<PAGE> 1
As filed with the Securities and Exchange Commission on September [28], 1995
REGISTRATION NO. 33-61841
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
CHAMPION HEALTHCARE CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 14340 TORREY CHASE, SUITE 320 58-2283872
(State of Other Jurisdiction HOUSTON, TEXAS 77014 (I.R.S. Employer
of Incorporation or Organization) (713) 583-5491 Identification No.)
(Address including zip code, and
telephone number, including area
code of Registrants)
</TABLE>
JAMES G. VANDEVENDER, EXECUTIVE VICE-PRESIDENT
CHAMPION HEALTHCARE CORPORATION
14340 TORREY CHASE, SUITE 320
HOUSTON, TEXAS 77014
713-583-5491
(Name, address, including zip code, telephone number, including area code of
Agent for Service):
With Copy to
WAYNE M. WHITAKER
MICHENER, LARIMORE, SWINDLE, WHITAKER, FLOWERS, SAWYER, REYNOLDS & CHALK,
L.L.P.
3500 CITY CENTER TOWER II
301 COMMERCE STREET
FORT WORTH, TEXAS 76102
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this registration.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
================================================================================
<PAGE> 2
PRELIMINARY PROSPECTUS DATED September 28, 1995
PROSPECTUS
422,538 SHARES
CHAMPION HEALTHCARE CORPORATION
COMMON STOCK
$0.01 PAR VALUE
The 422,538 shares of Common Stock of Champion Healthcare Corporation
(the "Company") offered by this Prospectus are being offered by the selling
shareholders (the "Selling Shareholders") named herein. No part of the
proceeds of the offering of these shares will be received by the Company.
The Company has been advised that sales of the shares may be made from
time to time by or for the account of the Selling Shareholders on the American
Stock Exchange, in the over-the-counter market, in private transactions, or
otherwise, through broker-dealers. These sales will be made either at market
prices prevailing at the time of sale or at negotiated prices. Broker-dealers
may either act as agent for a Selling Shareholder or may purchase any of the
shares as principal and thereafter may sell such shares from time to time in
transactions on the American Stock Exchange or in the over-the-counter market
at market prices prevailing at the time of sale or at negotiated prices.
A Selling Shareholder may be considered to be an underwriter within
the meaning of the Securities Act of 1933, with respect to the Common Stock
offered hereby, although no Selling Shareholder hereby admits to being of such
status.
Pursuant to an agreement with the Company, all expenses incurred by
the Company in connection with this offering are to be borne by the Company
except for brokers' commissions, taxes and other similar selling expenses which
are to be borne by the Selling Shareholders.
Sales of these 422,538 shares on behalf of the Selling Shareholders
under this Prospectus will terminate 120 days after the date hereof.
The closing price per share of the Common Stock of the Company on the
American Stock Exchange on September 27, 1995, was $7.00.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
**********
The date of this Prospectus is September [28], 1995.
<PAGE> 3
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), in Washington, D.C., a registration statement on Form S-3
(together with all amendments and exhibits, referred to as the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the Shares. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information pertaining to the Shares and the Company, reference is made
to the Registration Statement. Statements contained herein concerning the
provisions of any document are not necessarily complete and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Commission.
Reports, proxy statements and other information filed by the Company, including
the Registration Statement, can be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549; Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661-2511; and at Room 1400, 75 Park Place, New
York, New York 10007; and copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates.
The Company's Common Stock is traded on the American Stock Exchange
and reports, proxy statements and other information can be inspected at such
exchange at 86 Trinity Place, New York, New York 10006.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference the
Company's: (i) Annual Report on Form 10-K for the year ended December 31, 1994
(as amended by Form 10-K/A Amendment No. 3); (ii) Quarterly Report on Form 10-Q
for the quarter ended June 30, 1995 (as amended by Form 10Q/A Amendment No. 1);
and (iii) Current Report on Form 8-K dated April 13, 1995 (as amended by Form
8-K/A Amendment No. 1). All documents filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date hereof and prior to the termination of the offering of the
Shares described in this Prospectus shall be deemed to be incorporated herein
by reference and to be a part hereof from the respective dates of the filing of
such documents.
In addition the Company hereby incorporates in this Prospectus by
reference the following:
(1) For AmeriHealth, Inc.
From its Form 10-K dated December 31, 1993, as amended;
Consolidated Statement of Financial Position as of December
31, 1993 and 1992;
Consolidated Statement of Operations for the years ended
December 31, 1993 and 1992;
Consolidated Statement of Cash Flows for the years ended
December 31, 1993 and 1992;
Consolidated Statement of Shareholders' Equity for the years
ended December 31, 1993 and 1992;
Notes to Consolidated Financial Statements; and
Report of Independent Public Accountants.
From the Company's Form 8-K/A Amendment No. 2, dated December
6, 1994 (filed August 7, 1995);
Condensed Consolidated Statement of Operations for the eleven
months ended November 30, 1994 (Unaudited);
-2-
<PAGE> 4
Condensed Consolidated Statement of Cash Flows for the eleven
months ended November 30, 1994 (Unaudited); and
Notes to Condensed Consolidated Financial Statements
(Unaudited).
