<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended: DECEMBER 31, 1993
Commission file number: 0-14022
MEDITRUST
(Exact name of registrant as specified in its charter)
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<S> <C>
Massachusetts 04-6532031
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
128 Technology Center, Waltham, MA 02154
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number including area code (617) 736-1500
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Securities registered pursuant to Section 12(b) of the Act:
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<CAPTION>
Title of Each Class Name of Each Exchange on Which Registered
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<S> <C>
Shares of Beneficial Interest without par value New York Stock Exchange
9% Convertible Debentures due 2002 New York Stock Exchange
7% Convertible Debentures due 1998 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No________
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K, or any amendment to
this Form 10-K. ______
Aggregate market value of voting shares held by non-affiliates as of February
28, 1994: $1,083,421,000
Number of Shares of Beneficial Interest outstanding of registrant as of
February 28, 1994: 33,407,993
The following documents are incorporated by reference into the indicated Part
of this Form 10-K.
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Document Part
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Definitive Proxy Statement for the May 26, 1994 Annual Meeting of
Shareholders, to be filed pursuant to Regulation 14A III
</TABLE>
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PART I
Item 1.
BUSINESS
General
Information regarding Meditrust's business is given as of February 28,
1994.
Meditrust (the "Company"), a real estate investment trust organized on
August 6, 1985, invests in the subacute sector of the health care industry in
locations throughout the United States. The objective of the Company is to
enable shareholders to participate in the investment in health care related
facilities held primarily for the production of income to be distributed to
shareholders. In meeting this objective, the Company attempts to invest in
high quality facilities that are managed by experienced operators and to
achieve diversity in its property portfolio by sector of the health care
industry, geographic location, operator and form of investment.
The Company was organized to qualify, and intends to continue to
operate, as a real estate investment trust in accordance with federal tax laws
and regulations. So long as the Company so complies, with limited exceptions,
the Company will not be taxed under federal income tax laws on that portion of
its taxable income that it distributes to its shareholders. The Company has
distributed, and intends to continue to distribute, substantially all of its
real estate investment trust taxable income to shareholders.
The Company currently has investments in 213 facilities, consisting of
179 long-term care facilities, 20 rehabilitation hospitals, two alcohol and
substance abuse treatment facilities, six psychiatric hospitals, four
retirement living centers and two medical office buildings. Included in the
213 facilities are four properties under construction that are expected to
begin operations during the next three to twelve months. The Company's
investments take the form of sale/leaseback transactions, permanent mortgage
loans and development mortgage loans. The Company only enters into development
mortgage loans if, upon completion of the facility, the Company's development
mortgage loan is to be replaced by either a permanent mortgage loan from the
Company or a sale/leaseback transaction with the Company.
The Company's gross real estate investments increased by $206,822,000
during 1993 to $1,287,602,000 at December 31, 1993 as a result of the Company
making permanent and development mortgage loans and entering into
sale/leaseback transactions.
Permanent Mortgage Loans. During 1993, the Company provided permanent
mortgage financing of $181,908,000 for 26 long-term care facilities, one
rehabilitation facility and one retirement living facility totaling
approximately 4,300 beds and located in 13 states and for additions to four
facilities having permanent mortgage loans. As of February 28, 1994, the
Company was committed to provide additional financing of approximately
$2,207,000 for four existing permanent mortgage loans.
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Sale/Leaseback Transactions. During 1993, the Company funded $8,000,000
for the purchase of a rehabilitation facility located in Arkansas and
capitalized additional costs of $10,272,000 relating to thirteen facilities
located in eight states.
Other Transactions. During the year ended December 31, 1993, the
Company entered into a series of transactions with a prior operator of certain
rehabilitation and long-term care facilities financed by the Company. As a
result of these transactions, the Company acquired for $99,763,000 five
rehabilitation and four long-term care facilities (located in New York,
Massachusetts, Michigan, New Hampshire, Wisconsin and Washington), reduced
existing mortgage loans by $81,690,000, reduced a related bank participation in
one of the mortgage loans by $18,073,000, acquired from the operators of
certain facilities operating receivables and provided advances under a working
capital line. Also in connection with these transactions, the Company leased
eight of these facilities to four different operators and entered into a
management agreement for the remaining facility.
During 1993, the Company acquired a psychiatric facility in Texas for an
amount equal to its existing mortgage loan of $6,803,000 and entered into a
lease transaction with one of its existing operators.
Also during 1993, the Company reduced its real estate investments by
$34,978,000 from the sale of a long-term care facility located in Washington
and from the prepayment of permanent mortgage loans on five long-term care
facilities located in Massachusetts and two long-term care facilities located
in Connecticut. In addition, the Company collected principal payments of
$4,662,000 and reduced its investment in a partnership by $178,000.
Conversion of Development Mortgage Loans to Permanent Loans. During
1993, the Company provided ongoing development financing of $16,097,000
resulting in an aggregate funding of $33,963,000 for four long-term care
facilities located in four states totaling 496 beds. Construction of these
facilities was completed and development mortgage loans totaling $16,969,000
were converted to permanent mortgage loans and development mortgage loans
totaling $16,994,000 were converted into sale/leaseback transactions.
Development Mortgage Loans. During 1993, the Company provided ongoing
construction financing of $12,290,000 for three long- term care facilities and
for additions to two existing long-term care facilities. As of February 28,
1994, the Company is committed to provide additional financing of approximately
$17,831,000 for the completion of seven facilities.
Financings. In February 1993, the Company completed the sale of
3,277,500 Shares at $30.625 per Share and issued $92,120,000 of 7% convertible
debentures due 1998. The Company used the proceeds to repay short-term
borrowings and for investments in additional health care facilities.
In November 1993, the Company issued $86,250,000 of 6 7/8% convertible
debentures due 1998. The Company used the proceeds to repay short-term
borrowings and for investments in additional health care facilities.
The Company may raise additional capital from public or private sources
and invest in additional health care related facilities.
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INVESTMENT AND OTHER POLICIES
General
The Company invests in income-producing health care related facilities
which may include long-term care facilities, rehabilitation hospitals, alcohol
and substance abuse treatment facilities, psychiatric hospitals, retirement
living facilities, medical office buildings and other health care related
facilities. These investments are made primarily for the production of income.
Because the Company invests in health care related facilities, the Company is
not in a position to diversify its investment portfolio to include assets
selected to reduce the risks associated with investment in improved real estate
in a single industry. However, the Company intends to continue to diversify
its portfolio by broadening its geographic base, providing financing to more
operators, diversifying the type of health care facilities in its portfolio and
diversifying the types of financing methods provided.
In evaluating potential investments, the Company considers such factors
as: (1) the current and anticipated cash flow and its adequacy to meet
operational needs and other obligations and to provide a competitive market
return on equity to the Company's shareholders; (2) the geographic area, type
of property and demographic profile; (3) the location, construction quality,
condition and design of the property; (4) the potential for capital
appreciation, if any; (5) the growth, tax and regulatory environment of the
communities in which the properties are located; (6) occupancy and demand for
similar health care facilities in the same or nearby communities; (7) an
adequate mix of private and governmental-sponsored patients; (8) potential
alternative uses of the facilities; and (9) prospects of liquidity through
financing or refinancing.
Management conducts market research and analysis for all potential
investments on behalf of the Company. Management also reviews the value of the
property, the interest rates and debt service coverage requirements of any debt
to be assumed and the anticipated sources of repayment for such debt.
The Company's Declaration of Trust places no limitations on the
percentage of the Company's total assets that may be invested in any one
property or joint venture or on the nature or identity of the operators of such
properties. The independent Trustees of the Company, however, may establish
such limitations as they deem appropriate from time to time.
From time to time, the Company enters into senior debt transactions.
The Company has no current plans to underwrite securities of other issuers.
The Company has authority to offer shares of beneficial interest ("Shares") in
exchange for investments which conform to its standards and to repurchase or
otherwise acquire its Shares or other securities. The Company has no present
plans to invest in the securities of others for the purpose of exercising
control, although the Company owns interests in partnerships which own health
care facilities. The Company makes loans on such terms as the Trustees may
approve.
The Company will not, without the prior approval of a majority of
Trustees, including a majority of the independent Trustees of the Company,
acquire from or sell to any Trustee, director, officer or employee of the
Company, or any affiliate thereof, any of the assets or other property of the
Company.
The Company provides its shareholders with annual reports containing
audited financial statements and quarterly reports containing unaudited
financial information.
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Reinvestment of Sales Proceeds
In the event the Company sells or otherwise disposes of any of its
properties, the independent Trustees will determine whether and to what extent
the Company will acquire additional properties or distribute the proceeds to
the shareholders.
Short-Term Investments
The Company invests its cash in certain short-term investments during
interim periods between the receipt of revenues and distributions to
shareholders. Cash not invested in facilities may be invested in
interest-bearing bank accounts, certificates of deposit, short-term
money-market securities, short-term United States government securities,
mortgage-backed securities guaranteed by the Government National Mortgage
Association, mortgages insured by the Federal Housing Administration or
guaranteed by the Veterans Administration, mortgage loans, mortgage loan
participations, and certain other similar investments. The Company's ability
to make certain of these investments may be limited by tax considerations. The
Company's return on these short-term investments may be more or less than its
return on real estate investments.
Borrowing Policies
The Company may incur additional indebtedness when, in the opinion of
the Trustees, it is advisable. For short-term purposes, the Company may, from
time to time, negotiate lines of credit, arrange for other short-term
borrowings from banks or others or issue commercial paper. The Company may
arrange for long-term borrowing from banks, insurance companies, public
offerings or private placements to institutional investors. Under the
Company's Declaration of Trust and under documents pertaining to certain
existing indebtedness, the Company is subject to various restrictions with
respect to borrowings. See "Prohibited Investments and Activities."
In addition, the Company may incur mortgage indebtedness on real estate
which it has acquired through purchase, foreclosure or otherwise. When terms
are deemed favorable, the Company may invest in properties subject to existing
loans or mortgages. The Company also may obtain financing for unleveraged
properties in which it has invested or may refinance properties acquired on a
leveraged basis. There is no limitation on the number or amount of mortgages
which may be placed on any one property, but overall restrictions on mortgage
indebtedness are provided under documents pertaining to certain existing
indebtedness.
Prohibited Investments and Activities
The Declaration of Trust imposes certain prohibitions and restrictions
on various investment practices or activities of the Company, including
prohibitions against:
(i) investing in junior mortgage loans, unless, by appraisal or
other method, the Independent Trustees determine: (a) the capital investment
in any such mortgage loan is adequately secured on the basis of the equity of
the borrower in the property underlying such investment and of the ability of
the borrower to repay the mortgage loan; or (b) such mortgage loan is a
financing device entered into by the Company to establish the priority of its
capital investment over the capital of others investing with the Company in a
real estate project;
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(ii) allowing the aggregate borrowings of the Company to exceed 300%
of the net assets of the Company, unless the Independent Trustees determine
that a higher level of borrowing is appropriate;
(iii) investing more than 10% of the Company's total assets in
unimproved real property or mortgage loans with respect thereto;
(iv) investing in commodity or commodity futures contracts other than
interest rate futures used solely for hedging purposes;
(v) issuing equity securities which are redeemable at the option of
the holders thereof;
(vi) issuing debt securities, unless the historical debt service
coverage for the most recently completed fiscal year, as adjusted for known
changes, is sufficient to service the higher level of debt;
(vii) granting options or issuing warrants to purchase Shares at an
exercise price or for consideration less than the fair market value of such
Shares on the date of such grant or issuance;
(viii) investing more than 1% of the assets of the Company in real
estate contracts for sale, unless such real estate contracts are recordable in
the chain of title; and
(ix) acting in any way that would disqualify the Company as a real
estate investment trust under the provisions of the Internal Revenue Code.
At the Annual Meeting in May 1992, the shareholders voted to amend the
Declaration of Trust by deleting all of the foregoing restrictions. The
amendment remains subject to the consent of certain third party lenders.
In addition to prohibitions and restrictions imposed by the Declaration
of Trust, there are and may be, from time to time, additional restrictions
imposed by debt instruments or other agreements entered into by the Company.
Policy Changes
The prohibitions and restrictions contained in the Declaration of Trust
may not be changed by the Trustees without shareholder approval. All other
policies set forth herein may be changed by the Trustees without shareholder
approval.
Competition
The Company competes, primarily on the basis of price, knowledge of the
industry, and flexibility of financing structure, with real estate
partnerships, other real estate investment trusts, banks and other investors
generally in the acquisition, leasing and financing of health care related
facilities.
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The operators of the facilities compete on a local and regional basis
with other operators of comparable facilities. They compete with independent
operators as well as companies managing multiple facilities, some of which are
substantially larger and have greater resources than the operators of the
Company's facilities. Some of these facilities are operated for profit while
others are owned by governmental agencies or tax-exempt not-for-profit
organizations.
Employees
The Company currently employs 44 persons.
Declaration of Trust
The Declaration of Trust of the Company provides that shareholders of
the Company shall not be subject to any liability for the acts or obligations
of the Company and that, as far as is practicable, each written agreement of
the Company is to contain a provision to that effect. No personal liability
will attach to the shareholders for claims under any contract containing such a
provision in writing where adequate notice is given of such provision, except
possibly in a few jurisdictions. With respect to all types of claims in such
jurisdictions and with respect to tort claims, contract claims where the
shareholder liability is not disavowed as described above, claims for taxes and
certain statutory liabilities in other jurisdictions, a shareholder may be held
personally liable to the extent that claims are not satisfied by the Company.
However, the Declaration of Trust provides that, upon payment of any such
liability, the shareholder will be entitled to reimbursement from the general
assets of the Company. The Trustees intend to conduct the operations of the
Company, with the advice of counsel, in such a way as to avoid, as far as is
practicable, the ultimate liability of the shareholders of the Company. The
Trustees do not intend to provide insurance covering such risks to the
shareholders.
GOVERNMENT REGULATION
Each of the Company's investments is in a health care related facility
and the amount of percentage rent or additional interest, if any, which is
based on the operator's gross revenues from certain of the facilities, is in
most cases subject to changes in the reimbursement and license policies of
federal, state and local governments. In addition, the acquisition of health
care facilities is generally subject to state and local regulatory approval.
Medicare, Medicaid, Blue Cross and Other Payors
Certain of the operators receive payments for patient care from federal
Medicare programs for elderly and disabled patients, state Medicaid programs
for medically indigent and cash grant patients, private insurance carriers,
employers and Blue Cross plans, health maintenance organizations, preferred
provider organizations and directly from patients. In general, Medicare
payments for psychiatric care, long-term care services and rehabilitative care
are based on allowable costs plus a return on equity for proprietary
facilities. Payments from state Medicaid programs for psychiatric care are
based on reasonable costs or are at fixed rates. Long-term care facilities are
generally paid by the Medicaid programs at fixed rates. Most Medicare and
Medicaid payments are below retail rates. Blue Cross payments in different
states and areas are based on costs, negotiated rates or retail rates.
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Long-Term Care Facilities
Regulation of long-term care facilities is exercised primarily through
the licensing of such facilities. The particular agency having regulatory
authority and the license qualification standards vary from state to state and,
in some instances, from locality to locality. Licensure standards are
constantly under review and undergo periodic revision. Governmental
authorities generally have the power to review the character, competence and
community standing of the operator and the financial resources and adequacy of
the facility, including its plant, equipment, personnel and standards of
medical care. Long-term care facilities are certified under the Medicare
program and all are eligible to qualify under state Medicaid programs, although
not all participate in the Medicaid programs.
Rehabilitation Hospitals
Rehabilitation hospitals are also subject to extensive federal, state
and local legislation and regulation. Rehabilitation hospitals are subject to
periodic inspections and licensure requirements. Inpatient rehabilitation
facilities are cost-reimbursed, receiving the lower of reasonable costs or
reasonable charges. Typically, the fiscal intermediary pays a set rate per day
based on the prior year's costs for each facility. Annual cost reports are
filed with the operator's fiscal intermediary and adjustments are made, if
necessary.
Alcohol and Substance Abuse Treatment Facilities
Alcohol and substance abuse treatment facilities must comply with the
licensing requirements of federal, state and local health agencies and with the
requirements of municipal building codes, health codes and local fire
departments. In granting and renewing a facility's license, a state health
agency considers, among other things, the physical buildings and equipment, the
qualifications of the administrative personnel and health care staff, the
quality of nursing and other services and the continuing compliance of such
facility with the laws and regulations applicable to its operations.
Psychiatric Hospitals
Psychiatric hospitals generally are subject to extensive federal, state
and local legislation and regulation. Licensing for psychiatric hospitals is
subject to periodic inspections regarding standards of medical care, equipment
and hygiene. In addition, there are specific laws regulating civil commitment
of patients and disclosure of information regarding patients being treated for
chemical dependency. Many states have adopted a "patient's bill of rights"
which sets forth standards, such as using the least restrictive treatment,
allowing patient access to the telephone and mail, allowing the patient to see
a lawyer and requiring the patient to be treated with dignity. Insurance
reimbursement for psychiatric treatment generally is more limited than for
general health care.
Medical Office Buildings
The individual physicians, groups of physicians and health care
providers which occupy medical office buildings are subject to a variety of
federal, state and local regulations applicable to their specific areas of
practice. Since medical office buildings may contain numerous types of medical
services, a wide variety of regulations may apply. In addition, medical office
buildings must comply with the requirements of municipal building codes, health
codes and local fire departments.
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Item 2.
PROPERTIES
The table sets forth certain information as of February 28, 1994
regarding the Company's facilities:
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Purchase Price Annual Base Rent
Number of Number of or Mortgage Plus Debt Service or
Location Facilities Beds (1) Amount (2) Interest Payment(3)
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(dollars in thousands)
<S> <C> <C> <C> <C>
LONG-TERM CARE FACILITIES
Alabama 1 226 $ 7,759 $ 940
Arizona 1 120 2,883 (4) 317
Colorado 3 427 19,209 (5) 2,305
Connecticut 18 2,382 129,071 (6) 15,056
Florida 2 330 19,432 (7) 2,149
Illinois 29 2,881 59,100 (8) 5,572
Indiana 1 145 6,270 706
Maryland 1 136 8,494 977
Massachusetts 20 3,194 187,799 (9) 21,209
Michigan 7 888 28,978 (10) 3,580
Missouri 1 186 8,798 1,078
New Jersey 4 687 27,211 (11) 2,952
Nevada 2 350 16,846 (4) 2,087
New York 3 432 49,226 5,529
North Carolina 1 120 3,164 (4) 380
Ohio 5 567 23,400 2,581
Pennsylvania 4 546 21,443 (12) 2,665
Pennsylvania and New Jersey (16) 12 2,050 84,947 (4) 9,776
Rhode Island 1 156 5,000 (4) 538
Tennessee 2 323 11,187 (4) 1,204
Texas 22 1,903 41,759 (13) 3,745
Utah 1 120 5,600 (4) 461
West Virginia and Pennsylvania (16) 5 400 13,968 (4) 1,607
Wyoming 1 150 5,500 649
Various (17) 15 1,759 44,182 (4) 5,304
Various (18) 17 2,680 96,075 (4) 10,332
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TOTAL LONG-TERM CARE 179 23,158 927,301 103,699
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REHABILITATION HOSPITALS
Arkansas 2 140 17,451 1,999
Arizona 1 80 9,965 1,196
California 5 298 68,899 (14) 8,528
Kansas 1 80 11,649 1,437
Louisiana 2 170 21,920 2,751
Michigan 1 55 7,788 817
New Hampshire 1 128 11,835 1,354
New York 1 30 4,701 493
Tennessee 1 60 8,858 (4) 1,108
Texas 3 200 34,889 4,344
Washington 1 55 5,685 686
Wisconsin 1 109 13,861 1,619
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TOTAL REHABILITATION 20 1,405 217,501 26,332
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<TABLE>
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Purchase Price Annual Base Rent
Number of Number of or Mortgage Plus Debt Service or
Location Facilities Beds (1) Amount (2) Interest Payment(3)
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(dollars in thousands)
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ALCOHOL AND SUBSTANCE
ABUSE TREATMENT FACILITIES
New York 2 354 94,000 10,058
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PSYCHIATRIC HOSPITALS
Arizona 1 114 8,088 (4) 1,012
California 1 61 5,750 719
Louisiana 1 90 8,750 1,050
New York 1 100 30,000 3,363
Texas 2 156 13,420 1,462
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TOTAL PSYCHIATRIC 6 521 66,008 7,606
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RETIREMENT LIVING FACILITIES
Colorado 1 215 15,820 (4) 1,701
Florida 1 182 10,430 (4) 1,025
Texas 1 424 960 (15) 899 (15)
Wyoming 1 161 9,700 1,144
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TOTAL RETIRMENT LIVING 4 982 36,910 4,769
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MEDICAL OFFICE BUILDINGS
California 1 8,201 (19) 656
Florida 1 5,023 (19) 402
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TOTAL MEDICAL OFFICE
BUILDINGS 2 13,224 1,058
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TOTAL ALL FACILITIES (20)(21) 213 26,420 $1,354,944 $153,522
=== ====== ========== ========
</TABLE>
(1) Based upon information provided by the operators of the facilities,
the average occupancy of the Company's facilities for the year ended
December 31, 1993, was as follows: long-term care facilities, 90%;
rehabilitation hospitals, 54%; alcohol and substance abuse treatment
facilities, 61%; psychiatric hospitals, 52%; retirement living
facilities, 82%. Generally, average occupancy rates are determined by
dividing the number of patient days in each period by the average
number of licensed bed days during such period.
(2) Represents purchase price or mortgage amount at February 28, 1994 for
operating facilities and the estimated construction loan amount for
facilities under construction. The annual base rentals/interest
payments under the leases or mortgages are generally projected to be
10.0% - 12.5% of the purchase price or mortgage amount, in accordance
with the terms of the respective agreements.
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(3) Base rent excludes additional and percentage rent and interest but
includes an aggregate of $6,868,000 in debt service. Additional and
percentage rent and interest for the year ended December 31, 1993 was
an aggregate of $8,657,000 for all of the facilities. Additional and
percentage rent and interest are calculated based upon a percentage of
a facility's revenues over an agreed upon base amount.
(4) Permanent mortgage loans.
(5) Includes a permanent mortgage loan of $7,301,000.
(6) Includes permanent mortgage loans aggregating $69,158,000.
(7) Includes permanent mortgage loan of $8,432,000
(8) Includes a permanent mortgage loan of $50,500,000.
(9) Includes permanent mortgage loans of $74,292,000.
(10) Includes permanent mortgage loans of $21,494,000.
(11) Includes a permanent mortgage loan of $3,426,000.
(12) Includes a permanent mortgage loan of $9,911,000.
(13) Includes permanent mortgage loans of $36,246,000.
(14) Includes a permanent mortgage loan of $29,911,000.
(15) Fifty percent owned by the Company. The amount shown as annual base
rent represents the Company's partnership distribution received during
the year ended December 31, 1993.
(16) Represents mortgages collateralized by multi-state facilities.
(17) Represents a permanent mortgage on fifteen properties located in nine
states.
(18) Represents a permanent mortgage on seventeen properties located in ten
states.
(19) Construction mortgage loan.
(20) Investments by the Company in facilities operated by The Mediplex
Group, Inc., Life Care Centers of America, Inc., and Continental
Medical Systems, Inc. represented 27.2%, 14.6% and 9.7%, respectively,
of the Company's total assets as of February 28, 1994.
(21) The 28 facilities for which The Mediplex Group, Inc. has guaranteed
the lessee's or borrower's obligations or provided working capital
assurances are located in Massachusetts, Connecticut, New York, New
Jersey, Florida, Michigan and Arkansas and include 22 long-term care
facilities, 3 rehabilitation hospitals, 2 alcohol and substance abuse
treatment facilities and 1 psychiatric hospital.
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Long-Term Care Facilities. The long-term care facilities offer
restorative, rehabilitative and custodial nursing care for patients not
requiring more extensive and sophisticated treatment available at acute care
hospitals. The facilities are designed to provide custodial care and to
supplement hospital care and many have transfer agreements with one or more
acute care hospitals.
Rehabilitation Hospitals. The rehabilitation hospitals provide
treatment to restore physical, psycho-social, educational, vocational and
economic usefulness and independence to disabled persons. Rehabilitation
concentrates on physical disabilities and impairments and utilizes a
coordinated multidisciplinary team approach to help patients attain measurable
goals.
Alcohol and Substance Abuse Treatment Facilities. These facilities
provide inpatient treatment for alcohol and substance abuse, including medical
evaluation, detoxification and rehabilitation. Specialized programs offer
treatment for adults, adolescents, families and chronic abusers.
Psychiatric Hospitals. The psychiatric hospitals offer comprehensive,
multidisciplinary adult, adolescent and substance abuse psychiatric programs.
Patients are evaluated upon admission and an individualized treatment plan is
developed. Elements of the treatment plan include individual, group and family
therapy, activity therapy, educational programs and career and vocational
planning.
Retirement Living Facilities. The retirement living facilities offer
specially designed residential units for active and ambulatory elderly
residents and provide various ancillary services. They contain nursing
facilities to provide a continuum of care. The retirement living facilities
offer their residents an opportunity for an independent lifestyle with a range
of social and health services.
Medical Office Buildings. Medical office building facilities contain
individual physician, physician group and other health care provider offices
for the administration and treatment of patients, usually in close proximity to
the general service acute care hospital to which the physicians are affiliated.
The types of services provided in a medical office building may include
outpatient therapy, clinics, examination facilities and the provision of other
medical services in a non-hospital setting.
LEASES
Each facility (which includes the land, buildings and improvements,
related easements and rights and fixtures (the "Leased Properties")), that is
owned by the Company is leased to a health care provider pursuant to a
long-term net lease (collectively, the "Leases") which generally contains terms
as outlined below. Generally, the Leased Properties do not include major
movable equipment.
The fixed terms of the Leases generally range from 10 to 20 years and
contain from two to nine five-year renewal options. Some Leases are subject to
earlier termination upon the occurrence of certain contingencies described in
the Lease.
The Company's Leased Properties aggregated approximately $686,000,000
of gross real estate investments at December 31, 1993. The base rents range
from approximately 10% to 15% per annum of the Company's equity investment in
the Leased Properties and many may be adjusted upward during the terms of the
leases to an amount equal to 300 to 500 basis points over the five-year United
States Treasury securities' yield at the time of adjustment. The base rents
for the renewal periods are generally fixed rents for the initial renewal
periods and market rates for later renewal periods. All Leases, except for two
facilities located in New York, provide for additional rents in addition to the
base rent, based on revenues exceeding specified base revenues. The rents for
these two facilities are subject to periodic
-12-
<PAGE> 13
fixed increases. In addition, the Company typically charges a lease commitment
fee at the initiation of the sale/leaseback transaction.
Each Lease is a net lease requiring the lessee to pay rent and all
additional charges incurred in the operation of the Leased Property. The
lessees are required to repair, rebuild and maintain the Leased Properties.
The obligations under the Leases are guaranteed by the parent
corporation of the lessee, if any, or affiliates or individual principals of
the lessee. Some obligations are further backed by letters of credit, security
deposits or certificates of deposit from various financial institutions which
cover up to one full year's lease payments and which remain in effect until the
expiration of a fixed time period or the fulfillment of certain performance
criteria. The Company also may obtain other credit enhancement devices similar
to those it may obtain with respect to permanent mortgage loans. See
"Permanent Mortgage Loans."
With respect to two of the facilities, the Company leases the land
pursuant to ground leases and in turn subleases the land to the operator of the
facility. Such subleases contain substantially similar terms as the Leases.
PERMANENT MORTGAGE LOANS
The Company's permanent mortgage loan program is comprised of secured
loans which are structured to provide the Company with interest income,
additional interest based upon the revenue growth of the operating facility,
principal amortization and commitment fees. Virtually all of the approximately
$589,000,000 of permanent mortgage loans as of December 31, 1993 are first
mortgage loans.
The interest rates on the Company's investments in permanent mortgage
loans for operating facilities ranged from 10.0% to 13.5% per annum on the
outstanding balances. The yield to the Company on permanent mortgage loans
depends upon a number of factors, including the stated interest rate, average
principal amount outstanding during the term of the loan, the amount of the
commitment fee charged at the inception of the loan, the interest rate
adjustments and the additional interest earned in the revenue growth of the
operating facility.
The permanent mortgage loans for operating facilities made through
December 31, 1993 are generally subject to 10-year terms that provide for a
balloon payment on the outstanding principal balance at the end of the tenth
year. The interest adjustment generally provides for interest to be charged at
the greater of the current interest rate or 300 to 450 basis points over the
five- year United States Treasury securities' yield at the time of adjustment.
-13-
<PAGE> 14
The Company generally requires a variety of additional forms of security
and collateral beyond that which is provided by the lien of the mortgage. For
example, the Company requires one or more of the following items: (a) a
guaranty of the complete payment and performance of all obligations associated
with each mortgage loan from the borrower's parent corporation, if any, other
affiliates of the borrower and/or one or more of the individual principals
controlling such borrower; (b) a collateral assignment from the borrower of the
leases and the rents relating to the mortgaged property; (c) a collateral
assignment from the borrower of all permits, licenses, approvals and contracts
relating to the operation of the mortgaged property; (d) a pledge of all, or
substantially all, of the equity interest held in the borrower; (e) cash
collateral or a pledge of a certificate of deposit, for a negotiated dollar
amount typically equal to at least one year's principal and interest on the
loan (which cash collateral or pledge of certificate of deposit typically
remains in effect until the later to occur of (i) three years after the closing
of the mortgage loan or (ii) the achievement by the facility of an agreed-upon
cash flow debt coverage ratio for three consecutive fiscal quarters and, in the
event that after the expiration of the letter of credit or pledge of
certificate of deposit, the agreed-upon financial covenants are not maintained
throughout the loan term, the borrower is often required to provide the Company
with cash collateral or pledge of certificate of deposit); (f) an agreement by
any affiliate of the borrower or the facility to subordinate all payments due
to it from the borrower to all payments due to the Company under the mortgage
loan; and (g) a security interest in all of the borrower's personal property,
including, in some instances, the borrower's accounts receivable. In addition,
the mortgage loans are generally cross-defaulted and cross-collateralized with
any other mortgage loans, leases or other agreements between the borrower or an
affiliate of the borrower and the Company.
DEVELOPMENT MORTGAGE LOANS
The Company makes development mortgage loans that by their terms convert
either into sale/leaseback transactions or permanent mortgage loans upon the
completion of development of the facilities. Generally, the interest rates on
the outstanding balances of the Company's development mortgage loans are the
greater of a base rate or 75 to 550 basis points over the prime rate of a
specified financial institution. The Company also typically charges a
commitment fee at the commencement of the loan. The development loan period
generally commences upon the funding of such loans and terminates upon the
earlier of (a) the completion of development of the applicable facility or (b)
a specific date. This period is generally 12 to 18 months. During the term of
the development loan, funds are advanced pursuant to draw requests made by the
borrower in accordance with the terms and conditions of the applicable loan
agreement which require a site visit prior to the advancement of funds.
Monthly payments of interest only are made on the total amount of the loan
proceeds advanced during the development period.
-14-
<PAGE> 15
Since it began its development mortgage loan program in August 1987, the
Company has funded the development of ten rehabilitation hospitals, six
long-term care facilities and one retirement living facility. These
facilities, subsequently converted into sale/leaseback transactions, represent
an investment of approximately $140,606,000 as of December 31, 1993. The
Company had advanced approximately $11,477,000 towards a commitment of
$13,896,000 of development mortgage loans in conjunction with the development
of additions to three additional long-term care facilities as of December 31,
1993. These development loans convert automatically into sale/leaseback
transactions upon completion of the facility. Simultaneously with the
commencement of the term of each of these development loans, the Company has
generally entered into a purchase and sale and lease agreement with the
borrower pursuant to which (a) the Company will purchase the facility upon
completion of the development for purchase prices ranging from (i) a stated
maximum price that is generally equal to the face amount of the development
mortgage loan to (ii) the actual cost of developing the facility plus an amount
equal to the sum of specified "soft costs" items associated with such
development and (b) upon such sale the borrower will immediately lease back the
facility from the Company. The base rent under the lease is established upon
the conclusion of the development loan period at the greater of (i) a rate
specifically agreed to at the time of the issuance of the commitment for the
loan or (ii) 300 to 450 basis points over the five-year United States Treasury
securities' yield at the time of adjustment. See "Leases."
The Company has also funded since inception the development of two
rehabilitation hospitals, eight long-term care facilities and one retirement
living facility that were converted to permanent mortgage loans, representing
an investment of approximately $104,788,000 as of December 31, 1993. The
Company had advanced approximately $4,663,000 towards a total commitment of
$10,335,000 of development mortgage loans in conjunction with the development
of two additional long-term care facilities as of December 31, 1993. These
development mortgage loans convert automatically into permanent mortgage loans
upon completion of the facility and the balance, if any, of the principal
amount of the loan is advanced to the borrower. The interest rate of the loans
is adjusted upon their conversion to permanent status to be the greater of (i)
a rate specifically agreed to at the time of the issuance of the commitment for
the loan or (ii) 300 to 350 basis points over the five-year United States
Treasury securities' yield at the time of adjustment. The other terms and
conditions of such loans generally are substantially similar to the Company's
permanent mortgage loans. See "Permanent Mortgage Loans."
As with the Company's permanent mortgage financing program, the
development mortgage loans generally include a variety of additional forms of
security and collateral beyond that which is provided by the lien of the
mortgage. See "Permanent Mortgage Loans." During the development loan period,
the Company generally requires additional security and collateral in the form
of either (a) payment and performance completion bonds or (b) completion
guarantees by either one, or a combination of, the borrower's parent entity,
other affiliates of the borrower or one or more of the individual principals
who control the borrower. In addition, prior to any advance of funds by the
Company under the development mortgage loan, the borrower must provide (a)
satisfactory evidence in the form of an endorsement to the Company's title
insurance policy for the loan that no intervening liens have been placed on the
property since the date of the Company's previous advance; (b) a certificate
executed by the architect for the project that indicates that all construction
work completed on the project conforms with the requirements of the applicable
plans and specifications; (c) a certificate executed by the general contractor
that all work requested for reimbursement by the borrower has been completed;
and (d) satisfactory evidence that the funds remaining unadvanced under the
loan are sufficient for the payment of all costs necessary for the completion
of the project in accordance with the terms and provisions of the applicable
loan agreement.
-15-
<PAGE> 16
As a further safeguard during the development loan period, the Company
generally will retain a portion of the loan proceeds equal to 10% of the
principal loan amount until it has received satisfactory evidence that the
project has been fully completed in accordance with the applicable plans and
specifications and the period during which liens may be perfected with respect
to any work performed, or labor or materials supplied, in connection with the
construction of the project has expired. The Company also monitors the
progress of the development of each project and the accuracy of the borrower's
draw requests by having its own inspector perform on- site inspections of the
project prior to the release of any requested funds.
Item 3.
LEGAL PROCEEDINGS
NONE.
