1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 20, 2001
REGISTRATION NO. 333-
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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BEVERLY ENTERPRISES, INC.
(Exact name of the registrant as specified in its charter)
DELAWARE 8051 62-1691861
(State or other (Primary Standard Industrial Classification Code (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation or
organization)
ONE THOUSAND BEVERLY WAY
FORT SMITH, ARKANSAS 72919
(501) 201-2000
(Address, including zip code, and telephone number, including area code, of
the registrants' principal executive offices)
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SEE TABLE OF ADDITIONAL CO-REGISTRANTS INCLUDED IN THIS REGISTRATION
------------------------------------
DOUGLAS J. BABB, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
BEVERLY ENTERPRISES, INC.
ONE THOUSAND BEVERLY WAY
FORT SMITH, ARKANSAS 72919
(501) 201-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------------
COPY TO:
MICHAEL D. LEVIN, ESQ.
LATHAM & WATKINS
233 S. WACKER, SUITE 5800
CHICAGO, ILLINOIS 60606
(312) 876-7700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED NEW NOTES OFFERING PRICE(1) FEE(2)
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9 5/8% Senior Notes due April 15,
2009............................ $200,000,000 100% $200,000,000 $50,000
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f) under the Securities Act of 1933, as amended.
(2) Calculated pursuant to Section 6(b) and Rule 457 of the Securities Act.
Pursuant to Rule 459(p) of the Securities Act, the registration fee of
$50,000 is offset against the $75,000 registration fee that was previously
paid to the Commission relating to 300,000,000 of Debt Securities, Preferred
Stock, Common Stock and Warrants previously registered by Beverly
Enterprises, Inc. pursuant to Registration Statement No. 333-52708 (filed
December 22, 2000), which remain unissued at the close of business on June
19, 2001.
PURSUANT TO RULE 429 OF THE SECURITIES ACT, THE PROSPECTUS CONTAINED IN THIS
REGISTRATION STATEMENT ALSO RELATES TO REGISTRANT'S REGISTRATION STATEMENT NO.
333-52708, PREVIOUSLY FILED BY THE REGISTRANT ON FORM S-3.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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TABLE OF ADDITIONAL CO-REGISTRANTS
(PRIMARY
(STATE OR OTHER STANDARD
JURISDICTION OF INDUSTRIAL
(EXACT NAME OF THE CO-REGISTRANT (I.R.S. EMPLOYER INCORPORATION OR CLASSIFICATION
AS SPECIFIED IN ITS CHARTER) IDENTIFICATION NO.) ORGANIZATION) CODE NUMBER)
-------------------------------- ------------------- ---------------- --------------
AEGIS Therapies, Inc. (f/k/a Beverly
Rehabilitation, Inc.)..................... 71-0811574 Delaware 8093
AGI-Camelot, Inc............................ 43-1253376 Missouri 8051
Arborland Management Company, Inc........... 58-2340689 South Carolina 8049
Associated Physical Therapy Practitioners,
Inc....................................... 23-2638708 Pennsylvania 8049
Beverly Assisted Living, Inc................ 71-0777901 Delaware 8051
Beverly -- Bella Vista Holding, Inc......... 71-0797481 Delaware 8051
Beverly -- Branson Holdings, Inc............ 71-0817008 Delaware 8051
Beverly -- Indianapolis, LLC................ 71-0824184 Indiana 8051
Beverly -- Missouri Valley Holding, Inc..... 71-0797485 Delaware 8051
Beverly -- Plant City Holdings, Inc......... 71-0817010 Delaware 8051
Beverly -- Rapid City Holding, Inc.......... 71-0797483 Delaware 8051
Beverly -- Tamarac Holdings, Inc............ 71-0817009 Delaware 8051
Beverly -- Tampa Holdings, Inc.............. 71-0817007 Delaware 8051
Beverly Clinical, Inc....................... 71-0796035 Delaware 8051
Beverly Enterprises International Limited... 95-3982125 California AUX1
Beverly Enterprises -- Alabama, Inc......... 95-3742145 California 8051
Beverly Enterprises -- Arizona, Inc......... 95-3750871 California 8051
Beverly Enterprises -- Arkansas, Inc........ 95-3751272 California 8051
Beverly Enterprises -- California, Inc...... 95-2499218 California 8051
Beverly Enterprises -- Colorado, Inc........ 95-3750882 California 8051
Beverly Enterprises -- Connecticut, Inc..... 95-3849642 California 8051
Beverly Enterprises -- Delaware, Inc........ 95-3849628 California 8051
Beverly Enterprises -- Distribution
Services, Inc............................. 95-4081567 California 8051
Beverly Enterprises -- District of Columbia,
Inc....................................... 95-3750889 California 8051
Beverly Enterprises -- Florida, Inc......... 95-3742251 California 8051
Beverly Enterprises -- Garden Terrace,
Inc....................................... 95-3849648 California 8051
Beverly Enterprises -- Georgia, Inc......... 95-3750880 California 8051
Beverly Enterprises -- Hawaii, Inc.......... 95-3750890 California 8051
Beverly Enterprises -- Idaho, Inc........... 95-3750886 California 8051
Beverly Enterprises -- Illinois, Inc........ 95-3750883 California 8051
Beverly Enterprises -- Indiana, Inc......... 95-3744258 California 8051
Beverly Enterprises -- Iowa, Inc............ 95-3751271 California 8051
Beverly Enterprises -- Kansas, Inc.......... 95-3751269 California 8051
Beverly Enterprises -- Kentucky, Inc........ 95-3750894 California 8051
Beverly Enterprises -- Louisiana, Inc....... 95-3849633 California 8051
Beverly Enterprises -- Maine, Inc........... 95-3849627 California 8051
Beverly Enterprises -- Maryland, Inc........ 95-3750892 California 8051
Beverly Enterprises -- Massachusetts,
Inc....................................... 95-3750893 California 8051
Beverly Enterprises -- Michigan, Inc........ 95-3898661 California 8051
Beverly Enterprises -- Minnesota, Inc....... 95-3742698 California 8051
Beverly Enterprises -- Mississippi, Inc..... 95-3742144 California 8051
Beverly Enterprises -- Missouri, Inc........ 95-3750895 California 8051
Beverly Enterprises -- Montana, Inc......... 95-3849636 California 8051
Beverly Enterprises -- Nebraska, Inc........ 95-3750873 California 8051
Beverly Enterprises -- Nevada, Inc.......... 95-3750896 California 8051
Beverly Enterprises -- New Hampshire,
Inc....................................... 95-3849630 California 8051
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(PRIMARY
(STATE OR OTHER STANDARD
JURISDICTION OF INDUSTRIAL
(EXACT NAME OF THE CO-REGISTRANT (I.R.S. EMPLOYER INCORPORATION OR CLASSIFICATION
AS SPECIFIED IN ITS CHARTER) IDENTIFICATION NO.) ORGANIZATION) CODE NUMBER)
-------------------------------- ------------------- ---------------- --------------
Beverly Enterprises -- New Jersey, Inc...... 95-3750884 California 8051
Beverly Enterprises -- New Mexico, Inc...... 95-3750869 California 8051
Beverly Enterprises -- North Carolina,
Inc....................................... 95-3742257 California 8051
Beverly Enterprises -- North Dakota, Inc.... 95-3751270 California 8051
Beverly Enterprises -- Ohio, Inc............ 95-3750867 California 8051
Beverly Enterprises -- Oklahoma, Inc........ 95-3849624 California 8051
Beverly Enterprises -- Oregon, Inc.......... 95-3750881 California 8051
Beverly Enterprises -- Pennsylvania, Inc.... 95-3750870 California 8051
Beverly Enterprises -- Rhode Island, Inc.... 95-3849621 California 8051
Beverly Enterprises -- South Carolina,
Inc....................................... 95-3750866 California 8051
Beverly Enterprises -- Tennessee, Inc....... 95-3742261 California 8051
Beverly Enterprises -- Texas, Inc........... 95-3744256 California 8051
Beverly Enterprises -- Utah, Inc............ 95-3751089 California 8051
Beverly Enterprises -- Vermont, Inc......... 95-3750885 California 8051
Beverly Enterprises -- Virginia, Inc........ 95-3742694 California 8051
Beverly Enterprises -- Washington, Inc...... 95-3750868 California 8051
Beverly Enterprises -- West Virginia,
Inc....................................... 95-3750888 California 8051
Beverly Enterprises -- Wisconsin, Inc....... 95-3742696 California 8051
Beverly Enterprises -- Wyoming, Inc......... 95-3849638 California 8051
Beverly Health and Rehabilitation Services,
Inc....................................... 95-2301514 California 8051
Beverly Healthcare, LLC..................... 71-0817438 Indiana 8051
Beverly Healthcare Acquisition, Inc......... 71-0812407 Delaware 8051
Beverly Healthcare -- California, Inc....... 95-3750879 California 8051
Beverly Holdings I, Inc..................... 71-0768985 Delaware 8051
Beverly Indemnity, Ltd...................... 71-0712927 Vermont H63
Beverly Manor Inc. of Hawaii................ 99-0144750 California 8051
Beverly Real Estate Holdings, Inc........... 71-0768984 Delaware 8051
Beverly Savana Cay Manor, Inc............... 95-4217381 California 8051
Carrollton Physical Therapy Clinic, Inc..... 75-2102832 Texas 8049
Commercial Management, Inc.................. 42-0891358 Iowa 8051
Community Care, Inc......................... 56-1487367 North Carolina 8082
Compassion and Personal Care Services,
Inc....................................... 56-1904822 North Carolina 8082
Eastern Home Health Supply & Equipment Co.,
Inc....................................... 56-1581980 North Carolina 8082
Greenville Rehabilitation Services, Inc..... 75-2059145 Texas 8049
Hallmark Convalescent Homes, Inc............ 41-1413478 Michigan 8051
HomeCare Preferred Choice, Inc.............. 62-1702864 Delaware 8082
Home Health and Rehabilitation Services,
Inc....................................... 75-2012280 Texas 8049
Hospice of Eastern Carolina, Inc............ 56-1951841 North Carolina 8082
Hospice Preferred Choice, Inc............... 71-0761314 Delaware 8082
HTHC Holdings, Inc.......................... 71-0807323 Delaware 8082
Las Colinas Physical Therapy Center, Inc.... 75-2402177 Texas 8049
Liberty Nursing Homes, Incorporated......... 54-0784334 Virginia 8051
MATRIX Occupational Health, Inc............. 58-2380955 Delaware 8049
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(PRIMARY
(STATE OR OTHER STANDARD
JURISDICTION OF INDUSTRIAL
(EXACT NAME OF THE CO-REGISTRANT (I.R.S. EMPLOYER INCORPORATION OR CLASSIFICATION
AS SPECIFIED IN ITS CHARTER) IDENTIFICATION NO.) ORGANIZATION) CODE NUMBER)
-------------------------------- ------------------- ---------------- --------------
MATRIX Rehabilitation, Inc.................. 71-0783147 Delaware 8049
MATRIX Rehabilitation -- Delaware, Inc...... 71-0842504 Delaware 8049
MATRIX Rehabilitation -- Georgia, Inc....... 58-2554073 Delaware 8049
MATRIX Rehabilitation -- Maryland, Inc...... 71-0842503 Delaware 8049
MATRIX Rehabilitation -- Ohio, Inc.......... 71-0842505 Delaware 8049
MATRIX Rehabilitation -- South Carolina,
Inc....................................... 73-1575603 Delaware 8049
MATRIX Rehabilitation -- Texas, Inc......... 73-1589542 Delaware 8049
MATRIX Rehabilitation -- Washington, Inc.... 58-2554074 Delaware 8049
Medical Arts Health Facility of
Lawrenceville, Inc........................ 58-1329700 Georgia 8051
Moderncare of Lumberton, Inc................ 56-1217025 North Carolina 8051
Nebraska City S-C-H, Inc.................... 41-1413481 Nebraska 8051
Network for Physical Therapy, Inc........... 74-2453469 Texas 8049
North Dallas Physical Therapy Associates,
Inc....................................... 75-2075331 Texas 8049
Nursing Home Operators, Inc................. 34-0949279 Ohio 8051
Petersen Health Care, Inc................... 59-2043392 Florida 8051
PT NET, Inc................................. 62-1575533 Tennessee 8049
PT Net (Colorado), Inc...................... 84-1277912 Colorado 8049
Rehabilitation Associates of Lafayette,
Inc....................................... 72-1118473 Louisiana 8049
South Alabama Nursing Home, Inc............. 95-3809397 Alabama 8051
South Dakota -- Beverly Enterprises, Inc.... 95-3750887 California 8051
Spectra Healthcare Alliance, Inc............ 71-0759298 Delaware AUX1
Tar Heel Infusion Company, Inc.............. 56-1767308 North Carolina 8082
The Parks Physical Therapy and Work
Hardening Center, Inc..................... 75-2452926 Texas 8049
Theraphysics Corp........................... 13-3643705 Delaware 8049
Theraphysics of New York IPA, Inc........... 71-0817011 New York 8049
Theraphysics Partners of Colorado, Inc...... 51-0372115 Delaware 8049
Theraphysics Partners of Texas, Inc......... 62-1659976 Delaware 8049
Theraphysics Partners of Western
Pennsylvania, Inc......................... 23-2901884 Delaware 8049
TMD Disposition Company..................... 59-3151568 Florida AUX1
Vantage Healthcare Corporation.............. 35-1572998 Delaware 8051
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY
SECURITIES IN ANY PLACE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 20, 2001
PRELIMINARY PROSPECTUS
BEVERLY ENTERPRISES, INC.
Offer to Exchange All Our Outstanding
9 5/8% Senior Notes due 2009
$200,000,000 aggregate principal amount
In Exchange for 9 5/8% Senior Notes Due 2009
Which Have Been Registered Under the Securities Act of 1933
We are offering to exchange all of our outstanding 9 5/8% Senior Notes due
2009, which we refer to as the old notes, for our registered 9 5/8% Senior Notes
due 2009, which we refer to as the new notes. We refer to the old notes and new
notes collectively as the notes. We issued the old notes on April 25, 2001. The
terms of the new notes are identical to the terms of the old notes except that
we will register the new notes under the Securities Act of 1933.
* PLEASE CONSIDER THE FOLLOWING:
- ------------------------------------------------------
- - You should carefully review the Risk Factors beginning on page 18 of this
prospectus.
- - Our offer to exchange the old notes for the new notes will be open until 5:00
p.m., New York City time, on , 2001, unless we extend the offer.
- - You should carefully review the procedures for tendering the old notes
beginning on page 10 of this prospectus.
- - If you fail to tender your old notes, you will continue to hold unregistered
securities and your ability to transfer them could be adversely affected.
- - No public market currently exists for the notes. We do not intend to list the
new notes on any securities exchange and, therefore we do not anticipate that
an active public market will develop for the new notes.
INFORMATION ABOUT THE NOTES:
- - The notes will mature on April 15, 2009.
- - Interest on the notes will accrue from April 25, 2001.
- - We will pay interest on the notes semi-annually on April 15 and October 15 of
each year beginning October 15, 2001, at the rate of 9 5/8% per year.
- - We may redeem some or all of the notes at any time. The redemption price is
described beginning on page 13.
- - The notes will be guaranteed on a senior unsecured basis by substantially all
of our existing and future subsidiaries.
- - These guarantees will be senior obligations of our subsidiary guarantors. If
we fail to make payments on the notes, our subsidiary guarantors must make
them instead.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS JUNE , 2001
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IN MAKING YOUR INVESTMENT DECISION, YOU SHOULD RELY ONLY ON THE INFORMATION
CONTAINED IN THIS PROSPECTUS AND THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN.
WE HAVE NOT AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU WITH DIFFERENT
INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION,
YOU SHOULD NOT RELY ON IT.
EACH BROKER-DEALER THAT RECEIVES NEW NOTES FOR ITS OWN ACCOUNT IN
CONNECTION WITH THE EXCHANGE OFFER MUST ACKNOWLEDGE THAT IT WILL DELIVER A
PROSPECTUS IF IT RESELLS THOSE NEW NOTES. THE TRANSMITTAL LETTER STATES THAT BY
SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, A BROKER-DEALER WILL NOT BE
DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES
ACT OF 1933, AS AMENDED. THIS PROSPECTUS, AS IT MAY BE AMENDED OR SUPPLEMENTED
FROM TIME TO TIME, MAY BE USED BY A BROKER-DEALER IN CONNECTION WITH RESALES OF
NEW NOTES RECEIVED IN EXCHANGE FOR OLD NOTES ACQUIRED BY THE BROKER-DEALER AS A
RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES. WE HAVE AGREED
THAT, FOR A PERIOD ENDING ON THE EARLIER OF:
- 180 days after the date of this prospectus; or
- the date on which a broker-dealer is no longer required to deliver a
prospectus in connection with market-making or other trading activities,
WE WILL MAKE THIS PROSPECTUS AVAILABLE TO ANY BROKER-DEALER FOR USE IN
CONNECTION WITH ANY SUCH RESALE. SEE "PLAN OF DISTRIBUTION."
TABLE OF CONTENTS
PAGE
----
Where You Can Find More Information......................... 3
Documents Incorporated By Reference......................... 3
Forward-Looking Statements.................................. 4
Prospectus Summary.......................................... 6
Risk Factors................................................ 18
Use Of Proceeds............................................. 25
Capitalization.............................................. 26
Selected Historical Consolidated Financial Data............. 27
The Exchange Offer.......................................... 29
The New Notes............................................... 38
Description Of Certain Indebtedness......................... 52
United States Federal Income Tax Considerations............. 53
Plan Of Distribution........................................ 54
Legal Matters............................................... 54
Experts..................................................... 54
Glossary.................................................... 55
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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, as amended. Our SEC filings are available to the public at
the SEC's website at http://www.sec.gov. You may also read and copy any document
we file at the following SEC public reference rooms:
Judiciary Plaza, Room 1024 Citicorp Center, Suite 1400 7 World Trade Center
450 Fifth Street, N.W. 500 West Madison Street Suite 1300
Washington, D.C. 20549 Chicago, Illinois 60621 New York, New York 10048
You may obtain information regarding the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330.
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-4 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
Beverly Enterprises, Inc., One Thousand Beverly Way, Fort Smith, Arkansas,
72919, Attention: Legal Department, or call (501) 201-2000 and ask to speak to
someone in our legal department. IN ADDITION, TO OBTAIN TIMELY DELIVERY OF ANY
INFORMATION YOU REQUEST, YOU MUST SUBMIT YOUR REQUEST NO LATER THAN ,
2001, WHICH IS FIVE BUSINESS DAYS BEFORE THE DATE THE EXCHANGE OFFER EXPIRES.
DOCUMENTS INCORPORATED 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 year ended December 31, 2000,
which we filed with the SEC on March 30, 2001;
- Our proxy statement for the annual stockholders' meeting held on May 24,
2001, which we filed with the SEC on April 9, 2001;
- Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2001,
which we filed with the SEC on May 15, 2001; and
- Our Current Reports on Form 8-K, which we filed with the SEC on June 14,
2001 and June 18, 2001.
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: One Thousand Beverly Way, Fort Smith, Arkansas, 72919,
Attention: Legal Department. Our telephone number is: (501) 201-2000. To obtain
timely delivery of any
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information you request, you must submit your request no later than ,
2001, which is five business days before the date the exchange offer expires.
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," "contemplate,"
"continue," "estimate," "expect," "intend," "may," "objective," "plan,"
"predict," "potential," "project," "should," and "will" 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 that 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:
- national and local economic conditions, including their effect on the
availability and cost of labor, utilities and materials;
- the effect of government regulations and changes in regulations
governing the health care industry, including our compliance with such
regulations; and regulators', law enforcement agencies' and courts'
interpretations thereof;
- changes in payment levels by private payors;
- changes in Medicare and Medicaid payment levels and methodologies and
the application of such methodologies by the U.S. government and its
fiscal intermediaries and any changes in the timing or receipt of
Medicare, Medicaid and other payments;
- liabilities and other claims asserted against us, including patient care
liabilities (including any increases in the frequency or severity of
patient care liabilities claims in Florida or elsewhere), and the
resolution of various securities laws class action and derivative
lawsuits brought against us;
- our ability to execute our strategic plan;
- our ability to consummate a divestiture transaction (and the terms of
any such transaction) with respect to our Florida nursing home
operations;
- our ability to refinance debt obligations;
- our ability to attract and retain qualified personnel;
- the availability and terms of capital to fund acquisitions, capital
improvements and working capital;
- the competitive environment in which we operate;
- the availability and cost of liability insurance coverage;
- our ability to maintain and increase census levels; and
- demographic changes.
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 prospectus to reflect any change in
our expectations with regard to these statements or any change in events,
conditions or circumstances on which any such statement is based. All subsequent
written and oral forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by the
cautionary statements set forth or referred to above.
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9
INDUSTRY AND MARKET DATA
In this prospectus we rely on and refer to information and statistics
regarding the health care industry. We obtained this information and statistics
from various third-party sources, discussions with our customers and our own
internal estimates. We believe that these sources and estimates are reliable,
but we have not independently verified them and cannot guarantee their accuracy
or completeness.
------------------------
INTELLECTUAL PROPERTY
We own or have rights to various trademarks, copyrights, service marks and
tradenames used in our business, including the following: Beverly(R), Aegis
Therapies(SM) and Matrix Rehabilitation(R).
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PROSPECTUS SUMMARY
This summary highlights the information contained elsewhere in 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 and the documents to which we refer you. You should read the
following summary together with the more detailed information and consolidated
financial statements and the notes to those statements included elsewhere in or
incorporated by reference into this prospectus.
In this prospectus, "Company," "Beverly Enterprises," "we," "our," and "us"
refer to Beverly Enterprises, Inc. and its subsidiaries.
SUMMARY
COMPANY OVERVIEW
We are one of the leading long-term health care providers and one of the
largest operators of nursing facilities in the United States. We provide health
care services through our nursing home facilities, assisted living centers,
hospice and home care operations, outpatient therapy clinics and contract
rehabilitation therapy services. As of March 31, 2001, we owned or operated 528
nursing home facilities with a total of 59,265 licensed beds, ranging in size
from 20 to 355 licensed beds per facility. Our nursing home facilities are
located in 29 states and the District of Columbia. We also operate 34 assisted
living centers containing 1,132 units, 163 outpatient therapy clinics, and 58
hospice and home care centers. For the year ended December 31, 2000, we reported
net operating revenues of $2.6 billion. We are pursuing the sale of our
facilities-based eldercare operations in Florida, where we operate 50 nursing
home facilities, with a total of 6,185 licensed beds and four assisted living
centers containing 315 units, with net operating revenues of $267.0 million for
the year ended December 31, 2000.
OPERATIONS AND SERVICES
We recently reorganized into three operating segments: facilities-based
eldercare operations, service-based health care operations and
Matrix/Theraphysics.
Our facilities-based eldercare operations, our largest operating segment,
consists of our nursing home facilities and assisted living centers and
accounted for approximately 92% of our net operating revenues in 2000. Our
facilities-based eldercare operations provide residents with routine long-term
care services, including daily nursing, dietary, social and recreational
services. Our dedicated and skilled staff can also provide complex and intensive
medical services to patients with higher acuity disorders outside the
traditional acute care hospital setting. Additionally, we provide a full range
of pharmacy services and medical supplies. Our assisted living centers are
designed to provide residents with a greater degree of independence while still
offering routine care services and, if required, medical care.
