<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 14, 1997
REGISTRATION NO. 333-27651
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMERICAN HEALTH PROPERTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<C> <C>
DELAWARE 95-4084878
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
6400 SOUTH FIDDLER'S GREEN CIRCLE, SUITE 1800
ENGLEWOOD, COLORADO 80111
(303) 796-9793
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JOSEPH P. SULLIVAN
6400 SOUTH FIDDLER'S GREEN CIRCLE, SUITE 1800
ENGLEWOOD, COLORADO 80111
(303) 796-9793
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
PAUL HILTON
DAVIS, GRAHAM & STUBBS, LLP
370 17TH STREET, SUITE 4700
DENVER, COLORADO 80202
(303) 892-9400
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement, as determined
by the Registrant.
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]
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 number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
(Cover continued on following page)
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<PAGE> 2
CALCULATION OF REGISTRATION FEE
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<CAPTION>
======================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED(1) REGISTERED(2) PER UNIT(3) OFFERING PRICE(2)(4)(5) FEE(4)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities(6)...
- ------------------------------------------------------------------------------------------------------------------
Preferred Stock, $.01
par value............
- ------------------------------------------------------------------------------------------------------------------
Depositary Shares....
- ------------------------------------------------------------------------------------------------------------------
Common Stock, $.01
par value(7)(8)......
- ------------------------------------------------------------------------------------------------------------------
Warrants.............
- ------------------------------------------------------------------------------------------------------------------
Total................ $300,000,000 100% $300,000,000 $90,910(9)
==================================================================================================================
</TABLE>
(1) Any securities registered hereunder may be sold separately or as units with
other securities registered hereunder. Subject to Footnote (4), there are
being registered hereunder an indeterminate principal amount of Debt
Securities, Preferred Stock (and Depositary Shares with respect thereto),
Common Stock and Warrants as may be sold from time to time by the
Registrant. This Registration Statement also covers contracts that may be
issued by the Registrant under which the counterparty may be required to
purchase Debt Securities, Preferred Stock, Depositary Shares, Common Stock
or Warrants. Such contracts would be issued with Debt Securities, Preferred
Stock, Depositary Shares, Common Stock or Warrants. There are also being
registered hereunder an indeterminate principal amount of Debt Securities,
Preferred Stock, Depositary Shares, Common Stock and Warrants as may be
issuable upon conversion of Debt Securities, Preferred Stock or Warrants or
pursuant to antidilution provisions thereof. This Registration Statement
does not cover Common Stock that may be issuable upon exchange of the
Psychiatric Group Stock.
(2) In U.S. dollars or the equivalent thereof in one or more foreign currencies
or currency units or composite currencies, including the European Currency
Unit.
(3) The proposed maximum offering price per unit will be determined from time to
time by the Registrant in connection with the issuance by the Registrant of
the securities registered hereunder.
(4) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o). In no event will the aggregate initial offering
price of the Debt Securities, Preferred Stock, Depositary Shares, Common
Stock and Warrants issued under this Registration Statement exceed
$300,000,000 or the equivalent thereof in one or more foreign or composite
currencies.
(5) No separate consideration will be received for (i) Debt Securities, shares
of Common Stock or Preferred Stock or Depositary Shares that are issued upon
conversion of Debt Securities, Preferred Stock or Depositary Shares or (ii)
Debt Securities, shares of Common Stock or Preferred Stock or Depositary
Shares that are issued upon exercise of Warrants registered hereby.
(6) If any such Debt Securities are issued at an original issue discount, then
the offering price shall be in such greater principal amount as shall result
in an aggregate initial offering price of up to $300,000,000.
(7) The aggregate amount of Common Stock registered hereunder is limited to that
which is permissible under Rule 415(a)(4) under the Securities Act of 1933,
as amended.
(8) This Registration Statement also covers Preferred Stock Purchase Rights
under the Registrant's Preferred Stock Purchase Rights Plan, which are
attached to and tradeable only with the shares of Common Stock registered
hereby. No registration fees are required for such shares and such rights as
they will be issued for no additional consideration.
(9) Fee previously paid.
<PAGE> 3
PROSPECTUS
American Health Properties, Inc.
COMMON STOCK
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
WARRANTS
------------------------
American Health Properties, Inc. (the "Company", which term refers to the
Company and its subsidiaries unless the context otherwise requires) may offer
from time to time (i) shares of Common Stock, par value $.01 per share ("Common
Stock") of the Company, (ii) debt securities ("Debt Securities"), which may be
either senior debt securities ("Senior Securities") or subordinated debt
securities ("Subordinated Securities"), consisting of debentures, notes, bonds
and/or other unsecured evidences of indebtedness in one or more series, which
Debt Securities may (or may not) be convertible into Common Stock, other Debt
Securities, or Preferred Stock, par value $.01 per share ("Preferred Stock") of
the Company or (iii) shares of Preferred Stock in one or more series, which may
(or may not) be convertible into Common Stock; (iv) depositary shares
("Depositary Shares") representing a fractional interest in a share of Preferred
Stock; or (v) warrants ("Warrants") to purchase Common Stock, Debt Securities,
Preferred Stock or Depositary Shares. The foregoing securities are collectively
referred to as the "Securities." The Securities will be offered at an aggregate
initial offering price not to exceed U.S. $300,000,000, at prices and on terms
to be determined at the time of sale.
The accompanying Prospectus Supplement sets forth with regard to the
particular Securities in respect of which this Prospectus is being delivered (i)
in the case of Common Stock, the number of shares of Common Stock and the terms
of the offering thereof; (ii) in the case of Debt Securities, the title,
aggregate principal amount, whether such Debt Securities are senior or
subordinate, denominations (which may be in United States dollars or in any
other currency, currencies or currency unit), maturity, premium (if any),
interest rate (which may be fixed or variable) or method of calculation thereof,
and time of payment of any interest, place or places where principal of (and
premium, if any) and interest on such Debt Securities will be payable, the
currency or currency unit in which principal, premium (if any) or interest is
payable, any terms for redemption at the option of the Company or the holder of
such Debt Securities, any terms for sinking fund payments, any conversion or
exchange rights, any listing on a securities exchange and the initial public
offering price and any other terms in connection with the offering and sale of
such Debt Securities; (iii) in the case of Preferred Stock and Depositary
Shares, the designation, number of shares, stated value and liquidation
preference per share, initial public offering price, dividend rate (or method of
calculation), dates on which dividends will be payable and dates from which
dividends will accrue, voting rights, any redemption or sinking fund provisions,
any conversion or exchange rights, whether the Company has elected to offer the
Preferred Stock in the form of Depositary Shares, any listing of the Preferred
Stock or Depositary Shares on a securities exchange, and any other terms in
connection with the offering and sale of such Preferred Stock and/or Depositary
Shares; and (iv) in the case of Warrants, the number and terms thereof, the
designation and the number of Securities issuable upon their exercise, the
exercise price, any listing of the Warrants or the underlying Securities on a
securities exchange and any other terms in connection with the offering, sale
and exercise of the Warrants. The Prospectus Supplement will also contain
information, as applicable, about material United States Federal income tax,
accounting and other considerations relating to the Securities in respect of
which this Prospectus is being delivered.
The Senior Securities will rank equally with all other unsubordinated and
unsecured indebtedness of the Company. The Subordinated Securities will be
subordinated to all existing and future Senior Indebtedness (as defined herein)
of the Company. If so specified in the accompanying Prospectus Supplement, all
or a portion of any Debt Securities may be issued in permanent global form.
The Company's Common Stock is listed on The New York Stock Exchange, Inc.
(Symbol: "AHE") and its Psychiatric Group Preferred Stock is quoted on the
National Association of Securities Dealers Automated Quotations National Market
(Symbol: "AHEPZ"). Any Common Stock offered hereby or into which the other
Securities offered hereby are convertible will be listed, subject to notice of
issuance, on The New York Stock Exchange, Inc.
The Company may sell Securities to or through underwriters, and also may
sell Securities directly to other purchasers or through agents. The accompanying
Prospectus Supplement sets forth the names of any underwriters or agents
involved in the sale of the Securities in respect of which this Prospectus is
being delivered, the principal amounts, if any, to be purchased by underwriters
and the compensation, if any, of such underwriters or agents. See "Plan of
Distribution" herein. This Prospectus may not be used to consummate sales of
Securities unless accompanied by a Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL
------------------------
The date of this Prospectus is October 14, 1997
<PAGE> 4
No person is authorized to give any information or to make any
representations not contained or incorporated by reference in this Prospectus or
in the accompanying Prospectus Supplement, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or any underwriter, agent or dealer. This Prospectus and the
accompanying Prospectus Supplement do not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the Securities in
respect of which this Prospectus and the accompanying Prospectus Supplement is
delivered or an offer of any securities in any jurisdiction to any person when
such an offer would be unlawful.
The delivery of this Prospectus together with a Prospectus Supplement
relating to particular Securities shall not constitute an offer in any
jurisdiction of any of the other Securities covered by this Prospectus.
AVAILABLE INFORMATION
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, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and at its Regional Offices located
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, and Seven World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material can be obtained at prescribed rates from the Public
Reference Section of the Commission, 450 Fifth Street, N.W. Plaza, Washington,
D.C. 20549. The Commission also maintains a website at http://www.sec.gov that
contains reports, proxy statements and other information of and concerning the
Company. Such reports and proxy statements can also be inspected at the offices
of The New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005
and at the offices of the National Association of Securities Dealers, Inc., 1735
K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Securities offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all the information set forth in the Registration Statement and
reference is hereby made to the Registration Statement and the exhibits thereto
for further information with respect to the Company and the Securities.
Statements contained in this Prospectus as to the contents of certain documents
are not necessarily complete, and, with respect to each such document filed as
an exhibit to the Registration Statement or otherwise filed with the Commission,
reference is made to the copy of the document so filed. Each statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1996.
2. Quarterly Report on Form 10-Q for the three months ended March 31, 1997.
3. Quarterly Report on Form 10-Q for the six months ended June 30, 1997.
4. Current Report on Form 8-K, dated August 14, 1995.
5. All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the offering of
the Securities shall be deemed to be incorporated herein by reference
and to be a part of this Prospectus from the date of filing of each such
document.
Any statement contained herein or in a document all or a portion of which
is incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this
2
<PAGE> 5
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein or in the Prospectus Supplement 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.
The Company will furnish without charge to each person, including any
beneficial owner of Securities, to whom this Prospectus is delivered, upon the
request of such person, a copy of any of the documents incorporated by reference
herein, except for the exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should be
directed to 6400 South Fiddler's Green Circle, Suite 1800, Englewood, Colorado
80111 (Telephone: (303) 796-9793), Attention: Secretary.
3
<PAGE> 6
The following information is qualified in its entirety by reference to the
more detailed information and financial statements, including the notes thereto,
incorporated herein by reference. Certain capitalized terms used herein are
defined in the Glossary.
THE COMPANY
American Health Properties, Inc. (together with its subsidiaries, the
"Company") is a self-administered real estate investment trust ("REIT") that
commenced operations in 1987. The Company has investments in health care
facilities that are operated by qualified third party health care providers, as
well as medical office buildings.
As of June 30, 1997, the Company's portfolio of investments consisted of 13
acute care hospitals, three psychiatric hospitals owned by the Company, two
mortgage loans secured by psychiatric hospitals, three rehabilitation hospitals,
four assisted living facilities, one mortgage loan secured by a long-term acute
care hospital, one long-term acute care hospital (currently under construction),
six skilled nursing facilities (two of which are under construction), two
medical office buildings and two Alzheimer's care facilities. The Company has
separated its business and properties into two distinct units: (i) the Core
Group, which includes the Company's acute care, rehabilitation hospitals,
assisted living facilities, long-term acute care facility, skilled nursing
facilities, medical office buildings and Alzheimer's care facilities and (ii)
the Psychiatric Group, which includes all of the Company's investments in
psychiatric hospitals.
The Company's principal executive office is located at 6400 South Fiddler's
Green Circle, Suite 1800, Englewood, Colorado 80111, and its telephone number at
such address is (303) 796-9793.
MANAGEMENT AND ACCOUNTING POLICIES
The Company prepares financial statements in accordance with generally
accepted accounting principles, consistently applied, for both of the Groups,
and these financial statements, taken together, comprise all of the accounts
included in the corresponding consolidated financial statements of the Company.
The financial statements of each Group principally reflect the investments
included therein. Such Group financial statements also include allocated
portions of the Company's corporate assets, liabilities (including contingent
liabilities), stockholders' equity and items of income, expense and cash flow
that are not separately identified with the operations of the other Group.
Notwithstanding such allocations for the purpose of preparing Group financial
statements, each holder of Common Stock, Preferred Stock (and Depositary Shares
with respect thereto) or Psychiatric Group Stock is a holder of an issue of
capital stock of the entire Company and is subject to risks associated with an
investment in the entire Company and all of its businesses, assets and
liabilities.
Cash management and allocation of principal corporate activities between
the Psychiatric Group and the Core Group are based upon methods that management
believes to be reasonable and are reflected in their respective Group financial
statements. The following is a summary of certain policies adopted by the Board
and relating to these matters, as in effect as of the date of this Prospectus.
(i) Cash needs of the Psychiatric Group in excess of cash held by the
Psychiatric Group may, at the option of the Board, be funded by advances
from the Core Group to the Psychiatric Group constituting additional
revolving inter-Group loans, but the aggregate revolving inter-Group loans
owed by the Psychiatric Group to the Core Group are limited to a maximum of
$7,930,000 at any one time outstanding, subject to reduction of such limit
commensurate with any permanent repayment in the future of working capital
loans extended to certain psychiatric hospital operators, but in no event
will such limit be reduced below $5,000,000.
(ii) Except as permitted by (i) above, no additional fixed rate or
other inter-Group loans will be advanced by the Core Group to the
Psychiatric Group.
4
<PAGE> 7
(iii) All third party debt incurred by the Company and its
subsidiaries is specifically attributed to and reflected on the financial
statements of the Core Group except for debt that is non-recourse to the
assets of the Core Group.