Item 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following information relative to the Company's executive officers
is given as of February 28, 1994:
<TABLE>
<CAPTION>
Name Age Position with the Company
---- --- -------------------------
<S> <C> <C>
Abraham D. Gosman 65 Chairman, Chief Executive
Officer and Trustee
David F. Benson 44 President and Trustee
Michael F. Bushee 36 Senior Vice President of Operations
Michael S. Benjamin 36 Senior Vice President, Secretary
and General Counsel
Lisa M. Pavelka 30 Vice President and Treasurer
Stephen H. Press 57 Vice President of Acquisitions
C. Michael Ford 55 Vice President of Marketing
Keith E. Grant 53 Controller
</TABLE>
-16-
<PAGE> 17
Abraham D. Gosman has been Chairman of the Company since its
organization in 1985 and became Chief Executive Officer in February 1991. He
had been Chief Executive Officer of A.M.A. Advisory Corp., the Company's former
advisor (the "Advisor"), from June 1988 until February 1991 and President of
the Advisor from its incorporation until July 1988. From August 1989 until
April 12, 1991, Mr. Gosman had been Chief Executive Officer of Diamond
Treatment Centers, Inc. ("Diamond") and, until he resigned in March 1991, each
of its subsidiaries, which own and operate alcohol treatment facilities. On
April 12, 1991, involuntary proceedings under Chapter 11 of the Federal
Bankruptcy Code were filed against Diamond and each of its subsidiaries, to
which filing such companies consented on April 24, 1991. Mr. Gosman was the
Chief Executive Officer of The Mediplex Group, Inc. ("Mediplex"), an operator
and developer of health care facilities, from its incorporation in 1983 until
September 1988. After the acquisition of Mediplex in August 1990 by a company,
the majority of whose stock was owned by Mr. Gosman, Mr. Gosman again assumed
the position of Chief Executive Officer and Chairman of the Board of Mediplex.
Mr. Gosman has been in the health care and development business for more than
thirty years.
David F. Benson has been President of the Company since September 1991
and was Treasurer of the Company from January 1986 to May 1992. He was
Treasurer of Mediplex from January 1986 through June 1987. He was previously
associated with Coopers & Lybrand, independent accountants, from 1979 to 1985.
Michael F. Bushee has been Senior Vice President of Operations of the
Company since October 1993. He was Vice President from December 1989 to
October 1993, Director of Development from January 1988 to December 1989 and
has been associated with the Company since July 1987. He was previously
associated with The Stop & Shop Companies, Inc., a retailer of food products
and general merchandise, for three years and Wolf & Company, P.C., independent
accountants, for four years.
Michael S. Benjamin has been Senior Vice President, Secretary and
General Counsel of the Company since October 1993. He was Vice President,
Secretary and General Counsel from May 1992 to October 1993, Secretary and
General Counsel from December 1990 to May 1992 and Assistant Counsel to the
Company from November 1989 to December 1990. His previous association was with
the law firm of Brown, Rudnick, Freed & Gesmer, from 1983 to 1989.
Lisa M. Pavelka has been Vice President of the Company since October
1993 and Treasurer since May 1992. She was Controller from December 1990 to May
1992 and Assistant Controller of the Company from November 1988 to December
1990. She was previously associated with Arthur Andersen & Co., independent
accountants, from 1985 to 1988.
Stephen H. Press has been Vice President of Acquisitions of the Company
since October 1993 and previously held this position with the Company from June
1987 to December 1990. He was Vice President of Development and Regulatory
Affairs for Integrated Health Services, Inc., a medical services company, from
April 1991 to October 1993.
C. Michael Ford has been Vice President of Marketing of the Company since
October 1993. He previously was Chairman of the Board and Chief Executive
Officer of Montpelier Corporation, a health care consulting company, from
December 1990 to October 1993. He was previously associated with Charter
Medical Corporation, an acute care and psychiatric hospital management company,
from 1976 to 1990.
-17-
<PAGE> 18
Keith E. Grant has been Controller of the Company since May 1992. He was
Director of Operations Management of the Company from January 1990 to May 1992.
He was previously associated with New MediCo Holding Co., Inc., an operator of
health care facilities, from September 1989 to December 1989 and Damon
Corporation, a health care company, from August 1971 to August 1989.
-18-
<PAGE> 19
PART II
Item 5.
MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
(a) The Shares are traded on the New York Stock Exchange under the
symbol MT. The following table sets forth for periods shown the high and low
sale prices for the Shares as reported on the New York Stock Exchange composite
tape.
<TABLE>
<CAPTION>
High Low
---- ----
<S> <C> <C> <C>
1992
First Quarter . . . . . . . . . . $31.250 $25.500
Second Quarter . . . . . . . . . . 28.500 25.375
Third Quarter . . . . . . . . . . 30.000 27.625
Fourth Quarter . . . . . . . . . . 31.375 28.250
1993
First Quarter . . . . . . . . . . $34.000 $29.125
Second Quarter . . . . . . . . . . 33.750 30.250
Third Quarter . . . . . . . . . . 34.625 31.875
Fourth Quarter . . . . . . . . . . 34.250 31.250
1994
First Quarter
(through February 28, 1994) . . . $33.750 $31.375
</TABLE>
(b) As of February 28, 1994, there were 3,942 holders of record of
the Shares.
(c) The Company has declared the following dividends during its two
most recent fiscal years:
<TABLE>
<CAPTION>
Dividends
Period Declared Per Share
------ ------------------
<S> <C>
Quarter Ended March 31, 1992 . . . . . . . . . . . . . . $ .6075
Quarter Ended June 30, 1992 . . . . . . . . . . . . . . . .6125
Quarter Ended September 30, 1992 . . . . . . . . . . . . .6175
Quarter Ended December 31, 1992 . . . . . . . . . . . . . .6225
-------
$2.4600
=======
</TABLE>
<TABLE>
<S> <C>
Quarter Ended March 31, 1993 . . . . . . . . . . . . . . $ .6275
Quarter Ended June 30, 1993 . . . . . . . . . . . . . . .6325
Quarter Ended September 30, 1993 . . . . . . . . . . . . .6375
Quarter Ended December 31, 1993 . . . . . . . . . . . . . .6425
-------
$2.5400
=======
</TABLE>
-19-
<PAGE> 20
The Company intends to distribute to its shareholders on a quarterly
basis a majority of cash flow from operating activities available for
distribution. Cash flow from operating activities available for distribution
to shareholders of the Company will be derived primarily from the rental
payments and interest payments derived from its real estate investments. All
distributions will be made by the Company at the discretion of the Trustees and
will depend on the earnings of the Company, its financial condition and such
other factors as the Trustees deem relevant. In order to qualify for the
beneficial tax treatment accorded to real estate investment trusts by Sections
856 to 860 of the Internal Revenue Code, the Company is required to make
distributions to holders of its Shares which actually will be of at least 95%
of the Company's "real estate investment trust taxable income".
-20-
<PAGE> 21
Item 6.
SELECTED FINANCIAL INFORMATION
The following table presents selected financial information with respect
to the Company for each of the five years in the period ended December 31,
1993. This financial information has been derived from financial statements
included elsewhere in this Form 10-K and should be read in conjunction with
those financial statements and accompanying footnotes.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
(In thousands except per Share data)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues $ 150,826 $132,394 $112,910 $89,121 $71,601
--------- -------- -------- ------- -------
Expenses:
Interest expense . . . . . . . . . 62,193 58,159 56,886 43,494 34,614
Depreciation and amortization . . 16,277 14,032 13,185 10,821 9,625
General and administrative expenses 8,720 8,845 4,930 5,824 5,847
--------- -------- -------- ------- -------
Total expenses . . . . . . . . . 87,190 81,036 75,001 60,139 50,086
--------- -------- -------- ------- -------
Net income before extraordinary item 63,636 51,358 37,909 28,982 21,515
Loss on prepayment of debt --------- -------- 3,684 ------- -------
Net income . . . . . . . . . . . . . $ 63,636 $ 51,358 $ 34,225 $28,982 $21,515
========= ======== ======== ======= =======
Shares of beneficial interest
(weighted average) . . . . . . . . 31,310 26,360 21,710 18,409 15,721
PER SHARE DATA:
Net income before extraordinary item $2.03 $1.95 $1.75 $1.57 $1.37
Net income . . . . . . . . . . . . . 2.03 1.95 1.58 1.57 1.37
Dividends paid(1) . . . . . . . . . . 2.54 2.46 2.38 2.33 2.09
</TABLE>
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
(in Thousands)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Real estate investments, net . . . . $ 1,214,308 $1,021,630 $842,518 $746,517 $647,104
Total assets . . . . . . . . . . . . 1,310,401 1,094,941 928,254 821,741 681,638
Long-term obligations . . . . . . . . 658,245 606,585 463,695 512,010 417,039
Total liabilities . . . . . . . . . . 724,606 663,458 500,736 548,378 459,885
Total shareholders' equity . . . . . 585,795 431,483 427,518 273,363 221,753
</TABLE>
(1) Dividends, used in this context, include distributions in excess of current
or accumulated net income.
-21-
<PAGE> 22
Item 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Year Ended December 31, 1993 vs. Year Ended December 31, 1992
Revenues for the year ended December 31, 1993 were $150,826,000 compared
to $132,394,000 for the year ended December 31, 1992, an increase of
$18,432,000 or 14%. Revenue growth resulted from increased rental income of
$10,776,000 and increased interest income of $7,656,000 as a result of
additional real estate investments made during the past year.
For the year ended December 31, 1993, total expenses increased by
$6,154,000. Interest expense increased by $4,034,000 and resulted primarily
from the issuance of convertible debentures in February and November 1993 which
was partially offset by the prepayment of senior debt in December 1992.
Depreciation and amortization increased by $2,245,000 primarily due to
depreciation of the additional real estate investments made during the past
year. Other expenses decreased by $125,000 principally attributable to lower
administrative expenses.
Year Ended December 31, 1992 vs. Year Ended December 31, 1991
Revenues for the year ended December 31, 1992 were $132,394,000 compared
to $112,910,000 for the year ended December 31, 1991, an increase of
$19,484,000 or 17%. This increase is primarily the result of increased
interest income of $19,259,000 from additional mortgage investments made during
the year. Additional rent and interest increased approximately $2,222,000 or
41% from $5,399,000 in 1991 to $7,621,000 in 1992. Interest earned on
investments decreased in 1992 by $3,005,000 resulting from a higher level of
investment cash available from an equity offering in the second quarter of
1991. Other revenues increased by approximately $1,008,000.
For the year ended December 31, 1992, total expenses increased
$6,035,000. Interest expense increased by $1,273,000, resulting from the
issuance of $100,000,000 of convertible debentures in April 1992 and was
partially offset by the secured debt prepayment of $57,000,000 in December
1991. Depreciation and amortization increased by $847,000, principally due to
increased amortization expense of other assets. Other expenses increased by
$3,915,000, principally due to a higher level of operating costs associated
with the portfolio growth and the issuance of Shares for executive
compensation, a non-cash expense of $1,220,000.
-22-
<PAGE> 23
Liquidity and Capital Resources
The Company provides funding for its investments through a combination
of long-term and short-term financing including both debt and equity. The
Company obtains long-term financing through the issuance of Shares, the
issuance of long-term secured and unsecured notes, the issuance of convertible
debentures and the assumption of mortgage notes. The Company obtains
short-term financing through the use of bank lines of credit which are replaced
with long-term financing as appropriate. It is the Company's objective to
match the mortgage and lease terms with the terms of its borrowings. The
Company seeks to maintain an appropriate spread between its borrowing costs and
the rate of return on its investments. When development mortgage loans convert
to sale/leaseback transactions or permanent mortgage loans, the base rent or
interest rate, as appropriate, is fixed at the time of such conversion.
In February 1993, the Company completed the sale of 3,277,500 Shares at
$30.63 per Share and issued $92,120,000 of 7% convertible debentures due 1998.
The Company used the proceeds to repay short-term borrowings and for
investments in additional health care facilities.
In November 1993, the Company issued $86,250,000 of 6 7/8% convertible
debentures due 1998. The Company used the proceeds to repay short-term
borrowings and for investments in additional health care facilities.
As of February 28, 1994, the Company's gross real estate investments
totaled approximately $1,338,599,000 including 179 long- term care facilities,
20 rehabilitation hospitals, two alcohol and substance abuse treatment
facilities, six psychiatric hospitals, three retirement living facilities and
two medical office buildings. The Company has shareholders' equity of
approximately $590,313,000 and a total debt to equity ratio of approximately
1.2 to 1.0 as of February 28, 1994.
The Company has an unsecured line of credit of $130,000,000 bearing
interest at the lender's prime rate or LIBOR plus 1.5%, of which $16,000,000 is
available at February 28, 1994. As of February 28, 1994, the Company had
outstanding funding commitments of approximately $20,038,000 for the completion
of four facilities under construction and for additions to seven existing
facilities.
The Company believes that its various sources of capital resources are
adequate to finance its operations as well as pending property acquisitions,
mortgage financings and future dividends. For the balance of 1994, however, in
the event that the Company identifies appropriate investment opportunities, the
Company may raise additional capital through the sale of shares of beneficial
interest or by the issuance of additional long-term debt.
-23-
<PAGE> 24
Item 8.
FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . F-2
Financial Statements
- --------------------
Consolidated Balance Sheets as of December 31, 1993 and 1992 . . . . . . . . . . F-3
Consolidated Statements of Income for the years ended
December 31, 1993, 1992 and 1991 . . . . . . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Changes in Shareholders'
Equity for the years ended December 31, 1993, 1992 and 1991 . . . . . . . F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1993, 1992 and 1991 . . . . . . . . . . . . . . . . . . . . . F-6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . F-8
Financial Statement Schedules
- -----------------------------
Report of Independent Accountants on Financial Statement Schedules . . . . . . . S-1
VIII. Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . S-2
XI. Real Estate and Accumulated Depreciation . . . . . . . . . . . . . . . . . S-3
XII. Mortgage Loans on Real Estate . . . . . . . . . . . . . . . . . . . . . . S-6
</TABLE>
F-1
<PAGE> 25
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of Meditrust:
We have audited the accompanying consolidated balance sheets of
Meditrust as of December 31, 1993 and 1992, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for each
of the three years in the period ended December 31, 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Meditrust at December 31, 1993 and 1992, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
March 10, 1994
F-2
<PAGE> 26
MEDITRUST
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-------------------------------
1993 1992
-------- --------
(In thousands)
<S> <C> <C>
ASSETS
Real estate investments:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 48,257 $ 42,836
Buildings and improvements, net of
accumulated depreciation of $73,294
and $59,150, respectively (Notes 3 and 6) . . . . . . 564,345 446,978
Real estate mortgages (Note 4) . . . . . . . . . . . . . 601,706 531,816
---------- ----------
Total real estate investments . . . . . . . . . . . 1,214,308 1,021,630
Other assets, net . . . . . . . . . . . . . . . . . . . . . . 66,862 36,551
Short-term cash investments . . . . . . . . . . . . . . . . . 16,306 24,858
Fees, interest and other receivables (Note 7) . . . . . . . . 12,925 11,902
---------- ----------
Total assets . . . . . . . . . . . . . . . . . . . . $1,310,401 $1,094,941
========== ==========
LIABILITIES & SHAREHOLDERS' EQUITY
Indebtedness (Note 6):
Senior unsecured notes payable, net . . . . . . . . . . . $ 297,155 $ 296,476
Senior mortgage notes payable, net . . . . . . . . . . . . 31,804 75,167
Convertible debentures, net . . . . . . . . . . . . . . . 199,822 93,356
Bank notes payable, net . . . . . . . . . . . . . . . . . 69,375 80,780
Bonds and mortgages payable, net . . . . . . . . . . . . . 60,089 60,806
---------- ----------
Total indebtedness . . . . . . . . . . . . . . . . . 658,245 606,585
Deferred income . . . . . . . . . . . . . . . . . . . . . . . 14,468 14,910
Accrued expenses and other liabilities . . . . . . . . . . . 51,893 41,963
---------- ----------
Total liabilities . . . . . . . . . . . . . . . . . 724,606 663,458
---------- ----------
Commitments and contingencies (Note 4)
Shareholders' equity (Notes 5, 6 and 12):
Shares of Beneficial Interest without par value:
Unlimited Shares authorized; 32,836
and 26,767 Shares issued and
outstanding in 1993 and 1992, respectively . . . . . 666,220 497,222
Distributions in excess of net income . . . . . . . . . (80,425) (65,739)
---------- ---------
Total shareholders' equity . . . . . . . . . . . . . 585,795 431,483
---------- ---------
Total liabilities and shareholders' equity . . . . . $1,310,401 $1,094,941
========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 27
MEDITRUST
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For The Year Ended December 31,
----------------------------------------------
1993 1992 1991
----------- ----------- -------------
(In thousands except per Share data)
<S> <C> <C> <C>
Revenues:
Rental income (Note 7) . . . . . . . . . . . $ 80,455 $ 69,679 $ 68,628
Interest income . . . . . . . . . . . . . . . 70,371 62,715 44,282
--------- -------- --------
Total revenues . . . . . . . . . 150,826 132,394 112,910
--------- -------- --------
Expenses:
Interest expense . . . . . . . . . . . . . . 62,193 58,159 56,886
Depreciation and amortization . . . . . . . . 16,277 14,032 13,185
General and administrative (Note 7) . . . . . 8,720 8,845 4,930
--------- -------- --------
Total expenses . . . . . . . . . 87,190 81,036 75,001
--------- -------- --------
Net income before extraordinary item . . . . . . 63,636 51,358 37,909
Loss on prepayment of debt (Note 6) . . . . . . 3,684
--------- -------- --------
Net income . . . . . . . . . . . . . . . . . . . $ 63,636 $ 51,358 $ 34,225
========= ======== ========
Net income before extraordinary item per Share
of Beneficial Interest . . . . . . . . . . . $ 2.03 $ 1.95 $ 1.75
Net income per Share of Beneficial Interest . . . 2.03 1.95 1.58
Weighted average Shares of Beneficial
Interest outstanding . . . . . . . . . . . . . 31,310 26,360 21,710
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 28
MEDITRUST
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Shares Amount
--------- ------------
(In thousands
except per Share data)
<S> <C> <C>
Balance, December 31, 1990 . . . . . . . . . . . . . . . . . . . . . 18,722 $273,363
Proceeds from issuance of Shares of Beneficial
Interest, net of offering costs of $6,089 . . . . . . . . . . . . 6,880 161,604
Issuance of Shares of Beneficial Interest for
purchase of A.M.A. Advisory Corp. (Note 7) . . . . . . . . . . . 342 8,005
1991 Dividends paid during 1991 ($2.38 per Share) . . . . . . . . . . (49,679)
Net income for the year ended December 31, 1991 . . . . . . . . . . 34,225
------ --------
Balance, December 31, 1991 . . . . . . . . . . . . . . . . . . . . . 25,944 427,518
Issuance of Shares of Beneficial Interest associated with:
Conversion of debentures . . . . . . . . . . . . . . . . . . . . . 114 3,075
Exercise of warrants . . . . . . . . . . . . . . . . . . . . . . . 486 9,712
Employee compensation . . . . . . . . . . . . . . . . . . . . . . 223 4,750
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (86)
1992 Dividends paid during 1992 ($2.46 per Share) . . . . . . . . . . (64,844)
Net income for the year ended December 31, 1992 . . . . . . . . . . . 51,358
------ --------
Balance, December 31, 1992 . . . . . . . . . . . . . . . . . . . . . 26,767 431,483
Proceeds from issuance of Shares of Beneficial
Interest, net of offering costs of $5,135 . . . . . . . . . . 3,277 95,239
Issuance of Shares of Beneficial Interest associated with:
Conversion of debentures, net of unamortized issue costs of $2,414 2,508 67,263
Exercise of warrants . . . . . . . . . . . . . . . . . . . . . 182 3,646
Employee compensation . . . . . . . . . . . . . . . . . . . . 102 2,851
1993 Dividends paid during 1993 ($2.54 per Share) . . . . . . . . (78,323)
Net income for the year ended December 31, 1993 . . . . . . . . . 63,636
------ --------
Balance, December 31, 1993 . . . . . . . . . . . . . . . . . . . 32,836 $585,795
====== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 29
MEDITRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For The Year Ended December 31,
---------------------------------------
1993 1992 1991
-------- -------- --------
(In thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . $ 63,636 $ 51,358 $34,225
Depreciation, amortization and provision for
losses . . . . . . . . . . . . . . . . . . . . . 28,422 16,020 14,982
Gain on sale of real estate and mortgage
prepayments . . . . . . . . . . . . . . . . . . . (8,005)
Loss on prepayment of debt . . . . . . . . . . . . . 3,684
Other items, net . . . . . . . . . . . . . . . . . . 778 564 1,059
---------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
AVAILABLE FOR DISTRIBUTION . . . . . . . . . . . . . . 84,831 67,942 53,950
Net change in other assets and liabilities (Note 2) . (5,540) 7,916 (9,656)
--------- -------- --------
Net cash provided by operating activities . . . 79,291 75,858 44,294
---------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible debentures . . . . . . . . 178,370 100,000
Proceeds from bank notes . . . . . . . . . . . . . . 100,000 75,000
Payment of senior mortgage notes payable . . . . . . (43,800) (32,600) (57,200)
Debt prepayment and issuance costs . . . . . . . . . (5,483) (4,541) (4,338)
Payments of bank note payable . . . . . . . . . . . (130,000)
Proceeds from bonds and mortgages payable.... . . . 8,300
Principal payments on bonds and mortgages payable . (868) (662) (560)
Distributions to shareholders . . . . . . . . . . . (78,323) (64,844) (49,679)
Proceeds from equity offering . . . . . . . . . . . 100,374 166,244
Equity offering costs . . . . . . . . . . . . . . . (5,135) (97) (6,089)
Proceeds from warrant conversions and stock options 5,671 13,253 1,449
---------- -------- --------
Net cash provided by financing activities . . . 120,806 85,509 58,127
---------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 30
MEDITRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
<TABLE>
<CAPTION>
For The Year Ended December 31,
--------------------------------------
1993 1992 1991
------- -------- --------
(In thousands)
<S> <C> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of real estate . . . . . . . . . . . $ (18,272) $ (6,520) $(15,886)
Investment in real estate mortgages and
development funding . . . . . . . . . . . . . (210,295) (208,092) (135,933)
Prepayment proceeds and principal payments on real
estate mortgages and note . . . . . . . . . . 42,045 27,228 3,200
Proceeds from sale of real estate . . . . . . . . 5,194
Repayment of construction loan advances . . . . . 41,053
Acquisition of receivables and working
capital advances . . . . . . . . . . . . . . . (47,153)
Collection of receivables and repayment of working
capital advances . . . . . . . . . . . . . . . 19,832
Decrease in committed funds. . . . . . . . . . . 33,958 8,416
--------- -------- --------
Net cash used in investing activities . . (208,649) (153,426) (99,150)
--------- -------- --------
Net (decrease) increase in
short-term cash investments . . . . . . (8,552) 7,941 3,271
Short-term cash investments at:
Beginning of year . . . . . . . . . . . . . . . 24,858 16,917 13,646
--------- -------- --------
End of year . . . . . . . . . . . . . . . . . . $ 16,306 $ 24,858 $ 16,917
========= ======== ========
Supplemental disclosure of cash flow information:
Interest paid during the period . . . . . . . . . . . $ 59,746 $ 51,600 $ 55,383
Non-cash investing and financing transactions:
Acquisition and lease of real estate:
Value of real estate acquired . . . . . . . . . 106,566 22,500
Reduction of real estate mortgage . . . . . . . (88,493) (15,843)
Issuance of demand note payable . . . . . . . . (18,073) (6,657)
Shares issued for:
Purchase of A.M.A. Advisory Corp. . . . . . . . 8,005
Executive compensation . . . . . . . . . . . . 826 1,220
Conversion of debentures . . . . . . . . . . . 69,677 3,075
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE> 31
MEDITRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
Meditrust (the "Company"), a real estate investment trust, invests in the
sub-acute sector of the health care industry, including long-term care
facilities, rehabilitation hospitals, and other sub-acute health care related
facilities. These facilities are located throughout the United States and are
operated by regional and national health care providers. The Company's more
significant accounting policies follow:
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company, its wholly-owned subsidiaries and its majority- owned partnerships
after the elimination of all significant intercompany accounts and
transactions. The Company uses the equity method of accounting for its 50%
ownership in a limited partnership.
Real Estate Investments
Land, buildings and improvements are stated at cost. Depreciation is
provided for on a straight-line basis over 40 years, the expected useful lives
of the buildings and improvements. The Company provides reserves for potential
losses based upon management's periodic review of its portfolio and such
reserves are included in accrued expenses and other liabilities.
Capitalization of Construction Period Interest
The Company capitalizes interest costs associated with funds used to
finance the construction of facilities. The amount capitalized is based upon
the borrowings outstanding during the construction period using the rate of
interest which approximates the Company's cost of financing.
Short-term Cash Investments
Short-term cash investments consist of certificates of deposit and
other investments with less than 90-day maturities at time of purchase and are
stated at cost which approximates fair value.
Other Assets
Other assets includes cash restricted for specified disbursement in
accordance with certain facility acquisitions and mortgage financings. The
corresponding liabilities are reflected in accrued expenses and other
liabilities.
Other assets also includes goodwill associated with the acquisition of
the Company's previous investment advisor which is being amortized on a
straight-line basis over a ten year period and facilities' operating
receivables and working capital advances.
F-8
<PAGE> 32
MEDITRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--continued
Debt Issuance Costs
Debt issuance costs have been deferred and are being amortized using
primarily the effective interest method over the term of the related
borrowings.
Revenue Recognition
Rental income from operating leases is recognized as earned over the
life of the lease agreements. Interest income on real estate mortgages is
recognized on the accrual basis. Deferred income consists principally of fees
which are being amortized over the fixed term of the lease, construction period
or mortgage related to such facilities.
Net Income Per Share
Net income per Share of Beneficial Interest ("Shares") is computed using
the weighted average number of Shares outstanding during the year of
computation.
Income Taxes
The Company has elected to be taxed as a real estate investment trust
under the Internal Revenue Code of 1986, as amended, and believes it has met
all the requirements for qualification as such. Accordingly, the Company will
not be subject to federal income taxes on amounts distributed to shareholders,
provided it distributes annually at least 95% of its real estate investment
trust taxable income and meets certain other requirements for qualifying as a
real estate investment trust. Therefore, no provision for federal income taxes
is believed necessary in the financial statements.
Reclassifications
Certain reclassifications have been made in the prior years'
consolidated financial statements to conform with the current year's
presentation.
F-9
<PAGE> 33
MEDITRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--continued
2. SUPPLEMENTAL CASH FLOW INFORMATION
Details of net change in other assets and liabilities (excluding
non-cash items, deferred income recognized in excess of cash received and
changes in restricted cash and related liabilities) follow:
<TABLE>
<CAPTION>
For The Year Ended December 31,
--------------------------------------
1993 1992 1991
-------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Increase in fees, interest and
other receivables . . . . . . . . . . . . . . . . $(1,705) $(3,904) $ (6,157)
Increase in other assets . . . . . . . . . . . . . (1,630) (83) (7,144)
Increase in deferred income . . . . . . . . . . . . 2 2,314 4,122
Increase (decrease) in accrued
expenses and other liabilities . . . . . . . . (2,207) 9,589 (477)
-------- ------ ---------
$(5,540) $7,916 $ (9,656)
======== ====== =========
</TABLE>
3. REAL ESTATE INVESTMENTS
During 1993, the Company funded $8,000,000 for the purchase of a
rehabilitation facility located in Arkansas and capitalized additional costs of
$10,272,000 relating to thirteen facilities located in eight states. Also
during 1993, the Company received proceeds of $5,194,000 from the sale of a
long-term care facility located in Washington.
Depreciation of real estate amounted to $14,548,000, $12,250,000 and
$11,992,000 for the years ended December 31, 1993, 1992 and 1991, respectively.
Minority interest in the equity of the majority-owned (94%) partnerships
relating to the Company's investment in seven rehabilitation facilities is
$2,661,000 and $2,686,000 as of December 31, 1993 and 1992 and is included in
accrued expenses and other liabilities in the consolidated financial
statements.
4. REAL ESTATE MORTGAGES
During 1993, the Company provided permanent mortgage financing of
approximately $181,908,000 for 26 long-term care facilities, one rehabilitation
facility and one retirement living facility, which are located in 13 states and
for additions to four facilities having permanent mortgage loans. During 1993,
the Company also provided ongoing construction financing of $12,290,000 for
three long-term care facilities and for additions to two existing long-term
care facilities. Also during 1993, the Company provided ongoing development
funding of $16,097,000, resulting in aggregate funding of $33,963,000 for four
long-term care facilities located in three states. Construction of these
facilities was completed and development mortgage loans totaling $16,969,000
were converted to permanent mortgage loans and development mortgage loans
totaling $16,994,000 were converted into sale/leaseback transactions.
F-10
<PAGE> 34
MEDITRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--continued
During 1993, the Company received proceeds amounting to $37,383,000 from
the prepayment of permanent mortgage loans on five long-term care facilities
located in Massachusetts and two long-term care facilities located in
Connecticut and collected principal payments of $4,662,000 on mortgage loans.
During the year ended December 31, 1993, the Company entered into a
series of transactions with a prior operator of certain rehabilitation and
long-term care facilities financed by the Company. As a result of these
transactions, the Company acquired for $99,763,000 five rehabilitation and four
long-term care facilities (located in New York, Massachusetts, Michigan, New
Hampshire, Wisconsin and Washington), reduced existing mortgage loans by
$81,690,000, reduced a related bank participation in one of the mortgage loans
by $18,073,000, acquired from operators of certain facilities operating
receivables and provided advances under a working capital line. Amounts
associated with the receivables and advances under the working capital line are
included in other assets at December 31, 1993. Also in connection with these
transactions, the Company leased eight of these facilities to four different
operators and entered into a management agreement for the remaining facility.
During 1993, the Company acquired a psychiatric facility in Texas for an
amount equal to its existing mortgage loan of $6,803,000 and entered into a
lease transaction with one of its existing operators.
At December 31, 1993, the Company was committed to provide additional
financing of approximately $8,994,000 relating to three long-term care
facilities currently under construction and for additions to four existing
long-term care facilities.
5. SHARES OF BENEFICIAL INTEREST
Distributions paid to shareholders are determined by the Company's Board
of Trustees based on an analysis of cash flows from operating activities. Cash
flows from operating activities differ from net income primarily due to
depreciation and amortization expense, a noncash item. Distributions in excess
of net income as reflected on the Company's consolidated balance sheets is
primarily a result of an accumulation of this difference. All Shares
participate equally in dividends and in net assets available for distribution
to shareholders on liquidation or termination of the Company. The Trustees of
the Company have the authority to effect certain Share redemptions or prohibit
the transfer of Shares under certain circumstances.
Total distributions to shareholders during the years ended December 31,
1993, 1992 and 1991 included a return of capital per Share of $.3797, $.7462
and $.7273, respectively. Also, the 1993 distribution includes a long-term
capital gain distribution of $.1351 per Share.
F-11
<PAGE> 35
MEDITRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--continued
6. INDEBTEDNESS.
Indebtedness of the Company at December 31, 1993 and 1992 is as follows:
<TABLE>
<CAPTION>
1993 1992
---- ----
(In thousands)
<S> <C> <C>
Senior unsecured notes:
Principal payments of $20,000,000 due in December 1995
and $16,000,000 due in December 1996 through December
2000, interest ranging from 10.00% to 10.57% . . . . . . . . $ 99,511 $ 99,331
Principal payments of $20,000,000 due in October 1995
through October 1999, interest at 10.22% . . . . . . . . . . 98,920 98,716
Principal payments of $12,500,000 due in February 1994
through February 2001, interest at 10.86% . . . . . . . . . 98,724 98,429
-------- --------
297,155 296,476
-------- --------
Senior mortgage notes:
Principal payments of $10,800,000 due in December 1994 through
December 1996 and $200,000 due in December 1997,
interest at 10.75% . . . . . . . . . . . . . . . . . . . . . 31,804 42,402
Principal payment with interest at 9.95% . . . . . . . . . . . 32,765
-------- --------
31,804 75,167
-------- --------
Convertible debentures:
9% interest, convertible at $27.00 per Share, due 2002 . . . . 42,499 93,356
7% interest, convertible at $30.625 per Share, due 1998 . . . 73,317
6 7/8% interest, convertible at $37.125 per Share, due 1998 . 84,006
-------- --------
199,822 93,356
-------- --------
Bank notes payable:
Revolving credit agreement expiring July 1995 . . . . . . . . 44,785 74,135
Demand note, due July 1994 . . . . . . . . . . . . . . . . . . 24,590 6,645
-------- --------
69,375 80,780
Bonds and mortgages payable:
Mortgage notes, interest ranging from 3.1% to 12.2%,
monthly principal and interest payments ranging from
$22,000 to $78,000 and maturing from January 1998
through March 2001, collateralized by nine facilities . . . 56,519 57,196
Manatee County, Florida Industrial Revenue Bonds, Series
1983, serial payments ranging from $45,000 to $90,000 due
in 1994 through 2000 and $345,000 due in December 2003
and $2,770,000 due in December 2013, interest ranging from
12.0% to 13.5%, collateralized by one facility . . . . . . . 3,570 3,610
-------- --------
60,089 60,806
-------- --------
Total indebtedness . . . . . . . . . . . . . . . . . . . . . . . $658,245 $606,585
======== ========
</TABLE>
F-12
<PAGE> 36
MEDITRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--continued
Convertible Debentures.
The 9% convertible debentures issued in April 1992 are subject to
redemption by the Company on or after April 23, 1995 at 100% of the principal
amount plus accrued interest. During the year ended December 31, 1993,
$53,042,000 of debentures were converted into 1,964,495 Shares. During the
year ended December 31, 1992, $3,075,000 of debentures were converted into
113,886 Shares.
The 7% debentures issued in February 1993 are subject to redemption by
the Company on or after March 1, 1996 at 100% of the principal amount plus
accrued interest. During the year ended December 31, 1993, $16,635,000 of
debentures were converted into 543,182 Shares.
The 6 7/8% debentures issued in November 1993 are subject to redemption,
to the extent necessary to preserve the Company's status as a real estate
investment trust, at any time by the Company at 100% of the principal amount
plus accrued interest.
Senior Mortgage Notes.
The 10.75% notes due December 1997 are collateralized by six facilities.
In December 1992, $10,800,000 of principal amount due December 1997 was
prepaid. These notes were issued with detachable warrants to purchase 790,000
Shares at a price of $20 per Share with an expiration date of December 1994.
The Company has valued these warrants at $1,202,500 and is amortizing this
discount over ten years. Warrants were exercised for 182,308 Shares and
486,154 Shares during 1993 and 1992, respectively.
Principal payments on the mortgage notes in the amounts of $33,000,000
(9.95%) due in March 1994, $11,000,000 (9.81%) due in March 1993 and
$11,000,000 (9.81%) due in March 1992 were prepaid in December 1993, December
1992 and December 1991, respectively. In connection with the prepayment in
1991, the Company incurred charges and wrote off unamortized debt issuance
costs of $121,000, which is included in loss on prepayment of debt.
In December 1991, the Company prepaid a $46,200,000, 10.25% five-year
note agreement with a bank and incurred prepayment charges of $3,251,000 and
wrote off unamortized issuance costs of $312,000, which amounts are included in
loss on prepayment of debt.
Bank Notes Payable.
The Company has an unsecured revolving credit agreement for a maximum of
$130,000,000 bearing interest at the lender's prime rate or LIBOR plus 1.5%.
Fees associated with this agreement are .5% per annum of the total unused
commitment plus an $80,000 agent fee.
F-13
<PAGE> 37
MEDITRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--continued
Bonds Payable.
In December 1987, the Company defeased the Camden County, New Jersey
Economic Development Revenue Bonds, Series A and extinguished the related debt.
The Company placed U.S. Treasury bills aggregating $5,019,986 in an irrevocable
trust to fund applicable trustee fees and satisfy the interest and sinking fund
payments on the remaining balance of $4,270,000.
The senior unsecured notes payable, senior mortgage notes payable,
convertible debentures, bank notes payable and mortgages payable are presented
net of unamortized debt issuance costs of $9,785,000 and $9,347,000 at December
31, 1993 and 1992, respectively. Amortization expense associated with the debt
issuance costs amounted to $2,961,000, $2,123,000 and $1,797,000 for the years
ended December 31, 1993, 1992 and 1991, respectively, and is reflected in
interest expense.