Our service-based health care operations consists of contract
rehabilitative therapy services, home care and hospice services and accounted
for approximately 4% of our net operating revenues for 2000. Our contract
rehabilitative therapy services, operated primarily under the brand name Aegis
Therapies, offer recuperative assistance, such as occupational, physical and
speech therapy, to ease and speed recovery from surgery, accidents and other
disabling events. We provide contract rehabilitative therapy services in our
nursing facilities and in facilities operated by other health care providers.
Our home care services provide our clients with necessary periodic medical
attention and daily living assistance, as well as medical equipment, medications
and supplies, while allowing them to reside in their own homes. This is an
increasingly popular way to provide for eldercare, offering patients a
comfortable environment while ensuring that their medical needs can be met. Our
hospice services provide palliative care for terminally ill patients. We provide
hospice services within our nursing facilities, in facilities operated by other
health care providers and in our clients' homes.
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Matrix/Theraphysics provides outpatient therapy services through its
stand-alone clinics, as well as managed care advisory services. This segment
accounted for approximately 4% of our net operating revenues in 2000.
INDUSTRY OVERVIEW
According to the Health Care Financing Administration (the "HCFA"), total
U.S. health care spending is estimated to grow at an annual average rate of 8.6%
in 2001 and at an average annual rate of 7.1% from 2001 through 2010. By these
estimates, health care expenditures will account for approximately $2.6
trillion, or 15.9%, of the total U.S. gross domestic product by 2010. The
nursing home care segment of the U.S. health care industry encompasses a broad
range of health care services provided in skilled nursing facilities, including
traditional skilled nursing care and specialty medical services. Total revenues
generated by the nursing home industry in 2000 were estimated at $96.2 billion
and have grown at a compound annual growth rate of 4.8% from 1996 to 2000.
According to HCFA, nursing home care industry revenues are projected to grow at
an average annual rate of 6.7% from 2000 to 2010.
According to Managed Care Digest, the long-term care industry is
highly-fragmented and consisted of approximately 15,130 skilled nursing
facilities and 1,707,234 nursing home beds at December 31, 1999. According to
the United States Census Bureau, there are approximately 34.9 million people
over the age of 65 in the U.S. and this number is expected to grow by 14.0% to
39.7 million by 2010. The fastest growing segment of the population is comprised
of people over the age of 85. There are approximately 4.4 million people 85
years of age or older today and growth rates for this segment are expected to
average 2.2% per year. We believe that demand for long-term care will continue
to grow due to the growth in these segments of the population and
cost-containment efforts by payors, which encourage shorter stays in acute care
facilities.
Throughout the 1990s, there were numerous initiatives on the federal and
state levels to achieve comprehensive reforms affecting the payment for, and
availability of, health care services. Aspects of these initiatives included
changes in reimbursement regulations by HCFA and enhanced pressure to contain
health care costs by Medicare, Medicaid and other payors. The passage of the
Balanced Budget Act of 1997 ("1997 Act") was designed to reduce and control the
rate of increase in Medicare expenditures for services rendered by various
providers. Specifically, the 1997 Act eliminated the prior "cost-based"
reimbursement system and implemented a prospective payment system ("PPS") that
reimburses nursing home providers based on health care services required by
various categories of patients. The implementation of the 1997 Act resulted in
greater than expected reductions in Medicare reimbursement and created an
extremely difficult operating environment for many long-term care,
rehabilitative care and general health care providers. In 1999, Congress passed
the Medicare, Medicaid and State Child Health Insurance Program ("SCHIP")
Balanced Budget Refinement Act of 1999 ("BBRA 99") which restored a portion of
the lost Medicare reimbursement resulting from the implementation of the 1997
Act. The 1997 Act required that for each year within a three-year phase-in
period a facility would be reimbursed based upon a combination of percentages of
the facility's specific base rate and the federal rate. In all subsequent years
a facility would then be reimbursed based upon the full federal rates. Under
BBRA 99, however, skilled nursing facilities received a 20% reimbursement
increase for 15 service categories beginning in April 2000, a 4%
across-the-board increase for both fiscal 2001 and 2002, and the option to elect
to be reimbursed, beginning with the start of the facility's next cost report
period, the full federal per diem rates rather than to continue with the three
year phase-in mandated by the 1997 Act. Additionally, Congress passed the
Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act in December
2000 ("BIPA") which restored an additional $2.0 billion to the nursing home
industry over a five-year period, with many of its key long-term care provisions
becoming effective on April 1, 2001. In 2000, Medicare, Medicaid and private and
other revenue constituted 21%, 53% and 26%, respectively, of our net operating
revenues.
As a result of the positive trends in the Medicare reimbursement
environment over the past two years, we believe the outlook for the long-term
health care industry has become more favorable for providers.
7
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BUSINESS STRATEGY
We believe our extensive facility network, our ability to offer a broad
range of high quality services and our experienced management team form a strong
foundation which will enable us to enhance our status as one of the nation's
leading long-term health care providers. Additionally, we believe the recently
announced reorganization of our operations, as well as the promotion of William
R. Floyd to Chief Executive Officer, will facilitate the implementation of our
business strategy and allow us to capitalize on favorable industry trends and
changes to reimbursement rates.
The primary components of our business strategy are:
STREAMLINE OUR NURSING HOME PORTFOLIO. After an extensive review of our
facilities-based eldercare operations, we have classified these operations into
three divisions. Our first division encompasses those facilities that we believe
offer the most attractive opportunities for growth and continued strong
financial performance. This attractiveness is due in large measure to
demographics, the applicable states' Medicaid reimbursement rates, and
regulatory and legal environments. Our second division represents the facilities
located in those states that, in our view, currently have a less favorable
regulatory and legal environment. This group of facilities generally has had
below-average financial performance. Our third division is comprised of our
nursing home facilities and assisted living centers located in the State of
Florida. We have recently developed and are in the process of implementing
business strategies for each division that we believe will enable us to improve
the utilization of our existing asset base and maximize each division's
financial performance. For the first division, our objective is to increase
occupancy and revenues, and improve our payor mix. For the second division, our
objective is to improve overall operating performance within the current
operating environment, primarily through cost control measures, implementing
best practices and increasing management incentives. We intend to continue
reviewing these strategies and classifications, based on future financial
performance and other future events. We may, from time to time, dispose of, or
close, certain of our facilities or exit from certain regions or states to
further strengthen our long-term financial prospects. In that regard, we have
recently undertaken to dispose of our Florida division primarily due to an
unfavorable patient care liability environment in that state.
EXPAND OUR SERVICE BUSINESSES. Because of our extensive experience in
outpatient therapy services, contract rehabilitation therapy, hospice and home
care, we believe we are well-positioned to meet the needs of a growing number of
patients who prefer to have health care services provided on an
as-needed/where-needed basis. For example, we believe that contract
rehabilitation therapy is a rapidly growing industry with a high quality payor
mix and is a service that we currently do not provide on a significant basis
outside of our nursing home facilities. To improve our market position, we
recently renamed our contract rehabilitation therapy business "Aegis Therapies"
and we plan to hire more than 900 new full-time equivalent therapists in 2001.
We believe our experience in contract rehabilitation therapy combined with a
focused sales effort and expanded operations will enable us to significantly
increase our contract rehabilitation therapy services revenue. By expanding and
developing our service businesses, through internal growth and targeted
acquisitions, we believe we will be able to take advantage of favorable market
trends in this segment of our industry.
FOCUS ON ELDERCARE INNOVATION. We are committed to being a leader in
eldercare innovation. We have created a distinct, yet integrated, research and
development function that is focused on developing new business strategies,
products and services. This function will generate, screen, test and launch new
products and services for the eldercare market, as well as identify and
implement best practices for our operations. We have already seen initial
success in the area of Alzheimer's care. Over the past two years we have
designed and tested a prototype Alzheimer's care unit that we opened in 29 of
our existing facilities. Since these units opened, the host facilities have
experienced increased occupancy rates and improved payor mix. We intend to open
over 40 additional Alzheimer's care units in our existing facilities during
2001.
RE-ENGINEERING FOR IMPROVED PERFORMANCE. We have recently re-engineered
our management structure and streamlined reporting relationships to increase
control at the local level and increase overall accountability
8
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and, in certain circumstances, to eliminate non-critical positions. These
changes are aimed at focusing our resources on five key drivers to our success:
- deliver quality care;
- increase occupancy/revenues;
- collect cash;
- influence public policy; and
- recruit, retain and develop quality people.
We believe these changes, among others, will make the Company more
effective in providing quality care to our patients and improving our financial
performance.
RECENT DEVELOPMENTS
During the first quarter of 2001, a formal plan was initiated by management
to pursue the sale of our nursing home operations in Florida. Such decision was
made due to the excessive patient care liability costs that we have been
incurring in recent periods in the state of Florida. Accordingly, the property
and equipment, identifiable intangibles and operating supplies of our Florida
nursing home operations at March 31, 2001 were considered assets to be disposed
of, as that term is defined in Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" ("SFAS No. 121"). Management estimated the fair value
less selling costs of such assets based upon verbal and non-binding purchase
prices from potential buyers and determined that an impairment write-down was
necessary as of March 31, 2001. The pre-tax charge related to this write-down
was approximately $68,900,000. In addition, we recorded a pre-tax charge of
approximately $17,200,000 for certain costs to exit the Florida facilities (as
defined below). These costs relate to severance agreements, termination payments
on certain contracts and various other items. Such pre-tax charges have been
included in the condensed consolidated statement of operations caption "Asset
impairments, workforce reductions and other unusual items." At March 31, 2001,
the assets held for sale totaled approximately $122,100,000 and are classified
as current assets in the condensed consolidated balance sheet, as we expect to
close a transaction on the Florida facilities in 2001.
Our Florida nursing home operations include 49 nursing facilities (6,129
beds) and four assisted living centers (315 units) (the "Florida facilities")
currently being marketed as a group, as well as one additional nursing facility
(56 beds) and certain other assets which we plan to sell in separate
transactions. All of these assets are included in the total assets of our
nursing facilities segment. We are currently negotiating with a potential
purchaser of all of the Florida facilities. Other potential purchasers have
expressed an interest in purchasing all or portions of the Florida facilities.
During the three months ended March 31, 2001, our Florida nursing home
operations recorded a pre-tax loss of approximately $1,100,000. Included in this
pre-tax loss was depreciation and amortization expense of approximately
$2,600,000. In accordance with SFAS No. 121, depreciation and amortization
expense will be excluded from our consolidated statement of operations during
the period these assets are held for sale, as these assets are now recorded at
their estimated net realizable value.
9
14
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
Old Notes.................. On April 25, 2001 we completed a private offering
of the old notes, which consist of $200,000,000
aggregate principal amount of 9 5/8% Senior Notes
due 2009. In connection with the initial sale of
the old notes, we entered into a registration
rights agreement in which we agreed, among other
things, to deliver this prospectus to you and to
complete an exchange offer.
The Exchange Offer......... We are offering to issue up to $200,000,000
aggregate principal amount of our 9 5/8% Senior
Notes due 2009, which have been registered under
the Securities Act of 1933, as amended (the
"Securities Act"), in exchange for an equal
aggregate principal amount of our outstanding
unregistered notes.
The terms of the new notes are identical in all
material respects to the terms of the old notes,
except that the registration rights and related
liquidation damages provisions and the transfer
restrictions that apply to the old notes, do not
apply to the new notes.
You may tender old notes only in $1,000 increments.
Subject to the satisfaction or waiver of specified
conditions, we will exchange the new notes for all
old notes that are validly tendered and not
withdrawn before the exchange offer expires. We
discuss these conditions in "The Exchange
Offer -- Terms of the Exchange Offer." We will
cause the exchange to be effected promptly after
the exchange offer expires.
Resale Of The New Notes.... We believe that the new notes issued in the
exchange offer may be offered for sale, resold or
otherwise transferred by you, without compliance
with the registration and prospectus delivery
requirements of the Securities Act, if you:
- acquire the new notes in the ordinary course of
your business;
- are not engaging in, and do not intend to engage
in, a distribution of the new notes;
- do not have an arrangement or understanding with
any person to participate in a distribution of
the new notes;
- are not an affiliate of ours within the meaning
of Rule 405 under the Securities Act; and
- are not a broker-dealer that acquired the old
notes directly from us.
If any of these conditions is not satisfied and you
transfer any new notes without delivering a proper
prospectus or without qualifying for an exemption
from registration, you may incur liability under
the Securities Act. In addition, if you are a
broker-dealer seeking to receive new notes for your
own account in exchange for old notes that you
acquired as a result of market-making or other
trading activities, you must acknowledge that you
will deliver this prospectus in connection with any
offer to resell, or any resale or other transfer of
the new notes that you receive in the exchange
offer. See "Plan of Distribution."
Expiration Date............ The exchange offer will expire at 5:00 p.m., New
York City time, on , 2001, unless we
extend it.
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Withdrawal................. You may withdraw the tender of your old notes at
any time before the exchange offer expires. We will
return to you any of your old notes that we do not
accept for exchange for any reason, without expense
to you, promptly after the exchange offer expires
or terminates.
Interest on the New Notes
and the Old Notes.......... The new notes will bear interest at the rate of
9 5/8% per year beginning April 25, 2001. This
interest will be payable semi-annually on each
April 15 and October 15, with the first payment on
October 15, 2001. We will not pay interest on the
old notes after we accept them for exchange. See
"The New Notes."
Conditions to the Exchange
Offer...................... THE EXCHANGE OFFER IS SUBJECT TO VARIOUS
CONDITIONS. WE RESERVE THE RIGHT TO TERMINATE OR
AMEND THE EXCHANGE OFFER AT ANY TIME BEFORE THE
EXPIRATION DATE IF VARIOUS SPECIFIED EVENTS OCCUR.
THE EXCHANGE OFFER IS NOT CONDITIONED UPON ANY
MINIMUM PRINCIPAL AMOUNT OF OUTSTANDING OLD NOTES
BEING TENDERED. SEE "THE EXCHANGE
OFFER -- CONDITIONS OF THE EXCHANGE OFFER."
Procedures for Tendering
Old Notes................ If you wish to tender your old notes, you must
cause the following to be transmitted to, and
received by, the exchange agent no later than 5:00
p.m., New York City time, on the expiration date:
- a confirmation of the book-entry transfer of the
tendered old notes into the exchange agent's
account at The Depository Trust Company;
- a properly completed and duly executed
transmittal letter in the form accompanying this
prospectus, with any required signature
guarantees, or, at your option in the case of a
book-entry tender, an agent's message in lieu of
the transmittal letter; and
- any other documents required by the transmittal
letter.
Guaranteed Delivery
Procedures............... If you wish to tender your old notes and you cannot
cause the old notes or any other required documents
to be transmitted to and received by the exchange
agent before 5:00 p.m., New York City time, on the
expiration date, you may tender your old notes
according to the guaranteed delivery procedures
described in this prospectus under the heading "The
Exchange Offer -- Guaranteed Delivery Procedures."
Special Procedures for
Beneficial Owners.......... If you are the beneficial owner of old notes that
are registered in the name of your broker, dealer,
commercial bank, trust company or other nominee and
you wish to participate in the exchange offer, you
should promptly contact the person in whose name
your outstanding old notes are registered and
instruct that person to tender your old notes on
your behalf. See "The Exchange Offer -- Procedures
for Tendering."
Representations of
Tendering Holders.......... By tendering old notes pursuant to the exchange
offer, you will, in addition to other customary
representations, represent to us that you:
- are acquiring the new notes in the ordinary
course of business;
- are not engaging in a distribution of the new
notes;
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16
- have no arrangement or understanding with any
person to participate in a distribution of the
new notes;
- are not an affiliate of ours, or if you are an
affiliate, you will comply with the registration
and prospectus delivery requirements of the
Securities Act; and
- are not a broker-dealer tendering old notes
acquired directly from us.
Acceptance of Old Notes and
Delivery of New Notes.... Subject to the satisfaction or waiver of the
conditions to the exchange offer, we will accept
for exchange any and all old notes that are
properly tendered and not withdrawn prior to 5:00
p.m., New York City time, on the expiration date.
We will cause the exchange to be effected promptly
after the exchange offer expires.
Exchange Agent............. The Bank of New York is serving as exchange agent
for the exchange offer.
Federal Income Tax
Considerations........... The exchange of old notes for new notes pursuant to
the exchange offer will not be a taxable event for
United States federal income tax purposes. See
"United States Federal Income Tax Considerations."
Consequences of Failing to
Exchange Your Old
Notes.................... The exchange offer satisfies our obligations and
your rights under the registration rights
agreement. After the exchange offer is completed,
you will not be entitled to any registration rights
with respect to your old notes.
Therefore, if you do not exchange your old notes,
you will not be able to reoffer, resell or
otherwise dispose of your old notes unless:
- you comply with the registration and prospectus
delivery requirements of the Securities Act; or
- you qualify for an exemption from the Securities
Act registration requirements.
Appraisal or Dissenters'
Rights..................... You will have no appraisal or dissenters' rights in
connection with the exchange offer.
Use of Proceeds............ We will not receive any proceeds from the issuance
of the new notes pursuant to the exchange offer. We
will pay all expenses incident to the exchange
offer.
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SUMMARY OF THE TERMS OF THE NEW NOTES
The terms of the new notes will be identical in all material respects to
the terms of the old notes, except that the registration rights and related
liquidated damages provisions, and the transfer restrictions that apply to the
old notes do not apply to the new notes. The new notes will evidence the same
debt as the old notes. The new notes and the old notes will be governed by the
same indenture.
The following summary contains basic information about the new notes and is
not intended to be complete. It does not contain all the information that may be
important to you. For a more complete understanding of the new notes, please
refer to the section of this prospectus entitled "The New 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 Beverly Enterprises,
Inc. and do not include our subsidiaries.
Issuer..................... Beverly Enterprises, Inc.
Securities................. $200,000,000 in principal amount of 9 5/8% Senior
Notes due 2009.
Maturity Date.............. April 15, 2009
Interest Payment Dates..... April 15 and October 15 of each year, commencing
October 15, 2001.
Optional Redemption........ The new notes will be redeemable, at our option, in
whole at any time or in part from time to time, at
a redemption price equal to the greater of:
1. 100% of their principal amount plus accrued
but unpaid interest to the date of redemption;
or
2. (a) the sum of the present values of the
remaining scheduled payments of principal
and interest thereon from the date of
redemption to the date of maturity, except
for currently accrued but unpaid interest,
discounted to the date of redemption, on a
semi-annual basis, at the U.S. treasury
rate plus 50 basis points,
plus
(b) accrued but unpaid interest to the date of
redemption.
When we refer to the U.S. treasury rate, we mean
the U.S. treasury rate at the time of redemption
for U.S. treasury notes with a maturity comparable
to the remaining term of the notes, determined as
described in "The New Notes."
Change of Control.......... Upon a change of control, you may require us to
repurchase your notes, in whole or in part, at a
purchase price equal to 101% of the principal
amount of your notes plus accrued but unpaid
interest to the purchase date.
Guarantees................. The new notes will be guaranteed by substantially
all of our existing and future subsidiaries on a
senior unsecured basis. The guarantees are
unsecured senior debt of our subsidiary guarantors.
Ranking.................... The notes will rank equally in right of payment
with all our existing and future unsecured senior
debt (including other notes that may be issued
under the indenture) and are senior in right of
payment to any future subordinated debt. As of
March 31, 2001, on a pro forma basis after giving
effect to the offering of the old notes and the use
of the estimated net proceeds therefrom, the
aggregate outstanding principal amount of senior
indebtedness of the Company (including the old
notes) would have been $784,496,000, of which
approximately $388,068,000 would
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have been secured indebtedness that would
effectively rank senior to the old notes and other
unsecured indebtedness of the Company.
The guarantees will rank equally in right of
payment with the existing unsecured senior debt of
our subsidiary guarantors and will be senior in
right of payment to any future subordinated debt of
our subsidiaries. The notes and the guarantees will
effectively rank junior to any secured debt of the
Company or the subsidiary guarantors, to the extent
of the assets securing such indebtedness.
Certain Covenants.......... We will issue the notes under an indenture with The
Bank of New York, as trustee. The indenture, among
other things, restricts our ability to:
- incur additional debt;
- pay dividends and redeem our capital stock;
- incur or permit to exist liens;
- engage in transactions with our affiliates; and
- merge or consolidate with or into other
companies.
The covenants listed above are subject to certain
exceptions and limitations described in the
indenture.
Use of Proceeds............ We will not receive any proceeds from the exchange
offer. For a description of the use of proceeds
from the offering of the old notes, see "Use of
Proceeds."
Form of the New Notes...... The new notes will be represented by one or more
permanent global securities in registered form
deposited with The Bank of New York, as custodian,
for the benefit of The Depository Trust Company.
You will not receive notes in registered form
unless one of the events set forth under the
heading "Book-Entry, Delivery and Form" occurs.
Instead, beneficial interests in the new notes will
be shown on, and transfers of these interests will
be effected only through, records maintained in
book-entry form by The Depository Trust Company for
its participants.
Transfer Restrictions;
Absence Of A Public Market
For The Notes............ There has been no public market for the old notes,
and we do not anticipate that an active market for
the new notes will develop. We do not intend to
apply to list the new notes on any securities
exchange or to include them in any automated
quotation system. We cannot make any assurances
regarding the liquidity of the market for the new
notes, your ability to sell your new notes or the
price at which you may sell your new notes. See
"Plan of Distribution."
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SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary sets forth: (i) historical consolidated financial
information of the Company with respect to the years ended December 31, 1998,
1999 and 2000, (ii) consolidated financial information of the Company on an
adjusted basis to give effect to the offering of the old notes and the
refinancing of our senior secured credit facility for the year ended December
31, 2000 and the three months ended March 31, 2001, and (iii) unaudited
consolidated financial information of the Company with respect to the three
months ended March 31, 2000 and 2001. This summary information should be read in
conjunction with "Selected Historical Consolidated Financial Data" beginning on
page 27 and our consolidated financial statements and related notes contained in
our Annual Report on Form 10-K for the year ended December 31, 2000 and in our
Quarterly Report on Form 10-Q for the three months ended March 31, 2001, which
are incorporated by reference into this prospectus. See "Documents Incorporated
by Reference."
