SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Meditrust Corporation Meditrust Operating Company
- ------------------------------------ ------------------------------------
(Name of Registrant (Name of Registrant as Specified
as Specified In Its Charter) In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[Preliminary Joint Proxy Statement]
[To be released as soon as practicable, but not sooner than on or about
February 11, 1999]
MEDITRUST CORPORATION
197 First Avenue, Suite 300
Needham, Massachusetts 02494
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 1999
------------------------
A Special Meeting of Shareholders of Meditrust Corporation ("Meditrust")
will be held at the Goodwin, Procter & Hoar LLP Conference Center, Second
Floor, 53 State Street, Boston, Massachusetts 02109 on ,
, 1999 at 10:00 a.m., local time, (together with all adjournments and
postponements thereof, the "Meditrust Meeting"), for the following purposes:
1. To consider and act upon a proposal to approve and adopt the Amended
and Restated Certificate of Incorporation of Meditrust (the "Amended Meditrust
Certificate"), which will include (i) requirements, which are waiveable or
terminable by Meditrust's Board of Directors, to "pair" shares of common stock
of Meditrust with shares of common stock of Meditrust Operating Company, a
Delaware corporation ("Operating Company"), and (ii) such terms and provisions
as are present in Meditrust's Restated Certificate of Incorporation, as amended
to date (the "Existing Meditrust Certificate"). A copy of the proposed Amended
Meditrust Certificate is attached as Annex A of this Joint Proxy Statement.
2. To consider and act upon a proposal to terminate the Pairing Agreement,
dated as of December 20, 1979, as amended, by and between Meditrust and
Operating Company (the "Pairing Agreement"), upon the filing of each of the
Amended Meditrust Certificates and the Amended and Restated Certificate of
Incorporation of Operating Company. A copy of the Pairing Agreement, as amended
is attached as Annex C of this Joint Proxy Statement.
3. To consider and act upon such other business as may properly come before
the Meditrust Meeting.
The Board of Directors of Meditrust has fixed the close of business on
, 1999 as the record date for determining the shareholders
having the right to receive notice of and to vote at the Meditrust Meeting.
Only shareholders of record of Meditrust's common stock, par value $.10 per
share ("Meditrust Common Stock"), at the close of business on such date are
entitled to notice of and to vote at the Meditrust Meeting. A list of
shareholders entitled to vote at the Meditrust Meeting will be available during
ordinary business hours at the offices of Goodwin, Procter & Hoar LLP, 53 State
Street, Boston, Massachusetts 02109 and also at Meditrust's executive offices,
197 First Avenue, Suite 300, Needham, Massachusetts 02494, at least (10) ten
days prior to the Meditrust Meeting, for examination by any Meditrust
shareholder for purposes germane to the Meditrust Meeting.
The Board of Directors of Meditrust recommends that you vote "FOR"
approval and adoption of the Amended Meditrust Certificate, "FOR" approval of
the termination of the Pairing Agreement and "FOR" approval of each of the
other proposals presented at the Meditrust Meeting.
Your vote is important. The approval and adoption of the Amended Meditrust
Certificate requires the affirmative vote of a majority of the outstanding
shares of Meditrust Common Stock entitled to vote at the Meditrust Meeting. The
approval of the termination of the Pairing Agreement requires the affirmative
vote of two-thirds of the outstanding shares of Meditrust Common Stock entitled
to vote at the Meditrust Meeting. Whether or not you expect to attend the
Meditrust Meeting, please sign and mail promptly the enclosed proxy which is
being solicited on behalf of the Board of Directors of Meditrust. A return
envelope which requires no postage if mailed in the United States is enclosed
for that purpose.
Failure to return a properly executed proxy will have the same effect as a
vote against the approval and adoption of the Amended Meditrust Certificate and
against the termination of the Pairing Agreement unless you vote in person at
the Meditrust Meeting.
By Order of the Board of Directors of
MEDITRUST CORPORATION
MICHAEL S. BENJAMIN
Secretary
Needham, Massachusetts
, 1999
<PAGE>
MEDITRUST OPERATING COMPANY
197 First Avenue, Suite 100
Needham, Massachusetts 02494
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 1999
------------------------
A Special Meeting of Shareholders of Meditrust Operating Company
("Operating Company") will be held at the Goodwin, Procter & Hoar LLP
Conference Center, Second Floor, 53 State Street, Boston, Massachusetts 02109
on , , 1999 at 10:30 a.m., local time, (together with
all adjournments and postponements thereof, the "Operating Company Meeting"),
for the following purposes:
1. To consider and act upon a proposal to approve and adopt the Amended
and Restated Certificate of Incorporation of Operating Company (the "Amended
Operating Company Certificate"), which will include (i) requirements, which are
waiveable or terminable by Operating Company's Board of Directors, to pair
shares of common stock of Operating Company with shares of common stock of
Meditrust Corporation, a Delaware corporation ("Meditrust"), and (ii) such
terms and provisions as are present in Operating Company's Restated Certificate
of Incorporation, as amended to date (the "Existing Operating Company
Certificate"). A copy of the proposed Amended Operating Company Certificate is
attached as Annex B to this Joint Proxy Statement.
2. To consider and act upon a proposal to terminate the Pairing Agreement,
dated as of December 20, 1979, as amended (the "Pairing Agreement"), by and
between Operating Company and Meditrust, upon filing of each of the Amended
Operating Company Certificate and the Amended and Restated Certificate of
Incorporation of Meditrust. A copy of the Pairing Agreement, as amended is
attached as Annex C to this Joint Proxy Statement.
3. To consider and act upon such other business as may properly come before
the Operating Company Meeting.
The Board of Directors of Operating Company has fixed the close of
business on , 1999 as the record date for determining the
shareholders having the right to receive notice of and to vote at the Operating
Company Meeting. Only shareholders of record of Operating Company's common
stock, par value $.10 per share ("Operating Company Common Stock"), at the
close of business on such date are entitled to notice of and to vote at the
Operating Company Meeting. A list of shareholders entitled to vote at the
Operating Company Meeting will be available during ordinary business hours at
the offices of Goodwin, Procter & Hoar LLP, 53 State Street, Boston,
Massachusetts 02109 and also at Operating Company's executive offices, 197
First Avenue, Suite 100, Needham, Massachusetts 02494, at least ten (10) days
prior to the Operating Company Meeting, for examination by any Operating
Company shareholder for purposes germane to the Operating Company Meeting.
The Board of Directors of Operating Company recommends that you vote "FOR"
approval and adoption of the Amended Operating Company Certificate, "FOR"
approval of the termination of the Pairing Agreement and "FOR" approval of each
of the other proposals presented at the Operating Company Meeting.
Your vote is important. The approval and adoption of the Amended Operating
Company Certificate requires the affirmative vote of a majority of the
outstanding shares of Operating Company Common Stock entitled to vote at the
Operating Company Meeting. The approval of the termination of the Pairing
Agreement requires the affirmative vote of two-thirds of the outstanding shares
of Operating Company Common Stock entitled to vote at the Operating Company
Meeting. Whether or not you expect to attend the Operating Company Meeting,
please sign and mail promptly the enclosed proxy which is being solicited on
behalf of the Board of Directors of Operating Company. A return envelope which
requires no postage if mailed in the United States is enclosed for that
purpose.
Failure to return a properly executed proxy will have the same effect as a
vote against the approval and adoption of the Amended Operating Company
Certificate and against the termination of the Pairing Agreement unless you
vote in person at the Operating Company Meeting.
By Order of the Board of Directors of
MEDITRUST OPERATING COMPANY
WILLIAM C. BAKER
President
Needham, Massachusetts
, 1999
<PAGE>
THE MEETINGS
This Joint Proxy Statement is furnished in connection with the
solicitation of proxies from the holders of the common stock of each of
Meditrust Corporation, a Delaware Corporation ("Meditrust") and Meditrust
Operating Company, a Delaware corporation ("Operating Company" and together
with Meditrust, "The Meditrust Companies"), which shares are paired and trade
as a single unit on the New York Stock Exchange (the "Paired Shares"), by the
Boards of Directors of Meditrust and Operating Company for use at the Meditrust
Meeting and the Operating Company Meeting (as each is defined below). This
Joint Proxy Statement and accompanying form of proxy are first being mailed to
the respective shareholders of The Meditrust Companies on or about
, 1999.
THE MEDITRUST AND OPERATING COMPANY MEETINGS
Purpose of the Meetings
Meditrust
At a special meeting of the shareholders of Meditrust to be held at the
Goodwin, Procter & Hoar LLP Conference Center, Second Floor, 53 State Street,
Boston, Massachusetts on , 1999, at 10:00 a.m. local time
(together with all adjournments and postponements thereof, the "Meditrust
Meeting"), holders of Meditrust common stock, par value $.10 per share,
("Meditrust Common Stock") will consider and vote upon:
(A) a proposal to approve and adopt the Amended and Restated Certificate
of Incorporation of Meditrust (the "Amended Meditrust Certificate"), which
will include (i) requirements, which are waiveable or terminable by
Meditrust's Board of Directors, to pair shares of Meditrust Common Stock
with shares of common stock of Operating Company and (ii) such terms and
provisions as are present in Meditrust's Restated Certificate of
Incorporation, as amended to date (the "Existing Meditrust Certificate");
(B) a proposal to approve the termination of the Pairing Agreement, dated
as of December 20, 1979, as amended, by and between Meditrust and Operating
Company (the "Pairing Agreement"); and
(C) such other matters as may properly be brought before the Meditrust
Meeting.
THE MEDITRUST BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
APPROVAL AND ADOPTION OF THE AMENDED MEDITRUST CERTIFICATE AND FOR APPROVAL OF
THE TERMINATION OF THE PAIRING AGREEMENT.
Operating Company
At a special meeting of the shareholders of Operating Company to be held
at the Goodwin, Procter & Hoar LLP Conference Center, Second Floor, 53 State
Street, Boston, Massachusetts on , 1999, at 10:30 a.m. local time
(together with all adjournments and postponements thereof, the "Operating
Company Meeting"), holders of Operating Company common stock, par value $.10
per share, ("Operating Company Common Stock") will consider and vote upon:
(A) a proposal to approve and adopt the Amended and Restated Certificate
of Incorporation of Operating Company (the "Amended Operating Company
Certificate"), which will include (i) requirements, which are waiveable or
terminable by Operating Company's Board of Directors, to pair shares of
Operating Company Common Stock with shares of Meditrust Common Stock and
(ii) such terms and provisions as are present in Operating Company's
Restated Certificate of Incorporation, as amended to date (the "Existing
Operating Company Certificate");
(B) a proposal to terminate the Pairing Agreement; and
(C) such other matters as may properly be brought before the Operating
Company Meeting.
THE OPERATING COMPANY BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
VOTE FOR APPROVAL AND ADOPTION OF THE AMENDED OPERATING COMPANY CERTIFICATE AND
FOR APPROVAL OF THE TERMINATION OF THE PAIRING AGREEMENT.
<PAGE>
Record Date; Voting Rights; Proxies
The Meditrust Companies have fixed the close of business on
, 1999 as the record date ("The Meditrust Companies Record Date") for
determining holders of Paired Shares entitled to notice of and to vote at each
of the Meditrust Meeting and the Operating Company Meeting. Only holders of
Paired Shares at the close of business on The Meditrust Companies Record Date
will be entitled to notice of and to vote at the Meditrust Meeting and the
Operating Company Meeting. As of The Meditrust Companies Record Date, there
were outstanding and entitled to vote and shares of
Meditrust Common Stock and Operating Company Common Stock, respectively. Shares
held in the treasury of Meditrust or Operating Company are not considered
outstanding. There were and holders of record of Meditrust Common
Stock and Operating Company Common Stock, respectively, as of The Meditrust
Companies Record Date.
All Paired Shares that are entitled to vote and are represented at the
Meditrust Meeting and the Operating Company Meeting by properly executed
proxies received prior to or at the respective meeting will be voted at the
meeting in accordance with the instructions indicated on the proxies. If no
instructions are given on the proxy cards, it will be voted "FOR" approval and
adoption of the respective proposals set forth thereon. If any other matters
are properly presented at the Meditrust Meeting or the Operating Company
Meeting for consideration, including, among other things, consideration of a
motion to adjourn such meeting to another time and/or place (including, without
limitation, for the purposes of soliciting additional proxies), the persons
named in the enclosed forms of proxy will have discretion to vote on such
matters in accordance with their best judgment. However, proxies voted against
the proposals will not be voted in favor of adjournment in order to continue to
solicit proxies. Pursuant to the respective By-laws of The Meditrust Companies,
no notice of an adjourned meeting need be given other than announcement at the
Meditrust Meeting or the Operating Company Meeting, as the case may be, except
where the meeting is adjourned for 30 days or more.
A shareholder who has given a proxy may revoke it at any time before it is
exercised by giving written notice to the Secretary of Meditrust or Operating
Company, as the case may be, by signing and returning a later dated proxy, or
by voting in person at the Meditrust Meeting or the Operating Company Meeting,
as the case may be; however mere attendance at the Meditrust Meeting or the
Operating Company Meeting will not in and of itself have the effect of revoking
the proxy.
Solicitation of Proxies
Meditrust and Operating Company will bear equally the costs of
solicitation of proxies and of preparing, printing and mailing this Joint Proxy
Statement. Brokerage houses, fiduciaries, nominees and others will be
reimbursed for their out-of-pocket expenses in forwarding proxy materials to
beneficial owners of Paired Shares held in their names. In addition to the
solicitation of proxies by use of the mails, proxies may be solicited from
holders of Paired Shares by directors, officers and employees of The Meditrust
Companies in person or by telephone, telegraph, facsimile or other appropriate
means of communications. No additional compensation, except for reimbursement
of reasonable out-of-pocket expenses, will be paid to these directors, officers
and employees of The Meditrust Companies in connection with the solicitation.
In addition, D.F. King & Co., Inc., a proxy solicitation firm, has been engaged
by The Meditrust Companies to act as proxy solicitor and will receive fees
estimated at $100,000, plus reimbursement of out-of-pocket expenses.
Quorum
The holders of a majority of the common stock issued and outstanding and
entitled to vote, present in person or represented by proxy, shall constitute a
quorum at the Meditrust Meeting and the Operating Company Meeting. Votes cast
in person or by proxy at the Meditrust Meeting and the Operating Company
Meeting will be tabulated by the inspector of elections appointed for the
meeting and will determine whether or not a quorum is present. The inspector of
elections will treat abstentions as shares that are present and entitled to
vote for purposes of determining the presence of a quorum, but as unvoted for
purposes of determining the approval of any matter submitted to the
shareholders for a vote. Broker non-votes (i.e., proxies on which a broker or
nominee indicates that it does not have
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<PAGE>
discretionary authority as to certain shares to vote on a particular matter)
will also be considered as present for the purposes of determining the presence
of a quorum, but unvoted with respect to that matter.
Required Vote
Meditrust Voting Requirements. The adoption and approval of the Amended
Meditrust Certificate requires the affirmative vote of holders of a majority of
the outstanding shares of Meditrust Common Stock entitled to vote at the
Meditrust Meeting, which shall be duly convened and at which a quorum is
present and acting throughout. The approval of the termination of the Pairing
Agreement requires the affirmative vote of the holders of two-thirds of the
outstanding shares of Meditrust Common Stock entitled to vote at the Meditrust
Meeting, which shall be duly convened and at which a quorum is present and
acting throughout. Abstentions and broker non-votes will have the effect of a
vote against the adoption and approval of the Amended Meditrust Certificate and
against the approval of the termination of the Pairing Agreement.
As of , 1999, the directors and officers of Meditrust
beneficially owned approximately % of the outstanding Meditrust Common Stock
and have expressed their intention to vote in favor of the approval and
adoption of the Amended Meditrust Certificate and in favor of the approval of
the termination of the Pairing Agreement.
Operating Company Voting Requirements. The adoption and approval of the
Amended Operating Company Certificate requires the affirmative vote of holders
of a majority of the outstanding shares of the Operating Company Common Stock
entitled to vote at the Operating Company Meeting, which shall be duly convened
and at which a quorum is present and acting throughout. The approval of the
termination of the Pairing Agreement requires the affirmative vote of the
holders of two-thirds of the outstanding shares of Operating Company Common
Stock entitled to vote at the Operating Company Meeting, which shall be duly
convened and at which a quorum is present and acting throughout. Abstentions
and broker non-votes will have the effect of a vote against the adoption and
approval of the Amended Operating Company Certificate and against the approval
of the termination of the Pairing Agreement.
As of , 1999, the directors and officers of Operating
Company beneficially owned approximately % of the outstanding Operating
Company Common Stock and have expressed their intention to vote in favor of the
approval and adoption of the Amended Operating Company Certificate and in favor
of the approval of the termination of the Pairing Agreement.
3
<PAGE>
PROPOSAL 1 -- APPROVE AND ADOPT THE RESPECTIVE AMENDED AND RESTATED
CERTIFICATES OF INCORPORATION OF EACH OF THE MEDITRUST COMPANIES
Each of The Meditrust Companies has proposed the approval and adoption of
an Amended and Restated Certificate of Incorporation (collectively, the
"Amended Certificates"), which will include all of the terms and provisions
presently contained within each of The Meditrust Companies' Restated
Certificates of Incorporation, as amended to date (as the case may be, the
"Existing Meditrust Certificate" and the "Existing Operating Company
Certificate" and, collectively, the "Existing Certificates"). In addition,
provisions which will require the pairing of each of The Meditrust Companies'
shares of common stock with the shares of common stock of the other Company
will be included in each of the Amended Certificates. These pairing provisions,
which are not present in the Existing Certificates, will be waiveable and
terminable by the Boards of Directors of each of The Meditrust Companies.
Background
For Meditrust to qualify as a real estate investment trust (a "REIT") under
the Internal Revenue Code of 1986, as amended (the "Code"), it must meet certain
requirements concerning the ownership of its outstanding shares of capital
stock. Specifically, not more than 50% in value of Meditrust's outstanding
shares of capital stock may be owned, directly or indirectly, by five or fewer
individuals (as defined in the Code to include certain entities) (such ownership
restriction, the "5/50 Test") and, 100 or more persons must beneficially own
Meditrust. In addition, in order to qualify as a REIT, at least 75% of
Meditrust's gross income for each year must consist of qualified rents from real
property and income from certain other real property investments. The Code
contains certain provisions that exclude rental income paid by a "related party"
from the concept of qualified rents from real property for purposes of this
gross income test. The Code will treat Operating Company as a "related party"
for purposes of this gross income test if Meditrust owns, actually or
constructively, 10% or more of the ownership interests in Operating Company
within the meaning of Section 856(d)(2)(B) of the Code. Meditrust will be deemed
to constructively own 10% or more of the ownership interests in Operating
Company if a person holding 10% or more of Meditrust Common Stock also holds 10%
or more of Operating Company Common Stock, including through the ownership of
Paired Shares. In the event this were to occur, Meditrust would lose its status
as a REIT. Accordingly, both of The Meditrust Companies must have various
restrictions on the ownership of shares of their capital stock in order to
ensure that the 5/50 Test is met, as well as to ensure that rents received by
Meditrust from Operating Company are not deemed to be rents from a related
party.
Both of The Meditrust Companies Restated Certificates of Incorporation were
filed with the Delaware Secretary of State on March 2, 1998. The terms of these
Restated Certificates of Incorporation were substantially similar to the
Certificates of Incorporation inherited from the predecessors to The Meditrust
Companies ("The Santa Anita Companies"), except for name changes and increases
in the amount of authorized capital stock. These Restated Certificates of
Incorporation did not contain any restrictions on ownership of shares of the
respective Company's capital stock. Rather, The Santa Anita Companies had relied
upon provisions contained within their respective By-laws to restrict ownership.
On June 18, 1998, the shareholders of The Meditrust Companies approved an
amendment to each of The Meditrust Companies' Restated Certificates of
Incorporation to include restrictions on the ownership of shares of the capital
stock of The Meditrust Companies that are sufficiently stringent to preserve,
under current law, Meditrust's status as a REIT, while at the same time
preserving The Meditrust Companies' flexibility to raise additional capital in
manners that the Code currently permits. The Meditrust Companies' Restated
Certificates of Incorporation, together with these amendments (which together
constitute each Companies' Existing Certificate), will be included in the
Amended Certificates.
Pairing Provisions of Amended Certificates
The Amended Certificate will also contain provisions which require the
"pairing" of the shares of Meditrust Common Stock with the shares of Operating
Company Common Stock. These provisions, which will be waiveable and terminable
by The Meditrust Companies' Boards of Directors, are designed to preserve The
Meditrust Companies' paired share structure. Currently, the pairing of The
Meditrust Companies may only be terminated by the shareholders of The Meditrust
Companies. In the event the Amended Certificates, and the termination of the
Pairing Agreement,
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<PAGE>
are approved by the shareholders of The Meditrust Companies, the Boards of
Directors will be able to terminate the pairing of The Meditrust Companies
without further action by The Meditrust Companies' shareholders. The Boards of
Directors believe that the limitations on the use of the paired share structure
imposed by the Internal Revenue Service Restructuring and Reform Act of 1998
(the "Reform Act") will ultimately require a response by The Meditrust
Companies. See "Proposal 2--Approve the Termination of the Pairing Agreement
- --Effect of the Reform Act." These limitations will likely require that The
Meditrust Companies have the flexibility to respond efficiently and timely
through one or more transactions (including destapling The Meditrust Companies)
that would be prohibited under The Meditrust Companies' current Pairing
Agreement and By-laws, but would be permitted under the Amended Certificates.
The Amended Certificates will provide that outstanding shares of Meditrust
Common Stock and Operating Company Common Stock will continue to be paired and
traded as a single unit. The Amended Certificates' pairing requirements, which
are substantially similar to the current pairing requirements contained in the
Pairing Agreement and the By-laws, will also require that preferred stock
convertible into shares of common stock that are currently outstanding (if any)
must continue to be paired. However, unlike the current pairing requirements,
the pairing provisions will be waiveable and terminable by the Boards of
Directors. In addition, the Amended Certificate will provide that The Meditrust
Companies may issue unpaired shares of capital stock, including unpaired common
stock and convertible preferred stock. Presently, the Pairing Agreement and the
By-laws do not permit The Meditrust Companies to issue unpaired common stock or
unpaired preferred stock that is convertible into common stock. The Meditrust
Companies believe that the ability to issue unpaired common stock and unpaired
preferred stock convertible into common stock will enhance The Meditrust
Companies' capital raising and formation activities as The Meditrust Companies
will be able to match each of their respective needs with the specific goals and
criteria of potential investors. The following table summarizes the differences
between the pairing provisions of the Amended Certificates, on the one hand, and
the Pairing Agreement and By-laws, on the other.
<TABLE>
<CAPTION>
Pairing Agreement
Circumstances Amended Certificate and By-laws
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Currently Outstanding Securities:
Common Stock Must continue to be paired Must continue to be paired
Preferred Stock Convertible Must continue to be paired Must continue to be paired
into Common Stock
Preferred Stock (not convertible) Meditrust's unpaired preferred Meditrust's unpaired preferred
may continue to be unpaired may continue to be unpaired
- -------------------------------------------------------------------------------------------------------
Issuance of New Securities:
Common Stock May issue unpaired (subject to Must be paired
REIT qualification tests)
Preferred Stock Convertible May issue unpaired (subject to Must be paired
into Common Stock REIT qualification tests)
Preferred Stock (not convertible) May issue unpaired (subject to Meditrust and Operating Company
REIT qualification tests) may each issue unpaired
- -------------------------------------------------------------------------------------------------------
Waiver of Pairing By Boards of Directors By Shareholders
- -------------------------------------------------------------------------------------------------------
Termination of Pairing By Boards of Directors By Shareholders
</TABLE>
Notwithstanding the foregoing, the shares of capital stock of The
Meditrust Companies will continue to be subject to the ownership restrictions
contained within the Amended Certificates that are designed to preserve
Meditrust's status
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<PAGE>
as a REIT. For example, a purchaser of shares of capital stock, including shares
of unpaired common stock or unpaired preferred stock that is convertible into
common stock, will be subject to the provisions of the Amended Certificate that
are designed to ensure that Meditrust satisfies the 5/50 Test.
If the termination of the Pairing Agreement is not approved, the Amended
Certificates will not be filed with the Delaware Secretary of State.
A copy of the proposed Amended Meditrust Certificate and the proposed
Amended Operating Company Certificate, which you are encouraged to read in
their entirety, are attached as Annex A and Annex B, respectively.
Required Vote
The adoption and approval of the Amended Meditrust Certificate requires
the affirmative vote of the holders of a majority of the outstanding Meditrust
Common Stock. The adoption and approval of the Amended Operating Company
Certificate requires the affirmative vote of the holders of a majority of the
outstanding Operating Company Common Stock.
The Boards of Directors of The Meditrust Companies recommend a vote "FOR"
the approval and adoption of the Amended Certificates.
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<PAGE>
PROPOSAL 2 -- APPROVE THE TERMINATION OF THE PAIRING AGREEMENT
In connection with the proposed approval and adoption of the Amended
Certificates, The Meditrust Companies have proposed the termination of the
Pairing Agreement. The provisions requiring the pairing of the common stock of
each of The Meditrust Companies will be incorporated into the Amended
Certificates, thus eliminating the need for a separate Pairing Agreement.
Termination of the Pairing Agreement will be effective upon the filing of the
Amended Certificates.
Background
Qualification as a REIT involves the application of highly technical and
complex provisions of the Code. See "Proposal 1--Approve and Adopt The
Respective Amended and Restated Certificates of Incorporation of Each of The
Meditrust Companies--Background." Meditrust's ability to qualify as a REIT is
dependent upon its continued exemption from the anti-pairing rules of Section
269B(a)(3) of the Code, which would ordinarily prevent Meditrust from
qualifying as a REIT. The "grandfathering" rules governing Section 269B
generally provide, however, that Section 269B(a)(3) does not apply to a paired
share REIT and its paired operating company were paired on or before June 30,
1983. On December 20, 1979, Meditrust's predecessor was paired with the
Operating Company.
In order to preserve the paired share status of The Santa Anita
Companies, The Meditrust Companies continued under the original Pairing
Agreement, subject to certain amendments to correct certain provisions with
respect to option grants and to include subsequently issued classes and series
of stock. In connection with the restrictions of the Pairing Agreement
inherited from The Santa Anita Companies, certain provisions in each of the
respective By-laws of The Meditrust Companies that were similarly inherited,
reiterated certain pairing requirements in addition to certain ownership
restrictions intended to protect the REIT status of the predecessor to
Meditrust. On June 18, 1998, in an amendment to the respective Restated
Certificates of Incorporation of The Meditrust Companies, the shareholders of
The Meditrust Companies approved and adopted stricter restrictions that provided
the Boards of Directors with more flexibility. Such restrictions will continue
in the Amended Certificates. See "Proposal 1--Approve and Adopt the Respective
Amended and Restated Certificates of Incorporation of Each of The Meditrust
Companies-- Background." The provisions of the respective By-laws that reiterate
certain pairing requirements are only effective until the termination of the
Pairing Agreement. Thus, the termination of the Pairing Agreement will also
terminate the reiteration of the pairing requirements in the respective By-laws
of each of The Meditrust Companies.
Effect of the Reform Act
Since its enactment on July 22, 1998, the Reform Act froze the
grandfathered status of paired share REITs, such as The Meditrust Companies.
Under this legislation, the anti-pairing rules provided in the Code apply to
real property interests acquired after March 26, 1998 by The Meditrust
Companies, or by a subsidiary or partnership in which a 10% or greater interest
is owned by The Meditrust Companies, unless (1) the real property interests are
acquired pursuant to a written agreement that was binding on March 26, 1998 and
at all times thereafter or (2) the acquisition of such real property interests
was described in a public announcement or in a filing with the SEC on or before
March 26, 1998.
The restrictions on the activities of a paired share REIT provided in the
Reform Act may in the future make it impractical or undesirable for The
Meditrust Companies to continue to maintain their paired share structure. The
proposed adoption of the Amended Certificates and the proposed termination of
the Pairing Agreement will provide the Boards of Directors of The Meditrust
Companies with the ability to most efficiently and effectively deal with the
restrictions imposed on The Meditrust Companies by the Reform Act.
Pairing Agreement No Longer Necessary
Once the pairing provisions of the Amended Certificates are adopted, a
separate Pairing Agreement will no longer be necessary. See "Proposal
1--Approve and Adopt the Respective Amended and Restated Certificates of
Incorporation of Each of The Meditrust Companies--Pairing Provisions of Amended
Certificates." The pairing provisions contained in the Amended Certificates
will provide the Boards of Directors with the power to waive or terminate the
pairing provisions without further shareholder action. See "Proposal 1--Approve
and Adopt the Respective Amended and
7
<PAGE>
Restated Certificates of Incorporation of Each of The Meditrust
Companies--Pairing Provisions of Amended Certificates."
If the Amended Certificates are not approved and adopted by the
shareholders of The Meditrust Companies, the Pairing Agreement will not be
terminated.
In considering the termination of the Pairing Agreement, shareholders of
Meditrust and Operating Company should carefully read the Pairing Agreement,
attached for your convenience as Annex C to this Joint Proxy Statement.
Required Vote
The termination of the Pairing Agreement requires approval by the
affirmative vote of the holders of two-thirds of the outstanding shares of
Meditrust Common Stock and the holders of two-thirds of the outstanding shares
of Operating Company Common Stock.
The Boards of Directors of The Meditrust Companies recommend a vote "FOR"
the termination of the Pairing Agreement.
Interests of Certain Persons in Matters to be Acted Upon
In considering the recommendation of the Boards of Directors of The
Meditrust Companies with respect to the adoption of the Amended Certificates
and the termination of the Pairing Agreement, holders of the common stock of
each of The Meditrust Companies should be aware that certain members of
management of The Meditrust Companies and certain members of the Boards of
Directors of The Meditrust Companies may have interests that are different
from, or in addition to, the interests of the holders of Meditrust Common Stock
and Operating Company Common Stock generally. The Boards of Directors of The
Meditrust Companies were aware of such interests and considered them, among
other matters, in approving the proposed Amended Certificates and the proposed
termination of the Pairing Agreement.
The proposed Amended Certificates, together with the proposed termination
of the Pairing Agreement, will provide The Meditrust Companies with more
flexibility in raising capital in the future. Such flexibility may allow The
Meditrust Companies to raise additional capital through investments from
institutional investors that may exceed the 9.25% Ownership Limit in the
respective Certificates of Incorporation. Subsequent to the adoption of the
proposed Amended Certificates and termination of the Pairing Agreement, The
Meditrust Companies may also raise additional capital by allowing certain
shareholders affiliated with Thomas M. Taylor & Co. and other entities and
individuals associated with certain members of the Bass family (the "Bass
Group"), including Thomas M. Taylor, the Interim Chairman of the Boards of
Directors of The Meditrust Companies, to increase their holdings in Meditrust
up to an aggregate of 13%, subject to applicable REIT qualification tests. Some
or all of this increase may be accomplished through participation in an
offering or offerings, whose terms are yet to be decided, of, among other
securities, unpaired common stock of Meditrust or unpaired preferred stock
convertible into unpaired common stock of Meditrust or, in certain
circumstances, Paired Shares. Any such offering, which may include an offering
to the public or a private placement, would be conducted in accordance with
all applicable law. Thus, any sale of equity securities of The Meditrust
Companies, if offered publicly will be offered pursuant to a prospectus.
Notwithstanding the foregoing, no assurance can be made that any such offering
or placement will be made, or, if made, that the Bass Group would participate.
Outstanding Capital Stock
Each of The Meditrust Companies' authorized capital stock consists of
270,000,000 shares of common stock, par value $.10 per share, 30,000,000 shares
of series common stock, par value $.10 per share, 10,000,000 shares of which
have been designated as Series A Common Stock, 6,000,000 shares of preferred
stock, par value $.10 per share, 200,000 shares of which have been designated
as Junior Participating Preferred Stock and 805,000 shares of which have been
designated, in the case of Meditrust, as Series A Preferred Stock, and
25,000,000 shares of excess stock, par value $.10 per share. The Board of
Directors of each company is authorized, without further shareholder approval,
to issue the preferred stock from time to time in one or more series, and to
determine the provisions applicable to each series, including the number of
shares, dividend rights, dividend rate, conversion rights, voting rights,
rights and terms of redemption (including sinking fund provisions), redemption
price or prices, and liquidation preferences.
8
<PAGE>
The Meditrust Companies Paired Shares are traded on the NYSE under the
ticker symbol "MT." As of January , 1999 there were issued and outstanding
shares of Meditrust Common Stock, shares of Operating Company
Common Stock, no shares of Series A Common Stock, no shares of Junior
Participating Preferred Stock and 700,000 shares of Series A Preferred Stock.
Holders of Meditrust Common Stock and Operating Company Common Stock are
entitled to one vote for each share held on each matter submitted to a
shareholder vote. Except as otherwise provided by law, or by the certificates
of incorporation or by resolutions of the Board of Directors providing for the
issuance of any series of preferred stock, the holders of the Meditrust Common
Stock and Operating Company Common Stock have sole voting power.
9
<PAGE>
PRINCIPAL AND MANAGEMENT SHAREHOLDERS OF THE MEDITRUST COMPANIES
The following table sets forth as of January 15, 1999, except as otherwise
noted, the number of Paired Shares beneficially owned, directly or indirectly,
by (i) each of the Directors of each of The Meditrust Companies, (ii) all
persons who served as chief executive officer of either of The Meditrust
Companies for the year ended December 31, 1998, (iii) each of the four most
highly compensated executive officers for the year ended December 31, 1998,
(iv) all Directors and current executive officers of The Meditrust Companies as
a group, and (v) all persons who, to the knowledge of The Meditrust Companies,
beneficially own five percent or more of the Paired Shares as of January 15,
1999. Unless otherwise indicated, all information concerning beneficial
ownership was provided by the respective director, executive officer or five
percent beneficial owner, as the case may be.
<TABLE>
<CAPTION>
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership(1) Percent of Class
- ------------------------------------------------- ------------------------- -----------------
<S> <C> <C>
Directors and Executive Officers:
Donald J. Amaral 13,500 *
William C. Baker 61,400 *
David F. Benson 207,810(2) *
Nancy G. Brinker 1,500 *
Edward W. Brooke 229,229(3) *
William G. Byrnes 80,182 *
James P. Conn 15,062 *
John C. Cushman, III 224,954 *
C. Gerald Goldsmith 1,000 *
Thomas J. Magovern 81,941 *
Stephen E. Merrill 1,000 3.4%
Thomas M. Taylor 5,161,647(4) *
Gerald Tsai, Jr. 69,889 *
Michael S. Benjamin 118,665 *
Michael F. Bushee 120,316 *
Laurie T. Gerber 28,665 *
Abraham D. Gosman 969,644(5)
All Directors and current executive officers of 6,416,760(6) 4.2%
The Meditrust Companies as a group
5% Shareholders:
Trinity I Fund, L.P. 2,990,809(7)
The Airlie Group, L.P. 269,633(8)
Annie R. Bass Grandson's Trust for Lee M. Bass 445,962(9)
Annie R. Bass Grandson's Trust for Sid. R. Bass 445,962(10)
The Bass Management Trust 658,526(11)
Hyatt Anne Bass Successor Trust 857,701(12)
Lee M. Bass, Inc. 2,294,211(13)
Peter Sterling 187,600
Samantha Sims Bass Successor Trust 857,701(14)
Sid R. Bass, Inc. 2,294,211(15)
Thomas M. Taylor & Co. 1,901,205(16)
William P. Hallman, Jr. 14,002
</TABLE>
- ------------------------
(as a Group)
c/o W. Robert Cotham
2600 First City Bank Tower
Fort Worth, Texas 76102
- ------------
* Less than 1%.