All debt instruments contain certain covenants, the most restrictive of
which limits the ratio of total debt to consolidated shareholders' equity. The
Company's debt-to-equity ratio may exceed 180% no longer than 180 days out of
any 450-day period and may not exceed 225% at any time.
The aggregate maturities of senior unsecured notes payable, senior
mortgage notes payable, bonds and mortgages payable and convertible debentures,
excluding the bank notes payable, the 9% convertible debentures and amounts
defeased for the five years subsequent to December 31, 1993, are as follows:
<TABLE>
<S> <C>
1994...................... $ 48,714,000
1995...................... 64,195,000
1996...................... 60,274,000
1997...................... 49,767,000
1998...................... 231,335,000
</TABLE>
7. RELATED PARTY TRANSACTIONS
The Company has material transactions with related parties as described
in these notes, including, but not limited to, the acquisition of health care
facilities, lending of mortgage and construction funds, lease transactions and
advisory services (through February 26, 1991), all of which transactions have
been reviewed by the Independent Trustees.
On February 26, 1991, the Company's Advisor merged (the "Merger") with
and into a wholly-owned subsidiary of the Company, Meditrust Management Corp.
("MMC"), pursuant to an Agreement and Plan of Merger among the Company, MMC,
the Advisor and all of the shareholders of the Advisor. Initial consideration
for this transaction totaled approximately $5,000,000, comprised of 185,000
Shares and $1,300,000 in cash. In addition, the Company agreed to pay to the
shareholders of the Advisor a contingent acquisition price up to a maximum of
$2,000,000 for each $1.00 increase in the price per Share in excess of $20.00
per Share during the five year period ending December 31, 1995, up to an
aggregate maximum amount of $10,000,000. During 1991, contingent payments
totaling $10,000,000 were paid in the form of Shares.
F-14
<PAGE> 38
MEDITRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--continued
Until the Merger, the Company had an Advisory Agreement with the
Advisor, a corporation principally owned by Abraham D. Gosman, the Company's
Chairman of the Board. For the year ended December 31, 1991, the fees pursuant
to its advisory agreements amounted to $738,000.
As of December 31, 1993, The Mediplex Group, Inc. ("Mediplex")
guarantees the lessees' and borrowers' obligations or provides working capital
assurances for 28 of the Company's facilities and a Mediplex affiliate is a
subordinated participant in six of the Company's permanent mortgage loans.
Approximately 25% of the stock of Mediplex is owned by the Chairman of the
Company. The expiration of the fixed term of the Company's leases and
mortgages with Mediplex or its subsidiaries range from 1995 to 2007. The lease
terms require Mediplex to pay aggregate base rent of $32,669,000 per annum and
the mortgages require annual principal and interest payments of $3,598,000. As
a result of these lease and mortgage transactions with Mediplex or its
subsidiaries, the Company recorded revenues of approximately $34,516,000,
$29,256,000 and $28,609,000 for the years ended December 31, 1993, 1992 and
1991, respectively. Mediplex owed the Company $450,000 and $250,000 for
additional rent at December 31, 1993 and 1992, respectively.
During 1992, the Company acquired from a prior operator for $22,500,000
two previously mortgaged long-term care facilities located in Massachusetts and
leased these facilities to The Mediplex Group, Inc. During 1993, the Company
acquired from a prior operator for $26,353,000 two previously mortgaged
rehabilitation facilities located in Michigan and in New York and a long-term
care facility located in Massachusetts and leased these properties to The
Mediplex Group, Inc. Also, during 1993, the Company provided permanent
mortgage financing of $32,740,000 for four long-term care facilities located in
Massachusetts and Connecticut and entered into a sale/leaseback transaction for
$8,000,000 for a rehabilitation facility located in Arkansas.
The land and facility owned by one of the Company's subsidiaries is
leased to a corporation wholly-owned by Abraham D. Gosman and is managed by a
Mediplex subsidiary. The lease is a fixed-term operating lease expiring in
2006. The lessee is required to pay aggregate base rent of $3,364,000 per
annum over the lease term and supplemental rent (as defined in the lease
agreements). Total revenues earned by the Company from this lease arrangement
were $3,421,000, $3,486,000 and $3,440,000 for the years ended December 31,
1993, 1992 and 1990, respectively.
For further information regarding the Company and Mediplex, see Note 12.
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments," requires that the Company disclose
estimated fair values for certain of its financial instruments as defined by
the Standard.
F-15
<PAGE> 39
MEDITRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--continued
Fair value estimates are subjective in nature and are dependent on a
number of significant assumptions associated with each financial instrument or
group of financial instruments. Because of a variety of permitted calculations
and assumptions regarding estimates of future cash flows, risks, discount rates
and relevant comparable market information, reasonable comparisons of the
Company's fair value information with other companies cannot necessarily be
made.
The following methods and assumptions were used to estimate the fair
value of financial instruments for which it is practicable to estimate that
value:
Real Estate Mortgages
The fair value of real estate mortgages have been estimated by
discounting future cash flows using current interest rates at which similar
loans would be made to borrowers with similar credit ratings and for the same
remaining maturities. As of December 31, 1993, the fair value of real estate
mortgages amounted to approximately $652,000,000.
Indebtedness
The quoted market price for the Company's publicly traded convertible
debentures and rates currently available to the Company for debt with similar
terms and remaining maturities were used to estimate fair value of existing
debt. As of December 31, 1993, the fair value of the Company's indebtedness
amounted to approximately $711,000,000.
9. LEASE COMMITMENTS
The Company's land and facilities are generally leased pursuant to
noncancelable, fixed-term operating leases expiring from 1995 to 2007. The
leases also generally provide multiple, five-year renewal options and the
option to purchase the facilities at fair market value at the end of the
initial term of the lease or at various times during the lease.
The lessees are required to pay aggregate base rent during the lease term
and applicable debt service payments as well as percentage, supplemental and
additional rent (as defined in the lease agreements). For the years ended
December 31, 1993, 1992 and 1991, additional rent and interest amounted to
$8,657,000, $7,621,000 and $5,399,000, respectively. In addition, the lessees
pay all taxes, insurance, maintenance and other operating costs of the land and
facilities.
F-16
<PAGE> 40
MEDITRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--continued
Future minimum lease payments, including debt service payments (as
defined in the lease agreements) which are based on interest rates in effect at
December 31, 1993, expected to be received by the Company during the initial
term of the leases for the years subsequent to December 31, 1993, are as
follows:
<TABLE>
<S> <C>
1994 $ 77,144,000
1995 76,146,000
1996 70,927,000
1997 70,213,000
1998 63,086,000
Thereafter 244,576,000
</TABLE>
10. STOCK OPTION PLANS
Incentive awards under the Company's stock option plans (the "Plans")
which may be granted by the Board of Trustees include nonqualified or
nonstatutory options to purchase Company shares and incentive stock options
(collectively, "options"). The number of Shares available for issuance under
the Plans is 5% of the number of outstanding Shares. Up to 500,000 Shares
available under each Plan may be issued pursuant to incentive stock options.
Trustees, officers and key employees of the Company or any other entity
providing similar services to the Company and its officers, directors and key
employees, and all persons retained by the Company solely as consultants are
eligible to participate in the Plans. Such options expire 10 years after the
date granted. One third of all options granted become exercisable at the end
of each year following the date of issuance. Options to purchase 290,000
Shares were exercisable as of December 31, 1993.
Information concerning option activity for the years 1993, 1992, and 1991
is as follows:
<TABLE>
<CAPTION>
Shares Option Price
------ ------------
<S> <C> <C>
Outstanding at December 31, 1990 . . . . . . . . 299,000 $16.625 to $20.375
Granted . . . . . . . . . . . . . . . . . . . 585,000 $26.250 to $26.625
Exercised . . . . . . . . . . . . . . . . . . 86,000 $16.625 to $19.875
Expired . . . . . . . . . . . . . . . . . . . 52,000 $16.625 to $18.625
-------
Outstanding at December 31, 1991 . . . . . . . . 746,000 $16.625 to $26.625
Granted . . . . . . . . . . . . . . . . . . . 62,000 $26.75 to $29.00
Exercised . . . . . . . . . . . . . . . . . . 182,000 $16.625 to $26.375
Expired . . . . . . . . . . . . . . . . . . . 28,000 $26.25 to $26.375
-------
Outstanding at December 31, 1992 . . . . . . . . 598,000 $16.625 to $29.00
Granted . . . . . . . . . . . . . . . . . . . 126,000 $26.375 to $34.00
Exercised . . . . . . . . . . . . . . . . . . 83,000 $16.625 to $27.625
Expired . . . . . . . . . . . . . . . . . . . 23,000 $26.375 to $27.625
-------
Outstanding at December 31, 1993 . . . . . . . . 618,000 $16.625 to $34.000
=======
</TABLE>
F-17
<PAGE> 41
MEDITRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
11. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following quarterly financial data summarizes the unaudited quarterly
results for the years ended December 31, 1993 and 1992:
<TABLE>
<CAPTION>
Quarter Ended
------------------------------------------------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
1993 (In thousands, except per Share amounts)
- ----
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . $36,625 $37,311 $38,616 $38,274
Net income . . . . . . . . 14,838 16,001 16,081 16,716
Net income per Share . . . .50 .51 .51 .51
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------------------------------
1992 March 31 June 30 September 30 December 31
- ---- -------- ------- ------------ -----------
(In thousands, except per Share amounts)
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . $30,943 $33,235 $34,845 $33,371
Net income . . . . . . . . 12,662 12,676 12,981 13,039
Net income per Share . . . .49 .49 .49 .49
</TABLE>
12. SUBSEQUENT EVENTS
On January 11, 1994, the Board of Trustees of the Company declared a
dividend of $.6475 per Share payable February 15, 1994, to shareholders of
record on January 31, 1994. The dividend related to the period October 1, 1993
through December 31, 1993.
On January 27, 1994, the Company entered into a Consent Agreement with
Sun Healthcare Group, Inc. ("Sun"), pursuant to which the Company agreed to
consent to a proposed merger of Mediplex with a subsidiary of Sun, subject to
the fulfillment by Sun and Mediplex of certain closing conditions. The
Company's consent to the merger is required pursuant to the terms of the
various leases and loans between the Company and Mediplex (the "Mediplex
Financing Documents"). As a condition to the Company's consent to the merger,
Sun and Mediplex have agreed to certain modifications to the existing Mediplex
Financing Documents and to certain terms which will govern the ongoing
relationship and future transactions among the Company, Mediplex and Sun. (See
Note 7 for further information regarding related party transactions between the
Company and Mediplex).
On March 2, 1994, the Company announced the sale of $90,000,000 of 7 1/2%
convertible debentures due 1998 and convertible at $36.18 per Share. The
Company used the proceeds to repay short-term borrowings.
F-18
<PAGE> 42
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Shareholders and Trustees of Meditrust:
Our report on the consolidated financial statements of Meditrust is included on
page F-2 of this Form 10-K. In connection with our audits of such financial
statements, we have also audited the related financial statement schedules
listed in the index on page F-1 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
Coopers & Lybrand
Boston, Massachusetts
March 10, 1994
S-1
<PAGE> 43
MEDITRUST
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Balance at Additions Balance at
Beginning Charged to Costs End of
Description of Period and Expenses Deductions Period
- ----------- --------- ------------ ---------- ------
<S> <C> <C> <C> <C>
General valuation
allowance included in
Accrued Expenses and Other
Liabilities for the year
ended December 31:
1991 $1,031,000 $ 1,031,000
1992 $1,031,000 5,113,132 $3,438,186 (A) 2,705,946
1993 2,705,946 9,329,724 12,035,670
</TABLE>
(A) Costs primarily associated with the disposition of certain real estate
investments.
S-2
<PAGE> 44
MEDITRUST
SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1993
<TABLE>
<CAPTION>
Initial Cost
to Company
----------
Cost
Capitalized
Building & Subsequent to
Description (1) Encumbrances Improvements Acquisiton
- -------------- ------------ ------------ ----------
<S> <C> <C> <C>
LTC
- ---
Alabaster, AL . . $ 5,799,000 $1,810,000
Aurora, CO . . . 5,015,448
Evergreen, CO . . 5,540,775
Danbury, CT . . . 5,295,000
Westport, CT . . 4,970,000
Newington, CT . . 8,970,000
Cheshire, CT . . 6,770,000
Wethersfield, CT 12,440,000
Southfield, CT . 7,750,000
Bradenton, FL . . $3,570,000 9,900,000
Hoffman Estates, IL 6,000,012 7,720,000
W. Lafayette, IN 4,535,267 6,030,000 190,000
Beverly, MA . . . 6,300,000
Newton, MA . . . 12,430,000
Lexington, MA . . 11,210,000
E. Longmeadow, MA 12,400,000
Holyoke, MA . . . 11,980,670 684,248
Lowell, MA . . . 9,897,730 594,621
Lynn, MA . . . . 13,293,267 870,248
Peabody, MA . . . 7,245,315
Randolph, MA . . 9,014,760
Wilmington, MA . 6,689,925
Baltimore, MD . . 4,494,200
Grand Blanc, MI . 6,500,000 863,800
Riverside, MO . . 8,559,900
Bound Brook, NJ . 1,624,000
Camden, NJ . . . 8,334,780
New Milford, NJ . 11,110,000
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at Which
Carried at Close of Period
--------------------------------------------
Acumm.
Building & Deprec. Cost Date
Description (1) Land (2) Improvements Total (5) (4)(5) Date Acquired
- --------------- -------- ------------ ---------- -------- ---- -------
<S> <C> <C> <C> <C> <C> <C>
LTC
- ---
Alabaster, AL . . $ 150,000 $ 7,609,000 $ 7,759,000 $ 1,019,206 1971 8/87
Aurora, CO . . . 974,552 5,015,448 5,990,000 449,306 1990 6/90
Evergreen, CO . . 377,013 5,540,775 5,917,788 415,214 1991 6/90
Danbury, CT . . . 305,000 5,295,000 5,600,000 1,086,562 1976 10/85
Westport, CT . . 400,000 4,970,000 5,370,000 1,019,874 1965 10/85
Newington, CT . . 430,000 8,970,000 9,400,000 1,840,688 1978 10/85
Cheshire, CT . . 455,000 6,770,000 7,225,000 1,389,253 1975 10/85
Wethersfield, CT 12,440,000 12,440,000 2,284,221 1965 8/86
Southfield, CT . 750,000 7,750,000 8,500,000 32,292 1993 11/93
Bradenton, FL . . 1,100,000 9,900,000 11,000,000 1,485,000 1985 12/87
Hoffman Estates, IL 880,000 7,720,000 8,600,000 1,157,996 1976 1/88
W. Lafayette, IN 50,000 6,220,000 6,270,000 912,758 1964 1/88
Beverly, MA . . . 645,000 6,300,000 6,945,000 1,292,815 1972 10/85
Newton, MA . . . 630,000 12,430,000 13,060,000 2,550,750 1977 10/85
Lexington, MA . . 590,000 11,210,000 11,800,000 2,058,365 1965 8/86
E. Longmeadow, MA 400,000 12,400,000 12,800,000 1,937,480 1986 9/87
Holyoke, MA . . . 121,600 12,664,918 12,786,518 403,107 1973 9/92
Lowell, MA . . . 500,000 10,492,351 10,992,351 333,345 1975 9/92
Lynn, MA . . . . 1,206,734 14,163,515 15,370,249 264,174 1960 4/93
Peabody, MA . . . 805,035 7,245,315 8,050,350 1,086,800 1987 10/90
Randolph, MA . . 1,001,640 9,014,760 10,016,400 1,352,220 1987 10/90
Wilmington, MA . 743,325 6,689,925 7,433,250 1,003,492 1987 10/90
Baltimore, MD . . 4,000,000 4,494,200 8,494,200 74,903 1993 5/93
Grand Blanc, MI . 120,000 7,363,800 7,483,800 979,780 1970 5/88
Riverside, MO . . 238,000 8,559,900 8,797,900 1,230,479 1965 3/88
Bound Brook, NJ . 1,176,000 1,624,000 2,800,000 284,177 1963 12/86
Camden, NJ . . . 450,250 8,334,780 8,785,030 1,458,571 1984 12/86
New Milford, NJ . 1,090,000 11,110,000 12,200,000 1,666,510 1971 12/87
</TABLE>
S-3
<PAGE> 45
MEDITRUST
SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1993
<TABLE>
<CAPTION>
Initial Cost
to Company
------------
Cost
Capitalized
Building & Subsequent
Description (1) Encumbrances Improvement Acquisiton
- -------------- ------------ ----------- ----------
<S> <C> <C> <C>
LTC CONTINUED
- -------------
Cortland, NY . . $ 4,440,173 $ 260,930
Niskayuna, NY . . 9,708,000 834,537
Troy, NY 9,967,564 491,673
Bellbrook, OH . . 2,787,134
Huber Heights, OH 3,593,360
Medina, OH . . . $ 7,066,509 10,568,000
New London, OH . 2,110,837
West Carrolton, OH 3,483,669
Erie, PA . . . . 4,753,000 375,000
Greensburg, PA . 5,544,012
Houston, TX 4,000,000
Cheyenne, WY . . 5,200,000
RL-
Cheyenne, WY . . 9,325,000
PSYCH
- -----
Hollywood, CA . . 4,035,000
Monroe, LA . . . 7,770,000
Holliswood, NY . 26,400,000
DeSoto, TX . . . 3,934,000
College Station, TX 5,822,509
A & D------
Carmel, NY . . . 32,300,000
Scotia, NY . . . 57,000,000
REHAB.
- ------
Benton, AK . . . 7,865,000 392,410
Jonesboro, AR . . 4,305,472 8,861,835
Tucson, AZ . . . 9,965,000
Bakersfield, CA . 10,907,463
Fresno, CA . . . 8,077,584 14,469,580
Kentfield, CA . . 9,650,000
Topeka, KS . . . 5,286,162 10,353,829
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at Which
Carried at Close of Period
-------------------------------------------
Accum.
Building & Deprec. Const. Date
Description (1) Land (2) Improvements Total (5) (4)(5) Date Acquired
- -------------- -------- ------------ --------- ------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
LTC CONTINUED
- -------------
Cortland, NY . . $ 4,701,103 $ 4,701,103 $ 47,138 1986 8/93
Niskayuna, NY . . $ 292,000 10,542,537 10,834,537 210,135 1976 3/93
Troy, NY 56,100 10,459,237 10,515,337 104,854 1972 8/93
Bellbrook, OH . . 212,000 2,787,134 2,999,134 214,841 1981 12/90
Huber Heights, OH 174,000 3,593,360 3,767,360 276,988 1984 12/90
Medina, OH . . . 232,000 10,568,000 10,800,000 1,497,153 1954 4/88
New London, OH . 22,600 2,110,837 2,133,437 162,711 1985 12/90
West Carrolton, OH 216,400 3,483,669 3,700,069 268,534 1983 12/90
Erie, PA . . . . 335,000 5,128,000 5,463,000 756,055 1977 12/87
Greensburg, PA . 525,000 5,544,012 6,069,012 288,750 1991 6/90
Houston, TX 4,000,000 4,000,000 1962 3/92
Cheyenne, WY . . 300,000 5,200,000 5,500,000 519,984 1989 12/89
RL
- --
Cheyenne, WY . . 375,000 9,325,000 9,700,000 932,496 1989 12/89
PSYCH
- -----
Hollywood, CA . . 1,715,000 4,035,000 5,750,000 571,610 1957 5/88
Monroe, LA . . . 530,000 8,220,000 8,750,000 1,152,114 1982 5/88
Holliswood, NY . 3,600,000 26,400,000 30,000,000 4,620,000 1963 12/86
DeSoto, TX . . . 849,270 5,709,730 6,559,000 805,875 1988 1/88
College Station, TX 980,185 5,880,631 6,860,816 98,008 1987 5/93
A & D
- -----
Carmel, NY . . . 1,700,000 32,300,000 34,000,000 5,930,999 1979 8/86
Scotia, NY . . . 3,000,000 57,000,000 60,000,000 10,466,052 1929 8/86
REHAB.
- ------
Benton, AK . . . 135,000 8,257,410 8,392,410 148,287 1967 4/93
Jonesboro, AR . . 196,225 8,861,835 9,058,060 1,091,927 1989 2/89
Tucson, AZ . . . 9,965,000 9,965,000 851,177 1990 8/90
Bakersfield, CA . 1,522,537 10,907,463 12,430,000 977,129 1990 6/90
Fresno, CA . . . 2,088,920 14,469,580 16,558,500 1,026,687 1991 3/91
Kentfield, CA . . 350,000 9,650,000 10,000,000 1,387,179 1963 3/88
Topeka, KS . . . 1,295,499 10,353,829 11,649,328 1,276,313 1989 2/89
</TABLE>
S-4
<PAGE> 46
MEDITRUST
SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1993
<TABLE>
<CAPTION>
Initial Cost
to Company
----------
Cost
Capitalized
Building & Subsequent to
Description (1) Encumbrances Improvements Acquisition
- -------------- ------------ ------------ -----------
<S> <C> <C> <C>
REHAB. (CONTINUED)
- ------------------
Ruston, LA . . . $ 4,258,489 $ 10,021,462
Baton Rouge, LA . 5,642,004 10,366,008
Battle Creek, MI 7,265,913 $ 374,542
Effingham, NH . . 8,121,200 2,235,304
Cortland, NY 26,309,407 1,303,410
Arlington, TX . . 10,132,662
Ft. Worth, TX . . 6,009,891 10,814,520
Houston, TX . . . 5,469,929 10,707,069
Lake Terrace, WA 4,389,224 265,819
Waterford, WI . . 11,515,023 2,066,205
----------- ------------ -----------
TOTAL . . . . . . $60,221,319 $621,742,223 $15,896,599
=========== ============ ===========
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at Which
Carried at Close of Period
----------------------------------------
Accum.
Building & Deprec. Const. Date
Description (1) Land (2) Improvements Total (5) (4)(5) Date Acquired
- -------------- -------- ------------ --------- -------- ---- --------
<S> <C> <C> <C> <C> <C> <C>
REHAB. (CONTINUED)
- ------------------
Ruston, LA . . . $ 321,551 $ 10,021,462 $ 10,343,013 $1,277,904 1988 12/88
Baton Rouge, LA . 1,211,000 10,366,008 11,577,008 1,230,963 1988 4/89
Battle Creek, MI 146,970 7,640,455 7,787,425 137,190 1933 4/93
Effingham, NH . . 1,478,800 10,356,504 11,835,304 212,688 1985 4/93
Cortland, NY 263,000 27,612,817 27,875,817 276,770 1971 8/93
Arlington, TX . . 1,161,338 10,132,662 11,294,000 907,729 1990 6/90
Ft. Worth, TX . . 1,548,022 10,814,520 12,362,542 923,730 1990 8/90
Houston, TX . . . 525,000 10,707,069 11,232,069 1,271,465 1989 4/89
Lake Terrace, WA 1,029,980 4,655,043 5,685,023 73,708 1987 5/93
Waterford, WI . . 280,000 13,581,228 13,861,228 230,146 1968 4/93
---------- ------------ ------------ -----------
TOTAL . . . . . . $48,257,546 $637,638,822 $685,896,368 (3) $73,294,627
=========== ============ ============ ===========
</TABLE>
S-5
<PAGE> 47
MEDITRUST
SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1993
(1) Facility classifications are Long-Term Care (LTC), Retirement Living
(RL), Psychiatric Hospital (Psych), Alcohol and Substance Abuse Treatment
(A&D) and Rehabilitation Hospital (Rehab).
(2) Gross amount at which land is carried at close of period also represents
initial cost to Company.
(3) Cost for federal income tax purposes.
(4) Depreciation is calculated using a 40-year life for all completed
facilities.
(5) Real estate and accumulated depreciation reconciliations for the three
years ended December 31, 1993 are as follows:
<TABLE>
<CAPTION>
Accumulated
Real Estate Depreciation
----------- ------------
<S> <C> <C>
Balance at close of year--December 31, 1990 . . . . . . . $540,343,000 $35,661,000
Additions during the period:
Acquisitions . . . . . . . . . . . . . . . . . . 15,886,000
Construction in progress . . . . . . . . . . . . 4,768,000
Provision for depreciation . . . . . . . . . . . 11,239,000
Deductions during the period:
Repayment of construction loan advance . . . . . . (41,053,000)
------------ -----------
Balance at close of year--December 31, 1991 . . . . . . . 519,944,000 46,900,000
Additions during the period:
Acquisitions . . . . . . . . . . . . . . . . . . 4,750,000
Value of real estate acquired . . . . . . . . . 22,500,000
Additions to existing properties . . . . . . . . 1,770,000
Provision for depreciation . . . . . . . . . . . -----------
Balance at close of year--December 31, 1992 . . . . . . . 548,964,000 59,150,000
Additions during the period:
Acquisitions . . . . . . . . . . . . . . . . . . 20,244,000
Value of real estate acquired . . . . . . . . . . 106,566,000
Other . . . . . . . . . . . . . . . . . . . . . . 4,000,000
Additions to existing properties . . . . . . . . 10,272,000
Provision for depreciation . . . . . . . . . . . 14,548,000
Deductions:
Sale of real estate . . . . . . . . . . . . . . . (4,150,000) (404,000)
------------ -----------
Balance at close of year--December 31, 1993 . . . . . . . $685,896,000 $73,294,000
============ ===========
</TABLE>
S-6
<PAGE> 48
MEDITRUST
SCHEDULE XII
MORTGAGE LOANS ON REAL ESTATE
December 31, 1993
<TABLE>
<CAPTION>
Periodic Face Carrying
Interest Final Payment Amount of Amount of
Description(A) Rate Maturity Date Terms (B)(C) Mortgages Mortgages (D)
-------------- -------- ------------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C>
Long-term care facilities:
Arizona 11.00% October, 2002 $ 2,509,000 $ 2,910,000 $2,887,000
Colorado 12.00% May, 2001 6,542,000 7,455,000 7,312,000
Connecticut 7.13% - August, 1995 -
13.5% December, 2003 68,794,000 68,959,000 67,696,000
Connecticut 11.00% -
11.50% In progress 7,738,000 7,738,000
Florida 10.75% November, 2003 8,181,244 8,432,000 8,432,000
Illinois
(29 facilities) 12.03% December, 1998 30,252,000 37,073,000 32,900,000
Massachusetts 12.50% November, 2001 25,912,000 27,000,000 26,960,000
Massachusetts 11.50% In progress 3,450,000 3,450,000
Massachusetts 11.00% - August, 2000 -
(All other) 12.90% March, 2003 44,451,000 49,890,000 47,430,000
Michigan 11.75% - December, 2001 -
12.75% June, 2002 20,770,000 21,768,000 21,521,000
Nevada 12.25% - May, 2000 -
12.50% February, 2001 16,296,000 16,994,000 16,866,000
New Jersey 11.38% December, 1993 8,332,000 4,636,000 3,439,000(E)
North Carolina 12.00% September, 1998 2,918,000 3,325,000 3,171,000
Pennsylvania 12.25% In progress 9,911,000 9,911,000
Pennsylvania and
New Jersey 12.00% April, 2002 77,152,000 86,003,000 85,063,000
Rhode Island 10.75% November, 2003 4,851,000 5,000,000 5,000,000
Tennessee 10.75% July, 2003 10,888,000 11,222,000 11,196,000
Texas 12.00% November, 2000 8,360,000 8,625,000 8,480,000
Utah 11.00% In progress 3,440,000 3,440,000
Various (9 states) 12.00% October, 1994 44,150,000 44,493,000 44,213,000
Various (9 states) 10.75% May, 2003 93,063,000 96,298,000 96,149,000
West Virginia and
Pennsylvania 11.50% October, 2002 12,269,000 14,100,000 13,987,000
Rehabilitation hospitals:
California 12.50% July, 2001 24,042,000 30,975,000 29,990,000
Tennessee 12.50% September, 2000 8,637,000 9,000,000 8,870,000
Retirement living facilities:
Colorado 12.25% October, 1993 15,795,000 16,200,000 15,770,000(F)
Florida 10.00% December, 1998 11,734,000 11,734,000 11,734,000
Psychiatric hospitals:
Arizona 12.50% October, 1999 7,077,000 8,360,000 8,101,000
------------ ------------
Total $614,991,000 $601,706,000(G)(H)
============ ============
</TABLE>
S-7
<PAGE> 49
MEDITRUST
SCHEDULE XII
MORTGAGE LOANS ON REAL ESTATE
(A) All mortgage loans on real estate are first mortgage loans except a
second mortgage loan amounting to $4,250,000 for a Connecticut
facility.
(B) Ten-year terms (except for loan on fifteen facilities located in nine
states which is two years, Waterford, CT, Bourne and New Bedford, MA
and Lauderhill, FL, which are five years and Waterbury and Bristol,
CT, which are seven years) with principal and interest payable at
varying amounts over life to maturity with interest adjustment
generally at the end of the fifth year.
(C) Balloon payment is due upon maturity based on current interest rate
with various prepayment penalties.
(D) No mortgage loan is subject to delinquent principal or interest.
(E) Mortgage loan term has been extended for a one year period.
(F) Mortgage loan term has been extended for a ten year period.
(G) The aggregate cost for federal income tax purposes.
(H) Reconciliation of carrying amount of mortgage loans for the three
years ended December 31, 1993 is as follows:
<TABLE>
<S> <C>
Balance at December 31, 1990 . . . . . . . . . . $240,141,000
Additions during period:
New mortgage loans . . . . . . . . . . . . 108,194,000
Construction loan advances . . . . . . . . 22,371,000
Deductions during period:
Collection of principal . . . . . . . . . . (2,600,000)
-----------
Balance at December 31, 1991 . . . . . . . . . . 368,106,000
Additions during period:
New mortgage loans . . . . . . . . . . . . 183,426,000
Construction loan advances . . . . . . . . 24,666,000
Other . . . . . . . . . . . . . . . . . . . 1,189,000
Deductions during period:
Collection of principal . . . . . . . . . . (27,228,000)
Acquisition of properties, net . . . . . . . (15,843,000)
Other . . . . . . . . . . . . . . . . . . . (2,500,000)
-----------
Balance at December 31, 1992 . . . . . . . . . . 531,816,000
Additions during period:
New mortgage loans . . . . . . . . . . . . 181,908,000
Construction loan advances . . . . . . . . 28,387,000
Deductions during period:
Collection of principal . . . . . . . . . . (35,490,000)
Acquisition of properties, net . . . . . . (88,493,000)
Conversion of construction loans to
sale/leaseback transactions . . . . . . (12,244,000)
Other . . . . . . . . . . . . . . . . . . . (4,178,000)
------------
Balance at December 31, 1993 . . . . . . . . . . $601,706,000
============
</TABLE>
S-8
<PAGE> 50
Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
NOT APPLICABLE.
PART III
Item 10.
TRUSTEES AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference to Item 4a above and the table and the
information following it appearing in the first subsection of the section
entitled "Election of Trustees" contained in the Company's Proxy Statement for
its Annual Meeting of Shareholders ("Annual Meeting Proxy Statement"), to be
filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended ("Regulation 14A"). There are no family relationships among any of the
Trustees or executive officers of the Company.
Item 11.
EXECUTIVE COMPENSATION
Incorporated by reference to the section entitled "Executive
Compensation" contained in the Company's Annual Meeting Proxy Statement, to be
filed pursuant to Regulation 14A.
Item 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference to the table appearing in the first subsection
of the section entitled "Election of Trustees" and the section entitled "Voting
Securities, Principal Holders Thereof and Holdings by Certain Executive
Officers" contained in the Company's Annual Meeting Proxy Statement, to be
filed pursuant to Regulation 14A.
Item 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference to the section entitled "Certain Transactions"
contained in the Company's Annual Meeting Proxy Statement, to be filed pursuant
to Regulation 14A.
-24-
<PAGE> 51
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
Financial Statements filed as a part of this report are listed in the
index appearing on Page F-1.
(a) 2. Financial Statement Schedules
Financial Statement Schedules required as part of this report are
listed on the index appearing on Page F-1.
(a) 3. Exhibits
Exhibits required as part of this report are listed in the index
appearing on Page 29.
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
<TABLE>
<S> <C>
1988 Stock Option Plan - Form 10-K for fiscal year ended December 31, 1988, Exhibit
10.13
1992 Equity Incentive Plan - Registration Statement No. 33-48695, Exhibit 4.3
Employment Agreement with - Form 10-Q for fiscal quarter ended March 31, 1993, Exhibit
Abraham D. Gosman 10.1
</TABLE>
(b) No reports on Form 8-K were filed during the quarter ended
December 31, 1993.
-25-
<PAGE> 52
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
MEDITRUST
By:/s/ Lisa M. Pavelka
Vice President and Treasurer
(and Principal Financial and
Accounting Officer)
Dated: March 21, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ Abraham D. Gosman Chairman, Chief Executive March 21, 1994
- ----------------------------
Abraham D. Gosman Officer and Trustee
/s/ David F. Benson President and March 21, 1994
- ----------------------------
David F. Benson Trustee
/s/ Edward W. Brooke Trustee March 21, 1994
- ----------------------------
Edward W. Brooke
/s/ Hugh L. Carey Trustee March 21, 1994
- ----------------------------
Hugh L. Carey
/s/ Robert Cataldo Trustee March 21, 1994
- ----------------------------
Robert Cataldo
/s/ Thomas J. Magovern Trustee March 21, 1994
- ----------------------------
Thomas J. Magovern
/s/ Philip L. Lowe Trustee March 21, 1994
- ----------------------------
Philip L. Lowe
/s/ Gerald Tsai, Jr. Trustee March 21, 1994
- ----------------------------
Gerald Tsai, Jr.
/s/ Frederick W. Zuckerman Trustee March 21, 1994
- ----------------------------
Frederick W. Zuckerman
</TABLE>
-26-
<PAGE> 53
The Declaration of Trust establishing Meditrust dated August 6, 1985
(the "Declaration"), a copy of which is duly filed in the office of the
Secretary of State of the Commonwealth of Massachusetts, provides that the name
"Meditrust" refers to the Trustees under the Declaration collectively as
Trustees, but not individually or personally; and that no Trustee, officer,
shareholder, employee or agent of the Company shall be held to any personal
liability, jointly or severally, for any obligation of, or claim against, the
Company. All persons dealing with the Company, in any way, shall look only to
the assets of the Company for the payment of any sum or the performance of any
obligation.
