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(Exact name of registrant as specified in its charter)
Delaware | 8051 | 52-2057472 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
James J. Clark, Esq. Susanna M. Suh, Esq. Cahill Gordon & Reindelllp 80 Pine Street New York, New York 10005 Tel: (212) 701-3000 Fax: (212) 269-5420 | J. Chase Cole, Esq. Waller Lansden Dortch & Davis, LLP 511 Union Street Suite 2700 Nashville, Tennessee 37219 Tel: (615) 244-6380 Fax: (615) 244-6804 |
Proposed Maximum | ||||||||||||
Title of Each Class of Securities | Amount to Be | Proposed Maximum | Aggregate Offering | Amount of | ||||||||
to Be Registered | Registered | Offering Price Per Unit | Price | Registration Fee | ||||||||
Series A Convertible Preferred Stock, $.01 par value per share | 10,869,418(1) | N/A | $164,048,289.76(2) | $5,036.28(5) | ||||||||
Common Stock, $.01 par value per share | 2,629,624(3) | N/A | N/A | None(4) | ||||||||
Total | $5,036.28 | |||||||||||
(1) | Represents the maximum number of shares of Series A convertible preferred stock, $.01 par value per share, of National HealthCare Corporation that may be issued pursuant to the transactions described in this registration statement. |
(2) | The registration fee was calculated based on a price of $23.32 per share of common stock of National Health Realty, Inc. pursuant to Rule 457(f)(1). Upon the effectiveness of the transactions described in this registration statement, 363,200 shares of common stock of National Health Realty, Inc. held by National HealthCare Corporation will be cancelled. For purposes of the calculation of the maximum aggregate offering price (i) these 363,200 shares have been added to the shares to be registered hereby pursuant to Rule 457(f)(1) and (ii) $97,779,762 representing the amount of cash to be paid by National HealthCare Corporation upon the effectiveness of the transactions described in this registration statement, has been deducted pursuant to Rule 457(f)(3). |
(3) | Represents the maximum number of shares of common stock, $.01 par value per share, of National HealthCare Corporation initially issuable upon conversion of the 10,869,418 shares of Series A convertible preferred stock of National HealthCare Corporation that may be issued pursuant to the transactions described in this registration statement. Such maximum number is subject to adjustment under certain circumstances as described in this registration statement. |
(4) | No consideration will be received by National HealthCare Corporation upon the conversion of the Series A Convertible Preferred Stock of National HealthCare Corporation. See Rule 457(i). |
(5) | $5,086.71 was previously paid. |
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The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. |
100 Vine Street, Suite 1402 Murfreesboro, Tennessee 37130 | 100 Vine Street, Suite 1400 Murfreesboro, Tennessee 37130 |
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Donald K. Daniel | Robert G. Adams | |
Senior Vice President & Controller Principal Accounting Officer National Health Realty, Inc. | President and Chief Executive Officer National HealthCare Corporation |
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National Health Realty, Inc. 100 Vine Street, Suite 1402 Murfreesboro, Tennessee 37130 Attention: Corporate Secretary Telephone Number:(615) 890-2020 | National HealthCare Corporation 100 Vine Street, Suite 1400 Murfreesboro, Tennessee 37130 Attention: Corporate Secretary Telephone Number: (615) 890-2020 |
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EX-12.1 NATIONAL HEALTHCARE CORPORATION - COMPUTATION OF RATIO OF EARNINGS | ||||||||
EX-12.2 NATIONAL HEALTH REALTY - COMPUTATION OF RATIO OF EARNINGS | ||||||||
EX-23.2 CONSENT OF BDO SEIDMAN, LLP | ||||||||
EX-23.3 CONSENT OF BDO SEIDMAN, LLP | ||||||||
Ex-99.1 Form of NHC Proxy Card | ||||||||
Ex-99.2 Form of NHR Proxy Card |
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Annex A | Agreement and Plan of Merger, dated December 20, 2006, by and among Davis Acquisition Sub LLC, NHC/OP, L.P., NHC and NHR (including Amendment and Waiver No. 1 and Amendment No. 2) | A-1 | ||||||
Annex B | Voting Agreement, dated December 20, 2006, between NHC and certain stockholders of NHC, and NHR and certain stockholders of NHR | B-1 | ||||||
Annex C | Certificate of Designations of Series A Convertible Preferred Stock of NHC | C-1 | ||||||
Annex D | Fairness Opinion of Avondale Partners, LLC, dated as of December 20, 2006 | D-1 | ||||||
Annex E | Fairness Opinion of 2nd Generation Capital, LLC, dated as of December 20, 2006 | E-1 | ||||||
Annex F | Form of Amendment to the Certificate of Incorporation of NHC | F-1 |
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Q: | When and where are the special stockholders meetings? |
A1: | The NHC special meeting will take place on October 25, 2007, at 4:30 p.m. Central Time, at 100 Vine Street, Suite 1400, Murfreesboro, Tennessee 37130. |
A2: | The NHR special meeting will take place on October 25, 2007, at 4:00 p.m. Central Time, at 100 Vine Street, Suite 1402, Murfreesboro, Tennessee 37130. |
Q: | What is happening at each special meeting? | |
A1: | At the NHC special meeting, stockholders of NHC will be asked (1) to consider and vote upon a proposal to adopt an amendment to the certificate of incorporation of NHC to increase the maximum number of shares of undesignated preferred stock having a par value of $.01 per share from 10,000,000 shares to 25,000,000 shares, (2) to consider and vote upon a proposal to approve the issuance of Series A convertible preferred stock, having a par value of $.01 per share, pursuant to the merger agreement, (3) to approve the postponement or adjournment of the NHC special meeting for the solicitation of additional votes, if necessary, and (4) to transact any other business as may properly come before the NHC special meeting or any adjournment or postponement of the NHC special meeting. | |
A2: | At the NHR special meeting, stockholders of NHR will be asked (1) to consider and vote upon the approval of the merger, (2) to approve the postponement or adjournment of the NHR special meeting for the solicitation of additional votes, if necessary, and (3) to transact any other business as may properly come before the NHR special meeting or any adjournment or postponement of the NHR special meeting. | |
Q: | What will happen in the merger? | |
A: | If the merger is approved and all other conditions to the merger have been satisfied or waived, NHR will merge with and into Davis Acquisition Sub LLC, upon the terms and subject to the conditions set forth in the merger agreement. Upon effectiveness of the merger, the separate corporate existence of NHR shall cease and Davis Acquisition Sub LLC shall continue as the surviving person in the merger and a wholly-owned subsidiary of NHC/OP, L.P., which is a wholly-owned subsidiary of NHC and shall succeed to and assume all the rights and obligations of NHR. | |
Q: | Why are the parties proposing to merge? | |
A: | The parties believe that the combined company will provide the present stockholders of each company with a more focused, flexible and efficient corporation whose purpose and activities are more closely aligned with those of its stockholders. See “Special Factors — NHC’s Reasons for, and Advantages of, the Merger” and “Special Factors — NHR’s Reasons for, and Advantages of, the Merger.” | |
Q: | What will NHR stockholders receive in the merger? | |
A: | Upon the effectiveness of the merger, each issued and outstanding share of common stock, par value $0.01 per share, of NHR, other than any such shares directly owned by Davis Acquisition Sub LLC, NHC/OP, L.P. or NHC, will be converted into the right to receive cash and shares of the Preferred Stock, having the rights and designations set forth in the Certificate of Designations, the form of which is attached to this proxy statement/prospectus asAnnex C. In addition, immediately prior to the consummation of the merger, NHR will declare a special dividend payable to each holder of record of NHR common stock who shall receive the merger consideration at the effective time of the merger in an amount equal to the dividend that NHR would have declared and paid in the ordinary course of business in order to qualify as a real estate investment trust (“REIT”) for the taxable year commencing on January 1, 2007 and ending on the effective date of the merger if NHR had not entered into the merger agreement. | |
Q: | Are stockholders able to exercise dissenters’ rights? | |
A1: | The stockholders of NHC will not be entitled to exercise dissenters’ rights with respect to any matter to be voted upon at the NHC special meeting. |
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A2: | The stockholders of NHR will not be entitled to exercise dissenters’ rights with respect to any matter to be voted upon at the NHR special meeting. | |
Q: | When do you expect to complete the merger? | |
A: | We expect to complete the merger in the fall of 2007. | |
Q: | How will the combined company’s business be different? | |
A: | The merger will provide NHC with a larger asset and equity base that is anticipated to enhance NHC’s future growth and prospects for long-term increases in stockholder value. Following the merger, NHC will no longer be required to make lease payments to NHR. Assuming the continuation of current operating trends, the elimination of such required lease payments will result in a substantial increase in the annual recurring free cash flow of NHC, even after providing for the dividends that NHC will be required to pay on the Preferred Stock. In addition, the merger will (i) reduce the expense and management time required to manage two public companies, (ii) eliminate the possibility that NHR could be acquired by a competitor of NHC, (iii) broaden NHC’s access to debt financing sources and (iv) eliminate the financial uncertainty that resulted from the periodic negotiation and renegotiation of the leasing terms of the properties that NHR leased to NHC. | |
Q: | How will the combined company be managed? | |
A: | NHR is currently managed by a wholly-owned subsidiary of NHC pursuant to the Restated Advisory, Administrative Services and Facilities Agreement (the “Management Agreement”), which will be terminated upon the consummation of the merger. NHR does not have any officers or employees who are not also officers or employees of NHC. Following the merger, these officers and employees will be officers or employees of NHC only, and perform substantially the same functions as they did before the merger, except that they will not have the duties of managing NHR as a separate public company. The merger will not affect the composition of the current board of directors of NHC, except that, under certain circumstances, the holders of Preferred Stock will have the right to elect two directors to the NHC board of directors. The directors of NHR will resign following the merger. | |
Q: | What will be the composition of the board of directors of NHC and NHR following the merger? | |
A: | Immediately following the merger, NHC will have the same board of directors it has today. The certificate of designations governing the Preferred Stock will allow the holders of the Preferred Stock the right to elect two additional directors to the board of directors of NHC in limited circumstances. NHR, whose successor will be merged into Davis Acquisition Sub LLC, will cease to exist as a company. Davis Acquisition Sub LLC will continue to be managed by its sole managing member following the merger. | |
Q: | What are the U.S. federal income tax consequences of the merger? | |
A: | Assuming that the merger is completed as currently contemplated, it is expected that the receipt of cash and shares of the Preferred Stock by stockholders of NHR in exchange for their common stock of NHR pursuant to the merger should be a taxable transaction for U.S. federal income tax purposes. The specific tax consequences to stockholders of NHR of the merger will depend on their own particular situation. |
YOU SHOULD READ “MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES” FOR A MORE COMPLETE DISCUSSION OF THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. TAX MATTERS ARE COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER TO YOU WILL DEPEND UPON THE FACTS OF YOUR PARTICULAR SITUATION. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, WE URGE YOU TO CONSULT WITH YOUR TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO YOU, INCLUDING THE APPLICABILITY OF U.S. FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS. |
Q: | How will NHC be treated for U.S. federal income tax purposes following the merger? | |
A: | NHR is organized and has operated in a way intended to qualify it as a real estate investment trust (“REIT”) for U.S. federal income tax purposes. Generally, a REIT, with certain limited exceptions, is not taxed at the corporate level on its ordinary net income or capital gains distributed currently to its |
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stockholders. This treatment substantially eliminates the “double taxation” (at the corporate and stockholder levels) that typically results from the use of corporate investment vehicles. NHC is not and will not be a REIT and will be taxable as a corporation for U.S. federal income tax purposes. Consequently, NHC will be subject to tax (including applicable alternative minimum tax) on its taxable income at regular corporate rates. Distributions to holders of stock in NHC will not be deductible by NHC, nor are distributions required to be made. Generally, if NHC makes a distribution to holders of its stock, all such distributions will be taxable to such holders as dividends, to the extent of NHC’s current or accumulated earnings and profits. Dividends to individual holders of stock of NHC may qualify as qualified dividend income for U.S. federal income tax purposes, taxable at reduced rates. Corporate holders of stock of NHC may be eligible for the dividends received deduction with respect to dividends on stock of NHC. | ||
Q: | What stockholder vote is required to approve the items to be voted on at each special meeting, including the merger? | |
A1: | With respect to the NHC special meeting: | |
• the affirmative vote of the holders of a majority of common shares outstanding and entitled to vote thereon at the NHC special meeting is required to approve the amendment of the NHC certificate of incorporation; and | ||
• the affirmative vote of the holders of a majority of the outstanding common shares represented and voting at the NHC special meeting is required to approve the issuance of shares of the Preferred Stock and on each other matter to be acted on, including any postponement or adjournment of the NHC special meeting to solicit additional votes. | ||
A2: | With respect to the NHR special meeting, approval of the merger is conditioned on receiving: | |
• the affirmative vote of the holders of a majority of all common stock outstanding and entitled to vote thereon at the NHR special meeting; and | ||
• the affirmative vote of the holders of a majority of the common stock outstanding and entitled to vote thereon that are not owned by an affiliate of NHR, including any director or officer of NHR or NHC, or any of their affiliates. | ||
On each other matter to be acted on at the NHR special meeting, including any postponement or adjournment of the NHR special meeting to solicit additional votes, the approval of a majority of the outstanding common stock present in person or represented by proxy at the NHR special meeting is required to approve such matter. | ||
Q: | Do the boards recommend approval of the proposals? | |
A: | Yes. Based on the recommendation of their respective special committees, taking into consideration the fairness opinions of their respective financial advisors, which are attached to this proxy statement/prospectus asAnnex D andAnnex E, the boards of directors of NHC and NHR each approved and adopted the merger agreement and the transactions contemplated thereby and recommend that you vote “FOR” approval of the NHC Proposal or the NHR Proposal, as the case may be. | |
Q: | What do I need to do now? | |
A: | We urge you to read carefully this joint proxy statement/prospectus, including its annexes and the documents incorporated by reference herein. You also may want to review the documents referenced under “Where You Can Find More Information” and consult with your accounting, legal and tax advisors. | |
Q: | How do I vote my shares? |
A1: | Holders of shares of NHC common stock may indicate how they want to vote on their proxy card and then sign and mail their proxy card in the enclosed return envelope, or submit their vote via the Internet or by telephone, as soon as possible so that their shares may be represented at the NHC special meeting. Holders of shares of NHC common stock may also attend the NHC special meeting in person instead of submitting a proxy. |
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Unless such shares are held in a brokerage account, if holders of shares of NHC common stock sign, date and send their proxy and do not indicate how they want to vote, such proxies will be voted “FOR” the NHC Proposal and all other proposals to be voted on at the NHC special meeting. If such shares are held in a brokerage account, please see the answer to the next question. If holders of shares of NHC common stock fail either to return their proxy card or if they “ABSTAIN” with respect to the NHC Proposal to amend the NHC certificate of incorporation, the effect will be a vote “AGAINST” such proposal. With respect to the issuance of Preferred Stock pursuant to the merger, the postponement or adjournment of the NHC special meeting or any other business as may properly come before the NHC special meeting; if the holders of shares of NHC common stock fail to return their proxy card, such shares of NHC common stock will not be counted for purposes of the such vote. |
A2: | If you hold shares of NHR common stock in your name, please sign, date and return your proxy card with voting instructions, or submit your vote via the Internet or by telephone as soon as possible. If your stock is held in “street name” through a bank or a broker, please direct your bank or broker to vote your stock in the manner described in the instructions you have received from your bank or broker. Also, you may attend the special meeting in person instead of submitting a proxy. Unless your shares are held in a brokerage account, if you sign, date and send your proxy and do not indicate how you want to vote, your proxy will be voted “FOR” the NHR Proposal and all other proposals to be voted on at the NHR special meeting. If your shares are held in a brokerage account, please see the answer to the next question. |
