LIFEPOINT HOSPITALS, INC. - FORM S-3/A
As filed with the Securities and Exchange Commission on
October 18, 2005
Registration No. 333-128279
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pre-Effective Amendment No. 2
to
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
LIFEPOINT HOSPITALS, INC.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware |
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20-1538254 |
(State or Other Jurisdiction of
Incorporation or Organization) |
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(I.R.S. Employer
Identification Number) |
103 Powell Court, Suite 200
Brentwood, Tennessee 37027
(615) 372-8500
(Address, including zip code, and telephone number,
including area code, of registrants principal executive
offices)
Kenneth C. Donahey
President
103 Powell Court, Suite 200
Brentwood, Tennessee 37027
(615) 372-8500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Morton A. Pierce, Esq.
Frank R. Adams, Esq.
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
(212) 259-8000
Approximate Date of Commencement of Proposed Sale to the
Public: From time to time after this Registration Statement
becomes effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following
box. o
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest
reinvestment plans, check the following
box. þ
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, please check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the
same
offering. o
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following
box. o
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
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 it is not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
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SUBJECT TO COMPLETION, DATED
OCTOBER 18, 2005
PROSPECTUS
$225,000,000
3.25% CONVERTIBLE SENIOR SUBORDINATED DEBENTURES DUE 2025
AND
COMMON STOCK ISSUABLE UPON CONVERSION OF THE DEBENTURES
We issued the Debentures in a private placement in August 2005.
This prospectus will be used by selling securityholders to
resell their Debentures and the common stock issuable upon
conversion of their Debentures.
The Debentures are our unsecured senior subordinated
indebtedness. The Debentures will bear regular interest at a
rate of 3.25% per annum. We will pay regular interest on
the Debentures on February 15 and August 15 of each year,
beginning on February 15, 2006. The Debentures will mature
on August 15, 2025.
The Debentures are convertible (subject to certain limitations
imposed by our Credit Agreement) under the following
circumstances: (1) if the price of our common stock reaches
a specified threshold during specified periods, (2) if the
trading price of the Debentures is below a specified threshold,
(3) if the Debentures have been called for redemption, or
(4) if specified corporate transactions or other specified
events occur, each as described in this prospectus. Subject to
certain exceptions described under Description of the
Debentures, we will deliver cash and shares of our common
stock, as follows: (i) an amount in cash (the
principal return) equal to the lesser of
(a) the principal amount of Debentures surrendered for
conversion and (b) the product of the conversion rate and
the average price of our common stock, as defined herein (the
conversion value), and (ii) if the conversion
value is greater than the principal return, an amount in shares
of our common stock, as described in this offering memorandum.
As described in this prospectus, our ability to pay the
principal return in cash is subject to important limitations
imposed by our Credit Agreement and other indebtedness we may
have in the future. In certain circumstances, even if any of the
foregoing conditions to conversion have occurred, the Debentures
will not be convertible because of our Credit Agreement, and you
will not be able to declare a default or an event of default
under the Debentures.
The conversion rate will initially be 16.3345 shares of our
common stock per $1,000 principal amount of Debentures (subject
to adjustment in certain events). This is equivalent to a
conversion price of $61.22 per share of common stock. In
addition, if certain corporate transactions that constitute a
change of control occur on or prior to February 20, 2013,
we will increase the conversion rate in certain circumstances,
unless such transaction constitutes a public acquirer change of
control and we elect to modify the conversion rate into public
acquirer common stock, as described in this prospectus.
On or after February 20, 2013, we may redeem for cash some
or all of the Debentures at any time at a price equal to 100% of
the principal amount of the Debentures to be redeemed, plus any
accrued and unpaid interest, including additional interest, to
but excluding the date fixed for redemption.
Holders may require us to purchase for cash some or all of their
Debentures on February 15, 2013, February 15, 2015 and
February 15, 2020, or upon the occurrence of a fundamental
change as described under Description of the
Debentures, at 100% of the principal amount of the
Debentures to be purchased, plus any accrued and unpaid
interest, including additional interest, to but excluding the
purchase date.
Investing in these securities involves risks. You should
carefully review the discussion under the heading Risk
Factors beginning on page 10 regarding information
included and incorporated by reference in this prospectus and
the applicable prospectus supplement.
The Debentures are not listed on any securities exchange.
Although the Debentures issued in the private placement are
eligible for trading in the PORTAL market, the Debentures sold
using this prospectus will no longer be eligible for trading in
the PORTAL market.
Our common stock is quoted on the Nasdaq National Market under
the symbol LPNT. The last reported sale price of our
common stock on October 12, 2005 was $42.91.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this prospectus
is ,
2005.
TABLE OF CONTENTS
We have not authorized any person to give any information or to
make any representation in connection with this offering other
than those contained or incorporated by reference in this
prospectus, and, if given or made, the information or
representation must not be relied upon as having been authorized
by us. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy by anyone in any jurisdiction in
which the offer or solicitation is not authorized, or in which
the person is not qualified to do so or to any person to whom it
is unlawful to make the offer or solicitation. Neither the
delivery of this prospectus nor any sale under this prospectus
shall, under any circumstances, create any implication that
there has been no change in our affairs since the date of this
prospectus, that the information contained in this prospectus is
correct as of any time subsequent to its date, or that any
information incorporated by reference in this prospectus is
correct as of any time subsequent to its date.
Unless otherwise indicated, currency amounts in this prospectus
and any prospectus supplement are stated in United States
dollars ($, dollars,
U.S. dollars or U.S.$).
ABOUT THIS PROSPECTUS
This prospectus is part of a resale registration statement that
we have filed with the Securities and Exchange Commission using
a shelf registration process. Under this prospectus,
as it may be amended or supplemented from time to time, the
selling securityholders may sell some or all of the securities
described in this prospectus in one or more transactions from
time to time.
FORWARD-LOOKING STATEMENTS
Forward-looking statements are included or incorporated by
reference in this prospectus. Broadly speaking, forward-looking
statements include:
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projections of our revenues, net income, earnings per share,
capital expenditures or other financial items; |
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descriptions of our plans or objectives for future operations or
services, including pending acquisitions; |
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forecasts of our future economic performance; and |
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descriptions of assumptions underlying or relating to any of the
foregoing. |
In this prospectus and the documents incorporated by reference
herein, for example, we make forward-looking statements
discussing our expectations about:
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future financial performance; |
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future liquidity; |
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industry trends; |
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patient volumes and related revenues; |
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recruiting and retention of physicians and clinical personnel; |
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future capital expenditures; |
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the impact of new accounting standards; and |
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future acquisitions. |
Forward-looking statements discuss matters that are not
historical facts. Because they discuss future events or
conditions, forward-looking statements often include words such
as can, could, may,
should, believe, will,
would, expect, project,
estimate, anticipate, plan,
intend, target, continue or
similar expressions. Do not unduly rely on forward-looking
statements, which give our expectations about the future and are
not guarantees. Forward-looking statements speak only as of the
date they are made, and we might not update them to reflect
changes that occur after the date they are made. The following
are some of the factors that could cause our actual results to
differ materially from the expected results described in or
underlying our forward-looking statements:
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problems that may arise in integrating the Province hospitals
and our other acquired hospitals; |
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reduction in payments to healthcare providers by government and
commercial third-party payors, as well as cost-containment
efforts of insurers and other payors; |
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the possibility of adverse changes in, and requirements of,
applicable laws, regulations, policies and procedures, including
those required by our corporate integrity agreement; |
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our ability to manage healthcare risks and the lack of state and
federal tort reform; |
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the availability, cost and terms of insurance coverage; |
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the highly competitive nature of the healthcare business,
including the competition to recruit and retain physicians and
other healthcare professionals; |
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the ability to attract and retain qualified management and
personnel; |
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the geographic concentration of our operations; |
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our ability to acquire hospitals on favorable terms and to
complete budgeted capital improvements successfully; |
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our ability to operate and integrate newly acquired facilities
successfully; |
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the availability and terms of capital to fund our business
strategy; |
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changes in our liquidity or the amount or terms of our
indebtedness and in our debt credit ratings; |
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the potential adverse impact of government investigations and
litigation involving the business practices of healthcare
providers, including whistleblower investigations; |
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changes in generally accepted accounting principles or practices; |
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volatility in the market value of our common stock; |
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changes in general economic conditions in the markets we serve
and changes in the manner in which employers provide healthcare
coverage to their employees; |
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our reliance on information technology systems maintained by HCA
Information Technology and Services, Inc.; |
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the costs of complying with the Americans with Disabilities Act
and the related litigation; |
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our ability to comply with all aspects of the Sarbanes-Oxley Act
and regulations promulgated thereunder; and |
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those risks and uncertainties described from time to time in our
filings with the SEC. |
Many of these factors are beyond our control and could cause
results to differ significantly from our expectations. Some of
these factors are described in more detail in the section
captioned Risk Factors. Other factors are described
elsewhere in this prospectus and the documents incorporated by
reference in this prospectus. Any factor described in this
prospectus or the documents incorporated by reference could by
itself, or together with one or more factors, adversely affect
our business, results of operations and/or financial condition.
There may be factors not described in this prospectus or the
documents incorporated by reference that could cause results to
differ from our expectations.
In addition, this prospectus and the documents incorporated by
reference contain forward-looking statements about the benefits
of the business combination with Province, as well as other
acquisitions that we have entered into since the Province
business combination. They reflect our current beliefs. However,
as with any undertaking of this type, there are substantial
risks and uncertainties in the process of integrating the
businesses of Historic LifePoint and Province. There is no
guarantee that we will realize the expected financial,
operational and other benefits we anticipate from the business
combination with Province.
We undertake no duty to update forward-looking statements.
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SUMMARY
This summary highlights information contained elsewhere in
this prospectus and the documents incorporated by reference in
this prospectus. This summary may not contain all of the
information that may be important to you. Please review this
prospectus in its entirety, including the Risk
Factors and the financial statements and the related notes
incorporated by reference in this prospectus, before you decide
to invest in these Debentures. Unless otherwise noted, the terms
LifePoint, Company, we,
us, and our refer to LifePoint
Hospitals, Inc. and its subsidiaries.
Overview
We are a hospital company focused on providing healthcare
services in non-urban communities. On April 15, 2005 we
acquired all of the outstanding capital stock of each of
Historic LifePoint (formerly LifePoint Hospitals, Inc.) and
Province Healthcare Company through the merger of LifePoint
Merger Sub with and into Historic LifePoint, with Historic
LifePoint continuing as the surviving corporation of such
merger, and the merger of Province Merger Sub with and into
Province, with Province continuing as the surviving corporation
of such merger. Each of Historic LifePoint and Province is now a
wholly owned subsidiary of ours.
As of July 1, 2005, the Company operated 52 general, acute
care hospitals with an aggregate of 5,671 licensed beds in
non-urban communities in 20 states. Forty-nine of our
hospitals are located in markets where we are the sole hospital
provider in the community. For the fiscal year ended
December 31, 2004, on a pro forma basis to reflect the
Province business combination, we had revenues of approximately
$1.9 billion. Our predecessor company, Historic LifePoint,
became an independent, publicly traded company on May 11,
1999, when HCA Inc., which we refer to in this prospectus as
HCA, distributed all outstanding shares of Historic LifePoint
common stock to its stockholders.
Industry Overview
We believe that non-urban healthcare markets are attractive
because of the following factors:
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Less Competition. Non-urban communities have smaller
populations with fewer hospitals and other healthcare service
providers. We believe that the smaller populations and relative
significance of the hospitals in these markets may lessen the
likelihood of the entry of other hospitals or alternate
non-hospital providers, including outpatient surgery centers,
rehabilitation centers and diagnostic imaging centers. |
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Community Focus. We believe that non-urban areas
generally view the local hospital as an integral part of the
community. Therefore, we believe patients and physicians tend to
be more loyal to the hospital. |
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Acquisition Opportunities. Currently, not-for-profit and
governmental entities own most non-urban hospitals. These
entities often have limited access to the capital needed to keep
pace with advances in medical technology. In addition, these
entities sometimes lack the management resources necessary to
control hospital expenses, recruit and retain physicians, expand
healthcare services and comply with increasingly complex
reimbursement and managed care requirements. As a result,
patients may migrate to, may be referred by local physicians to,
or may be encouraged by managed care plans to travel to,
hospitals in larger, urban markets. We believe that, as a result
of these pressures, many not-for-profit and governmental owners
of non-urban hospitals who wish to preserve the local
availability of quality healthcare services are interested in
selling or leasing these hospitals to companies, like ours, that
are committed to the local delivery of healthcare and that have
greater access to capital and management resources. |
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Operating Philosophy
We are committed to operating general, acute care hospitals in
growing, non-urban markets. As a result, our operating
philosophy is focused on the unique patient and provider needs
and opportunities in these communities. This philosophy includes
a commitment to:
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improving and increasing the scope of available healthcare
services; |
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providing physicians a positive environment in which to practice
medicine, with access to necessary equipment, office space and
resources; |
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providing an outstanding work environment for employees; |
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recognizing and expanding the hospitals role as a
community asset; and |
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continuing to improve each hospitals financial performance. |
Business Strategy
We intend to manage our hospitals in accordance with our
operating philosophy and use the following strategies tailored
for each of our markets:
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Expand Breadth of Services and Attract Community
Patients. We will strive to increase revenues by improving
and broadening the scope of healthcare services available at our
facilities and to recruit physicians with a broader range of
specialties. We believe that our expansion of available
treatments and our community focus will encourage residents in
the non-urban markets we serve to seek care locally at our
facilities rather than at facilities outside the area. Historic
LifePoint has undertaken projects in a majority of its hospitals
that are targeted at expanding specialty services. |
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Strengthen Physician Recruiting and Retention. We believe
that recruiting physicians in local communities is critical to
increasing the quality of healthcare and the breadth of
available services at our facilities. Our physician recruitment
program is currently focused on recruiting additional specialty
care physicians and primary care physicians and we expect to
continue this focus. Our management will continue to focus on
working more effectively with individual physicians and
physician practices. We believe that expansion of the range of
available treatments at our hospitals should also assist in
physician recruiting and contribute to the sense that our
hospitals are community assets. |
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Improve Expense Management. We will seek to control costs
by, among other things, attempting to improve labor productivity
and decrease the use of contract labor, controlling supply
expenses through the use of a group purchasing organization,
controlling professional and general liability insurance
expenses through the utilization of risk management and quality
care programs, and reducing uncollectible revenues. Historic
LifePoint has implemented cost control initiatives that include
appropriately adjusting staffing levels according to patient
volumes, modifying supply purchases according to usage patterns
and providing support to hospital staff in more efficient
billing and collection processes. We believe that as our company
grows, we should benefit from our ability to spread fixed
administrative costs over a larger base of operations. |
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Retain and Develop Stable Management. We will seek to
retain the executive teams at our hospitals to enhance medical
staff relations and maintain continuity of relationships within
the community. We will focus our recruitment of managers on
those who wish to live and practice in the communities in which
our hospitals are located and we will allow our hospital
managers to participate in our stock incentive plans. |
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Improve Managed Care Position. We will continue to strive
to improve our revenues from managed care plans by negotiating
facility-specific contracts with these payors on terms
appropriate for smaller, non-urban markets. |
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Acquire Other Hospitals. We will continue to pursue a
disciplined acquisition strategy and seek to identify and
acquire hospitals in non-urban markets that are the sole or
significant market provider of healthcare services in the
community. By implementing our operating strategies, we believe
that we may attract many of the patients in these markets that
historically have sought care elsewhere. |
We believe that our strategic goals align our interests with
those of the local communities served by our hospitals. We
believe that the following qualities enable us to successfully
compete for acquisitions:
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our commitment to maintaining the local availability of
healthcare services; |
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our reputation for providing market-specific, broader-based
healthcare; |
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our focus on physician recruiting and retention; |
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our managements operating experience; |
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our access to financing and our liquidity; and |
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our ability to provide the necessary equipment and resources for
physicians. |
Recent Developments
On July 1, 2005, the Company completed its acquisition of
Danville Regional Medical Center and related assets in Danville,
Virginia. Danville Regional Medical Center is a 350-bed hospital
servicing residents in the Dan River Region.
On July 14, 2005, the Company announced that it had signed
a definitive agreement to purchase five non-urban Virginia and
West Virginia hospitals from HCA for approximately
$285 million, plus working capital and other adjustments.
The transaction is expected to be completed in the fourth
quarter of 2005. The five facilities include the 200-bed Clinch
Valley Medical Center, Richlands, Virginia; 325-bed
St. Josephs Hospital, Parkersburg, West Virginia;
155-bed Saint Francis Hospital, Charleston, West Virginia;
369-bed Raleigh General Hospital, Beckley, West Virginia; and
68-bed Putnam General Hospital, Hurricane, West Virginia. The
acquisition is subject to customary conditions, including the
obtaining of regulatory approvals and consents, and there can be
no assurance that such acquisition will be consummated.
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The Offering
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Issuer |
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LifePoint Hospitals, Inc. |
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Securities Offered |
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$200 million principal amount of 3.25% Convertible
Senior Subordinated Debentures due 2025 (plus up to an
additional $25 million principal amount available for
purchase by the initial purchasers at their option solely to
cover over-allotments, which option must close within
30 days from the initial closing date). |
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Maturity Date |
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August 15, 2025. |
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Interest |
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3.25% per annum on the principal amount, payable
semi-annually in arrears on February 15 and August 15 of each
year, commencing February 15, 2006. |
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Ranking |
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The Debentures will be our unsecured senior subordinated
obligations, and any payments on the Debentures will be
subordinated to the prior payment in full of our existing and
future senior indebtedness, including obligations under our
Credit Agreement dated as of April 15, 2005 between us and
the lenders referred to therein (the Credit
Agreement). The Debentures will also rank equally in
express right of payment with our existing and future senior
subordinated indebtedness and senior to any of our existing and
future subordinated indebtedness. The Debentures will also rank
effectively junior to our secured indebtedness (including the
Credit Agreement) to the extent of the underlying collateral.
The Debentures will be effectively subordinated to all existing
and future indebtedness and other liabilities, including trade
payables, of our subsidiaries. |
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Conversion Rights |
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Holders may convert their Debentures (subject to certain
limitations imposed by our Credit Agreement as described below)
at the conversion rate prior to the close of business on the
business day prior to the maturity date only under the following
circumstances: during any fiscal quarter after our fiscal
quarter ending September 30, 2005 (and only during such
fiscal quarter) if the closing sale price of our common stock,
for each of at least 20 trading days during the period of 30
consecutive trading days ending on the last trading day of the
previous fiscal quarter, is greater than or equal to 130% of the
conversion price per share of our common stock; |
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during the five business day period following any
five consecutive trading day period in which the trading price
of the Debentures for each day of such period was less than 96%
of the product of the closing sale price per share of our common
stock on such day and the conversion rate in effect on each such
day; |
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if the Debentures have been called for
redemption; or |
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upon the occurrence of specified corporate
transactions or other specified events described under
Description of the Debentures Conversion
Rights Conversion Upon Specified Corporate
Transactions and Other Specified Events. |
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The initial conversion rate will be 16.3345 shares of our
common stock per $1,000 principal amount of Debentures. This
represents an initial conversion price of approximately
$61.22 per share of our common stock. In addition, if
certain corporate transactions that constitute a change of
control occur on or prior to February 20, 2013, we will
increase the conversion rate in certain circumstances, unless
such transactions constitute a public acquirer change of control
and we elect to modify the conversion rate into public acquirer
common stock. See Description of the
Debentures Conversion Rights Make Whole
Amount and Public Acquirer Change of Control. |
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As described in this prospectus, the conversion rate may be
adjusted upon the occurrence of certain events, including for
any cash dividend, but will not be adjusted for accrued and
unpaid interest. By delivering to the holder cash and shares of
our common stock, if any, we will satisfy our obligations with
respect to the Debentures subject to the conversion.
Accordingly, upon conversion of a Debenture, accrued and unpaid
interest will be deemed to be paid in full, rather than
canceled, extinguished or forfeited. Debentures called for
redemption may be surrendered for conversion prior to the close
of business on the business day immediately preceding the
redemption date. |
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Our ability to pay the principal return in cash, as described
below, will be subject to the limitations imposed by our Credit
Agreement and by any limitations we may have in any other Credit
Agreements or indebtedness that we may incur in the future. See
Description of the Debentures Conversion
Rights Restrictions on Conversion Imposed by Our
Credit Agreement and Description of Credit
Agreement. As described under Conversion
Restrictions Imposed by our Credit Agreement below, the
Debentures will not be convertible (even if any of the other
conditions to conversion described above have occurred) if, at
the time the Debentures are tendered for conversion, a default
or event of default exists under the Credit Agreement or would
occur as a result of such conversion. At present, if the entire
principal amount of the Debentures were converted, we would not
be able to pay the principal return in cash because of our
Credit Agreement and, accordingly, the Debentures would not be
convertible. |
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Conversion Settlement |
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Subject to certain exceptions described under Description
of the Debentures, we will deliver cash and shares of our
common stock, if any, upon conversion of the Debentures, as
follows: |
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an amount in cash (the principal return)
equal to the lesser of (a) the principal amount of
Debentures surrendered for conversion and (b) the product
(the conversion value) of the conversion rate
multiplied by the average of the closing sale prices (the
average price) of our common stock during the 10
trading day period commencing after the third trading day
following the date the Debentures are tendered for conversion,
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if the conversion value of the Debentures submitted
for conversion is greater than the principal amount of such
Debentures, an amount of whole shares of our common stock (the
net shares), equal to the sum of the daily share
amounts, calculated as described under Description of the
Debentures Conversion Rights Conversion
Settlement below. |
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We will pay the principal return and cash for fractional shares,
and deliver net shares, no later than the third business day
following the determination of the average price. |
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Conversion Restrictions Imposed by our Credit Agreement |
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Even if any of the conditions to conversion as described under
Conversion Rights above has occurred, the Debentures
will not be convertible if, at the time the Debentures are
surrendered for conversion, a default or event of default shall
have occurred and is continuing under our Credit Agreement, or
would result from such conversion of Debentures. In this
circumstance, your inability to convert the Debentures will not
be a default or event of default under the indenture governing
the Debentures. The defaults and events of default under our
Credit Agreement are described below under Description of
Credit Agreement and include the occurrence of a
fundamental change under the Debentures (as defined
below under Description of the Debentures
Fundamental Change Requires Us to Repurchase Debentures at the
Option of the Holder) and our failure to maintain certain
financial covenants. |
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If you submit your Debentures for conversion at a time and
during the period when the conditions to conversion as described
under Conversion Rights above has occurred, but the
Debentures are not convertible because of the Credit Agreement,
we will seek the consent of our lenders under the Credit
Agreement or attempt to refinance the debt, in each case only on
terms which are acceptable to us in our commercially reasonable
discretion, unless we have not previously elected to exercise an
exchange in lieu of conversion as described under Exchange
in Lieu of Conversion below and a designated financial
institution has accepted such exchange. There can be no
assurance that the lenders under our Credit Agreement will
consent to the conversion of the Debentures, or that we can
successfully refinance such debt, or in either case that we can
do so on terms acceptable to us. If we cannot obtain such
consent or cannot successfully refinance such debt we will
designate (if we have not already done so) a financial
institution to exchange the Debentures in lieu of conversion.
Any Debentures not accepted by such financial institution will
be returned to the holder and the related notice of conversion
will be deemed to be revoked to the extent of such returned
Debentures. See Description of the Debentures
Conversion Rights Restrictions on Conversion Imposed
by our Credit Agreement. There can be no assurance that a
financial institution will accept any exchange of the Debentures
in lieu of conversion. See Risk Factors Risks |
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Related to this Offering We may not have the funds
necessary to repurchase the Debentures or pay the amounts due
upon conversion of the Debentures when necessary, and our Credit
Agreement contains limitations on our ability to pay the
principal return in cash to holders of Debentures upon
conversion or to repurchase the Debentures under certain
circumstances. |
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Exchange in Lieu of Conversion |
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We may, in lieu of delivering cash and shares, if any, of our
common stock upon conversion (including any conversion otherwise
prohibited by our Credit Agreement as described above), direct
the conversion agent to surrender Debentures a holder has
tendered for conversion to a financial institution designated by
us for exchange in lieu of conversion. We will be required to do
so if, at the time a holder has tendered a Debenture for
conversion, such conversion is not permitted because of our
Credit Agreement, as described above, or we are prohibited from
settling that Debenture under the terms of our other
indebtedness. |
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In order to accept any such Debentures, the designated
institution must agree to deliver, in exchange for such
Debentures, a number of shares of our common stock equal to the
applicable conversion rate, plus cash for any fractional shares,
or cash or a combination of cash and shares of our common stock
in lieu thereof. If the designated institution accepts any such
Debentures, it will deliver the appropriate number of shares
(and cash, if any) of our common stock to the conversion agent
and the conversion agent will deliver those shares (and cash) to
the holder. Any Debentures exchanged by the designated
institution will remain outstanding. If the designated
institution agrees to accept any Debentures for exchange but
does not timely deliver the related consideration, we will,
deliver the consideration due upon conversion by the due dates
set forth in Description of the Debentures
Conversion Rights General, subject to the
restrictions imposed by our Credit Agreement. See
Description of the Debentures Exchange in Lieu
of Conversion. |
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Optional Redemption |
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We may redeem for cash some or all of the Debentures on a
redemption date that is on or after February 20, 2013 at a
price equal to 100% of the principal amount of the Debentures to
be redeemed plus any accrued and unpaid interest, including
additional interest, to but excluding the date fixed for
redemption. See Description of the Debentures
Optional Redemption. |
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Purchase of Debentures By Us at the Option of the Holder |
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Each holder of the Debentures has the right to require us to
purchase some or all of its Debentures on February 15,
2013, February 15, 2015 and February 15, 2020, each of
which we refer to as a purchase date. |
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In each case, we will pay a purchase price in cash equal to 100%
of the principal amount of the Debentures to be purchased, plus
any accrued and unpaid interest, including additional interest. |
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See Description of the Debentures Purchase of
Debentures By Us at the Option of the Holder. |
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Fundamental Change |
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Upon a fundamental change, each holder of the Debentures may
require us to repurchase some or all of its Debentures at a
purchase price in cash equal to 100% of the principal amount of
the Debentures, plus any accrued and unpaid interest, including
additional interest. See Description of the
Debentures Fundamental Change Requires Us to
Repurchase Debentures at the Option of the Holder. Our
ability to pay the purchase price is subject to important
limitations imposed by our Credit Agreement. See Risk
Factors Risks Related to this Offering
We may not have the funds necessary to repurchase the Debentures
or pay the amounts due upon conversion of the Debentures when
necessary, and our Credit Agreement contains limitations on our
ability to pay the principal return in cash to holders of
Debentures upon conversion or to repurchase the Debentures upon
certain circumstances. |
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Make Whole Amount and Public Acquirer Change of Control |
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If the effective date or anticipated effective date of certain
transactions that constitute a change of control occur on or
prior to February 20, 2013, under certain circumstances, we
will increase the conversion rate by a number of additional
shares for any conversion of Debentures in connection with such
transactions, as described under Description of the
Debentures Conversion Rights Make Whole
Amount and Public Acquirer Change of Control. The amount
of additional shares will be determined based on the related
conversion date and the price paid per share of our common stock
in such transaction. However, if such transaction constitutes a
public acquirer change of control, in lieu of increasing the
conversion rate, we may elect to modify the conversion rate such
that upon conversion of the Debentures, we will deliver cash and
acquirer common stock as described under Description of
the Debentures Conversion Rights Make
Whole Amount and Public Acquirer Change of Control. |
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Sinking Fund |
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None. |
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United States Federal Income Tax Considerations |
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A summary of material U.S. federal income tax
considerations relating to the purchase, ownership and
disposition of a Debenture and shares of our common stock into
which a Debenture is convertible is set forth in this prospectus
under Material United States Federal Income Tax
Considerations. Prospective purchasers should seek
independent tax advice as to the U.S. federal, state, local
and other tax consequences of acquiring, owning and disposing of
Debentures and our common stock, based on their own particular
circumstances. |
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Use of Proceeds |
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The selling securityholders will receive all of the net proceeds
from the sales of Debentures and shares of our common stock |
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offered by this prospectus. We will not receive any proceeds
from the resale of these securities. |
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Registration Rights |
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We have agreed to file within 120 days after the original
issuance of the Debentures and use our commercially reasonable
efforts to cause to become effective no later than 210 days
thereof, a shelf registration statement with the SEC for the
resale of the Debentures and the common stock issuable upon
conversion of the Debentures. If we do not comply with our
registration obligations, we will be required to pay additional
interest to the holders of the Debentures. We will not pay
additional interest to holders of the common stock, if any,
issuable upon conversion of the Debentures. See
Description of the Debentures Conversion
Rights General and Description of the
Debentures Registration Rights. |
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Trading |
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The Debentures are currently eligible for trading in the PORTAL
market. However, Debentures resold using this prospectus will no
longer be eligible for trading in the PORTAL market. We do not
intend to list the Debentures on any national securities
exchange or for quotation through Nasdaq. Thus, we provide no
assurance as to the liquidity of, or trading markets for, the
Debentures. Our common stock is quoted on the Nasdaq National
Market under the symbol LPNT. |
Additional Information
Our principal executive offices are located at 103 Powell Court,
Suite 200, Brentwood, Tennessee 37027 and our telephone
number at that address is (615) 372-8500. Our corporate
website address is http://www.lifepointhospitals.com.
Information contained on our website does not constitute a part
of this prospectus.
Risk Factors
Investing in the Debentures and the common stock issuable upon
conversion involves risks. You should carefully consider the
information in the Risk Factors section and all
other information included in this prospectus before investing
in the Debentures.
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RISK FACTORS
Purchasing Debentures involves a high degree of risk. You
should carefully read and consider the following risk factors,
in addition to the other information included in or incorporated
by reference in this prospectus before investing in these
Debentures. If any of the following events actually occur, our
business, results of operations, financial condition, cash flows
or prospects could be materially adversely affected, which in
turn could adversely affect our ability to pay interest or
principal on the Debentures. You may lose all or part of your
original investment.
Risks Related to this Offering
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We may not have the funds necessary to repurchase the
Debentures or pay the amounts due upon conversion of the
Debentures when necessary, and our Credit Agreement contains
limitations on our ability to pay the principal return in cash
to holders of Debentures upon conversion or to repurchase the
Debentures under certain circumstances. |
Your ability to convert your Debentures into cash and shares of
our common stock (if any) or to require us to repurchase your
Debentures (either on February 15, 2013, February 15,
2015 or February 15, 2020 or in connection with a
fundamental change) will be subject to limitations imposed by
our Credit Agreement and by any limitations we may have in any
other credit facilities or indebtedness we may incur in the
future. See Description of Credit Agreement. Under
our Credit Agreement, we will not be permitted to pay the
principal return in cash with respect to any conversion of
Debentures if there exists a default or event of default
thereunder, or a default or event of default would result from
such conversion. Our ability to make such payment in cash is
materially limited by covenants in our Credit Agreement. In
addition, the occurrence of a default or event of default under
our Credit Agreement includes the occurrence of a fundamental
change under the Debentures and our inability to meet certain
requirements including financial covenants as described under
Description of Credit Agreement below.
If you tender your Debentures for conversion at a time when we
are prohibited from paying the principal return in cash under
our Credit Agreement, you will be prohibited from converting
your Debentures. We will agree to seek the consent of our
lenders or attempt to refinance this debt, in each case, on
terms acceptable to the Company in its commercially reasonable
discretion, unless we have otherwise exercised our right to
designate a financial institution to exchange the Debentures
tendered for conversion and such financial institution has
accepted such exchange as described below under
Description of the Debentures Exchange in Lieu
of Conversion. If we do not obtain such consent or
refinance such debt, we will (if we have not already done so)
designate a financial institution to exchange the Debentures in
lieu of conversion. If such financial institution does not
accept such Debentures, we will not accept such Debentures for
conversion. Our failure to pay the principal return in this
circumstance will not constitute a default or event of default
under the indenture governing the Debentures. There can be no
assurance that we can successfully obtain the consent of our
lenders under the Credit Agreement or that we can refinance this
debt. In addition, there can be no assurance that any financial
institution will agree to accept such Debentures for exchange.