10
<PAGE>
(1) Unless otherwise indicated, the number of Paired Shares stated as being
owned beneficially includes (i) Paired Shares beneficially owned by
spouses, minor children and/or other relatives in which the Director or
officer may share voting power and (ii) any Paired Shares listed as
being subject to options exercisable within 60 days of January 15, 1999.
(2) Does not include 120 Paired Shares owned by Mr. Benson's children, to
which Mr. Benson disclaims any beneficial interest.
(3) Does not include 1,201 Paired Shares owned by Mr. Brooke's wife's IRA,
6,000 Paired Shares owned of record by Mr. Brooke as custodian for his son
and 1,733 Paired Shares owned of record by Mr. Brooke as trustee for his
grandchildren and 270 shares as custodian, as to which Paired Shares Mr.
Brooke disclaims any beneficial interest.
(4) Mr. Taylor may be deemed to beneficially own the shares beneficially
owned by Thomas M. Taylor & Co., Portfolio C Investors, L.P., Trinity I
Fund, L.P. and the Airlie Group, L.P. The aggregate of all of such shares
which Mr. Taylor may be deemed to beneficially own is 7,354,730.
(5) Mr. Gosman served as CEO of Operating Company until August 1998. Based on
company filings prior to Mr. Gosman's resignation on August 3, 1998.
(6) Does not include an aggregate of 9,324 Paired Shares owned by or for
parents, spouses or children, as to which Paired Shares the Directors or
officers disclaim any beneficial interest.
(7) Mr. Thomas M. Taylor, solely in his capacity as President of the general
partner of Trinity I Fund, L.P.'s general partner, may also be deemed a
beneficial owner of such shares.
(8) Mr. Thomas M. Taylor, solely in his capacity as President of the general
partner of the Airlie Group, L.P.'s general partner, may also be deemed a
beneficial owner of such shares.
(9) Mr. William P. Hallman, Jr., solely in his capacity as Trustee of the
Annie R. Bass Grandson's Trust for Lee M. Bass, may also be deemed a
beneficial owner of such shares.
(10) Mr. William P. Hallman, Jr., solely in his capacity as Trustee of the
Annie R. Bass Grandson's Trust for Sid R. Bass, may also be deemed a
beneficial owner of such shares.
(11) Mr. Perry R. Bass, solely in his capacity as sole Trustor and as one of
two trustees of The Bass Management Trust, may also be deemed a beneficial
owner of such shares.
(12) Panther City Investment Company, solely in its capacity as Trustee of the
Hyatt Anne Bass Successor Trust, may also be deemed a beneficial owner of
such shares.
(13) Mr. Lee M. Bass, solely in his capacity as President of Lee M. Bass, Inc.,
may also be deemed a beneficial owner of such shares.
(14) Panther City Investment Company, solely in its capacity as Trustee of the
Samantha Sims Bass Successor Trust, may also be deemed a beneficial owner
of such shares.
(15) Mr. Sid R. Bass, solely in his capacity as President of Sid R. Bass, Inc.,
may also be deemed a beneficial owner of such shares.
(16) Mr. Thomas M. Taylor, solely in his capacity as President of Thomas M.
Taylor & Co., may also be deemed a beneficial owner of such shares.
The information reflected for certain beneficial owners listed under the
heading "5% Shareholders" is based on statements and reports filed with the SEC
and furnished to The Meditrust Companies by such holders. No independent
investigation concerning the accuracy thereof has been made by The Meditrust
Companies.
11
<PAGE>
OTHER MATTERS
As of the date of this Joint Proxy Statement, The Meditrust Companies'
Boards of Directors know of no matters that will be presented for consideration
at the respective meetings other than as described in this Joint Proxy
Statement. If any other matters shall properly come before the Meditrust
Meeting or the Operating Company Meeting and be voted upon, the enclosed
proxies will be deemed to confer discretionary authority on the individuals
named as proxies therein to vote the shares represented by such proxies as to
any such matters. The persons named as proxies intend to vote in accordance
with the recommendation of the management of Meditrust or Operating Company.
FUTURE SHAREHOLDER PROPOSALS
Any Meditrust or Operating Company shareholder who intends to submit a
proposal for inclusion in the proxy materials for the 1999 annual meetings of
shareholders of Meditrust or Operating Company must have submitted such
proposal in writing to the respective Secretary of Meditrust or Operating
Company by January 21, 1999, if the proposal is to be considered for inclusion
in the Joint Proxy Statement of Meditrust and Operating Company and the form of
proxy relating to those meetings. The Meditrust Companies' By-laws include
advance notice and other requirements regarding proposals for shareholder
action at shareholders' meetings other than those proposed by the Boards of
Directors. A copy of the By-laws of either Meditrust or Operating Company may
be obtained by written request addressed to the respective secretary at the
address set forth below.
SEC rules set forth standards as to what shareholder proposals are
required to be included in a proxy statement for an annual meeting.
WHERE YOU CAN FIND MORE INFORMATION
The Meditrust Companies file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information we file at the SEC's public reference
rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please
call the SEC at 800-SEC-0330 for further information on the public reference
rooms. Our SEC filings are also available to the public from commercial
document retrieval services and at the web site maintained by the SEC at
"http://www.sec.gov."
The Meditrust Companies' SEC filings are also available through their
website at "http://www.reit.com." or by contacting their Investor Relations
Departments at the addresses and phone numbers listed below.
The SEC allows us to "incorporate by reference" information into this
Joint Proxy Statement, which means that we can disclose important information
to you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this Joint Proxy
Statement, except for any information superseded by information in this Joint
Proxy Statement. This Joint Proxy Statement incorporates by reference the
documents set forth below that we have previously filed with the SEC. These
documents contain important information about our companies and their finances.
<TABLE>
<CAPTION>
Meditrust and Operating Company
(File Nos. 1-08131 and 1-08132) Period
- ------------------------------------------------------- -------------------------------------
<S> <C>
Joint Annual Reports on Form 10-K and Form 10-K/A ..... Year ended December 31, 1997
Joint Quarterly Reports on Form 10-Q .................. Quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998
Joint Current Report on Form 8-K ...................... Event date May 13, 1998
Joint Current Report on Form 8-K ...................... Event date January 3, 1998
Joint Current Report on Form 8-K ...................... Event date January 3, 1998
Joint Current Report on Form 8-K and Form 8-K/A ....... Event date January 3, 1998
Joint Current Report on Form 8-K ...................... Event date January 4, 1998
Joint Current Report on Form 8-K ...................... Event date January 11, 1998
Joint Current Report on Form 8-K ...................... Event date January 11, 1998
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Meditrust and Operating Company
(File Nos. 1-08131 and 1-08132) Period
- ------------------------------------------------------ -----------------------------
<S> <C>
Joint Current Report on Form 8-K ..................... Event date February 24, 1998
Joint Current Report on Form 8-K and Form 8-K/A ...... Event date February 26, 1998
Joint Current Report on Form 8-K ..................... Event date March 16, 1998
Joint Current Report on Form 8-K ..................... Event date March 31, 1998
Joint Current Report on Form 8-K ..................... Event date May 13, 1998
Joint Current Report on Form 8-K ..................... Event date May 20, 1998
Joint Current Report on Form 8-K ..................... Event date May 29, 1998
Joint Current Report on Form 8-K ..................... Event date June 10, 1998
Joint Current Report on Form 8-K and Form 8-K/A ...... Event date July 17, 1998
Joint Current Report on Form 8-K ..................... Event date August 3, 1998
Joint Current Report on Form 8-K ..................... Event date November 12, 1998
</TABLE>
We are also incorporating by reference additional documents that we will
file with the SEC between the date of this Joint Proxy Statement and the dates
of the meetings of our shareholders.
If you are a shareholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us or the
SEC. Documents incorporated by reference are available from us without charge,
excluding all exhibits unless we have specifically incorporated by reference an
exhibit in this Joint Proxy Statement. Shareholders may obtain documents
incorporated by reference in this Joint Proxy Statement by requesting them in
writing or by telephone from the appropriate party at the following address:
<TABLE>
<S> <C>
Meditrust Corporation Meditrust Operating Company
197 First Avenue, Suite 300 197 First Avenue, Suite 100
Needham, MA 02494 Needham, MA 02494
Attn: Investor Relations Attn: Investor Relations
Tel: (781) 433-6000 Tel: (781) 453-8062
</TABLE>
If you would like to request documents from us, please do so by ,
1999 to receive them before the Meetings. You should rely only on the
information contained or incorporated by reference in this Joint Proxy
Statement to vote on The Meditrust Companies' proposals. We have not authorized
anyone to provide you with information that is different from what is contained
in this Joint Proxy Statement. This Joint Proxy Statement is dated ,
1999. You should not assume that the information contained in this Joint Proxy
Statement is accurate as of any date other than such date, and the mailing of
this Joint Proxy Statement to shareholders shall not create any implication to
the contrary.
13
<PAGE>
Annex A
-------
Form of
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MEDITRUST CORPORATION
Meditrust Corporation, a corporation organized and existing under the laws
of the State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the corporation is Meditrust Corporation. The date of the
filing of its original Certificate of Incorporation with the Secretary of State
of Delaware was August 23, 1979 (the "Original Certificate of Incorporation").
The name under which the Corporation filed the Original Certificate of
Incorporation was Santa Anita Realty Enterprises, Inc. The name of the
Corporation was changed to Meditrust Corporation on ___, by way of amendment to
the Original Certificate of Incorporation. A Restated Certificate of
Incorporation (the "Second Certificate") was filed with the Secretary of State
of Delaware on March 2, 1998 restating and integrating the Corporation's
certificate of incorporation as theretofore amended and supplemented.
2. This Amended and Restated Certificate of Incorporation (the
"Certificate") amends, restates and integrates the Corporation's certificate of
incorporation as heretofore amended and supplemented, was duly adopted by the
Board of Directors of the Corporation in accordance with the provisions of
Section 242 and 245 of the Delaware General Corporation Law, as amended from
time to time (the "DGCL"), and was duly adopted by the stockholders of the
Corporation in accordance with the applicable provisions of Section 242 and 245
of the DGCL.
3. The text of the Second Certificate, as amended and to date, is hereby
amended and restated in its entirety to provide as herein set forth in full:
FIRST. Name. The name of the Corporation is Meditrust Corporation.
SECOND. Registered Office. The address of its registered office in the
State of Delaware is 1013 Centre Road, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is Corporation Service
Company.
THIRD. Purposes. The nature of the business or purposes to be conducted or
promoted is:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware and to do all
things and exercise all
<PAGE>
powers, rights and privileges which a business corporation may now or
hereafter be organized or authorized to do or to exercise under the laws of
the State of Delaware.
FOURTH. Capitalization.
SECTION 1. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 331,000,000, of which 270,000,000
shares of the par value of $.10 each are to be a class designated Common Stock,
6,000,000 shares of the par value of $.10 each are to be of a class designated
Preferred Stock, 30,000,000 shares of the par value of $.10 each are to be of a
class designated Series Common Stock and 25,000,000 of the par value $.10 each
are to be of a class designated Excess Stock.
SECTION 2. The shares of Preferred Stock may be issued from time to time in
one or more series. The Board of Directors of the Corporation is hereby
authorized to fix or alter the dividend rights, dividend rate, conversion
rights, voting rights, rights and terms of redemption (including sinking fund
provisions), the redemption price or prices, and the liquidation preferences of
any wholly unissued series of Preferred Stock and the number of shares
constituting any such series and the designation thereof, or all or any of them.
SECTION 3. The shares of Series Common Stock may be issued from time to
time in one or more series. The Board of Directors of the Corporation is hereby
authorized to fix or alter the dividend rights, dividend rate, conversion
rights, voting rights, rights and terms of redemption (including sinking fund
provisions), the redemption price or prices, and the liquidation preferences of
any wholly unissued series of Series Common Stock and the number of shares
constituting any such series and the designation thereof, or all or any of them.
SECTION 4. (a) Each holder of Common Stock, as such, shall be entitled to
one vote for each share of Common Stock held of record by such holder on all
matters on which stockholders generally are entitled to vote.
(b) Except as otherwise required by law, holders of a series of
Preferred Stock or Series Common Stock, as such, shall be entitled only to such
voting rights, if any, as shall expressly be granted thereto by this Certificate
of Incorporation (including any Certificate of Designation relating to such
series).
(c) Subject to applicable law and the rights, if any, of the holders of
any outstanding series of Preferred Stock or Series Common Stock or any class or
series of stock having a preference over or the right to participate with the
Common Stock with respect to the payment of dividends, dividends may be declared
and paid on the Common Stock at such times and in such amounts as the Board of
Directors of the Corporation in its discretion shall determine.
(d) Upon the dissolution, liquidation or winding up of the Corporation,
subject to the rights, if any, of the holders of any outstanding series of
Preferred Stock or Series Common Stock or any class or series of stock having a
preference over or the right to participate with the Common Stock with respect
to the distribution of assets of the Corporation upon such dissolution,
liquidation or winding up of the Corporation, the holders of the
A-2
<PAGE>
Common Stock, as such, shall be entitled to receive the assets of the
Corporation available for distribution to its stockholders ratably in proportion
to the number of shares held by them.
SECTION 5. The terms and conditions applicable to shares of Excess Stock
are set forth in Article Thirteenth hereof.
FIFTH. [DELETED].
SIXTH. By-laws. In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors of the Corporation is expressly
authorized, without stockholder approval, to make, alter or repeal the by-laws
of the Corporation.
SEVENTH. Right to Amend Certificate of Incorporation. The Board of
Directors of the Corporation shall have the power to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
EIGHTH. [DELETED].
NINTH:
Part 1. Vote Required for Certain Business Combinations
- -------------------------------------------------------
1.1. Higher Vote for Certain Business Combinations. In addition to any
affirmative vote required by law or any other Article of this Certificate of
Incorporation, and except as otherwise expressly provided in Part 2 of this
Article Ninth:
(a) any merger or consolidation of the Corporation or any Subsidiary
with (i) any Interested Stockholder or (ii) any other corporation (whether or
not itself an Interested Stockholder) which is, or after such merger or
consolidation would be, an Affiliate or Associate of an Interested Stockholder;
or
(b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with any
Interested Stockholder or any Affiliate or Associate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary having an
aggregate Fair Market Value of $5,000,000 or more; or
(c) the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of transactions) of any securities of the
Corporation or any Subsidiary to any Interested Stockholder or any Affiliate or
Associate of any Interested Stockholder in exchange for cash, securities or
other property (or a combination thereof) having an aggregate Fair Market Value
of $5,000,000 or more, other than the issuance of securities by the Corporation
or any Subsidiary upon the conversion of convertible securities of the
Corporation or any Subsidiary into stock of the Corporation or any Subsidiary;
or
A-3
<PAGE>
(d) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Stockholder or any Affiliate or Associate of any Interested Stockholder; or
(e) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or consolidation
of the Corporation with any of its Subsidiaries or any other transaction
(whether or not with or into or otherwise involving an Interested Stockholder)
which has the effect, directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or indirectly owned by
any Interested Stockholder or any Affiliate or Associate of any Interested
Stockholder;
shall require the affirmative vote of the holders of at least (a) 80% of the
combined voting power of the then outstanding shares of stock of all classes and
series of the Corporation entitled to vote in the election of directors (the
"Voting Stock"), and (b) a majority of the combined voting power of the then
outstanding shares of Voting Stock held by persons who are Disinterested
Stockholders, provided, however, that the majority vote requirement of this
clause (b) shall not be applicable if the Business Combination is approved by
the affirmative vote of the holders of not less than 90% of combined voting
power of the then outstanding shares of Voting Stock. The foregoing affirmative
vote requirements are hereinafter referred to as the "Special Vote Requirement."
The Special Vote Requirement shall be applicable notwithstanding the fact that
no vote may be required, or that a lesser percentage may be specified, by law or
in any agreement with any national securities exchange or otherwise.
1.2. Definition of "Business Combination." The term "Business Combination"
as used in this Article Ninth shall mean any transaction which is referred to in
any one or more of clauses (a) through (e) of Section 1.1.
Part 2. When Special Vote Requirement Is Not Applicable
- -------------------------------------------------------
The provisions of Part 1 of this Article Ninth shall not be applicable to
any particular Business Combination, and such Business Combination shall require
only such affirmative vote as is required by law and any other Article of this
Certificate of Incorporation, if all of the conditions specified in either of
the following Sections 2.1 and 2.2 are met:
2.1. Approval by Continuing Directors. The Business Combination shall have
been approved by a majority of the Continuing Directors.
2.2. Price and Procedural Requirements. All of the following conditions
shall have been met:
(a) The aggregate amount of the cash and the Fair Market Value, as of
the date of the consummation of the Business Combination, of consideration other
than cash to be received per share by holders of Common Stock in such Business
Combination shall be at least
A-4
<PAGE>
equal to the higher of (i) the highest price paid for any share of Common Stock
by any person who is an Interested Stockholder within the two-year period
immediately prior to the time of the first public announcement of the proposed
Business Combination (the "Announcement Date") or in the transaction in which
such person became an Interested Stockholder, whichever price is the higher; or
(ii) the Fair Market Value per share of the Corporation's Common Stock on the
Announcement Date or on the date on which the Interested Stockholder became an
In terested Stockholder (the "Determination Date"), whichever is higher. The
price paid for any share of Common Stock shall be the amount of cash plus the
Fair Market Value of any other consideration to be received therefor, determined
at the time of payment thereof.
(b) The aggregate amount of the cash and the Fair Market Value, as of
the date of the consummation of the Business Combination, of consideration other
than cash to be received in such Business Combination by holders of securities
of the Corporation other than Common Stock shall be at least equal to the higher
of (i) if applicable, the highest preferential amount to which the holders of
such securities are entitled in the event of any voluntary liquidation,
dissolution or winding up of the Corporation, (ii) the highest price paid for
any of such securities by any person who is an Interested Stockholder within the
two-year period immediately prior to the Announcement Date or in the transaction
in which such person became an Interested Stockholder, whichever price is
higher, (iii) the Fair Market Value of such securities on the Announcement Date
or the Determination Date, whichever is higher, or (iv) if such securities are
convertible into or exchangeable for shares of Common Stock, the amount per
share of such Common Stock determined pursuant to the foregoing paragraph (a)
reduced by any amount payable by the holders of such securities in accordance
with the terms of such securities, per share, upon such conversion or exchange,
multiplied by the total number of shares of Common Stock into which or for which
such securities are convertible or exchangeable.
(c) The consideration to be received by holders of a particular class
of outstanding Voting Stock (including Common Stock) shall be in cash or in the
same forms the Interested Stockholder has previously paid for shares of such
class of Voting Stock. If the Interested Stockholder has paid for shares of any
class of Voting Stock with varying forms of consideration, the form of
consideration for such class of Voting Stock shall be either cash or the form of
consideration used to acquire the largest number of shares of such class of
Voting Stock previously acquired by it.
(d) After such Interested Stockholder has become an Interested
Stockholder and prior to the consummation of such Business Combination: (i)
there shall have been (1) no reduction in the annual rate of dividends paid on
the Common Stock (except as necessary to reflect any subdivision of the Common
Stock), except as approved by a majority of the Continuing Directors, and (2) an
increase in such annual rate of dividends necessary to reflect any
reclassification (including any reverse stock split), recapitalization,
reorganization or any similar transaction which has the effect of reducing the
number of outstanding shares of the Common Stock, unless the failure so to
increase such annual rate is approved by a majority of the Continuing Directors;
and (ii) such Interested Stockholder shall have not become the
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beneficial owner of any additional shares of Voting Stock except as part of the
transaction which results in such Interested Stockholder becoming an Interested
Stockholder.
(e) After such Interested Stockholder has become an Interested
Stockholder, such Interested Stockholder shall not have received the benefit,
directly or indirectly (except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance or any tax credits
or other tax advantages provided by the Corporation, whether in anticipation of
or in connection with such Business Combination or otherwise.
(f) A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities Exchange Act
of 1934 and the rules and regulations thereunder (or any subsequent provisions
replacing such Act, rules or regulations) shall be mailed to all stockholders of
the Corporation at least 30 days prior to the consummation of such Business
Combination (whether or not such proxy or information statement is required to
be mailed pursuant to such Act or subsequent provisions).
Part 3. Certain Definitions
- ---------------------------
For the purposes of this Article Ninth:
3.1. A "person" shall mean any individual, firm, corporation, partnership,
trust or other entity.
3.2. "Interested Stockholder" shall mean any person (other than the
Corporation or any Subsidiary) who or which:
(a) is the beneficial owner, directly or indirectly, of more than 10%
of the combined voting power of the then outstanding Voting Stock; or
(b) is an Affiliate of the Corporation and at any time within the
two-year period immediately prior to the date in question was the beneficial
owner, directly or indirectly, of 10% or more of the combined voting power of
the then outstanding Voting Stock; or
(c) is an assignee of or has otherwise succeeded to any shares of
Voting Stock which were at any time within the two-year period immediately prior
to the date in question beneficially owned by any Interested Stockholder, if
such assignment or succession shall have occurred in the course of a transaction
or series of transactions not involving a public offering within the meaning of
the Securities Act of 1933.
3.3. A person shall be a "beneficial owner" of any Voting Stock:
(a) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
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(b) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately or only
after the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote or to direct the
vote pursuant to any agreement, arrangement or understanding; or
(c) which are beneficially owned, directly or indirectly, by any other
person with which such person or any of its Affiliates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Voting Stock.
3.4. For the purposes of determining whether a person is an Interested
Stockholder pursuant to Section 3.2, the number of shares of Voting Stock deemed
to be outstanding shall include shares deemed owned through application of
Section 3.3 but shall not include any other shares of Voting Stock which may be
issuable to other persons pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options, or
otherwise.
3.5. "Affiliate" or "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on January 1, 1984.
3.6. "Subsidiary" means any corporation of which more than a majority of
any class of equity security is owned, directly or indirectly, by the
Corporation; provided, however, that for purposes of the definition of
Interested Stockholder set forth in Section 3.2, the term "Subsidiary" shall
mean only a corporation of which a majority of each class of equity security is
owned by the Corporation, by a Subsidiary, or by the Corporation and one or more
Subsidiaries.
3.7. "Continuing Director" means any member of the Board of Directors of
the Corporation who is unaffiliated with, and not a nominee of, the Interested
Stockholder and was a member of the Board of Directors of the Corporation prior
to the time that the Interested Stockholder became an Interested Stockholder and
any successor of a Continuing Director who is unaffiliated with, and not a
nominee of, the Interested Stockholder and who is recommended to succeed a
Continuing Director by a majority of Continuing Directors then on the Board of
Directors of the Corporation.
3.8. "Disinterested Stockholder" means a holder of Voting Stock who is not
an Interested Stockholder or an Affiliate or Associate of an Interested
Stockholder and whose shares are not deemed owned by an Interested Stockholder
through application of Section 3.3.
3.9. "Fair Market Value" means: (a) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding the date in
question of a share of such stock on the Composite Tape for New York Stock
Exchange-Listed Stocks, or, if such stock is
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not quoted on the Composite Tape, on the New York Stock Exchange, or, if such
stock is not listed on such Exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934 on which such
stock is listed, or, if such stock is not listed on any such exchange, the
highest closing bid quotation with respect to a share of such stock during the
30-day period preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any system then in use,
or if no such quotations are available, the Fair Market Value on the date in
question of a share of such stock as determined by a majority of the Continuing
Directors in good faith; and (b) in the case of stock of any class of securities
not traded on any securities exchange or in the over-the-counter market or in
the case of property other than cash or stock, the Fair Market Value of such
securities or property on the date in question as determined by a majority of
the Continuing Directors in good faith. If the stock is paired for purposes of
trading with that of any other corporation, the Fair Market Value of the paired
stock shall be determined pursuant to the pairing or other agreement which
provides for the determination of the relative values of the stock of the
Corporation and the stock of such other corporation, after determining the Fair
Market Value of the paired stock as set forth above.
3.10. In the event of any Business Combination in which the Corporation
survives, the phrase "consideration to be received" as used in Sections 2.2(a),
(b) and (c) shall include the shares of Common Stock and/or the shares of any
other class of outstanding Voting Stock retained by the holders of such shares.
Part 4. Directors' Duty to Determine Certain Facts
- --------------------------------------------------
The majority of the Continuing Directors of the Corporation shall have the
power and duty to determine for the purpose of this Article Ninth, on the basis
of information known to them after reasonable inquiry, all facts necessary to
determine the applicability of the various provisions of this Article Ninth,
including (A) whether a person is an Interested Stockholder, (B) the number of
shares of Voting Stock beneficially owned by any person, (C) whether a person is
an Affiliate or Associate of another, (D) whether the requirements of Section
2.2 have been met with respect to any Business Combination, and (E) whether the
assets which are the subject of any Business Combination have, or the
consideration to be received for the issuance or transfer of securities by the
Corporation or any Subsidiary in any Business Combination has, an aggregate Fair
Market Value of $5,000,000 or more; and the good faith determination of a
majority of the Continuing Directors shall be conclusive and binding for all
purposes of this Article Ninth.
Part 5. No Effect on Fiduciary Obligations of Interested Stockholders
- ---------------------------------------------------------------------
Nothing contained in this Article Ninth shall be construed to relieve any
Interested Stockholder from any fiduciary obligation imposed by law.
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Part 6. Amendment, Repeal, Inconsistent Provisions
- --------------------------------------------------
Notwithstanding any other provisions of law or of this Certificate of
Incorporation or the by-laws of the Corporation which might otherwise permit a
lesser vote or no vote, but in addition to any affirmative vote of the holders
of any particular class or series of securities which may be required by law or
by this Certificate of Incorporation, any proposal to amend or repeal, or adopt
any provisions inconsistent with, this Article Ninth of this Certificate of
Incorporation shall require for approval the affirmative vote of at least (a)
80% of the combined voting power of the then outstanding Shares of Voting Stock
and (b) a majority of the combined voting power of the then outstanding shares
of Voting Stock held by persons who are Disinterested Stockholders, provided
that the majority vote requirement of this clause (b) shall not be applicable if
the proposal is approved by the affirmative vote of not less than 90% of the
combined voting power of the then outstanding shares of Voting Stock.
TENTH:
(a) The number of directors shall be as provided in the by-laws. The
Board of Directors of the Corporation shall be divided into three classes,
designated Class I, Class II and Class III, such classes to be as nearly equal
in number as possible and to have the number provided in the by-laws. At the
annual meeting of stockholders in 1986, directors of Class I shall be elected to
hold office for a term expiring at the next succeeding annual meeting, directors
of Class II shall be elected to hold office for a term expiring at the second
succeeding annual meeting, and directors of Class III shall be elected to hold
office for a term expiring at the third succeeding annual meeting. Thereafter at
each annual meeting of stockholders, directors shall be chosen for a term of
three years to succeed those whose terms then expire and shall hold office until
the third following annual meeting of stockholders and until the election of
their respective successors. Any vacancy on the Board of Directors of the
Corporation, whether arising through death, resignation or removal of a director
or through an increase in the number of directors of any class, shall be filled
by a majority vote of all the remaining directors. The term of office of any
director elected to fill such a vacancy shall expire at the expiration of the
term of office of directors of the class in which the vacancy occurred.
Notwithstanding any other provision of this Article, and except as otherwise
required by law, whenever the holders of any one or more series of Preferred
Stock or other securities of the Corporation shall have the right, voting
separately as a class, to elect one or more directors of the Corporation, the
term of office, the filling of vacancies and other features of such
directorships shall be governed by the terms of this Certificate of
Incorporation applicable thereto, and unless the terms of this Certificate of
Incorporation expressly provide otherwise, such directorships shall be in
addition to the number of directors provided in the by-laws and such directors
shall not be classified pursuant to this Article.
(b) Any action required or permitted to be taken by holders of stock of
the Corporation must be taken at a meeting of such holders and may not be taken
by consent in writing. The by-laws of the Corporation may be amended by the
stockholders only by the affirmative vote of at least 80% of the voting power of
the Corporation. Notwithstanding any
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other provision of law or of this Certificate of Incorporation or the by-laws of
the Corporation which might otherwise permit a lesser vote or no vote, but in
addition to any affirmative vote of the holders of any particular class or
series of securities which may be required by law or by this Certificate of
Incorporation, any proposal to amend or repeal, or adopt any provisions
inconsistent with, this Article Tenth shall require for approval the affirmative
vote of at least 80% of the voting power of the Corporation.
ELEVENTH:
The Board of Directors of the Corporation shall base the response of this
Corporation to any proposed Business Combination on the evaluation of the Board
of Directors of the Corporation of what is in the best interest of this
Corporation. In evaluating what is in the best interest of this Corporation, the
Board of Directors of the Corporation shall consider:
(a) The best interest of the shareholders. For this purpose, the Board
shall consider among other factors, not only the consideration offered in the
proposed Business Combination in relation to the then current market price of
this Corporation's stock, but also in relation to the then current value of this
Corporation in a freely negotiated transaction and in relation to the estimate
of the Board of Directors of the Corporation of the future value of this
Corporation as an independent entity; and
(b) Such other factors as the Board of Directors of the Corporation
determines to be relevant, including, among other factors, the social, legal and
economic effects on the communities in which this Corporation and its
subsidiaries operate and are located.
TWELFTH:
To the fullest extent permitted by the General Corporation Law of the State
of Delaware as the same exists or may hereafter be amended, a director of the
Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as director.
Any repeal or modification of this Article shall not result in any
liability for a director with respect to any action or omission occurring prior
to such repeal or modification.
THIRTEENTH:
Section 13.1 Restrictions on Ownership and Transfer of Equity Stock.
-------------------------------------------------------
(a) Definitions. For purposes of this Article Thirteenth and Article
Fourteenth, the following terms shall have the meanings set forth below:
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"Beneficial Ownership" shall mean, with respect to any Person, ownership of
shares of Equity Stock equal to the sum of (i) the shares of Equity Stock
directly or indirectly owned by such Person, (ii) the number of shares of Equity
Stock treated as owned directly or indirectly by such Person through the
application of the constructive ownership rules of Section 544 of the Internal
Revenue Code of 1986, as amended (the "Code"), as modified by Section
856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock which
such Person is deemed to beneficially own pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); provided,
however, that for the purposes of calculating the foregoing, no share shall be
counted more than once. The terms "Beneficial Owner," "Beneficially Owns" and
"Beneficially Owned" shall have correlative meanings.
"Beneficiary" shall mean, with respect to any Trust, one or more
organizations described in each of Section 170(b)(1)(A) (other than clauses
(vii) and (viii) thereof) and Section 170(c)(2) of the Code that are named by
the Corporation as the beneficiary or beneficiaries of such Trust, in accordance
with the provisions of Section 13.2(d).
"Common Stock" shall mean the common stock, par value $.10 per share of the
Corporation.
"Constructive Ownership" shall mean ownership of shares of Equity Stock by
a Person who is or would be treated as a direct or indirect owner of such shares
of Equity Stock through the application of Section 318 of the Code, as modified
by Section 856(d)(5) of the Code. The terms "Constructive Owner,"
"Constructively Owns" and "Constructively Owned" shall have correlative
meanings.
"Equity Stock" shall mean the Common Stock, par value $.10 per share, and
the Preferred Stock, par value $.10 per share of the Corporation and Operating
Company.
"Look-Through Entity" shall mean a Person that is either (i) a trust
described in Section 401(a) of the Code and exempt from tax under Section 501(a)
of the Code as modified by Section 856(h)(3) of the Code or (ii) registered
under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, with respect to a class or
series of Equity Stock, 9.8% of the number of outstanding shares of such Equity
Stock.
"Market Price" on any date shall mean the average of the Closing Price for
the five consecutive Trading Days ending on such date. The "Closing Price" on
any date shall mean the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Equity Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Equity Stock are listed or admitted to trading or, if the shares of Equity Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted price, or if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the Nasdaq Stock
Market, Inc. or, if such system is no longer
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in use, the principal other automated quotation system that may then be in use
or, if the shares of Equity Stock are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker selected by the Board of Directors of the Corporation making a
market in the shares of Equity Stock. In the case of Equity Stock that is
paired, "Market Price" shall mean the "Market Price" for paired shares
multiplied by a fraction (expressed as a percentage) determined by dividing the
value for such Equity Stock most recently determined under Section 14.2(c) by
the value of a paired share most recently determined under Section 14.2(c) (the
"Valuation Percentage").
"Non-Transfer Event" shall mean an event (other than a purported Transfer)
that would (a) cause any Person (other than a Look-Through Entity) to
Beneficially Own or Constructively Own shares of Equity Stock in excess of the
Ownership Limit, (b) cause any Look-Through Entity to Beneficially Own or
Constructively Own shares of Equity Stock in excess of the Look-Through
Ownership Limit, (c) result in the capital stock of the Corporation being
beneficially owned (within the meaning of Section 856(a)(5) of the Code) by
fewer than 100 persons within the meaning of Section 856(a)(5) of the Code, (d)
result in the Corporation being "closely held" within the meaning of Section
856(h) of the Code, or (e) cause the Corporation to Constructively Own 10% or
more of the ownership interest in a tenant of the Corporation's or a
Subsidiary's real property within the meaning of Section 856(d)(2)(B) of the
Code. Non-Transfer Events include but are not limited to (i) the granting of any
option or entering into any agreement for the sale, transfer or other
disposition of shares of Equity Stock or (ii) the sale, transfer, assignment or
other disposition of interests in any Person or of any securities or rights
convertible into or exchangeable for shares of Equity Stock that results in
changes in Beneficial Ownership or Constructive Ownership of shares of Equity
Stock.
"Operating Company" shall mean Meditrust Operating Company.
"Operating Company Common Stock" shall mean the common stock, par value
$.10 per share of Meditrust Operating Company.
"Ownership Limit" shall mean, with respect to any class or series of Equity
Stock, 9.25% of the number of outstanding shares of such class or series of
Equity Stock. For purposes of computing the percentage of shares of any class or
series of Equity Stock of the Corporation that is Beneficially Owned by any
Person, any shares of Equity Stock of the Corporation which are deemed to be
Beneficially Owned by such Person pursuant to Rule 13d-3 of the Exchange Act
but which are not outstanding shall be deemed to be outstanding.