-27-
<PAGE> 54
EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No Title Method of Filing
- ------- ----- ----------------
<S> <C> <C>
3.1 Restated Declaration of Trust, as
amended . . . . . . . . . . . . Incorporated by reference to Exhibit 3.1 to the
Registration Statement on Form S-3 (File No. 33-55386)
3.2 By-Laws, as amended . . . . . . Incorporated by reference to Exhibit 3.2 to Form 10-K
for the fiscal year ended December 31, 1992
4.1 1988 Stock Option Plan, as amended
. . . . . . . . . . . . . . . . .. Incorporated by reference to Exhibit 10.13 to Form 10-K
for the fiscal year ended December 31, 1988
4.2 1992 Equity Incentive Plan . . Incorporated by reference to Exhibit 4.3 to the
Registration Statement on Form S-8 (File No. 33-48695)
4.3 Form of Indenture dated February 4,
1993 between The Company and Fleet
National Bank, as trustee . . . Incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-3 (File No. 33-55386)
4.4 Form of 7% Convertible Debenture due
1998 . . . . . . . . . . . . . Incorporated by reference to Exhibit 4.2 to the
Registration Statement on Form S-3 (File No. 33-55386)
4.5 Form of Fiscal Agency Agreement dated
February 4, 1993 between the Company
and Fleet National Bank as fiscal
agent . . . . . . . . . . . . . Filed herewith
4.6 Form of 7% Convertible Debenture due
1998 . . . . . . . . . . . . . Included in Exhibit 4.5
4.7 Form of Fiscal Agency Agreement dated
November 15, 1993 between the Company
and Fleet National Bank as fiscal
agent . . . . . . . . . . . . . Filed herewith
4.8 Form of 6 7/8% Convertible Debenture
due 1998 . . . . . . . . . . . Included in Exhibit 4.7
</TABLE>
-28-
<PAGE> 55
<TABLE>
<CAPTION>
Exhibit
No Title Method of Filing
- ------- ----- ----------------
<S> <C> <C>
4.9 Form of Indenture dated April 23, 1992
between The Company and Fleet National
Bank, as trustee.. Incorporated by reference to Exhibit 4 to the
Registration Statement on Form S-3 (File No. 33-45979
4.10 Form of 9% Convertible Debenture due
2002 . . . . . . . . . . . . . Incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-3 (File No. 33-45979)
10.1 Note Agreement relating to first
mortgage notes due December 1, 1997
Incorporated by reference to Exhibit 10.4 to the
Registration Statement on Form S-11 (File No. 33-20557)
10.2 Amended and Restated Lease Agreement
between Mediplex of Queens, Inc. and
QPH, Inc. dated December 30, 1986
Incorporated by reference to Exhibit 2.2 to the Form 8-K
dated January 13, 1987
10.3 Form of Lease for Carmel, New York and
Scotia, New York facilities . . Incorporated by reference to Exhibit 10.5 to the
Registration Statement on Form S-11 (File No. 33-7483)
10.4 Form of Credit Agreement between the
Registrant and Barclays Bank PLC, New
York Branch dated as of March 7, 1988
. . . . . . . . . . . . . . . . . . . Incorporated by reference to Exhibit 10.11 to the
Registration Statement on Form S-11 (File No. 33-20557)
10.5 Note Agreement dated as of October 31,
1989 among the Registrant, The
Prudential Insurance Company of
America, et al . . . . . . . . Incorporated by reference to Exhibit 10.4 to Form 8
-- dated December 5, 1989
</TABLE>
-29-
<PAGE> 56
<TABLE>
<CAPTION>
Exhibit
No Title Method of Filing
- ------- ----- ----------------
<S> <C> <C>
10.6 Note Agreement dated as of February
16, 1989, as amended and restated as
of October 31, 1989, among the
Registrant, The Prudential Insurance
Company of America, et al . . Incorporated by reference to Exhibit 10.5 to Form 8
----- dated December 5, 1989
10.7 Note Agreement dated as of January 1,
1993 by and among the Registrant,
Principal Mutual Life Insurance
Company, et al . . . . . . . . Incorporated by reference to Exhibit 10.1 to Form 10-Q
----- dated May 4, 1993
10.8 Employment Agreement dated January 1,
1993 by and between the Company and
Abraham D. Gosman . . . . . . . Incorporated by reference to Exhibit 10.1 to Form 10-Q
dated May 4, 1993
10.9 Revloving Credit Agreement dated as of
July 1, 1991 among the Company,
various financial institutions and
Societe Generale, New York Branch, as
agent . . . . . . . . . . . . . Incorporated by reference to Exhibit 10.23 to Form 10-K
dated February 28, 1992
10.10 Revolving Credit Agreement dated as of
March 10, 1992 between the Company and
Via Banque . . . . . . . . . . Incorporated by reference to Exhibit 10.10 to Form 10-K
dated March 25, 1993
10.11 Consent Agreement dated as of January
27, 1994 between the Company and Sun
Healthcare Group, Inc. . . . . Incorporated by reference to Form 8-K dated
January 27, 1994
11 Statement Regarding Computation of Per
Share Earnings . . . . . . . . Filed herewith
21 Subsidiaries of the Registrant Filed herewith
23 Consent of Coopers & Lybrand Filed herewith
</TABLE>
-30-
<PAGE> 1
EXHIBIT 4.5
FISCAL AGENCY AGREEMENT
dated as of
February 4, 1993
between
MEDITRUST
and
Fleet National Bank,
as Fiscal Agent
<PAGE> 2
FISCAL AGENCY AGREEMENT, dated as of February 4, 1993, between MEDITRUST,
a business trust duly organized and validly existing under the laws of the
Commonwealth of Massachusetts (the "Company"), and Fleet National Bank, a
banking corporation duly organized and validly existing under the laws of the
United States of America (the "Fiscal Agent").
1. The Securities. The Company has by a Placement Agency Agreement,
dated January 27, 1993 (the "Placement Agency Agreement"), among the Company
and the placement agents named therein (the "Placement Agents"), agreed to
issue up to U.S. $64,870,000, aggregate principal amount of its 7% Convertible
Debentures Due 1998 (hereinafter referred to as the "Securities"). Interest on
the Securities shall be calculated on the basis of a 360 day year comprised of
twelve 30 day months. Except as set forth in the next sentence, the Securities
will initially be issued in temporary form, and will subsequently be exchanged
for Securities in definitive form either as bearer Securities ("Bearer
Securities"), in denominations of U.S. $1,000 and U.S. $10,000 and with
interest coupons attached, representing the semiannual interest payable
thereon, or as fully registered Securities ("Registered Securities"), in
denominations of U.S. $1,000 and integral multiples thereof. The Securities in
definitive form shall be substantially in the form of Exhibit A hereto (the
"Definitive Securities"). The Securities will be convertible as provided in
Section 4 of the Definitive Securities and Section 7 hereof. The Securities
may be redeemed by the Company as provided in Section 3 of the Definitive
Securities and Section 6 hereof. The temporary global debenture in respect of
the Securities will be issued in bearer form without coupons in the aggregate
principal amount of the entire issue of Securities, substantially in the form
of Exhibit B hereto (the "Global Security"). The Definitive Securities and the
Global Security shall contain such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Agreement and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may, consistent herewith, be
determined by the officer of the Company executing such Securities, as
evidenced by his execution of such Securities.
Appointment of Agents and Security Registrar.
The Company hereby appoints Fleet National Bank, at present having its
principal corporate trust office at 111 Westminster Street, Providence, Rhode
Island 02903 and having an office in London at Fleet Bank of Massachusetts,
N.A., 40-41 St. Andrews Hill, London EC4V 5DE England, as its fiscal agent in
respect of the Securities upon the terms and subject to the conditions herein
set forth. (Fleet National Bank and its successor or successors as such fiscal
agent qualified and appointed in accordance with Section 11 hereof are herein
called the "Fiscal Agent.") The Fiscal Agent shall have the powers and
authority granted to and conferred upon it herein and in the Securities,
<PAGE> 3
and such further powers and authority, acceptable to it, to act on behalf of
the Company as the Company may hereafter grant to or confer upon it.
In addition, the Company hereby appoints Fleet National Bank at present
located at 111 Westminster Street, Providence, Rhode Island 02903 acting
through its office in London at Fleet Bank of Massachusetts, N.A., 40-41 St.
Andrews Hill, London EC4V 5DE England, as its paying agent in respect of the
Securities upon the terms and subject to the conditions herein set forth.
(Fleet National Bank and its successor or successors as such paying agent
qualified and appointed in accordance with Section 11 hereof are herein called
the "Paying Agent.") The Paying Agent shall have the powers and authority
granted to and conferred upon it herein and in the Securities, and such further
powers and authority, acceptable to it, to act on behalf of the Company as the
Company may hereafter grant to or confer upon it. As used herein, "paying
agencies" shall mean paying agencies maintained by the Company as provided in
Section 12(f) hereof.
The Company hereby appoints Fleet National Bank, at present located at 111
Westminster Street, Providence, Rhode Island 02903, acting through its office
in London at Fleet Bank of Massachusetts, N.A., 40-41 St. Andrews Hill, London
EC4V 5DE England, as its conversion agent in respect of the Securities upon the
terms and subject to the conditions herein set forth (Fleet National Bank and
its successor or successors as such conversion agent qualified and appointed in
accordance with Section 11 hereof are herein called the "Conversion Agent," and
the Paying Agent, the Conversion Agent, the Transfer Agents (as herein defined)
and the Fiscal Agent are sometimes herein referred to severally as an "Agent"
and, collectively, as the "Agents"). The Conversion Agent shall have the
powers and authority granted to and conferred upon it herein and in the
securities, and such further powers and authority, acceptable to it, to act on
behalf of the Company as the Company may hereafter grant to or confer upon it.
As used herein, "conversion agencies" shall mean conversion agencies maintained
by the Company as provided in Section 12(f) hereof.
(i) The Company shall cause to be kept at the principal corporate trust
office of the Fiscal Agent a register (the registers maintained in such office
and in any other office or agency designated for such purpose (which office
shall be located outside of the United Kingdom) being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as the Company may prescribe, the Company shall provide
for the registration of Registered Securities and of transfers of Registered
Securities. The Fiscal Agent is hereby appointed "Security Registrar" for the
purpose of registering Registered Securities and transfers of Registered
Securities as herein provided.
-2-
<PAGE> 4
i. Registration and Transfer.
(i) Upon surrender for registration of transfer of any Registered
Security at any office or agency designated for such purpose by the Company
pursuant to Section 12(g) hereof, the Company shall execute, and the Fiscal
Agent shall authenticate and register and make available for delivery, in the
name of the designated transferee or transferees, one or more new Registered
Securities of any authorized denominations and of a like aggregate principal
amount.
(ii) Bearer Securities may, at the option of the holder thereof, be
exchanged for an equal aggregate principal amount of Registered Securities in
denominations of $1000 and integral multiples thereof without coupons and/or
Bearer Securities of authorized denominations, upon surrender of the Bearer
Securities to be exchanged at any office or agency designated for such purpose
by the Company pursuant to Section 12(g), with all unmatured coupons and all
matured coupons in default thereto appertaining. If such holder is unable to
produce any such unmatured coupon or coupons or matured coupon or coupons in
default, such exchange may be effected if the Bearer Securities are accompanied
by payment in an amount equal to the face amount of such missing coupon or
coupons, or the surrender of such missing coupon or coupons may be waived by
the Company in writing if there be furnished to it such security or indemnity
as it may require to save it, the Fiscal Agent, the Paying Agent and any paying
agency harmless. If thereafter the holder of such Security shall surrender to
any paying agency any such missing coupon in respect of which such a payment
shall have been made, such holder shall be entitled to receive the amount of
such payment.
Registered Securities may, at the option of the holder thereof, be
exchanged for Registered Securities of any other authorized denominations and
of a like aggregate principal amount, upon surrender of the Securities to be
exchanged at any office or agency designated for such purpose by the Company
pursuant to Section 12(g). Registered Securities shall not be exchangeable for
Bearer Securities. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Fiscal Agent shall authenticate and deliver,
the Registered Securities which the holder making the exchange is entitled to
receive.
(iii) All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing the
same obligations, and entitled to the same benefits under this Agreement, as
the Securities surrendered upon such registration of transfer or exchange.
-3-
<PAGE> 5
(iv) Every Registered Security presented for registration of transfer or
surrendered for exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company, the Fiscal Agent
and the Transfer Agent to which such Security is presented or surrendered and
the Security Registrar, duly executed by the holder thereof or his attorney
duly authorized in writing. In the case of Registered Securities, all such
instruments shall comply with the provisions of Paragraph (a) above. The
registration of the transfer of a Registered Security by the Security Registrar
shall be deemed to be the written acknowledgement of such transfer on behalf of
the Company.
(v) No service charge shall be made for any exchange or registration of
transfer, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
exchange or registration of transfer of Securities, other than exchanges
pursuant to Section 4 hereof or not involving any registration of transfer.
(vi) Neither the Company nor the Fiscal Agent nor any of the offices or
agencies designated for the purposes specified in Section 12(f) nor any
Transfer Agent shall be required (i) to exchange Bearer Securities for
Registered Securities during the period between the close of business on the
Record Date (as defined in Section 5 hereof) and the opening of business on the
next succeeding interest payment date, (ii) to exchange any Bearer Security (or
portion thereof) for a Registered Security if the Company shall determine and
inform the Fiscal Agent in writing that, as a result thereof, the Company may
incur adverse consequences under the Federal income tax laws and regulations
(including proposed regulations) of the United States in effect or proposed at
the time of such exchange, or (iii) in the event of a redemption in part, (A)
to register the transfer of Registered Securities or to exchange any Bearer
Securities for Registered Securities during a period of 15 days immediately
preceding the date notice is given identifying the serial numbers of the
Securities to be redeemed, or (B) to register the transfer of or exchange any
Registered Security so selected for redemption in whole or in part, except
portions not being redeemed of Securities being redeemed in part, or (C) to
exchange any Bearer Security called for redemption; provided, however, that a
Bearer Security called for redemption may be exchanged, on the terms and
conditions set forth above, for a Registered Security that is simultaneously
surrendered, with written instruction for payment on the date fixed for
redemption, unless the redemption date is between the close of business on any
Record Date and the close of business on the next succeeding interest payment
date, in which case such exchange may only be made prior to the Record Date
immediately preceding the redemption date.
-4-
<PAGE> 6
ii. Global Security; Exchange.
(i) The Securities shall initially be in the form of the Global
Security. The Global Security shall be authenticated by the Fiscal Agent upon
the order of the Company on the same conditions, in substantially the same
manner and with the same effect as the Definitive Securities. The Global
Security will be issued upon payment to the Company or its order in United
States dollars in next-day funds by check or wire transfer to a United States
dollar account designated by the Company, at 2:30 p.m., London time, on
February 4, 1993, or at such other time on the same or such other date, not
later than 5:00 p.m., London time, on the fifth business day in London
thereafter, as the Placement Agents and the Company may agree. Such payment
will be made (1) upon authorization from the Placement Agents and (2) against
delivery of the Global Security for the balance of the Securities to The Chase
Manhattan Bank, N.A., London office, as depositary (the "Common Depositary")
for Morgan Guaranty Trust Company of New York, Brussels office, as operator of
the Euroclear System (the "Euroclear Operator"), and Centrale de Livraison de
Valeurs Mobilieres S.A. ("CEDEL S.A."). The Global Security shall be held on
deposit with the Common Depositary for the accounts of the Euroclear Operator
and CEDEL S.A., for credit to the Placement Agents' respective Securities
Clearance Accounts (or to such other accounts as the Placement Agents may have
specified) with the Euroclear Operator or CEDEL S.A.
(ii) Without unnecessary delay but in any event not less than 15 days
prior to the Exchange Date (as defined below), the Company will execute and
deliver to the Fiscal Agent at its office in London Definitive Securities in
the aggregate principal amount outstanding in the Global Debenture. "Exchange
Date" means the date following the expiration of the 40-day period commencing
on the Closing Date. On or after the Exchange Date, the Global Security may be
surrendered to the Fiscal Agent to be exchanged, as a whole or in part, for
Definitive Bearer Securities without charge, and the Fiscal Agent shall
authenticate and deliver, in exchange for such Global Security or the portions
thereof to be exchanged, an equal aggregate principal amount of Definitive
Bearer Securities, but only upon presentation to the Fiscal Agent at its office
in London of a certificate of the Euroclear Operator or CEDEL S.A. with respect
to the Global Security or portions thereof being exchanged, substantially in
the form of Exhibit C hereto, to the effect that it has received a certificate
or certificates in substantially the form set forth in Exhibit D hereto dated
no earlier than 15 days prior to the Exchange Date and signed by the person
appearing in its records as the owner of the Global Security or portions
thereof being exchanged. Similarly, after the Exchange Date, portions of the
Global Security may be exchanged for an equal aggregate principal amount of
Definitive Registered Securities upon presentation to the Fiscal Agent at its
office in
-5-
<PAGE> 7
London of a certificate substantially in the form of Exhibit E hereto.
(iii) Only Bearer Securities may be issued upon receipt by the Euroclear
Operator or CEDEL S.A. of a certificate or certificates in the form of Exhibit
D hereto. Bearer Securities will be delivered only outside the United States,
its territories or possessions. Only Registered Securities may be issued upon
receipt by the Euroclear Operator or CEDEL S.A. of a certificate or
certificates in the form of Exhibit E hereto.
(iv) The delivery to the Fiscal Agent by the Euroclear Operator or CEDEL
S.A. of any certificate referred to above may be relied upon by the Company and
the Fiscal Agent as conclusive evidence that a corresponding certificate or
certificates has or have been delivered to the Euroclear Operator or CEDEL S.A.
pursuant to the terms of this Agreement.
(v) Upon any such exchange of a portion of the Global Security for a
Definitive Security or Securities, the Global Security shall be endorsed by the
Fiscal Agent to reflect the reduction of its principal amount by an amount
equal to the aggregate principal amount of such Definitive Security or
Securities. Until so exchanged in full, the Global Security shall in all
respects be entitled to the same benefits under this agreement as Definitive
Securities authenticated and delivered hereunder.
iii. Payment.
(i) The Company will pay or cause to be paid to the Paying Agent the
amounts, at the times and for the purposes, set forth herein and in the text of
the Securities, and the Company hereby authorizes and directs the Paying Agent
to make payment of the principal of and interest on and Additional Amounts (as
defined in Section 2 of the Definitive Securities), if any, on the Securities
from such payments.
(ii) At least 15 days prior to the date on which any payment of
Additional Amounts shall be required to be made pursuant to Section 2 of the
Definitive Securities, the Company will furnish the Paying Agent, each other
paying agency of the Company and the Fiscal Agent with a certificate of one of
its duly authorized officers instructing the Paying Agent and each other paying
agency of the Company as to the amounts required (i) to be deducted or withheld
for or on account of any taxes described in Section 2 of the Definitive
Securities from a payment to be made on that date and (ii) to be paid to each
holder of Securities or coupons as Additional Amounts pursuant to that
paragraph. If the foregoing amounts are not uniform for all holders, then the
Company's certificate shall specify by country of residence or other factor,
with reasonable clarity, the amounts required to be
-6-
<PAGE> 8
deducted or withheld and to be paid as Additional Amounts for each holder or
class of holders of the Securities or coupons. In the absence of its receipt
of any such certificate from the Company, the Paying Agent may make payment
without deduction or withholding. The Company hereby agrees to indemnify the
Paying Agent, each other paying agency of the Company and the Fiscal Agent for,
and to hold them harmless against, any loss, liability or expense reasonably
incurred without gross negligence or bad faith on their part, arising out of or
in connection with actions taken or omitted by any of them in reliance on any
certificate furnished pursuant to this Section.
(iii) Interest on any Registered Security that is payable, and is
punctually paid or duly provided for, on any interest payment date shall be
paid to the person in whose name that Security is registered at the close of
business on the February 15 or August 15 immediately preceding such interest
payment date (each a "Record Date"). In case a Bearer Security is surrendered
for exchange for a Registered Security after the close of business on any
Record Date and before the opening of business on the next succeeding interest
payment date, the Fiscal Agent shall not be required to perform such transfer
or exchange of such Security.
(iv) In the case of any Registered Security which is converted after any
Record Date and on or prior to the next succeeding interest payment date (other
than any Registered Security called for redemption prior to such interest
payment date), interest that is payable on such interest payment date shall be
payable on such interest payment date notwithstanding such conversion, and such
interest shall be paid to the person in whose name that Registered Security is
registered at the close of business on such Record Date. Except as otherwise
expressly provided in the immediately preceding sentence, in the case of any
Security which is converted, interest that is payable after the date of
conversion on such Security shall not be payable.
(v) Any interest on any Registered Security that is payable, but is not
punctually paid or duly provided for, on any interest payment date shall
forthwith cease to be payable to the registered holder thereof on the relevant
Record Date by virtue of having been such holder, and such defaulted interest
may be paid by the Company to the registered holder of such Registered Security
on a subsequent record date established by the Company in any lawful manner if,
after written notice given by the Company to the Fiscal Agent of the proposed
payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Fiscal Agent.
(vi) Subject to the foregoing provisions of this Section 5, each
Security delivered under this Agreement upon registration of transfer of or in
exchange for or in lieu of any other Security
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<PAGE> 9
shall carry all the rights to interest accrued and unpaid, and to accrue, which
were carried by such other Security.
(vii) In order to provide for the payment of the principal of and
interest on the Securities as the same shall become due and payable, the
Company shall pay to the Paying Agent at its office in London, in such coin or
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts therein, and in same day
funds, the following amounts (and the Company shall give notice to the Fiscal
Agent at least one full business day prior to the date payment is due to the
Paying Agent as to the means of such payment), to be held and applied by the
Paying Agent as hereinafter set forth:
(i) The Company shall pay to the Paying Agent on the business day
immediately prior to each interest payment date in immediately available
funds an amount sufficient to pay the interest due on (and Additional
Amounts, if any, on) all the Securities outstanding on such interest
payment date, and the Paying Agent shall apply the amounts so paid to it
to the payment of such interest (and Additional Amounts, if any) on such
interest payment date.
(ii) If the Company shall elect, or shall be required, to redeem
the Securities in accordance with Section 6 hereof, the Company will pay
to the Paying Agent on the business day immediately prior to the date
fixed for redemption thereof in immediately available funds an amount
sufficient (with any amount then held by the Paying Agent and available
for the purpose) to pay the redemption price of the Securities called for
redemption on the redemption date or entitled to be redeemed, together
with accrued interest thereon (and Additional Amounts, if any, thereon) to
the date fixed for redemption if such redemption date occurs on an
interest payment date, and the Paying Agent shall apply such amount to the
payment of the redemption price and accrued interest (and Additional
Amounts, if any) in accordance with the terms of the Securities.
(iii) On the business day immediately prior to the maturity
date of the Securities, the Company shall pay to the Paying Agent in
immediately available funds an amount which, together with any amounts
then held by the Paying Agent, and available for payment thereof, shall be
equal to the entire amount of principal and interest (and Additional
Amounts, if any) to be due on such maturity date on all the Securities
then outstanding, and the Paying Agent shall apply such amount to the
payment of the principal of and interest on (and Additional Amounts, if
any, on) the Securities in accordance with the terms of the Securities.
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<PAGE> 10
iv. Redemption. If, under the circumstances described in Section
3 of the Definitive Securities, the Company shall elect to redeem the
outstanding Securities, the following provisions shall be applicable:
(i) The Company shall, at least 75 days (or such shorter period as
shall be reasonably acceptable to the Fiscal Agent) before the date designated
for such redemption, give written notice to the Agents of its election to
redeem the outstanding Securities on the redemption date specified in such
notice and state in such notice that the conditions precedent to such
redemption have occurred and describe them and shall request the Fiscal Agent
to arrange for publication and mailing of the notice specified in clause (c)
below.
(ii) In case the Company shall give notice to the Agents of its election
to redeem the Securities, the Fiscal Agent shall cause to be published on
behalf of the Company a notice of redemption in accordance with the provisions
of Section 3 of the Definitive Securities and shall mail by first-class mail a
copy of the notice to each holder of a Registered Security at the address of
such holder as it shall appear in the Security Register. The Fiscal Agent
shall send a copy of such notice of redemption to the Company, the Paying Agent
(if different from the Fiscal Agent) and each other paying agency of the
Company.
(iii) Such notice shall be published on behalf and at the expense of the
Company in an Authorized Newspaper (as defined in Section 19 hereof) in
Providence, Rhode Island, London and, so long as the Securities are listed on
the Luxembourg Stock Exchange, in Luxembourg, as set forth in Section 19 of
this Agreement and Section 3 of the Definitive Securities. In the case of a
redemption in whole, notice will be given once not more than 60 nor less than
30 days prior to the date fixed for redemption. In the case of a partial
redemption, notice will be given twice, the first such notice to be given not
more than 75 nor less than 60 days prior to the date fixed for redemption and
the second such notice to be given not more than 60 and not less than 30 days
prior to the date fixed for redemption. The Fiscal Agent shall notify the
Company promptly of the portions of outstanding Securities to be called for
redemption.
Notwithstanding any other provision of this Section 6, with respect to
redemptions described in Section 3(a)(ii) of the Definitive Securities, the
Securities will be immediately redeemable, at the option of and upon notice by
the Company to the extent deemed sufficient in the opinion of the Company's
Board of Trustees to prevent the holder of such Securities or any other person
having an interest therein if the Securities were thereupon converted from
being deemed to own shares of beneficial interest of the Company ("Shares") in
excess of the limits
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<PAGE> 11
prescribed in Article VI, Section 6.15 of the Company's Restated Declaration of
Trust, as amended.
v. Conversion of Securities.
(i) Subject to and upon compliance with the provisions of this Section
7, at the option of the holder thereof, any Definitive Security or, in the case
of any Registered Security or Bearer Security of a denomination other than
$1,000, any portion of the principal amount thereof which is $1,000 or an
integral multiple of $1,000 may be converted at any time on or after the date
which is, in the case of Bearer Securities, the Exchange Date, at the principal
amount thereof, or of such portion thereof, into fully paid and nonassessable
Shares as set forth in the Definitive Securities. The price at which Shares
shall be delivered upon conversion (herein called the "Conversion Price") shall
be initially $30.625 per Share. The Conversion Price shall be adjusted in
certain instances as provided in paragraphs (c)(i), (ii), (iii), (iv), (vi) and
(vii) of Section 4 of the Definitive Securities. Notwithstanding the
foregoing, a holder may not convert any Security, and such Security shall not
be convertible by any holder, if as a result of such conversion any person
would then be deemed to own Shares in excess of the limits prescribed in
Article VI, Section 6.15 of the Company's Restated Declaration of Trust, as
amended.
(ii) In order to exercise the conversion privilege, the holder of any
Security to be converted shall surrender such Security, or, if less than the
entire principal amount of a Registered Security or Bearer Security of a
denomination other than $1,000 is to be converted, the portion thereof to be
converted, together with all unmatured coupons and any matured coupons in
default appertaining thereto, at the office of the Conversion Agent or any
office or agency of the Company maintained for that purpose pursuant to Section
12(f), accompanied by written notice, in substantially the form set forth in
the Definitive Security, to the Company, at such office or agency that the
holder elects to convert such Security. Registered Securities surrendered for
conversion during the period after the close of business on any Record Date
next preceding any interest payment date to the close of business on such
interest payment date shall (except in the case of Registered Securities or
portions thereof which have been called for redemption on a redemption date
within such period) be accompanied by payment of an amount equal to interest
payable on such interest payment date on the principal amount being surrendered
for conversion. Except as otherwise provided in the immediately preceding
sentence and subject to Section 5(d), no payment or adjustment shall be made
upon any conversion on account of any interest accrued on the Securities
surrendered for conversion or on account of any dividends on the Shares issued
upon conversion.
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<PAGE> 12
a) Securities shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of such Securities
for conversion in accordance with the foregoing provisions, and at such
time the rights of the holders of such Securities as holders shall cease,
and the person or persons entitled to receive the Shares issuable upon
conversion shall be treated for all purposes as the record holder or
holders of such Shares at such time. As promptly as practicable on or
after the conversion date, the Company shall cause to be issued or
delivered at such office or agency a certificate or certificates for the
number of full Shares issuable or deliverable upon conversion, together
with payment, in lieu of any fraction of a share, as provided below.
(iii) In the case of any Registered Security or Bearer Security of a
denomination other than $1,000 which is converted in part only, upon such
conversion the Company shall execute and the Fiscal Agent shall authenticate
and deliver to the holder thereof, at the expense of the Company, a new
Security or Securities of any authorized kind or denomination as requested by
such holder, in aggregate principal amount equal to the unconverted portion of
the principal amount of such Security.
(iv) No fractional Shares shall be issued or delivered upon conversion
of Securities. If more than one Security shall be surrendered for conversion
at one time by the same holder, the number of full shares which shall be
issuable or deliverable upon conversion thereof shall be computed on the basis
of the aggregate principal amount of the Securities (or, in the case of
Registered Securities or Bearer Securities of a denomination other than $1,000,
specified portions thereof) so surrendered. Instead of any fractional Share
which would otherwise be issuable or deliverable upon conversion of any
Security or Securities (or, in the case of Registered Securities or Bearer
Securities of a denomination other than $1,000, specified portions thereof),
the Company shall pay a cash adjustment in respect of such fraction in an
amount equal to the same fraction of the Closing Price per Share (as defined in
the Definitive Securities) at the close of business on the day preceding the
day of conversion.
(v) Whenever the Conversion Price is adjusted as provided in the
Definitive Securities:
1) the Company shall compute the adjusted Conversion Price in
accordance with the terms of the Definitive Securities and shall prepare a
certificate signed by the President, any Vice President or the Treasurer
of the Company setting forth the adjusted Conversion Price and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed with the Conversion Agent and at each
office or agency
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<PAGE> 13
maintained for the purpose of conversion of Securities pursuant to Section
12(f); and
2) a notice stating that the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price shall forthwith be
required, and, as soon as practicable after it is required, the Company
shall promptly cause a notice setting forth the adjusted Conversion Price
to be given to the holders of the Securities as provided in Section 19.
(vi) In case:
1) the Company shall declare a dividend (or any other
distribution) on its Shares payable otherwise than in cash out of its
retained earnings (excluding dividends payable in Shares for which
adjustment is made pursuant to the terms of the Definitive Securities); or
2) the Company shall authorize the granting to the holders of its
Shares of rights or warrants to subscribe for or purchase any equity
securities of any class or of any other rights; or
3) of any reclassification of the Shares of the Company (other
than a subdivision or combination of its outstanding Shares) or of any
consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the Company; or
4) of the involuntary dissolution, liquidation or winding up of
the Company; or
5) the Company proceeds to take any other action which would
require an adjustment of the Conversion Price pursuant to the Definitive
Securities;
then the Company shall cause to be filed with the Conversion Agent and at each
office or agency maintained for the purpose of conversion of Securities a
notice setting forth the anticipated adjusted Conversion Price and a brief
statement of the facts requiring such adjustment, and shall cause notice to be
given as provided in Section 19 except that notice need be given once at least
20 days (or 10 days in any case specified in clause (i) or (ii) above) prior to
the applicable record date hereinafter specified, stating (x) the date on which
a record is to be established for the purpose of such dividend, distribution,
or grant of rights or warrants or, if a record is not to be established, the
date as of which the holders of Shares of record to be entitled to such
dividend, distribution, rights or warrants
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<PAGE> 14
is to be determined, or (y) the date on which a reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up
or other action is expected to become effective, and the date as of which it is
expected that holders of Shares of record shall be entitled to exchange their
Shares for the securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up or other action. The failure to give notice required
by this Section or any defect therein shall not affect the legality or validity
of any dividend, distribution, rights, warrants, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up,
or other action, or the vote on any such action.
(vii) The Company shall, at all times from and after the date on which
the Securities are convertible into Shares, have reserved and available, free
from preemptive rights, out of its authorized but unissued Shares, for the
purpose of effecting the conversion of Securities, the full number of Shares
then issuable upon the conversion of all Securities.
(viii) The Company covenants that all Shares which may be issued or
delivered upon conversion of Securities will upon issuance be fully paid and
nonassessable and, except as provided in Section 13, the Company will pay all
stamp, excise or similar taxes or duties, liens and charges with respect to the
issue thereof.
(ix) All converted Securities shall be held by the Company, and may, at
any time, be delivered to the Fiscal Agent for cancellation, which shall hold
or dispose of the same in accordance with its policy for disposal of canceled
securities or as otherwise directed by the Company. Converted Securities shall
not be transferred. The Company will promptly give, or cause to be given,
written notice to the Fiscal Agent of the serial numbers of all Securities
which have been converted.
(x) In case of any consolidation with, or merger of the Company into,
any other corporation, or in case of any merger of another corporation into the
Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding Shares of the Company), or
in case of any sale or transfer of all or substantially all of the assets of
the Company, the corporation formed by such consolidation or resulting from
such merger or which acquires such assets, as the case may be, shall execute
and deliver to the Fiscal Agent an amendment to the Fiscal Agency Agreement
providing that the holder of each Definitive Security shall have the right
during the period such Security shall be convertible as specified in the
Definitive Securities to convert such Securities only into the kind and amount
of securities, cash, and other property receivable upon such consolidation,
merger, sale or transfer by a
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<PAGE> 15
holder of the number of Shares of the Company into which such Security might
have been converted immediately prior to such consolidation, merger, sale or
transfer assuming, if such consolidation, merger, sale or transfer is prior to
the period such Security shall be convertible, that the Securities were
convertible at such time at the initial Conversion Price as adjusted pursuant
to the terms of the Definitive Securities. Such amendment shall provide for
adjustments which, for events subsequent to the effective date of such
amendment, shall be as nearly equivalent as may be practicable, as determined
by the Company, to the adjustments provided for in the Definitive Securities.
The above provisions of this Section shall similarly apply to successive
consolidations, mergers, sales or transfers.
(xi) Subject to Section 11(j), neither the Fiscal Agent nor the
Conversion Agent or agency appointed by the Company shall at any time be under
any duty or responsibility to any holder of Securities to determine whether any
facts exist which may require any adjustment of the Conversion Price, or with
respect to the nature or extent of any such adjustment when made, or with
respect to the method employed, or herein or in the Definitive Securities
provided to be employed, in making the same. Neither the Fiscal Agent nor the
Conversion Agent or agency appointed by the Company shall be accountable with
respect to the validity or value (or the kind or amount) of any Shares or of
any securities or property which may at any time be issued or delivered upon
the conversion of any Security; and neither the Fiscal Agent nor the Conversion
Agent or agency appointed by the Company makes any representation with respect
thereto. Neither the Fiscal Agent nor the Conversion Agent or agency appointed
by the Company shall be responsible for any acts or omissions of the Company
including without limitation any failure of the Company to issue, transfer or
deliver any Shares or Share certificates or other securities or property or to
make any cash payment upon the delivery of any Security for the purpose of
conversion or to comply with any of the covenants contained in this Section 7.
(m) The Fiscal Agent has no duty to determine when an adjustment
under this paragraph 7 should be made, how it should be made or whether it
should be made. The Fiscal Agent shall not be accountable for and makes no
representation as to the validity or value of any securities or assets issued
upon conversion of the Securities.
vi. Surrendered Securities. All Securities, together with any coupons
appertaining thereto, surrendered for payment, redemption, retirement, transfer
or exchange and all coupons paid through the application of interest
installments shall be delivered to the Fiscal Agent. In any such case the
Fiscal Agent shall cancel all Securities and coupons not previously canceled
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<PAGE> 16
and dispose of or deliver all such Securities and coupons to the Company in
accordance with the Fiscal Agent's policy for disposal of canceled securities.
vii. Mutilated, Destroyed, Stolen or Lost Securities. The Fiscal Agent
is hereby authorized, in accordance with the provisions of the Securities and
this Section, from time to time to authenticate and deliver Securities in
exchange for or in lieu of Securities that become mutilated, destroyed, stolen
or lost, upon receipt of indemnity and such other documents or proof as may be
required in form and substance satisfactory to the Fiscal Agent and the
Company. Every Security authenticated and delivered in exchange for or in lieu
of any such Security shall be considered the obligation of the Company and
shall carry all the rights to interest accrued and unpaid and to accrue which
were carried by such Security, and notwithstanding anything to the contrary
herein contained, any new Bearer Security shall have attached thereto such
coupons that neither gain nor loss in interest shall result from such exchange
or substitution.
viii. Signatures. Securities shall be executed on behalf of the Company
by its Chairman, its President, its Secretary, any Vice President or its
Treasurer or any Assistant Secretary, any of whose signatures may be manual or
in facsimile, and any coupons appertaining thereto shall be executed on behalf
of the Company by the facsimile signature of its Chairman, its President, its
Secretary, any Vice President or its Treasurer or any Assistant Secretary. Any
signature in facsimile may be imprinted or otherwise reproduced on the
Securities. The Company may adopt and use the signature or facsimile signature
of any person who shall be a Chairman, President, Secretary, Vice President,
Treasurer or Assistant Secretary at the time of the execution of the
Securities, notwithstanding the fact that at the time the Securities shall be
authenticated and delivered, or disposed of, such person shall have ceased to
have held such office by virtue of which such person so executed such security.
ix. Agreements Concerning Agents. Each of the Agents accepts its
obligations herein and in the Securities, upon the terms and conditions hereof
and thereof, including the following, to all of which the Company agrees and to
all of which the rights hereunder of the holders from time to time of the
Securities and coupons shall be subject:
(i) Each of the Agents shall be entitled to reasonable compensation for
all services rendered by such Agent, as separately agreed to from time to time
by the Company and such Agent, and the Company agrees to pay promptly such
compensation and to reimburse each of the Agents for the reasonable
out-of-pocket expenses (including, but not limited to, reasonable counsel fees
and expenses) incurred by such Agent in connection with the services rendered
by it hereunder. The Company also
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<PAGE> 17
agrees to indemnify each of the Agents and each other paying agency and
conversion agency of the Company for, and to hold it harmless against, any
loss, liability or expense (including the costs and expenses of defending
against any claim of liability, including the reasonable fees and expenses of
its counsel) incurred without gross negligence or bad faith on the part of such
Agent or other paying agency and conversion agency, arising out of or in
connection with its acting as an Agent or other paying agency and conversion
agency of the Company hereunder. The obligations of the Company under this
clause (a) shall survive payment of the Securities or the resignation or
removal of any Agent or paying agency and conversion agency.
