Filed Pursuant to Rule 424(b)(7)
Registration No. 333-139013
A filing fee of $40.04, calculated in
accordance with Rule 457(r) of the
Securities Act of 1933, has been
transmitted to the SEC in connection
with the offering of common stock by
means of this prospectus supplement.
A filing fee of $4,135 has previously
been paid in connection with the
Company’s Registration Statement No.
333-127085. Pursuant to Rule 457(p),
such unutilized filing fee is being
applied to the filing fee payable in
connection with the offering of common
stock pursuant to this prospectus
supplement.
PROSPECTUS SUPPLEMENT
(To prospectus dated November 30, 2006)
26,896 Shares
PSYCHIATRIC SOLUTIONS, INC.
Common Stock
This prospectus supplement relates to the offer and sale of an aggregate of 26,896 shares of
our common stock by the selling stockholder listed under the heading “Selling Stockholder.” We
issued these shares on July 1, 2008 in a private transaction. We will not receive any proceeds from
the sale by the selling stockholder of shares of our common stock.
Our common stock is traded on the NASDAQ Global Select Market under the symbol “PSYS.” On
July 1, 2008, the last reported sales price of our common stock as reported on the NASDAQ Global
Select Market was $38.41 per share.
The selling stockholder identified in this prospectus supplement or his successors, including
transferees, pledgees or donees or their successors, may offer the shares from time to time through
public or private transactions at market prices prevailing at the time of sale, at a fixed or fixed
prices, at negotiated prices, at various prices determined at the time of sale or at prices related
to prevailing market prices. The timing and amount of any sale are within the sole discretion of
the selling stockholder, subject to certain restrictions.
Investing in our common stock involves risks. See the “Risk Factors” section beginning on page
S-3 of this prospectus supplement and in the documents incorporated by reference herein, including
our Annual Report on
Form 10-K
for the year ended December 31, 2007, to read about risks that you
should consider before buying shares of our common stock.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS SUPPLEMENT OR THE
ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENCE.
The date of this prospectus supplement is July 2, 2008.
TABLE OF CONTENTS
Prospectus Supplement
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Page
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S-1
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S-3
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S-5
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S-5
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S-6
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S-8
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S-11
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S-11
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S-11
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S-12
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Prospectus
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ABOUT THIS PROSPECTUS
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3
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
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3
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RISK FACTORS
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THE COMPANY
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SELLING STOCKHOLDERS
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USE OF PROCEEDS
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5
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RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
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5
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GENERAL DESCRIPTION OF SECURITIES WE MAY SELL
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DESCRIPTION OF COMMON STOCK
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DESCRIPTION OF COMMON STOCK WARRANTS
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DESCRIPTION OF PREFERRED STOCK
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DESCRIPTION OF DEBT SECURITIES
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PLAN OF DISTRIBUTION
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LEGAL MATTERS
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EXPERTS
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WHERE YOU CAN FIND MORE INFORMATION
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
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You should rely only on the information contained or incorporated by reference in this
prospectus supplement and the accompanying prospectus. We have not, and the selling stockholder has
not, authorized any other person to provide you with any information different from what is
contained in this prospectus supplement and the accompanying prospectus. If any one provides you
with different or inconsistent information, you should not rely on it. We are not, and the selling
stockholder is not, making an offer to sell these securities in any jurisdiction where the offer or
sale is not permitted. The information contained in this prospectus supplement, the accompanying
prospectus and the documents incorporated by reference herein and therein is accurate only as of
their respective dates. Our business, financial condition, results of operations and prospects may
have changed since those dates.
i
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement and the accompanying prospectus are part of a registration statement
that we filed with the Securities and Exchange Commission, or SEC, utilizing a “shelf” registration
process. This prospectus supplement provides you with the specific details regarding this offering
of common stock and general information about the selling stockholder and also adds to and updates
information contained in the accompanying prospectus. The accompanying prospectus provides you with
more general information, some of which does not apply to this offering of our common stock. To the
extent information in this prospectus supplement is inconsistent with the accompanying prospectus
or any of the documents incorporated by reference into this prospectus supplement and the
accompanying prospectus, you should rely on this prospectus supplement. You should read both this
prospectus supplement and the accompanying prospectus together with the additional information
described under the heading “Where You Can Find More Information.”
ii
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information included or incorporated by reference in this prospectus supplement may be
deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934,
as amended, or Exchange Act. Forward-looking statements include all statements that do not relate
solely to historical or current facts, and can be identified by the use of words such as “may,”
“will,” “expect,” “believe,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “continue,”
“should” and other comparable terms. These forward-looking statements are based on the current
plans and expectations of our management and are subject to a number of risks and uncertainties,
including those set forth below, which could significantly affect our current plans and
expectations and future financial condition and results.
We undertake no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. Stockholders and investors are
cautioned not to unduly rely on such forward-looking statements when evaluating the information
presented in this prospectus supplement and the accompanying prospectus.
While it is not possible to identify all these factors, we continue to face many risks and
uncertainties that could cause actual results to differ from those forward-looking statements,
including:
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our ability to successfully integrate and improve the operations of acquired
inpatient facilities;
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potential competition that alters or impedes our acquisition strategy by decreasing
our ability to acquire additional inpatient facilities on favorable terms;
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our ability to maintain favorable and continuing relationships with physicians who
use our inpatient facilities;
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our substantial indebtedness and our ability to receive timely additional financing
on terms acceptable to us to fund our acquisition strategy and capital expenditure
needs;
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risks inherent to the health care industry, including the impact of changes in
regulation and exposure to claims and legal actions by patients and others;
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efforts by federal and state health care programs and managed care companies to
reduce reimbursement rates for our services;
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our ability to comply with applicable licensure and accreditation requirements;
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our ability to comply with extensive laws and government regulations related to
billing, physician relationships, adequacy of medical care and licensure;
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our ability to retain key employees who are instrumental to our successful
operations;
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fluctuations in the market value of our common stock;
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our ability to maintain effective internal controls in accordance with Section 404
of the Sarbanes-Oxley Act;
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our ability to ensure confidential information is not inappropriately disclosed and
that we are in compliance with federal and state health information privacy standards;
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our ability to comply with federal and state governmental regulation covering health
care-related products and services on-line, including the regulation of medical devices
and the practice of medicine and pharmacology;
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S-1
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our ability to obtain adequate levels of general and professional liability
insurance;
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those risks and uncertainties described from time to time in our filings with the
SEC; and
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future trends for pricing, margins, revenue and profitability remain difficult to
predict in the industries that we serve.
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We caution you that the factors listed above, as well as the risk factors included or
incorporated by reference in this prospectus supplement and the accompanying prospectus, may not be
exhaustive. We operate in a continually changing business environment, and new risk factors emerge
from time to time. We cannot predict such new risk factors, nor can we assess the impact, if any,
of such new risk factors on our businesses or the extent to which any factor or combination of
factors may cause actual results to differ materially from those expressed or implied by any
forward-looking statements.
S-2
RISK FACTORS
Investing in our common stock involves a high degree of risk. You should consider carefully
each of the following risks and all other information contained or incorporated by reference in
this prospectus supplement and the accompanying prospectus, including our Annual Report on Form
10-K for the year ended December 31, 2007, before deciding to purchase shares of our common stock.
If any of the events described below actually occur, our business, financial condition and
operating results could be adversely affected. As a result, the trading price of our common stock
could decline, perhaps significantly, and you could lose all or part of your investment.
The price of our common stock may be volatile and this may adversely affect our stockholders.
The price at which our common stock will trade may be volatile. The stock market has from time
to time experienced significant price and volume fluctuations that have affected the market prices
of securities, particularly securities of health care companies. The market price of our common
stock may be influenced by many factors, including:
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our operating and financial performance;
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the depth and liquidity of the market for our common stock;
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future sales of common stock or the perception that sales could occur;
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investor perception of our business and our prospects;
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developments relating to litigation or governmental investigations;
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changes or proposed changes in health care laws or regulations or enforcement of
these laws and regulations or announcements relating to these matters;
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changes in market conditions in the mental health or behavioral health care
industries;
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timing of acquisitions;
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ratings by equity analysts and rating agencies; and
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general economic and stock market conditions.
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In addition, the stock market in general, and the Nasdaq Global Select Market in particular,
have experienced price and volume fluctuations that have often been unrelated or disproportionate
to the operating performance of health care provider companies. These broad market and industry
factors may materially reduce the market price of our common stock, regardless of our operating
performance. In the past, following periods of volatility in the market price of a particular
company’s securities, securities class action litigation has often been brought against that
company. We may become involved in this type of litigation in the future. Litigation of this type
is often expensive to defend and may divert our management’s attention and resources from the
operation of our business.
Future sales of our common stock may adversely affect our stock price.
Sales of a substantial number of our shares of common stock in the public market, or the
perception that these sales could occur, could substantially decrease the market price of our
common stock. We can make no prediction as to the effect, if any, that future sales of common
stock, or the availability of common stock for future sale, will have on the market price of our
common stock prevailing from time to time.
S-3
Our quarterly operating results may vary in the future and such variations may adversely affect our
stock price.
If our quarterly net revenue and operating results fall below the expectations of securities
analysts and investors, the market price of our common stock could fall substantially and prevent
investors from reselling their shares of our common stock at or above the price at which they
purchased their shares. Operating results vary depending on a number of factors, many of which are
outside our control, including:
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demand for our services;
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introduction of new competitors;
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the loss of key personnel;
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wage and cost pressures;
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timing and rates of reimbursement;
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same-facility results;
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timing of acquisitions;
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costs related to acquisitions of technologies or businesses; and
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general economic factors.
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As we do not anticipate paying cash dividends in the future, you should not expect any return on
your investment except through appreciation, if any, in the value of our common stock.
You should not rely on an investment in our common stock to provide dividend income, as we do
not plan to pay dividends on our common stock in the foreseeable future. Thus, if you are to
receive any return on your investment in our common stock, it will likely have to come from the
appreciation, if any, in the value of our common stock. The payment of future cash dividends, if
any, will be reviewed periodically by our board of directors and will depend upon, among other
things, conditions then existing, including our earnings, financial condition and capital
requirements, restrictions in financing agreements, business opportunities and conditions and other
factors.
Provisions in our certificate of incorporation and bylaws, as well as Delaware law, may hinder a
change of control.
Provisions of our amended and restated certificate of incorporation and by-laws, as well as
provisions of the Delaware General Corporation Law, could discourage unsolicited proposals to
acquire us, even though such proposals may be beneficial to you. These provisions include:
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classification of our board of directors into three classes;
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our board’s authorization to issue shares of preferred stock, on terms the board
determines in its discretion, without stockholder approval; and
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provisions of Delaware law that restrict many business combinations.
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We are subject to the provisions of Section 203 of the Delaware General Corporation Law, which
could prevent us from engaging in a business combination with a 15% or greater stockholder for a
period of three years from the date it acquired such status unless appropriate board or stockholder
approvals are obtained.
S-4
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares of our common stock by the selling
stockholder.
SELLING STOCKHOLDER
The following table sets forth information concerning beneficial ownership of our capital
stock by the selling stockholder as of July 1, 2008 and after the consummation of this offering.