(iv) All Common Stock and any other class or series of stock of the
Company, including the Preferred Stock and any Depositary Shares with
respect thereto, other than the Psychiatric Group Stock, as well as the net
proceeds of any future issuances thereof, are specifically attributed to
and reflected on the financial statements of the Core Group.
(v) If the Psychiatric Group sells any assets out of the ordinary
course ("Psychiatric Group Asset Sales"), the Net Proceeds from Psychiatric
Group Asset Sales will be applied, first, to repay revolving inter-Group
loans owed by the Psychiatric Group to the Core Group to the extent of the
psychiatric hospital operator working capital loans associated with the
asset or assets sold, second, to repay fixed rate inter-Group loans owed by
the Psychiatric Group to the Core Group (until repaid in full), and third,
to repay other revolving inter-Group loans owed by the Psychiatric Group to
the Core Group (until repaid in full), before any remaining Net Proceeds
from Psychiatric Group Asset Sales may be used to make distributions to
holders of Psychiatric Group Stock as described under "Description of
Common Stock and Psychiatric Group Stock -- Dividends."
(vi) Excess cash held by the Psychiatric Group (other than Net
Proceeds from Psychiatric Group Asset Sales, which is treated as described
in (v) above) is applied to reduce revolving inter-Group loans owed by the
Psychiatric Group to the Core Group (until repaid in full), subject to the
ability of the Psychiatric Group, at the option of the Board, to re-borrow
cash from the Core Group up to the limitations described in (i) above to
cover future cash needs of the Psychiatric Group (including, without
limitation, to fund dividends in a manner consistent with the dividend
policy then applicable to the Psychiatric Group Stock).
(vii) Fixed rate inter-Group loans owed by the Psychiatric Group to
the Core Group (a) bear interest at a fixed rate of approximately 13% per
annum and (b) are prepayable without premium at any time, at the option of
the Board. The higher interest rate charged to the Psychiatric Group
reflects management's belief that the consolidated Company is a stronger
credit than the Psychiatric Group on a stand alone basis.
(viii) Revolving inter-Group loans owed by the Psychiatric Group to
the Core Group (a) bear interest at a floating rate equal from time to time
to the prevailing prime rate (as determined by the Board, whose
determination shall be conclusive) plus 2% and (b) are prepayable without
premium at any time, at the option of the Board. The higher interest rate
charged to the Psychiatric Group reflects management's belief that the
consolidated Company is a stronger credit than the Psychiatric Group on a
stand alone basis.
(ix) Cash held by the Psychiatric Group in excess of inter-Group loans
owed by the Psychiatric Group required to be repaid as set forth in (v) and
(vi) above may, at the option of the Board, be advanced to the Core Group
as revolving inter-Group loans (to the extent such cash can be beneficially
put to use by the Core Group) or otherwise invested on behalf of the
Psychiatric Group.
(x) Revolving inter-Group loans owed by the Core Group to the
Psychiatric Group (a) bear interest at a floating rate equal from time to
time to the weighted average interest rate borne by the Company's revolving
debt (or, for periods in which there is no such revolving debt outstanding,
the interest rate at which the Company could borrow on a revolving basis,
as determined by the Board, whose determination shall be conclusive) and
(b) are prepayable without premium at any time, at the option of the Board.
The interest rate charged to the Core Group reflects management's belief
that the consolidated Company and the Core Group, on a stand alone basis,
are comparable credits.
(xi) As a result of the foregoing, the balance sheet of the Core Group
reflects its net revolving and net fixed rate inter-Group loans to or
borrowings from the Psychiatric Group, and the balance sheet of the
Psychiatric Group reflects its net revolving and net fixed rate inter-Group
loans to or borrowings from the Core Group. Similarly, the respective
income statements of the Core Group and the Psychiatric Group
5
<PAGE> 8
reflect interest income or expense, as the case may be, associated with
such loans or borrowings and the respective statements of cash flows of the
Core Group and the Psychiatric Group reflect changes in the amounts thereof
deemed outstanding.
(xii) Corporate, general and administrative costs that cannot be
directly allocated to either Group are allocated between the Core Group and
the Psychiatric Group on the basis of their respective contributions to
revenue, provided that at no time will such expenses allocated to either
Group be less than $250,000 per annum.
Nothing in the foregoing policies obligates the Board to cause the Core
Group to provide funds to the Psychiatric Group if the Board determines it is in
the best interests of the Company not to do so. The foregoing policies may be
modified or rescinded in the sole discretion of the Board without the approval
of stockholders, although there is no present intention to do so. The Board
could also adopt additional policies depending upon the circumstances. Any
determination by the Board to modify or rescind such policies, or to adopt
additional policies, including any such decision that could have disparate
effects upon holders of Common Stock and Psychiatric Group Stock, would be made
by the Board in the good faith belief that such decision is in the best
interests of the Company and its stockholders, including the holders of Common
Stock and Psychiatric Group Stock. In addition, generally accepted accounting
principles would require that changes in accounting principles must be
preferable (in accordance with generally accepted accounting principles) to the
principles previously in place.
USE OF PROCEEDS
Except as otherwise described in the accompanying Prospectus Supplement,
the net proceeds from the sale of Securities will be used for general corporate
purposes, which may include working capital, acquisitions, investments,
refinancings of indebtedness, capital expenditures, and repurchases and
redemptions of securities.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of
the Company for the periods indicated. For purposes of calculating such ratio,
"earnings" includes income before income taxes and fixed charges. "Fixed
charges" consists of interest on all indebtedness and that portion of rental
expense that management believes to be representative of interest. Because
dividends payable on the Psychiatric Group Stock are not fixed, dividends paid
on the Psychiatric Group Stock are not included in the presentation of the ratio
of earnings to combined fixed charges and preferred stock dividends.
Accordingly, the ratio of earnings to combined fixed charges and preferred stock
dividends is identical to the ratio of earnings to fixed charges for the periods
presented.
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED JUNE 30, ------------------------------------
1997 1996 1995 1994 1993 1992
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Consolidated ratio of earnings to fixed
charges (unaudited)...................... 2.16(a) 2.91 2.54 1.33(b) 2.81 (c)
</TABLE>
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(a) Decrease in ratio was primarily due to an $11 million impairment loss on
Psychiatric Group real estate investments and other notes receivable.
(b) Decrease in ratio was primarily due to a $30 million write-down of
Psychiatric Group real estate investments.
(c) Earnings did not cover fixed charges by $7.2 million primarily due to a $45
million write-down of Psychiatric Group real estate investments.
The Coverage Ratios as defined in the Company's debt agreements for the six
months ended June 30, 1997 and the years ended 1996, 1995, 1994, 1993 and 1992
were 4.05, 3.78, 3.04, 3.09, 2.58, and 2.29, respectively.
6
<PAGE> 9
DESCRIPTION OF COMMON STOCK AND PSYCHIATRIC GROUP STOCK
The following description is intended as a summary of the principal
provisions of, and is qualified in all respects by reference to, (a) the
Company's Certificate of Incorporation and Bylaws previously filed with the
Securities and Exchange Commission and (b) the Certificate of Designations
specifying the terms of the Psychiatric Group Stock, filed as Exhibit 4.1 to the
Current Report on Form 8-K, dated August 14, 1995, incorporated by reference
herein.
GENERAL
The Certificate of Incorporation of the Company provides that the Company
is authorized to issue 100,000,000 shares of Common Stock, par value $0.01 per
share, and 1,000,000 shares of Preferred Stock, par value $0.01 per share,
issuable in series by the Board. As of June 30, 1997, the Company had issued and
outstanding 23,463,754 shares of Common Stock. As of June 30, 1997, the Company
had outstanding approximately 208,000 shares of Psychiatric Group Stock, which
constitute a separate series of Preferred Stock, issued and outstanding. Such
shares are the only shares of Psychiatric Group Stock authorized by the Board to
be issued, except shares of Psychiatric Group Stock issuable upon exercise of
options granted in connection with the transaction in which the Company
distributed Depositary Shares representing Psychiatric Group Stock to the
holders of the Company's Common Stock (the "Distribution"). In addition, the
Company has authorized the issuance of approximately 257,000 Series A Preferred
Shares. See " -- Preferred Stock Purchase Rights Plan."
The authorized but unissued shares of Common Stock of the Company will be
available for issuance from time to time by the Company at the sole discretion
of the Board for any proper corporate purpose, which could include raising
capital, providing compensation or benefits to employees, paying stock dividends
or acquiring companies or businesses. Under applicable Delaware law, such future
issuances of Common Stock would not require further approval of stockholders,
and the Company would not seek approval of stockholders unless such approval
would be required by stock exchange regulations, would be in conjunction with a
further amendment to the Certificate of Incorporation or would otherwise be
deemed advisable by the Board.
Each holder of Common Stock is a holder of an issue of capital stock of the
entire Company and is subject to the risks associated with an investment in the
Company and all of its businesses, assets and liabilities. For example, if the
cash flow and proceeds of any sales of assets of the Psychiatric Group should be
insufficient to service inter-Group loans or other debt owed by the Psychiatric
Group, the Core Group would be adversely affected.
The Common Stock trades on The New York Stock Exchange, Inc. under the
symbol "AHE" and the Psychiatric Group Stock is quoted on the National
Association of Securities Dealers Automated Quotations National Market under the
symbol "AHEPZ."
DIVIDENDS
Subject to the rights, if any, of holders of any other Preferred Stock,
dividends may be paid on the Common Stock and/or the Psychiatric Group Stock in
equal or unequal amounts, when, as and if declared by the Board. Dividends on
the Common Stock and Psychiatric Group Stock will be limited to the Available
Dividend Amount attributable to the Core Group and the Psychiatric Group,
respectively. As of June 30, 1997, the Available Dividend Amount attributable to
the Core Group and the Psychiatric Group as of that date was at least $282.7
million and $36.9 million, respectively. The Available Dividend Amount is
similar to the amount that would be legally available under Delaware law for the
payment of dividends by the Core Group or Psychiatric Group, as the case may be,
if such Group were a separate Delaware corporation. There can be no assurance
that there will be an Available Dividend Amount with respect to either Group.
Dividends on the Common Stock and the Psychiatric Group Stock will be
further limited to the amount of funds of the Company legally available under
Delaware law for the payment of dividends by the Company on its capital stock.
As of June 30, 1997 the funds of the Company legally available for the payment
of dividends would have been at least $319.6 million. Payments of dividends on
either the Common Stock or the Psychiatric Group Stock will decrease the amount
of funds legally available for the payment of dividends on both the Common Stock
and the Psychiatric Group Stock.
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EXCHANGE AND REDEMPTION
Common Stock. The Certificate of Incorporation does not provide for either
mandatory or optional conversion, exchange or redemption rights relating to
outstanding shares of Common Stock.
Psychiatric Group Stock. The Company may, at any time commencing one year
after the date of the Distribution and in its sole discretion, redeem all
outstanding shares of Psychiatric Group Stock for cash in an amount, or in
exchange for newly issued shares of Common Stock having an aggregate value
(based on the average Market Value for the ten consecutive Trading Days ending
on the last Trading Day prior to the date on which notice of such exchange is
mailed to holders of Psychiatric Group Stock), equal to 115% of the average
Market Value during such ten Trading Day period of the shares of Psychiatric
Group Stock being redeemed; provided, however, that in connection with the sale
of all or substantially all of the assets of the Psychiatric Group the Company
may at any time after the date of the Distribution redeem all outstanding shares
of Psychiatric Group Stock for cash or in exchange for newly issued shares of
Common Stock having an aggregate value (based on the average Market Value for
the ten consecutive Trading Days ending on the last Trading Day prior to the
date on which notice of such exchange is mailed to holders of Psychiatric Group
Stock), equal to 105% of the average Market Value during such ten Trading Day
period of the shares of Psychiatric Group Stock being redeemed.
If at any time commencing one year after the date of the Distribution, the
Fair Market Value of the assets (other than cash, deposits and readily
marketable securities) of the Psychiatric Group (as determined by the Board,
whose determination shall be conclusive) is less than $10,000,000, the Company
may, in its sole discretion, redeem all outstanding shares of Psychiatric Group
Stock for cash in an amount, or in exchange for newly issued shares of Common
Stock having an aggregate value (based on the average Market Value for the ten
consecutive Trading Days ending on the last Trading Day prior to the date on
which notice of such exchange is mailed to holders of Psychiatric Group Stock),
equal to 105% of the Net Fair Market Value of the Psychiatric Group (as
determined by the Board, whose determination shall be conclusive).
VOTING RIGHTS
Holders of Common Stock are entitled to one vote per share and vote as one
class with the holders of Psychiatric Group Stock (together with any other
series of Preferred Stock outstanding at the time of such vote and so entitled
to vote) on all matters submitted to stockholders, other than matters which
would be required by law or the Company's Certificate of Incorporation to be
submitted to a separate class vote.
Holders of Psychiatric Group Stock are entitled to a variable number of
votes per share equal to the ratio (calculated to the nearest three decimal
places) of the average Market Value of one share of Psychiatric Group Stock to
one share of Common Stock for the ten consecutive Trading Days ending on the
last Trading Day prior to the applicable record date, and could have more than,
less than or exactly one vote per share. This formula is intended to equate the
proportionate voting rights of the Common Stock and Psychiatric Group Stock to
their respective Market Values at the time of any vote. Holders of Psychiatric
Group Stock vote as one class with holders of Common Stock (together with any
other series of Preferred Stock outstanding at the time of such vote and so
entitled to vote) on all matters submitted to stockholders, other than matters
which would be required by law or the Company's Certificate of Incorporation to
be submitted to a separate class vote. Each holder of Depositary Shares
representing interests in Psychiatric Group Stock is, through the depositary
share arrangements relating thereto, entitled to a number of votes per
Depositary Share equal to one-tenth the number of votes to which a holder of one
share of Psychiatric Group Stock is entitled.