(2) For Gulf Coast Hospital
From the AmeriHealth, Inc. Proxy Statement dated November 11,
1994, as amended;
Condensed Statement of Operations for the eight months ended
August 31, 1992 (Unaudited);
Condensed Statement of Cash Flows for the eight months ended
August 31, 1992 (Unaudited); and
Notes to Condensed Financial Statements (Unaudited).
(3) For Psychiatric Healthcare Corporation
From the AmeriHealth, Inc. Proxy Statement dated November 11,
1994, as amended;
Consolidated Statement of Operations for the year ended
December 31, 1993;
Consolidated Statement of Cash Flows for the year ended
December 31, 1993; and
Report of Independent Auditors.
From the Company's Form 8-K/A Amendment No. 1, dated December
6, 1994;
Condensed Consolidated Statement of Operations for the nine
months ended September 30, 1994 (Unaudited);
Condensed Consolidated Statement of Cash Flows for the nine
months ended September 30, 1994 (Unaudited); and
Notes to Condensed Consolidated Financial Statements
(Unaudited).
(4) For Dakota Hospital
From the Company's Form 8-K dated December 21, 1994;
Dakota Hospital Balance Sheets dated September 30, 1993 and
1994;
Dakota Hospital Statements of Revenue and Expenses and Changes
in Fund Balance for the years ended September 30,
1993 and 1994;
Dakota Hospital Statements of Cash Flows for the years ended
September 30, 1993 and 1994;
Notes to Financial Statements; and
Independent Auditor's Report.
From the Company's Form 8-K/A Amendment No. 2 dated December
21, 1994 (filed August 7, 1995);
Condensed Statement of Revenue and Expenses and Changes in
Fund Balance for the three months ended December 31,
1994 (Unaudited);
Condensed Statement of Cash Flows for the three months ended
December 31, 1994 (Unaudited); and
Notes to Condensed Financial Statements (Unaudited).
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
-3-
<PAGE> 5
The Company will provide without charge to each person to whom a
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference herein, other
than certain exhibits to such documents. Such requests should be addressed to
James G. VanDevender, Executive Vice-President, Champion Healthcare
Corporation, 14340 Torrey Chase, Suite 320, Houston, Texas 77014; telephone
(713) 583-5491.
THE COMPANY
Champion Healthcare Corporation (including, where appropriate, its
wholly-owned and majority-owned subsidiaries and controlled partnerships, the
"Company"), is engaged in the ownership and management of general acute care
and specialty hospitals and related health care facilities. The Company
currently owns and operates five general acute care hospitals with a total of
716 licensed beds in Alabama, North Dakota, Texas, Utah and Virginia, two
psychiatric hospitals with a total of 219 licensed beds in Missouri and
Louisiana and one skilled nursing facility with a total of 72 licensed beds in
Alabama. The Company also owns a 50% interest in a partnership that owns and
operates two general acute care hospitals with a total of 341 licensed beds in
Fargo, North Dakota which it accounts for under the equity method of
accounting. The Company's principal executive offices are located at 14340
Torrey Chase, Suite 320, Houston, Texas 77014, and its telephone number is
(713) 583-5491.
The Company is effectively controlled by the preferred shareholders
pursuant to a voting agreement that grants such shareholders the right to elect
eight of ten directors on the Company's Board of Directors. Preferred
shareholders also have voting rights on all matters according to the number of
common shares into which the preferred stock is convertible at the time of any
shareholder vote. See "Voting Agreement for Election of Directors" and "Voting
Rights for Series A, A-1, BB, C and D Preferred Stock."
On December 6, 1994, the Company merged with AmeriHealth, Inc.
("AHH"), a Delaware corporation, with AHH being the surviving corporation (the
"Combined Company") resulting from the merger (the "Merger"). The Merger was
accounted for as a recapitalization of the Company with the Company as the
acquiror (a reverse acquisition). Concurrent with the Merger, the name of the
Combined Company was changed to Champion Healthcare Corporation, and the
Combined Company adopted the Company's certificate of incorporation provisions.
The Company's common stock trades on the American Stock Exchange under the
symbol "CHC".
THE SELLING SHAREHOLDERS AND THE OFFERED SHARES
Background. In connection with the Merger, the Company, AHH, Lenox
Healthcare, Inc. ("Lenox"), and certain other individuals (together with
Lenox, the "Lenox Group") on October 17, 1994, entered into an agreement (the
"Lenox Agreement") providing, among other things, that the Company would
provide certain registration rights for any shareholder of AHH (including
members of the Lenox Group) holding shares of the Common Stock whose trading
was restricted (other than affiliates of the Company who remained affiliates
after the Merger).
Agreement with Selling Shareholders. Under the Lenox Agreement the
Company agreed to use its best efforts to cause a registration statement to
become and remain effective for a period of 120 days and the Company agreed to
pay all expenses incurred by it in connection with the registration of the
Shares; provided, however, the Company is not required to pay or reimburse any
expenses incurred by the Selling Shareholders in connection with the
registration of the Shares or underwriting discounts and commissions.
The Company agreed in the Lenox Agreement to indemnify the Selling
Shareholders against certain civil liabilities, including liabilities under the
Securities Act and the Exchange Act. In addition, certain Selling Shareholders
have agreed in the Lenox Agreement to indemnify the Company, its directors and
officers and each person, if any, who controls the Company within the meaning
of either the Securities Act or the Exchange Act against certain liabilities
including civil liabilities under the Securities Act.