When we refer to the “selling stockholder” in this prospectus supplement, we mean the person listed
in the table below, as well as the donees, transferees, pledgees or others who may later hold the
selling stockholder’s interests. The shares of our common stock offered by this prospectus
supplement were issued on July 1, 2008 to the selling stockholder in a private placement in
connection with our acquisition of an employee assistance program business. The selling stockholder
has been a consultant to an affiliate of the Company and has agreed to be employed by an affiliate
of the Company after the Company’s acquisition of the selling stockholder’s business.
We believe that the beneficial owner has sole voting and investment power over such shares.
Unless set forth or incorporated by reference herein, to our knowledge the selling stockholder does
not hold, nor within the past three years held, any position, office or other material relationship
with us or any of our predecessors or affiliates.
The shares offered by this prospectus supplement may be offered from time to time by the
selling stockholder. The selling stockholder will receive all of the proceeds from the sale of the
shares under this prospectus supplement. The amounts and information set forth below are based upon
information provided to us by the selling stockholder or his representatives, and are accurate to the best of our knowledge. It is possible, however, that the selling
stockholder may acquire or dispose of additional shares of our common stock from time to time after
the date of this prospectus supplement.
Information about the selling stockholder may change from time to time. Any changed
information will be set forth in prospectus supplements or post-effective amendments if required by
applicable law.
The selling stockholder may not necessarily intend to sell any of the shares identified below.
The selling stockholder may decide to sell only a portion of the shares offered by him pursuant to
this prospectus supplement or may decide not to sell any of the shares offered by him pursuant to
this prospectus supplement.
For information on the procedure for sales by any selling stockholder, read the disclosure
under the heading “Plan of Distribution” below.
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Common Stock
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Number of Shares of
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Beneficially Owned
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Number of Shares of
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Common Stock That
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Assuming Completion of
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Name of Selling
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Common Stock
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May Be Sold
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This Offering
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Stockholder
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Beneficially Owned
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Pursuant Hereto
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Number
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Percentage
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William H. Mulcahy
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26,896
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26,896
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0
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0
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We have confirmed with the selling stockholder that he is not a broker-dealer or an affiliate
of a broker-dealer.
Only the selling stockholder may sell the common stock listed above pursuant to this
prospectus supplement. Prior to any use of this prospectus supplement in connection with an
offering of the shares by any holder not identified above, the prospectus will be supplemented to
set forth the name and aggregate number of shares beneficially owned by the selling stockholder(s)
intending to sell such shares and the aggregate number of shares to be offered. The prospectus as
so supplemented will also disclose whether any selling stockholder selling in connection with such
prospectus has held any position or office, or otherwise had a material relationship, with
us
S-5
during the three years prior to the date of the applicable prospectus supplement if such
information has not been disclosed herein.
PLAN OF DISTRIBUTION
The shares are being registered to permit the resale of such securities by the selling
stockholder from time to time after the date of this prospectus supplement. We will not receive any
of the proceeds from the sale of the shares of our common stock by a selling stockholder. We will
bear the fees and expenses incurred in connection with our obligation to register the resale of the
shares of common stock covered by this prospectus supplement. These fees and expenses include
registration and filing fees, exchange listing fees, printing expenses, fees and disbursements of
our counsel and independent accountants, and blue sky fees and expenses. However, a selling
stockholder will be solely responsible for all underwriting discounts and commissions and agent’s
commissions, if any. A selling stockholder may offer and sell the shares of our common stock
offered hereby from time to time in one or more transactions at fixed prices, at prevailing market
prices at the time of sale, at varying prices determined at the time of sale or at negotiated
prices.
Such sales may be effected by a variety of methods, including the following:
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In market transactions on the Nasdaq Global Select Market;
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In privately negotiated transactions;
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Through options, swaps and derivatives;
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In a block trade in which a broker-dealer will attempt to sell a block of securities
as agent but may position and resell a portion of the block as principal to facilitate
the transaction (including crosses where the same broker acts as agent for both sides
of the transaction);
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Through broker-dealers, which may act as agents or principals;
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Directly to one or more purchasers;
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In short sales or transactions to cover short sales;
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Through agents; and/or
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In any combination of the above or by any other legally available means.
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In connection with sales of the shares of common stock, a selling stockholder may enter into
hedging transactions with broker-dealers, which may in turn engage in short sales of the offered
securities, short and deliver the common stock to close out such short positions, or loan or pledge
the common stock to broker-dealers that in turn may sell such securities.
If a material arrangement with any underwriter, broker, dealer or other agent is entered into
for the sale of the shares of common stock covered by this prospectus supplement through a
secondary distribution or a purchase by a broker or dealer, or if other material changes are made
in the plan of distribution of the shares of common stock covered by this prospectus supplement, a
prospectus supplement will be filed, if necessary, under the Securities Act disclosing the material
terms and conditions of such arrangement.
To our knowledge, there are currently no plans, arrangements or understandings between the
selling stockholder and any underwriter, broker-dealer or agent regarding the sale of the shares of
common stock offered hereby. The selling stockholder may transfer, devise or gift the shares of
common stock covered by this prospectus supplement by other means not described in this prospectus
supplement.
The selling stockholder may also sell all or a portion of his shares of our common stock in
transactions exempt from the registration requirements of the Securities Act in reliance upon Rule
144 under the Securities Act provided they meet the criteria and conform to the requirements of that rule, Section 4(1) of
the Securities Act or other applicable exemptions.
S-6
Each selling stockholder may from time to time pledge or grant a security interest in some or
all of the shares owned by him, her or it and, if he, she or it defaults in the performance of his,
her or its secured obligations, his, her or its pledgees or secured parties may offer and sell the
shares from time to time under this prospectus supplement, or under another supplement to this
prospectus under Rule 424(b) or other applicable provision of the Securities Act to include such
pledgee, transferee or other successor in interest as a selling stockholder.
The selling stockholder and any underwriters, broker-dealers or agents participating in the
distribution of the shares covered by this prospectus supplement may be deemed to be “underwriters”
within the meaning of the Securities Act, and any profit on the sale of the shares of common stock
by the selling stockholder and any commissions received by any such underwriters, broker-dealers or
agents may be deemed to be underwriting commissions under the Securities Act. If any selling
stockholder was deemed to be an underwriter, he, she or it may be subject to statutory liabilities,
including, but not limited to, those under Sections 11, 12 and 17 of the Securities Act and Rule
10b-5 under the Exchange Act.
We have advised the selling stockholder that he and any other person participating in the
distribution may be subject to the applicable provisions of the Exchange Act and the rules and
regulations under the Exchange Act, including, without limitation, Regulation M, which may limit
the timing of purchases and sales of common stock by the selling stockholder and any other relevant
person. Furthermore, Regulation M may restrict the ability of any person engaged in the
distribution of our common stock to engage in market-making activities with respect to the common
stock. All of the above may affect the marketability of our common stock and the ability of any
person or entity to engage in market-making activities with respect to our common stock.
Under the securities laws of certain states, the shares of common stock covered by this
prospectus supplement may be sold in those states only through registered or licensed
broker-dealers. In addition, in certain states the shares covered by this prospectus supplement may
not be sold unless such shares have been registered or qualified for sale in that state or an
exemption from registration or qualification is available and complied with.
S-7
MATERIAL U.S. FEDERAL TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS
The following is a general discussion of the material U.S. federal income and estate tax
considerations to a Non-U.S. Holder (defined below) with respect to the ownership and disposition
of our common stock as of the date hereof. This summary is generally limited to Non-U.S. Holders
who will hold our common stock as capital assets (i.e., generally as investments) and does not deal
with special tax situations including those that may apply to particular holders such as tax-exempt
organizations, holders subject to the U.S. federal alternative minimum tax, dealers in securities,
commodities or foreign currencies, financial institutions or “financial services entities,” grantor
trusts, tax deferred accounts, insurance companies, regulated investment companies, controlled
foreign corporations, passive foreign investment companies, companies that accumulate earnings to
avoid U.S. federal income tax, certain former citizens or former long-term residents of the United
States, partnerships or other pass-through entities, and persons who hold our common stock in
connection with a “straddle,” “hedging,” “conversion” or other integrated transaction. This
discussion does not address the tax consequences arising under any state, local or non-U.S. law or
gift tax laws.
As used herein, a “Non-U.S. Holder” means a beneficial owner of our common stock that is
not
a
U.S. person or a partnership for U.S. federal income tax purposes. For U.S. federal income tax
purposes, a U.S. person includes:
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an individual who is a citizen or resident of the United States;
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a corporation, or other entity taxable as a corporation for U.S. federal income
tax purposes, created or organized in or under the laws of the United States, any
state thereof or the District of Columbia;
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an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
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a trust, if (i) a court within the United States is able to exercise primary
jurisdiction over its administration and one or more U.S. persons have authority to
control all of its substantial decisions, or (ii) the trust has a valid election in
effect under applicable Treasury regulations to be treated as a U.S. person.
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If a partnership (including an entity treated as a partnership for U.S. federal income tax
purposes) is a beneficial owner of the common stock, the tax treatment of a partner in the
partnership will generally depend upon the status of the partner and the activities of the
partnership. A beneficial owner that is a partnership and partners in such a partnership should
consult their tax advisors about the U.S. federal income tax consequences of the ownership and
disposition of our common stock.
The U.S. federal income tax considerations set forth below are based upon the Internal Revenue
Code of 1986, as amended, or the Code, Treasury regulations promulgated thereunder, court
decisions, and rulings and pronouncements of the Internal Revenue Service, or the IRS, now in
effect, all of which are subject to change. Prospective investors should particularly note that any
such change could have retroactive application so as to result in U.S. federal income tax
consequences different from those discussed below. No ruling has been or is expected to be sought
from the IRS with respect to the matters discussed below, and the IRS would not be precluded from
taking contrary positions. As a result, the IRS might not agree with all of the tax
characterizations and the tax consequences described below.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE PARTICULAR
U.S. FEDERAL TAX CONSEQUENCES TO THEM OF ACQUIRING, OWNING AND DISPOSING OF OUR COMMON STOCK, AS
WELL AS ANY TAX CONSEQUENCES ARISING UNDER ANY STATE, LOCAL OR NON-U.S. TAX LAWS.
S-8
Distributions on our Common Stock
Our Second Amended and Restated Credit Agreement prohibits us from paying dividends on our
common stock. In the event, however, that we are able to pay dividends on our common stock, such
distributions will constitute dividends for U.S. federal income tax purposes to the extent paid
from our current or accumulated earnings and profits, as determined under U.S. federal income tax
principles. Amounts not treated as dividends for U.S. federal income tax purposes will constitute a
return of capital and will first be applied against and reduce a holder’s adjusted tax basis in the
common stock, but not below zero. Any excess will be treated as capital gain.
Dividends paid to a Non-U.S. Holder of our common stock will generally be subject to U.S.
federal withholding tax at a 30% rate unless (i) such rate is reduced by an applicable income tax
treaty and the Non-U.S. Holder provides to us an IRS Form W-8BEN (or applicable successor form)
certifying that it is entitled to such treaty benefits or (ii) the dividends are effectively
connected with a U.S. trade or business and we receive an IRS Form W-8ECI (or applicable successor
form) from a Non-U.S. Holder claiming that the payments are effectively connected with the Non-U.S.
Holder’s conduct of a U.S. trade or business.