AT OR FOR THE YEARS ENDED AT OR FOR THE THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
-------------------------------------------- ---------------------------------
2000 2001
1998 1999 2000 AS ADJUSTED 2000 2001 AS ADJUSTED
-------- -------- -------- ----------- -------- -------- -----------
(DOLLARS IN MILLIONS)
RESULTS OF OPERATIONS DATA
Net operating revenues................. $2,812.2 $2,546.7 $2,625.6 $2,625.6 $ 646.1 $ 659.5 $ 659.5
Interest income(1)..................... 10.7 4.3 2.6 3.9 0.8 0.4 0.4
-------- -------- -------- -------- -------- -------- --------
Total revenues................. 2,822.9 2,551.0 2,628.2 2,629.5 646.9 659.9 659.9
Costs and expenses:
Operating and administrative:
Wages and related.................. 1,664.7 1,542.1 1,591.5 1,591.5 389.7 397.9 397.9
Provision for insurance and related
items............................ 154.3 88.4 120.9 120.9 20.5 27.2 27.2
Other.............................. 814.1 723.8 769.5 769.5 181.7 178.5 178.5
Interest(1).......................... 65.9 72.6 80.0 84.7 19.6 19.1 19.6
Depreciation and amortization........ 93.7 99.2 100.1 100.1 25.3 24.5 24.5
Asset impairments, workforce
reductions and other unusual
items.............................. 69.5 23.8 43.0 43.0 -- 107.7 107.7
Special charges related to
settlements of federal government
investigations..................... 1.9 202.4 -- -- -- -- --
Year 2000 remediation................ 9.7 12.4 -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total costs and expenses....... 2,873.8 2,764.7 2,705.0 2,709.7 636.8 754.9 755.4
Income (loss) before provision for
(benefit from) income taxes,
extraordinary charge and cumulative
effect of change in accounting for
start-up costs....................... $ (50.9) $ (213.7) $ (76.8) $ (80.2) $ 10.1 $ (95.0) $ (95.5)
======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA
Total assets........................... $2,160.5 $1,982.9 $1,876.0 $1,906.2 $1,992.8 $1,843.6 $1,856.4
Total debt............................. 906.0 780.2 791.4 827.4 828.7 766.5 784.5
Other liabilities and deferred items... 33.9 178.6 195.0 195.0 183.1 237.9 237.9
Total stockholders' equity............. 776.2 641.1 584.0 581.6 643.0 537.5 537.3
OTHER DATA
Net cash provided by (used for):
Operating activities................. $ 6.8 $ 189.1 $ 37.0 $ 33.6 $ (36.2) $ 29.6 $ 29.1
Investing activities................. (230.6) (71.5) (42.2) (42.2) (13.4) (9.2) (9.2)
Financing activities................. 135.8 (110.2) 6.5 36.7 45.1 (20.4) (7.7)
Capital expenditures................... 150.5 95.4 76.0 76.0 20.0 13.9 13.9
Adjusted EBITDA(2)..................... 278.1 228.6 235.3 235.3 54.2 55.9 55.9
Ratio of Adjusted EBITDA to interest
expense.............................. 4.2x 3.1x 2.9x 2.8x 2.8x 2.9x 2.9x
Number of nursing home facilities...... 562 561 534 534 560 528 528
Number of licensed nursing home beds... 62,293 62,217 59,799 59,799 62,045 59,265 59,265
Average occupancy(3)................... 88.7% 87.2% 87.0% 87.0% 87.3% 86.4% 86.4%
- ---------------
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(1) The interest expense for 2000 As Adjusted and March 31, 2001 As Adjusted
reflects a coupon rate on the notes of 9 5/8%. The interest income for 2000
As Adjusted reflects a rate of return of 4 1/3% on the excess proceeds from
the issuance and sale of the old notes.
(2) Adjusted EBITDA (unaudited) has been calculated for the periods presented as
follows:
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------------------- ----------------------------
2000 2001
1998 1999 2000 AS ADJUSTED 2000 2001 AS ADJUSTED
------ ------- ------ ----------- ----- ------ -----------
(DOLLARS IN MILLIONS)
Income (loss) before provision for (benefit
from) income taxes, extraordinary charge and
cumulative effect of change in accounting
for start-up costs.......................... $(50.9) $(213.7) $(76.8) $(80.2) $10.1 $(95.0) $(95.5)
Plus:
Interest.................................. 65.9 72.6 80.0 84.7 19.6 19.1 19.6
Depreciation and amortization............. 93.7 99.2 100.1 100.1 25.3 24.5 24.5
Year 2000 remediation..................... 9.7 12.4 -- -- -- -- --
Special charges related to settlements of
federal government investigations....... 1.9 202.4 -- -- -- -- --
Provision for insurance and other claims
related to (i) a loss portfolio transfer
in 1998 and (ii) changes in actuarial
estimates for insurance reserves for
prior years(a).......................... 82.2 31.6 44.4 44.4 -- -- --
Asset impairments, workforce reductions,
and other unusual items(b).............. 69.5 23.8 43.0 43.0 -- 107.7 107.7
Increase in accounts receivable related
allowances(c)........................... -- -- 43.6 43.6 -- -- --
Other..................................... 16.8 4.6 3.6 3.6 -- -- --
------ ------- ------ ------ ----- ------ ------
Total additions:.......................... 339.7 446.6 314.7 319.4 44.9 151.3 151.8
Less:
Interest income........................... 10.7 4.3 2.6 3.9 0.8 0.4 0.4
------ ------- ------ ------ ----- ------ ------
Adjusted EBITDA............................... $278.1 $ 228.6 $235.3 $235.3 $54.2 $ 55.9 $ 55.9
====== ======= ====== ====== ===== ====== ======
- ---------------
(a) See Note 1 to Notes to Consolidated Financial Statements in our Annual
Report on Form 10-K for the year ended December 31, 2000.
(b) See Note 3 to Notes to Consolidated Financial Statements in our Annual
Report on Form 10-K for the year ended December 31, 2000 and Notes 3, 4
and 7 to Notes to Condensed Consolidated Financial Statements in our
Quarterly Report on Form 10-Q for the three months ended March 31,
2001.
(c) Includes changes in estimates related to: $31.3 million of additional
allowances for uncollectible patient accounts receivable primarily
related to our nursing facilities; and $12.3 million of increased
contractual allowances related to our outpatient therapy business.
We have included information concerning Adjusted EBITDA because management
believes that Adjusted EBITDA most accurately reflects the Company's ability to
service its debt and other obligations. You should not, however, consider
Adjusted EBITDA in isolation or as a substitute for net income, cash flows or
other consolidated income or cash flow data prepared in accordance with
generally accepted accounting principles, or as a measure of our profitability
or liquidity. Adjusted EBITDA in a period is not reduced by cash outlays in such
period for federal government investigation settlement costs, patient care
liabilities or future cash payments with respect to our loss portfolio transfer
or other expenditures, where an accrual on our income statement was made in a
prior period. See "Risk Factors -- Our Adjusted EBITDA is not necessarily a
measure of our cash flow from operations."
(3) Average occupancy for 1998, 1999 and 2000, and the three months ended March
31, 2000 and 2001, was based on operational beds. Average occupancy for
1998, 1999 and 2000, and the three months ended March 31, 2000 and 2001,
based on licensed beds was 86.9%, 85.3%, 84.9%, 85.3% and 84.3%,
respectively.
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GENERAL
Beverly Enterprises, Inc. is incorporated in Delaware. Our principal
executive offices are located at One Thousand Beverly Way, Fort Smith, Arkansas,
72919. Our telephone number is (501) 201-2000.
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RISK FACTORS
Our business, operations and financial condition are subject to various
risks. Some of these risks are described below and under "Forward-Looking
Statements," and you should take these risks into account in evaluating us or
any investment decision involving us or in deciding whether to participate in
the exchange offer proposed in this prospectus. This section does not describe
all risks applicable to us or our industry, and it is intended only as a summary
of certain material factors.
OUR SUBSTANTIAL INDEBTEDNESS AND OTHER OBLIGATIONS COULD ADVERSELY AFFECT OUR
FINANCIAL CONDITION.
We have a significant amount of indebtedness. At March 31, 2001, we would
have had approximately $784.5 million of outstanding indebtedness for money
borrowed on our balance sheet on a pro forma basis after giving effect to the
offering of the old notes and use of proceeds and the refinancing of our senior
secured credit facility. This outstanding indebtedness does not include
approximately $92.8 million ($124.1 million on an undiscounted basis) of amounts
we owe to the federal government over the next eight years under a civil
settlement agreement (see "Business -- Legal Proceedings" in our Annual Report
on Form 10-K for the year ended December 31, 2000) and $155.4 million of other
liabilities and deferred items (principally patient care liability claims), as
well as certain other off-balance sheet obligations. Our substantial
indebtedness and other obligations could:
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness and other liabilities,
thereby reducing the availability of our cash flow to fund working
capital, capital expenditures and other general corporate activities;
- limit our flexibility in planning for, or reacting to, changes in our
business or industry;
- place us at a competitive disadvantage compared to competitors with less
indebtedness or lower fixed costs;
- increase our vulnerability to general adverse economic and industry
conditions; or
- limit our ability to pursue business opportunities that may be in our
interest.
If we incur additional indebtedness or other obligations, these related
risks could increase.
IF WE ARE UNABLE TO GENERATE SUFFICIENT CASH FLOW TO SERVICE OUR INDEBTEDNESS OR
OTHER OBLIGATIONS, OUR BUSINESS AND FINANCIAL CONDITION COULD SUFFER.
Our ability to make payments on our indebtedness and other obligations, and
to fund planned capital expenditures, depends on our ability to generate future
cash flow. This, to some extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors that are beyond our
control. In addition, our ability to borrow funds under our $150.0 million
senior secured credit facility, which matures on April 25, 2004, depends on our
satisfying various covenants. These covenants, as well as similar covenants
under certain of our other obligations with maturities beyond that of the new
senior secured credit facility, have the following effects on us and our
subsidiaries:
- limit our ability to borrow and place liens on assets;
- require us to comply with a coverage ratio test;
- require us to maintain a minimum consolidated net worth;
- limit our ability to merge with other parties or sell all or
substantially all of our assets; and
- limit our ability to make investments.
The covenants governing the notes are substantially the same as the
covenants contained in the indenture governing the 9% senior notes due February
15, 2006. We calculate that under such covenants we currently have approximately
$87.7 million (which amount includes the $20.0 million basket described under
"Description of Notes-Certain Covenants-Restricted Payments") of Restricted
Payment capacity.
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We cannot assure you that our business will generate cash flow from
operations or that future borrowings will be available to us under our senior
secured credit facility or otherwise. If the need arises, inability to refinance
our existing senior secured credit facility could have a material adverse effect
on our consolidated financial position, results of operations or cash flows.
WE ARE SUBJECT TO INCREASINGLY EXPENSIVE AND UNPREDICTABLE PATIENT CARE
LIABILITY COSTS, ESPECIALLY IN FLORIDA.
General liability and professional liability costs for the long-term care
industry, especially in the state of Florida, have become increasingly expensive
and difficult to estimate. We, along with most of our competitors, are
experiencing substantial increases in both the number of claims and lawsuits, as
well as the size of the typical claim and lawsuit. This phenomenon is most
evident in the state of Florida, where well-intended patient rights' statutes
tend, in our view, to be exploited by plaintiffs' attorneys. These statutes
allow for actual damages, punitive damages and plaintiff attorney fees to be
included in any proven violation of these rights. Industry statistics show that
Florida long-term care providers:
- incur more than four times the number of general liability claims as
compared to the rest of the country;
- have an average claim size that is approximately three times higher than
the rest of the country; and
- incur 44% of the total general liability losses for the country, but
represent only approximately 10% of the total nursing facility beds.
Insurance companies are exiting the state of Florida, or severely
restricting their capacity to write long-term care general liability insurance.
Insurers cannot provide coverage when faced with the magnitude of losses and the
explosive growth of claims. Our overall general liability costs per bed in
Florida are severely out of line with the rest of the country and continue to
escalate.
During the first quarter of 2001, a formal plan was initiated by management
to pursue the sale of our nursing home operations in Florida. Such decision was
made due to the excessive patient care liability costs that we have been
incurring in recent periods in the state of Florida. Accordingly, the property
and equipment, identifiable intangibles and operating supplies of our Florida
nursing home operations at March 31, 2001 were considered assets to be disposed
of, as that term is defined in Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" ("SFAS No. 121"). Management estimated the fair value
less selling costs of such assets based upon verbal and non-binding purchase
prices from potential buyers and determined that an impairment write-down was
necessary as of March 31, 2001. The pre-tax charge related to this write-down
was approximately $68,900,000. In addition, we recorded a pre-tax charge of
approximately $17,200,000 for certain costs to exit the Florida facilities (as
defined below). These costs relate to severance agreements, termination payments
on certain contracts and various other items. Such pre-tax charges have been
included in the condensed consolidated statement of operations caption "Asset
impairments, workforce reductions and other unusual items." At March 31, 2001,
the assets held for sale totaled approximately $122,100,000 and are classified
as current assets in the condensed consolidated balance sheet, as we expect to
close a transaction on the Florida facilities in 2001.
Our Florida nursing home operations include 49 nursing facilities (6,129
beds) and four assisted living centers (315 units) (the "Florida facilities")
currently being marketed as a group, as well as one additional nursing facility
(56 beds) and certain other assets which we plan to sell in separate
transactions. All of these assets are included in the total assets of our
nursing facilities segment. We are currently negotiating with a potential
purchaser of all of the Florida facilities. Other potential purchasers have
expressed an interest in purchasing all or portions of the Florida facilities.
During the three months ended March 31, 2001, our Florida nursing home
operations recorded a pre-tax loss of approximately $1,100,000. Included in this
pre-tax loss was depreciation and amortization expense of approximately
$2,600,000. In accordance with SFAS No. 121, depreciation and amortization
expense will be
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excluded from our consolidated statement of operations during the period these
assets are held for sale, as these assets are now recorded at their estimated
net realizable value.
OUR CIVIL SETTLEMENT AGREEMENT WITH THE U.S. GOVERNMENT WITH RESPECT TO ALLEGED
VIOLATIONS OF COST ALLOCATIONS UNDER MEDICARE NEGATIVELY IMPACTS OUR CASH FLOWS.
On February 3, 2000, we entered into a series of separate agreements with
the U.S. Department of Justice and the Office of Inspector General (the "OIG")
of the Department of Health and Human Services ("HHS"), which are described in
detail under "Business -- Legal Proceedings" in our Annual Report on Form 10-K
for the year ended December 31, 2000. Under the civil settlement agreement, we
paid the federal government $25.0 million during the first quarter of 2000 and
agreed to reimburse the federal government an additional $145.0 million through
withholdings from our biweekly Medicare periodic interim payments in equal
installments through the first quarter of 2008, of which $124.1 million remained
to be paid at March 31, 2001. As a result of such withholdings, our cash flows
from operations were negatively impacted by approximately $4.2 million during
the three months ended March 31, 2001, and are expected to be negatively
impacted at an annual rate of approximately $18.1 million through the first
quarter of 2008. In addition, we have resubmitted certain filings for 1996 to
reflect reduced labor costs allocated to the Medicare program. We are also
awaiting results of recently-completed audits for 1997 and 1998. We have
reserved $39.0 million in connection with such matters.
WE ARE SUBJECT TO CERTAIN CLASS ACTION AND STOCKHOLDER DERIVATIVE LAWSUITS.
A purported class action lawsuit is pending against the Company and certain
of our officers in the United States District Court for the Eastern District of
Arkansas. In addition, various stockholders have filed derivative actions
against us. See "Business -- Legal Proceedings" in our Annual Report on Form
10-K for the year ended December 31, 2000. These actions allege various claims
and generally arose from the matters that were the subject of the settlements
with the OIG. Because of the preliminary state of these actions, we are unable
at this time to assess the probable outcome of these actions or the materiality
of the risk of loss. Therefore, we can give no assurances of the ultimate impact
on our consolidated financial position, results of operations or cash flows as a
result of these proceedings.
OUR ADJUSTED EBITDA IS NOT NECESSARILY A MEASURE OF OUR CASH FLOW FROM
OPERATIONS.
We have incurred significant charges as a result of the OIG investigation
settlements, liabilities arising out of the provision of patient care services
(and related insurance expenses, including the loss portfolio transfer),
workforce reductions and other unusual items. The charges incurred in periods
prior to 2001 require cash payments to be made in subsequent years. Primarily
because of these charges, Adjusted EBITDA (as presented herein) does not
necessarily reflect cash flow from operations or net cash provided by operating
activities (as commonly understood under generally accepted accounting
principles). See Note 2 to "Summary Consolidated Financial Data" and Notes 1, 2
and 3 of "Notes to Consolidated Financial Statements" in our Annual Report on
Form 10-K for the year ended December 31, 2000 and Notes 3, 4 and 7 of "Notes to
Condensed Consolidated Financial Statements" in our Quarterly Report on Form
10-Q for the three months ended March 31, 2001.
WE RELY ON REIMBURSEMENT FROM GOVERNMENTAL PROGRAMS FOR A MAJORITY OF OUR
REVENUES.
Changes in the reimbursement policies of Medicaid and Medicare as a result
of budget cuts by federal and state governments or other legislative and
regulatory actions could have a material adverse effect on our consolidated
financial position, results of operations and cash flows.
In the past, states have curtailed their Medicaid payments as a result of
budget considerations. No assurance can be given that states will not do so in
the future or that the future funding of Medicaid programs will remain at levels
comparable to the present levels. The 1997 Act authorized states to develop
their own standards for setting payment rates. It requires each state to use a
public process for establishing proposed rates whereby the methodologies and
justifications used for setting such rates are available for public review
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and comment. This requires facilities to become more involved in the rate
setting process since failure to do so may interfere with a facility's ability
to challenge rates later. Currently, a few states in which we operate are
experiencing deficits in their fiscal operating budgets. There can be no
assurance that those states in which we operate that are experiencing budget
deficits, as well as other states in which we operate, will not reduce payment
rates.
OUR INDUSTRY IS HEAVILY REGULATED BY THE GOVERNMENT WHICH REQUIRES OUR
COMPLIANCE WITH A VARIETY OF LAWS.
The operation of our facilities and the services we provide are subject to
periodic inspection by governmental authorities to ensure that we are complying
with various standards established for continued licensure under state law and
certification for participation under the Medicare and Medicaid programs.
Additionally, in certain states, certificates of need or other similar approvals
are required for expansion of our operations. We could be adversely affected if
we cannot obtain these approvals, if the standards applicable to approvals or
the interpretation of those standards change and by possible delays and expenses
associated with obtaining approvals. Our failure to obtain, retain or renew any
required regulatory approvals, licenses or certificates could prevent us from
being reimbursed for our services. In addition, compliance with new regulations,
including regulations related to electronic data interchange and confidentiality
and security of health data, could result in increased cost to us. See
"Business -- Our Industry is Heavily Regulated by the Government which Requires
Our Compliance with a Variety of Laws" in our Annual Report on Form 10-K for the
year ended December 31, 2000.
In the ordinary course of our business and like others in the health care
industry, we receive requests for information from government agencies in
connection with their regulatory or investigational authority and notices of
deficiencies for failure to comply with various regulatory requirements. We
review such requests and notices and take appropriate corrective action. In most
cases, with respect to the notices, the facility and the reviewing agency will
agree upon the steps to be taken to bring the facility into compliance with
regulatory requirements. In some cases or upon repeat violations, the reviewing
agency may take a number of adverse actions against a facility. These adverse
actions include:
- the imposition of fines;
- temporary suspension of admission of new patients to the facility;
- decertification from participation in the Medicaid or Medicare programs;
or
- in extreme circumstances, revocation of a facility's license.
We have been subject to certain of these adverse actions in the past and
could be subject to adverse actions in the future which could result in
significant penalties, as well as adverse publicity. The results of any current
or future investigation or actions could have a material adverse effect on our
operations or financial position.
OUR FAILURE TO ATTRACT QUALIFIED PERSONNEL COULD HARM OUR BUSINESS.
Due to nationwide low unemployment rates, we are currently experiencing
difficulty attracting and retaining nursing assistants, nurses' aides and other
facility-based personnel. Our weighted average wage rate and use of contract
nursing personnel have increased, indicating the difficulty our facilities are
having in attracting these personnel. Although we are addressing this challenge
through recruiting and retention programs and training initiatives, these
programs and initiatives may not stabilize or improve our ability to attract and
retain these personnel. Our inability to control labor availability and cost
could have a material adverse affect on our future operating results.
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CERTAIN TRENDS IN THE HEALTH CARE INDUSTRY ARE PUTTING PRESSURE ON OUR ABILITY
TO MAINTAIN NURSING FACILITY CENSUS.
Over the past decade a number of trends have developed that have negatively
impacted our census. These trends include:
- overbuilding of nursing facilities, particularly in states that have
eliminated the certificate of need process for new construction;
- creation of nursing facilities by acute care hospitals to retain
discharged patients within their facility;
- rapid growth of assisted living facilities, which sometimes are more
attractive to less medically complex patients; and
- the development of the scope and availability of health services
delivered to the home.
These factors and others could adversely affect our ability to maintain or
increase occupancy rates at our facilities. Lower occupancy rates could have a
negative impact on our cash flows, results of operations and overall financial
condition.
ALTHOUGH THE 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 be general unsecured obligations of the Company that rank
senior in right of payment to all existing and 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 or its subsidiaries, to the extent 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 are collateral for our 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 subsidiaries 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.
In addition, neither Beverly Funding Corporation, a non-consolidated
subsidiary of the Company, nor any of its successors will guarantee the notes.
Beverly Funding Corporation has issued $70.0 million of medium-term notes that,
as of December 31, 2000, were secured by approximately $107.2 million of net
patient accounts receivable that are purchased from our subsidiaries' operating
nursing homes. These accounts receivable, in addition to the other assets of
Beverly Funding Corporation, are not available as a source of payment to holders
of the notes.
Furthermore, the change in control provisions may, in certain
circumstances, make more difficult, or discourage a takeover of our company and
the removal of incumbent management.
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 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,
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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 guarantor's 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.
Any payment by that guarantor pursuant to its guarantee determined to be a
fraudulent transfer 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, was greater than
the fair saleable value of all of its assets;
- if the present fair saleable value of its assets was 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
- 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 guarantor's 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 the
obligations of the applicable guarantor were incurred for less than fair
consideration because the guarantee was incurred for our benefit, and only
indirectly for the benefit of the subsidiary guarantor.
A court could thus void the obligations under the guarantee or subordinate
the guarantee to the applicable guarantor's other debt or take other action
detrimental to holders of the notes. In that case, the holders of the notes
would be effectively subordinated to all claims of creditors against our
subsidiaries.
Our operations are conducted through our subsidiaries. As a result, we
depend on dividends, loans or advances, or payments from our subsidiaries to
satisfy our financial obligations and to 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.
WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE CHANGE
OF CONTROL OFFER REQUIRED BY THE INDENTURE AND SUBSTANTIALLY ALL OF OUR OTHER
DEBT INSTRUMENTS.
The terms of substantially all of our debt instruments require that we
repay or refinance indebtedness under such debt instruments in the event of a
change of control, as defined in such debt instruments. Such change of control
provisions may be triggered under such debt instruments prior to the occurrence
of a change of control as defined in the indenture relating to the notes,
thereby requiring that the indebtedness under such debt instruments be repaid or
refinanced prior to our repurchasing any notes upon the occurrence of a change
of control. As such, we may not be able to satisfy our obligations to repurchase
the notes unless we are able to refinance or obtain waivers with respect to such
debt instruments. There can be no assurance that we will have the financial
resources to repurchase the notes in the event of a change of control.
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YOU CANNOT BE SURE THAT AN ACTIVE TRADING MARKET WILL DEVELOP FOR THESE NOTES.
We have been informed by the initial purchasers that they intend to make a
market in the notes after the exchange offer is completed. However, the initial
purchasers may cease their market-making at any time. In addition, the liquidity
of the trading market in the notes, and the market price quoted for the notes,
may be adversely affected by changes in the overall market for this type of
security and by changes in our financial performance or prospects or in the
prospects for companies in our industry generally. In addition, such market-
making activities will be subject to limits imposed by the Securities Act and
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a
result, you cannot be sure that an active trading market will develop for the
notes.
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USE OF PROCEEDS
We intend the exchange offer to satisfy our obligations under the
registration rights agreement that we entered into in connection with the
private offering of the old notes. We will not receive any cash proceeds from
the issuance of the new notes pursuant to the exchange offer. Old notes
surrendered in exchange for the new notes will be retired and canceled and
cannot be reissued. As a result, the issuance of the new notes will not result
in any increase or decrease in our indebtedness. We have agreed to bear the
expenses of the exchange offer. No underwriter is being used in connection with
the exchange offer.