"Pairing Agreement" shall mean the Pairing Agreement, dated as of December
20, 1979, by and between Santa Anita Realty Enterprises, Inc. (the predecessor
of the Corporation) and Santa Anita Operating Company (the predecessor of
Operating Company), as amended from time to time in accordance with the
provisions thereof.
"Permitted Transferee" shall mean any Person designated as a Permitted
Transferee in accordance with the provisions of Section 13.2(h).
"Person" shall mean (a) an individual or any corporation, partnership,
estate, trust, association, private foundation, joint stock company, limited
liability company or any other
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entity and (b) a "group" as that term is defined for purposes of Rule 13d-5 of
the Exchange Act.
"Prohibited Owner" shall mean, with respect to any purported Transfer or
Non-Transfer Event, any Person who is prevented from being or becoming the
owner of record title to shares of Equity Stock by the provisions of Section
13.2(a).
"Restriction Termination Date" shall mean the first day on which the Board
of Directors of the Corporation determines that it is no longer in the best
interests of the Corporation to attempt to, or continue to, qualify under the
Code as a real estate investment trust (a "REIT").
"Trading Day" shall mean a day on which the principal national securities
exchange on which shares of Equity Stock are listed or admitted to trading is
open for the transaction of business or, if shares of Equity Stock are not
listed or admitted to trading on any national securities exchange, any day other
than a Saturday, a Sunday or a day on which banking institutions in the State of
New York are authorized or obligated by law or executive order to close.
"Transfer" (as a noun) shall mean any sale, transfer, gift, assignment,
devise or other disposition of shares of Equity Stock, whether voluntary or
involuntary, whether of record, constructively or beneficially and whether by
operation of law or otherwise. "Transfer" (as a verb) shall have the correlative
meaning.
"Trust" shall mean any separate trust created and administered in
accordance with the terms of Section 13.2, for the exclusive benefit of any
Beneficiary.
"Trustee" shall mean any Person or entity unaffiliated with both the
Corporation and any Prohibited Owner designated by the Corporation to act as
trustee of any Trust, or any successor trustee thereof. The Trustee shall be
designated by the Corporation and Operating Company in accordance with Article
Fourteenth.
(b) Restriction on Ownership and Transfer.
--------------------------------------
(i) Except as provided in Section 13.1(d), until the Restriction
Termination Date, (i) no Person (other than a Look-Through Entity) shall
Beneficially Own or Constructively Own outstanding shares of Equity Stock in
excess of the Ownership Limit and no Look-Through Entity shall Beneficially Own
or Constructively Own outstanding shares of Equity Stock in excess of the
Look-Through Ownership Limit, (ii) any Transfer (whether or not the result of a
transaction entered into through the facilities of the New York Stock Exchange)
that, if effective, would result in any Person (other than a Look-Through
Entity) Beneficially Owning or Constructively Owning shares of Equity Stock in
excess of the Ownership Limit shall be void ab initio as to the Transfer of that
number of shares of Equity Stock which would be otherwise Beneficially Owned or
Constructively Owned by such Person
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in excess of the Ownership Limit and the intended transferee shall acquire no
rights in such shares of Equity Stock, and (iii) any Transfer (whether or not
the result of a transaction entered into through the facilities of the New York
Stock Exchange) that, if effective, would result in any Look-Through Entity
Beneficially Owning or Constructively Owning shares of Equity Stock in excess of
the Look-Through Ownership Limit shall be void ab initio as to the Transfer of
that number of shares of Equity Stock which would be otherwise Beneficially
Owned or Constructively Owned by such Look-Through Entity in excess of the
Look-Through Ownership Limit and the intended transferee shall acquire no rights
in such shares of Equity Stock.
(ii) Until the Restriction Termination Date, any Transfer (whether or
not the result of a transaction entered into through the facilities of the New
York Stock Exchange) that, if effective, would result in the Corporation being
"closely held" within the meaning of Section 856(h) of the Code shall be void ab
initio as to the Transfer of that number of shares of Equity Stock that would
cause the Corporation to be "closely held" within the meaning of Section 856(h)
of the Code, and the intended transferee shall acquire no rights in such shares
of Equity Stock.
(iii) Until the Restriction Termination Date, any Transfer (whether or
not the result of a transaction entered into through the facilities of the New
York Stock Exchange) of shares of Equity Stock that, if effective, would cause
the Corporation to Constructively Own 10% or more of the ownership interests in
a tenant of the real property of the Corporation or any direct or indirect
subsidiary (whether a corporation, partnership, limited liability company or
other entity) of the Corporation (a "Subsidiary"), within the meaning of Section
856(d)(2)(B) of the Code, shall be void ab initio as to the Transfer of that
number of shares of Equity Stock that would cause the Corporation to
Constructively Own 10% or more of the ownership interests in a tenant of the
real property of the Corporation or a Subsidiary within the meaning of Section
856(d)(2)(B) of the Code, and the intended transferee shall acquire no rights in
such shares of Equity Stock.
(iv) Until the Restriction Termination Date, any Transfer (whether or
not the result of a transaction entered into through the facilities of the New
York Stock Exchange) that, if effective, would result in the shares of capital
stock of the Corporation being beneficially owned (within the meaning of Section
856(a)(5) of the Code) by fewer than 100 persons within the meaning of Section
856(a)(5) of the Code shall be void ab initio and the intended transferee shall
acquire no rights in such shares of Equity Stock.
(c) Owners Required to Provide Information. Until the Restriction
Termination Date:
(i) Every Beneficial Owner or Constructive Owner of more than 5%, or
such lower percentages as required pursuant to regulations under the Code, of
the outstanding shares of any class or series of Equity Stock of the Corporation
shall, within 30 days after January 1 of each year, provide to the Corporation a
written statement or affidavit
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stating the name and address of such Beneficial Owner or Constructive Owner, the
number of shares of Equity Stock Beneficially Owned or Constructively Owned, and
a description of how such shares are held. Each such Beneficial Owner or
Constructive Owner shall provide to the Corporation such additional information
as the Corporation may request to ensure compliance with the restrictions in
this Section 13.1.
(ii) Each Person who is a Beneficial Owner or Constructive Owner of
shares of Equity Stock and each Person (including the stockholder of record) who
is holding shares of Equity Stock for a Beneficial Owner or Constructive Owner
shall provide to the Corporation a written statement or affidavit stating such
information as the Corporation may request in order to determine the
Corporation's status as a REIT and to ensure compliance with the Ownership Limit
or the Look-Through Ownership Limit, as the case may be.
(d) Exception. The Board of Directors of the Corporation, upon receipt of a
ruling from the Internal Revenue Service or an opinion of counsel in each case
to the effect that the restrictions contained in subsections (b)(ii) through
(iv) of this Section 13.1 would not be violated, may exempt a Person from the
Ownership Limit or Look-Through Ownership Limit, provided that (A) the Board of
Directors of the Corporation obtains such representations and undertakings from
such Person as are reasonably necessary to ascertain that no Person's Beneficial
Ownership or Constructive Ownership of shares of Equity Stock will (i) result in
the capital stock of the Corporation being beneficially owned (within the
meaning of Section 856(a)(5) of the Code) by fewer than 100 persons within the
meaning of Section 856(a)(5) of the Code, (ii) result in the Corporation being
"closely held" within the meaning of Section 856(h) of the Code or (iii) cause
the Corporation to Constructively Own 10% or more of the ownership interests in
the real property of a tenant of the Corporation or a Subsidiary within the
meaning of Section 856(d)(2)(B) of the Code and (B) such Person agrees in
writing that any violation or attempted violation of the Ownership Limit or
Look-Through Ownership Limit will result in the conversion of such shares into
shares of Excess Stock pursuant to Section 13.2(a).
(e) New York Stock Exchange Transactions. Notwithstanding any provision
contained herein to the contrary, nothing in this Certificate of Incorporation
shall preclude the settlement of any transaction entered into through the
facilities of the New York Stock Exchange.
Section 13.2. Excess Stock.
-------------
(a) Conversion into Excess Stock.
-----------------------------
(i) If, notwithstanding the other provisions contained in this
Article Thirteenth, prior to the Restriction Termination Date, there is a
purported Transfer or Non-Transfer Event such that any Person (other than a
Look-Through Entity) would either Beneficially Own or Constructively Own shares
of Equity Stock in excess of the Ownership Limit or such that any Person that is
a Look-Through Entity would either Beneficially Own or Constructively Own shares
of Equity Stock in excess of the Look-Through Ownership Limit,
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then, (i) except as otherwise provided in Section 13.1(d), the purported
transferee shall be deemed to be a Prohibited Owner and shall acquire no right
or interest (or, in the case of a Non-Transfer Event, the Person holding record
title to the shares of Equity Stock Beneficially Owned or Constructively Owned
by such Beneficial Owner or Constructive Owner, shall cease to own any right or
interest) in such number of shares of Equity Stock which would cause such
Beneficial Owner or Constructive Owner to Beneficially Own or Constructively Own
shares of Equity Stock in excess of the Ownership Limit or the Look-Through
Ownership Limit, as the case may be, (ii) such number of shares of Equity Stock
in excess of the Ownership Limit or the Look-Through Ownership Limit, as the
case may be, (rounded up to the nearest whole share) shall be automatically
converted into an equal number of shares of Excess Stock and transferred to a
Trust in accordance with Section 13.2(d) and (iii) the Prohibited Owner shall
submit such number of shares of Equity Stock to the Corporation for registration
in the name of the Trustee of the Trust. Such conversion into Excess Stock and
transfer to a Trust shall be effective as of the close of trading on the Trading
Day prior to the date of the Transfer or Non-Transfer Event, as the case may
be.
(ii) If, notwithstanding the other provisions contained in this
Article Thirteenth, prior to the Restriction Termination Date, there is a
purported Transfer or Non-Transfer Event that, if effective, would (i) result
in the capital stock of the Corporation being beneficially owned (within the
meaning of Section 856(a)(5) of the Code) by fewer than 100 persons within the
meaning of Section 856(a)(5) of the Code, (ii) result in the Corporation being
"closely held" within the meaning of Section 856(h) of the Code or (iii) cause
the Corporation to Constructively Own 10% or more of the ownership interest in a
tenant of the Corporation's or a Subsidiary's real property within the meaning
of Section 856(d)(2)(B) of the Code, then (x) the purported transferee shall be
deemed to be a Prohibited Owner and shall acquire no right or interest (or, in
the case of a Non-Transfer Event, the Person holding record title of the shares
of Equity Stock with respect to which such Non-Transfer Event occurred, shall be
deemed to be a Prohibited Owner and shall cease to own any right or interest) in
such number of shares of Equity Stock, the ownership of which by such purported
transferee or record holder would (A) result in the shares of capital stock of
the Corporation being beneficially owned (within the meaning of Section
856(a)(5) of the Code) by fewer than 100 persons within the meaning of Section
856(a)(5) of the Code, (B) result in the Corporation being "closely held" within
the meaning of Section 856(h) of the Code or (C) cause the Corporation to
Constructively Own 10% or more of the ownership interests in a tenant of the
Corporation's or a Subsidiary's real property within the meaning of Section
856(d)(2)(B) of the Code, (y) such number of shares of Equity Stock (rounded up
to the nearest whole share) shall be automatically converted into an equal
number of shares of Excess Stock and transferred to a Trust in accordance with
Section 13.2(d) and (z) the Prohibited Owner shall submit such number of shares
of Equity Stock to the Corporation for registration in the name of the Trustee
of the Trust. Such conversion into Excess Stock and transfer to a Trust shall be
effective as of the close of trading on the Trading Day prior to the date of the
Transfer or Non-Transfer Event, as the case may be.
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(iii) Upon the occurrence of such a conversion of shares of any
class or series of Equity Stock into an equal number of shares of Excess Stock,
such shares of Equity Stock shall be automatically retired and canceled, without
any action required by the Board of Directors of the Corporation, and shall
thereupon be restored to the status of authorized but unissued shares of the
particular class or series of Equity Stock from which such Excess Stock was
converted and may be reissued by the Corporation as that particular class or
series of Equity Stock.
(iv) Upon the conversion into Excess Shares (pursuant to the
Certificate of Incorporation of Operating Company) of any shares of any class or
series of Operating Company stock that are paired with a class or series of
shares of Equity Stock, pursuant to Article Fourteenth, such shares of Equity
Stock shall likewise be converted into an equal number of shares of Excess Stock
and be paired with such converted shares of Operating Company, pursuant to
Article Fourteenth.
(b) Remedies for Breach. If the Corporation, or its designees, shall at
any time determine in good faith that a Transfer has taken place in violation of
Section 13.1(b) or that a Person intends to acquire or has attempted to acquire
Beneficial Ownership or Constructive Ownership of any shares of Equity Stock in
violation of Section 13.1(b), the Corporation shall take such action as it deems
advisable to refuse to give effect to or to prevent such Transfer or
acquisition, including, but not limited to, refusing to give effect to such
Transfer on the stock transfer books of the Corporation or instituting
proceedings to enjoin such Transfer or acquisition.
(c) Notice of Restricted Transfer. Any Person who acquires or attempts
to acquire shares of Equity Stock in violation of Section 13.1(b), or any Person
who owns shares of Equity Stock that were converted into shares of Excess Stock
and transferred to a Trust pursuant to subsections (a) and (d) of this Section
13.2, shall immediately give written notice to the Corporation of such event and
shall provide to the Corporation such other information as the Corporation may
request in order to determine the effect, if any, of such Transfer or Non-
Transfer Event, as the case may be, on the Corporation's status as a REIT.
(d) Ownership in Trust. Upon any Transfer or Non-Transfer Event that
results in Excess Stock pursuant to Section 13.2(a), such Excess Stock shall be
automatically transferred to a Trust to be held for the exclusive benefit of the
Beneficiary. The Corporation and the Operating Company shall name a Beneficiary
for each Trust. Any conversion of shares of Equity Stock into shares of Excess
Stock and transfer to a Trust shall be effective as of the close of trading on
the Trading Day prior to the date of the Transfer or Non-Transfer Event that
results in the conversion. Shares of Excess Stock so held in trust shall remain
issued and outstanding shares of stock of the Corporation.
(e) Dividend Rights. Each share of Excess Stock shall be entitled to
the same dividends and distributions (as to both timing and amount) as may be
declared by the Board of Directors of the Corporation as shares of the class or
series of Equity Stock from
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which such Excess Stock was converted. The Trustee, as record holder of the
shares of Excess Stock, shall be entitled to receive all dividends and
distributions and shall hold all such dividends or distributions in trust for
the benefit of the Beneficiary. The Prohibited Owner with respect to such shares
of Excess Stock shall repay to the Trust the amount of any dividends or
distributions received by it (i) that are attributable to any shares of Equity
Stock that have been converted into shares of Excess Stock and (ii) the record
date of which was on or after the date that such shares were converted into
shares of Excess Stock. The Corporation shall take all measures that it
determines reasonably necessary to recover the amount of any such dividend or
distribution paid to a Prohibited Owner, including, if necessary, withholding
any portion of future dividends or distributions payable on shares of Equity
Stock Beneficially Owned or Constructively Owned by the Person who, but for the
provisions of this Article Thirteenth, would Constructively Own or Beneficially
Own the shares of Equity Stock that were converted into shares of Excess Stock;
and, as soon as reasonably practicable following the Corporation's receipt or
withholding thereof, shall pay over to the Trust for the benefit of the
Beneficiary the dividends so received or withheld, as the case may be.
(f) Rights upon Liquidation. In the event of any voluntary or
involuntary liquidation of, or winding up of, or any distribution of the assets
of, the Corporation, each holder of shares of Excess Stock shall be entitled to
receive, ratably with each other holder of shares of Equity Stock of the same
class or series from which the Equity Stock was converted, that portion of the
assets of the Corporation that is available for distribution to the holders of
such class or series of Equity Stock. The Trust shall distribute to the
Prohibited Owner the amounts received upon such liquidation, dissolution, or
winding up, or distribution; provided, however, that the Prohibited Owner shall
not be entitled to receive amounts in excess of, in the case of a purported
Transfer in which the Prohibited Owner gave value for shares of Equity Stock and
which Transfer resulted in the conversion of the shares into shares of Excess
Stock, the price per share, if any, such Prohibited Owner paid for the shares of
Equity Stock (which, in the case of Equity Stock that is paired, shall equal the
price per paired share multiplied by the most recent Valuation Percentage) and,
in the case of a Non- Transfer Event or Transfer in which the Prohibited Owner
did not give value for such shares (e.g., if the shares were received through a
gift or devise) and which Non-Transfer Event or Transfer, as the case may be,
resulted in the conversion of the shares into shares of Excess Stock, the price
per share equal to the Market Price on the date of such Non-Transfer Event or
Transfer. Any remaining amount in such Trust shall be distributed to the
Beneficiary.
(g) Voting Rights. Each share of Excess Stock shall entitle the holder
to the number of votes the holder would have, if such share of Excess Stock was
a share of Equity Stock of the same class or series from which such Excess Stock
was converted, on all matters submitted to a vote at any meeting of
stockholders. The holders of shares of Excess Stock converted from the same
class or series of Equity Stock shall vote together with the holders of such
Equity Stock as a single class on all such matters. The Trustee, as record
holder of the Excess Stock, shall be entitled to vote all shares of Excess
Stock. Any vote by a Prohibited Owner as a purported holder of shares of Equity
Stock prior to the discovery by the Corporation that the shares of Equity Stock
have been converted into shares of Excess Stock
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shall, subject to applicable law, be rescinded and shall be void ab initio with
respect to such shares of Excess Stock, and the Prohibited Owner shall be deemed
to have given, as of the close of trading on the Trading Day prior to the date
of the purported Transfer or Non- Transfer Event that results in the conversion
of the shares of Equity Stock into shares of Excess Stock and the transfer of
such shares to a Trust pursuant to subsections (a) and (d) of this Section 13.2,
an irrevocable proxy to the Trustee to vote the shares of Excess Stock in the
manner in which the Trustee, in its sole and absolute discretion, desires.
(h) Designation of Permitted Transferee.
------------------------------------
(i) The Trustee shall have the exclusive and absolute right to
designate one or more Permitted Transferees of any and all shares of Excess
Stock if the Corporation fails to exercise its option with respect to such
shares pursuant to Section 13.2(j) hereof within the time period set forth
therein. As soon as practicable, but in an orderly fashion so as not to
materially adversely affect the Market Price of the shares of Excess Stock, the
Trustee shall designate any one or more Persons as Permitted Transferees;
provided, however, that (i) the Permitted Transferee so designated purchases for
valuable consideration (whether in a public or private sale) the shares of
Excess Stock (which, in the case of paired Excess Stock, shall be determined
based on the Valuation Percentage) and (ii) the Permitted Transferee so
designated may acquire such shares of Excess Stock without violating any of the
restrictions set forth in Section 13.1(b) and without such acquisition resulting
in the conversion of the shares of Equity Stock so acquired into shares of
Excess Stock and the transfer of such shares to a Trust pursuant to subsections
(a) and (d) of this Section 13.2.
(ii) Upon the designation by the Trustee of a Permitted Transferee
in accordance with the provisions of this Section 13.2(h), the Trustee shall
cause to be transferred to the Permitted Transferee that number of shares of
Excess Stock acquired by the Permitted Transferee. Upon such transfer of the
shares of Excess Stock to the Permitted Transferee, such shares of Excess Stock
shall be automatically converted into an equal number of shares of Equity Stock
of the same class and series from which such Excess Stock was converted. Upon
the occurrence of such a conversion of shares of Excess Stock into an equal
number of shares of Equity Stock, such shares of Excess Stock shall be
automatically retired and canceled, without any action required by the Board of
Directors of the Corporation, and shall thereupon be restored to the status of
authorized but unissued shares of Excess Stock and may be reissued by the
Corporation as Excess Stock.
(iii) The Trustee shall (i) cause to be recorded on the stock
transfer books of the Corporation that the Permitted Transferee is the holder of
record of such number of shares of Equity Stock, and (ii) distribute to the
Beneficiary any and all amounts held with respect to the shares of Excess Stock
after making payment to the Prohibited Owner pursuant to Section 13.2(i).
(iv) If the Transfer of shares of Excess Stock to a purported
Permitted Transferee shall violate any of the transfer restrictions set forth in
Section 13.1(b), such
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Transfer shall be void ab initio as to that number of shares of Excess Stock
that cause the violation of any such restriction when such shares are converted
into shares of Equity Stock (as described in subsection (h)(ii) above) and the
purported Permitted Transferee shall be deemed to be a Prohibited Owner and
shall acquire no rights in such shares of Excess Stock or Equity Stock. Such
shares of Equity Stock shall be automatically reconverted into Excess Stock and
transferred to the Trust from which they were originally Transferred. Such
conversion and transfer to the Trust shall be effective as of the close of
trading on the Trading Day prior to the date of the Transfer to the purported
Permitted Transferee and the provisions of this Article Thirteenth shall apply
to such shares, including, without limitation, the provisions of subsections (h)
through (j) of this Section 13.2 with respect to any future Transfer of such
shares by the Trust.
(i) Compensation to Record Holder of Shares of Equity Stock that are
Converted into Shares of Excess Stock. Any Prohibited Owner shall be entitled
(following discovery of the shares of Excess Stock and subsequent designation of
the Permitted Transferee in accordance with Section 13.2(h) or following the
acceptance of the offer to purchase such shares in accordance with Section
13.2(j) to receive from the Trustee following the sale or other disposition of
such shares of Excess Stock the lesser of (i)(a) in the case of a purported
Transfer in which the Prohibited Owner gave value for shares of Equity Stock and
which Transfer resulted in the conversion of such shares into shares of Excess
Stock, the price per share, if any, such Prohibited Owner paid for the shares of
Equity Stock (which, in the case of paired Excess Stock, shall be determined
based on the Valuation Percentage) and (b) in the case of a Non-Transfer Event
or Transfer in which the Prohibited Owner did not give value for such shares
(e.g., if the shares were received through a gift or devise) and which Non-
Transfer Event or Transfer, as the case may be, resulted in the conversion of
such shares into shares of Excess Stock, the price per share equal to the Market
Price on the date of such Non-Transfer Event or Transfer or (ii) the price per
share (which, in the case of paired Excess Stock, shall be determined based on
the Valuation Percentage) received by the Trustee from the sale or other
disposition of such shares of Excess Stock in accordance with this Section
13.2(i) or Section 13.2(j). Any amounts received by the Trustee in respect of
such shares of Excess Stock and in excess of such amounts to be paid the
Prohibited Owner pursuant to this Section 13.2(i) shall be distributed to the
Beneficiary in accordance with the provisions of Section 13.2(h). Each
Beneficiary and Prohibited Owner shall waive any and all claims that it may have
against the Trustee and the Trust arising out of the disposition of shares of
Excess Stock, except for claims arising out of the gross negligence or willful
misconduct of, or any failure to make payments in accordance with this Section
13.2 by, such Trustee or the Corporation.
(j) Purchase Right in Excess Stock. Shares of Excess Stock shall be
deemed to have been offered for sale to the Corporation or its designee, at a
price per share equal to the lesser of (i) the price per share (which, in the
case of paired Excess Stock, shall be determined based on the Valuation
Percentage) in the transaction that created such shares of Excess Stock (or, in
the case of devise, gift or Non-Transfer Event, the Market Price at the time of
such devise, gift or Non-Transfer Event) or (ii) the Market Price on the date
the
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Corporation, or its designee, accepts such offer. The Corporation shall have the
right to accept such offer for a period of 90 days following the later of (a)
the date of the Non-Transfer Event or purported Transfer which results in such
shares of Excess Stock or (b) the date on which the Corporation determines in
good faith that a Transfer or Non-Transfer Event resulting in shares of Excess
Stock previously has occurred, if the Corporation does not receive a notice of
such Transfer or Non-Transfer Event pursuant to Section 13.2(c).
Section 13.3. Remedies Not Limited. Nothing contained in this Article
Thirteenth shall limit the authority of the Corporation to take such other
action as it deems necessary or advisable to protect the Corporation and the
interests of its stockholders by preservation of the Corporation's status as a
REIT and to ensure compliance with the requirements of Article Fourteenth and
Section 13.1.
Section 13.4. Ambiguity. In the case of an ambiguity in the application of
any of the provisions of this Article Thirteenth, including any definition
contained in Section 13.1(a), the Board of Directors of the Corporation shall
have the power to determine the application of the provisions of this Article
Thirteenth with respect to any situation based on the facts known to it.
Section 13.5. Legend. Each certificate for shares of Equity Stock shall
bear the following legend:
"The shares of Meditrust Corporation and Meditrust Operating Company
represented by this combined certificate are subject to restrictions in the
respective Certificates of Incorporation of each company which prohibit (a) any
Person (other than a Look-Through Entity) (as such terms are defined in the
respective Certificates of Incorporation of each company) from Beneficially
Owning or Constructively Owning (as these terms are defined in the respective
Certificates of Incorporation of each company) in excess of 9.25% of the number
of outstanding shares of any class or series of Equity Stock (as that term is
defined in the respective Certificates of Incorporation of each company), (b)
any Look-Through Entity from Beneficially Owning or Constructively Owning in
excess of 9.8% of the number of outstanding shares of any class or series of
Equity Stock, (c) any Person from acquiring or maintaining any ownership
interest in the stock of either company that is inconsistent with (i) the
requirements of the Internal Revenue Code of 1986, as amended, pertaining to
real estate investment trusts or (ii) Article Thirteenth of the respective
Certificates of Incorporation of each company and (d) any transfer of shares of
any class or series of Equity Stock of either company that are paired pursuant
to Article Fourteenth of the respective Certificates of Incorporation of each
company, except in combination with an equal number of shares of the other
company in accordance with the respective Certificates of Incorporation of each
company, copies of which are on file with the transfer agent named on the face
hereof, and the holder of this certificate by his acceptance hereof consents to
be bound by such restrictions.
Meditrust Corporation and Meditrust Operating Company will furnish without
charge to each stockholder who so requests a copy of the relevant provisions of
the respective
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Certificates of Incorporation of each company and a copy of the provisions
setting forth the designations, preferences, privileges and rights of each class
of stock or series thereof that each company is authorized to issue and the
qualifications, limitations and restrictions of such preferences and/or rights.
Any such request may be addressed to the Secretary of either company or to the
transfer agent named on the face hereof."
Section 13.6 Severability. Each provision of this Article Thirteenth shall
be severable and an adverse determination as to any such provision shall be in
no way affect the validity of any other provision.
FOURTEENTH:
Section 14.1 Transfer of Shares. Until this Article Fourteenth shall have
been terminated in the manner herein provided:
(a) Except as provided herein, no shares of Common Stock shall be
transferable, and they shall not be transferred on the books of the Corporation,
unless (i) a simultaneous transfer is made by the same transferor to the same
transferee, or (ii) such transferor has previously arranged with Operating
Company for the transfer to the transferee, of the same number of shares of
Operating Company Common Stock, except that Operating Company may transfer
shares of Common Stock acquired by it from the Corporation to a person to whom
Operating Company simultaneously issues the same number of shares of Operating
Company Common Stock.
(b) Except as provided herein, each certificate evidencing ownership of
shares of Common Stock shall be deemed to evidence, in addition, the same number
of shares of Operating Company Common Stock.
(c) Any registered holder of a certificate evidencing ownership of
shares of Common Stock of the Corporation (formerly known as Santa Anita
Realty Enterprises, Inc.) or its predecessor (namely, Santa Anita Consolidated,
Inc., a California corporation) issued prior to the distribution by the
Corporation (formerly known as Santa Anita Realty Enterprises, Inc.) of
shares of common stock of Operating Company (as formerly known as Santa Anita
Operating Company, Inc.) may, upon request and presentation of said certificate
to the transfer agent for the Common Stock, obtain in substitution therefor a
certificate or certificates registered in such holder's name evidencing the same
number of shares of Common Stock and a like number of shares of Operating
Company Common Stock.
(d) Notwithstanding the foregoing, any shares of Common Stock issued
after the date of the filing of this Certificate, which are issued on an
unpaired basis by the Corporation pursuant to the terms of Section 14.7 of this
Certificate may be transferred without compliance with Section 14.1(a) and may
be evidenced solely by a certificate which is not deemed to evidence a like
number of shares of Operating Company Common Stock as required by Section
14.1(b).
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Section 14.2 Issuance of Shares. Until such time as the pairing of the
outstanding shares of Common Stock and the outstanding shares of Operating
Company Common Stock in accordance with this Article Fourteenth (the "Pairing"
and each paired share a "Paired Share") shall have been terminated in the manner
herein provided:
(a) Except as provided herein, the Corporation shall not issue or agree
to issue any shares of Common Stock to any person except Operating Company
unless effective provision has been made for the simultaneous issuance or
transfer to the same person of the same number of shares of Operating Company
Common Stock and for the pairing of such shares of the Corporation and Operating
Company and unless the Corporation and Operating Company have agreed on the
manner and basis of allocating the consideration to be received upon such
issuance between the Corporation and Operating Company or, if allocation of such
consideration between them is not practicable, on the payment by one company to
the other of cash or other consideration in lieu thereof. Any such allocation or
payment shall be based on the respective fair market values of the Common Stock
and the Operating Company Common Shares.
(b) Upon exercise of any stock option granted by Santa Anita
Consolidated, Inc. and assumed by Operating Company or granted by Operating
Company, the Corporation will, upon request by management of Operating Company,
simultaneously issue a number of shares of Common Stock to Operating Company or
to the exercising optionee equal to the number of Operating Company Common
Shares issued by Operating Company pursuant to such exercise, and Operating
Company agrees to pay the Corporation the fair market value of each share of
Common Stock so issued at the date of exercise of such option, notwithstanding
the provisions of subsection (a) of this Section 14.2.
(c) As desired from time to time, but not less often than once each
calendar year beginning with [___________], the Corporation and Operating
Company shall jointly arrange for the determination of the fair market value as
of a date specified by the Corporation and Operating Company (the "valuation
date") of the shares of Operating Company Common Stock outstanding on the
valuation date. The amount so determined (the "fair market value of the
Operating Company Shares") shall thereafter be used in all calculations pursuant
to this Section 2 until a new determination is made. The fair market value of
each share of Common Stock shall be determined by subtracting the fair market
value of one Operating Company Share from the average of the closing sale prices
of a Paired Share over the principal exchange on which the Paired Shares are
listed, or if not listed, then the average of the last bid prices in the
over-the-counter market during the ten business days prior to any date of
determination of the fair market value of Common Stock.
Section 14.3 Stock Certificates; Transfer Agents and Registrars. Until such
time as the Pairing shall have been terminated in the manner herein provided,
except in the case of shares of Common Stock issued to Operating Company, each
certificate which is issued evidencing shares of Common Stock shall be printed
"back-to-back" with a certificate evidencing the same number of Operating
Company Common Shares, shall bear a conspicuous legend (on the face thereof)
referring to the restrictions on the
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transfer of the shares evidenced thereby contained in the bylaws of the
Corporation, and shall be in a form which satisfies the requirements of the laws
of Delaware and which has been approved by the Board of Directors of the
Corporation.
Section 14.4 Stock Dividends, Reclassifications, etc. Until such time as
the Pairing shall have been terminated in the manner herein provided, the
Corporation shall not declare or pay any stock dividend consisting in whole or
in part of Common Stock, issue any rights or warrants to purchase any shares of
Common Stock, or subdivide, combine or otherwise reclassify the shares of Common
Stock, unless Operating Company simultaneously takes the same or equivalent
action with respect to the Operating Company Common Shares, to the end that the
outstanding shares of Common Stock and Operating Company Common Shares will at
all times be effectively paired on a one-for-one basis as contemplated herein.
Section 14.5 Shares in Excess of the Ownership Limit or in Violation of the
Transfer Restrictions; Designation of Trustee and Beneficiaries. Until such time
as the Board of Directors of the Corporation determines that it is no longer in
the best interest of the Corporation to attempt to, or continue to, qualify
under the Code, as a REIT:
(a) Upon the conversion of a share of any class or series of Common
Stock or Preferred Stock (collectively, "Equity Stock"), of the Corporation into
a share of Excess Stock of the Corporation in accordance with the provisions of
Article Thirteenth, if such share of Equity Stock was paired prior to its
conversion into Excess Stock, the corresponding paired share of that same class
or series of Equity Stock of Operating Company shall be simultaneously converted
into a share of Excess Stock of Operating Company; such shares of Excess Stock
of the Corporation and Operating Company shall be paired and shall be
simultaneously transferred to a trust established by the Corporation and
Operating Company for such purpose (a "Trust").
(b) Upon the conversion of a share of Excess Stock of the Corporation
into a share of Equity Stock of the Corporation of the same class or series from
which such Excess Stock was converted in accordance with the provisions of
Article Thirteenth, if such share of Excess Stock was paired prior to its
conversion from Equity Stock into Excess Stock, the corresponding paired share
of Excess Stock of Operating Company shall be simultaneously converted into a
share of Equity Stock of Operating Company of the same class or series from
which such Excess Stock was converted and such shares of Equity Stock shall be
paired.
(c) With respect to an offer made by the Trust to the Corporation to
purchase shares of Excess Stock from a Trust pursuant to Article Thirteenth, in
the case of shares of Excess Stock that are paired, the Corporation shall accept
such offer with respect to its shares of Excess Stock without the agreement of
Operating Company to accept such offer with respect to the corresponding paired
shares of its Excess Stock.
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(d) The Trustee of each Trust shall be designated by mutual agreement
of the Board of Directors of the Corporation and the Board of Directors of
Operating Company.
(e) The Beneficiary with respect to each Trust shall be designated by
mutual agreement of the Board of Directors of the Corporation and the Board of
Directors of Operating Company.
(f) At such time that the Board of Directors of the Corporation no
longer deems it in the best interests of the Corporation to attempt to, or
continue to, qualify under the Code as a REIT, it shall notify the Board of
Directors of Operating Company in writing of such determination and the
Ownership Limit and the Transfer Restrictions shall cease to have effect, as
provided in Article Thirteenth.
Section 14.7 Unpaired Shares.
----------------
(a) Shares of capital stock of any class or series, irrespective of
whether such shares are convertible into paired shares of the Common Stock and
Operating Company Common Stock, may be issued by the Corporation to any person
without effective provision for the simultaneous issuance or transfer to the
same person of the same number of shares of that same class or series of capital
stock of Operating Company and without effective provision for the pairing of
such shares of capital stock of the Corporation and Operating Company, as the
Board of Directors of the Corporation shall in its sole discretion determine
(any such shares of capital stock of any class or series issued by the
Corporation pursuant to this Section 14.7 are referred to herein as "Unpaired
Shares").
(b) Unpaired Shares may be transferred on the books of the Corporation
without a simultaneous transfer to the same transferee of any shares of any
other class or series of capital stock of Operating Company.
Section 14.7 Exemption from the Ownership Limit. The Corporation shall not
exempt any Person from the Ownership Limit or the Look-Through Ownership Limit
pursuant to Article Thirteenth without the prior written consent of Operating
Company, which consent shall not be unreasonably withheld.