-4-
<PAGE> 6
Selling Shareholder Information. The following table sets forth
information with respect to the Selling Shareholders:
<TABLE>
<CAPTION>
Amount of
Relationship with Amount of Amount of Common Stock
Company during Common Stock Owned Common Stock Owned After
Name Last Three Years Prior to Offering Offered Offering(1)
---- ---------------- ----------------- ------- -----------
<S> <C> <C> <C> <C>
Stockbridge Investment
Partners, Inc. None 101,690 101,690 -0-
Lenox Healthcare, Inc. None 54,175 54,175 -0-
John F. Hunt None 28,052 28,052 -0-
John C. Orestis None 28,052 28,052 -0-
Patricia E. Greenberg None 31,734 26,475 5,259
Alan Gordich None 184,094 184,094 -0-
</TABLE>
(1) Assumes that the Selling Shareholders sell all the Common Stock offered
hereby.
DIVIDENDS
Other than a distribution of $0.085 per share paid to the shareholders
of the common stock of AHH in connection with the Merger, the Company has not
paid cash dividends on its Common Stock and does not anticipate the declaration
or payment of dividends on Common Stock for the foreseeable future. Payment of
cash dividends, if any, in the future will be determined by the Company's Board
of Directors in light of the Company's earnings, financial condition and other
relevant considerations. Currently, payments of cash dividends or other
distributions or repurchases of any capital stock is prohibited by the
Company's Senior Bank Loan Agreement. Cash dividends on Common Stock are
also prohibited under the Company's subordinated debt agreements. Further,
agreements with the Company's preferred shareholders and the Company's
Certificate of Incorporation, as amended, contain provisions that limit the
payment of dividends on Common Stock. The Company has outstanding five classes
of Preferred Stock, each of which ranks senior to the Common Stock with respect
to the declaration and payment of dividends. See "Description of Capital Stock
- - Preferred Stock".
PRICE RANGE OF COMMON STOCK
The common stock price is regularly quoted on the American Stock
Exchange Composite Transaction Listing under the ticker symbol "CHC". Prior to
the Merger the shares of AHH were traded under the symbol "AHH".
For purposes of reporting stock information, AHH is considered the
predecessor of the Company; accordingly, the following table sets forth the high
and low sales prices for the common stock of AHH through December 6, 1994, the
date of the Merger, and the Company thereafter. The sales prices have been
adjusted to reflect the effect of a 5.70358 to 1 reverse stock split effective
December 6, 1994.
-5-
<PAGE> 7
<TABLE>
<CAPTION>
JANUARY 1, 1995 TO
TO SEPTEMBER 26, 1995 1994 1993
--------------------- ---- ----
HIGH LOW HIGH LOW HIGH LOW
---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C>
1st Quarter $9.13 $7.50 $4.63 $3.21 $9.63 $5.35
2nd Quarter $8.62 $6.25 $5.70 $3.21 $8.20 $4.28
3rd Quarter $7.87 $6.69 $6.42 $3.21 $5.35 $3.21
4th Quarter $10.00 $6.42 $4.63 $2.85
</TABLE>
INFORMATION REGARDING CAPITAL STOCK
COMMON STOCK.
The Company has authority to issue 25,000,000 shares of Common Stock,
$0.01 par value ("Common Stock"), of which approximately 4,243,975 shares are
issued and outstanding as of April 10, 1995. (The foregoing number of
outstanding shares does not take into account the conversion of any shares of
Preferred Stock or the exercise of any options, warrants or other rights.)
Holders of Common Stock are entitled to such dividends as may be
declared from time to time by the Board of Directors of the Company in its
discretion, on a ratable basis, out of funds legally available therefor, and to
a pro rata share of all assets available for distribution upon liquidation,
dissolution or winding up of the affairs of the Company, after payment of debts
and liquidation preferences of the Preferred Stock (as described below).
Payments of dividends and/or distributions in respect of the Common Stock can
only be made if funds for the same are available after payment (or provisions
for such payments) have been made in respect of Preferred Stock. Certain
credit agreements of the Company prohibit the payment of dividends. See
"Dividends". Each share of Common Stock entitles the holder thereof to one
vote. Under the Company's Certificate of Incorporation and Bylaws, no rights
to cumulative voting exist for the election of the directors of the Company,
which means that the holders of more than 50% of the shares voting for the
election of the directors can elect 100% of the Directors if they choose to do
so. The holders of the remaining shares may therefore not be able to elect any
person or persons to the Board of Directors. Holders of Common Stock, as such,
do not have preemptive rights to subscribe for any securities of the Company.
All of the outstanding shares of the Company are fully paid and non-assessable.
Mellon Securities Transfer Services, 85 Challenger Road, Overpeck
Centre, Ridgefield Park, New Jersey 07660, is the transfer agent for the
Common Stock.
PREFERRED STOCK.
SERIES D The Company has authority to issue 2,200,000 shares
of Series D Cumulative convertible preferred stock, $0.01 par value ("Series
D"), of which 2,112,819 shares are issued and outstanding as of April 10, 1995.