No class vote of holders of Psychiatric Group Stock is required upon a
merger or consolidation if (a) the Psychiatric Group Stock remains outstanding
and unchanged as a result of the merger or consolidation, (b) the type and
amount of consideration for such merger or consolidation is divided between
holders of Psychiatric Group Stock and holders of Common Stock in a manner
determined to be fair by the Board (whose determination shall be conclusive) or
(c) the Psychiatric Group Stock is converted into capital stock of the surviving
company to the merger or consolidation having terms substantially similar to the
terms of the Psychiatric Group Stock. A class vote of the holders of a majority
of the outstanding shares of Psychiatric Group Stock is required for any other
merger or consolidation.
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Provisions of the Company's Certificate of Incorporation require that any
action permitted or required to be taken by the stockholders must be effected at
a duly called annual or special meeting; stockholders cannot take any action by
written consent of the stockholders. Special meetings of the stockholders may be
called only by a majority of the Board, by the Chairman of the Board or by the
President and may not be called by the stockholders.
Neither the holders of Common Stock nor the holders of Psychiatric Group
Stock have any cumulative voting rights or any preemptive rights to subscribe
for or purchase additional shares of capital stock or any other obligations
convertible into or exercisable for shares of capital stock that may hereafter
be issued by the Company.
LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution or
winding-up of the Company, holders of Common Stock and Psychiatric Group Stock
are entitled to receive their respective proportionate interests in the net
assets of the Company, if any, remaining for distribution to holders of stock
(after payment or provision for all liabilities, including contingent
liabilities, of the Company and payment of the liquidation preference payable to
holders of any other series of Preferred Stock ranking senior to the Psychiatric
Group Stock as to distributions upon liquidation) pro rata based upon the
average Market Value of the Common Stock as compared to the average Market Value
of the Psychiatric Group Stock, in each case for the ten consecutive Trading
Days ending on the Trading Day prior to the date of the first public
announcement of (i) a voluntary liquidation, dissolution or winding-up of the
Company or (ii) the institution of any proceeding for the involuntary
liquidation, dissolution or winding-up of the Company; provided that if the
foregoing would result in a liquidation payment valued at less than $1.00 per
share of the Psychiatric Group Stock, the holders of Psychiatric Group Stock are
not entitled to a proportionate interest in such net assets but instead are
entitled to receive a liquidation preference of $1.00 per share (and no more)
before any payment may be made to holders of Common Stock.
Neither the merger nor consolidation of the Company into or with any other
corporation, nor the merger or consolidation of any other corporation into or
with the Company, nor a sale, transfer or lease of all or any part of the assets
of the Company, would be deemed a liquidation, dissolution or winding-up for
these purposes.
DETERMINATIONS BY THE BOARD
The Company's Certificate of Incorporation provides that a Director will
not be liable to the Company or its stockholders for monetary damages for breach
of fiduciary duty as a Director, except for liability (i) for any breach of the
Director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or
knowing violation of law, (iii) pursuant to specific provisions of Delaware law
or (iv) for any transaction from which the Director derived any improper
personal benefit. The liability of Directors will be further eliminated or
limited to the fullest extent permitted by future changes in Delaware law. In
addition, the Certificate of Designations relating to the Psychiatric Group
Stock provides that any determinations made in good faith by the Board under
such Certificate of Designations, and any determinations with respect to either
Group or the rights of holders of shares of Common Stock or Psychiatric Group
Stock made pursuant to or in furtherance of such Certificate of Designations,
will be final and binding on all stockholders of the Company, subject to the
rights of stockholders under Delaware law and under the federal securities laws.
PREFERRED STOCK PURCHASE RIGHTS PLAN
On April 20, 1990, the Company distributed to its holders of Common Stock
one preferred stock purchase right (each, a "Right") for each outstanding share
of Common Stock. Under certain conditions, each Right may be exercised to
purchase one one-hundredth of a share of preferred stock, Series A, par value
$.01 per share (the "Series A Preferred Shares"), of the Company at a price of
$45. The total number of Rights issued or issuable at June 30, 1997, including
Rights issuable in connection with Common Stock which
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may be issued under the Company's stock incentive plans and upon the conversion
of the Company's outstanding Swiss franc convertible bonds, was approximately
25,721,000. Approximately 257,000 Series A Preferred Shares could be purchased
upon the exercise of all Rights currently issued or issuable. The number of
Rights outstanding and Series A Preferred Shares issuable upon exercise, as well
as the Series A Preferred Share purchase price, are subject to customary
antidilution adjustments.
The Rights are evidenced by the certificates for shares of Common Stock,
and in general are not transferable apart from the Common Stock or exercisable
until after a party has acquired beneficial ownership of or made a tender offer
for 10% or more of the outstanding Common Stock of the Company (an "Acquiring
Person"), or the occurrence of other events as specified in the Rights Plan.
Under certain conditions as specified in the Rights Plan, including but not
limited to the acquisition by a party of 15% or more of the outstanding Common
Stock of the Company or the acquisition of the Company in a merger or other
business combination, each holder of a Right (other than an Acquiring Person,
whose Rights will be void) will receive upon exercise thereof and payment of the
exercise price that number of shares of Common Stock of the Company or of the
other party, as applicable, having a market value of two times the exercise
price of the Right.
The Rights expire on April 20, 2000, and until exercised, the holder
thereof, as such, will have no rights as a shareholder of the Company. At the
Company's option, the Rights may be redeemed in whole at a price of $.01 per
Right at any time prior to becoming exercisable. In general, the Company may
also exchange the Rights at a ratio of one share of Common Stock per Right after
becoming exercisable but prior to the acquisition of 50% or more of the
outstanding shares of Common Stock by any party.
Series A Preferred Shares issuable upon exercise of the Rights will not be
redeemable. Each Series A Preferred Share will have 100 votes and will be
entitled to (a) dividends in an amount equal to the greater of $1.00 or 100
times the amount of the dividends per share paid on the Common Stock, (b) a
liquidation preference in an amount equal to the greater of $100 or 100 times
the amount per share paid on the Common Stock and (c) a payment in connection
with a business combination (in which shares of Common Stock are exchanged)
equal to 100 times the amount per share paid on the Common Stock.
The Psychiatric Group Stock does not include, or entitle the holders
thereof to receive, the Rights, which are applicable only to the Common Stock.
LIMITS ON STOCK OWNERSHIP
The Company's Certificate of Incorporation provides that as a condition to
the transfer and/or registration of transfer of any shares of capital stock of
the Company which would result in any stockholder owning, directly or
indirectly, shares in excess of 9% of the issued and outstanding capital stock
of the Company, the proposed transferee must file with the Company an affidavit
setting forth the number of shares owned, directly or indirectly, by such
transferee. Any acquisition of shares, transfer of shares or any options,
warrants or other securities convertible into shares that would result in the
disqualification of the Company as a REIT will be deemed void to the fullest
extent permitted under applicable law and the intended transferee shall be
deemed never to have had an interest therein. If more than 9.8% of the capital
stock of the Company has become concentrated in the hands of one beneficial
owner, (i) such beneficial owner and its affiliates and associates will be
deemed to have offered to sell to the Company or its designee on the date
specified in the Company's notice of acceptance of such offer to sell such
number of shares sufficient, in the opinion of the Board, to maintain or bring
the direct or indirect ownership of the capital stock of the Company held by
such beneficial owner to a level of no more than 9.8% of the issued and
outstanding capital stock of the Company, and (ii) the Board also will refuse to
transfer or issue shares of capital stock to any person whose acquisition of
such shares would result in the direct or indirect ownership by that person of
more than 9.8% of the issued and outstanding capital stock of the Company. The
purchase price for any shares of capital stock of the Company so redeemed will
be equal to the fair market value of the shares reflected in the closing sales
price for the shares, if then listed on a national securities exchange, or the
average of the closing sales prices for the shares if then listed on more than
one national securities exchange, or if the shares are not then listed on a
national securities exchange, the latest bid quotation for the shares if then
traded over-the-counter, on the last business
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day immediately preceding the day on which notice of acceptance of the offer of
sale is sent by the Company, or, if no such closing sales prices or quotations
are available, then the purchase price will be equal to the net asset value of
such shares as determined in good faith by the Board. The purchase price of any
such shares acquired by the Company, or its designee, will be paid, at the
option of the Company, in cash or in the form of an unsecured, subordinated
promissory note of the Company, or its designee, bearing interest and having a
term to maturity (to be not less than 5 nor more than 20 years) as determined by
the Board. From and after the tender by the Company of the purchase price
therefor, the holder of any shares of capital stock of the Company so called for
purchase will cease to be entitled to any rights as a holder of such shares,
except the right to payment of the purchase price therefor.
BUSINESS COMBINATION PROVISIONS
The Certificate of Incorporation requires that Business Combinations (as
defined in the Certificate of Incorporation) between the Company and a
Beneficial Owner (as defined in the Certificate of Incorporation) of 10% or more
of the Company's outstanding shares of Voting Stock (as defined in the
Certificate of Incorporation) (a "Related Person"), and any Affiliate (as
defined in the Certificate of Incorporation) or Associate (as defined in the
Certificate of Incorporation) of such person, be approved by (i) the affirmative
vote of the holders of not less than 80% of the outstanding shares of Voting
Stock and (ii) the holders of a majority of the outstanding shares of Voting
Stock other than such Related Person and such person's Associates and
Affiliates, unless a majority of the Continuing Directors (as defined in the
Certificate of Incorporation) shall have approved the Business Combination or
shall have approved the acquisition of outstanding shares of Voting Stock which
caused the Related Person to become a Related Person. In general, Voting Stock
means the capital stock of the Company entitled to vote generally in the
election of directors, including the Psychiatric Group Stock, and each share is
allocated for this purpose the number of votes granted to it generally in the
election of directors.
A "Business Combination" is defined in the Certificate of Incorporation as
(a) any merger or consolidation of the Company or any subsidiary (other than
pursuant to Section 253 of the Delaware General Corporation Law with or into any
corporation which owns at least 90% of the outstanding shares of each class of
stock of the Company or its subsidiary, as applicable) with a Related Person or
any other corporation (whether or not itself a Related Person) which is, or
after such merger or consolidation would be, an Affiliate or Associate of a
Related Person, (b) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to or with a
Related Person or such person's Affiliates or Associates of any assets of the
Company (including the securities of a subsidiary) or a subsidiary having a fair
market value of $20 million or more, (c) the issuance or transfer of any
securities of the Company or a subsidiary by the Company or such subsidiary to
any Related Person having an aggregate fair market value of $20 million or more,
other than by any distribution pro rata to, or exchange offer made to, all
holders of a publicly held class or series of stock of the Company or any of its
subsidiaries, or upon the exercise, conversion or exchange of securities of the
Company or any of its subsidiaries which are exercisable, convertible or
exchangeable into or for securities of the Company or any of its subsidiaries,
(d) the adoption of any plan or proposal for the liquidation or dissolution of
the Company by or on behalf of a Related Person or any of such person's
Affiliates or Associates or (e) any reclassification of securities or
recapitalization of the Company (including any reverse stock split), or any
merger or consolidation of the Company with any of its subsidiaries or any other
transaction involving the Company or any of its subsidiaries (whether or not
with or into or otherwise involving a Related Person) which has the effect,
directly or indirectly, of increasing the proportionate share of the outstanding
shares of any class of voting stock of the Company or of any of its subsidiaries
directly or indirectly owned by any Related Person or such person's Associates
or Affiliates.
The Company is also subject to the provisions of Section 203 of the
Delaware General Corporation Law, which relate to business combinations.
STAGGERED BOARD; REMOVAL OF DIRECTORS
The Board is divided into three classes, each class consisting, as nearly
as may be possible, of one-third of the total number of Directors. Directors are
elected for a three-year term and the term of one class expires
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each year. A Director holds office until the annual meeting for the year in
which his or her term expires. If the number of Directors is changed, any
increase or decrease shall be apportioned among the classes so as to maintain
the number of Directors in each class as nearly equal as possible, but in no
case will a decrease in the number of Directors shorten the term of any
incumbent Director. Under Delaware law, because the Board is divided into
classes, no Director may be removed from office before expiration of his or her
term except for cause.
VOTE REQUIRED TO CHANGE CERTAIN PROVISIONS
The provisions described under "Limits on Stock Ownership" and "Business
Combination Provisions" above may not be amended without the affirmative vote of
stockholders holding at least 80% of the Voting Stock of the Company and, with
respect to the provisions under "Business Combination Provisions" only, a
majority vote of the stockholders of Voting Stock who are Disinterested
Stockholders (as defined in the Certificate of Incorporation). The provisions
described under "Staggered Board" above may not be amended without the
affirmative vote of stockholders holding at least 66 2/3% of the outstanding
shares of capital stock of the Company entitled to vote generally in the
election of Directors.
CERTAIN ANTI-TAKEOVER EFFECTS
The provisions described under "-- Preferred Stock Purchase Rights Plan,"
"-- Limits on Stock Ownership," "-- Business Combination Provisions" and
"-- Staggered Board" above may have the effect of discouraging unilateral tender
offers or other takeover proposals which certain stockholders might deem in
their interests or in which they might receive a substantial premium over market
price for their shares. The Board's authority to issue and establish the terms
of currently authorized Preferred Stock without stockholder approval may also
have the effect of discouraging takeover attempts. The provisions could also
have the effect of insulating current management against the possibility of
removal and could, by possibly reducing temporary fluctuations in market price
caused by accumulations of Common Stock, deprive stockholders of opportunities
to sell at a temporarily higher market price. However, the Board believes that
the Preferred Stock Purchase Rights Plan and inclusion of the Business
Combination and Staggered Board provisions may help assure fair treatment of
stockholders and continuity of management and that the Limits on Stock Ownership
provision is reasonably necessary to safeguard the Company's REIT status.
STOCK REGISTRAR AND TRANSFER AGENT
ChaseMellon Shareholder Services is the registrar and transfer agent for
the Common Stock and the Psychiatric Group Stock. ChaseMellon Shareholder
Services is also depositary for the depositary shares with respect to the
Psychiatric Group Stock.