Section 14.8 Merger, Sale of Assets, etc. Commencing at the Effective Time
and continuing until such time as the Pairing shall have been terminated in the
manner provided herein, the Corporation will not be a party to any merger,
consolidation, sale of assets, liquidation or other form or reorganization
purchase to which shares of Common Stock are converted, redeemed, exchanged or
otherwise changed unless Operating Company is also a party to such transaction.
Section 14.10 Waiver and Termination. The Board of Directors of the
Corporation is hereby authorized to waive or repeal this Article Fourteenth in
its entirety or any provision of this Article Fourteenth.
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Section 14.11 Severability. Each provision of this Article Fourteenth shall
be severable and an adverse determination as to any provision shall in no way
affect the validity of any other provision.
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CERTIFICATE OF DESIGNATIONS
of
JUNIOR PARTICIPATING PREFERRED STOCK
The following resolution was adopted by the Board of Directors of the
Corporation as required by Section 151 of the General Corporation Law at a
meeting duly called and held on June 15, 1989:
RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of the Corporation in accordance with the provisions of the
Certificate of Incorporation, the Board of Directors of the Corporation hereby
creates a series of preferred stock (the "Preferred Stock"), of the Corporation
and hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:
Junior Participating Preferred Stock:
I. Designation and Amount
----------------------
The shares of such series shall be designated as "Junior Participating
Preferred Stock" (the "Junior Preferred Stock") and the number of shares
constituting the Junior Preferred Stock shall be 200,000. Such number of shares
may be increased or decreased by resolution of the Board of Directors of the
Corporation; provided, that no decrease shall reduce the number of shares of
Junior Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Junior
Preferred Stock.
II. Dividends and Distributions
---------------------------
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Junior
Preferred Stock with respect to dividends, the holders of shares of Junior
Preferred Stock, in preference to the holders of Common Stock, par value $.10
per share (the "Common Stock"), of the Corporation, and of any other junior
stock, shall be entitled to receive, when, as and if declared by the Board of
Directors of the Corporation out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June, September
and December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Junior Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1.00 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock since the
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immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Junior Preferred Stock. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Junior Preferred Stock were entitled immediately prior to
such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Junior
Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Junior
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Junior Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Junior Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Junior Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors of the Corporation may fix a record date for
the determination of holders of shares of Junior Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.
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III. Voting Rights
-------------
The holders of shares of Junior Preferred Stock shall have the following
voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Junior Preferred Stock shall entitle the holder thereof to 100 votes on
all matters submitted to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein, in any other Certificate of
Designation creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Junior Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) Except as set forth herein, in the Corporation's Certificate of
Incorporation or as otherwise provided by law, holders of Junior Preferred Stock
shall have no voting rights.
IV. Certain Restrictions
--------------------
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Junior Preferred Stock as provided in Section II are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Junior Preferred Stock outstanding shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preferred Stock,
except dividends paid ratably on the Junior Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Junior Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Junior Preferred Stock, or any shares of stock ranking on a
parity with the Junior
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Preferred Stock, except in accordance with a purchase offer made in writing
or by publication (as determined by the Board of Directors of the
Corporation) to all holders of such shares upon such terms as the Board of
Directors of the Corporation, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section IV
purchase or otherwise acquire such shares at such time and in such manner.
V. Reacquired Shares
-----------------
Any shares of Junior Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock subject to the conditions and
restrictions on issuance set forth herein, in the Certificate of Incorporation,
in any other Certificate of Designations creating a series of Preferred Stock or
any similar stock or as otherwise required by law.
VI. Liquidation, Dissolution or Winding Up
--------------------------------------
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Junior Preferred Stock unless, prior thereto, the holders of shares of Junior
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Junior
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Junior Preferred Stock, except distributions made ratably on the Junior
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Junior Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of
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shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
VII. Consolidation, Merger, etc.
---------------------------
In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case each share of Junior Preferred Stock shall at
the same time be similarly exchanged or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Junior
Preferred Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
VIII. Redemption
----------
The shares of Junior Preferred Stock shall not be redeemable.
IX. Rank
----
The Junior Preferred Stock shall rank, with respect to the payment of
dividends and the distribution of assets, junior to all series of any other
class of the Corporation's Preferred Stock.
X. Amendment
---------
The Certificate of Incorporation of the Corporation shall not be amended in
any manner which would alter or change the powers, preferences or special rights
of the Junior Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least two-thirds of the outstanding shares
of Junior Preferred Stock, voting together as a single series.
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<PAGE>
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
RIGHTS OF SERIES OF NON-VOTING CONVERTIBLE STOCK
The following resolution was adopted by the Board of Directors of the
Corporation on January 23, 1998 as required by Section 151 of the General
Corporation Law:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation in accordance with the provisions of the Certificate of
Incorporation of the Corporation, as amended, a series of stock of the
Corporation known as Series A Non-Voting Convertible Common Stock be, and it
hereby is, created, classified and authorized, and the issuance thereof is
provided for, and that the designation and number of shares, and relative
rights, preferences and limitations thereof, shall be as set forth in the form
appended hereof as follows:
1. Designation and Amount. There shall be a series of undesignated Series
Common Stock of the Corporation designated as "Series A Non-Voting Convertible
Common Stock" and the number of shares constituting such series shall be ten
million (10,000,000). The number of shares designated as shares of Series A
Non-Voting Convertible Common Stock may be increased or decreased by the Board
of Directors of the Corporation without a vote of stockholders. Except as
otherwise expressly provided herein, all shares of Series A Non-Voting
Convertible Common Stock shall be identical to shares of Common Stock (as
defined in Article FOURTH of the Certificate of Incorporation of the
Corporation, as amended (the "Certificate of Incorporation")) and shall entitle
the holders thereof to the same rights and privileges.
2. Voting. The holders of Series A Non-Voting Convertible Common Stock
shall not have any right to vote, except as required under applicable law and,
except as required by law, the holders of Common Stock and Series A Non-Voting
Convertible Common Stock shall vote together as a single class on all matters as
to which holders of Series A Non-Voting Convertible Common Stock are entitled to
vote as set forth herein. Except as required by law or as set forth herein, the
holders of Series A Non-Voting Convertible Common Stock (to the extent permitted
by this Section 2), Common Stock (to the extent permitted by the Certificate of
Incorporation), Preferred Stock (to the extent permitted by the Certificate of
Incorporation) and Series Common Stock (to the extent permitted by the
Certificate of Incorporation) shall vote together as a single class on all
matters submitted to the stockholders for a vote.
3. Dividends. Subject to applicable law, the holders of Series A Non-Voting
Convertible Common Stock shall be entitled to receive such dividends out of
funds legally available therefor at such times and in such amounts as the Board
of Directors of the Corporation may determine in its sole discretion shall be
paid with respect to the Common Stock, with each share of Common Stock and each
share of Series A Non-Voting Convertible Common Stock sharing share-for-share in
such dividends (with each share of Series A Non-Voting Convertible Common Stock
being equal to the number of shares of Common Stock into
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<PAGE>
which it would then be convertible on the record date for such dividend) except
that if dividends are declared which are payable in shares of Common Stock or
Series A Non-Voting Convertible Common Stock, dividends shall be declared which
are payable at the equivalent rate in both classes of stock and the dividends
payable in shares of Common Stock shall be payable to the holders of that class
of stock and the dividends payable in shares of Series A Non-Voting Convertible
Common Stock shall be payable to the holders of that class of stock.
4. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary
(a "Liquidation Event"), after the payment or provision for payment of all debts
and liabilities of the Corporation and all preferential amounts to which the
holders of Preferred Stock or Series Common Stock, if any, are entitled with
respect to the distribution of assets in liquidation, the holders of Series A
Non-Voting Convertible Common Stock shall be entitled to share ratably with the
holders of Common Stock (with each share of Series A Non-Voting Convertible
Common Stock being equal to the number of shares of Common Stock into which it
would then be convertible on the effective date of such Liquidation Event) in
the remaining assets of the Corporation available for distribution.
5. Conversion of Series A Non-Voting Convertible Common Stock.
--------------------------------------------------------------
(a) Automatic Conversion. Each share of Series A Non-Voting Convertible
Common Stock shall be automatically converted, without the payment of any
additional consideration, into fully paid and non-assessable shares of Common
Stock at the rate of one share of Common Stock for each share of Series A
Non-Voting Convertible Common Stock so converted (the "Series A Non-Voting
Conversion Rate") as of the date (the "Conversion Date") that is the earlier to
occur of (i) the next Business Day (as defined below) following the date on
which the shareholders of the Corporation and of Operating Company shall have
approved the merger transaction (the "Merger") among La Quinta Inns, Inc. ("La
Quinta"), Operating Company and the Corporation, and (ii) the date of any
termination of the Agreement and Plan of Merger dated as of January 3, 1998 and
among La Quinta, Operating Company and the Corporation relating to the Merger in
accordance with the terms thereof. As used herein, the term "Business Day" means
any day other than Saturday, Sunday, or any other day on which banking
institutions in the States of Delaware or New York are not open for business.
(b) Procedure for Conversion. As of the Conversion Date, all
outstanding shares of Series A Non-Voting Convertible Common Stock shall be
converted automatically without any further action by the holders of Series A
Non-Voting Convertible Common Stock and whether or not the certificates
representing such shares of Series A Non-Voting Convertible Common Stock are
surrendered to the Corporation or its transfer agent. On the Conversion Date,
all rights with respect to the Series A Non-Voting Convertible Common Stock so
converted shall terminate, except any of the rights of the holders thereof, in
accordance with the procedures herein, to receive certificates for the number of
shares of Common Stock into which such Series A Non-Voting Convertible Common
Stock has been
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<PAGE>
converted. The Corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable on the Conversion Date unless
certificates evidencing such shares of the Series A Non-Voting Convertible
Common Stock being converted, duly assigned or endorsed for transfer to the
Corporation (or accompanied by duly executed stock powers relating thereto), are
surrendered at the principal executive office of the Corporation (or the offices
of the transfer agent for the Series A Non-Voting Convertible Common Stock or
such office or offices of an agent for conversion as may from time to time be
designated by notice to the holders of the Series A Non-Voting Convertible
Common Stock by the Corporation), together with written notice by the holder of
such Series A Non-Voting Convertible Common Stock stating the name or names
(with addresses) and denominations in which the certificate or certificates for
Common Stock shall be issued and shall include instructions for delivery
thereof. Upon such surrender of a certificate representing Series A Non-Voting
Convertible Common Stock following its automatic conversion, the Corporation
shall issue and send by hand delivery, by courier or by first class mail
(postage prepaid) to the holder thereof or to such holder's designee, at the
address designated by such holder, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled upon
conversion. In the event that there shall have been surrendered a certificate or
certificates representing Series A Non-Voting Convertible Common Stock, only
part of which are to be converted, the Corporation shall issue and send to such
holder or such holder's designee, in the manner set forth in the preceding
sentence, a new certificate or certificates representing the number of shares of
Series A Non-Voting Convertible Common Stock which shall not have been
converted. If the certificate or certificates for Common Stock are to be issued
in a name other than the name of the registered holder of the Series A
Non-Voting Convertible Common Stock surrendered for conversion, the Corporation
shall not be obligated to issue or deliver any certificate unless and until the
holder of the Series A Non-Voting Convertible Common Stock surrendered has paid
to the Corporation the amount of any tax that may be payable in respect of any
transfer involved in such issuance or has established to the satisfaction of the
Corporation that such tax has been paid.
(c) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
shares of Series A Non-Voting Convertible Common Stock such number of its shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Series A Non-Voting Convertible Common
Stock.
6. Adjustments.
---------------
(a) Changes in Common Stock. In the event the Corporation shall (i) pay
a dividend in or make a distribution in shares of Common Stock, (ii) subdivide
its outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares, or (iv) issue by reclassification
of its shares of Common Stock any shares of the Corporation, the Series A
Non-Voting Conversion Rate in effect immediately prior thereto shall be adjusted
so that the holder of a share of Series A Non-Voting Convertible Common
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<PAGE>
Stock thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock which it would have owned or have been entitled
to receive after the happening of any of the events described above had such
share of Series A Non-Voting Convertible Common Stock been converted on or
immediately prior to the record date for such dividend or the effective date of
such subdivision, combination or reclassification, as the case may be.
(b) Changes in Series A Non-Voting Convertible Common Stock. In the
event that the Corporation shall (i) pay a dividend in or make a distribution in
shares of its Series A Non-Voting Convertible Common Stock, (ii) subdivide its
outstanding shares of Series A Non-Voting Convertible Common Stock, (iii)
combine its outstanding shares of Series A Non-Voting Convertible Common Stock
into a smaller number of shares, or (iv) issue by reclassification of its shares
of Series A Non-Voting Convertible Common Stock any shares of the Corporation,
the Series A Non-Voting Conversion Rate in effect immediately prior thereto
shall be adjusted so that the holder of a share of Series A Non-Voting
Convertible Common Stock thereafter surrendered for conversion shall be entitled
to receive the number of shares of Common Stock which it would have owned or
have been entitled to receive after the happening of any of the events described
above had such share of Series A Non-Voting Convertible Common Stock been
converted on or immediately prior to the record date for such dividend or the
effective date of such subdivision, combination or reclassification, as the case
may be.
(c) General. An adjustment made pursuant to this Section 6 shall become
effective immediately after the record date (in the case of a dividend or
distribution in shares of capital stock) and shall become effective immediately
after the effective date (in the case of a subdivision, combination or
reclassification). No adjustment in accordance with this Section 6 shall be
required unless such adjustment would require an increase or decrease in any
conversion rate of at least 0.1%; provided, however, that any adjustments which
by reason of this clause are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.
7. Notices. In the event that the Corporation provides any notice, report
or statement to the holders of Common Stock or Series A Non-Voting Convertible
Common Stock (in their capacity as such), the Corporation shall at the same time
provide a copy of any such notice, report or statement to each record holder of
outstanding Series A Non-Voting Convertible Common Stock.
8. Status of Acquired Shares. Shares of Series A Non-Voting Convertible
Common Stock acquired by the Corporation (upon conversion or otherwise) will be
restored to the status of authorized but unissued shares of undesignated Series
Common Stock.
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<PAGE>
MEDITRUST CORPORATION
CERTIFICATE OF THE POWERS, DESIGNATIONS
PREFERENCES AND RIGHTS OF THE
9% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK
PAR VALUE $.10 PER SHARE
LIQUIDATION VALUE $250 PER SHARE
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned, the President of Meditrust Corporation, a Delaware
corporation, DOES HEREBY CERTIFY that the following resolutions have been duly
adopted by a duly authorized committee of the Board of Directors of the
Corporation:
RESOLVED, that pursuant to the authority expressly granted to and vested in
the Board of Directors of the Corporation, by the provisions of the
Corporation's Restated Certificate of Incorporation (as the same may be further
amended, supplemented or restated from time to time and including the
Certificate of Designation (as defined below) and any other certificates of
designation forming a part thereof, the "Certificate of Incorporation"), which
authority has been delegated by the Board of Directors of the Corporation to
this duly authorized committee (the "Preferred Stock Committee") of the Board of
Directors of the Corporation, this Preferred Stock Committee hereby authorizes
the issuance of a series (this "Series") of the preferred stock, par value $.10
per share (the "Preferred Stock"), of the Corporation, and hereby fixes the
powers, designations, preferences and relative, participating, optional or other
special rights, and the qualifications or restrictions, of the shares of this
Series (in addition to the powers, preferences and relative, participating,
optional or other special rights, and the qualifications or restrictions
thereof, set forth in the Certificate of Incorporation which are applicable to
this Series of Preferred Stock) as follows:
I.
(a) Title. The Series of Preferred Stock is hereby designated as the "9%
Series A Cumulative Redeemable Preferred Stock" (the "Series A Preferred
Stock").
(b) Number. The number of authorized shares of Series A Preferred Stock
shall be 805,000.
(c) Ranking. In respect of rights to the payment of dividends and the
distribution of assets in the event of any liquidation, dissolution or winding
up of the Corporation, the Series A Preferred Stock shall rank (i) senior to the
Corporation's Common stock, par value $.10 per share (the "Common Stock"),
senior to the Corporation's Series A Non-Voting
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<PAGE>
Convertible Common Stock, par value $.10 per share (the "Series A Common
Stock"), senior to the Corporation's Junior Participating Preferred Stock, par
value $.10 per share (the "Junior Preferred Stock"), and senior to any other
class or series of capital stock of the Corporation other than capital stock
referred to in clauses (ii) and (iii) of this sentence, (ii) on a parity with
any class or series of capital stock of the Corporation the terms of which
specifically provide that such class or series of capital stock ranks on a
parity with the Series A Preferred Stock in respect of rights to the payment of
dividends and the distribution of assets in the event of any liquidation,
dissolution or winding up of the Corporation, and (iii) junior to any class or
series of capital stock of the Corporation the terms of which specifically
provide that such class or series of capital stock ranks senior to the Series A
Preferred Stock in respect of rights to the payment of dividends and the
distribution of assets in the event of any liquidation, dissolution or winding
up of the Corporation. The term "capital stock" does not include convertible
debt securities.
Without limitation to the provisions of the preceding paragraph, the
Series A Preferred Stock shall rank, in respect of rights to the payment of
dividends and the distribution of assets in the event of any liquidation,
dissolution or winding up of the Corporation, (a) senior to any shares of Excess
Stock (as defined below) issued upon conversion of any capital stock referred to
in clause (i) of the preceding paragraph, (b) on a parity with any shares of
Excess Stock issued upon conversion of any capital stock referred to in clause
(ii) of the preceding paragraph and (c) junior to any shares of Excess Stock
issued upon conversion of any capital stock referred to in clause (iii) of the
preceding paragraph.
(d) Dividends.
--------------
(i) Subject to the preferential rights of the holders of any class or
series of capital stock of the Corporation ranking prior to the Series A
Preferred Stock as to dividends, the holders of the then outstanding shares of
Series A Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors of the Corporation or any duly authorized committee
thereof (collectively, the "Board of Directors of the Corporation"), out of
funds legally available for the payment of dividends, cumulative cash dividends
at the rate of 9% per annum of the $250.00 per share liquidation preference of
the Series A Preferred Stock (equivalent to an annual rate of $22.50 per share).
Such dividends shall accrue daily, shall accrue and the cumulative from June 17,
1998 (the "Original Issue Date") and shall be payable quarterly in arrears in
cash on March 31, June 30, September 30 and December 31 (each, a "Dividend
Payment Date") of each year, commencing September 30, 1998; provided that if any
Dividend Payment Date is not a Business Day (as hereinafter defined), then the
dividend which would otherwise have been payable on such Dividend Payment Date
may be paid on the next succeeding Business Day with the same force and effect
as if paid on such Dividend Payment Date and no interest or additional dividends
or other sum shall accrue on the amount so payable for the period from and after
such Dividend Payment Date to such next succeeding Business Date. The period
from and including the Original Issue Date to but excluding the first Dividend
Payment Date, and each subsequent period from and including a Dividend Payment
Date to but excluding the next succeeding Dividend Payment Date, is
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<PAGE>
hereinafter called a "Dividend Period". Dividends shall be payable to holders of
record as they appear in the stock transfer books of the Corporation at the
close of business on the applicable record date (each, a "Record Date"), which
shall be the 15th day of the calendar month in which the applicable Dividend
Payment Date falls or such other date designated by the Board of Directors of
the Corporation for the payment of dividends that is not more than thirty (30)
nor less than ten (10) days prior to such Dividend Payment Date. The amount of
any dividend payable for any Dividend Period, or portion thereof, shall be
computed on the basis of a 360-day year consisting of twelve 30-day months, it
being understood that the amount of the dividend payable per share of Series A
Preferred Stock for each full Dividend Period shall be computed by dividing the
annual dividend rate of $22.50 per share by four (it being further understood
that the dividend payable on September 30, 1998 shall be for more than a full
Dividend Period). The dividends payable on any Dividend Payment Date or any
other date shall include dividends accrued to but excluding such Dividend
Payment Date or other date, as the case may be.
"Business Day" shall mean any day, other than a Saturday or Sunday, that is
not a day on which banking institutions in The City of New York are authorized
or required by law, regulation or executive order to close. All references
herein to "accrued and unpaid" dividends on the Series A Preferred Stock (and
all references of like import) shall include, unless otherwise expressly stated
or the context otherwise requires, accumulated dividends, if any, on the Series
A Preferred Stock; and all references herein to "accrued and unpaid" dividends
on any other class or series of capital stock of the Corporation shall include,
if (and only if) such class or series of capital stock provides for cumulative
dividends and unless otherwise expressly stated or the context otherwise
requires, accumulated dividends, if any, thereon.
(ii) If any shares of Series A Preferred Stock are outstanding, no full
dividends will be declared or paid or set apart for payment on any capital stock
of the Corporation of any other class or series ranking, as to dividends, on a
parity with or junior to the Series A Preferred Stock for any period unless full
cumulative dividends 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 Series A Preferred Stock for all past Dividend Periods (including,
without limitation, any Dividend Period terminating on the date upon which the
dividends on such other capital stock are declared or paid or set apart for
payment, as the case may be). When dividends are not paid in full (or a sum
sufficient for such full payment is not set apart therefor) upon the Series A
Preferred Stock and the shares of any other class or series of capital stock of
the Corporation ranking on a parity as to dividends with the Series A Preferred
Stock, all dividends declared upon the Series A Preferred Stock and any other
class or series of capital stock of the Corporation ranking on a parity as to
dividends with the Series A Preferred Stock shall be declared pro rata so that
the amount of dividends declared per share of Series A Preferred Stock and such
other class or series of capital stock of the Corporation shall in all cases
bear to each other the same ratio that accrued and unpaid dividends per share on
the shares of Series A Preferred Stock and such other class or series of capital
stock of the Corporation bear to each other.
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Except as provided in the immediately preceding paragraph, unless full
cumulative dividends on the Series A 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 Series A Preferred Stock for
all past Dividend Periods (including, without limitation, any Dividend Period
terminating on the applicable Subject (as defined below)), (A) no dividends
(other than in shares of, or options, warrants or rights to subscribe for or
purchase shares of, Common Stock or any other class or series of capital stock
of the Corporation ranking junior to the Series A Preferred Stock as to
dividends and as to the distribution of assets upon liquidation, dissolution and
winding up of the Corporation) shall be declared or paid or set apart for
payment or other distribution declared or made upon the Common Stock of the
Corporation or any other class or series of capital stock of the Corporation
ranking junior to or on a parity with the Series A Preferred Stock as to
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up of the Corporation, nor shall any shares of Common Stock of the
Corporation or shares of any other class or series of capital stock of the
Corporation ranking junior to or on a parity with the Series A Preferred Stock
as to dividends or as to the distribution of assets upon liquidation,
dissolution or winding up of the Corporation be redeemed, purchased or otherwise
acquired for any consideration (or any monies paid to or made available for a
sinking fund for the redemption of any such shares of junior or parity stock) by
the Corporation (except by conversion into or exchange for shares of any other
class or series of capital stock of the Corporation ranking junior to the Series
A Preferred Stock as to dividends and as to the distribution of assets upon
liquidation, dissolution and winding up of the Corporation, except for the
purchase of capital stock of the Corporation pursuant to Section 7.5 of the
Corporation's by-laws (so long as such purchase is made in accordance with the
terms of such Section 7.5), and except for, if the Amendments (as hereinafter
defined) to the Certificate of Incorporation become effective in accordance with
the DGCL as contemplated by Section I(j) hereof, the purchase or conversion of
Excess Stock (as hereinafter defined) in accordance with the provisions of
Article Thirteenth (as hereinafter defined). As used in this paragraph, the term
"Subject Date" means any date on which any dividends shall be declared or paid
or set apart for payment or other distribution declared or made upon the Common
Stock of the Corporation or any other class or series of capital stock of the
Corporation ranking junior to on a parity with the Series A Preferred Stock as
to dividends or as to the distribution of assets upon liquidation, dissolution
or winding up of the Corporation or on which any shares of Common Stock of the
Corporation or any shares of any other class or series of capital stock of the
Corporation ranking junior to or on a parity with the Series A Preferred Stock
as to dividends or as to the distribution of assets upon liquidation,
dissolution or winding up of the Corporation shall be redeemed, purchased or
otherwise acquired for any consideration (or any moneys paid to or made
available for a sinking fund for the redemption of any such shares of junior or
parity stock) by the Corporation.
(iii) No dividends on the Series A Preferred Stock shall be declared by
the Board of Directors of the Corporation or paid or set apart for payment by
the Corporation at such times as any agreement of the Corporation, including any
agreement relating to its indebtedness, prohibits such declaration, payment or
setting apart for payment or provides that
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such declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration or payment shall be
restricted or prohibited by law.
Anything in the Certificate of Designation to the contrary notwithstanding,
dividends on the Series A Preferred Stock will accrue and be cumulative from the
Original Issue Date whether or not the Corporation has earnings, whether or not
there are funds legally available for the payment of such dividends and whether
or not such dividends are declared.
(iv) No interest, or sum of money in lieu of interest, shall be payable
in respect of any dividend or payments on the Series A Preferred Stock which may
be in arrears, and holders of the Series A Preferred Stock will not be entitled
to any dividends (within the meaning of the Code), whether payable in cash,
securities or other property, in excess of the full cumulative dividends
described herein.
(v) Any dividend payment made on the Series A Preferred Stock shall
first be credited against the earliest accrued but unpaid dividend due with
respect to such shares.
(vi) If, for any taxable year, the Corporation elects to designate as
"capital gain dividends" (as defined in Section 857 of the Internal Revenue Code
of 1986, as amended (the "Code")), any portion (the "Capital Gains Amount") of
the dividends (within the meaning of the Code) paid or made available for the
year to holders of all classes and series of the Corporation's capital stock
(the "Total Dividends"), then the portion of the Capital Gains Amount that shall
be allocable to the holders of the Series A Preferred Stock shall be an amount
equal to (A) the total Capital Gains Amount multiplied by (B) a fraction (1) the
numerator of which is equal to the total dividends (within the meaning of the
Code), paid or made available to the holders of the Series A Preferred Stock for
that year and (2) the denominator of which is the Total Dividends for that year.
(e) Liquidation Preference.
---------------------------
(i) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, then, before any distribution or payment shall be
made to the holders of any Common Stock of the Corporation or shares of any
other class or series of capital stock of the Corporation ranking junior to the
Series A Preferred Stock with respect to the distribution of assets upon
liquidation, dissolution or winding up of the Corporation, but subject to the
preferential rights of the holders of shares of any class or series of capital
stock of the Corporation ranking prior to the Series A Preferred Stock with
respect to such distribution of assets upon liquidation, dissolution or winding
up, the holders of the shares of Series A Preferred Stock then outstanding shall
be entitled to receive and be paid out of the assets of the Corporation legally
available for distribution to it stockholders liquidating distributions in cash
or property at its fair market value as determined by the Board of Directors of
the Corporation in the amount of $250.00 per share, plus an amount equal to all
accrued and unpaid dividends thereon to the date of payment.
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(ii) After payment to the holders of the Series A Preferred Stock of
the full amount of the liquidating distributions (including accrued and unpaid
dividends) to which they are entitled, the holders of Series A Preferred Stock,
as such, shall have no right or claim to any of the remaining assets of the
Corporation.
(iii) If, upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation legally available
therefor are insufficient to pay the full amount of liquidating distributions on
all outstanding shares of Series A Preferred Stock and the full amount of the
liquidating distributions payable on all outstanding shares of any other classes
or series of capital stock of the Corporation ranking on a parity with the
Series A Preferred Stock with respect to the distribution of assets upon
liquidation, dissolution or winding up of the Corporation, then the holders of
the Series A Preferred Stock and all such other classes or series of capital
stock will share ratably in any such distribution of assets in proportion to the
full liquidating distributions (including, if applicable, accrued and unpaid
dividends) to which they would otherwise respectively be entitled.
(iv) If liquidating distributions shall have been made in full to all
holders of Series A Preferred Stock, the remaining assets of the Corporation
shall be distributed among the holders of any other classes or series of capital
stock of the Corporation ranking junior to the Series A Preferred Stock as to
the distribution of assets upon liquidation, dissolution or winding up,
according to their respective rights and preferences.
(v) For purposes of this Section I(e), neither the consolidation or
merger of the Corporation with or into any other corporation, trust or other
entity, nor the sale, lease or conveyance of all or substantially all of the
property or business of the Corporation, shall be deemed to constitute a
liquidation, dissolution or winding up of the Corporation.
(f) Redemption.
---------------
(i) The Series A Preferred Stock is not redeemable prior to June 17,
2003. However, the Company is entitled, irrespective of any provision of this
Certificate of Designation to the contrary, pursuant to Section 7.5 of its
by-laws, to call for purchase and purchase from the holders thereof shares of
Series A Preferred Stock on the terms and subject to the conditions set forth in
such Section 7.5.
(ii) On and after June 17, 2003, the Corporation may, at its option,
upon not less than thirty (30) nor more than six (6) days' prior written notice
to the holders of record of the Series A Preferred Stock, redeem the Series A
Preferred Stock, in whole or from time to time in part, for a cash redemption
price equal to $250.00 per share, together with (except as provided in Section
I(g)(vi) below) all accrued and unpaid dividends to the date fixed for
redemption (the "Redemption Price"). Any date fixed for the redemption of shares
of Series A Preferred Stock is hereinafter called a "Redemption Date".
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(iii) The Redemption Price of the Series A Preferred Stock (other than
the portion thereof consisting of accrued and unpaid dividends) shall be payable
solely out of the proceeds received by the Corporation from the sale of other
capital stock of the Corporation and not from any other source. For purposes of
the preceding sentence, the term "capital stock" means any equity securities
(including Common Stock of the Corporation, series common stock, par value $.10
per share ("Series Common Stock"), of the Corporation, and any other series of
Preferred Stock of the Corporation), shares, interest, participations or other
ownership interests (however designated), depositary shares representing
interests in any of the foregoing, and any rights (other than debt securities
convertible into or exchangeable for equity securities) or options to purchase
any of the foregoing.
(g) Procedures for Redemption; Limitations on Redemption.
---------------------------------------------------------
(i) If fewer than all of the outstanding shares of Series A Preferred
Stock are to be redeemed at the option of the Corporation, the number of shares
to be redeemed will be determined by the Corporation 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, if fractional shares are outstanding, with such
additional adjustments as the Corporation may elect in order to effect the
redemption of fractional shares) or by lot or any other equitable manner
determined by the Corporation (a) that will not give the Corporation the right
to purchase shares of Series A Preferred Stock pursuant to Section 7.5 of its
by-laws and (b) if the Amendments to the Certificate of Incorporation become
effective in accordance with the DGCL as contemplated by Section I(j) hereof,
that will not result in the conversion of any Series A Preferred Stock into
Excess Stock.
(ii) Notice of redemption will be given by publication in The Wall
Street Journal or, if such newspaper is not then being published, another
newspaper of general circulation in The City of New York, such publication to be
made once a week for two successive weeks commencing not less than thirty (30)
or more than sixty (60) days prior to the Redemption Date. Notice of any
redemption will also be mailed by or on behalf of the Corporation, first class
postage prepaid, not less than thirty (30) nor more than sixty (60) days prior
to the applicable Redemption Date, addressed to each holder of record of the
Series A Preferred Stock to be redeemed at the address set forth in the share
transfer records of the Corporation. In addition to any information required by
laws or by the applicable rules of any exchange upon which Series A Preferred
Stock may be listed or admitted to trading, such notice shall state: (1) the
Redemption Date; (2) the Redemption Price; (3) the number of shares of Series A
Preferred Stock to be redeemed; (4) the place or places (which shall include a
place in the Borough of Manhattan, The City of New York) where certificates for
such shares are to be surrendered for payment of the Redemption Price; and (5)
that dividends on the shares of Series A Preferred Stock to be redeemed will
cease to accrue on such Redemption Date. If fewer than all of the outstanding
shares of Series A Preferred Stock are to be redeemed, the notice mailed to each
holder of shares to be redeemed shall also specify the number of Series A
Preferred Stock to be redeemed from such holder. No failure to give or
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defect in such notice or defect in the mailing thereof shall affect the validity
of the proceedings for the redemption of any shares of Series A Preferred Stock
except as to the holder to whom notice was defective or not given.
(iii) If notice has been published and mailed in accordance with
Section I(g)(ii) above and provided that on or before the Redemption Date
specified in such notice all funds necessary for such redemption have been
irrevocably set aside by the Corporation, separate and apart from its other
funds, in trust for the benefit of the holders of the Series A Preferred Stock
so called for redemption, so as to be, and to continue to be, available
therefor, then, from and after the Redemption Date, dividends on the shares of
Series A Preferred Stock so called for redemption shall cease to accrue, such
shares shall no longer be deemed to be outstanding, and all rights of the
holders thereof as holders of such shares (except the right to receive the
Redemption Price) shall terminate. In the event any Redemption Date shall not be
a Business Day, then payment of the Redemption Price need not be made on such
Redemption Date but may be made on the next succeeding Business Day with the
same force and effect as if made on such Redemption Date and no interest,
additional dividends or other sum shall accrue on the amount payable for the
period from and after such Redemption Date to such next succeeding Business
Date.
(iv) Upon surrender, in accordance with such notice, of the
certificates for any shares of Series A Preferred Stock to be so redeemed
(properly endorsed or assigned for transfer, if the Corporation shall so require
and the notice shall so state), such shares of Series A Preferred Stock shall be
redeemed by the Corporation at the Redemption Price. In case fewer than all the
shares of Series A Preferred Stock represented by any such certificate are
redeemed, a new certificate or certificates shall be issued representing the
unredeemed shares of Series A Preferred Stock without cost to the holder
thereof.
(v) Any deposit of monies with a bank or trust company for the purpose
of redeeming Series A Preferred Stock shall be irrevocable and such monies shall
be held in trust for the benefit of the holders of Series A Preferred Stock
entitled thereto, except that (1) the Corporation shall be entitled to receive
from such bank or trust company the interest or other earnings, if any, earned
on the monies so deposited in trust; and (2) any balance of the monies so
deposited by the Corporation and unclaimed by the holders of the Series A
Preferred Stock entitled thereto at the expiration of two years from the
applicable Redemption Date shall be repaid, together with any interest or other
earnings earned thereon, to the Corporation and, after any such repayment, the
holders of the shares entitled to the funds so repaid to the Corporation shall
look only to the Corporation for payment without interest or other earnings
thereon.
(vi) Anything in this Certificate of Designation to the contrary
notwithstanding, the holders of record of shares of Series A Preferred Stock at
the close of business on a Record Date will be entitled to receive the dividend
payable with respect to such shares on the corresponding Dividend Payment Date
notwithstanding the redemption of such shares after such Record Date and on or
prior to such Dividend Payment Date or the
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Corporation's default in the payment of the dividend due on such Dividend
Payment Date, in which case the amount payable upon redemption of such shares
(including fractional shares) of Series A Preferred Stock will not include such
dividend (and the full amount of the dividend payable for the applicable
Dividend Period shall instead be paid on such Dividend Payment Date to the
holders of record on such Record Date as aforesaid). Except as provided in this
Section I(g)(vi) and except to the extent that accrued and unpaid dividends are
payable as part of the Redemption Price pursuant to Section I(f)(ii), the
Corporation will make no payment or allowance for unpaid dividends, regardless
of whether or not in arrears, on shares of Series A Preferred Stock or
Depositary Shares called for redemption.