If a Non-U.S. Holder of our common stock is engaged in a trade or business in the United
States, and if dividends on the stock are effectively connected with the conduct of such trade or
business (or, if certain income tax treaty provisions apply, are attributable to a U.S. permanent
establishment maintained by the Non-U.S. Holder in the United States), the Non-U.S. Holder,
although exempt from the withholding tax discussed in the preceding paragraph, will generally be
subject to regular U.S. federal income tax on dividends in the same manner as if it were a U.S.
person. Such a Non-U.S. Holder will be required to provide the withholding agent with a properly
executed IRS Form W-8ECI (or applicable successor form) in order to claim an exemption from
withholding tax. In addition, if such a Non-U.S. Holder is a foreign corporation, it may be subject
to a branch profits tax on its effectively connected earnings and profits at a 30% rate or a lower
rate as may be specified by an applicable income tax treaty.
Gain on Disposition of our Common Stock
A Non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax on
gain realized on the sale or other disposition of our common stock unless:
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the gain is effectively connected with the Non-U.S. Holder’s conduct of a trade
or business in the United States (or, if certain income tax treaty provisions
apply, is attributable to a permanent establishment maintained by such holder in
the United States); in these cases the Non-U.S. Holder generally will be taxed on
the net gain from the disposition at the regular U.S. federal income tax rates, in
the same manner as if it were a U.S. person;
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the Non-U.S. Holder is a non-resident alien individual, and the individual is
present in the United States for 183 or more days in the taxable year of the
disposition and certain other conditions are met; in these cases, the Non-U.S.
Holder will be subject to a flat 30% tax on its net gain from the disposition; or
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we are or have been a U.S. Real Property Holding Corporation (“USRPHC”) at any
time within the five-year period preceding the disposition or the Non-U.S. Holder’s
holding period, whichever is shorter. In general, we would be a USPRHC if our
interests in United States real property comprised the majority of our assets.
Although there can be no assurance, we believe that we are not, nor do we
anticipate becoming, a USRPHC. If we become a USRPHC, so long as our common stock
continues to be traded regularly on an established securities market, only a
Non-U.S. Holder who actually or constructively owns (or owned at any time during
the five-year period ending on the date of disposition) more than 5% of our common
stock will be subject to U.S. federal income tax on the sale or disposition
thereof. There can be no assurance that our common stock will continue to be
regularly traded on an established securities market.
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S-9
U.S. Federal Estate Tax
Common stock owned or deemed owned by an individual who not a citizen or resident (as defined
for U.S. federal estate tax purposes) of the United States at the time of death will be included in
the individual’s gross estate for U.S. federal estate tax purposes, unless an applicable United
States treaty provides otherwise and, therefore, may be subject to U.S. federal estate tax.
Backup Withholding and Information Reporting
Information returns will be filed annually with the IRS and provided to each Non-U.S. Holder
with respect to any distributions on our common stock and the proceeds from their sale or other
disposition that are subject to withholding or that are exempt from U.S. withholding tax pursuant
to an income tax treaty or other reason. Copies of these information returns also may be made
available under the provisions of a specific treaty or agreement to the tax authorities of the
country in which the Non-U.S. Holder resides.
Under certain circumstances, the Code imposes a backup withholding obligation (currently at
the rate of 28%). Dividends generally will be exempt from backup withholding if the Non-U.S. Holder
provides a properly executed IRS Form W-8BEN or otherwise establishes an exemption. The payment of
the proceeds from the disposition of our common stock to or through the U.S. office of any broker,
United States or foreign, will be subject to information reporting and possible backup withholding
unless the holder certifies as to its non-U.S. status under penalties of perjury or otherwise
establishes an exemption, provided that the broker does not have actual knowledge or reason to know
that the holder is a U.S. person or that the conditions of any other exemption are not, in fact,
satisfied. The payment of the proceeds from the disposition of our common stock to or through a
non-U.S. office of a non-U.S. broker will not be subject to information reporting or backup
withholding unless the non-U.S. broker has certain types of relationships with the United States,
referred to as a U.S. related person. In the case of the payment of the proceeds from the
disposition of the common stock to or through a non-U.S. office of a broker that is either a U.S.
person or a U.S. related person, the Treasury regulations require information reporting on the
payment unless the broker has documentary evidence in its files that the holder is a Non-U.S.
Holder and the broker has no knowledge or reason to know otherwise; but backup withholding is not
required unless the broker has actual knowledge that the holder is not a Non-U.S. Holder. Non U.S.
Holders should consult their own tax advisors regarding the application of the information
reporting and backup withholding rules to them.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding
rules from a payment to a Non-U.S. Holder will be refunded or credited against the Non-U.S.
Holder’s U.S. federal income tax liability, if any, if the Non-U.S. Holder provides, on a timely
basis, the required information to the IRS.
S-10
LEGAL MATTERS
Certain legal matters in connection with this offering will be passed upon for us by Waller
Lansden Dortch & Davis, LLP.
EXPERTS
The consolidated financial statements of Psychiatric Solutions, Inc. appearing in Psychiatric
Solutions, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2007, and the
effectiveness of Psychiatric Solutions, Inc.’s internal control over financial reporting as of
December 31, 2007, have been audited by Ernst & Young LLP, independent registered public accounting
firm, as set forth in their reports thereon included therein, and incorporated herein by reference.
Such financial statements and management’s assessment are, and audited financial statements to be
included in subsequently filed documents will be, incorporated herein in reliance upon the reports
of Ernst & Young LLP pertaining to such financial statements and the effectiveness of our internal
control over financial reporting as of the respective dates (to the extent covered by consents
filed with the Securities and Exchange Commission) given on the authority of such firm as experts
in accounting and auditing.
The consolidated financial statements of Horizon Health Corporation as of August 31, 2006 and
2005 and for each of the three years in the period ended August 31, 2006 and management’s
assessment of the effectiveness of internal control over financial reporting (which is included in
Management’s Report on Internal Control over Financial Reporting) of Horizon Health Corporation as
of August 31, 2006 incorporated in this prospectus by reference to Horizon Health Corporation’s
Annual Report on Form 10-K for the year ended August 31, 2006 have been so incorporated in reliance
on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm,
given on the authority of said firm as experts in auditing and accounting.
The combined financial statements of Behavioral Healthcare Services at December 31, 2004 and
2003, and for each of the three years in the period ended December 31, 2004, appearing in our
Current Report on Form 8-K, filed with the SEC on August 31, 2005, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon (which contains an
explanatory paragraph describing conditions that raise substantial doubt about the ability of
Behavioral Healthcare Services to continue as a going concern as described in Note 1 to the
combined financial statements), included therein, and incorporated herein by reference. Such
combined financial statements are incorporated herein by reference in reliance upon such report of
Ernst & Young LLP given on the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the
SEC. You may read and copy any document we file at the SEC’s public reference room at 100 F Street,
N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. Our SEC filings are also available to the public at the SEC’s web site at
www.sec.gov
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This prospectus supplement constitutes part of a registration statement on Form S-3 that we
filed with the SEC under the Securities Act. As permitted by the rules and regulations of the SEC,
this prospectus supplement omits some of the information, exhibits and undertakings included in the
registration statement. You may read and copy the information omitted from this prospectus
supplement but contained in the registration statement, as well as the periodic reports and other
information we file with the SEC, at the public reference facilities maintained by the SEC in
Washington, D.C.
This prospectus supplement and the accompanying prospectus summarize material provisions of
contracts and other documents to which we refer you. Since this prospectus supplement and the
accompanying prospectus may not contain all the information that you may find important, you should
review the full text of those documents. You should rely only on the information contained and
incorporated by reference in this prospectus supplement and the accompanying prospectus.
We make available free of charge through our website, which you can find at
www.psysolutions.com
, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and amendments to
S-11
these reports filed or furnished pursuant to Section 13(a)
or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such
material with, or furnish it to, the SEC.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to “incorporate by reference” the information we file with the SEC, which
means:
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incorporated documents are considered part of this prospectus supplement;
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we can disclose important information to you by referring you to those documents;
and
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information that we file later with the SEC automatically will update and supersede
information contained in this prospectus supplement and the accompanying prospectus.
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We are incorporating by reference the following documents, which we and Horizon Health
Corporation have previously filed with the SEC:
(1) Combined Financial Statements of Behavioral Healthcare Services as of December 31, 2004
and 2003, and for each of the three years in the period ended December 31, 2004 (incorporated by
reference to our Current Report on Form 8-K, filed with the SEC on August 31, 2005);
(2) Consolidated Financial Statements of Horizon Health Corporation as of August 31, 2006 and
2005, and for each of the three years in the period ended August 31, 2006 (incorporated by
reference to Horizon Health Corporation’s Annual Report on Form 10-K for the year ended August 31,
2006);
(3) our Annual Report on Form 10-K for the year ended December 31, 2007;
(4) our Quarterly Report on Form 10-Q for the quarter ended March 31, 2008;
(5) our Current Report on Form 8-K filed with the SEC on February 28, 2008;
(6) our Current Report on Form 8-K filed with the SEC on May 21, 2008;
(7) the portions of our Definitive Proxy Statement on Schedule 14A that are deemed “filed”
with the SEC under the Exchange Act, filed on April 10, 2008;
(8) our Registration Statement on Form 10 filed with the SEC on July 31, 1992, including all
amendments or reports filed for the purpose of updating the description of our capital stock; and
(9) any future filings with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act until the termination of the offering under this prospectus supplement; provided that this
prospectus will not incorporate any information we may furnish to the SEC under Item 2.02 or Item
7.01 of Form 8-K.
The information incorporated by reference is deemed to be a part of this prospectus
supplement, except for information incorporated by reference that is superseded by information
contained in this prospectus supplement or any other document we subsequently file with the SEC
that is incorporated or deemed to be incorporated by reference in this prospectus supplement.
Likewise, any statement contained in this prospectus supplement, the accompanying prospectus or in
a document incorporated or deemed to be incorporated by reference herein will be deemed to have
been modified or superseded for purposes of this prospectus supplement and the accompanying
prospectus to the extent that any statement contained in any document that we subsequently file
with the SEC that is incorporated or deemed to be incorporated by reference herein modifies or
supersedes the statement. Any statement so modified or superseded will not be deemed, except as so
modified or superseded, to constitute a part of this prospectus.
You can obtain copies of the documents incorporated by reference in this prospectus supplement
without charge through our website (
www.psysolutions.com
) as soon as reasonably practicable after
we electronically file
S-12
the material with, or furnish it to, the SEC, or by requesting them in
writing or by telephone at the following address:
Psychiatric Solutions, Inc.
6640 Carothers Parkway, Suite 500
Franklin, Tennessee 37067
Attention: Investor Relations
(615) 312-5700
S-13
Prospectus
Common Stock
Common Stock Warrants
Preferred Stock
Debt Securities
We may from time to time offer, in one or more series, the following:
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Shares of common stock;
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Warrants to purchase shares of common stock;
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Shares of preferred stock;
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Debt securities, which may be either senior debt securities or subordinated debt
securities, in each case consisting of notes or other evidence of indebtedness; or
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Any combination of these securities, individually or as units.
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We will offer such securities on terms determined at the time we offer such securities. We may
offer our common stock and warrants, preferred stock and debt securities separately or together, in
separate classes or series, in amounts, at prices and on terms set forth in an applicable
prospectus supplement to this prospectus. In addition, selling stockholders to be named in a
prospectus supplement may offer and sell from time to time shares of our common stock in such
amounts as set forth in a prospectus supplement. The applicable prospectus supplement will also
contain information, where applicable, about certain federal income tax considerations relating to,
and any listing on a securities exchange of, the securities covered by such prospectus supplement.