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DESCRIPTION OF DEBT SECURITIES
The Debt Securities constitute either Senior Securities or Subordinated
Securities as specified in the accompanying Prospectus Supplement. The Senior
Securities will be issued under an Indenture (the "Senior Indenture") to be
entered into by the Company prior to the issuance of any such Senior Securities,
the form of which is filed as an exhibit to the Registration Statement. The
Subordinated Securities will be issued under an Indenture (the "Subordinated
Indenture") to be entered by the Company prior to the issuance of any such
Subordinated Securities, the form of which is also filed as an exhibit to the
Registration Statement. Both the Senior Indenture and the Subordinated Indenture
are subject to and governed by the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). Information regarding the trustee under the Senior
Indenture (the "Senior Trustee") or the trustee under the Subordinated Indenture
(the "Subordinated Trustee"), as the case may be, will be included in any
Prospectus Supplement and/or Pricing Supplement relating to such Senior
Securities or Subordinated Securities. The Senior Indenture and the Subordinated
Indenture are sometimes collectively referred to herein as the "Indentures;" the
Senior Trustee and the Subordinated Trustee are sometimes collectively referred
to herein as the "Trustees" and individually as a "Trustee." The following
discussion includes a summary description of all material terms of the
Indentures, other than terms that are specific to a particular series of Debt
Securities, which will be described in the Prospectus Supplement and/or Pricing
Supplement relating to such series. Accordingly, for a description of the terms
of a particular issue of Debt Securities reference must be made to both the
accompanying Prospectus Supplement, any Pricing Supplement and the following
description. The following summary does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all of the
provisions of the Indentures, including the definitions therein of certain
capitalized terms in this Prospectus. The following summary is also qualified in
its entirety by reference to the terms made a part of the Indenture by the Trust
Indenture Act. Wherever particular Sections or Articles or defined terms of the
Indentures are referred to herein or in a Prospectus Supplement or any Pricing
Supplement, such Sections, Articles or defined terms are incorporated herein or
therein by reference.
The Debt Securities may be issued from time to time in one or more series.
The particular terms of each series of Debt Securities offered by any Prospectus
Supplement or Prospectus Supplements will be described in such Prospectus
Supplement or Prospectus Supplements relating to such series.
Other than as set forth under "Certain Covenants of the Company," and only
to the extent applicable to the Debt Securities of a particular series, as
indicated in the applicable Prospectus Supplement, there are no provisions of
the Indentures that afford holders of the Debt Securities protection in the
event of a highly leveraged transaction involving the Company.
GENERAL
The Indentures do not limit the aggregate amount of Debt Securities that
may be issued thereunder, and Debt Securities may be issued thereunder from time
to time in separate series up to the aggregate amount from time to time
authorized by the Company for each series. The Senior Securities will be
unsecured and unsubordinated obligations of the Company and will rank equally
and ratably with other unsecured and unsubordinated indebtedness of the Company.
The Subordinated Securities will be subordinated in right of payment to the
prior payment in full of the Senior Indebtedness (as defined) of the Company, as
described below under "Subordination of Subordinated Securities" and in a
Prospectus Supplement applicable to an offering of Subordinated Securities.
The applicable Prospectus Supplement or Prospectus Supplements and any
Pricing Supplement will describe the following terms of the series of Debt
Securities in respect of which this Prospectus is being delivered: (1) the title
of such Debt Securities; (2) any limit on the aggregate principal amount of such
Debt Securities; (3) whether any of such Debt Securities are to be issuable in
permanent global form ("Global Security") and, if so, the terms and conditions,
if any, upon which interests in such Securities in global form may be exchanged,
in whole or in part, for the individual Debt Securities represented thereby; (4)
the person to whom any interest on any Debt Security of the series shall be
payable if other than the person in whose name the Debt Security is registered
on the Regular Record Date; (5) the date or dates on which such Debt
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Securities will mature; (6) the rate or rates of interest, if any, or the method
of calculation thereof, which such Debt Securities will bear; (7) the date or
dates from which any such interest will accrue, the Interest Payment Dates on
which any such interest on such Debt Securities will be payable and the Regular
Record Date for any interest payable on any Interest Payment Date; (8) the place
or places where the principal of, premium (if any) and interest on such Debt
Securities will be payable; (9) the period or periods within which, the events
upon the occurrence of which, and the price or prices at which, such Debt
Securities may, pursuant to any optional provisions, be redeemed or purchased,
in whole or in part, and any terms and conditions relevant thereto and the
period or periods within which and the price or prices at which the Debt
Securities will be redeemed or purchased, in whole or in part, and any terms and
conditions relevant thereto; (10) the obligation of the Company, if any, to
redeem or repurchase such Debt Securities pursuant to any sinking fund or
analogous provisions or at the option of the Holders; (11) the denominations in
which any such Debt Securities will be issuable, if other than denominations of
$1,000 and any integral multiple thereof; (12) the currency, currencies or
currency unit or units of payment of principal of and any premium and interest
on such Debt Securities if other than U.S. dollars; (13) any index or formula
used to determine the amount of payments of principal of and any premium and
interest on such Debt Securities; (14) if the principal of or any premium or
interest on such Debt Securities is to be payable, at the election of the
Company or a Holder thereof, in one or more currencies or currency units other
than that or those in which such Debt Securities are stated to be payable, the
currency, currencies or currency units in which payment of the principal of and
any premium and interest on Debt Securities of such series as to which such
election is made shall be payable, and the periods within which and the terms
and conditions upon which such election is to be made; (15) if other than the
principal amount thereof, the portion of the principal amount of such Debt
Securities of the series which will be payable upon declaration of the
acceleration of the Maturity thereof; (16) the applicability of any provisions
described under "Certain Covenants of the Company"; (17) the applicability of
any provisions described under "Defeasance"; (18) the terms and conditions, if
any, pursuant to which such Debt Securities are convertible or exchangeable into
Common Stock or other securities of the Company or another issuer and (19) any
other terms of such Debt Securities not inconsistent with the provisions of the
applicable Indentures. (Section 301)
Debt Securities may be issued at a discount from their principal amount.
All material United States Federal income tax, accounting and other special
considerations applicable to any such Original Issue Discount Securities will be
described in the applicable Prospectus Supplement or Pricing Supplement.
If the purchase price of any of the Debt Securities is denominated in a
foreign currency or currencies or a foreign currency unit or units or if the
principal of and any premium and interest on any series of Debt Securities is
payable in a foreign currency or currencies or a foreign currency unit or units,
the restrictions, elections, general tax considerations, specific terms and
other information with respect to such issue of Debt Securities and such foreign
currency or currencies or foreign currency unit or units will be set forth in
the applicable Prospectus Supplement or any Pricing Supplement.
SUBORDINATION OF SUBORDINATED SECURITIES
The indebtedness evidenced by the Subordinated Securities will be
subordinated and junior in right of payment to the extent set forth in the
Subordinated Indenture to the prior payment in full of amounts then due on all
Senior Indebtedness (as defined below). No payment shall be made by the Company
on account of principal of (or premium, if any) or interest on the Subordinated
Securities or on account of the purchase or other acquisition of Subordinated
Securities, if the maturity of any of the Subordinated Securities shall have
been accelerated, until all amounts due have been paid on all outstanding Senior
Indebtedness, or if (i) there shall have occurred and be continuing a default in
the payment of principal (or premium, if any) or interest on any Senior
Indebtedness beyond any applicable grace period with respect thereto, or any
event of default with respect to any Senior Indebtedness resulting in the
acceleration of the maturity of such Senior Indebtedness, unless and until such
default or event of default shall have been cured or waived or shall have ceased
to exist and such acceleration shall have been rescinded or annulled or (ii) any
such default in payment or event of default shall be the subject of a judicial
proceeding. By reason of these provisions in the event of default of any Senior
Indebtedness, whether now outstanding or hereafter issued, payments of principal
of (and premium, if
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any) and interest on the Subordinated Securities may not be permitted to be made
until such default is cured or such Senior Indebtedness is paid in full.
Upon any distribution of assets of the Company upon any receivership,
dissolution, winding-up, liquidation, reorganization or similar proceeding of
the Company, whether voluntary or involuntary, or in bankruptcy or insolvency,
all principal of (and premium, if any) and interest due upon all Senior
Indebtedness must be paid in full before the Holders of the Subordinated
Securities or the Trustee is entitled to receive or retain any assets so
distributed in respect of the Subordinated Securities. By reason of this
provision, in the event of insolvency Holders of the Subordinated Securities may
recover less than other creditors of the Company, including holders of Senior
Indebtedness.
"Senior Indebtedness" means the principal of (and premium, if any) and
interest on (a) all indebtedness of the Company (including indebtedness of
others guaranteed by the Company) other than the Subordinated Securities which
is (i) for money borrowed or (ii) evidenced by a note or similar instrument
given in connection with the acquisition of any business, properties or assets
of any kind, (b) obligations of the Company as lessee under leases required to
be capitalized on the balance sheet of the lessee under generally accepted
accounting principles, and (c) amendments, renewals, extensions, modifications
and refunding of any such indebtedness or obligation, in any such case whether
outstanding on the date of the Subordinated Indenture or thereafter created,
incurred or assumed, unless in any case in the instrument creating or evidencing
any such indebtedness or obligation or pursuant to which the same is outstanding
it is provided that such indebtedness or obligation is not superior in right of
payment to the Subordinated Securities or it is provided that such obligation is
subordinated to senior indebtedness to substantially the same extent as the
Subordinated Securities are subordinated to Senior Indebtedness. As of June 30,
1997, the amount of Senior Indebtedness was approximately $219.0 million. The
Subordinated Indenture does not prohibit or limit the incurrence of additional
Senior Indebtedness.
FORM, EXCHANGE, REGISTRATION, CONVERSION, TRANSFER AND PAYMENT
Unless otherwise indicated in the applicable Prospectus Supplement or any
Pricing Supplement, the Debt Securities will be issued only in fully registered
form in denominations of $1,000 or integral multiples thereof. (Section 302)
Unless otherwise indicated in the applicable Prospectus Supplement or any
Pricing Supplement, payment of principal, premium (if any) and interest on the
Debt Securities will be payable, and the exchange, conversion and transfer of
Debt Securities will be registrable, at the office or agency of the Company
maintained for such purposes and at any other office or agency maintained for
such purpose. (Sections 301, 305 and 1002) No service charge will be made for
any registration of transfer or exchange of the Debt Securities, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
change imposed in connection therewith. (Section 305)
All moneys paid by the Company to a Paying Agent for the payment of
principal of and any premium or interest on any Debt Security which remain
unclaimed for two years after such principal, premium or interest has become due
and payable may be repaid to the Company and thereafter the Holder of such Debt
Security may look only to the Company for payment thereof. (Section 1003)
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a Depositary ("Depositary") or its nominee identified in the applicable
Prospectus Supplement or Pricing Supplement. In such a case, one or more Global
Securities will be issued in a denomination or aggregate denominations equal to
the portion of the aggregate principal amount of Outstanding Debt Securities of
the series to be represented by such Global Security or Securities. Unless and
until it is exchanged in whole or in part for Debt Securities in registered
form, a Global Security may not be registered for transfer or exchange except as
a whole by the Depositary for such Global Security to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any nominee to a successor
Depositary or a nominee of such
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successor Depositary and except in the circumstances described in the applicable
Prospectus Supplement or Pricing Supplement. (Sections 204 and 305)
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in the applicable Prospectus Supplement or Pricing Supplement.
The Company expects that the following provisions will apply to depositary
arrangements.
Unless otherwise specified in the applicable Prospectus Supplement or
Pricing Supplement, Debt Securities that are to be represented by a Global
Security to be deposited with or on behalf of a Depositary will be represented
by a Global Security registered in the name of such Depositary or its nominee.
Upon the issuance of such Global Security, and the deposit of such Global
Security with or on behalf of the Depositary for such Global Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such Global
Security to the accounts of institutions that have accounts with such Depositary
or its nominee ("participants"). The accounts to be credited will be designated
by the underwriters or agents of such Debt Securities or by the Company, if such
Debt Securities are offered and sold directly by the Company. Ownership of
beneficial interest in such Global Security will be limited to participants or
Persons that may hold interests through participants. Ownership of beneficial
interests by participants in such Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, records
maintained by the Depositary or its nominee for such Global Security. Ownership
of beneficial interests in such Global Security by Persons that hold through
participants will be shown on, and the transfer of that ownership interest
within such participant will be effected only through, records maintained by
such participant. The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of such securities in certificated form.
The foregoing limitations and such laws may impair the ability to transfer
beneficial interests in such Global Securities.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the Securities
represented by such Global Security for all purposes under the applicable
Indenture. Unless otherwise specified in the applicable Prospectus Supplement or
Pricing Supplement, owners of beneficial interests in such Global Security will
not be entitled to have Debt Securities of the series represented by such Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of Debt Securities of such series in certificated form and
will not be considered the Holders thereof for any purposes under the applicable
Indenture. (Sections 204 and 305) Accordingly, each Person owning a beneficial
interest in such Global Security must rely on the procedures of the Depositary
and, if such Person is not a participant, on the procedures of the participant
through which such Person owns its interest, to exercise any rights of a Holder
under the applicable Indenture. The Company understands that under existing
industry practices, if the Company requests any action of Holders or an owner of
a beneficial interest in such Global Security desires to give any notice or take
any action a Holder is entitled to give or take under an Indenture, the
Depositary would authorize the participants to give such notice or take such
action, and participants would authorize beneficial owners owning through such
participants to give such notice or take such action or would otherwise act upon
the instructions of beneficial owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement or any
Pricing Supplement.
CERTAIN COVENANTS OF THE COMPANY
If so indicated in the applicable Prospectus Supplement or any Pricing
Supplement with respect to a particular series of Debt Securities, the Company
will be subject to either or both of the following covenants, except as may be
indicated in the applicable Prospectus Supplement or any Pricing Supplement.