Each share of the Series D preferred stock is convertible, at the holder's
option, into two shares of Common Stock until redemption date. The conversion
rate is subject to adjustment upon the sale or issuance by the Company of
additional Common Stock, including stock rights, options and convertible
securities, for consideration less than the conversion price in effect
immediately prior to the sale or issuance in question. The Series D shares are
mandatorily redeemable on June 1, 2000 at $18.00 per share plus any accrued and
unpaid dividends. Subject to certain limitations, Series D shareholders may
require redemption of their stock within 90 days of receipt of written notice
from the Company of a Change in Control Event or Default Event (as defined); and
no redemption of Series D shares shall occur unless all the outstanding Series C
and Series D shares can be redeemed, subject to prorations between Series D and
Series C shares if sufficient funds to redeem all such shares
-6-
<PAGE> 8
are not available. The term "Change in Control Event" is defined in the
Company's Certificate of Incorporation to include, generally, (i) certain
reductions in the amount of shares of Common Stock beneficially owned by Charles
R. Miller as of certain dates, (ii) the acquisition by certain persons of
beneficial ownership of securities representing 50% or more of combined voting
power of the Company's then outstanding voting securities, (iii) the sale,
transfer or other disposition of substantially all the Company's assets, (iv)
the merger or consolidation of the Company with or into another entity (other
than a wholly-owned subsidiary), which results in a reclassification,
conversion, exchange or cancellation of any outstanding shares of Common Stock
of the Company, (v) the Company proceeding to acquire its Common Stock or
undertaking a corporate reorganization or recapitalization or other action in
certain circumstances, and (vi) the liquidation or dissolution of the Company or
one or more of its subsidiaries. The term "Default Event" is defined in the
Company's Certificate of Incorporation to include, generally, (i) failure by the
Company to redeem the full number of shares of, or pay certain dividends on,
certain classes of Preferred Stock when required to do so, or the breach or
failure to perform certain covenants, (ii) any payment default under any
material evidence of indebtedness, (iii) acceleration of indebtedness due under
any material evidence of indebtedness, whether due to a payment or other
default, which renders the Company insolvent, (iv) breach or failure to perform
by the Company of certain covenants set forth in the Note and Stock Purchase
Agreement dated May 27, 1992 to which the Company is a party, (v) the occurrence
of a Change in Control Event, (vi) an "Event of Default" as defined in the Loan
Agreement among the Company and Banque Paribas, as Agent, dated as of May 31,
1995, (vii) breach or failure to perform by the Company of certain covenants in
the Company's Series D Note and Stock Purchase Agreement dated December 31,
1993, and (viii) the commencement by the Company of any proceedings under any
bankruptcy, reorganization, insolvency, readjustment of debts, dissolution or
other liquidation law of any jurisdiction, or an assignment for the benefit of
creditors or request for receivership. Dividends on the Series D shares accrue
at a rate of 8% of the stated value of $18.00 per share and are payable in cash
in certain events, including, among others, a Change in Control or a Successful
Secondary Public Offering of the Company's Common Stock resulting in receipt by
the Company of gross proceeds not less than $25,000,000 (the term "Successful
Secondary Public Offering" being defined in the Company Certificate of
Incorporation, however, as a registered public offering of Common Stock by the
Company following its merger with AmeriHealth, Inc. which shall have resulted in
receipt by the Company of gross proceeds of a minimum of $15,000,000). All
accrued dividends shall be paid upon conversion of Series BB through D preferred
stock. Series D preferred stock has preference to the Series A through Series C
preferred stock and Common Stock as to dividends and redemption and has
preference to Series C in liquidation.
The Company has the right to convert all or any shares of Series D
into Common Stock after a Successful Secondary Public Offering of the Company's
Common Stock (resulting in receipt by the Company of gross proceeds not less
than $25,000,000), provided that prior thereto or concurrently therewith all
outstanding Series A through Series C preferred stock shall also have been
converted.
SERIES C The Company has authority to issue 500,000 shares of
Series C cumulative convertible preferred stock, $0.01 par value ("Series C"),
of which 448,811 shares are issued and outstanding as of April 10, 1995. Each
share of the Series C preferred stock is convertible, at the holder's option,
into two shares of Common Stock until the redemption date. The conversion rate
is adjustable upon the same terms and conditions as the other series of
preferred stock. The Series C shares are mandatorily redeemable on June 1,
2000 at $18.00 per share plus any accrued and unpaid dividends; however, no
redemption of Series C shall occur unless all the outstanding Series C and
Series D shares can be redeemed, subject to prorations between Series D and
Series C shares if sufficient funds to redeem all such shares are not
available. Dividends on the Series C shares accrue at a rate of 8% of the
stated value of $18.00 per share and are payable in cash under certain events,
including, among others, a Change in Control or a Successful Secondary Public
Offering of the Company's Common Stock. As to dividends and redemption, the
Series C has preference to the Series A, A-1 and Common Stock and is generally
equal to the Series BB and Series D.
-7-
<PAGE> 9
The Company has the right to convert all or any shares of Series C
into Common Stock after a Successful Secondary Public Offering of the Company's
Common Stock, provided that prior thereto or concurrently therewith all
outstanding Series A, A-1, and BB preferred stock shall have been converted.