Abstentions will be counted as shares that are present and entitled to vote for purposes of determining the number of shares that are present and entitled to vote with respect to any particular matter, but will not be counted as votes in favor of such matter. Accordingly, an abstention from voting on the NHR Proposal will have the same legal effect as a vote “AGAINST” the matter. With respect to any other matter to be voted on at the NHR special meeting, a vote to “ABSTAIN” will have no effect on the outcome of such other matters. | ||
Q: | If my NHC common stock or NHR common stock are held in a brokerage account or in “street name,” will my broker vote my shares for me? | |
A: | If you are an NHC stockholder or NHR stockholder, and, in either case, if you do not provide your bank or broker with instructions on how to vote your street name shares, your bank or broker will not be permitted to vote them. Also, if your bank or broker has indicated on the proxy that it does not have discretionary authority to vote such street name shares, your bank or broker will not be permitted to vote them. Either of these situations results in a “broker non-vote.” | |
A “broker non-vote” with respect to the NHC special meeting will not be considered as present and entitled to vote with respect to any matter presented at the NHC special meeting, but will be counted for purposes of establishing a quorum. A broker non-vote with respect to the issuance of the Preferred Stock will have the effect of a vote“AGAINST”such matter. With respect to all other matters to be voted on at the NHC special meeting, a broker non-vote will have no effect on the outcome of such matter. | ||
A broker non-vote on the NHR Proposal or any other proposal requiring a specified percentage of the outstanding voting stock will have the same effect as a vote “AGAINST” such proposal. With respect to all matters requiring a specified percentage of the votes cast to be voted on at the NHR special meeting, a broker non-vote will have no effect on the outcome of such matter. | ||
You should, therefore, provide your bank or broker with instructions on how to vote your shares or arrange to attend the NHC special meetingand/or the NHR special meeting, as the case may be, and vote your shares in person to avoid a broker non-vote. You are urged to utilize telephone or Internet voting if your bank or broker has provided you with the opportunity to do so. See the relevant voting instruction form for instructions. If your bank or broker holds your shares and you attend the special meeting in person, you should bring a letter from your bank or broker identifying you as the beneficial owner of the shares and authorizing you to vote your shares at the meeting. |
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Q: | What do I do if I want to change my vote? | |
A: | You may change your vote at any time before the vote takes place at the NHC special meetingand/or the NHR special meeting, as the case may be. To do so, you may either complete and submit a new proxy card or send a written notice stating that you would like to revoke your proxy. In addition, you may elect to attend the NHC special meetingand/or the NHR special meeting, as the case may be, and vote in person, as described above. | |
Q: | Should I send in my NHR share certificates now? | |
A: | No. If the merger is completed, written instructions will be sent to stockholders of NHR with respect to the exchange of their share certificates for the merger consideration described in the merger agreement, including the appropriate number of shares of the Preferred Stock. | |
Q: | Who can I contact with any additional questions? | |
A: | You may call the Corporate Secretary of NHC or NHR at: |
National HealthCare Corporation | National Health Realty, Inc. | |
100 Vine Street, Suite 1400 | 100 Vine Street, Suite 1402 | |
Murfreesboro, Tennessee 37130 | Murfreesboro, Tennessee 37130 | |
(615)890-2020 | (615) 890-2020 |
Q: | Where can I find more information about the companies? | |
A: | You can find more information about NHC and NHR in the documents described under “Where You Can Find More Information”. |
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• | Special Committee Recommendations. Each special committee unanimously recommended to its respective board that the NHC Proposal and the NHR Proposal, as applicable, was advisable and in the best interests of each company and its stockholders, and that the merger agreement and the transactions contemplated thereby should be approved. | |
• | NHC Board Recommendation. The board of directors of NHC adopted the recommendation of its special committee that the merger agreement and the transactions contemplated thereby should be approved and that the NHC Proposal should be submitted to stockholders for approval.The NHC board of directors believes that the NHC Proposal is advisable and in the best interests of the company’s stockholders, and it recommends that the company’s stockholders vote “FOR” approval of the NHC Proposal. | |
• | NHR Board Recommendation. The board of directors of NHR adopted the recommendation of its special committee that the merger agreement and the transactions contemplated thereby should be approved and that the NHR Proposal should be submitted to stockholders for approval.The NHR board of directors believes that the NHR Proposal is advisable and in the best interests of the stockholders of NHR, and it recommends that such stockholders vote “FOR” approval of the NHR Proposal. |
1. | The financial presentation of Avondale Partners, LLP (“Avondale Partners”) to the NHC board of directors and Avondale Partners’ opinion addressed to the NHC special committee that the merger consideration to be paid by Davis Acquisition Sub LLC in the merger was fair, from a financial point of view, to both Davis Acquisition Sub LLC and NHC; | |
2. | the unanimous recommendation of the NHC special committee in favor of the merger and related transactions in light of (i) the composition of the two-member non-employee NHC special committee, each of whom the NHC board of directors had previously determined were unaffiliated with NHR, (ii) the in-depth review of NHR’s business, assets, liabilities and financial condition by the NHC special committee, (iii) the protracted arms-length negotiations of the NHC special committee with the NHR special committee and (iv) the retention by the NHC special committee of independent legal and financial advisors possessing experience with transactions similar to the merger to assist the NHC special committee; | |
3. | the increase in operating flexibility expected to result from the merger, which will allow NHC to renovate and expand its facilities; |
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4. | the expected increase in annual recurring free cash flow resulting from the elimination of annual lease payment obligations of NHC to NHR, even after providing for the dividends on the Preferred Stock. In addition, the merger will eliminate the financial uncertainty that resulted from the periodic negotiation and renegotiation of the leasing terms of the properties that NHC leased from NHR; | |
5. | the benefits arising from a management team focused on NHC’s core business and freed of the burden of managing two public companies; | |
6. | the elimination of the possibility that NHR could be acquired by a competitor of NHC; | |
7. | the belief that the expected increase in annual recurring free cash flow and larger asset base will allow NHC to more easily access a broader range of debt financing sources and obtain borrowings on improved terms; and | |
8. | the expected reduction in redundant expenses relating to corporate overhead and the costs of managing a public company. |
1. | The merger consideration represents a premium on the trading price of NHR common stock. The face value of the per share merger consideration (a cash payment of $9.00 and a share of Preferred Stock with a liquidation preference of $15.75) represents (1) a 17.5% premium over the average of the closing prices of NHR stock on the 20 trading days prior to the merger announcement ($21.07), (2) a 10% increase over NHC’s initial proposal and (3) a 16.3% premium over the closing price of NHR’s common stock on December 20, 2006, the last trading day prior to the announcement of the merger agreement. | |
2. | The merger will provide the stockholders of NHR with ownership in a company with a larger and more diversified asset and equity base, and with greater access to capital. | |
3. | The stockholders of NHR will receive the Preferred Stock, which has many of the same dividend characteristics as the NHR stock, but with a greater potential for growth and appreciation. | |
4. | Following the merger, NHC and NHR expect to achieve operational efficiencies and eliminate duplication of functions between the two companies. |
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• | the NHR Proposal and the NHC Proposal shall have been approved by the requisite votes of the NHR and NHC stockholders, as applicable; | |
• | the registration statement, including this joint proxy statement/prospectus, shall have been declared effective by the SEC; | |
• | the shares of the Preferred Stock to be issued in the merger shall have been approved for listing on the American Stock Exchange; | |
• | the NHR reorganization shall have been consummated, including the merger of NHR and its wholly-owned subsidiary, NHR-Delaware, Inc., a Delaware corporation, with NHR as the surviving entity; | |
• | the limited partnership units of NHR/OP, L.P. held by Adams Mark, L.P. and National Health Corporation will be purchased by Davis Acquisition Sub LLC for consideration equivalent to the consideration paid in the merger for the shares of NHR common stock; | |
• | the representations and warranties of the parties to the merger agreement shall be true, except for inaccuracies that would not have a material adverse effect; | |
• | the requisite covenants of each of the parties shall have been performed in accordance with the merger agreement; | |
• | no limitations or other restraints (including any pending or threatened suit, action or proceeding by any governmental entity) shall be in effect which would prevent the consummation of the merger or cause a material adverse effect on Davis Acquisition Sub LLC, NHC/OP, L.P., on the one hand, or NHR, on the other hand; and | |
• | since the date of the merger agreement, there shall not have been a material adverse effect relating to NHR, on the one hand, or Davis Acquisition Sub LLC, NHC/OP, L.P. or NHC, on the other hand. |
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• | the merger shall not have been consummated by December 14, 2007, as long as the failure to complete the merger on or before that date is not the result of the failure by the terminating party to fulfill any of its obligations under the merger agreement; | |
• | either the requisite stockholders of NHC do not approve the NHC Proposal or the requisite stockholders of NHR do not approve the NHR Proposal; | |
• | any legal restraint or prohibition preventing the merger or which has a material adverse effect on either NHC or NHR shall have become final and nonappealable; | |
• | either NHR, on the one hand, or Davis Acquisition Sub LLC, NHC/OP, L.P. or NHC, on the other hand, shall have breached or failed to perform certain representations, warranties, covenants or agreements as set forth in the merger agreement; | |
• | NHR provides written notice that it is prepared, upon termination of the merger agreement, to enter into a binding definitive agreement in connection with a superior proposal; or | |
• | the board of directors of NHR fails (i) to recommend the NHR Proposal to its stockholders, (ii) to call or hold the NHR special meeting or to prepare and mail this joint proxy statement/prospectus, or (iii) to comply with its non-solicitation obligations under the merger agreement. |
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• | the NHR board of directors received a fairness opinion from 2nd Generation that the merger consideration to be paid by Davis Acquisition Sub LLC in the merger was fair from a financial point of view, to the stockholders of NHR; | |
• | the NHR special committee was represented by independent legal counsel, Waller Lansden and independent financial advisors, 2nd Generation; | |
• | the unanimous recommendation of the NHR special committee in favor of the merger and related transactions in light of (i) the composition of the two-member non-employee NHR special committee, each of whom the NHR board of directors had previously determined were unaffiliated with NHC, (ii) the in-depth review of NHR’s and NHC’s business, assets, liabilities and financial condition by the NHR special committee and (iii) the protracted arms-length negotiations of the NHC special committee with the NHR special committee; | |
• | the business, financial strength and prospects of NHR as a stand-alone entity was viewed less favorably when compared to the value of the merger consideration and participation with a larger NHC entity because of NHR’s history of no acquisition and limited growth; | |
• | the nature of the representations, warranties, covenants and other provisions of NHC and NHR set forth in the draft of the merger agreement and certificate of designations for the NHC preferred stock were |
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negotiated by the NHR special committee to protect the interests of NHR and its stockholders and, therefore were viewed as supporting the fairness of the merger; |
• | the nature of the proposed consideration consisting of a combination of cash and NHC preferred stock to be paid by NHC upon the consummation of the merger, which was considered by the NHR special committee and the NHR board of directors to be favorable to the NHR stockholders based on the financial analysis of 2nd Generation and the opportunity for stockholders to receive a substantial amount of cash per share of NHC common stock and participate through the NHC preferred stock in the future of the merger entity; | |
• | the financial analysis conducted by 2nd Generation, on which the NHR special committee and board of directors relied, valued the merger consideration at $26.18 per share, which supported the fairness of the transaction because it represented a 22.6% premium over the closing price on December 19, 2006, the day prior to execution of the merger agreement, which was the historical high price of NHR common stock. 2nd Generation also considered the historical market prices of NHR’s common stock since inception, as described under the heading “— Opinion of NHR’s Financial Advisor 2nd Generation — Merger Consideration Fairness Analysis; Historical Stock Trading Analysis”; | |
• | although 2nd Generation does not believe that there is a single method for determining the going concern value of NHR, based on a precedent transactions analysis, comparable companies analysis, discounted cash flow analysis, dividend discount analysis and net asset value analysis conducted by 2nd Generation on which the NHR special committee and board of directors relied, the NHR special committee and board of directors believed that NHR’s going concern as a stand-alone entity was less than the proposed merger consideration and, therefore, supported the fairness of the merger. 2nd Generation used, and the NHR special committee and board of directors believed, that the above tests were representative of NHR as a going concern because these methods are generally accepted by appraisers to determine going concern value; | |
• | the liquidation value of NHR, the replacement cost of NHR’s assets, the potential market value of NHR’s assets and the benefits to NHC as an operator of long-term health care facilities, of operational control of NHR’s assets; |
• | the financial presentation of Avondale Partners to the NHC board of directors on December 20, 2006 and Avondale Partner’s opinion addressed to the NHC special committee that the merger consideration to be paid by Davis Acquisition Sub LLC in the merger was fair, from a financial point of view, to both Davis Acquisition Sub LLC and NHC. We have described Avondale Partner’s opinion in detail under the heading “Special Factors — Opinion of NHC’s Financial Advisor Avondale Partners, LLC.” While not specifically addressed to the unaffiliated stockholders of NHC, the NHC board of directors considers the fairness opinion to be relevant to the determination that the consideration paid in the merger was fair to NHC’s stockholders, including its unaffiliated stockholders. The NHC board of directors was not aware of and did not consider any reports, opinions or appraisals received by any other filing person in connection with its deliberations; | |
• | the unanimous recommendation of the NHC special committee in favor of the merger and related transactions in light of (i) the composition of the two-member non-employee NHC special committee, each of whom the NHC board of directors had previously determined were unaffiliated with NHR, (ii) the in-depth review of NHR’s business, assets, liabilities and financial condition by the NHC special committee, (iii) the protracted arms-length negotiations of the NHC special committee with the NHR special committee and (iv) the retention by the NHC special committee of independent legal and financial advisors possessing experience with transactions similar to the merger to assist the NHC special committee; | |
• | the business, financial strength and prospects of NHC as a stand-alone entity; |
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• | the absence of firm offers for NHR from unaffiliated persons during the two years prior to the execution of the merger agreement; | |
• | the nature of the representations, warranties, covenants and other provisions of NHC and NHR set forth in the draft of the merger agreement and certificate of designations for the NHC preferred stock; | |
• | the nature of the proposed consideration consisting of a combination of cash and NHC preferred stock to be paid by NHC upon the consummation of the merger; | |
• | the expected U.S. Federal income tax consequences of the merger; | |