(ii) In acting under this Agreement and in connection with the
Securities, each of the Agents and each other paying agency and conversion
agency of the Company is acting solely as agent of the Company, and does not
assume any obligation, or relationship of agency or trust, for or with any of
the owners or holders of the Securities or coupons, except that all funds held
by the Paying Agent or any other paying agency of the Company for payment of
principal of or interest on (or Additional Amounts, if any, on) the Securities
shall be held in trust but need not be segregated from other funds except as
required by law and as set forth herein and in the Securities, and shall be
applied as set forth herein and in the Securities; provided, however, that
monies paid by the Company to the Paying Agent or any other paying agency of
the Company for the payment of principal of or interest on (or Additional
Amounts, if any, on) Securities remaining unclaimed at the end of two years
after such principal or interest (or Additional Amounts, if any) shall have
become due and payable shall be repaid to the Company, as provided and in the
manner set forth in the Definitive Securities, whereupon the aforesaid trust
shall terminate and all liability of the Paying Agent or such other paying
agency of the Company with respect thereto shall cease.
(iii) Each of the Agents and each other paying agency and conversion
agency of the Company may consult with one or more counsel satisfactory to it
(including counsel to the Company), and the written opinion of such counsel
shall be full and complete authorization and protection in respect of any
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel.
(iv) Each of the Agents and each other paying agency and conversion
agency of the Company shall be protected and shall incur no liability for or in
respect of any action taken, omitted or suffered by it in reliance upon any
Security or coupon, notice, direction, consent, certificate, affidavit,
statement or other paper or document believed in good faith by such Agent or
such other paying agency and conversion agency of the Company to
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<PAGE> 18
be genuine and to have been signed by the proper party or parties.
(v) Each of the Agents and each other paying agency and conversion
agency of the Company, its officers, directors and employees may become the
owner of, or acquire any interest in, any Securities or coupons, with the same
rights that it or they would have if it were not an Agent or such other paying
agency of the Company hereunder, and may engage or be interested in any
financial or other transaction with the Company and its affiliates and may act
on, or as depositary, trustee or agent for, any committee or body of holders of
Securities or other obligations of the Company, as freely as if it were not an
Agent or a paying agency or conversion agency of the Company hereunder.
(vi) Neither the Paying Agent nor any other paying agency of the Company
shall be under any liability for interest on, or have any responsibility to
invest, any monies at any time received by it pursuant to any of the provisions
of this Agreement or of the Securities.
(vii) The recitals contained herein and in the Securities (except in the
Fiscal Agent's certificates of authentication), shall be taken as the
statements of the Company, and the Agents assume no responsibility for the
correctness of the same. None of the Agents makes any representation as to the
validity or sufficiency of this Agreement or the Securities or coupons or the
Company's Offering Memorandum dated January 28, 1993, or any other offering
material, except for such Agent's due authorization to execute this Agreement.
Neither the Agents nor any other paying agency of the Company shall be
accountable for the use or application by the Company of the proceeds of any
Securities.
(viii) The Agents and each other paying agency and conversion agency of
the Company shall be obligated to perform such duties and only such duties as
are herein and in the Securities specifically set forth and no implied duties
or obligations shall be read into this Agreement or the Securities against the
Agents or any other paying agency and conversion agency of the Company. The
Agents shall not be under any obligation to take any action hereunder which may
tend to involve them in any expense or liability, the payment or reimbursement
of which within a reasonable time is not, in their reasonable opinion, assured
to them through surety or other indemnity satisfactory to such Agents.
(ix) Unless herein or in the Securities otherwise specifically provided,
any order, certificate, notice, request, direction, or other communication,
from the Company made by or given by it under any provision of this Agreement
shall be in writing and shall be sufficient if signed by the Chairman,
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<PAGE> 19
President, Secretary, Assistant Secretary, any Vice President or Treasurer of
the Company.
(x) Anything in this Agreement to the contrary notwithstanding, none of
the Agents shall incur any liability hereunder, except as a result of gross
negligence or bad faith attributable to it or its officers or employees, and
shall incur no liability for the gross negligence or bad faith of its agents
appointed by it with due care; provided that the Agent shall notify the Company
of the appointment of any such agents.
(xi) Except as specifically provided herein or in the Securities, none
of the Agents shall have any duty or responsibility in case of any default by
the Company in the performance of its obligations (including, without limiting
the generality of the foregoing, any duty or responsibility to accelerate all
or any of the Securities or to initiate or to attempt to initiate any
proceedings at law or otherwise or to be make any demand for the payment
thereof upon the Company).
x. Offices, Resignation, Successors, Etc. of Agents; Paying,
Conversion and Transfer Agencies.
(i) The Company agrees that, until none of the Securities and coupons
is outstanding or until monies for the payment of all principal of and interest
on (and Additional Amounts payable pursuant to Section 2 of the Definitive
Securities, if any, on) all outstanding Securities shall have been made
available at the office of the Paying Agent and shall have been returned to the
Company as provided in the Securities, there shall at all times be a Fiscal
Agent in Providence, Rhode Island or the Borough of Manhattan, New York City,
which shall be a bank or trust company organized and doing business under the
laws of the United States of America or of any State of the United States of
America, in good standing and authorized under such laws to exercise corporate
trust powers, a Paying Agent and a Conversion Agent having offices in a city in
Western Europe and in either Providence, Rhode Island or New York City, which
shall be a bank or trust company organized, in good standing and doing business
under the laws of the United States of America or of any State of the United
States of America, and a paying agency and a conversion agency in at least one
city in Western Europe, which shall be Luxembourg so long as the Securities are
listed on the Luxembourg Stock Exchange.
(ii) Each of the Agents may at any time resign as such Agent by giving
written notice to the Company of such intention on its part, specifying the
date on which its desired resignation shall become effective; provided,
however, that such date shall never be less than ninety days after receipt of
such notice by the Company unless the Company agrees to accept less notice.
Each of the Agents hereunder may be removed at any time by the
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<PAGE> 20
filing with it at least 30 days prior to the date of such proposed removal, an
instrument in writing signed on behalf of the Company and specifying such
removal and the date when it is intended to become effective. Such resignation
or removal shall take effect upon the date of the appointment by the Company,
as hereinafter provided, of a successor Fiscal Agent, Conversion Agent,
Transfer Agent or Paying Agent, as the case may be, and the acceptance of such
appointment by such successor Agent. At the time of its resignation or
removal, each of the Agents shall be entitled to the payment by the Company of
its compensation for the services rendered hereunder and to the reimbursement
of all reasonable out-of-pocket expenses incurred in connection with the
services rendered hereunder by such Agent.
(iii) In case at any time any of the Agents shall resign, or shall be
removed, or shall be incapable of acting, or shall file a voluntary petition as
a debtor under Chapter 7 or 11 of Title 11 of the United States Code or have an
order for relief-entered against it as a debtor under Chapter 7 or 11 of Title
11 of the United States Code or make an assignment for the benefit of its
creditors or consent to the appointment of a receiver of all or any substantial
part of its property, or shall admit in writing its inability to pay or meet
its debts as they mature, or if an order of any court shall be entered
approving any petition filed by or against the Fiscal Agent under any
legislation similar to the provisions of Title 11 of the United States Code or
against any of the Agents under the provisions of any legislation similar to
the Provisions of Title 11 of the United States Code, or if a receiver of it or
of all or any substantial part of its property shall be appointed, or if any
public officer shall take charge or control of it or of its property or
affairs, for the purpose of rehabilitation, conservation or liquidation, a
successor Agent, qualified as aforesaid, shall be appointed by the Company by
an instrument in writing. Upon the appointment as aforesaid of a successor
Agent and acceptance by it of such appointment, the Agent so superseded shall
cease to be such Agent hereunder. If no successor Agent shall have been so
appointed by the Company and shall have accepted appointment as hereinafter
provided, any holder of a Security, on behalf of itself and all others
similarly situated, or any Agent may petition any court of competent
jurisdiction for the appointment of a successor Agent and shall promptly notify
the Company of such action.
(iv) Any successor Fiscal Agent, Conversion Agent, Transfer Agent or
Paying Agent appointed hereunder shall execute, acknowledge and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder, and thereupon such successor Agent, without any further act, deed or
conveyance, shall become vested with all the authority, rights, powers, trusts,
immunities, duties and obligations of such predecessor with like effect as if
originally named as such Agent hereunder, and such predecessor, upon payment of
its charges and
-19-
<PAGE> 21
disbursements then unpaid, shall thereupon become obligated to transfer,
deliver and pay over, and such successor Agent shall be entitled to receive,
all monies, securities or other property on deposit with or held by such
predecessor, as such Agent hereunder.
(v) Any corporation or bank into which any of the Agents hereunder may
be merged or converted, or any corporation or bank with which such Agent may be
consolidated, or any corporation or bank resulting from any merger, conversion
or consolidation to which such Agent shall be a party, or any corporation or
bank to which such Agent shall sell or otherwise transfer all or substantially
all the assets and business of such Agent, or any corporation to which the
Fiscal Agent shall sell or otherwise transfer all or substantially all of its
corporate trust business, provided that it shall be qualified as aforesaid,
shall be the successor to such Agent under this Agreement without the execution
or filing of any document or any further act on the part of any of the parties
hereto.
(vi) So long as there shall be a Fiscal Agent and Paying Agent
hereunder, the Company shall maintain agencies (i) where Registered Securities
(but not Bearer Securities or coupons) may be presented for surrender and
payment (and for the payment of Additional Amounts on the Registered
Securities, if any) and where Securities may be surrendered for conversion in
Providence, Rhode Island or the Borough of Manhattan, New York City, and (ii)
where Securities and coupons may be surrendered for payment (and for the
payment of Additional Amounts (pursuant to Section 2 of the Definitive
Securities) on Bearer Securities, if any) and where Securities may be
surrendered for conversion in at least one city in Western Europe, which shall
be Luxembourg so long as the Securities are listed on the Luxembourg Stock
Exchange. The Company now intends to maintain additional agencies (subject to
applicable laws and regulations) where Bearer Securities and coupons may be
surrendered for payment (and for the payment of Additional Amounts (pursuant to
Section 2 of the Definitive Securities) on Bearer Securities, if any), where
Registered Securities may be surrendered for payment and where Securities may
be surrendered for conversion in London, England and Luxembourg, and during
such period to keep the Agents advised of the names and locations of such
agencies. Unless the Company shall otherwise notify each of the Agents in
writing, the sole such paying agencies and conversion agencies shall be the
agencies specified in the Securities. The Company authorizes the Paying Agent
to pay to or to the order of the aforesaid agencies, upon demand by such
agencies, funds for the payment of the principal of and interest on (and
Additional Amounts pursuant to Section 2 of the Definitive Securities, if any,
on) the Securities. Except as otherwise arranged by the Company, the Fiscal
Agent shall arrange for the payment of the compensation of such paying agencies
for their services as such, and the Company
-20-
<PAGE> 22
shall pay to the Fiscal Agent from time to time sufficient funds to make such
payments.
(vii) So long as there shall be a Fiscal Agent, Paying Agent and
Conversion Agent hereunder, the Company shall maintain a Security Registrar and
additional transfer agencies (the "Transfer Agents") (i) where Registered
Securities may be surrendered for exchange for Registered Securities and (ii)
in at least one city in Western Europe, where Bearer Securities may be
delivered in exchange for Bearer Securities or for Registered Securities.
Consistent with applicable laws and regulations, including the provisions of
the federal income tax laws of the United States, such agencies may be the same
agencies as or different agencies from those maintained by the Company pursuant
to Section 12(f).
The Company hereby appoints Banque Generale du Luxembourg ("Banque
Generale"), 27 Avenue Monterey, L-2951 Luxembourg, as Transfer Agent for such
exchanges. The transfer, exchange and registration of transfer or exchange of
Registered Securities shall be made by the Fiscal Agent in Providence, Rhode
Island or by Banque Generale, as agent for the Fiscal Agent, so long as the
Securities are registered on the Luxembourg Stock Exchange.
xi. Taxes. The Company will pay all stamp taxes and other similar
duties, if any, that may be imposed by the United States of America or the
United Kingdom, or any state or political subdivision thereof or taxing
authority therein, with respect to the execution or delivery of this Agreement,
or the issuance of the Global Security, or the exchange from time to time of
the Global Security for Definitive Securities, or with respect to the issue or
delivery of Shares on conversion of Securities; provided, however, that the
Company shall not be required to pay any tax or duty which may be payable in
respect of any transfer involved in the issue or delivery of Shares in a name
other than that of the holder of the Security or Securities to be converted,
and no such issue or delivery shall be made unlessand until the person
requesting such issue has paid to the Company the amount of any such tax or
duty or has established to the satisfaction of the Company that such tax or
duty has been paid.
xii. Meetings and Votes of Holders.
(i) A meeting of holders of Securities may be called at any time and
from time to time pursuant to this Section for any of the following purposes:
(i) to give any notice to the Company or to the Fiscal Agent, or to give any
directions to the Fiscal Agent, or to consent to the waiving of any default
hereunder or under the Definitive Securities and its consequences, or to take
any other action authorized to be taken by holders of Securities pursuant to
Section 9 of the Definitive Securities; or (ii) to take any other action
authorized to be taken by or on behalf of
-21-
<PAGE> 23
the holders of any specified aggregate principal amount of the Securities under
any other provision of this Agreement, the Definitive Securities or under
applicable law.
(ii) Meetings of holders of Securities may be held at such place or
places in Providence, Rhode Island, The City of New York or London as the
Fiscal Agent or, in case of its failure to act, the Company or the holders
calling the meeting shall from time to time determine.
(iii) The Fiscal Agent may at any time call a meeting of holders of
Securities to be held at such time and at such place in any of the locations
designated in Section 14(b) hereof as the Fiscal Agent shall determine. Notice
of every meeting of holders shall be made as specified in Section 19 hereof,
except that such notice shall set forth the time and the place of such meeting,
in general terms the action proposed to be taken at such meeting and a general
description of regulations applicable to such meeting and shall be published at
least three times in the publications specified in such Section 19, the first
publication to be not less than 21 nor more than 180 days prior to the date
fixed for the meeting.
(iv) In case at any time the Company or the holders of at least 25% in
aggregate principal amount of the Securities shall have requested the Fiscal
Agent to call a meeting of the holders, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Fiscal Agent shall not have given the first notice of such meeting within 21
days after receipt of such request or shall not thereafter proceed to cause the
meeting to be held as provided herein, then the Company or the holders of
Securities in the amount above specified may determine the time and the place
in either of the locations designated in Section 14(b) hereof for such meeting
and may call such meeting to take any action authorized in Section 14(a) hereof
by giving notice thereof as provided in Section 14(c) hereof.
(v) To be entitled to vote at any meeting of holders of Securities, a
person shall be (i) a holder of one or more Securities, or (ii) a person
appointed by an instrument in writing as proxy for a holder or holders of
Securities by such holder or holders, which proxy need not be a holder of
Securities. The only persons who shall be entitled to be present or to speak
at any meeting of holders shall be the persons entitled to vote at such meeting
and their counsel and any representatives of the Fiscal Agent and its counsel
and any representatives of the Company and its counsel.
(vi) The persons entitled to vote a majority in principal amount of the
outstanding Securities shall constitute a quorum for the transaction of all
business specified in Section 14(a)
-22-
<PAGE> 24
hereof. No business shall be transacted in the absence of a quorum unless a
quorum is represented when the meeting is called to order. In the absence of a
quorum within 30 minutes of the time appointed for any such meeting, the
meeting shall, if convened at the request of the holders of Securities (as
provided in Section 14(d) hereof), be dissolved. In any other case the meeting
shall be adjourned for a period of not less than 10 days as determined by the
chairman of the meeting prior to the adjournment of such adjourned meeting.
Notice of the reconvening of any adjourned meeting shall be given as provided
in Section 14(c) hereof except that such notice need be published only once but
must be given not less than five days prior to the date on which the meeting is
scheduled to be reconvened. Subject to the foregoing, at the reconvening of
any meeting adjourned for a lack of a quorum, the persons entitled to vote 25%
in principal amount of the Securities shall constitute a quorum for the taking
of any action set forth in the notice of the original meeting. Notice of the
reconvening of an adjourned meeting shall state expressly the percentage of the
aggregate principal amount of the Securities that shall constitute a quorum.
At a meeting or an adjourned meeting duly reconvened and at which a quorum is
present as aforesaid, any resolution and all matters (except as limited by
Section 9 of the Definitive Securities) shall be effectively passed and decided
if passed or decided by the persons entitled to vote a majority in principal
amount of the Securities represented and voting at such meeting, provided that
such amount shall be not less than 25% in principal amount of the Securities
outstanding. Any holder of a Security who has executed an instrument in
writing appointing a person as his proxy shall be deemed to be present for the
purposes of determining a quorum and be deemed to have voted; provided,
however, that such holder shall be considered as present or voting only with
respect to the matters covered by such instrument in writing. Any resolution
effectively passed or decision taken at any meeting of the holders of
Securities duly held in accordance with this Section 14 shall be binding on all
the holders of Securities whether or not present or represented at the meeting.
(vii) Notwithstanding any other provision of this Agreement, the Fiscal
Agent may make such reasonable regulations as it may deem advisable for any
meeting of holders of Securities in regard to proof of the holding of
Securities and of the appointment of proxies and in regard to the appointment
and duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall deem appropriate. Except as
otherwise permitted or required by any such regulations, the holding of Bearer
Securities shall be proved by the production of the Bearer Securities or by a
certificate executed, as depositary, by, and the appointment of any proxy shall
be proved by having the signature of the person
-23-
<PAGE> 25
executing the proxy witnessed or guaranteed by, in each case, any trust
company, bank or banker satisfactory to the Fiscal Agent. Such regulations may
provide that written instruments appointing proxies, regular on their face, may
be presumed valid and genuine without the proof specified herein or other
proof. The holding of Registered Securities shall be proved by the registry
books maintained in accordance with Section 2(d) hereof or by a certificate or
certificates of the Fiscal Agent in its capacity as the Company's agent for the
maintenance of such books.
(viii) The Fiscal Agent shall, by an instrument in writing, appoint a
temporary chairperson of the meeting, unless the meeting shall have been called
by the Company or by the holders of Securities as provided in Section 14(d)
hereof, in which case the Company or the holders calling the meeting, as the
case may be, shall in like manner appoint a temporary chairperson. A permanent
chairperson and a permanent secretary of the meeting shall be elected by vote
of the holders of a majority in principal amount of the Securities represented
at the meeting and entitled to vote.
(ix) At any meeting each holder or proxy shall be entitled to one vote
for each U.S. $1,000 principal amount of Securities held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
respect of any Securities challenged as not outstanding and ruled by the
chairperson of the meeting to be not outstanding. The chairperson of the
meeting shall have no right to vote, except as a holder or proxy.
(x) Any meeting of holders of Securities duly called pursuant to Section
14(c) or 14(d) hereof at which a quorum is present may be adjourned from time
to time by vote of the holders (or proxies for the holders) of a majority in
principal amount of the Securities represented at the meeting and entitled to
vote; and the meeting may be held as so adjourned without further notice.
(xi) The vote upon any resolution submitted to any meeting of holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of the holders of Securities or of their representatives by proxy
and the serial number or numbers of the Securities held or represented by them.
The permanent chairperson of the meeting shall appoint two inspectors of votes
who shall count all votes cast at the meeting for or against any resolution and
who shall make and file with the secretary of the meeting their verified
written reports in triplicate of all votes cast at the meeting. A record, at
least in triplicate, of the proceedings of each meeting of holders of
Securities shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts
-24-
<PAGE> 26
setting forth a copy of the notice of the meeting and showing that said notice
was published as provided in Section 14(c) or 14(d) hereof and, if applicable,
Section 14(f) hereof. Each copy shall be signed and verified by the affidavits
of the chairperson and secretary of the meeting, and one such copy shall be
delivered to the Company and another to the Fiscal Agent to be preserved by the
Fiscal Agent, the copy delivered to the Fiscal Agent to have attached thereto
the ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
xiii. Merger, Consolidation or Sale of Assets.
(i) If at any time there shall be a merger, consolidation, sale or
conveyance of assets or assumption of obligations to which any of the covenants
contained in Section 6 of the Definitive Securities pertains, then in any such
event the successor or assuming corporation referred to therein will promptly
deliver to the Fiscal Agent:
1) A certificate signed by an executive officer of such successor
or assuming corporation stating that as of the time immediately after the
effective date of any such transaction the covenants of the Company
contained in the Definitive Securities have been complied with and the
successor or assuming corporation is not in default under the provisions
of this Agreement or the Securities, as applicable; and
2) A written opinion of legal counsel (who may be an employee of
or counsel to the successor or assuming corporation) stating that in such
counsel's opinion such covenants have been complied with and that any
instrument or instruments executed in the performance of such covenants
comply with the requirements thereof.
In case of any such merger, consolidation, sale, conveyance or
assumption, such successor or assuming corporation shall succeed to and be
substituted for the Company with the same effect, subject to (in the case of a
merger to which the Company is a party) Section 6(b) of the Definitive
Securities, as if it had been named herein and in the Definitive Securities as
the Company; the Company shall thereupon be relieved of any further obligation
or liability hereunder or upon the Securities, and the Company, as the
predecessor corporation may thereupon or at any time thereafter be dissolved,
wound up or liquidated. If applicable, such successor or assuming corporation
thereupon may cause to be signed, and may issue either in its own name or in
the name of the Company any or all of the Securities issuable hereunder which
theretofore shall not have been executed on behalf of the Company and delivered
to the Fiscal Agent; and, upon the order of such successor or assuming
corporation, instead
-25-
<PAGE> 27
of the Company, and subject to all the terms, conditions and limitations in
this Agreement prescribed, the Fiscal Agent shall authenticate and shall
deliver any Securities which previously shall have been signed and delivered by
the officers of the Company to the Fiscal Agent for authentication, and any
Securities which such successor or assuming corporation thereafter shall cause
to be signed and delivered to the Fiscal Agent for that purpose. All the
Securities so issued shall in all respects have the same legal rank and benefit
under this Agreement as the Securities theretofore or thereafter issued in
accordance with the terms of this Agreement as though all of such Securities
had been issued at the date of the execution hereof.
In case of any merger, consolidation, sale, conveyance or assumption,
such changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be deemed by the Company to be
appropriate.
(ii) The Fiscal Agent may rely on the documents delivered to it pursuant
to this Agreement by any successor or assuming corporation pursuant to this
Section 15 as conclusive evidence that any such merger, consolidation, sale,
conveyance or assumption complies with the provisions of this Section and the
Securities.
xiv. GOVERNING LAW. THIS AGREEMENT, THE SECURITIES AND ANY COUPONS
APPERTAINING THERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE COMMONWEALTH OF MASSACHUSETTS, UNITED STATES OF AMERICA.
xv. Amendments. This Agreement may be amended by the parties hereto,
and certain provisions hereof may be waived, in the manner provided in Section
9 of the Definitive Securities. This Agreement may also be amended by the
parties hereto, without the consent of the holder of any Security, for the
purposes set forth in Section 9 of the Definitive Securities and for the
purpose of curing any ambiguity, or of curing, correcting or supplementing any
defective provision contained herein or in any manner that the parties may
mutually deem necessary or desirable, and that shall not adversely affect the
interests of the holders of the Securities.
xvi. Agent for Service of Process. As long as any of the Securities or
coupons appertaining thereto remain outstanding, the Company will at all times
have an authorized agent in the United States of America, upon whom process may
be served in any legal action or proceeding arising out of or relating to this
Agreement or any Security or any coupons appertaining thereto. Service of
process upon such agent and written notice of such service mailed or delivered
to the Company shall to the extent permitted by law be deemed in every respect
effective service of process upon the Company in any such legal action or
proceeding.
-26-
<PAGE> 28
The Company hereby appoints the Fiscal Agent as its agent for such purpose, and
covenants and agrees that service of process in any legal action or proceeding
may be made upon it at the office of such agent at 111 Westminster Street,
Providence, Rhode Island 02903 Attention: Corporate Trust Department (or such
other address as may be the principal corporate trust office of such agent, or
such other address as may be the principal corporate trust office of any
successor fiscal agent located in the City of New York), unless and until the
Company shall designate another agent for such purpose by written notice to the
Fiscal Agent. If the Fiscal Agent receives any such service of process, it
shall promptly notify the Company of such service.
xvii. Notices.
All notices hereunder shall be deemed to have been given when deposited
in the mail as first class mail, registered or certified, return receipt
requested, postage prepaid, addressed to any party hereto as follows:
Address
The Company 128 Technology Center
Waltham, Massachusetts 02154
Attn: President
The Fiscal Agent 111 Westminster Street
Providence, Rhode Island 02903
Attn: Vice President
Corporate Trust
The Paying Agent 111 Westminster Street
Providence, Rhode Island 02903
Attn: Vice President
Corporate Trust
or at any other address of which any of the foregoing shall have notified the
others in writing.
Notices to holders of the Securities shall be given by publication in an
Authorized Newspaper. For purposes of this Agreement, the term "Authorized
Newspaper" means a newspaper customarily published on each business day in
morning editions, whether or not it shall be published in Saturday, Sunday or
holiday editions, such as The Wall Street Journal (Eastern edition) in
Providence, Rhode Island or The City of New York, the Financial Times in London
and the Luxemburger Wort in Luxembourg. If by reason of the temporary or
permanent suspension of publication of any newspaper or by reason of any other
cause it shall be impossible to make publication of such notice in an
Authorized Newspaper as herein provided, then such publication or
-27-
<PAGE> 29
other notice in lieu thereof as shall be made by the Fiscal Agent shall
constitute sufficient publication of such notice, if such publication or other
notice shall, so far as may be possible approximate the terms and conditions of
the publication in lieu of which it is given. Notices will be mailed to
registered holders of Registered Securities at their registered address as the
same shall appear on the books of the Fiscal Agent on the day fifteen days
prior to such mailing. The Fiscal Agent shall promptly furnish to the Company
and to each other paying agency of the Company a copy of each notice so
published or mailed.
xviii. Counterparts. This Agreement may be executed in separate
counterparts, and by each party separately in a separate counterpart, each such
counterpart, when so executed and delivered, to be an original. Such
counterparts shall together constitute but one and the same instrument.
-28-
<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
MEDITRUST
By:
Name:
Title:
Fleet National Bank, as Fiscal Agent
By:
Name:
Title:
20343
-29-
<PAGE> 31
EXHIBIT A
-30-
<PAGE> 32
(FORM OF FACE OF REGISTERED DEBENTURE)
THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO U.S. PERSONS EXCEPT IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT.
Each purchaser, by its purchase of this Security, represents, acknowledges
and agrees that: (1) it is purchasing "restricted" securities which have not
been registered under the Securities Act; (2) if it should decide to dispose of
any of such Securities, it will not offer, sell, transfer, pledge, hypothecate
or otherwise dispose of any of such Securities except (A) pursuant to Rule 144A
under the Securities Act, (B) pursuant to Regulation S under the Securities
Act, (C) to a sophisticated institutional investor approved as an "accredited
investor" (within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act by a broker or dealer registered under Section 15 of the
Securities Exchange Act of 1934, (D) pursuant to any other exemption from, or
otherwise in a transaction not subject to, the registration requirements of the
Securities Act as confirmed in an opinion of U.S. counsel or (E) pursuant to an
effective registration statement under the Securities Act, in each case in
accordance with any applicable state laws of the United States governing the
offer or sale of securities.
<PAGE> 33
MEDITRUST
(Organized in the Commonwealth of Massachusetts)
7% CONVERTIBLE DEBENTURE DUE 1998
No. R- U.S. $
--------------- ---------------
Meditrust, a business trust duly organized and existing under the laws of
the Commonwealth of Massachusetts (the "Company"), for value received, hereby
promises to pay to ________, or registered assigns, the principal sum of
__________ Thousand United States Dollars on March 1, 1998, and to pay interest
thereon, from February 4, 1993, or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, semiannually in arrears
on March 1 and September 1, in each year (each an "Interest Payment Date"),
commencing September 1, 1993, at the rate of 7% per annum until the principal
hereof is paid or made available for payment. Interest hereon shall be
calculated on the basis of a 360 day year comprised of twelve 30 day months.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Fiscal Agency Agreement, be paid
to the person in whose name this Security is registered at the close of
business on the Record Date for such interest, which shall be February 15 or
August 15 (whether or not a Business Day) next preceding such Interest Payment
Date. Except as otherwise provided in the Fiscal Agency Agreement, any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the holder on such Record Date and may be paid at any time in any
lawful manner, all as more fully provided in the Fiscal Agency Agreement.
Payment of interest on this Security shall be made by United States dollar
check drawn on a bank in The City of New York and mailed to the person entitled
thereto at his address as it shall appear in the Security Register, or (if
arrangements satisfactory to the Company and the Fiscal Agent are made) by wire
transfer to a United States dollar account maintained by the payee with a bank
in the City of New York; provided, however, that if such mailing is not
possible and no such application shall have been made, payment of interest
shall be made at the Corporate Trust Office of the Fiscal Agent, or such other
office or agency of the Company as may be designated for such purpose in
Providence, Rhode Island or The City of New York, in United States currency.
Reference is hereby made to the further provisions of this Security set
forth under Terms and Conditions of the Securities on the reverse hereof, which
further provisions shall for all purposes have the same effect as if set forth
at this place.
This Security shall not become valid or enforceable for any purpose unless
and until the certificate of authentication hereon
<PAGE> 34
shall have been manually signed by a duly authorized signatory of the Fiscal
Agent.
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed in its name by the manual or facsimile signature of a duly authorized
signatory.
Dated: 1993
-------- --,
MEDITRUST
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE> 35
(FORM OF FACE OF BEARER DEBENTURE)
THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT), AND MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO U.S. PERSONS EXCEPT IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE
CODE.
MEDITRUST
(Organized in the Commonwealth of Massachusetts)
7% CONVERTIBLE DEBENTURE DUE 1998
No. B- U.S.$
-------- --------
Meditrust, a business trust duly organized and existing under the laws of
the Commonwealth of Massachusetts (the "Company"), for value received, hereby
promises to pay to bearer upon presentation and surrender of this Security the
principal sum of ________________ Thousand United States Dollars on March 1,
1998, and to pay interest thereon, from February 4, 1993, semiannually in
arrears on March 1 and September 1 in each year (each an "Interest Payment
Date"), commencing September 1, 1993, at the rate of 7% per annum, until the
principal hereof is paid or made available for payment. Interest hereon shall
be calculated on the basis of a 360 day year comprised of twelve 30 day months.
Such payments shall be made in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts, subject to any laws or regulations applicable thereto
and to the right of the Company (limited as provided in the Fiscal Agency
Agreement) to terminate the appointment of any paying agency, at the main
offices of Fleet National Bank or Banque Generale du Luxembourg, 27 Avenue
Monterey, L-2951 Luxembourg or at such other offices or agencies outside the
United States of America, its territories or possessions as the Company may
designate, by United States dollar check drawn on a bank in the City of New
York, or (if arrangements satisfactory to the Company and the Fiscal Agent are
made) by wire transfer to a United States dollar account maintained by the
holder at a bank outside the United States, its territories and its
possessions. Interest on this Security shall be paid only at an office or
agency located outside the United States, its territories or possessions and,
in the case of interest due on or before maturity, only upon presentation and
surrender at such an office or agency of the interest coupons hereto attached
as they severally mature. No
<PAGE> 36
payment on this Security or any coupon will be made at the Corporate Trust
Office of the Fiscal Agent or any other paying agency maintained by the Company
in the United States, nor will any payment be made by transfer to an account
in, or by mail to an address in, the United States, except as may be permitted
by United States tax laws and regulations in effect at the time of such payment
without detriment to the Company. Notwithstanding the foregoing, payment of
this Security and coupons may be made at the office of the Fiscal Agent in
Providence, Rhode Island or The City of New York if full payment at all paying
agencies outside the United States is illegal or effectively precluded by
exchange controls or other similar restrictions.
Reference is hereby made to the further provisions of this Security set
forth under Terms and Conditions of the Securities on the reverse hereof, which
further provisions shall for all purposes have the same effect as if set forth
at this place.
Neither this Security nor any of the coupons attached hereto shall become
valid or enforceable for any purpose unless and until the certificate of
authentication hereon shall have been manually signed by a duly authorized
signatory of the Fiscal Agent.
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed in its name by the manual or facsimile signature of a duly authorized
officer and coupons bearing the facsimile signature of a duly authorized
signatory to be annexed hereto.
Dated: 1993
----------,
MEDITRUST
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
<PAGE> 37
(FORM OF FACE OF COUPON ON BEARER DEBENTURES)
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE
CODE.
MEDITRUST
7% CONVERTIBLE DEBENTURE DUE 1998
U.S.$ *
-------------
Due
----------
Unless the Security to which this coupon appertains shall have been called
for redemption prior to the due date hereof and payment thereof duly provided
for or converted or exchanged, on the date set forth hereon, Meditrust (herein
called the "Company") will pay to bearer, upon surrender hereof, the amount
shown hereon (together with any Additional Amount in respect thereof which the
Company may be required to pay according to the terms of said Security) at the
paying agencies set out on the reverse hereof or at such other places outside
the United States of America, its territories and possessions as the Company
may determine from time to time, by United States dollar check drawn on a bank
in The City of New York, or (if arrangements satisfactory to the Company and
the Fiscal Agent referred to in the Security to which this coupon appertains
are made) wire transfer to a United States dollar account maintained by the
payee at a bank outside the United States of America, its territories and
possessions, being one-half year's interest then payable on said Security.
MEDITRUST
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
*The amount due shown on the coupon for the first Interest Payment Date will be
interest for the period February 4, 1993 to September 1, 1993.
<PAGE> 38
[Reverse of Coupon]
Fleet Bank of Massachusetts, N.A. Banque Generale du Luxembourg
40-41 St. Andrews Hill 27 Avenue Monterey
London EC4V 5DE L-2951 Luxembourg
England
<PAGE> 39
CERTIFICATE OF AUTHENTICATION
This is one of the Securities described in the within-mentioned Fiscal
Agency Agreement.