The securities may be sold directly through agents designated from time to time by us, or to
or through underwriters or dealers, or through a combination of these methods. We reserve the sole
right to accept, and together with our agents, dealers and underwriters reserve the right to
reject, in whole or in part, any proposed purchase of securities to be made directly or through
agents, dealers or underwriters. If any agents, dealers or underwriters are involved in the sale of
any of the securities, their names, and any applicable purchase price, fee, commission or discount
arrangement between or among them, will be set forth, or will be calculable from the information
set forth, in the applicable prospectus supplement. See “Plan of Distribution.” Our net proceeds
from the sale of securities also will be set forth in the relevant prospectus supplement. No
securities may be sold without delivery of the applicable prospectus supplement describing the
method and terms of the offering of such series of securities.
Our common stock is listed on the Nasdaq Global Select Market under the symbol “PSYS.” On
November 29, 2006, the last reported sale price of our common
stock was $35.08 per share.
Investing in these securities involve risks. You should carefully review the discussion under
the heading “Risk Factors” on page 4 regarding information included and incorporated by reference
in this prospectus and the applicable prospectus supplement.
Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is November 30, 2006
TABLE OF CONTENTS
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You should rely only on the information contained or incorporated by reference in this
prospectus and the applicable prospectus supplement. We have not authorized any person to provide
you with different information. If anyone provides you with different or inconsistent information,
you should not rely on it. We are not making an offer to sell, or a solicitation of an offer to
purchase, these securities in any jurisdiction where the offer or sale is not permitted. You should
assume that the information appearing in this prospectus or any other documents incorporated by
reference is accurate only as of the date on the front cover of the applicable document. Our
business, financial condition, results of operations and prospects may have changed since that
date.
References in this prospectus to “Psychiatric Solutions,” “we,” “us” and “our” refer to
Psychiatric Solutions, Inc., a behavioral health care services company incorporated in Delaware,
unless the context otherwise requires.
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the Securities and
Exchange Commission, or SEC, utilizing a “shelf” registration process. Under this shelf process, we
are registering an unspecified amount of each class of the securities described in this prospectus
and we may sell any combination of the securities described in this prospectus in one or more
offerings. This prospectus provides you with a general description of the securities we may offer
and the shares of our common stock that selling stockholders may offer. Each time we sell
securities, or register shares of our common stock for resale by selling stockholders, we will file
a prospectus supplement that will contain specific information about the terms of that offering.
See “Plan of Distribution.” The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both the prospectus and any prospectus supplement
together with the additional information described under the heading “Where You Can Find More
Information.”
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information included or incorporated by reference in this prospectus may be deemed to
be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as
amended, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or
Exchange Act. Forward-looking statements include all statements that do not relate solely to
historical or current facts, and can be identified by the use of words such as “may,” “will,”
“expect,” “believe,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “continue,” “should”
and other comparable terms. These forward-looking statements are based on the current plans and
expectations of our management and are subject to a number of risks and uncertainties, including
those set forth below, which could significantly affect our current plans and expectations and
future financial condition and results.
While it is not possible to identify all these factors, we continue to face many risks and
uncertainties that could cause actual results to differ from those forward-looking statements,
including:
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potential competition that alters or impedes our acquisition strategy by
decreasing our ability to acquire additional inpatient facilities on favorable terms;
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our ability to complete the acquisition of Alternative Behavioral Services,
Inc. (“ABS”) and to successfully integrate the ABS facilities;
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our ability to integrate and improve the operations of acquired inpatient
facilities (including the ABS inpatient facilities to be acquired);
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our ability to maintain favorable and continuing relationships with physicians
who use our inpatient facilities;
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our ability to receive timely additional financing on terms acceptable to us to
fund our acquisition strategy and capital expenditure needs;
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risks inherent to the health care industry, including the impact of changes in
regulation and exposure to claims and legal actions by patients and others;
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reductions in reimbursement rates from federal and various state health care
programs or managed care companies;
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our ability to comply with applicable licensure and accreditation requirements;
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our ability to retain key employees who are instrumental to our successful operations;
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fluctuations in the market value of our common stock;
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our ability to maintain effective internal controls in accordance with Section
404 of the Sarbanes-Oxley Act;
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our ability to ensure confidential information is not inappropriately disclosed
and that we are in compliance with federal and state health information privacy
standards;
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our ability to comply with federal and state governmental regulation covering
health care-related products and services on-line, including the regulation of medical
devices and the practice of medicine and pharmacology;
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our ability to obtain adequate levels of general and professional liability insurance; and
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those risks and uncertainties described from time to time in our filings with the SEC.
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In addition, future trends for pricing, margins, revenues and profitability remain difficult to
predict in the industries that we serve.
We caution you that the factors listed above, as well as the risk factors included or
incorporated by reference in this prospectus or any prospectus supplement, may not be exhaustive.
We operate in a continually changing business environment, and new risk factors emerge from time to
time. We cannot predict such new risk factors, nor can we assess the impact, if any, of such new
risk factors on our businesses or the extent to which any factor or combination of factors may
cause actual results to differ materially from those expressed or implied by any forward-looking
statements.
All forward-looking statements attributable to us or persons acting on our behalf apply only
as of the date of this prospectus and are expressly qualified in their entirety by the cautionary
statements included in this prospectus. We undertake no obligation to publicly update or revise
forward-looking statements, which may be made to reflect events or circumstances after the date
made or to reflect the occurrence of unanticipated events, except as required by applicable
securities laws. Stockholders and investors are cautioned not to unduly rely on such
forward-looking statements when evaluating the information presented in this prospectus.
RISK FACTORS
An investment in our securities involves a high degree of risk. In addition to the other
information included and incorporated by reference in this prospectus, you should carefully review
the risk factors and other information included and incorporated by reference in the applicable
prospectus supplement when determining whether or not to purchase the securities offered under this
prospectus and the applicable prospectus supplement.
THE COMPANY
We are the leading provider of inpatient behavioral health care services in the United States.
Through our inpatient division, we operate 64 owned or leased behavioral health care facilities
with approximately 6,900 beds in 27 states. In addition, through our inpatient management contract
division, we manage behavioral health care units for private third parties. Our address is 840
Crescent Centre Drive, Suite 460, Franklin, Tennessee 37067; our phone number is (615) 312-5700.
SELLING STOCKHOLDERS
We may register shares of common stock covered by this prospectus for re-offers and resales by
any selling stockholders named in a prospectus supplement. Because we are a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act, we may add secondary sales of shares of our
common stock by any selling stockholders by filing a prospectus supplement with the SEC. We may
register these shares to permit selling stockholders to resell their shares when they deem
appropriate. Selling stockholders may resell all, a portion or none of their shares at any time and
from time to time. Selling stockholders may also sell, transfer or otherwise dispose of some or all
of their shares of our common stock in transactions exempt from the registration requirements of
the Securities Act. We do not know when or in what amounts the selling stockholders may offer
shares for sale under this prospectus and any
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prospectus supplement. We may pay all expenses incurred with respect to the registration of the
shares of common stock owned by the selling stockholders, other than underwriting fees, discounts
or commissions, which will be borne by the selling stockholders. We will provide you with a
prospectus supplement naming the selling stockholder(s), the amount of shares to be registered and
sold and any other terms of the shares of common stock being sold by the selling stockholder(s).
USE OF PROCEEDS
Unless we indicate otherwise in an accompanying prospectus supplement, we intend to use the
net proceeds from the sale of the securities offered by this prospectus for general corporate
purposes, which may include, but not be limited to, working capital, capital expenditures,
acquisitions, refinancing of indebtedness and repurchases or redemptions of securities.
We will receive no proceeds from the sale of shares of our common stock by any selling
stockholders.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth our consolidated ratio of earnings to combined fixed charges
and preferred stock dividends for the periods indicated:
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Year Ended December 31,
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Nine Months Ended
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2001
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Ratio of earnings
to combined fixed
charges and
preferred stock
dividends(1)(2)
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1.36x
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1.81x
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1.48x
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2.19x
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2.46x
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3.28x
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(1)
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For the purpose of calculating the ratio of earnings to combined fixed charges and preferred
stock dividends, earnings are defined as earnings from continuing operations before income
taxes plus fixed charges, less preferred stock dividends. Fixed charges are defined as
interest expense, plus amortized premiums, discounts and capitalized expenses related to
indebtedness, plus an estimate of the interest within rental expense. Preferred stock
dividends are divided by 100% minus the effective income tax rate.
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(2)
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At December 31, 2001, we had 10,497,000 shares of Series A Preferred Stock and 4,975,736
shares of Series B Preferred Stock outstanding. No dividends were paid on Series A or Series B
Preferred Stock. During our merger with PMR Corporation, all shares of Series A and Series B
Preferred Stock were converted into common stock and, at December 31, 2002, we had no
preferred stock outstanding. During 2003, we issued Series A Convertible Preferred Stock that
accrued pay-in-kind dividends. During 2004, all shares of Series A Convertible Preferred Stock
were converted into common stock and at December 31, 2005 and September 30, 2006 no preferred
stock was outstanding.
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GENERAL DESCRIPTION OF SECURITIES WE MAY SELL
We, directly or through agents, dealers or underwriters that we may designate, may offer and
sell, from time to time, an unspecified amount of:
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Shares of our common stock;
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Warrants to purchase shares of our common stock;
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Shares of our preferred stock; or
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Our debt securities, which may be either senior debt securities or subordinated debt securities.
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We may offer and sell these securities either individually or as units consisting of one or
more of these securities, each on terms to be determined at the time of the offering. We may issue
debt securities and/or preferred stock that are exchangeable for and/or convertible into common
stock or any of the other securities that may be sold
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under this prospectus. When particular
securities are offered, a supplement to this prospectus will be delivered with this prospectus,
which will describe the terms of the offering and sale of the offered securities.
DESCRIPTION OF COMMON STOCK
Our amended and restated certificate of incorporation, as amended, provides that our
authorized capital stock consists of 125,000,000 shares of common stock, $0.01 par value, and
1,186,530 shares of preferred stock, $0.01 par value. We describe the preferred stock under the
heading “Description of Preferred Stock” below.
This section summarizes the general terms of our common stock that we may offer. The
prospectus supplement relating to the common stock offered will state the number of shares offered,
the initial offering price and the market price, dividend information and any other relevant
information. The summaries in this section and the prospectus supplement do not describe every
aspect of the common stock. When evaluating the common stock, you should also refer to all of the
provisions of our amended and restated certificate of incorporation, our amended and restated
bylaws and the Delaware General Corporation Law (“DGCL”). Our amended and restated certificate of
incorporation, as amended, and our amended and restated bylaws are incorporated by reference in the
registration statement.
Terms of Common Stock
As of November 24, 2006, there were 53,278,670 shares of our common stock issued and
outstanding.
Subject to the rights and preferences specifically granted to our preferred stockholders, if
any, our common stockholders are entitled to receive dividends as they may be declared by our board
of directors. Our common stockholders do not have fixed or cumulative dividend rights. Upon our
liquidation or dissolution, holders of our common stock are entitled to share ratably in all of our
assets remaining after payment of our liabilities and payment of any preferential liquidation
rights of our preferred stock then outstanding. The holders of our common stock are entitled to one
vote for each share held of record on all matters submitted to a vote of the stockholders.