The net proceeds from the issuance and sale of the old notes was
approximately $194.8 million. We used the net proceeds to repay borrowings under
our senior secured credit facility and permanently reduce our commitment
thereunder. Excess proceeds were used for general corporate purposes.
Simultaneously with the consummation of the initial offering, we refinanced our
$375.0 million senior secured credit facility with a new $150.0 million senior
secured credit facility. The new senior secured credit facility is described
under "Description of Certain Indebtedness." As of May 31, 2001, the interest
rate under the new senior secured credit facility was 9.38% and $117.0 million
was available for future borrowing.
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CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Company at March 31, 2001 on an actual basis and an as adjusted basis to
give effect to the offering of the old notes and the use of net proceeds to
refinance the senior secured credit facility.
This table should be read in conjunction with "Selected Historical
Consolidated Financial Data" and the historical financial statements and related
notes in our Annual and Quarterly reports filed with the SEC and incorporated by
reference into this prospectus, as well as the section of our Annual and
Quarterly reports titled "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
AT MARCH 31, 2001
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
Total debt (including current portion of long-term debt)(1):
Existing senior secured credit facility................... $ 182,000 $ --
New senior secured credit facility(2)..................... -- --
9% senior notes due 2006.................................. 180,000 180,000
9 5/8% senior notes due 2009.............................. -- 200,000
Notes and mortgages....................................... 262,861 262,861
Industrial development revenue bonds...................... 130,705 130,705
Capital lease obligations................................. 10,930 10,930
---------- ----------
Total debt............................................. 766,496 784,496
Stockholders' equity:
Preferred stock, shares authorized: 25,000,000............ -- --
Common stock, shares issued: 112,157,746.................. 11,216 11,216
Additional paid-in capital................................ 880,918 880,918
Accumulated deficit....................................... (246,205) (246,474)
Accumulated other comprehensive income.................... 896 896
Treasury stock, at cost: 8,515,758 shares................. (109,278) (109,278)
---------- ----------
Total stockholders' equity............................. 537,547 537,278
---------- ----------
Total capitalization...................................... $1,304,043 $1,321,774
========== ==========
- ---------------
(1) The Company has significant obligations that are not reflected in this
table, including, but not limited to, obligations under our civil settlement
agreement and liabilities related to insurance. See "Description of Certain
Indebtedness" and Notes 1 and 2 to Notes to Consolidated Financial
Statements in our Annual Report on Form 10-K for the year ended December 31,
2000.
(2) Total availability under the new senior secured credit facility is $150.0
million, of which up to $75.0 million is available for letters of credit.
See "Description of Certain Indebtedness."
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
In the table below, we provide you with selected historical consolidated
financial information of the Company. We have prepared this information using
the consolidated financial statements for the Company for each of the five years
in the period ended December 31, 2000 and for the three-month periods ended
March 31, 2001 and 2000. The financial statements for each of the five years in
the period ended December 31, 2000 have been audited by Ernst & Young LLP, our
independent auditors. The financial statements for the three-month periods ended
March 31, 2001 and 2000 have not been audited. When you read this selected
historical consolidated financial data, it is important that you read along with
it the historical financial statements and related notes in our Annual and
Quarterly reports filed with the SEC, as well as the section of our Annual and
Quarterly reports titled "Management's Discussion and Analysis of Financial
Condition and Results of Operations." We have also provided other data for the
periods presented.
AT OR FOR THE
THREE MONTHS
ENDED MARCH 31, AT OR FOR THE YEARS ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
2001 2000 2000 1999 1998(1) 1997(2) 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Net operating revenues............... $ 659,468 $ 646,102 $2,625,610 $2,546,672 $2,812,232 $3,217,099 $3,267,189
Interest income...................... 387 825 2,650 4,335 10,708 13,201 13,839
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues............... 659,855 646,927 2,628,260 2,551,007 2,822,940 3,230,300 3,281,028
Costs and expenses:
Operating and administrative....... 603,637 591,875 2,481,914 2,354,328 2,633,135 2,888,021 2,958,942
Interest........................... 19,110 19,618 80,016 72,578 65,938 82,713 91,111
Depreciation and amortization...... 24,464 25,336 100,061 99,160 93,722 107,060 105,468
Asset impairments, workforce
reductions and other unusual
items............................ 107,689 -- 43,033 23,818 69,443 44,000 --
Special charges related to
settlements of federal government
investigations................... -- -- -- 202,447 1,865 -- --
Year 2000 remediation.............. -- -- -- 12,402 9,719 -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total costs and expenses..... 754,900 636,829 2,705,024 2,764,733 2,873,822 3,121,794 3,155,521
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before provision for
(benefit from) income taxes,
extraordinary charge and cumulative
effect of change in accounting for
start-up costs..................... (95,045) 10,098 (76,764) (213,726) (50,882) 108,506 125,507
Provision for (benefit from) income
taxes.............................. (42,771) 3,837 (22,262) (79,079) (25,936) 49,913 73,481
Extraordinary charge, net of income
tax benefit of $1,057 in 1998 and
$1,099 in 1996..................... -- -- -- -- (1,660) -- (1,726)
Cumulative effect of change in
accounting for start-up costs, net
of income tax benefit of $2,811.... -- -- -- -- (4,415) -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss).................... $ (52,274) $ 6,261 $ (54,502) $ (134,647) $ (31,021) $ 58,593 $ 50,300
========== ========== ========== ========== ========== ========== ==========
CONSOLIDATED BALANCE SHEET DATA:
Total assets......................... $1,843,599 $1,992,795 $1,875,993 $1,982,880 $2,160,511 $2,073,469 $2,525,082
Current portion of long-term debt.... 62,568 72,599 227,111 34,052 27,773 31,551 38,826
Long-term debt, excluding current
portion............................ 703,928 756,057 564,247 746,164 878,270 686,941 1,106,256
Stockholders' equity................. 537,547 643,030 583,993 641,124 776,206 862,505 861,095
OTHER DATA:
Average occupancy(3)................. 86.4% 87.3% 87.0% 87.2% 88.7% 88.9% 87.4%
Number of licensed nursing home
beds............................... 59,265 62,045 59,799 62,217 62,293 63,552 71,204
Ratios of earnings to fixed
charges(4)......................... -- 1.32 -- -- -- 1.87 1.97
- ---------------
(1) Amounts for 1998 include the operations of American Transitional Hospitals,
Inc. through June 30, 1998.
(2) Amounts for 1997 include the operations of Pharmacy Corporation of America
through December 3, 1997.
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(3) Average occupancy percentage for the three months ended March 31, 2001 and
2000 and for the years ended December 31, 2000, 1999, 1998 and 1997 was
based on operational beds, and for the year ended December 31, 1996, such
percentage was based on licensed beds. Average occupancy percentage for the
three months ended March 31, 2001 and 2000 and for the years ended December
31, 2000, 1999, 1998 and 1997, based on licensed beds, was 84.9%, 85.3%,
86.9%, 87.1%, 84.3% and 85.3%, respectively.
(4) Earnings were inadequate to cover fixed charges by $95.4 million for the
three months ended March 31, 2001 and $79.1 million, $215.4 million and
$52.2 million for the years ended December 31, 2000, 1999 and 1998,
respectively.
For purposes of computing the ratios of earnings to fixed charges, earnings
have been calculated by adding fixed charges (excluding capitalized interest
during the periods) to pre-tax income (loss) from continuing operations. Fixed
charges include interest costs, whether expensed or capitalized, the interest
component of rental expense and amortization of debt discounts and issue costs.
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We sold the old notes to the initial purchasers in a private offering on
April 25, 2001. These initial purchasers resold the old notes to qualified
institutional buyers under Rule 144A and outside the United States pursuant to
Regulation S under the Securities Act. As of the date of this prospectus, $200.0
million aggregate principal amount of old notes are outstanding. In connection
with the private offering of the old notes, we and our subsidiary guarantors
entered into an exchange and registration rights agreement in which we and our
subsidiary guarantors agreed to file a registration statement with the
Securities and Exchange Commission relating to an offer to exchange the old
notes and the guarantees under the Securities Act for new notes and guarantees.
We have filed the exchange and registration rights agreement as an exhibit
to the registration statement of which this prospectus is a part.
EFFECT OF THE EXCHANGE OFFER
We believe that you may offer for resale, resell or otherwise transfer any
new notes issued to you in the exchange offer without further registration under
the Securities Act or delivery of a prospectus if you:
- are acquiring the new notes in the ordinary course of your business;
- are not participating, do not intend to participate and have no
arrangement or understanding with any person to participate, in a
distribution of the new notes;
- are not an affiliate of ours as defined in Rule 405 under the Securities
Act; and
- are not a broker-dealer who acquired old notes from us.
If you do not satisfy these criteria:
- you will not be able to rely on the interpretations of the staff of the
SEC in connection with any offer for resale, resale or other transfer of
new notes; and
- you must comply with the registration and prospectus delivery
requirements of the Securities Act, or have an exemption available to
you, in connection with any offer for resale, resale or other transfer
of the new notes.
Each broker-dealer that receives new notes for its own account in exchange
for old notes it acquired as a result of market-making or other trading
activities, may be a statutory underwriter and must acknowledge that it will
deliver a prospectus in connection with any resale of its new notes. This will
not be an admission by the broker-dealer that it is an underwriter within the
meaning of the Securities Act. See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
- We will accept all old notes validly tendered and not withdrawn prior to
5:00 p.m., New York City time, on the expiration date of the exchange
offer.
- You should read "-- Expiration Date; Extensions; Amendments" below for
an explanation of how the expiration date may be amended.
- We will issue and deliver $1,000 principal amount of new notes in
exchange for each $1,000 principal amount of outstanding old notes
accepted in the exchange offer. Holders may exchange some or all of
their old notes in minimum denominations of $1,000 and integral
multiples of $1,000 in excess of $1,000.
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- By tendering old notes in exchange for new notes and by signing the
transmittal letter -- or delivering an agent's message in lieu of the
transmittal letter, you will be representing that, among other things:
(1) any new notes to be received by you will be acquired in the
ordinary course of your business;
(2) you are not engaged in, and do not intend to engage in, and you
have no arrangement or understanding with any person to participate in,
a distribution of the new notes;
(3) you acknowledge and agree that any person who is a
broker-dealer or is participating in the exchange offer for the purpose
of distributing the new notes must comply with the registration and
prospectus delivery requirements of the Securities Act; and
(4) you are not an affiliate of ours within the meaning of Rule 405
under the Securities Act.
- The terms of the new notes are identical in all material respects to the
terms of the old notes, except that the registration rights and related
liquidated damages provisions, and the transfer restrictions that apply
to the old notes do not apply to the new notes. The new notes will
evidence the same debt as the old notes and will be entitled to the
benefits of the indenture governing the old notes.
- We are sending this prospectus and the transmittal letter to all
registered holders of old notes as of the close of business on
, 2001.
- We are not conditioning the exchange offer upon the tender of any
minimum amount of old notes.
- The exchange offer is subject to the condition that the exchange offer
not violate applicable law, rules or regulations, or applicable
interpretations of the staff of the SEC. See "-- Conditions of the
Exchange Offer."
- We may accept tendered old notes by giving oral or written notice to the
exchange agent. We must promptly confirm oral notice in writing. The
exchange agent will act as your agent for the purpose of receiving the
new notes from us and delivering them to you.
- You will not be required to pay brokerage commissions or fees or,
subject to the instructions in the transmittal letter, transfer taxes
with respect to the exchange of old notes. We will pay all charges and
expenses in connection with the exchange offer, other than taxes
specified under "-- Transfer Taxes."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The exchange offer will expire at 5:00 p.m., New York City time, on,
, 2001, unless we, in our sole discretion, extend it. We may extend
the exchange offer at any time and from time to time by giving oral or written
notice to the exchange agent and by publicly announcing the extension before
9:00 a.m., New York City time, on the next business day after the previously
scheduled expiration date. We must promptly confirm oral notice in writing. We
may also accept all properly tendered old notes as of the expiration date and
extend the expiration date in respect of the remaining outstanding old notes. We
may, in our sole discretion:
- amend the terms of the exchange offer in any manner;
- delay acceptance of, or refuse to accept, any old notes not previously
accepted;
- extend the exchange offer; or
- terminate the exchange offer.
We will give prompt notice of any amendment to the registered holders of
the old notes. If we materially amend the exchange offer, we will promptly
disclose the amendment in a manner reasonably calculated to inform you of the
amendment and we will extend the exchange offer to the extent required by law.
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PROCEDURES FOR TENDERING
Only a holder of old notes may tender them in the exchange offer. For
purposes of the exchange offer, the term "holder" or "registered holder"
includes any participant in The Depository Trust Company whose name appears on a
security position listing as a holder of old notes.
To tender in the exchange offer, you must cause the following to be
transmitted to and received by the exchange agent no later than 5:00 p.m., New
York City time, on the expiration date:
- a confirmation of the book-entry transfer of the tendered old notes into
the exchange agent's account at The Depository Trust Company;
- a properly completed and duly executed transmittal letter in the form
accompanying this prospectus, with any required signature guarantees,
or, at the option of the tendering holder in the case of a book-entry
tender, an agent's message in lieu of the transmittal letter; and
- any other documents required by the transmittal letter.
If you wish to tender your old notes and you cannot cause the old notes or
any other required documents to be transmitted to and received by the exchange
agent before 5:00 p.m., New York City time, on the expiration date, you may
tender your old notes according to the guaranteed delivery procedures described
in this section under the heading "-- Guaranteed Delivery Procedures."
If you beneficially own old notes that are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee and you wish to
participate in the exchange offer, you should promptly contact the person
through which you beneficially own your old notes and instruct that person to
tender your old notes on your behalf. See "Instructions Forming Part of the
Terms and Conditions of the Exchange Offer" included with the transmittal
letter. If you wish to tender on your own behalf, you must, before completing
and executing the transmittal letter and delivering your old notes, either make
appropriate arrangements to register ownership of the old notes in your name or
obtain a properly completed bond power from the registered holder. The transfer
of registered ownership may take considerable time.
The tender by a holder of old notes will constitute an agreement between
the holder, us and the exchange agent in accordance with the terms and subject
to the conditions specified in this prospectus and in the transmittal letter. If
a holder tenders less than all the old notes held, the holder should fill in the
amount of old notes being tendered in the appropriate box on the transmittal
letter. The exchange agent will deem the entire amount of old notes delivered to
it to have been tendered unless the holder has indicated otherwise.
The method of delivery of the transmittal letter and all other required
documents to the exchange agent is at your election and risk. Instead of
delivery by mail, we recommend that you use an overnight or hand delivery
service. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ENSURE DELIVERY TO
THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. DO NOT SEND YOUR TRANSMITTAL
LETTER OR OTHER REQUIRED DOCUMENTS TO US.
SIGNATURE REQUIREMENTS AND SIGNATURE GUARANTEE
You must arrange for an "eligible institution" to guarantee your signature
on the transmittal letter or a notice of withdrawal, unless the old notes are
tendered:
- by the registered holder of the old notes; or
- for the account of an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act.
The following are "eligible institutions:"
- a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc.;
- a commercial bank or trust company having an office or correspondent in
the United States; or
- an eligible guarantor institution.
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If a transmittal letter is signed by a person other than the registered
holder of any old notes listed in the transmittal letter, the old notes must be
endorsed or accompanied by a properly completed bond power and signed by the
registered holder as the registered holder's name appears on the old notes.
If trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, sign or endorse any required documents, they should so indicate when
signing, and unless waived by us, submit evidence satisfactory to us of their
authority to so act with the transmittal letter.
BOOK-ENTRY TRANSFER
The exchange agent will make a request promptly after the date of this
prospectus to establish an account for the old notes. Once the exchange agent
establishes the account, any financial institution that is a participant in The
Depository Trust Company's system may make book-entry delivery of old notes by
causing The Depository Trust Company to transfer them into the exchange agent's
account for the old notes. However, the exchange agent will only exchange the
old notes so tendered after it confirms their book-entry transfer into the
exchange agent's account, and receives an agent's message and any other
documents required by the transmittal letter in a timely manner.
The term "agent's message" means a message, transmitted by The Depository
Trust Company to, and received by, the exchange agent and forming part of the
confirmation of a book-entry transfer, which states that:
- The Depository Trust Company has received an express acknowledgment from
a participant tendering old notes stating the aggregate principal amount
of old notes that have been tendered by such participant;
- the participant has received the transmittal letter and agrees to be
bound by its terms; and
- we may enforce this agreement against the participant.
Although you may deliver old notes through The Depository Trust Company
into the exchange agent's account at The Depository Trust Company, you must
provide the exchange agent a completed and executed transmittal letter with any
required signature guarantee -- or an agent's message in lieu thereof -- and all
other required documents before the expiration date. If you comply with the
guaranteed delivery procedures described below, you must provide the transmittal
letter -- or an agent's message in lieu thereof -- to the exchange agent within
the time period provided. DELIVERY OF DOCUMENTS TO THE DEPOSITORY TRUST COMPANY
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your old notes and (1) you cannot deliver the
transmittal letter or any other required documents to the exchange agent before
the expiration date or (2) you cannot complete the procedure for book-entry
transfer on a timely basis, you may instead effect a tender if:
- you make the tender through an eligible guarantor institution;
- before the expiration date, the exchange agent receives from the
eligible guarantor institution,
(a) a properly completed and duly executed notice of guaranteed
delivery, by facsimile transmittal, mail or hand delivery,
specifying the name and address of the holder and the principal
amount of the old notes tendered, stating that the tender is
being made, and guaranteeing that, within three New York Stock
Exchange trading days after the date of execution of the notice
of guaranteed delivery, the old notes will be tendered,
(b) a properly completed and duly executed transmittal letter or a
confirmation of a book-entry transfer into the exchange agent's
account at The Depository Trust Company, and
(c) an agent's message and any other documents required by the
transmittal letter,
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will be deposited by the eligible guarantor institution with the
exchange agent; and
- the exchange agent receives the old notes and transmittal letter or
confirmation of a book-entry transfer into its account at The Depository
Trust Company and an agent's message and all other documents required by
the transmittal letter within three New York Stock Exchange trading days
after the date of execution of the notice of guaranteed delivery.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw any old
notes that you tender at any time before 5:00 p.m., New York City time, on the
expiration date. To do so, you must provide the exchange agent with a written or
facsimile transmission notice of withdrawal before 5:00 p.m., New York City
time, on the expiration date. Any notice of withdrawal must:
- identify the old notes to be withdrawn, including the principal amount
of the old notes and the name and number of the account at The
Depository Trust Company to be credited; and
- be signed by you in the same manner as the original signature on your
transmittal letter, including any required signature guarantee, or be
accompanied by transfer documents sufficient to permit the registrar to
register the transfer of the withdrawn old notes into your name.
Our determination shall be final and binding on all parties. We will not
deem any old notes so withdrawn to be validly tendered for purposes of the
exchange offer and will not issue new notes with respect to them unless the
holder of these old notes validly retenders them. You may retender withdrawn old
notes by following one of the procedures described above under " -- Procedures
for Tendering" at any time before the expiration date.
DETERMINATION OF VALIDITY
We will determine all questions as to the validity, form,
eligibility -- including time of receipt -- acceptance and withdrawal of the
tendered old notes, and will interpret the terms and conditions of the exchange
offer -- including any instructions in the transmittal letter -- in our sole
discretion. Our determination will be final and binding. We may reject any and
all old notes that are not properly tendered or any old notes that, in the
opinion of our counsel, we cannot lawfully accept. We also may waive any
irregularities or conditions of tender as to particular old notes. Unless we
waive them, you must cure any defects or irregularities in your tender of old
notes within such time as we shall determine.
Although we intend to notify tendering holders of defects or irregularities
with respect to tenders of old notes, neither we nor anyone else has any duty to
do so. Neither we nor anyone else will incur any liability for failure to notify
you of these defects or irregularities. Your old notes will not be deemed
tendered until you have cured or we have waived any irregularities. As soon as
practicable following the expiration date, the exchange agent will return any
old notes that we reject due to improper tender or otherwise unless you cured
all defects or irregularities or we waive them.
We reserve the right in our sole discretion:
- to purchase or make offers for any old notes that remain outstanding
after the expiration date;
- to terminate the exchange offer, as set forth in "-- Conditions of the
Exchange Offer;" and
- to the extent permitted by applicable law, to purchase old notes in the
open market, in privately negotiated transactions or otherwise.
The terms of any of these purchases or offers may differ from the terms of
the exchange offer.
CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other term of the exchange offer, if the exchange offer
violates applicable law, rules or regulations or an applicable interpretation of
the staff of the SEC, we will not be required to accept for
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exchange, or to issue new notes for, any old notes, and we may terminate or
amend the exchange offer as provided in this prospectus before we accept old
notes.
If we reasonably determine that we cannot lawfully complete the exchange
offer we may:
- refuse to accept any old notes and return all tendered old notes to the
tendering holders; or
- extend the exchange offer and retain all old notes tendered before the
expiration of the exchange offer, subject, however, to the rights of
holders to withdraw such old notes. See " -- Withdrawal of Tenders."
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the expiration date, all old notes that have been
validly tendered and not withdrawn, and will issue the applicable new notes in
exchange for such old notes promptly after our acceptance of such old notes. For
purposes of the exchange offer, we will be deemed to have accepted validly
tendered old notes for exchange when, as, and if we have given written notice of
such acceptance to the exchange agent.
For each old note accepted for exchange, the holder of the old note will
receive a new note having a principal amount equal to that of the surrendered
old note. The new notes will bear interest from the most recent date to which
interest has been paid on the old notes or, if no interest has been paid on the
old notes, from April 25, 2001. Accordingly, registered holders of new notes on
the relevant record date for the first interest payment date following the
completion of the exchange offer will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid,
from April 25, 2001. Old notes accepted for exchange will cease to accrue
interest from and after the date we accept them for exchange. You will not
receive any payment for accrued interest on the old notes otherwise payable on
any interest payment date if the record date occurs on or after date on which we
accept the old notes for exchange and you will be deemed to have waived your
rights to receive the accrued interest on the old notes.
If we do not accept any tendered old notes for any reason or if you submit
old notes for a greater principal amount than you desire to exchange, we will
return the unaccepted or non-exchanged old notes at our expense or, if the old
notes were tendered by book-entry transfer, the exchange agent will credit the
non-exchanged old notes to an account maintained with the book-entry transfer
facility. In either case, these old notes will be returned promptly after the
expiration or termination of the exchange offer.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
Pursuant to the terms of the exchange and registration rights agreement, we
agreed to use our best efforts to complete the exchange offer and issue the new
notes in exchange for the old notes. The following description is a summary of
the material provisions of the exchange and registration rights agreement. It
does not restate that agreement in its entirety. We urge you to read the
exchange and registration rights agreement.
If
- we are not permitted to effect the exchange offer as contemplated by
this prospectus because of any change in law or applicable
interpretations of the law by the staff of the Securities and Exchange
Commission;
- for any other reason we do not consummate the exchange offer within 150
days after we issued the old notes;
- we do not exchange any old notes validly tendered pursuant to the
exchange offer for new notes within 10 days after we accepted them in
the exchange offer;
- any initial purchaser so requests with respect to old notes held by the
initial purchasers that are not eligible to be exchanged for new notes
in the exchange offer;
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- any applicable law or interpretation does not permit any holder of old
notes to participate in the exchange offer; or
- any holder of old notes that participates in the exchange offer does not
receive freely transferable new notes in exchange for tendered old
notes,
then we will file with the Securities and Exchange Commission as promptly as
practicable, but in no event more than 20 business days after so required or
requested, a shelf registration statement to cover resales of Transfer
Restricted Securities by those holders who provide the information required for
the shelf registration statement.