Fleet National Bank, as Fiscal Agent
By:
---------------------------------
Authorized Signatory
<PAGE> 40
Terms and Conditions of the Securities
1. General.
(a) This Security is one of a duly authorized issue of Securities of the
Company designated as its 7% Convertible Debentures due 1998 (herein called the
"Securities"), limited in aggregate principal amount to U.S. $64,870,000. The
Company, for the benefit of the holders from time to time of the Securities,
has entered into a Fiscal Agency Agreement dated as of February 4, 1993 (the
"Fiscal Agency Agreement"), between the Company and Fleet National Bank, as
Fiscal Agent, Paying Agent, Security Registrar and Conversion Agent (the
"Fiscal Agent"), to which Fiscal Agency Agreement reference is hereby made for
a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Fiscal Agent, and the holders of
Securities and any coupons appertaining thereto and of the terms upon which the
Securities are, and are to be, authenticated and delivered. The holders of the
Securities will be entitled to the benefits of, be bound by, and be deemed to
have notice of, all of the provisions of the Fiscal Agency Agreement. A copy
of the Fiscal Agency Agreement is on file and may be inspected at the offices
of paying agencies appointed by the Company.
(b) The Securities are issuable as bearer Securities (the "Bearer
Securities"), with interest coupons attached, in the denominations of U.S.
$1,000 and U.S. $10,000, and as registered Securities (the "Registered
Securities"), without coupons, in denominations of U.S. $1,000 and integral
multiples thereof. The Registered Securities, and transfers thereof, shall be
registered as provided in Section 8 hereof and in the Fiscal Agency Agreement.
The holder of any Bearer Security or any coupon and the registered holder of a
Registered Security shall (to the fullest extent permitted by applicable law)
be treated at all times, by all persons and for all purposes as the absolute
owner of such Security or coupon, as the case may be, regardless of any notice
of ownership, theft or loss or of any writing thereon.
(c) The Securities are direct and unsecured obligations of the Company.
There are no restrictions herein on other indebtedness or securities which may
be incurred or issued by the Company.
2. Additional Amounts.
The Company will pay, as additional interest ("Additional Amounts"), to
the holder of this Security or of any coupon appertaining hereto who is a
United States Alien (as defined below) such amounts as may be necessary in
order that every net
<PAGE> 41
payment of the principal of (and premium, if any) and interest on this
Security, after withholding for or on account of any present or future tax,
assessment or other governmental charge imposed upon or as a result of such
payment by the United States or any political subdivision or taxing authority
thereof or therein, will not be less than the interest provided herein or any
coupon appertaining hereto to be then due and payable; provided, however, that
the foregoing obligation to pay Additional Amounts shall not apply to:
(a) any tax, assessment or other governmental charge which would not
have been so imposed but for (i) the existence of any present or former
connection between such holder (or between a fiduciary, settlor or
beneficiary of, or a person holding a power over, such holder, if such
holder is an estate or trust, or a member of such holder, if such holder
is a partnership) and the United States, including, without limitation,
such holder (or such fiduciary, settlor, beneficiary, person holding a
power or member) being or having been a citizen or resident or treated as
a resident thereof or being or having been engaged in a trade or business
therein or being or having been present therein or having or having had a
permanent establishment therein, (ii) such holder's present or former
status as a personal holding company, foreign personal holding company,
passive foreign investment company, foreign private foundation or other
foreign tax-exempt entity or controlled foreign corporation for United
States tax purposes or a corporation which accumulates earnings to avoid
United States Federal income tax, or (iii) such holder's status as a bank
extending credit pursuant to a loan agreement entered into in the ordinary
course of business;
(b) any tax, assessment or other governmental charge which would not
have been so imposed but for the presentation by the holder of this
Security or any coupon appertaining hereto for payment on a date more than
10 days after the date on which such payment became due and payable or on
the date on which payment thereof is duly provided, whichever occurs
later;
(c) any estate, inheritance, gift, sales, transfer or personal
property tax or any similar tax, assessment or other governmental charge;
(d) any tax, assessment or other governmental charge which would not
have been imposed but for the failure to comply with certification,
information, documentation or other reporting requirements concerning the
nationality, residence, identity or present or former connection with the
United States of the holder or beneficial owner of such Security or any
related coupon if such compliance is required by statute, regulation or
ruling of the United
<PAGE> 42
States or any political subdivision or taxing authority thereof or therein
as a precondition to relief or exemption from such tax, assessment or
other governmental charge;
(e) any tax, assessment or other governmental charge which is
payable otherwise than by withholding from payments of principal of and
premium, if any, or interest on this Security;
(f) any tax, assessment or other governmental charge imposed on
interest received by a person holding, actually or constructively, 10
percent or more of the total combined voting power of all classes of stock
of the Company entitled to vote; or
(g) any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of principal of and premium,
if any, or interest on any Security or interest on any coupon appertaining
thereto if such payment can be made without such withholding by any other
paying agent;
nor shall Additional Amounts be paid with respect to any payment of the
principal of and premium, if any, or interest on this Security to a person
other than the sole beneficial owner of such payment to the extent such
beneficial owner would not have been entitled to the Additional Amounts had
such beneficial owner been the holder of this Security or any coupon
appertaining hereto.
The term "United States Alien" means any person who, for United States
Federal income tax purposes, is a foreign corporation, a non-resident alien
individual, a non-resident alien fiduciary of a foreign estate or trust, or a
foreign partnership to the extent one or more of the members of which is, for
United States Federal income tax purposes, a foreign corporation, a
non-resident alien individual or a non-resident alien fiduciary of a foreign
estate or trust, and the term "United States" means the United States of
America, its territories and possessions.
Except as specifically provided herein and in the Fiscal Agency Agreement,
the Company shall not be required to make any payment with respect to any tax,
assessment or other governmental charge imposed by any government or any
political subdivision or taxing authority thereof or therein.
3. Redemption.
(a) The Securities are subject to redemption (i) as necessary for the
Company to continue to qualify for United States Federal tax treatment as a
real estate investment trust under section 856(a)(6) of the Internal Revenue
Code of the United States of America, and (ii) on or after March 1, 1996 as a
whole or in part (but, if in part, in aggregate principal amounts
<PAGE> 43
of no less than $10,000), at the election of the Company at a redemption price
equal to 100% of the principal amount, together with accrued interest to the
date fixed for redemption. Provisions of this Security that apply to
Securities called for redemption also apply to portions of Securities called
for redemption. The Fiscal Agent shall notify the Company promptly of the
Securities or portions of Securities to be called for redemption.
Notwithstanding any other provision of this Section 3, with respect to
redemptions described in (i) above, this Security will be immediately
redeemable, at the option of and upon notice by the Company to the extent
deemed sufficient in the opinion of the Company's Board of Trustees to prevent
the holder hereof or any other person having an interest herein if this
Security were thereupon converted from being deemed to own shares of beneficial
interest of the Company ("Shares") in excess of the limits prescribed in
Article VI, Section 6.15 of the Company's Restated Declaration of Trust, as
amended.
(b) If, at any time, the Company shall determine that as a result of any
change in or amendment to the laws (or any regulations or rulings promulgated
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein affecting taxation, or any amendment to or change
in an official application or interpretation of such laws, regulations or
rulings which change or amendment becomes effective on or after February 4,
1993, the Company has or will become obligated to pay to the holder of any
Security or coupon Additional Amounts and such obligation cannot be avoided by
the Company taking reasonable measures available to it, then the Company may,
at its election exercised at any time when such conditions continue to exist,
redeem the Securities as a whole at a redemption price equal to 100% of the
principal amount, together with accrued interest, if any, to the date fixed for
redemption; provided that no such notice of redemption shall be given earlier
than 90 days prior to the earliest date on which the Company would be obliged
to pay such Additional Amounts were a payment in respect of this Security then
due; and provided further, that at the time such notice is given, such
obligation to pay such Additional Amounts remains in effect.
Prior to any redemption of the Securities pursuant to the preceding
paragraph, the Company shall provide the Fiscal Agent with one or more
certificates (signed by the President or any Vice President and the Treasurer
or the Secretary) of the Company on which the Fiscal Agent may conclusively
rely to the effect that the Company is entitled to redeem the Securities
pursuant to such paragraph and that the conditions precedent to the right of
the Company to redeem the Securities pursuant to such paragraph have occurred
and a written opinion of counsel (who may be an employee of the Company)
stating that all legal conditions precedent to the right of the Company to
redeem the Securities pursuant to such paragraph have occurred.
<PAGE> 44
(c) The Company shall, except as set forth in the succeeding paragraph,
redeem the Securities as a whole but not in part, at 100% of their principal
amount, together with interest accrued to the date fixed for redemption, after
determining, based on a written opinion of counsel, that any certification,
identification or information reporting requirement of United States law or
regulation with regard to the nationality, residence or identity of a
beneficial owner of a Bearer Security or a coupon appertaining thereto who is a
United States Alien (as defined in Section 2 hereof) would be applicable to a
payment of principal of, premium, if any, or interest on a Bearer Security or a
coupon appertaining thereto made outside the United States by the Company or a
paying agent (other than a requirement (a) which would not be applicable to a
payment made (i) directly to the beneficial owner or (ii) to a custodian,
nominee or other agent of the beneficial owner, or (b) which could be satisfied
by the holder, custodian, nominee or other agent certifying that the beneficial
owner is a United States Alien, provided, however, in each case referred to in
clauses (a)(ii) and (b) payment by such custodian, nominee or agent to the
beneficial owner is not otherwise subject to any requirement referred to in
this sentence). The Company shall make such determination and will notify the
Fiscal Agent thereof in writing as soon as practicable, stating in the notice
the effective date of such certification, identification, or information
reporting requirement and the dates within which the redemption shall occur,
and the Fiscal Agent shall give prompt notice thereof in accordance with the
Fiscal Agency Agreement. The Company shall determine the redemption date by
notice to the Fiscal Agent at least 75 days before the redemption date, unless
shorter notice is acceptable to the Fiscal Agent. Such redemption of the
Securities must take place on such date, not later than one year after the
publication of the initial notice of the Company's determination of the
existence of such certification, identification or information reporting
requirement. The Company shall not so redeem the securities, however, if the
Company shall, based on a subsequent event, determine, based on a written
opinion of counsel, not less than 30 days prior to the date fixed for
redemption, that no payment would be subject to any requirement described
above, in which case the Company shall notify the Fiscal Agent, which shall
give prompt notice of that determination in accordance with the Fiscal Agency
Agreement and any earlier redemption notice shall thereupon be revoked and of
no further effect.
Notwithstanding the preceding paragraph, if and so long as the
certification, identification or information reporting requirement referred to
in the preceding paragraph would be fully satisfied by payment of United States
withholding, backup withholding or similar taxes, the Company may elect, prior
to the giving of the notice of redemption, to have the provisions of this
paragraph apply in lieu of the provisions of the preceding paragraph. In that
event, the Company will pay such Additional Amounts (without regard to Section
2 hereof) as are necessary in
<PAGE> 45
order that, following the effective date of such requirements, every net
payment made outside the United States by the Company or a paying agent of the
principal of, premium, if any, and interest on a Bearer Security or a coupon
appertaining thereto to a holder who is a United States Alien (without regard
to a certification, identification or information reporting requirement as to
the nationality, residence or identity of such holder), after deduction for
United States withholding, backup withholding or similar taxes (other than
withholding, backup withholding or similar taxes (i) which would not be
applicable in the circumstances referred to in the parenthetical clauses of the
first sentence of the next preceding paragraph or (ii) are imposed as a result
of presentation of such Bearer Security or coupon for payment more than 10 days
after the date on which such payment becomes due and payable or on which
payment thereof is duly provided for, whichever is later), will not be less
than the amount provided in the Bearer Security or the coupon to be then due
and payable. If the Company elects to pay such Additional Amounts and as long
as it is obligated to pay such Additional Amounts, the Company may subsequently
redeem the Securities, at any time, in whole but not in part, upon not more
than 60 days nor less than 30 days notice, at 100% of their principal amount,
plus accrued interest to the date fixed for redemption and Additional Amounts,
if any.
(d) Notice of redemption will be given by publication in Authorized
Newspapers (as defined in the Fiscal Agency Agreement) in The City of New York
and in London, and, so long as the Securities are listed on the Luxembourg
Stock Exchange, in Luxembourg, and by mail to holders of Registered Securities,
in each case in the English language, all as provided in the Fiscal Agency
Agreement. In the case of a redemption in whole at the option of the Company,
notice will be given once not more than 60 nor less than 30 days prior to the
date fixed for redemption. In the case of a partial redemption at the option
of the Company, notice will be given twice, the first such notice to be given
not more than 75 or less than 60 days prior to the date fixed for redemption
and the second such notice to be given not more than 60 or less than 30 days
prior to the date fixed for redemption. Neither the failure to give notice nor
any defect in any notice given to any particular holder of a Security shall
affect the sufficiency of any notice with respect to other Securities.
Notices relating to the redemption of Securities whether at the option of
the Company or the holder thereof shall specify: the date fixed for redemption
or the Holder Redemption Date, as the case may be; the redemption price; the
place or places of payment; that payment will be made upon presentation and
surrender of the Securities to be redeemed, together, in the case of a Bearer
Security, with all appurtenant coupons, if any, maturing subsequent to the date
fixed for redemption; that interest accrued to the date fixed for redemption
(unless the redemption date is an interest payment date) will be paid as
specified in said notice; and that on and after said date
<PAGE> 46
interest thereon will cease to accrue. In the case of a redemption in part at
the option of the Company, notices shall specify the aggregate principal amount
of Securities to be redeemed and the aggregate principal amount of Securities
outstanding after such partial redemption. The first notice shall specify the
last date on which exchanges or transfers of Securities may be made, and the
second notice shall specify the serial numbers of the Securities and the
portions thereof called for redemption. In the case of a redemption in whole
or in part by the Company, notices shall specify the date the conversion
privilege expires in accordance with Section 4(a) hereof. Such notices shall
also state that the conditions precedent, if any, to such redemption have
occurred and the last day for surrender of the Securities being redeemed.
(e) If notice of redemption has been given in the manner set forth in
Section 3(d) hereof with respect to Securities to be redeemed at the option of
the Company, the Securities so to be redeemed shall become due and payable on
the applicable redemption date specified in such notice and upon presentation
and surrender of the Securities at the place or places specified in the notice
given by the Company with respect to such redemption, together in the case of
Bearer Securities with all appurtenant coupons, if any, maturing subsequent to
the redemption date, the Securities shall be paid and redeemed by the Company,
at the places and in the manner and currency herein specified and at the
redemption price together with accrued interest, if any, to the redemption
date; provided, however, that interest due in respect of coupons maturing on or
prior to the redemption date shall be payable only upon the presentation and
surrender of such coupons (at an office or agency located outside of the United
States of America). If any Bearer Security surrendered for redemption shall
not be accompanied by all appurtenant coupons maturing after the redemption
date, such Security may be paid after deducting from the amount otherwise
payable an amount equal to the face amount of all such missing coupons, or the
surrender of such missing coupon or coupons may be waived by the Company and
the Fiscal Agent if they are furnished with such security or indemnity as they
may require to save each of them and each other paying agency of the Company
harmless. From and after the redemption date, if monies for the redemption of
Securities shall have been available at the principal corporate trust office of
the Fiscal Agent for redemption on the redemption date, the Securities shall
cease to bear interest, the coupons for interest appertaining to Bearer
Securities maturing subsequent to the redemption date shall be void, and the
only right of the holders of such Securities shall be to receive payment of the
redemption price together with accrued interest to the redemption date if the
redemption date is an interest payment date. If monies for the redemption of
the Securities are not made available for payment until after the redemption
date, the Securities shall not cease to bear interest until such monies have
been so made available.
<PAGE> 47
4. Conversion.
(a) Subject to and upon compliance with the provisions of the Fiscal
Agency Agreement, a holder of Securities is entitled, at his option, at any
time on or after the Exchange Date (as defined in the Fiscal Agency Agreement)
and on or before the close of business on March 1, 1998, or in case a Security
or a portion thereof is called for redemption by the Company, or the holder
thereof elects to have such Security or a portion thereof redeemed by the
Company pursuant to Section 3(d) hereof, then in respect of such Security or
such portion thereof until and including, but (unless the Company defaults in
making the payment due upon redemption) not after, the close of business on the
date fixed for redemption, to convert such Security (or any portion of the
principal amount thereof which is U.S. $1,000 or an integral multiple thereof),
at the principal amount thereof, or of such portion, into fully paid and
nonassessable Shares (calculated as to each conversion to the nearest 1/1000 of
a Share) at a Conversion Price equal to U.S. $30.625 aggregate principal amount
of Securities for each Share (the "Conversion Price") (or at the current
adjusted Conversion Price if an adjustment has been made as provided herein) by
surrender of the Security, or in the case of a Security submitted for
redemption pursuant to Section 3(d) hereof, satisfactory evidence of such
submission, together with (i) if a Bearer Security, all unmatured coupons and
any matured coupons in default appertaining thereto, and if a Registered
Security (if so required by the Company or the Fiscal Agent), instruments of
transfer in form satisfactory to the Company and the Fiscal Agent, duly
executed by the registered holder or by his duly authorized attorney and (ii)
the conversion notice hereon duly executed (a) at the Corporate Trust Office of
the Fiscal Agent, or at such other office or agency of the Company as may be
designated by it for such purpose in the City of New York, or (b) subject to
any laws or regulations applicable thereto and subject to the right of the
Company to terminate the appointment of any such conversion agency, at the
offices of Fleet National Bank, and Banque Generale du Luxembourg, 27 Avenue
Monterey, L-2951 Luxembourg, or at such other offices or agencies as the
Company may designate. Notwithstanding the foregoing, a holder may not convert
any Security, and such Security shall not be convertible by any holder, if as a
result of such conversion any person would then be deemed to own Shares in
excess of the limits prescribed in Article VI, Section 6.15 of the Company's
Restated Declaration of Trust, as amended.
(b) In the case of any Registered Security which is converted after any
Record Date and on or prior to the next succeeding Interest Payment Date (other
than any Registered Security whose maturity is prior to such Interest Payment
Date), interest that is payable on such Interest Payment Date shall be payable
on such Interest Payment Date notwithstanding such conversion, and such
interest shall be paid to the person in whose name that Registered Security is
registered at the close of business on such Record Date. Except as otherwise
provided in
<PAGE> 48
the immediately preceding sentence, no payment or adjustment shall be made upon
any conversion on account of any interest accrued on the Securities surrendered
for conversion or on account of any dividends on the Shares issued upon
conversion. Registered Securities surrendered for conversion during the period
after the close of business on any Record Date next preceding any Interest
Payment Date to the close of business on such Interest Payment Date shall
(except in the case of Registered Securities or portions thereof which are
called for redemption on a redemption date within such period) be accompanied
by payment of any amount equal to interest payable on such Interest Payment
Date on the principal amount being surrendered for conversion. No fractions of
shares or scrip representing fractions of shares will be issued or delivered on
conversion, but instead of any fractional interest the Company shall pay a cash
adjustment as provided in the Fiscal Agency Agreement.
(c) (i) In case at any time the Company shall pay or make a stock
dividend or other distribution (payable otherwise than in cash out of its
retained earnings) on any class of equity securities of the Company in Shares,
the Conversion Price in effect at the opening of business on the day following
the date fixed for the determination of stockholders entitled to receive such
dividend or other distribution shall be reduced so that the same shall equal
the price determined by multiplying such Conversion Price by a fraction of
which the numerator shall be the number of Shares outstanding at the close of
business on the date fixed for such determination and the denominator shall be
the sum of such number of shares and the total number of shares constituting
such dividend or other distribution, such adjustment to become effective
immediately after the opening of business on the day following the date fixed
for such determination.
(ii) In case at any time the Company shall (A) subdivide its
outstanding Shares, (B) combine its outstanding Shares into a smaller number of
shares, or (C) issue by reclassification of its Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation) any shares, the Conversion Price in
effect at the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the holder of any
Security surrendered for conversion after such time shall be entitled to
receive the aggregate number and kind of shares which, if such Security had
been converted immediately prior to such time, he would have owned upon such
conversion and been entitled to receive upon such subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any
event listed above shall occur.
(iii) In case at any time the Company shall fix a record date for
the issuance of rights or warrants to all holders of its Shares entitling them
to subscribe for or purchase Shares
<PAGE> 49
at a price per share less than the current market price per Share (determined
as provided in paragraph (v) of this subsection (c)) on such record date, the
Conversion Price in effect at the opening of business on the day following such
record date, shall be reduced so that the same shall equal the price determined
by multiplying such Conversion Price by a fraction of which the numerator shall
be the number of Shares outstanding at the close of business on such record
date plus the number of Shares which the aggregate of the offering price of the
total number of Shares so offered for subscription or purchase would purchase
at such current market price and the denominator shall be the number of Shares
outstanding at the close of business on such record date plus the number of
Shares so offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day following such
record date. Such reduction shall be made successively whenever such a record
date is fixed; and in the event that such rights or warrants are not so issued,
the Conversion Price shall again be adjusted to be the Conversion Price which
would then be in effect if such record date had not been fixed.
(iv) In case at any time the Company shall fix a record date for the
making of a distribution, by dividend or otherwise, to all holders of its
Shares, or evidences of its indebtedness or assets (including securities, but
excluding (x) any dividend or distribution referred to in paragraph (i) of this
subsection (c), any rights or warrants referred to in paragraph (iii) of this
subsection (c), and (y) any dividend, return of capital or distribution paid in
cash out of the retained earnings of the Company), then in each such case the
Conversion Price in effect after such record date shall be determined by
multiplying the Conversion Price in effect immediately prior to such record
date by a fraction, of which the numerator shall be the total number of
outstanding Shares multiplied by the current market price per Share (as defined
in paragraph (v) of this subsection (c) on such record date, less the fair
market value (as determined by the Board of Directors of the Company, whose
determination shall be conclusive and described in a statement filed with the
Fiscal Agent) of the portion of the assets or evidences of indebtedness so to
be distributed, and of which the denominator shall be the total number of
outstanding Shares multiplied by such current market price per Share. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such record date has not been fixed.
(v) For the purpose of any computation under paragraphs (iii) and
(iv) of this subsection (c), the current market price per Share on any date
shall be deemed to be the average of the Closing Prices for the 15 consecutive
days upon which the principal trading market for the Shares is open selected by
the Company commencing not less than 20 nor more than
<PAGE> 50
30 days before the day in question. The Closing Price for any day shall be the
last reported sales prices regular way or, in case no such reported sale takes
place on such day, the average of the reported closing bid and asked prices
regular way, in either case on the New York Stock Exchange or, if the Shares
are not listed or admitted to trading on such Exchange, on the principal
national securities exchange on which the Shares are listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange, the closing sale price quoted on the NASDAQ National Market System,
or if not so quoted, as determined by the Company.
(vi) The Company may make such adjustments in the Conversion Price,
in addition to those required by paragraphs (i), (ii) and (iii) of this
section, as it considers to be advisable in order that any event treated for
United States Federal income tax purposes as a dividend of stock or stock
rights shall not be taxable to the recipients.
(vii) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least twenty-five
cents ($0.25) in such Conversion Price; provided, however, that any adjustment
which by reason of this paragraph (vii) is not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this subsection (c) shall be made to the nearest cent or to
the nearest 1/1000 of a Share, as the case may be.
(d) Whenever the Conversion Price is adjusted and in the event of certain
other corporate actions, as herein provided, the Company shall give notice, all
as provided in the Fiscal Agency Agreement.
(e) The Company shall, at all times from and after the date on which the
Securities are convertible into Shares, have reserved and available, free from
preemptive rights, out of its authorized but unissued Shares, for the purpose
of effecting the conversion of Securities, the full number of Shares then
issuable upon the conversion of all Securities. The Company covenants that all
Shares which may be issued or delivered upon conversion of Securities will upon
issuance be fully paid and nonassessable.
(f) In case of any consolidation with, or merger of the Company into, any
other corporation, or in case of any merger of another corporation into the
Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding Shares of the Company), or
in case of any sale or transfer of all or substantially all of the assets of
the Company, the corporation formed by such consolidation or resulting from
such merger or which acquires such assets, as the case may be, shall execute
and deliver to the Fiscal Agent an amendment to the Fiscal Agency Agreement
providing that the holder of each Security shall have the right during the
period
<PAGE> 51
such Security shall be convertible as specified in section (a) hereof to
convert such Security only into the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer by
a holder of the number of Shares of the Company into which such Security might
have been converted immediately prior to such consolidation, merger, sale or
transfer assuming, if such consolidation, merger, sale or transfer is prior to
the period such Security shall be convertible as specified in subsection (a)
hereof, that the Securities were convertible at such time at the initial
Conversion Price as adjusted from February 4, 1993 to such time pursuant to
paragraphs (i), (ii), (iii), (iv) and (vi) of subsection (c) hereof. Such
amendment shall provide for adjustments which, for events subsequent to the
effective date of such amendment, shall be as nearly equivalent as may be
practicable to the adjustments provided for herein. The above provisions of
this subsection shall similarly apply to successive consolidations, mergers,
sales or transfers.
5. Events of Default.
In the event that any of the following ("Events of Default") shall occur
and be continuing:
(a) the Company shall fail to pay when due the principal amount of any of
the Securities whether at maturity or upon redemption or otherwise; or
(b) the Company shall fail to pay any installment of interest or
Additional Amounts (as described in Section 2 hereof) on any of the Securities
for a period of 30 days after the date when due; or
(c) the Company shall fail duly to perform or observe any other term,
covenant or agreement contained in any of the Securities or in the Fiscal
Agency Agreement for a period of 60 days after the date on which written notice
of such failure, requiring the Company to remedy the same, shall first have
been given to the Company and the Fiscal Agent by the holders of at least 25%
in aggregate principal amount of the Securities at the time outstanding;
provided, however, that in the event the Company shall within the aforesaid
period of 60 days commence legal action in a court of competent jurisdiction
seeking a determination that the Company had not failed to duly perform or
observe the term or terms, covenant or covenants or agreement or agreements
specified in the aforesaid notice, such failure shall not be an Event of
Default unless the same continues for a period of 10 days after the date of any
final determination to the effect that the Company had failed to duly perform
or observe one or more of such terms, covenants or agreements; or
(d) a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of the Company in an involuntary case or proceeding
under any applicable bankruptcy,
<PAGE> 52
insolvency, reorganization or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of the Company or for any substantial part of the
property of it or ordering the winding-up or liquidation of the affairs of it
and such decree or order shall remain unstayed and in effect for a period of 20
consecutive days; or
(e) the Company shall commence a voluntary case or proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or similar official) of the Company or for any substantial part
of its property, or shall make any general assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts as they
become due or shall take any corporate action in furtherance of any of the
foregoing; or
(f) an event of default, as defined in any indenture or instrument
evidencing or under which the Company shall have outstanding at least
$10,000,000 (or its equivalent in another currency), in aggregate principal
amount of indebtedness for borrowed money, shall happen and be continuing and
such default shall involve the failure to pay the principal of such
indebtedness (or any part thereof), when due and payable after the expiration
of any applicable grace period with respect thereto, or such indebtedness shall
have been accelerated so that the same shall be or become due and payable prior
to the date on which the same would otherwise have become due and payable, and
failure to pay shall not have been cured by the Company within 30 days after
such failure or such acceleration shall not be rescinded or annulled within 30
days after notice thereof shall have first been given to the Company; provided
that if such event of default under such indenture or instrument shall be
remedied or cured by the Company or waived by the holders of such indebtedness,
then the Event of Default hereunder by reason thereof shall be deemed likewise
to have been thereupon remedied, cured or waived without further action upon
the part of any of the holders of Securities;
then the holder of this Security may, at such holder's option, declare the
principal of this Security and the interest accrued hereon (and Additional
Amounts under Section 2 hereof, if any, thereon) to be due and payable
immediately by written notice to the Company and the Fiscal Agent, and if any
such Event of Default shall continue at the time of receipt of such written
notice, the principal of this Security and the interest accrued hereon (and
Additional Amounts, if any, hereon) shall become immediately due and payable,
subject to the proviso of subsection (c) of this Section 5. Upon payment of
such amount of principal and interest (and Additional Amounts pursuant to
Section 2
<PAGE> 53
hereof, if any), all of the Company's obligations in respect of payment of
principal of and interest on (and Additional Amounts, if any, on) this Security
shall terminate. Interest on overdue principal and interest (and Additional
Amounts, if any) shall accrue from the date on which such principal and
interest (and Additional Amounts, if any) were due and payable to the date such
principal and interest (and Additional Amounts, if any) are paid or duly
provided for, at the rate borne by the Securities (to the extent payment of
such interest shall be legally enforceable).
If an Event of Default, as defined in this Section 5, with respect to the
Securities, or an event which would, with the passing of time or the giving of
notice, or both be an Event of Default, shall occur and be continuing, the
Company shall within two business days of becoming aware thereof notify the
Fiscal Agent in writing, of such Event of Default and the Fiscal Agent shall
thereupon promptly notify all of the holders of the Securities of such Event of
Default.
The Company shall provide to the Fiscal Agent on each anniversary of the
date hereof, a certificate to the effect that there is then existing no default
with respect to the Securities, as defined in this Section.
6. Merger, Consolidation, Sale, Conveyance or Assumption.
(a) The Company will not merge or consolidate with, or sell or convey all
or substantially all of its assets to, any other corporation (for purposes
hereof "corporation" shall include business trusts, limited partnerships,
business corporations and other business entities), unless (i) either (A) the
Company shall be the surviving corporation in the case of a merger or (B) (I)
the surviving, resulting or transferee corporation shall expressly assume the
due and punctual payment (including Additional Amounts pursuant to Section 2
hereof, if any) of all the Securities, according to their tenor, and the due
and punctual performance of all of the covenants and obligations of the Company
under the Securities, the coupons and the Fiscal Agency Agreement, by
supplemental agreement reasonably satisfactory to the Fiscal Agent, (II)
immediately after such merger, consolidation, sale or conveyance, the
Securities will not be subject to United States Federal estate tax as a result
thereof, if held by a person who at the time of death is not a citizen or
resident of the United States unless such successor corporation shall have
agreed, by supplemental agreement, to indemnify the persons liable therefor for
the amount of United States Federal estate tax attributable and paid in respect
of any Securities includable in the gross estate of a person who at the time of
death is not a citizen or resident of the United States or unless the
Securities would be subject to United States Federal estate tax immediately
prior to such merger, consolidation, sale or conveyance if held by a person who
at the time of death is not a citizen or resident of the United States, and
(III) the Fiscal Agent shall have received the documentation
<PAGE> 54
required in the context by the Fiscal Agency Agreement, (ii) the surviving,
resulting or transferee corporation, if not organized and validly existing
under the laws of the United States, shall expressly agree to make payments
under the Securities free of any deduction or withholding for or on account of
taxes, levies, imposts and charges whatsoever imposed by or for the account of
the jurisdiction where such successor corporation is generally subject to
taxation (or any political subdivision or taxing authority thereof or therein)
in a manner equivalent to that set forth herein, subject to the exceptions
contained in such forms of the Securities, and (iii) the Company or such
successor corporation, as the case may be, shall not, immediately after such
merger, consolidation, sale or conveyance, be in default in the performance of
any covenants or obligations of the Company under the Securities or the Fiscal
Agency Agreement. In calculating the amount of tax attributable to any
Securities for purposes of sub-clause (II) above in accordance with the
provisions of the Internal Revenue Code of 1986, as amended, the gross estate
of the decedent shall be deemed to include only Securities issued under the
Fiscal Agency Agreement.
(b) Upon any merger, consolidation, sale, conveyance or assumption as
provided in Section 6(a), the successor or assuming corporation shall succeed
to and be substituted for, and may exercise every right and power of and be
subject to all the obligations of, the Company under the Securities and Fiscal
Agency Agreement, with the same effect as if such successor or assuming
corporation had been named as the Company therein and herein and the Company
shall be released from its liability as obligor under the Securities and Fiscal
Agency Agreement.
7. INTENTIONALLY OMITTED
8. Replacement, Transfer and Exchange of Securities.
(a) In case any Security shall at any time become mutilated, destroyed,
stolen or lost and such Security or evidence of the loss, theft or destruction
thereof (together with the indemnity hereinafter referred to and such other
documents or proof as may be required) shall be delivered to the Fiscal Agent,
a new Security of like tenor and date with appropriate interest coupons, if
any, will be issued by the Company in exchange for the Security so mutilated,
or in lieu of the Security so destroyed, stolen or lost, but, in the case of a
destroyed, stolen or lost Security only upon receipt of evidence satisfactory
to the Fiscal Agent and the Company that such Security was destroyed, stolen or
lost, and if required by the Fiscal Agent or the Company, upon receipt also of
indemnity satisfactory to the Fiscal Agent and the Company. All expenses and
reasonable charges associated with procuring such indemnity and with the
preparation, authentication and delivery of a new Security shall be borne by
the owner of the Security so mutilated, destroyed, stolen or lost.
<PAGE> 55
(b) As provided in the Fiscal Agency Agreement and subject to certain
limitations therein set forth, Bearer Securities (with all unmatured coupons
appertaining thereto) are exchangeable at, subject to applicable laws and
regulations, the offices of the paying agencies in London and Luxembourg or as
designated by the Company for such purpose pursuant to the Fiscal Agency
Agreement, for an equal aggregate principal amount of Registered Securities
and/or Bearer Securities of authorized denominations, and Registered Securities
are exchangeable at the Corporate Trust Office of the Fiscal Agent in
Providence, Rhode Island or The City of New York or, subject to applicable laws
and regulations, the offices of the paying agencies in London and Luxembourg or
as designated by the Company for such purpose pursuant to the Fiscal Agency
Agreement, for an equal aggregate principal amount of Registered Securities of
authorized denominations as requested by the holder surrendering the same.
Registered Securities will not be exchangeable for Bearer Securities. The
Company shall not be required (a) to exchange Bearer Securities for Registered
Securities during the period between the close of business on any February 15
or August 15 and the opening of business on the next succeeding interest
payment date, or (b) in the event of a redemption in part, (i) to register the
transfer of Registered Securities or to exchange Bearer Securities for
Registered Securities during a period of 15 days immediately preceding the date
notice is given identifying the serial numbers of the Securities called for
such redemption; (ii) to register the transfer of or exchange any such
Registered Securities, or portion thereof, called for redemption; or (iii) to
exchange any such Bearer Securities called for redemption; provided, however,
that a Bearer Security called for redemption may be exchanged for a Registered
Security which is simultaneously surrendered, with written instruction for
payment on the date fixed for redemption, unless the date fixed for redemption
is during the period between the close of business on any February 15 or August
15 and the close of business on the next succeeding interest payment date, in
which case such exchange may only be made prior to the close of business on
February 15 or August 15 immediately preceding the date fixed for redemption.
The Company also shall not be required to exchange Securities if, as a result
thereof, the Company would incur adverse consequences under United States
Federal income tax laws in effect at the time of such exchange. In the event
of redemption or conversion of a Registered Security in part only, a new
Security or Securities for the unredeemed or unconverted portion hereof will be
issued in the name of the holder thereof.
(c) The costs and expenses of effecting any exchange or registration of
transfer pursuant to the foregoing provisions, except for the expenses of
delivery by other than regular mail (if any) and except, if the Company shall
so require, the payment of a sum sufficient to cover any tax or other
governmental charge or insurance charges that may be imposed in relation
thereto, will be borne by the Company.
<PAGE> 56
(d) The Company has initially appointed as registrar and transfer agent
the Fiscal Agent acting through its principal corporate trust office in
Providence, Rhode Island. The Company has also initially appointed Banque
Generale du Luxembourg as a transfer agent. The Company may at any time
terminate the appointment of the registrar and transfer agent and appoint
additional or other registrars and transfer agents or approve any change in an
office through which the registrar or transfer agent acts; provided that, until
all of the Securities have been delivered to the Fiscal Agent for cancellation,
or monies sufficient to pay the Securities have been made available for payment
and either paid or returned to the Company as provided in the Securities, the
Company will maintain a registrar and a transfer agent in The City of New York
in the United States and in Luxembourg, so long as the Securities are
registered on the Luxembourg Stock Exchange.