• | the current and historical market prices of NHR’s common stock; as a result of which the merger price represented a 15.9% premium over the price of NHR common stock one day prior to the announcement of the merger and a 17.9% premium over the price of NHR common stock four weeks prior to the announcement of the merger; | |
• | the value of NHR based on a precedent transactions analysis, comparable companies analysis, discounted cash flow analysis, dividend discount analysis and net asset value analysis; | |
• | the liquidation value of NHR, the replacement cost of NHR’s assets, the potential market value of NHR’s assets and the benefits to NHC as an operator of long-term health care facilities, of operational control of NHR’s assets; | |
• | the potential benefits of the contemplated merger with NHR, including the potential realization of (i) a larger asset and equity base, (ii) greater operating flexibility to renovate and expand facilities, (iii) an increase in annual recurring free cash flow resulting from the elimination of annual lease payment obligations of NHC to NHR, (iv) benefits arising from a management team focused on NHC’s core business and freed of the burden of managing two public companies, (v) increased access to debt financing sources and (vi) reductions in redundant expenses relating to corporate overhead and the costs of managing a public company; and | |
• | the potential reduction in NHC’s earnings per share resulting from the merger. |
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• | the financial presentation of Avondale Partners to the NHC board of directors on December 20, 2006, and Avondale Partners’ opinion addressed to the NHC special committee that the merger consideration to be paid by Davis Acquisition Sub LLC in the merger was fair, from a financial point of view, to both Davis Acquisition Sub LLC and NHC. We have described Avondale Partner’s opinion in detail under the heading “Special Factors — Opinion of NHC’s Financial Advisor Avondale Partners, LLC;” | |
• | the unanimous recommendation of the NHC special committee in favor of the merger and related transactions in light of (i) the composition of the two-member non-employee NHC special committee, each of whom the NHC board of directors had previously determined were unaffiliated with NHR, (ii) the in-depth review of NHR’s business, assets, liabilities and financial condition by the NHC special committee, (iii) the protracted arms-length negotiations of the NHC special committee with the NHR special committee and (iv) the retention by the NHC special committee of independent legal and financial advisors possessing experience with transactions similar to the merger to assist the NHC special committee; | |
• | the increase in operating flexibility expected to result from the merger, which will allow NHC to renovate and expand its facilities; | |
• | the expected increase in annual recurring free cash flow resulting from the elimination of annual lease payment obligations of NHC to NHR, even after providing for the dividends on the Preferred Stock. In addition, the merger will eliminate the financial uncertainty that resulted from the periodic negotiation and renegotiation of the leasing terms of the properties that NHC leased from NHR; | |
• | the benefits arising from a management team focused on NHC’s core business and freed of the burden of managing two public companies; | |
• | the elimination of the possibility that NHR could be acquired by a competitor of NHC; | |
• | the belief that the expected increase in annual recurring free cash flow and larger asset base will allow NHC to more easily access a broader range of debt financing sources and obtain borrowings on improved terms; and | |
• | the expected reduction in redundant expenses relating to corporate overhead and the costs of managing a public company. |
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• | reviewed certain publicly available business and financial information relating to NHC and NHR that Avondale Partners deemed to be relevant; | |
• | reviewed the merger agreement and certain exhibits and documents referenced therein; | |
• | compared NHR from a financial point of view with certain other companies in the REIT industry that Avondale Partners deemed relevant; | |
• | reviewed certain information, including financial forecasts relating to the business and prospects of NHC and NHR, furnished to Avondale Partners by management of NHC and NHR; | |
• | considered the financial terms, to the extent publicly available, of selected recent business combinations in the REIT industry that Avondale Partners deemed to be comparable, in whole or in part, to the merger; | |
• | interviewed senior management of NHC and NHR regarding each company’s operating history and respective prospects; | |
• | compared the trading histories of NHC common stock and NHR common stock from December 19, 2005 to December 19, 2006 and reviewed the trading history of NHR common stock from December 19, 2004 to December 19, 2006; | |
• | reviewed publicly available premiums paid of certain other transactions Avondale Partners believed to be reasonably comparable to the merger; | |
• | reviewed the potential pro forma financial results, financial condition and capitalization of NHC after giving effect to the merger; and | |
• | performed other such analyses such as dividend discount and net asset valuation analyses and examinations as Avondale Partners deemed appropriate. |
• | the internal operating data and financial analyses and forecasts supplied to Avondale Partners were reasonably prepared on bases reflecting the best currently available estimates and judgments of NHC and NHR senior management as to NHC’s and NHR’s recent and likely future performance; |
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• | the merger will be consummated on the terms and subject to the conditions described in the merger agreement; and | |
• | all necessary governmental and regulatory approvals and third-party consents will be obtained on terms and conditions that will not have a material adverse effect on NHC. |
• | relied on advice of NHC counsel and considered the Company’s audited financial statements as to legal and financial reporting matters with respect to NHC, the merger and the merger agreement; | |
• | did not assume responsibility for making an independent physical inspection or appraisal of any of the assets, properties or facilities of NHR; and | |
• | was not authorized to and did not solicit indications of interest from any third party with respect to the purchase of all or part of NHR. |
Prices as of12/19/2006 | ||||
Merger Price | $ | 24.75 | ||
1 Week Average | $ | 21.10 | ||
1 Month Average | $ | 21.05 | ||
3 Month Average | $ | 20.63 | ||
9 Month Average | $ | 19.30 | ||
1 Year Average | $ | 19.34 | ||
1 Year High | $ | 21.35 | ||
2 Year Average | $ | 19.31 | ||
2 Year High | $ | 21.35 |
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Premium One Week | ||||||||||||
Premium One Day Prior | Prior | Premium Four Weeks | ||||||||||
to Announcement | to Announcement | Prior to Announcement | ||||||||||
High | 58.0 | % | 60.9 | % | 66.2 | % | ||||||
Low | (3.7 | )% | (2.1 | )% | (2.6 | )% | ||||||
Deal Premium | 15.9 | % | 17.6 | % | 17.9 | % |
Date | ||||
Announced | Name of Acquiror | Name of Target | ||
8/21/2006 | Morgan Stanley Real Estate | Glenborough Realty Trust, Inc. | ||
8/8/2006 | Revenue Properties Co Ltd | Sizeler Property Investors, Inc. | ||
7/10/2006 | Kimco Realty Corp | Pan Pacific Ret Property, Inc. | ||
7/9/2006 | Centro Properties Group | Heritage Property Invest Trust Inc. | ||
6/5/2006 | Brookfield Properties Corp. and Blackstone Group LP | Trizec Properties Inc. | ||
5/19/2006 | Braveheart Holdings LP | Boykin Lodging Co. | ||
5/2/2006 | Health Care Property Investors Inc | CNL Retirement Properties, Inc. | ||
3/6/2006 | Blackstone Group LP | CarrAmerica Realty Corp. | ||
2/21/2006 | Blackstone Group LP | MeriStar Hospitality Corp. | ||
2/10/2006 | LBA Realty LLC | Bedford Property Investors, Inc. | ||
12/22/2005 | GE Capital Real Estate | Arden Realty Inc. | ||
12/19/2005 | Magazine Acquisition GP LLC | Town & Country Trust | ||
12/7/2005 | CalEast Industrial Investors | CenterPoint Properties Trust | ||
10/24/2005 | Prime Property Fund | Amli Residential Property Trust |
Proposed | ||||||||||||
Enterprise | Transaction | |||||||||||
Value to: | Multiples | Low | High | |||||||||
LTM Revenues | 13.0 | x | 2.0 | x | 14.7x | |||||||
LTM FFO | 14.5 | x | 13.3 | x | 37.8x |
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• | Health Care Property Investors, Inc. | |
• | Health Care REIT, Inc. | |
• | Healthcare Realty Trust, Inc. | |
• | LTC Properties, Inc. | |
• | Medical Properties Trust | |
• | National Health Investors Inc. | |
• | Nationwide Health Properties, Inc. | |
• | Omega Healthcare Investors, Inc. | |
• | Senior Housing Properties Trust | |
• | Universal Health Realty Income Trust | |
• | Ventas Inc. |
Proposed | ||||||||||||
Transaction | ||||||||||||
Enterprise Value to: | Multiples | Low | High | |||||||||
LTM Revenue | 13.0 | x | 5.4 | x | 17.5x | |||||||
Estimated CY 2006 Revenues | 13.3 | x | 10.1 | x | 15.7x | |||||||
Estimated CY 2007 Revenues | 13.1 | x | 8.2 | x | 14.1x | |||||||
LTM FFO per share | 14.5 | x | 11.9 | x | 18.4x | |||||||
Estimated CY 2006 FFO per share | 14.8 | x | 13.2 | x | 18.2x | |||||||
Estimated CY 2007 FFO per share | 14.5 | x | 10.9 | x | 16.8x | |||||||
LTM EPS | 20.7 | x | 13.7 | x | 45.2x | |||||||
Estimated CY 2006 EPS | 21.2 | x | 14.6 | x | 39.9x | |||||||
Estimated CY 2007 EPS | 20.2 | x | 15.9 | x | 41.6x |
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($ in millions, except per | ||||||||
share data) | Low | High | ||||||
Implied Enterprise Value | $ | 162.8 | $ | 376.8 | ||||
Implied Equity Value | $ | 169.9 | $ | 383.9 | ||||
Implied Price per Share | $ | 15.20 | $ | 34.35 |
($ in millions, except per | ||||||||
share data) | Low | High | ||||||
Implied Enterprise Value | $ | 131.9 | $ | 283.5 | ||||
Implied Equity Value | $ | 139.0 | $ | 290.6 | ||||
Implied Price per Share | $ | 12.43 | $ | 26.00 |
($ in millions, except per | ||||||||
share data) | Low | High | ||||||
Implied Enterprise Value | $ | 198.5 | $ | 370.3 | ||||
Implied Equity Value | $ | 205.6 | $ | 377.3 | ||||
Implied Price per Share | $ | 18.39 | $ | 33.76 |
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• | the financial presentation of 2nd Generation to the NHR board of directors on December 20, 2006 and 2nd Generation’s opinion addressed to the NHR special committee that the merger consideration to be |
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paid by Davis Acquisition Sub LLC in the merger was fair, from a financial point of view, to the stockholders of NHR. We have described 2nd Generation’s opinion in detail under the heading “Special Factors — Opinion of NHR’s Financial Advisor 2nd Generation.” The NHR board of directors was not aware of and did not consider any financial reports, opinions or appraisals received by any other filing person in connection with its deliberations; |
• | the unanimous recommendation of the NHR special committee in favor of the merger and related transactions in light of (i) the composition of the two-member non-employee NHR special committee, each of whom the NHR board of directors had previously determined were unaffiliated with NHC, (ii) the review of NHR’s and NHC’s business, assets, liabilities and financial condition by the NHR special committee, (iii) the protracted arms-length negotiations of the NHR special committee with the NHC special committee and (iv) the retention by the NHR special committee of independent legal and financial advisors possessing experience with transactions similar to the merger to assist the NHR special committee; | |
• | the business, financial strength and prospects of NHR as a stand-alone entity was viewed less favorably when compared to the value of the merger consideration and participation with a larger NHC entity because of NHR’s history of no acquisitions and limited growth; | |
• | the nature of the representations, warranties, covenants and other provisions of NHC and NHR set forth in the draft of the merger agreement and certificate of designations for the NHC preferred stock were negotiated by the NHR special committee to protect the interests of NHR and its stockholders and, therefore, were viewed as supporting the fairness of the merger; | |
• | the nature of the proposed consideration consisting of a combination of cash and NHC preferred stock to be paid by NHC upon the consummation of the merger, which was considered by the NHR special committee and the NHR board of directors to be favorable to the NHR stockholders based on the financial analysis of 2nd Generation and the opportunity for stockholders to receive a substantial amount of cash per share of NHC common stock and participate through the NHC preferred stock in the future of the merger entity; | |
• | the financial analysis conducted by 2nd Generation, on which the NHR special committee and board of directors relied, valued the merger consideration at $26.18 per share, which supported the fairness of the transaction because it represented a 22.6% premium over the closing price on December 19, 2006, the day prior to execution of the merger agreement, which was the historical high price of NHR common stock. 2nd Generation also considered the historical market prices of NHR’s common stock since inception, as described under the heading “— Opinion of NHR’s Financial Advisor 2nd Generation — Merger Consideration Fairness Analysis; Historical Stock Trading Analysis”; | |
• | although 2nd Generation does not believe that there is a single method for determining the going concern value of NHR, based on a precedent transactions analysis, comparable companies analysis, discounted cash flow analysis, dividend discount analysis and net asset value analysis conducted by 2nd Generation on which the NHR special committee and board of directors relied, the NHR special committee and board of directors believed that NHR’s going concern as a stand-alone entity was less than the proposed merger consideration and, therefore, supported the fairness of the merger. 2nd Generation used, and the NHR special committee and board of directors believed, that the above tests were representative of NHR as a going concern because these methods are generally accepted by appraisers to determine going concern value; | |
• | the potential benefits of the contemplated merger with NHC, including the potential realization of (i) a larger asset and equity base for NHC, (ii) greater operating flexibility of NHC to renovate and expand facilities, (iii) an increase in annual recurring free cash flow resulting from the elimination of annual lease payment obligations of NHC to NHR, (iv) benefits arising from a management team focused on NHC’s core business and freed of the burden of managing two public companies, (v) increased access to debt financing sources and (vi) reductions in redundant expenses relating to corporate overhead and the costs of managing NHR as a public company. |
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• | the expected U.S. Federal income tax consequences of the merger, which will likely result in a taxable transaction to the NHR stockholders, and | |
• | the potential reduction in NHC’s earnings per share resulting from the issuance of the NHC preferred stock in the merger; |
• | Net Book Value — The NHR special committee and board of directors did not consider the Company’s net book value, which is an accounting concept, to be material to the conclusion regarding the fairness of the merger because they believed that net book value is not a material indicator of the value of the Company as a going concern, but rather is indicative of historical cost. Because, as with NHR, real property is the primary asset of a REIT and the historical cost of such real property generally does not reflect the current value, net book value is seldom used as a measurement of value in NHR’s industry. Although it was not considered by the NHR special committee or board of directors, NHR’s net diluted book value per share (which gives effect to the exercise of all options) as of September 30, 2006 was approximately $11.28 per share, which was below the proposed merger consideration. | |
• | Liquidation Value — In the course of reaching its decision to approve the merger agreement, NHR’s special committee and board of directors did not consider the liquidation value of NHR’s assets. Liquidation value does not take into account existing tenant relationships and other operational efficiencies of a REIT that may not be immediately available to the purchaser or purchasers of NHR’s properties and other assets in a liquidation; therefore, the NHR special committee and board of directors believed that the liquidation value would be lower than the Company’s value as a viable going concern. As discussed above, the estimated going concern value of NHR was determined by 2nd Generation to be less than the proposed merger consideration. As a result, the NHR special committee and board of directors did not consider the liquidation value of the NHR assets. | |
• | Purchase prices paid for NHR common stock over the past two years by persons filing theSchedule 13e-3 related to this transaction — There have been no such purchases known to the NHR board of directors, so it did not consider this in the course of reaching its decision to approve the merger agreement and did not consider it as relevant to a determination of fairness. | |
• | Firm offers of which NHR or any of the filing persons are aware made by any unaffiliated person, other than the filing persons, during the past two years for a merger or consolidation involving NHR, or |
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the sale or other transfer of all or any substantial part of the assets of NHR, or a purchase of NHR securities that would enable the holder to exercise control of the NHR — There have been no such offers known to the NHR board of directors, so it did not consider this in the course of reaching its decision to approve the merger agreement and did not consider it as relevant to a determination of fairness. |
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• | Reviewed a draft dated December 19, 2006 of the merger agreement; | |
• | Reviewed certain publicly available financial statements and other business and financial information of NHR, National Health Investors, Inc., and NHC; | |