At present, if the Debentures were converted, we would not be
permitted to pay the principal return in cash with respect to
those conversions absent a permitted refinancing.
In addition, a fundamental change in respect of the Debentures
constitutes an Event of Default under our Credit Agreement.
Accordingly, upon the occurrence of a fundamental change we
would not be permitted to make payments in respect of any
subordinated or senior subordinated indebtedness, including the
Debentures. With respect to any repurchase of the Debentures in
February 15, 2013, 2015 or 2020, you should be aware that
we expect that the indebtedness under the Credit Agreement will
become due and payable in April 2012. If the senior indebtedness
under the Credit Agreement is not paid upon maturity, we would
be in default under such agreement and accordingly we would be
prohibited from repurchasing the Debentures. Moreover, any
refinancing of our existing Credit Agreement on or before its
maturity or any new senior credit agreements we enter into in
the future that replace, supplement or amend our existing or
future debt, may restrict our ability to repurchase the
Debentures to a similar
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extent. Our inability to repurchase the Debentures upon the
occurrence of a fundamental change or in 2013, 2015 or 2020 will
constitute an event of default under the indenture governing the
Debentures. This default would, in turn, constitute an event of
default under our existing Credit Agreement and may constitute
an event of default under any future agreement governing our
senior indebtedness, which may cause the related indebtedness to
be accelerated after any applicable notice or cure periods. If
such indebtedness were to be accelerated, we may not have
sufficient funds to repurchase the Debentures and repay the
indebtedness.
Finally, we may not have sufficient funds available to
repurchase the Debentures or pay the principal return in cash
upon conversion of the Debentures, even if we are otherwise
allowed to repurchase the Debentures or pay the principal return
in cash under our Credit Agreement or other senior indebtedness.
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Your right to receive payments on the Debentures will be
junior to all of our senior indebtedness, including our
obligations under the Credit Agreement and other existing and
future senior debt. In addition, your right to receive payments
on the Debentures is effectively junior to all current and
future lenders who have a security interest in our
assets. |
The Debentures will be junior in right of payment to all our
existing and future senior indebtedness.
We may not pay principal, premium, if any, interest or other
amounts on account of the Debentures in the event of a payment
default or certain other defaults in respect of certain of our
senior indebtedness, including under our Credit Agreement,
unless such senior indebtedness has been paid in full or the
default has been cured or waived. In addition, in the event of
certain other defaults with respect to the senior indebtedness,
we may not be permitted to pay any amount on account of the
Debentures for a designated period of time.
Because of the subordination provisions in the Debentures, in
the event of a bankruptcy, liquidation or dissolution of our
Company, our assets will not be available to pay obligations
under the Debentures until we have made all payments on such
senior indebtedness. We may not have sufficient assets after all
these payments have been made to make any payments on the
Debentures, including payments of principal or interest when due.
In addition, our obligations under the Debentures are unsecured.
Accordingly, the Debentures will be junior to any existing
secured debt and any secured debt that we may issue in the
future to the extent of the value of the collateral securing
such obligations. Currently our secured debt, including our
obligations under the Credit Agreement and the obligations of
each guarantor under its guarantee of the Credit Agreement are
each secured by a first-priority security interest in the
capital stock and intercompany notes owned by us and the
guarantor subsidiaries, subject to certain exceptions and
limitations. If we enter bankruptcy or become insolvent, or if
we default under our existing senior credit agreement, the
lenders could declare all of the funds borrowed thereunder,
together with accrued interest, immediately due and payable. If
we were unable to repay such indebtedness, the lenders could
foreclose on the pledged stock and intercompany notes to the
exclusion of holders of the Debentures, even if an event of
default exists at such time under the indenture under which the
Debentures will be issued. In any such event, because the
Debentures will not be secured by any of our assets or the
equity interests in our subsidiaries, it is possible that there
would be no assets remaining from which your claims could be
satisfied or, if any assets remained, they might be insufficient
to satisfy your claims fully. As a result, you may lose a
portion of or the entire value of your investment in the
Debentures.
As of June 30, 2005, on a pro forma basis after giving
effect to this offering and the use of proceeds hereof, we had
approximately $1,416.3 million of senior indebtedness (all
of which is secured indebtedness). The indenture governing the
Debentures will permit the incurrence of substantial additional
indebtedness by us and our restricted subsidiaries in the
future, including senior indebtedness and secured indebtedness.
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The Debentures will not be guaranteed by any of our
subsidiaries and, as a result, are structurally subordinated to
all indebtedness and other liabilities of our subsidiaries.
Creditors of our subsidiaries have priority as to our
subsidiaries assets. |
You do not have any claims as a creditor against our
subsidiaries. All indebtedness and other liabilities of our
subsidiaries, including, without limitation, guarantees of our
existing senior credit agreement, other indebtedness of ours and
trade payables, whether senior, subordinated, secured or
unsecured, are effectively senior to your claims against the
assets of our subsidiaries. All obligations owed by our
subsidiaries would have to be satisfied before any of the assets
of our subsidiaries would be available for distribution, upon a
liquidation or otherwise, to us. In addition, any future
indebtedness that we are permitted to incur under the terms of
the existing senior credit agreement and the indenture may be
incurred by our subsidiaries.
As of June 30, 2005, on a pro forma basis after giving
effect to this offering and the use of proceeds hereof, our
subsidiaries had total indebtedness of approximately
$1,422.5 million.
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The terms of the Debentures will not provide protection
against some types of important corporate events. |
Upon the occurrence of a fundamental change, we may be required
to offer to repurchase all of the Debentures then outstanding.
However, certain important corporate events, such as leveraged
recapitalizations, that would increase the level of our
indebtedness, would not constitute a fundamental
change under the indenture governing the Debentures.
Therefore, if an event occurs that does not constitute a
fundamental change, we will not be required to make
an offer to repurchase the Debentures and you may be required to
continue to hold your Debentures despite the event. See
Description of the Debentures Fundamental
Change Requires Us to Repurchase Debentures at the Option of the
Holder.
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An active trading market for the Debentures may not
develop. |
The Debentures are a new issue of securities for which there is
currently no public market, and no active trading market might
ever develop. If the Debentures are traded after their initial
issuance, they may trade at a discount from their initial
offering price, depending on prevailing interest rates, the
market for similar securities, the price, and volatility in the
price, of our shares of common stock, our performance and other
factors. In addition, we do not know whether an active trading
market will develop for the Debentures. To the extent that an
active trading market does not develop, the liquidity and
trading prices for the Debentures may be harmed.
We have no plans to list the Debentures on a securities
exchange. We expect the Debentures to be eligible for trading on
the Nasdaq National Markets screen-based automated trading
system known as PORTAL, Private Offerings, Resale and
Trading through Automated Linkages. We have been advised
by the initial purchasers that they presently intend to make a
market in the Debentures. However, the initial purchasers are
not obligated to do so. Any market-making activity, if
initiated, may be discontinued at any time, for any reason or
for no reason, without notice. If the initial purchasers cease
to act as the market makers for the Debentures, we cannot assure
you another firm or person will make a market in the Debentures.
The liquidity of any market for the Debentures will depend upon
the number of holders of the Debentures, our results of
operations and financial condition, the market for similar
securities, the interest of securities dealers in making a
market in the Debentures and other factors. An active or liquid
trading market for the Debentures may not develop.
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The market price of the Debentures could be significantly
affected by the market price of our common stock, which may
fluctuate significantly. |
We expect that the market price of the Debentures will be
significantly affected by the market price of our common stock.
This may result in greater volatility in the trading value for
the Debentures than
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would be expected for nonconvertible debt securities we may
issue. Factors that could affect our common stock price include
the following:
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fluctuations in our quarterly results of operations and cash
flows or those of other companies in our industry; |
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the publics reaction to our press releases, announcements
and filings with the SEC; |
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additions or departures of key personnel; |
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changes in financial estimates or recommendations by research
analysts; |
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changes in the amount of indebtedness we have outstanding; |
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changes in the ratings of our Debentures, if rated, or other
securities; |
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changes in general conditions in the U.S. and international
economy, financial markets or the industry in which we operate,
including changes in regulatory requirements; |
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significant contracts, acquisitions, dispositions, financings,
joint marketing relationships, joint ventures or capital
commitments by us or our competitors; |
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developments related to significant claims or proceedings
against us; |
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our dividend policy; and |
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future sales of our equity or equity-linked securities. |
In recent years, stock markets, including the Nasdaq National
Market, have experienced extreme price and volume fluctuations.
This volatility has had a significant effect on the market price
of securities issued by many companies for reasons unrelated to
the operating performance of these companies. These broad market
fluctuations may adversely affect the market prices of our
common stock and the Debentures. See Price Range of Common
Stock.
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You may have to pay taxes if we adjust the conversion rate
of the Debentures in certain circumstances, even though you
would not receive any cash. |
We will adjust the conversion rate of the Debentures for stock
splits and combinations, stock dividends, certain cash dividends
and certain other events that affect our capital structure.
Please read Description of the Debentures
Conversion Rights Make Whole Amount and Public
Acquirer Change of Control and Description of the
Debentures Conversion Rights Conversion
Rate Adjustments. If we adjust the conversion rate, in
certain circumstances you may be treated as having received a
constructive distribution from us, resulting in taxable income
to you for U.S. federal income tax purposes, even though
you would not receive any cash in connection with the conversion
rate adjustment and even though you might not exercise your
conversion right. In addition, non-U.S. holders (as defined
in Material United States Federal Income Tax
Considerations) of the Debentures may, in certain
circumstances, be deemed to have received a distribution subject
to U.S. federal withholding tax requirements. Please read
Material United States Federal Income Tax
Considerations.
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Future sales of our common stock in the public market or
the issuance of securities senior to our common stock could
adversely affect the trading price of our common stock and the
value of the Debentures and our ability to raise funds in new
stock offerings. |
Future sales of substantial amounts of our common stock or
equity-related securities in the public market, or the
perception that such sales could occur, could adversely affect
prevailing trading prices of our common stock and the value of
the Debentures and could impair our ability to raise capital
through future offerings of equity or equity-related securities.
No prediction can be made as to the effect, if any, that future
sales of shares of common stock or the availability of shares of
common stock for future sale will have on the trading price of
our common stock or the value of the Debentures. The price of
our common stock could be affected by possible sales of our
common stock by investors who view the
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Debentures as a more attractive means of equity participation in
our company and by hedging or arbitrage trading activity that we
expect to develop involving our common stock. The hedging or
arbitrage could, in turn, affect the trading price of the
Debentures.
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The make whole amount payable on Debentures converted in
connection with a change of control may not adequately
compensate you for the lost option time value of your Debentures
as a result of such change of control. |
If the effective date or anticipated effective date of certain
change of control transactions occurs on or prior to
February 20, 2013, we will increase, for the time period
described herein, the conversion rate by a number of additional
shares for any Debentures converted in connection with such
change of control. The number of additional shares will be
determined based on the conversion date and the price paid per
share of our common stock in the transaction constituting the
change of control, as described below under Description of
the Debentures Conversion Rights Make
Whole Amount and Public Acquirer Change of Control. While
the number of additional shares is designed to compensate you
for the lost option time value of your Debentures as a result of
such change of control, the number of additional shares is only
an approximation of such lost value and may not adequately
compensate you for such loss. In addition, if a change of
control occurs after February 20, 2013, or if our stock
price is equal to or less than $45.35 per share or equal to
or greater than $200.00 per share, the conversion rate will
not be increased. In no event will the total number of shares of
common stock, if any, issuable upon conversion of the Debentures
exceed 22.050 per $1,000 principal amount of Debentures,
subject to adjustment. Our obligation to deliver the additional
shares upon a change of control could be considered a penalty,
in which case the enforceability thereof would be subject to
general principles of reasonableness of economic remedies. In
addition, in certain circumstances, upon a change of control
arising from our acquisition by a public company, we may elect
to adjust the conversion rate as described under
Description of the Debentures Conversion
Rights Make Whole Amount and Public Acquirer Change
of Control and, if we so elect, holders of the Debentures
will not be entitled to the increase in the conversion rate
described above.
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The conditional conversion feature of the Debentures could
result in your receiving less than the value of the
consideration into which a Debenture is convertible. |
The Debentures are convertible only if specified conditions are
met. If the specific conditions for conversion are not met, you
will not be able to convert your Debentures, and you may not be
able to receive the value of the consideration into which the
Debentures would otherwise be convertible. The contingent
conversion features could also adversely affect the value and
the trading prices of the Debentures.
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As a holder of Debentures, you will not be entitled to any
rights with respect to our common stock, but you will be subject
to all changes made with respect to our common stock. |
If you hold Debentures, you will not be entitled to any rights
with respect to our common stock (including, without limitation,
voting rights and rights to receive any dividends or other
distributions on our common stock), but you will be subject to
all changes affecting our common stock. You will have the rights
with respect to our common stock only when we deliver shares of
common stock, if any, to you upon conversion of your Debentures
and, in limited cases, under the conversion rate adjustments
applicable to the Debentures. For example, in the event that an
amendment is proposed to our certificate of incorporation or
bylaws requiring shareholder approval and the record date for
determining the shareholders of record entitled to vote on the
amendment occurs prior to the delivery of common stock, if any,
to you, you will not be entitled to vote on the amendment,
although you will nevertheless be subject to any changes in the
powers, preferences or special rights of our common stock.
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The repurchase rights in the Debentures triggered by a
fundamental change could discourage a potential acquiror. |
The repurchase rights in the Debentures triggered by a
fundamental change, as described under the heading
Description of the Debentures Fundamental
Change Requires Us to Repurchase Debentures at the Option of the
Holder, could discourage a potential acquiror. The term
fundamental change is limited to specified
transactions and may not include other events that might
adversely affect our financial condition or business operations.
Our obligation to offer to repurchase the Debentures upon a
fundamental change would not necessarily afford you protection
in the event of a highly leveraged transaction, reorganization,
merger or similar transaction involving us.
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The conversion rate of the Debentures may not be adjusted
for all dilutive events that may occur. |
The conversion rate of the Debentures is subject to adjustment
for certain events including, but not limited to, the issuance
of stock dividends on our common stock, the issuance of certain
rights or warrants, subdivisions or combinations of our common
stock, certain distributions of assets, debt securities, capital
stock or cash to holders of our common stock and certain tender
or exchange offers as described under Description of the
Debentures Conversion Rights Conversion
Rate Adjustments. The conversion rate will not be adjusted
for other events, such as stock issuances for cash, that may
adversely affect the trading price of the Debentures or the
common stock. There can be no assurance that an event that
adversely affects the value of the Debentures, but does not
result in an adjustment to the conversion rate, will not occur.
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Upon conversion of the Debentures, you may receive fewer
proceeds than expected because the value of our common stock may
decline between the day that you exercise your conversion right
and the day the conversion value of your Debentures is
determined. |
The conversion value that you will receive upon conversion of
your Debentures is determined by the average of the sale price
of our common stock for ten consecutive trading days beginning
on the third trading day immediately following the day you
deliver your conversion notice to the conversion agent. If the
price of our common stock decreases after we receive your notice
of conversion and prior to the end of the applicable ten trading
day period, the conversion value you receive will be adversely
affected.
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We are a holding company and depend on funds from our
subsidiaries. |
We are a holding company and hold most of our assets at, and
conduct most of our operations through, direct and indirect
subsidiaries. As a holding company, our results of operations
depend on the results of operations of our subsidiaries.
Moreover, we are dependent on dividends or other intercompany
transfers of funds from our subsidiaries to meet our debt
service and other obligations, including payment on the
Debentures. The ability of our subsidiaries to pay dividends or
make other payments or advances to us will depend on their
operating results and will be subject to applicable laws and
restrictions contained in agreements governing the debt of such
subsidiaries.
Our less than wholly-owned subsidiaries may also be subject to
restrictions on their ability to distribute cash to us in their
financing or other agreements and, as a result, we may not be
able to access their cash flows to service their respective debt
obligations, including in respect of the Debentures.
Risks Related to Our Business and Industry
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We have substantial indebtedness and we may incur
significant amounts of additional indebtedness in the future
which could affect our ability to repay the Debentures, finance
operations, pursue desirable business opportunities or
successfully run our business in the future. |
We have substantial indebtedness. As of June 30, 2005, our
consolidated debt was approximately $1,589.2 million. We
also may draw upon revolving credit loans in an aggregate
principal amount of up to $300 million, $150 million
of which has been drawn as of June 30, 2005. We also have
the ability to incur
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significant amounts of additional indebtedness, subject to the
conditions imposed by the terms of our Credit Agreement and the
agreements or indentures governing any additional indebtedness
that we incur in the future. In addition, our Credit Agreement
contains an uncommitted accordion feature that
permits us to borrow at a later date additional aggregate
principal amounts of up to $400 million under the term
facility and up to $100 million under the revolving
facility, subject to the receipt of commitments and the
satisfaction of other conditions. We intend to incur additional
debt to finance the pending acquisition of five hospitals from
HCA. Our ability to repay or refinance our indebtedness will
depend upon our future ability to monetize our interests in our
companies and our operating performance, which may be affected
by general economic, financial, competitive, regulatory,
business and other factors beyond our control.
Although we believe that our future operating cash flow,
together with available financing arrangements, will be
sufficient to fund our operating requirements, our leverage and
debt service obligations could have important consequences,
including the following:
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Under our Credit Agreement, we are required to satisfy and
maintain specified financial ratios and tests. Failure to comply
with these obligations may cause an event of default which, if
not cured or waived, could require us to repay substantial
indebtedness immediately. Moreover, if debt repayment is
accelerated, we will be subject to higher interest rates on our
debt obligations as a result of these covenants, and our credit
ratings may be adversely impacted; |
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We may be vulnerable in the event of downturns and adverse
changes in our businesses, in our industry, or in the economy
generally, such as the implementation by the government of
further limitations on reimbursement under Medicare and
Medicaid, because of our need for increased cash flow; |
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We may have difficulty obtaining additional financing at
favorable interest rates to meet our requirements for working
capital, capital expenditures, acquisitions, general corporate
or other purposes; |
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We will be required to dedicate a substantial portion of our
cash flow to the payment of principal and interest on
indebtedness, which will reduce the amount of funds available
for operations, capital expenditures and future acquisitions; |
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Any borrowings we complete at variable interest rates expose us
to increases in interest rates generally; |
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A breach of any of the restrictions or covenants in our debt
agreements could cause a cross-default under other debt
agreements. We may be required to pay our indebtedness
immediately if we default on any of the numerous financial or
other restrictive covenants contained in the debt agreements. It
is not certain whether or not we will have, or will be able to
obtain, sufficient funds to make these accelerated payments. If
any senior debt is accelerated, our assets may not be sufficient
to repay such indebtedness and our other indebtedness; and |
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In the event of a default, we may be forced to pursue one or
more alternative strategies, such as restructuring or
refinancing our indebtedness, selling assets, reducing or
delaying capital expenditures or seeking additional equity
capital. There can be no assurances that any of these strategies
could be effected on satisfactory terms, if at all, or that
sufficient funds could be obtained to make these accelerated
payments. |
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Substantially all of our indebtedness is floating rate
debt which exposes us to interest rate risk. |
Substantially all of our indebtedness consists of floating rate
debt which is at variable rates of interest and exposes us to
interest rate risk. Changes in the interest rates generally will
not impact the fair market value of the floating rate debt
instruments but could have a material adverse effect on our
financial condition and results of operations. If interest rates
increase, our debt service obligations on the variable rate
indebtedness will increase, even though the amount borrowed will
remain the same.
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We manage our exposure to interest rate risk through internally
established policies and procedures. To the extent that we
maintain such floating rate debt, we will evaluate the
appropriateness of using various hedging instruments. Currently,
we have not used financial instruments for hedging such interest
rate risk and are not a party to any derivative contracts which
would reduce exposure to such risk.
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We may be unable to successfully integrate the operations
and businesses of Historic LifePoint and Province and realize
the full cost savings and benefits anticipated from the Province
business combination. |
The Province business combination, which was completed on
April 15, 2005, involves the integration of two companies
that previously operated as independent public companies. We are
required to devote significant management attention and
resources to integrating the business practices and operations
of Province. The potential difficulties that we may encounter in
the integration process include the following:
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complexities associated with managing and coordinating the
geographically disparate combined businesses, which has 52
facilities in 20 states; |
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integrating personnel from the two companies while maintaining
focus on providing consistent, high quality patient care; |
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our inability to achieve the cost savings and efficiencies
anticipated in the Province business combination, including
increased purchasing efficiencies and cost reductions expected
to result from the Province business combination; |
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delays in replacing Provinces information systems with our
information systems; and |
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potential unknown liabilities and increased costs associated
with the Province business combination. |
The process of integrating operations could cause an
interruption of, or loss of momentum in, the activities of our
business and could also cause the loss of key personnel upon
whom our success will depend in large part. The diversion of
managements attention and any delays or difficulties
encountered in connection with the Province business combination
and the integration of the two companies operations could
have an adverse effect on our business, results of operations,
financial condition, cash flows or prospects. If encountered,
these potential difficulties could result in reduced earnings
and revenues compared to operations of Historic LifePoint and
Province for periods prior to the Province business combination.
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We incurred significant expenses in connection with the
Province business combination and related financing
transactions. |
We have recognized a pretax charge to operations for transaction
costs as of June 30, 2005, of $44.6 million, which is
comprised of $26.4 million as a result of conforming
Provinces accounts receivable to our accounting policies,
$8.7 million relating to assumed liabilities,
$4.2 million relating to retention bonuses to former
Province employees and $5.3 million relating to
compensation expense, primarily in the form of restricted stock
vesting from the change in control. Additional unanticipated
costs may be incurred in future periods relating to the
integration of the businesses of Historic LifePoint and
Province. If the benefits of the Province business combination
do not exceed its associated costs, our financial results could
be adversely affected.
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We may have difficulty acquiring hospitals on favorable
terms and, because of regulatory scrutiny, acquiring
not-for-profit entities. |
One element of our business strategy is expansion through the
acquisition of acute care hospitals in growing, non-urban
markets. We face significant competition to acquire other
attractive, non-urban hospitals, and we may not find suitable
acquisitions on favorable terms. We also may incur or assume
additional indebtedness as a result of the consummation of
acquisitions. Our failure to acquire non-urban hospitals
consistent with our growth plans could prevent us from
increasing our revenues.
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The cost of an acquisition could result in a dilutive effect on
our results of operations, depending on various factors,
including the amount paid for the acquisition, the acquired
hospitals results of operations, allocation of purchase
price, effects of subsequent legislation and limitations on rate
increases.
In recent years, the legislatures and attorneys general of
several states have become more interested in sales of hospitals
by not-for-profit entities. This heightened scrutiny may
increase the cost and difficulty, or prevent the completion, of
transactions with not-for-profit organizations in the future.
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We may encounter numerous business risks in acquiring
additional hospitals, and may have difficulty operating and
integrating those hospitals. As a result, we may be unable to
achieve our growth strategy. |
We may be unable to timely and effectively integrate the
hospitals that we acquire with our ongoing operations. We may
experience delays in implementing operating procedures and
systems in newly acquired hospitals.
Integrating a new hospital could be expensive and time consuming
and could disrupt our ongoing business, negatively affect cash
flow and distract management and other key personnel. In
addition, acquisition activity requires transitions from, and
the integration of, operations and, usually, information systems
that are used by acquired hospitals, and we will rely heavily on
HCA for information systems integration as part of a contractual
arrangement for information technology services. We may not be
successful in causing HCA to convert our newly acquired
hospitals information systems, including those used by the
Province hospitals, in a timely manner.
In addition, we also may acquire businesses with unknown or
contingent liabilities for past activities of acquired
businesses, including liabilities for failure to comply with
healthcare laws and regulations. We will have policies to
conform the practices of acquired facilities to our standards
and to applicable law, and generally will seek indemnification
from prospective sellers covering these matters. However, we
were not indemnified by Province. Although we have historically
obtained, and we will likely obtain, contractual indemnification
from sellers covering these matters, this indemnification may be
insufficient to cover material claims or liabilities for past
activities of acquired businesses.
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We depend significantly on key personnel, and the loss of
one or more of our senior management personnel or key local
management personnel could limit our ability to execute our
business strategy. |
We depend on the services and management experience of Kenneth
C. Donahey, our Chairman of the Board, Chief Executive Officer
and President, and our other current executive officers. If
Mr. Donahey or any of our other executive officers resign
or otherwise are unable to serve, our management expertise and
ability to deliver healthcare services efficiently could be
weakened. If we fail to attract and retain managers at our
hospitals and related facilities, our operations will suffer.
Moreover, we do not maintain key-man or similar life insurance
policies for Mr. Donahey or any other executive officers.
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If we fail to effectively recruit and retain physicians,
nurses, medical technicians and other healthcare professionals,
our ability to deliver healthcare services efficiently will be
adversely affected. |
Physicians generally direct the majority of hospital admissions
and services. Our success, in part, will depend on the number
and quality of physicians on our hospitals medical staffs,
the admissions practices of these physicians and the maintenance
of good relations with these physicians. Only a limited number
of physicians practice in the non-urban communities where our
hospitals are located. The primary method we use to add or
expand medical services will be the recruitment of new
physicians into our communities.
The success of our recruiting efforts will depend on several
factors. In general, there is a shortage of specialty care
physicians. We will face intense competition in the recruitment
of specialists because of the difficulty in convincing these
individuals of the benefits of practicing in non-urban
communities, in particular, whether the patient volume in
non-urban hospitals will allow physicians to generate income
comparable to that which they would expect to generate in an
urban setting. If the growth rate slows in
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the non-urban communities where our hospitals operate, then we
could experience difficulty attracting physicians to practice in
our communities.
There is generally a shortage of nurses and certain medical
technicians in the healthcare field. Our hospitals may be forced
to hire expensive contract personnel if they are unable to
recruit and retain fulltime employees. The shortage of nurses
and medical technicians may affect our ability to deliver
healthcare services efficiently.
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Our revenues may decline if federal or state programs
reduce our Medicare or Medicaid payments, or if managed care
companies reduce reimbursement amounts. In addition, the
financial condition of purchasers of healthcare services and
healthcare cost containment initiatives may limit our revenues
and profitability. |
In 2004, Historic LifePoint derived 48.1% of its revenues from
continuing operations, and Province derived 47.8% of its
revenues from continuing operations, from the Medicare and
Medicaid programs. In recent years, federal and state
governments have made significant changes in the Medicare and
Medicaid programs. A number of states have incurred budget
deficits and adopted legislation designed to reduce their
Medicaid expenditures and to reduce Medicaid enrollees.
Employers have also passed more healthcare benefit costs on to
employees to reduce the employers health insurance
expenses. This trend has caused the self-pay/deductible
component of healthcare services to become more common. This
payor shifting increases collection costs and reduces overall
collections.
During the past several years, major purchasers of healthcare,
such as federal and state governments, insurance companies and
employers, have undertaken initiatives to revise payment
methodologies and monitor healthcare costs. As part of their
efforts to contain healthcare costs, purchasers increasingly are
demanding discounted fee structures or the assumption by
healthcare providers of all or a portion of the financial risk
through prepaid capitation arrangements, often in exchange for
exclusive or preferred participation in their benefit plans. We
expect efforts to impose greater discounts and more stringent
cost controls by government and other payors to continue,
thereby reducing the payments we receive for our services.
An increasing number of managed care organizations have
experienced financial difficulties in recent years, in some
cases resulting in bankruptcy or insolvency. In some instances,
organizations, which currently have provider agreements with
certain of our hospitals have become insolvent, and the
hospitals have been unable to collect the full amounts due from
these organizations. Other managed care organizations with whom
we do business may encounter similar difficulties in paying
claims in the future. We believe that reductions in the payments
that we receive for our services, coupled with the increased
percentage of patient admissions from organizations offering
prepaid and discounted medical services and difficulty in
collecting receivables from managed care organizations, could
reduce our overall revenues and profitability.
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Our revenues are especially concentrated in a small number
of states which will make us particularly sensitive to
regulatory and economic changes in those states. |
Our revenues are particularly sensitive to regulatory and
economic changes in Kentucky, Tennessee, Alabama and Louisiana.
Certain managed care organizations that participate in the
Medicaid programs of Tennessee and Kentucky have been placed in
receivership or encountered other financial difficulties. Other
managed care organizations in the states in which we derive
significant revenues may encounter similar difficulties in
paying claims in the future.
On a pro forma basis, after giving effect to the Province
business combination:
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our Kentucky hospitals generated approximately 18.6% of revenues
for the year ended December 31, 2003 and approximately
18.7% of revenues for the year ended December 31, 2004; |
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our Tennessee hospitals generated approximately 11.1% of
revenues for the year ended December 31, 2003 and
approximately 10.3% of revenues for the year ended
December 31, 2004; |
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our Alabama hospitals generated approximately 10.3% of revenues
for the year ended December 31, 2003 and approximately 9.6%
of revenues for the year ended December 31, 2004; and |
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our Louisiana hospitals generated approximately 9.6% of revenues
for the year ended December 31, 2003 and approximately 9.5%
of revenues for the year ended December 31, 2004. |
In addition, following consummation of the acquisition of the
five hospitals from HCA, together with our recent hospital
acquisitions since the Province business combination, we will
also have significant hospital concentrations in the states of
Virginia and West Virginia.
Accordingly, any change in the current demographic, economic,
competitive or regulatory conditions in Kentucky, Tennessee,
Alabama or Louisiana could have a material adverse effect on our
business, financial condition, results of operations and/or
prospects. Tennessee has begun implementation of significant
reductions in the state-sponsored TennCare program. As benefits
are reduced and a significant number of beneficiaries are
terminated from the program, these changes could materially
reduce the amount we receive from the TennCare program.
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Other hospitals and freestanding outpatient facilities
provide services similar to those we offer, which may raise the
level of competition we face and may adversely affect our
revenues, profitability and market share. |
Competition among hospitals and other healthcare providers for
patients has intensified in recent years, and we compete with
other hospitals, including larger tertiary care centers located
in larger metropolitan areas. Although the hospitals that
compete with us may be a significant distance away from our
facilities, patients in our markets may migrate to, may be
referred by local physicians to, or may be lured by their health
plan to travel to these hospitals. Furthermore, some of the
hospitals that compete with us may offer more specialized
services, procedures or equipment than those available at our
hospitals. Also, some of the hospitals that compete with our
facilities are owned by tax-supported governmental agencies or
not-for-profit entities supported by endowments and charitable
contributions. These hospitals are also exempt from paying
sales, property and income taxes.
We also face competition from other specialized care providers,
including outpatient surgery, oncology, physical therapy and
diagnostic centers (including many in which physicians may have
an ownership interest), as well as competing services rendered
in physician offices. Where necessary to effectively compete,
some of our hospitals may develop specialized outpatient
facilities. However, to the extent that other providers are
successful in developing specialized outpatient facilities, our
market share for these specialized services will likely decrease
in the future. While, many of our hospitals attempt to attract
patients from surrounding counties and communities, including
communities in which a competing facility exists, if our
competitors are able to improve and expand services at their
facilities, we may be unable to attract these patients in the
future.
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We are subject to governmental regulation, and may be
subjected to allegations that we have failed to comply with
governmental regulations which could result in sanctions that
reduce our revenues and profitability. |
All participants in the healthcare industry are required to
comply with many laws and regulations at the federal, state and
local government levels. These laws and regulations require that
hospitals meet various requirements, including those relating to
the adequacy of medical care, equipment, personnel, operating
policies and procedures, billing and cost reports, payment for
services and supplies, maintenance of adequate records, privacy,
compliance with building codes and environmental protection. If
we fail to comply with applicable laws and regulations, we could
suffer civil or criminal penalties, including the loss of our
licenses to operate our hospitals and our ability to participate
in the Medicare, Medicaid and other federal and state healthcare
programs.