SERIES BB The Company has authority to issue 2,300,000 shares
of Series BB cumulative convertible preferred stock, $0.01 par value ("Series
BB"), of which 1,577,546 shares are issued and outstanding as of April 10,
1995. Each share of the Series BB preferred stock is convertible, at the
holder's option, into two shares of Common Stock until redemption date. The
conversion rate is adjustable upon the same terms and conditions as the other
series of preferred stock. The Series BB shares are mandatorily redeemable on
June 30, 2000 at $11.80 per share plus any accrued and unpaid dividends;
however, no redemption of Series BB shall occur prior to the redemption of
Series C and Series D preferred stock. Dividends on the Series BB shares
accrue at a rate of 8% of the stated value of $11.80 per share and are payable
in cash under certain events, including, among others, a Change in Control or a
Successful Secondary Public Offering of the Company's Common Stock. The Series
BB has preference to the Series A and A-1 convertible redeemable preferred
stock and Common Stock as to redemption, liquidation and dividends.
The Company has the right to convert all or any shares of Series BB
into Common Stock after a Successful Secondary Public Offering of the Company's
Common Stock, provided that prior thereto or concurrently therewith all
outstanding Series A and A-1 preferred stock shall have been converted.
SERIES B The Company has authority to issue 400,000 shares of
Series B $2.125 Increasing Rate Cumulative Convertible Preferred Stock $.01 par
value ("Series B"); provided, however that any such issuance must first be
approved by unanimous consent of the holders of all Series A, A-1, BB, C and D
Preferred Stock. There are currently no shares of Series B preferred stock
outstanding and the Company has no intention to issue any such shares.
SERIES A-1 The Company has authority to issue 6,500,000 shares
of Series A-1 convertible preferred stock, $0.01 par value ("Series A-1"), of
which 2,769,109 shares are issued and outstanding as of July 1, 1995. Series
A-1 preferred stock is convertible, at the holder's option, into Common Stock
at a conversion rate of one share of Common Stock for each four shares of
Series A-1 preferred stock. The conversion rate is adjustable upon the same
terms and conditions as the other series of preferred stock. Series A-1 shares
are mandatorily redeemable, at the holder's option, at $1.00 per share within
90 days of receipt of written notice of a Change in Control Event or a Default
Event; however, no redemption of Series A-1 shall occur prior to the redemption
of Series BB through Series D preferred stock. Dividends on Series A-1 accrue
at a rate of $.08 per share per annum cumulative and accruing from December 28,
1993. Prior to December 28, 1993, cumulative dividends accrued from the date
of issuance at a dividend rate of $0.0467 per share per annum. Dividends are
payable in Common Stock and/or cash in the event of a Change in Control,
subject to the Company's existing agreement with senior secured lenders and the
approval of two-thirds of all outstanding Series BB, C and D preferred stock.
Subject to the prior liquidation rights of the Series BB through D preferred
shareholders, the Series A-1 preferred shareholders shall receive liquidation
payments of $1.00 per share plus all accrued but unpaid dividends or ratable
payments among all Series A and A-1 preferred shareholders if less than $1.00
plus all accrued but unpaid dividends are available.
The Company has the right to convert the shares of Series A-1 into
Common Stock after a Successful Secondary Public Offering, or upon a qualified
merger, consolidation or other similar transaction, as defined.
SERIES A The Company has authority to issue 3,500,000 shares
of Series A cumulative convertible preferred stock, $0.01 par value ("Series
A"), of which 3,500,000 shares are issued and outstanding as of July 1, 1995.
Series A preferred stock is convertible, at the holder's option, into Common
Stock at a conversion rate of 1 share of Common Stock for each 3.685 shares of
Series A preferred stock. All other rights and preferences that apply to
Series A-1 preferred stock apply to Series A preferred stock.
-8-
<PAGE> 10
VOTING RIGHTS FOR SERIES A, A-1, BB, C, AND D PREFERRED STOCK.
All series of preferred stock have voting rights on all matters according to
the number of common shares into which the preferred stock is convertible at
the time of any shareholders' vote. The issuance of a new class of stock or
the increase of shares within an existing class of stock that either ranks on
parity with or is superior to a given series of preferred stock as to
dividends, redemption and liquidation requires the following approvals by the
then outstanding class or classes: (1) 66.66% of Series A and A-1 voting
together as a class; (2) 75% of Series BB and C, voting together as a class;
and (3) 75% of Series D, voting as a class. No amendment of voting powers,
designations, preferences or rights and no amendments of Articles or Bylaws
that materially adversely affect the rights of Series A, BB, C, and D preferred
stock shall occur without the following approvals by then outstanding class or
classes: (1) 90% vote of Series A, voting as a class; (2) 90% of Series BB and
C, voting together as a class; and (3) 90% of the Series D, voting as a class.
Upon the occurrence of a Default Event, the preferred stock shareholders will
have the right to enlarge the Board of Directors and elect a controlling number
of directors as described in a Change in Control Event in the section entitled
"Certain Anti-Takeover Provisions" herein below.