Cumulative voting for directors is not permitted. Subject to certain exceptions, removal of any
director (or of our entire board of directors), approval of amendments to our amended and restated
certificate of incorporation and approval of amendments to our amended and restated bylaws
generally require the affirmative vote of the holders of two-thirds of the combined voting power of
our then-outstanding shares of capital stock, voting together as a single class. Our amended and
restated certificate of incorporation and amended and restated bylaws contain no provision that
would require greater than a majority of stockholders to approve mergers, consolidations, sales of
a substantial amount of assets, or other similar transactions. Our common stockholders do not have
preemptive rights to purchase shares of our common stock. The issued and outstanding shares of our
common stock are not subject to any redemption provisions and are not convertible into any other
shares of our capital stock. All outstanding shares of our common stock are, and any shares of
common stock issued will be, upon payment therefor, fully paid and nonassessable. The rights,
preferences and privileges of holders of our common stock are subject to those of the holders of
any preferred stock that we may issue in the future.
Anti-Takeover Considerations and Special Provisions of Delaware Law, our Amended and Restated
Certificate of Incorporation and our Amended and Restated Bylaws
Delaware Anti-Takeover Law
We are subject to the provisions of Section 203 of the DGCL, which regulates corporate
takeovers. This section prevents Delaware corporations, under certain circumstances, from engaging
in a “business combination” with:
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A stockholder who owns 15% or more of our outstanding voting stock (otherwise known
as an interested stockholder);
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An affiliate of an interested stockholder; or
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An associate of an interested stockholder,
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for three years following the date that the stockholder became an interested stockholder. A
“business combination” includes a merger or sale of more than 10% of our assets.
However, the above provisions of Section 203 do not apply if:
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Our board of directors approves the transaction that made the stockholder an
interested stockholder, prior to the date of that transaction;
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After the completion of the transaction that resulted in the stockholder becoming an
interested stockholder, that stockholder owned at least 85% of our voting stock
outstanding at the time the transaction commenced, excluding shares owned by our
officers and directors; or
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On or subsequent to the date of the transaction, the business combination is
approved by our board of directors and authorized at a meeting of our stockholders by
an affirmative vote of at least two-thirds of the outstanding voting stock not owned by
the interested stockholder.
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This statute could prohibit or delay mergers or other change in control attempts, and thus may
discourage attempts to acquire us.
Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws
A number of provisions of our amended and restated certificate of incorporation and our
amended and restated bylaws concern matters of corporate governance and the rights of our
stockholders. Provisions that grant our board of directors the ability to issue shares of
preferred stock and to set the voting rights, preferences and other terms thereof may discourage
takeover attempts that are not first approved by our board of directors, including takeovers that
may be considered by some stockholders to be in their best interests. Certain provisions could
delay or impede the removal of incumbent directors even if such removal would be beneficial to our
stockholders. These provisions also could discourage or make more difficult a merger, tender offer
or proxy contest, even if they could be favorable to the interests of stockholders, and could
potentially depress the market price of our common stock. Our board of directors believes that
these provisions are appropriate to protect our interests and the interests of our stockholders.
Classified Board of Directors
. Our amended and restated certificate of incorporation divides
our board of directors into three classes. Moreover, no director may be removed prior to the
expiration of his or her term except for cause and upon the vote of at least two-thirds of the
combined voting power of the then outstanding shares of our common stock. These provisions in our
amended and restated certificate of incorporation may tend to discourage a third party from making
a tender offer or otherwise attempting to obtain control of our company and may maintain the
incumbency of our board of directors because this structure generally increases the difficulty of,
or may delay, replacing a majority of the directors.
Meetings of Stockholders
. Our amended and restated bylaws provide that annual meetings of our
stockholders may take place at the time and place established by our board of directors. A special
meeting of our stockholders may be called at any time by either the chairman of the board, the
chief executive officer, the president, or a majority of the board of directors, and the
stockholders are entitled to written notice thereof.
Filling of Board Vacancies
. Our amended and restated certificate of incorporation provides
that vacancies and newly created directorships resulting from any increase in the authorized number
of directors may be filled by the affirmative vote of a majority of our directors then in office,
even though that number may be less than a quorum of the board of directors.
Amendment of the Amended and Restated Certificate of Incorporation
. Our amended and restated
certificate of incorporation may be amended or repealed by an affirmative vote of at least
two-thirds of the combined voting power of the then-outstanding shares of stock entitled to vote on
the proposed amendment. In the
event a resolution to amend the amended and restated certificate of incorporation is adopted
by an affirmative vote
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of at least 80% of our board of directors, final approval of the amendment
only requires an affirmative vote of a majority of the combined voting power then outstanding.
Amendment of the Amended and Restated Bylaws
. Our amended and restated bylaws may be amended
or repealed by a majority of our board of directors, subject to the right of stockholders entitled
to vote with respect thereto to amend or repeal bylaws adopted by the board of directors. Any
amendment or repeal of our amended and restated bylaws by our stockholders shall require the
affirmative vote of the holders of at least two-thirds of the voting power of our then-outstanding
shares of stock entitled to vote on any proposed amendment or repeal of our amended and restated
bylaws.
Limitations on Liability and Indemnification of Officers and Directors
Our amended and restated certificate of incorporation includes a provision that eliminates the
personal liability of our directors for monetary damages for certain breaches of fiduciary duty as
a director to the fullest extent permitted by Delaware law. Our amended and restated bylaws provide
that we must indemnify our directors and officers to the fullest extent permitted by Delaware law,
and we may advance expenses to our directors and officers in connection with a legal proceeding to
the fullest extent permitted by Delaware law, subject to certain exceptions. These obligations
apply with equal force to any surviving or constituent entities to a merger to which we may be a
party. We also carry directors’ and officers’ liability insurance.
The limitation of liability and indemnification provisions in our amended and restated
certificate of incorporation may discourage stockholders from bringing a lawsuit against directors
for breaches of their fiduciary duty. They may also have the effect of reducing the likelihood of
derivative litigation against directors and officers, even though an action of this kind, if
successful, might otherwise benefit us and our stockholders. Furthermore, a stockholders’
investment may be adversely affected to the extent we pay the costs of settlement and damage awards
against directors and officers pursuant to these indemnification provisions. However, we believe
that these indemnification provisions are necessary to attract and retain qualified directors and
officers.
Transfer Agent and Registrar
StockTrans, Inc. is the transfer agent and registrar for our common stock.
Listing
Our common stock is listed on the Nasdaq Global Select Market under the trading symbol “PSYS.”
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DESCRIPTION OF COMMON STOCK WARRANTS
We may issue warrants for the purchase of common stock. Common stock warrants may be issued
independently or together with any other securities pursuant to any prospectus supplement and may
be attached to or separate from such securities. Each series of common stock warrants will be
issued under a separate warrant agreement to be entered into between us and the warrant recipient
or, if the recipients are numerous, a warrant agent identified in the applicable prospectus
supplement. The warrant agent, if engaged, will act solely as our agent in connection with the
common stock warrants of such series and will not assume any obligation or relationship of agency
or trust for or with any holders or beneficial owners of common stock warrants. Further terms of
the common stock warrants and the applicable warrant agreements will be set forth in the applicable
prospectus supplement.
The applicable prospectus supplement will describe the terms of any common stock warrants in
respect of which this prospectus is being delivered, including, where applicable, the following:
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The title of such common stock warrants;
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The aggregate number of such common stock warrants;
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The price or prices at which such common stock warrants will be issued;
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The designation, number and terms of the shares of common stock purchasable upon
exercise of such common stock warrants;
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The designation and terms of the other securities with which such common stock
warrants are issued and the number of such common stock warrants issued with each such
offered security;
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The date, if any, on and after which such common stock warrants and the related
common stock will be separately transferable;
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The price at which each share of common stock purchasable upon exercise of such
common stock warrants may be purchased;
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The date on which the right to exercise such common stock warrants shall commence
and the date on which such right shall expire;
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The minimum or maximum amount of such common stock warrants that may be exercised at
any one time;
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Information with respect to book-entry procedures, if any;
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A discussion of certain federal income tax considerations; and
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Any other terms of such common stock warrants, including terms, procedures and
limitations relating to the exchange and exercise of such common stock warrants.
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You should review the section captioned “Description of Common Stock” for a general description of
the common stock which would be acquired upon the exercise of the common stock warrants.
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DESCRIPTION OF PREFERRED STOCK
General
We are authorized to issue 1,186,530 shares of preferred stock and no shares of preferred
stock are currently issued and outstanding. We previously authorized and issued series A
convertible preferred stock to certain investors. All of the outstanding shares of series A
preferred stock have been converted into shares of our common stock.
The following description of preferred stock sets forth certain anticipated general terms and
provisions of the preferred stock to which any prospectus supplement may relate. Certain other
terms of any series of preferred stock (which terms may be different than those stated below) will
be described in the prospectus supplement to which such series relates. The statements below
describing the preferred stock are in all respects subject to and qualified in their entirety by
reference to the applicable provisions of the prospectus supplement, our amended and restated
certificate of incorporation (including the amendment describing the designations, rights, and
preferences of each series of preferred stock) and our amended and restated bylaws.
Subject to limitations prescribed by Delaware law and our amended and restated certificate of
incorporation, the board of directors is authorized to fix the number of shares constituting each
series of preferred stock and the designations and powers, preferences and relative, participating,
optional or other special rights and qualifications, limitations or restrictions thereof, including
such provisions as may be desired concerning voting, redemption, dividends, dissolution or the
distribution of assets, conversion or exchange, and such other subjects or matters as may be fixed
by resolution of the board of directors or the duly authorized committee thereof. The preferred
stock will, when issued, be fully paid and nonassessable and will have no preemptive rights.
The prospectus supplement relating to preferred stock will contain the specific terms, including:
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The title and stated value of such preferred stock;
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The number of shares of such preferred stock offered, the liquidation preference per
share and the offering price of such preferred stock;
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The dividend rate(s), period(s) and or payment date(s) or method(s) of calculation
thereof applicable to such preferred stock;
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The date from which dividends on such preferred stock shall accumulate, if applicable;
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The provision for a sinking fund, if any, for such preferred stock;
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The provisions for redemption, if applicable, of such preferred stock;
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Any listing of such preferred stock on any securities exchange;
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The terms and conditions, if applicable, upon which such preferred stock will be
convertible into common stock, including the conversion price (or manner of calculation
thereof);
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A discussion of certain federal income tax considerations applicable to such
preferred stock;
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The relative ranking and preferences of such preferred stock as to dividend rights
and rights upon our liquidation, dissolution or winding up of its affairs;
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Any limitations on issuance of any series of preferred stock ranking senior to or on
a parity with such series of preferred stock as to dividend rights and rights upon
liquidation, dissolution or winding up of affairs; and
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Any other specific terms, preferences, rights, limitations or restrictions of such
preferred stock.
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Rank
Unless otherwise specified in the prospectus supplement, the preferred stock will, with
respect to dividend rights and rights upon our liquidation, dissolution or winding up, rank:
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Senior to all classes or series of common stock, and to all equity securities
ranking junior to such preferred stock with respect to dividend rights or rights upon
liquidation, dissolution or winding up;
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On a parity with all equity securities the terms of which specifically provide that
such equity securities rank on a parity with the preferred stock with respect to
dividend rights or rights upon liquidation, dissolution or winding up; and
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Junior to all equity securities the terms of which specifically provide that such
equity securities rank senior to the preferred stock with respect to dividend rights or
rights upon liquidation, dissolution or winding up.