(vii) Unless full cumulative dividends on all outstanding shares of
Series A Preferred Stock shall have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for
payment for all past Dividend Periods (including, without limitation, any
Dividend Period terminating on the date of the redemption of shares of Series A
Preferred Stock referred to below), no shares of Series A Preferred Stock shall
be redeemed unless all outstanding shares of Series A Preferred Stock are
simultaneously redeemed; provided, however, that the foregoing shall not prevent
(a) the purchase or acquisition of Series A Preferred Stock pursuant to Section
7.5 of the by-laws of the Corporation (so long as such purchase is made in
accordance with the terms of such Section 7.5) or pursuant to a purchase or
exchange offer made on the same terms to the holders of all outstanding shares
of Series A Preferred Stock or (b) if the Amendments to the Certificate of
Incorporation become effective in accordance with the DGCL as contemplated by
Section I(j) hereof, the purchase or conversion of Excess Stock of the
Corporation in accordance with the provisions of Article Thirteenth. In
addition, unless full cumulative dividends on all outstanding shares of Series A
Preferred Stock have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for payment for all past
Dividend Periods (including, without limitation, any Dividend Period terminating
on the date of the direct or indirect purchase or other acquisition of shares of
Series A Preferred Stock by the Corporation referred to below) the Corporation
shall not purchase or otherwise acquire, directly or indirectly, any shares of
Series A Preferred Stock (except by conversion into or exchange for capital
stock of the Corporation ranking junior to the Series A Preferred Stock as to
the payment of dividends and with respect to the distribution of assets upon
liquidation, dissolution and winding up of the Corporation); provided, however,
that the foregoing shall not prevent (a) the purchase or acquisition of Series A
Preferred Stock pursuant to Section 7.5 of the by-laws of the Corporation (so
long as such purchase is made in accordance with the terms of such Section 7.5)
or pursuant to a purchase or exchange offer made on the same terms to the
holders of all outstanding shares of Series A Preferred Stock or (b) if the
Amendments to the Certificate of Incorporation become effective in accordance
with the DGCL as contemplated by Section I(j) hereof, the purchase or conversion
of Excess Stock of the Corporation in accordance with the provisions of Article
Thirteenth.
(h) Voting Rights. Except as required by laws and as set forth below in
this Section I(h), the holders of the Series A Preferred Stock shall not have
any voting rights.
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(i) Whenever dividends on any shares of Series A Preferred Stock shall be
in arrears for six or more Dividend Periods, whether or not such Dividend
Periods are consecutive, the number of directors then constituting the Board of
Directors of the Corporation shall be automatically increased by two (if not
already increased by two by reason of the election of directors by the holders
of any other class or series of capital stock of the Corporation upon which like
voting rights have been conferred and are exercisable and with which the Series
A Preferred Stock is entitled to vote as a class with respect to the election of
such two directors) and the holders of shares of Series A Preferred Stock
(voting separately as a class with all other classes or series of capital stock
of the Corporation upon which like voting rights have been conferred and are
exercisable and which are entitled to vote as a class with the Series A
Preferred Stock in the election of such two directors) will be entitled to vote
for the election of such two directors of the Corporation at a special meeting
called by an officer of the Corporation at the request of the holders of record
of at least 10% of the outstanding shares of Series A Preferred Stock or by
holders of any other class or series of capital stock of the Corporation upon
which like voting rights have been conferred and are exercisable and which is
entitled to vote as a class with the Series A Preferred Stock in the election of
such two directors (unless such request is receive less than ninety (90) days
before the date fixed for the next annual or special meeting of stockholders, in
which case the vote for such two directors shall be held at the earlier of the
next such annual or special meeting of stockholders), and at each subsequent
annual meeting of stockholders until all dividends accumulated on the Series A
Preferred Stock for all past Dividend Periods and the then current Dividend
Period shall have been fully paid or declared and a sum sufficient for the
payment thereof set aside for payment, whereupon the right of the holders of
Series A Preferred Stock to elect such two directors shall cease and (unless
there are one or more other classes or series of capital stock of the
Corporation upon which like voting rights have been conferred and are
exercisable) the term of office of such directors previously so elected shall
terminate and the authorized number of directors of the Corporation shall
thereupon return to the number of authorized directors otherwise in effect, but
subject always to the same provisions for the reinstatement and divestment of
the right to elect such two additional directors in the case of any such future
dividend arrearage.
In the case of any such request for a special meeting (unless such request
is received less than ninety (90) days before the date fixed for the next annual
or special meeting of stockholders), such meeting shall be held on the earliest
practicable date at the place designated by the holders of capital stock
requesting such meeting or, if none, at a place designated by the Secretary of
the Corporation, upon notice similar to that required for an annual meeting of
stockholders. If such special meeting is not called by an officer of the
Corporation within thirty (30) days after such request, then the holders of
record of at least 10% of the outstanding shares of Series A Preferred Stock may
designate in writing a holder of Series A Preferred Stock to call such meeting
at the expense of the Corporation, and such meeting may be called by the holder
so designated upon notice similar to that required for annual meetings of
stockholders and shall be held at the place designated by the holder calling
such meeting. The holders of Series A Preferred Stock shall have access to the
stock transfer records of the
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Corporation for the purpose of causing a meeting of stockholders to be called
pursuant to the provisions of this paragraph.
The procedures in this Section I(h) for the calling of meetings and the
election of directors shall, to the extent permitted by law, supersede anything
inconsistent contained in the by-laws of the Corporation.
So long as any Series A Preferred Stock are outstanding, the number of
directors constituting the entire Board of Directors of the Corporation shall at
all times be such so that the exercise, by the holders of the Series A Preferred
Stock and the holders of any other classes or series of capital stock of the
Corporation upon which like voting rights have been conferred, of the right to
elect directors under the circumstances provided above will not contravene any
provision of the Corporation's Certificate of Incorporation or by-laws
restricting the number of directors which may constitute the entire Board of
Directors of the Corporation.
If at any time when the voting rights conferred upon the Series A Preferred
Stock pursuant to this Section I(h)(i) are exercisable any vacancy in the office
of a director elected pursuant to this Section I(h)(i) shall occur, then such
vacancy may be filled only by the remaining such director or by vote of the
holders of record of the outstanding Series A Preferred Stock and any other
classes or series of capital stock of the Corporation upon which like voting
rights have been conferred and are exercisable and which are entitled to vote as
a class with the Series A Preferred Stock in the election of directors pursuant
to this Section I(h)(i).
(ii) So long as any shares of Series A Preferred Stock remain
outstanding, the Corporation shall not, without the affirmative vote or consent
of the holders of at least two-thirds of the shares of Series A Preferred Stock
outstanding at the time, given in person or by proxy (with the Series A
Preferred Stock voting separately as a class), (A) authorize or create, or
increase the authorized or issued amount of, any class or series of capital
stock of the Corporation ranking prior to the Series A Preferred Stock with
respect to the payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up of the Corporation or reclassify any
authorized capital stock of the Corporation into such shares, or create,
authorize or issue any obligation or security convertible into, exchangeable or
exercisable for, or evidencing the right to purchase, any such shares, or (B)
amend, alter or repeal the provisions of the Certificate of Incorporation
(including, without limitation, the certificate of powers, designations,
preferences and rights of the Series A Preferred Stock (the "Certificate of
Designation")), whether by merger or consolidation (an "Event") or otherwise, so
as to materially and adversely affect any right, preference, privilege or voting
power of the Series A Preferred Stock or the holders thereof; provided, however,
with respect to the occurrence of any of the Events set forth in (B) above, so
long as the Series A Preferred Stock remains outstanding or is converted into
like securities of the surviving entity, in each case with the terms thereof
materially unchanged, taking into account that upon the occurrence of such an
Event the Corporation may not be the surviving entity, the occurrence of any
such
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Event shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting power of the Series A Preferred Stock or the
holders thereof; and provided, further, that the Amendments to the Certificate
of Incorporation shall not be deemed, with respect to the Series A Preferred
Stock, to be an amendment, alteration or repeal which materially and adversely
affects such rights, preferences, privileges or voting powers; and provided,
further, that any amendment to the Certificate of Incorporation to authorize any
increase in the amount of the authorized Excess Stock, Preferred Stock or Series
Common Stock or the creation or issuance of any other series of Preferred Stock
or any shares or series of Excess Stock or Series Common Stock, or any increase
in the amount of authorized or outstanding shares of Series A Preferred Stock or
any other series of Preferred Stock or any shares or series of Excess Stock or
Series Common Stock, in each case ranking on a parity with or junior to the
Series A Preferred Stock with respect to payment of dividends and the
distribution of assets upon liquidation, dissolution or winding up of the
Corporation, shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers. For purposes of this paragraph, the
filing in accordance with applicable law of a certificate of designations
setting forth the designations, preferences and relative, participating,
optional or other special rights of a class or series of capital stock of the
Corporation shall be deemed an amendment to the Certificate of Incorporation.
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 Series A Preferred Stock shall have been redeemed
or called for redemption and sufficient funds shall have been deposited in trust
in accordance with the terms of Section I(g)(v) hereof to effect such
redemption.
(iii) On each matter submitted to a vote of the holders of Series A
Preferred Stock, including any action by written consent, in accordance with
this Section I(h) or as otherwise required by law, each whole share of Series A
Preferred Stock shall be entitled to ten votes, each of which ten votes may be
directed separately by the holder thereof (or by any proxy or proxies of such
holder). With respect to each whole share of Series A Preferred Stock, the
holder thereof may designate up to ten proxies, with each such proxy having the
right to vote a whole number of votes (totaling ten per share of Series A
Preferred Stock). In the event that fractional shares of Series A Preferred
Stock are issued, then each such fractional share shall be entitled to a
proportionate number of votes and, if any such fractional share is entitled to
more than one vote, such votes may be directed separately and proxies may be
designated as in the case of whole shares of Series A Preferred Stock.
(i) Conversion. The Series A Preferred Stock is not convertible into or
exchangeable for any other property or securities of the Corporation, except
that, if the Amendments to the Certificate of Incorporation become effective in
accordance with the DGCL as contemplated by Section I(j) hereof, the Series A
Preferred Stock shall be convertible into Excess Stock on the terms and subject
to the conditions set forth in Article Thirteenth.
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(j) Restrictions on Ownership and Transfer. In the event that the
Corporation shall purchase any shares of Series A Preferred Stock pursuant to
Section 7.5 of its by-laws, then the purchase price paid by the Corporation for
any such shares of Series A Preferred Stock shall be the price specified in its
by-laws plus accrued and unpaid dividends on such shares to the date of
purchase.
As set forth in the Joint Proxy Statement/Prospectus dated May 19, 1998
(the "Proxy Statement") of The Meditrust Companies and La Quinta Inns, Inc., the
Corporation is soliciting the vote of its stockholders in favor of amendments
(the "Amendments") to its Certificate of Incorporation which would (i) add a new
Article Thirteenth to such Certificate of Incorporation in the form set forth as
Annex E to the Proxy Statement ("Article Thirteenth") and (ii) authorize a new
class of capital stock of the Corporation to be known as Excess Stock ("Excess
Stock"). If the Amendments are approved and become effective in accordance with
the DGCL, then, from and after the date on which the Amendments shall have
become effective in accordance with the DGCL, the Series A Preferred Stock shall
be subject to all of the terms and provisions of Article Thirteenth and, without
limitation to the foregoing, shall be convertible into Excess Stock on the terms
and subject to the conditions, and shall be subject to the limitations on
ownership and transfer, set forth in Article Thirteenth.
(k) Fractional Shares. Series A Preferred Stock may be issued in fractional
shares equal to 1/10th of a whole share of Series A Preferred Stock and any
integral multiple of 1/10th of a whole share of Series A Preferred Stock.
(l) Office or Agency in New York City. The Corporation will at all times
maintain an office or agency in the Borough of Manhattan, The City of New York,
where shares of Series A Preferred Stock may be surrendered for payment
(including upon redemption or repurchase, if any), registration of transfer or
exchange.
If any shares of Series A Preferred Stock are purchased by the Corporation
in accordance with Section 7.5 of its by-laws or if the Amendments shall have
become effective as contemplated by this Section I(j) and thereafter any shares
of Series A Preferred Stock are converted into Excess Stock and, in either such
case, if fewer than all the shares of Series A Preferred Stock evidenced by any
stock certificate are so purchased or converted, a new certificate or
certificates shall be issued representing the remaining shares of Series A
Preferred Stock evidenced by such certificate without cost to the holder
thereof.
II.
The Series A Preferred Stock shall have no preemptive rights.
III.
If any power, preference or relative, participating, optional and other
special right of the Series A Preferred Stock, or qualification or restriction
thereof, set forth in the Certificate
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of Designation is invalid, unlawful or incapable of being enforced by reason of
any rule of law or public policy, then, to the extent permitted by law, all
other powers, preferences and relative, participating, optional and other
special rights of the Series A Preferred Stock and qualifications and
restrictions thereof set forth in the Certificate of Designation which can be
given effect without the invalid, unlawful or unenforceable powers, preferences
or relative, participating, optional or other special rights of the Series A
preferred Stock or the qualifications or restriction thereof shall remain in
full force and effect and shall not be deemed dependent upon any other such
powers, preferences or relative, participating, optional or other special right
of the Series A Preferred Stock or qualifications or restrictions thereof unless
so expressed herein.
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IN WITNESS WHEREOF, this Certificate of Amendment and Restatement of the
Certificate of Incorporation has been executed on behalf of Meditrust
Corporation by its duly authorized officers on this ____ day of _______, 1999.
By: ____________________________
Name:
Title:
ATTEST:
By: ____________________________
Name:
Title:
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Annex B
-------
Form of
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MEDITRUST OPERATING COMPANY
Meditrust Operating Company, a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the corporation is Meditrust Operating Company. The date of
the filing of its original Certificate of Incorporation with the Secretary of
State of Delaware was August 23, 1979 (the "Original Certificate of
Incorporation"). The name under which the Corporation filed the Original
Certificate of Incorporation was Santa Anita Operating Company. The name of the
Corporation was changed to Meditrust Operating Company on ___, by way of
amendment to the Original Certificate of Incorporation. A Restated Certificate
of Incorporation (the "Second Certificate") was filed with the Secretary of
State of Delaware on March 2, 1998 restating and integrating the Corporation's
certificate of incorporation as theretofore amended and supplemented.
2. This Amended and Restated Certificate of Incorporation (the
"Certificate") amends, restates and integrates the Corporation's certificate of
incorporation as heretofore amended and supplemented, was duly adopted by the
Board of Directors of the Corporation in accordance with the provisions of
Section 242 and 245 of the Delaware General Corporation Law, as amended from
time to time (the "DGCL"), and was duly adopted by the stockholders of the
Corporation in accordance with the applicable provisions of Section 242 and 245
of the DGCL.
3. The text of the Certificate, as amended and restated to date, shall at
the effective time of this Certificate read as follows:
FIRST. Name. The name of the Corporation is Meditrust Operating Company.
SECOND. Registered Office. The address of its registered office in the
State of Delaware is 1013 Centre Road, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is Corporation Service
Company.
THIRD. Purposes. The nature of the business or purposes to be conducted or
promoted is:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware and to do all
things and exercise all powers, rights and privileges which a business
corporation may now or hereafter be organized or authorized to do or to
exercise under the laws of the State of Delaware.
<PAGE>
FOURTH. Capitalization.
SECTION 1. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 331,000,000, of which 270,000,000
shares of the par value of $.10 each are to be a class designated Common Stock,
6,000,000 shares of the par value of $.10 each are to be of a class designated
Preferred Stock, 30,000,000 shares of the par value of $.10 each are to be of a
class designated Series Common Stock and 25,000,000 of the par value $.10 each
are to be of a class designated Excess Stock.
SECTION 2. The shares of Preferred Stock may be issued from time to time in
one or more series. The Board of Directors of the Corporation is hereby
authorized to fix or alter the dividend rights, dividend rate, conversion
rights, voting rights, rights and terms of redemption (including sinking fund
provisions), the redemption price or prices, and the liquidation preferences of
any wholly unissued series of Preferred Stock and the number of shares
constituting any such series and the designation thereof, or all or any of them.
SECTION 3. The shares of Series Common Stock may be issued from time to
time in one or more series. The Board of Directors of the Corporation is hereby
authorized to fix or alter the dividend rights, dividend rate, conversion
rights, voting rights, rights and terms of redemption (including sinking fund
provisions), the redemption price or prices, and the liquidation preferences of
any wholly unissued series of Series Common Stock and the number of shares
constituting any such series and the designation thereof, or all or any of them.
SECTION 4. (a) Each holder of Common Stock, as such, shall be entitled to
one vote for each share of Common Stock held of record by such holder on all
matters on which stockholders generally are entitled to vote.
(b) Except as otherwise required by law, holders of a series of
Preferred Stock or Series Common Stock, as such, shall be entitled only to such
voting rights, if any, as shall expressly be granted thereto by this Certificate
of Incorporation (including any Certificate of Designation relating to such
series).
(c) Subject to applicable law and the rights, if any, of the holders of
any outstanding series of Preferred Stock or Series Common Stock or any class or
series of stock having a preference over or the right to participate with the
Common Stock with respect to the payment of dividends, dividends may be declared
and paid on the Common Stock at such times and in such amounts as the Board of
Directors of the Corporation in its discretion shall determine.
(d) Upon the dissolution, liquidation or winding up of the Corporation,
subject to the rights, if any, of the holders of any outstanding series of
Preferred Stock or Series Common Stock or any class or series of stock having a
preference over or the right to participate with the Common Stock with respect
to the distribution of assets of the Corporation upon such dissolution,
liquidation or winding up of the Corporation, the holders of the
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Common Stock, as such, shall be entitled to receive the assets of the
Corporation available for distribution to its stockholders ratably in proportion
to the number of shares held by them.
SECTION 5. The terms and conditions applicable to shares of Excess Stock
are set forth in Article Thirteenth hereof.
FIFTH. [DELETED].
SIXTH. By-laws. In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors of the Corporation is expressly
authorized, without stockholder approval, to make, alter or repeal the by-laws
of the Corporation.
SEVENTH. Right to Amend Certificate of Incorporation. The Board of
Directors of the Corporation shall have the power to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
EIGHTH. [DELETED].
NINTH:
Part 1. Vote Required for Certain Business Combinations
- -------------------------------------------------------
1.1. Higher Vote for Certain Business Combinations. In addition to any
affirmative vote required by law or any other Article of this Certificate of
Incorporation, and except as otherwise expressly provided in Part 2 of this
Article Ninth:
(a) any merger or consolidation of the Corporation or any Subsidiary
with (i) any Interested Stockholder or (ii) any other corporation (whether or
not itself an Interested Stockholder) which is, or after such merger or
consolidation would be, an Affiliate or Associate of an Interested Stockholder;
or
(b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with any
Interested Stockholder or any Affiliate or Associate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary having an
aggregate Fair Market Value of $5,000,000 or more; or
(c) the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of transactions) of any securities of the
Corporation or any Subsidiary to any Interested Stockholder or any Affiliate or
Associate of any Interested Stockholder in exchange for cash, securities or
other property (or a combination thereof) having an aggregate Fair Market Value
of $5,000,000 or more, other than the issuance of securities by the Corporation
or any Subsidiary upon the conversion of convertible securities of the
Corporation or any Subsidiary into stock of the Corporation or any Subsidiary;
or
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(d) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Stockholder or any Affiliate or Associate of any Interested Stockholder; or
(e) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or consolidation
of the Corporation with any of its Subsidiaries or any other transaction
(whether or not with or into or otherwise involving an Interested Stockholder)
which has the effect, directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or indirectly owned by
any Interested Stockholder or any Affiliate or Associate of any Interested
Stockholder;
shall require the affirmative vote of the holders of at least (a) 80% of the
combined voting power of the then outstanding shares of stock of all classes and
series of the Corporation entitled to vote in the election of directors (the
"Voting Stock"), and (b) a majority of the combined voting power of the then
outstanding shares of Voting Stock held by persons who are Disinterested
Stockholders, provided, however, that the majority vote requirement of this
clause (b) shall not be applicable if the Business Combination is approved by
the affirmative vote of the holders of not less than 90% of combined voting
power of the then outstanding shares of Voting Stock. The foregoing affirmative
vote requirements are hereinafter referred to as the "Special Vote Requirement."
The Special Vote Requirement shall be applicable notwithstanding the fact that
no vote may be required, or that a lesser percentage may be specified, by law or
in any agreement with any national securities exchange or otherwise.
1.2. Definition of "Business Combination." The term "Business Combination"
as used in this Article Ninth shall mean any transaction which is referred to in
any one or more of clauses (a) through (e) of Section 1.1.
Part 2. When Special Vote Requirement Is Not Applicable
- -------------------------------------------------------
The provisions of Part 1 of this Article Ninth shall not be applicable to
any particular Business Combination, and such Business Combination shall require
only such affirmative vote as is required by law and any other Article of this
Certificate of Incorporation, if all of the conditions specified in either of
the following Sections 2.1 and 2.2 are met:
2.1. Approval by Continuing Directors. The Business Combination shall have
been approved by a majority of the Continuing Directors.
2.2. Price and Procedural Requirements. All of the following conditions
shall have been met:
(a) The aggregate amount of the cash and the Fair Market Value, as of
the date of the consummation of the Business Combination, of consideration other
than cash to be received per share by holders of Common Stock in such Business
Combination shall be at least
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equal to the higher of (i) the highest price paid for any share of Common Stock
by any person who is an Interested Stockholder within the two-year period
immediately prior to the time of the first public announcement of the proposed
Business Combination (the "Announcement Date") or in the transaction in which
such person became an Interested Stockholder, whichever price is the higher; or
(ii) the Fair Market Value per share of the Corporation's Common Stock on the
Announcement Date or on the date on which the Interested Stockholder became an
Interested Stockholder (the "Determination Date"), whichever is higher. The
price paid for any share of Common Stock shall be the amount of cash plus the
Fair Market Value of any other consideration to be received therefor, determined
at the time of payment thereof.
(b) The aggregate amount of the cash and the Fair Market Value, as of the
date of the consummation of the Business Combination, of consideration other
than cash to be received in such Business Combination by holders of securities
of the Corporation other than Common Stock shall be at least equal to the higher
of (i) if applicable, the highest preferential amount to which the holders of
such securities are entitled in the event of any voluntary liquidation,
dissolution or winding up of the Corporation, (ii) the highest price paid for
any of such securities by any person who is an Interested Stockholder within the
two-year period immediately prior to the Announcement Date or in the transaction
in which such person became an Interested Stockholder, whichever price is
higher, (iii) the Fair Market Value of such securities on the Announcement Date
or the Determination Date, whichever is higher, or (iv) if such securities are
convertible into or exchangeable for shares of Common Stock, the amount per
share of such Common Stock determined pursuant to the foregoing paragraph (a)
reduced by any amount payable by the holders of such securities in accordance
with the terms of such securities, per share, upon such conversion or exchange,
multiplied by the total number of shares of Common Stock into which or for which
such securities are convertible or exchangeable.
(c) The consideration to be received by holders of a particular class of
outstanding Voting Stock (including Common Stock) shall be in cash or in the
same forms the Interested Stockholder has previously paid for shares of such
class of Voting Stock. If the Interested Stockholder has paid for shares of any
class of Voting Stock with varying forms of consideration, the form of
consideration for such class of Voting Stock shall be either cash or the form of
consideration used to acquire the largest number of shares of such class of
Voting Stock previously acquired by it.
(d) After such Interested Stockholder has become an Interested Stockholder
and prior to the consummation of such Business Combination: (i) there shall have
been (1) no reduction in the annual rate of dividends paid on the Common Stock
(except as necessary to reflect any subdivision of the Common Stock), except as
approved by a majority of the Continuing Directors, and (2) an increase in such
annual rate of dividends necessary to reflect any reclassification (including
any reverse stock split), recapitalization, reorganization or any similar
transaction which has the effect of reducing the number of outstanding shares of
the Common Stock, unless the failure so to increase such annual rate is approved
by a majority of the Continuing Directors; and (ii) such Interested Stockholder
shall have not become the
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beneficial owner of any additional shares of Voting Stock except as part of the
transaction which results in such Interested Stockholder becoming an Interested
Stockholder.
(e) After such Interested Stockholder has become an Interested
Stockholder, such Interested Stockholder shall not have received the benefit,
directly or indirectly (except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance or any tax credits
or other tax advantages provided by the Corporation, whether in anticipation of
or in connection with such Business Combination or otherwise.
(f) A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities Exchange Act
of 1934 and the rules and regulations thereunder (or any subsequent provisions
replacing such Act, rules or regulations) shall be mailed to all stockholders of
the Corporation at least 30 days prior to the consummation of such Business
Combination (whether or not such proxy or information statement is required to
be mailed pursuant to such Act or subsequent provisions).
Part 3. Certain Definitions
- ---------------------------
For the purposes of this Article Ninth:
3.1. A "person" shall mean any individual, firm, corporation, partnership,
trust or other entity.
3.2. "Interested Stockholder" shall mean any person (other than the
Corporation or any Subsidiary) who or which:
(a) is the beneficial owner, directly or indirectly, of more than 10%
of the combined voting power of the then outstanding Voting Stock; or
(b) is an Affiliate of the Corporation and at any time within the
two-year period immediately prior to the date in question was the beneficial
owner, directly or indirectly, of 10% or more of the combined voting power of
the then outstanding Voting Stock; or
(c) is an assignee of or has otherwise succeeded to any shares of
Voting Stock which were at any time within the two-year period immediately prior
to the date in question beneficially owned by any Interested Stockholder, if
such assignment or succession shall have occurred in the course of a transaction
or series of transactions not involving a public offering within the meaning of
the Securities Act of 1933.
3.3. A person shall be a "beneficial owner" of any Voting Stock:
(a) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
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(b) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately or only
after the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote or to direct the
vote pursuant to any agreement, arrangement or understanding; or
(c) which are beneficially owned, directly or indirectly, by any other
person with which such person or any of its Affiliates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Voting Stock.
3.4. For the purposes of determining whether a person is an Interested
Stockholder pursuant to Section 3.2, the number of shares of Voting Stock deemed
to be outstanding shall include shares deemed owned through application of
Section 3.3 but shall not include any other shares of Voting Stock which may be
issuable to other persons pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options, or
otherwise.
3.5. "Affiliate" or "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on January 1, 1984.
3.6. "Subsidiary" means any corporation of which more than a majority of
any class of equity security is owned, directly or indirectly, by the
Corporation; provided, however, that for purposes of the definition of
Interested Stockholder set forth in Section 3.2, the term "Subsidiary" shall
mean only a corporation of which a majority of each class of equity security is
owned by the Corporation, by a Subsidiary, or by the Corporation and one or more
Subsidiaries.
3.7. "Continuing Director" means any member of the Board of Directors of
the Corporation who is unaffiliated with, and not a nominee of, the Interested
Stockholder and was a member of the Board of Directors of the Corporation prior
to the time that the Interested Stockholder became an Interested Stockholder and
any successor of a Continuing Director who is unaffiliated with, and not a
nominee of, the Interested Stockholder and who is recommended to succeed a
Continuing Director by a majority of Continuing Directors then on the Board of
Directors of the Corporation.
3.8. "Disinterested Stockholder" means a holder of Voting Stock who is not
an Interested Stockholder or an Affiliate or Associate of an Interested
Stockholder and whose shares are not deemed owned by an Interested Stockholder
through application of Section 3.3.
3.9. "Fair Market Value" means: (a) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding the date in
question of a share of such stock on the Composite Tape for New York Stock
Exchange-Listed Stocks, or, if such stock is
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not quoted on the Composite Tape, on the New York Stock Exchange, or, if such
stock is not listed on such Exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934 on which such
stock is listed, or, if such stock is not listed on any such exchange, the
highest closing bid quotation with respect to a share of such stock during the
30-day period preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any system then in use,
or if no such quotations are available, the Fair Market Value on the date in
question of a share of such stock as determined by a majority of the Continuing
Directors in good faith; and (b) in the case of stock of any class of securities
not traded on any securities exchange or in the over-the-counter market or in
the case of property other than cash or stock, the Fair Market Value of such
securities or property on the date in question as determined by a majority of
the Continuing Directors in good faith. If the stock is paired for purposes of
trading with that of any other corporation, the Fair Market Value of the paired
stock shall be determined pursuant to the pairing or other agreement which
provides for the determination of the relative values of the stock of the
Corporation and the stock of such other corporation, after determining the Fair
Market Value of the paired stock as set forth above.
3.10. In the event of any Business Combination in which the Corporation
survives, the phrase "consideration to be received" as used in Sections 2.2(a),
(b) and (c) shall include the shares of Common Stock and/or the shares of any
other class of outstanding Voting Stock retained by the holders of such shares.
Part 4. Directors' Duty to Determine Certain Facts
- --------------------------------------------------
The majority of the Continuing Directors of the Corporation shall have the
power and duty to determine for the purpose of this Article Ninth, on the basis
of information known to them after reasonable inquiry, all facts necessary to
determine the applicability of the various provisions of this Article Ninth,
including (A) whether a person is an Interested Stockholder, (B) the number of
shares of Voting Stock beneficially owned by any person, (C) whether a person is
an Affiliate or Associate of another, (D) whether the requirements of Section
2.2 have been met with respect to any Business Combination, and (E) whether the
assets which are the subject of any Business Combination have, or the
consideration to be received for the issuance or transfer of securities by the
Corporation or any Subsidiary in any Business Combination has, an aggregate Fair
Market Value of $5,000,000 or more; and the good faith determination of a
majority of the Continuing Directors shall be conclusive and binding for all
purposes of this Article Ninth.
Part 5. No Effect on Fiduciary Obligations of Interested Stockholders
- ---------------------------------------------------------------------
Nothing contained in this Article Ninth shall be construed to relieve any
Interested Stockholder from any fiduciary obligation imposed by law.
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Part 6. Amendment, Repeal, Inconsistent Provisions
- --------------------------------------------------
Notwithstanding any other provisions of law or of this Certificate of
Incorporation or the by-laws of the Corporation which might otherwise permit a
lesser vote or no vote, but in addition to any affirmative vote of the holders
of any particular class or series of securities which may be required by law or
by this Certificate of Incorporation, any proposal to amend or repeal, or adopt
any provisions inconsistent with, this Article Ninth of this Certificate of
Incorporation shall require for approval the affirmative vote of at least (a)
80% of the combined voting power of the then outstanding Shares of Voting Stock
and (b) a majority of the combined voting power of the then outstanding shares
of Voting Stock held by persons who are Disinterested Stockholders, provided
that the majority vote requirement of this clause (b) shall not be applicable if
the proposal is approved by the affirmative vote of not less than 90% of the
combined voting power of the then outstanding shares of Voting Stock.
TENTH:
(a) The number of directors shall be as provided in the by-laws. The
Board of Directors of the Corporation shall be divided into three classes,
designated Class I, Class II and Class III, such classes to be as nearly equal
in number as possible and to have the number provided in the by-laws. At the
annual meeting of stockholders in 1986, directors of Class I shall be elected to
hold office for a term expiring at the next succeeding annual meeting, directors
of Class II shall be elected to hold office for a term expiring at the second
succeeding annual meeting, and directors of Class III shall be elected to hold
office for a term expiring at the third succeeding annual meeting. Thereafter at
each annual meeting of stockholders, directors shall be chosen for a term of
three years to succeed those whose terms then expire and shall hold office until
the third following annual meeting of stockholders and until the election of
their respective successors. Any vacancy on the Board of Directors of the
Corporation, whether arising through death, resignation or removal of a director
or through an increase in the number of directors of any class, shall be filled
by a majority vote of all the remaining directors. The term of office of any
director elected to fill such a vacancy shall expire at the expiration of the
term of office of directors of the class in which the vacancy occurred.
Notwithstanding any other provision of this Article, and except as otherwise
required by law, whenever the holders of any one or more series of Preferred
Stock or other securities of the Corporation shall have the right, voting
separately as a class, to elect one or more directors of the Corporation, the
term of office, the filling of vacancies and other features of such
directorships shall be governed by the terms of this Certificate of
Incorporation applicable thereto, and unless the terms of this Certificate of
Incorporation expressly provide otherwise, such directorships shall be in
addition to the number of directors provided in the by-laws and such directors
shall not be classified pursuant to this Article.
(b) Any action required or permitted to be taken by holders of stock of
the Corporation must be taken at a meeting of such holders and may not be taken
by consent in writing. The by-laws of the Corporation may be amended by the
stockholders only by the affirmative vote of at least 80% of the voting power of
the Corporation. Notwithstanding any
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other provision of law or of this Certificate of Incorporation or the by-laws of
the Corporation which might otherwise permit a lesser vote or no vote, but in
addition to any affirmative vote of the holders of any particular class or
series of securities which may be required by law or by this Certificate of
Incorporation, any proposal to amend or repeal, or adopt any provisions
inconsistent with, this Article Tenth shall require for approval the affirmative
vote of at least 80% of the voting power of the Corporation.
ELEVENTH:
The Board of Directors of the Corporation shall base the response of this
Corporation to any proposed Business Combination on the evaluation by the Board
of Directors of the Corporation of what is in the best interest of this
Corporation. In evaluating what is in the best interest of this Corporation, the
Board of Directors of the Corporation shall consider:
(a) The best interest of the shareholders. For this purpose, the Board
of Directors of the Corporation shall consider among other factors, not only the
consideration offered in the proposed Business Combination in relation to the
then current market price of this Corporation's stock, but also in relation to
the then current value of this Corporation in a freely negotiated transaction
and in relation to the estimate by the Board of Directors of the future value of
this Corporation as an independent entity; and
(b) Such other factors as the Board of Directors of the Corporation
determines to be relevant, including, among other factors, the social, legal and
economic effects on the communities in which this Corporation and its
subsidiaries operate and are located.
TWELFTH:
To the fullest extent permitted by the General Corporation Law of the State
of Delaware as the same exists or may hereafter be amended, a director of the
Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as director.
Any repeal or modification of this Article shall not result in any
liability for a director with respect to any action or omission occurring prior
to such repeal or modification.
THIRTEENTH:
Section 13.1. Restrictions on Ownership and Transfer of Equity Stock.