• | Reviewed certain internal financial statements and other financial and operating data concerning NHR as well as estimates and financial forecasts for NHR, NHC, and the combined entity; | |
• | Discussed the past and current operations, financial conditions and prospects of NHR with senior management of NHR, National Health Investors, Inc., and NHC; | |
• | Reviewed information and discussed with senior management of NHR, National Health Investors, Inc., and NHC information relating to certain strategic implications and financial benefits anticipated as a result of the transaction; | |
• | Reviewed certain publicly available information regarding other companies that it believed to be comparable to NHR and the stock trading data for certain of such other companies’ securities; | |
• | Reviewed certain publicly available information concerning the nature and terms of certain other transactions that it considered relevant to its inquiry; | |
• | Reviewed current and historical market prices and trading volumes of NHR common stock; and | |
• | Reviewed convertible preferred stock and convertible corporate bond markets. |
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• | $9.00 in cash; and | |
• | $15.75 face value of the Preferred Stock with $0.80 annual dividend (5.09%). |
• | is convertible into 0.24204 shares of NHC common stock with an initial conversion price of $65.07; and | |
• | has call protection that at assures at minimum realizable amount of $65.07 per as-if converted share of Preferred Stock. |
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• | Current price: $56.30 as of December 19, 2006 | |
• | Conversion price: $65.07 as set by the Preferred Stock’s certificate of designations | |
• | Time: five years based upon expected call or conversion after that time | |
• | Interest rate: 4.56%, based upon current five-year Treasury note yields | |
• | Volatility: 39.9%, based on Bloomberg calculated annual volatility | |
• | Expected NHC dividend payments |
• | Blockage discount, as a large number of share of the Preferred Stock that would potentially convert to NHC common stock at the same time relative to the average volume of NHC common stock; and | |
• | The features of the Preferred Stock are not the same as an actual option and cannot be traded as a detachable option. |
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• | Historical Price Analysis of NHR Common Stock | |
• | Publicly-Traded Comparable Company analysis | |
• | Dividend Discount Model analysis | |
• | Discounted Cash Flow (DCF) analysis | |
• | Precedent Acquisition and Premiums Paid analysis | |
• | Net Asset Value analysis |
Period | Average | Daily Closing Price | ||||||||||||||||||
Period | Start Date | Volume | Close | High | Low | |||||||||||||||
Latest Month | 11/17/06 | 3,018 | $ | 21.05 | $ | 21.35 | $ | 20.80 | ||||||||||||
Latest 3 Months | 9/19/06 | 3,968 | $ | 20.60 | $ | 21.35 | $ | 19.57 | ||||||||||||
Latest 6 Months | 6/19/06 | 7,919 | $ | 19.55 | $ | 21.35 | $ | 16.75 | ||||||||||||
Latest 12 Months | 12/19/05 | 8,988 | $ | 18.83 | $ | 21.35 | $ | 16.36 | ||||||||||||
Latest 2 Years | 12/17/04 | 8,881 | $ | 18.11 | $ | 21.35 | $ | 15.97 | ||||||||||||
Latest 5 Years | 12/19/01 | 9,300 | $ | 15.10 | $ | 21.35 | $ | 9.19 | ||||||||||||
Since Inception | 1/5/98 | 8,761 | $ | 10.96 | $ | 21.35 | $ | 3.53 |
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• | Current: 0.3792 | |
• | One year ago: 0.4921 | |
• | Two years ago: 0.5277 | |
• | Five years ago: 0.7005 |
• | involved a United States company operating as a REIT | |
• | was announced in the preceding four years | |
• | had an announced enterprise value between $100 million and $1 billion | |
• | had a publicly disclosed value |
Deal | Deal | |||||||||||||||||||
Premium | Premium | |||||||||||||||||||
Date | Date | Deal Value | Consideration | 1 Week | 4 Weeks | |||||||||||||||
Announced | Effective | Target Name | Acquiror Name | ($Millions) | Paid | Prior | Prior | |||||||||||||
11/6/06 - | Columbia Equity Trust Inc | Special Situation Ppty Fund | $ | 476.40 | Cash Only | 10.02 | 13.37 | |||||||||||||
10/23/06 - | Government Properties Trust | Record Realty | 223.60 | Cash Only | 13.40 | 18.78 | ||||||||||||||
9/13/06 - | Windrose Med Ppty Trust | Health Care REIT Inc | 806.86 | Cash & Stock | 20.24 | 20.72 | ||||||||||||||
8/31/06 - | BNP Residential Properties Inc | Babcock & Brown Real Estate | 703.51 | Cash Only | 39.45 | 43.37 | ||||||||||||||
8/21/06 | 11/29/06 | Glenborough Realty Trust Inc | Morgan Stanley Real Estate | 992.56 | Cash & Stock | 11.44 | 15.56 | |||||||||||||
8/8/06 | 11/10/06 | Sizeler Property Investors Inc | Revenue Properties Co Ltd | 305.82 | Cash Only | (3.70 | ) | (4.73 | ) | |||||||||||
8/8/06 | 12/4/06 | Saxon Capital Inc | Morgan Stanley | 706.16 | Cash Only | 27.49 | 21.87 | |||||||||||||
7/23/06 - | Newkirk Realty Trust Inc | Lexington Corporate Ppty Trust | 396.80 | Stock Only | 23.75 | 21.90 | ||||||||||||||
5/19/06 | 9/21/06 | Boykin Lodging Co | Braveheart Holdings LP | 195.96 | Cash Only | 17.27 | 7.00 | |||||||||||||
2/10/06 | 5/5/06 | Bedford Property Investors Inc | LBARealty LLC | 435.68 | Cash Only | 17.74 | 20.13 | |||||||||||||
12/19/05 | 3/31/06 | Town & Country Trust | Magazine Acquisition GP LLC | 961.56 | Cash Only | 32.28 | 34.13 | |||||||||||||
10/6/05 | 1/18/06 | CRIIMI MAE Inc | CDP Capital Financing Inc | 321.02 | Cash Only | 15.61 | 3.57 | |||||||||||||
6/17/05 | 9/27/05 | CRT Properties Inc | DRA Advisers LLC | 901.03 | Cash Only | 17.15 | 18.70 | |||||||||||||
2/17/05 | 7/1/05 | Prime Group Realty Trust | Lightstone Group LLC | 194.00 | Cash Only | 11.20 | 13.28 | |||||||||||||
12/19/04 | 4/20/05 | Kramont Realty Trust | Centro Watt | 571.14 | Cash Only | 16.57 | 18.21 | |||||||||||||
10/22/04 | 4/1/05 | Cornerstone Realty Income Tr | Colonial Properties Trust | 613.14 | Stock Only | 8.90 | 12.04 | |||||||||||||
8/24/04 | 12/21/04 | Price Legacy Corp | PL Retail LLC | 757.40 | Cash Only | (0.16 | ) | 2.33 | ||||||||||||
5/3/04 | 8/4/04 | Keystone Property Trust | Investor Group | 855.81 | Cash Only | 14.20 | 0.55 | |||||||||||||
4/16/04 | 7/16/04 | Hallwood Realty Partners LP | HRPT Properties Trust | 433.98 | Cash Only | 60.92 | 66.20 | |||||||||||||
1/22/04 | 4/28/04 | Great Lakes REIT Inc | Aslan Realty Partners II LP | 251.76 | Cash Only | (1.94 | ) | (2.00 | ) | |||||||||||
11/20/03 | 2/6/04 | ElderTrust Realty Group | Ventas Inc | 101.64 | Cash Only | 19.05 | 23.76 | |||||||||||||
7/12/03 | 12/3/03 | Apex Mortgage Capital Inc | American Home Mtg Hldgs Inc | 183.83 | Stock Only | 14.66 | 18.63 | |||||||||||||
6/18/03 | 10/1/03 | Mid-AtIantic Realty Trust | Kimco Realty Corp | 446.32 | Cash Only | 6.70 | 7.40 | |||||||||||||
5/8/03 | 7/10/03 | RFS Hotel Investors Inc | CNL Hospitality Properties Inc | 687.96 | Cash Only | 14.99 | 26.15 | |||||||||||||
High | 60.92 | % | 66.20 | % | ||||||||||||||||
Low | (3.70 | )% | (4.73 | )% | ||||||||||||||||
Average | 16.97 | % | 17.54 | % | ||||||||||||||||
Average excluding high and low | 15.91 | % | 16.34 | % |
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Health Care Property Investors, Inc. | HCP | |||
Ventas, Inc. | VTR | |||
Health Care REIT, Inc. | HCN | |||
Nationwide Health Properties, Inc. | NHP | |||
Healthcare Realty Trust Inc. | HR | |||
Senior Housing Properties Trust | SHN | |||
Omega Healthcare Investors, Inc. | OHI | |||
Windrose Medical Properties Trust | WRS | |||
LTC Properties, Inc. | LTC | |||
National Health Investors, Inc. | NHI | |||
Universal Health Realty Income Trust | UHT |
• | Closing stock prices as of December 19, 2006 divided by estimated FFO (“FFO” means Funds From Operations, defined as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of properties, plus real estate-related depreciation and amortization and other comparable adjustments for NHR’s portion of these items related to unconsolidated entities and joint ventures) for the calendar years 2006 and 2007, referred to as “Price/FFO multiple”. |
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Price | 2006 | 2006 | 2007 | 2007 | ||||||||||||||||||||
Company Name | Ticker | 12/19/2006 | FFO est. | Price/FFO | FFO est. | Price/FFO | ||||||||||||||||||
Health Care Property Investors, Inc. | HCP | $ | 35.76 | $ | 1.97 | $ | 18.2 | x | $ | 2.13 | 16.8 | x | ||||||||||||
Ventas, Inc. | VTR | 40.88 | 2.41 | 17.0 | x | 2.76 | 14.8 | x | ||||||||||||||||
Health Care REIT, Inc. | HCN | 41.00 | 2.91 | 14.1 | x | 3.06 | 13.4 | x | ||||||||||||||||
Nationwide Health Properties, Inc. | NHP | 29.62 | 1.93 | 15.4 | x | 2.02 | 14.7 | x | ||||||||||||||||
Healthcare Realty Trust Inc. | HR | 37.70 | 2.19 | 17.2 | x | 2.37 | 15.9 | x | ||||||||||||||||
Senior Housing Properties Trust | SNH | 22.95 | 1.61 | 14.2 | x | 1.67 | 13.7 | x | ||||||||||||||||
Omega Healthcare Investors, Inc. | OHI | 17.07 | 1.20 | 14.2 | x | 1.25 | 13.7 | x | ||||||||||||||||
Windrose Medical Properties Trust | WRS | 18.32 | 1.18 | 15.6 | x | 1.36 | 13.5 | x | ||||||||||||||||
LTC Properties, Inc. | LTC | 26.53 | 1.84 | 14.5 | x | 1.93 | 13.7 | x | ||||||||||||||||
National Health Investors, Inc. | NHI | 32.83 | na | na | na | na | ||||||||||||||||||
Universal Health Realty Income Trust | UHT | 37.75 | 2.48 | 15.2 | x | 2.55 | 14.8 | x | ||||||||||||||||
High | 18.2 | x | 16.8 | x | ||||||||||||||||||||
Low | 14.1 | x | 13.4 | x | ||||||||||||||||||||
Average | 15.6 | x | 14.5 | x | ||||||||||||||||||||
Average excluding high and low | 15.4 | x | 14.3 | x | ||||||||||||||||||||
National Health Realty | NHR | $ | 21.35 | $ | 1.68 | 12.7 | x | $ | 1.70 | 12.6 | x |
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• | debt of NHR as of September 30, 2006 as reported in its public filings; | |
• | minority interest; and | |
• | other outstanding liabilities. |
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• | the affirmative vote of the holders of a majority of all common stock outstanding and entitled to vote thereon at the NHR special meeting; and | |
• | the affirmative vote of the holders of a majority of the common stock outstanding and entitled to vote thereon that are not owned by a director or officer of NHR, any affiliate of NHR or NHC. |
Stock | Stock | |||||||||||
Ownership | Ownership | |||||||||||
Director/Officer | NHC Position | NHR Position | in NHR | in NHC | ||||||||
Robert G. Adams | President & CEO, Director | President and Director | 4.4 | % | 4.7 | % | ||||||
Donald K. Daniel | Senior VP & Controller | Senior VP & Controller | 1.4 | % | 1.7 | % | ||||||
Charlotte A. Swafford | Senior VP & Treasurer | Senior VP & Treasurer | 1.5 | % | 1.5 | % | ||||||
W. Andrew Adams | Chairman and Director | Chairman and Director | 12.8 | % | 11.1 | % | ||||||
Dr. J. Paul Abernathy | Director | Director | 0.1 | % | 0.2 | % | ||||||
Ernest G. Burgess, III | Director | Director | 1.6 | % | 1.6 | % | ||||||
Richard F. LaRoche, Jr. | Director | Director | 3.9 | % | 3.3 | % |
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Description | Amount to be Paid | |||
SEC filing fee (inclusive ofSchedule 13E-3 filing fee) | $ | 8,077 | ||
Printing, proxy solicitation and mailing expenses | 117,000 | |||
Financial, legal, accounting and tax advisory fees and expenses | $ | 2,800,000 | ||
Miscellaneous expenses | $ | 271,000 | ||
Total | $ | 3,196,077 |
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Six Months Ended | ||||||||||||||||||||||||||||
June 30, | Year Ended December 31, | |||||||||||||||||||||||||||
2007(b) | 2006 | 2006(a) | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||||||
Net revenues | $ | 296,450 | $ | 277,620 | $ | 562,958 | $ | 542,381 | $ | 521,829 | $ | 472,864 | $ | 458,252 | ||||||||||||||
Total costs and expenses | 266,442 | 251,181 | 508,679 | 495,691 | 481,574 | 439,577 | 430,806 | |||||||||||||||||||||
Income before income taxes | 30,008 | 26,439 | 54,279 | 46,690 | 40,055 | 33,287 | 27,446 | |||||||||||||||||||||
Income tax provision | 11,076 | 10,656 | 17,539 | 18,055 | 16,083 | 13,335 | 11,009 | |||||||||||||||||||||
Net income | 18,932 | 15,783 | 36,740 | 28,635 | 23,972 | 19,952 | 16,437 | |||||||||||||||||||||
Earnings per share: | ||||||||||||||||||||||||||||
Basic | $ | 1.51 | $ | 1.28 | $ | 2.99 | $ | 2.34 | $ | 2.05 | $ | 1.72 | $ | 1.43 | ||||||||||||||
Diluted | $ | 1.46 | $ | 1.22 | $ | 2.85 | $ | 2.24 | $ | 1.95 | $ | 1.65 | $ | 1.37 | ||||||||||||||
Dividends declared per share: | ||||||||||||||||||||||||||||
Cash | $ | 0.39 | $ | 0.33 | $ | 0.690 | $ | 0.575 | $ | 0.500 | $ | — | $ | — | ||||||||||||||
Balance Sheet Data (at period end): | ||||||||||||||||||||||||||||
Total current assets | $ | 306,596 | $ | 268,744 | $ | 290,611 | $ | 260,579 | $ | 227,734 | $ | 204,796 | $ | 164,611 | ||||||||||||||
Total noncurrent assets | 187,777 | 165,733 | 180,866 | 150,046 | 145,383 | 147,597 | 140,964 | |||||||||||||||||||||
Total assets | 494,373 | 434,477 | 471,477 | 410,625 | 373,117 | 352,393 | 305,575 | |||||||||||||||||||||
Accrued risk reserves | 83,479 | 77,246 | 76,471 | 70,290 | 62,354 | 43,953 | 31,632 | |||||||||||||||||||||
Total current liabilities | 166,756 | 155,163 | 168,548 | 147,191 | 128,605 | 131,809 | 114,077 | |||||||||||||||||||||
Long-term debt, less current portion | 10,000 | 12,457 | 10,381 | 13,568 | 16,025 | 19,000 | 26,220 | |||||||||||||||||||||
Debt serviced by other parties | — | — | — | — | 1,494 | 1,727 | 1,952 | |||||||||||||||||||||
Other noncurrent liabilities | 52,980 | 47,544 | 43,406 | 45,622 | 43,771 | 48,018 | 42,435 | |||||||||||||||||||||
Minority interests in consolidated subsidiaries | — | — | — | 1,185 | 874 | 812 | 750 | |||||||||||||||||||||
Shareholders’ equity | 264,637 | 217,943 | 249,142 | 203,059 | 182,348 | 151,027 | 120,141 |
(a) | Effective January 1, 2006, NHC adopted Statement of Financial Accounting Standards No. 123 (Revised 2004), “Share Based Payment”. |
(b) | Effective January 1, 2007, NHC adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Tax — an interpretation of FASB Statement No. 109”. |
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Six Months Ended | ||||||||||||||||||||||||||||
June 30, | Year Ended December 31, | |||||||||||||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||||||||||||||
Net revenues | $ | 10,096 | $ | 10,143 | $ | 20,137 | $ | 19,772 | $ | 20,191 | $ | 24,508 | $ | 24,549 | ||||||||||||||
Expenses | 3,935 | 3,686 | 7,080 | 7,688 | 7,782 | 11,612 | 15,199 | |||||||||||||||||||||
Net income | 5,891 | 6,036 | 12,407 | 11,277 | 11,435 | 11,845 | 8,498 | |||||||||||||||||||||
Net income per share: | ||||||||||||||||||||||||||||
Basic | $ | .59 | $ | .61 | $ | 1.25 | $ | 1.14 | $ | 1.19 | $ | 1.24 | $ | 0.89 | ||||||||||||||
Diluted | $ | .59 | $ | .61 | $ | 1.25 | $ | 1.14 | $ | 1.16 | $ | 1.21 | $ | 0.87 | ||||||||||||||
Mortgages and other notes receivable | 12,216 | 12,848 | 12,541 | 13,207 | 13,553 | 44,595 | (a) | 65,562 | (a) | |||||||||||||||||||
Real estate properties, net | 106,682 | 112,208 | 109,363 | 115,054 | 120,926 | 126,931 | 138,963 | |||||||||||||||||||||
Total assets | 137,075 | 140,485 | 140,305 | 142,755 | 150,032 | 182,878 | 214,941 | |||||||||||||||||||||
Long term debt | 7,900 | 9,600 | 8,750 | 10,450 | 16,150 | 47,820 | (a) | 79,488 | (a) | |||||||||||||||||||
Total liabilities | 12,413 | 14,906 | 14,621 | 16,840 | 22,146 | 54,462 | 85,980 | |||||||||||||||||||||
Minority interests in consolidated subsidiaries | 13,208 | 13,453 | 13,299 | 13,525 | 13,888 | 14,174 | 14,485 | |||||||||||||||||||||
Total stockholders’ equity | 111,454 | 112,126 | 112,385 | 112,390 | 113,998 | 114,242 | 114,476 | |||||||||||||||||||||
Common shares outstanding | 9,956,864 | 9,944,463 | 9,951,864 | 9,939,463 | 9,699,108 | 9,590,588 | 9,570,323 | |||||||||||||||||||||
Weighted average common shares: | ||||||||||||||||||||||||||||
Basic | 9,954,074 | 9,941,341 | 9,942,803 | 9,853,490 | 9,594,852 | 9,575,546 | 9,570,323 | |||||||||||||||||||||
Diluted | 9,970,050 | 9,946,697 | 9,950,022 | 9,881,484 | 9,822,823 | 9,757,238 | 9,770,730 | |||||||||||||||||||||
Common dividends declared per share | $ | 0.6650 | $ | 0.6650 | $ | 1.43 | $ | 1.43 | $ | 1.41 | $ | 1.49 | $ | 1.33 |
(a) | Approximately $21,982,000 and $30,384,000 of 10.25% notes receivable were prepaid to NHR in November 2003 and February 2004, respectively. NHR used the proceeds of the prepayments to pay down its long-term debt. |
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Unaudited Pro Forma Condensed Consolidated Income Statement
Six Months Ended June 30, 2007
(in thousands, except share and per share amounts)
Historical | Pro Forma Adjustments | Pro Forma | ||||||||||||||||||
NHC | NHR | Debit | Credit | Consolidated | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Net patient revenue | $ | 267,511 | $ | — | — | — | $ | 267,511 | ||||||||||||
Other revenue | 28,939 | 447 | $ | 250 | (b) | 26,285 | ||||||||||||||
242 | (d) | |||||||||||||||||||
2,609 | (f) | |||||||||||||||||||
Rental income | — | 9,052 | 5,657 | (a) | 3,395 | |||||||||||||||
Mortgage interest income | — | 1,044 | 1,044 | |||||||||||||||||
Net revenue | 296,450 | 10,543 | 8,758 | — | 298,235 | |||||||||||||||
Costs and expenses: | ||||||||||||||||||||
Salaries, wages and benefits | 160,713 | — | — | — | 160,713 | |||||||||||||||
Other operating expenses | 82,761 | 983 | $ | 250 | (b) | 83,082 | ||||||||||||||
412 | (c) | |||||||||||||||||||
Recovery of note receivable | (6,195 | ) | — | (6,195 | ) | |||||||||||||||
Rent | 21,009 | — | 5,657 | (a) | 15,352 | |||||||||||||||
Depreciation and amortization | 7,584 | 2,681 | 152 | (e) | — | 10,417 | ||||||||||||||
Interest | 570 | 271 | — | 841 | ||||||||||||||||
Total cost and expenses | 266,442 | 3,935 | 152 | 6,319 | 264,210 | |||||||||||||||
Income before income taxes and minority interest | 30,008 | 6,608 | 8,910 | 6,319 | 34,025 | |||||||||||||||
Minority interest | (717 | ) | 717 | (g) | — | |||||||||||||||
Income tax provision | 11,076 | — | 1,606 | (i) | 12,682 | |||||||||||||||
Net income | 18,932 | 5,891 | 10,516 | 7,036 | 21,343 | |||||||||||||||
Dividends to preferred stockholders | — | — | 4,329 | (h) | (4,329 | ) | ||||||||||||||
Net income available to common stockholders | $ | 18,932 | $ | 5,891 | $ | 14,845 | $ | 7,036 | $ | 17,014 | ||||||||||
Earnings Per Common Share | ||||||||||||||||||||
Basic | $ | 1.51 | $ | 0.59 | $ | 1.36 | ||||||||||||||
Diluted | $ | 1.46 | $ | 0.59 | $ | 1.31 | ||||||||||||||
Weighted Average Common Shares Outstanding | ||||||||||||||||||||
Basic | 12,532,200 | 9,954,074 | 12,532,200 | |||||||||||||||||
Diluted | 12,993,625 | 9,970,500 | 12,993,625 |