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Significant media and public attention recently has focused on
the hospital industry as a result of ongoing investigations
related to referrals, physician recruiting practices, cost
reporting and billing practices, laboratory and home healthcare
services and physician ownership and joint ventures involving
hospitals. Both federal and state government agencies have
announced heightened and coordinated civil and criminal
enforcement efforts. In addition, the Office of Inspector
General, which we refer to in this prospectus as the OIG, of the
U.S. Department of Health and Human Services, which we
refer to in this prospectus as the DHHS (which is responsible
for investigating fraud and abuse activities in government
programs) and the DOJ periodically establish enforcement
initiatives that focus on specific billing practices or other
suspected areas of abuse. In January 2005, the OIG issued
Supplemental Compliance Program Guidance for Hospitals that
focuses on hospital compliance risk areas. Some of the risk
areas highlighted by the OIG include correct outpatient
procedure coding; revising admission and discharge policies to
reflect current CMS rules; submitting appropriate claims for
supplemental payments such as pass-through costs and outlier
payments; and a general discussion of the fraud and abuse risks
related to financial relationships with referral sources.
In public statements, governmental authorities have taken
positions on issues for which little official interpretation was
previously available. Some of these positions appear to be
inconsistent with common practices within the industry but have
not previously been challenged. Moreover, some government
investigations that have in the past been conducted under the
civil provisions of federal law are now being conducted as
criminal investigations under the Medicare fraud and abuse laws.
The laws and regulations with which we must comply are complex
and subject to change. In the future, different interpretations
or enforcement of these laws and regulations could subject our
practices to allegations of impropriety or illegality or could
require us to make changes in our facilities, equipment,
personnel, services, capital expenditure programs and operating
expenses.
Finally, we are subject to various federal, state and local
statutes and ordinances regulating the discharge of materials
into the environment. Our healthcare operations generate and
will generate medical waste, such as pharmaceuticals, biological
materials and disposable medical instruments, that must be
disposed of in compliance with federal, state and local
environmental laws, rules and regulations. Our operations also
will be subject to various other environmental laws, rules and
regulations. Environmental regulations also may apply when we
renovate or refurbish hospitals, particularly older facilities.
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We may be subjected to actions brought by the government
under anti-fraud and abuse provisions, or by individuals on the
governments behalf under the False Claims Acts
qui tam or whistleblower provisions. |
Unlike companies in other industries, companies in the
healthcare industry are subject to Medicare and Medicaid
anti-fraud and abuse provisions, known as the
anti-kickback statute. As a company in the
healthcare industry, we are subject to the anti-kickback
statute, which prohibits some business practices and
relationships related to items or services reimbursable under
Medicare, Medicaid and other federal healthcare programs. For
instance, the anti-kickback statute prohibits healthcare service
providers from paying or receiving remuneration to induce or
arrange for the referral of patients or purchase of items or
services covered by a federal or state healthcare program. If
regulatory authorities determine that any of our hospitals
arrangements violate the anti-kickback statute, we could be
subject to liabilities under the Social Security Act, including:
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criminal penalties; |
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civil monetary penalties; and/or |
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exclusion from participation in Medicare, Medicaid or other
federal healthcare programs, any of which could impair our
ability to operate one or more of our hospitals profitably. |
Whistleblower provisions allow private individuals to bring
actions on behalf of the government alleging that the defendant
has defrauded the federal government. Defendants found to be
liable under the
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False Claims Act may be required to pay three times the actual
damages sustained by the government, plus mandatory civil
penalties ranging between $5,500 and $11,000 for each separate
false claim.
There are many potential bases for liability under the False
Claims Act. Liability often arises when an entity knowingly
submits a false claim for reimbursement to the federal
government. The False Claims Act defines the term
knowingly broadly. Although simple negligence will
not give rise to liability under the False Claims Act,
submitting a claim with reckless disregard to its truth or
falsity constitutes a knowing submission under the
False Claims Act and, therefore, will qualify for liability.
In some cases, whistleblowers or the federal government have
taken the position that providers who allegedly have violated
other statutes, such as the anti-kickback statute and the Stark
Law, have thereby submitted false claims under the False Claims
Act. In addition, a number of states have adopted their own
false claims provisions as well as their own whistleblower
provisions whereby a private party may file a civil lawsuit in
state court.
Although we intend and will endeavor to conduct our business in
compliance with all applicable federal and state fraud and abuse
laws, many of these laws are broadly worded and may be
interpreted or applied in ways that cannot be predicted.
Therefore, we cannot assure you that our arrangements or
business practices will not be subject to government scrutiny or
be found to violate applicable fraud and abuse laws.
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We may be subject to liabilities because of malpractice
and related legal claims brought against our hospitals. If we
become subject to these claims, we could be required to pay
significant damages, which may not be covered by
insurance. |
We will be subject to medical malpractice lawsuits, product
liability lawsuits and other legal actions arising out of the
operations of our owned and leased hospitals. These actions may
involve large claims and significant defense costs. To mitigate
a portion of this risk, we will maintain professional
malpractice liability and general liability insurance coverage
for these claims in amounts that we believe to be appropriate
for our operations. However, some of these claims could exceed
the scope of the coverage in effect, or coverage of particular
claims could be denied. It is possible that successful claims
against us that are within the self-insured retention level
amounts, when considered in the aggregate, could have an adverse
effect on our results of operations, cash flows, financial
condition or liquidity. Furthermore, insurance coverage in the
future may not continue to be available at a cost allowing us to
maintain adequate levels of insurance with acceptable
self-insured retention level amounts. In addition, physicians
using our hospitals may be unable to obtain insurance on
acceptable terms.
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We may be required to make significant capital
expenditures in order to bring our facilities into compliance
with the Americans with Disabilities Act. |
The Americans with Disabilities Act, which we refer to in this
prospectus as the ADA, generally requires that public
accommodations be made accessible to disabled persons. On
January 12, 2001, a class action lawsuit was filed in the
United States District Court for the Eastern District of
Tennessee against each of Historic LifePoints hospitals
alleging non-compliance with the accessibility guidelines of the
ADA. The lawsuit does not seek any monetary damages, but seeks
injunctive relief requiring facility modification, where
necessary, to meet ADA guidelines, in addition to
attorneys fees and costs. We are currently unable to
estimate the costs that could be associated with modifying these
facilities because these costs are negotiated and determined on
a facility-by-facility basis and, therefore, have varied and
will continue to vary significantly among facilities. In January
2002, the District Court certified the class action and issued a
scheduling order that requires the parties to complete discovery
and inspection for approximately six facilities per year. We are
vigorously defending the lawsuit, recognizing our obligation to
correct any deficiencies in order to comply with the ADA. To
date, the District Court has approved the settlement agreements
between the parties relating to ten of our facilities. We are
now moving forward in implementing facility modifications in
accordance with the terms of the settlement. We currently
anticipate that the costs associated with modifying three of
these facilities will be approximately
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$1.0 million. We currently do not have an estimate of the
anticipated costs for modifications at the remaining seven
facilities.
Although no studies have been undertaken with respect to
Provinces facilities, we believe such facilities are
currently compliant with the material provisions of the ADA.
However, if Provinces facilities become subject to the
class action lawsuit, we may be required to expend significant
capital expenditures at one or more of these facilities in order
to comply with the ADA, and our financial position and results
of operations could be adversely affected as a result.
Alternatively, noncompliance with the requirements of the ADA
could result in the imposition of fines against us by the
federal government, or the award of damages from us to private
litigants.
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Certificate of need laws and regulations regarding
licenses, ownership and operation may impair our future
expansion in some states. |
Some states require prior approval for the purchase,
construction and expansion of healthcare facilities, based on
the states determination of need for additional or
expanded healthcare facilities or services. Ten states in which
we currently operate hospitals (Alabama, Florida, Kentucky,
Louisiana, Mississippi, Nevada, South Carolina, Tennessee,
Virginia and West Virginia) require a certificate of need for
capital expenditures exceeding a prescribed amount, changes in
bed capacity or services, and certain other matters. We may not
be able to obtain certificates of need required for expansion
activities in the future. In addition, all of the states in
which we operate facilities require hospitals and most
healthcare providers to maintain one or more licenses. If we
fail to obtain any required certificate of need or license, our
ability to operate or expand operations in those states could be
impaired.
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We will be required to comply with California seismic
standards, which may require significant capital expenditures
with respect to our California hospitals. |
California has a statute and regulations which require hospital
facilities located in California to have the ability to
withstand earthquakes of specified magnitudes. Regulated
hospitals that do not meet these standards may be required to
retrofit their facilities. California law further requires that
owners of regulated hospitals evaluate their facilities and
develop a plan and schedule for complying with these standards.
We are required to conduct engineering studies of our two
California facilities to determine whether and to what extent
modifications to these facilities will be required. To date,
engineering studies have been conducted and compliance plans
have been implemented for our two California facilities, which
satisfy all current requirements and, through December 31,
2004, have cost approximately $450,000. In addition, we continue
to develop plans for compliance with California requirements.
Any facilities not in compliance with Californias
additional seismic regulations and standards must be brought
into compliance by 2008, or 2013 if the facility obtains an
extension. In the event that our two current California
facilities are found not to be in compliance with these
regulations and standards, we may be required to make
significant capital expenditures to bring those facilities into
compliance, which could adversely impact our earnings and
liquidity. Additionally, current or future California
legislation could change the standards, and we cannot predict
whether such legislation will be enacted or the extent of any
changes.
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If our access to HCAs information systems is
restricted or we are not able to integrate changes to our
existing information systems or information systems of acquired
hospitals, our operations could suffer. |
Our business will depend significantly on effective information
systems to process clinical and financial information.
Information systems require an ongoing commitment of significant
resources to maintain and enhance existing systems and develop
new systems in order to keep pace with continuing changes in
information processing technology. Since the completion of the
Province business combination, we rely heavily on HCA for
information systems. Under a contract with a term that will
expire on December 31, 2009, HCA provides LifePoint with
financial, clinical, patient accounting and network information
services. If our access to these systems is limited in the
future or if HCA develops systems more appropriate for the urban
healthcare market and not suited for our hospitals, our
operations could suffer.
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In addition, as new information systems are developed in the
future, we will need to integrate them into our existing
systems. Evolving industry and regulatory standards, such as the
HIPAA regulations, may require changes to our information
systems in the future. We may not be able to integrate new
systems or changes required to our existing systems or systems
of acquired hospitals in the future effectively or on a
cost-efficient basis.
A key element of our business strategy is growth through the
acquisition of additional acute care hospitals. Our acquisition
activity requires transitions from, and the integration of,
various information systems that are used by the hospitals we
acquire. If we experience difficulties with the integration of
the information systems of acquired hospitals, we could suffer,
among other things, operational disruptions and increases in
administrative expenses.
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If we fail to comply with the terms of Historic
LifePoints current corporate integrity agreement, we could
be required to pay significant monetary penalties. |
Because HCA was under investigation by the OIG at the time of
Historic LifePoints spinoff from HCA, Historic LifePoint
agreed to enter into a five-year corporate integrity agreement
effective December 2000, on terms that management believed to be
customary and commonplace for companies in the healthcare
industry that are subject to corporate integrity agreements.
Historic LifePoints corporate integrity agreement has
subsequently been amended, primarily to reduce the level of
third-party oversight that is required with respect to the
compliance oversight and analysis that is provided internally.
Under the terms of the corporate integrity agreement, we
currently have an affirmative obligation to report violations of
applicable laws and regulations. In particular, the compliance
measures and reporting and auditing requirements contained in
the corporate integrity agreement include:
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continuing the duties and activities of Historic
LifePoints audit and compliance committee, corporate
compliance officer, internal audit and compliance department,
local hospital ethics and compliance officers, corporate
compliance committee and hospital compliance committees; |
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maintaining Historic LifePoints written code of conduct,
which sets out its commitment to full compliance with all
statutes, regulations and guidelines applicable to federal
healthcare programs; |
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maintaining Historic LifePoints written policies and
procedures addressing the operation of its compliance program; |
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providing general training on the compliance program; |
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providing specific training for the appropriate personnel on
billing, coding and cost report issues; |
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having an independent third party conduct periodic analyses of
Historic LifePoints internal audits of its
facilities diagnosis related group billing and coding; |
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continuing Historic LifePoints confidential disclosure
program and compliance hotline to enable employees or others to
disclose issues or questions regarding possible inappropriate
policies or behavior; |
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enhancing Historic LifePoints screening program to ensure
that it does not hire or engage employees or contractors who
have been sanctioned or excluded from participation in federal
healthcare programs; |
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reporting any material deficiency which resulted in an
overpayment to Historic LifePoint by a federal healthcare
program; |
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reporting any healthcare related fraud involving any federally
funded program; and |
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submitting annual reports to the OIG which describe in detail
the operations of Historic LifePoints corporate compliance
program for the past year. |
These obligations could result in greater scrutiny by regulatory
authorities. Integrating the Province hospitals into our
processes to achieve ongoing compliance with the corporate
integrity agreement will
24
require additional efforts and costs, as described above. Our
failure to comply with the terms of the corporate integrity
agreement could subject us to significant monetary penalties.
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Our revenues and volume trends may be adversely affected
by certain factors relevant to the markets in which we have
hospitals. |
Our revenues and volume trends will be predicated on many
factors, including physicians clinical decisions on
patients, physicians availability, payor programs shifting
to a more outpatient-based environment, whether or not certain
services are offered, seasonal weather conditions, the intensity
and timing of yearly flu outbreaks, and the judgment of the
U.S. Centers for Disease Control on the strains of flu that
may circulate in the United States. Any of these factors could
have a material adverse effect on our revenues and volume
trends, and many of these factors will not be within the control
of our management.
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Different interpretations of accounting principles could
have a material adverse effect on our results of operations or
financial condition. |
Generally accepted accounting principles are complex,
continually evolving and are subject to varied interpretation by
us, our independent registered public accounting firm and the
SEC. Such varied interpretations may result from differing views
related to specific facts and circumstances. Differences in
interpretation of generally accepted accounting principles could
have a material adverse effect on the our results of operations
or financial condition.
25
PRICE RANGE OF COMMON STOCK
Our common stock is traded on the Nasdaq National Market®,
or Nasdaq, under the symbol LPNT. The following
table sets forth, for each of the quarterly periods indicated,
the high and low bid prices of our common stock as quoted by
Nasdaq. Periods prior to April 15, 2005 reflect the high
and low bid prices of Historic LifePoint common stock, as quoted
by Nasdaq.
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High | |
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Low | |
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2005
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4th Quarter (through October 12, 2005)
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$ |
43.98 |
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$ |
41.86 |
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3rd Quarter
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51.54 |
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40.80 |
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2nd Quarter
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51.11 |
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41.67 |
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1st Quarter
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45.58 |
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33.24 |
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2004
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4th Quarter
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$ |
37.83 |
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$ |
28.51 |
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3rd Quarter
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38.65 |
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26.40 |
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2nd Quarter
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39.21 |
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32.24 |
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1st Quarter
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37.35 |
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29.48 |
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2003
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4th Quarter
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$ |
31.05 |
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$ |
22.51 |
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3rd Quarter
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29.44 |
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20.55 |
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2nd Quarter
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25.72 |
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16.55 |
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1st Quarter
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30.65 |
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19.60 |
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2002
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4th Quarter
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$ |
38.05 |
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$ |
28.75 |
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On October 12, 2005 the last sale price for our common
stock as quoted by Nasdaq was $42.91 per share. As of
September 30, 2005, there were approximately 84,023 holders
of record of our common stock either directly or in street name.
DIVIDEND POLICY
We have never declared or paid dividends on our common stock. We
intend to retain future earnings to finance the growth and
development of our business and, accordingly, do not currently
intend to declare or pay any dividends on our common stock. Our
Board of Directors will evaluate our future earnings, results of
operations, financial condition and capital requirements in
determining whether to declare or pay cash dividends. In
addition, our Credit Agreement imposes restrictions on our
ability to pay cash dividends.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed
charges for the indicated periods.
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Six Months Ended | |
Year Ended December 31, | |
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June 30, | |
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2000 | |
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2001 | |
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2002 | |
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2003 | |
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2004 | |
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2004 | |
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2005 | |
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2.08 |
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3.67 |
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5.03 |
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7.44 |
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8.84 |
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9.00 |
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2.95 |
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The ratio of earnings to fixed charges is calculated by dividing
earnings by fixed charges. For this purpose,
earnings means income from continuing operations
before minority interests and income taxes plus fixed charges
(excluding capitalized interest). Fixed charges
means total interest whether capitalized or expensed (including
the portion of rent expense representative of interest costs) on
outstanding debt plus (i) debt-related fees and
(ii) amortization of deferred loan costs.
26
USE OF PROCEEDS
All of the Debentures and the shares of our common stock
issuable upon conversion of the Debentures are being sold by or
for the account of the selling securityholders listed in this
prospectus or any prospectus supplement. We will not receive any
proceeds from the sale by any selling securityholders of the
Debentures or the shares of our common stock issuable upon
conversion of the Debentures.
CAPITALIZATION
The following table sets forth our cash and cash equivalents and
capitalization as of June 30, 2005 on an actual basis and
as adjusted for the issuance of the Debentures, which were
issued on August 10, 2005, and the application of the net
proceeds from such issuance. You should read this table in
conjunction with the caption Managements Discussion
and Analysis of Financial Condition and Results of
Operations, the consolidated financial statements and the
notes thereto contained in our Quarterly Report on
Form 10-Q for the period ended June 30, 2005, which is
incorporated by reference in this prospectus. For a presentation
of the estimated pro forma impact of acquisitions since the
Province business combination, including the pending acquisition
of five hospitals from HCA and other recent acquisitions, on our
capitalization and results, including the underlying
assumptions, see our Current Report on Form 8-K filed on
July 29, 2005, which is incorporated by reference in this
prospectus.
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As of June 30, 2005 | |
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As Adjusted for this | |
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Actual | |
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Offering | |
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(Unaudited) | |
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(Dollars in millions) | |
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(Dollars in millions) | |
Cash and cash equivalents
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$ |
53.0 |
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$ |
80.5 |
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Long-term debt, including amounts due in one year:
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Senior debt:
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Revolving loan facility
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$ |
150.0 |
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$ |
150.0 |
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Term loan facility
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1,237.5 |
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1,237.5 |
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Capital lease obligations
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3.5 |
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3.5 |
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Total senior debt
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1,391.0 |
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1,391.0 |
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Senior subordinated term loan facility
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192.0 |
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Convertible Senior Subordinated Debentures offered hereby
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225.0 |
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Province
71/2% Senior
Subordinated Notes due 2013
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6.1 |
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6.1 |
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Province
41/4% Convertible
Subordinated Notes due 2008
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0.1 |
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0.1 |
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Total long-term debt, including amounts due in one year
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1,589.2 |
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1,622.2 |
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Total stockholders equity
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1,219.7 |
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1,219.7 |
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Total capitalization
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$ |
2,808.9 |
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$ |
2,841.9 |
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27
DESCRIPTION OF CREDIT AGREEMENT
In connection with the Province business combination, we entered
into a Credit Agreement with Citicorp North America, Inc., as
administrative agent, the lenders referred to therein, Bank of
America, N.A., CIBC World Markets Corp., SunTrust Bank, UBS
Securities LLC, as co-syndication agents and Citigroup Global
Markets Inc., as sole lead arranger and sole bookrunner. The
Credit Agreement provides for secured term B loans up to
$1,250.0 million maturing on April 15, 2012 (the
Term B Loans) and revolving loans up to
$300.0 million maturing on April 15, 2010 (the
Revolving Loans). In addition, the Company may
request additional tranches of Term B loans up to
$400.0 million and additional tranches of Revolving Loans
up to $100.0 million. Interest on the outstanding balances
of the Revolving Loans is payable, at the Companys option,
at an alternate base rate or at LIBOR, in each case plus a
margin depending on the Companys leverage ratio. Interest
on the outstanding balances of the Term B Loans is payable, at
the Companys option, at the alternate base rate plus a
margin or at LIBOR plus a margin.
In connection with the Province business combination, the
Company borrowed Term B loans under the Credit Agreement in the
aggregate principal amount of $1,250.0 million. As of
April 22, 2005, the applicable annual interest rate under
Term B loans is approximately 4.6%. The Term B loans outstanding
principal balance is scheduled to be repaid in consecutive
quarterly installments of approximately $3.1 million in the
aggregate, over six years beginning on June 30, 2005. The
remaining balance of the Term B loans is scheduled to be repaid
in the seventh year in four equal installments of approximately
$293.8 million. The Term B loans interest payments
are payable in arrears, beginning on May 15, 2005.
The loans under our Credit Agreement are senior secured loans
guaranteed by existing and future direct and indirect domestic
subsidiaries that collectively comprise at least 75% of our
consolidated total assets. The loans, the guarantees and, to the
extent relating to the loans, our obligations under each
interest rate protection agreement entered into with a lender is
secured by a first-priority security interest in the capital
stock and intercompany notes owned by us and the guarantor
subsidiaries, subject to certain exceptions and subject to the
limitation that only 65% of first-tier
non-U.S. subsidiaries need be pledged.
The Credit Agreement provides for customary mandatory
prepayments, subject to certain exceptions and limitations, from:
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up to 50% (depending on our senior leverage ratio) of the net
proceeds from certain equity issuances; |
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100% of the net proceeds from certain debt incurrences; |
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100% of the net proceeds from certain asset dispositions and
insurance or condemnation proceeds, subject to reinvestment
provisions; and |
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up to 50% (depending on our senior leverage ratio) of our annual
excess cash flow (as defined in the credit agreement). |
The Credit Agreement permits us to make optional prepayments, in
whole or in part, in minimum amounts, without premium or
penalty, and subject to the reimbursement of lenders
redeployment costs in the case of a prepayment of LIBOR
borrowings on a day other than the last day of the relevant
interest period.
The Credit Agreement requires us to meet certain financial
covenants, including a minimum interest coverage ratio and a
maximum total leverage ratio. The minimum interest coverage
ratio can be no less than 3.00:1.00 for the periods ending on
June 30 and September 30, 2005, no less than 3.25:1.00
for the period ending on December 31, 2005, and no less
than 3.50:1.00 for all periods ending after December 31,
2005. Such calculations are based on the trailing four quarters.
The maximum total leverage ratio cannot exceed 4.75:1.00 for the
periods ending on June 30, 2005 through December 31,
2006; cannot exceed 4.50:1.00 for the periods ending on
March 31, 2007 through December 31, 2007; cannot
exceed 4.25:1.00 for the periods ending on March 31, 2008
through December 31, 2008; cannot exceed 4.00:1.00 for the
periods ending on March 31, 2009 through December 31,
2009; and cannot exceed 3.75:1.00 for the periods ending
thereafter. In addition, on an annualized basis, we are also
limited with respect to amounts
28
spent on our capital expenditures. Such amounts cannot exceed
12% of net revenues for periods ended December 31, 2005 and
2006, and cannot exceed 10% thereafter. In addition, the Credit
Agreement contains customary affirmative and negative covenants,
which, among other things, limit our ability to incur additional
debt (including subordinated debt); create liens; make
investments; pay dividends and make other distributions in
connection with equity interests in LifePoint or any of its
subsidiaries; effect transactions with our affiliates; sell
assets; pay subordinated debt (including the Debentures) with
certain exceptions, including but not limited to, exchange of
our capital stock for such subordinated debt; merge,
consolidate, enter into acquisitions; and effect sale-leaseback
transactions. The Credit Agreement also includes customary
events of default such as payment defaults, cross-defaults to
other LifePoint indebtedness, including the Debentures,
bankruptcy and insolvency, or a change in control, including a
fundamental change under the Debentures.
29
DESCRIPTION OF THE DEBENTURES
The Debentures were issued under an indenture dated as of
August 10, 2005 between us and Citibank, N.A., as trustee.
Copies of the form of indenture, Debentures and the registration
rights agreement have been filed as exhibits to our current
report on Form 8-K dated August 10, 2005. We have
summarized portions of the indenture and the registration rights
agreement below. This summary is not complete. We urge you to
read the indenture and the registration rights agreement because
those documents, and not this description, define your rights as
a holder of the Debentures. In this section, the
Company, LifePoint, we,
our and us each refers only to LifePoint
Hospitals, Inc. and not to any existing or future subsidiary,
unless expressly stated otherwise.
General
The Debentures are unsecured, senior subordinated obligations of
LifePoint and are convertible into cash and, if applicable,
shares of our common stock, as described under
Conversion Rights below. The Debentures
are limited to an initial aggregate principal amount of
$200 million (or $225 million if the initial
purchasers exercise their over-allotment option in full) and
will mature on August 15, 2025.
The Debentures bear interest at the rate of 3.25% per year
from the date of original issuance of the Debentures, or from
the most recent date to which interest had been paid or provided
for to, but excluding, the next scheduled interest payment date.
Interest is payable semi-annually in arrears on February 15 and
August 15 of each year, commencing February 15, 2006, to
holders of record at the close of business on the preceding
February 1 and August 1, respectively. Interest is computed
on the basis of a 360-day year comprised of twelve 30-day
months. In the event of the maturity, conversion, purchase by us
at the option of the holder or redemption of a Debenture,
interest ceases to accrue on the Debenture under the terms of
and subject to the conditions of the indenture.
Principal is payable, and Debentures may be presented for
conversion, registration of transfer and exchange, without
service charge, at our office or agency in New York, New York,
which is initially the office or agency of the trustee in New
York, New York. See Form, Denomination and
Registration.
The indenture does not contain any financial covenants or any
restrictions on the payment of dividends, the incurrence of
senior or secured debt or other indebtedness, or the issuance or
repurchase of securities by us. The indenture contains no
covenants or other provisions to protect holders of the
Debentures in the event of a highly leveraged transaction or a
fundamental change, except to the limited extent described under
Fundamental Change Requires Us to Repurchase
Debentures at the Option of the Holder below.
We may, without the consent of the holders, reopen the
Debentures and issue additional Debentures under the indenture
with the same terms and with the same CUSIP numbers as the
Debentures offered hereby in an unlimited aggregate principal
amount, provided that no such additional Debentures may be
issued with the same CUSIP number unless fungible with the
Debentures offered hereby for U.S. federal income tax
purposes. We may also from time to time repurchase the
Debentures in open market purchases or negotiated transactions
without prior notice to holders.
Ranking
The Debentures are our unsecured, senior subordinated
obligations. The payment of the principal of, interest on, and
any cash due upon conversion of, the Debentures will be
subordinated in right of payment to the prior payment in full of
our existing and future senior indebtedness, including
obligations under the Credit Agreement described above under
Description of Credit Agreement (the Credit
Agreement) as described under
Subordination of Debentures below. The
Debentures will also rank equally in express right of payment
with our existing and future senior subordinated indebtedness
and senior to any of our existing and future subordinated
indebtedness. The Debentures will also effectively rank junior
to our secured indebtedness (including obligations under the
Credit Agreement) to the extent of the underlying collateral. At
June 30, 2005, on a pro forma basis after giving effect to
the offering, we had
30
$1,416.3 million of senior indebtedness and our
subsidiaries had $1,422.5 million of indebtedness that
would effectively rank senior to the Debentures.
LifePoint is a holding company with no significant assets other
than its ownership interests in its various subsidiaries.
LifePoint conducts most of its operations through those
subsidiaries. As a result, we are dependent upon the operations
and cash flows of our subsidiaries to meet our obligations,
including our debt service obligations with respect to the
Debentures. Our subsidiaries will have no obligation to pay any
amounts due on the Debentures or to make any funds available to
us for payment of the Debentures upon maturity or upon a
conversion, redemption or repurchase of the Debentures as
described below.
Claims of creditors of our subsidiaries, including trade
creditors, secured creditors and creditors holding debt and
guarantees issued by those subsidiaries (if any), and claims of
preferred stockholders (if any) of those subsidiaries, generally
will have priority with respect to the assets and earnings of
those subsidiaries over the claims of our creditors, including
holders of the Debentures.
Conversion Rights
Subject to the conditions and during the periods described
below, holders may convert their Debentures into cash and, if
applicable, shares, of our common stock based on an initial
conversion rate of 16.3345 shares of our common stock per
$1,000 principal amount of Debentures, unless previously
redeemed or purchased. This is equivalent to an initial
conversion price of approximately $61.22 per share.
The conversion rate (including any adjustments as described
below under Conversion Rate Adjustments
and Make Whole Amount and Public Acquirer
Change of Control) and the equivalent conversion
price in effect at any given time are referred to as the
applicable conversion rate and the applicable
conversion price, respectively, and will be subject to
adjustment as set forth in Conversion Rate
Adjustments and Make Whole Amount and
Public Acquirer Change of Control below. A holder may
convert fewer than all of such holders Debentures so long
as the Debentures converted are an integral multiple of $1,000
principal amount.
We will settle conversions of Debentures as described below
under Conversion Settlement. However,
our ability to pay cash upon settlement of the Debentures, as
described below, will be subject to important limitations
imposed by our Credit Agreement and by any limitations that we
may have in any other credit agreements or indebtedness we may
incur in the future. See Restrictions on
Conversion Imposed by Our Credit Agreement below,
Risk Factors Risks Related to this
Offering We may not have the funds necessary to
repurchase the Debentures or pay the amounts due upon conversion
of the Debentures when necessary, and our Credit Agreement
contains limitations on our ability to pay the principal return
in cash to holders of Debentures upon conversion or to
repurchase the Debentures under certain circumstances and
Description of Credit Agreement.
Upon conversion of a Debenture, a holder will not receive any
cash payment of interest (unless such conversion occurs after
the close of business on a regular record date and before the
related interest payment date or as set forth under
Registration Rights below), and we will
not adjust the conversion rate to account for accrued and unpaid
interest. Our delivery to the holder of cash and, if applicable,
shares, of our common stock upon conversion of a Debenture will
be deemed to satisfy in full our obligations with respect to
such Debenture. Accordingly, any accrued but unpaid interest
will be deemed to be paid in full upon conversion, rather than
cancelled, extinguished or forfeited. For a discussion of the
tax consequences to a holder of receiving our common stock upon
conversion, see Material United States Federal Income Tax
Considerations U.S. Holders
Conversion of the Debentures into Cash and Shares of Our Common
Stock Received From Us, and
Non-U.S. Holders Conversion
of the Debentures.
Holders of Debentures at the close of business on a regular
record date will receive payment of the interest payable on the
corresponding interest payment date notwithstanding the
conversion of such Debentures at any time after the close of
business on the applicable regular record date. Debentures
31
surrendered for conversion by a holder after the close of
business on any regular record date but prior to the next
interest payment date must be accompanied by payment of an
amount equal to the interest payment that is due on those
Debentures on that interest payment date; provided, however,
that no such payment need be made (1) if we have specified
a redemption date that is after a record date and on or prior to
the next interest payment date, (2) if we have specified a
purchase date following a fundamental change that is after a
record date and on or prior to the next interest payment date or
(3) only to the extent of overdue interest, if any overdue
interest exists at the time of conversion with respect to such
Debentures.
If a holder converts Debentures, we will pay any documentary,
stamp or similar issue or transfer tax due on the issue of
shares of our common stock upon the conversion, if any, unless
the tax is due because the holder requests the shares, if any,
due upon conversion to be issued or delivered to a person other
than such holder, in which case such holder will pay that tax.
If a holder wishes to exercise its conversion right, such holder
must deliver a duly completed conversion notice, together, if
the Debentures are in certificated form, with the certificated
security, to the conversion agent along with appropriate
endorsements and transfer documents, if required, and pay any
transfer or similar tax payment, if required as described above.