(e) For purposes of the provisions of this Security and the Fiscal Agency
Agreement, any Security authenticated and delivered pursuant to the Fiscal
Agency Agreement shall, as of any date of determination, be deemed to be
"outstanding", except for:
(i) Securities previously converted, or canceled by the Fiscal
Agent or delivered to the Fiscal Agent for cancellation;
(ii) Securities which have been called for redemption by the Company
in accordance with Section 3 hereof or which have become due and payable at
maturity or otherwise and with respect to which monies sufficient to pay the
principal thereof and interest thereon shall have been made available to the
Fiscal Agent; or
(iii) Securities in lieu of or in substitution for which other
Securities have been authenticated and delivered pursuant to the Fiscal Agency
Agreement;
provided, however, that in determining whether the holders of the requisite
principal amount of outstanding Securities are present at a meeting of holders
of Securities for quorum purposes or have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any subsidiary thereof shall be disregarded and deemed not to
be outstanding.
9. Modifications and Amendments.
(a) Without the consent of any holders of Securities or coupons,
modifications of or amendments to the Fiscal Agency Agreement may be made for
any of the following purposes:
(i) to evidence the succession of another corporation to the
Company and the assumption by any such successor of the
<PAGE> 57
covenants of the Company in the Fiscal Agency Agreement or the Securities;
(ii) to add to the covenants of the Company for the benefit of the
holders of Securities or coupons, or to surrender any right or power herein
conferred upon the Company;
(iii) to permit payment of principal and interest on Bearer
Securities in the United States, provided that such payment is permitted by
United States tax laws and regulations then in effect;
(iv) to make provision with respect to the conversion rights of
holders of Securities pursuant to Section 4(f) hereof;
(v) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein; and
(vi) to make any other provisions with respect to matters or
questions arising under this Security or the Fiscal Agency Agreement, provided
such action pursuant to this clause (vi) shall not adversely affect the
interests of the holders of Securities or coupons.
(b) Modifications and amendments to the Fiscal Agency Agreement or to
these Securities may be made, and future compliance with or past default by the
Company under any of the provisions thereof may be waived, with the consent of
the holders of at least a majority in aggregate principal amount of the
Securities at the time outstanding, or of such lesser percentage as may act at
a meeting of holders of Securities held in accordance with the provisions set
forth herein; provided, that no such modification, amendment or waiver may,
without the consent of the holder of each such Security affected thereby:
(i) waive a default in the payment of the principal of or interest
on any Security;
(ii) change the stated maturity of the principal of or any
installment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or change the obligation of the Company
to pay Additional Amounts pursuant to Section 2 hereof (except as permitted by
subsection (a) of this Section 9), or change the coin or currency in which any
Security or the interest thereon is payable, or convert any Securities as
provided in Sections 3 and 4, respectively.
(iii) reduce the requirements of Section 10 hereof for quorum or
voting, or reduce the percentage in principal amount of the outstanding
Securities the consent of whose holders is required for any amendment or
modification of the Fiscal Agency Agreement or the Terms and Conditions of the
Securities or the consent of whose holders is required for any waiver (of
<PAGE> 58
compliance with certain provisions of the Fiscal Agency Agreement or the
Securities or certain defaults hereunder and thereunder and their consequences)
provided for in these Terms and Conditions;
(iv) change the obligation of the Company to maintain an office or
agency in the City of New York and outside the United States; or
(v) modify any of the provisions of this Section except to increase
any such percentage or to provide that certain other provisions of the Fiscal
Agency Agreement or the Securities cannot be modified or waived without the
consent of the holder of each outstanding Security affected thereby.
It shall not be necessary for any act of holders of Securities under this
Section to approve the particular form of any proposed amendment, modification
or waiver, but it shall be sufficient if such act shall approve the substance
thereof. Any modifications, amendments or waivers to the Fiscal Agency
Agreement or to these Terms and Conditions will be conclusive and binding on
all holders of the Securities, whether or not they have given such consent or,
were present at such meeting, and on all holders of coupons, whether or not
notation of such modifications, amendments or waivers is made upon the
Securities or coupons, and on all future holders of Securities and coupons.
Any instrument given by or on behalf of any holder of a Security in connection
with any consent to any such modification, amendment or waiver will be
irrevocable once given and will be conclusive and binding on all subsequent
holders of such Security.
10. Meetings and Votes of Holders.
(a) A meeting of holders of Securities may be called at any time and from
time to time pursuant to this Section for any of the following purposes: (i)
to give any notice to the Company or to the Fiscal Agent, or to give any
directions to the Fiscal Agent, or to consent to the waiving of any default
hereunder and its consequences, or to take any other action authorized to be
taken by holders of Securities pursuant to these Terms and Conditions; or (ii)
to take any other action authorized to be taken by or on behalf of the holders
of any specified aggregate principal amount of the Securities under any other
provision of the Fiscal Agency Agreement, under applicable law or under these
Terms and Conditions.
(b) Meetings of holders of Securities may be held at such place or places
in Providence, Rhode Island or The City of New York or London as the Fiscal
Agent or, in case of its failure to act, the Company or the holders calling the
meeting shall from time to time determine.
The Fiscal Agent may at any time call a meeting of holders of the
Securities to be held at such time and at such place in
<PAGE> 59
any of such designated locations as the Fiscal Agent shall determine. Notice of
every meeting of holders shall be made as specified in the Fiscal Agency
Agreement.
In case at any time the Company or the holders of at least 25% in
aggregate principal amount of the Securities outstanding shall have requested
the Fiscal Agent to call a meeting of the holders, by written request setting
forth in reasonable detail the action proposed to be taken at the meeting, and
the Fiscal Agent shall not have given the first notice of such meeting within
21 days after receipt of such request or shall not thereafter proceed to cause
the meeting to be held as provided herein, then the Company or the holders of
Securities in the amount above specified may determine the time and the place
in such designated locations for such meeting and may call such meeting to take
any action authorized herein by giving notice thereof as provided in the Fiscal
Agency Agreement.
(c) To be entitled to vote at any meeting of holders of Securities, a
person shall be (i) a holder of one or more Securities, or (ii) a person
appointed by an instrument in writing as proxy for a holder or holders of
Securities by such holder or holders, which proxy need not be a holder of
Securities. The only persons who shall be entitled to be present or to speak
at any meeting of holders shall be the persons entitled to vote at such meeting
and their counsel and any representatives of the Fiscal Agent and its counsel
and any representatives of the Company and its counsel. The persons entitled
to vote a majority in principal amount of the Securities shall constitute a
quorum for the transaction of all business specified in subsection (a) hereof.
No business shall be transacted in the absence of a quorum unless a quorum is
represented when the meeting is called to order. In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting
shall, if convened at the request of the holders of Securities, be dissolved.
In any other case the meeting shall be adjourned for a period of not less than
10 days as determined by the chairman of the meeting prior to the adjournment
of such adjourned meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided in the Fiscal Agency Agreement. Subject to the
foregoing, at the reconvening of any meeting adjourned for a lack of a quorum
the persons entitled to vote 25% in principal amount of the Securities
outstanding shall constitute a quorum for the taking of any action set forth in
the notice of the original meeting. Notice of the reconvening of an adjourned
meeting shall state expressly the percentage of the aggregate principal amount
of the Securities that shall constitute a quorum. At a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid, any
resolution and all matters (except as limited by Section 9 of these Terms and
Conditions) shall be effectively passed and decided if passed or decided by the
persons entitled to vote a majority in principal amount of the Securities
represented and voting at such meeting, provided that
<PAGE> 60
such amount shall be not less than 25% in principal amount of the Securities
outstanding. Any holder of a Security who has executed an instrument in
writing appointing a person as his proxy shall be deemed to be present for the
purposes of determining a quorum and be deemed to have voted; provided,
however, that such holder shall be considered as present or voting only with
respect to the matters covered by such instrument in writing. Any resolution
effectively passed or decision taken at any meeting of the holders of
Securities duly held in accordance with this Section 10 shall be binding on all
the holders of Securities whether or not present or represented at the meeting.
(d) The Fiscal Agent may make such reasonable regulations as it may deem
advisable for any meeting of holders of Securities in regard to proof of the
holding of Securities and of the appointment of proxies and in regard to the
appointment and duties of inspectors of votes, the submission and examination
of proxies, certificates and other evidence of the right to vote, and such
other matters concerning the conduct of the meeting as it shall deem
appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Bearer Securities shall be proved by the production
of the Bearer Securities or by a certificate executed, as depositary, by, and
the appointment of any proxy shall be proved by having the signature of the
person executing the proxy witnessed or guaranteed by, in each case, any trust
company, bank or banker satisfactory to the Fiscal Agent. Such regulations may
provide that written instruments appointing proxies, regular on their face, may
be presumed valid and genuine without the proof specified herein or other
proof. The holding of Registered Securities shall be proved by the registry
books maintained in accordance with the Fiscal Agency Agreement or by a
certificate or certificates of the Fiscal Agent in its capacity as the
Company's agent for the maintenance of such books.
(e) The Fiscal Agent shall, by an instrument in writing, appoint a
temporary chairperson and a temporary secretary of the meeting, unless the
meeting shall have been called by the Company or by the holders of Securities
as provided herein and in the Fiscal Agency Agreement, in which case the
Company or the holders calling the meeting, as the case may be, shall in like
manner appoint a temporary chairperson and a temporary secretary. A permanent
chairperson and a permanent secretary of the meeting shall be elected by vote
of the holders of a majority in principal amount of the Securities represented
at the meeting and entitled to vote. At any meeting each holder or proxy shall
be entitled to one vote for each U.S. $1,000 principal amount of Securities
held or represented by him; provided, however, that no vote shall be cast or
counted at any meeting in respect of any Securities challenged as not
outstanding and ruled by the chairperson of the meeting to be not outstanding.
The chairperson of the meeting shall have no right to vote, except as a holder
or proxy. Any meeting of holders of Securities duly
<PAGE> 61
called at which a quorum is present may be adjourned from time to time by vote
of the holders (or proxies for the holders) of a majority in principal amount
of the Securities represented at the meeting and entitled to vote; and the
meeting may be held as so adjourned without further notice.
(f) The vote upon any resolution submitted to any meeting of holders of
Securities shall be written ballots on which shall be subscribed the signatures
of the holders of Securities or of their representatives by proxy and the
serial number or numbers of the Securities held or represented by them. The
permanent chairperson of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record, at least in
triplicate, of the proceedings of each meeting of holders of Securities shall
be prepared by the secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having knowledge of the
facts setting forth a copy of the notice of the meeting and showing that said
notice was published as provided in the Fiscal Agency Agreement. Each copy
shall be signed and verified by the affidavits of the chairperson and secretary
of the meeting, and one of such copy shall be delivered to the Company and
another to the Fiscal Agent to be preserved by the Fiscal Agent, the copy
delivered to the Fiscal Agent to have attached thereto the ballots voted at the
meeting. Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
11. Non-Business Days.
In any case where the date of maturity of the principal of or interest on
(or Additional Amounts, if any) the Securities or the date fixed for redemption
of any Security shall be at any place of payment a Saturday, Sunday, a legal
holiday or a day on which banking institutions in such place of payment are
authorized or obligated by law to close, then payment of principal or interest
(or Additional Amounts, if any) need not be made on such date at such place but
may be made on the next succeeding day at such place of payment which is not a
Saturday, Sunday, a legal holiday or a day on which banking institutions are
authorized or obligated by law to close, with the same force and effect as if
made on the date of maturity or the date fixed for redemption, and no interest
shall accrue for the period after such date.
12. Fiscal and Paying Agent.
(a) In acting under the Fiscal Agency Agreement and in connection with
the Securities, the Fiscal Agent is acting solely as agent of the Company and
does not assume any obligation towards or relationship of agency or trust for
or with the owner
<PAGE> 62
or holder of this Security or any interest coupon appertaining hereto, except
that any funds held by the Fiscal Agent for payment on this Security shall be
held in trust by it and applied as set forth herein, but need not be segregated
from other funds held by it, except as required by law. For a description of
the duties and the immunities and rights of the Fiscal Agent under the Fiscal
Agency Agreement, reference is made to the Fiscal Agency Agreement, and the
obligations of the Fiscal Agent to the holder hereof are subject to such
immunities and rights.
(b) Any monies paid by the Company to any paying agency for payment of
principal of or interest on any Security (including Additional Amounts, if any,
in respect thereof) and remaining unclaimed for two years after such payment
has been made shall be repaid to the Company and to the extent permitted by law
the holder of any Security shall thereafter look only to the Company for any
payment thereof as a general unsecured obligation thereof and all liability of
the Fiscal Agent with respect thereto shall cease.
(c) No reference herein to the Fiscal Agency Agreement and no provision
of this Security or of the Fiscal Agency Agreement shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest (including Additional Amounts, as described above) on
this Security at the times, places and rate, and in the coin or currency,
herein prescribed or to convert or redeem (at the request of a holder) this
Security as provided herein or in the Fiscal Agency Agreement.
Title to Bearer Securities and coupons shall pass by delivery. As
provided in the Fiscal Agency Agreement and subject to certain limitations
therein set forth, the transfer of Registered Securities is registrable on the
Security Register upon surrender of a Registered Security for registration of
transfer at the office or agency of the Company in Providence, Rhode Island or
The City of New York, or, subject to applicable laws and regulations, at the
offices of the paying agency in Luxembourg, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the holder thereof or his attorney duly
authorized in writing, and thereupon one or more new Registered Securities, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
13. Notices.
All notices to the holders of Securities will be published in an
Authorized Newspaper (as defined in the Fiscal Agency Agreement) in Providence,
Rhode Island, The City of New York and in London, and, as long as the
Securities are listed on the Luxembourg Stock Exchange, in Luxembourg. It is
expected that publication in Providence, Rhode Island and The City of New York
<PAGE> 63
will be made in The Wall Street Journal (Eastern edition), in London in the
Financial Times and in Luxembourg in the Luxemburger Wort. Notices shall be
deemed to have been given on the date of publication as aforesaid or, if
published on different dates, on the date of the first such publication.
Notices will be mailed to registered holders of Registered Securities at their
registered addresses as the same shall appear on the books of the Fiscal Agent
on the day fifteen days prior to such mailing.
14. GOVERNING LAW.
(a) THE FISCAL AGENCY AGREEMENT, THE SECURITIES AND ANY COUPONS
APPERTAINING THERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
(b) THE COMPANY HAS APPOINTED FLEET NATIONAL BANK, 111 WESTMINSTER
STREET, PROVIDENCE, RHODE ISLAND 02903 (ATTENTION: CORPORATE TRUST
ADMINISTRATOR) AS ITS AGENT UPON WHOM PROCESS MAY BE SERVED IN ANY SUIT, ACTION
OR PROCEEDING RELATING TO OR ARISING OUT OF THIS SECURITY, THE FISCAL AGENCY
AGREEMENT OR ANY COUPON APPERTAINING HERETO, WITH A COPY TO THE COMPANY AT 128
TECHNOLOGY CENTER, WALTHAM, MASSACHUSETTS 02154 (ATTENTION: PRESIDENT).
15. Authentication.
This Security and any coupon appertaining thereto shall not become valid
or obligatory for any purpose until the certificate of authentication hereon
shall have been duly signed by the Fiscal Agent acting under the Fiscal Agency
Agreement.
16. Warranty of the Issuer.
Subject to Section 15 hereof, the Company hereby certifies and warrants
that all acts, conditions and things required to be done and performed and to
have happened precedent to the creation and issuance of this Security and any
coupons appertaining thereto, and to constitute the same legal, valid and
binding obligations of the Company enforceable in accordance with their terms,
have been done and performed and have happened in due and strict compliance
with all applicable laws.
17. Accounting Terms.
All accounting terms not otherwise defined herein shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
applied in the United States.
18. Descriptive Headings.
The descriptive headings appearing herein are for convenience of reference
only and shall not alter, limit or define the provisions hereof.
<PAGE> 64
TRANSFER NOTICE
Only if a Registered Security or Shares issued upon conversion of any
Security is transferred (if no registration statement covering such Shares is
effective):
FOR VALUE RECEIVED, the undersigned Holder hereby sell(s), assign(s) and
transfer(s) unto _____________________________ _______________________________
whose taxpayer identification number is ________________ and whose address
including postal/zip code is __________________________________________________
___________________________________________________________ the within Security
and all rights thereunder, hereby irrevocably constituting and appointing
__________________________ attorney-in-fact to transfer said Security on the
books of the Company with full power of substitution in the premises.
In connection with the transfer of this Security, the undersigned Holder
certifies that:
[Check one)
[ ] (a) This Security is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under
the Securities Act of 1933) in compliance with the
exemption from registration under the Securities Act
of 1933 provided by Rule 144A.
[ ] (b) This Security is being transferred in an Offshore
Transaction (as defined in Regulation S under the
Securities Act of 1933) in compliance with the
exemption from registration under the Securities Act
of 1933 provided by Regulation S.
[ ] (c) This Security is being transferred to a sophisticated
institutional investor which is an "accredited
investor" (within the meaning of Rule 501(a)(l),
(2), (3) or (7) under the Securities Act of 1933) in a
transaction not involving any general solicitation or
advertising.
Dated: Name:
------------- -----------------------
By:
-------------------------
Title:
----------------------
<PAGE> 65
NOTICE: The signature of the Holder to
this assignment must correspond with the
name as written upon the face of the within
instrument in every particular, without
enlargement or any change whatsoever.
SIGNATURE GUARANTEED
----------------------------------------
TO BE COMPLETED BY A BROKER OR DEALER IF (c) ABOVE IS CHECKED:
The undersigned represents and warrants that (i) it is a broker or dealer
registered under Section 15 of the Securities Exchange Act of 1934, (ii) each
person which will become a beneficial owner of this Security upon transfer is a
sophisticated institutional investor which is an "accredited investor" (within
the meaning of Rule 501(a)(l), (2), (3) or (7) under the Securities Act of
1933); (iii) no general solicitation or advertising was made or used by it in
connection with the offer and sale of this Security to such person(s); and (iv)
each such person has been notified that this Security has not been registered
under the Securities Act of 1933 and is subject to the restrictions on transfer
of the Security set forth herein and in the Fiscal Agency Agreement.
Dated:
-------------- ----------------------------
By:
------------------------
IF NONE OF THE FOREGOING BOXES IS CHECKED, THE FISCAL AGENT SHALL NOT BE
OBLIGATED TO REGISTER THE TRANSFER OF THIS SECURITY UNLESS AND UNTIL THE
CONDITIONS TO ANY SUCH TRANSFER OF REGISTRATION SET FORTH HEREIN, ON THE FACE
HEREOF AND IN THE FISCAL AGENCY AGREEMENT SHALL HAVE BEEN SATISFIED.
<PAGE> 66
CONVERSION NOTICE
If or Bearer Security of denomination U.S. $1,000:
The undersigned holder of this Security hereby irrevocably exercises the
option to convert this Security into Shares of Meditrust in accordance with the
terms of this Security and directs that such shares be registered in the name
of and delivered, together with a check in payment for any fractional share, to
the undersigned unless a different name has been indicated below. If shares
are to be registered in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto.
Dated:
--------------
----------------------
Signature
[MUST BE GUARANTEED]
If shares are to be registered
in the name of and delivered to
a person other than the holder,
please print such person's name
and address:
- -----------------------------
- -----------------------------
- -----------------------------
HOLDER
Please print name and address of
holder:
------------------------------
------------------------------
-----------------------------
<PAGE> 67
CONVERSION NOTICE
If Registered Security or Bearer Security of denomination U.S. $10,000:
The undersigned holder of this Security hereby irrevocably exercises the
option to convert this Security, or portion hereof (which is U.S. $1,000 or an
integral multiple thereof) below designated, into Shares of Meditrust in
accordance with the terms of this Security, and directs that such Shares,
together with a check in payment for any fractional share and any Securities
representing any unconverted principal amount hereof, be delivered to and be
registered (if a Registered Security) in the name of the undersigned unless a
different name has been indicated below. If shares or Securities are to be
registered in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto.
Dated:
-------------- ----------------------------
Signature
[MUST BE GUARANTEED]
If shares or Securities are to If only a portion of the
registered in the name of a , Securities is to be
Person other than the holder, converted please indicate:
please print such person's name
and address: 1. Principal Amount to be con-
verted: U.S.$
- ----------------------------- ---------
2. Kind, amount and denomina-
- ----------------------------- tion of Securities repre-
senting unconverted prin-
- ----------------------------- cipal amount to be issued:
Bearer-U.S.$
--------------
Denominations: U.S.$______
(U.S. $1,000 or $10,000)
Registered-U.S.$__________
Denominations: U.S.$______
(U.S. $1,000 or an integral
multiple thereof)
REGISTERED SECURITIES ARE NOT EXCHANGEABLE
FOR BEARER SECURITIES.
<PAGE> 68
EXHIBIT B
<PAGE> 69
(FORM OF GLOBAL SECURITY)
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). NEITHER THIS SECURITY NOR ANY
PORTION HEREOF MAY BE OFFERED OR SOLD DIRECTLY OR INDIRECTLY IN THE UNITED
STATES OF AMERICA, ITS TERRITORIES OR POSSESSIONS ("UNITED STATES") OR TO
CITIZENS, NATIONALS OR RESIDENTS THEREOF OR TO ANY CORPORATION, PARTNERSHIP OR
OTHER ENTITY CREATED OR ORGANIZED IN OR UNDER THE LAWS OF THE UNITED STATES OR
ANY POLITICAL SUBDIVISION THEREOF OR TO ANY ESTATE" OR TRUST WHICH IS SUBJECT
TO UNITED STATES FEDERAL INCOME TAXATION REGARDLESS OF THE SOURCE OF ITS INCOME
OR TO ANY OTHER PERSON DEEMED A U.S. PERSON UNDER REGULATION S UNDER THE
SECURITIES ACT, EXCEPT BRANCHES OR AGENCIES OF UNITED STATES BANKS OR INSURANCE
COMPANIES THAT OPERATE OUTSIDE THE UNITED STATES FOR VALID BUSINESS REASONS AS
LOCALLY REGULATED BRANCHES OR AGENCIES ENGAGED IN THE BANKING OR INSURANCE
BUSINESS AND NOT SOLELY FOR THE PURPOSE OF INVESTING IN SECURITIES NOT
REGISTERED UNDER THE SECURITIES ACT ("UNITED STATES PERSONS") OTHER THAN ANY
PORTION OF THIS SECURITY SOLD, SUBJECT TO CERTAIN RESTRICTIONS, PURSUANT TO
REGULATION S UNDER THE SECURITIES ACT.
ANY UNITED STATES PERSON WHO HOLDS THIS SECURITY WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE
CODE.
MEDITRUST
(Originated in the Commonwealth of Massachusetts)
7% CONVERTIBLE DEBENTURES DUE 1998
TEMPORARY GLOBAL DEBENTURE
Meditrust, a corporation duly organized and existing under the laws of the
Commonwealth of Massachusetts (the "Company") for value received, hereby
promises to pay to bearer upon presentation and surrender of this Global
Security the Principal sum of ___________________________________________
United States Dollars on March 1, 1998, and to pay interest thereon, from the
date hereof, semiannually in arrears on March 1 and September 1 in each year,
commencing September 1, 1993, at the rate of 7% per annum, until the principal
hereof is paid or made available for payment, provided, however, that interest
on this Global Security shall be payable only after the issuance of the
Definitive Securities for which this Global Security is exchangeable and, in
the case of Definitive Securities in bearer
<PAGE> 70
form, only upon presentation and surrender of the interest coupons thereto
attached as they severally mature.
This Global Security is one of a duly authorized issue of Securities of
the Company designated as specified in the title hereof (the "Securities").
This Global Security and the Definitive Securities for which it is
exchangeable, as described below, are limited to the aggregate principal amount
of $___________ and are entitled to the benefits of a Fiscal Agency Agreement
of even date herewith (the "Fiscal Agency Agreement") among the Company and
Fleet National Bank, as Fiscal Agent, Paying Agent, Security Registrar, and
Conversion Agent (the "Fiscal Agent"). It is a temporary security and is
exchangeable in whole or from time to time in part without charge upon request
of the holder hereof for Definitive Securities in bearer form, with interest
coupons attached, (a) not earlier than 40 days after the date hereof and (b) as
promptly as practicable following presentation of certification, in the form
set forth as Exhibits C and D of the Fiscal Agency Agreement for such purpose,
that the beneficial owner or owners of this Global Security (or, if such
exchange is only for a part of this Global Security, of such part) are not
United States Persons. Upon any exchange of a part of this Global Security
for Definitive Securities, the portion of the principal amount hereof so
exchanged shall be endorsed by the Fiscal Agent on the Schedule of Exchanges
hereto, and the principal amount hereof shall be reduced for all purposes by
the amount so exchanged.
Until exchanged in full for Definitive Securities, this Global Security
shall in all respects be entitled to the same benefits under, and subject to
the same terms and conditions of, the Fiscal Agency Agreement as Definitive
Securities authenticated and delivered thereunder, except that neither the
holder hereof nor the beneficial owners of this Global Security shall be
entitled to receive payment of interest hereon, except as provided above, or to
convert this Global Security into Shares of the Company or any other security,
cash or other property.
This Global Security shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
All terms used in this Global Security which are defined in the Fiscal
Agency Agreement shall have the meanings assigned to them in the Fiscal Agency
Agreement.
Unless the certificate of authentication hereon has been executed by an
authorized signatory of the Fiscal Agent, this Global Security shall not be
valid or obligatory for any purpose.
<PAGE> 71
IN WITNESS WHEREOF, the Company has caused this Global Security to be duly
executed in its corporate name by its duly authorized signatory.
Dated as of , 1993
-----------,
MEDITRUST
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
CERTIFICATE OF AUTHENTICATION
This is the Global Security described in the within-mentioned Fiscal Agency
Agreement.
Fleet National Bank, as Fiscal Agent
By:
----------------------------------
Authorized Signatory
<PAGE> 72
SCHEDULE OF EXCHANGES
<TABLE>
<CAPTION>
Remaining
principal
Principal amount
amount exchanged following Notation made
Date for Definitive such on behalf of
made Securities exchange the Fiscal Agent
- ---- ---------------- --------- ----------------
<S> <C> <C> <C>
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
</TABLE>
<PAGE> 73
<TABLE>
<CAPTION>
Remaining
principal
Principal amount
amount exchanged following Notation made
Date for Definitive such on behalf of
made Securities exchange the Fiscal Agent
- ---- ---------------- --------- ----------------
<S> <C> <C> <C>
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
- ----- ---------------- ----------- ----------------
</TABLE>
<PAGE> 74
EXHIBIT C
<PAGE> 75
Form of Certificate to be Given by
The Euroclear Operator and CEDEL S.A.
CERTIFICATION
U.S. $______________
7% Convertible Debentures
due March 1, 1998
(the "Securities")
This is to certify that, based solely on certifications we have
received in writing, by tested telex or by electronic transmission from member
organizations appearing in our records as persons being entitled to a portion
of the principal amount set forth below (our "Member Organizations")
substantially to the effect set forth in the Fiscal Agency Agreement, as of the
date hereof, [principal amount of the above-captioned Securities] is owned by
persons that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States Federal income taxation regardless of its source or
any other person deemed a "U.S. person" under Regulation S under the U.S.
Securities Act of 1933, as amended ("United States persons").
As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its territories and
possessions, including Puerto Rico, the U.S. Virgin Islands, Guam, American
Samoa, Wake Island and the Northern Mariana Islands.
We further certify (i) that we are not making available herewith for
exchange any portion of the Global Security excepted in such certifications and
(ii) that as of the date hereof we have not received any notification from any
of our Member Organizations to the effect that the statements made by such
Member Organization with respect to any portion of the part submitted herewith
for exchange are no longer true and cannot be relied upon as the date hereof.
We understand that this certification is required in connection with
certain tax laws and, if applicable, certain securities laws of the United
States. In connection therewith, if administrative or legal proceedings are
commenced or
<PAGE> 76
threatened in connection with which this certification is or would be relevant,
we irrevocably authorize you to produce this certification to any interested
party in such proceedings.
Dated: ______________, 1993
*
Yours faithfully,
[________________________________
(______________________ Office)
as Operator of the Euroclear
System]
[CEDEL S.A.]**
By:
----------------------------
- -------------------------
* To be dated no earlier than the date which is 40 days after
_____________, 1993.
** Delete as appropriate.
<PAGE> 77
EXHIBIT D
<PAGE> 78
Form of Certificate of Beneficial Ownership for
Bearer Securities to be Provided to the
Euroclear Operator or to CEDEL S.A.
CERTIFICATION
U.S. $________________
7% Convertible Debentures
due March 1, 1998
(the "Securities")
This is to certify that as of the date hereof, and except as set forth
below, the above-captioned Securities held by you for our account are owned by
persons that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to the United States Federal income taxation regardless of its
source or any other person deemed a "U.S. person" under Regulation S under the
United States Securities Act of 1933, as amended ("United States persons").
As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its territories and
possessions, including Puerto Rico, the U.S. Virgin Islands, Guam, American
Samoa, Wake Island and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or prior to the
date on which you intend to submit your certification relating to the
Securities held by you for our account in accordance with your operating
procedures if any applicable statement herein is not correct on such date, and
in the absence of any such notification it may be assumed that this
certification applies as of such date.
This certification excepts and does not relate to $____________ of such
interest in the above Securities in respect of which we are not able to certify
and as to which we understand exchange and delivery of definitive Securities
cannot be made until we do so certify.
We understand that this certification is required in connection with
certain tax laws and, if applicable, certain securities laws of the United
States. In connection therewith, if administrative or legal proceedings are
commenced or threatened in connection with which this certification is or
<PAGE> 79
would be relevant, we irrevocably authorize you to produce this
certification to any interested party in such proceedings.
Dated: ______________, 199_
*
[Name]
By:
-----------------------------
Signature
As, or as agent for, the
beneficial owner(s) of the
Securities to which this
certificate relates.
- -------------------------
* Not earlier than 15 days prior to the date which is 40 days after
_______________, 1993.
<PAGE> 80
EXHIBIT E
<PAGE> 81
Form of Certificate of Beneficial Ownership
for Registered Securities to be Provided to the
Euroclear Operator or to CEDEL S.A.
Please issue $_________ of the U.S. $____________ 7% Convertible
Debentures due March 1, 1998 (the "Securities"), of Meditrust held by you for
our account in registered form. We hereby certify to you that we are not a
U.S. person as defined in Regulation S under the United States Securities Act
of 1933, as amended. The exact name of the beneficial holder that the
Securities are to be registered in is as follows:
We hereby certify that we have provided such certifications on Form W-8
or its equivalent as may be necessary to avoid imposition of withholding and/or
back-up withholding under U.S. federal tax law with respect to any payments of
interest on the Securities.
We irrevocably authorize you to produce this certificate or
a copy hereof to any interested party in any administrative or
proceedings with respect to the matters covered by this certificate.
Dated: ______________, 1993*
[NAME]
By:
-----------------------------
Signature
[to be completed by the account
holder as, or as agent for, the
beneficial owner(s) of the Securities
to which this certificate relates.]
- -------------------------
* To be dated not earlier than the date which is 40 days after
_____________, 1993.
<PAGE> 1
EXHIBIT 4.7
FISCAL AGENCY AGREEMENT
dated as of
November 15, 1993
between
MEDITRUST
and
FLEET NATIONAL BANK,
as Fiscal Agent
<PAGE> 2
FISCAL AGENCY AGREEMENT, dated as of November 15, 1993, between MEDITRUST,
a business trust duly organized and validly existing under the laws of the
Commonwealth of Massachusetts (the "Company"), and Fleet National Bank, a
banking corporation duly organized and validly existing under the laws of the
United States of America.
1. The Securities. The Company has by a Placement Agency
Agreement, dated as of November 2, 1993 (the "Placement Agency Agreement"),
among the Company and NatWest Securities Limited, as representative of the
several placement agents (collectively, the "Placement Agents"), agreed to
issue up to U.S.$86,250,000 aggregate principal amount of its 6-7/8%
Convertible Debentures Due 1998 (hereinafter referred to as the "Securities").
Interest on the Securities shall be calculated on the basis of a 360 day year
comprised of twelve 30 day months. Except as set forth in the next sentence,
the Securities will initially be issued in temporary form, and will
subsequently be exchanged for Securities in definitive form either as bearer
Securities ("Bearer Securities"), in denominations of U.S. $1,000 and U.S.
$10,000 and with interest coupons attached, representing the semiannual
interest payable thereon, or as fully registered Securities ("Registered
Securities"), in denominations of U.S. $1,000 and integral multiples thereof.
The Securities in definitive form shall be substantially in the form of Exhibit
A hereto (the "Definitive Securities"). The Securities will be convertible as
provided in Section 4 of the Definitive Securities and Section 7 hereof. The
Securities may be redeemed by the Company as provided in Section 3 of the
Definitive Securities and Section 6 hereof. The temporary global debenture in
respect of the Securities will be issued in bearer form without coupons in the
aggregate principal amount of the entire issue of Securities, substantially in
the form of Exhibit B hereto (the "Global Security"). The Definitive
Securities and the Global Security shall contain such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Agreement and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may,
consistent herewith, be determined by the officer of the Company executing such
Securities, as evidenced by his execution of such Securities.
2. Appointment of Agents and Security Registrar.
(a) The Company hereby appoints Fleet National Bank, at present
having its principal corporate trust office at 111 Westminster Street,
Providence, Rhode Island 02903 and having an agent with an office in London at
Fleet Bank of Massachusetts, N.A., 40-41 St. Andrews Hill, London EC4V 5DE
England, as its fiscal agent in respect of the Securities upon the terms and
subject to the conditions herein set forth. (Fleet National Bank and its
successor or successors as such fiscal agent qualified and appointed in
accordance with Section 11 hereof are herein called the "Fiscal Agent.") The
Fiscal Agent shall have the
<PAGE> 3
powers and authority granted to and conferred upon it herein and in the
Securities, and such further powers and authority, acceptable to it, to act on
behalf of the Company as the Company may hereafter grant to or confer upon it.
(b) In addition, the Company hereby appoints Fleet National
Bank at present located at 111 Westminster Street, Providence, Rhode Island
02903 acting through its agent's office in London at Fleet Bank of
Massachusetts, N.A., 40-41 St. Andrews Hill, London EC4V 5DE England, as its
paying agent in respect of the Securities upon the terms and subject to the
conditions herein set forth. (Fleet National Bank and its successor or
successors as such paying agent qualified and appointed in accordance with
Section 11 hereof are herein called the "Paying Agent.") The Paying Agent
shall have the powers and authority granted to and conferred upon it herein and
in the Securities, and such further powers and authority, acceptable to it, to
act on behalf of the Company as the Company may hereafter grant to or confer
upon it. As used herein, "paying agencies" shall mean paying agencies
maintained by the Company as provided in Section 12(f) hereof.
(c) The Company hereby appoints Fleet National Bank, at present
located at 111 Westminster Street, Providence, Rhode Island 02903, acting
through its agent's office in London at Fleet Bank of Massachusetts, N.A.,
40-41 St. Andrews Hill, London EC4V 5DE England, as its conversion agent in
respect of the Securities upon the terms and subject to the conditions herein
set forth (Fleet National Bank and its successor or successors as such
conversion agent qualified and appointed in accordance with Section 11 hereof
are herein called the "Conversion Agent," and the Paying Agent, the Conversion
Agent, the Transfer Agents (as herein defined) and the Fiscal Agent are
sometimes herein referred to severally as an "Agent" and, collectively, as the
"Agents"). The Conversion Agent shall have the powers and authority granted to
and conferred upon it herein and in the securities, and such further powers and
authority, acceptable to it, to act on behalf of the Company as the Company may
hereafter grant to or confer upon it. As used herein, "conversion agencies"
shall mean conversion agencies maintained by the Company as provided in Section
12(f) hereof.