-------------------------------------------------------
(a) Definitions. For purposes of this Article Thirteenth and Article
Fourteenth the following terms shall have the meanings set forth below:
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"Beneficial Ownership" shall mean, with respect to any Person, ownership of
shares of Equity Stock equal to the sum of (i) the shares of Equity Stock
directly or indirectly owned by such Person, (ii) the number of shares of Equity
Stock treated as owned directly or indirectly by such Person through the
application of the constructive ownership rules of Section 544 of the Internal
Revenue Code of 1986, as amended (the "Code"), as modified by Section
856(h)(1)(B) of the Code as if the Corporation were a real estate investment
trust (a "REIT") as defined in the Code, and (iii) the number of shares of
Equity Stock which such Person is deemed to beneficially own pursuant to Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); provided, however, that for the purposes of calculating the foregoing, no
share shall be counted more than once. The terms "Beneficial Owner,"
"Beneficially Owns" and "Beneficially Owned" shall have correlative meanings.
"Beneficiary" shall mean, with respect to any Trust, one or more
organizations described in each of Section 170(b)(1)(A) (other than clauses
(vii) and (viii) thereof) and Section 170(c)(2) of the Code that are named by
the Corporation as the beneficiary or beneficiaries of such Trust, in accordance
with the provisions of Section 13.2(d).
"Common Stock" shall mean the common stock, par value $.10 per share of the
Corporation.
"Constructive Ownership" shall mean ownership of shares of Equity Stock by
a Person who is or would be treated as a direct or indirect owner of such shares
of Equity Stock through the application of Section 318 of the Code, as modified
by Section 856(d)(5) of the Code. The terms "Constructive Owner,"
"Constructively Owns" and "Constructively Owned" shall have correlative
meanings.
"Equity Stock" shall mean the Common Stock, par value $.10 per share, and
the Preferred Stock, par value $.10 per share of the Corporation and Realty.
"Look-Through Entity" shall mean a Person that is either (i) a trust
described in Section 401(a) of the Code and exempt from tax under Section 501(a)
of the Code as modified by Section 856(h)(3) of the Code as if the Corporation
were a REIT or (ii) registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, with respect to a class or
series of Equity Stock, 9.8% of the number of outstanding shares of such Equity
Stock.
"Market Price" on any date shall mean the average of the Closing Price for
the five consecutive Trading Days ending on such date. The "Closing Price" on
any date shall mean the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Equity Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Equity Stock are listed or admitted to trading or, if the shares of Equity Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted
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price, or if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the Nasdaq Stock Market, Inc. or, if
such system is no longer in use, the principal other automated quotation system
that may then be in use or, if the shares of Equity Stock are not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker selected by the Board of Directors of the
Corporation making a market in the shares of Equity Stock. In the case of Equity
Stock that is paired, "Market Price" shall mean the "Market Price" for paired
shares multiplied by a fraction (expressed as a percentage) determined by
dividing the value for such Equity Stock most recently determined under Section
14.2(c) by the value of a paired share most recently determined under Section
14.2(c) (the "Valuation Percentage").
"Non-Transfer Event" shall mean an event (other than a purported Transfer)
that would (a) cause any Person (other than a Look-Through Entity) to
Beneficially Own or Constructively Own shares of Equity Stock in excess of the
Ownership Limit, (b) cause any Look-Through Entity to Beneficially Own or
Constructively Own shares of Equity Stock in excess of the Look-Through
Ownership Limit, (c) result in the capital stock of the Corporation being
beneficially owned (within the meaning of Section 856(a)(5) of the Code as if
the Corporation were a REIT) by fewer than 100 persons within the meaning of
Section 856(a)(5) of the Code as if the Corporation were a REIT, (d) result in
the Corporation being "closely held" within the meaning of Section 856(h) of the
Code as if the Corporation were a REIT, or (e) cause the Corporation to
Constructively Own 10% or more of the ownership interest in a tenant of the
Corporation's or a Subsidiary's real property within the meaning of Section
856(d)(2)(B) of the Code as if the Corporation were a REIT. Non-Transfer Events
include but are not limited to (i) the granting of any option or entering into
any agreement for the sale, transfer or other disposition of shares of Equity
Stock or (ii) the sale, transfer, assignment or other disposition of interests
in any Person or of any securities or rights convertible into or exchangeable
for shares of Equity Stock that results in changes in Beneficial Ownership or
Constructive Ownership of shares of Equity Stock.
"Ownership Limit" shall mean, with respect to any class or series of Equity
Stock, 9.25% of the number of outstanding shares of such class or series of
Equity Stock. For purposes of computing the percentage of shares of any class or
series of Equity Stock of the Corporation that is Beneficially Owned by any
Person, any shares of Equity Stock of the Corporation which are deemed to be
Beneficially Owned by such Person pursuant to Rule 13d-3 of the Exchange Act
but which are not outstanding shall be deemed to be outstanding.
"Permitted Transferee" shall mean any Person designated as a Permitted
Transferee in accordance with the provisions of Section 13.2(h).
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"Person" shall mean (a) an individual or any corporation, partnership,
estate, trust, association, private foundation, joint stock company, limited
liability company or any other entity and (b) a "group" as that term is defined
for purposes of Rule 13d-5 of the Exchange Act.
"Prohibited Owner" shall mean, with respect to any purported Transfer or
Non-Transfer Event, any Person who is prevented from being or becoming the
owner of record title to shares of Equity Stock by the provisions of Section
13.2(a).
"Realty" shall mean Meditrust Corporation, a Delaware corporation.
"Realty Common Stock" shall mean the common stock, par value $.10 per share
of Realty.
"Restriction Termination Date" shall mean the first day on which the Board
of Directors of Realty determines that it is no longer in the best interests of
Realty to attempt to, or continue to, qualify under the Code as a REIT.
"Trading Day" shall mean a day on which the principal national securities
exchange on which shares of Equity Stock are listed or admitted to trading is
open for the transaction of business or, if shares of Equity Stock are not
listed or admitted to trading on any national securities exchange, any day other
than a Saturday, a Sunday or a day on which banking institutions in the State of
New York are authorized or obligated by law or executive order to close.
"Transfer" (as a noun) shall mean any sale, transfer, gift, assignment,
devise or other disposition of shares of Equity Stock, whether voluntary or
involuntary, whether of record, constructively or beneficially and whether by
operation of law or otherwise. "Transfer" (as a verb) shall have the correlative
meaning.
"Trust" shall mean any separate trust created and administered in
accordance with the terms of Section 13.2, for the exclusive benefit of any
Beneficiary.
"Trustee" shall mean any Person or entity unaffiliated with both the
Corporation and any Prohibited Owner designated by the Corporation to act as
trustee of any Trust, or any successor trustee thereof. The Trustee shall be
designated by the Corporation and Realty in accordance with Article Fourteenth.
(b) Restriction on Ownership and Transfer.
--------------------------------------
(i) Except as provided in Section 13.1(d), until the Restriction
Termination Date, (i) no Person (other than a Look-Through Entity) shall
Beneficially Own or Constructively Own outstanding shares of Equity Stock in
excess of the Ownership Limit and no Look-Through Entity shall Beneficially Own
or Constructively Own outstanding shares of Equity Stock in excess of the
Look-Through Ownership Limit, (ii) any Transfer (whether or not the result of a
transaction entered into through the facilities of the New York Stock Exchange)
that, if effective, would result in any Person (other than a Look-Through
Entity)
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Beneficially Owning or Constructively Owning shares of Equity Stock in excess of
the Ownership Limit shall be void ab initio as to the Transfer of that number of
shares of Equity Stock which would be otherwise Beneficially Owned or
Constructively Owned by such Person in excess of the Ownership Limit and the
intended transferee shall acquire no rights in such shares of Equity Stock, and
(iii) any Transfer (whether or not the result of a transaction entered into
through the facilities of the New York Stock Exchange) that, if effective, would
result in any Look-Through Entity Beneficially Owning or Constructively Owning
shares of Equity Stock in excess of the Look-Through Ownership Limit shall be
void ab initio as to the Transfer of that number of shares of Equity Stock which
would be otherwise Beneficially Owned or Constructively Owned by such
Look-Through Entity in excess of the Look-Through Ownership Limit and the
intended transferee shall acquire no rights in such shares of Equity Stock.
(ii) Until the Restriction Termination Date, any Transfer (whether or
not the result of a transaction entered into through the facilities of the New
York Stock Exchange) that, if effective, would result in the Corporation being
"closely held" within the meaning of Section 856(h) of the Code if the
Corporation were a REIT shall be void ab initio as to the Transfer of that
number of shares of Equity Stock that would cause the Corporation to be "closely
held" within the meaning of Section 856(h) of the Code as if the Corporation
were a REIT, and the intended transferee shall acquire no rights in such shares
of Equity Stock.
(iii) Until the Restriction Termination Date, any Transfer (whether or
not the result of a transaction entered into through the facilities of the New
York Stock Exchange) of shares of Equity Stock that, if effective, would cause
the Corporation to Constructively Own 10% or more of the ownership interests in
a tenant of the real property of the Corporation or any direct or indirect
subsidiary (whether a corporation, partnership, limited liability company or
other entity) of the Corporation (a "Subsidiary"), within the meaning of Section
856(d)(2)(B) of the Code as if the Corporation were a REIT, shall be void ab
initio as to the Transfer of that number of shares of Equity Stock that would
cause the Corporation to Constructively Own 10% or more of the ownership
interests in a tenant of the real property of the Corporation or a Subsidiary
within the meaning of Section 856(d)(2)(B) of the Code as if the Corporation
were a REIT, and the intended transferee shall acquire no rights in such shares
of Equity Stock.
(iv) Until the Restriction Termination Date, any Transfer (whether or
not the result of a transaction entered into through the facilities of the New
York Stock Exchange) that, if effective, would result in the shares of capital
stock of the Corporation being beneficially owned (within the meaning of Section
856(a)(5) of the Code as if the Corporation were a REIT) by fewer than 100
persons within the meaning of Section 856(a)(5) of the Code as if the
Corporation were a REIT shall be void ab initio and the intended transferee
shall acquire no rights in such shares of Equity Stock.
(c) Owners Required to Provide Information. Until the Restriction
Termination Date:
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(i) Every Beneficial Owner or Constructive Owner of more than 5%, or
such lower percentages as required pursuant to regulations under the Code as if
the Corporation were a REIT, of the outstanding shares of any class or series of
Equity Stock of the Corporation shall, within 30 days after January 1 of each
year, provide to the Corporation a written statement or affidavit stating the
name and address of such Beneficial Owner or Constructive Owner, the number of
shares of Equity Stock Beneficially Owned or Constructively Owned, and a
description of how such shares are held. Each such Beneficial Owner or
Constructive Owner shall provide to the Corporation such additional information
as the Corporation may request to ensure compliance with the restrictions in
this Section 13.1.
(ii) Each Person who is a Beneficial Owner or Constructive Owner of
shares of Equity Stock and each Person (including the stockholder of record) who
is holding shares of Equity Stock for a Beneficial Owner or Constructive Owner
shall provide to the Corporation a written statement or affidavit stating such
information as the Corporation may request in order to determine the
Corporation's status as a REIT (as if the Corporation were a REIT) and to ensure
compliance with the Ownership Limit or the Look-Through Ownership Limit, as the
case may be.
(d) Exception. The Board of Directors of the Corporation, upon receipt of a
ruling from the Internal Revenue Service or an opinion of counsel in each case
to the effect that the restrictions contained in subsections (b)(ii) through
(iv) of this Section 13.1 would not be violated, may exempt a Person from the
Ownership Limit or Look-Through Ownership Limit, provided that (A) the Board of
Directors of the Corporation obtains such representations and undertakings from
such Person as are reasonably necessary to ascertain that no Person's Beneficial
Ownership or Constructive Ownership of shares of Equity Stock will (i) result in
the capital stock of the Corporation being beneficially owned (within the
meaning of Section 856(a)(5) of the Code as if the Corporation were a REIT) by
fewer than 100 persons within the meaning of Section 856(a)(5) of the Code as if
the Corporation were a REIT, (ii) result in the Corporation being "closely held"
within the meaning of Section 856(h) of the Code as if the Corporation were a
REIT or (iii) cause the Corporation to Constructively Own 10% or more of the
ownership interests in the real property of a tenant of the Corporation or a
Subsidiary within the meaning of Section 856(d)(2)(B) of the Code as if the
Corporation were a REIT and (B) such Person agrees in writing that any violation
or attempted violation of the Ownership Limit or Look-Through Ownership Limit
will result in the conversion of such shares into shares of Excess Stock
pursuant to Section 13.2(a).
(e) New York Stock Exchange Transactions. Notwithstanding any provision
contained herein to the contrary, nothing in this Certificate of Incorporation
shall preclude the settlement of any transaction entered into through the
facilities of the New York Stock Exchange.
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Section 13.2. Excess Stock.
-------------
(a) Conversion into Excess Stock.
---------------------------------
(i) If, notwithstanding the other provisions contained in this Article
Thirteenth, prior to the Restriction Termination Date, there is a purported
Transfer or Non-Transfer Event such that any Person (other than a Look-Through
Entity) would either Beneficially Own or Constructively Own shares of Equity
Stock in excess of the Ownership Limit or such that any Person that is a
Look-Through Entity would either Beneficially Own or Constructively Own shares
of Equity Stock in excess of the Look-Through Ownership Limit, then, (i) except
as otherwise provided in Section 13.1(d), the purported transferee shall be
deemed to be a Prohibited Owner and shall acquire no right or interest (or, in
the case of a Non-Transfer Event, the Person holding record title to the shares
of Equity Stock Beneficially Owned or Constructively Owned by such Beneficial
Owner or Constructive Owner, shall cease to own any right or interest) in such
number of shares of Equity Stock which would cause such Beneficial Owner or
Constructive Owner to Beneficially Own or Constructively Own shares of Equity
Stock in excess of the Ownership Limit or the Look-Through Ownership Limit, as
the case may be, (ii) such number of shares of Equity Stock in excess of the
Ownership Limit or the Look-Through Ownership Limit, as the case may be,
(rounded up to the nearest whole share) shall be automatically converted into an
equal number of shares of Excess Stock and transferred to a Trust in accordance
with Section 13.2(d) and (iii) the Prohibited Owner shall submit such number of
shares of Equity Stock to the Corporation for registration in the name of the
Trustee of the Trust. Such conversion into Excess Stock and transfer to a Trust
shall be effective as of the close of trading on the Trading Day prior to the
date of the Transfer or Non- Transfer Event, as the case may be.
(ii) If, notwithstanding the other provisions contained in this Article
Thirteenth, prior to the Restriction Termination Date, there is a purported
Transfer or Non-Transfer Event that, if effective, would (i) result in the
capital stock of the Corporation being beneficially owned (within the meaning of
Section 856(a)(5) of the Code as if the Corporation were a REIT) by fewer than
100 persons within the meaning of Section 856(a)(5) of the Code as if the
Corporation were a REIT, (ii) result in the Corporation being "closely held"
within the meaning of Section 856(h) of the Code as if the Corporation were a
REIT or (iii) cause the Corporation to Constructively Own 10% or more of the
ownership interest in a tenant of the Corporation's or a Subsidiary's real
property within the meaning of Section 856(d)(2)(B) of the Code as if the
Corporation were a REIT, then (x) the purported transferee shall be deemed to be
a Prohibited Owner and shall acquire no right or interest (or, in the case of a
Non-Transfer Event, the Person holding record title of the shares of Equity
Stock with respect to which such Non-Transfer Event occurred, shall be deemed to
be a Prohibited Owner and shall cease to own any right or interest) in such
number of shares of Equity Stock, the ownership of which by such purported
transferee or record holder would (A) result in the shares of capital stock of
the Corporation being beneficially owned (within the meaning of Section
856(a)(5) of the Code as if the Corporation were a REIT) by fewer than 100
persons within the meaning of Section 856(a)(5) of the Code as if the
Corporation were a REIT, (B) result in the Corporation being
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"closely held" within the meaning of Section 856(h) of the Code as if the
Corporation were a REIT or (C) cause the Corporation to Constructively Own 10%
or more of the ownership interests in a tenant of the Corporation's or a
Subsidiary's real property within the meaning of Section 856(d)(2)(B) of the
Code as if the Corporation were a REIT, (y) such number of shares of Equity
Stock (rounded up to the nearest whole share) shall be automatically converted
into an equal number of shares of Excess Stock and transferred to a Trust in
accordance with Section 13.2(d) and (z) the Prohibited Owner shall submit such
number of shares of Equity Stock to the Corporation for registration in the name
of the Trustee of the Trust. Such conversion into Excess Stock and transfer to a
Trust shall be effective as of the close of trading on the Trading Day prior to
the date of the Transfer or Non-Transfer Event, as the case may be.
(iii) Upon the occurrence of such a conversion of shares of any class
or series of Equity Stock into an equal number of shares of Excess Stock, such
shares of Equity Stock shall be automatically retired and canceled, without any
action required by the Board of Directors of the Corporation, and shall
thereupon be restored to the status of authorized but unissued shares of the
particular class or series of Equity Stock from which such Excess Stock was
converted and may be reissued by the Corporation as that particular class or
series of Equity Stock.
(iv) Upon the conversion into Excess Shares (pursuant to the
Certificate of Incorporation of Realty) of any shares of any class or series of
Realty stock that are paired with a class or series of shares of Equity Stock,
pursuant to Article Fourteenth, such shares of Equity Stock shall likewise be
converted into an equal number of shares of Excess Stock and be paired with such
converted shares of Realty, pursuant to Article Fourteenth.
(b) Remedies for Breach. If the Corporation, or its designees, shall at any
time determine in good faith that a Transfer has taken place in violation of
Section 13.1(b) or that a Person intends to acquire or has attempted to acquire
Beneficial Ownership or Constructive Ownership of any shares of Equity Stock in
violation of Section 13.1(b), the Corporation shall take such action as it deems
advisable to refuse to give effect to or to prevent such Transfer or
acquisition, including, but not limited to, refusing to give effect to such
Transfer on the stock transfer books of the Corporation or instituting
proceedings to enjoin such Transfer or acquisition.
(c) Notice of Restricted Transfer. Any Person who acquires or attempts to
acquire shares of Equity Stock in violation of Section 13.1(b), or any Person
who owns shares of Equity Stock that were converted into shares of Excess Stock
and transferred to a Trust pursuant to subsections (a) and (d) of this Section
13.2, shall immediately give written notice to the Corporation of such event and
shall provide to the Corporation such other information as the Corporation may
request in order to determine the effect, if any, of such Transfer or Non-
Transfer Event, as the case may be, on the Corporation's status as a REIT
(determined as if the Corporation were a REIT).
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<PAGE>
(d) Ownership in Trust. Upon any Transfer or Non-Transfer Event that
results in Excess Stock pursuant to Section 13.2(a), such Excess Stock shall be
automatically transferred to a Trust to be held for the exclusive benefit of the
Beneficiary. The Corporation and Realty shall name a Beneficiary for each Trust.
Any conversion of shares of Equity Stock into shares of Excess Stock and
transfer to a Trust shall be effective as of the close of trading on the Trading
Day prior to the date of the Transfer or Non-Transfer Event that results in the
conversion. Shares of Excess Stock so held in trust shall remain issued and
outstanding shares of stock of the Corporation.
(e) Dividend Rights. Each share of Excess Stock shall be entitled to the
same dividends and distributions (as to both timing and amount) as may be
declared by the Board of Directors of the Corporation as shares of the class or
series of Equity Stock from which such Excess Stock was converted. The Trustee,
as record holder of the shares of Excess Stock, shall be entitled to receive all
dividends and distributions and shall hold all such dividends or distributions
in trust for the benefit of the Beneficiary. The Prohibited Owner with respect
to such shares of Excess Stock shall repay to the Trust the amount of any
dividends or distributions received by it (i) that are attributable to any
shares of Equity Stock that have been converted into shares of Excess Stock and
(ii) the record date of which was on or after the date that such shares were
converted into shares of Excess Stock. The Corporation shall take all measures
that it determines reasonably necessary to recover the amount of any such
dividend or distribution paid to a Prohibited Owner, including, if necessary,
withholding any portion of future dividends or distributions payable on shares
of Equity Stock Beneficially Owned or Constructively Owned by the Person who,
but for the provisions of this Article Thirteenth, would Constructively Own or
Beneficially Own the shares of Equity Stock that were converted into shares of
Excess Stock; and, as soon as reasonably practicable following the Corporation's
receipt or withholding thereof, shall pay over to the Trust for the benefit of
the Beneficiary the dividends so received or withheld, as the case may be.
(f) Rights upon Liquidation. In the event of any voluntary or involuntary
liquidation of, or winding up of, or any distribution of the assets of, the
Corporation, each holder of shares of Excess Stock shall be entitled to receive,
ratably with each other holder of shares of Equity Stock of the same class or
series from which the Equity Stock was converted, that portion of the assets of
the Corporation that is available for distribution to the holders of such class
or series of Equity Stock. The Trust shall distribute to the Prohibited Owner
the amounts received upon such liquidation, dissolution, or winding up, or
distribution; provided, however, that the Prohibited Owner shall not be entitled
to receive amounts in excess of, in the case of a purported Transfer in which
the Prohibited Owner gave value for shares of Equity Stock and which Transfer
resulted in the conversion of the shares into shares of Excess Stock, the price
per share, if any, such Prohibited Owner paid for the shares of Equity Stock
(which, in the case of Equity Stock that is paired, shall equal the price per
paired share multiplied by the most recent Valuation Percentage) and, in the
case of a Non-Transfer Event or Transfer in which the Prohibited Owner did not
give value for such shares (e.g., if the shares were received through a gift or
devise) and which Non-Transfer Event or Transfer, as the case may be, resulted
in the conversion of the shares into shares of Excess Stock, the price per share
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equal to the Market Price on the date of such Non-Transfer Event or Transfer.
Any remaining amount in such Trust shall be distributed to the Beneficiary.
(g) Voting Rights. Each share of Excess Stock shall entitle the holder to
the number of votes the holder would have, if such share of Excess Stock was a
share of Equity Stock of the same class or series from which such Excess Stock
was converted, on all matters submitted to a vote at any meeting of
stockholders. The holders of shares of Excess Stock converted from the same
class or series of Equity Stock shall vote together with the holders of such
Equity Stock as a single class on all such matters. The Trustee, as record
holder of the Excess Stock, shall be entitled to vote all shares of Excess
Stock. Any vote by a Prohibited Owner as a purported holder of shares of Equity
Stock prior to the discovery by the Corporation that the shares of Equity Stock
have been converted into shares of Excess Stock shall, subject to applicable
law, be rescinded and shall be void ab initio with respect to such shares of
Excess Stock, and the Prohibited Owner shall be deemed to have given, as of the
close of trading on the Trading Day prior to the date of the purported Transfer
or Non-Transfer Event that results in the conversion of the shares of Equity
Stock into shares of Excess Stock and the transfer of such shares to a Trust
pursuant to subsections (a) and (d) of this Section 13.2, an irrevocable proxy
to the Trustee to vote the shares of Excess Stock in the manner in which the
Trustee, in its sole and absolute discretion, desires.
(h) Designation of Permitted Transferee.
----------------------------------------
(i) The Trustee shall have the exclusive and absolute right to
designate one or more Permitted Transferees of any and all shares of Excess
Stock if the Corporation fails to exercise its option with respect to such
shares pursuant to Section 13.2(j) hereof within the time period set forth
therein. As soon as practicable, but in an orderly fashion so as not to
materially adversely affect the Market Price of the shares of Excess Stock, the
Trustee shall designate any one or more Persons as Permitted Transferees;
provided, however, that (i) the Permitted Transferee so designated purchases for
valuable consideration (whether in a public or private sale) the shares of
Excess Stock (which, in the case of paired Excess Stock, shall be determined
based on the Valuation Percentage) and (ii) the Permitted Transferee so
designated may acquire such shares of Excess Stock without violating any of the
restrictions set forth in Section 13.1(b) and without such acquisition resulting
in the conversion of the shares of Equity Stock so acquired into shares of
Excess Stock and the transfer of such shares to a Trust pursuant to subsections
(a) and (d) of this Section 13.2.
(ii) Upon the designation by the Trustee of a Permitted Transferee in
accordance with the provisions of this Section 13.2(h), the Trustee shall cause
to be transferred to the Permitted Transferee that number of shares of Excess
Stock acquired by the Permitted Transferee. Upon such transfer of the shares of
Excess Stock to the Permitted Transferee, such shares of Excess Stock shall be
automatically converted into an equal number of shares of Equity Stock of the
same class and series from which such Excess Stock was converted. Upon the
occurrence of such a conversion of shares of Excess Stock into an equal number
of shares of Equity Stock, such shares of Excess Stock shall be automatically
retired and canceled,
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without any action required by the Board of Directors of the Corporation, and
shall thereupon be restored to the status of authorized but unissued shares of
Excess Stock and may be reissued by the Corporation as Excess Stock.
(iii) The Trustee shall (i) cause to be recorded on the stock transfer
books of the Corporation that the Permitted Transferee is the holder of record
of such number of shares of Equity Stock, and (ii) distribute to the Beneficiary
any and all amounts held with respect to the shares of Excess Stock after making
payment to the Prohibited Owner pursuant to Section 13.2(i).
(iv) If the Transfer of shares of Excess Stock to a purported Permitted
Transferee shall violate any of the transfer restrictions set forth in Section
13.1(b), such Transfer shall be void ab initio as to that number of shares of
Excess Stock that cause the violation of any such restriction when such shares
are converted into shares of Equity Stock (as described in subsection (h)(ii)
above) and the purported Permitted Transferee shall be deemed to be a Prohibited
Owner and shall acquire no rights in such shares of Excess Stock or Equity
Stock. Such shares of Equity Stock shall be automatically reconverted into
Excess Stock and transferred to the Trust from which they were originally
Transferred. Such conversion and transfer to the Trust shall be effective as of
the close of trading on the Trading Day prior to the date of the Transfer to the
purported Permitted Transferee and the provisions of this Article Thirteenth
shall apply to such shares, including, without limitation, the provisions of
subsections (h) through (j) of this Section 13.2 with respect to any future
Transfer of such shares by the Trust.
(i) Compensation to Record Holder of Shares of Equity Stock that are
Converted into Shares of Excess Stock. Any Prohibited Owner shall be entitled
(following discovery of the shares of Excess Stock and subsequent designation of
the Permitted Transferee in accordance with Section 13.2(h) or following the
acceptance of the offer to purchase such shares in accordance with Section
13.2(j) to receive from the Trustee following the sale or other disposition of
such shares of Excess Stock the lesser of (i)(a) in the case of a purported
Transfer in which the Prohibited Owner gave value for shares of Equity Stock and
which Transfer resulted in the conversion of such shares into shares of Excess
Stock, the price per share, if any, such Prohibited Owner paid for the shares of
Equity Stock (which, in the case of paired Excess Stock, shall be determined
based on the Valuation Percentage) and (b) in the case of a Non-Transfer Event
or Transfer in which the Prohibited Owner did not give value for such shares
(e.g., if the shares were received through a gift or devise) and which
Non-Transfer Event or Transfer, as the case may be, resulted in the conversion
of such shares into shares of Excess Stock, the price per share equal to the
Market Price on the date of such Non-Transfer Event or Transfer or (ii) the
price per share (which, in the case of paired Excess Stock, shall be determined
based on the Valuation Percentage) received by the Trustee from the sale or
other disposition of such shares of Excess Stock in accordance with this Section
13.2(i) or Section 13.2(j). Any amounts received by the Trustee in respect of
such shares of Excess Stock and in excess of such amounts to be paid the
Prohibited Owner pursuant to this Section 13.2(i) shall be distributed to the
Beneficiary in accordance with the provisions of Section
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13.2(h). Each Beneficiary and Prohibited Owner shall waive any and all claims
that it may have against the Trustee and the Trust arising out of the
disposition of shares of Excess Stock, except for claims arising out of the
gross negligence or willful misconduct of, or any failure to make payments in
accordance with this Section 13.2 by, such Trustee or the Corporation.
(j) Purchase Right in Excess Stock. Shares of Excess Stock shall be deemed
to have been offered for sale to the Corporation or its designee, at a price per
share equal to the lesser of (i) the price per share (which, in the case of
paired Excess Stock, shall be determined based on the Valuation Percentage) in
the transaction that created such shares of Excess Stock (or, in the case of
devise, gift or Non-Transfer Event, the Market Price at the time of such devise,
gift or Non-Transfer Event) or (ii) the Market Price on the date the
Corporation, or its designee, accepts such offer. The Corporation shall have the
right to accept such offer for a period of 90 days following the later of (a)
the date of the Non-Transfer Event or purported Transfer which results in such
shares of Excess Stock or (b) the date on which the Corporation determines in
good faith that a Transfer or Non-Transfer Event resulting in shares of Excess
Stock previously has occurred, if the Corporation does not receive a notice of
such Transfer or Non-Transfer Event pursuant to Section 13.2(c).
Section 13.3. Remedies Not Limited. Nothing contained in this Article
Thirteenth shall limit the authority of the Corporation to take such other
action as it deems necessary or advisable to protect the Corporation and the
interests of its stockholders by preservation of the Realty's status as a REIT
and to ensure compliance with the requirements of Article Fourteenth and Section
13.1.
Section 13.4. Ambiguity. In the case of an ambiguity in the application of
any of the provisions of this Article Thirteenth, including any definition
contained in Section 13.1(a), the Board of Directors of the Corporation shall
have the power to determine the application of the provisions of this Article
Thirteenth with respect to any situation based on the facts known to it.
Section 13.5. Legend. Each certificate for shares of Equity Stock shall
bear the following legend:
"The shares of Meditrust Corporation and Meditrust Operating Company
represented by this combined certificate are subject to restrictions in the
respective Certificates of Incorporation of each company which prohibit (a) any
Person (other than a Look-Through Entity) (as such terms are defined in the
respective Certificates of Incorporation of each company) from Beneficially
Owning or Constructively Owning (as these terms are defined in the respective
Certificates of Incorporation of each company) in excess of 9.25% of the number
of outstanding shares of any class or series of Equity Stock (as that term is
defined in the respective Certificates of Incorporation of each company), (b)
any Look-Through Entity from Beneficially Owning or Constructively Owning in
excess of 9.8% of the number of outstanding shares of any class or series of
Equity Stock, (c) any Person from acquiring or maintaining any ownership
interest in the stock of either company that is inconsistent with (i)
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the requirements of the Internal Revenue Code of 1986, as amended, pertaining to
real estate investment trusts or (ii) Article Thirteenth of the respective
Certificates of Incorporation of each company and (d) any transfer of shares of
any class or series of Equity Stock of either company that are paired pursuant
to Article Fourteenth of the respective Certificates of Incorporation of each
company, except in combination with an equal number of shares of the other
company in accordance with the respective Certificates of Incorporation of each
company, copies of which are on file with the transfer agent named on the face
hereof, and the holder of this certificate by his acceptance hereof consents to
be bound by such restrictions.
Meditrust Corporation and Meditrust Operating Company will furnish without
charge to each stockholder who so requests a copy of the relevant provisions of
the respective Certificates of Incorporation of each company, and a copy of the
provisions setting forth the designations, preferences, privileges and rights of
each class of stock or series thereof that each company is authorized to issue
and the qualifications, limitations and restrictions of such preferences and/or
rights. Any such request may be addressed to the Secretary of either company or
to the transfer agent named on the face hereof."
Section 13.6. Severability. Each provision of this Article Thirteenth shall
be severable and an adverse determination as to any such provision shall be in
no way affect the validity of any other provision.
FOURTEENTH:
Section 14.1 Transfer of Shares. Until this Article Fourteenth shall have
been terminated in the manner herein provided:
(a) Except as provided herein, no shares of Common Stock shall be
transferable, and they shall not be transferred on the books of the Corporation,
unless (i) a simultaneous transfer is made by the same transferor to the same
transferee, or (ii) such transferor has previously arranged with Realty for the
transfer to the transferee, of the same number of shares of Realty Common Stock,
except that the Corporation may transfer Common Stock acquired by it from Realty
to a person to whom Realty simultaneously issues the same number of Common
Stock.
(b) Each certificate evidencing ownership of shares of Realty Common
Stock shall be deemed to evidence, in addition, the same number of shares of
Common Stock.
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(c) Notwithstanding the foregoing, any shares of Common Stock issued
after the date of the filing of this Certificate, which are issued on an
unpaired basis by the Corporation pursuant to the terms of Section 14.7 of this
Certificate, may be transferred without compliance with Section 14.1(a) and may
be evidenced solely by a certificate which is not deemed to evidence a like
number of shares of Realty Common Stock as required by Section 14.1(b).
Section 14.2 Issuance of Shares. Until such time as the pairing of the
outstanding shares of Common Stock and the outstanding shares of Realty Common
Stock in accordance with this Article Fourteenth (the "Pairing" and each paired
share a "Paired Share") shall have been terminated in the manner herein
provided:
(a) Except as provided herein, the Corporation shall not issue or agree
to issue any shares of Common Stock to any person except Realty unless effective
provision has been made for the simultaneous issuance or transfer to the same
person of the same number of shares of Realty Common Stock and for the pairing
of such shares of the Corporation and Realty and unless the Corporation and
Realty have agreed on the manner and basis of allocating the consideration to be
received upon such issuance between the Corporation and Realty or, if allocation
of such consideration between them is not practicable, on the payment by one
company to the other of cash or other consideration in lieu thereof. Any such
allocation or payment shall be based on the respective fair market values of the
Common Stock and Realty Common Stock.
(b) Upon exercise of any stock option granted by Santa Anita
Consolidated, Inc. and assumed by Realty or granted by Realty, the Corporation
will upon request of management of Realty, simultaneously issue a number of
shares of Common Stock to Realty or to the exercising optionee equal to the
number of Realty Common Shares issued by Realty pursuant to such exercise, and
Realty agrees to pay the Corporation the fair market value of each Common Stock
so issued at the date of exercise of such option, notwithstanding the provisions
of subsection (a) of this Section 14.2.
(c) As desired from time to time, but not less often than once each
calendar year beginning with _____________, the Corporation and Realty shall
jointly arrange for the determination of the fair market value as of a date
specified by the Corporation and Realty (the "valuation date") of the Common
Stock outstanding on the valuation date. The amount so determined (the "fair
market value of the Common Stock") shall thereafter be used in all calculations
pursuant to this Section 14.2 until a new determination is made. The fair market
value of each share of Realty Common Stock shall be determined by subtracting
the fair market value of one share of Common Stock from the average of the
closing sale prices of a Paired Share over the principal exchange on which the
Paired Shares are listed, or if not listed, then the average of the last bid
prices in the over-the-counter market during the ten business days prior to any
date of determination of the fair market value of Realty Common Stock.
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Section 14.3. Stock Certificates; Transfer Agents and Registrars.
Until such time as the Pairing shall have been terminated in the manner herein
provided, except in the case of shares of Common Stock issued to Realty, each
certificate which is issued evidencing shares of Common Stock shall be printed
"back-to-back" with a certificate evidencing the same number of Realty Common
Stock, shall bear a conspicuous legend (on the face thereof) referring to the
restrictions on the transfer of the shares evidenced thereby contained in the
By-laws of the Corporation, and shall be in a form which satisfies the
requirements of the laws of Delaware and which has been approved by the Board of
Directors of the Corporation.