At January 31, 1995, preferred stock was convertible into Common Stock
as follows:
<TABLE>
<CAPTION>
PREFERRED CONVERSION COMMON
STOCK RATIO SHARES
----- ----- ------
<S> <C> <C> <C>
Series D 2,112,819 2:1 4,225,638
Series C 448,811 2:1 897,622
Series BB 1,577,546 2:1 3,155,092
Series A-1 2,769,109 1:4 692,277
Series A 3,500,000 1:3.685 949,796
--------- ----------
Total 10,408,285 9,920,425
========== =========
</TABLE>
VOTING AGREEMENT FOR ELECTION OF DIRECTORS
The holders of all classes of the Company's preferred and common stock
and the Company executed on December 31, 1993, the D Stockholders Agreement
(the "D Agreement"), which contains, among other things, a voting agreement
that requires that the Board of Directors consist of eight persons and provides
nominee designation rights among specified groups (and agreed voting) for each
of these eight positions. The D Agreement was amended in the connection with
the December 6, 1994 merger to provide for two additional directors of the
Company, which seats were filled by William G. White and Richard D. Sage, two
of the former directors of AHH. By virtue of the voting control that the
preferred shareholders have in the Company as noted above, such shareholders
will, by virtue of the D Agreement, determine who is elected to the Board of
Directors of the Company. Neither the Certificate of Incorporation or the
Bylaws of the Company provide for cumulative voting rights to elect directors.
In addition to the voting rights, the D Agreement contains
restrictions on transfers of stock, and limited preemptive rights to future
Common Stock issues or sales by the Company.
CERTAIN ANTI-TAKEOVER PROVISIONS
Under the terms of the Company's Certificate of Incorporation, as
amended, the occurrence of a "Change in Control Event" results in a "Default
Event". During the period of a "Default Event," the control of the Board of
Directors changes such that a majority of the seats shall be held by nominees
elected by the Series D preferred shareholders, and a majority of the
remaining seats shall be filled by the nominees elected by the holders of the
Series A, A-1, BB and C Preferred Stock voting as a class.
In addition, upon a Change in Control Event or a Default Event, the
holders of Series A, A-1, BB, C and D Preferred Stock have redemption rights.
-9-
<PAGE> 11
LEGAL MATTERS
Certain legal matters with respect to the Shares will be passed upon
for the Company by Michener, Larimore, Swindle, Whitaker, Flowers, Sawyer,
Reynolds & Chalk, L.L.P. ("Michener Larimore"), 3500 City Center Tower II, 301
Commerce Street, Fort Worth, Texas 76102. Certain partners and associates of
Michener Larimore are common Shareholders of the Company.
EXPERTS
The consolidated balance sheets of Champion Healthcare Corporation
and subsidiaries as of December 31, 1994 and 1993, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1994, and related
consolidated financial statement schedules, which appear in Champion Healthcare
Corporation's Annual Report on Form 10-K/A Amendment No.3 for the year ended
December 31, 1994, have been incorporated herein in reliance upon the report,
dated March 30, 1995 of Coopers & Lybrand L.L.P., independent auditors,
incorporated by reference herein, and upon the authority of said firm as
experts in auditing and accounting.
The consolidated financial statements of AmeriHealth, Inc. and
subsidiaries as of December 31, 1993 and 1992, appearing in AmeriHealth Inc.'s
Annual Report (Form 10K, as amended) for the year ended December 31, 1993, and
incorporated herein by reference, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such report contains an explanatory
paragraph with respect to the existence of substantial doubt regarding the
ability of AmeriHealth to continue as a going concern mentioned in Note B to
the consolidated financial statements. Such consolidated financial statements
are incorporated herein by reference in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Psychiatric Healthcare
Corporation (formerly Pinnacle Healthcare Corporation) and subsidiaries as of
December 31, 1993, included in the AmeriHealth Proxy Statement dated November
11, 1994, as amended, and incorporated herein by reference, have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The balance sheets of Dakota Hospital as of September 30, 1994 and
1993, and the related statements of revenues, fund balances, and cash flows for
each of the years in the two-year period ended September 30, 1994, which appear
in the Company's Report on Form 8-K dated December 21, 1994, have been
incorporated herein in reliance upon the report, dated November 8, 1994 (except
for Note 13 as to which the date is December 21, 1994) of Charles Bailly &
Company P.L.L.P., independent auditors, incorporated by reference herein, and
upon the authority of said firm as experts in auditing and accounting.
The consolidated balance sheets of Salt Lake Regional Medical Center
and subsidiaries as of April 13, 1995 and May 31, 1994 and the related
statements of income, equity, and cash flows for the period from June 1, 1994
through April 13, 1995 and the year ended May 31, 1994, respectively, which
appear in the Company's Report on Form 8-K/A Amendment No.1 dated April 13,
1995, have been incorporated herein in reliance upon the report, dated June 11,
1995 of Coopers & Lybrand L.L.P., independent auditors, incorporated by
reference herein, and upon the authority of said firm as experts in auditing
and accounting.
-10-
<PAGE> 12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Company will bear all expenses in connection with the issuance and
distribution of the Shares, including those set forth below.