We will use our commercially reasonable efforts to have the exchange offer
registration statement or, if applicable, the shelf registration statement
declared effective by the Securities and Exchange Commission as promptly as
practicable after it is filed. Unless the exchange offer would not be permitted
by policy of the Securities and Exchange Commission, we will commence the
exchange offer and will use our reasonable best efforts to consummate the
exchange offer as promptly as practicable, but in any event before 150 days
after the date we issued the old notes. If applicable, we will use our
reasonable best efforts to keep the shelf registration statement effective for a
period ending on the earlier of two years after the date we issued the old notes
or the date all Transfer Restricted Securities become eligible for resale
without volume restrictions under Rule 144 under the Securities Act.
The occurrence of any of the following events is a registration default:
- the exchange offer registration statement is not filed with the
Securities and Exchange Commission on or before 60 days after the date
of issuance of the notes or the shelf registration statement is not
filed with the Securities and Exchange Commission on or before the shelf
filing date;
- the exchange offer registration statement is not declared effective
within 120 days after the date we issued the old notes or the shelf
registration statement is not declared effective within 90 days after
the shelf filing date;
- the exchange offer is not consummated on or before 150 days after the
date we issued the old notes; or
- the shelf registration statement is declared effective within 90 days
after the shelf filing date but thereafter ceases to be effective, at
any time that we and our subsidiary guarantors are obligated to maintain
its effectiveness, without being succeeded within 30 days by an
additional registration statement filed and declared effective.
If a registration default occurs, we and our subsidiary guarantors will be
obligated to pay additional interest to each holder of Transfer Restricted
Securities, during the period of one or more registration defaults, in an amount
equal to $0.05 per week per $1,000 principal amount of the old notes
constituting Transfer Restricted Securities held by the holder until the
applicable registration statement is filed, the exchange offer registration
statement is declared effective and the exchange offer is consummated, or the
shelf registration statement is declared effective or again becomes effective,
as the case may be. This rate will be increased by an additional $0.05 per week
per $1,000 principal amount of the old notes for each 90 day period that any
additional interest described in this paragraph continues to accrue. However,
the rate for additional interest will not exceed $0.15 per week per $1,000
principal amount of old notes. All accrued additional interest will be paid to
holders in the same manner as interest payments on the old notes on semi-annual
payment dates that correspond to interest payment dates for the old notes.
Additional interest only accrues during a registration default.
The exchange and registration rights agreement also provides that we will:
- make available, for a period of 180 days after the consummation of the
exchange offer, a prospectus meeting the requirements of the Securities
Act to any broker-dealer for use in connection with any resale of any
new notes; and
- pay all expenses incident to the exchange offer, including the expense
of one counsel to the holders of the old notes, and will indemnify
certain holders of the old notes, including any broker-dealer, against
some liabilities, including liabilities under the Securities Act.
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A broker-dealer that delivers a prospectus to purchasers in connection with
resales of the new notes will be subject to civil liability provisions under the
Securities Act and will be bound by the provisions of the exchange and
registration rights agreement, including indemnification rights and obligations.
You will be required to deliver information to be used in connection with
the shelf registration statement in order to have your old notes included in the
shelf registration statement and benefit from the provisions regarding
additional interest set forth in the preceding paragraphs. If you sell old notes
pursuant to the shelf registration statement you generally will be required to
be named as a selling securityholder in the related prospectus and to deliver a
prospectus to purchasers. You will also be subject to civil liability provisions
under the Securities Act in connection with these sales and will be bound by the
provisions of the exchange and registration rights agreement that apply to you,
including indemnification obligations.
EXCHANGE AGENT
We have appointed The Bank of New York as the exchange agent for the
exchange offer. The Bank of New York also acts as trustee under the indenture.
You should send all executed transmittal letters to the exchange agent and
direct all communications with the exchange agent, including requests for
assistance or for additional copies of this prospectus or of the transmittal
letters as follows:
THE BANK OF NEW YORK, EXCHANGE AGENT
By Registered or Certified Mail: The Bank of New York
Reorganization Unit
101 Barclay Street, 7 East
New York, NY 10286
Attn: Mr. Santino Ginocchietti
By Hand or Overnight Delivery: The Bank of New York
101 Barclay Street
Corporate Trust Services Window
New York, NY 10286
Attn: Reorganization Section/Mr. Santino
Ginocchietti
By Facsimile for Eligible Institutions: (212) 815-6339
For Information: (212) 815-6331
IF YOU DELIVER THE TRANSMITTAL LETTER TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMIT INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, YOUR
DELIVERY OR INSTRUCTIONS WILL NOT BE EFFECTIVE.
FEES AND EXPENSES
We will bear all expenses of the exchange offer. We are making the
principal solicitation pursuant to the exchange offer by mail. Our officers and
employees and our affiliates may also make solicitations in person, by
telegraph, telephone or facsimile transmission.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. We will, however, pay the exchange
agent reasonable and customary fees for its services and will reimburse its
reasonable out-of-pocket costs and expenses and will indemnify the exchange
agent for all losses and claims incurred by it as a result of the exchange
offer. We may also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding
copies of this prospectus, letters of transmittal and related documents to the
beneficial owners of the old notes and in handling or forwarding tenders for
exchange.
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TRANSFER TAXES
We will pay any transfer taxes applicable to the exchange of old notes
pursuant to the exchange offer. If, however, a transfer tax is imposed for any
reason other than the exchange of old notes pursuant to the exchange offer, then
the amount of any of these transfer taxes -- whether imposed on you or any other
person -- will be payable by you.
For example, you will pay transfer taxes, if:
- new notes for principal amounts not tendered, or accepted for exchange
are to be registered or issued in the name of any person other than the
registered holder of the old notes tendered; or
- tendered old notes are registered in the name of any person other than
the person signing the transmittal letter.
If you do not submit satisfactory evidence of payment of taxes for which
you are liable or exemption from them with your transmittal letter, we will bill
you for the amount of these transfer taxes directly.
ACCOUNTING TREATMENT
We will record the new notes at the same carrying value as the old notes,
which is the principal amount as reflected in our accounting records on the date
of the exchange. Accordingly, we will not recognize any gain or loss for
accounting purposes. We will capitalize the expenses of the exchange offer or
debt issuance costs for accounting purposes. We will classify these expenses as
prepaid expenses and include them in other assets on our balance sheet. We will
amortize these expenses on a straight line basis over the life of the new notes.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
If you do not exchange your old notes for new notes pursuant to the
exchange offer, you will continue to be subject to the transfer restrictions of
your old notes. The old notes were originally issued in a transaction exempt
from registration under the Securities Act, and may be offered, sold, pledged,
or otherwise transferred only:
- in the United States to a person whom the seller reasonably believes is
a qualified institutional buyer as defined in Rule 144A under the
Securities Act;
- outside the United States in an offshore transaction in accordance with
Rule 904 under the Securities Act;
- pursuant to an exemption from registration under the Securities Act
provided by Rule 144, if available; or
- pursuant to an effective registration statement under the Securities
Act.
The offer, sale, pledge or other transfer of old notes must also be made in
accordance with any applicable securities laws of any state of the United
States, and the seller must notify any purchaser of the old notes of the
restrictions on transfer described above. We do not currently anticipate that we
will register the old notes under the Securities Act.
APPRAISAL OR DISSENTERS' RIGHTS
You will not have appraisal or dissenters' rights in connection with the
exchange offer.
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THE NEW NOTES
We will issue the new notes under an existing indenture dated as of April
25, 2001 between us and The Bank of New York, as 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 following describes some general terms and provisions of the new notes,
which are identical in all material respects to the terms of the old notes,
except that the registration rights and related liquidated damages provisions,
and the transfer restrictions that apply to the old notes, do not apply to the
new notes. The new notes will be a separate series of securities under the
indenture.
This description of new notes is intended to be a useful overview of the
material provisions of the notes and the indenture. Since this description is
only a summary, you should refer to the indenture and the notes for a complete
description of our obligations and your rights.
For purposes of this description, references to "Beverly Enterprises,"
"we," "our," and "us" refer only to Beverly Enterprises, Inc. and not to our
subsidiaries. For the purposes of this section, the term "notes" will refer to
the new notes.
GENERAL
THE NOTES
The notes:
- are our general unsecured, senior obligations;
- are limited to an aggregate principal amount of $200.0 million;
- mature on April 15, 2009;
- will be issued in denominations of $1,000 and integral multiples of
$1,000;
- will be represented by one or more registered notes in global form, but
in certain limited circumstances may be represented by notes in
definitive form. See "Book-Entry, Delivery and Form"; and
- rank equally in right of payment to any of our future unsecured senior
debt.
INTEREST
Interest on the notes will be computed semi-annually and:
- accrue at the rate of 9 5/8% per year;
- accrue from April 25, 2001, or the most recent interest payment date on
which interest has been paid;
- be payable in cash semi-annually in arrears on April 15 and October 15,
with the first payment on October 15, 2001;
- be payable to the holders of record on the April 1 and October 1
immediately preceding the related interest payment dates; and
- be computed on the basis of a 360-day year comprised of twelve 30-day
months.
PAYMENTS ON THE NOTES; PAYING AGENT AND REGISTRAR
We will pay principal of, premium, if any, and interest on the notes at the
office or agency designated by us in the Borough of Manhattan, The City of New
York, except that we may, at our option, pay interest on the notes by check
mailed to holders of the notes at their registered address as it appears in the
registrar's books; provided that if you have given wire transfer instructions to
the paying agent on or before the relevant record date, then your interest
payment will be made by wire transfer of immediately available funds to the
account
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specified in your instructions. We have initially designated The Bank of New
York 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
you, and we may act as paying agent or registrar.
We will pay principal of, premium, if any, and interest on, 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 the global notes.
OPTIONAL REDEMPTION
We may redeem the notes, at our option, in whole at any time or in part
from time to time, on at least 30 days, but not more than 60 days' prior notice
mailed to the registered address of each holder of notes to be so redeemed, at a
redemption price equal to the greater of
(1) 100% of their principal amount plus accrued but unpaid interest to
the date of redemption, or
(2) (A) the sum of the present values of the remaining scheduled
payments of principal and interest thereon from the date of redemption to
the date of maturity, except for currently accrued but unpaid interest,
discounted to the date of redemption, on a semiannual basis, assuming a
360-day year consisting of twelve 30-day months, at the Treasury Rate, plus
50 basis points, plus
(B) accrued but unpaid interest to the date of redemption.
MANDATORY REDEMPTION
Except as set forth below under "-- Repurchase at the Option of the
Holders", we are not required to make mandatory redemption payments or sinking
fund payments for the notes.
REPURCHASE AT THE OPTION OF THE HOLDERS
Change of Control
The indenture provides that, if a Change of Control occurs, you will have
the right to require us to offer to repurchase all or any part of your notes at
a purchase price in cash equal to 101% of the principal amount of the notes plus
accrued and unpaid interest, if any, to the date of purchase, subject to the
right of holders of record on the relevant record date to receive interest due
on the relevant interest payment date. We will only redeem notes in a amount of
$1,000 or an integral multiple of $1,000.
Within 45 days following any Change of Control, we will, or we will direct
the trustee to, mail a notice (the "Change of Control Offer") to each registered
holder with a copy to the trustee stating:
(1) that a Change of Control has occurred and that you have the right
to require us to purchase your notes at a purchase price in cash equal to
101% of the principal amount of your notes plus accrued and unpaid
interest, if any, to the date of purchase, subject to the right of holders
of record on a record date to receive interest on the relevant interest
payment date (the "Change of Control Payment");
(2) the repurchase date, which will not be earlier than 30 days from
the date such notice is mailed, or later than 90 days from the date the
Change of Control occurred (the "Change of Control Payment Date");
(3) that any notes not tendered will continue to accrue interest in
accordance with the terms of the indenture; and
(4) the procedures determined by us, consistent with the indenture,
that you must follow to have your notes repurchased.
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On the Change of Control Payment Date, we will, to the extent lawful:
(1) accept for payment all notes or portions of notes in integral
multiples of $1,000 properly tendered and not withdrawn under the Change of
Control Offer;
(2) deposit with the paying agent an amount equal to the Change of
Control Payment for all notes or portions of notes so tendered; and
(3) deliver or cause to be delivered to the trustee the notes so
accepted together with an officers' certificate stating the aggregate
principal amount of notes or portions of notes being purchased by us.
The paying agent will promptly mail to each holder of notes so tendered the
Change of Control Payment for the notes, and the trustee will promptly
authenticate and mail, or cause to be transferred by book entry, to each holder
a new note equal in principal amount to any unpurchased portion of the notes
surrendered, if any; provided that each such new note will be in a principal
amount of $1,000 or an integral multiple of $1,000. We will publicly announce
the results of the Change of Control Offer on or as soon as practicable after
the Change of Control Payment Date.
If the Change of Control Payment Date is on or after an interest record
date and on or before the related interest payment date, any accrued and unpaid
interest, will be paid to the person in whose name a note is registered at the
close of business on such record date, and no additional interest will be
payable to holders who tender pursuant to the Change of Control Offer.
The Change of Control provisions described above will apply whether or not
any other provisions of the indenture apply. If we fail to comply with the
provisions of the four preceding paragraphs, our failure will constitute an
Event of Default. Except as described above for a Change of Control, the
indenture does not contain provisions that permit you to require that we
repurchase or redeem the notes in the event of a takeover, recapitalization or
similar transaction.
We will comply, to the extent applicable, with the requirements of Section
14(e) of the Exchange Act and any other securities laws or regulations that
apply to the repurchase of notes pursuant to this covenant. To the extent that
the provisions of any securities laws or regulations conflict with provisions of
the indenture, we will comply with the applicable securities laws and
regulations and will not be deemed to have breached our obligations described in
the indenture by virtue of the conflict.
The terms of substantially all of our Debt Instruments require that we
repay or refinance our indebtedness under them in the event of a change of
control, as defined in those Debt Instruments. If one or more of the change of
control provisions in our other Debt Instruments is triggered before a Change of
Control occurs, then we will have to repay or refinance the triggered Debt
Instrument(s) before we repurchase any notes. As such, we may not be able to
satisfy our obligations to repurchase the notes unless we are able to refinance
those Debt Instruments or obtain waivers from our creditors under those Debt
Instruments. We can not assure you that we will have the financial resources to
repurchase the notes in the event of a Change of Control. See "Description of
Certain Indebtedness."
Asset Sales
The indenture provides that we will not, and will not permit any of our
Subsidiaries to, consummate an Asset Sale unless:
(1) we (or the Subsidiary, as the case may be) receive consideration
at the time of such Asset Sale at least equal to the fair market value (as
conclusively determined by a resolution of the Board of Directors set forth
in an Officers' Certificate delivered to the trustee) of the assets or
Equity Interests issued or sold or otherwise disposed of; and
(2) at least 75% of the consideration therefor that we or such
Subsidiary receive is in the form of cash or Cash Equivalents, provided
that for purposes of this provision,
(A) the amount of:
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(i) any of our or such Subsidiary's liabilities (as shown on our
or such Subsidiary's most recent balance sheet or in the notes
thereto), other than liabilities that are by their terms subordinated
to the notes or the Guarantees, that are assumed by the transferee of
any such assets, and
(ii) any securities or other obligations that we or such
Subsidiary receive from such transferee that we or such Subsidiary
immediately convert into cash or Cash Equivalents (or as to which we
or such Subsidiary have received at or prior to the consummation of
the Asset Sale a commitment (which may be subject to customary
conditions) from a nationally recognized investment, merchant or
commercial bank to convert into cash or Cash Equivalents within 90
days of the consummation of such Asset Sale and which are thereafter
actually converted into cash or Cash Equivalents within such 90-day
period)
will be deemed to be cash or Cash Equivalents (but shall not be
deemed to be Net Proceeds for purposes of the following provisions
until reduced to cash or Cash Equivalents), and
(B) the fair market value of any Non-Cash Consideration that we or
a Subsidiary receive in any Non-Qualified Asset Sale shall be deemed to
be cash to the extent that the aggregate fair market value (as
conclusively determined by resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the trustee) of all
Non-Cash Consideration (measured at the time received and without giving
effect to any subsequent changes in value) received by the Company or
any of its Subsidiaries since the date of the indenture in all
Non-Qualified Asset Sales does not exceed 6% of our Stockholders' Equity
as of the date of such consummation. Notwithstanding the foregoing, to
the extent we or any of our Subsidiaries receives Non-Cash Consideration
as proceeds of an Asset Sale, such Non-Cash Consideration shall be
deemed to be Net Proceeds for purposes of (and shall be applied in
accordance with) the following provisions when the Company or such
Subsidiary receives cash or Cash Equivalents from a sale, repayment,
exchange, redemption or retirement of or extraordinary dividend or
return of capital on such Non-Cash Consideration.
Pursuant to the indenture, within 365 days after the receipt of any Net
Proceeds from an Asset Sale, the Company or such Subsidiary may apply such Net
Proceeds:
(1) to purchase one or more Nursing Facilities or Related Businesses
and/or a controlling interest in the Capital Stock of a Person owning one
or more Nursing Facilities and/or one or more Related Businesses,
(2) to make a capital expenditure or to acquire other tangible assets,
in each case, that are used or useful in any business in which we are
permitted to be engaged pursuant to the covenant described below under the
caption "-- Certain Covenants -- Limitation on Business Activities," or
(3) to permanently reduce our or our Subsidiaries' Indebtedness (other
than Subordinated Indebtedness).
Pending the final application of any such Net Proceeds, we or such Subsidiary
may temporarily reduce Indebtedness or otherwise invest such Net Proceeds in any
manner that is not prohibited by the indenture. Any Net Proceeds from Asset
Sales that are not applied or invested as provided in the first sentence of this
paragraph will be deemed to constitute "Excess Proceeds." When the aggregate
amount of Excess Proceeds exceeds $25.0 million, we will be required to make an
offer to all holders of notes and holders of any of our other Indebtedness
ranking on a parity with the notes from time to time outstanding with similar
provisions that require us to make an offer to purchase or to redeem such
Indebtedness with the proceeds from any Asset Sales, pro rata in proportion to
the respective principal amounts of notes and such other Indebtedness then
outstanding (a "Senior Asset Sale Offer") to purchase the maximum principal
amount of the notes and such other Indebtedness that may be purchased out of the
Excess Proceeds, at an offer price in cash equal to 100% of the principal amount
thereof plus accrued and unpaid interest thereon to the date of purchase, in
accordance with the procedures set forth in the indenture. To the extent that
the aggregate amount of notes and such other Indebtedness tendered pursuant to a
Senior Asset Sale Offer is less than the Excess Proceeds, we may use any
remaining Excess Proceeds for general corporate purposes not prohibited at the
time under
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the indenture. If the aggregate principal amount of notes and such other
Indebtedness surrendered by holders thereof exceeds the amount of Excess
Proceeds, the notes and such other Indebtedness will be purchased on a pro rata
basis. Upon completion of a Senior Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero.
CERTAIN COVENANTS
Restricted Payments
The indenture provides that we will not, and will not permit any of our
Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any distribution on account of
the Equity Interests of the Company or any of its Subsidiaries (other than
(x) dividends or distributions payable in Qualified Equity Interests of the
Company, (y) dividends or distributions payable to the Company or any
Subsidiary of the Company, and (z) dividends or distributions by any
Subsidiary of the Company payable to all holders of a class of Equity
Interests of such Subsidiary on a pro rata basis);
(2) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company or any of its Subsidiaries;
(3) make any principal payment on, or purchase, redeem, defease or
otherwise acquire or retire for value any Subordinated Indebtedness, except
at the original final maturity date thereof; or
(4) make any Restricted Investment,
all such payments and other actions set forth in clauses (1) through (4) above
being collectively referred to as "Restricted Payments," unless, at the time of
and after giving effect to such Restricted Payment (the amount of any such
Restricted Payment, if other than cash or Cash Equivalents, shall be the fair
market value (as conclusively evidenced by a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to the trustee within
60 days prior to the date of such Restricted Payment) of the asset(s) proposed
to be transferred by the Company or such Subsidiary, as the case may be,
pursuant to such Restricted Payment):
(1) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(2) we would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at the
beginning of the Reference Period immediately preceding the date of such
Restricted Payment, have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test
set forth in the first paragraph of the covenant in the indenture described
below under the caption "-- Incurrence of Indebtedness and Issuance of
Preferred Stock"; and
(3) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Subsidiaries after December
31, 1995 (excluding Restricted Payments permitted by clauses (1), (2), (3)
and (4) of the next succeeding paragraph), is less than the sum (without
duplication) of:
(A) 50% of our Consolidated Net Income for the period (taken as one
accounting period) from the beginning of the fiscal quarter commencing
after December 31, 1995 to the end of our most recently ended fiscal
quarter for which internal financial statements are available at the
time of such Restricted Payment (or, if such Consolidated Net Income for
such period is a deficit, less 100% of such deficit), plus
(B) 100% of the aggregate net cash proceeds that we receive from
the issue or sale (other than to one of our Subsidiaries) since December
31, 1995 of Qualified Equity Interests of the Company or of debt
securities of the Company or any of its Subsidiaries that have been
converted into or exchanged for such Qualified Equity Interests of the
Company, plus
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(C) to the extent that any Restricted Investment that was made
after the date of the indenture is sold for cash or otherwise liquidated
or repaid for cash, the lesser of (i) the cash return of capital with
respect to such Restricted Investment (net of taxes and the cost of
disposition, if any) or (ii) the initial amount of such Restricted
Investment, plus
(D) $20.0 million.
The foregoing provisions will not prohibit the following Restricted
Payments:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
otherwise complied with the provisions of the indenture;
(2) the redemption, repurchase, retirement or other acquisition of any
Equity Interests of the Company or any Subsidiary in exchange for, or out
of the net cash proceeds of, the substantially concurrent sale (other than
to a Subsidiary of the Company) of Qualified Equity Interests of the
Company; provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (3)(B) of the preceding
paragraph;
(3) the defeasance, redemption or repurchase of Subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness or in exchange for or out of the net cash proceeds
from the substantially concurrent sale (other than to one of our
Subsidiaries) of Qualified Equity Interests of the Company; provided that
the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement or other acquisition shall be excluded
from clause (3)(B) of the preceding paragraph; and
(4) any purchase or defeasance of Subordinated Indebtedness to the
extent required upon a change of control or asset sale (as defined therein)
by the indenture or other agreement or instrument pursuant to which such
Subordinated Indebtedness was issued, but only if we (A) in the case of a
Change of Control, have complied with our obligations under the provisions
described under the covenant entitled "Repurchase at the Option of the
Holders -- Change of Control" or (B) in the case of an Asset Sale, have
applied the Net Proceeds from such Asset Sale in accordance with the
provisions under the covenant entitled "Repurchase at the Option of the
Holders -- Asset Sales;"
provided, however, in the case of each of clauses (1), (2), (3) and (4) of this
paragraph, no Default or Event of Default shall have occurred or be continuing
at the time of such Restricted Payment or would occur as a consequence thereof.
Not later than the date of making any Restricted Payment, we shall deliver
to the trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
the covenant "Restricted Payments" were computed.
Incurrence of Indebtedness and Issuance of Preferred Stock
The indenture provides that we will not, and will not permit any of our
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") after the date of the indenture any
Indebtedness (including Acquired Debt) and we will not permit any of our
Subsidiaries, to issue any shares of preferred stock; provided, however, that we
and our Subsidiaries may incur Indebtedness (including Acquired Debt) if the
Fixed Charge Coverage Ratio for the Reference Period immediately preceding the
date on which such additional Indebtedness is incurred would have been at least
2.5 to 1, in each case determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred at the beginning of such Reference Period. Indebtedness
consisting of reimbursement obligations in respect of a letter of credit will be
deemed to be incurred when the letter of credit is first issued.