Note: | Pro forma diluted weighted average common shares excludes 2,616,227 preferred stock potential common shares issuable upon the conversion of the preferred stock due to their antidilutive impact. |
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(a) | To eliminate NHR rent charged to NHC. | |
(b) | To eliminate NHR advisory revenue and expense. | |
(c) | To eliminate NHR merger related transactional expenses reflected in the historical financial statements. | |
(d) | To eliminate dividend income of $242,000 on 363,200 shares of NHR common stock owned by NHC. | |
(e) | To record additional depreciation on NHR assets after merger due to adjustment to estimated fair value. Depreciation on newly acquired assets (consisting only of real property) is calculated assuming an average life of 30 years. | |
(f) | To reduce interest and investment income earned on cash, restricted cash and marketable securities due to the use of NHC’s cash in the merger ($98.4 million historically earning an average of 5.3%). The proforma adjustment assumes that NHC will borrow up to $25.0 million from its wholly owned insurance company subsidiary. As of June 30, 2007, these funds are included in restricted cash. | |
(g) | To eliminate minority interest attributable to NHR by conversion of NHR/OP, L.P. partnership units into 1,215,754 shares of NHR common stock. | |
(h) | To record cumulative dividends payable to holders of preferred stock at $0.80 per annum assuming 10,822,893 shares issued. | |
(i) | To record additional income tax due to the incremental increase in taxable income after the merger based on NHC’s historical income tax rate of 40%. |
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Historical | Pro Forma Adjustments | Pro Forma | ||||||||||||||||||
NHC | NHR | Debit | Credit | Consolidated | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Net patient revenue | $ | 501,705 | $ | — | — | — | $ | 501,705 | ||||||||||||
Other revenue | 61,253 | 862 | $ | 524 | (b) | 55,854 | ||||||||||||||
519 | (d) | |||||||||||||||||||
5,218 | (f) | |||||||||||||||||||
Rental income | — | 17,995 | 11,382 | (a) | 6,613 | |||||||||||||||
Mortgage interest income | — | 2,142 | 2,142 | |||||||||||||||||
Net revenue | 562,958 | 20,999 | 17,643 | — | 566,314 | |||||||||||||||
Costs and expenses: | ||||||||||||||||||||
Salaries, wages and benefits | 302,862 | — | — | — | 302,862 | |||||||||||||||
Other operating expenses | 157,664 | 785 | 524 | (b) | 157,378 | |||||||||||||||
547 | (c) | |||||||||||||||||||
Recovery of note receivable | (7,309 | ) | — | (7,309 | ) | |||||||||||||||
Rent | 40,310 | — | 11,382 | (a) | 28,928 | |||||||||||||||
Depreciation and amortization | 14,172 | 5,691 | 1,574 | (e) | — | 21,437 | ||||||||||||||
Interest | 980 | 604 | — | 1,584 | ||||||||||||||||
Total cost and expenses | 508,679 | 7,080 | 1,574 | 12,453 | 504,880 | |||||||||||||||
Income before income taxes and minority interest | 54,279 | 13,919 | 19,217 | 12,453 | 61,434 | |||||||||||||||
Minority interest | (1,512 | ) | 1,512 | (g) | — | |||||||||||||||
Income tax provision | 17,539 | — | 2,862 | (i) | 20,401 | |||||||||||||||
Net income | 36,740 | 12,407 | 22,079 | 13,965 | 41,033 | |||||||||||||||
Dividends to preferred stockholders | — | — | 8,647 | (h) | (8,647 | ) | ||||||||||||||
Net income available to common stockholders | $ | 36,740 | $ | 12,407 | $ | 30,726 | $ | 13,965 | $ | 32,386 | ||||||||||
Earnings Per Common Share | ||||||||||||||||||||
Basic | $ | 2.99 | $ | 1.25 | $ | 2.63 | ||||||||||||||
Diluted | $ | 2.85 | $ | 1.25 | $ | 2.51 | ||||||||||||||
Weighted Average Common Shares Outstanding | ||||||||||||||||||||
Basic | 12,294,730 | 9,942,803 | 12,294,730 | |||||||||||||||||
Diluted | 12,886,171 | 9,950,022 | 12,886,171 |
Note: | Pro forma diluted weighted average common shares excludes 2,616,227 preferred stock potential common shares issuable upon the conversion of the preferred stock due to their antidilutive impact. |
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(a) | To eliminate NHR rent charged to NHC. | |
(b) | To eliminate NHR advisory revenue and expense. | |
(c) | To eliminate NHR merger related transactional expenses reflected in the historical financial statements. | |
(d) | To eliminate dividend income of $519,000 on 363,200 shares of NHR common stock owned by NHC. | |
(e) | To record additional depreciation on NHR assets after merger due to adjustment to fair value. Depreciation on newly acquired assets (consisting only of real property) is calculated assuming an average life of 30 years. | |
(f) | To reduce interest and investment income earned on cash, restricted cash and marketable securities due to the use of NHC’s cash in the merger ($98.4 million historically earning an average of 5.3%). The pro forma adjustment assumes that NHC will borrow up to $25.0 million from its wholly owned insurance company subsidiary. As of December 31, 2006, these funds are included in restricted cash. | |
(g) | To eliminate minority interest attributable to NHR by conversions of NHR/OP, LP partnership units into 1,215,754 shares of NHR common stock. | |
(h) | To record cumulative dividends payable to holders of preferred stock at $0.80 per share per annum assuming 10,822,893 shares issued. | |
(i) | To record additional income tax due to the incremental increase in taxable income after the merger based on NHC’s historical tax rate of 40%. |
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Historical | ||||||||||||||||||||
National | National | Pro Forma | ||||||||||||||||||
HealthCare | Health Realty | Adjustments | Pro Forma | |||||||||||||||||
Corporation | Inc. | Debit | Credit | Consolidated | ||||||||||||||||
Assets: | ||||||||||||||||||||
Current Assets: | ||||||||||||||||||||
Cash and cash equivalents: | $ | 67,702 | $ | 10,695 | $ | 17,000 | (b) | $ | 73,406 | (c) | $ | 21,991 | ||||||||
Restricted cash | 103,120 | — | 25,000 | (c) | 78,120 | |||||||||||||||
Marketable securities | 67,969 | 7,137 | 8,557 | (a) | 49,549 | |||||||||||||||
17,000 | (b) | |||||||||||||||||||
Restricted marketable securities | 1,299 | — | 1,299 | |||||||||||||||||
Accounts receivable, less allowance for doubtful amounts | 57,970 | — | 57,970 | |||||||||||||||||
Notes and mortgages receivable | 189 | — | 189 | |||||||||||||||||
Other current assets | 8,347 | 214 | 8,561 | |||||||||||||||||
306,596 | 18,046 | 17,000 | 123,963 | 217,679 | ||||||||||||||||
Property, Equipment &Intangibles, net | 127,062 | 106,682 | 3,045 | (a) | 124,662 | (d) | 372,878 | |||||||||||||
260,751 | (c) | |||||||||||||||||||
Other Assets: | ||||||||||||||||||||
Notes and mortgages receivable | 19,941 | 12,216 | 8,172 | (c) | 40,329 | |||||||||||||||
Other | 40,774 | 131 | 2,205 | (a) | 43,110 | |||||||||||||||
60,715 | 12,347 | 10,377 | — | 83,439 | ||||||||||||||||
TOTAL ASSETS | $ | 494,373 | $ | 137,075 | $ | 291,173 | $ | 248,625 | $ | 673,996 | ||||||||||
Liabilities and Stockholders’ Equity: | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accrued risk reserves | $ | 83,479 | $ | — | $ | 83,479 | ||||||||||||||
Other current liabilities | 83,277 | 4,513 | 87,790 | |||||||||||||||||
166,756 | 4,513 | — | — | 171,269 | ||||||||||||||||
Long-term debt, less current portion | 10,000 | 7,900 | 17,900 | |||||||||||||||||
Other noncurrent liabilities | 20,008 | — | 20,008 | |||||||||||||||||
Deferred lease credit | 5,452 | — | 5,452 | |||||||||||||||||
Deferred revenue | 27,520 | 27,520 | ||||||||||||||||||
Minority interest in consolidated subsidiaries | — | 13,208 | 13,208 | (d) | — | |||||||||||||||
Stockholders’ Equity: | ||||||||||||||||||||
Preferred stock | — | — | 170,517 | (c) | 170,517 | |||||||||||||||
Common stock | 96,126 | 138,881 | 138,881 | (d) | 96,126 | |||||||||||||||
Retained earnings | 144,625 | 144,625 | ||||||||||||||||||
Cumulative net income | 95,216 | 95,216 | (d) | — | ||||||||||||||||
Cumulative dividends | (126,297 | ) | 126,297 | (d) | ||||||||||||||||
Unrealized gains on marketable securities | 23,886 | 3,654 | 3,307 | (a) | 20,579 | |||||||||||||||
3,654 | (d) | |||||||||||||||||||
Total shareholder’s equity | 264,637 | 111,454 | 241,058 | 296,814 | 431,847 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 494,373 | $ | 137,075 | $ | 254,266 | $ | 296,814 | $ | 673,996 | ||||||||||
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(a) | To eliminate NHC’s investment in 363,200 shares of NHR common stock, which shares are to be canceled upon the merger including the unrealized appreciation of $5,512,000. | |
(b) | To account for the sale of securities expected to partially fund the merger. | |
(c) | To record the acquisition by NHC of the property, equipment, notes and mortgage notes receivable and liabilities of NHR. Consideration given includes cash ($9.00 for each outstanding share of the common stock of NHR) and the issuance by NHC of convertible preferred stock ($15.75 per share of the common stock of NHR). The preferred stock is convertible into 0.24204 shares of NHC common stock. Transaction costs are estimated at $1 million and are included in this adjustment. Such costs will be capitalized as part of the purchase price. The portion of the purchase price to be allocated to intangibles, if any, has not been finalized. | |
(d) | To remove NHR’s historical equity and minority interest. The merger will result in NHC acquiring 100% of the NHR common stock. |
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Six Months | ||||||||
Ended | Year Ended | |||||||
June 30, | December 31, | |||||||
2007 | 2006 | |||||||
Earnings per share: Basic | ||||||||
NHC historical | $ | 1.51 | $ | 2.99 | ||||
NHR historical | 0.59 | 1.25 | ||||||
Pro formacombined | 1.36 | 2.63 | ||||||
Equivalentpro formafor one share of NHC common stock(1) | 0.33 | 0.64 | ||||||
Earnings per share: Diluted | ||||||||
NHC historical | $ | 1.46 | $ | 2.85 | ||||
NHR historical | 0.59 | 1.25 | ||||||
Pro formacombined | 1.31 | 2.51 | ||||||
Equivalentpro formafor one share of NHC common stock(1) | 0.32 | 0.61 | ||||||
Cash dividends declared per share | ||||||||
NHC historical | $ | 0.39 | $ | 0.69 | ||||
NHR historical | 0.6650 | 1.43 | ||||||
Pro formacombined common and preferred dividends(2) | 0.79 | 1.49 | ||||||
Equivalentpro formafor one share of NHC common stock(2) | 0.48 | 0.86 | ||||||
Book value per share (at period end) | ||||||||
NHC historical | $ | 21.11 | $ | 19.90 | ||||
NHR historical | 11.19 | 11.29 | ||||||
Pro formacombined | 34.44 | 33.24 | ||||||
Equivalentpro formafor one share of NHC common stock(1) | 28.49 | 27.50 |
(1) | The NHC equivalentpro formainformation shows the effect of the merger from the perspective of an owner of NHC common stock. The NHR equivalent was calculated by using an assumed exchange ratio of 0.24204 shares of NHC common stock for each share of Preferred Stock. | |
(2) | Assumes no change in NHC’s cash dividends per share of common stock. In addition, assumes that NHC will pay a dividend of $0.80 per share of Preferred Stock. |
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Six Months | ||||||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||||||
June 30, | Year Ended December 31 | |||||||||||||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||||||||
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends | 4.5 | x | 3.9 | x | 4.0 | x | 3.7 | x | 3.4 | x | 2.9 | x | 2.4 | x |
Six Months | ||||||||
Ended | ||||||||
June 30, | ||||||||
2007 | Year Ended December 31, 2006 | |||||||
Pro Forma Ratio of Earnings to Fixed Charges and Preferred Stock Dividends | 6.0 | x | 5.5 | x |
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Six Months Ended | ||||||||||||||||
June 30 | Year Ended December 31 | |||||||||||||||
2007 | 2006 | 2006 | 2005 | |||||||||||||
Ratio of Earnings to Fixed Charges | 25.4 | x | 23.8 | x | 24.3 | x | 18.5 | x |
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NHC | NHR | |||||||||||||||||||||||
High | Low | Dividend | High | Low | Dividend | |||||||||||||||||||
2005 | ||||||||||||||||||||||||
First Quarter | $ | 37.61 | $ | 30.00 | $ | 0.125 | $ | 21.00 | $ | 17.66 | $ | 0.3325 | ||||||||||||
Second Quarter | $ | 36.49 | $ | 30.51 | $ | 0.150 | $ | 20.10 | $ | 18.20 | $ | 0.3325 | ||||||||||||
Third Quarter | $ | 36.95 | $ | 33.62 | $ | 0.150 | $ | 20.23 | $ | 18.45 | $ | 0.3325 | ||||||||||||
Fourth Quarter | $ | 38.95 | $ | 33.83 | $ | 0.150 | $ | 20.98 | $ | 18.00 | $ | 0.4325 | ||||||||||||
2006 | ||||||||||||||||||||||||
First Quarter | $ | 42.58 | $ | 36.50 | $ | 0.150 | $ | 20.95 | $ | 18.30 | $ | 0.3325 | ||||||||||||
Second Quarter | $ | 47.75 | $ | 38.26 | $ | 0.180 | $ | 19.99 | $ | 16.80 | $ | 0.3325 | ||||||||||||
Third Quarter | $ | 55.81 | $ | 39.22 | $ | 0.180 | $ | 20.41 | $ | 18.42 | $ | 0.3325 | ||||||||||||
Fourth Quarter | $ | 59.00 | $ | 49.84 | $ | 0.180 | $ | 25.30 | $ | 19.29 | $ | 0.4325 | ||||||||||||
2007 | ||||||||||||||||||||||||
First Quarter (through March 31, 2007) | $ | 57.50 | $ | 50.02 | $ | 0.180 | $ | 24.26 | $ | 23.21 | $ | 0.3325 | ||||||||||||
Second Quarter (through June 30, 2007) | $ | 54.75 | $ | 49.82 | $ | 0.21 | $ | 24.10 | $ | 23.32 | $ | 0.3325 | ||||||||||||
Third Quarter (through September 10, 2007) | $ | 54.59 | $ | 48.73 | $ | 0.21 | $ | 23.97 | $ | 21.80 | $ | 0.3325 |
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• | the value of the merger consideration that the holders of NHR common stock will receive in the merger may decline depending on the market value of the NHC common stock; | |
• | the failure to realize the intended benefits of the merger, which could have a negative impact on the market price of the shares of NHC’s common stock and the Preferred Stock following the completion of the merger; | |
• | NHC and NHR may incur substantial expenses and payments if the merger does not occur; | |
• | the termination fee payable by NHR under specified circumstances may discourage third party proposals to acquire NHR that NHR stockholders may otherwise find desirable; | |
• | the financial advisors’ fairness opinions will not reflect changes in circumstances between signing the merger agreement and the closing of the merger; | |
• | the directors and executive officers of NHR have interests in the completion of the merger that may differ from or conflict with the interests of the stockholders of NHR; | |
• | financial forecasts and projections considered by the parties may not be realized, which may adversely affect the market price of the NHC common stock and the Preferred Stock or the NHR common stock; | |
• | the respective financial advisors to the NHC special committee and the NHR special committee reviewed and relied on, among other things, certain projected financial forecasts and costs savings and operational synergies, and a failure of the combined company to achieve those results could have a material adverse effect on the market price of the NHC common stock and the Preferred Stock; | |
• | most of the Preferred Stock issued in the merger will be eligible for sale immediately after the merger is completed; |
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• | the Preferred Stock to be issued in the merger has never been publicly traded so NHC cannot predict the extent to which a market will develop for the Preferred Stock or how volatile or liquid that market will be or what the effect of its issuance will be on the market for NHC’s common stock; | |
• | NHC may incur adverse tax consequences if NHR has failed or fails to qualify as a REIT for U.S. federal income tax purposes; | |
• | the price of NHC common stock may fluctuate significantly; and | |
• | certain provisions in the NHC certificate of incorporation, the NHC bylaws and of Delaware law could deter, delay or prevent a third party from acquiring NHC and that could deprive you of an opportunity to obtain a takeover premium for NHC common stock and the Preferred Stock. |
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• | the affirmative vote of the holders a majority of common shares outstanding and entitled to vote thereon at the NHC special meeting is required to approve the amendment of the NHC certificate of incorporation; | |
• | the affirmative vote of the holders of a majority of the outstanding common shares represented and voting is required to approve the issuance of shares of the Preferred Stock pursuant to the merger; | |
• | on each other matter to be acted on, including any postponement or adjournment of the NHC special meeting to solicit additional votes, the affirmative vote of a majority of the outstanding common shares represented and voting at the NHC special meeting is required to approve such matter. |
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• | the affirmative vote of the holders of a majority of all common stock outstanding and entitled to vote thereon at the NHR special meeting; and | |
• | the affirmative vote of the holders of a majority of the common stock outstanding and entitled to vote thereon that are not owned by an affiliate of NHR, including any director or officer of NHR or NHC, or any of their affiliates. |
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• | due organization, valid existence and good standing; | |
• | authorization to enter into the merger agreement and required stockholder approvals to complete the merger; | |
• | enforceability of the merger agreement; | |
• | compliance with SEC reporting requirements; | |
• | required governmental consents; | |
• | no breach of organizational documents or material agreements as a result of the merger agreement or the completion of the merger; | |
• | receipt of opinion of financial advisors; | |
• | payment of fees of brokers, finders and investment bankers; | |
• | accuracy of information contained in the documents filed with the SEC; | |
• | capital structure and subsidiaries; | |
• | exemption from anti-takeover statutes; | |
• | tax matters; | |
• | permits and licenses; |
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• | compliance with laws; | |
• | no changes since December 31, 2005 that would have a material adverse effect; | |
• | no material legal proceedings; | |
• | environmental matters; | |
• | ownership of real property; and | |
• | no material undisclosed liabilities. |
• | declare, set aside or pay any dividend or make any other distribution in respect of capital stock, with some exceptions, including (i) the payment by NHR of its 2006 dividend for REIT purposes and the special dividend for the period from January 1, 2007 and (ii) the payment by NHC of normal quarterly cash dividends on its shares of common stock, in each case, until the closing of the merger; | |