<TABLE>
<S> <C>
Registration Fee $ 1,061
Blue Sky Fees and Expenses (including counsel fees)* 1,000
Legal Fees and Expenses* 10,000
Accounting Fees and Expenses* 35,000
Miscellaneous* 939
-------
Total $48,000
=======
</TABLE>
*Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") provides,
generally, 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 suit or proceeding
(except actions by or in the right of the corporation) by reason of the fact
that such person is or was a director or officer of the corporation against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. A corporation may similarly indemnify such person for expenses
actually and reasonably incurred by him in connection with the defense or
settlement of any action or suit by or in the right of the corporation,
provided such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and, in the
case of claims, issues and matters as to which such person shall have been
adjudged liable to the corporation, provided that a court shall have
determined, upon application, that, despite the adjudication of liability but
in view of all of the facts and circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper.
Section 102(b)(7) of the DGCL provides, generally, that the
certificate of incorporation may contain a provision eliminating or limiting
the personal liability of a director to the corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director, provided that such
provision may not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its
shareholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under section 174
of Title 8 of the DGCL, or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision may eliminate or limit
the liability of a director for any act or omission occurring prior to the date
when such provision becomes effective.
Article VI of the Company's Certificate of Incorporation provides as
follows:
"A director of the Corporation shall not be personally liable
to the corporation or its shareholders for monetary damages for any
breach of fiduciary duty as a director, except for liability (i) for
any breach by the director of his duty of loyalty to the Corporation
or its shareholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct
II-1
<PAGE> 13
or a knowing violation of law, (iii) under Section 174 of the DGCL or
(iv) for any transaction from which the director derived an improper
personal benefit.
No repeal, modification or amendment of, or adoption of any
provision inconsistent with this Article VI nor, to the fullest extent
permitted by law, any modification of law shall adversely affect any
right or protection of a director of the Corporation existing at the
time of such repeal, amendment, adoption of modification or affect the
liability of any director of the Corporation for any action taken or
any omission that occurred prior to the time of such repeal,
amendment, adoption or modification.
If the DGLC, shall be amended after the date hereof to
authorize corporation action further eliminating or limiting the
liability of directors, then a director of the Corporation, in
addition to the circumstances in which he is not liable immediately
prior to such amendment, shall be free of liability to the fullest
extent permitted by the DGLC, as so amended."
Article VII of the Company's by-laws also contains an indemnity
provision, requiring the Company to indemnify members of the Board of Directors
and officers of the Company and their respective heirs, personal
representatives and successors in interest, to the extent provided by the
Delaware Corporation statutes and by the Company's Certificate of
Incorporation.
The Company may purchase liability insurance policies covering its
directors and officers.
In addition, certain Selling Shareholders have agreed in the Lenox
Agreement to indemnify the Company, its directors and officers and each person,
if any, who controls the Company within the meaning of either the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended,
against certain liabilities including civil liabilities under the Securities
Act.
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
4.01(a)** Form of Common Stock certificate of the registrant.
4.01(b)* Certificate of Incorporation, as amended (Incorporated by reference to Exhibit 3.01 of
the registrant's Form 10-K for the year ended December 31, 1987 and to Exhibit 4 of
the registrant's Form 10-Q for the quarter ended September 30, 1989).
4.01(c)* Amended Certificate of Incorporation dated December 6, 1994 (Incorporated by reference
to Exhibit 3.01(b) of the registrant's Form 10-K for the year ended December 31,
1994).
4.01(d)** Bylaws as amended, of the Registrant.
5 Opinion of Michener, Larimore, Swindle, Whitaker, Flowers, Sawyer, Reynolds & Chalk,
L.L.P., counsel to registrant.
23.1** Consent of Coopers & Lybrand L.L.P.
23.2** Consent of Ernst & Young LLP
23.3 Consent of Charles Bailly & Company, P.L.L.P.
23.4** Consent of Coopers & Lybrand L.L.P.
23.5 Consent of Michener, Larimore, Swindle, Whitaker, Flowers, Sawyer, Reynolds & Chalk,
L.L.P. (included in Exhibit 5).
</TABLE>
II-2
<PAGE> 14
<TABLE>
<S> <C>
24** Powers of Attorney (included at page II-5 in original filing)
</TABLE>
______________________________________________
* Incorporated by reference as indicated.
** Previously filed
ITEM 17. UNDERTAKINGS.
(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;
(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 the undertakings set forth in
paragraph (1)(i) and (1)(ii) above 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 Exchange Act that are incorporated by reference
in the registration statement.
(2) That, for the purpose 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.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference
in this registration statement shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(5) 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 provisions described under Item 15 above, or otherwise,
the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as
expressed in the
II-3
<PAGE> 15
Securities Act of 1933 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 that matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, on September 27,
1995.