The Debt Securities will not be secured by mortgage, pledge or other lien.
The Company will covenant in the Indenture not to pledge or otherwise subject to
any lien, any property or assets of the Company or its subsidiaries unless the
Debt Securities of such series are secured by such pledge or lien equally and
ratably with all other obligations secured thereby so long as such obligations
shall be so secured; provided, however, that such covenant will not apply to
liens securing obligations which do not in the aggregate at any one time
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outstanding exceed 10% of Consolidated Net Tangible Assets (as defined below) of
the Company and its consolidated subsidiaries and in addition will not apply to:
(1) Any lien or charge on any property, tangible or intangible, real
or personal, existing at the time of acquisition or construction of such
property (including acquisition through merger or consolidation) or given
to secure the payment of all or any part of the purchase or construction
price thereof or to secure any indebtedness incurred prior to, at the time
of, or within one year after, the acquisition or completion of construction
thereof for the purpose of financing all or any part of the purchase or
construction price thereof;
(2) Any liens securing the performance of any contract or undertaking
of the Company not directly or indirectly in connection with the borrowing
of money, obtaining of advances or credit or the securing of debts, if made
and continuing in the ordinary course of business;
(3) Any lien in favor of the United States or any state thereof or the
District of Columbia, or any agency, department or other instrumentality
thereof, to secure progress, advance, or other payments pursuant to any
contract or provision of any statute;
(4) Mechanics, materialmen's, carriers', or other like liens arising
in the ordinary course of business (including construction of facilities)
in respect of obligations which are not due or which are being contested in
good faith;
(5) Any lien arising by reason of deposits with, or the giving of any
form of security to, any governmental agency or any body created or
approved by law or governmental regulations, which is required by law or
governmental regulation as a condition to the transaction of any business,
or the exercise of any privilege, franchise or license;
(6) Any liens for taxes, assessments or governmental charges or levies
not yet delinquent, or liens for taxes, assessments or governmental charges
or levies already delinquent but the validity of which is being contested
in good faith;
(7) Liens (including judgment liens) arising in connection with legal
proceedings so long as such proceedings are being contested in good faith
and in the case of judgment liens, execution thereof is stayed;
(8) Liens relating to secured indebtedness of the Company outstanding
as of June 30, 1995; and
(9) Any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, of any lien referred to
in the foregoing clauses (1) to (8) inclusive; provided, however, that the
amount of any and all obligations and indebtedness secured thereby shall
not exceed the amount thereof so secured immediately prior to the time of
such extension, renewal or replacement and that such extension, renewal or
replacement shall be limited to all or a part of the property which secured
the charge or lien so extended, renewed or replaced (plus improvements on
such property).
"Consolidated Net Tangible Assets" means the aggregate amount of assets
(less applicable reserves and other properly deductible items) less (i) all
current liabilities and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expenses and other like intangibles of the Company
and its consolidated subsidiaries, all as set forth on the most recent balance
sheet of the Company and its consolidated subsidiaries prepared in accordance
with generally accepted accounting principles. (Section 1008)
The Company will also covenant in the Indenture that it will not create,
assume, incur, or otherwise become liable in respect of, any
(a) Senior Debt (as defined below) unless the aggregate outstanding
principal amount of Senior Debt of the Company will not, at the time of
such creation, assumption or incurrence and after giving effect thereto and
to any concurrent transactions, exceed the greater of (i) 150% of Capital
Base (as defined below), or (ii) 225% of Tangible Net Worth (as defined
below); and
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(b) Non-Recourse Debt (as defined below) unless the aggregate
outstanding principal amount of Senior Debt and Non-Recourse Debt of the
Company will not, at the time of such creation, assumption or incurrence
and after giving effect thereto and to any concurrent transactions, exceed
225% of Capital Base.
For the purposes of this limitation as to borrowing money, "Senior Debt"
means all Debt other than Non-Recourse Debt and Subordinated Debt; "Debt", with
respect to any Person, means (i) its indebtedness, secured or unsecured, for
borrowed money; (ii) Liabilities secured by any existing lien on property owned
by such Person; (iii) Capital Lease Obligations, and the present value of all
payments due under any arrangement for retention of title (discounted at a rate
per annum equal to the average interest borne by all outstanding Debt Securities
determined on a weighted average basis and compounded semi-annually) if such
arrangement is in substance an installment purchase or an arrangement for the
retention of title for security purposes; and (iv) guarantees of obligations of
the character specified in the foregoing clauses (i), (ii) and (iii), to the
full extent of the liability of the guarantor (discounted to present value, as
provided in the foregoing clause (iii), in the case of guarantees of title
retention arrangements); "Capital Lease" means at any time any lease of
property, real or personal, which, in accordance with generally accepted
accounting principles, would at such time be required to be capitalized on a
balance sheet of the lessee; "Capital Lease Obligation" means at any time the
amount of the liability in respect of a Capital Lease which, in accordance with
generally accepted accounting principles, would at such time be required to be
capitalized on a balance sheet of the lessee; "Person" means an individual,
partnership, corporation, joint venture, association, joint stock company,
trust, limited liability company, unincorporated organization, or a government
or agency or political subdivision thereof; "Non-Recourse Debt" with respect to
any Person, means any Debt secured by, and only by, property on or with respect
to which such Debt is incurred where the rights and remedies of the holder of
such Debt in the event of default do not extend to assets other than the
property constituting security therefor; "Subordinated Debt" means any unsecured
Debt of the Company which is issued or assumed pursuant to, or evidenced by, an
indenture or other instrument which contains provisions for the subordination of
such other Debt (to which appropriate reference shall be made in the instruments
evidencing such other Debt if not contained therein) to the Debt Securities
(and, at the option of the Company, if so provided, to other Debt of the
Company, either generally or as specifically designated); "Capital Base" means,
at any date, the sum of Tangible Net Worth and Subordinated Debt; "Tangible Net
Worth" means, at any date, the net book value (after deducting related
depreciation, obsolescence, amortization, valuation, and other proper reserves)
of the tangible assets of the Company at such date, minus the amount of its
Liabilities at such date; and "Liabilities" means, at any date, the items shown
as liabilities on the balance sheet of the Company, except any item of deferred
income, including capital gains. (Section 1009)
EVENTS OF DEFAULT
The following are Events of Default under the Indentures with respect to
Debt Securities of any series: (a) failure to pay principal of or premium, if
any, on any Debt Security of that series when due; (b) failure to pay any
interest on any Debt Security of that series when due, continued for 30 days;
(c) failure to make any sinking fund payment, when due, in respect of any Debt
Security of that series; (d) failure to perform any other covenant of the
Company in the applicable Indenture (other than a covenant included in such
Indenture solely for the benefit of a series of Debt Securities other than that
series), continued for 60 days after written notice as provided in the
respective Indentures; (e) failure to pay at the final maturity thereof the
principal of, or acceleration of, any indebtedness for money borrowed by the
Company in excess of $5 million, if such indebtedness is not discharged, or such
acceleration is not annulled, as provided in the respective Indentures; (f)
certain events of bankruptcy, insolvency or reorganization; and (g) any other
Event of Default provided with respect to Debt Securities of that series.
(Section 501)
If an Event of Default (other than an Event of Default described in clause
(f) above) with respect to Outstanding Debt Securities of any series shall occur
and be continuing, either the Trustee or the Holders of at least 25% in
principal amount of the Outstanding Debt Securities of that series by notice as
provided in the respective Indentures may declare the principal amount (or, if
the Debt Securities of that series are Original Issue Discount Securities, such
portion of the principal amount as may be specified in the terms of that series)
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of all Debt Securities of that series to be due and payable immediately. If an
Event of Default described in clause (f) above with respect to the Debt
Securities of any series at the time Outstanding shall occur, the principal
amount of all the Debt Securities of that series (or, in the case of any such
Original Issue Discount Security or other Debt Security, such specified amount)
will automatically, and without any action by the Trustee or any Holder, become
immediately due and payable. However, at any time after a declaration of
acceleration with respect to Debt Securities of any series has been made, but
before a judgment or decree based on such acceleration his been obtained, the
Holders of a majority in principal amount of the Outstanding Debt Securities of
that series may, under certain circumstances, rescind and annul such
acceleration. (Section 502) For information as to waiver or defaults, see
"Modification and Waiver" below.
The Indentures provide that, subject to the duty of the respective Trustees
thereunder during an Event of Default to act with the required standard of care,
such Trustee will be under no obligation to exercise any of its rights or powers
under the respective Indentures at the request or direction of any of the
Holders, unless such Holders shall have offered to such Trustee reasonable
security or indemnity. (Sections 601 and 603) Subject to certain provisions,
including those requiring security or indemnification of the Trustees, the
Holders of a majority in principal amount of the Outstanding Debt Securities of
any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the applicable Trustee, or
exercising any trust or power conferred on such Trustee, with respect to the
Debt Securities of that series. (Section 512)
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the applicable Indenture or for any remedy
thereunder, unless such Holder shall have previously given to the applicable
Trustee written notice of a continuing Event of Default (as defined) and unless
the Holders of at least 25 percent in aggregate principal amount of the
outstanding Debt Securities of the same series shall have made written request,
and offered reasonable indemnity, to the Trustee to institute such proceeding as
trustee, and the Trustee shall not have received from the Holders of a majority
in aggregate principal amount of the outstanding Debt Securities of the same
series a direction inconsistent with such request and shall have failed to
institute such proceeding within 60 days. (Section 507) However, such
limitations do not apply to a suit instituted by a Holder of a Debt Security for
enforcement of payment of the principal of and interest on such Debt Security on
or after the respective due dates expressed in such Debt Security. (Section 508)
The Company will be required to furnish to the Trustees annually a
statement as to the performance by the Company of its obligations under the
respective Indentures and as to any default in such performance. (Section 1004)
MODIFICATION AND WAIVER
Modifications and amendments of the respective Indentures may be made by
the Company and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Debt Securities of
each series affected thereby; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Outstanding Debt
Security affected thereby: (a) change the Stated Maturity of the principal of,
or any installment of principal of, or interest on, any Debt Security; (b)
reduce the principal amount of, the rate of interest on, or the premium, if any,
payable upon the redemption of, any Debt Security; (c) reduce the amount of
principal of an Original Issue Discount Security payable upon acceleration of
the Maturity thereof, (d) change the place or currency of payment of principal
of, or premium, if any, or interest on any Debt Security; (e) impair the right
to institute suit for the enforcement of any payment on or with respect to any
Debt Security on or after the Stated Maturity or Redemption Date thereof; (f) in
the case of Subordinated Securities, modify the provisions of the Subordinated
Indenture with respect to subordination or conversion of such Subordinated
Securities in a manner adverse to the Holders, or (g) reduce the percentage in
principal amount of Outstanding Debt Securities of any series, the consent of
the Holders of which is required for modification or amendment of the applicable
Indenture or for waiver of compliance with certain provisions of the applicable
Indenture or for waiver of certain defaults. (Section 902)
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The Holders of at least a majority in aggregate principal amount of the
Outstanding Debt Securities of any series may on behalf of the Holders of all
Debt Securities of that series waive, insofar as that series is concerned,
compliance by the Company with certain covenants of the applicable Indenture.
(Section 1010) The Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of any series may, on behalf of the Holders of
all Debt Securities of that series, waive any past default under the applicable
Indenture with respect to that series, except a default in the payment of the
principal of, or premium, if any, or interest on, any Debt Security of that
series or in respect of a provision which under the applicable Indenture cannot
be modified or amended without the consent of the Holder of each Outstanding
Debt Security of that series affected. (Section 513)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of any Holders of Outstanding Debt
Securities, may consolidate with or merge into, or transfer or lease its assets
substantially as an entirety to, any Person, and any other Person may
consolidate with or merge into, or transfer or lease its assets substantially as
an entirety to, the Company, provided (a) that the Person (if other than the
Company) formed by such consolidation or into which the Company is merged or
which acquires or leases the assets of the Company substantially as an entirety
is a Person organized and existing under the laws of any United States
jurisdiction and assumes the Company's obligations on the Debt Securities and
under the respective Indentures, (b) that after giving effect to such
transaction no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have happened and be
continuing, and (c) that certain other conditions are met. (Article Eight)
DEFEASANCE AND COVENANT DEFEASANCE
If so indicated in the applicable Prospectus Supplement or any Pricing
Supplement with respect to the Debt Securities of a series, the Company, at its
option, (i) will be discharged from any and all obligations in respect of the
Debt Securities of such series (except for certain obligations to register the
transfer or exchange of Debt Securities of such series, to replace destroyed,
stolen, lost or mutilated Debt Securities of such series, and to maintain an
office or agency in respect of the Debt Securities and hold moneys for payment
in trust) or (ii) will be released from its obligations to comply with the
Covenants that are specified under "Certain Covenants of the Company" above with
respect to the Debt Securities of such series, and the occurrence of an event
described in clause (d) under "Events of Default" above with respect to any
defeased covenant and clauses (e) and (g) of the "Events of Default" above shall
no longer be an Event of Default if, in either case, the Company irrevocably
deposits with the Trustee, in trust, money or U.S. Government Obligations that
through the payment of interest thereon and principal thereof in accordance with
their terms will provide money in an amount sufficient to pay all of the
principal of (and premium, if any) and any interest on the Debt Securities of
such series on the dates such payments are due (which may include one or more
redemption dates designated by the Company) in accordance with the terms of such
Debt Securities. Such a trust may only be established if, among other things,
(a) no Event of Default or event which with the giving of notice or lapse of
time, or both, would become an Event of Default under the applicable Indenture
shall have occurred and be continuing on the date of such deposit, (b) no Event
of Default described under clause (f) under "Events of Default" above or event
which with the giving of notice or lapse of time, or both, would become an Event
of Default described under such clause (f) shall have occurred and be continuing
at any time on or prior to the 90th day following such date of deposit, (c) the
Company shall have delivered an Opinion of Counsel to the effect that the
Holders of the Debt Securities of such series will not recognize gain or loss
for United States Federal income tax purposes as a result of such deposit or
defeasance and will be subject to United States Federal income tax in the same
manner as if such defeasance had not occurred. In the event the Company omits to
comply with its remaining obligations under the applicable Indenture after a
defeasance of such Indenture with respect to the Debt Securities of any series
as described under clause (ii) above and the Debt Securities of such series are
declared due and payable because of the occurrence of any undefeased Event of
Default, the amount of money and U.S. Government Obligations on deposit with the
Trustee may be insufficient to pay amounts due on the Debt Securities of such
series at the time of the acceleration resulting
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from such Event of Default. However, the Company will remain liable in respect
of such payments. (Article Thirteen)
Notwithstanding the description set forth under "Subordination of
Subordinated Securities" above, in the event that the Company deposits money or
U.S. Government Obligations in compliance with the Subordinated Indenture in
order to defease all or certain of its obligations with respect to any
Subordinated Securities, the moneys or U.S. Government Obligations so deposited
will not be subject to the subordination provisions of the Subordinated
Indenture and the indebtedness evidenced by such Subordinated Securities will
not be subordinated in right of payment to the holders of Senior Indebtedness to
the extent of the moneys or U.S. Government Obligations so deposited.