• | amend organizational documents (except, in the case of NHC, to amend the certificate of incorporation in accordance with the terms of the merger agreement, including the amendment in connection with the authorization of the Preferred Stock); | |
• | change their fiscal year; or | |
• | authorize, commit or agree to take any actions which would make any of the representations and warranties stated in the merger agreement untrue or incorrect, subject to certain materiality qualifications. |
• | issue, deliver, sell, pledge, dispose or encumber any shares of its capital stock; | |
• | acquire any person or business; | |
• | terminate the Management Agreement; | |
• | adopt any new employee benefit plan, incentive plan, severance plan, stock option or similar plan, grant new stock appreciation rights or amend any existing plans or rights, except such changes as are required by law or which are not more favorable to participants than provisions presently in effect; | |
• | take any action that would cause NHR not to qualify and be taxable as a REIT; | |
• | conduct its operations other than in the ordinary course of business consistent with past practice; |
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• | enter into any new material line of business or incur or commit any capital expenditures or any liabilities other than the ones incurred in the ordinary course of business; | |
• | sell, lease or dispose of any of its assets other than in the ordinary course of business; | |
• | enter into any joint venture, partnership or similar agreement; | |
• | make any loans or incur any indebtedness other than in the ordinary course of business; | |
• | modify, amend or terminate any material contract (as defined in the merger agreement); | |
• | settle or compromise any claim or lawsuit, whether now pending or hereafter brought without the prior written consent of Davis Acquisition Sub LLC; or | |
• | commit any act or omission which constitutes a material breach or default under any agreement with any governmental entity or under any material contract or material license. |
• | the NHR Proposal and the NHC Proposal shall have been approved by the requisite votes of the NHR and NHC stockholders, as applicable; | |
• | no legal restraint or prohibition shall be in effect preventing the consummation of the merger; | |
• | the registration statement, including this joint proxy statement/prospectus, shall have been declared effective by the SEC; | |
• | the shares of Preferred Stock to be issued in the merger shall have been approved for listing on the American Stock Exchange; | |
• | the NHR reorganization shall have been consummated, including the merger of NHR and its wholly-owned subsidiary, NHR-Delaware, Inc., a Delaware corporation, with NHR as the surviving entity; | |
• | the limited partnership units of NHR/OP, L.P. held by Adams Mark, L.P. and National Health Corporation will be purchased by Davis Acquisition Sub LLC for consideration equivalent to the consideration paid in the merger for the shares of NHR common stock; | |
• | the representations and warranties of the parties to the merger agreement shall be true, except for inaccuracies that would not have a material adverse effect; | |
• | the requisite covenants of each of the parties shall have been performed in accordance with the merger agreement; | |
• | no limitations or other restraints (including any pending or threatened suit, action or proceeding by any governmental entity) shall be in effect which would prevent the consummation of the merger or cause a material adverse effect on Davis Acquisition Sub LLC, NHC/OP, L.P. or NHC, on the one hand, or NHR, on the other hand; and | |
• | since the date of the merger agreement, there shall not have been a material adverse effect relating to NHR, on the one hand, or Davis Acquisition Sub LLC, NHC/OP, L.P. or NHC, on the other hand. |
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• | the merger shall not have been consummated by December 14, 2007, as long as the failure to complete the merger before that date is not the result of the failure by the terminating party to fulfill any of its obligations under the merger agreement; | |
• | either the stockholders of NHC do not approve the NHC Proposal or the stockholders of NHR do not approve the NHR Proposal; | |
• | any legal restraint or prohibition preventing the merger or which has a material adverse effect on either Davis Acquisition Sub LLC, NHC/OP, L.P., NHC, on the one hand, or NHR, on the other hand, shall have become final and nonappealable; | |
• | either NHR, on the one hand, or Davis Acquisition Sub LLC, NHC/OP, L.P. or NHC, on the other hand, breached or failed to perform certain representations, warranties, covenants or agreement as set forth in the merger agreement; or | |
• | the consolidation of NHR is not approved by the required vote of the stockholders of NHR. |
• | Davis Acquisition Sub, LLC or NHR terminates the merger agreement because the merger is not consummated by December 14, 2007; or | |
• | Davis Acquisition Sub, LLC terminates the merger agreement because NHR did not obtain the appropriate stockholder vote to complete the merger; |
• | Davis Acquisition Sub, LLC or NHR terminates the merger agreement because the NHR special committee failed to recommend the merger to NHR stockholders; or | |
• | Davis Acquisition Sub, LLC or NHR terminates the merger agreement because NHR failed to hold the NHR special meeting or mail the joint proxy statement to NHR stockholders; or | |
• | Davis Acquisition Sub, LLC or NHR terminates the merger agreement because NHR breached NHR’s non solicitation covenant. |
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• | the merger agreement is terminated by Davis Acquisition Sub LLC as a result of NHR’s breach or failure to perform any of its representations, warranties, covenants or agreements as set forth in the merger agreement; or | |
• | the merger agreement is terminated by Davis Acquisition Sub LLC because NHR fails (i) to recommend the NHR Proposal to its stockholders, (ii) to call or hold the NHR special meeting or to prepare and mail this joint proxy statement/prospectus, or (iii) to comply with its non-solicitation obligations under the merger agreement. |
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• | extend the time for the performance of any of the obligations or other acts of the other parties; | |
• | waive any inaccuracies in the representations and warranties of the other parties contained in the merger agreement or in any document delivered under the merger agreement; or | |
• | waive compliance with any of the agreements or conditions of the other parties contained in the merger agreement. |
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• | in favor of approval of the merger agreement and the transactions contemplated by the merger agreement; and | |
• | against approval or adoption of any action or agreement (other than the merger agreement or the transactions contemplated by the merger agreement) that would impede, interfere with, delay, postpone or attempt to discourage the merger. |
• | not to sell, transfer, pledge, encumber, assign or otherwise dispose of, enforce any redemption agreement with NHR, or enter into, any contract, option or other arrangement or understanding with respect to any disposition of any common shares of NHR common stock owned beneficially by that stockholder; | |
• | not to request NHR to, and NHR will not, register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of such party’s shares of NHR common stock, unless such transfer is made in compliance with the voting agreement; | |
• | to comply with the non-solicitation provisions of the merger agreement; and | |
• | to waive such stockholder’s appraisal rights. |
• | in favor of the establishment and issuance of the shares of Preferred Stock, including any related amendment to the certificate of incorporation of NHC pursuant to the merger agreement; and | |
• | against approval or adoption of any action or agreement (other than the transactions contemplated by the merger agreement) that would impede, interfere with, delay, postpone or attempt to discourage fulfilling this voting agreement. |
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Name | Position | Age | ||||
J. Paul Abernathy | Director | 71 | ||||
Robert G. Adams | Director, CEO & President | 60 | ||||
W. Andrew Adams | Director & Chairman | 61 | ||||
Ernest G. Burgess, III | Director | 67 | ||||
Emil E. Hassan | Director | 60 | ||||
Richard F. LaRoche, Jr. | Director | 62 | ||||
Lawrence C. Tucker | Director | 64 | ||||
Joanne M. Batey | Senior V.P., Homecare | 62 | ||||
D. Gerald Coggin | Senior V.P., Corporate Relations | 56 | ||||
Donald K. Daniel | Senior V.P. & Controller | 61 | ||||
Stephen F. Flatt | Senior V.P., Development | 52 | ||||
David L. Lassiter | Senior V.P., Corporate Affairs | 52 | ||||
Julia W. Powell | Senior V.P., Patient Services | 58 | ||||
Charlotte W. Swafford | Senior V.P. & Treasurer | 59 | ||||
R. Michael Ussery | Senior V.P., Operations | 49 | ||||
John K. Lines | Senior V.P. & General Counsel | 48 |
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Name | Position | Age | ||||
J. Paul Abernathy | Director | 71 | ||||
Robert G. Adams | Director & President | 60 | ||||
W. Andrew Adams | Director & Chairman | 61 | ||||
Ernest G. Burgess, III | Director | 67 | ||||
James R. Jobe | Director | 46 | ||||
Richard F. LaRoche, Jr. | Director | 62 | ||||
Joseph M. Swanson | Director | 68 | ||||
Donald K. Daniel | Senior V.P. & Controller | 61 | ||||
Charlotte W. Swafford | Senior V.P. & Treasurer | 59 | ||||
John K. Lines | Senior V.P. and General Counsel | 48 |
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• | junior to each class or series of NHC’s capital stock established by the board of directors after the effectiveness of the merger, the terms of which expressly provide that such class or series will rank senior to the Preferred Stock; | |
• | on a parity with each class or series of NHC’s capital stock established by the board of directors after the effectiveness of the merger, the terms of which provide that such class or series will rank on a parity with the Preferred Stock; and | |
• | senior to each class or series of NHC’s capital stock established by the board of directors after the effectiveness of the merger, the terms of which provide that such class or series will rank junior to the Preferred Stock. |
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• | NHC may not take any of the following actions with respect to any of its junior stock: (i) declare or pay any dividend or make any distribution of assets on any junior stock, except that NHC may pay dividends in shares of its junior stock and pay cash in lieu of fractional shares in connection with any such dividends, or (ii) redeem, purchase or otherwise acquire any junior stock, except that (x) NHC may redeem, repurchase or otherwise acquire junior stock upon conversion or exchange of such junior stock for other junior stock and pay cash in lieu of fractional shares in connection with any such conversion or exchange and (y) NHC may make (A) repurchases of capital stock deemed to occur upon the exercise of stock options if such capital stock represents a portion of the exercise price thereof and (B) repurchases of capital stock deemed to occur upon the withholding of a portion of the capital stock issued, granted or awarded to one of NHC’s directors, officers or employees to pay for the taxes payable by such director, officer or employee upon such issuance, grant or award in order to satisfy, in whole or in part, withholding tax requirements in connection with the exercise of such options, in accordance with the provisions of an option or rights plan or program of NHC; | |
• | NHC may not take any of the following actions with respect to any of its parity stock: (i) declare or pay any dividend or make any distribution of assets on any of its parity stock, except that NHC may pay dividends on parity stock provided that the total funds to be paid be divided among the Preferred Stock and such parity stock on a pro rata basis in proportion to the aggregate amount of dividends accrued and unpaid or accumulated thereon; or (ii) redeem, purchase or otherwise acquire any parity stock, except that NHC may redeem, purchase or otherwise acquire parity stock upon conversion or exchange of such parity stock for junior stock or other parity stock and pay cash in lieu of fractional shares in connection with any such conversion or exchange, so long as, in the case of such other parity stock, (x) such other parity stock contains terms and conditions that are not materially less favorable, taken as a whole, to NHC or to the holders of Preferred Stock than those contained in the parity stock that is converted into or exchanged for such other parity stock, (y) the aggregate amount of the liquidation preference of such other parity stock does not exceed the aggregate amount of the liquidation preference, plus accrued and unpaid or accumulated dividends, of the parity stock that is converted into or exchanged for such other parity stock and (z) the aggregate number of shares of common stock issuable upon conversion, redemption or exchange of such other parity stock does not exceed the aggregate number of shares of common stock issuable upon conversion, redemption or exchange of the parity stock that is converted into or exchanged for such other parity stock. |
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NHC | NHR | |
Authorized Capital Stock | ||
NHC has authority to issue 30,000,000 shares of common stock, $.01 par value per share, and 10,000,000 shares of preferred stock, $.01 par value per share. If the proposed amendment to the NHC certificate of incorporation described in this joint proxy statement/prospectus is approved at the NHC special meeting, the number of shares of preferred stock, $.01 par value per share, that NHC has the authority to issue will be increased to 25,000,000 shares. | NHR has authority to issue 75,000,000 shares of common stock, $.01 par value per share, 5,000,000 shares of preferred stock, $.01 par value per share, and 20,000,000 shares of excess stock, $.01 par value per share. | |
Ownership Limitations | ||
The certificate of incorporation and bylaws do not contain ownership limitations on NHC common stock or other securities. | For NHR to qualify as a REIT under the Internal Revenue Code, among other things: • not more than 50% in value of its outstanding shares may be owned, directly or indirectly, by five or fewer individuals, as defined in the Internal Revenue Code, during the last half of a taxable year; and | |
• the shares must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year. | ||
NHR’s charter, subject to certain exceptions, provides that no holder other than any person approved by the directors, at their option and in their discretion, may own, or be deemed to own by virtue of the attribution provisions of the Internal Revenue Code, more than 9.8% of the lesser of the number or value, as determined in good faith by the directors, of the total outstanding shares of NHR common stock. |
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Distributions and Dividends | ||
The holders of shares NHC of common stock shall be entitled to receive such dividends and distributions as may be declared upon such shares of NHC common stock, from time to time by resolution of the board of directors, except that no payment of dividends or distributions shall be made to the holders of shares of NHC common stock unless and until the holders of shares of Preferred Stock receive any preferential amounts to which they are entitled. | Dividends and other distributions may be declared by the NHR board of directors as set forth in the applicable provisions of the NHR charter and any applicable law, at any meeting, subject to certain required determinations about the financial condition of NHR after giving effect to the dividend. Dividends and other distributions may be paid in cash, property or stock, subject to any applicable law and the NHR charter. | |
Upon any voluntary or involuntary liquidation, dissolution orwinding-up of NHC, each holder of Preferred Stock shall be entitled to payment out of the assets of NHC legally available for distribution of an amount equal to $15.75 per share of the shares held by such holder, plus an amount equal to all accrued and unpaid and accumulated dividends on those shares to but excluding the date of liquidation, dissolution or winding-up, before any distribution is made on any NHC junior stock, including NHC common stock. The holders of the NHC common stock shall share pro rata all assets of NHC, after payment or provision for payment of the debts and liabilities of NHC. | ||
The holders of shares of Preferred Stock will be entitled to receive, when, as and if dividends are declared by the board of directors, dividends at the rate of $0.80 per annum per share of Preferred Stock, to be payable in cash out of funds legally available therefore. Dividends on the Preferred Stock are cumulative. | ||
Meeting of Stockholders | ||
The annual meeting of the NHC stockholders shall be held, at such place within or without the state of Delaware as may be designated by the board of directors of NHC, on such date and at such time as shall be designated each year by the board of directors of NHC and stated in the notice of the meeting. At the annual meeting the NHC stockholders shall elect directors by a plurality vote and transact such other business as may properly be brought before the meeting. | As provided in the bylaws, an annual meeting of the stockholders of NHR shall be held on the third Wednesday in September of each year or on or before the 30th day thereafter as may be fixed by the NHR board of directors. At the annual meeting, the NHR stockholders shall elect directors and transact any other business properly brought before the meeting. | |
Special meetings of stockholders may be called by the president or a majority of the NHC board of directors. The place of said meetings shall be designated by the directors. The business transacted at special meetings of NHC stockholders shall be confined to the business stated in the notice given to the NHC stockholders. | Special meetings of stockholders may be called by the president, the chairman of the board or a majority of the board of directors. The secretary may also call special meetings of stockholders but only upon written request of stockholders entitled to cast a majority of all of the votes at the meeting. The date, time, place and record date for any special meeting shall be established by the board of directors. Only business specifically designated in the notice of the meeting may be transacted at a special meeting. |