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Dividends
Holders of preferred stock of each series shall be entitled to receive, when, as and if
declared by the board of directors, out of our assets legally available for payment, cash dividends
(or dividends in kind or in other property if expressly permitted and described in the applicable
prospectus supplement) at such rates and on such dates as will be set forth in the applicable
prospectus supplement. Each such dividend shall be payable to holders of record as they appear on
our stock transfer books on such record dates as shall be fixed by the board of directors.
Dividends on any series of preferred stock may be cumulative or non-cumulative, as provided in
the applicable prospectus supplement. Dividends, if cumulative, will be cumulative from and after
the date set forth in the prospectus supplement. If the board of directors fails to declare a
dividend payable on a dividend payment date on any series of preferred stock for which dividends
are non-cumulative, then the holders of such series of preferred stock will have no right to
receive a dividend in respect of the dividend period ending on such dividend payment date, and we
will have no obligation to pay the dividend accrued for such period, whether or not dividends on
such series are declared payable on any future dividend payment date.
Unless otherwise specified in the applicable prospectus supplement, if any preferred stock of
any series is outstanding, no full dividends shall be declared or paid or set apart for payment on
the preferred stock of any other series ranking, as to dividends, on a parity with or junior to the
preferred stock of such series for any period unless full dividends (which include all unpaid
dividends in the case of cumulative dividend preferred stock) have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set apart for such
payment on the preferred stock of such series.
When dividends are not paid in full (or a sum sufficient for such full payment is not so set
apart) upon the preferred stock of any series and the shares of any other series of preferred stock
ranking on a parity as to dividends with the preferred stock of such series, all dividends declared
upon shares of preferred stock of such series and any other series of preferred stock ranking on a
parity as to dividends with such preferred stock shall be declared pro rata among the holders of
such series. No interest, or sum of money in lieu of interest, shall be payable in respect of any
dividend payment or payments on preferred stock of such series which may be in arrears.
Until required dividends are paid, no dividends shall be declared or paid, or set aside for
payment, and no other distribution shall be declared or made upon the common stock or any other
capital stock ranking junior to or on a parity with the preferred stock of such series as to
dividends or upon liquidation. In addition, no common stock or any other capital stock ranking
junior to or on a parity with the preferred stock of such series as to dividends or upon
liquidation shall be redeemed, purchased or otherwise acquired for any consideration (or any moneys
be paid to or made available for a sinking fund for the redemption of any shares of any such stock)
by us (except by
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conversion into or exchange for other capital stock ranking junior to the preferred stock of
such series as to dividends and upon liquidation).
Any dividend payment made of a series of preferred stock shall first be credited against the
earliest accrued but unpaid dividend due with respect to shares of preferred stock of such series
which remains payable.
Redemption
If so provided in the applicable prospectus supplement, any series of preferred stock will be
subject to mandatory redemption or redemption at our option, as a whole or in part, in each case
upon the terms, at the times and at the redemption prices set forth in such prospectus supplement.
The prospectus supplement relating to a series of preferred stock that is subject to mandatory
redemption will specify the number of shares of such preferred stock that we shall redeem in each
year commencing after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon (which shall not, if such
preferred stock does not have a cumulative dividend, include any accumulation in respect of unpaid
dividends for prior dividend periods) to the date of redemption. We may pay the redemption price in
cash or other property, as specified in the prospectus supplement. If the redemption price for
preferred stock of any series is payable only from the net proceeds of our issuance of capital
stock, the terms of such preferred stock may provide that, if no such capital stock shall have been
issued or to the extent the net proceeds from any issuance are insufficient to pay in full the
aggregate redemption price then due, such preferred stock shall automatically and mandatorily be
converted into shares of the applicable capital stock pursuant to conversion provisions specified
in the applicable prospectus supplement.
So long as any dividends on any series of preferred stock ranking on a parity as to dividends
and distributions of assets with such series of the preferred stock are in arrears, no shares of
any such series of the preferred stock will be redeemed (whether by mandatory or optional
redemption) unless all such shares are simultaneously redeemed, and we will not purchase or
otherwise acquire any such shares. However, this will not prevent the purchase or acquisition of
preferred stock pursuant to a purchase or exchange offer made on the same terms to holders of all
outstanding preferred stock of such series and, unless the full cumulative dividends on all
outstanding shares of any cumulative preferred stock of such series and any other stock of
Psychiatric Solutions ranking on a parity with such series as to dividends and upon liquidation
shall have been paid or contemporaneously are declared and paid for all past dividend periods, we
shall not purchase or otherwise acquire directly or indirectly any preferred stock of such series
(except by conversion into or exchange for stock ranking junior to the preferred stock of such
series as to dividends and upon liquidation). However, this will not prevent the purchase or
acquisition of such preferred stock pursuant to a purchase or exchange offer made on the same terms
to holders of all outstanding shares of preferred stock of such series.
If we are to redeem fewer than all of the outstanding preferred stock of any series, we will
determine the number of shares to be redeemed and such shares may be redeemed pro rata from the
holders of record of such shares in proportion to the number of such shares held by such holders
(with adjustments to avoid redemption of fractional shares) or any other equitable method
determined by us that will not result in the issuance of any excess shares.
We will mail a notice of redemption at least 30 days but not more than 60 days before the
redemption date to each holder of record of preferred stock of any series to be redeemed. If notice
of redemption of any preferred stock has been given and we have set aside the funds necessary for
such redemption in trust for the benefit of the holders of any preferred stock so called for
redemption, then from and after the redemption date dividends will cease to accrue on such
preferred stock, such preferred stock shall no longer be deemed outstanding and all rights of the
holders of such shares will terminate, except the right to receive the redemption price.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, then,
before any distribution or payment shall be made to the holders of common stock, or any other class
or series of our capital
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stock ranking junior to the preferred stock in the distribution of assets upon any
liquidation, dissolution or winding up, the holders of each series of preferred stock will be
entitled to receive out of our assets legally available for distribution to stockholders
liquidating distributions in the amount of the liquidation preference per share (set forth in the
applicable prospectus supplement), plus an amount equal to all dividends accrued and unpaid thereon
(which shall not include any accumulation in respect of unpaid dividends for prior dividend periods
if such preferred stock does not have a cumulative dividend). After payment of the full amount of
the liquidating distributions to which they are entitled, the holders of preferred stock will have
no right or claim to any of our remaining assets. In the event that, upon any such voluntary or
involuntary liquidation, dissolution or winding up, our legally available assets are insufficient
to pay the amount of the liquidating distributions on all outstanding preferred stock and the
corresponding amounts payable on all shares of other classes or series of capital stock ranking on
a parity with the preferred stock in the distribution of assets upon liquidation, dissolution or
winding up, then the holders of the preferred stock and all other such classes or series of capital
stock shall share ratably in any such distribution of assets in proportion to the full liquidating
distributions to which they would otherwise be respectively entitled.
If liquidating distributions shall have been made in full to all holders of preferred stock,
our remaining assets shall be distributed among the holders of any other classes or series of
capital stock ranking junior to the preferred stock upon liquidation, dissolution or winding up,
according to their respective rights and preferences and in each case according to their respective
number of shares.
Voting Rights
Holders of preferred stock will not have any voting rights, except as set forth below or as
otherwise from time to time required by law or as indicated in the applicable prospectus
supplement.
Any series of preferred stock may provide that, so long as any shares of such series remain
outstanding, the holders of such series may vote as a separate class on certain specified matters,
which may include changes in our capitalization, amendments to our amended and restated certificate
of incorporation and mergers and dispositions.
The foregoing voting provisions will not apply if, at or prior to the time when the act with
respect to which such vote would otherwise be required shall be effected, all outstanding shares of
such series of preferred stock shall have been redeemed or called for redemption upon proper notice
and sufficient funds shall have been irrevocably deposited in trust to effect such redemption.
The provisions of a series of preferred stock may provide for additional rights, remedies, and
privileges if dividends on such series are in arrears for specified periods, which rights and
privileges will be described in the applicable prospectus supplement.
Conversion Rights
The terms and conditions, if any, upon which shares of any series of preferred stock are
convertible into common stock will be set forth in the prospectus supplement relating thereto. Such
terms will include the number of shares of common stock into which the preferred stock is
convertible, the conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversion will be at the option of the holders of the preferred stock or
us, the events requiring an adjustment of the conversion price and provisions affecting conversion
in the event of the redemption of such preferred stock.
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DESCRIPTION OF DEBT SECURITIES
We may issue debt securities under one or more trust indentures to be executed by us and a
specified trustee. The terms of the debt securities will include those stated in the indenture and
those made a part of the indenture (before any supplements) by reference to the Trust Indenture Act
of 1939. The indentures will be qualified under the Trust Indenture Act.
The following description sets forth certain anticipated general terms and provisions of the
debt securities to which any prospectus supplement may relate. The particular terms of the debt
securities offered by any prospectus supplement (which terms may be different than those stated
below) and the extent, if any, to which such general provisions may apply to the debt securities so
offered will be described in the prospectus supplement relating to such debt securities.
Accordingly, for a description of the terms of a particular issue of debt securities, investors
should review both the prospectus supplement relating thereto and the following description. Forms
of the senior indenture (as discussed herein) and the subordinated indenture (as discussed herein)
have been filed as exhibits to the registration statement of which this prospectus is a part.
General
The debt securities will be our direct obligations and may be either senior debt securities or
subordinated debt securities. The indebtedness represented by subordinated securities will be
subordinated in right of payment to the prior payment in full of our senior debt (as defined in the
applicable indenture). Senior securities and subordinated securities will be issued pursuant to
separate indentures (respectively, a senior indenture and a subordinated indenture), in each case
between us and a trustee.
Except as set forth in the applicable indenture and described in a prospectus supplement
relating thereto, the debt securities may be issued without limit as to aggregate principal amount,
in one or more series, secured or unsecured, in each case as established from time to time in or
pursuant to authority granted by a resolution of our board of directors or as established in the
applicable indenture. All debt securities of one series need not be issued at the time and, unless
otherwise provided, a series may be reopened, without the consent of the holders of the debt
securities of such series, for issuance of additional debt securities of such series.