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The foregoing provisions do not apply to:
(1) the incurrence by the Company or any of its Subsidiaries of
Indebtedness pursuant to the Credit Agreement in an aggregate principal
amount at any time outstanding (with letters of credit being deemed to have
a principal amount equal to the maximum potential reimbursement obligation
of the Company or any Subsidiary with respect thereto) not to exceed an
amount equal to $175.0 million;
(2) the incurrence by the Company and the guarantors of Indebtedness
represented by the notes offered hereby and the related exchange notes and
any guarantees thereof;
(3) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund,
Indebtedness that was permitted by the indenture to be incurred (including,
without limitation, Existing Indebtedness);
(4) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Subsidiaries; provided that in the case of such Indebtedness of the
Company, such obligations shall be unsecured;
(5) the incurrence by the Company or any of its Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate or currency risk with respect to any fixed or floating rate
Indebtedness that is permitted by the indenture to be outstanding or any
receivable or liability the payment of which is determined by reference to
a foreign currency; provided that the notional principal amount of any such
Hedging Obligation does not exceed the principal amount of the Indebtedness
or the amount of such receivable or liability to which such Hedging
Obligation relates;
(6) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by performance bonds, warranty or contractual
service obligations, standby letters of credit or appeal bonds, in each
case to the extent incurred in the ordinary course of business of the
Company or such Subsidiary;
(7) the incurrence by Receivables Subsidiaries of Indebtedness not to
exceed $100.0 million in the aggregate at any time outstanding, provided
that
(x) the Company has received customary legal or accounting opinions
(or advice from a nationally recognized rating agency) that such
Receivables Subsidiary is "bankruptcy remote" or otherwise would not be
consolidated with the Company in a bankruptcy proceeding and that the
sale of receivables to such Receivables Subsidiary qualify as a "true
sale" and
(y) such Indebtedness is otherwise non-recourse to the assets of
the Company and its Subsidiaries other than a Receivables Subsidiary;
and
(8) the incurrence by the Company or any of its Subsidiaries of
Indebtedness (in addition to Indebtedness permitted by any other clause of
this paragraph) in an aggregate principal amount at any time outstanding
not to exceed $100.0 million.
For purposes of determining any particular amount of Indebtedness under
this covenant, guarantees, Liens or obligations with respect to letters of
credit supporting Indebtedness otherwise included in the determination of such
particular amount shall not be included. For purposes of determining compliance
with this covenant,
(1) in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness permitted by the second
paragraph of this covenant, the Company shall classify such item of
Indebtedness and only be required to include the amount and type of such
Indebtedness in one of the categories of permitted Indebtedness described
above, and
(2) the outstanding principal amount on any date of any Indebtedness
issued with original issue discount is the face amount of such Indebtedness
less the remaining unamortized portion of the original issue discount of
such Indebtedness on such date.
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Limitation on Liens
The indenture provides that we will not, and will not permit any of our
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien (except Permitted Liens) on any asset now owned or hereafter
acquired, or any income or profits therefrom or assign or convey any right to
receive income therefrom unless all payments due under the indenture and the
notes are secured on an equal and ratable basis with the Obligations so secured
until such time as such Obligations are no longer secured by a Lien.
Dividend and other Payment Restrictions Affecting Subsidiaries
The indenture provides that we will not, and will not permit any of our
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary, other than a Receivables Subsidiary, to:
(1) (A) pay dividends or make any other distributions to the Company
or any of its Subsidiaries on its Capital Stock or with respect to any
other interest or participation in, or measured by, its profits, or
(B) pay any Indebtedness owed to the Company or any of its
Subsidiaries,
(2) make loans or advances to the Company or any of its Subsidiaries,
or
(3) transfer any of its properties or assets to the Company or any of
its Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of:
(1) existing Indebtedness as in effect on the date of the indenture,
(2) the indenture,
(3) applicable law,
(4) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Subsidiaries as in effect at the time
of such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition or in violation of
the covenant described above under the caption "-- Incurrence of
Indebtedness and Issuance of Preferred Stock"), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person, or the property or assets of the Person,
so acquired, provided that the Consolidated Cash Flow of such Person is not
taken into account in determining whether such acquisition was permitted by
the terms of the indenture except to the extent that such Consolidated Cash
Flow would be permitted to be dividended to the Company without the prior
consent or approval of any third party,
(5) customary non-assignment provisions in leases entered into in the
ordinary course of business,
(6) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in
clause (3) in the preceding paragraph on the property so acquired,
(7) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive than those contained in the agreements
governing the Indebtedness being refinanced, or
(8) the Credit Agreement and related documentation as the same is in
effect on the date of the indenture and as amended or replaced from time to
time, provided that no such amendment or replacement is more restrictive as
to the matters enumerated above than the Credit Agreement and related
documentation as in effect on the date of the indenture.
Nothing contained in this "Dividend and Other Payment Restrictions Affecting
Subsidiaries" covenant shall prevent us or any of our Subsidiaries from
creating, incurring, assuming or suffering to exist any Permitted Liens or
entering into agreements in connection therewith that impose restrictions on the
transfer or disposition of the property or assets subject to such Permitted
Liens.
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Limitation on Business Activities
The indenture provides that we will not, and we will not permit any of our
Subsidiaries to, engage to any material extent in any business other than the
ownership, operation and management of Nursing Facilities and Related
Businesses.
Merger, Consolidation or Sale of Assets
The indenture provides that we may not consolidate or merge with or into
(whether or not we are the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions, to another corporation, Person or
entity unless:
(1) we are the surviving corporation or the entity or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or
existing under the laws of the United States, any state thereof or the
District of Columbia;
(2) the entity or Person formed by or surviving any such consolidation
or merger (if other than the Company) or the entity or Person to which such
sale, assignment, transfer, lease, conveyance or other disposition shall
have been made assumes all of our obligations under the notes and the
indenture pursuant to a supplemental indenture in form reasonably
satisfactory to the trustee;
(3) immediately after such transaction no Default or Event of Default
exists; and
(4) we or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have
been made
(A) will have Consolidated Net Worth immediately after the
transaction equal to or greater than our Consolidated Net Worth
immediately preceding the transaction and
(B) will, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the
beginning of the Reference Period, be permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of the covenant in the indenture
described above under the caption "-- Incurrence of Indebtedness and
Issuance of Preferred Stock."
Prior to the consummation of the proposed transaction, we will deliver to
the trustee, an Officers' Certificate covering clauses (1) through (4) above and
an Opinion of Counsel covering clauses (1) and (2) above, and each stating that
the proposed transaction and such supplemental indenture comply with the
indenture. The trustee shall be entitled to conclusively rely upon such
Officers' Certification and Opinion of Counsel.
Transactions with Affiliates
The indenture provides that neither we nor any of our Subsidiaries will
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make any contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable
to the Company or the relevant Subsidiary than those that could have been
obtained in a comparable transaction by the Company or such Subsidiary with
an unrelated Person, and
(2) we deliver to the trustee
(A) with respect to an Affiliate Transaction involving aggregate
consideration in excess of $5.0 million, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that
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such Affiliate Transaction complies with clause (1) above and that such
Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors, and
(B) with respect to an Affiliate Transaction involving aggregate
consideration in excess of $10.0 million, an opinion as to the fairness
to the Company or such Subsidiary of such Affiliate Transaction from a
financial point of view issued by an investment banking firm of national
standing; provided that
(i) transactions or payments pursuant to any employment
arrangements, director or officer indemnification agreements or
employee or director benefit plans entered into by the Company or any
of its Subsidiaries in the ordinary course of business of the Company
or such Subsidiary,
(ii) transactions between or among the Company and/or its
Subsidiaries and
(iii) Restricted Payments permitted by the provisions of the
indenture described above under the caption "-- Restricted Payments,"
in each case, shall not be deemed to be Affiliate Transactions.
Future Guarantors and Release of Guarantors
The indenture provides that any of our existing or future subsidiaries will
be a guarantor of the notes, on a senior unsecured basis, on substantially the
same terms as the existing guarantors, subject to certain exceptions, including
that no Receivables Subsidiary will be required to be guarantors. Upon the sale
or disposition (whether by merger, stock purchase, asset sale or otherwise) of a
guarantor (or all of its assets) to an entity which is not our Subsidiary, or
upon the dissolution of any guarantors which sale, disposition or dissolution is
otherwise in compliance with the indenture, such guarantor shall be deemed
released from its obligations under its Guarantee of the notes; provided,
however, that any such termination shall occur only to the extent that all
obligations of such guarantor under all of its guarantees of, and under all of
its pledges of assets or other security interests which secure any of our
Indebtedness shall also terminate upon such sale, disposition or dissolution.
Reports
The indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any notes are outstanding, we will
furnish to the trustee, within 15 days after we file or would have been required
to file, all quarterly and annual financial information that would be required
to be contained in a filing with the Commission on Forms 1O-Q and 10-K if we
were required to file such Forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by our certified independent
accountants. In addition, whether or not required by the rules and regulations
of the Commission, we will file a copy of all such information and reports with
the Commission for public availability and make such information available to
securities analysts and prospective investors upon request.
EVENTS OF DEFAULT AND REMEDIES
The indenture provides that each of the following constitutes an Event of
Default:
(1) default for 30 days in the payment, when due, of interest on the
notes;
(2) default in payment when due of the principal of or premium, if
any, on the notes, at maturity or otherwise;
(3) failure by the Company or any guarantor to comply with the
provisions described under the caption " -- Repurchase at the Option of
Holders -- Change of Control" or " -- Repurchase at the Option of
Holders -- Asset Sales";
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(4) failure by the Company or any guarantor for 30 days after notice
to comply with the provisions described under the caption "-- Certain
Covenants -- Restricted Payments" or "-- Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock";
(5) failure by the Company or any guarantor for 60 days after notice
to comply with any of its agreements in the indenture or the notes;
(6) any default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Significant Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Significant Subsidiaries), whether such Indebtedness
or guarantee exists on the date of the indenture or is thereafter created,
which default (A) constitutes a Payment Default or (B) results in the
acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been
a Payment Default or that has been so accelerated, aggregates in excess of
$20.0 million;
(7) failure by the Company or any of its Significant Subsidiaries to
pay final judgments aggregating in excess of $20.0 million entered by a
court or courts of competent jurisdiction against the Company or such
Significant Subsidiaries, which judgments are not paid, discharged or
stayed for a period of 60 days;
(8) any Guarantee shall cease for any reason not permitted by the
indenture to be in full force and effect or any guarantor, or any person
acting on behalf of any guarantor, shall deny or disaffirm its obligations
under its Guarantee; and
(9) certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries.
A Default under clause (4) or (5) is not an Event of Default until the
trustee notifies the Company in writing, or the holders of at least 25% in
aggregate principal amount of the then outstanding notes notify the Company and
the trustee in writing, of the Default and the Company does not cure the Default
within 30 days, with respect to a Default under clause (4), or 60 days with
respect to a Default under clause (5), after receipt of such notice. The written
notice must specify the Default, demand that it be remedied and state that the
notice is a "Notice of Default."
If any Event of Default occurs and is continuing (other than an Event of
Default with respect to (9) above), the trustee or the holders of at least 25%
in aggregate principal amount of the then outstanding notes may declare all the
notes to be due and payable immediately. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency with respect to the Company, all outstanding notes will become due
and payable without further action or notice. Holders of the notes may not
enforce the indenture or the notes except as provided in the indenture. Subject
to certain limitations, holders of a majority in aggregate principal amount of
the then outstanding notes may direct the trustee in its exercise of any trust
or power. The trustee may withhold from holders of the notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
The holders of a majority in aggregate principal amount of the notes then
outstanding by notice to the trustee on behalf of the holders of all of the
notes, may waive any existing Default or Event of Default and its consequences
under the indenture except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, or interest on the notes.
We are required to deliver to the trustee annually a statement regarding
compliance with the indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the trustee a statement
specifying such Default or Event of Default.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
We may, at our option and at any time, elect to have all of our obligations
and the obligations of our guarantors discharged with respect to the outstanding
notes ("Legal Defeasance") except for:
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(1) the rights of holders of outstanding notes to receive payments in
respect of the principal of, premium, if any, and interest on such notes
when such payments are due from the trust referred to below,
(2) our obligations with respect to the notes concerning issuing
temporary notes, registration of notes, mutilated, destroyed, lost or
stolen notes and the maintenance of an office or agency for payment and
money for security payments held in trust,
(3) the rights, powers, trusts, duties and immunities of the trustee,
and our obligations in connection therewith, and
(4) the Legal Defeasance provisions of the indenture.
In addition, we may, at our option and at any time, elect to have our
obligations and the obligations of our guarantors released with respect to
certain covenants that are described in the indenture ("Covenant Defeasance")
and thereafter any omission to comply with such obligations shall not constitute
a Default or Event of Default with respect to the notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
notes.
In order to exercise either Legal Defeasance or Covenant Defeasance,
(1) we must irrevocably deposit with the trustee, in trust, for the
benefit of the holders of the notes, cash, U.S. Government Obligations, or
a combination thereof, in such amounts as will be sufficient, in the
opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest on such outstanding
notes on the Maturity Date;
(2) in the case of Legal Defeasance, we shall have delivered to the
trustee an opinion of counsel in the United States confirming that:
(A) we have received from, or there has been published by, the
Internal Revenue Service a ruling or
(B) since the date of the indenture, there has been a change in the
applicable Federal income tax law, in either case to the effect that,
and based thereon such opinion of counsel shall confirm that, the
holders of such outstanding notes will not recognize income, gain or
loss for Federal income tax purposes as a result of such Legal
Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, we shall have delivered to the
trustee an opinion of counsel in the United States confirming that the
holders of such outstanding notes will not recognize income, gain or loss
for Federal income tax purposes as a result of such Covenant Defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day
after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the indenture) to which we or any of
our Subsidiaries is a party or by which we or any of our Subsidiaries is
bound (other than a breach, violation or default resulting from the
borrowing of funds to be applied to such deposit);
(6) we must have delivered to the trustee an opinion of counsel to the
effect that after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
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(7) we must deliver to the trustee an Officers' Certificate stating
that we did not make the deposit with the intent of preferring the holders
of such notes over our other creditors with the intent of defeating,
hindering, delaying or defrauding our creditors or others; and
(8) we must deliver to the trustee an Officers' Certificate and an
opinion of counsel, each stating that all conditions precedent relating to
the Legal Defeasance or the Covenant Defeasance, as the case may be, have
been complied with.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATORS OR
STOCKHOLDERS
None of our directors, officers, employees, incorporators or stockholders,
as such, shall have any liability for any of our obligations under the notes,
the indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each holder of notes by accepting a note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the notes. Such waiver may not be effective to
waive liabilities under the Federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
TRANSFER AND EXCHANGE
A holder may transfer or exchange notes in accordance with the indenture.
The registrar and the trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and we may require a
holder to pay any taxes and fees required by law or permitted by the indenture.
The registered holder of a note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the indenture or
the notes may be amended or supplemented with the consent of the holders of at
least a majority in principal amount of the notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for such
notes), and any existing default or compliance with any provision of the
indenture or the notes may be waived with the consent of the holders of a
majority in principal amount of the then outstanding notes (including consents
obtained in connection with a tender offer or exchange offer for such notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any notes held by a non-consenting holder):
(1) reduce the principal amount of notes whose holders must consent to
an amendment, supplement or waiver,
(2) reduce the principal of or change the fixed maturity of any note,
(3) reduce the rate of or change the time for payment of interest on
any note,
(4) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the notes (except a rescission of
acceleration of the notes by the holders of at least a majority in
aggregate principal amount thereof and a waiver of the Payment Default that
resulted from such acceleration),
(5) make any note payable in money other than that stated in the
notes,
(6) make any change in the provisions of the indenture relating to
waivers of past Defaults or the rights of holders of notes to receive
payments of principal of or premium, if any, or interest on the notes, or
(7) make any change in the foregoing amendment and waiver provisions.
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Notwithstanding the foregoing, without the consent of any holder of notes,
we, our guarantors and the trustee may amend or supplement the indenture or the
notes:
(1) to cure any ambiguity, defect or inconsistency,
(2) to provide for uncertificated notes in addition to or in place of
certificated notes,
(3) to provide for additional guarantors of the notes or the release,
in accordance with the indenture, of any guarantor,
(4) to provide for the assumption of our or any guarantor's
obligations to holders of notes in the case of a merger, consolidation or
sale of assets,
(5) to provide for additional guarantors of the notes,
(6) to evidence the release of any guarantor in accordance with the
provisions of the indenture,
(7) to make any change that would provide any additional rights or
benefits to the holders of notes or that does not adversely affect the
legal rights under the indenture of any such holder,
(8) to comply with requirements of the Commission in order to effect
or maintain the qualification of the indenture under the Trust Indenture
Act of 1939, as amended,
(9) to evidence and provide for the acceptance of the appointment of a
successor trustee with respect to the Securities, or
(10) in any other case, pursuant to the provisions of the indenture,
where a supplemental indenture is required or permitted to be entered into
without the consent of any holder of notes.
CONCERNING THE TRUSTEE
The indenture will contain certain limitations on the rights of the
trustee, should the trustee become our creditor, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The trustee will be permitted to engage in other
transactions; however, if the trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue or resign.
The holders of a majority in principal amount of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that in case an Event of Default
shall occur (which shall not be cured), the trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the trustee will not be under
any obligation to exercise any of its rights or powers under the indenture at
the request of any holder of notes, unless such holder shall have offered to the
trustee security and indemnity satisfactory to it against any loss, liability or
expense.
The Bank of New York, an affiliate of BNY Capital Markets, Inc., is the
trustee, registrar and paying agent under the indenture.
An affiliate of the trustee, BNY Capital Markets, Inc., was an initial
purchaser of the old notes. BNY Capital Markets, Inc. is also a lender under our
senior secured credit facility.
If an event of default (or an event that would be an event of default if
the requirements for giving us notice of default or our default having to exist
for a specific period of time were disregarded) occurs, the trustee may be
considered to have a conflicting interest with respect to the notes for purposes
of the Trust Indenture Act. In that case, the trustee may be required to resign
as trustee under the indenture and we would be required to appoint a successor
trustee.
GOVERNING LAW
The indenture will provide that it and the notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
The net proceeds of the old notes were used to refinance and permanently
reduce our commitment under our old $375.0 million senior secured credit
facility.
New Senior Secured Credit Facility. Simultaneously with the offering of
the old notes, we entered into a new $150.0 million senior secured credit
facility of which $75.0 million will be available for letters of credit.
Borrowings under our new senior secured credit facility will bear interest
according to a pricing schedule based on our financial leverage and will bear an
initial interest rate of adjusted LIBOR plus 2.875%, the Base Rate plus 1.875%
or the adjusted CD rate, each as defined, plus 3.000% at our option. Such
spreads may be adjusted quarterly based on certain financial ratio calculations.
Our new senior secured credit facility is secured by certain of our real and
personal property (but not our receivables), stock of certain of our
subsidiaries and is guaranteed by substantially all of our present and future
subsidiaries and imposes on us certain financial tests and restrictive
covenants, and maintenance tests.
Senior Notes. We have $180.0 million of 9% Senior Notes due February 15,
2006 (the "Senior Notes") which were sold through a public offering. The Senior
Notes are unsecured obligations and guaranteed by the same subsidiaries that
will guarantee these notes and impose on us certain restrictive covenants that
are substantially similar to those to be contained in the notes offered hereby.
The Senior Notes are redeemable at our option in whole or in part, at any
time at the following redemption prices (expressed as percentages at the
principal amount) if redeemed during the 12-month period commencing February 15
of the years indicated below, in each case, together with accrued and unpaid
interest thereon to the redemption date:
YEAR PERCENTAGE
- ---- ----------
2001........................................................ 104.5%
2002........................................................ 103.0%
2003........................................................ 101.5%
2004 and thereafter......................................... 100.0%
Upon the occurrence of a change of control each holder of the Senior Notes
will have the right to require us to repurchase all or any part of such holder's
Senior Notes at an offer price in cash equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest thereon to the date of purchase.
In certain circumstances, we may be required to offer to redeem the Senior Notes
from excess proceeds from asset sales. We are not otherwise required to make any
mandatory redemption or sinking fund payments with respect to the Senior Notes.
7% Note. We issued a $65.0 million 7% note to A.I. Credit Corp. of which
$32.5 million is currently outstanding and is due in installments through
January 2002. This Note is secured by a surety bond.
Medium Term Notes. Our subsidiary, Beverly Funding Corporation, has
outstanding $70,000,000 of Medium Term Notes due March 2005. The Medium Term
Notes are collateralized by patient accounts receivable, which are sold, from
time to time, by one of our subsidiaries to Beverly Funding Corporation. Under
applicable accounting rules, Beverly Funding Corporation is not consolidated in
our financial statements. At December 31, 2000, Beverly Funding Corporation had
total assets of approximately $110,000,000. Beverly Funding Corporation is
required to maintain receivables and certain other liquid assets based upon the
amount of the then outstanding Medium Term Notes. We service and administer the
receivables sold by us to Beverly Funding Corporation.
The Medium Term Notes bear interest at LIBOR plus 0.70%. We are not
otherwise required to make any mandatory redemption or sinking fund payments
with respect to the Medium Term Notes.
Other Indebtedness. Our subsidiaries have tax-exempt industrial
development revenue bonds outstanding which were originally issued prior to 1986
primarily for the construction or acquisition of nursing facilities. In
addition, our subsidiaries, have various mortgage financings. We also have other
debt obligations with respect to the OIG Settlement and patient care liability
claims. See Notes 6 and 7 to Notes to Consolidated Financial Statements in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2000.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of the material federal income tax
considerations relevant to the exchange of old notes for new notes pursuant to
the exchange offer. This discussion is based upon the Internal Revenue Code of
1986, as amended, Treasury regulations, Internal Revenue Service rulings and
pronouncements, and judicial decisions now in effect, all of which are subject
to change at any time by legislative, judicial or administrative action. Any
such changes may be applied retroactively in a manner that could adversely
affect your notes. We have not and will not seek any rulings from the Internal
Revenue Service with respect to the matters discussed below. We cannot assure
you that the Internal Revenue Service will not take positions concerning tax
consequences of the exchange offer which are different from those discussed
below. This discussion does not consider the effect of any applicable foreign,
state, local or other tax laws or estate or gift tax considerations. This
discussion also does not address the federal income tax consequences to holders
subject to special treatment under the federal income tax laws, such as dealers
in securities or foreign currency, tax-exempt entities, banks, thrifts,
insurance companies, persons that hold the notes as part of a straddle, hedge or
conversion transaction, persons that have a functional currency other than the
United States dollar, and investors in pass-through entities.
YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO YOU OF EXCHANGING OLD NOTES FOR NEW NOTES PURSUANT TO THE
EXCHANGE OFFER, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR
FOREIGN TAX LAWS.