Section 14.4. Stock Dividends, Reclassifications, etc. Until such time as
the Pairing shall have been terminated in the manner herein provided, the
Corporation shall not declare or pay any stock dividend consisting in whole or
in part of Common Stock, issue any rights or warrants to purchase any shares of
Common Stock, or subdivide, combine or otherwise reclassify the shares of Common
Stock, unless Realty simultaneously takes the same or equivalent action with
respect to the Realty Common Stock, to the end that the outstanding Common Stock
and the outstanding shares of Realty Common Stock will at all times be
effectively paired on a one-for-one basis as contemplated herein.
Section 14.5. Shares in Excess of the Ownership Limit or in Violation of
the Transfer Restrictions; Designation of Trustee and Beneficiaries. Until such
time as the Board of Directors of Realty determines that it is no longer in the
best interest of Realty to attempt to, or continue to, qualify under the Code,
as a REIT:
(a) Upon the conversion of a share of any class or series of Common
Stock, or Preferred Stock (collectively "Equity Stock"), of the Corporation into
a share of Excess Stock of the Corporation in accordance with the provisions of
Article Thirteenth, if such share of Equity Stock was paired prior to its
conversion into Excess Stock, the corresponding paired share of that same class
or series of Equity Stock of Realty shall be simultaneously converted into a
share of Excess Stock of Realty; such shares of Excess Stock of Realty and the
Corporation shall be paired and shall be simultaneously transferred to a Trust.
(b) Upon the conversion of a share of Excess Stock of the Corporation
into a share of Equity Stock of the Corporation of the same class or series from
which such Excess Stock was converted in accordance with the provisions of
Article Thirteenth, if such share of Excess Stock was paired prior to its
conversion from Equity Stock into Excess Stock, the corresponding paired share
of Excess Stock of Realty shall be simultaneously converted into a share of
Equity Stock of Realty of the same class or series from which such Excess Stock
was converted and such shares of Equity Stock shall be paired.
(c) With respect to an offer made by a Trust pursuant to Article
Thirteenth to the Corporation to purchase shares of Excess Stock from a Trust
pursuant to Article Thirteenth, in the case of shares of Excess Stock that are
paired, the Corporation shall accept such offer with respect to
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its shares of Excess Stock without the agreement of Realty to accept such offer
with respect to the corresponding paired shares of its Excess Stock.
(d) The Trustee of each Trust shall be designated by mutual agreement
of the Board of Directors of the Corporation and the Board of Directors of
Realty.
(e) The Beneficiary with respect to each Trust shall be designated by
mutual agreement of the Board of Directors of the Corporation and the Board of
Directors of Realty.
(f) At such time that the Board of Directors of Realty no longer deems
it in the best interests of Realty to attempt to, or continue to, qualify under
the Code as a REIT, the Ownership Limit and the Transfer Restrictions shall
cease to have effect, as provided in Article Thirteenth.
Section 14.7. Unpaired Shares.
----------------
(a) Shares of capital stock of any class or series other than Common
Stock, irrespective of whether such shares are convertible into paired shares of
Common Stock and Realty Common Stock, may be issued by the Corporation to any
person without effective provision for the simultaneous issuance or transfer to
the same person of the same number of shares of that same class or series of
capital stock of Realty and without effective provision for the pairing of such
shares of capital stock of the Corporation and Realty, as the Board of Directors
of the Corporation shall in its sole discretion determine (any such shares of
capital stock of any class or series issued by the Corporation pursuant to this
Section 14.7 are referred to herein as "Unpaired Shares").
(b) Unpaired Shares may be transferred on the books of the Corporation
without a simultaneous transfer to the same transferee of any shares of any
other class or series of capital stock of Realty.
Section 14.8. Exemption from the Ownership Limit. The Corporation shall not
exempt any Person from the Ownership Limit or the Look-Through Ownership Limit
pursuant to Article Thirteenth without the prior written consent of Realty,
which consent shall not be unreasonably withheld.
Section 14.9. Merger, Sale of Assets, etc. Until such time as the Pairing
shall have been terminated in the manner provided herein, the Corporation will
not be a party to any merger, consolidation, sale of assets, liquidation or
other form or reorganization pursuant to which shares of Common Stock are
converted, redeemed, exchanged or otherwise changed unless Realty is also a
party to such transaction.
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Section 14.10. Waiver and Termination. The Board of Directors of the
Corporation is hereby authorized to waive or repeal this Article Fourteenth in
its entirety or any provision of this Article Fourteenth.
Section 14.11. Severability. Each provision of this Article Fourteenth
shall be severable and in adverse determination as to any provision shall in no
way affect the validity of any other provision.
CERTIFICATE OF DESIGNATIONS
of
JUNIOR PARTICIPATING PREFERRED STOCK
The following resolution was adopted by the Board of Directors of the
Corporation as required by Section 151 of the General Corporation Law at a
meeting duly called and held on June 15, 1989:
RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of the Corporation in accordance with the provisions of the
Certificate of Incorporation, the Board of Directors of the Corporation hereby
creates a series of preferred stock (the "Preferred Stock"), of the Corporation
and hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:
Junior Participating Preferred Stock:
I. Designation and Amount
----------------------
The shares of such series shall be designated as "Junior Participating
Preferred Stock" (the "Junior Preferred Stock") and the number of shares
constituting the Junior Preferred Stock shall be 200,000. Such number of shares
may be increased or decreased by resolution of the Board of Directors of the
Corporation; provided, that no decrease shall reduce the number of shares of
Junior Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Junior
Preferred Stock.
II. Dividends and Distributions
---------------------------
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Junior
Preferred Stock with respect to dividends, the holders of shares of Junior
Preferred Stock, in preference to the holders of Common Stock, par value $.10
per share (the "Common Stock"), of the Corporation, and of any other junior
stock, shall be entitled to receive, when, as and if declared by the Board of
Directors of the Corporation out of funds legally available for the purpose,
quarterly dividends
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payable in cash on the first day of March, June, September and December in each
year (each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Junior Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00
or (b) subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Junior Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Junior
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) The Corporation shall declare a dividend or distribution on the Junior
Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Junior
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Junior Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Junior Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Junior Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors of the Corporation may fix a record date for
the determination of holders of
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shares of Junior Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
III. Voting Rights
-------------
The holders of shares of Junior Preferred Stock shall have the following
voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Junior Preferred Stock shall entitle the holder thereof to 100 votes on
all matters submitted to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein, in any other Certificate of
Designation creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Junior Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) Except as set forth herein, in the Corporation's Certificate of
Incorporation or as otherwise provided by law, holders of Junior Preferred Stock
shall have no voting rights.
IV. Certain Restrictions
--------------------
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Junior Preferred Stock as provided in Section II are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Junior Preferred Stock outstanding shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Junior Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preferred Stock,
except dividends paid ratably on the Junior Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Junior Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of
any such junior stock in exchange
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for shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Junior
Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Junior Preferred Stock, or any shares of stock ranking on a
parity with the Junior Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors of the Corporation) to all holders of such shares upon
such terms as the Board of Directors of the Corporation, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section IV
purchase or otherwise acquire such shares at such time and in such manner.
V. Reacquired Shares
-----------------
Any shares of Junior Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock subject to the conditions and
restrictions on issuance set forth herein, in the Certificate of Incorporation,
in any other Certificate of Designations creating a series of Preferred Stock or
any similar stock or as otherwise required by law.
VI. Liquidation, Dissolution or Winding Up
--------------------------------------
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Junior Preferred Stock unless, prior thereto, the holders of shares of Junior
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Junior
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Junior Preferred Stock, except distributions made ratably on the Junior
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of
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Common Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which holders of shares of
Junior Preferred Stock were entitled immediately prior to such event under the
proviso in clause (1) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
VII. Consolidation, Merger, etc.
---------------------------
In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case each share of Junior Preferred Stock shall at
the same time be similarly exchanged or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Junior
Preferred Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
VIII. Redemption
----------
The shares of Junior Preferred Stock shall not be redeemable.
IX. Rank
----
The Junior Preferred Stock shall rank, with respect to the payment of
dividends and the distribution of assets, junior to all series of any other
class of the Corporation's Preferred Stock.
X. Amendment
---------
The Certificate of Incorporation of the Corporation shall not be amended in
any manner which would alter or change the powers, preferences or special rights
of the Junior Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least two-thirds of the outstanding shares
of Junior Preferred Stock, voting together as a single series.
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CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
RIGHTS OF A SERIES OF STOCK
The following resolution was adopted by the Board of Directors of the
Corporation on January 23, 1998 as required by Section 151 of the General
Corporation Law:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation in accordance with the provisions of the Certificate of
Incorporation of the Corporation, as amended, a series of stock of the
Corporation known as Series A Non-Voting Convertible Common Stock be, and it
hereby is, created, classified and authorized, and the issuance thereof is
provided for, and that the designation and number of shares, and relative
rights, preferences and limitations thereof, shall be as set forth in the form
hereof as follows:
1. Designation and Amount. There shall be a series of undesignated Series
Common Stock of the Corporation designated as "Series A Non-Voting Convertible
Common Stock" and the number of shares constituting such series shall be ten
million (10,000,000). The number of shares designated as shares of Series A
Non-Voting Convertible Common Stock may be increased or decreased by the Board
of Directors of the Corporation without a vote of stockholders. Except as
otherwise expressly provided herein, all shares of Series A Non-Voting
Convertible Common Stock shall be identical to shares of Common Stock (as
defined in Article FOURTH of the Certificate of Incorporation of the
Corporation, as amended (the "Certificate of Incorporation")) and shall entitle
the holders thereof to the same rights and privileges.
2. Voting. The holders of Series A Non-Voting Convertible Common Stock
shall not have any right to vote, except as required under applicable law and,
except as required by law, the holders of Common Stock and Series A Non-Voting
Convertible Common Stock shall vote together as a single class on all matters as
to which holders of Series A Non-Voting Convertible Common Stock are entitled to
vote as set forth herein. Except as required by law or as set forth herein, the
holders of Series A Non-Voting Convertible Common Stock (to the extent permitted
by this Section 2), Common Stock (to the extent permitted by the Certificate of
Incorporation), Preferred Stock (to the extent permitted by the Certificate of
Incorporation) and Series Common Stock (to the extent permitted by the
Certificate of Incorporation) shall vote together as a single class on all
matters submitted to the stockholders for a vote.
3. Dividends. Subject to applicable law, the holders of Series A Non-Voting
Convertible Common Stock shall be entitled to receive such dividends out of
funds legally available therefor at such times and in such amounts as the Board
of Directors of the Corporation may determine in its sole discretion shall be
paid with respect to the Common Stock, with each share of Common Stock and each
share of Series A Non-Voting Convertible Common Stock sharing share-for-share in
such dividends (with each share of Series A Non-Voting Convertible Common Stock
being equal to the number of shares of Common Stock into which it would then be
convertible on the record date for such dividend) except that if
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dividends are declared which are payable in shares of Common Stock or Series A
Non-Voting Convertible Common Stock, dividends shall be declared which are
payable at the equivalent rate in both classes of stock and the dividends
payable in shares of Common Stock shall be payable to the holders of that class
of stock and the dividends payable in shares of Series A Non-Voting Convertible
Common Stock shall be payable to the holders of that class of stock.
4. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary
(a "Liquidation Event"), after the payment or provision for payment of all debts
and liabilities of the Corporation and all preferential amounts to which the
holders of Preferred Stock or Series Common Stock, if any, are entitled with
respect to the distribution of assets in liquidation, the holders of Series A
Non-Voting Convertible Common Stock shall be entitled to share ratably with the
holders of Common Stock (with each share of Series A Non-Voting Convertible
Common Stock being equal to the number of shares of Common Stock into which it
would then be convertible on the effective date of such Liquidation Event) in
the remaining assets of the Corporation available for distribution.
5. Conversion of Series A Non-Voting Convertible Common Stock.
--------------------------------------------------------------
(a) Automatic Conversion. Each share of Series A Non-Voting Convertible
Common Stock shall be automatically converted, without the payment of any
additional consideration, into fully paid and non-assessable shares of Common
Stock at the rate of one share of Common Stock for each share of Series A
Non-Voting Convertible Common Stock so converted (the "Series A Non-Voting
Conversion Rate") as of the date (the "Conversion Date") that is the earlier to
occur of (i) the next Business Day (as defined below) following the date on
which the shareholders of the Corporation and of Meditrust Corporation
("Meditrust Corporation") shall have approved the merger transaction (the
"Merger") among La Quinta Inns, Inc. ("La Quinta"), Meditrust Corporation and
the Corporation, and (ii) the date of any termination of the Agreement and Plan
of Merger dated as of January 3, 1998 and among La Quinta, Meditrust Corporation
and the Corporation relating to the Merger in accordance with the terms thereof.
As used herein, the term "Business Day" means any day other than Saturday,
Sunday, or any other day on which banking institutions in the States of Delaware
or New York are not open for business.
(b) Procedure for Conversion. As of the Conversion Date, all
outstanding shares of Series A Non-Voting Convertible Common Stock shall be
converted automatically without any further action by the holders of Series A
Non-Voting Convertible Common Stock and whether or not the certificates
representing such shares of Series A Non-Voting Convertible Common Stock are
surrendered to the Corporation or its transfer agent. On the Conversion Date,
all rights with respect to the Series A Non-Voting Convertible Common Stock so
converted shall terminate, except any of the rights of the holders thereof, in
accordance with the procedures herein, to receive certificates for the number of
shares of Common Stock into which such Series A Non-Voting Convertible Common
Stock has been converted. The Corporation shall not be obligated to issue
certificates evidencing the shares of
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Common Stock issuable on the Conversion Date unless certificates evidencing such
shares of the Series A Non-Voting Convertible Common Stock being converted, duly
assigned or endorsed for transfer to the Corporation (or accompanied by duly
executed stock powers relating thereto), are surrendered at the principal
executive office of the Corporation (or the offices of the transfer agent for
the Series A Non-Voting Convertible Common Stock or such office or offices of an
agent for conversion as may from time to time be designated by notice to the
holders of the Series A Non-Voting Convertible Common Stock by the Corporation),
together with written notice by the holder of such Series A Non-Voting
Convertible Common Stock stating the name or names (with addresses) and
denominations in which the certificate or certificates for Common Stock shall be
issued and shall include instructions for delivery thereof. Upon such surrender
of a certificate representing Series A Non-Voting Convertible Common Stock
following its automatic conversion, the Corporation shall issue and send by hand
delivery, by courier or by first class mail (postage prepaid) to the holder
thereof or to such holder's designee, at the address designated by such holder,
a certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled upon conversion. In the event that there shall
have been surrendered a certificate or certificates representing Series A
Non-Voting Convertible Common Stock, only part of which are to be converted, the
Corporation shall issue and send to such holder or such holder's designee, in
the manner set forth in the preceding sentence, a new certificate or
certificates representing the number of shares of Series A Non-Voting
Convertible Common Stock which shall not have been converted. If the certificate
or certificates for Common Stock are to be issued in a name other than the name
of the registered holder of the Series A Non-Voting Convertible Common Stock
surrendered for conversion, the Corporation shall not be obligated to issue or
deliver any certificate unless and until the holder of the Series A Non-Voting
Convertible Common Stock surrendered has paid to the Corporation the amount of
any tax that may be payable in respect of any transfer involved in such issuance
or has established to the satisfaction of the Corporation that such tax has been
paid.
(c) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
shares of Series A Non-Voting Convertible Common Stock such number of its shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Series A Non-Voting Convertible Common
Stock.
6. Adjustments.
---------------
(a) Changes in Common Stock. In the event the Corporation shall (i) pay
a dividend in or make a distribution in shares of Common Stock, (ii) subdivide
its outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares, or (iv) issue by reclassification
of its shares of Common Stock any shares of the Corporation, the Series A
Non-Voting Conversion Rate in effect immediately prior thereto shall be adjusted
so that the holder of a share of Series A Non-Voting Convertible Common Stock
thereafter surrendered for conversion shall be entitled to receive the number of
shares of
B-33
<PAGE>
Common Stock which it would have owned or have been entitled to receive after
the happening of any of the events described above had such share of Series A
Non-Voting Convertible Common Stock been converted on or immediately prior to
the record date for such dividend or the effective date of such subdivision,
combination or reclassification, as the case may be.
(b) Changes in Series A Non-Voting Convertible Common Stock. In the
event that the Corporation shall (i) pay a dividend in or make a distribution in
shares of its Series A Non-Voting Convertible Common Stock, (ii) subdivide its
outstanding shares of Series A Non-Voting Convertible Common Stock, (iii)
combine its outstanding shares of Series A Non-Voting Convertible Common Stock
into a smaller number of shares, or (iv) issue by reclassification of its shares
of Series A Non-Voting Convertible Common Stock any shares of the Corporation,
the Series A Non-Voting Conversion Rate in effect immediately prior thereto
shall be adjusted so that the holder of a share of Series A Non-Voting
Convertible Common Stock thereafter surrendered for conversion shall be entitled
to receive the number of shares of Common Stock which it would have owned or
have been entitled to receive after the happening of any of the events described
above had such share of Series A Non-Voting Convertible Common Stock been
converted on or immediately prior to the record date for such dividend or the
effective date of such subdivision, combination or reclassification, as the case
may be.
(c) General. An adjustment made pursuant to this Section 6 shall become
effective immediately after the record date (in the case of a dividend or
distribution in shares of capital stock) and shall become effective immediately
after the effective date (in the case of a subdivision, combination or
reclassification). No adjustment in accordance with this Section 6 shall be
required unless such adjustment would require an increase or decrease in any
conversion rate of at least 0.1%; provided, however, that any adjustments which
by reason of this clause are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.
7. Notices. In the event that the Corporation provides any notice, report
or statement to the holders of Common Stock or Series A Non-Voting Convertible
Common Stock (in their capacity as such), the Corporation shall at the same time
provide a copy of any such notice, report or statement to each record holder of
outstanding Series A Non-Voting Convertible Common Stock.
8. Status of Acquired Shares. Shares of Series A Non-Voting Convertible
Common Stock acquired by the Corporation (upon conversion or otherwise) will be
restored to the status of authorized but unissued shares of undesignated Series
Common Stock.
B-34
<PAGE>
IN WITNESS WHEREOF, this Certificate of Amendment and Restatement of the
Certificate of Incorporation has been executed on behalf of Meditrust Operating
Company by its duly authorized officers this __ day of ____, 1999.
By: ________________________________
Name:
Title:
ATTEST:
By: ____________________________
Name:
Title:
B-35
<PAGE>
Annex C
-------
Form of
PAIRING AGREEMENT
(as amended)
THIS AGREEMENT (the "Pairing Agreement") is dated as of the 20th of
December, 1979, as amended by the First Amendment to Pairing Agreement, dated
November 6, 1997, as further amended by the Second Amendment to Pairing
Agreement, dated February 6, 1998, as further amended by the Third Amendment to
Pairing Agreement, dated July 17, 1998, by and between Santa Anita Realty
Enterprises, Inc. ("Realty"), a Delaware corporation, and Santa Anita Operating
Company ("Operating Company"), a Delaware corporation.
RECITALS
Realty and Operating Company are wholly-owned subsidiaries of Santa Anita
Consolidated, Inc. ("Santa Anita"), a California corporation. Santa Anita,
Realty and Operating Company have proposed a related series of transactions
consisting principally of: (i) the merger of Santa Anita with and into Realty,
pursuant to which each outstanding share of Santa Anita common stock, no par
value ("Santa Anita Common Stock"), will be converted into one share of Realty
common stock, $.10 par value ("Realty Common Stock") (the "Merger"): (ii) the
distribution by Realty, immediately after the Merger becomes effective of the
Operating Company common stock, $.10 par value ("Operating Company Common
Shares"), which it receives in the Merger to the holders of the outstanding
share of Realty Common Stock, on a share-for-share basis (the "Distribution");
and (iii) the pairing of the outstanding shares of Realty Common Stock and the
Operating Company Common Shares so that they are transferable only in units (the
"Units"), each Unit consisting of one share of Realty Common Stock and one
Operating Company Common Share (the "Pairing").
The by-laws of Realty and Operating Company each provide that, commencing
on the effective date of the Merger and the Distribution, the shares of Realty
Common Stock and the Operating Company Common Shares are not transferable, and
shall not be transferred on the books of Realty or Operating Company, as the
case may be, except in combination with an equal number of share of the other
company, with the exception of certain shares of Realty Common Stock and
Operating Company Common Shares to be received by shareholders of Santa Anita
whose ownership of Operating Company Common Shares after the Distribution would
otherwise cause Realty to be deemed to own in excess of 9.25% of the Operating
Company Common Shares.
Realty and Operating Company wish to enter into this Pairing Agreement for
the purpose of further effectuating the Pairing, including the establishment of
the terms and conditions which will govern the issuance and the transfer of
shares of Realty Common Stock and Operating Company Common Shares after the
effective date of the Merger and the Distribution.
<PAGE>
COVENANTS
1. Transfer of Shares. Subject to the provisions of Section 10 hereof,
commencing at the time when the Distribution becomes effective (the "Effective
Time of the Pairing") and continuing until such time as the Pairing shall have
been terminated in the manner herein provided:
(a) No shares of Realty Common Stock shall be transferable, and they
shall not be transferred on the books of Realty, unless (i) a simultaneous
transfer is made by the same transferor to the same transferee, or (ii)
such transferor has previously arranged with Realty for the transfer to the
transferee, of the same number of Operating Company Common Shares, except
that Operating Company may transfer shares of Realty Common Stock acquired
by it from Realty to a person to whom Operating Company simultaneously
issues the same number of Operating Company Common Shares.
(b) No Operating Company Common Shares shall be transferable, and they
shall not be transferred on the books of Operating Company, unless (i) a
simultaneous transfer is made by the same transferor to the same
transferee, or (ii) such transferor has previously arranged with Realty for
the transfer to the transferee, of the same number of shares of Realty
Common Stock except that Realty may transfer Operating Company Common
Shares acquired by it from Operating Company to a person to whom Realty
simultaneously issues the same number of shares of Realty Common Stock.
(c) Except for certificates representing Realty Common Stock described
in Section 10 hereof, each certificate evidencing ownership of shares of
Realty Common Stock (including certificates representing shares of Santa
Anita Common Stock that were converted into shares of Realty Common Stock
in the Merger) issued and not canceled prior to the Effective Time of the
Pairing shall be deemed to evidence, in addition, the same number of
Operating Company Common Shares.
(d) Except for certificates representing Realty Common Stock described
in Section 10 hereof, any registered holder of a certificate evidencing
ownership of share of Realty Common Stock (including certificates
representing shares of Santa Anita that were converted into share of Realty
Common Stock in the Merger) issued prior to the Effective Time of the
Pairing may, upon request and presentation of said certificate to the
transfer agent for the Realty Common Stock, obtain in substitution therefor
a certificate or certificates registered in such holder's name evidencing
the same number of shares of Realty Common Stock and a like number of
Operating Company Common Shares.
C-2
<PAGE>
2. Issuance of Shares. Subject to the provisions of Section 10 hereof,
commencing at the Effective Time of the Pairing and continuing until such time
as the Pairing shall have been terminated in the manner herein provided:
(a) Realty shall not issue or agree to issue any shares of Realty
Common Stock to any person except Operating Company unless effective
provision has been made for the simultaneous issuance or transfer to the
same person of the same number of Operating Company Common Shares and for
the pairing of such shares of Realty and Operating Company and unless
Realty and Operating Company has agreed on the manner and basis of
allocating the consideration to be received upon such issuance between
Realty and Operating Company or, if allocation of such consideration
between them is not practicable, on the payment by one company to the other
of cash or other consideration in lieu thereof. Any such allocation or
payment shall be based or the respective fair market values of the Realty
Common Stock and the Operating Company Common Shares.
(b) Operating Company shall not issue or agree to issue any Operating
Company Common Shares to any person except Realty unless effective
provision has been made for the simultaneous issuance or transfer to the
same person of the same number of shares of Realty Common Stock and for the
pairing of such share of Operating Company and Realty and unless Operating
Company and Realty have agreed on the manner and basis of allocating the
consideration to be received upon such issuance between Operating Company
and Realty or, if allocation of such consideration between them is not
practicable, on the payment by one company to the other of cash or other
consideration in lieu thereof. Any such allocation or payment shall be
based on the respective fair market values of the Realty Common Stock and
the Operating Company Common Shares.
(c) Realty shall not issue any shares of its common stock upon
exercise of a stock option assumed by Realty in the Merger or granted by
Realty after the Merger, unless the exercising optionee produces evidence
that Operating Company will simultaneously issue a number of Operating
Company Common Shares to the exercising optionee equal to the number of
shares of Realty Common Stock issued by Realty to the optionee pursuant to
such exercise. In connection with any issuance by Operating Company of its
common stock to an exercising optionee, the optionee shall pay to Operating
Company the fair market value of each Operating Company Common Share so
issued at the date of grant of such option, notwithstanding the provisions
of subsection (a) of this Section 2.
(d) Upon the exercise of any stock option granted by Santa Anita prior
to the Merger and assumed by Operating Company or granted by Operating
Company after the Merger, Realty agrees, upon request by management of
Operating Company, that it will simultaneously issue a number of shares of
Realty Common Stock to Operating Company or to the exercising optionee
equal to the number of Operating Company
C-3
<PAGE>
Common Shares issued by Operating Company pursuant to such exercise, and
Operating Company agrees to pay to Realty the fair market value of each
share of Realty Common Stock so issued at the date of grant of such option,
notwithstanding the provisions of subsection (a) of this Section 2.
(e) As desired from time to time, but not less often than once each
calendar year beginning with January 1, 1981, Realty and Operating Company
shall jointly arrange for the determination of the fair market value as of
a date specified by Realty and Operating Company (the "valuation date") of
the Operating Company Common Shares outstanding on the valuation date. The
amount so determined (the "fair market value of the Operating Company
Shares") shall thereafter be used in all calculations pursuant to this
Section 2 until a new determination is made. The fair market value of the
Operating Company Shares as determined by Paine, Webber, Jackson & Curtis
Incorporated as of the Effective Time of the Pairing shall be used in all
calculations hereunder prior to a new determination pursuant to this
paragraph. The fair market value of each share of Realty Common Stock shall
be determined by subtracting the fair market value of one Operating Company
Common Share from the average of the closing sale prices of a Unit over the
principal exchange on which the Units are listed, or if not listed, then
the average of the last bid pieces in the over-the-counter market, during
the ten business days prior to any date of determination of the fair market
value of Realty Common Stock.
3. Stock Certificates; Transfer Agents and Registrars. Commencing at the
Effective Time of Pairing and continuing until such time as the Pairing shall
have been terminated in the manner herein provided:
(a) With the exception of the unpaired Realty Common Stock described
in Section 10 hereof, each certificate which is issued evidencing shares of
Realty Common Stock shall be printed "back-to-back" with a certificate
evidencing the same number of Operating Company Common Shares, shall bear a
conspicuous legend (on the face thereof) referring to the restrictions on
the transfer of the shares evidenced thereby contained in the by-laws of
Realty, and shall be in a form which satisfies the requirements of the laws
of Delaware and which has been approved by the board of directors of
Realty.
(b) With the exception of the unpaired Operating Company Common Shares
described in Section 10 hereof, each certificate which is issued evidencing
Operating Company Common Shares shall be printed "back-to-back" with a
certificate evidencing the same number of shares of Realty Common Stock,
shall bear a conspicuous legend (on the face thereof) referring to the
restrictions on the transfer of the shares evidenced thereby contained in
the by-laws of Operating Company, and shall be in a form which satisfies
the requirements of the laws of Delaware and which has been approved by the
board of directors of Operating Company.
C-4
<PAGE>
(c) Realty and Operating Company shall appoint the same transfer
agents and registrars for the shares of Realty Common Stock and the
Operating Company Common Shares, respectively.
4. Registrations.
(a) Realty agrees to cause its class of Realty Common Stock to be duly
registered with the Securities and Exchange Commission pursuant to Section
12 of the Securities Exchange Act of 1934.
(b) Operating Company agrees to cause its class of Operating Company
Common Shares to be duly registered with the Securities and Exchange
Commission pursuant to Section 12 of the Securities Exchange Act of 1934.
5. Stock Dividends, Reclassifications, etc. Commencing at the Effective
Time of the Pairing and continuing until such time as the Pairing shall have
been terminated in the manner herein provided:
(a) Realty shall not declare or pay any stock dividend consisting in
whole or in part of Realty Common Stock, issue any rights or warrants to
purchase any shares of Realty Common Stock, or subdivide, combine or
otherwise reclassify the shares of Realty Common Stock, unless Operating
Company simultaneously takes the same or equivalent action with respect to
the Operating Company Common Shares, to the end that the outstanding shares
of Realty Common Stock and Operating Company Common Shares will at all
times be effectively "paired" on a one-for-one basis as contemplated
herein.
(b) Operating Company shall not declare or pay any stock dividend
consisting in whole or in part of Operating Company Common Shares, issue
any rights or warrants to purchase any Operating Company Common Shares, or
subdivide, combine or otherwise reclassify the Operating Company Common
Shares, unless Realty simultaneously takes the same or equivalent action
with respect to the Realty Common Stock, to the end that the outstanding
Operating Company Common Shares and the outstanding shares of Realty Common
Stock will at all times be effectively "paired" on a one-for-one basis as
contemplated herein.
6. Merger, Sale of Assets, etc. Commencing at the Effective Time of the
Pairing and continuing until such time as the Pairing shall have been terminated
in the manner provided herein, neither Realty nor Operating Company will be a
party to any merger, consolidation, sale of assets, liquidation or other form or
reorganization pursuant to which either the shares of Realty Common Stock or the
Operating Company Common Shares, as the case may be, are converted, redeemed,
exchanged or otherwise changed unless the other party hereto (Operating Company
or Realty, as the case may be) is also a party to such transaction.
C-5
<PAGE>
7. Repurchase of Shares. Commencing at the Effective Time of the Pairing
and continuing until such time as the Pairing shall have been terminated in the
manner provided herein:
(a) If at any time the direct or indirect ownership of the Realty
Common Stock has or may become concentrated to an extent which is not in
conformity with the requirements of Section 856 of the Internal Revenue
Code of 1954, as amended, or similar provisions of successor statutes (the
"Code"), the board of directors of Realty shall call for purchase from such
stockholders of such number of shares as may be necessary to maintain or
bring the direct or indirect ownership of the Realty Common Stock into
conformity with the requirements of the Code and shall refuse to register
any transfer of shares of Realty Common Stock to any person whose
acquisition of such shares would result in Realty being unable to conform
to the requirements of the Code.
(b) If at any time the direct or indirect ownership of the Operating
Company Common Shares has or may become concentrated to an extent which is
not in conformity with the requirements of the Code pertaining to Realty,
the board of directors of Operating Company shall call for purchase from
such stockholders of such number of shares as may be necessary to maintain
or bring the direct or indirect ownership of the Operating Company Common
Shares into conformity with the requirements of the Code pertaining to
Realty and shall refuse to register any transfer of Operating Company
Common Shares to any person whose acquisition of such shares would result
in Realty being unable to conform to the requirement of the Code.
The provisions of this Section 7 shall apply to all outstanding Realty
Common Stock and Operating Company Common Stock notwithstanding any other
provision of this Pairing Agreement.
8. Termination. This Pairing Agreement and the Pairing may be terminated by
action of the board of directors of either Realty or of Operating Company upon
30 days' written notice to the other party hereto that such termination has been
approved by the affirmative vote of the holders of two-thirds of the outstanding
shares of Realty Common Stock (if terminated by Realty) or of the holders of
two-thirds of the outstanding Operating Company Common Shares (if terminated by
Operating Company). In the event of termination, the parties agree to cooperate
to effect a separation of the paired securities so as to permit the separate
issuance and transfer thereof, and, in that connection, appropriate provision
shall be made to honor any outstanding commitments to issue additional shares of
Realty Common Stock and Operating Company Common Shares.
9. Preferred Stock, Series Common Stock and Excess Stock. The terms "Realty
Common Stock" and "Operating Company Common Shares," as used in this Pairing
Agreement, shall include, respectively, any preferred stock or series common
stock of Realty or Operating Company which is convertible into Realty Common
Stock or Operating Company Common Shares (the "Convertible Equity Stock") and
shall also include any REIT Excess
C-6
<PAGE>
Stock or OPCO Excess Stock issued as a result of the conversion of Realty Common
Stock, Operating Common Shares or Convertible Equity Stock, to the end that such
Convertible Equity Stock, REIT Excess Stock or OPCO Excess Stock, as the case
may be, shall be paired in the same manner as, and be subject to the same
conditions, limitations, restrictions and requirements as the Realty Common
Stock and Operating Company Common Shares under this Pairing Agreement.
10. Unpaired Shares. Subject to Section 7 hereof, notwithstanding any other
provision of this Agreement, the Pairing shall not apply to those Operating
Company Common Shares and shares of Realty Common Stock received by any
stockholder of Santa Anita whose ownership of Operating Company Common Shares
would be deemed, after application of the attribution rules of the Internal
Revenue Code of 1954, to result in Realty owning, directly or indirectly, in
excess of 9.25% of the outstanding Operating Company Common Shares to the extent
that such ownership would cause Realty, directly or indirectly, to be deemed to
own, after application of such attribution rules, in excess of 9.25% of the
total number of shares of Operating Company. The provisions of this Pairing
Agreement and the Pairing shall apply to all other shares held by such
stockholder. This Section 10 shall apply only to the extent that (i) the
Operating Company Common Shares (or the right to receive such Operating Company
Common Shares) are sold and ownership by the transferee will not cause Realty to
own, directly or indirectly, under attribution rules of the Internal Revenue
Code of 1954, more than 9.25% of the outstanding Operating Company Common
Shares; (ii) holders of unpaired shares enter into agreement, prior to the
effective date of the Merger and the Distribution, satisfactory to the boards of
directors of Realty, Operating Company and Santa Anita, providing that such
shares not be transferable by sale or other means, without arranging for such
shares to be paired with an equal number of shares of the other corporation,
unless such sale is made to Realty or Operating Company; and (iii) such
stockholders execute a waiver as to any claims he or she may have arising out of
the close business relationship between Realty and Operating Company and claims
arising out of conflicts of interest inherent in such business relationship.
Subsequent shares acquired by any such shareholder shall be subject in full to
the terms of this Pairing Agreement notwithstanding the provisions of this
Section 10.
11. Amendment. This Pairing Agreement may be amended by action of the Board
of Directors both Realty and Operating Company, provided that any such action
shall be approved by the affirmative vote of the holders of two-thirds of the
outstanding shares of Realty Common Stock and the holders of two-thirds of the
outstanding Operating Company Common Shares if such amendment shall permit a
separation of the paired securities so as to allow the separate issuance and
transfer thereof other than as provided herein.
C-7
<PAGE>
IN WITNESS WHEREOF the parties hereto have set their hands and seals to
this Pairing Agreement as of the date first mentioned above.