The conversion notice is irrevocable, except as described in the
paragraph below and as set forth under Restrictions
Imposed by our Credit Agreement below. We refer to the
date that all these conditions are satisfied as the
conversion date. The conversion agent will, on the
holders behalf, convert the Debentures into cash and, if
applicable, shares of our common stock. Holders may obtain
copies of the required form of the conversion notice from the
conversion agent. A certificate, or a book-entry transfer
through The Depository Trust Company, New York, New York,
or DTC, for the number of full shares of our common stock if
any, due upon conversion of any Debentures, together with a cash
payment for any fractional shares, will be delivered through the
conversion agent as soon as practicable, but no later than the
third business day, following the determination of the average
price related to such conversion, subject to certain exceptions
described under Make Whole Amount and Public Acquirer
Change of Control. The trustee will initially act as the
conversion agent.
If a holder has already delivered a purchase notice as described
under either Purchase of Debentures By Us at
the Option of the Holder or Fundamental
Change Requires Us to Repurchase Debentures at the Option of the
Holder with respect to a Debenture, however, the holder
may not surrender that Debenture for conversion until the holder
has withdrawn the purchase notice in accordance with the
indenture.
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Restrictions on Conversion Imposed by our Credit
Agreement |
Even if the Debentures are otherwise convertible as described
below under Conversion Upon Satisfaction of Sale Price
Condition, Conversion Upon Satisfaction of Trading
Price Condition, Conversion Upon Notice of
Redemption and Conversion Upon Specified Corporate
Transactions and Other Specified Events, the Debentures
will not be convertible if, at the time you tender your
Debentures for conversion, there exists a default or event of
default under our Credit Agreement, or a default or event of
default thereunder would result from such conversion. Your
inability to convert your Debentures because of this
circumstance will not constitute a default or event of default
under the indenture governing the Debentures. The term
Credit Agreement means our Credit Agreement
described under Description of Credit Agreement
above and any amendment, modification, renewal, extension, or
refinancing thereof; provided that such amended, modified,
renewed, extended, or refinanced credit agreement is (i) an
unsubordinated credit facility with a group of institutional
lenders secured by a substantial portion of our assets and our
subsidiaries and guaranteed by a substantial portion of our
subsidiaries and (ii) contains no worse terms with respect
to restrictions on conversion under the Debentures, which
restrictions shall not be materially less favorable to the
holders of Debentures than the terms of the Credit Agreement on
the date of the indenture.
32
If the Debentures would be convertible but are not convertible
because of the restrictions described in the previous paragraph
and you tender your Debentures for conversion, we will seek the
consent of our lenders under the Credit Agreement to allow such
conversion, or we will attempt to refinance the debt, in each
case only on terms which are acceptable to the Company in its
commercially reasonable discretion, unless we have previously
designated a financial institution to exchange such Debentures,
as described under Exchange in Lieu of
Conversion below and the financial institution has
accepted such exchange. If we are unable to obtain such consent
or refinance the debt, we will (i) promptly inform such
converting holder and such holder will have the option to revoke
its notice of conversion and (ii) if such converting
holder, does not revoke its conversion notice, designate a
financial institution to exchange the Debentures in lieu of
conversion as described below to the extent we have not already
done so. Any Debentures not accepted by such financial
institution will be returned to the holder, and the related
notice of conversion will be deemed to be revoked to the extent
of such returned Debentures. See Exchange in
Lieu of Conversion.
We cannot assure you that the lenders under the Credit Agreement
will consent to the conversion of the Debentures after we seek
their consent. Nor can we assure you that we can obtain such
consent on terms that are, in our opinion, acceptable to us. In
addition, there can be no assurance that, after we attempt to
refinance the Credit Agreement, we can obtain any such
refinancing on terms that are, in our opinion, acceptable to us.
Furthermore, we cannot assure you that any financial institution
that we designate will accept any such Debentures. See
Risk Factors Risks Related to this
Offering We may not have the funds necessary to
repurchase the Debentures or pay the amounts due upon conversion
of the Debentures when necessary, and our Credit Agreement
contains limitations on our ability to pay the principal return
in cash to holders of Debentures upon conversion or to
repurchase the Debentures under certain circumstances.
Make Whole Amount and Public Acquirer Change of Control
If the effective date or anticipated effective date of a
transaction (a make-whole change of control)
described in clause (2) of the definition of change
of control (as set forth under
Fundamental Change Requires Us to Repurchase
Debentures at the Option of the Holder) where more than
10% of the consideration received in connection with such
transaction consists of cash, or of securities or other property
that are not, or upon issuance will not be, traded on a
U.S. national securities exchange or quoted on the Nasdaq
National Market occurs on or prior to February 20, 2013,
and a holder surrenders its Debentures for conversion during the
period commencing 20 days prior to the anticipated
effective date of such transaction and ending 20 days
following the actual effective date (the effective
date) of such transaction, we will increase the applicable
conversion rate for the Debentures surrendered for conversion by
a number of additional shares of common stock (the
additional shares), as described below. However, if
such make-whole change of control is also a public
acquirer change of control, as described below under
Public Acquirer Change of Control then,
in lieu of increasing the conversion rate as described above, we
may elect to change the conversion right in the manner described
below.
We will mail a notice to holders and issue a press release no
later than 25 days prior to such transactions
anticipated effective date. If such transaction also constitutes
a public acquirer change of control, our notice will
also state whether we elect to modify the conversion rate into
acquirer common stock as described below.
The number of additional shares to be added to the conversion
rate will be determined by reference to the table below and is
based on the conversion date and the applicable
price in connection with such transaction.
33
The applicable price in connection with a make-whole
change of control means:
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If the consideration (excluding cash payment for fractional
share or pursuant to statutory appraisal rights) paid to holders
of our common stock in connection with such transaction consists
exclusively of cash, the amount of such cash per share of our
common stock; and |
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In all other cases, the average of the closing sale prices per
share of our common stock for the five consecutive trading days
immediately preceding the related conversion date. |
The stock prices set forth in the first row of the table below
(i.e., the column headers), will be adjusted as of any
date on which the conversion rate of the Debentures is adjusted.
The adjusted stock prices will equal the applicable prices in
effect immediately prior to such adjustment multiplied by a
fraction, the numerator of which is the conversion rate in
effect immediately prior to the adjustment giving rise to the
applicable price adjustment and the denominator of which is the
conversion rate as so adjusted. The increase of the additional
shares to the conversion rate will be subject to adjustment in
the same manner as the conversion rate as set forth under
Conversion Rate Adjustments.
The following table sets forth the applicable price and number
of additional shares to be added to the conversion rate per
$1,000 principal amount of Debentures:
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Applicable Price | |
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Conversion Date |
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$45.35 | |
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$50.00 | |
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$55.00 | |
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$60.00 | |
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$65.00 | |
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$75.00 | |
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$90.00 | |
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$110.00 | |
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$150.00 | |
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$200.00 | |
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August 10, 2005
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5.7161 |
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4.6563 |
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3.7939 |
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3.1348 |
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2.6260 |
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1.9211 |
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1.3035 |
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0.8785 |
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0.5227 |
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0.3560 |
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February 15, 2006
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5.6854 |
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4.6057 |
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3.7283 |
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3.0749 |
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2.5722 |
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1.8618 |
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1.2527 |
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0.8350 |
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0.4937 |
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0.3376 |
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February 15, 2007
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5.6068 |
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4.4836 |
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3.5774 |
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2.9100 |
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2.4000 |
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1.6892 |
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1.1001 |
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0.7125 |
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0.4132 |
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0.2824 |
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February 15, 2008
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5.5048 |
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4.3258 |
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3.3888 |
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2.6952 |
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2.1722 |
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1.4653 |
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0.9021 |
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0.5563 |
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0.3133 |
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0.2149 |
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February 15, 2009
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5.4694 |
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4.2298 |
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3.2484 |
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2.5257 |
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1.9848 |
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1.2971 |
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0.7587 |
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0.4534 |
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0.2567 |
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0.1797 |
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February 15, 2010
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5.3832 |
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4.0559 |
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3.0194 |
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2.2761 |
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1.7376 |
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1.0424 |
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0.5625 |
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0.3179 |
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0.1813 |
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0.1303 |
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February 15, 2011
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5.3105 |
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3.8370 |
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2.6985 |
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1.9007 |
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1.3440 |
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0.6818 |
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0.2953 |
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0.1466 |
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0.0875 |
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0.0647 |
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February 15, 2012
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5.3220 |
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3.6244 |
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2.3191 |
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1.4379 |
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0.8667 |
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0.2881 |
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0.0709 |
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0.0342 |
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0.0240 |
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0.0179 |
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February 20, 2013
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0.0000 |
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0.0000 |
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0.0000 |
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0.0000 |
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0.0000 |
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0.0000 |
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0.0000 |
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0.0000 |
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0.0000 |
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0.0000 |
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The exact applicable price and conversion date may not be set
forth in the table above, in which case:
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1. if the actual applicable price is between two applicable
price amounts in the table or the conversion date is between two
dates in the table, the increase in the conversion rate will be
determined by straight-line interpolation between the numbers
set forth for the higher and lower applicable price amounts,
and/or the two dates, based on a 365 day year, as
applicable; |
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2. if the actual applicable price is equal to or in excess
of $200.00 per share (subject to adjustment), we will not
increase the conversion rate applicable to the converted
Debenture; and |
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3. if the actual applicable price is equal to or less than
$45.35 per share (the last bid price of our common stock on
the date of this prospectus) (subject to adjustment), we will
not increase the conversion rate applicable to the converted
Debenture. |
Notwithstanding the foregoing, in no event will we increase the
conversion rate as described above to the extent the increase
will cause the conversion rate to exceed 22.050 per $1,000
principal amount of Debentures, subject to adjustment in the
same manner as the conversion rate as set forth under
Conversion Rate Adjustments.
In addition, certain continued listing standards of the Nasdaq
National Market potentially limit the amount by which we may
increase the conversion rate. These standards generally require
us to obtain the approval of our stockholders before entering
into certain transactions that potentially result in the
issuance of 20% or more of our outstanding common stock.
Accordingly, we will not increase the conversion rate as
described above beyond the maximum level permitted by these
continued listing standards. In accordance
34
with these listing standards, these restrictions will apply at
any time when the Debentures are outstanding, regardless of
whether we then have a class of securities quoted on the Nasdaq
National Market.
Our obligation to increase the conversion rate as described
above could be considered a penalty, in which case the
enforceability thereof would be subject to general principles of
reasonableness of economic remedies.
If, as described above, we are required to increase the
conversion rate by the additional shares as a result of the
make-whole change of control, Debentures surrendered for
conversion will be settled as follows:
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If the last day of the applicable conversion period (as defined
below under Conversion Settlement)
related to such Debentures is on or prior to the fourth trading
day immediately preceding the effective date of such
transaction, we will settle such conversion as described under
Conversion Settlement below by paying
the principal return and delivering the net shares, if any, on
the third business day immediately following the determination
of the average price, but without giving any effect to the
additional shares to be added to the conversion rate. As soon as
practicable following the effective date of the make-whole
change of control transaction, we will deliver the increase in
the conversion value (as defined below under
Conversion Settlement) for such
Debentures as if the conversion rate had been increased by such
number of additional shares during the related applicable
conversion period (and based upon the related average price). If
such increased conversion value results in an increase to the
principal return (as defined below under
Conversion Settlement), we will pay such
increase in cash. In addition, if such increased conversion
value results in an increase to the number of net shares (as
defined below under Conversion
Settlement) we will deliver such increase in shares of our
common stock or, as described below under
Recapitalizations, Reclassifications and
Changes of Our Common Stock, the same form of
consideration into which our common stock was converted or
exchanged in connection with such make-whole transaction. We
will not increase the conversion rate by the number of
additional shares, or otherwise deliver any increase to the
conversion value, if the make whole change of control never
becomes effective; |
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Otherwise, if the last day of the applicable conversion period
(without giving effect to the next sentence) is after the fourth
trading day immediately preceding the effective date of the make
whole change of control, we will settle such conversion as
described under Conversion Settlement
below by paying the principal return and delivering the net
shares, if any, including the additional shares to be added to
the conversion rate, if any, on the later to occur of
(1) the effective date of the transaction and (2) the
third business day following the conversion date. However, the
applicable conversion period will be deemed to be the ten
trading days ending on the fourth trading day immediately
preceding the effective date for such make-whole change of
control transaction. |
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Public Acquirer Change of Control |
Notwithstanding the foregoing, and in lieu of adjusting the
conversion rate as set forth above, in the case of a
public acquirer change of control (as defined
below), we may elect that, from and after the effective date of
such public acquirer change of control, the right to convert a
Debenture into cash and, if applicable, shares of our common
stock will be changed into the right to convert it into cash
and, if applicable, shares of public acquirer common
stock (as described below), based on an initial conversion
rate equal to the product of:
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the conversion rate in effect immediately prior to the effective
date of such public acquirer change of control; and |
35
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the average of the quotients obtained, for each trading day in
the 10 consecutive trading day period commencing on the trading
day immediately after the effective date of such public acquirer
change of control (the valuation period), by dividing |
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(i) the acquisition value per share of our
common stock on such trading day, by |
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(ii) the closing sale price per share of the acquirer
common stock on such trading day. |
The acquisition value per share is calculated based
on the value of the consideration paid per share of our common
stock in connection with such public acquirer change of control.
Specifically, the acquisition value per share of our
common stock on each trading day in the valuation period means
the sum of:
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if any of such consideration consists of cash, 100% of the face
amount of such cash consideration per share of our common stock; |
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if any of such consideration consists of shares of acquirer
common stock, the product of 100% of the closing sale price of
such acquirer common stock on such trading day and the number of
shares of acquirer common stock paid per share of our common
stock; and |
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if any of such consideration consists of any other securities,
assets or property, 100% of the fair market value, on such
trading day, of the amount of such security, asset or property
paid per share of our common stock, as determined by two
independent nationally recognized investment banks selected by
us for this purpose. |
If we elect to change the conversion rate as described above in
connection with a public acquirer change of control, then:
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such change will apply to all holders from and after the
effective date of the public acquirer change of control; |
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the principal return due upon conversion will continue to be
payable in cash, but the average price used to
calculate the conversion value will be based on the
closing sale price per share of the acquirer common stock; |
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the conversion rate will be subject to further adjustments in
the manner described under Make Whole Amount
and Public Acquirer Change of Control and
Conversion Rate Adjustments; and |
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we will not change the conversion right in the manner described
in under Recapitalizations, Reclassifications
and Changes of Our Common Stock below in connection with
such public acquirer change of control. |
A public acquirer change of control is any
transaction described in clause (2) of the definition of
change of control below where the acquirer, or any entity that
it is a direct or indirect beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of more than
50% of the total voting power of all shares of such
acquirers capital stock that are entitled to vote
generally in the election of directors, but in each case other
than us, has a class of common stock traded on a national
securities exchange or quoted on the Nasdaq National Market or
which will be so traded or quoted when issued or exchanged in
connection with such change of control; provided that if there
is more than one such entity, the relevant entity will be such
entity that has the most direct beneficial ownership to such
acquirers or entitys capital stock. We refer to such
acquirers or other entitys class of common stock
which is traded on a national securities exchange or quoted on
the Nasdaq National Market or which will be so traded or quoted
when issued or exchanged in connection with such change of
control as the acquirer common stock.
For a discussion of the tax consequences to a holder of changes
to the conversion rate of the Debentures, see Material
United States Federal Income Tax Considerations
U.S. Holders Conversion Rate Adjustments
and Non-U.S. Holders Conversion Rate
Adjustments.
36
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Conversion Upon Satisfaction of Sale Price
Condition |
Except as described under Restrictions on
Conversion Imposed by our Credit Agreement above, a holder
may surrender any of its Debentures for conversion into cash
and, if applicable, shares of our common stock in any fiscal
quarter (and only during such fiscal quarter) after the quarter
ending September 30, 2005 if the closing sale price per
share of our common stock, for each of at least 20 trading days
during the period of 30 consecutive trading days ending on the
last trading day of the previous fiscal quarter, is greater than
or equal to 130% of the applicable conversion price per share of
our common stock on such last trading day.
The closing sale price per share of our common stock
on any date means the closing sale price per share (or if no
closing sale price is reported, the average of the bid and asked
prices or, if more than one in either case, the average of the
average bid and the average asked prices) on that date as
reported in transactions for the principal U.S. securities
exchange on which our common stock is traded or, if our common
stock is not listed on a U.S. national or regional
securities exchange, as reported by the Nasdaq National Market
or Nasdaq Small Cap Market. The closing sale price will be
determined without reference to after-hours or extended market
trading. If our common stock is not listed for trading on a
U.S. national or regional securities exchange and not
reported by the Nasdaq National Market or Nasdaq Small Cap
Market on the relevant date, the closing sale price
per share will be the last quoted bid price per share, of our
common stock in the over-the-counter market on the relevant date
as reported by the National Quotation Bureau or similar
organization. If our common stock is not so quoted, the
closing sale price per share will be the average of
the mid-point of the last bid and asked prices for our common
stock on the relevant date from each of at least three
nationally recognized independent investment banking firms
selected by us for this purpose.
Trading day means a day (i) during which
trading in securities generally occurs on The New York Stock
Exchange or, if our common stock is not then listed on The New
York Stock Exchange, on the principal other national or regional
securities exchange on which our common stock is then listed or,
if our common stock is not then listed on a national or regional
securities exchange, on the Nasdaq National Market or, if our
common stock is not then quoted on the Nasdaq National Market,
on the principal other market on which our common stock is then
traded and (ii) on which a closing sale price for our
common stock may be obtained.
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Conversion Upon Satisfaction of Trading Price
Condition |
Except as described under Restrictions on
Conversion Imposed by our Credit Agreement above, a holder
may surrender Debentures for conversion into cash and, if
applicable, shares, of our common stock prior to maturity during
the five business days immediately following any five
consecutive trading day period (we refer to this five
consecutive trading day period as the measurement
period) in which the trading price per $1,000 principal
amount of Debentures (as determined following a request by a
holder of the Debentures in accordance with the procedures
described below) for each trading day of such measurement period
was less than 96% of the conversion value on such day.
The conversion value of the Debentures on any date
of determination means the product of the closing sale price per
share of our common stock on such day and the conversion rate in
effect on such day.
The trading price of the Debentures on any date of
determination means the average of the secondary market bid
quotations per $1,000 principal amount of Debentures obtained by
the trustee for $5,000,000 principal amount of the Debentures at
approximately 3:30 p.m., New York City time, on such
determination date from three independent nationally recognized
securities dealers we select, provided that if three such bids
cannot reasonably be obtained by the trustee, but two such bids
are obtained, then the average of the two bids shall be used,
and if only one such bid can reasonably be obtained by the
trustee, that one bid shall be used. If the trustee cannot
reasonably obtain at least one bid for $5,000,000 principal
amount of the Debentures from a nationally recognized securities
dealer, then the trading price per $1,000
37
principal amount of the Debentures will be deemed to be less
than 96% of the conversion value on such determination date.
The trustee shall have no obligation to determine the trading
price of the Debentures unless we have requested such
determination; and we shall have no obligation to make such
request unless a holder provides us with reasonable evidence
that the trading price per $1,000 principal amount of the
Debentures would be less than 96% of the conversion value on
such determination date, at which time, we shall instruct the
trustee to determine the trading price of the Debentures
beginning on the next trading day and on each successive trading
day until the trading price is greater than or equal to 96% of
the product of the conversion value.
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Conversion Upon Notice of Redemption |
Except as described under Restrictions on
Conversion Imposed by our Credit Agreement above, if we
call any of the Debentures for redemption, holders may convert
any of their Debentures into cash and shares of our common
stock, if any, at any time prior to the close of business on the
business day immediately preceding the redemption date, even if
the Debentures are not otherwise convertible at such time. If a
holder already has delivered a purchase notice with respect to a
Debenture, however, the holder may not surrender that Debenture
for conversion until the holder has withdrawn the purchase
notice in accordance with the indenture.
Under the terms of our Credit Agreement, we are not permitted to
redeem the Debentures without seeking the consent of our lenders
or refinancing their debt. Accordingly, if we do redeem the
Debentures such consent or refinancing will permit conversion of
the Debentures pursuant to their terms.
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Conversion Upon Specified Corporate Transactions and Other
Specified Events |
Conversions Upon Certain Distributions. Except as
described under Restrictions on Conversion
Imposed by our Credit Agreement above, if we elect to:
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distribute to all holders of our common stock rights entitling
them to purchase, for a period expiring not more than
60 days immediately following the record date for the
distribution, shares of our common stock at a price per share
that is less than the closing price per share of our common
stock on the trading day immediately preceding the announcement
date of the distribution, or |
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distribute to all holders of our common stock our assets, debt
securities or certain rights to purchase our securities, where
the value of such assets, securities, or rights per share of
common stock, as determined by our board of directors, exceeds
5% of the closing sale price of a share of our common stock on
the trading day immediately preceding the declaration date of
the distribution, |
we must notify the holders of the Debentures at least
20 days prior to the ex-dividend date for such
distribution. Once we have given such notice, holders may
surrender their Debentures for conversion at any time until the
earlier of the close of business on the business day immediately
prior to the ex-dividend date or the date we announce that such
distribution will not take place. No holder may exercise this
right to convert if the holder otherwise may participate in the
distribution without conversion. The ex-dividend date is the
first date upon which a sale of our common stock does not
automatically transfer the right to receive the relevant
distribution from the seller of the common stock to its buyer.
Conversions Upon Specified Events. Except as described
under Restrictions on Conversion Imposed by
our Credit Agreement above, if we are party to any
transaction or event (including any consolidation, merger or
binding share exchange) pursuant to which all shares of our
common stock would be converted into or exchanged for cash,
securities or other property, a holder may surrender Debentures
for conversion at any time from and after the date that is
20 days prior to the date we originally announce as the
anticipated effective date of the transaction until 20 days
after the actual effective date of such transaction (or, if such
transaction also constitutes a fundamental change, until the
fundamental change purchase date). We will notify holders and
the trustee as promptly as practicable following the date we
38
publicly announce such transaction (but in no event less than
20 days prior to the effective date of such transaction).
We will settle any such conversions as described below under
Conversion Settlement and
Make Whole Amount and Public Acquirer Change
of Control. However, such transaction may constitute an
event which requires us to change the conversion right in the
manner described under Recapitalizations,
Reclassifications and Changes of Our Common Stock, or it
may constitute a public acquirer change of control, which
permits us to change the conversion right in the manner
described under Make Whole Amount and Public
Acquirer Change of Control, above. Accordingly, settlement
of conversions after such transaction may be made in cash and,
if applicable, in property other than our common stock.
If such transaction also constitutes a fundamental change, the
holder will be able to require us to purchase all or a portion
of such holders debentures as described under
Fundamental Change Requires Us to Repurchase
Debentures at the Option of the Holder. In addition, if
such transaction constitutes a make-whole change of control we
will adjust the conversion rate for Debentures tendered for
conversion in connection with the fundamental change
transaction, as described above under Make
Whole Amount and Public Acquirer Change of Control.
However, we will not make such an adjustment if such transaction
also constitutes a public acquirer change of control and we
elect to modify the conversion obligation as described below as
described above under Make Whole Amount and
Public Acquirer Change of Control. We will specify in the
notice to holders whether we will adjust the conversion rate or
deliver cash and, if applicable, shares of acquirer common stock
upon conversion, as described above under Make
Whole Amount and Public Acquirer Change of Control.
Terminations of Trading. Except as described under
Restrictions on Conversion Imposed by our
Credit Agreement above, Debentures may be surrendered for
conversion at any time a termination of trading, as
defined under Fundamental Change Requires Us
to Repurchase Debentures at the Option of the Holder
below, has occurred and is continuing.
Subject to certain exceptions set forth below and under
Make Whole Amount and Public Acquirer Change
of Control, Recapitalizations,
Reclassifications and Change of Our Common Stock,
Restrictions on Conversion Imposed by our
Credit Agreement above and Exchange in
Lieu of Conversion, upon conversion of Debentures, we will
deliver, in respect of each $1,000 principal amount of
Debentures:
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cash in an amount (the principal return) equal to
the lesser of (a) the principal amount of Debentures
surrendered for conversion and (b) the conversion
value, and |
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if the conversion value of the Debentures submitted for
conversion is greater than the principal amount, an amount of
whole shares of our common stock (the net shares)
equal to the sum of the daily share amounts (calculated as
described below) for each trading day during the applicable
conversion period. |
The conversion value for each $1,000 principal
amount of Debentures is equal to (a) the applicable
conversion rate, multiplied by (b) the average price.
The applicable conversion period means the 10
consecutive trading day period commencing after the third
trading day following the date the Debentures are tendered for
conversion, except as described under Make
Whole Amount and Public Acquirer Change of Control.
The average price per share of our common stock is
equal to the average of the closing sale prices of our common
stock for each trading day in the applicable conversion period.
39
The daily share amount, for each $1,000 principal
amount of Debentures and each trading day in the applicable
conversion period, is equal to the greater of:
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zero; and |
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a number of shares of our common stock determined by the
following formula: |
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[
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(closing sale price of our common stock on such trading day) -
($1,000)
10
× closing sale price of our common stock on such trading day |
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] |
The conversion value, principal return, and the number of net
shares will be determined by us promptly after the end of the
applicable conversion period. We will pay the principal return
and cash in lieu of fractional shares, and deliver the net
shares, no later than the third business day following the
determination of the average price. We will deliver cash in lieu
of any fractional shares of our common stock issuable in
connection with payment of the net shares, based upon the
average price.
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Conversion Rate Adjustments |
The initial conversion rate will be adjusted for the following
events:
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(1) the issuance of our common stock as a dividend or
distribution to all holders of our common stock, or a
subdivision or combination of our common stock, in which event
the conversion rate will be adjusted based on the following
formula: |
where,
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CR0 |
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= the conversion rate in effect at the close of business on
the record date |
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CR1 |
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= the conversion rate in effect immediately after the
record date |
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OS0 |
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= the number of shares of our common stock outstanding at
the close of business on the record date |
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OS1 |
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= the number of shares of our common stock that would be
outstanding immediately after, and solely as a result of, such
event |
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(2) the issuance to all holders of our common stock of
certain rights or warrants entitling them for a period expiring
45 days or less from the date of issuance of such rights or
warrants to purchase shares of our common stock (or securities
convertible into our common stock) at less than (or having |
40
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a conversion price per share less than) the current market price
of our common stock; in which event the conversion rate will be
adjusted based on the following formula: |
where,
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CR0 |
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= the conversion rate in effect at the close of business on
the record date |
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CR1 |
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= the conversion rate in effect immediately after the
record date |
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OS0 |
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= the number of shares of our common stock outstanding at
the close of business on the record date |
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X |
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= the total number of shares of our common stock issuable
pursuant to such rights |
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Y |
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= the aggregate price payable to exercise such rights divided
by the average of the closing sale prices of our common stock
for the ten consecutive trading days prior to the business day
immediately preceding the announcement of the issuance of such
rights |
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However, the conversion rate will be readjusted to the
extent that such rights or warrants are not exercised prior to
their expiration |
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(3) the dividend or other distribution to all holders of
our common stock of shares of our capital stock (other than
common stock) or evidences of our indebtedness or our assets
(excluding (A) any dividend, distribution or issuance
covered by clauses (1) or (2) above or (4) or
(5) below) in which event the conversion rate will be
adjusted based on the following formula: |
where,
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CR0 |
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= the conversion rate in effect at the close of business on the
record date |
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CR1 |
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= the conversion rate in effect immediately after the record date |
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SP0 |
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= the current market price |
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FMV |
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= the fair market value (as determined by our board of directors),
on the record date, of the shares of capital stock, evidences of
indebtedness or assets so distributed, expressed as an amount
per share of our common stock |
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However, if the transaction that gives rise to an adjustment
pursuant to this clause (3) is one pursuant to which the
payment of a dividend or other distribution on our common stock
consist of shares of capital stock of, or similar equity
interests in, a subsidiary or other business unit of ours,
(i.e., a spin-off) that are, or, when issued, will be,
traded on a U.S. securities exchange or quoted on |
41
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the Nasdaq National Market or the Nasdaq Small Cap Market, then
the conversion rate will instead be adjusted based on the
following formula: |
where,
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CR0 = |
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the conversion rate in effect at the close of business on the
record date |
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CR1 = |
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the conversion rate in effect immediately after the record date |
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FMV0= |
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the average of the closing sale prices of the capital
stock or similar equity interests distributed to holders of our
common stock applicable to one share of our common stock over
the 10 consecutive trading days commencing on and including the
third trading day after the date on which ex-distribution
trading commences for such dividend or distribution on the
Nasdaq National Market or such other national or regional
exchange or market on our common stock then listed or
quoted |
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MP0 = |
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the average of the closing sale prices of our common stock over
the 10 consecutive trading days commencing on and including the
third trading day after the date on which ex-distribution
trading commences for such dividend or distribution on the
Nasdaq National Market or such other national or regional
exchange or market on our common stock is then listed or quoted |
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(4) dividends or other distributions consisting exclusively
of cash to all holders of our common stock during any fiscal
quarter, in which event the conversion rate will be adjusted
based on the following formula: |
where,
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CR0 = |
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the conversion rate in effect at the close of business on the
record date |
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CR1 = |
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the conversion rate in effect immediately after the record date |
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SP0 = |
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the current market price |
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C = |
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the amount in cash per share we distribute to holders of our
common stock |
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(5) we or one or more of our subsidiaries make purchases of
our common stock pursuant to a tender offer or exchange offer by
us or one of our subsidiaries for our common stock to the extent
that the cash and value of any other consideration included in
the payment per share of our common stock validly tendered or
exchanged exceeds the current market price per share of our
common stock on the trading day next preceding the last date on
which tenders or exchanges may be made pursuant to such tender
or exchange offer (the expiration date), in which
event the conversion rate will be adjusted based on the
following formula: |
42
where,
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CR0 |
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= the conversion rate in effect at the close of business on the
record date |
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CR1 |
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= the conversion rate in effect immediately after the record date |
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FMV0 |
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= the fair market value (as determined by our board of
directors), on the expiration date, of the aggregate value of
all cash and any other consideration paid or payable for shares
validly tendered or exchanged and not withdrawn as of the
expiration date (the purchased shares) |
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OS1 |
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= the number of shares of our common stock outstanding as of the
last time tenders or exchanges may be made pursuant to such
tender or exchange offer (the expiration time) less
any purchased shares |
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OS0 |
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= the number of shares of our common stock outstanding at the
expiration time, including any purchased shares |
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SP0 |
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= the current market price per share of our common stock on the
trading day next preceding the expiration date |
Notwithstanding the above, in no event will we adjust the
conversion rate pursuant to the events described in
clauses (2) through (5) above to an amount that
exceeds 22.050 shares per $1,000 principal amount of
Debentures. We will adjust this maximum conversion rate in the
same manner in which we must adjust the conversion rate for
stock splits and combinations, stock dividends,
reclassifications and similar events.
In addition, in no event will we adjust the conversion rate to
the extent that the adjustment would reduce the conversion price
below the par value per share of our common stock.
Current market price of our common stock on any day
means the average of the closing sale price of our common stock
for each of the 10 consecutive trading days ending on the
earlier of the day in question and the day before the
ex-date with respect to the issuance or distribution
requiring such computation. For purposes of this paragraph,
ex-date means the first date on which the shares of
our common stock trade on the applicable exchange or in the
applicable market, regular way, without the right to receive
such issuance or distribution.
Record date means, for purpose of this section, with
respect to any dividend, distribution or other transaction or
event in which the holders of our common stock have the right to
receive any cash, securities or other property or in which our
common stock (or other applicable security) is exchanged for or
converted into any combination of cash, securities or other
property, the date fixed for determination of holders of our
common stock entitled to receive such cash, securities or other
property (whether such date is fixed by our board of directors
or by statute, contract or otherwise).