The exchange of old notes for new notes pursuant to the exchange offer will
not constitute a taxable exchange for federal income tax purposes. You will have
a tax basis in the new notes equal to your tax basis in the old notes exchanged
therefor and your holding period for the new notes will include your holding
period for the old notes exchanged therefor. Accordingly, the exchange should
have no material federal income tax consequences to you.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account in
connection with the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such new notes. This prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of new notes received in exchange for
old notes where the old notes were acquired as a result of market-making
activities or other trading activities. We have agreed that for a period ending
on the earlier of
(1) 180 days after the date of this prospectus or
(2) the date on which a broker-dealer is no longer required to deliver
a prospectus in connection with market-making or other trading activities,
we will make available and provide promptly upon reasonable request this
prospectus, in a form meeting the requirements of the Securities Act, to any
broker-dealer for use in connection with any such resale.
We will receive no proceeds in connection with the exchange offer. Exchange
notes received by broker-dealers for their own account in the exchange offer may
be sold from time to time in one or more transactions in the over-the-counter
market, in negotiated transactions, through the writing of options on the new
notes or a combination of these methods of resale, at market prices prevailing
at the time of resale, at prices related to the prevailing market prices or
negotiated prices.
A resale may be made directly to purchasers or through brokers or dealers
who may receive compensation in the form of commissions or concessions from the
broker-dealer and/or the purchasers of new notes. Any broker-dealer that resells
new notes that it received for its own account in the exchange offer and any
broker or dealer that participates in a distribution of the new notes may be an
underwriter within the meaning of the Securities Act, and any profit on the
resale of exchange notes and any commissions or concessions received by these
persons may be underwriting compensation under the Securities Act. The
transmittal letter states that by acknowledging that it will deliver, and by
delivering, a prospectus, a broker-dealer will not be considered to admit that
it is an underwriter.
We have agreed to pay all expenses incident to our performance of, or
compliance with, the exchange and registration rights agreement and will
indemnify the holders of Transfer Restricted Securities, including any
broker-dealers, and certain parties related to such holders, against certain
liabilities including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the new notes will be passed upon for us by Latham &
Watkins, Chicago, Illinois, and certain other matters will be passed on for us
by Douglas J. Babb, Esq. our Executive Vice President -- Law and Government
Relations and Secretary of the Company.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 2000, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our financial statements and schedule are incorporated by reference
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
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GLOSSARY
Set forth below are certain defined terms used in the indenture. Reference
is made to the indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"ACQUIRED DEBT" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"ASSET SALE" means (i) the sale, lease, conveyance or other disposition of
any assets (including, without limitation, by way of a sale and leaseback or by
merger or consolidation) other than in the ordinary course of business (provided
that the sale, lease, conveyance or other disposition of all or substantially
all of the assets of the Company and its Subsidiaries taken as a whole will be
governed by the provisions of the indenture described above under the caption
"-- Repurchase at the Option of Holders -- Change of Control" and/or the
provisions described above under the caption "-- Certain Covenants -- Merger,
Consolidation or Sale of Assets" and not by the provisions of the covenant
described above under the caption "-- Repurchase at the Option of
Holders -- Asset Sales"), and (ii) the issuance or sale by the Company or any of
its Subsidiaries of Equity Interests of any of the Company's Subsidiaries, in
the case of either clause (i) or (ii), whether in a single transaction or a
series of related transactions (a) that have a fair market value in excess of
$10.0 million or (b) for net proceeds in excess of $10.0 million.
Notwithstanding the foregoing: (a) a transfer of assets by the Company to a
Subsidiary or by a Subsidiary to the Company or to another Subsidiary, (b) an
issuance of Equity Interests by a Subsidiary to the Company or to another
Subsidiary, (c) a Restricted Payment that is permitted by the covenant described
above under the caption "-- Restricted Payments" and (d) a Nursing Facility Swap
will not be deemed to be an Asset Sale.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"CASH EQUIVALENTS" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than one
year from the date of acquisition, (iii) certificates of deposit with maturities
of one year or less from the date of acquisition, bankers' acceptances (or, with
respect to foreign banks, similar instruments) with maturities not exceeding one
year and overnight bank deposits, in each case with any domestic commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia, or any United States branch of a foreign bank having
at the date of acquisition thereof combined capital and surplus of not less than
$100.0 million, (iv) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above,
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(v) commercial paper having the highest rating obtainable from Moody's or S&P
and in each case maturing within one year after the date of acquisition, and
(vi) investments in money market funds which invest substantially all their
assets in securities of the types described in the foregoing clauses (i) through
(v).
"CHANGE OF CONTROL" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition, in one or a series of
related transactions, of all or substantially all of the assets of the Company
and its Subsidiaries taken as a whole to any Person or group (as such term is
used in Sections l3(d)(3) and l4(d)(2) of the Exchange Act) other than to a
Person or group who, prior to such transaction, held a majority of the voting
power of the voting stock of the Company, (ii) the acquisition by any Person or
group (as defined above) of a direct or indirect interest in more than 50% of
the voting power of the voting stock of the Company, by way of merger or
consolidation or otherwise, or (iii) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors.
The phrase "all or substantially all" of the assets of the Company will
likely be interpreted under applicable state law and will be dependent upon
particular facts and circumstances. As a result, there may be a degree of
uncertainty in ascertaining whether a sale or transfer of "all or substantially
all" of the assets of the Company has occurred, in which case a holder's ability
to obtain the benefit of a Change of Control Offer may be impaired. In addition,
no assurances can be given that the Company will be able to acquire notes
tendered upon the occurrence of a Change of Control.
"COMPARABLE TREASURY ISSUE" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such notes.
"COMPARABLE TREASURY PRICE" means, with respect to any redemption date, the
average of the bid and asked prices for the Comparable Treasury Issue (expressed
in each case as a percentage of its principal amount) on the third business day
preceding such redemption date, (i) as set forth in the daily statistical
release (or any successor release) published by the Federal Reserve Bank of New
York or published on the website of the Federal Reserve Bank of New York at
http://www.ny.frb.org and designated "Composite 3:30 p.m. Quotations for the
U.S. Government Securities" or (ii) if such release (or any successor release)
is not published or does not contain such prices on such business day, the
average of the Reference Treasury Dealer Quotations for such redemption date.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) provision
for taxes based on income or profits of such Person and its Subsidiaries for
such period, to the extent such provision for taxes was included in computing
such Consolidated Net Income, plus (ii) the Fixed Charges of such Person and its
Subsidiaries for such period, to the extent that such Fixed Charges were
deducted in computing such Consolidated Net Income, plus (iii) depreciation and
amortization (including amortization of goodwill and other intangibles) of such
Person and its Subsidiaries for such period to the extent that such depreciation
and amortization were deducted in computing such Consolidated Net Income, plus
(iv) other non-cash items of such Person and its Subsidiaries for such period to
the extent such non-cash items were deducted in computing such Consolidated Net
Income, in each case, on a consolidated basis and determined in accordance with
GAAP. Notwithstanding the foregoing, the provision for taxes on the income or
profits of, the depreciation and amortization of, and the other non-cash items
of, a Subsidiary of the referent Person shall be added to Consolidated Net
Income to compute Consolidated Cash Flow only to the extent (and in the same
proportion) that the Net Income of such Subsidiary was included in calculating
the Consolidated Net Income of such Person and only if a corresponding amount
would be permitted at the date of determination to be dividended to the Company
by such Subsidiary without prior approval (that has not been obtained), pursuant
to the terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Subsidiary or its stockholders.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis; provided that, (i) the Net Income, if positive,
of any Person that is not a Subsidiary or that is accounted for by the equity
method of
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accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Subsidiary thereof, (ii)
the Net Income, if positive, of any Subsidiary shall be excluded to the extent
that the declaration or payment of dividends or similar distributions by that
Subsidiary of that Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its stockholders, (iii) the Net
Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded and (iv) the
cumulative effect of a change in accounting principles shall be excluded.
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Redeemable Stock), less all write-ups
(other than write-ups resulting from foreign currency translations and write-ups
of tangible assets of a going concern business made in accordance with GAAP as a
result of the acquisition of such business) subsequent to the date of the
indenture in the book value of any asset owned by such Person or a consolidated
Subsidiary of such Person, and excluding the cumulative effect of a change in
accounting principles, all as determined in accordance with GAAP.
"CONTINUING DIRECTORS" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"CREDIT AGREEMENT" means a credit agreement providing for revolving or term
loans and other extensions of credit to the Company and its Subsidiaries.
"DEFAULT" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EXISTING COLLATERAL" means property or assets of the Company or its
Subsidiaries (other than any Receivables Subsidiary) that are, or since the date
of the original issuance of the 9% Senior Notes of the Company due 2006, subject
to one or more Permitted Liens.
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries in existence on the date of the indenture until such amounts are
repaid.
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that such
Person or any of its Subsidiaries incurs, assumes, guarantees, redeems or repays
any Indebtedness (other than revolving credit borrowings) or issues or redeems
preferred stock subsequent to the commencement of the period for which the Fixed
Charge Coverage Ratio is being calculated but prior to the date on which the
event for which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, guarantee, redemption or
repayment of Indebtedness, or such issuance or redemption of preferred stock, as
if the same had occurred at the beginning of the applicable Reference Period. In
addition, for purposes of making the computation referred to above, (i)
acquisitions that have been made by the Company or any of its Subsidiaries,
including through mergers or consolidations and including any related financing
transactions, during the Reference Period or subsequent to such Reference Period
and on or prior to the Calculation Date shall be deemed to have occurred on the
first day of the Reference Period and (ii) the Consolidated Cash Flow and Fixed
Charges attributable to operations or businesses disposed of prior to the
Calculation Date shall be excluded.
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"FIXED CHARGES" means, with respect to any Person for any period, the sum
of (i) the consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued (including, without limitation,
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letters of credit or
bankers' acceptance financings, and net payments (if any) pursuant to Hedging
Obligations) and (ii) the consolidated interest expense of such Person and its
Subsidiaries that was capitalized during such period, and (iii) interest
actually paid by such Person or any of its Subsidiaries under any guarantee of
Indebtedness or other obligation of any other Person and (iv) the product of (a)
all cash dividend payments (and non-cash dividend payments in the case of a
Person that is a Subsidiary) on any series of preferred stock of such Person,
times (b) a fraction, the numerator of which is one and the denominator of which
is one minus the then current combined federal, state and local statutory tax
rate of such Person, expressed as a decimal, in each case, on a consolidated
basis and in accordance with GAAP; provided, however, in the event that any cash
dividend payment is deductible for federal, state and/or local tax purposes, the
amount of the tax deduction relating to such cash dividend payment for such
period shall be subtracted from the Fixed Charges for such Person for such
period.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, as in effect from time to time.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements, (ii) foreign exchange contracts
or currency swap agreements and (iii) other agreements or arrangements designed
to protect such Person against fluctuations in interest rates or currency
values.
"INDEBTEDNESS" means, with respect to any Person, (i) any Redeemable Stock
of such Person, (ii) any indebtedness of such Person, whether or not contingent,
in respect of borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing Capital Lease Obligations or
the balance deferred and unpaid of the purchase price of any property or
representing any Hedging Obligations, except any such balance that constitutes
an accrued expense or trade payable, if and to the extent any of the foregoing
indebtedness (other than letters of credit and Hedging Obligations) would appear
as a liability upon a balance sheet of such Person prepared in accordance with
GAAP, (iii) all indebtedness of any other Person secured by a Lien on any asset
of such Person (whether or not such indebtedness is assumed by such Person) and,
(iv) to the extent not otherwise included, the guarantee by such Person of any
indebtedness of any other Person.
"INDEPENDENT INVESTMENT BANKER" means the Reference Treasury Dealer
appointed by the trustee after consultation with the Company.
"INVESTMENT" by any Person in any other Person means (without duplication)
(a) the acquisition (whether by purchase, merger, consolidation or otherwise) by
such Person (whether for cash, property, services, securities or otherwise) of
capital stock, bonds, notes, debentures, partnership or other ownership
interests or other securities, including any options or warrants, of such other
Person or any agreement to make any such acquisition; (b) the making by such
Person of any deposit with, or advance, loan or other extension of credit to,
such other Person (including the purchase of property from another Person
subject to an understanding or agreement, contingent or otherwise, to resell
such property to such other Person) or any commitment to make any such advance,
loan or extension (but excluding accounts receivable or deposits arising in the
ordinary course of business); (c) other than guarantees of Indebtedness of the
Company or any Subsidiary to the extent permitted by the covenant described
under the caption "-- Certain Covenants --
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Incurrence of Indebtedness and Issuance of Preferred Stock," the entering into
by such Person of any guarantee of, or other credit support or contingent
obligation with respect to, Indebtedness or other liability of such other
Person; provided, however, Investments shall not be deemed to include extensions
of trade credit by such Person or any of its Subsidiaries on commercially
reasonable terms in accordance with normal trade practices of such Person or
such Subsidiary, as the case may be.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset
given to secure Indebtedness, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction with respect to any such lien, pledge, charge or
security interest).
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP, and before any reduction in
respect of preferred stock dividends, excluding, however, the effect of any
extraordinary or other material non-recurring gain or loss outside the ordinary
course of business, together with any related provision for taxes on such
extraordinary or other material non-recurring gain or loss.
"NET PROCEEDS" means the aggregate cash or Cash Equivalent proceeds
received by the Company or any of its Subsidiaries in respect of any Asset Sale,
net of the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and sales
commissions) and any other expenses incurred or to be incurred by the Company or
a Subsidiary as a direct result of the sale of such assets (including, without
limitation, severance, relocation, lease termination and other similar
expenses), taxes actually paid or payable as a result thereof, amounts required
to be applied to the repayment of Indebtedness (other than Subordinated
Indebtedness) secured by a Lien on the asset or assets that were the subject of
such Asset Sale and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"NON-CASH CONSIDERATION" means any non-cash or non-Cash Equivalent
consideration received by the Company or a Subsidiary of the Company in
connection with an Asset Sale and any non-cash or non-Cash Equivalent
consideration received by the Company or any of its Subsidiaries upon
disposition thereof.
"NON-QUALIFIED ASSET SALE" means an Asset Sale in which the Non-Cash
Consideration received by the Company or its Subsidiaries exceeds 25% of the
total consideration received in connection with such Asset Sale calculated in
accordance with clause (x), but not clause (y), of the proviso to the first
sentence under the caption "-- Repurchase at the Option of Holders -- Asset
Sales."
"NURSING FACILITY" means a nursing facility, hospital, outpatient clinic,
assisted living center, hospice, long-term care facility or other facility that
is used or useful in the provision of health care services.
"NURSING FACILITY SWAP" means an exchange of assets by the Company or one
or more Subsidiaries of the Company for one or more Nursing Facilities and/or
one or more Related Businesses or for the Capital Stock of any Person owning one
or more Nursing Facilities and/or one or more Related Businesses.
"OBLIGATIONS" means any principal, premium, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"PAYMENT DEFAULT" means any failure to pay any scheduled installment of
principal on any Indebtedness within the grace period provided for such payment
in the documentation governing such Indebtedness.
"PERMITTED LIENS" means (i) Liens in favor of the Company; (ii) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with the Company or any Subsidiary of the Company or becomes a
Subsidiary of the Company; provided that such Liens were in existence prior to
the contemplation of such merger, consolidation or acquisition and do not extend
to any assets other than those of the Person merged into or consolidated with
the Company or that becomes a Subsidiary of the Company; (iii) Liens on property
existing at the time of acquisition thereof by the Company or any Subsidiary of
the Company, provided that such Liens were in existence prior to the
contemplation of such acquisition;
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(iv) Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business; (v) Liens (I) existing on the date of the indenture
under which the notes are to be issued to the extent that such Liens secure
Indebtedness outstanding on the date of the indenture, (II) secured Indebtedness
under clause (i) of the second paragraph of "Incurrence of Indebtedness and
Issuance of Preferred Stock" or (III) on property or assets that were subject to
a Lien on the date of the indenture that secure indebtedness permitted by the
indenture under which the notes are to be issued; (vi) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (vii) Liens to secure Permitted Refinancing Indebtedness
incurred to refinance Indebtedness that was secured by a Lien permitted under
the indenture and that was incurred in accordance with the provisions of the
indenture; provided that such Liens do not extend to or cover any property or
assets of the Company or any of its Subsidiaries other than assets or property
securing the Indebtedness so refinanced or Substitute Mortgage Collateral
therefor; (viii) Liens on Substitute Mortgage Collateral; (ix) Purchase Money
Liens; (x) Liens on Medicare, Medicaid or other patient accounts receivable of
the Company or its Subsidiaries and any other Liens granted by a Receivables
Subsidiary, in each case in connection with a Receivables Financing; provided
that the aggregate principal or redemption amount of Receivables Financing
outstanding shall not exceed 50% of the net amount of the uncollected Medicare,
Medicaid or other patient accounts receivable then owing to the Company or its
Subsidiaries; (xi) Liens on real estate and related personal property with a
fair market value not in excess of 50% of the fair market value of any Existing
Collateral which has become free and clear of all Liens securing Indebtedness
since the date of original issuance of the 9% Senior Notes of the Company due
2006; (xii) Liens of carriers, warehousemen, mechanics, suppliers, materialmen,
repairmen and other Liens imposed by law incurred in the ordinary course of
business; (xiii) easements, rights-of-way, zoning restrictions, reservations,
encroachments and other similar encumbrances in respect of real property; (xiv)
any interest or title of a lessor under any Capitalized Lease Obligation; (xv)
Liens upon specific items of inventory or equipment and proceeds of the Company
or any subsidiary securing its obligations in respect of bankers' acceptances
issued or created for its account (whether or not under the Credit Agreement) to
facilitate the purchase, shipment, or storage of such inventory and equipment;
(xvi) Liens securing reimbursement obligations with respect to letters of credit
(whether or not issued under the Credit Agreement) otherwise permitted under the
indenture and issued in connection with the purchase of inventory or equipment
by the Company or any Subsidiary in the ordinary course of business; (xvii)
Liens to secure (or encumbering deposits securing) obligations arising from
warranty or contractual service obligations of the Company or any Subsidiary,
including rights of offset and set-off; (xviii) Liens securing Acquired Debt or
acquisition Indebtedness otherwise permitted by the indenture; provided that (A)
the Indebtedness secured shall not exceed the fair market value of the assets so
acquired (such fair market value to be determined in good faith by the Board of
Directors of the Company at the time of such acquisition) and (B) such
Indebtedness shall be incurred, and the Lien securing such Indebtedness shall be
created, within 12 months after such acquisition; (xix) Liens securing Hedging
Obligations agreements relating to Indebtedness otherwise permitted under the
indenture; (xx) Liens securing stay and appeal bonds or judgment Liens in
connection with any judgment not giving rise to a Default under the indenture;
and (xxi) other Liens on assets of the Company or any of its Subsidiaries
securing Indebtedness that is permitted by the terms of the indenture to be
outstanding having an aggregate principal amount at any one time outstanding not
to exceed $5.0 million.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of which
are used solely to extend, refinance, renew, replace, defease or refund, other
Indebtedness of the Company or any of its Subsidiaries; provided that: (i) the
principal amount of such Permitted Refinancing Indebtedness does not exceed the
principal amount of the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded (plus the amount of any premiums paid and reasonable
expenses incurred in connection therewith); (ii) such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and has a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended,
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refinanced, renewed, replaced, defeased or refunded is Subordinated
Indebtedness, such Permitted Refinancing Indebtedness has a final maturity date
of, and is subordinated in right of payment to, the notes on terms at least as
favorable to the holders of the notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) if the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded is a Subsidiary
that is not a guarantor, such Permitted Refinancing Indebtedness shall only be
incurred by such Subsidiary.
"PURCHASE MONEY INDEBTEDNESS" means any Indebtedness of a Person to any
seller or other Person incurred to finance the acquisition or construction
(including in the case of a Capital Lease Obligation, the lease) of any asset or
property which is incurred within 180 days of such acquisition or completion of
construction (or, if later, commencement of current operations) and is secured
only by the assets so financed.
"PURCHASE MONEY LIEN" means a Lien granted on an asset or property to
secure Purchase Money Indebtedness permitted to be incurred under the indenture
and incurred solely to finance the acquisition or construction of such asset or
property; provided, however, that such Lien encumbers only such asset or
property and is granted within 180 days of such acquisition or completion of
construction (or, if later, commencement of current operations).
"QUALIFIED EQUITY INTERESTS" shall mean all Equity Interests of the Company
other than Redeemable Stock of the Company.
"RECEIVABLES FINANCING" means the sale or other disposition of Medicare,
Medicaid or other patient accounts receivable of the Company or any of its
Subsidiaries to a Receivables Subsidiary followed by a financing transaction in
connection with such sale or disposition of such accounts receivable.
"RECEIVABLES SUBSIDIARY" means a Subsidiary of the Company exclusively
engaged in Receivables Financing and activities reasonably related thereto,
including Beverly Funding Corporation, a Delaware corporation.
"REDEEMABLE STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
on which the notes mature.
"REFERENCE PERIOD" with regard to any Person means the four full fiscal
quarters (or such lesser period during which such Person has been in existence)
for which internal financial statements are available ended immediately
preceding any date upon which any determination is to be made pursuant to the
terms of the notes or the indenture.
"REFERENCE TREASURY DEALER" means JPMorgan, a division of Chase Securities
Inc., and its successors; provided, however, that if JPMorgan shall cease to be
a primary U.S. government securities dealer in New York City (a "Primary
Treasury Dealer"), the Company shall substitute therefore another Primary
Treasury Dealer.
"REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quote in
writing to the trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third business day preceding such redemption date.
"RELATED BUSINESS" means the business conducted by the Company and its
Subsidiaries as of the date of the indenture and any and all health care service
businesses that in the good faith judgment of the Board of Directors of the
Company are materially related businesses. Without limiting the generality of
the foregoing, Related Business shall include the operation of long-term and
specialty health care services, skilled nursing care, subacute care,
rehabilitation programs, pharmaceutical services, geriatric care and home health
care.
"RESTRICTED INVESTMENT" means, in one or a series of related transactions,
any Investment, other than (i) Investments in Cash Equivalents, (ii) Investments
in a Subsidiary, (iii) Investments in any Person that as a consequence of such
Investment becomes a Subsidiary, (iv) Investments existing on the date of the
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indenture, (v) accounts receivable, advances, loans, extensions of credit
created or acquired in the ordinary course of business, (vi) Investments made as
a result of the receipt of Non-Cash Consideration from an Asset Sale that was
made pursuant to and in compliance with the covenant described above under the
caption "-- Repurchase at the Option of the Holders -- Asset Sales," (vii)
Investments made as the result of the guarantee by the Company or any of its
Subsidiaries of Indebtedness of a Person or Persons other than the Company or
any Subsidiary of the Company that is secured by Liens on assets sold or
otherwise disposed of by the Company or such Subsidiary to such Person or
Persons; provided, that such Indebtedness was in existence prior to the
contemplation of such sale or other disposition and that the terms of such
guarantee permit the Company or such Subsidiary to foreclose on the pledged or
mortgaged assets if the Company or such Subsidiary are required to perform under
such guarantee and (viii) Investments in any Related Business; provided,
however, that a merger of another person with or into the Company or a Guarantor
shall not be deemed to be a Restricted Investment so long as the surviving
entity is the Company or a direct wholly owned Guarantor.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 or Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date of the
indenture.
"STOCKHOLDERS' EQUITY" means, with respect to any Person as of any date,
the stockholders' equity of such Person determined in accordance with GAAP as of
the date of the most recent available internal financial statements of such
Person, and calculated on a pro forma basis to give effect to any acquisition or
disposition by such person consummated or to be consummated since the date of
such financial statements and on or prior to the date of such calculation.