MEDITRUST CORPORATION
By _________________________________
Name:
Title:
MEDITRUST OPERATING COMPANY
By _________________________________
Name:
Title:
C-8
<PAGE>
[PRELIMINARY FORM OF PROXY]
[To be released as soon as practicable, but not sooner than on or about
February 11, 1999]
PROXY FOR SPECIAL MEETINGS OF SHAREHOLDERS
TO BE HELD ON , 1999
MEDITRUST CORPORATION
197 First Avenue
Needham, Massachusetts 02494
SOLICITED BY THE BOARD OF DIRECTORS FOR THE SPECIAL MEETING
OF SHAREHOLDERS
The undersigned hereby appoints David F. Benson and Michael S.
Benjamin, and each of them acting singly, with full power of substitution,
attorneys and proxies to represent the undersigned at the Special Meeting of
Shareholders of Meditrust Corporation to be held on , 1999
and at any adjournment or postponement thereof with all power which the
undersigned would possess if personally present, and to vote all shares of
common stock of Meditrust Corporation which the undersigned may be entitled to
vote at said meeting upon the matters set forth in the Notice of Special Meeting
in accordance with the following instructions and with discretionary authority
on such other matters as may be properly come before the Special Meeting or any
adjournment or postponement thereof. All previously dated proxies are hereby
revoked.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER SPECIFIED
HEREIN. IF NO SPECIFICATION IS MADE THE PROXIES INTEND TO VOTE FOR EACH OF THE
PROPOSALS.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED POSTAGE-PAID ENVELOPE.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE>
PROPOSALS
MEDITRUST CORPORATION:
1. To approve and adopt the Amended and Restated Certificate of
Incorporation of Meditrust Corporation. Approval and adoption of the
Amended and Restated Certificate of Incorporation is conditioned on the
approval of the termination of the Pairing Agreement.
2. To approve the termination of the Pairing Agreement, dated as of
December 20, 1979, as amended. Approval of the termination of the
Pairing Agreement is conditioned on the approval and adoption, and
subsequent filing, of the Amended and Restated Certificate of
Incorporation of Meditrust Corporation.
|X| Please mark
votes as in
this example.
PLEASE REFER ABOVE FOR EXPLANATION OF PROPOSALS SET FORTH BELOW
Meditrust Corporation:
FOR AGAINST ABSTAIN
1. To approve and adopt the Amended |_| |_| |_|
and Restated Certificate
of Incorporation
FOR AGAINST ABSTAIN
2. To approve and adopt the |_| |_| |_|
Termination of the Pairing
Agreement
MARK HERE FOR ADDRESS CHANGE AND NOTE AT RIGHT |_|
In Signing, please write name(s) exactly as appearing in the imprint on this
card. For shares held jointly, each joint owner should sign. If signing as
executor, or in any other representative capacity, or as an officer of a
corporation, please indicate your full title as such.
Signature: Date:
--------------------------------------- --------------------
<PAGE>
[PRELIMINARY FORM OF PROXY]
[To be released as soon as practicable, but not sooner than on or about
February 11, 1999]
PROXY FOR SPECIAL MEETINGS OF SHAREHOLDERS
TO BE HELD ON , 1999
MEDITRUST OPERATING COMPANY
197 First Avenue
Needham, Massachusetts 02494
SOLICITED BY THE BOARD OF DIRECTORS FOR THE SPECIAL MEETING
OF SHAREHOLDERS
The undersigned hereby appoints David F. Benson and Michael S.
Benjamin, and each of them acting singly, with full power of substitution,
attorneys and proxies to represent the undersigned at the Special Meeting of
Shareholders of Meditrust Operating Company to be held on , 1999
and at any adjournment or postponement thereof with all power which the
undersigned would possess if personally present, and to vote all shares of
common stock of Meditrust Operating Company which the undersigned may be
entitled to vote at said meeting upon the matters set forth in the Notice of
Special Meeting in accordance with the following instructions and with
discretionary authority on such other matters as may be properly come before the
Special Meeting or any adjournment or postponement thereof. All previously dated
proxies are hereby revoked.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER SPECIFIED
HEREIN. IF NO SPECIFICATION IS MADE THE PROXIES INTEND TO VOTE FOR EACH OF THE
PROPOSALS.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED POSTAGE-PAID ENVELOPE.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE>
PROPOSALS
MEDITRUST OPERATING COMPANY:
1. To approve and adopt the Amended and Restated Certificate of
Incorporation of Meditrust Operating Company. Approval and adoption
of the Amended and Restated Certificate of Incorporation is conditioned
on the approval of the termination of the Pairing Agreement.
2. To approve the termination of the Pairing Agreement, dated as of
December 20, 1979. Approval of the termination of the Pairing Agreement
is conditioned on the approval and adoption, and subsequent filing, of
the Amended and Restated Certificate of Incorporation of Meditrust
Operating Company.
|X| Please mark
votes as in
this example.
PLEASE REFER ABOVE FOR EXPLANATION OF PROPOSALS SET FORTH BELOW
Meditrust Operating Company:
FOR AGAINST ABSTAIN
1. To approve and adopt the |_| |_| |_|
Amended and Restated
Certificate of Incorporation
FOR AGAINST ABSTAIN
2. To approve and adopt the |_| |_| |_|
Termination of the Pairing
Agreement
MARK HERE FOR ADDRESS CHANGE AND NOTE AT RIGHT |_|
In Signing, please write name(s) exactly as appearing in the imprint on this
card. For shares held jointly, each joint owner should sign. If signing as
executor, or in any other representative capacity, or as an officer of a
corporation, please indicate your full title as such.
Signature: Date:
----------------------------------------- -----------------
[Preliminary Additional Solicitation Materials]
[To be released as soon as practicable but not sooner than on or about
February 11, 1999]
The Meditrust Companies
[Glossy photo of healthcare property]
Shareholder Information
Concerning the
Restructuring of the
Corporate Documents of
The Meditrust Companies
[Glossy photo of La Quinta hotel]
[Glossy photo of healthcare property]
<PAGE>
The Meditrust Companies are furnishing this brochure to their shareholders
concurrently with the Joint Proxy Statement for the Special Meetings of their
Shareholders to be held on , 1999. This brochure is not a substitute for the
information presented in the Joint Proxy Statement. Shareholders are urged to
read the Joint Proxy Statement, including its exhibits, in its entirety.
Table of Contents
<TABLE>
<S> <C>
Page
-----
Summary .................................. 1
Introduction ............................. 2
The Plan ................................. 2
The Record to Date ....................... 3
The Corporate Document Proposals ......... 4
Conclusion ............................... 8
How to Vote .............................. 9
</TABLE>
Forward Looking Statements Legend
Certain matters discussed within this brochure may constitute "forward-looking
statements" within the meaning of the federal securities laws. Although
Meditrust Corporation ("Meditrust") and Meditrust Operating Company ("Operating
Company", and together with Meditrust, "The Meditrust Companies") believe the
statements are based on reasonable assumptions, they can give no assurance that
their expectations will be attained. Actual results and the timing of certain
events could differ materially from those projected in or contemplated by the
forward-looking statements due to a number of factors, including, without
limitation, general economic and real estate conditions, the conditions of the
capital markets at the time of the proposed spin-off of the health-care
division, the identification of satisfactory prospective buyers for the
non-strategic assets which have not yet been sold and the availability of
financing for such prospective buyers, the availability of equity and debt
financing for The Meditrust Companies' capital investment program, interest
rates, competition for hotel services and health care facilities in a given
market and other risks detailed from time to time in the filings of Meditrust
and Operating Company with the Securities and Exchange Commission, including
the Joint Annual Report on Form 10-K/A for the year ended December 31, 1997 and
other periodic filings under the Securities Exchange Act of 1934, as amended.
<PAGE>
Summary
On ________ , _____ , 1999, Meditrust Corporation ("Meditrust") and Meditrust
Operating Company ("Operating Company" and together with Meditrust, "The
Meditrust Companies") will hold Special Meetings of their Shareholders to
consider and vote on proposals including the following:
o The Meditrust Companies' Restated Certificates of Incorporation, as amended
to date, will be amended and restated in their entirety. The existing
provisions will be contained in the Amended and Restated Certificates of
Incorporation (the "Amended Certificates") and a new provision calling for,
among other things, the pairing of each Company's common stock with the
common stock of the other Company will be added. The Amended Certificates
will not contain any new so-called "anti-takeover" devices.
o The Pairing Agreement, as amended, between The Meditrust Companies will be
terminated. The termination of the Pairing Agreement will not, however,
terminate the paired share structure of The Meditrust Companies as the
Amended Certificates pairing provisions are intended to preserve this
structure.
o The termination of the Pairing Agreement will, by extension, terminate
certain provisions of the By-laws of each of The Meditrust Companies which
also require the pairing of certain classes of The Meditrust Companies'
capital stock.
Adoption of these proposals will enable The Meditrust Companies to:
o more efficiently engage in capital raising and formation transactions;
o efficiently respond in a timely manner to the challenges presented by
recently adopted federal legislation which limits the use of the paired
share structure; and
o capitalize on further opportunities to enhance shareholder value through
acquisitions that are consistent with The Meditrust Companies growth
strategy, which may have the ancillary benefit of mitigating the tax costs
associated with the proposed spin-off.
As part of the capital raising transactions, either one of The Meditrust
Companies may be permitted to issue unpaired capital stock, subject to
applicable real estate investment trust ("REIT") qualification tests. As
previously announced in connection with The Meditrust Companies' comprehensive
restructuring plan, these proposals will also permit certain existing
shareholders affiliated with Thomas M. Taylor & Co. and other entities and
individuals associated with certain members of the Bass family, including Thomas
M. Taylor, the Interim Chairman of the Boards of Directors of The Meditrust
Companies, to increase their ownership in Meditrust up to an aggregate of 13%,
again, subject to applicable REIT qualification tests.
Your Boards of Directors unanimously recommend that you vote "FOR" both of the
proposals by signing, dating and promptly returning the enclosed proxy cards in
the enclosed postage-paid envelope.
The proposals and their potential effects are described in more detail in the
accompanying Joint Proxy Statement. In addition, this brochure describes the
comprehensive restructuring plan of The Meditrust Companies announced on
November 12, 1998, the status of the plan and the role the proposals play in
the overall plan, though this brochure should not be viewed as a substitute for
the Joint Proxy Statement, which you are encouraged to read in its entirety.
<PAGE>
Introduction
On November 12, 1998, The Meditrust Companies announced that their Boards
of Directors had approved a comprehensive restructuring plan (the "Plan") for
their real estate portfolio. The Plan is designed to strengthen The Meditrust
Companies' financial position and clarify their investment and operating
strategy by focusing on the healthcare and lodging business segments, The
Meditrust Companies' two most prominent business segments. The healthcare and
lodging business segments are also the businesses that The Meditrust Companies
and their management teams know best and from which The Meditrust Companies
believe that they can best create long-term value for their shareholders.
The Plan
The comprehensive Plan has a number of components, several of which have
been successfully completed or are well on their way to successful completion.
The Plan, as announced on November 12, 1998, includes the following components:
[SIDEBAR TEXT]
"This restructuring makes
strategic sense. We
believe it will focus
Meditrust on its core
competencies, provide
financial and operating
flexibility, and enhance
shareholder value."
Thomas M. Taylor,
Interim Chairman of the
Boards of Directors.
[/SIDEBAR_TEXT]
o Separate Primary Businesses -- The Meditrust Companies intend to
pursue the separation of the healthcare and lodging business segments.
This separation will be accomplished through the spin-off of a new
separately traded publicly listed REIT which will engage principally
in the healthcare financing business. After the spin-off, which The
Meditrust Companies intend to complete during the latter part of 1999,
The Meditrust Companies' shareholders will continue to hold stock in
The Meditrust Companies, which will be focused on the lodging
business, as well as stock in a newly-created publicly traded
healthcare REIT.
o Sell Non-Strategic Assets -- The Meditrust Companies will sell over $1
billion of non-strategic assets.
o Reduce Debt Through Asset Sales -- The Meditrust Companies will use
approximately $550 million of the proceeds from the sales of
non-strategic assets to reduce The Meditrust Companies' debt.
o Settle Forward Equity Transaction -- The Meditrust Companies reached
an agreement with certain affiliates of Merrill Lynch & Co. which
allows them to complete the settlement of The Meditrust Companies'
only forward equity investment transaction ("FEIT").
o Continue to Operate in Paired Share Structure -- The Meditrust
Companies intend to continue to utilize the paired share structure to
operate the healthcare and lodging businesses through the completion
of the spin-off, and to operate the lodging business immediately
following the spin-off of the new healthcare REIT.
o Reduce Capital Investments -- The Meditrust Companies will reduce
capital investments to reflect current industry operating conditions.
o Reset The Meditrust Companies' Annual Dividend -- The Meditrust
Companies reset their 1999 annual dividend to $1.84 per paired common
share, an amount that is sustainable and comparable to The Meditrust
Companies' peer groups.
2
<PAGE>
o Record Non-Recurring Charges -- The Meditrust Companies recorded
non-recurring charges of $248 million in the third quarter of 1998 and
approximately $ million in the fourth quarter of 1998.
The Record to Date
Although the Plan was announced approximately two months ago, The
Meditrust Companies have been actively implementing its components and have
successfully completed, or will soon successfully complete, a number of the
component parts as discussed below.
[SIDEBAR_TEXT]
"We are delivering on our
promises ahead of our
original schedule. These
asset sales are a key step
towards settling our forward
equity obligation, reducing
near-term debt obligations
and strengthening our
balance sheet. We are
confident that Meditrust
and our shareholders will
soon realize the benefits
of our comprehensive
restructuring plan."
David F. Benson, President
[/SIDEBAR_TEXT]
o Sale of Non-Strategic Assets -- The Meditrust Companies began actively
pursuing the sale of approximately $1 billion of non-strategic assets
during the fourth quarter of 1998. Since The Meditrust Companies
announced the Plan, they have sold assets resulting in approximately
$613 million of proceeds including the Santa Anita Racetrack and its
related operations for $126 million in gross proceeds, certain art
work acquired in the acquisition of the Santa Anita Companies for
gross proceeds of $11 million, a fifty percent joint venture interest
in the Santa Anita Fashion Park for gross proceeds of $40 million and
58 healthcare properties or healthcare investments for aggregate gross
proceeds of $436 million. In addition, The Meditrust Companies have
retained Goldman, Sachs & Co. to assist in the sale of the Companies'
golf segment, the Cobblestone Golf Group.
o Reduction of Debt through Asset Sales -- The Meditrust Companies have
applied substantially all of the net proceeds from the above-described
sales of non-strategic assets to the repayment of The Meditrust
Companies' debt, including its senior credit facility, and to the
settlement of the FEIT, as described below. The Meditrust Companies'
stated goal is to reduce its debt by approximately $550 million. In
January, the Meditrust Companies repaid $24 million of mortgages and
$250 million of its credit facility, which would otherwise have been
due on April 30, 1999.
o Settlement of FEIT -- The Meditrust Companies have entered into a
comprehensive agreement which provides for settlement of The Meditrust
Companies' FEIT with certain affiliates of Merrill Lynch & Co. (the
"Merrill Lynch Entities"). This settlement did not increase the amount
of money to be paid by or on behalf of The Meditrust Companies to the
Merrill Lynch Entities. The Meditrust Companies have settled a portion
of their $277 million FEIT in cash and approximately $103 million
remains outstanding. The Meditrust Companies intend to settle the
remaining portion of the FEIT by March 31, 1999 through the sale of
preferred stock.
o Reduction of Capital Investments -- The Meditrust Companies have
reduced their capital investment program over the near term,
reflecting current industry and market conditions. The Meditrust
Companies believe that their new strategic focus, together with the
asset sales which includes the sale of the Santa Anita Racetrack and
the contemplated sale of Cobblestone, will enable The Meditrust
Companies to grow under a reduced level of capital investments through
1999 and have the financial flexibility to respond quickly to new
opportunities.
3
<PAGE>
Healthcare: The Meditrust Companies will remain one of the leading
providers of financing to the healthcare industry and will continue to
seek opportunities to invest or acquire in those areas of the
healthcare industry experiencing expansion and profitability. Although
The Meditrust Companies' projected level of new healthcare investments
for 1999 is, at $200 million, less than The Meditrust Companies'
annual investments in recent years, The Meditrust Companies believe
that this level of investment is appropriate in the current capital
markets.
Lodging: One of the attributes that made La Quinta attractive to The
Meditrust Companies was the significant capital improvements of
approximately $270 million that had occurred at La Quinta during the
mid to latter 1990s. The lodging business will continue to benefit
from the opening of 57 Inns & Suites hotels during the past 22 years
and the opening in 1999 of the 13 Inns & Suites hotels currently under
construction. Upon completion of the hotels currently under
construction, The Meditrust Companies will own and operate 233 La
Quinta Inns and 70 La Quinta Inn & Suites hotels, with a total of
approximately 39,000 rooms. The Meditrust Companies do not presently
plan to proceed with further development efforts or to enter new
segments of the lodging industry until industry market conditions
improve, although the past capital improvements will permit The
Meditrust Companies to focus on internal efficiencies and growth.
Going forward, La Quinta will evaluate development and acquisition
investment opportunities as they arise.
o Reset of Annual Dividend -- The Meditrust Companies announced on
November 12, 1998 that they expected their annual dividend in 1999 to
be at least $1.84 per Paired Share. The Meditrust Companies noted that
the new dividend is sustainable, is comparable to its peer groups'
payout ratios and the adjustment will provide, compared to its prior
dividend, approximately $90 million in additional cash from
operations. On January 14, 1999 the Board of Directors of Meditrust
declared a $.46 dividend payable to shareholders of record on January
29, 1999 payable February 16, 1999.
The Corporate Document Proposals
Background: On November 5, 1997, the predecessor to The Meditrust
Corporation acquired The Santa Anita Companies. The Santa Anita Companies
enjoyed, at that time, the benefits of a unique organizational structure called
a "paired share structure." The shares of the capital stock of the two
companies that made up The Santa Anita Companies were "paired." As a result,
these shares of capital stock sold and traded together as a single unit called
a "paired share." The paired share structure provided certain benefits, at the
time of the acquisition of The Santa Anita Companies, as it linked an operating
company with a REIT. A REIT may own and lease real estate but it generally may
not conduct an operating business on the real property that it owns. By linking
a REIT, which can own and lease real property, with an operating company, which
can operate a business on the underlying real estate, the owners of the paired
shares retained the economic benefits (and, consequently, assumed the related
risks) associated with owning and operating the real estate. Consequently,
operating profits which normally would accrue to a third party operator instead
were earned by a company in which the REIT's shareholders owned stock.
Meditrust's predecessor, together with other REITs, saw the benefits that
this unique structure provided to the REIT's shareholders and acquired The
Santa Anita Companies. The acquisition was structured in a way that provided
maximum certainty that the paired share structure would be preserved, namely
Meditrust's predecessor merged with and into the REIT portion of The Santa
Anita Companies, which subsequently
4
<PAGE>
changed its name to Meditrust Corporation. As a result, the corporate
organizational and governing documents of The Santa Anita Companies, each of
which was originally prepared nearly twenty years ago, became the corporate and
organizational documents of The Meditrust Companies. These documents, which
were amended for name changes and other administrative matters, included the
following:
[SIDEBAR_TEXT]
The proposals to retructure The
Meditrust Companies' corporate
documents will enable The Meditrust
Companies to:
o more efficiently engage in capital raising and formation transactions
o efficiently respond in a timely manner to the challenges presented by the
Reform Act and its limitations on the use of the paired share structure
o capitalize on further opportunities to enhance shareholder value through
acquisitions that are consistent with The Meditrust Companies' growth
strategy, which may have the ancillary benefit of mitigating the tax costs
associated with the spin-off
[/SIDEBAR_TEXT]
o Certificate of Incorporation -- A certificate of incorporation is a
corporation's organizational document and typically outlines
fundamental information about the corporation such as its name,
purpose, amount of authorized capital stock and the number of
directors. Each of The Meditrust Companies inherited The Santa Anita
Companies' Certificates of Incorporation, subject to name changes and
administrative amendments that were made at the time of the
acquisition.
o By-laws -- A corporation's by-laws constitute its governing document
and typically set forth rules governing the internal management of the
corporation, as well as rules pertaining to shareholders and directors
meetings, electing and removing directors, appointing officers and
transferring shares of capital stock. Each of The Meditrust Companies
inherited The Santa Anita Companies' By-laws, subject to name changes
and administrative amendments that were made at the time of the
acquisition.
o Pairing Agreement -- This agreement, originally prepared in 1979,
provides for the pairing of The Meditrust Companies' shares of common
stock, as well as any securities convertible into common stock. In
other words, a share of common stock issued by Meditrust must be
accompanied ("paired") by a share of common stock issued by the
Operating Company and, once issued, must trade in tandem with the
Operating Company common stock.
At the time of the acquisition of The Santa Anita Companies in November
1997, these organizational and governing documents were viewed as somewhat
outdated and inflexible given the developments that had been made in corporate
practice as well as tax law related to REITs generally and paired share REITs
specifically. However, maintaining the integrity of the paired share platform
(including the organizational and governing documents) was important. Meditrust
Corporation's predecessor determined that if the platform, as then constituted,
worked, it should be put to use rather than making an attempt to revise these
inherited, inflexible documents. Accordingly, the platform was immediately put
to work by The Meditrust Companies with the announcements on January 3, 1998 and
January 11, 1998, respectively, of the acquisitions of La Quinta Inns, Inc., an
independent publicly traded corporation that focused on the ownership, operation
and development of hotel properties, and Cobblestone Holdings, Inc., an
independent company that owned, operated and developed golf course properties.
The acquisitions of La Quinta and Cobblestone were consummated by The Meditrust
Companies on July 17, 1998 and May 29, 1998, respectively.
5
<PAGE>
Changes in the Law: On July 22, 1998, the President of the United States
signed into law the Internal Revenue Service Restructuring and Reform Act of
1998 (the "Reform Act"). The Reform Act includes provisions which greatly
diminished the ability of the various paired share entities to continue to use
this previously grandfathered structure as a platform for further growth and
value creation. Although both the La Quinta and Cobblestone acquisitions were
"grandfathered" (The Meditrust Companies and their shareholders could enjoy the
benefits of the paired share structure for these acquisitions), further growth
by The Meditrust Companies (including through the La Quinta and Cobblestone
business segments) would be substantially limited by the Reform Act. However,
although the benefits of continued growth through the use of the paired share
structure is now limited, The Meditrust Companies must continue, subject to
approval of the proposals, to operate and raise capital pursuant to the existing
corporate documents which were largely intended to preserve this paired share
structure and impose inflexible rules on The Meditrust Companies' capital
raising and formation activities.
[SIDEBAR_TEXT]
The Reform Act will
ultimately force The
Meditrust Companies
to adopt an
alternative structure
in order to maximize
further growth
through acquisitions.
[/SIDEBAR_TEXT]
The Proposed Changes to the Corporate Documents: The Meditrust Companies'
organizational and governing documents were originally drafted nearly twenty
years ago and were largely designed to, among other things, preserve the unique
paired share structure of The Santa Anita Companies. Since these corporate
documents were originally drafted and put in place, a number of changes have
occurred that cause these documents to be outdated, but more importantly,
inflexible. The Meditrust Companies are now proposing to their shareholders that
they approve and adopt new organizational and governing documents that will
succeed the documents inherited from The Santa Anita Companies. The proposals
will not include any new so-called "anti-takeover" devices. Rather, the
proposals will make it easier to raise capital and to respond to the challenges
presented by the Reform Act and its limitations on the continued use of the
paired share structure. Finally, the proposals may provide The Meditrust
Companies with further opportunities to enhance shareholder value.
[SIDEBAR_TEXT]
The proposals to restructure The
Meditrust Companies' corporate
documents will not add any
so-called "anti-takeover" devices.
[/SIDEBAR_TEXT]
The proposals to restructure The Meditrust Companies corporate documents
will, if approved by The Meditrust Companies shareholders, do the following:
o Amend and Restate The Meditrust Companies' Certificates of
Incorporation -- The Meditrust Companies' Restated Certificates of
Incorporation, as amended to date, will be amended and restated in
their entirety. The existing provisions (which are contained in two
separate documents for each Company) will be continued in the Amended
and Restated Certificates of Incorporation, though they will be
compiled into one document for each of The Meditrust Companies. In
addition, a new provision calling for the pairing of each Company's
common stock with the common stock of the other Company will be added.
However, unlike the existing pairing arrangements contained in the
Pairing Agreement and the By-laws of each Company, the pairing
requirements contained in the Amended and Restated Certificates of
Incorporation will be waiveable and terminable by the Boards of
Directors of The Meditrust Companies. The Amended and Restated
Certificates of Incorporation will not, however, contain any new
so-called "anti-takeover" devices.
o Termination of the Pairing Agreement -- The Pairing Agreement, as
amended to date, will be terminated upon filing of the Amended and
Restated Certificates of Incorporation. The pairing of The Meditrust
Companies' outstanding common stock will continue though through the
6
<PAGE>
Amended and Restated Certificates of Incorporation until such time as
the Boards of Directors determine to terminate such pairing.
Automatic Termination of Certain Provisions of The Meditrust Companies'
By-laws -- As a result of the termination of the Pairing Agreement, certain
provisions in The Meditrust Companies' By-laws providing for the pairing of The
Meditrust Companies' common stock will automatically terminate. These
provisions, which were originally designed to preserve The Santa Anita
Companies' status as a paired share REIT, will be supplanted by the pairing
provisions contained within the Amended and Restated Certificates of
Incorporation. The Amended and Restated Certificates of Incorporation will,
upon approval and filing thereof with the Delaware Secretary of State, contain
the necessary provisions to preserve The Meditrust Companies' status as a
paired share REIT until such time as the Boards of Directors determine to
terminate such paired share status, as well as the provisions that are
necessary to preserve Meditrust's status as a REIT.
The Effect of the Proposed Changes to The Meditrust Companies' Corporate
Documents: The changes of The Meditrust Companies' corporate documents are
designed principally to enable The Meditrust Companies to engage in more
flexible capital raising and formation transactions that are not presently
permitted under The Meditrust Companies' existing organizational and governing
documents. Such flexibility may allow The Meditrust Companies to raise
additional capital through investments from institutional investors that may
exceed the 9.25% Ownership Limit in the respective Restated Certificates of
Incorporation. Adoption of the proposals will also allow The Meditrust Companies
to raise additional capital by allowing certain shareholders affiliated with
Thomas M. Taylor & Co. and other entities and individuals associated with
certain members of the Bass family (the "Bass Group"), including Thomas M.
Taylor, the Interim Chairman of the Boards of Directors of The Meditrust
Companies, to increase their holdings in Meditrust up to an aggregate of 13%.
Notwithstanding the foregoing, no assurance can be made that any such
investments will be made. In addition, the revised organizational and governing
documents will permit The Meditrust Companies to respond in a timely manner to
the challenges presented by the Reform Act and its limitations on the use of the
paired share structure. Finally, a further benefit may be that The Meditrust
Companies will be able to enter into transactions designed to enhance
shareholder value including engaging in an acquisition that may have the
ancillary effect of mitigating the tax costs associated with the spin-off.
o Capital Raising and Formation Transactions -- The changes to The
Meditrust Companies' corporate documents will enable The Meditrust
Companies to issue unpaired securities, including securities that are
convertible into common stock, and to facilitate capital raising and
formation transactions. The Meditrust Companies will be able to
structure offerings of their securities that will more appropriately
match one of The Meditrust Companies' needs with the investment
criteria and goals of various segments of the investment community.
The ability to structure offerings that match with the criteria and
goals of potential investors should have the benefit of achieving more
efficient and cost-effective capital raising.
o Efficient and Timely Response to the Reform Act -- The changes to The
Meditrust Companies' corporate documents will permit The Meditrust
Companies to efficiently respond in a timely manner to the challenges
presented by the Reform Act. The Reform Act diminishes the ability of
The Meditrust Companies to continue to use the paired share structure
as a platform for further growth and future value creation. However,
The Meditrust Companies' present corporate documents will not permit
The Meditrust Companies from engaging in certain transactions that may
be appropriate responses to the limitations imposed by the Reform Act.
For example, one response to the limitations imposed by the Reform Act
may be the destapling of The Meditrust
7
<PAGE>
Companies whereby more than fifty percent of one of The Meditrust
Companies' outstanding equity securities are issued unpaired. This
response is not currently permitted under The Meditrust Companies'
current corporate documents. However, the proposed changes to the
corporate documents will enable The Meditrust Companies to restructure
in response to the Reform Act in future efforts to further growth and
enhance shareholder value.
Enhance Shareholder Value Through Transactions that are Consistent with The
Meditrust Companies' Focused Strategy -- The changes in The Meditrust
Companies' corporate documents will permit The Meditrust Companies, when, as
and if appropriate, to engage in transactions that will enhance shareholder
value. For example, under the proposed corporate documents, Meditrust could
acquire a company that fits within its growth strategy on a fully tax-free
basis. An ancillary benefit of this type of transaction could be that The
Meditrust Companies may be able to mitigate the tax costs associated with the
spin-off.
Conclusion
The Meditrust Companies are asking their shareholders to consider changes
to The Meditrust Companies' organizational and governing documents that are
designed to enable The Meditrust Companies to engage in cost-effective capital
raising and formation transactions and to respond to the challenges presented
by the Reform Act. The Meditrust Companies believe that because of the changes
in the capital markets generally, and in the real estate industry specifically,
the most cost-effective and desirable way to raise capital in the future will
be to match one or both of The Meditrust Companies' needs with the goals and
criteria of potential investors. In addition, The Meditrust Companies believe
that in order to efficiently respond in a timely manner to the challenges
presented by the Reform Act, they will need to be governed by corporate
documents that will permit them to implement a structure that will ultimately
enhance shareholder value. The Meditrust Companies believe that their current
corporate documents restrict both of these types of efforts to further The
Meditrust Companies' long-term goals and enhance shareholder value.
Accordingly, they have proposed the changes to the corporate documents that are
to be considered at each of their Special Meetings of Shareholders to be held
__________ , __________ __ , 1999. The Meditrust Companies urge you to read
the accompanying Joint Proxy Statement in its entirety as you consider these
proposals. Once you have done so, we ask you to sign and return the enclosed
proxy cards as soon as possible.
8
<PAGE>
How to Vote
The Meditrust Companies' Boards of Directors unanimously recommend that
you vote "FOR" each of these proposals by signing, dating and promptly
returning the enclosed proxy cards in the enclosed postage-paid envelope.
The vote of each shareholder is important. You are urged to mark, date and sign
the accompanying proxy cards and return it in the enclosed postage-paid envelope
as soon as possible.
You may vote either "FOR" the proposals, "AGAINST" the proposals, or
"ABSTAIN" from voting on the proposals.
If you sign and return the proxy cards without clearly indicating an
"AGAINST" vote or without clearly indicating that you "ABSTAIN" from voting,
you will be deemed to have voted "FOR" the approval and adoption of the
amendment and restatement of the Certificates of Incorporation and "FOR" the
termination of the Pairing Agreement.
If you indicate you wish to "ABSTAIN" from voting with respect to the
approval and adoption of the amendment and restatement of the Certificates of
Incorporation, you will be deemed to have voted "AGAINST" the approval and
adoption of the amendment and restatement of the Certificates of Incorporation.
If you indicate you wish to "ABSTAIN" from voting with respect to the
termination of the Pairing Agreement, you will be deemed to have voted
"AGAINST" the termination of the Pairing Agreement.
The failure to return properly executed proxy cards will be the same as
voting "AGAINST" the approval and adoption of the amendment and restatement of
the Certificates of Incorporation and "AGAINST" the termination of the Pairing
Agreement unless you vote in person at the Special Meetings of Shareholders.
Additional detailed information about the proposals are set forth in the
accompanying Joint Proxy Statement, which you are urged to read carefully. If
you have any questions or need assistance in completing your proxy cards, please
call D.F. King & Co., Inc., our proxy solicitor, toll free at 1-800-____-____.
YOUR VOTE IS IMPORTANT. PLEASE ACT PROMPTLY.
IMPORTANT
If your shares are held for you by a broker or bank, only your broker and
bank can vote your shares, but only after receiving specific voting
instructions from you. Accordingly, please sign and return the
accompanying voting instruction form in the enclosed return envelope as
soon as possible.
9
[Preliminary Additional Solicitation Materials]
[To be released as soon as practicable but not sooner than on or about
February 11, 1999]
The Meditrust Companies
- --------------------------------------------------------------------------------
, 1999
Dear Fellow Shareholder:
We are asking you to consider and vote on two important proposals to
better position The Meditrust Companies (the "Companies") for the business
challenges and opportunities that lie ahead. The proposals relating to the
Companies corporate documents to be considered and acted upon by the Companies
shareholders will accomplish the following:
o The Companies' Restated Certificates of Incorporation, as amended to date,
will be amended and restated in their entirety. The existing provisions
will be continued in the Amended and Restated Certificates of Incorporation
(the "Amended Certificates") and a new provision calling for, among other
things, the pairing of each Company's common stock with the common stock of
the other Company will be added. The Amended Certificates will not contain
any new so-called "anti-takeover" devices.
o The Pairing Agreement, as amended, between the Companies will be
terminated. The termination of the Pairing Agreement will not, however,
terminate the paired share structure of the Companies as the Amended
Certificates' pairing provisions are intended to preserve this structure.
o The termination of the Pairing Agreement will, by extension, terminate
certain provisions of the By-laws of each of the Companies which also
require the pairing of certain classes of the Companies capital stock.
We believe that these proposals will facilitate the Companies' capital
raising and formation efforts, will enable the Companies to efficiently respond
in a timely manner to the challenges presented by recently adopted federal
legislation, which limits the future use of the Companies' paired share
structure, and will permit the Companies to capitalize on further opportunities
to enhance shareholder value.
These proposals are described in detail in the accompanying Joint Proxy
Statement, which we urge you to read in its entirety. We are also enclosing a
brochure for your review which describes the comprehensive restructuring plan
announced by the Companies on November 12, 1998 and how these proposals fit
into that plan.
The Companies Boards of Directors unanimously recommend you vote "FOR"
adoption of both of the proposals by signing, dating and promptly returning the
proxy cards to us in the postage-paid envelope.
The Special Meeting of Shareholders will be held on , 1999.
To assure that your vote on these proposals is counted, please return the
enclosed proxy cards as soon as practicable. If you have additional questions or
need assistance with the proper completion and return of your proxy cards,
please call D.F. King & Co., Inc., the Companies' proxy solicitation firm,
toll-free at .
We believe that we have developed a promising plan for the Companies'
future and we have already begun to successfully implement this plan. However,
more work needs to be done to ensure the Companies' success in the new
business environment.
Thank you for your prompt attention to this important matter.
Very truly yours,
<TABLE>
<S> <C> <C>
Thomas M. Taylor David F. Benson William C. Baker
Interim Chairman of President of President of Meditrust
the Boards of Directors of Meditrust Corporation Operating Company
The Meditrust Companies
</TABLE>