To the extent that we have a shareholder rights plan
(i.e., a poison pill) in effect, upon conversion of the
Debentures into common stock, you will receive, in addition to
the cash and, if applicable, common stock due upon conversion,
the rights under the rights plan, whether or not the rights have
separated from the common stock, prior to any conversion. So
long as we comply with the preceding sentence, a distribution of
rights pursuant to such a rights plan will not trigger a
conversion rate adjustment.
The indenture does not require us to adjust the conversion rate
for any of the transactions described above if we make provision
for holders of the Debentures to participate in the transaction
without conversion on a basis and with notice that our board of
directors determines to be fair and appropriate.
No adjustment in the conversion rate will be required unless
such adjustment would require a change of at least 1% in the
conversion rate then in effect at such time. Any adjustment that
would otherwise be required to be made shall be carried forward
and taken into account in any subsequent adjustment; provided
that, notwithstanding the foregoing, all such carried forward
adjustments shall be made at the time we mail a notice of
redemption or notify holders of Debentures of a specified
corporate transaction that would entitle them to convert their
Debentures and thereafter any conversion rate adjustment shall
be made without regard to the 1% threshold described in the
preceding sentence.
43
Except as stated above, the conversion rate will not be adjusted
for the issuance of our common stock or any securities
convertible into or exchangeable for our common stock or
carrying the right to purchase any of the foregoing.
We may from time to time, to the extent permitted by law and
subject to applicable rules of The Nasdaq Stock Market, increase
the conversion rate of the Debentures by any amount for any
period of at least 20 days. In that case, we will give at
least 15 days notice of such increase. We may make such
increases in the conversion rate, in addition to those set forth
above, as our board of directors deems advisable, including to
avoid or diminish any income tax to holders of our common stock
resulting from any dividend or distribution of stock (or rights
to acquire stock) or from any event treated as such for income
tax purposes.
As a result of any adjustment of the conversion rate, the
holders of Debentures may, in certain circumstances, be deemed
to have received a distribution subject to U.S. income tax
as a dividend. In certain other circumstances, the absence of an
adjustment may result in taxable dividend income to the holders
of common stock. In addition, non-U.S. holders of
Debentures in certain circumstances may be deemed to have
received a distribution subject to U.S. federal withholding
tax requirements. See Material United States Federal
Income Tax Considerations
U.S. Holders Conversion Rate Adjustments
and Non-U.S. Holders
Conversion Rate Adjustments.
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Recapitalizations, Reclassifications and Changes of Our
Common Stock |
In the case of any recapitalization, reclassification or change
of our common stock (other than changes resulting from a
subdivision or combination), a consolidation, merger or
combination involving us, a sale, lease or other transfer to a
third party of the consolidated assets of ours and our
subsidiaries substantially as an entirety, or any statutory
share exchange, in each case as a result of which our common
stock would be converted into, or exchanged for, stock, other
securities, other property or assets (including cash or any
combination thereof), then, at the effective time of the
transaction, the right to convert a Debenture will be changed
into a right to convert it into the kind and amount of shares of
stock, other securities or other property or assets (including
cash or any combination thereof) that a holder of a number of
shares of common stock equal to the conversion rate prior to
such transaction would have owned or been entitled to receive
(the reference property) upon such transaction. In
the event holders of our common stock have the opportunity to
elect the form of consideration to be received in such
transaction, we will make adequate provision whereby the holders
of the Debentures shall have a reasonable opportunity, to
determine the form of consideration into which all of the
Debentures, treated as a single class, shall be convertible from
and after the effective date of such transaction. However, at
and after the effective time of the transaction, the principal
return payable upon conversion of the Debentures will continue
to be payable in cash, and the conversion value will be
calculated based on the fair value of the reference property. We
will agree in the indenture not to become a party to any such
transaction unless its terms are consistent with the foregoing.
However, if the transaction described above also constitutes a
public acquirer change of control, then we may in
certain circumstances elect to change the conversion right in
the manner described under Make Whole Amount
and Public Acquirer Change of Control in lieu of changing
the conversion right in the manner described in this paragraph.
For a discussion of the tax consequences to a holder of changes
to the conversion rate of the Debentures, see Material
United States Federal Income Tax Considerations
U.S. Holders Conversion Rate Adjustments
and Non-U.S. Holders
Conversion Rate Adjustments.
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Adjustments of Average Prices |
Whenever any provision of the indenture requires us to calculate
an average of closing sale prices over a span of multiple days,
we will make appropriate adjustments to account for any
adjustment to the conversion rate that becomes effective, or any
event requiring an adjustment to the conversion rate where the
ex date of the event occurs, at any time during the period from
which the average is to be calculated.
44
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Exchange in Lieu of Conversion |
When a holder surrenders Debentures for conversion, we may
direct the conversion agent to surrender, on or prior to the
date of determination of the average price, such Debentures to a
financial institution designated by us for exchange in lieu of
conversion. If, at the time a holder surrenders Debentures for
conversion, we are prohibited from settling the Debentures as
described above under Conversion
Rights Restrictions on Conversion Imposed by our
Credit Agreement, we will be required to so direct the
conversion agent if we have not already done so.
In order to accept any Debentures surrendered for conversion,
the designated institution must agree to deliver, in exchange
for such Debentures, a number of shares of our common stock
equal to the applicable conversion rate, plus cash for any
fractional shares, or cash or a combination of cash and shares
of our common stock in lieu thereof. Any cash amounts will be
based on the average price.
If the designated institution accepts any such Debentures, it
will deliver the appropriate number of shares of our common
stock or cash, or any combination thereof, to the conversion
agent and the conversion agent will deliver those shares to you.
Any Debentures exchanged by the designated institution will
remain outstanding. If the designated institution agrees to
accept any Debentures for exchange but does not timely deliver
the related consideration, we will deliver the consideration due
upon conversion by the due dates set forth in
Conversion Settlement above, subject to
the limitations on conversion as described above under
Conversion Rights Restrictions on
Conversion Imposed by our Credit Agreement.
Our designation of an institution to which the Debentures may be
submitted for exchange does not require the institution to
accept any Debentures. If the designated institution declines to
accept any Debentures surrendered for exchange, we will convert
those Debentures into cash and, if applicable, shares of our
common stock, as described under Conversion
Settlement above, subject to the limitations on conversion
as described above under Conversion
Rights Restrictions on Conversion Imposed by our
Credit Agreement. We will not pay any consideration to, or
otherwise enter into any arrangement with, the designated
institution for or with respect to such designation.
We may redeem for cash all or a portion of the Debentures on a
redemption date that is on or after February 20, 2013 and
that is not less than 30 nor more than 60 days after the
date we mail a notice to each registered holder of the
Debentures to be redeemed, at a price equal to 100% of the
principal amount of the Debentures to be redeemed plus accrued
and unpaid interest (including additional interest, if any), if
any, to, but excluding, the redemption date.
If we decide to redeem fewer than all of the outstanding
Debentures, the trustee will select the Debentures to be
redeemed (in principal amounts of $1,000 or integral multiples
thereof) by lot, on a pro rata basis or by another method the
trustee considers fair and appropriate so long as such method is
not prohibited by the rules of any stock exchange or quotation
association on which the Debentures may then be traded or quoted.
If the trustee selects a portion of your Debenture for partial
redemption and you convert a portion of the same Debenture, the
converted portion will be deemed to be from the portion selected
for redemption. In the event of any redemption in part, we will
not be required to issue, register the transfer of or exchange
any certificated Debenture during a period of 15 days
before the mailing of the redemption notice.
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Purchase of Debentures by Us at the Option of the
Holder |
Holders have the right to require us to purchase all or a
portion of their Debentures on February 15, 2013,
February 15, 2015 and February 15, 2020 (each, a
purchase date). The purchase price payable will be
equal to 100% of the principal amount of the Debentures to be
purchased plus any accrued and unpaid interest (including
additional interest, if any) to but excluding the purchase date.
45
We will be required to purchase any outstanding Debentures for
which a holder delivers a written purchase notice to the paying
agent. This notice must be delivered during the period beginning
at any time from the opening of business on the date that is 20
business days prior to the relevant purchase date until the
close of business on the business day immediately preceding the
purchase date. If the purchase notice is withdrawn before the
close of business on the business day before the purchase date,
we will not be obligated to purchase the related Debentures.
Also, as described in the Risk Factors section of
this prospectus under the caption Risks Related to this
Offering We may not have the funds necessary to
repurchase the Debentures or pay the amounts due upon conversion
of the Debentures when necessary, and our Credit Agreement
contains limitations on our ability to pay the principal return
in cash to holders of Debentures upon conversion or to
repurchase the Debentures under certain circumstances, we
may not have funds sufficient to purchase the Debentures when we
are required to do so.
On or before the 20th business day prior to each purchase
date, we will mail to the trustee, any paying agent and to all
holders of the Debentures at their addresses shown in the
register of the registrar, and to beneficial owners as required
by applicable law, a notice stating, among other things:
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the name and address of the trustee, any paying agent and the
conversion agent; and |
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the procedures that holders must follow to require us to
purchase their Debentures. |
The purchase notice given by each holder electing to require us
to purchase their Debentures must state:
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in the case of Debentures in certificated form, the certificate
numbers of the holders Debentures to be delivered for
purchase; |
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the portion of the principal amount of Debentures to be
purchased, in integral multiples of $1,000; and |
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that the Debentures are to be purchased by us pursuant to the
applicable provision of the Debentures and the indenture. |
If the Debentures are not in certificated form, the notice given
by each holder must comply with appropriate DTC procedures.
Simultaneously with providing such notice, we will publish a
notice containing this information in a newspaper of general
circulation in The City of New York or publish the information
on our website or through such other public medium as we may use
at that time.
No Debentures may be purchased by us at the option of the
holders if the principal amount of the Debentures has been
accelerated, and such acceleration has not been rescinded, on or
prior to such date.
A holder may withdraw any purchase notice in whole or in part by
a written notice of withdrawal delivered to the trustee or any
paying agent prior to the close of business on the business day
prior to the purchase date. The notice of withdrawal must state:
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the name of the holder; |
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a statement that the holder is withdrawing its election to
require us to purchase its Debentures; |
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the principal amount of the withdrawn Debentures, which must be
an integral multiple of $1,000; |
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if certificated Debentures have been issued, the certificate
numbers of the withdrawn Debentures; and |
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the principal amount, if any, which remains subject to the
purchase notice which must be an integral multiple of $1,000. |
If the Debentures are not in certificated form, the notice given
by each holder must comply with appropriate DTC procedures.
46
A holder must either effect book-entry transfer or deliver the
Debentures, together with necessary endorsements, to the office
of the trustee or any paying agent after delivery of the
purchase notice to receive payment of the purchase price. A
holder will receive payment promptly following the later of the
purchase date or the date of book-entry transfer or the delivery
of the Debentures together with the necessary endorsements. If
the trustee or any paying agent holds money sufficient to pay,
on the purchase date, the purchase price of the Debentures,
then, as of the purchase date:
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the Debentures will cease to be outstanding and interest will
cease to accrue; and |
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all other rights of the holder will terminate (other than the
right to receive the purchase price upon delivery or transfer of
the Debentures together with necessary endorsements). |
This will be the case whether or not book-entry transfer of the
Debentures is made and whether or not the Debentures are
delivered to the paying agent.
We will comply with the provisions of Rule 13e-4 and any
other tender offer rules under the Exchange Act that may be
applicable at the time of our repurchase notice. If then
required by the applicable rules, we will file a
schedule TO or any other schedule required in connection
with any offer by us to repurchase the Debentures.
Our ability to repurchase Debentures is subject to important
limitations. Any future credit agreements or other agreements
relating to our indebtedness or otherwise may contain provisions
prohibiting repurchase of the Debentures under certain
circumstances, or expressly prohibit our repurchase of the
Debentures. If you elect to require us to purchase your
Debentures at a time when we are prohibited from repurchasing
Debentures, we may seek the consent of our lenders to repurchase
the Debentures or may attempt to refinance this debt. Further,
there can be no assurance that the Company would have the
financial resources, or would be able to arrange financing, to
pay the purchase price for all the Debentures seeking to
exercise their repurchase right. If we do not obtain consent, we
would not be permitted to repurchase the Debentures. Our failure
to repurchase tendered Debentures would constitute an event of
default under the indenture, which might constitute a default
under the terms of our other indebtedness.
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Fundamental Change Requires Us to Repurchase Debentures at
the Option of the Holder |
If a fundamental change (as described below) occurs, each holder
of Debentures will have the right to require us to purchase some
or all of that holders Debentures, in integral multiples
of $1,000 principal amount, on a repurchase date (the
fundamental change repurchase date) of our choosing
that is not less than 20 nor more than 35 business days after
the date of our notice of the fundamental change. We will
purchase such Debentures at a purchase price in cash equal to
100% of the principal amount of the Debentures to be purchased,
plus any accrued and unpaid interest (including additional
interest) to but excluding the fundamental change repurchase
date, unless such fundamental change repurchase date falls after
a record date and on or prior to the corresponding interest
payment date, in which case we will pay the full amount of
accrued and unpaid interest (including additional interest, if
any) payable on such interest payment date to the holder of
record at the close of business on the corresponding record date.
Within 15 days after the occurrence of a fundamental
change, we are required to mail notice to all holders of
Debentures, as provided in the indenture, of the occurrence of
the fundamental change and of their resulting repurchase right
and the fundamental change repurchase date. We must also deliver
a copy of our notice to the trustee. To exercise the repurchase
right, a holder of Debentures must deliver, on or before the
close of business on the business day immediately preceding the
fundamental change repurchase date specified in our notice,
written notice to the trustee of the holders exercise of
its repurchase right. We will pay the repurchase price for
Debentures surrendered for repurchase promptly following the
later of the fundamental change repurchase date and the time of
book-entry transfer or delivery of the Debenture.
47
You may withdraw any written repurchase notice by delivering a
written notice of withdrawal to the paying agent prior to the
close of business on the business day before the fundamental
change repurchase date. The withdrawal notice must state:
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the name of the holder; |
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a statement that the holder is withdrawing its election to
require us to purchase its Debentures; |
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the principal amount of the withdrawn Debentures which must be
an integral multiple of $1,000; |
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if certificated Debentures have been issued, the certificate
number of the withdrawn Debentures; and |
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the principal amount, if any, that remains subject to the
repurchase notice which must be an integral multiple of $1,000. |
If the Debentures are not in certificated form, the notice given
by each holder must comply with appropriate DTC procedures.
Payment of the repurchase price for a Debenture for which a
repurchase notice has been delivered and not withdrawn is
conditioned upon book-entry transfer or delivery of the
Debenture, together with necessary endorsements, to the paying
agent at its corporate trust office in the Borough of Manhattan,
The City of New York, or any other office of the paying agent,
at any time after delivery of the repurchase notice. Payment of
the repurchase price for the Debenture will be made promptly
following the later of the fundamental change repurchase date
and the time of book-entry transfer or delivery of the
Debenture. If the paying agent holds money sufficient to pay, on
the repurchase date, the repurchase price of the Debenture, on
the repurchase date, then, as of the repurchase date:
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the Debenture will cease to be outstanding and interest will
cease to accrue; and |
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all other rights of the holder will terminate (other than the
right to receive the repurchase price upon delivery of the
Debenture, together with necessary endorsements). |
This will be the case whether or not book-entry transfer of the
Debentures is made and whether or not the Debentures are
delivered to the paying agent.
A fundamental change will be deemed to have occurred
upon a change of control or a termination of
trading.
A change of control will be deemed to have occurred
at such time after the original issuance of the Debentures when
the following has occurred:
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(1) a person or group within the
meaning of Section 13(d) of the Exchange Act, other than
us, our subsidiaries or our or their employee benefit plans,
files a Schedule TO or any schedule, form or report under
the Exchange Act disclosing that such person or group has become
the direct or indirect beneficial owner, as defined
in Rule 13d-3 under the Exchange Act, of our common stock
representing more than 50% of the voting power of our common
stock entitled to vote generally in the election of directors; |
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(2) consummation of any transaction or event (whether by
means of a liquidation, share exchange, tender offer,
consolidation, recapitalization, reclassification, merger of us
or any sale, lease or other transfer of the consolidated assets
of ours and our subsidiaries substantially as an entirety) or a
series of related transactions or events pursuant to which our
common stock is exchanged for, converted into or constitutes
solely the right to receive cash, securities or other property
other than pursuant to a transaction in which the persons that
beneficially owned, directly or indirectly, the
shares of our common stock immediately prior to such transaction
beneficially own, directly or indirectly, shares of common stock
representing a majority of the total voting power of all
outstanding classes of common stock of the surviving or
transferee person in substantially the same proportion amongst
themselves as such ownership immediately prior to such
transaction; or |
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(3) continuing directors (as defined below in this section)
cease to constitute at least a majority of our board of
directors. |
Continuing director means a director who either was
a member of our board of directors on the date of this
prospectus or who becomes a member of our board of directors
subsequent to that date and whose appointment, election or
nomination for election by our shareholders is duly approved by
a majority of the continuing directors on our board of directors
at the time of such approval, either by a specific vote or by
approval of the proxy statement issued by us on behalf of the
board of directors in which such individual is named as nominee
for director.
The beneficial owner shall be determined in accordance with
Rule 13d-3 promulgated by the SEC under the Exchange Act.
The term person includes any syndicate or group
which would be deemed to be a person under
Section 13(d)(3) of the Exchange Act.
The definition of change of control includes a phrase relating
to the sale, lease or other transfer of the consolidated assets
of ours and our subsidiaries substantially as an
entirety. There is no precise, established definition of
the phrase substantially as an entirety, under
applicable law. Accordingly, your ability to require us to
repurchase your Debentures as a result of a sale, lease or other
transfer of less than all our assets may be uncertain.
A termination of trading will be deemed to have
occurred if our common stock (or other common stock into which
the Debentures are then convertible) is neither listed for
trading on a U.S. national securities exchange nor approved
for quotation on the Nasdaq National Market.
Rule 13e-4 under the Exchange Act, as amended, requires the
dissemination of certain information to securityholders if an
issuer tender offer occurs and may apply if the repurchase
option becomes available to holders of the Debentures. We will
comply with this rule to the extent applicable at that time.
We may, to the extent permitted by applicable law, at any time
purchase the Debentures in the open market or by tender offer at
any price or by private agreement. Any Debenture so purchased by
us may, to the extent permitted by applicable law, be reissued
or resold or may be surrendered to the trustee for cancellation.
Any Debentures surrendered to the trustee for cancellation may
not be reissued or resold and will be canceled promptly.
The foregoing provisions would not necessarily protect holders
of the Debentures if highly leveraged or other transactions
involving us occur that may adversely affect holders.
Our ability to repurchase Debentures upon the occurrence of a
fundamental change is subject to important limitations. Under
the terms of our Credit Agreement, a fundamental change is an
event of default thereunder and we will be prohibited from
paying the purchase price for the Debentures in cash. In
addition, any future credit agreements or other agreements
relating to our indebtedness or otherwise may contain provisions
prohibiting repurchase of the Debentures under certain
circumstances, or expressly prohibit our repurchase of the
Debentures upon a fundamental change or may provide that a
fundamental change constitutes an event of default under that
agreement. If a fundamental change occurs at a time when we are
prohibited from repurchasing Debentures, we may seek the consent
of our lenders to repurchase the Debentures or may attempt to
refinance this debt. If we do not obtain consent, we would not
be permitted to repurchase the Debentures. Further, there can be
no assurance that the Company would have the financial
resources, or would be able to arrange financing, to pay the
repurchase price for all the Debentures seeking to exercise
their repurchase right. Our failure to repurchase tendered
Debentures would constitute an event of default under the
indenture, which might constitute a default under the terms of
our other indebtedness. See Risk Factors Risks
Related to this Offering We may not have the funds
necessary to repurchase the Debentures or pay the amounts due
upon conversion of the Debentures when necessary, and our Credit
Agreement contains limitations on our ability to pay the
principal return in cash to holders of Debentures upon
conversion or to repurchase the Debentures under certain
circumstances.
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No Debentures may be purchased by us at the option of the
holders upon a fundamental change if the principal amount of the
Debentures has been accelerated, and such acceleration has not
been rescinded, on or prior to such date.
The fundamental change purchase feature of the Debentures may in
certain circumstances make more difficult or discourage a
takeover of our company. The fundamental change repurchase
feature, however, is not the result of our knowledge of any
specific effort to accumulate shares of our common stock, to
obtain control of us by means of a merger, tender offer
solicitation or otherwise, or by management to adopt a series of
anti-takeover provisions. Instead, the fundamental change
repurchase feature is a standard term contained in securities
similar to the Debentures.
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Subordination of Debentures |
Payment on the Debentures will, to the extent provided in the
indenture, be subordinated in right of payment to the prior
payment in full of all of our senior indebtedness. The
Debentures also are effectively subordinated to all debt and
other liabilities, including trade payables and lease
obligations, if any, of our subsidiaries.
Upon any distribution of our assets upon any dissolution,
winding up, liquidation or reorganization, the payment of the
principal of, interest, and additional interest, if any, on the
Debentures will be subordinated in right of payment to the prior
payment in full in cash or other payment satisfactory to the
holders of senior indebtedness of all senior indebtedness. In
the event of any acceleration of the Debentures because of an
event of default, the holders of any outstanding senior
indebtedness would be entitled to payment in full in cash or
other payment satisfactory to the holders of senior indebtedness
of all senior indebtedness obligations before the holders of the
Debentures are entitled to receive any payment or distribution.
We are required under the indenture to promptly notify holders
of our senior indebtedness, if payment of the Debentures is
accelerated because of an event of default.
We may not make any payment on the Debentures if:
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a default in the payment of designated senior indebtedness
occurs and is continuing beyond any applicable period of grace
(called a payment default); or |
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a default other than a payment default on any designated senior
indebtedness occurs and is continuing that permits holders of
designated senior indebtedness to accelerate its maturity, or in
the case of a lease, a default occurs and is continuing that
permits the lessor to either terminate the lease or require us
to make an irrevocable offer to terminate the lease, and the
trustee receives a notice of such default (called payment
blockage notice) from any other person permitted to give
such notice under the indenture (called a non-payment
default). |
We may resume payments and distributions on the Debentures:
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in case of a payment default, upon the date on which such
default is cured or waived in writing or ceases to
exist; and |
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in case of a non-payment default, the earlier of (1) the
date on which such nonpayment default is cured or waived or
ceases to exist or (2) 179 days after the date on
which the payment blockage notice is received, if the maturity
of the designated senior indebtedness has not been accelerated,
(or in the case of any lease, 179 days after the payment
blockage notice is received, so long as we have not received
notice that the lessor under such lease has exercised its right
to terminate the lease or require us to make an irrevocable
offer to terminate the lease). |
No new period of payment blockage may be commenced pursuant to a
payment blockage notice unless 365 days have elapsed since
the initial effectiveness of the immediately prior payment
blockage notice. No non-payment default that existed or was
continuing on the date of delivery of any payment blockage
notice shall be the basis for any later payment blockage notice.
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If the trustee or any holder of the Debentures receives any
payment or distribution of our assets in contravention of the
subordination provisions of the Debentures or the indenture
before all senior indebtedness is paid in full in cash or other
payment satisfactory to holders of senior indebtedness, then
such payment or distribution will be held in trust for the
benefit of holders of senior indebtedness or their
representatives to the extent necessary to make payment in full
in cash or payment satisfactory to the holders of senior
indebtedness of all unpaid senior indebtedness.
Because of the subordination provisions discussed above, in the
event of our bankruptcy, dissolution or reorganization, holders
of senior indebtedness may receive more, ratably, and holders of
the Debentures may receive less, ratably, than our other
creditors. This subordination will not prevent the occurrence of
any event of default under the indenture except as described
under Restrictions on Conversion Imposed by
our Credit Agreement above.
The Debentures are exclusively obligations of us. A substantial
portion of our operations are conducted through our
subsidiaries. As a result, our cash flow and our ability to
service our debt, including the Debentures, is dependent upon
the earnings of our subsidiaries. In addition, we are dependent
on the distribution of earnings, loans or other payments from
our subsidiaries. In addition, any payment of dividends,
distributions, loans or advances by our subsidiaries to us could
be subject to statutory or contractual restrictions. Payments to
us by our subsidiaries will also be contingent upon our
subsidiaries earnings and business considerations.
Our right to receive any assets of any of our subsidiaries upon
their liquidation or reorganization, and therefore the right of
the holders to participate in those assets, will be effectively
subordinated to the claims of that subsidiarys creditors,
including trade creditors. In addition, even if we were a
creditor to any of our subsidiaries, our rights as a creditor
would be subordinate to any security interest in the assets of
our subsidiaries and any indebtedness of our subsidiaries senior
to that held by us.
The term senior indebtedness is defined in the
indenture and includes principal, premium, interest, rent, fees,
costs, expenses and other amounts accrued or due on our existing
or future indebtedness, as defined below, or any existing or
future indebtedness guaranteed or in effect guaranteed by us,
subject to certain exceptions. The term does not include:
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any indebtedness that by its express terms is not senior to the
Debentures or is pari passu or junior to the Debentures; or |
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any indebtedness we owe to any of our majority-owned
subsidiaries; or |
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the Debentures. |
The term indebtedness is also defined in the
indenture and includes, in general terms, our liabilities in
respect of borrowed money, bonds, debentures, letters of credit,
bank guarantees, bankers acceptances, capital and certain
other leases, interest rate and foreign currency derivative
contracts or similar arrangements, guarantees and certain other
obligations described in the indenture, subject to certain
exceptions. The term does not include, for example, any account
payable or other accrued current liability or obligation
incurred in the ordinary course of business in connection with
the obtaining of materials or services.
The term designated senior indebtedness is defined
in the indenture and includes our Credit Agreement, in general
terms, any senior indebtedness that by its terms expressly
provides that it is designated senior indebtedness
for purposes of the indenture.
As of June 30, 2005, on a pro forma basis after giving
effect to this offering and the use of proceeds hereof, we had
$1,416.3 million of senior indebtedness outstanding and our
subsidiaries had $1,422.5 million of indebtedness. Neither
we nor our subsidiaries are prohibited under the indenture from
incurring debt, including senior indebtedness. We may from time
to time incur additional debt, including senior or secured
indebtedness. Our subsidiaries may also from time to time incur
additional debt and liabilities.
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We are obligated to pay reasonable compensation to the trustee
and to indemnify the trustee against certain losses, liabilities
or expenses incurred by the trustee in connection with its
duties relating to the Debentures. The trustees claims for
these payments will generally be senior to the claims of holders
in respect of all funds collected or held by the trustee.
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Consolidation, Merger and Sale of Assets |
We may, without the consent of the holders of Debentures,
consolidate with, merge with or into or sell, lease or otherwise
transfer in one transaction or a series of related transactions
the consolidated assets of ours and our subsidiaries
substantially as an entirety to any corporation, limited
liability company, partnership or trust organized under the laws
of the United States or any of its political subdivisions
provided that:
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the surviving entity assumes all our obligations under the
indenture and the Debentures; |
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if as a result of such transaction the Debentures become
convertible into common stock or other securities issued by a
third party, such third party fully and unconditionally
guarantees all obligations of LifePoint or such successor under
the Debentures and the indenture; |
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at the time of such transaction or series of transactions, no
event of default, and no event which, after notice or lapse of
time, would become an event of default, shall have happened and
be continuing; and |
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an officers certificate and an opinion of counsel, each
stating that the consolidation, merger, sale, lease or transfer
complies with the provisions of the indenture, have been
delivered to the trustee. |
We will agree that for a period of two years after closing,
during any period in which we are not subject to the reporting
requirements of Section 13(a) or Section 15(d) of the
Exchange Act, to make available to holders of the Debentures, or
beneficial owners of interests therein, or any prospective
purchaser of the Debentures, the information required by
Rule 144A(d)(4) to be made available in connection with the
sale of Debentures or beneficial interests in the Debentures.
Each of the following will constitute an event of default under
the indenture:
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our failure to pay when due the principal on any of the
Debentures at final maturity, upon acceleration, redemption or
exercise of a repurchase right or otherwise (whether or not
prohibited by the subordination provision of the Debentures); |
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our failure to pay an installment of interest (including
additional interest, if any) on any of the Debentures for
30 days after the date when due (whether or not prohibited
by the subordination provision of the Debentures); |
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our failure to pay when due the principal return or the net
shares due upon conversion of Debentures, together with cash in
lieu of any fractional shares, upon conversion of a Debenture,
and that failure continues for 5 days. It will not be an
event of default if we do not pay the principal return or
deliver the net shares if the Debentures are not convertible
because of a prohibition imposed by our Credit Agreement as
described above under Restrictions on
Conversion Imposed by our Credit Agreement; |
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our failure to perform or observe any other term, covenant or
agreement contained in the Debentures or the indenture for a
period of 60 days after written notice of such failure,
requiring us to remedy the same, shall have been given to us by
the trustee or to us and the trustee by the holders of at least
25% in aggregate principal amount of the Debentures then
outstanding; |
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our, or any of our significant subsidiaries, failure
to make any payment by the end of the applicable grace period,
if any, after the maturity of any indebtedness for borrowed
money (including, without limitation, under our Credit
Agreement) in an amount in excess of $25 million, or if
there is an acceleration of indebtedness for borrowed money in
such principal amount because of a default with respect to such
indebtedness without such indebtedness having been discharged or
such acceleration having been cured, waived, rescinded or
annulled, in either case, for a period of 60 days after
written notice to us by the trustee or to us and the trustee by
holders of at least 25% in aggregate principal amount of the
Debentures then outstanding; |
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our failure to give timely notice of a fundamental change; and |
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certain events of our bankruptcy, insolvency or reorganization
or any significant subsidiary of ours. |
If an event of default specified in the seventh bullet point
above occurs and is continuing (other than pursuant to the
bankruptcy, insolvency or reorganization of a significant
subsidiary of ours), then the principal of all the Debentures
and the accrued and unpaid interest thereon shall automatically
become immediately due and payable. If any other event of
default shall occur and be continuing, the trustee or the
holders of at least 25% in aggregate principal amount of the
Debentures then outstanding may by written notice to us and the
trustee declare the Debentures due and payable at their
principal amount together with accrued and unpaid interest, and
thereupon the trustee may, at its discretion, proceed to protect
and enforce the rights of the holders of Debentures by
appropriate judicial proceedings. Such declaration may be
rescinded and annulled with the written consent of the holders
of a majority in aggregate principal amount of the Debentures
then outstanding, subject to the provisions of the indenture.
The holders of a majority in aggregate principal amount of
Debentures at the time outstanding through their written
consent, or the holders of a majority in aggregate principal
amount of Debentures then outstanding represented at a meeting
at which a quorum is present by a written resolution, may waive
any existing default or event of default and its consequences
except any default or event of default:
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in any payment on the Debentures; |
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in respect of the failure to convert the Debentures; or |
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in respect of the covenants or provisions in the indenture that
may not be modified or amended without the consent of the holder
of each Debenture affected as described in
Modification, Waiver and Meetings below. |
Holders of a majority in aggregate principal amount of the
Debentures then outstanding through their written consent, or
the holders of a majority in aggregate principal amount of the
Debentures then outstanding represented at a meeting at which a
quorum is present by a written resolution, may direct the time,
method and place of conducting any proceeding for any remedy
available to the trustee or exercising any trust or power
conferred upon the trustee, subject to the provisions of the
indenture. The indenture contains a provision entitling the
trustee, subject to the duty of the trustee during a default to
act with the required standard of care, to be indemnified by the
holders of Debentures before proceeding to exercise any right or
power under the indenture at the request of such holders. The
rights of holders of the Debentures to pursue remedies with
respect to the indenture and the Debentures are subject to a
number of additional requirements set forth in the indenture.
The indenture will provide that the trustee shall, within
90 days of the occurrence of a default, give to the
registered holders of the Debentures notice of all uncured
defaults known to it, but the trustee shall be protected in
withholding such notice if it, in good faith, determines that
the withholding of such notice is in the best interest of such
registered holders, except in the case of a default in the
payment of the principal of, or premium, if any, or interest on,
any of the Debentures when due or in the payment of any
conversion, redemption or repurchase obligation.