CHAMPION HEALTHCARE
CORPORATION
BY: /s/ JAMES G. VANDEVENDER
------------------------------
James G. VanDevender
Executive Vice-President,
Chief Financial Officer and
Director
II-4
<PAGE> 16
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ CHARLES R. MILLER* President, CEO & Director September 27, 1995
- ---------------------
Charles R. Miller
/s/ JAMES G. VANDEVENDER Executive Vice-President, CFO
- ------------------------ and Director September 27, 1995
James G. VanDevender
/s/ NOLAN LEHMANN* Director September 27, 1995
- -----------------
Nolan Lehmann
/s/ PAUL B. QUEALLY* Director September 27, 1995
- -------------------
Paul B. Queally
/s/ JAMES A. CONROY* Director September 27, 1995
- -------------------
James A. Conroy
/s/ DAVID S. SPENCER* Director September 27, 1995
- --------------------
David S. Spencer
/s/ Director
- --------------------
Scott F. Meadow
/s/ MANUEL M. FERRIS* Director September 27, 1995
- --------------------
Manuel M. Ferris
/s/ WILLIAM G. WHITE* Director September 27, 1995
- --------------------
William G. White
/s/ Director
- --------------------
Richard D. Stage
/s/ ROBERT M. STARLING* Vice President and Controller September 27, 1995
- ----------------------
Robert M. Starling
* By /s/ JAMES G. VANDEVENDER
- ------------------------------
James G. VanDevender,
power of attorney
</TABLE>
II-5
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
<S> <C>
4.01(a)** Form of Common Stock certificate of the registrant.
4.01(b)* Certificate of Incorporation, as amended (Incorporated by
reference to Exhibit 3.01 of the registrant's Form 10-K for
the year ended December 31, 1987 and to Exhibit 4 of the
registrant's Form 10-Q for the quarter ended September 30,
1989).
4.01(c)* Amended Certificate of Incorporation dated December 6, 1994
(Incorporated by reference to Exhibit 3.01(b) of the
registrant's Form 10-K for the year ended December 31,
1994).
4.01(d)** Bylaws as amended, of the Registrant.
5 Opinion of Michener, Larimore, Swindle, Whitaker, Flowers,
Sawyer, Reynolds & Chalk, L.L.P., counsel to registrant.
23.1** Consent of Coopers & Lybrand L.L.P.
23.2** Consent of Ernst & Young LLP
23.3 Consent of Charles Bailly & Company, P.L.L.P.
23.4** Consent of Coopers & Lybrand L.L.P.
23.5 Consent of Michener, Larimore, Swindle, Whitaker, Flowers,
Sawyer, Reynolds & Chalk, L.L.P. (included in Exhibit 5).
24** Powers of Attorney (included at page II-5 in original filing).
</TABLE>
- -----------------
* Incorporated by reference as indicated.
** Previously filed.
II-6
<PAGE> 1
EXHIBIT 5
MICHENER, LARIMORE, SWINDLE, WHITAKER, FLOWERS,
SAWYER, REYNOLDS & CHALK, L.L.P.
ATTORNEYS & COUNSELORS
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
3500 CITY CENTER TOWER II
301 COMMERCE STREET
FORT WORTH, TEXAS 76102-4135
(817) 335-4417
WRITER'S DIRECT DIAL NUMBER METRO (817) 429-6268 FAX (817) 878-0706
(817) 878-0530 Refer to File Number:
9/26/95
Champion Healthcare Corporation
14340 Torrey Chase, Suite 320
Houston, Texas 77014
Re: Champion Healthcare Corporation
Registration Statement on Form S-3
File NO. 33-61841
Gentlemen:
As set forth in the above Registration Statement on Form S-3, as amended
(the "Registration Statement") filed by Champion Healthcare Corporation, a
Delaware corporation (the "Company"), with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act"), relating to shares of common stock, $0.01 par value, of the Company
(the "Common Stock"), certain legal matters in connection with the Common Stock
are being passed upon for you by us. At your request, this opinion is being
furnished to you for filing as Exhibit 5 to the Registration Statement.
In our capacity as your counsel in connection referred to above, we have
examined the Company's Articles of Incorporation, and its Bylaws, each as
amended to date, and have examined the originals, or copies certified or
otherwise identified, of corporate records of the Company, including minute
books of the Company as furnished to us by the Company, certificates of public
officials and of representatives of the Company, statutes and other instruments
or documents, as a basis for the opinions hereinafter expressed.
We have assumed that all signatures on all documents examined by us are
genuine, that all documents submitted to us as originals are accurate and
complete, that all documents submitted to us as copies are true and correct
copies of the originals thereof and that all information submitted to us was
accurate and complete.
Based upon our examination as aforesaid and subject to assumptions,
limitations and qualifications set forth herein, we are of the opinion that:
The Company is a corporation duly organized and validly
existing in good standing under the laws of the State
of Delaware.
Such Shares are validly issued, fully paid and nonassessable.
We do not express any opinion herein on any other respect of the Shares,
the effect of any equitable principles or fiduciary considerations relating to
<PAGE> 2
Champion Healthcare Corporation
September 26, 1995
Page 2
the Shares, the enforceability of any particular provisions of the Shares, or
the provisions of the Shares which discriminate or create unequal voting power
among shareholders.
The opinions set forth above are limited in all respects to matters of
Delaware law as in effect on the date hereof.
We consent to the inclusion in the Registration Statement of this
opinion.
Very truly yours,
/s/WAYNE M. WHITAKER
Wayne M. Whitaker, Partner
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Champion Healthcare Corporation, on Form S-3 (File No. 33-61841, dated
September 28, 1995) of our report dated November 5, 1994, on our audits of the
financial statements of Dakota Hospital as of September 30, 1994 and 1993, and
for the years ended September 30, 1994 and 1993. We also consent to the
reference to our firm under the caption "Experts".
/S/ CHARLES BAILLY & COMPANY P.L.L.P.
Fargo, North Dakota
August 11, 1995
