer & Assistant Secretary
(Principal Financial and Accounting Officer) |
*
Spencer C. Moler |
|
Vice President, Controller, Assistant Treasurer
& Assistant Secretary
(Principal Accounting Officer) |
*
Paul A. Ormond |
|
Director of Health Care and Retirement Corporation
of America, Managing Member of the above-
referenced limited liability company |
*
Stephen L. Guillard |
|
Director of Health Care and Retirement Corporation
of America, Managing Member of the above-
referenced limited liability company |
*
M. Keith Weikel |
|
Director of Health Care and Retirement Corporation
of America, Managing Member of the above-
referenced limited liability company |
|
|
|
* |
|
Richard A. Parr, by signing his name hereto, does hereby sign this document individually and
on behalf of each of the above-named officers and/or directors of the Group 11 Co-Registrants
pursuant to powers of attorney duly executed by such persons. |
|
|
|
|
|
|
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Richard A. Parr, Individually and as Attorney-in- |
|
|
|
fact of the Group 11
Co-Registrants |
|
|
S-18
Group 12 Co-Registrant
Pursuant to the requirements of the Securities Act of 1933, the Group 12 Co-Registrant
listed below certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Toledo, State of Ohio, on
August 15, 2006.
|
|
|
|
|
|
HEARTLAND CARE, LLC
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Name: |
Richard A. Parr |
|
|
|
Title: |
Attorney-in-fact of each of the
above-referenced Group 12
Co-Registrants |
|
|
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities indicated on August 15, 2006
|
|
|
SIGNATURE |
|
TITLE |
|
|
|
*
Paul A. Ormond |
|
Chairman, President & Chief Executive Officer
(Principal Executive Officer) |
*
Steven M. Cavanaugh |
|
Vice President, Chief Financial
Officer & Assistant Secretary
(Principal Financial and Accounting Officer) |
*
Spencer C. Moler |
|
Vice President, Controller, Assistant Treasurer
& Assistant Secretary
(Principal Accounting Officer) |
*
Matthew S. Kang |
|
Sole Director of HCR Manor Care Services, Inc.,
Managing Member of the above-
referenced limited liability company |
|
|
|
* |
|
Richard A. Parr, by signing his name hereto, does hereby sign this document individually and
on behalf of each of the above-named officers and/or directors of the Group 12 Co-Registrants
pursuant to powers of attorney duly executed by such persons. |
|
|
|
|
|
|
|
|
|
By: |
/s/ Richard A. Parr |
|
|
|
Richard A. Parr, Individually and as Attorney-in- |
|
|
|
fact of the Group 12
Co-Registrants |
|
|
S-19
Exhibit Index
|
|
|
Exhibit |
|
|
Number |
|
Description |
|
|
|
3.1
|
|
Certificate of Incorporation including all amendments (filed as exhibit 3.1 to
Manor Care, Inc.s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004
and incorporated herein by reference) |
|
|
|
3.2
|
|
Amended and Restated By-laws of Manor Care, Inc. (filed as exhibit 3.1 to Manor
Care, Inc.s Form 8-K filed February 7, 2005 and incorporated herein by reference) |
|
|
|
4.1
|
|
Indenture, dated as of May 17, 2006, among Manor Care, Inc., the subsidiary
guarantors as named therein and U.S. Bank National Association, as trustee (filed as
exhibit 4.1 to Manor Care, Inc.s Form 8-K filed May 17, 2006 and incorporated herein
by reference) |
|
|
|
4.2
|
|
Form of 2% Convertible Senior Note due 2036 (filed as exhibit 4.2 to Manor
Care, Inc.s Form 8-K filed May 17, 2006 and incorporated herein by reference) |
|
|
|
4.3
|
|
Registration Rights Agreement, dated as of May 17, 2006, among Manor Care, Inc,
the guarantors as named therein and the initial purchasers named therein (filed as
exhibit 4.3 to Manor Care, Inc.s Form 8-K filed May 17, 2006 and incorporated herein
by reference) |
|
|
|
4.4
|
|
Certificate of Incorporation including all amendments (see Exhibit 3.1) |
|
|
|
4.5
|
|
Amended and Restated By-laws of Manor Care, Inc. (see Exhibit 3.2) |
|
|
|
4.6
|
|
Specimen certificate representing the Common Stock of Manor Care, Inc. (filed as
exhibit 4.6 to Manor Care, Inc.s Form S-3 filed October 18, 2005 and incorporated
herein by reference) |
|
|
|
*5.1
|
|
Opinion of Latham & Watkins LLP |
|
|
|
*5.2
|
|
Opinion of Richard A. Parr, Esq. |
|
|
|
*12.1
|
|
Statement regarding Computation of Ratios |
|
|
|
*23.1
|
|
Consent of Ernst & Young LLP |
|
|
|
*23.2
|
|
Consent of Latham & Watkins LLP (included in Exhibit 5.1) |
|
|
|
*23.3
|
|
Consent of Richard A. Parr II, Esq. (included in Exhibit 5.2) |
|
|
|
*24.1
|
|
Power of Attorney of the Company |
|
|
|
*24.2
|
|
Power of Attorney of the Guarantors |
|
|
|
*25.1
|
|
Statement of Eligibility of Trustee on Form T-1 |