We are required to furnish annually to the trustee a statement
as to the existence of any default or event of default under the
indenture. In addition, we are required to file with the trustee
a written notice
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of the occurrence of any default or event of default within five
business days of our becoming aware of the occurrence of any
default or event of default.
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Modification, Waiver and Meetings |
The indenture contains provisions for convening meetings of the
holders of Debentures to consider matters affecting their
interests.
The indenture (including the terms and conditions of the
Debentures) may be modified or amended by us and the trustee,
without the consent of the holder of any Debenture, for the
purposes of, among other things:
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adding to our covenants for the benefit of the holders of
Debentures; |
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adding additional dates on which holders may require us to
repurchase their Debentures; |
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surrendering any right or power conferred upon us; |
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providing for conversion rights of holders of Debentures upon
any recapitalization, reclassification or change of our common
stock, a consolidation, merger or combination involving us, a
sale, lease or other transfer to another corporation of the
consolidated assets of us and our subsidiaries substantially as
an entirety, or any statutory share exchange; |
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providing for a change in the conversion right in accordance
with the indenture following a public acquirer change of control
in the event we make the election referred to under
Conversion Rights Make Whole Amount and
Public Acquirer Change of Control above; |
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providing for the combination of cash and shares of our common
stock to be delivered by a financial institution to a converting
holder of the Debentures pursuant to an exchange in lieu of
conversion as described above under Exchange
in Lieu of Conversion; |
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providing for the assumption of our obligations to the holders
of Debentures in the case of a merger, consolidation,
conveyance, sale, transfer or lease; |
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increasing the conversion rate in the manner described in the
indenture; |
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effecting or maintaining the qualification of the indenture
under the Trust Indenture Act of 1939, as amended, or complying
with the requirements of the SEC with respect thereto; |
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making any changes or modifications to the indenture necessary
in connection with the registration of the Debentures under the
Securities Act, as contemplated by the registration rights
agreement; |
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securing our obligations in respect of the Debentures; |
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curing any ambiguity or correcting or supplementing any
defective provision contained in the indenture; provided that
such modification or amendment does not, in the good faith
opinion of our board of directors and the trustee, adversely
affect the interests of the holders of Debentures in any
material respect; provided further that any amendment made
solely to conform the provisions of the indenture to the
description of the Debentures in this prospectus will not be
deemed to adversely affect the interests of the holders of the
Debentures; or |
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adding or modifying any other provisions which we and the
trustee may deem necessary or desirable and which will not
adversely affect the interests of the holders of Debentures in
any material respect. |
Modifications and amendments to the indenture or to the terms
and conditions of the Debentures may also be made, and
noncompliance by us with any provision of the indenture or the
Debentures may be waived, either:
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with the written consent of the holders of at least a majority
in aggregate principal amount of the Debentures at the time
outstanding; or |
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by the adoption of a resolution at a meeting of holders at which
a quorum is present by at least a majority in aggregate
principal amount of the Debentures represented at such meeting. |
However, no such modification, amendment or waiver may, without
the written consent or the affirmative vote of the holder of
each outstanding Debenture affected:
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change the maturity date of the principal of, or any date an
installment of interest or additional interest is due on, any
Debenture; |
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reduce the principal amount of any Debenture; |
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reduce the interest rate or amount of interest (including any
additional interest) on any Debenture; |
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change the currency of payment of principal of or interest on
any Debenture; |
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impair the right to institute suit for the enforcement of any
payment on or with respect to, or the conversion of, any
Debenture; |
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except as otherwise permitted or contemplated by provisions of
the indenture, impair or adversely affect the conversion rights
of holders of the Debentures, including any change to the
payment of the principal return or net share amount; |
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materially adversely affect any repurchase option of holders; |
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modify the redemption provisions of the indenture in a manner
materially adverse to the holders of Debentures; |
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modify the subordination provisions of the indenture in a manner
that is materially adverse to the holder of the Debentures; |
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reduce the percentage in aggregate principal amount of
Debentures outstanding necessary to modify or amend the
indenture or to waive any past default; or |
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reduce the percentage in aggregate principal amount of
Debentures outstanding required for any other waiver under the
indenture. |
The quorum at any meeting called to adopt a resolution will be
persons holding or representing a majority in aggregate
principal amount of the Debentures at the time outstanding.
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Form, Denomination and Registration |
The Debentures were issued in fully registered form, without
coupons, in denominations of $1,000 principal amount and whole
multiples of $1,000.
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Global Debentures: Book-Entry Form |
The Debentures are evidenced by one or more global Debentures
deposited with the trustee as custodian for DTC, and registered
in the name of Cede & Co., as DTCs nominee.
Record ownership of the global Debentures may be transferred, in
whole or in part, only to another nominee of DTC or to a
successor of DTC or its nominee, except as set forth below.
Ownership of beneficial interests in a global Debenture will be
limited to persons that have accounts with DTC or its nominee
(participants) or persons that may hold interests
through participants. Transfers between direct DTC participants
will be effected in the ordinary way in accordance with
DTCs rules and will be settled in same-day funds. Holders
may also beneficially own interests in the global Debentures
held by DTC through certain banks, brokers, dealers, trust
companies and other parties that clear through or maintain a
custodial relationship with a direct DTC participant, either
directly or indirectly.
So long as Cede & Co., as nominee of DTC, is the
registered owner of the global Debentures, Cede & Co.
for all purposes will be considered the sole holder of the
global Debentures. Except as
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provided below, owners of beneficial interests in the global
Debentures will not be entitled to have certificates registered
in their names, will not receive or be entitled to receive
physical delivery of certificates in definitive form, and will
not be considered holders thereof. The laws of some states
require that certain persons take physical delivery of
securities in definitive form. Consequently, the ability to
transfer or pledge a beneficial interest in the global
Debentures to such persons may be limited.
We will wire, through the facilities of the trustee, the
principal, and interest payments on the global Debentures to
Cede & Co., the nominee for DTC, as the registered
owner of the global Debentures. We, the trustee and any paying
agent will have no responsibility or liability for paying
amounts due on the global Debentures to owners of beneficial
interests in the global Debentures.
It is DTCs current practice, upon receipt of any payment
of principal of, and interest on the global Debentures, to
credit participants accounts on the payment date in
amounts proportionate to their respective beneficial interests
in the Debentures represented by the global Debentures, as shown
on the records of DTC, unless DTC believes that it will not
receive payment on the payment date. Payments by DTC
participants to owners of beneficial interests in Debentures
represented by the global Debentures held through DTC
participants will be the responsibility of DTC participants, as
is now the case with securities held for the accounts of
customers registered in street name.
If a holder would like to convert Debentures into cash and, if
applicable, common stock pursuant to the terms of the
Debentures, the holder should contact the holders broker
or other direct or indirect DTC participant to obtain
information on procedures, including proper forms and cut-off
times, for submitting those requests.
Because DTC can only act on behalf of DTC participants, who in
turn act on behalf of indirect DTC participants and other banks,
a holders ability to pledge the holders interest in
the Debentures represented by global Debentures to persons or
entities that do not participate in the DTC system, or otherwise
take actions in respect of such interest, may be affected by the
lack of a physical certificate.
Neither we nor the trustee (nor any registrar, paying agent or
conversion agent under the indenture) will have any
responsibility for the performance by DTC or direct or indirect
DTC participants of their obligations under the rules and
procedures governing their operations. DTC has advised us that
it will take any action permitted to be taken by a holder of
Debentures, including, without limitation, the presentation of
Debentures for conversion as described below, only at the
direction of one or more direct DTC participants to whose
account with DTC interests in the global Debentures are credited
and only for the principal amount of the Debentures for which
directions have been given.
DTC has advised us as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a
member of the Federal Reserve System, a clearing
corporation within the meaning of the Uniform Commercial
Code and a clearing agency registered pursuant to
the provisions of Section 17A of the Exchange Act. DTC was
created to hold securities for DTC participants and to
facilitate the clearance and settlement of securities
transactions between DTC participants through electronic
book-entry changes to the accounts of its participants, thereby
eliminating the need for physical movement of certificates.
Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and may include
certain other organizations such as the initial purchasers of
the Debentures. Certain DTC participants or their
representatives, together with other entities, own DTC. Indirect
access to the DTC system is available to others such as banks,
brokers, dealers and trust companies that clear through, or
maintain a custodial relationship with, a participant, either
directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to
facilitate transfers of interests in the global Debentures among
DTC participants, it is under no obligation to perform or
continue to perform such procedures, and such procedures may be
discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is
not appointed by us within 90 days, we will cause
Debentures to be issued in definitive registered form in
exchange for the global Debentures. None of us, the trustee or
any of our or the trustees respective agents will have any
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responsibility for the performance by DTC or direct or indirect
DTC participants of their obligations under the rules and
procedures governing their operations, including maintaining,
supervising or reviewing the records relating to, or payments
made on account of, beneficial ownership interests in global
Debentures.
According to DTC, the foregoing information with respect to DTC
has been provided to its participants and other members of the
financial community for informational purposes only and is not
intended to serve as a representation, warranty or contract
modification of any kind.
We will issue the Debentures in definitive certificated form if
DTC notifies us that it is unwilling or unable to continue as
depositary or DTC ceases to be a clearing agency registered
under the U.S. Securities Exchange Act of 1934, as amended
and a successor depositary is not appointed by us within
90 days. In addition, beneficial interests in a global
Debenture may be exchanged for definitive certificated
Debentures upon request by or on behalf of DTC in accordance
with customary procedures. The indenture permits us to determine
at any time and in our sole discretion that Debentures shall no
longer be represented by global Debentures. DTC has advised us
that, under its current practices, it would notify its
participants of our request, but will only withdraw beneficial
interests from the global Debentures at the request of each DTC
participant. We would issue definitive certificates in exchange
for any such beneficial interests withdrawn.
Any Debenture that is exchangeable pursuant to the preceding
sentence is exchangeable for Debentures registered in the names
which DTC will instruct the trustee. It is expected that
DTCs instructions may be based upon directions received by
DTC from its participants with respect to ownership of
beneficial interests in that global Debenture. Subject to the
foregoing, a global Debenture is not exchangeable except for a
global Debenture or global Debentures of the same aggregate
denominations to be registered in the name of DTC or its nominee.
Except as otherwise provided in the indenture, notices to
holders of Debentures will be given by mail to the addresses of
holders of the Debentures as they appear in the Debenture
register.
The indenture, the Debentures and the registration rights
agreement will be governed by, and construed in accordance with,
the law of the State of New York.
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Information Regarding the Trustee |
Citibank, N.A., as trustee under the indenture, has been
appointed by us as paying agent, conversion agent, registrar and
custodian with regard to the Debentures. The trustee or its
affiliates may from time to time in the future provide banking
and other services to us in the ordinary course of their
business.
The registration statement of which this prospectus forms a part
has been filed pursuant to the terms of the registration rights
agreement which we entered into with the initial purchasers of
the Debentures. In the registration rights agreement we agreed,
for the benefit of the holders of the Debentures and the shares
of common stock issuable upon conversion of the Debentures (the
registrable securities) that we would, at our
expense, use our commercially reasonable efforts to:
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file such shelf registration statement with the SEC within
120 days after the earliest date of original issuance of
any of the Debentures; |
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cause such registration statement to become effective no later
than 210 days after the earliest date of original issuance
of any of the Debentures; and |
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keep the registration statement effective for a period (the
registration period) beginning on the date such
registration statement is declared effective by the SEC and
ending on the earlier of (1) the date as of which all the
Debentures or the common stock issuable upon conversion of the
Debentures have been sold either under Rule 144 under the
Securities Act (or any similar provision then in force) or
pursuant to the shelf registration statement; (2) the date as of
which all the Debentures or the common stock issuable upon
conversion of the Debentures held by non-affiliates are eligible
to be sold to the public pursuant to Rule 144(k) under the
Securities Act or any successor provision; (3) the date on
which there are no outstanding registrable securities; and
(4) the date that is two years after the earliest date of
original issuance of any of the Debentures. |
We also agreed to provide to each registered holder such number
of copies of this prospectus as may reasonably be requested by
such holder, notify each registered holder by mail when the
shelf registration statement has become effective and take
certain other actions as are required to permit resales of the
Debentures and the common stock issuable upon conversion of the
Debentures. A holder who sells securities pursuant to the
registration statement of which this prospectus forms a part
generally will be required to be named as a selling
securityholder in this prospectus and to deliver this prospectus
to purchasers. By accepting any Debenture, each holder is bound
by the provisions of the registration rights agreement. These
provisions include, without limitation, a provision whereby the
holders:
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must indemnify us for any damages arising from information such
holder has provided to us for inclusion in the shelf
registration statement; |
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agree to deliver a prospectus in accordance with the Securities
Act of 1933; and |
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refrain from any sale of registrable securities pursuant to the
shelf registration statement during any suspension period
described below. |
If a shelf registration statement covering those securities is
not effective, they may not be sold or otherwise transferred
except pursuant to an exemption from registration under the
Securities Act and any other applicable securities laws or in a
transaction not subject to those laws.
We may suspend the holders use of the prospectus for a
maximum period (the suspension period) of
60 days in any 90-day period, and an aggregate of
120 days in any 12-month period, if (i) any pending
corporate development that, in our reasonable discretion, makes
it appropriate to suspend the availability of the shelf
registration statement (ii) the prospectus would, in our
judgment, contain a material misstatement or omission as a
result of an event that has occurred or is continuing or the
existence of any fact, or (iii) the SEC issues a stop order
suspending the effectiveness of the shelf registration statement
or initiates proceedings with respect to the shelf registration
statement under Section 8(d) or 8(e) of the Securities Act
of 1933. We will not specify the nature of the event giving rise
to a suspension in any notice to holders of the Debentures of
the existence of such a suspension other than an event described
in clause (iii) above.
If,
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on the 120th day following the earliest date of original
issuance of any of the Debentures, the shelf registration
statement has not been filed with the SEC; or |
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on the 210th day following the earliest date of original
issuance of any of the Debentures, the shelf registration
statement has not become effective; or |
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the shelf registration statement is filed and has become
effective but then ceases to be effective (without being
immediately succeeded by an additional registration statement
that is filed and has become effective) or usable for the offer
and sale of registrable securities for a period of time
(including any suspension period) that exceeds an aggregate of
60 days in any 90-day period or an aggregate of
120 days in any 12-month period. |
(each, a registration default), additional interest
will accrue on the Debentures, from and including the day
following the registration default to but excluding the earlier
of (i) the day after the end of the
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registration period, (ii) the day on which the registration
default has been cured and (iii) the date such security is
no longer a registrable security. So long as a registration
default continues, we will pay additional interest in arrears in
cash on August 15 and February 15 of each year to each holder
who is entitled to receive additional interest in respect of a
Debenture of which the holder was the holder of record at the
close of business on the immediately preceding August 1,
and February 1, respectively. Additional interest will
accrue at a rate equal to:
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0.25% per annum of the principal amount for the first
90 days following such registration default; and |
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0.50% per annum of the principal amount after the first
90 days following such registration default. |
In no event will additional interest accrue at a rate per year
exceeding 0.50%. Additional interest will be computed on the
basis of a 360-day year composed of twelve 30-day months. If a
holder has converted some or all of its Debentures into common
stock, the holder will be entitled to receive upon conversion of
its Debentures accrued and unpaid additional interest to the
conversion date. In no event will we pay additional interest,
and additional interest will not accrue, on any Debenture after
it has been converted into cash and if applicable, shares of our
common stock. In addition, no holder will be entitled to any
additional interest unless he has delivered a duly completed
form of notice and questionnaire referred to below, together
with any other information we may reasonably request. The right
to additional interest, if any, shall be the sole remedy in the
event of a registration default.
The Debentures and common stock issuable upon conversion will
cease to be registrable securities when (i) the shelf
registration statement described above has been declared
effective under the Securities Act and such securities have been
disposed of pursuant to the shelf registration statement,
(ii) the expiration of the holding period that would be
applicable under Rule 144(k) or any successor or similar
provision then in effect, (iii) the sale to the public
pursuant to Rule 144 or any successor or similar provision
then in effect or (iv) such securities have ceased to be
outstanding.
We have agreed to mail notice to all holders of the filing and
effectiveness of the shelf registration statement by issuing a
press release. In order to be named as a selling securityholder
in the prospectus at the time of effectiveness of the shelf
registration statement, a holder must have completed and
delivered a notice and questionnaire, together with any other
information we may reasonably request, to us on or prior to the
tenth business day before the effectiveness of the registration
statement. If a holder provides us with a completed
questionnaire after the tenth business day before the
effectiveness of the registration statement, together with any
other information we may reasonably request, we will, within 30
business days of receipt (or if a suspension period is in effect
at the time of such receipt or a suspension period commences
within 30 business days after such receipt, within 30 business
days after the end of such suspension period), file any
amendments to the registration statement or supplements to the
related prospectus as are necessary and permitted to allow such
holder to deliver a prospectus to purchasers of registrable
securities, provided that we will not be obligated to file more
than one post-effective amendment in any 90-day period. Such
holder will be entitled to additional interest in the manner and
amount described above if we fail to make the filing in the time
required (or, where such filing is a post effective amendment to
the shelf registration statement, if such amendment is not
declared effective within 90 days after the date such
post-effective amendment is required to be filed). If a holder
does not complete and deliver a questionnaire or provide the
other information we may request, the holder will not be named
as a selling securityholder in the prospectus and will not be
permitted to sell the holders registrable securities
pursuant to the shelf registration statement. This summary of
the registration rights agreement is not complete. This summary
is subject to, and is qualified in its entirety by reference to,
all the provisions of the registration rights agreement.
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DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock is not meant to
be complete and is qualified in its entirety by reference to our
restated certificate of incorporation and restated bylaws.
Authorized Capital Stock
Our authorized capital stock consists of 90,000,000 authorized
shares of common stock, par value $0.01 per share, and
10,000,000 authorized shares of preferred stock, of which
90,000 shares are designated as series A junior
participating preferred stock, par value $0.01 per share.
As of June 30, 2005 approximately 57.0 million shares
of our common stock were issued and outstanding, approximately
4.3 million shares were reserved for issuance upon the
exercise of options issued and outstanding pursuant to stock
option plans and no shares of preferred stock were outstanding.
Common Stock
Holders of our common stock are entitled to one vote for each
share they hold on all matters voted on by our stockholders, and
are not entitled to cumulate votes for the election of
directors. Subject to any preferences that may be applicable to
any outstanding preferred stock, the holders of shares of our
common stock are entitled to receive any dividends that may be
declared from time to time by our board of directors out of
assets or funds legally available to pay dividends. In the event
of our liquidation, dissolution or winding up, the holders of
shares of our common stock will be entitled to share ratably in
all assets remaining after payment of liabilities, subject to
the prior distribution rights of holders of shares of our
preferred stock, if any are then outstanding.
Preferred Stock
We may issue up to 10,000,000 shares of preferred stock.
Our board of directors will have the authority to issue
preferred stock in one or more series and to fix for each series
the voting powers, full, limited or none, and the designations,
preferences and relative, participating, optional or other
special rights and qualifications, limitations or restrictions
thereon, and the number of shares constituting any series and
the designations of the series, without any further vote or
action by our stockholders. Because the terms of the preferred
stock may be fixed by our board of directors without stockholder
action, the preferred stock could be issued quickly with terms
calculated to defeat a proposed takeover of our company, or to
make the removal of our management more difficult. Under certain
circumstances, this could have the effect of decreasing the
market price of our common stock.
In connection with the stockholder rights plan that we adopted,
our restated certificate of incorporation provides for the
issuance of 90,000 shares of preferred stock designated as
the series A junior participating preferred stock, par
value $0.01 per share. No shares of our preferred stock are
outstanding.
Preferred Stock Purchase Rights
We have entered into a stockholder rights agreement with
National City Bank, as rights agent. Pursuant to the rights
agreement, each outstanding share of our common stock is
accompanied by one preferred stock purchase right. Each right
entitles its registered holder to purchase from us one
one-thousandth of a share of series A preferred stock at a
price of $35 per one one-thousandth of a share, subject to
adjustment.
Each share of series A preferred stock will be entitled,
when, as and if declared, to a preferential quarterly dividend
payment in an amount equal to the greater of $10 or 1,000 times
the aggregate of all dividends declared per share of our common
stock. In the event of our liquidation, dissolution or winding
up, the holders of series A preferred stock will be
entitled to a minimum preferential liquidation payment equal to
$1,000 per share, plus an amount equal to accrued and
unpaid dividends and distributions made per share of our common
stock. Each share of series A preferred stock will entitle
its holder to 1,000 votes on all matters submitted to a vote of
our stockholders. In the event of any consolidation, merger,
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combination or other transaction in which shares of our common
stock are exchanged, each share of series A preferred stock
will be entitled to receive 1,000 times the aggregate amount of
stock, securities, cash and/or other property (payable in kind)
as the case may be, into which or for which each share of our
common stock is changed or exchanged. The rights of
series A preferred stock as to dividends, liquidation and
voting, and in the event of mergers and consolidations, are
protected by customary antidilution provisions.
Initially, the rights will attach to all our common stock
certificates, and no separate rights certificates will be
issued. Separate certificates evidencing the rights will be
mailed to holders of record of our common stock as of the close
of business on the earlier to occur of the tenth day after:
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a public announcement that a person or group of affiliated or
associated persons, which we refer to in this joint proxy
statement/ prospectus as an acquiring person, has acquired
beneficial ownership of 15% or more of our outstanding common
stock; or |
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a date as may be determined by action of our board of directors
following the commencement of, or announcement of an intention
to make, a tender offer or exchange offer the consummation of
which would result in the beneficial ownership by a person or
group of 15% or more of the outstanding shares of our common
stock. Prior to the time that a person would otherwise become an
acquiring person, however, our board of directors may determine
that this person is not an acquiring person for purposes of the
rights agreement. |
The rights agreement provides that, until the rights
distribution date (or earlier redemption or expiration of the
rights):
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the rights will be transferred with and only with the
certificates of our common stock, |
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common stock certificates issued upon transfer or new issuances
of our common stock will contain a notation incorporating the
rights agreement by reference, and |
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the surrender for transfer of any certificates for our common
stock also will constitute the transfer of the rights associated
with the common stock represented by the certificate. |
The rights will not be exercisable until the rights distribution
date. The rights will expire on May 7, 2009, unless the
expiration date is extended or unless the rights are earlier
redeemed or exchanged by us, in each case, as described below.
If a person or group becomes an acquiring person, each holder of
a right will thereafter have the right to receive, upon
exercise, our common stock (or, in certain circumstances,
series A preferred stock or other similar securities of
ours) having a value equal to two times the exercise price of
the right. Notwithstanding any of the foregoing, following the
time that a person or group becomes an acquiring person, all
rights that are, or (under circumstances specified in the rights
agreement) were, beneficially owned by any acquiring person will
be null and void.
In the event that we are acquired in a merger or other business
combination transaction, or 50% or more of its consolidated
assets or earning power are sold after a person or group has
become an acquiring person, proper provision will be made so
that each holder of a right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise
price of the right, that number of shares of common stock of the
acquiring company which at the time of the transaction will have
a market value of two times the exercise price of the right.
At any time after any person or group becomes an acquiring
person and prior to the acquisition by the person or group of
50% or more of the outstanding shares of our common stock, our
board of directors may exchange the rights (other than rights
owned by the person or group, which will have become void), in
whole or in part, at an exchange ratio of one share of our
common stock or one one-thousandth of a share of series A
preferred stock (or of a share of a class or series of our
preferred stock having equivalent rights, preferences and
privileges), as the case may be, per right (subject to
adjustment).
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At any time prior to a person or group becoming an acquiring
person, our board of directors may redeem the rights, in whole
but not in part, at a redemption price of $0.01 per right.
The redemption of the rights may be made effective at that time
and on that basis with those conditions that our board of
directors, in its sole discretion, may establish. Immediately
upon any redemption of the rights, the right to exercise the
rights will terminate and the only right of the holders of
rights will be to receive the redemption price.
The terms of the rights may be amended by our board of directors
without the consent of the holders of the rights, except that
from and after the existence of an acquiring person no amendment
may adversely affect the interests of the holders of the rights
(other than the acquiring person).
The number of outstanding rights and the number of one
one-thousandths of a share of series A preferred stock
issuable upon exercise of each right are subject to adjustment
under circumstances specified in the rights agreement.
Until a right is exercised, the holder thereof, as a holder of
the right, will not have any rights as a stockholder of our
company, including, without limitation, the right to vote or to
receive dividends.
The rights have certain anti-takeover effects. The rights will
cause substantial dilution to a person or group that attempts to
acquire us on terms not determined by our board of directors to
be in the best interests of all our stockholders. The rights
should not interfere with any merger or other business
combination approved by our board of directors because, subject
to the limitations described above, the rights may be redeemed
by us at $0.01 per right prior to the time that a person or
group has become an acquiring person.
Anti-Takeover Provisions Our Restated Certificate
of Incorporation, Our Restated Bylaws and the DGCL
Provisions in our restated certificate of incorporation and
restated bylaws might make it harder for a person or group to
acquire us through a tender offer, proxy contest or otherwise.
These provisions, which are identical to provisions in our
certificate of incorporation and bylaws prior to completion of
the proposed transaction, include, for example, terms providing
for:
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the issuance of blank check shares of our preferred
stock by our board of directors without the approval of holders
of our common stock; |
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higher stockholder voting requirements for certain transactions,
including business combinations with specified related parties
(i.e., a fair price provision); |
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a prohibition on taking actions by written consent of our
stockholders; |
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restrictions on who is eligible to call a special meeting of our
stockholders; |
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classification of the our board of directors into three
classes; and |
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the removal of directors only for cause and only by a vote of
80% of our outstanding voting power. |
These provisions may also have the effect of discouraging third
parties from making proposals involving an acquisition or change
of control of our company, although these proposals, if made,
might be considered desirable by a majority of our stockholders.
A further effect of these provisions (as compared to not
including these provisions in our restated certificate of
incorporation and restated bylaws) could be to make it more
difficult for third parties to cause the replacement of our
board of directors. These provisions have been designed to
enable us to develop our business and foster our long-term
growth without the disruptions caused by the threat of a
takeover not deemed by our board of directors to be in the best
interest of us and our stockholders.
We are governed by the provisions of Section 203 of the
DGCL. Subject to specified exceptions, Section 203
prohibits a publicly held Delaware corporation from engaging in
a business combination with an interested
stockholder for a period of three years after the time of
the transaction in which the
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person became an interested stockholder. Subject to specified
exceptions, for purposes of Section 203, an
interested stockholder is defined as a person who,
together with the persons affiliates and associates, owns,
or within three years has owned, 15% or more of the
corporations voting stock. For purposes of
Section 203, a business combination includes a
merger, consolidation, sale or other disposition of assets
having an aggregate value in excess of 10% of either the
aggregate market value of the consolidated assets of the
corporation or the aggregate market value of all the outstanding
stock of the corporation, and certain transactions that would
increase the interested stockholders proportionate share
ownership in the corporation or which provide the interested
stockholder with a financial benefit. These restrictions would
not apply if:
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our board of directors approved the transaction which resulted
in the stockholder becoming an interested stockholder; |
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upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of our
company (excluding shares owed by officers, directors, or
specified employee purchase plans); or |
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at or subsequent to the time the transaction was approved by our
board of directors, there was an affirmative vote of at least
66.66% of the outstanding voting stock of our company. |
The business combinations provisions of Section 203 of the
DGCL may have the effect of prohibiting, deterring or delaying
merger proposals, tender offers or other attempts to effect a
change in control of our company that are not negotiated with
and approved by our board of directors.
Limited Liability and Indemnification Provisions
Our restated certificate of incorporation limits, to the fullest
extent now or hereafter permitted by the DGCL, the liability of
a director to us or our stockholders for monetary damages for
breach of his or her fiduciary duties as a director, except for
liability:
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for a breach of the directors duty of loyalty to us or our
stockholders; |
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for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; |
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under Section 174 of the DGCL, relating to prohibited
dividends, distributions and repurchases or redemptions of
stock; or |
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for any transaction from which the director derives an improper
personal benefit. |
This provision, however, will have no effect on the availability
of equitable remedies, including injunctions and rescissions.
Additionally, this provision will not limit liability under
state or federal securities laws.
Our restated certificate of incorporation contains provisions
for indemnification of directors and officers to the fullest
extent permitted by federal or state securities law. Our
restated certificate of incorporation also permits us to
maintain and pay premiums on an insurance policy on behalf of
our directors and officers covering losses arising from claims
based on breaches of duty, negligence, error and other wrongful
acts. We believe that these provisions will assist us in
attracting and retaining qualified individuals to serve as
directors.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is
National City Bank. Its address is 629 Euclid Avenue,
Suite 635, Cleveland, Ohio 44114, and its telephone number
at this location is (216) 5752492.
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
PURSUANT TO U.S. TREASURY DEPARTMENT CIRCULAR 230, YOU
ARE ADVISED THAT THE FOLLOWING SUMMARY OF MATERIAL
U.S. FEDERAL INCOME TAX CONSIDERATIONS IS NOT INTENDED OR
WRITTEN TO BE USED, AND IT CANNOT BE USED BY ANY TAXPAYER, FOR
THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THE
TAXPAYER. IT WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING
OF THE TRANSACTION OR MATTERS ADDRESSED HEREIN, NAMELY THE SALE
OF DEBENTURES BY THE SELLING SECURITY HOLDERS. EACH TAXPAYER
SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN
INDEPENDENT TAX ADVISOR.
The following is a general discussion of material
U.S. federal income and, in the case of
non-U.S. holders (as defined below), estate tax
considerations relating to the purchase, ownership and
disposition of the Debentures and shares of our common stock, if
any, acquired upon conversion of a Debenture. The
U.S. federal income and estate tax considerations set forth
below are based upon the Internal Revenue Code of 1986, as
amended (the Code), Treasury regulations promulgated
thereunder, and administrative and judicial interpretations
thereof, all as in effect on the date hereof and all of which
are subject to change, possibly with retroactive effect. We have
not sought any ruling from the Internal Revenue Service
(IRS) with respect to statements made and
conclusions reached in this discussion, and there can be no
assurance that the IRS will agree with such statements and
conclusions.
This summary is limited to holders that hold the Debentures and
the shares of our common stock as capital assets
(generally, property held for investment) for U.S. federal
income tax purposes. This discussion does not describe all of
the U.S. federal income or estate tax consequences that may
be relevant to a holder in light of its particular circumstances
or to holders subject to special rules including, without
limitation, tax-exempt entities, holders subject to the
U.S. federal alternative minimum tax, traders or dealers in
securities or currencies, financial institutions, insurance
companies, regulated investment companies, certain former
citizens or former long-term residents of the United States,
partnerships or other pass-through entities, U.S. holders
(as defined below) whose functional currency is not
the U.S. dollar and persons that hold the Debentures or
shares of our common stock in connection with a
straddle, hedging,
conversion or other risk reduction transaction. This
discussion does not address the tax consequences arising under
any state, local or foreign law. In addition, this summary does
not consider the effect of the U.S. federal estate or gift
tax laws, except for certain U.S. federal estate tax
consequences to non-U.S. holders.
As used herein, the term U.S. holder means a
beneficial owner of a Debenture (or shares of our common stock,
if any, acquired upon conversion of a Debenture) that is for
U.S. federal income tax purposes:
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an individual who is a citizen or resident of the United States; |
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a corporation (including any entity treated as a corporation for
U.S. federal income tax purposes) created or organized in
or under the laws of the United States, any state thereof or the
District of Columbia; |
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an estate the income of which is subject to U.S. federal
income taxation regardless of its source; or |
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a trust, if a court within the United States is able to exercise
primary jurisdiction over its administration and one or more
U.S. persons have authority to control all of its
substantial decisions, or if the trust has a valid election in
effect under applicable Treasury regulations to be treated as a
U.S. person. |
As used herein, the term non-U.S. holder means
a beneficial owner of a Debenture (or shares of our common
stock, if any, acquired upon conversion of a Debenture) that is
neither a U.S. holder nor a partnership or other entity
treated as a partnership for U.S. federal income tax
purposes.