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed
in accordance with, the laws of the State of New York. (Section 112)
REGARDING THE TRUSTEE
The Indentures contain certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize for its own account on certain property received in
respect of any such claim as security or otherwise. (Section 613) The Trustee
will be permitted to engage in certain other transactions; however, if it
acquires any potential conflicting interest and there is a default under the
Debt Securities, it must eliminate such conflict or resign. (Section 608)
DESCRIPTION OF PREFERRED STOCK
The following is a description of certain general terms and provisions of
the Preferred Stock. The particular terms of any series of Preferred Stock will
be described in the applicable Prospectus Supplement or any Pricing Supplement.
If so indicated in a Prospectus Supplement or a Pricing Supplement, the terms of
any such series may differ from the terms set forth below.
The summary of terms of the Company's preferred stock (including the
Preferred Stock) contained in this Prospectus does not purport to be complete
and is subject to, and qualified in its entirety by, the provisions of the
Company's Certificate of Incorporation and the certificate of designations
relating to each series of the Preferred Stock (the "Certificate of
Designations"), which will be filed as an exhibit to or incorporated by
reference in the Registration Statement of which this Prospectus is a part at or
prior to the time of issuance of such series of the Preferred Stock.
The Certificate of Incorporation of the Company provides that the Company
is authorized to issue 1,000,000 shares of Preferred Stock, par value $0.01 per
share, issuable in series by the Board. As of June 30, 1997, the Company had
outstanding approximately 208,000 shares of Psychiatric Group Stock, which
constitute a separate series of Preferred Stock, issued and outstanding. Such
shares are the only shares of Psychiatric Group Stock authorized by the Board to
be issued, except shares of Psychiatric Group Stock issuable upon exercise of
options granted in connection with the initial issuance of shares of Psychiatric
Group Stock. In addition, the Company has authorized the issuance of
approximately 257,000 Series A Preferred Shares. See "Description of Common
Stock and Psychiatric Group Stock -- Preferred Stock Purchase Rights Plan."
The authorized but unissued shares of Preferred Stock of the Company will
be available for issuance from time to time by the Company at the sole
discretion of the Board for any proper corporate purpose, which could include
raising capital, providing compensation or benefits to employees, paying stock
dividends or acquiring assets, companies or businesses. The Preferred Stock may
be issued in such series and with such voting powers, and such preferences or
other special rights, qualifications, limitations or restrictions, as may be
stated and expressed in the resolutions authorizing its issuance as may be
adopted by the Board from time to time. Under applicable Delaware law, such
future issuances would not require further approval of stockholders, and the
Company would not seek approval of stockholders unless such approval would be
required by stock
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exchange regulations, would be in conjunction with a further amendment to the
Certificate of Incorporation or would otherwise be deemed advisable by the
Board. Thus, the Board of Directors, without stockholder approval, could
authorize the issuance of preferred stock with voting, conversion and other
rights that could adversely affect the voting power and other rights of holders
of Common Stock or other series of preferred stock or that could have the effect
of delaying, deferring or preventing a change in control of the Company. See
"Description of Common Stock and Psychiatric Group Stock -- Preferred Stock
Purchase Rights Plan."
The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in a Prospectus
Supplement or any Pricing Supplement relating to a particular series of the
Preferred Stock. The applicable Prospectus Supplement or any Pricing Supplement
will describe the following terms of the series of Preferred Stock in respect of
which this Prospectus is being delivered: (1) the designation and stated value
per share of such Preferred Stock and the number of shares offered; (2) the
amount of liquidation preference per share; (3) the initial public offering
price at which such Preferred Stock will be issued; (4) the dividend rate (or
method of calculation), the dates on which dividends shall be payable and the
dates from which dividends shall commence to cumulate, if any; (5) any
redemption or sinking fund provisions; (6) any conversion or exchange rights;
(7) whether the Company has elected to offer Depositary Shares as described
below under "Description of Depositary Shares"; and (8) any additional voting,
dividend, liquidation, redemption, sinking fund and other rights, preferences,
privileges, limitations and restrictions.
GENERAL
The Preferred Stock will be issued in one or more series. The holders of
Preferred Stock will have no preemptive rights. Preferred Stock, upon issuance
against full payment of the purchase price therefor, will be fully paid and
nonassessable. Neither the par value nor the liquidation preference is
indicative of the price at which the Preferred Stock will actually trade on or
after the date of issuance. The applicable Prospectus Supplement or any Pricing
Supplement will contain a description of material United States Federal income
tax, accounting and other considerations relating to the purchase and ownership
of the series of Preferred Stock offered by such Prospectus Supplement.
As described under "Description of Depositary Shares," the Company may, at
its option, elect to offer depositary shares ("Depositary Shares") evidenced by
depositary receipts ("Depositary Receipts"), each representing a fractional
interest (to be specified in the Prospectus Supplement or any Pricing Supplement
relating to the particular series of the Preferred Stock) in a share of the
particular series of the Preferred Stock issued and deposited with a Depositary
(as defined below).
RANK
The Preferred Stock shall, with respect to dividend rights and rights on
liquidation, winding up and dissolution of the Company, rank prior to the
Company's Common Stock and Psychiatric Group Stock and to all other classes and
series of equity securities of the Company now or hereafter authorized, issued
or outstanding (the Common Stock and such other classes and series of equity
securities collectively may be referred to herein as the "Junior Stock"), other
than any classes or series of equity securities of the Company ranking on a
parity with (the "Parity Stock") or senior to (the "Senior Stock") the Preferred
Stock as to dividend rights and rights upon liquidation, winding up or
dissolution of the Company. The Preferred Stock shall be junior to all
outstanding debt of the Company. The Preferred Stock shall be subject to
creation of Senior Stock, Parity Stock and Junior Stock to the extent not
expressly prohibited by the Company's Certificate of Incorporation.
DIVIDENDS
Holders of shares of Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds of the Company legally
available for payment, cash dividends, payable at such dates and at such rates
per share per annum as set forth in the applicable Prospectus Supplement. Such
rates may be fixed or variable or both. Each declared dividend shall be payable
to holders of record as they appear at the close of business on the stock books
of the Company (or, if applicable, on the records of the Depositary (as
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hereinafter defined) referred to below under "Description of Depositary Shares")
on such record dates, not more than 60 calendar days preceding the payment dates
therefor, as are determined by the Board of Directors (each of such dates, a
"Record Date").
Such dividends may be cumulative or noncumulative, as provided in the
Prospectus Supplement or any Pricing Supplement. If dividends on a series of
Preferred Stock are noncumulative and if the Board of Directors fails to declare
a dividend in respect of a dividend period with respect to such series, then
holders of such Preferred Stock will have no right to receive a dividend in
respect of such dividend period, and the Company will have no obligation to pay
the dividend for such period, whether or not dividends are declared payable on
any future Dividend Payment Dates. Dividends on the shares of each series of
Preferred Stock for which dividends are cumulative will accrue from the date on
which the Company initially issues shares of such series.
No full dividends shall be declared or paid or set apart for payment on
preferred stock of the Company of any series ranking, as to dividends, on a
parity with or junior to the series of Preferred Stock offered by the Prospectus
Supplement and any Pricing Supplement attached hereto for any period unless full
dividends for the immediately preceding dividend period on such Preferred Stock
(including any accumulation in respect of unpaid dividends for prior dividend
periods, if dividends on such Preferred Stock are cumulative) have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for such payment. When dividends are not so paid in
full (or a sum sufficient for such full payment is not so set apart) upon such
Preferred Stock and any other preferred stock of the Company ranking on a parity
as to dividends with the Preferred Stock, dividends upon shares of such
Preferred Stock and dividends on such other preferred stock shall be declared
pro rata so that the amount of dividends declared per share on such Preferred
Stock and such other preferred stock shall in all cases bear to each other the
same ratio that accrued dividends for the then-current dividend period per share
on the shares of such Preferred Stock (including any accumulation in respect of
unpaid dividends for prior dividend periods, if dividends on such Preferred
Stock are cumulative) and accrued dividends, including required or permitted
accumulations, if any, on shares of such other preferred stock, bear to each
other. Unless full dividends on the series of Preferred Stock offered by the
Prospectus Supplement and any Pricing Supplement attached hereto have been
declared and paid or set apart for payment for the immediately preceding
dividend period (including any accumulation in respect of unpaid dividends for
prior dividend periods, if dividends on such Preferred Stock are cumulative) (a)
no cash dividend or distribution (other than in shares of Junior Stock) may be
declared, set aside or paid on the Junior Stock, (b) the Company may not
repurchase, redeem or otherwise acquire any shares of its Junior Stock (except
by conversion into or exchange for Junior Stock) and (c) the Company may not,
directly or indirectly, repurchase, redeem or otherwise acquire any shares of
Preferred Stock or Parity Stock otherwise than pursuant to certain pro rata
offers to purchase or a concurrent redemption of all, or a pro rata portion, of
the outstanding shares of such Preferred Stock and Parity Stock (except by
conversion into or exchange for Junior Stock). The Company does not currently
have outstanding any Parity Stock.
CONVERTIBILITY
The terms, if any, on which shares of Preferred Stock of any series may be
exchanged for or converted (mandatorily or otherwise) into shares of Common
Stock of the Company or another series of Preferred Stock or other securities of
the Company or another issuer will be set forth in the Prospectus Supplement or
any Pricing Supplement relating thereto. See "Description of Common Stock and
Psychiatric Group Stock."
REDEMPTION
The terms, if any, on which shares of Preferred Stock of any series may be
redeemed will be set forth in the related Prospectus Supplement or any Pricing
Supplement.
LIQUIDATION
Unless otherwise specified in the applicable Prospectus Supplement or any
Pricing Supplement, in the event of a voluntary or involuntary liquidation,
dissolution or winding-up of the affairs of the Company, the
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holders of a series of Preferred Stock will be entitled, subject to the rights
of creditors, but before any distribution or payment to the holders of Common
Stock or any other security ranking junior to the Preferred Stock on
liquidation, dissolution or winding up of the Company, to receive an amount per
share as set forth in the related Prospectus Supplement or any Pricing
Supplement plus accrued and unpaid dividends for the then-current dividend
period (including any accumulation in respect of unpaid dividends for prior
dividend periods, if dividends on such series of Preferred Stock are
cumulative). If the amounts available for distribution with respect to the
Preferred Stock and all other outstanding stock of the Company ranking on a
parity with the Preferred Stock upon liquidation are not sufficient to satisfy
the full liquidation rights of all the outstanding Preferred Stock and stock
ranking on a parity therewith, then the holders of each series of such stock
will share ratably in any such distribution of assets in proportion to the full
respective preferential amount (which in the case of preferred stock may include
accumulated dividends) to which they are entitled. After payment of the full
amount of the liquidation preference, the holders of shares of Preferred Stock
will not be entitled to any further participation in any distribution of assets
by the Company.
VOTING
The Preferred Stock of a series will not be entitled to vote, except as
provided below or in the applicable Prospectus Supplement or any Pricing
Supplement and as required by applicable law. Unless otherwise specified in the
related Prospectus Supplement or any Pricing Supplement, at any time dividends
in an amount equal to six quarterly dividend payments on the Preferred Stock
shall have accrued and be unpaid, holders of the Preferred Stock shall have the
right to a separate class vote (together with the holders of shares of any
Parity Stock upon which like voting rights have been conferred and are
exercisable, "Voting Parity Stock") to elect two members of the Board of
Directors at the next annual meeting of stockholders and thereafter until
dividends on the Preferred Stock have been paid in full for four consecutive
dividend periods, including the last preceding dividend period. Additionally,
without the affirmative vote of the holders of two-thirds of the shares of
Preferred Stock then outstanding (voting separately as a class together with any
Voting Parity Stock), the Company may not, either directly or indirectly or
through merger or consolidation with any other corporation, (i) approve the
authorization, creation or issuance, or an increase in the authorized or issued
amount, of any class or series of stock ranking prior to the shares of Preferred
Stock in rights and preferences or (ii) amend, alter or repeal its Certificate
of Incorporation or the Certificate of Designations so as to materially and
adversely change the specific terms of the Preferred Stock. An amendment which
increases the number of authorized shares of or authorizes the creation or
issuance of other classes or series of preferred stock ranking junior to or on a
parity with the Preferred Stock with respect to the payment of dividends or
distribution of assets upon liquidation, dissolution or winding up, or
substitutes the surviving entity in a merger, consolidation, reorganization or
other business combination for the Company, shall not be considered to be such
an adverse change.
As more fully described under "Description of Depositary Shares" below, if
the Company elects to issue Depositary Shares, each representing a fraction of a
share of a series of the Preferred Stock, each such Depositary Share will, in
effect, be entitled to such fraction of a vote per Depositary Share.