"SUBORDINATED INDEBTEDNESS" means Indebtedness of the Company or a
guarantor that is subordinated in right of payment to the notes or such
Subsidiary's Guarantee of the notes, as applicable.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of such Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"SUBSTITUTE MORTGAGE COLLATERAL" means real estate and related personal
property on which Liens are created in substitution for the release of Liens on
other real estate and related personal property ("Initial Liens"); provided that
(i) such Initial Liens were permitted by the terms of the indenture, (ii) the
fair market value of the Substitute Mortgage Collateral (as conclusively
evidenced by an Officers' Certificate delivered to the trustee within 60 days
prior to the date of such substitution of collateral) is substantially
equivalent to or less than the fair market value of the property subject to the
released Initial Liens and (iii) the Indebtedness secured by the Liens on
Substitute Mortgage Collateral is permitted by the terms of the indenture.
"TREASURY RATE" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity, or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
62
67
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
63
68
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. 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 XIII of the Certificate of Incorporation of Beverly Enterprises,
Inc. contains a provision eliminating or limiting director liability to Beverly
Enterprises, Inc. and its stockholders for monetary damages arising from acts or
omissions in the director's capacity as a director. The provision does not,
however, eliminate or limit the personal liability of a director (i) for any
breach of such director's duty of loyalty to Beverly Enterprises, Inc. 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
Beverly Enterprises, Inc. 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 Beverly Enterprises, Inc. 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 director's 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 XIII of the Certificate of Incorporation of Beverly
Enterprises, Inc. and Article VI, Section 1 of the Bylaws of Beverly
Enterprises, Inc. provide for mandatory indemnification rights, subject to
limited exceptions, to any director, officer, employee, or agent of Beverly
Enterprises, Inc. who, by reason of the fact that he or she is a director,
officer, employee, or agent of Beverly Enterprises, Inc., 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.
II-1
69
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4.1 Indenture, dated as of April 25, 2001, among Beverly
Enterprises, Inc., the subsidiary guarantors as named
therein and The Bank of New York, as trustee
4.2 Form of old 9 5/8% Senior Note due 2009 (included in Exhibit
4.1)
4.3 Form of new 9 5/8% Senior Note due 2009 (included in Exhibit
4.1)
4.4 Exchange and Registration Rights Agreement, dated April 25,
2001, among Beverly Enterprises, Inc., the guarantors as
named therein and JPMorgan, a division of Chase Securities
Inc., Banc of America Securities LLC, BNY Capital Markets,
Inc. and BMO Nesbitt Burns Corp.
5.1 Opinion of Latham & Watkins
5.2 Opinion of Douglas J. Babb, Esq.
10.1 Purchase Agreement, dated April 18, 2001, among Beverly
Enterprises Inc., the guarantors as named therein and
JPMorgan, a division of Chase Securities Inc., Banc of
America Securities LLC, BNY Capital Markets, Inc. and BMO
Nesbitt Burns Corp.
12.1 Statement re: Computation of Ratios
13.1 Annual Report on Form 10-K for the fiscal year ended
December 31, 2000
13.2 Quarterly Report on Form 10-Q for the three-months ended
March 31, 2001
23.1 Consent of Ernst & Young LLP
23.2 Consent of Latham & Watkins (included in Exhibit 5.1)
23.3 Consent of Douglas J. Babb, Esq. (included in Exhibit 5.2)
24.1 Power of Attorney of the Company (incorporated in the
signature page on page S-2 of this Registration Statement)
24.2 Power of Attorney of the Guarantors
25.1 Statement of Eligibility of Trustee
99.1 Form of Transmittal Letter
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to DTC Participants
99.4 Form of Letter to Beneficial Holders
99.5 Form of Letter to Clients
99.6 Form of Guidelines for Certification
99.7 Exchange Agent Agreement dated June 14, 2001, among Beverly
Enterprises, Inc. and The Bank of New York
ITEM 22. 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
II-2
70
(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;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) 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 SEC 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.
(c) The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(d) The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(e) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of each
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934, as amended (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934, as amended) 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.
II-3
71
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Fort Smith, State of
Arkansas, on date set forth below.
BEVERLY ENTERPRISES, INC.
/s/ Schuyler Hollingsworth, Jr.
By:
--------------------------------------
Schuyler Hollingsworth, Jr.
Senior Vice President and Treasurer
DATE: June 14, 2001
II-4
72
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below does hereby constitute and appoint Douglas J. Babb and John W.
MacKenzie, and each of them, with full power of substitution and full power to
act without the other, his true and lawful attorney-in-fact and agents to act
for him in his name, place and stead, in any and all capacities, to sign a
registration statement on Form S-4 and any or all amendments thereto (including
without limitation any post-effective amendments thereto), and any registration
statement for the same offering that is to be effective under Rule 462(b) of the
Securities Act, and to file each of the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully, to all intents and purposes, as they or he might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons on June 14,
2001 in the capacities indicated.
SIGNATURE TITLE
--------- -----
/s/ David R. Banks Chairman of the Board and Director
- ---------------------------------------------
David R. Banks
/s/ William R. Floyd President, Chief Executive Officer and Director
- --------------------------------------------- (Principal Executive Officer)
William R. Floyd
/s/ Pamela H. Daniels Senior Vice President and Controller (Principal
- --------------------------------------------- Financial and Accounting Officer)
Pamela H. Daniels
/s/ Beryl F. Anthony, Jr. Director
- ---------------------------------------------
Beryl F. Anthony, Jr.
/s/ Harris Diamond Director
- ---------------------------------------------
Harris Diamond
/s/ James R. Greene Director
- ---------------------------------------------
James R. Greene
/s/ Edith E. Holiday Director
- ---------------------------------------------
Edith E. Holiday
/s/ James W. McLane Director
- ---------------------------------------------
James W. McLane
/s/ Marilyn R. Seymann Director
- ---------------------------------------------
Marilyn R. Seymann
II-5
73
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrants listed below have duly caused this Registration Statement to be
signed on their behalf by the undersigned, thereunto duly authorized, in the
City of Fort Smith, State of Arkansas, on June 14, 2001.
AGI-Camelot, Inc.
Beverly -- Bella Vista Holding, Inc.
Beverly -- Branson Holdings, Inc.
Beverly -- Missouri Valley Holding,
Inc.
Beverly -- Rapid City Holding, Inc.
Beverly Enterprises -- Arkansas, Inc.
Beverly Enterprises -- Illinois, Inc.
Beverly Enterprises -- Indiana, Inc.
Beverly Enterprises -- Kansas, Inc.
Beverly Enterprises -- Michigan, Inc.
Beverly Enterprises -- Minnesota, Inc.
Beverly Enterprises -- Missouri, Inc.
Beverly Enterprises -- Nebraska, Inc.
Beverly Enterprises -- Nevada, Inc.
Beverly Enterprises -- New Hampshire,
Inc.
Beverly Enterprises -- New Mexico,
Inc.
Beverly Enterprises -- North Dakota,
Inc.
Beverly Enterprises -- Oklahoma, Inc.
Beverly Enterprises -- Oregon, Inc.
Beverly Enterprises -- Rhode Island,
Inc.
Beverly Enterprises -- Tennessee, Inc.
Beverly Enterprises -- Texas, Inc.
Beverly Enterprises -- Utah, Inc.
Beverly Enterprises -- Vermont, Inc.
Beverly Enterprises -- Washington,
Inc.
Beverly Enterprises -- Wisconsin, Inc.
Beverly Enterprises -- Wyoming, Inc.
Beverly Healthcare, LLC
Beverly-Indianapolis, LLC
Commercial Management, Inc.
Nebraska City S-C-H, Inc.
South Alabama Nursing Home, Inc.
South Dakota -- Beverly Enterprises,
Inc.
Vantage Healthcare Corporation
/s/ John W. Mackenzie
By:
--------------------------------------
Name: John W. MacKenzie
Title: Attorney-in-fact of the
above-referenced
Co-Registrants
II-6
74
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 June 14, 2001.
SIGNATURE TITLE
--------- -----
* Director and President
- --------------------------------------------- (Principal Executive Officer)
David R. Devereaux
* Director and Vice President -- Finance
- --------------------------------------------- (Principal Financial Officer)
Kevin M. Roberts
* Senior Vice President and Treasurer
- --------------------------------------------- (Principal Accounting Officer)
Schuyler Hollingsworth, Jr.
- ---------------
* John W. MacKenzie, Esq., by signing his name hereto, does hereby sign this
document on behalf of each of the above-named officers and/or directors of
the Co-Registrants pursuant to powers of attorney duly executed by such
persons.
/s/ John W. Mackenzie
By:
--------------------------------------
John W. MacKenzie, Esq.,
Attorney-in-fact
II-7
75
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrants listed below have duly caused this Registration Statement to be
signed on their behalf by the undersigned, thereunto duly authorized, in the
City of Fort Smith, State of Arkansas, on June 14, 2001.
Beverly Assisted Living, Inc.
Beverly -- Plant City Holdings, Inc.
Beverly -- Tamarac Holdings, Inc.
Beverly -- Tampa Holdings, Inc.
Beverly Clinical, Inc.
Beverly Enterprises -- Alabama, Inc.
Beverly Enterprises -- Arizona, Inc.
Beverly Enterprises -- Colorado, Inc.
Beverly Enterprises -- Connecticut,
Inc.
Beverly Enterprises -- Delaware, Inc.
Beverly Enterprises -- Distribution
Services, Inc.
Beverly Enterprises -- District of
Columbia, Inc.
Beverly Enterprises -- Florida, Inc.
Beverly Enterprises -- Garden Terrace,
Inc.
Beverly Enterprises -- Georgia, Inc.
Beverly Enterprises -- Hawaii, Inc.
Beverly Enterprises -- Idaho, Inc.
Beverly Enterprises -- Iowa, Inc.
Beverly Enterprises -- Kentucky, Inc.
Beverly Enterprises -- Louisiana, Inc.
Beverly Enterprises -- Maine, Inc.
Beverly Enterprises -- Maryland, Inc.
Beverly Enterprises -- Massachusetts,
Inc.
Beverly Enterprises -- Mississippi,
Inc.
Beverly Enterprises -- Montana, Inc.
Beverly Enterprises -- New Jersey,
Inc.
Beverly Enterprises -- North Carolina,
Inc.
Beverly Enterprises -- Ohio, Inc.
Beverly Enterprises -- Pennsylvania,
Inc.
Beverly Enterprises -- South Carolina,
Inc.
Beverly Enterprises -- Virginia, Inc.
Beverly Enterprises -- West Virginia,
Inc.
Beverly Healthcare Acquisition, Inc.
Beverly Healthcare -- California, Inc.
Beverly Holdings I, Inc.
Beverly Manor Inc. of Hawaii
Beverly Real Estate Holdings, Inc.
Beverly Savana Cay Manor, Inc.
Hallmark Convalescent Homes, Inc.
Liberty Nursing Homes, Incorporated
Medical Arts Health Facility of
Lawrenceville, Inc.
Moderncare of Lumberton, Inc.
Nursing Home Operators, Inc.
II-8
76
Petersen Health Care, Inc.
By: /s/ John W. Mackenzie
------------------------------------
Name: John W. MacKenzie, Esq.
Title: Attorney-in-fact of the
above-referenced
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 June 14, 2001.
SIGNATURE TITLE
--------- -----
* Director and President
- ------------------------------------------------ (Principal Executive Officer)
David R. Devereaux
* Vice President -- Finance-Coastal and Director
- ------------------------------------------------ (Principal Financial Officer)
Jerry S. Roles
* Senior Vice President and Treasurer
- ------------------------------------------------ (Principal Accounting Officer)
Schuyler Hollingsworth, Jr.
- ---------------
* John W. MacKenzie, Esq., by signing his name hereto, does hereby sign this
document on behalf of each of the above-named officers and/or directors of the
Co-Registrants pursuant to powers of attorney duly executed by such persons.
By: /s/ John W. Mackenzie
------------------------------------
John W. MacKenzie, Esq.,
Attorney-in-fact
II-9
77
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrants listed below have duly caused this Registration Statement to be
signed on their behalf by the undersigned, thereunto duly authorized, in the
City of Fort Smith, State of Arkansas, on June 14, 2001.
Arborland Management Company, Inc.
Associated Physical Therapy
Practitioners, Inc.
Carrollton Physical Therapy Clinic,
Inc.
Greenville Rehabilitation Services,
Inc.
Home Health and Rehabilitation
Services, Inc.
Las Colinas Physical Therapy, Inc.
Matrix Occupational Health, Inc.
Matrix Rehabilitation -- Delaware,
Inc.
Matrix Rehabilitation -- Georgia, Inc.
Matrix Rehabilitation -- Maryland,
Inc.
Matrix Rehabilitation -- Ohio, Inc.
Matrix Rehabilitation -- South
Carolina, Inc.
Matrix Rehabilitation -- Texas, Inc.
Matrix Rehabilitation -- Washington,
Inc.
Matrix Rehabilitation, Inc.
Network For Physical Therapy, Inc.
North Dallas Physical Therapy
Associates, Inc.
PT Net (Colorado), Inc.
PT Net, Inc.
Rehabilitation Associates of
Lafayette, Inc.
The Parks Physical Therapy And Work
Hardening Center, Inc.
Theraphysics Corp.
Theraphysics of New York IPA, Inc.
Theraphysics Partners of Colorado,
Inc.
Theraphysics Partners of Louisiana,
Inc.
Theraphysics Partners of Texas, Inc.
Theraphysics Partners of Western
Pennsylvania, Inc.
/s/ John W. Mackenzie
By:
--------------------------------------
Name: John W. MacKenzie, Esq.
Title: Attorney-in-fact of the
above-referenced
Co-Registrants
II-10
78
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 June 14, 2001.
SIGNATURE TITLE
--------- -----
* Chairman, President, Chief Executive Officer and
- --------------------------------------------- Director (Principal Executive Officer)
T. Jerald Moore
* Senior Vice President and Treasurer (Principal
- --------------------------------------------- Financial and Accounting Officer)
Schuyler Hollingsworth, Jr.
- ---------------
* John W. MacKenzie, Esq., by signing his name hereto, does hereby sign this
document on behalf of each of the above-named officers and/or directors of the
Co-Registrants pursuant to powers of attorney duly executed by such persons.
/s/ John W. Mackenzie
By:
--------------------------------------
John W. MacKenzie, Esq.
Attorney-in-fact
II-11
79
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrants listed below have duly caused this Registration Statement to be
signed on their behalf by the undersigned, thereunto duly authorized, in the
City of Fort Smith, State of Arkansas, on June 14, 2001.
Homecare Preferred Choice, Inc.
Compassion and Personal Care Services,
Inc.
Community Care, Inc.
Eastern Home Health Supply & Equipment
Co., Inc.
Hospice of Eastern Carolina, Inc.
Hospice Preferred Choice, Inc.
HTHC Holdings, Inc.
Tar Heel Infusion Company, Inc.
/s/ John W. Mackenzie
By:
--------------------------------------
Name: John W. MacKenzie, Esq.
Title: Attorney-in-fact of the
above-referenced
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 June 14, 2001.
SIGNATURE TITLE
--------- -----
* Chairman, Chief Executive Officer and Director
- --------------------------------------------- (Principal Executive Officer)
William A. Mathies
* Senior Vice President and Treasurer (Principal
- --------------------------------------------- Financial and Accounting Officer)
Schuyler Hollingsworth, Jr.
* Director
- ---------------------------------------------
Glen R. Cavallo
- ---------------
* John W. MacKenzie, Esq., by signing his name hereto, does hereby sign this
document on behalf of each of the above-named officers and/or directors of the
Co-Registrants pursuant to powers of attorney duly executed by such persons.
/s/ John W. Mackenzie
By:
--------------------------------------
John W. MacKenzie, Esq.,
Attorney-in-fact
II-12
80
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrants listed below have duly caused this Registration Statement to be
signed on their behalf by the undersigned, thereunto duly authorized, in the
City of Fort Smith, State of Arkansas, on June 14, 2001.
BEVERLY ENTERPRISES INTERNATIONAL
LIMITED
TMD DISPOSITION COMPANY
By: /s/ John W. Mackenzie
------------------------------------
Name: John W. MacKenzie, Esq.
Title: Attorney-in-fact of the
above-referenced
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 June 14, 2001.
SIGNATURE TITLE
--------- -----
* Chairman, Chief Executive Officer and Director
- --------------------------------------------- (Principal Executive Officer)
David R. Banks
* Senior Vice President and Controller
- --------------------------------------------- (Principal Financial and Accounting Officer)
Pamela H. Daniels
* Director
- ---------------------------------------------
Bobby W. Stephens
- ---------------
* John W. MacKenzie, Esq., by signing his name hereto, does hereby sign this
document on behalf of each of the above-named officers and/or directors of the
Co-Registrants pursuant to powers of attorney duly executed by such persons.
/s/ John W. Mackenzie
By:
--------------------------------------
John W. MacKenzie, Esq.,
Attorney-in-fact
II-13
81
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrant listed below have duly caused this Registration Statement to be
signed on their behalf by the undersigned, thereunto duly authorized, in the
City of Fort Smith, State of Arkansas, on June 14, 2001.
SPECTRA HEALTHCARE ALLIANCE, INC.
By: /s/ John W. Mackenzie
------------------------------------
Name: John W. MacKenzie, Esq.
Title: Attorney-in-fact of the
above-referenced
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 June 14, 2001.
SIGNATURE TITLE
--------- -----
* Director and President
- --------------------------------------------- (Principal Executive Officer)
William A. Mathies
* Senior Vice President and Treasurer
- --------------------------------------------- (Principal Financial and Accounting Officer)
Schuyler Hollingsworth, Jr.
* Director
- ---------------------------------------------
T. Jerald Moore
- ---------------
* John W. MacKenzie, Esq., by signing his name hereto, does hereby sign this
document on behalf of each of the above-named officers and/or directors of the
Co-Registrant pursuant to powers of attorney duly executed by such persons.
/s/ John W. Mackenzie
By:
--------------------------------------
John W. Mackenzie, Esq.,
Attorney-in-fact
II-14
82
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrant listed below have duly caused this Registration Statement to be
signed on their behalf by the undersigned, thereunto duly authorized, in the
City of Fort Smith, State of Arkansas, on June 14, 2001.
BEVERLY HEALTH AND REHABILITATION
SERVICES, INC.
By: /s/ John W. Mackenzie
------------------------------------
Name: John W. MacKenzie, Esq.
Title: Attorney-in-fact of the
above-referenced
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 June 14, 2001.
SIGNATURE TITLE
--------- -----
* Director & President
- --------------------------------------------- (Principal Executive Officer)
David R. Devereaux
* Vice President -- Finance, Nursing Home Operations
- --------------------------------------------- and Director
John E. Williams (Principal Financial Officer)
* Senior Vice President and Treasurer
- --------------------------------------------- (Principal Accounting Officer)
Schuyler Hollingsworth, Jr.
- ---------------
* John W. MacKenzie, Esq., by signing his name hereto, does hereby sign this
document on behalf of each of the above-named officers and/or directors of the
Co-Registrant pursuant to powers of attorney duly executed by such persons.
By: /s/ John W. Mackenzie
------------------------------------
John W. MacKenzie, Esq.,
Attorney-in-fact
II-15
83
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrant listed below have duly caused this Registration Statement to be
signed on their behalf by the undersigned, thereunto duly authorized, in the
City of Fort Smith, State of Arkansas, on June 14, 2001.
AEGIS THERAPIES, INC.
By: /s/ John W. Mackenzie
------------------------------------
Name: John W. MacKenzie, Esq.
Title: Attorney-in-fact of the
above-referenced
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 June 14, 2001.
SIGNATURE TITLE
--------- -----
* Chairman, Chief Executive Officer and Director
- --------------------------------------------- (Principal Executive Officer)
William A. Mathies
* Vice President -- Finance and Director
- --------------------------------------------- (Principal Financial Officer)
Mark A. Linam
* Senior Vice President and Treasurer
- --------------------------------------------- (Principal Accounting Officer)
Schuyler Hollingsworth, Jr.
- ---------------
* John W. MacKenzie, Esq., by signing his name hereto, does hereby sign this
document on behalf of each of the above-named officers and/or directors of the
Co-Registrant pursuant to powers of attorney duly executed by such persons.
By: /s/ John W. Mackenzie
------------------------------------
John W. MacKenzie, Esq.,
Attorney-in-fact
II-16
84
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrant listed below have duly caused this Registration Statement to be
signed on their behalf by the undersigned, thereunto duly authorized, in the
City of Fort Smith, State of Arkansas, on June 14, 2001.
BEVERLY INDEMNITY, LTD.
/s/ John W. Mackenzie
By:
--------------------------------------
Name: John W. MacKenzie, Esq.
Title: Attorney-in-fact of the
above-
referenced 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 June 14, 2001.
SIGNATURE TITLE
--------- -----
* Chairman, President, Chief Executive Officer, Chief
- --------------------------------------------- Operating Officer and Director (Principal Executive
William R. Floyd Officer)
* Senior Vice President, Treasurer and Director
- --------------------------------------------- (Principal Financial Officer)
Schuyler Hollingsworth, Jr.
* Senior Vice President and Controller (Principal
- --------------------------------------------- Accounting Officer)
Pamela H. Daniels
* Director
- ---------------------------------------------
Robert E. Fancy
- ---------------
* John W. MacKenzie, Esq., by signing his name hereto, does hereby sign this
document on behalf of each of the above-named officers and/or directors of the
Co-Registrant pursuant to powers of attorney duly executed by such persons.
/s/ John W. Mackenzie
By:
--------------------------------------
John W. MacKenzie, Esq.,
Attorney-in-fact
II-17
85
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4.1 Indenture, dated as of April 25, 2001, among Beverly
Enterprises, Inc., the subsidiary guarantors as named
therein and The Bank of New York, as trustee
4.2 Form of old 9 5/8% Senior Note due 2009 (included in Exhibit
4.1)
4.3 Form of new 9 5/8% Senior Note due 2009 (included in Exhibit
4.1)
4.4 Exchange and Registration Rights Agreement, dated April 25,
2001, among Beverly Enterprises, Inc., the guarantors as
named therein and JPMorgan, a division of Chase Securities
Inc., Banc of America Securities LLC, BNY Capital Markets,
Inc. and BMO Nesbitt Burns Corp.
5.1 Opinion of Latham & Watkins
5.2 Opinion of Douglas J. Babb, Esq.
10.1 Purchase Agreement, dated April 18, 2001, among Beverly
Enterprises Inc., the guarantors as named therein and
JPMorgan, a division of Chase Securities Inc., Banc of
America Securities LLC, BNY Capital Markets, Inc. and BMO
Nesbitt Burns Corp.
12.1 Statement re: Computation of Ratios
13.1 Annual Report on Form 10-K for the fiscal year ended
December 31, 2000
13.2 Quarterly Report on Form 10-Q for the three-months ended
March 31, 2001
23.1 Consent of Ernst & Young LLP
23.2 Consent of Latham & Watkins (included in Exhibit 5.1)
23.3 Consent of Douglas J. Babb, Esq. (included in Exhibit 5.2)
24.1 Power of Attorney of the Company (incorporated in the
signature page on page S-2 of this Registration Statement)
24.2 Power of Attorney of the Guarantors
25.1 Statement of Eligibility of Trustee
99.1 Form of Transmittal Letter
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to DTC Participants
99.4 Form of Letter to Beneficial Holders
99.5 Form of Letter to Clients
99.6 Form of Guidelines for Certification
99.7 Exchange Agent Agreement dated June 14, 2001, among Beverly
Enterprises, Inc. and The Bank of New York