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If a partnership (including any entity treated as a partnership
for U.S. federal income tax purposes) is a beneficial owner
of a Debenture (or shares of our common stock, if any, acquired
upon conversion of a Debenture), the tax treatment of a partner
in the partnership will generally depend upon the status of the
partner and the activities of the partnership. A beneficial
owner that is a partnership for U.S. federal income tax
purposes and partners in such a partnership should consult their
tax advisors about the U.S. federal income tax consequences
of the purchase, ownership and disposition of the Debentures (or
shares of our common stock, if any, acquired upon conversion of
a Debenture).
Investors considering the purchase of Debentures should
consult their own tax advisors with respect to the application
of the U.S. federal income tax laws to their particular
situations as well as any tax consequences arising under the
U.S. federal estate or gift tax rules or under the laws of
any state, local or foreign taxing jurisdiction or under any
applicable tax treaty.
U.S. Holders
Subject to the discussion below under
Additional Amounts, a U.S. holder
generally will be required to recognize as ordinary income any
interest paid or accrued on the Debentures, in accordance with
the U.S. holders regular method of tax accounting. If
a U.S. holder purchases a Debenture between interest payment
dates, a portion of the amount paid for the Debenture will be
attributed to interest accrued from the prior payment date; such
holder will not be required to recognize as ordinary income the
collection of the interest that accrued prior to the date of
purchase.
Under Treasury regulations relating to contingent payment
debt instruments, the possibility of an additional payment
under a Debenture may be disregarded for purposes of determining
the amount of interest or original issue discount
(OID) income to be recognized by the holder in
respect of such Debenture (or the timing of such recognition) if
the likelihood of the payment, as of the date the Debentures are
issued, is remote or the amount of potential payments is
incidental or certain other exceptions apply. Our failure to,
among other things, file or cause to be declared effective a
shelf registration statement as described under
Description of the Debentures Registration
Rights may result in the payment of additional amounts in
the manner described in that section of this prospectus. In
addition, as described under Description of the
Debentures Conversion Rights Make Whole
Amount and Public Acquirer Change of Control and
Description of the Debentures Conversion
Rights Conversion Rate Adjustments, we may
adjust the conversion ratio of the Debentures in certain
circumstances, which adjustment may result in a constructive
distribution to the holders of the Debentures. See
Conversion Rate Adjustments, below. We
do not intend to treat the possibility of such additional
payments or constructive distributions as affecting the amount
of interest or OID to be recognized by the holder of a Debenture
or the timing or character of such recognition because we
believe that the likelihood of any such payments or constructive
distributions is remote or that such payments or constructive
distributions are subject to other exceptions. Our determination
in this regard is binding on holders of Debentures, unless a
holder discloses to the IRS, in the manner required by
applicable Treasury regulations, that the holder is taking a
different position. It is possible, however, that the IRS may
take a different position regarding the possibility of such
additional payments or constructive distributions, in which
case, if the position of the IRS were sustained, the timing,
amount and character of income recognized with respect to a
Debenture may be substantially different than described herein,
and a holder may be required to recognize income significantly
in excess of payments received, may recognize additional gain
upon a conversion of the Debentures into cash and shares of our
common stock and may be required to treat as interest income all
or a portion of any gain recognized on the conversion or
disposition of a Debenture. This discussion assumes that the IRS
will not take a different position, or, if it takes a different
position, that such position will not be sustained. Prospective
purchasers should consult their own tax advisors as to the tax
considerations that relate to the possibility of additional
payments or constructive distributions.
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If a U.S. holder acquires a Debenture at a price that is less
than the stated principal amount, the U.S. holder may be deemed
to have acquired the Debenture with market discount. A U.S.
holder who acquires a Debenture with market discount that is
more than a statutorily-defined de minimis amount generally will
be required to recognize ordinary income upon a taxable
disposition of the Debenture in an amount equal to the lesser of
(i) the amount of gain recognized or (ii) accrued
market discount not previously included in income under an
election to include market discount in income on a current
basis. Such market discount will accrue ratably or, at the
election of the U.S. holder, under a constant yield method over
the remaining term of Debenture. A U.S. holder also will be
required to defer the deduction of a portion of any interest
paid or accrued on indebtedness incurred to purchase or carry
Debentures acquired with market discount.
Alternatively, a U.S. holder may elect to include market
discount in income currently as it accrues on all market
discount instruments acquired by such U.S. holder in the taxable
year of the election and thereafter, in which case the forgoing
rules will not apply. This election to include market discount
into income currently, once made, may not be revoked without the
consent of the IRS. A U.S. holders tax basis in the
Debentures will be increased by the amount of market discount
included in income under such election.
Whether a U.S. holder that converts a Debenture with market
discount into cash and shares of our common stock is required to
recognize income with respect to all or a portion of its accrued
market discount not previously included in income is uncertain.
Any accrued market discount that is not included in income upon
such conversion should attach to the shares of our common stock
received and, upon a disposition of such common stock, gain
recognized by the U.S. holder would be treated as ordinary
income to the extent of such accrued market discount. As noted
under Conversion of the Debentures into Cash
and Shares of Our Common Stock Received From Us,
prospective purchasers should consult their own tax advisors as
to the tax treatment of the conversion of a Debenture for cash
and shares of our common stock.
If a U.S. holder acquires a Debenture at a price that is greater
than the stated principal amount, the U.S. holder generally will
be treated as having acquired the Debenture with bond premium.
The amount of such premium will be included in the adjusted tax
basis of the Debenture, which may result in a capital loss upon
a sale, exchange or other disposition of the Debenture. In lieu
of the foregoing, the U.S. holder may elect to amortize such
premium, to the extent such premium is not attributable to the
conversion feature of the Debenture, as an offset to interest
income on the Debenture, using a constant yield method over the
remaining term of the Debenture. An electing U.S. holder must
reduce its tax basis in the Debenture by the amount of the
aggregate amortized bond premium. The election to amortize bond
premium, once made, will apply to all debt obligations acquired
by such U.S. holder in the taxable year of the election and
thereafter, and may not be revoked without consent of the IRS.
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Sale, Redemption or Exchange of Debentures |
Subject to the discussion below under
Conversion of the Debentures into Cash and
Shares of Our Common Stock Received From Us and above
under Market Discount, a
U.S. holder generally will recognize capital gain or loss
if the holder disposes of a Debenture in a sale, redemption or
exchange (including the disposition of a Debenture to a
financial institution in an exchange in lieu of
conversion, as described under Description of the
Debentures Exchange in Lieu of Conversion).
The U.S. holders gain or loss will equal the
difference between the proceeds received by the holder (other
than proceeds attributable to accrued and unpaid interest) and
the holders adjusted tax basis in the Debenture. The
proceeds received by a U.S. holder will include the amount
of any cash and the fair market value of any other property
received for the Debenture. The portion of any proceeds that is
attributable to accrued interest will not be taken into account
in computing the U.S. holders capital gain
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or loss. Instead, that portion will be recognized as ordinary
interest income to the extent that the U.S. holder has not
previously included the accrued interest in income. The gain or
loss recognized by a U.S. holder on a disposition of the
Debenture will be long-term capital gain or loss if the holder
held the Debenture for more than one year. Long-term capital
gains of noncorporate taxpayers generally are taxed at a lower
maximum marginal tax rate than the maximum marginal tax rate
applicable to ordinary income. The deduction of capital losses
is subject to limitations.
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Conversion of the Debentures into Cash and Shares of Our
Common Stock Received From Us |
If a U.S. holder converts the Debentures and receives from
us a combination of cash and shares of our common stock, the tax
treatment to the U.S. holder is uncertain. The conversion
might be treated as a recapitalization or other similar
transaction, in which case no loss would be recognized upon the
conversion, but the U.S. holder would be required to
recognize any gain in an amount equal to the lesser of
(1) the cash payment or (2) the excess of the fair
market value of shares of our common stock and cash payment
received in the conversion over the U.S. holders
adjusted tax basis in the Debenture at the time of conversion.
In this case, the U.S. holders tax basis in shares of
our common stock received upon conversion of a Debenture would
be the same as the U.S. holders tax basis in the
Debenture, increased by the amount of gain recognized, if any,
and reduced by the amount of the cash payment. Cash received in
lieu of a fractional share of our common stock generally would
be treated as a payment in exchange for the fractional share.
Accordingly, the receipt of cash in lieu of a fractional share
generally would result in capital gain or loss measured by the
difference between the cash received for the fractional share
and the U.S. holders adjusted tax basis in the
fractional share.
Alternatively, the receipt from us of shares of our common stock
and cash may be treated as a part conversion/part sale
transaction. In such case, the cash payment would be treated as
proceeds from a sale of a portion of the Debenture, as described
above under Sale, Redemption or Exchange of
Debentures, and shares of our common stock would be
treated as received upon conversion of a portion of the
Debenture, as described above in the preceding paragraph. A
U.S. holders tax basis in the Debenture would be
allocated pro rata between the shares of our common stock
received (including any fractional share treated as received)
and the portion of the Debenture that is treated as sold for
cash based upon the relative values of shares of our common
stock received and the cash payment.
In either case, the holding period of any shares of our common
stock received upon conversion should include the holding period
of the Debenture converted. All or a portion of any gain
recognized upon conversion of a Debenture that has accrued
market discount not previously included in income might be
recognized as ordinary income. See the discussion above under
Market Discount.
Other characterizations may also be possible. Prospective
purchasers should consult their own tax advisors as to the tax
treatment of the receipt from us of a combination of cash and
shares of our common stock upon conversion of a Debenture.
Upon a conversion of a Debenture where we deliver solely cash,
such cash payment will be treated as a sale of the Debenture by
the U.S. holder as described above under
Sale, Redemption or Exchange of
Debentures.
Notwithstanding the discussion above, the fair market value of
shares of our common stock and cash received with respect to
accrued and unpaid interest should be excluded from the
computation of gain described above and instead taxed as a
payment of interest (as described under
Payments of Interest, above). A
U.S. holders tax basis in any such shares of our
common stock received will be equal to such common stocks
fair market value upon conversion, and the holding period of
such shares will commence on the day after the date of
conversion.
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Conversion Rate Adjustments |
The conversion rate of the Debentures is subject to adjustment
under certain circumstances (see Description of the
Debentures Conversion Rights Make Whole
Amount and Public Acquirer
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Change of Control and Description of the
Debentures Conversion Rights). Certain
adjustments to (or the failure to make such adjustments to) the
conversion rate of the Debentures that increase the
proportionate interest of a U.S. holder in our assets or
earnings and profits may result in a taxable constructive
distribution to the holders of the Debentures, whether or not
the holders ever convert their Debentures. This could occur, for
example, if the conversion rate is adjusted to compensate
holders of Debentures for certain distributions of cash or
property to our stockholders. Such a constructive distribution
will be treated as a dividend, resulting in ordinary income, to
the extent of our current or accumulated earnings and profits as
determined under U.S. federal income tax principles. It is
unclear whether any such constructive dividend would be eligible
for the reduced rate of U.S. federal income tax applicable
to certain dividends received by individual holders or the
dividends received deduction applicable to corporate holders. As
a result of the treatment of a conversion rate adjustment as a
deemed dividend, U.S. holders of Debentures could recognize
taxable income as a result of an event pursuant to which they
receive no cash or property. Generally, a
U.S. holders tax basis in a Debenture will be
increased to the extent any such constructive distribution is
treated as a dividend. Moreover, if there is an adjustment (or a
failure to make an adjustment) to the conversion rate of the
Debentures that increases the proportionate interest of the
holders of our outstanding common stock in our assets or
earnings and profits, then such increase in the proportionate
interest of the holders of our common stock generally will be
treated as a constructive distribution to such holders, taxable
as described above.
In the event of a public acquirer change of control,
we may elect to change the conversion right as described under
Description of the Debentures Conversion
Rights Make Whole Amount and Public Acquirer Change
of Control. The tax consequences to a holder if we
exercise that election are unclear, and may vary depending on
the circumstances of such public acquirer change of control. The
election may result in a constructive dividend, as described
above, or in a deemed exchange of Debentures for tax purposes,
which may or may not be taxable for U.S. federal income tax
purposes. Prospective purchasers should consult their own tax
advisors as to the potential tax consequences of such a change
in the conversion right.
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Dividends on Our Common Stock |
If a U.S. holder receives shares of our common stock upon
the conversion of a Debenture and we subsequently make
distributions on our common stock, the distributions will
constitute dividends taxable to the holder as ordinary income
for U.S. federal income tax purposes to the extent of our
current or accumulated earnings and profits as determined under
U.S. federal income tax principles. To the extent a
U.S. holder receives distributions on shares of our common
stock that would otherwise constitute dividends for
U.S. federal income tax purposes but that exceed our
current and accumulated earnings and profits, such distributions
will be treated first as a non-taxable return of capital
reducing the holders tax basis in the shares of our common
stock. Any such distributions in excess of the
U.S. holders tax basis in its shares of our common
stock generally will be treated as gain from a sale or exchange.
Subject to applicable limitations, distributions on our common
stock constituting dividends will qualify for the dividends
received deduction applicable to holders that are
U.S. corporations and may qualify for preferential rates
applicable to certain non-corporate holders.
As noted above under Dividend Policy, we do not
currently intend to declare or pay dividends on our common stock.
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Sale or Exchange of Our Common Stock |
A U.S. holder generally will recognize capital gain or loss
on a sale or exchange of our common stock. The
U.S. holders gain or loss will equal the difference
between the proceeds received by the holder and the
holders tax basis in shares of our common stock. The
holders basis in shares of our common stock generally will
be the holders adjusted tax basis in the shares
immediately after such shares were acquired by the holder,
subject to certain adjustments, including those described above
under Dividends on Our Common Stock. The
proceeds received by a U.S. holder will include the amount
of any cash and the fair market value of any other property
received for the common stock. The gain or
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loss recognized by a U.S. holder on a sale or exchange of
our common stock will be long-term capital gain or loss if the
holders holding period for the common stock (which
generally should include the holding period for the Debenture)
is more than one year. Long-term capital gains of noncorporate
taxpayers are generally taxed at a lower maximum marginal tax
rate than the maximum marginal tax rate applicable to ordinary
income. The deduction of capital losses is subject to
limitations.
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Backup Withholding and Information Reporting |
Certain noncorporate U.S. holders may be subject to IRS
information reporting and backup withholding at the applicable
rate (currently 28%) on payments of interest on the Debentures,
dividends on shares of our common stock and proceeds from the
sale or other disposition of the Debentures or our common stock.
Backup withholding will only be imposed if a noncorporate
U.S. holder fails to furnish its taxpayer identification
number (TIN), furnishes an incorrect TIN, is
notified by the IRS that he or she has failed to properly report
payments of interest or dividends, or, under certain
circumstances, fails to certify, under penalties of perjury,
that he or she has furnished a correct TIN and has not been
notified by the IRS that he or she is subject to backup
withholding.
Backup withholding is not an additional tax. Any amounts
withheld under the backup withholding rules from payments to a
U.S. holder can be refunded or credited against the
U.S. holders U.S. federal income tax liability,
if any, if certain required information is furnished to the IRS
in a timely manner.
Non-U.S. Holders
In general, payments of interest on the Debentures to, or on
behalf of, a non-U.S. holder will be considered
portfolio interest and will not be subject to
U.S. federal income or withholding tax provided such
interest is not effectively connected with the conduct of a
trade or business within the United States by such
non-U.S. holder if:
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such non-U.S. holder does not actually or by attribution
own 10% or more of the total combined voting power of all
classes of our stock entitled to vote; |
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such non-U.S. holder is not, for U.S. federal income
tax purposes, a controlled foreign corporation that is related
to us, actually or by attribution, through stock ownership; |
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such non-U.S. holder is not a bank receiving interest
described in section 881(c)(3)(A) of the Code; and |
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the certification requirements, as described below, are
satisfied. |
To satisfy the certification requirements referred to above,
either (i) the beneficial owner of a Debenture must
certify, under penalties of perjury, to the payor that such
owner is not a U.S. person as defined in the
Code and must provide such owners name and address, and
TIN, if any, or (ii) a securities clearing organization,
bank or other financial institution that holds customer
securities in the ordinary course of its trade or business (a
Financial Institution), and holds the Debenture on
behalf of the beneficial owner thereof must certify, under
penalties of perjury, to us or our paying agent, as the case may
be, that such certificate has been received from the beneficial
owner and must furnish the payor with a copy thereof. Such
requirement will be fulfilled if the beneficial owner of a
Debenture certifies on IRS Form W-8 BEN, under penalties of
perjury, that it is a non-U.S. person and provides its name
and address or any Financial Institution holding the Debenture
on behalf of the beneficial owner files a statement with the
withholding agent to the effect that it has received such a
statement from the beneficial owner (and furnishes the
withholding agent with a copy thereof). Special certification
rules apply for Debentures held by foreign partnerships, foreign
trusts and other intermediaries.
If interest on the Debenture is effectively connected with the
conduct of a trade or business in the United States by a
non-U.S. holder (and, if an applicable tax treaty so
requires, is attributable to a permanent establishment
maintained by the non-U.S. holder in the United States),
the non-U.S. holder
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generally will not be subject to U.S. federal withholding
tax (provided that the certification requirements discussed in
the next sentence are met), but generally will be subject to
U.S. federal income tax on such interest on a net income
basis in the same manner as if it were a U.S. holder. In
order to claim an exemption from withholding tax, such a
non-U.S. holder must provide the payor with a properly
executed IRS Form W-8ECI certifying, under penalties of
perjury, that the holder is a non-U.S. person and the
interest is effectively connected with the holders conduct
of a U.S. trade or business and is includible in the
holders gross income. In addition, if such
non-U.S. holder engaged in a U.S. trade or business is
a foreign corporation, it may be subject to a branch profits tax
equal to 30% (or such lower rate provided by an applicable
treaty) of its effectively connected earnings and profits for
the taxable year, subject to certain adjustments.
Interest on Debentures not effectively connected with a
U.S. trade or business and not excluded from
U.S. federal withholding tax under the portfolio
interest exception described above generally will be
subject to withholding at a 30% rate, except where a
non-U.S. holder can claim the benefits of an applicable tax
treaty to reduce or eliminate such withholding tax and
demonstrates such eligibility to the payor and the IRS.
Non-U.S. holders should consult their tax advisors
regarding their entitlement to, and procedures for claiming, a
reduced rate of withholding under a tax treaty.
As described above under
U.S. Holders Additional
Amounts, we are obligated to pay additional amounts in the
event of a registration default (see Description of the
Debentures Registration Rights), and will
adjust the conversion rate of the Debentures in certain
circumstances (see Description of the
Debentures Conversion Rights Make Whole
Amount and Public Acquirer Change of Control and
Description of the Debentures Conversion
Rights), which adjustment may result in a constructive
distribution to holders of the Debentures. We do not intend to
treat the possibility of such additional payments or
constructive distributions as affecting the amount of interest
or OID to be recognized by the holder of a Debenture or the
timing or character of such recognition because we believe that
the likelihood of any such payments or constructive
distributions is remote or that such payments or constructive
distributions are subject to other exceptions. It is possible,
however that the IRS may take a different position, in which
case the withholding tax and other tax consequences of the
ownership and disposition of the Debentures could differ
significantly from those described herein. The remainder of this
discussion assumes that no such position is taken or sustained.
Non-U.S. holders should consult their tax advisor with
regard to the potential application of these rules.
If we are required to pay additional amounts upon a registration
default as described in Description of the
Debentures Registration Rights, the treatment
of such amounts as interest, portfolio interest, or other form
of payment is uncertain, and such amounts may therefore be
subject to withholding.
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Conversion of the Debentures |
To the extent a non-U.S. holder recognizes gain upon
conversion of a Debenture, such gain would be subject to the
rules described below with respect to the sale or exchange of a
Debenture or shares of our common stock. See
Sale or Exchange of the Debentures or Our
Common Stock below.
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Conversion Rate Adjustments |
The conversion rate of the Debentures is subject to adjustment
in certain circumstances, and such adjustments could, in certain
circumstances, give rise to a deemed distribution to
non-U.S. holders of the Debentures. See
U.S. Holders Conversion Rate
Adjustments above. In such case, the deemed distribution
would be subject to the rules below regarding withholding of
U.S. federal tax on dividends in respect of our common
stock. See Dividends on Our Common Stock
below. It is possible that such withholding tax would be
withheld from amounts owed to a non-U.S. holder, including
but not limited to interest, shares of our common stock, or
sales proceeds subsequently paid or credited to such holder.
In the event of a public acquirer change of control,
we may elect to change the conversion right as described under
Description of the Debentures Conversion
Rights Make Whole Amount and Public Acquirer Change
of Control. The tax consequences to a non-U.S. holder
if we exercise that election are
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unclear, and may vary depending on the circumstances of such
public acquirer change of control. The election may result in a
constructive distribution which may be classified as a dividend
to the extent of our current and accumulated earnings and
profits, as described above, or in a deemed exchange of
Debentures for tax purposes, which may be taxable for
U.S. federal income tax purposes. The consequences of a
taxable exchange are described in
Non-U.S. Holders Sale or
Exchange of the Debentures or Our Common Stock below.
Prospective purchasers should consult their own tax advisors as
to the potential tax consequences of such a change in the
conversion right.
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Sale or Exchange of the Debentures or Our Common
Stock |
A non-U.S. holder generally will not be subject to
U.S. federal income or withholding tax on gain realized on
the sale or other taxable disposition (including a redemption,
or the disposition of a Debenture to a financial institution in
an exchange in lieu of conversion as described under
Description of the Debentures Exchange in Lieu
of Conversion) of a Debenture or any shares of our common
stock received upon conversion thereof unless:
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the non-U.S. holder is an individual who was present in the
United States for 183 or more days during the taxable year of
the disposition and certain other conditions are met, in which
case the non-U.S. holder will be subject to a flat 30% tax
on its U.S.-sourced net gain, if any, from the sale or
disposition of such non-U.S. holders capital assets
and sold or otherwise disposed of during the taxable year; |
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the gain is effectively connected with the conduct of a
U.S. trade or business by the non-U.S. holder (and, if
an applicable tax treaty so requires, the gain is attributable
to a permanent establishment maintained by the
non-U.S. holder in the United States), in which case the
non-U.S. holder generally will be taxed on its net gain
derived from the disposition at the regular graduated United
States federal income tax rates and in the manner applicable to
U.S. persons and, if the non-U.S. holder is a foreign
corporation, the branch profits tax described above
may also apply; or |
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we are a United States real property holding
corporation at any time within the shorter of the five
year period preceding such disposition or such holders
holding period. |
We do not believe that we currently are a United States real
property holding corporation. However, if we are, or in the
future become, a United States real property holding
corporation, a non-U.S. holder might be subject to
U.S. federal income and, in certain circumstances,
withholding tax with respect to gain realized on the disposition
of Debentures or shares of our common stock. In that case, any
tax withheld pursuant to the rules applicable to dispositions of
a U.S. real property interest would be creditable against
such non-U.S. holders U.S. federal income tax
liability and might entitle such non-U.S. holder to a
refund upon furnishing required information to the IRS. However,
even if we are or were to become a United States real property
holding corporation, any gain realized on the disposition of
shares of our common stock or Debentures would only be subject
to U.S. federal income and, in certain circumstances,
withholding tax if (i) in the case of (a) our common
stock, or (b) Debentures that become regularly traded on a
securities market, the non-U.S. holder owned, actually or
by attribution, more than 5% of such common stock or regularly
traded Debentures within five years before the disposition of
such common stock or Debentures and (ii) in the case of
Debentures that were not regularly traded, the
non-U.S. holder owned, actually or by attribution, such
Debentures which, as of any date on which any Debentures were
acquired by the holder, had a fair market value greater than the
fair market value on that date of 5% of our common stock. If the
foregoing conditions were met, then any gain recognized by a
non-U.S. holder on the sale, exchange, or other disposition
of Debentures or shares of our common stock would be treated as
effectively connected with a U.S. trade or business and
would be subject to U.S. federal income tax at the regular
graduated rates and in the manner applicable to
U.S. persons.
71
|
|
|
Dividends on Our Common Stock |
If a non-U.S. holder receives shares of our common stock
upon the conversion of a Debenture and we subsequently make
distributions on our common stock, the distributions will
constitute a dividend for U.S. federal income tax purposes
to the extent of our current or accumulated earnings and profits
as determined under U.S. federal income tax principles.
Except as described below, dividends paid on our common stock
held by a non-U.S. holder will be subject to
U.S. federal withholding tax at a rate of 30% or lower
treaty rate, if applicable. To receive the benefit of a reduced
treaty rate, a non-U.S. holder must furnish the payor with
a valid IRS Form W-8BEN (or applicable successor form)
certifying such holders qualification for the reduced
rate. This certification must be provided to the payor prior to
the payment of any dividends on our common stock and must be
updated periodically. Non-U.S. holders that do not timely
provide the payor with the required certification, but that
qualify for a reduced treaty rate, may obtain a refund of any
excess amounts withheld by timely filing an appropriate claim
for refund with the IRS. Non-U.S. holders should consult
their tax advisors regarding their entitlement to, and
procedures for claiming, a reduced rate of withholding under a
tax treaty.
If dividends paid to a non-U.S. holder are effectively
connected with the conduct of a U.S. trade or business by
the non-U.S. holder (and, if an applicable tax treaty so
requires, are attributable to a permanent establishment
maintained by the non-U.S. holder in the United States),
the payor generally is not required to withhold tax from the
dividends, provided that the non-U.S. holder furnishes to
the payor a valid IRS Form W-8ECI certifying, under
penalties of perjury, that the holder is a non-U.S. person,
and the dividends are effectively connected with the
holders conduct of a U.S. trade or business and are
includible in the holders gross income. Dividends on
common stock exempt from the withholding tax as
effectively-connected income nevertheless will be subject to a
graduated U.S. federal income tax on a net income basis as
if such amounts were earned by a U.S. person. In addition,
if such non-U.S. holder is a foreign corporation, it may be
subject to a branch profits tax equal to 30% (or
lower applicable treaty rate) of its earnings and profits for
the taxable year, subject to adjustments, that are effectively
connected with its conduct of a trade or business in the United
States.
As noted above under Dividend Policy, we do not
currently intend to declare or pay dividends on our common stock.
|
|
|
Backup Withholding and Information Reporting |
Treasury regulations require annual reporting to the IRS and to
each non-U.S. holder of the amount of interest or dividends
paid to that holder and the tax withheld from those payments of
interest or dividends. These information reporting requirements
apply regardless of whether withholding was not required because
the payments consisted of portfolio interest that is
exempt from withholding, the payments were effectively connected
with a U.S. trade or business or withholding was reduced or
eliminated by any applicable tax treaty. Copies of the
information returns reporting those payments of interest or
dividends and withholding may also be made available to the tax
authorities in the country in which the non-U.S. holder is
a resident under the provisions of an applicable income tax
treaty or agreement.
A non-U.S. holder generally will not be subject to
additional information reporting or to backup withholding at the
applicable rate (currently 28%) with respect to payments of
interest on the Debentures or dividends on common stock provided
the holder has furnished to the payor or broker a valid IRS
Form W-8BEN certifying, under penalties of perjury, its
status as a non-U.S. person or otherwise established an
exemption.
The payment of the proceeds of the sale or other disposition of
the Debentures or shares of our common stock by a
non-U.S. holder to or through the U.S. office of any
broker, U.S. or non-U.S., generally will be reported to the
IRS and reduced by backup withholding at the applicable rate,
unless the non-U.S. holder certifies its status as a
non-U.S. holder under penalties of perjury or otherwise
establishes an exemption. The payment of the proceeds of the
sale or other disposition of shares of our common stock by a
non-U.S. holder to or through a non-U.S. office of a
non-U.S. broker will not be reduced by backup
72
withholding or reported to the IRS, unless the
non-U.S. broker has certain enumerated connections with the
United States. In general, the payment of proceeds from the sale
or other disposition of shares of our common stock by or through
a non-U.S. office of a broker that is a U.S. person or
has certain enumerated connections with the United States will
be reported to the IRS and may be reduced by backup withholding
at the applicable rate, unless the non-U.S. holder
certifies its status as a non-U.S. holder under penalties
of perjury or otherwise establishes an exemption or the broker
has specified documentary evidence in its files that the holder
is a non-U.S. holder.
Backup withholding is not an additional tax. Any amounts
withheld under the backup withholding rules from payments to a
non-U.S. holder can be refunded or credited against the
non-U.S. holders U.S. federal income tax
liability, if any, if certain required information is furnished
to the IRS in a timely manner. The backup withholding and
information reporting rules are complex, and
non-U.S. holders are urged to consult their own tax
advisors regarding application of these rules in their
particular circumstances.
Debentures owned or treated as owned by an individual who is not
a citizen or resident (as specifically defined for
U.S. federal estate tax purposes) of the United States at
the time of death, referred to as a nonresident
decedent, will not be includible in the nonresident
decedents gross estate for U.S. federal estate tax
purposes as a result of such nonresident decedents death,
provided that, at the time of death, the nonresident decedent
does not own, actually or by attribution, 10% or more of the
total combined voting power of all classes of our stock entitled
to vote and payments with respect to such Debentures would not
have been effectively connected with the conduct of a
U.S. trade or business by the nonresident decedent. Shares
of our common stock owned or treated as owned by a nonresident
decedent will be includible in the nonresident decedents
gross estate for U.S. federal estate tax purposes as a
result of the nonresident decedents death. Subject to
applicable treaty limitations, if any, a nonresident
decedents estate may be subject to U.S. federal
estate tax on property includible in the estate for
U.S. federal estate tax purposes.
CERTAIN ERISA CONSIDERATIONS
To the extent the Debentures are purchased and held by an
employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended, or ERISA, or
by an individual retirement account or employee benefit plan
subject to Section 4975 of the Code, the following
considerations should be made. A fiduciary of an employee
benefit plan subject to ERISA must determine that the purchase
and holding of a Debenture is consistent with its fiduciary
duties under ERISA. The fiduciary of an ERISA plan, as well as
any other prospective investor subject to Section 4975 of
the Code, must also determine that its purchase and holding of
Debentures does not result in a non-exempt prohibited
transaction as defined in Section 406 of ERISA or
Section 4975 of the Code. To address the above concerns,
the Debentures may not be purchased by or transferred to any
investor unless the investment complies with the two
representations contained at the end of the Notice to
Investors, which are designed to ensure that the
acquisition of the Debentures will not constitute or result in a
non-exempt prohibited transaction under ERISA or the Code.
73
SELLING SECURITYHOLDERS
We originally issued the Debentures in a private placement in
August 2005. The Debentures were resold by the initial
purchasers to qualified institutional buyers under
Rule 144A under the Securities Act. Selling
securityholders, including, to the extent permitted, their
transferees, pledgees or donees or their successors, may offer
and sell the Debentures and the common stock issuable upon
conversion of the Debentures pursuant to this prospectus.
The following table sets forth certain information as of
October 12, 2005 with respect to the selling
securityholders and the principal amount of Debentures and the
number of shares of our common stock that are beneficially owned
by each selling securityholder and that may be offered and sold
from time to time using this prospectus. We have prepared this
table using information furnished to us by or on behalf of the
selling securityholders and we have not independently verified
the information. The selling securityholders identified below
may have sold, transferred or disposed of all or a portion of
their Debentures since the date on which they provided the
information regarding their holdings in transactions exempt from
the registration requirements of the Securities Act without
having notified us of such sale, transfer or disposition.