NO OTHER RIGHTS
The shares of a series of Preferred Stock will not have any preferences,
voting powers or relative, participating, optional or other special rights
except as set forth above or in the related Prospectus Supplement or any Pricing
Supplement, the Certificate of Incorporation and in the certificate of
designations or as otherwise required by law.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of certain
provisions of the Deposit Agreement (as defined below) and of the Depositary
Shares and Depositary Receipts does not purport to be complete and is subject to
and qualified in its entirety by reference to the forms of Deposit Agreement and
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Depositary Receipts relating to each series of the Preferred Stock which have
been or will be filed with the Commission at or prior to the time of the
offering of such series of the Preferred Stock.
GENERAL
The Company may, at its option, elect to offer fractional interests in
shares of Preferred Stock, rather than shares of Preferred Stock. In the event
such option is exercised, the Company will provide for the issuance by a
Depositary to the public of receipts for Depositary Shares, each of which will
represent a fractional interest (to be set forth in the Prospectus Supplement or
any Pricing Supplement relating to a particular series of the Preferred Stock
which will be filed with the Commission at or prior to the time of the offering
of such series of the Preferred Stock as described below).
The shares of any series of the Preferred Stock underlying the Depositary
Shares will be deposited under a separate Deposit Agreement (the "Deposit
Agreement") between the Company and a bank or trust company selected by the
Company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000 (the "Depositary"). The Prospectus
Supplement or any Pricing Supplement relating to a series of Depositary Shares
will set forth the name and address of the Depositary. Subject to the terms of
the Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fractional interest in a share of Preferred Stock
underlying such Depositary Shares, to all the rights and preferences of the
Preferred Stock underlying such Depositary Share (including dividend, voting,
redemption, conversion and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of the Company, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts but
not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at the Company's expense.
Upon surrender of Depositary Receipts at the office of the Depositary and
upon payment of the charges provided in the Deposit Agreement and subject to the
terms thereof, a holder of Depositary Shares is entitled to have the Depositary
deliver to such holder the whole shares of Preferred Stock underlying the
Depositary Shares evidenced by the surrendered Depositary Receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all the dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares relating to such Preferred Stock in proportion to the
numbers of such Depositary Shares owned by such holders on the relevant record
date. Fractions will be rounded down to the nearest whole cent.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
The Deposit Agreement will also contain provisions relating to the manner
in which any subscription or similar rights offered by the Company to holders of
the Preferred Stock shall be made available to holders of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
If a series of the Preferred Stock underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of such series of the Preferred Stock held by the Depositary. The Depositary
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shall mail notice of redemption not less than 30 and not more than 60 days prior
to the date fixed for redemption to the record holders of the Depositary Shares
to be so redeemed at their respective addresses appearing in the Depositary's
books. The redemption price per Depositary Share will be equal to the applicable
fraction of the redemption price per share payable with respect to such series
of the Preferred Stock. Whenever the Company redeems shares of Preferred Stock
held by the Depositary, the Depositary will redeem as of the same redemption
date the number of Depositary Shares relating to shares of Preferred Stock so
redeemed. If less than all of the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected by lot or pro rata as may be
determined by the Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which the
holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Depositary of the Depositary Receipts evidencing such
Depositary Shares.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Shares
relating to such Preferred Stock. Each record holder of such Depositary Shares
on the record date (which will be the same date as the record date for the
Preferred Stock) will be entitled to instruct the Depositary as to the exercise
of the voting rights pertaining to the number of shares of Preferred Stock
underlying such holder's Depositary Shares. The Depositary will endeavor,
insofar as practicable, to vote the number of shares of Preferred Stock
underlying such Depositary Shares in accordance with such instructions, and the
Company will agree to take all action which may be deemed necessary by the
Depositary in order to enable the Depositary to do so. The Depositary will
refrain from voting shares of Preferred Stock to the extent it does not receive
specific instructions from the holders of Depositary Shares relating to such
Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which materially
and adversely alters the rights of the existing holders of Depositary Shares
will not be effective unless such amendment has been approved by the record
holders of at least a majority of the Depositary Shares then outstanding. A
Deposit Agreement may be terminated by the Company or the Depositary only if (i)
all outstanding Depositary Shares relating thereto have been redeemed or (ii)
there has been a final distribution in respect of the Preferred Stock of the
relevant series in connection with any liquidation, dissolution or winding up of
the Company and such distribution has been distributed to the holders of the
related Depositary Shares.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay charges of the Depositary in connection with the initial deposit of the
Preferred Stock and any redemption of the Preferred Stock. Holders of Depositary
Shares will pay other transfer and other taxes and government charges and such
other charges as are expressly provided in the Deposit Agreement for the
accounts.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Shares all reports
and communications from the Company which are delivered to the Depositary and
which the Company is required to furnish to the holders of the Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. Neither the
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Company nor the Depositary will be subject to any liability under the Deposit
Agreement to any holder of a Depositary Share, other than for their gross
negligence or willful misconduct, and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares or Preferred
Stock unless satisfactory indemnity is furnished. They may rely upon written
advice of counsel or accountants, or information provided by persons presenting
Preferred Stock for deposit, holders of Depositary Shares or other persons
believed to be competent and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to the Company notice
of its election to do so, and the Company may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary must be appointed within 60 days after delivery of the notice of
resignation or removal and must be a bank or trust company having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000.
DESCRIPTION OF WARRANTS
The Company may issue, together with any other series of Securities offered
or separately, Warrants entitling the holder to purchase from or sell to the
Company, or to receive from the Company the cash value of the right to purchase
or sell, Debt Securities, shares of Preferred Stock, Depositary Shares, Common
Stock or other securities. The Warrants are to be issued under Warrant
Agreements (each a "Warrant Agreement") to be entered into between the Company
and a bank or trust company, as warrant agent (the "Warrant Agent"), all as set
forth in the applicable Prospectus Supplement or any Pricing Supplement relating
to the particular issue of Warrants. Copies of the forms of Warrant Agreement,
including the forms of Warrant Certificates representing the Warrants (the
"Warrant Certificates"), are filed as exhibits to the Registration Statement of
which this Prospectus forms a part.
In the case of each series of Warrants, the applicable Prospectus
Supplement or any Pricing Supplement will describe the terms of the Warrants
being offered thereby, including the following, if applicable: (i) the offering
price; (ii) the currencies in which such Warrants are being offered; (iii) the
number of Warrants offered; (iv) the securities underlying the Warrants; (v) the
exercise price, the procedures for exercise of the Warrants and the
circumstances, if any, that will cause the Warrants to be deemed to be
automatically exercised; (vi) the date on which the right to exercise the
Warrants shall commence and the date on which such right shall expire; (vii)
U.S. federal income tax consequences; and (viii) other terms of the Warrants.
Warrants may be exercised at the appropriate office of the Warrant Agent or
any other office indicated in the applicable Prospectus Supplement or any
Pricing Supplement. Prior to the exercise of Warrants entitling the holder to
purchase any securities, holders of such Warrants will not have any of the
rights of holders of the securities purchasable upon such exercise and will not
be entitled to payments made to holders of such securities.
The Warrant Agreements may be amended or supplemented without the consent
of the holders of the Warrants issued thereunder to effect changes that are not
inconsistent with the provisions of the Warrants and that do not adversely
affect the interests of the holders of the Warrants.
PLAN OF DISTRIBUTION
The Company may offer Securities to or through underwriters, through agents
or directly to other purchasers. The accompanying Prospectus Supplement or any
Pricing Supplement sets forth the names of any underwriters or agents involved
in the sale of the Securities in respect of which this Prospectus is being
delivered.
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The distribution of Securities may be effected from time to time in one or
more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to such market prices
or at negotiated prices.
In connection with the sale of Securities, underwriters or agents may
receive compensation from the Company or from purchasers in the form of
discounts, concessions or commissions. The accompanying Prospectus Supplement or
any Pricing Supplement sets forth the terms of the offering of the Securities in
respect of which this Prospectus is being delivered, including any underwriting
discounts and other items constituting compensation of the underwriters and
agents. Underwriters, agents and dealers participating in the distribution of
the Securities may be deemed to be underwriters within the meaning of the
Securities Act.
Pursuant to agreements that may be entered into between the Company and any
underwriters or agents named in the Prospectus Supplement or any Pricing
Supplement, such underwriters or agents may be entitled to indemnification by
the Company against certain liabilities, including liabilities under the
Securities Act.
If so indicated in the Prospectus Supplement or any Pricing Supplement, the
Company will authorize underwriters or other persons acting as agents for the
Company to solicit offers by certain institutional investors to purchase Debt
Securities or Preferred Stock from the Company pursuant to contracts providing
for payment and delivery on a future date. Institutions with which such
contracts may be made include commercial and savings banks, insurance companies,
pension funds, investment companies, educational and charitable institutions and
others, but shall in all cases be subject to the approval of the Company. The
obligations of the purchaser under any such contract will not be subject to any
conditions except (i) the investment in the Debt Securities or Preferred Stock
by the institution shall not at the time of delivery be prohibited by the laws
of any jurisdiction in the United States to which such institution is subject,
and (ii) if a portion of the Debt Securities or Preferred Stock is being sold to
underwriters, the Company shall have sold to such underwriters the Debt
Securities or Preferred Stock not sold for delayed delivery. Underwriters and
such other persons will not have any responsibility in respect of the validity
or performance of such contracts.
All Debt Securities, Preferred Stock and Warrants offered will be a new
issue of securities with no established trading market. Any underwriters to whom
such Debt Securities, Preferred Stock, Depositary Shares and Warrants are sold
by the Company for public offering and sale may make a market in such Debt
Securities, Preferred Stock, Depositary Shares and Warrants, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of or the trading markets for any Debt Securities, Preferred Stock, Depositary
Shares or Warrants.
Certain of the underwriters or agents and their associates may be customers
of, engage in transactions with and perform services for the Company in the
ordinary course of business.
The specific terms and manner of sale of the Securities in respect of which
this Prospectus is being delivered are set forth or summarized in the Prospectus
Supplement or any Pricing Supplement.
VALIDITY OF SECURITIES
The validity of the Securities offered will be passed upon for the Company
by Davis, Graham & Stubbs, LLP, Denver, Colorado, and for the Underwriters or
agents, if any, by such counsel as may be named in the accompanying Prospectus
Supplement or any Pricing Supplement.
EXPERTS
The consolidated balance sheets of American Health Properties, Inc. and
subsidiaries as of December 31, 1996 and December 31, 1995 and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1996; the combined
balance sheets of the Core Group (a business unit of American Health Properties,
Inc.) as of December 31, 1996 and December 31, 1995 and the related combined
statements of operations, total attributed equity and cash flows for each of the
three years in the period ended December 31, 1996; and the combined balance
sheets of the Psychiatric Group (a business unit of American Health Properties,
Inc.) as of December 31, 1996 and
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December 31, 1995 and the related combined statements of operations, total
attributed equity and cash flows for each of the three years in the period ended
December 31, 1996, incorporated by reference in this Prospectus and elsewhere in
the Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as stated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
GLOSSARY
"Available Dividend Amount," on any date (the "calculation date") with
respect to the Common Stock or the Psychiatric Group Stock (the "subject group
stock") issued with reference to either Group (the "subject group"), means
either:
(i) the excess of (x) an amount equal to the total assets of the
subject group less its total liabilities as of such calculation date,
determined in accordance with Delaware law applied as if the subject group
were a Delaware corporation, over (y) the sum of the aggregate par value of
all outstanding subject group stock and all other capital stock of the
Company attributed to the subject group; or
(ii) in case there shall be no such excess, an amount equal to the net
profits, if any, of the subject group for the fiscal year in which the
dividend is declared and/or the preceding fiscal year, determined in
accordance with Delaware law applied as if the subject group were a
Delaware corporation.
"Board" means the Board of Directors of the Company.
"Core Group" means all assets and liabilities of, and all activities
engaged in by, the Company and its subsidiaries, other than assets, liabilities
and activities which comprise part of the Psychiatric Group. Future issuances of
Common Stock or any other capital stock of the Company (other than Psychiatric
Group Stock) will be deemed to be for the account of, and net proceeds from such
issuances will be deemed to be assets of, the Core Group. All dividends or other
distributions on or repurchases of the Common Stock or any other capital stock
of the Company (other than Psychiatric Group Stock), and all costs attributed by
the Board to the Core Group, will be deemed to be funded out of assets of the
Core Group. In the case of an issuance of shares of Common Stock as a dividend
or other distribution on Psychiatric Group Stock, the Psychiatric Group will be
deemed to have purchased such shares for an amount equal to the average Market
Value of such shares for the ten consecutive Trading Days ending on the last
Trading Day prior to the record date for determining holders of Psychiatric
Group Stock entitled to receive such dividend or distribution, and an amount
equal to such purchase price shall be deemed to have been transferred from the
Psychiatric Group to the Core Group.
"Fair Market Value" for any assets means the price that a willing buyer
adequately informed and not compelled to buy would pay for such assets to a
willing seller adequately informed and not compelled to sell, as determined by
the Board (whose determination shall be conclusive).
"Funds From Operations" as used herein means net income (loss) computed in
accordance with GAAP, excluding gains (losses) from sales of property, adjusted
for write-downs of mortgage notes and investments in real estate and certain
other non-cash items, primarily depreciation and amortization. Funds From
Operations does not represent cash generated from operating activities in
accordance with GAAP and should not be considered an alternative to net income
as an indicator of the Company's operating performance or an alternative to cash
flow as a measure of liquidity.
"GAAP" means generally accepted accounting principles.
"Group" means the Core Group or the Psychiatric Group.