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NHC | NHR | |
Stockholder Nominations and Proposals | ||
At an annual or special meeting of NHC stockholders, only such business shall be conducted as shall have been properly brought before the meeting. A stockholder’s notice must be delivered to or mailed and received at the principal executive offices of NHC not less than 60 nor more than 90 days prior to the stockholder’s meeting. | At an annual or special meeting of NHR stockholders, only such business shall be conducted as shall have been properly brought before the meeting. A stockholder’s notice must be delivered to or mailed and received at the principal executive offices of NHR not less than 75 nor more than 180 days prior to the anniversary date of the immediately preceding annual meeting of stockholders. | |
Size of the Board of Directors | ||
Under the NHC certificate of incorporation, the board of directors shall be comprised of not less than 6 or more than 12 members, the exact numbers to be fixed from time to time by the board of directors pursuant to a resolution adopted by a majority of directors then in office. | The charter provides that the board of directors shall consist of five members, which number may be increased or decreased in accordance with the bylaws, but shall not be less than the number required bySection 2-402 of the Maryland General Corporation Law, as the same may be amended from time to time. The NHR board of directors currently consists of seven members. | |
In addition, if and whenever six full quarterly dividends, whether or not consecutive, payable on the Preferred Stock are not paid, the number of directors constituting the NHC board of directors will be increased by two and the holders of Preferred Stock, voting together as a single class, will be entitled to elect those additional directors. In any case where the holders of Preferred Stock are entitled to vote as a class under this section, each holder of Preferred Stock will be entitled to one vote for each share of Preferred Stock owned by such holder. | ||
Removal of Directors | ||
Directors of NHC may be removed at any time for “cause” by the affirmative vote of the holders of a majority of the outstanding shares of NHC capital stock entitled to vote generally in the election of directors (considered for this purpose as one class). “Cause” means (i) any fraudulent or dishonest act or activity by the director; or (ii) behavior materially detrimental to the business of NHC. | Any NHR director, or the entire board of directors of NHR, may be removed from office at any time, but only for “cause” and then only by the affirmative vote of the holders of a majority of the votes entitled to be cast in the election of directors. “Cause” means with respect to any particular director a final judgment of a court of competent jurisdiction holding that such director caused demonstrable, material harm to NHR through bad faith or active and deliberate dishonesty. | |
Filling Director Vacancies | ||
Newly created directorships resulting from an increase in the number of NHC directors, and vacancies occurring in any office or directorship for any reason, including removal of an officer or director, may be filled by the vote of a majority of the NHC directors remaining in office. | A vacancy which results from the death, resignation or removal of an NHR director or as a result of an increase by the board of directors in the number of NHR directors may be filled by a vote of the entire board of directors, and a director so elected to fill a vacancy shall serve until the expiration of such |
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NHC | NHR | |
director’s term and until his successor shall be duly elected and qualified. | ||
Liability of Directors | ||
The NHC certificate of incorporation eliminates the personal liability of the NHC directors to the fullest extent permitted by paragraph (7) of clause (b) of Section 102 of the General Corporation Law of the State of Delaware, as the same may be amended or supplemented. | The NHR charter contains a provision, as permitted by Maryland law, that limits the liability of the directors and officers to NHR or its stockholders for money damages. | |
Indemnification | ||
Pursuant to the NHC certificate of incorporation, NHC shall, to the fullest extent permitted by ss.145 of the General Corporation Law of the State of Delaware, indemnify any and all directors, officers, employees and agents whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities or other matters referred to in or covered by said section, and the indemnification provided for therein shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such person. | To the maximum extent permitted by Maryland law, NHR shall indemnify, and pay or reimburse reasonable expenses in advance of final disposition of a proceeding to, (a) any individual who is a present or former director or officer of NHR or the predecessor corporation or (b) any individual who, while a director and at the request of NHR, serves or has served as a director, officer, partner or trustee of another corporation, partnership, joint venture, trust, employee benefit plan or any other enterprise from and against any claim or liability to which such person may become subject or which such person may incur by reason of his status as a present or former director or officer of NHR. | |
Inspection of Books and Records | ||
Pursuant to the General Corporation Law of the State of Delaware, any NHC stockholder shall, upon written demand stating the purpose thereof, have the right, during usual business hours to inspect for any proper purpose the NHC books and records. If the inspection sought is of NHC stockholder lists, the burden of proof is on NHC to prove the information is being sought for an improper purpose. For other corporate records, the burden is on the NHC stockholder to prove proper purpose. | Under the Maryland General Corporation Law, any NHR stockholder or holder of a voting trust certificate may inspect and copy during usual business hours NHR’s bylaws, minutes of the proceedings of the stockholders, annual statements of affairs and voting trust agreements on file at NHR’s principal office. Written demand shall be required for inspection of NHR’s stock records, but such request may only include stock records issued by NHR for a period of not more than 12 months before the date of the request. A person who has been the holder of 5% or more of the common stock for six months has additional inspection rights. | |
Amendment of the Certificate of Incorporation or Charter | ||
Any of the provisions of the NHC certificate of incorporation may be amended, altered or repealed in accordance with the laws of the State of Delaware at the time in force; provided, however, that the affirmative vote of the holders of at least a majority of the outstanding shares of common stock entitled to vote and a majority of the members of the NHC board of directors then holding office is required to | An amendment shall be effective and valid if such action has been approved, advised or recommended by the board of directors and is taken or authorized by the affirmative vote of holders of NHR common stock entitled to cast a majority of all the votes entitled to be cast on the matter. |
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amend those provisions of the certificate of incorporation. | ||
In some cases, the vote of holders of 70% or more of the combined voting power of the then outstanding shares of stock is required to amend provisions of the NHC certificate of incorporation. | ||
Amendment of the Bylaws | ||
The NHC bylaws may be amended, added to or repealed by an affirmative vote of at least a majority of either (i) the shares of NHC common stock entitled to vote, or (ii) the NHC board of directors. | The NHR board of directors shall have the power, at any annual or regular meeting, or at any NHR special meeting if notice thereof is included in the notice of such special meeting, to alter or repeal any bylaws of NHR and to make new bylaws. The NHR stockholders, by affirmative vote of a majority of the shares of NHR common stock shall have the power, at any annual meeting or at any special meeting, if notice thereof is included in the notice of such special meeting, to alter or repeal any bylaws of NHR and to make new bylaws. | |
Affiliated Transactions | ||
In addition to any affirmative vote required by law or the certificate of incorporation and subject to certain exceptions, affiliated transactions shall not be consummated without the affirmative vote of the holders of at least 70 percent of the combined voting power of the then outstanding shares of NHC common stock of all classes and series entitled to vote generally in the election of directors, in each case voting together as a single class. | An affiliated transaction shall be effective and valid if such action has been approved, advised or recommended by the affirmative vote of a majority of disinterested NHR directors or by the affirmative vote of a majority of NHR stockholders entitled to vote other than the votes of shares owned of record or beneficially by the interested party. | |
Vote on Merger | ||
Pursuant to the General Corporation Law of the State of Delaware, the NHC board of directors must recommend a plan of merger to its stockholders. Except in the case of affiliated transactions, as described above, and in the cases expressly set forth in the certificate of incorporation, a majority in interest of the NHC stock represented at a stockholders meeting shall decide the business. | A merger shall be effective and valid if such action has been approved, advised or recommended by the NHR board of directors and is taken or authorized by the affirmative vote of holders of NHR common stock entitled to cast a majority of all the votes entitled to be cast on the matter. | |
Dissenters’ Rights | ||
The stockholders of NHC will not be entitled to exercise dissenters’ rights with respect to any matter to be voted upon at the NHC special meeting. | The stockholders of NHR will not be entitled to exercise dissenters’ rights with respect to any matter to be voted upon at the NHR special meeting because NHR’s common stock is listed on the American Stock Exchange. |
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Stockholder Action Without a Meeting | ||
Any action required or permitted to be taken by the holders of the issued and outstanding NHC stock may be effected solely at an annual or special meeting of NHC stockholders. | An action required or permitted to be taken at a meeting of NHR stockholders may be taken without a meeting if a consent in writing, setting forth such action, is signed by all the NHR stockholders entitled to vote on the subject matter thereof and any other NHR stockholders entitled to notice of such meeting have waived in writing any rights which they may have to dissent from such action and such consents and waivers are filed with the records of the NHR stockholders meetings. | |
Stockholder Rights Plan | ||
NHC has a stockholder rights plan which could discourage unwanted or hostile takeover attempts which are not negotiated with its board of directors. The plan discourages such attempts by causing substantial dilution to any person who acquires an amount in excess of a specified percentage of NHC’s common stock and by making an acquisition of NHC without the consent of its board of directors prohibitively expensive. Each share of NHC common stock has attached to it a stock purchase right having the terms set forth in the stockholder rights agreement. Each right will entitle its holder to purchase one ten-thousandth of a share of Series B Preferred Stock at a price of $250.00 (subject to adjustment) (referred to below as the “exercise price”) and will generally become exercisable if any person or group(i) acquires 20% or more of NHC’s common stock or (ii) commences a tender or exchange offer to acquire 20% or more of NHC’s common stock. The dividend, voting, liquidation and other rights of the Series B Preferred Stock are such that the market value of one ten- thousandth of a share of Series B Preferred Stock should approximately equal the market value of one share of common stock. | NHR does not have a stockholder rights plan. | |
Upon announcement that any person or group has acquired 20% or more of NHC’s common stock, rights owned by the acquiring person will become void and each other right will “flip-in,” entitling its holder to purchase for the exercise price either Series B Preferred Stock or, at the option of NHC, common stock, having a market value of twice the exercise price. In addition, after any person has acquired more than 20% of NHC common stock, NHC may not consolidate or merge with any person or sell 50% or more of its assets or earning power to any person if at the time of such merger or sale the acquiring person controls NHC’s board of directors, unless provision is made such that each right would thereafter entitle its holder to buy, for the exercise |
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price, the number of shares of common stock of such other person having a market value of twice the exercise price. The rights may be redeemed by NHC for $.01 per right at any time prior to an acquisition of 20% or more of the common stock of NHC. The rights will expire on August 2, 2017 or before that date under certain circumstances |
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• | banks and other financial institutions; | |
• | insurance companies; | |
• | tax-exempt entities; | |
• | mutual funds and real estate investment trusts; | |
• | subchapter S corporations; | |
• | dealers in securities or currencies; | |
• | traders in securities that elect to use amark-to-market method of accounting for their securities holdings; | |
• | U.S. holders whose functional currency is not the United States dollar; | |
• | persons holding shares of NHR common stock or the Preferred Stock as part of a hedging or conversion transaction or as part of a “straddle” or a constructive sale; | |
• | U.S. expatriates; | |
• | persons subject to the alternative minimum tax; | |
• | holders who acquired NHR common stock or the Preferred Stock (or the common stock received upon conversion thereof) through the exercise of employee stock options or warrants or otherwise as compensation; | |
• | holders that are properly classified as a partnership or otherwise as a pass-through entity under the Code; and | |
• | non-U.S. holders, as defined below, except to the extent discussed below. |
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• | an individual who is a citizen or resident of the United States; | |
• | a corporation (or other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States or any state thereof, or the District of Columbia; | |
• | a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust, or (B) that has a valid election in effect under applicable United States Treasury Regulations to be treated as a United States person; or | |
• | an estate the income of which is subject to United States federal income taxation regardless of its source. |
• | the sum of the fair market value of the Preferred Stock and the amount of cash received in the merger, plus (subject to the discussion below) the amount of cash received as the Special Dividend; and | |
• | the U.S. holder’s adjusted tax basis in the NHR common stock surrendered for such consideration. |
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Existing Authorized Capital | ||
30,000,000 | Common Stock | |
10,000,000 | Preferred Stock | |
40,000,000 | Total | |
Proposed Authorized Capital | ||
30,000,000 | Common Stock | |
25,000,000 | Preferred Stock | |
55,000,000 | Total | |
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• | the affirmative vote of the holders of a majority of all common stock outstanding and entitled to vote; and | |
• | the affirmative vote of the holders of a majority of the common stock outstanding and entitled to vote that are not owned by a director or officer of NHR, any affiliate of NHR, or NHC. |
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NHC Filings | ||
(FileNo. 001-13489) | ||
Annual Report onForm 10-K | For fiscal year ended December 31, 2006 | |
Quarterly Reports on Form 10-Q | For the quarters ended March 31, 2007 and June 30, 2007 | |
Current Reports onForm 8-K | Filed on: January 16, 2007; January 19, 2007; February 15, 2007; April 11, 2007; April 26, 2007, August 3, 2007, and August 6, 2007 (other than the portions of those documents not deemed to be filed) | |
Proxy Statement (Annual Stockholders Meeting) | Filed on March 27, 2007 | |
Registration Statement on Form 8-A | Filed on August 3, 2007 |
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NHR Filings | ||
(FileNo. 001-13487) | ||
Annual Report onForm 10-K | For the fiscal year ended December 31, 2006 | |
Quarterly Reports on Form 10-Q | For the quarters ended March 31, 2007 and June 30, 2007 | |
Current Reports onForm 8-K | Filed on: January 16, 2007; January 19, 2007; March 12, 2007; March 23, 2007; April 11, 2007; June 7, 2007; August 7, 2007; September 11, 2007 and September 14, 2007 (other than the portions of those documents not deemed to be filed) | |
Proxy Statement (Annual Stockholders Meeting) | Filed on March 16, 2006 | |
Proxy Statement (Consolidation Special Meeting) | Filed on August 7, 2007 |
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Page | ||||||
Rule 16b-3 | A-28 | |||||
CONDITIONS PRECEDENT | ||||||
Conditions to Each Party’s Obligation to Effect the Merger | A-29 | |||||
Conditions to Obligations of NHC/OP Sub and Parent | A-29 | |||||
Conditions to Obligations of the Company | A-30 | |||||
Frustration of Closing Conditions | A-31 | |||||
TERMINATION, AMENDMENT AND WAIVER | ||||||
Termination | A-31 | |||||
Effect of Termination | A-32 | |||||
Amendment | A-34 | |||||
Extension; Waiver | A-34 | |||||
GENERAL PROVISIONS | ||||||
Nonsurvival of Representations and Warranties | A-34 | |||||
Notices | A-34 | |||||
Definitions | A-35 | |||||
Interpretation | A-37 | |||||
Counterparts | A-37 | |||||
Entire Agreement; No Third-Party Beneficiaries | A-37 | |||||
Assignment | A-37 | |||||