Except as indicated below, to our knowledge, no selling
securityholder nor any of its affiliates has held any position
or office with, been employed by or otherwise has had any
material relationship with us or our affiliates during the three
years prior to the date of this prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal Amount of Debentures at | |
|
|
|
|
|
|
Maturity | |
|
|
|
|
| |
|
Number of Shares of Common Stock | |
|
|
Principal Amount of | |
|
|
|
| |
|
|
Debentures | |
|
Percentage of | |
|
Number of Shares of | |
|
Percentage of | |
|
|
Beneficially Owned and | |
|
Debentures | |
|
Common Stock That | |
|
Outstanding Shares | |
|
|
That May be Sold | |
|
Outstanding | |
|
May be Sold(1) | |
|
of Common Stock(2) | |
|
|
| |
|
| |
|
| |
|
| |
Associated Electric & Gas Insurance Services Limited(3)
|
|
$ |
500,000 |
|
|
|
* |
|
|
|
8,167.3 |
|
|
|
* |
|
BNP Paribas Equity Strategies, SNC(4)(9)
|
|
|
1,344,000 |
|
|
|
* |
|
|
|
21,953.6 |
|
|
|
* |
|
CALAMOS® Convertible and High Income Fund
|
|
|
8,000,000 |
|
|
|
3.6 |
% |
|
|
130,676.0 |
|
|
|
* |
|
CALAMOS® Convertible Opportunities and Income Fund
|
|
|
7,000,000 |
|
|
|
3.1 |
% |
|
|
114,341.5 |
|
|
|
* |
|
CALAMOS® Global Growth & Income Fund
CALAMOS® Investment Trust
|
|
|
2,700,000 |
|
|
|
1.2 |
% |
|
|
44,103.2 |
|
|
|
* |
|
CALAMOS® High Yield Fund
CALAMOS®Investment Trust
|
|
|
2,000,000 |
|
|
|
* |
|
|
|
32,669.0 |
|
|
|
* |
|
CALAMOS® Strategic Total Return Fund
|
|
|
20,000,000 |
|
|
|
8.9 |
% |
|
|
326,690.0 |
|
|
|
* |
|
CBARB a segregated accounts company of Geode Capital Master
Fund Ltd., an open-ended exempted mutual fund company
registered as a segregated accounts company under the laws of
Bermuda
|
|
|
3,000,000 |
|
|
|
1.3 |
% |
|
|
49,003.5 |
|
|
|
* |
|
Cervantes Portfolio LLC(3)
|
|
|
300,000 |
|
|
|
* |
|
|
|
4,900.4 |
|
|
|
* |
|
CIGNA-Connecticut General Life Insurance Company(3)
|
|
|
550,000 |
|
|
|
* |
|
|
|
8,984.0 |
|
|
|
* |
|
CIGNA-Connecticut Life Insurance Company of North America(3)
|
|
|
250,000 |
|
|
|
* |
|
|
|
4,083.6 |
|
|
|
* |
|
Citigroup Global Markets Inc.(5)
|
|
|
17,977,000 |
|
|
|
8.0 |
% |
|
|
293,645.3 |
|
|
|
* |
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal Amount of Debentures at | |
|
|
|
|
|
|
Maturity | |
|
|
|
|
| |
|
Number of Shares of Common Stock | |
|
|
Principal Amount of | |
|
|
|
| |
|
|
Debentures | |
|
Percentage of | |
|
Number of Shares of | |
|
Percentage of | |
|
|
Beneficially Owned and | |
|
Debentures | |
|
Common Stock That | |
|
Outstanding Shares | |
|
|
That May be Sold | |
|
Outstanding | |
|
May be Sold(1) | |
|
of Common Stock(2) | |
|
|
| |
|
| |
|
| |
|
| |
City of Cincinnati Retirement System(3)
|
|
|
250,000 |
|
|
|
* |
|
|
|
4,083.6 |
|
|
|
* |
|
CMH Strategies Limited
|
|
|
71,000 |
|
|
|
* |
|
|
|
1,159.7 |
|
|
|
* |
|
Convertible Securities Fund
|
|
|
25,000 |
|
|
|
* |
|
|
|
408.4 |
|
|
|
* |
|
CooperNeff Convertible Strategies (Cayman) Master Fund, LP
|
|
|
290,000 |
|
|
|
* |
|
|
|
4,737.0 |
|
|
|
* |
|
Ellington Overseas Partners, Ltd.
|
|
|
5,900,000 |
|
|
|
2.6 |
% |
|
|
96,373.6 |
|
|
|
* |
|
Earlham Foundation(3)
|
|
|
100,000 |
|
|
|
* |
|
|
|
1,633.5 |
|
|
|
* |
|
Employees Retirement System of Rhode Island(3)
|
|
|
500,000 |
|
|
|
* |
|
|
|
8,167.3 |
|
|
|
* |
|
Evangelical Lutheran Church in America Board of Pensions(3)
|
|
|
300,000 |
|
|
|
* |
|
|
|
4,900.4 |
|
|
|
* |
|
Evangelical Lutheran Church in America Board of Pension Social
Criteria(3)
|
|
|
100,000 |
|
|
|
* |
|
|
|
1,633.5 |
|
|
|
* |
|
Fore Convertible Master Fund, Ltd.
|
|
|
5,000,000 |
|
|
|
2.2 |
% |
|
|
81,672.5 |
|
|
|
* |
|
Fore Erisa Fund, Ltd.
|
|
|
1,000,000 |
|
|
|
* |
|
|
|
16,334.5 |
|
|
|
* |
|
GMAM Investment Funds Trust(3)
|
|
|
1,000,000 |
|
|
|
* |
|
|
|
16,334.5 |
|
|
|
* |
|
Goldman Sachs & Co.(6)(7)
|
|
|
2,500,000 |
|
|
|
1.1 |
% |
|
|
40,836.3 |
|
|
|
* |
|
Grace Convertible Arbitrage Fund, Ltd.
|
|
|
4,000,000 |
|
|
|
1.8 |
% |
|
|
65,338.0 |
|
|
|
* |
|
Guggenheim Portfolio Company VIII (Cayman), Ltd.
|
|
|
1,000,000 |
|
|
|
* |
|
|
|
16,334.5 |
|
|
|
* |
|
HH Managed Account 9 Limited(3)
|
|
|
100,000 |
|
|
|
* |
|
|
|
1,633.5 |
|
|
|
* |
|
Honeywell International Inc. Master Retirement Trust(3)
|
|
|
1,000,000 |
|
|
|
* |
|
|
|
16,334.5 |
|
|
|
* |
|
Horace Mann Allegiance Life Insurance(3)
|
|
|
50,000 |
|
|
|
* |
|
|
|
816.7 |
|
|
|
* |
|
Horace Mann Insurance Company(3)
|
|
|
150,000 |
|
|
|
* |
|
|
|
2,450.2 |
|
|
|
* |
|
Horace Mann Life Insurance Company(3)
|
|
|
400,000 |
|
|
|
* |
|
|
|
6,533.8 |
|
|
|
* |
|
Horace Mann Teachers Insurance Company(3)
|
|
|
100,000 |
|
|
|
* |
|
|
|
1,633.5 |
|
|
|
* |
|
INOVA Health Care Services
|
|
|
350,000 |
|
|
|
* |
|
|
|
5,717.1 |
|
|
|
* |
|
JMG Capital Partners, LP
|
|
|
17,500,000 |
|
|
|
7.8 |
% |
|
|
285,853.8 |
|
|
|
* |
|
JMG Triton Offshore Fund, Ltd.
|
|
|
11,000,000 |
|
|
|
4.9 |
% |
|
|
179,679.5 |
|
|
|
* |
|
KBC Financial Products USA, Inc.(7)
|
|
|
1,500,000 |
|
|
|
* |
|
|
|
24,501.8 |
|
|
|
* |
|
Kellog Co. Master Retirement Trust(3)
|
|
|
500,000 |
|
|
|
* |
|
|
|
8,167.3 |
|
|
|
* |
|
The Kellog Company Welfare Benefit Trust(3)
|
|
|
100,000 |
|
|
|
* |
|
|
|
1,633.5 |
|
|
|
* |
|
Lyxor/ Convertible Arbitrage Fund Limited
|
|
|
98,000 |
|
|
|
* |
|
|
|
1,600.8 |
|
|
|
* |
|
75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal Amount of Debentures at | |
|
|
|
|
|
|
Maturity | |
|
|
|
|
| |
|
Number of Shares of Common Stock | |
|
|
Principal Amount of | |
|
|
|
| |
|
|
Debentures | |
|
Percentage of | |
|
Number of Shares of | |
|
Percentage of | |
|
|
Beneficially Owned and | |
|
Debentures | |
|
Common Stock That | |
|
Outstanding Shares | |
|
|
That May be Sold | |
|
Outstanding | |
|
May be Sold(1) | |
|
of Common Stock(2) | |
|
|
| |
|
| |
|
| |
|
| |
Man Mac 1 Limited(8)
|
|
|
3,000,000 |
|
|
|
1.3 |
% |
|
|
49,003.5 |
|
|
|
* |
|
Mohican VCA Master Fund, Ltd.
|
|
|
1,000,000 |
|
|
|
* |
|
|
|
16,334.5 |
|
|
|
* |
|
Municipal Employees Benefit Trust
|
|
|
357,000 |
|
|
|
* |
|
|
|
5,831.4 |
|
|
|
* |
|
Nations Convertible Securities Fund
|
|
|
3,975,000 |
|
|
|
1.8 |
% |
|
|
64,929.6 |
|
|
|
* |
|
Pension Reserves Investment Trust(3)
|
|
|
1,500,000 |
|
|
|
* |
|
|
|
24,501.8 |
|
|
|
* |
|
Permal Global High Yield Holdings N.V.(3)
|
|
|
500,000 |
|
|
|
* |
|
|
|
8,167.3 |
|
|
|
* |
|
Primus High Yield Bond Fund, L.P.(3)
|
|
|
1,000,000 |
|
|
|
* |
|
|
|
16,334.5 |
|
|
|
* |
|
Quest Global Convertible Master Fund Ltd.
|
|
|
100,000 |
|
|
|
* |
|
|
|
1,633.5 |
|
|
|
* |
|
Salomon Brothers Asset Management, Inc.(9)
|
|
|
15,525,000 |
|
|
|
6.9 |
% |
|
|
253,593.1 |
|
|
|
* |
|
Singlehedge US Convertible Arbitrage Fund
|
|
|
92,000 |
|
|
|
* |
|
|
|
1,502.8 |
|
|
|
* |
|
Southwest Carpenters Pension Trust(3)
|
|
|
250,000 |
|
|
|
* |
|
|
|
4,083.6 |
|
|
|
* |
|
Sturgeon Limited
|
|
|
176,000 |
|
|
|
* |
|
|
|
2,874.9 |
|
|
|
* |
|
Texas County & District Retirement System(3)
|
|
|
500,000 |
|
|
|
* |
|
|
|
8,167.3 |
|
|
|
* |
|
The Noyce Foundation(3)
|
|
|
100,000 |
|
|
|
* |
|
|
|
1,633.5 |
|
|
|
* |
|
The Salvation Army Eastern Territory(3)
|
|
|
100,000 |
|
|
|
* |
|
|
|
1,633.5 |
|
|
|
* |
|
Vicis Capital Master Fund
|
|
|
10,000,000 |
|
|
|
4.4 |
% |
|
|
163,345.0 |
|
|
|
* |
|
Wachovia Capital Markets LLC(7)
|
|
|
17,000,000 |
|
|
|
7.6 |
% |
|
|
277,686.5 |
|
|
|
* |
|
Wyeth Retirement Plan
U.S. Master Trust(3)
|
|
|
300,000 |
|
|
|
* |
|
|
|
4,900.4 |
|
|
|
* |
|
Unknown(10)
|
|
|
51,020,000 |
|
|
|
22.7 |
% |
|
|
833,386.19 |
|
|
|
1.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$ |
225,000,000.00 |
|
|
|
100 |
% |
|
|
3,675,262.5 |
|
|
|
6.45 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
The number of shares of our common stock issuable upon
conversion of the Debentures assumes a selling securityholder
would receive the maximum number of shares of common stock
issuable in connection with the conversion of the full amount of
Debentures held by such selling securityholder at the initial
conversion rate of 16.3345 shares of our common stock per
$1,000 in principal amount of the Debentures. Because we will
pay cash in lieu of fractional shares upon conversion in
accordance with the indenture, the total number of shares of
common stock that may be sold as presented in this table may
exceed the sum of the shares that each of the selling
securityholders will hold upon conversion. The conversion rate
and the number of shares issuable upon conversion of the
Debentures may adjust under circumstances described under
Description of Debentures Conversion
Rights Conversion Rate Adjustments.
Accordingly, the maximum number of shares of our common stock
issuable upon conversion of the Debentures may increase or
decrease from time to time. |
76
|
|
(2) |
Calculated based on 56,980,458 shares of common stock
outstanding on June 30, 2005. In calculating this amount
for each holder, we treated as outstanding the number of common
shares issuable upon conversion of all of the holders
debentures, but we did not assume conversion of any other
holders debentures and we included any shares reported by
the selling securityholder as being beneficially owned by such
holder in addition to the registrable shares. |
|
(3) |
Shenkman Capital Management, Inc. acts as investment manager for
the selling securityholders account. Neither Shenkman
Capital, its affiliates, officers, directors or owners is a
registered broker-dealer or an affiliate of a
broker-dealer (based on information provided to us by Shenkman
Capital Management, Inc.). |
|
(4) |
As of the date of the selling securityholders
questionnaire, the selling securityholder was under common
control with BNP Paribas Securities and beneficially owned
1,003 shares of common stock in addition to the registrable
securities indicated in the table. |
|
(5) |
Citigroup Global Markets Inc. is a broker-dealer and therefore
an underwriter, and served as an Initial Purchaser of the
Debentures in August 2005 (based on information provided to us
by Citigroup Global Markets Inc.). |
|
|
(6) |
As of the date of the selling securityholders
questionnaire (based on information provided to us by the
selling securityholder), the selling securityholder beneficially
owned 50,569 shares of common stock in addition to the
registrable securities indicated in the table. |
|
|
(7) |
Selling securityholder is a broker-dealer and therefore an
underwriter (based on information provided to us by the selling
securityholder). |
|
(8) |
Man-Diversified Fund II Ltd. has been identified as the
controlling entity of Man Mac 1 Ltd. (based on information
provided to us by the selling securityholder). The manager
shares of Man-Diversified Fund II Ltd. are owned 75% by
Albany Management Company Limited and 25% by Man Holdings
Limited. The registered shareholder of Albany Management Company
Limited is Argonaut Limited, a Bermuda company which is
controlled by Michael Collins, a resident of Bermuda. Man
Holdings Limited is a subsidiary of Man Group plc, which is a
public company listed on the London Stock Exchange. |
|
(9) |
Selling securityholder is an affiliate of a broker-dealer,
purchased such securities in the ordinary course of business
and, at the time of the purchase of the securities to be resold,
the selling securityholder had no agreement or understanding,
directly or indirectly, with any person to distribute the
securities (based on information provided to us by the selling
securityholder). |
|
|
(10) |
Information about other selling securityholders will be set
forth in amendments to the registration statement of which this
prospectus is a part or supplements to this prospectus as
required by the registration rights agreement and by applicable
law. The number of shares shown assumes that any other holders
of Debentures or common stock issued upon conversion of
Debentures, or any future transferee, pledgee, donee or
successor of any such holders, do not beneficially own any
common stock other than common stock issuable upon conversion of
the Debentures based upon the initial conversion rate. |
77
PLAN OF DISTRIBUTION
We will not receive any of the proceeds of the sale of the
Debentures and underlying common stock offered by this
prospectus. The Debentures and the underlying common stock may
be sold from time to time to purchasers:
|
|
|
|
|
directly by the selling securityholders; or |
|
|
|
through underwriters, broker-dealers or agents who may receive
compensation in the form of discounts, concessions or
commissions from the selling securityholders or the purchasers
of the Debentures and the underlying common stock (which
discounts, concessions or commissions as to particular
underwriters, brokers, dealers or agents may be in excess of
those customary in the types of transactions involved). |
The selling securityholders and any such broker-dealers or
agents who participate in the distribution of the Debentures and
the underlying common stock may be deemed to be
underwriters. As a result, any profits on the sale
of the underlying common stock by selling securityholders and
any discounts, commission or concessions received by any such
broker-dealers or agents might be deemed to be underwriting
discounts and commissions under the Securities Act. If the
selling securityholders were deemed to be underwriters, the
selling securityholders may be subject to certain statutory
liabilities as underwriters under the Securities Act.
If the Debentures and the underlying common stock are sold
through underwriters or broker-dealers, the selling
securityholders will be responsible for underwriting discounts
or commissions or agents commissions.
The Debentures and the underlying common stock may be sold in
one or more transactions at:
|
|
|
|
|
fixed prices; |
|
|
|
prevailing market prices at the time of sale; |
|
|
|
prices related to prevailing market prices; |
|
|
|
varying prices determined at the time of sale; or |
|
|
|
negotiated prices. |
These sales may be effected in transactions:
|
|
|
|
|
on any national securities exchange or quotation service on
which the Debentures and underlying common stock may be listed
or quoted at the time of the sale, including the Nasdaq National
Market in the case of the common stock; |
|
|
|
in the over-the-counter market; |
|
|
|
in transactions otherwise than on such exchanges or services or
in the over-the-counter market; |
|
|
|
through the writing of options; |
|
|
|
through the distribution by any selling security-holder to its
partners, members or shareholders; or |
|
|
|
through a combination of the above. |
These transactions may include block transactions or crosses.
Crosses are transactions in which the same broker acts as an
agent on both sides of the trade.
In connection with the sales of the Debentures and the
underlying common stock or otherwise, the selling
securityholders may enter into hedging transactions with
broker-dealers. These broker-dealers may in turn engage in short
sales of the Debentures and the underlying common stock in the
course of hedging their positions. The selling securityholders
may also sell the Debentures and the underlying common stock
short and deliver Debentures and the underlying common stock to
close out short positions, or loan or
78
pledge Debentures and the underlying common stock to
broker-dealers that in turn may sell the Debentures and the
underlying common stock.
Under the securities laws of some states, the Debentures and the
underlying common stock may be sold in these states only through
registered or licensed brokers or dealers. In addition, in some
states, the Debentures and underlying common stock may not be
sold unless the Debentures and underlying common stock have been
registered or qualified for sale in these states or an exemption
from registration or qualification is available and is complied
with.
To our knowledge, there are currently no plans, arrangements or
understandings between any selling securityholders and any
underwriter, broker-dealer or agent regarding the sale of the
Debentures and the underlying common stock by the selling
securityholders. Selling securityholders may not sell any or all
of the Debentures and the underlying common stock offered by
them pursuant to this prospectus. In addition, we cannot assure
you that any such selling securityholder will not transfer,
devise or gift the Debentures and the underlying common stock by
other means not described in this prospectus.
Our common stock is quoted on the Nasdaq National Market under
the symbol LPNT. The Debentures are currently
available for trading among qualified institutional buyers in
the PORTAL Market, as subsidiary of The Nasdaq National Market,
Inc. However, no assurance can be given as to the development of
liquidity or any trading market for the Debentures.
There can be no assurance that any selling securityholder will
sell any or all of the Debentures or the underlying common stock
pursuant to this prospectus. In addition, any Debentures or
underlying common stock converted by this prospectus that
qualify for sale pursuant to Rule 144 or Rule 144A of
the Securities Act may be sold under Rule 144 or
Rule 144A rather than pursuant to this prospectus.
The selling securityholders and any other person participating
in such distribution will be subject to the Exchange Act. The
Exchange Act rules include, without limitation,
Regulation M, which may limit the timing of the purchases
and sales of any of the Debentures and the underlying common
stock by the selling securityholders and any such other person.
In addition, Regulation M of the Exchange Act may restrict
the ability of any person engaged in the distribution of the
Debentures and the underlying common stock being distributed for
a period of up to five business days prior to the commencement
of such distribution. This may affect the marketability of the
Debentures and the underlying common stock and the ability of
any person or entity to engage in market-making activities with
respect to the Debentures and the underlying common stock.
Pursuant to the registration rights agreement that has been
incorporated by reference as an exhibit to this registration
statement, we have agreed under certain circumstances to
indemnify and hold harmless the selling securityholders against
certain liabilities.
We have agreed to pay substantially all of the expenses
incidental to the registration, offering and sale of the
Debentures and the underlying common stock to the public other
than commissions, fees and discounts of underwriters, brokers,
dealers and agents and transfer taxes.
79
LEGAL MATTERS
The validity of the Debentures and the common stock issuable
upon conversion of the Debentures will be passed upon for us by
Dewey Ballantine LLP, New York, New York. As of
September 1, 2005, a partner of Dewey Ballantine LLP owned
13 shares of LifePoint common stock.
EXPERTS
The consolidated financial statements of LifePoint Hospitals,
Inc. for the year ended December 31, 2004, and LifePoint
Hospitals Inc. managements assessment of the effectiveness
of internal control over financial reporting as of
December 31, 2004 included therein, appearing in LifePoint
Hospitals, Inc.s Annual Report (Form 10-K) filed with
the SEC on March 1, 2005 have been audited by
Ernst & Young LLP, independent registered public
accounting firm, as set forth in their reports thereon included
therein, and incorporated herein by reference. Such consolidated
financial statements and managements assessment are
incorporated herein by reference in reliance upon such reports
given on the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of Province Healthcare
Company for the year ended December 31, 2004 and Province
Healthcare Company managements assessment of the
effectiveness of internal control over financial reporting as of
December 31, 2004 included, therein, appearing in Province
Healthcare Companys Annual Report (Form 10-K) filed
with the SEC on March 24, 2005 have been audited by
Ernst & Young LLP, independent registered public
accounting firm, as set forth in their reports thereon included
therein and incorporated herein by reference. Such consolidated
financial statements and managements assessment are
incorporated herein by reference in reliance upon such reports
given on the authority of such firm as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY
REFERENCE
We file annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any
reports, statements or other information we file at the
SECs public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference
rooms. Our SEC filings are also available to the public from
commercial document retrieval services and at the Internet
website maintained by the SEC at http://www.sec.gov.
This prospectus incorporates by reference the documents set
forth below that each of LifePoint, Historic LifePoint and
Province has previously filed with the SEC. These documents
contain important information about LifePoint, Historic
LifePoint and Province and their respective finances. The
information incorporated by reference is deemed to be part of
this prospectus, except for any information superseded by
information in, or incorporated by reference in, this prospectus.
Historic LifePoint and LifePoint Filings:
|
|
|
|
|
Annual Report on Form 10-K for the fiscal year ended
December 31, 2004; |
|
|
|
Amendment No. 1 on Form 10-K/ A to the Annual Report
on Form 10-K for the fiscal year ended December 31,
2004; |
|
|
|
Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2005; |
|
|
|
Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 2005; and |
|
|
|
Current Reports on Form 8-K dated March 16, 2005,
March 18, 2005, March 21, 2005, March 28, 2005,
April 1, 2005, April 4, 2005, April 13, 2005,
April 15, 2005 (as amended by that Amendment No. 1 to
the Current Report on Form 8-K, dated April 20, 2005),
May 12, 2005, May 16, 2005, June 6, 2005,
June 15, 2005 and July 7, 2005, July 18, 2005,
July 29, 2005, August 10, 2005 and August 23,
2005. |
80
Province Filings:
|
|
|
|
|
Annual Report on Form 10-K for the fiscal year ended
December 31, 2004; and |
|
|
|
Current Reports on Form 8-K dated March 16, 2005,
March 18, 2005, March 28, 2005 and April 13, 2005. |
We are also incorporating by reference additional documents that
we file with the SEC under Sections 13(a), 13(e), 14 or
15(d) of the Exchange Act between the date of this prospectus
and termination or completion of this offering (excluding any
information furnished pursuant to Items 2.02 or 7.01 on any
current report on Form 8-K). In addition, all documents
that we file with the Securities and Exchange Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this
registration statement and prior to the effectiveness of the
registration statement shall be deemed to be incorporated by
reference herein.
If you are a stockholder, we may have sent you some of the
documents incorporated by reference, but you can obtain any of
them through us or the SEC. Documents incorporated by reference
are available from us without charge, excluding all exhibits
unless we have specifically incorporated by reference an exhibit
in this prospectus. Stockholders may obtain documents
incorporated by reference in this prospectus by requesting them
in writing or by telephone from:
LifePoint Hospitals, Inc.
Attention: Penny Brake, Investor Relations
103 Powell Court, Suite 200
Brentwood, Tennessee 37027
Telephone: (615) 372-8532
You can also get more information by visiting our investor
relations website at http://www.lifepointhospitals.com. Website
materials are not part of this prospectus.
81
Part II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
|
|
Item 14. |
Other Expenses of Issuance and Distribution |
The following table sets forth the costs and expenses, other
than underwriting discounts and commissions, payable by
LifePoint in connection with the distribution of the securities
being registered. All of the amounts shown are estimates, except
the Securities and Exchange Commission registration fee.
|
|
|
|
|
Securities and Exchange Commission Registration Fee
|
|
$ |
26,933.00 |
|
Accounting fees and expenses
|
|
|
30,000.00 |
|
Legal fees and expenses
|
|
|
30,000.00 |
|
Printing and engraving expenses
|
|
|
10,000.00 |
|
Miscellaneous expenses
|
|
|
4,000.00 |
|
|
|
|
|
Total:
|
|
$ |
100,933.00 |
|
|
|
|
|
|
|
Item 15. |
Indemnification of Directors and Officers |
Section 145(a) of the General Corporation Law of the State
of Delaware (the DGCL) provides, in general, that a
corporation shall have the power to indemnify any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, other
than an action by or in the right of the corporation, because
the person is or was a director or officer of the corporation.
Such indemnity may be against expenses, including
attorneys fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by the person in
connection with such action, suit or proceeding, if the person
acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the
corporation and if, with respect to any criminal action or
proceeding, the person did not have reasonable cause to believe
the persons conduct was unlawful.
Section 145(b) of the DGCL provides, in general, that a
corporation shall have the power to indemnify any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor
because the person is or was a director or officer of the
corporation, against any expenses (including attorneys
fees) actually and reasonably incurred by the person in
connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification
shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to be indemnified
for such expenses which the Court of Chancery or such other
court shall deem proper.
Section 145(g) of the DGCL provides, in general, that a
corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director or
officer of the corporation against any liability asserted
against the person in any such capacity, or arising out of the
persons status as such, whether or not the corporation
would have the power to indemnify the person against such
liability under the provisions of the law.
Article Thirteenth of our certificate of incorporation
requires indemnification to the fullest extent permitted under
the DGCL, as may be amended, of any person who is or was a
director or officer of LifePoint who is or was involved or
threatened to be made so involved in any proceeding, whether
civil, criminal, administrative or investigative, by reason of
the fact that such person is or was serving as a
II-1
director, officer, employee or agent of LifePoint or was serving
at the request of us as a director, officer, employee or agent
of any other enterprise.
The foregoing statements are subject to the detailed provisions
of Section 145 of the DGCL and Article Thirteenth of
our certificate of incorporation.
|
|
|
|
|
|
*4 |
.1 |
|
Indenture, dated August 10, 2005, between LifePoint
Hospitals, Inc., as Issuer, and Citibank, N.A., as Trustee. |
|
|
*4 |
.2 |
|
Form of 3.25% Convertible Senior Subordinated Debenture due
2025 (included as part of Exhibit 4.1). |
|
|
*4 |
.3 |
|
Registration Rights Agreement, dated as of August 10, 2005,
between LifePoint Hospitals, Inc. and Citigroup Global Markets
Inc. as Representative of the Initial Purchasers. |
|
|
**5 |
.1 |
|
Opinion of Dewey Ballantine LLP. |
|
|
**12 |
.1 |
|
Statement Regarding Computation of Ratios of Earnings to Fixed
Charges. |
|
|
23 |
.1 |
|
Consent of Ernst & Young LLP. |
|
|
**23 |
.3 |
|
Consent of Dewey Ballantine LLP (included in its opinion filed
as Exhibit 5.1). |
|
|
**24 |
.1 |
|
Power of Attorney (included on the signature page). |
|
|
**25 |
.1 |
|
Statement of Eligibility and Qualification of Trustee on
Form T-1. |
|
|
* |
Incorporated by reference to our Current Report on Form 8-K
filed with the Securities and Exchange Commission on
August 10, 2005. |
(a) The undersigned registrant hereby undertakes:
|
|
|
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement: |
|
|
|
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933; |
|
|
(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 and decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the Calculation of
Registration Fee table in the effective registration
statement; and |
|
|
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement; provided, however,
that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement. |
II-2
|
|
|
(2) That, for the purposes of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof. |
|
|
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering. |
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrants annual report
pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall
be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the financial adjudication of
such issue.
(d) The undersigned registrant hereby undertakes that:
|
|
|
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be a part of this registration statement
as of the time it was declared effective. |
|
|
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus 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
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on
Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of
Brentwood, State of Tennessee, on October 18, 2005.
|
|
|
LIFEPOINT HOSPITALS, INC. |
|
|
|
|
By: |
/s/ Kenneth C. Donahey |
|
|
|
|
|
Kenneth C. Donahey |
|
Chairman of the Board, President and |
|
Chief Executive Officer |
Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 2 to the Registration Statement has been
signed by the following persons in the capacities and on the
dates indicated.
|
|
|
|
|
|
|
Signature |
|
Title |
|
Date |
|
|
|
|
|
|
/s/ Kenneth C. Donahey
Kenneth
C. Donahey |
|
Chairman of the Board, President and Chief Executive Officer
(principal executive officer) |
|
October 18, 2005 |
|
/s/ Michael J. Culotta
Michael
J. Culotta |
|
Chief Financial Officer
(principal financial and accounting officer) |
|
October 18, 2005 |
|
*
Richard
H. Evans |
|
Director |
|
October 18, 2005 |
|
*
DeWitt
Ezell, Jr. |
|
Director |
|
October 18, 2005 |
|
*
Michael
P. Haley |
|
Director |
|
October 18, 2005 |
|
*
Ricki
Tigert Helfer |
|
Director |
|
October 18, 2005 |
|
*
William
V. Lapham |
|
Director |
|
October 18, 2005 |
|
*
John
E. Maupin, Jr. D.D.S. |
|
Director |
|
October 18, 2005 |
|
*
Owen
G. Shell, Jr. |
|
Director |
|
October 18, 2005 |
|
*By: |
|
/s/ Michael J. Culotta
Michael
J. Culotta
Attorney-in-Fact |
|
|
|
October 18, 2005 |
II-4
EXHIBIT INDEX
|
|
|
|
|
|
*4 |
.1 |
|
Indenture, dated August 10, 2005, between LifePoint
Hospitals, Inc., as Issuer, and Citibank, N.A., as Trustee. |
|
|
*4 |
.2 |
|
Form of 3.25% Convertible Senior Subordinated Debenture due
2025 (included as part of Exhibit 4.1). |
|
|
*4 |
.3 |
|
Registration Rights Agreement, dated as of August 10, 2005,
between LifePoint Hospitals, Inc. and Citigroup Global Markets
Inc. as Representative of the Initial Purchasers. |
|
|
**5 |
.1 |
|
Opinion of Dewey Ballantine LLP. |
|
|
**12 |
.1 |
|
Statement Regarding Computation of Ratios of Earnings to Fixed
Charges. |
|
|
23 |
.1 |
|
Consent of Ernst & Young LLP. |
|
|
**23 |
.3 |
|
Consent of Dewey Ballantine LLP (included in its opinion filed
as Exhibit 5.1). |
|
|
**24 |
.1 |
|
Power of Attorney (included on the signature page). |
|
|
**25 |
.1 |
|
Statement of Eligibility and Qualification of Trustee on
Form T-1. |
|
|
* |
Incorporated by reference to our Current Report on Form 8-K
filed with the Securities and Exchange Commission on
August 10, 2005. |