The prospectus supplement relating to any series of debt securities being offered will contain
the specific terms thereof, including, without limitation:
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The title of such debt securities and whether such debt securities are senior
securities or subordinated securities;
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The aggregate principal amount of such debt securities and any limit on such
aggregate principal amount;
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The percentage of the principal amount at which such debt securities will be issued
and, if other than the principal amount thereof, the portion of the principal amount
thereof payable upon declaration of acceleration of the maturity thereof, or the
portion of the principal amount of such debt securities which is convertible into
common stock or preferred stock (if applicable), or the method by which any such
portion shall be determined;
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If convertible, any applicable limitations on the ownership or transferability of
the common stock or preferred stock into which such debt securities are convertible;
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The date or dates, or the method for determining the date or dates, on which the
principal of such debt securities will be payable;
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The rate or rates (which may be fixed or variable), or the method by which the rate
or rates shall be determined, at which such debt securities will bear interest, if any;
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The date or dates, or the method for determining such date or dates, from which any
interest will accrue, the interest payment dates on which any such interest will be
payable, the regular record dates for such interest payment dates, or the method by
which any such date shall be determined, the person to whom such interest shall be
payable, and the basis upon which interest shall be calculated if other than that of a
360-day year of twelve 30-day months;
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The place or places where the principal of (and premium, if any) and interest, if
any, on such debt securities will be payable, such debt securities may be surrendered
for conversion or registration of transfer or exchange and notices or demands to or
upon us in respect of such debt securities and the applicable indenture may be served;
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The period or periods within which, the price or prices at which and the terms and
conditions upon which such debt securities may be redeemed, as a whole or in part, at
our option, if we have such an option;
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Our obligation, if any, to redeem, repay or purchase such debt securities pursuant
to any sinking fund or analogous provision or at the option of a holder thereof, and
the period or periods within which, the price or prices at which and the terms and
conditions upon which such debt securities will be redeemed, repaid or purchased, as a
whole or in part, pursuant to such obligation;
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If other than U.S. dollars, the currency or currencies in which such debt securities
are denominated and payable, which may be a foreign currency or units of two or more
foreign currencies or a composite currency or currencies, and the terms and conditions
relating thereto;
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Whether the amount of payments of principal of (and premium, if any) or interest, if
any, on such debt securities may be determined with reference to an index, formula or
other method (which index, formula or method may, but need not be, based on a currency,
currencies, currency unit or units or composite currencies) and the manner in which
such amounts shall be determined;
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Any additions to, modifications of or deletions from the terms of such debt
securities with respect to the events of default or covenants set forth in the
indenture;
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Any provisions for collateral security for repayment of such debt securities;
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Whether such debt securities will be issued in certificated and/or book-entry form;
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Whether such debt securities will be in registered or bearer form and, if in
registered form, the denominations thereof if other than $1,000 and any integral
multiple thereof and, if in bearer form, the denominations thereof and terms and
conditions relating thereto;
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The applicability, if any, of defeasance and covenant defeasance provisions of the
applicable indenture;
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The terms, if any, upon which such debt securities may be convertible into our
common stock or preferred stock and the terms and conditions upon which such conversion
will be effected, including, without limitation, the initial conversion price or rate
and the conversion period;
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Whether and under what circumstances we will pay additional amounts as contemplated
in the indenture on such debt securities in respect of any tax, assessment or
governmental charge and, if so, whether we will have the option to redeem such debt
securities in lieu of making such payment; and
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Any other terms of such debt securities not inconsistent with the provisions of the
applicable indenture.
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The debt securities may provide for less than the entire principal amount thereof to be
payable upon declaration of acceleration of the maturity thereof. Special federal income tax,
accounting and other considerations applicable to these original issue discount securities will be
described in the applicable prospectus supplement.
The applicable indenture may contain provisions that would limit our ability to incur
indebtedness or that would afford holders of debt securities protection in the event of a highly
leveraged or similar transaction involving us or in the event of a change of control.
Merger, Consolidation or Sale
The applicable indenture will provide that we may consolidate with, or sell, lease or convey
all or substantially all of our assets to, or merge with or into, any other corporation, provided
that:
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Either we shall be the continuing corporation, or the successor corporation (if
other than Psychiatric Solutions) formed by or resulting from any such consolidation or
merger or which shall have received the transfer of such assets shall expressly assume
payment of the principal of (and premium, if any), and interest on, all of the
applicable debt securities and the due and punctual performance and observance of all
of the covenants and conditions contained in the applicable indenture;
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Immediately after giving effect to such transaction and treating any indebtedness
which becomes our obligation or an obligation of one of our subsidiaries as a result
thereof as having been incurred by us or such subsidiary at the time of such
transaction, no event of default under the applicable indenture, and no event which,
after notice or the lapse of time, or both, would become such an event of default,
shall have occurred and be continuing; and
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An officer’s certificate and legal opinion covering such conditions shall be
delivered to the trustee.
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Covenants
The applicable indenture will contain covenants requiring us to take certain actions and
prohibiting us from taking certain actions. The covenants with respect to any series of debt
securities will be described in the prospectus supplement relating thereto.
Events of Default, Notice and Waiver
Each indenture will describe specific “events of default” with respect to any series of debt
securities issued thereunder. Such “events of default” are likely to include (with grace and cure
periods):
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Default in the payment of any installment of interest on any debt security of such
series;
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Default in the payment of principal of (or premium, if any, on) any debt security of
such series at its maturity;
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Default in making any required sinking fund payment for any debt security of such
series;
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Default in the performance or breach of any other covenant or warranty of
Psychiatric Solutions contained in the applicable indenture (other than a covenant
added to the indenture solely for the benefit of a series of debt securities issued
thereunder other than such series), continued for a specified period of days after
written notice as provided in the applicable indenture;
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Default in the payment of specified amounts of indebtedness of Psychiatric Solutions
or any mortgage, indenture or other instrument under which such indebtedness is issued
or by which such indebtedness is secured, such default having occurred after the
expiration of any applicable grace
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period and having resulted in the acceleration of the maturity of such indebtedness,
but only if such indebtedness is not discharged or such acceleration is not
rescinded or annulled; and
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Certain events of bankruptcy, insolvency or reorganization, or court appointment of
a receiver, liquidator or trustee of Psychiatric Solutions or any of our significant
subsidiaries or their property.
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If an event of default under any indenture with respect to debt securities of any series at
the time outstanding occurs and is continuing, then the applicable trustee or the holders of not
less than 25% of the principal amount of the outstanding debt securities of that series may declare
the principal amount (or, if the debt securities of that series are original issue discount
securities or indexed securities, such portion of the principal amounts may be specified in the
terms thereof) of all the debt securities of that series to be due and payable immediately by
written notice thereof to us (and to the applicable trustee if given by the holders). However, at
any time after such a declaration of acceleration with respect to debt securities of such series
(or of all debt securities then outstanding under any indenture, as the case may be) has been made,
but before a judgment or decree for payment of the money due has been obtained by the applicable
trustee, the holders of not less than a majority in principal amount of outstanding debt securities
of such series (or of all debt securities then outstanding under the applicable indenture, as the
case may be) may rescind and annul such declaration and its consequences if:
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We shall have deposited with the applicable trustee all required payments of the
principal of (and premium, if any) and interest on the debt securities of such series
(or of all debt securities then outstanding under the applicable indenture, as the case
may be), plus certain fees, expenses, disbursements and advances of the applicable
trustee; and
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All events of default, other than the non-payment of accelerated principal (or
specified portion thereof), with respect to debt securities of such series (or of all
debt securities then outstanding under the applicable indenture, as the case may be)
have been cured or waived as provided in such indenture.
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Each indenture also will provide that the holders of not less than a majority in principal
amount of the outstanding debt securities of any series (or of all debt securities then outstanding
under the applicable indenture, as the case may be) may waive any past default with respect to such
series and its consequences, except a default:
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In the payment of the principal of (or premium, if any) or interest on any debt
security of such series; or
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In respect of a covenant or provision contained in the applicable indenture that
cannot be modified or amended without the consent of the holder of each outstanding
debt security affected thereby.
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Each trustee will be required to give notice to the holders of debt securities within 90 days
of a default under the applicable indenture unless such default shall have been cured or waived;
provided, however, that such trustee may withhold notice to the holders of any series of debt
securities of any default with respect to such series (except a default in the payment of the
principal of (or premium, if any) or interest on any debt security of such series or in the payment
of any sinking fund installment in respect of any debt security of such series) if specified
responsible officers of such trustee consider such withholding to be in the interest of such
holders.
Each indenture will provide that no holders of debt securities of any series may institute any
proceedings, judicial or otherwise, with respect to such indenture or for any remedy thereunder,
except in the case of failure of the applicable trustee, for 60 days, to act after it has received
a written request to institute proceedings in respect of an event of default from the holders of
not less than 25% in principal amount of the outstanding debt securities of such series, as well as
an offer of indemnity reasonably satisfactory to it. This provision will not prevent, however, any
holder of debt securities from instituting suit for the enforcement of payment of the principal of
(and premium, if any) and interest on such debt securities at the respective due dates thereof.
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Subject to provisions in each indenture relating to its duties in case of default, no trustee
will be under any obligation to exercise any of its rights or powers under an indenture at the
request or direction of any holders of any series of debt securities then outstanding under such
indenture, unless such holders shall have offered to the trustee thereunder reasonable security or
indemnity. The holders of not less than a majority in principal amount of the outstanding debt
securities of any series (or of all debt securities then outstanding under an indenture, as the
case may be) shall have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the applicable trustee, or of exercising any trust or power conferred
upon such trustee. However, a trustee may refuse to follow any direction which is in conflict with
any law or the applicable indenture, which may involve such trustee in personal liability or which
may be unduly prejudicial to the holders of debt securities of such series not joining therein.
Within 120 days after the close of each fiscal year, we will be required to deliver to each
trustee a certificate, signed by one of several specified officers, stating whether or not such
officer has knowledge of any default under the applicable indenture and, if so, specifying each
such default and the nature and status thereof.
Modification of the Indenture
It is anticipated that modifications and amendments of an indenture may be made by us and the
trustee, with the consent of the holders of not less than a majority in principal amount of each
series of the outstanding debt securities issued under the indenture which are affected by the
modification or amendment, provided that no such modification or amendment may, without the consent
of each holder of such debt securities affected thereby:
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Change the stated maturity date of the principal of (or premium, if any) or any
installment of interest, if any, on any such debt security;
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Reduce the principal amount of (or premium, if any) or the interest, if any, on any
such debt security or the principal amount due upon acceleration of an original issue
discount security;
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Change the place or currency of payment of principal of (or premium, if any) or
interest, if any, on any such debt security;
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Impair the right to institute suit for the enforcement of any such payment on or
with respect to any such debt security;
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Reduce the above-stated percentage of holders of debt securities necessary to modify
or amend the indenture; or
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Modify the foregoing requirements or reduce the percentage of outstanding debt
securities necessary to waive compliance with certain provisions of the indenture or
for waiver of certain defaults.
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A record date may be set for any act of the holders with respect to consenting to any
amendment.
The holders of not less than a majority in principal amount of outstanding debt securities of
each series affected thereby will have the right to waive our compliance with certain covenants in
such indenture.
Each indenture will contain provisions for convening meetings of the holders of debt
securities of a series to take permitted action.
Redemption of Securities
Debt securities may also be subject to optional or mandatory redemption on terms and
conditions described in the applicable prospectus supplement.
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From and after notice has been given as provided in the applicable indenture, if funds for the
redemption of any debt securities called for redemption shall have been made available on such
redemption date, such debt securities will cease to bear interest on the date fixed for such
redemption specified in such notice, and the only right of the holders of the debt securities will
be to receive payment of the redemption price.
PLAN OF DISTRIBUTION
We may sell the securities, and certain selling stockholders may sell shares of our common
stock, to one or more underwriters for public offering and sale by them or may sell the securities
to investors through agents or dealers. Any selling stockholder, underwriter, agent or dealer
involved in the offer and sale of the securities will be named in the applicable prospectus
supplement. We also reserve the right to sell securities directly to investors in those
jurisdictions where we are authorized to do so. The distribution of securities may be effected from
time to time in one or more transactions at a fixed price or prices, which may be changed, or from
time to time at market prices prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices.