"Market Value" of any stock on any Trading Day means the average of the
high and low reported sales prices regular way of a share of such stock on such
Trading Day or in case no such reported sale takes place on such Trading Day the
average of the reported closing bid and asked prices regular way of a share of
such stock on such Trading Day, in either case on the New York Stock Exchange
Composite Tape or other national
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securities exchange, or if the shares of such stock are not listed or admitted
to trading on any national securities exchange on such Trading Day, on the
NASDAQ/NM, or if the shares of such stock are not listed or admitted to trading
on any national securities exchange or quoted on such National Market on such
Trading Day, the average of the closing bid and asked prices of a share of such
stock in the over-the-counter market on such Trading Day as furnished by any New
York Stock Exchange member firm selected from time to time by the Company, or if
such closing bid and asked prices are not made available by any such New York
Stock Exchange member firm on such Trading Day, the market value of a share of
such stock (as determined by the Board, whose determination shall be
conclusive); provided that, for purposes of determining the ratios which compare
the Market Values of Common Stock and Psychiatric Group Stock, as calculated
over any period, (i) the "Market Value" of any share of Common Stock and/or
Psychiatric Group Stock on any day prior to the "ex" date or any similar date
occurring during such period for any dividend or distribution paid or to be paid
with respect to such stock shall be reduced by the fair market value of the per
share amount of such dividend or distribution (as determined by the Board, whose
determination shall be conclusive) and (ii) the "Market Value" of any share of
Common Stock and/or Psychiatric Group Stock on any day prior to (A) the
effective date of any subdivision (by stock split or otherwise) or combination
occurring during such period or (B) the "ex" date or any similar date occurring
during such period for any dividend or distribution with respect to such stock
in shares of such stock shall be appropriately adjusted to reflect such
subdivision, combination, dividend or distribution. For purposes of the
foregoing, the Market Value of the Psychiatric Group Stock on any day will be
deemed to equal ten times (or such other ratio as reflects the number or
fraction of shares of Psychiatric Group Stock that a Depositary Share
represents, if such number or fraction is changed) the Market Value of the
Depositary Shares on such day.
"NASDAQ/NM" means the National Association of Securities Dealers Automated
Quotations National Market.
"Net Fair Market Value" of the Psychiatric Group or Core Group, as the case
may be, means the hypothetical Fair Market Value of 100% of the stock of a
corporation, assuming the corporation had all of the assets and liabilities of
such Group and no other assets or liabilities, as determined by the Board (whose
determination shall be conclusive).
"Net Proceeds from Psychiatric Group Asset Sales" means the net proceeds of
any sales of Psychiatric Group investments (after transaction costs and reserves
for contingencies).
"Psychiatric Group" means (a) the interests of the Company and its
subsidiaries in their respective investments in psychiatric hospitals, (b) all
activities engaged in by the Company and its subsidiaries in connection with
such investments and (c) all assets and liabilities of the Company or any of its
subsidiaries relating to or arising out of, or otherwise attributed by the Board
to, such investments or activities. Future issuances of Psychiatric Group Stock
will be deemed to be for the account of, and net proceeds from such issuances
will be deemed to be assets of, the Psychiatric Group. All dividends or other
distributions on or repurchases of the Psychiatric Group Stock, and all costs
attributed by the Board to the Psychiatric Group, will be deemed to be funded
out of assets of the Psychiatric Group. In the case of an issuance of shares of
Common Stock as a dividend or other distribution on Psychiatric Group Stock, the
Psychiatric Group will be deemed to have purchased such shares for an amount
equal to the average Market Value of such shares for the ten consecutive Trading
Days ending on the last Trading Day prior to the record date for determining
holders of Psychiatric Group Stock entitled to receive such dividend or
distribution, and an amount equal to such purchase price shall be deemed to have
been transferred from the Psychiatric Group to the Core Group.
"REIT" means a real estate investment trust.
"Trading Day" means each weekday other than any day on which the Common
Stock or Depositary Shares, as the case may be, is not traded on any national
securities exchange or the NASDAQ/NM or in the over-the-counter market.
30
<PAGE> 33
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Estimated expenses in connection with the issuance and distribution of the
Securities being registered are as follows:
<TABLE>
<S> <C>
SEC registration fee........................................ $ 90,910
Blue Sky fees and expenses (including legal fees)........... 10,000
Legal fees and expenses..................................... 150,000
Accounting fees and expenses................................ 100,000
Printing and engraving expenses............................. 150,000
Rating agency fees.......................................... 150,000
Trustees' fees and expenses................................. 45,000
Miscellaneous............................................... 54,090
--------
Total............................................. $750,000*
========
</TABLE>
- ---------------
* All amounts listed above, except for the registration fee, are estimates.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law grants to the Company
the power to indemnify its directors, employees and agents against liability
arising out of their respective capacities as directors, officers employees or
agents. Article V of the Company's Certificate of Incorporation provides for the
limitation of personal liability of the directors of the Company as follows:
ARTICLE V
PROVISIONS FOR DEFINING, LIMITING AND
REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE DIRECTORS
AND STOCKHOLDERS
Section 4. A Director of this Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except for liability (i) for any
breach of the Director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section
174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the Director derived any improper personal benefit. If the
Delaware General Corporation Law is amended after the date hereof to permit
the further elimination or limitation of the personal liability of
directors, then the liability of a Director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
Article V of the Company's Bylaws provides for indemnification of officers,
directors and employees of the Company as follows:
Section 13. Indemnification. Each officer, director and employee of
the Corporation shall be indemnified by the Corporation as provided in the
Certificate of Incorporation.
The Company has entered into indemnification agreements with its
directors that would require the Company, subject to any limitations on the
maximum permissible indemnification that may exist at law, to indemnify a
director for claims that arise because of his capacity as a director. The
Company also
II-1
<PAGE> 34
provides its directors and officers with coverage pursuant to a policy of
directors' and officers' liability insurance.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1.1++ Form of Underwriting Agreement for Preferred Stock,
Depositary Shares, Common Stock and Common Stock Warrants
1.2++ Form of Underwriting Agreement for Debt Securities
4.1 Restated Certificate of Incorporation, incorporated by
reference from Exhibit 4.1 to the Company's Registration
Statement on Form S-3 (No. 33-61895)
4.2 Certificate of Designations of Psychiatric Group Preferred
Stock, incorporated by reference from Exhibit 4.1 to the
Current Report on Form 8-K dated August 14, 1995
4.3 Amended and Restated By-laws, as amended to date,
incorporated by reference from Exhibit 3.2 to the Annual
Report on Form 10-K for the period ended December 31, 1992
(Commission File No. 1-9381)
4.4 Rights Agreement dated as of April 10, 1990, incorporated by
reference from Exhibit 2 to the Company's Registration
Statement on Form 8-A dated April 10, 1990 (Commission File
No. 1-9381)
4.5 Form of Senior Indenture, including form of Senior Debt
Security, incorporated by reference to Exhibit 4.5 to the
Company's Registration Statement on Form S-3 dated September
26, 1995 (No. 33-61895)
4.6 Form of Subordinated Indenture, including form of
Subordinated Security, incorporated by reference to Exhibit
4.6 to the Company's Registration Statement on Form S-3
dated September 26, 1995 (No. 33-61895)
4.7 Form of Certificate of Designations of Preferred Stock,
incorporated by reference to Exhibit 4.7 to the Company's
Registration Statement on Form S-3 dated September 26, 1995
(No. 33-61895)
4.8 Form of Deposit Agreement, including form of Depositary
Receipt for Depositary Shares, incorporated by reference to
Exhibit 4.8 to the Company's Registration Statement on Form
S-3 dated September 26, 1995 (No. 33-61895)
4.9 Specimen Stock Certificate with respect to Preferred Stock,
incorporated by reference to Exhibit 4.9 to the Company's
Registration Statement on Form S-3 dated September 26, 1995
(No. 33-61895)
4.10 Specimen Stock Certificate with respect to Common Stock,
incorporated by reference to Exhibit 4.10 to the Company's
Registration Statement on Form S-3 dated September 26, 1995
(No. 33-61895)
4.11 Form of Preferred Stock Warrant Agreement (including form of
Preferred Stock Warrant Certificate), incorporated by
reference to Exhibit 4.11 to the Company's Registration
Statement on Form S-3 dated September 26, 1995 (No.
33-61895)
4.12 Form of Common Stock Warrant Agreement (including form of
Common Stock Warrant Certificate), incorporated by reference
to Exhibit 4.12 to the Company's Registration Statement on
Form S-3 dated September 26, 1995 (No. 33-61895)
4.13 Form of Debt Warrant Agreement (including form of Debt
Warrant Certificate), incorporated by reference to Exhibit
4.13 to the Company's Registration Statement on Form S-3
dated September 26, 1995 (No. 33-61895)
5.1* Opinion of Davis, Graham & Stubbs, LLP
12.1 Statement regarding computations of ratio of earnings to
fixed charges
23.1 Consent of Arthur Andersen LLP, independent public
accountants
23.2 Consent of Davis, Graham & Stubbs, LLP (included in Exhibit
5.1)
</TABLE>
II-2
<PAGE> 35
24.1* Powers of Attorney
25.1+ Statement of Eligibility on Form T-1 with respect to the
Securities
- ---------------
* Previously filed
+ To be filed prior to effectiveness, on a Current Report on Form 8-K, or in
accordance with Rule 5b-3 under the Trust Indenture Act of 1939, as amended.
++ To be filed by post-effective amendment or in a Current Report on Form 8-K
ITEM 17. UNDERTAKINGS
(A) The undersigned 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 or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% 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 (1)(i) and (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.
(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.
(B) The undersigned registrant hereby undertakes 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
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(C) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions or otherwise, the Company 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 Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any
II-3
<PAGE> 36
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(D) The undersigned registrant hereby undertakes that:
(i) 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 Company pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(ii) For purposes 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.
(E) The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the Senior Trustee or the
Subordinated Trustee to act under subsection (a) of Section 310 of the Trust
Indenture Act in accordance with the rules and regulations prescribed by the
Commission under Section 305(b)(2) of the Trust Indenture Act.
(F) The undersigned registrant hereby undertakes to supplement the
prospectus, after the expiration of the subscription period, to set forth the
results of the subscription offer, the transactions by the underwriters during
the subscription period, the amount of unsubscribed securities to be purchased
by the underwriters, and the terms of any subsequent reoffering thereof. If any
public offering by the underwriters is to be made on terms differing from those
set forth on the cover page of the prospectus, a post-effective amendment will
be filed to set forth the terms of such offering.
II-4
<PAGE> 37
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 to be
signed on its behalf by the undersigned, thereunto duly authorized, in Denver,
Colorado on the 14th day of October, 1997.
AMERICAN HEALTH PROPERTIES, INC.
By: /s/ Joseph P. Sullivan*
-----------------------------------
Joseph P. Sullivan
Chairman of the Board of Directors,
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed below by the foregoing persons in the capacities and on the
dates indicated.
<TABLE>
<C> <S> <C>
/s/ Joseph P. Sullivan* Chairman of the Board of October 14, 1997
- --------------------------------------------- Directors, President and Chief
Joseph P. Sullivan Executive Officer
/s/ Michael J. McGee Senior Vice President, Chief October 14, 1997
- --------------------------------------------- Financial Officer (Principal
Michael J. McGee Financial and Accounting Officer)
and Assistant Secretary
/s/ Royce Diener* Director October 14, 1997
- ---------------------------------------------
Royce Diener
/s/ James L. Fishel* Director October 14, 1997
- ---------------------------------------------
James L. Fishel
Director
- ---------------------------------------------
Charles M. Haar
Director
- ---------------------------------------------
James D. Harper, Jr.
/s/ Sheldon S. King* Director October 14, 1997
- ---------------------------------------------
Sheldon S. King
Director
- ---------------------------------------------
John P. Mamana, M.D.
/s/ Louis T. Rosso* Director October 14, 1997
- ---------------------------------------------
Louis T. Rosso
*By: /s/ MICHAEL J. MCGEE
-----------------------------------------
Michael J. McGee
Attorney-in-fact
</TABLE>
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<PAGE> 38
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DOCUMENT NUMBER
------- -------- ------
<C> <S> <C>
12.1 Statement regarding computations of ratio of earnings to
fixed charges
23.1 Consent of Arthur Andersen LLP, independent public
accountants
</TABLE>
<PAGE> 1
EXHIBIT 12.1
AMERICAN HEALTH PROPERTIES, INC.
STATEMENT REGARDING COMPUTATIONS OF RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
1997 1996 1995 1994 1993 1992
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED EARNINGS
Net Income (Loss)................ $ (1,365) $44,379 $42,381 $ 9,693 $50,987 $(6,317)
-------- ------- ------- ------- ------- -------
Add (Deduct):
Interest Expense.............. 10,585 21,842 27,057 26,101 27,269 29,777
Interest Element of Rentals... 41 75 70 59 57 57
Extraordinary Loss on Debt
Prepayment.................. 11,427 -- -- -- -- --
-------- ------- ------- ------- ------- -------
Consolidated Earnings.... $ 23,418 $66,296 $69,508 $35,853 $78,313 $23,517
======== ======= ======= ======= ======= =======
CONSOLIDATED FIXED CHARGES
Interest Expense................. 10,585 $21,842 $27,057 $26,101 $27,269 $29,777
Capitalized Interest............. 201 895 198 883 577 872
Interest Element of Rentals...... 41 75 70 59 57 57
-------- ------- ------- ------- ------- -------
Consolidated Fixed
Charges................ $ 10,827 $22,812 $27,325 $27,043 $27,903 $30,706
======== ======= ======= ======= ======= =======
RATIO OF EARNINGS TO FIXED
CHARGES.......................... 2.16(a) 2.91 2.54 1.33(b) 2.81 (c)
</TABLE>
- ---------------
(a) Decrease in ratio was primarily due to an $11 million impairment loss on
Psychiatric Group real estate investments and other notes receivable.
(b) Decrease in ratio was primarily due to a $30 million write-down of
Psychiatric Group real estate investments.
(c) Earnings did not cover fixed charges by $7.2 million primarily due to a $45
million write-down of Psychiatric Group real estate investments.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our reports dated March 24, 1997
included in American Health Properties, Inc.'s Form 10-K for the year ended
December 31, 1996, and to all references to our Firm included in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
------------------------------------
ARTHUR ANDERSEN LLP
Denver, Colorado
October 14, 1997