Governing Law | A-37 | |||||
Specific Enforcement | A-37 | |||||
Consent to Jurisdiction | A-38 | |||||
Waiver of Jury Trial | A-38 | |||||
Severability | A-38 | |||||
Management Agreement | A-38 |
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(a) | if to NHC/OP Sub, NHC/OP or Parent, to: |
100 Vine Street
Suite 1400
Murfreesboro, TN 37130
Facsimile No.:(615) 890-0123
Attention: General Counsel
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80 Pine Street
New York, NY 10005
Facsimile No.:(212) 269-5420
Attention: James J. Clark
Susanna M. Suh
100 Vine Street
Suite 1400
Murfreesboro, TN 37130
Facsimile No.:(615) 890-0123
Attention: General Counsel
511 Union Street
Suite 2700
Nashville, TN 37219
Facsimile No.:(615) 244-6804
Attention: J. Chase Cole
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By: | /s/ R. Michael Ussery |
By: | NHC-Delaware, Inc. |
By: | /s/ R. Michael Ussery |
By: | /s/ R. Michael Ussery |
By: | /s/ Robert G. Adams |
Title: | President |
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Term | Section | ||
2006 Dividend | Section 8.03(o) | ||
Acquirer Expenses | Section 8.03(a) | ||
Affiliate | Section 8.03(b) | ||
Agreement | Preamble | ||
AMEX | Section 3.02(k) | ||
Approval of the Consolidation | Section 6.01(a) | ||
Approval of the Merger | Section 6.01(a) | ||
Business Day | Section 8.03(c) | ||
Certificate | Section 2.01(b) | ||
Certificate of Merger | Section 1.03 | ||
Change in Company Recommendation | Section 4.02(b) | ||
Closing | Section 1.02 | ||
Closing Date | Section 1.02 | ||
Code | Section 8.03(d) | ||
Company | Preamble | ||
Company Benefit Agreement | Section 8.03(e) | ||
Company Benefit Plans | Section 8.03(f) | ||
Company Common Stock | Recitals | ||
Company Disclosure Schedule | Section 3.01 | ||
Company Expenses | Section 8.03(g) | ||
Company Leases | Section 3.01(q)(ii) | ||
Company Owned Real Property | Section 3.01(q)(i) | ||
Company Preferred Stock | Section 3.01(c) | ||
Company Reorganization | Recitals | ||
Company Resolutions | Section 3.01(d)(iii) | ||
Company SEC Documents | Section 3.01(e) | ||
Company Stock Options | Section 3.01(c) | ||
Company Stock Plans | Section 3.01(c) | ||
Company Stockholder Approvals | Section 6.01(a) | ||
Company Stockholders Meeting | Section 5.02(a)(i) | ||
Company Takeover Proposal | Section 4.02(a) | ||
Company 200510-K | Section 3.01(e) | ||
Confidentiality Agreement | Section 5.03 | ||
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Term | Section | ||
Consolidated Company | Recitals | ||
Consolidation | Recitals | ||
DLLCA | Section 1.01 | ||
Effective Time | Section 1.03 | ||
Environmental Claim | Section 3.01(i)(iii)(A) | ||
Environmental Laws | Section 3.01(i)(iii)(B) | ||
ERISA | Section 3.01(r) | ||
Exchange Act | Section 3.01(e)(i) | ||
Exchange Agent | Section 2.02(a) | ||
Exchange Ratio | Section 2.01(b) | ||
Form S-4 | Section 3.01(d) | ||
GAAP | Section 3.01(e)(i) | ||
Governmental Entity | Section 2.02(f) | ||
Hazardous Materials | Section 3.01(i)(iii)(C) | ||
HSR Act | Section 3.01(d) | ||
Holder | Section 2.02(k) | ||
Joint Proxy Statement | Section 3.01(d) | ||
Knowledge | Section 8.03(h) | ||
Legal Provisions | Section 3.01(i) | ||
Liens | Section 3.01(b) | ||
Manager | Recitals | ||
Management Agreement | Recitals | ||
Material Adverse Effect | Section 8.03(i) | ||
Material Contract | Section 3.01(j) | ||
MGCL | Section 1.01 | ||
Merger | Recitals | ||
Merger Consideration | Section 2.01(b) | ||
NHC/OP | Preamble | ||
NHC/OP Sub | Preamble | ||
NHC/OP Sub Disclosure Schedule | Section 3.02 | ||
NHR-Delaware Merger | Recitals | ||
Non-Affiliated Stockholders | Section 6.01(a) | ||
Option Value | Section 2.02(k) | ||
Parachute Gross Up Payment | Section 3.01(k) | ||
Parent | Preamble | ||
Parent Common Stock | Section 3.02(c) | ||
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Term | Section | ||
Parent Preferred Stock | Recitals | ||
Parent SEC Documents | Section 3.02(e) | ||
Parent Stockholder Approval | Section 3.02(k) | ||
Parent Stockholders Meeting | Section 5.02(b) | ||
Parent Stock Options | Section 3.02(c) | ||
Parent Stock Plans | Section 3.02(c) | ||
Permits | Section 3.01(i) | ||
Permitted Exceptions | Section 3.01(q)(i)(A) | ||
person | Section 8.03(j) | ||
Previously Authorized Parent Preferred Stock | Section 3.02(c) | ||
Record Date | Section 2.03 | ||
REIT Dividend | Section 2.03 | ||
Release | Section 3.01(i)(iii)(D) | ||
Representatives | Section 4.02(a) | ||
Restraints | Section 6.01(c) | ||
Schedule 13E-3 | Section 3.01(d) | ||
SEC | Section 3.01(d) | ||
Section 7.02 Company Takeover Proposal | Section 8.03(k) | ||
Securities Act | Section 3.01(e)(i) | ||
Special Committee | Section 4.02(b) | ||
Special Dividend | Section 2.03 | ||
Subsidiary | Section 8.03(l) | ||
Superior Proposal | Section 8.03(m) | ||
Surviving Person | Section 1.01 | ||
Taxes | Section 3.01(l)(vi) | ||
Tax Returns | Section 3.01(l)(vi) | ||
Termination Fee | Section 8.03(n) | ||
Voting Agreement | Recitals |
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A. | Section 3.01(d)(i) of the Merger Agreement is hereby amended by deleting the words “by unanimous vote of all the directors” in the first sentence thereof and replacing them with the words “by unanimous vote of all the directors present and voting”. |
B. | Section 5.04 of the Merger Agreement is hereby amended by adding the following sentence to the end of such Section: |
C. | Section 7.01 of the Merger Agreement is hereby amended by deleting all references in such Section to “June 30, 2007” and replacing such references with “August 31, 2007”. |
A. | Each of NHC/OP Sub, NHC/OP and Parent hereby waive the breach at the time of execution of the Merger Agreement of the representation contained in Section 3.01(d)(i) (as in effect prior to the effectiveness of this Amendment) that the board of directors of the Company approved the matters set forth therein by the unanimous vote of all directors. |
B. | This Amendment shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflict of laws thereof. |
C. | This Amendment may be executed in one or more counterparts (including by facsimile), all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. |
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By: | /s/ R. Michael Ussery |
By: | NHC-Delaware, Inc. |
By: | /s/ R. Michael Ussery |
By: | /s/ R. Michael Ussery |
By: | /s/ Robert G. Adams |
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By: | /s/ R. Michael Ussery |
Title: | Vice President |
By: | NHC-Delaware, Inc. Its General Partner |
By: | /s/ R. Michael Ussery |
Title: Vice President
By: | /s/ R. Michael Ussery |
Title: Senior Vice President, Operations
By: | /s/ Robert G. Adams |
Title: President
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By: | /s/ R. Michael Ussery |
Title: | Senior V.P., Operations |
By: | /s/ Robert G. Adams |
Title: | President |
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/s/ James Paul Abernathy |
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/s/ James Paul Abernathy |
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Number of | ||||||
Stockholder of Parent | Notice Address | Existing Shares | ||||
James Paul Abernathy | 2102 Greenland Dr. | 10,473 | ||||
Murfreesboro, TN 37130 | ||||||
Robert G. Adams | 100 Vine St. Ste. 1400 | 354,932 | ||||
Murfreesboro, TN 37130 | ||||||
W. Andrew Adams | 100 Vine Street, Suite 1200 | 1,093,652 | ||||
Murfreesboro, TN 37130 | ||||||
Ernest G. Burgess, III | 7097 Franklin Road | 146,204 | ||||
Murfreesboro, TN 37128 | ||||||
Emil E. Hassan | 1704 Irby Lane | 6,000 | ||||
Murfreesboro, TN 37127 | ||||||
Richard F. LaRoche, Jr. | 2103 Shannon Dr. | 343,951 | ||||
Murfreesboro, TN 37129 | ||||||
Lawrence C. Tucker | 140 Broadway | 720,155 | ||||
New York, NY 10005 |
Number of | ||||||
Stockholder of Company | Notice Address | Existing Shares | ||||
James Paul Abernathy | 2102 Greenland Dr. | 8,187 | ||||
Murfreesboro, TN 37130 | ||||||
W. Andrew Adams | 100 Vine Street, Suite 1200 | 1,257,681 | ||||
Murfreesboro, TN 37130 | ||||||
Robert G. Adams | 100 Vine St. Ste. 1400 | 436,309 | ||||
Murfreesboro, TN 37130 | ||||||
Ernest G. Burgess, III | 7097 Franklin Road | 140,000 | ||||
Murfreesboro, TN 37128 | ||||||
James R. Jobe | 707 Regal Drive | 0 | ||||
Murfreesboro, TN 37129 | ||||||
Joseph M. Swanson | 1188 Park Avenue | 5,000 | ||||
Murfreesboro, TN 37129 | ||||||
Richard F. LaRoche, Jr. | 2103 Shannon Dr. | 372,714 | ||||
Murfreesboro, TN 37129 |
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PREFERENCES AND RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS AND
RESTRICTIONS THEREOF, OF SUCH PREFERRED STOCK OF
NATIONAL HEALTHCARE CORPORATION
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By: |
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Number: [ ] | [ ] Shares |
OF
NATIONAL HEALTHCARE CORPORATION
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Title: |
By: |
Title: |
Dated: |
By: |
Dated: |
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Signature: |
* | Signature must be guaranteed by an “eligible guarantor institution” (i.e., a bank, stockbroker, savings and loan association or credit union) meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. |
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in Order to Convert the Preferred Stock)
Signature: |
* | Signature must be guaranteed by an “eligible guarantor institution” (i.e., a bank, stockbroker, savings and loan association or credit union) meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. |
* | The Company is not required to issue shares of Common Stock to a person holding Preferred Stock until evidence of the book-entry transfer of, or physical delivery of the stock certificates representing such Preferred Stock to be converted (or evidence of loss, theft or destruction thereof) are received by the Company or its Registrar. | |
** | Address where certificated shares of Common Stock, if any, and any other payments or certificates shall be sent by the Company. |
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Number of shares | ||||||||||||||||
Amount of decrease | Amount of increase | represented by this | ||||||||||||||
in number of shares | in number of shares | Global Preferred | ||||||||||||||
Date | represented by this | represented by this | Certificate | Signature of | ||||||||||||
of | Global Preferred | Global Preferred | following such | authorized officer | ||||||||||||
Exchange | Certificate | Certificate | decrease or increase | of Registrar | ||||||||||||
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By: /s/ Michael E. Collins Michael E. CollinsChief Executive Officer Managing Member | By: /s/ Eric Bergesen Eric Bergesen, AVAChief Operating Officer Member |
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CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
NATIONAL HEALTHCARE CORPORATION
By: |
By: |
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Item 20. | Indemnification of Officers and Directors. |
Item 21. | Exhibits and Financial Statement Schedules. |
Exhibit | ||||
Number | Description | |||
2 | .1 | Agreement and Plan of Merger, dated December 20, 2006, by and among Davis Acquisition Sub LLC, NHC/OP, L.P., NHC and NHR (Included as Annex A to the joint proxy statement/prospectus included in this registration statement and incorporated by reference to Exhibit 2.1 to the current report onForm 8-K, filed with the SEC on December 20, 2006). | ||
2 | .2 | Amendment and Waiver No. 1 to Agreement and Plan of Merger, dated April 6, 2007, by and among Davis Acquisition Sub LLC, NHC/OP, L.P., NHC and NHR (Included in Annex A to the joint proxy statement/prospectus included in this registration statement and incorporated by reference to Exhibit 10.1 to the current report onForm 8-K filed on April 11, 2007). |
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Exhibit | ||||
Number | Description | |||
2 | .3 | Amendment No. 2 to Agreement and Plan of Merger, dated August 3, 2007, by and among Davis Acquisition Sub LLC, NHC/OP, L.P., NHC and NHR (included in Annex A to the joint proxy statement/prospectus included in this registration statement and incorporated by reference to Exhibit 2.01 to the current report onForm 8-K filed on August 3, 2007). | ||
3 | .1.1 | Articles of Incorporation (Incorporated by reference to Exhibit 3.1 toForm S-4, RegistrationNo. 333-37185). | ||
3 | .1.2 | Certificate of Designations of Series A Convertible Preferred Stock (Included as Annex C to the joint proxy statement/prospectus included in this registration statement and incorporated by reference to Exhibit 2.1 to the current report onForm 8-K filed on December 20, 2006). | ||
3 | .1.3 | Certificate of Designations of Series B Junior Participating Preferred Stock of NHC (Incorporated by reference to Exhibit 3.1 to Form 8-A filed on August 3, 2007). | ||
3 | .2 | By-laws (Incorporated by reference to Exhibit 3.2 toForm S-4, RegistrationNo. 333-37185). | ||
4 | .1 | Rights Agreement, dated August 2, 2007, between NHC and Computershare Trust Company, N.A. (Incorporated by reference to Exhibit 4.1 to Form 8-A filed on August 3, 2007). | ||
5 | .1* | Opinion of Cahill Gordon & Reindelllp regarding legality of the capital stock. | ||
9 | .1 | Voting Agreement, dated December 20, 2006, between NHC and certain stockholders of NHC, and NHR and certain stockholders of NHR (Included as Annex B to the joint proxy statement/prospectus included in this registration statement and filed as Exhibit 10.1 to the current report onForm 8-K, filed with the SEC on December 20, 2006). | ||
10 | .1 | Material Contracts, Incorporated by reference to Exhibits 10.1 through 10.9 attached toForm S-4, (Proxy Statement-Prospectus) as amended, RegistrationNo. 333-37185 (December 5, 1997). | ||
10 | .2 | Employee Stock Purchase Plan (Incorporated by reference to Exhibit A toForm S-4, RegistrationNo. 333-37185). | ||
10 | .3 | 1997 Stock Option Plan (Incorporated by reference to Exhibit 10.5.3 toForm S-4 filed on November 20, 1997). | ||
10 | .4 | 2004 Non-Qualified Stock Option Plan (Incorporated by reference to Appendix B to Schedule 14A filed on March 28, 2005). | ||
10 | .5 | 2005 Stock Option, Employee Stock Purchase, Physician Stock Purchase and Stock Appreciation Rights Plan (Incorporated by reference to Appendix A to Schedule 14A filed on March 28, 2005). | ||
10 | .6 | Amendment No. 1 to Master Operating Lease made to the Master Operating Lease between NHR/OP, L.P. and NHC (Incorporated by reference to Exhibit 10.15 to NHC’s annual report onForm 10-K filed on March 16, 2006). | ||
10 | .7 | Amendment No. 2 to Master Operating Lease by and between NHR/OP, L.P. and NHC (Incorporated by reference to Exhibit 10.16 to NHC’s annual report onForm 10-K filed on March 16, 2006). | ||
10 | .8 | Amendment No. 3 to Master Operating Lease by and between NHR/OP, L.P. and NHC (Incorporated by reference to Exhibit 10.17 to NHC’s annual report onForm 10-K filed on March 16, 2006). | ||
10 | .9 | Amendment No. 4 to Master Operating Lease by and between NHR/OP, L.P. and NHC (Incorporated by reference to Exhibit 10.18 to NHC’s annual report onForm 10-K filed on March 16, 2006). | ||
10 | .10 | Amendment No. 1 to Master Agreement to Lease made to the Master Agreement to Lease between National Health Investors, Inc. and National HealthCorp L.P. (Incorporated by reference to Exhibit 10.19 to NHC’s annual report onForm 10-K filed on March 16, 2006). |
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Exhibit | ||||
Number | Description | |||
10 | .11 | Amendment No. 2 to Master Agreement to Lease made to the Master Agreement to Lease between National Health Investors, Inc. and National HealthCare L.P. (Incorporated by reference to Exhibit 10.20 to NHC’s annual report onForm 10-K filed on March 16, 2006). | ||
10 | .12 | Amendment No. 3 to Master Agreement to Lease made to the Master Agreement to Lease between National Health Investors, Inc. and National HealthCare L.P. (Incorporated by reference to Exhibit 10.21 to NHC’s annual report onForm 10-K filed on March 16, 2006). | ||
10 | .13 | Amendment No. 4 to Master Agreement to Lease made to the Master Agreement to Lease between National Health Investors, Inc. and National HealthCare L.P. (Incorporated by reference to Exhibit 10.22 to NHC’s annual report onForm 10-K filed on March 16, 2006). | ||
10 | .14 | Amendment No. 5 to Master Agreement to Lease made to the Master Agreement to Lease between National Health Investors, Inc. and NHC (Incorporated by reference to Exhibit 10.23 to NHC’s annual report onForm 10-K filed on March 16, 2006). | ||
10 | .15 | Letter Agreement dated December 15, 2006, between NHC and AdamsMark, L.P. (Incorporated by reference to Exhibit 10.1 toForm 8-K filed on January 16, 2007). | ||
10 | .16 | 2002 Stock Option Plan (Incorporated by reference to Exhibit B to Schedule 14A filed on March 1, 2002). | ||
12 | .1 | NHC Ratio of Earnings to Fixed Charges and Preferred Stock Dividends. | ||
12 | .2 | NHR Ratio of Earnings to Fixed Charges. | ||
21 | .1 | Subsidiaries of NHC (Incorporated by reference to Exhibit 21 to the annual report onForm 10-K of NHC for the year ended December 31, 2006). | ||
23 | .1* | Consent of Cahill Gordon & Reindelllp (see Exhibit 5.1). | ||
23 | .2 | Consent of BDO Seidman, LLP, Independent Registered Public Accounting Firm. | ||
23 | .3 | Consent of BDO Seidman, LLP, Independent Registered Public Accounting Firm. | ||
23 | .4* | Consent of Avondale Partners, LLC. | ||
23 | .5* | Consent of 2nd Generation Capital, LLC. | ||
24 | .1* | Power of Attorney. | ||
99 | .1 | Form of NHC Proxy Card. | ||
99 | .2 | Form of NHR Proxy Card. |
* | Filed previously |
Item 22. | Undertakings. |
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By: | /s/ Robert G. Adams |
Title: | CEO & President |
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Signature | Title | Date | ||||
* Robert G. Adams | Director, CEO & President | September 14, 2007 | ||||
* W. Andrew Adams | Director & Chairman | September 14, 2007 | ||||
* Richard F. LaRoche, Jr. | Director | September 14, 2007 | ||||
* Donald K. Daniel | Senior Vice President and Controller, Principal Accounting Officer (Principal Financial Officer) | September 14, 2007 | ||||
* Ernest G. Burgess, III | Director | September 14, 2007 | ||||
* Lawrence C. Tucker | Director | September 14, 2007 | ||||
* J. Paul Abernathy | Director | September 14, 2007 | ||||
* Emil E. Hassan | Director | September 14, 2007 |
*By: | /s/ John K. Lines |
Title: | Attorney-in-Fact |
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