We and certain selling stockholders may, from time to time, authorize underwriters acting as
our agents to offer and sell the securities upon the terms and conditions set forth in any
prospectus supplement. In connection with the sale of the securities, underwriters may be deemed to
have received compensation from us or selling stockholders in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of the securities for whom they may
act as agent. Any underwriting compensation paid by us or selling stockholders to underwriters or
agents in connection with the offering of the securities, and any discounts, concessions or
commissions allowed by underwriters to participating dealers, will be set forth in an applicable
prospectus supplement. If a dealer is utilized in the sale of the securities in respect of which
this prospectus is delivered, we or selling stockholders may sell the securities to the dealer, as
principal. The dealer may then resell the securities to the public at varying prices to be
determined by the dealer at the time of resale. Selling stockholders, underwriters, dealers and
agents participating in the distribution of the securities may be deemed to be underwriters under
the Securities Act, and any discounts and commissions received by them and any profit realized by
them on resale of the securities may be deemed to be underwriting discounts and commissions under
the Securities Act. Additionally, because selling stockholders may be deemed to be “underwriters”
within the meaning of Section 2(11) of the Securities Act, selling stockholders may be subject to
the prospectus delivery requirements of the Securities Act. Underwriters, dealers and agents may be
entitled under agreements with us and selling stockholders to indemnification against and
contribution toward certain civil liabilities, including liabilities under the Securities Act, and
to reimbursement by us and the selling stockholders for certain expenses.
Securities offered may be a new issue of securities with no established trading market. Any
underwriters to whom or agents through whom these securities are sold by us for public offering and
sale may make a market in these securities, but such underwriters or agents will not be obligated
to do so and may discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of or the trading market for any such securities.
If so indicated in an applicable prospectus supplement, we and certain selling stockholders
may authorize dealers acting as an agent to solicit offers by institutions to purchase the
securities from us or the selling stockholders at the public offering price set forth in the
prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on
the date or dates stated in the prospectus supplement. Each delayed delivery contract will be for
an amount not less than, and the aggregate principal amount or offering price of the securities
sold pursuant to delayed delivery contracts will not be less nor more than, the respective amounts
stated in the prospectus supplement. Institutions with whom delayed delivery contracts, when
authorized, may be entered into include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions and other institutions, but
will in all cases be subject to approval by us and the selling stockholders.
The securities also may be offered and sold, if so indicated in the prospectus supplement, in
connection with a remarketing upon their purchase, in accordance with a redemption or repayment
pursuant to their terms, or otherwise, by one or more firms (“remarketing firms”), acting as
principals for their own accounts or as agents for us. Any remarketing firm will be identified and
the terms of its agreement, if any, with us or the selling stockholders will be described in the
applicable prospectus supplement. Remarketing firms may be deemed to be underwriters in connection
with the securities remarketed thereby. Remarketing firms may be entitled under agreements which
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be entered into with us and the selling stockholders to indemnification by us against certain
liabilities, including liabilities under the Securities Act.
We may enter into derivative transactions with third parties, or sell securities not covered
by this prospectus to third parties in privately negotiated transactions. If the applicable
prospectus supplement indicates, in connection with those derivatives, the third parties may sell
securities covered by this prospectus and the applicable prospectus supplement, including in short
sale transactions. If so, the third party may use securities pledged by us or borrowed from us or
others to settle those sales or to close out any related open borrowings of stock, and may use
securities received from us in settlement of those derivatives to close out any related open
borrowings of stock. The third parties in such sale transactions will be underwriters and, if not
identified in this prospectus, will be identified in the applicable prospectus supplement (or a
post-effective amendment).
Any selling stockholder may also resell all or a portion of his, her or its shares of our
common stock in transactions exempt from the registration requirements of the Securities Act in
reliance upon Rule 144 under the Securities Act provided he, she or it meets the criteria and
conforms to the requirements of that rule, Section 4(1) of the Securities Act or other applicable
exemptions, regardless of whether the securities are covered by the registration statement of which
this prospectus forms a part. Additionally, any selling stockholder may engage in hedging
transactions with broker-dealers in connection with distributions of shares or otherwise. In those
transactions, broker-dealers may engage in short sales of shares in the course of hedging the
positions they assume with such selling stockholder. Any selling stockholder also may sell shares
short and redeliver shares to close out such short positions. Any selling stockholder may also
enter into option or other transactions with broker-dealers which require the delivery of shares to
the broker-dealer. The broker-dealer may then resell or otherwise transfer such shares pursuant to
this prospectus. Any selling stockholder also may loan or pledge shares, and the borrower or
pledgee may sell or otherwise transfer the shares so loaned or pledged pursuant to this prospectus.
Such borrower or pledgee also may transfer those shares to investors in our securities or the
selling stockholder’s securities or in connection with the offering of other securities not covered
by this prospectus.
To facilitate the offering of securities, certain persons participating in the offering may
engage in transactions that stabilize, maintain, or otherwise affect the price of the securities.
These may include over-allotment, stabilization, syndicate short covering transactions and penalty
bids. Over-allotment involves sales in excess of the offering size, which creates a short position.
Stabilizing transactions involve bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Syndicate short covering transactions involve
purchases of securities in the open market after the distribution has been completed in order to
cover syndicate short positions. Penalty bids permit the underwriters to reclaim selling
concessions from dealers when the securities originally sold by the dealers are purchased in
covering transactions to cover syndicate short positions. These transactions, if commenced, may be
discontinued by the underwriters at any time.
One or more of the underwriters, dealers or agents, and/or one or more of their respective
affiliates, may be a lender under our second amended and restated credit agreement and may provide
other commercial banking, investment banking and other services to us and/or our subsidiaries and
affiliates in the ordinary course of business.
During such time as we may be engaged in a distribution of the securities covered by this
prospectus we are required to comply with Regulation M promulgated under the Securities Exchange
Act of 1934. With certain exceptions, Regulation M precludes us, any affiliated purchasers, and any
broker-dealer or other person who participates in such distributing from bidding for or purchasing,
or attempting to induce any person to bid for or purchase, any security which is the subject of the
distribution until the entire distribution is complete. Regulation M also restricts bids or
purchases made in order to stabilize the price of a security in connection with the distribution of
that security.
LEGAL MATTERS
Certain legal matters with respect to the validity of the securities being offered hereby will
be passed upon for us by Waller Lansden Dortch & Davis, LLP. Any underwriters will be advised about
other issues relating to any transaction by their own legal counsel.
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EXPERTS
The
consolidated financial statements of Psychiatric Solutions, Inc. at
December 31, 2005 and 2004, and for each of the three years in
the period ended
December 31, 2005, appearing in Psychiatric
Solutions, Inc.’s Current Report on Form 8-K, filed with the
SEC on November 30, 2006, and Psychiatric
Solutions, Inc. management’s assessment of the effectiveness of internal control over financial
reporting as of December 31, 2005 included therein, have been audited by Ernst & Young LLP,
independent registered public accounting firm, as set forth in its reports thereon included
therein, and incorporated herein by reference. Such financial statements and management’s
assessment are, and audited financial statements and management’s assessments of the effectiveness
of internal control over financial reporting to be included in subsequently filed documents will
be, incorporated herein in reliance upon the reports of Ernst & Young LLP pertaining to such
financial statements and management’s assessments (to the extent covered by consents filed with the
Securities and Exchange Commission) given on the authority of such firm as experts in accounting
and auditing.
The combined financial statements of Behavioral Healthcare Services at December 31, 2004 and
2003, and for each of the three years in the period ended December 31, 2004, appearing in our
Current Report on Form 8-K, filed with the SEC on August 31, 2005, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon (which contains an
explanatory paragraph describing conditions that raise substantial doubt about the ability of
Behavioral Healthcare Services to continue as a going concern as described in Note 1 to the
combined financial statements), included therein, and incorporated herein by reference. Such
combined financial statements are incorporated herein by reference in reliance upon such report of
Ernst & Young LLP given on the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus summarizes material provisions of contracts and other documents that we refer
you to. Since this prospectus may not contain all the information that you may find important, you
should review the full text of those documents. You should rely only on the information contained
and incorporated by reference in this prospectus.
We file annual, quarterly and current reports, proxy statements and other information with the
SEC. You may read and copy any document we file at the SEC’s public reference rooms at 100 F
Street, N.E., Washington, D.C. 20549 and at regional offices in New York, New York and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the
public reference rooms. Our SEC filings are also available to the public at the SEC’s web site at
www.sec.gov
. In addition, our stock is listed for trading on the Nasdaq Global Select Market. You
can read and copy reports and other information concerning us at the office of the National
Association of Securities Dealers, Inc. located at 1735 K Street, Washington, D.C. 20006.
We make available free of charge through our website, which you can find at
www.psysolutions.com
, our annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable
after we electronically file such material with, or furnish it to, the SEC.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We are “incorporating by reference” information we file with the SEC, which means:
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Incorporated documents are considered part of this prospectus;
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We can disclose important information to you by referring you to those documents; and
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Information that we file later with the SEC automatically will update and supersede
information contained in this prospectus.
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We are incorporating by reference the following documents, which we have previously filed with
the SEC:
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(1) Combined Financial Statements of Behavioral Healthcare Services as of December 31,
2004 and 2003, and for each of the three years in the period ended December 31, 2004
(incorporated by reference to our Current Report on Form 8-K, filed on August 31, 2005);
(2) our Annual Report on Form 10-K for the year ended December 31, 2005;
(3) our Quarterly Report on Form 10-Q for the quarter ended March 31, 2006;
(4) our Quarterly Report on Form 10-Q for the quarter ended June 30, 2006;
(5) our Quarterly Report on Form 10-Q for the quarter ended September 30, 2006;
(6) our Current Report on Form 8-K filed with the SEC on February 28, 2006;
(7) our Current Report on Form 8-K filed with the SEC on March 7, 2006;
(8) our Current Report on Form 8-K filed with the SEC on May 18, 2006;
(9) our Current Report on Form 8-K filed with the SEC on May 31, 2006;
(10) our Current Report on Form 8-K filed with the SEC on October 10, 2006;
(11) our Current Report on Form 8-K filed with the SEC on October 31, 2006;
(12) our Current Report on Form 8-K filed with the SEC on November 8, 2006;
(13)
our Current Report on Form 8-K filed with the SEC on November 30, 2006;
(14) the portions of our Definitive Proxy Statement on Schedule 14A that are deemed
“filed” with the SEC under the Exchange Act, filed on April 21, 2006;
(15) our Registration Statement on Form 10, filed with the SEC on July 31, 1992,
including all amendments or reports filed for the purpose of updating the description of our
capital stock; and
(16) any future filings with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act until the termination of the offerings under this prospectus; provided that
this prospectus will not incorporate any information we may furnish to the SEC under Item
2.02 or Item 7.01 of Form 8-K.
Any statement contained in this prospectus or in a document incorporated or deemed to be
incorporated by reference into this prospectus will be deemed to be modified or superseded for
purposes of this prospectus to the extent that a statement contained in this prospectus or any
other subsequently filed document that is deemed to be incorporated by reference into this
prospectus modifies or supersedes the statement. Any statement so modified or superseded will not
be deemed, except as so modified or superseded, to constitute a part of this prospectus.
You can obtain copies of the documents incorporated by reference in this prospectus without
charge through our website (
www.psysolutions.com
) as soon as reasonably practicable after we
electronically file the material with the SEC, or by requesting them in writing or by telephone at
the following address:
Psychiatric Solutions, Inc.
840 Crescent Centre Drive, Suite 460
Franklin, Tennessee 37067
Attention: Investor Relations
(615) 312-5700
22
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