(d) The Company shall cause to be kept at the principal
corporate trust office of the Fiscal Agent a register (the registers maintained
in such office and in any other office or agency designated for such purpose
(which office shall be located outside of the United Kingdom) being herein
sometimes collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as the Company may prescribe, the
Company shall provide for the registration of Registered Securities and of
transfers of Registered Securities. The Fiscal Agent is hereby appointed
"Security Registrar" for the
-2-
<PAGE> 4
purpose of registering Registered Securities and transfers of Registered
Securities as herein provided.
3. Registration and Transfer.
(a) Upon surrender for registration of transfer of any
Registered Security at any office or agency designated for such purpose by the
Company pursuant to Section 12(g) hereof, the Company shall execute, and the
Fiscal Agent shall authenticate and register and make available for delivery,
in the name of the designated transferee or transferees, one or more new
Registered Securities of any authorized denominations and of a like aggregate
principal amount.
(b) Bearer Securities may, at the option of the holder thereof,
be exchanged for an equal aggregate principal amount of Registered Securities
in denominations of $1000 and integral multiples thereof without coupons and/or
Bearer Securities of authorized denominations, upon surrender of the Bearer
Securities to be exchanged at any office or agency designated for such purpose
by the Company pursuant to Section 12(g), with all unmatured coupons and all
matured coupons in default thereto appertaining. If such holder is unable to
produce any such unmatured coupon or coupons or matured coupon or coupons in
default, such exchange may be effected if the Bearer Securities are accompanied
by payment (which payment shall be deposited in the Company's account with the
Fiscal Agent) in an amount equal to the face amount of such missing coupon or
coupons, or the surrender of such missing coupon or coupons may be waived by
the Company in writing if there be furnished to it such security or indemnity
as it may require to save it, the Fiscal Agent, the Paying Agent and any paying
agency harmless. If thereafter the holder of such Security shall surrender to
any paying agency any such missing coupon in respect of which such a payment
shall have been made, such holder shall be entitled to receive the amount of
such payment (which shall be provided to the Fiscal Agent by the Company).
Registered Securities may, at the option of the holder thereof,
be exchanged for Registered Securities of any other authorized denominations
and of a like aggregate principal amount, upon surrender of the Securities to
be exchanged at any office or agency designated for such purpose by the Company
pursuant to Section 12(g). Registered Securities shall not be exchangeable for
Bearer Securities. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Fiscal Agent shall authenticate and deliver
the Registered Securities which the holder making the exchange is entitled to
receive.
(c) All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid
-3-
<PAGE> 5
obligations of the Company, evidencing the same obligations, and entitled to
the same benefits under this Agreement, as the Securities surrendered upon such
registration of transfer or exchange.
(d) Every Registered Security presented for registration of
transfer or surrendered for exchange shall be duly endorsed in blank, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company, the Fiscal Agent and the Transfer Agent to which such Security is
presented or surrendered and the Security Registrar, duly executed by the
holder thereof or his attorney duly authorized in writing. In the case of
Registered Securities, all such instruments shall comply with the provisions of
paragraph (a) above. The registration of the transfer of a Registered Security
by the Security Registrar shall be deemed to be the written acknowledgement of
such transfer by the Company.
(e) No service charge shall be made for any exchange or
registration of transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any exchange or registration of transfer of Securities, other
than exchanges pursuant to Section 4 hereof or not involving any registration
of transfer.
(f) Neither the Company nor the Fiscal Agent nor any of the
offices or agencies designated for the purposes specified in Section 12(f) nor
any Transfer Agent shall be required (i) to exchange Bearer Securities for
Registered Securities during the period between the close of business on the
Record Date (as defined in Section 5 hereof) and the opening of business on the
next succeeding interest payment date, (ii) to exchange any Bearer Security (or
portion thereof) for a Registered Security if the Company shall have determined
and informed the Fiscal Agent in writing that, as a result thereof, the Company
may incur adverse consequences under the Federal income tax laws and
regulations (including proposed regulations) of the United States in effect or
proposed at the time of such exchange, or (iii) in the event of a redemption in
part, (A) to register the transfer of Registered Securities or to exchange any
Bearer Securities for Registered Securities during a period of 15 days
immediately preceding the date notice is given identifying the serial numbers
of the Securities to be redeemed, or (B) to register the transfer of or
exchange any Registered Security so selected for redemption in whole or in
part, except portions not being redeemed of Securities being redeemed in part,
or (C) to exchange any Bearer Security called for redemption; provided,
however, that a Bearer Security called for redemption may be exchanged, on the
terms and conditions set forth above, for a Registered Security that is
simultaneously surrendered, with written instruction for payment on the date
fixed for redemption,
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<PAGE> 6
unless the redemption date is between the close of business on any Record Date
and the close of business on the next succeeding interest payment date, in
which case such exchange may only be made prior to the Record Date immediately
preceding the redemption date.
4. Global Security; Exchange.
(a) The Securities shall initially be in the form of the Global
Security. The Global Security shall be authenticated by the Fiscal Agent upon
the order of the Company on the same conditions, in substantially the same
manner and with the same effect as the Definitive Securities. The Global
Security will be issued upon payment to the Company or its order in United
States dollars in next-day funds by check or wire transfer to a United States
dollar account designated by the Company, at 2:30 p.m., London time, on
November 15, 1993, or at such other time on the same or such other date, not
later than 5:00 p.m., London time, on the fifth business day in London
thereafter, as the Placement Agents and the Company may agree. Such payment
will be made (1) upon authorization from the Placement Agents and (2) against
delivery of the Global Security for the balance of the Securities to The Chase
Manhattan Bank, N.A., London office, as depositary (the "Common Depositary")
for Morgan Guaranty Trust Company of New York, Brussels office, as operator of
the Euroclear System (the "Euroclear Operator"), and Centrale de Livraison de
Valeurs Mobilieres S.A. ("CEDEL S.A."). The Global Security shall be held on
deposit with the Common Depositary for the accounts of the Euroclear Operator
and CEDEL S.A., for credit to the Placement Agents' respective Securities
Clearance Accounts (or to such other accounts as the Placement Agents may have
specified) with the Euroclear Operator or CEDEL S.A.
(b) Without unnecessary delay but in any event not less than
15 days prior to the Exchange Date (as defined below), the Company will execute
and deliver to the Fiscal Agent at its agent's office in London Definitive
Securities in the aggregate principal amount outstanding in the Global
Debenture. "Exchange Date" means the date following the expiration of the
40-day period commencing on the Closing Date. On or after the Exchange Date,
the Global Security may be surrendered to the Fiscal Agent to be exchanged, as
a whole or in part, for Definitive Bearer Securities without charge, and the
Fiscal Agent shall authenticate and deliver, in exchange for such Global
Security or the portions thereof to be exchanged, an equal aggregate principal
amount of Definitive Bearer Securities, but only upon presentation to the
Fiscal Agent at its agent's office in London of a certificate of the Euroclear
Operator or CEDEL S.A. with respect to the Global Security or portions thereof
being exchanged, substantially in the form of Exhibit C hereto, to the effect
that Morgan Guaranty Trust Company of New York as
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<PAGE> 7
operator of the Euroclear System (the "Euroclear Operator") or Centrale de
Livraison de Valeurs Mobilieres S.A. ("CEDEL S.A.") has received a certificate
or certificates in substantially the form set forth in Exhibit D hereto dated
no earlier than 15 days prior to the Exchange Date and signed by the person
appearing in its records as the owner of the Global Security or portions
thereof being exchanged. Similarly, after the Exchange Date, portions of the
Global Security may be exchanged for an equal aggregate principal amount of
Definitive Registered Securities upon presentation to the Fiscal Agent at its
agent's office in London of a certificate substantially in the form of Exhibit
E hereto.
(c) Only Bearer Securities may be issued upon receipt by the
Euroclear Operator or CEDEL S.A. of a certificate or certificates in the form
of Exhibit D hereto. Bearer Securities will be delivered only outside the
United States, its territories or possessions. Only Registered Securities may
be issued upon receipt by the Euroclear Operator or CEDEL S.A. of a certificate
or certificates in the form of Exhibit E hereto.
(d) The delivery to the Fiscal Agent by the Euroclear Operator
or CEDEL S.A. of any certificate referred to above may be relied upon by the
Company and the Fiscal Agent as conclusive evidence that a corresponding
certificate or certificates has or have been delivered to the Euroclear
Operator or CEDEL S.A. pursuant to the terms of this Agreement.
(e) Upon any such exchange of a portion of the Global Security
for a Definitive Security or Securities, the Global Security shall be endorsed
by the Fiscal Agent to reflect the reduction of its principal amount by an
amount equal to the aggregate principal amount of such Definitive Security or
Securities. Until so exchanged in full, the Global Security shall in all
respects be entitled to the same benefits under this agreement as Definitive
Securities authenticated and delivered hereunder.
5. Payment.
(a) The Company will pay or cause to be paid to the Paying
Agent the amounts, at the times and for the purposes, set forth herein and in
the text of the Securities, and the Company hereby authorizes and directs the
Paying Agent to make payment of the principal of and interest on and Additional
Amounts (as defined in Section 2 of the Definitive Securities), if any, on the
Securities from such payments.
(b) At least 15 days prior to the date on which any payment of
Additional Amounts shall be required to be made pursuant to Section 2 of the
Definitive Securities, the Company will furnish the Paying Agent, each other
paying agency of the
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<PAGE> 8
Company and the Fiscal Agent with a certificate of one of its duly authorized
officers instructing the Paying Agent and each other paying agency of the
Company as to the amounts required (i) to be deducted or withheld for or on
account of any taxes described in Section 2 of the Definitive Securities from a
payment to be made on that date and (ii) to be paid to each holder of
Securities or coupons as Additional Amounts pursuant to that paragraph. If the
foregoing amounts are not uniform for all holders, then the Company's
certificate shall specify by country of residence or other factor, with
reasonable clarity, the amounts required to be deducted or withheld and to be
paid as Additional Amounts for each holder or class of holders of the
Securities or coupons. In the absence of its receipt of any such certificate
from the Company, the Paying Agent may make payment without deduction or
withholding. The Company hereby agrees to indemnify the Paying Agent, each
other paying agency of the Company and the Fiscal Agent for, and to hold them
harmless against, any loss, liability or expense reasonably incurred without
negligence or bad faith on their part, arising out of or in connection with
actions taken or omitted by any of them in reliance on any certificate
furnished pursuant to this Section.
(c) Interest on any Registered Security that is payable, and is
punctually paid or duly provided for, on any interest payment date shall be
paid to the person in whose name that Security is registered at the close of
business on the May 1 or November 1 immediately preceding such interest payment
date (each a "Record Date"). In case a Bearer Security is surrendered for
exchange for a Registered Security after the close of business on any Record
Date and before the opening of business on the next succeeding interest payment
date, the Fiscal Agent shall not be required to perform such transfer or
exchange of such Security.
(d) In the case of any Registered Security which is converted
after any Record Date and on or prior to the next succeeding interest payment
date (other than any Registered Security called for redemption prior to such
interest payment date), interest that is payable on such interest payment date
shall be payable on such interest payment date notwithstanding such conversion,
and such interest shall be paid to the person in whose name that Registered
Security is registered at the close of business on such Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Security which is converted, interest that is payable after the date of
conversion on such Security shall not be payable.
(e) Any interest on any Registered Security that is payable,
but is not punctually paid or duly provided for, on any interest payment date
shall forthwith cease to be payable to the registered holder thereof on the
relevant Record Date by virtue of having been such holder, and such defaulted
interest
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<PAGE> 9
may be paid by the Company to the registered holder of such Registered Security
on a subsequent record date established by the Company in any lawful manner if,
after written notice given by the Company to the Fiscal Agent of the proposed
payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Fiscal Agent.
(f) Subject to the foregoing provisions of this Section 5, each
Security delivered under this Agreement upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry all the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
(g) In order to provide for the payment of the principal of and
interest on the Securities as the same shall become due and payable, the
Company shall pay to the Paying Agent at its agent's office in London, in such
coin or currency of the United States of America as at the time of payment is
legal tender for the payment of public and private debts therein, and in same
day funds, the following amounts (and the Company shall give notice to the
Fiscal Agent at least one full business day prior to the date payment is due to
the Paying Agent as to the means of such payment), to be held and applied by
the Paying Agent as hereinafter set forth:
(i) The Company shall pay to the Paying Agent on the
business day immediately prior to each interest payment date in
immediately available funds an amount sufficient to pay the interest
due on (and Additional Amounts, if any, on) all the Securities
outstanding on such interest payment date, and the Paying Agent shall
apply the amounts so paid to it to the payment of such interest (and
Additional Amounts, if any) on such interest payment date.
(ii) If the Company shall elect, or shall be required, to
redeem the Securities in accordance with Section 6 hereof, the
Company will pay to the Paying Agent on the business day immediately
prior to the date fixed for redemption thereof in immediately
available funds an amount sufficient (with any amount then held by
the Paying Agent and available for the purpose) to pay the redemption
price of the Securities called for redemption on the redemption date
or entitled to be redeemed, together with accrued interest thereon
(and Additional Amounts, if any, thereon) to the date fixed for
redemption if such redemption date occurs on an interest payment
date, and the Paying Agent shall apply such amount to the payment of
the redemption price and accrued interest (and Additional Amounts, if
any) in accordance with the terms of the Securities.
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<PAGE> 10
(iii) On the business day immediately prior to the maturity
date of the Securities, the Company shall pay to the Paying Agent in
immediately available funds an amount which, together with any
amounts then held by the Paying Agent, and available for payment
thereof, shall be equal to the entire amount of principal and
interest (and Additional Amounts, if any) to be due on such maturity
date on all the Securities then outstanding, and the Paying Agent
shall apply such amount to the payment of the principal of and
interest on (and Additional Amounts, if any, on) the Securities in
accordance with the terms of the Securities.
6. Redemption. If, under the circumstances described in Section 3
of the Definitive Securities, the Company shall elect to redeem the outstanding
Securities, the following provisions shall be applicable:
(a) The Company shall, at least 75 days (or such shorter period
as shall be reasonably acceptable to the Fiscal Agent) before the date
designated for any redemption, give written notice to the Agents of its
election to redeem the outstanding Securities on the redemption date specified
in such notice and state in such notice that the conditions precedent to such
redemption have occurred and describe them and shall request the Fiscal Agent
to arrange for publication and mailing of the notice specified in clause (c)
below.
(b) In case the Company shall give notice to the Agents of its
election to redeem the Securities, the Fiscal Agent shall cause to be published
on behalf of the Company a notice of redemption in accordance with the
provisions of Section 3 of the Definitive Securities and shall mail by
first-class mail a copy of the notice to each holder of a Registered Security
at the address of such holder as it shall appear in the Security Register. The
Fiscal Agent shall send a copy of such notice of redemption to the Company, the
Paying Agent (if different from the Fiscal Agent) and each other paying agency
of the Company.
(c) Such notice shall be published on behalf and at the expense
of the Company in an Authorized Newspaper (as defined in Section 19 hereof), as
provided in Section 19 of this Agreement and Section 3 of the Definitive
Securities. In the case of a redemption in whole at the option of the Company,
notice will be given once not more than 60 nor less than 30 days prior to the
date fixed for redemption. In the case of a partial redemption, notice will be
given twice, the first such notice to be given not more than 75 nor less than
60 days prior to the date fixed for redemption and the second such notice to be
given not more than 60 and not less than 30 days prior to the date fixed for
redemption. The Company shall notify the Fiscal Agent
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<PAGE> 11
promptly of the specific outstanding Securities to be called for redemption.
Notwithstanding any other provision of this Section 6, with
respect to redemptions described in Section 3(a) of the Definitive Securities,
the Securities will be immediately redeemable, at the option of and upon notice
by the Company to the Fiscal Agent as provided in this Section 6, to the extent
deemed sufficient in the opinion of the Company's Board of Trustees to prevent
the holder of such Securities or any other person having an interest therein if
the Securities were thereupon converted from being deemed to own shares of
beneficial interest of the Company ("Shares") in excess of the limits
prescribed in Article VI, Section 6.15 of the Company's Restated Declaration of
Trust, as amended, provided the Company shall notify the Fiscal Agent from time
to time with respect to the number of Shares that would exceed such limits.
7. Conversion of Securities.
(a) Subject to and upon compliance with the provisions of this
Section 7, at the option of the holder thereof, any Definitive Security or, in
the case of any Registered Security or Bearer Security of a denomination other
than $1,000, any portion of the principal amount thereof which is $1,000 or an
integral multiple of $1,000 may be converted at any time on or after the date
which is, in the case of Bearer Securities, the Exchange Date, at the principal
amount thereof, or of such portion thereof, into fully paid and nonassessable
Shares as set forth in the Definitive Securities. The price at which Shares
shall be delivered upon conversion (herein called the "Conversion Price") shall
be initially $37.125 per Share. The Conversion Price shall be adjusted in
certain instances as provided in paragraphs (c)(i), (ii), (iii), (iv), (vi) and
(vii) of Section 4 of the Definitive Securities. Notwithstanding the
foregoing, a holder may not convert any Security, and such Security shall not
be convertible by any holder, if as a result of such conversion any person
would then be deemed to own Shares in excess of the limits prescribed in
Article VI, Section 6.15 of the Company's Restated Declaration of Trust, as
amended.
(b) In order to exercise the conversion privilege, the holder
of any Security to be converted shall surrender such Security, or, if less than
the entire principal amount of a Registered Security or Bearer Security of a
denomination other than $1,000 is to be converted, the portion thereof to be
converted, together with all unmatured coupons and any matured coupons in
default appertaining thereto, at the office of the Conversion Agent or any
office or agency of the Company maintained for that purpose pursuant to Section
12(f), accompanied by written notice, in substantially the form set forth in
the Definitive Security, to the Company, at such office
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<PAGE> 12
or agency that the holder elects to convert such Security. Registered
Securities surrendered for conversion during the period after the close of
business on any Record Date next preceding any interest payment date to the
close of business on such interest payment date shall (except in the case of
Registered Securities or portions thereof which have been called for redemption
on a redemption date within such period) be accompanied by payment of an amount
equal to interest payable on such interest payment date on the principal amount
being surrendered for conversion. Except as otherwise provided in the
immediately preceding sentence and subject to Section 5(d), no payment or
adjustment shall be made upon any conversion on account of any interest accrued
on the Securities surrendered for conversion or on account of any dividends on
the Shares issued upon conversion.
(c) Securities shall be deemed to have been converted
immediately prior to the close of business on the day of surrender of such
Securities for conversion in accordance with the foregoing provisions, and at
such time the rights of the holders of such Securities as holders shall cease,
and the person or persons entitled to receive the Shares issuable upon
conversion shall be treated for all purposes as the record holder or holders of
such Shares at such time. As promptly as practicable on or after the
conversion date, the Company shall cause to be issued or delivered at such
office or agency a certificate or certificates for the number of full Shares
issuable or deliverable upon conversion, together with payment, in lieu of any
fraction of a share, as provided below.
(d) In the case of any Registered Security or Bearer Security
of a denomination other than $1,000 which is converted in part only, upon such
conversion the Company shall execute and the Fiscal Agent shall authenticate
and deliver to the holder thereof, at the expense of the Company, a new
Security or Securities of any authorized kind or denomination as requested by
such holder, in aggregate principal amount equal to the unconverted portion of
the principal amount of such Security.
(e) No fractional Shares shall be issued or delivered upon
conversion of Securities. If more than one Security shall be surrendered for
conversion at one time by the same holder, the number of full shares which
shall be issuable or deliverable upon conversion thereof shall be computed on
the basis of the aggregate principal amount of the Securities (or, in the case
of Registered Securities or Bearer Securities of a denomination other than
$1,000, specified portions thereof) so surrendered. Instead of any fractional
Share which would otherwise be issuable or deliverable upon conversion of any
Security or Securities (or, in the case of Registered Securities or Bearer
Securities of a denomination other than $1,000, specified portions thereof),
the Company shall pay a cash
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<PAGE> 13
adjustment in respect of such fraction in an amount equal to the same fraction
of the Closing Price per Share (as defined in the Definitive Securities) at the
close of business on the day preceding the day of conversion.
(f) Whenever the Conversion Price is adjusted as provided in
the Definitive Securities:
(i) the Company shall compute the adjusted Conversion
Price in accordance with the terms of the Definitive Securities and
shall prepare a certificate signed by the President, any Vice
President or the Treasurer of the Company setting forth the adjusted
Conversion Price and showing in reasonable detail the facts upon
which such adjustment is based, and such certificate shall forthwith
be filed with the Conversion Agent and at each office or agency
maintained for the purpose of conversion of Securities pursuant to
Section 12(f); and
(ii) a notice stating that the Conversion Price has been
adjusted and setting forth the adjusted Conversion Price shall
forthwith be required, and, as soon as practicable after it is
required, the Company shall promptly cause a notice setting forth the
adjusted Conversion Price to be given to the holders of the
Securities as provided in Section 19.
(g) In case:
(i) the Company shall declare a dividend (or any other
distribution) on its Shares payable otherwise than in cash out of its
retained earnings (excluding dividends payable in Shares for which
adjustment is made pursuant to the terms of the Definitive
Securities); or
(ii) the Company shall authorize the granting to the
holders of its Shares of rights or warrants to subscribe for or
purchase any equity securities of any class or of any other rights;
or
(iii) of any reclassification of the Shares of the Company
(other than a subdivision or combination of its outstanding Shares)
or of any consolidation or merger to which the Company is a party and
for which approval of any stockholders of the Company is required, or
of the sale or transfer of all or substantially all of the assets of
the Company; or
(iv) of the involuntary dissolution, liquidation or
winding up of the Company; or
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<PAGE> 14
(v) the Company proceeds to take any other action which
would require an adjustment of the Conversion Price pursuant to the
Definitive Securities;
then the Company shall cause to be filed with the Conversion Agent and at each
office or agency maintained for the purpose of conversion of Securities a
notice setting forth the anticipated adjusted Conversion Price and a brief
statement of the facts requiring such adjustment, and shall cause notice to be
given as provided in Section 19 except that notice need be given once at least
20 days (or 10 days in any case specified in clause (i) or (ii) above) prior to
the applicable record date hereinafter specified, stating (x) the date on which
a record is to be established for the purpose of such dividend, distribution,
or grant of rights or warrants or, if a record is not to be established, the
date as of which the holders of Shares of record to be entitled to such
dividend, distribution, rights or warrants is to be determined, or (y) the date
on which a reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up or other action is expected to become
effective, and the date as of which it is expected that holders of Shares of
record shall be entitled to exchange their Shares for the securities, cash or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding up or other action. The
failure to give notice required by this Section or any defect therein shall not
affect the legality or validity of any dividend, distribution, rights,
warrants, reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up, or other action, or the vote on any such action.
(h) The Company shall, at all times from and after the date on
which the Securities are convertible into Shares, have reserved and available,
free from preemptive rights, out of its authorized but unissued Shares, for the
purpose of effecting the conversion of Securities, the full number of Shares
then issuable upon the conversion of all Securities.
(i) The Company covenants that all Shares which may be issued
or delivered upon conversion of Securities will upon issuance be fully paid and
nonassessable and, except as provided in Section 13, the Company will pay all
stamp, excise or similar taxes or duties, liens and charges with respect to the
issue thereof.
(j) All converted Securities shall be held by the Company, and
may, at any time, be delivered to the Fiscal Agent for cancellation, which
shall hold or dispose of the same in accordance with its policy for disposal of
canceled Securities or as otherwise directed by the Company. Converted
Securities shall not be transferred. The Company will promptly give, or
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<PAGE> 15
cause to be given, written notice to the Fiscal Agent of the serial numbers of
all Securities which have been converted.
(k) In case of any consolidation with, or merger of the Company
into, any other corporation, or in case of any merger of another corporation
into the Company (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding Shares of
the Company), or in case of any sale or transfer of all or substantially all of
the assets of the Company, the corporation formed by such consolidation or
resulting from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Fiscal Agent an amendment to the Fiscal Agency
Agreement providing that the holder of each Definitive Security shall have the
right during the period such Security shall be convertible as specified in the
Definitive Securities to convert such Securities only into the kind and amount
of securities, cash, and other property receivable upon such consolidation,
merger, sale or transfer by a holder of the number of Shares of the Company
into which such Security might have been converted immediately prior to such
consolidation, merger, sale or transfer assuming, if such consolidation,
merger, sale or transfer is prior to the period such Security shall be
convertible, that the Securities were convertible at such time at the initial
Conversion Price as adjusted pursuant to the terms of the Definitive
Securities. Such amendment shall provide for adjustments which, for events
subsequent to the effective date of such amendment, shall be as nearly
equivalent as may be practicable, as determined by the Company, to the
adjustments provided for in the Definitive Securities. The above provisions of
this Section shall similarly apply to successive consolidations, mergers, sales
or transfers.
(l) Subject to Section 11(j), neither the Fiscal Agent nor the
Conversion Agent or agency appointed by the Company shall at any time be under
any duty or responsibility to any holder of Securities to determine whether any
facts exist which may require any adjustment of the Conversion Price, or with
respect to the nature or extent of any such adjustment when made, or with
respect to the method employed, or herein or in the Definitive Securities
provided to be employed, in making the same. Neither the Fiscal Agent nor the
Conversion Agent or agency appointed by the Company shall be accountable with
respect to (i) the validity or value (or the kind or amount) of any Shares or
of any securities or property which may at any time be issued or delivered upon
the conversion of any Security or (ii) the calculation of the Conversion Price;
and neither the Fiscal Agent nor the Conversion Agent or agency appointed by
the Company makes any representation with respect thereto. Neither the Fiscal
Agent nor the Conversion Agent or agency appointed by the Company shall be
responsible for any acts or omissions of the Company including without
limitation any failure of the Company to issue, transfer or deliver any Shares
or Share certificates or
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<PAGE> 16
other securities or property or to make any cash payment upon the delivery of
any Security for the purpose of conversion or to comply with any of the
covenants contained in this Section 7.
(m) The Fiscal Agent has no duty to determine when an
adjustment under this paragraph 7 should be made, how it should be made or
whether it should be made. The Fiscal Agent shall not be accountable for and
makes no representation as to the validity or value of any securities or assets
issued upon conversion of the Securities or the calculation of the Conversion
Price.
8. Surrendered Securities. All Securities, together with any
coupons appertaining thereto, surrendered for payment, redemption, retirement,
transfer or exchange and all coupons paid through the application of interest
installments shall be delivered to the Fiscal Agent. In any such case the
Fiscal Agent shall cancel all Securities and coupons not previously canceled
and dispose of or deliver all such Securities and coupons to the Company in
accordance with the Fiscal Agent's policy for disposal of canceled securities.
9. Mutilated, Destroyed, Stolen or Lost Securities. The Fiscal
Agent is hereby authorized, in accordance with the provisions of the Securities
and this Section, from time to time to authenticate and deliver Securities in
exchange for or in lieu of Securities that become mutilated, destroyed, stolen
or lost, upon receipt of indemnity and such other documents or proof as may be
required in form and substance satisfactory to the Fiscal Agent and the
Company. Every Security authenticated and delivered in exchange for or in lieu
of any such Security shall be considered the obligation of the Company and
shall carry all the rights to interest accrued and unpaid and to accrue which
were carried by such Security, and notwithstanding anything to the contrary
herein contained, any new Bearer Security shall have attached thereto such
coupons that neither gain nor loss in interest shall result from such exchange
or substitution.
10. Signatures. Securities shall be executed on behalf of the
Company by its Chairman, its President, its Secretary, any Vice President or
its Treasurer or any Assistant Secretary, any of whose signatures may be manual
or in facsimile, and any coupons appertaining thereto shall be executed on
behalf of the Company by the facsimile signature of its Chairman, its
President, its Secretary, any Vice President or its Treasurer or any Assistant
Secretary. Any signature in facsimile may be imprinted or otherwise reproduced
on the Securities. The Company may adopt and use the signature or facsimile
signature of any person who shall be a Chairman, President, Secretary, Vice
President, Treasurer or Assistant Secretary at the time of the execution of the
Securities, notwithstanding the fact that at the time the Securities shall be
authenticated and delivered, or
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<PAGE> 17
disposed of, such person shall have ceased to have held such office by virtue
of which such person so executed such security.
11. Agreements Concerning Agents. Each of the Agents accepts its
obligations herein and in the Securities, upon the terms and conditions hereof
and thereof, including the following, to all of which the Company agrees and to
all of which the rights hereunder of the holders from time to time of the
Securities and coupons shall be subject:
(a) Each of the Agents shall be entitled to reasonable compensation
for all services rendered by such Agent, as separately agreed to from time to
time by the Company and such Agent, and the Company agrees to pay promptly such
compensation and to reimburse each of the Agents for the reasonable
out-of-pocket expenses (including, but not limited to, reasonable counsel fees
and expenses) incurred by such Agent in connection with the services rendered
by it hereunder. The Company also agrees to indemnify each of the Agents and
each other paying agency and conversion agency of the Company for, and to hold
it harmless against, any loss, liability or expense (including the costs and
expenses of defending against any claims of liability, including the reasonable
fees and expenses of its counsel) incurred without negligence or bad faith on
the part of such Agent or other paying agency and conversion agency, arising
out of or in connection with its acting as an Agent or other paying agency and
conversion agency of the Company hereunder or otherwise in connection with the
Securities. The obligations of the Company under this clause (a) shall survive
payment of the Securities or the resignation or removal of any Agent or paying
agency and conversion agency.
(b) In acting under this Agreement and in connection with the
Securities, each of the Agents and each other paying agency and conversion
agency of the Company is acting solely as agent of the Company, and does not
assume any obligation, or relationship of agency or trust, for or with any of
the owners or holders of the Securities or coupons, except that all funds held
by the Paying Agent or any other paying agency of the Company for payment of
principal of or interest on (or Additional Amounts, if any, on) the Securities
shall be held in trust but need not be segregated from other funds except as
required by law and as set forth herein and in the Securities, and shall be
applied as set forth herein and in the Securities; provided, however, that
monies paid by the Company to the Paying Agent or any other paying agency of
the Company for the payment of principal of or interest on (or Additional
Amounts, if any, on) Securities remaining unclaimed at the end of two years
after such principal or interest (or Additional Amounts, if any) shall have
become due and payable shall be repaid to the Company, as provided and in the
manner set forth in the Definitive Securities, whereupon the aforesaid trust
shall terminate and all liability of the Paying
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<PAGE> 18
Agent or such other paying agency of the Company with respect thereto shall
cease.
(c) Each of the Agents and each other paying agency and conversion
agency of the Company may consult with one or more counsel satisfactory to it
(including counsel to the Company), and the written opinion of such counsel
shall be full and complete authorization and protection in respect of any
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel.
(d) Each of the Agents and each other paying agency and conversion
agency of the Company shall be protected and shall incur no liability for or in
respect of any action taken, omitted or suffered by it in reliance upon any
Security or coupon, notice, direction, consent, certificate, affidavit,
statement or other paper or document believed in good faith by such Agent or
such other paying agency and conversion agency of the Company to be genuine and
to have been signed by the proper party or parties.
(e) Each of the Agents and each other paying agency and conversion
agency of the Company, its officers, directors and employees may become the
owner of, or acquire any interest in, any Securities or coupons, with the same
rights that it or they would have if it were not an Agent or such other paying
agency of the Company hereunder, and may engage or be interested in any
financial or other transaction with the Company and its affiliates and may act
on, or as depositary, trustee or agent for, any committee or body of holders of
Securities or other obligations of the Company, as freely as if it were not an
Agent or a paying agency or conversion agency of the Company hereunder.
(f) Neither the Paying Agent nor any other paying agency of the
Company shall be under any liability for interest on, or have any
responsibility to invest, any monies at any time received by it pursuant to any
of the provisions of this Agreement or of the Securities.
(g) The recitals contained herein and in the Securities (except in
the Fiscal Agent's certificates of authentication), shall be taken as the
statements of the Company, and the Agents assume no responsibility for the
correctness of the same. None of the Agents makes any representation as to the
validity or sufficiency of this Agreement or the Securities or coupons or the
Company's Offering Memorandum dated October 29, 1993 and amended on November 2,
1993, or any other offering material, except for such Agent's due authorization
to execute this Agreement. Neither the Agents nor any other paying agency of
the Company shall be accountable for the use or application by the Company of
the proceeds of any Securities.
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<PAGE> 19
(h) The Agents and each other paying agency and conversion agency of
the Company shall be obligated to perform such duties and only such duties as
are herein and in the Securities specifically set forth and no implied duties
or obligations shall be read into this Agreement or the Securities against the
Agents or any other paying agency and conversion agency of the Company. The
Agents shall not be under any obligation to take any action hereunder which may
tend to involve them in any expense or liability, the payment or reimbursement
of which within a reasonable time is not, in their reasonable opinion, assured
to them through surety or other indemnity satisfactory to such Agents.
(i) Unless herein or in the Securities otherwise specifically
provided, any order, certificate, notice, request, direction, or other
communication, from the Company made by or given by it under any provision of
this Agreement shall be in writing and shall be sufficient if signed by the
Chairman, President, Secretary, Assistant Secretary, any Vice President or
Treasurer of the Company.
(j) Anything in this Agreement to the contrary notwithstanding, none
of the Agents shall incur any liability hereunder, except as a result of
negligence or bad faith attributable to it or its officers or employees, and
shall incur no liability for the negligence or bad faith of its agents
appointed by it with due care; provided that the Agent shall notify the Company
of the appointment of any such agents.
(k) Except as specifically provided herein or in the Securities,
none of the Agents shall have any duty or responsibility in case of any default
by the Company in the performance of its obligations (including, without
limiting the generality of the foregoing, any duty or responsibility to
accelerate all or any of the Securities or to initiate or to attempt to
initiate any proceedings at law or otherwise or to make any demand for the
payment thereof upon the Company).
12. Offices, Resignation, Successors, Etc. of Agents; Paying,
Conversion and Transfer Agencies.
(a) The Company agrees that, until none of the Securities and
coupons is outstanding or until monies for the payment of all principal of and
interest on (and Additional Amounts payable pursuant to Section 2 of the
Definitive Securities, if any, on) all outstanding Securities shall have been
made available at the office of the Paying Agent and shall have been returned
to the Company as provided in the Securities, there shall at all times be a
Fiscal Agent in Providence, Rhode Island or the Borough of Manhattan, New York
City, which shall be a bank or trust company organized and doing business under
the laws of the United States of America or of any State of the
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<PAGE> 20
United States of America, in good standing and authorized under such laws to
exercise corporate trust powers, a Paying Agent and a Conversion Agent having
offices or agents in a city in Western Europe and in either Providence, Rhode
Island or New York City, which shall be a bank or trust company organized, in
good standing and doing business under the laws of the United States of America
or of any State of the United States of America, and a paying agency and a
conversion agency in at least one city in Western Europe, which shall be
Luxembourg so long as the Securities are listed on the Luxembourg Stock
Exchange.
(b) Each of the Agents may at any time resign as such Agent by
giving written notice to the Company of such intention on its part, specifying
the date on which its desired resignation shall become effective; provided,
however, that such date shall never be less than ninety days after receipt of
such notice by the Company unless the Company agrees to accept less notice.
Each of the Agents hereunder may be removed at any time by the filing with it
at least 30 days prior to the date of such proposed removal, an instrument in
writing signed on behalf of the Company and specifying such removal and the
date when it is intended to become effective. Such resignation or removal
shall take effect upon the date of the appointment by the Company, as
hereinafter provided, of a successor Fiscal Agent, Conversion Agent, Transfer
Agent or Paying Agent, as the case may be, and the acceptance of such
appointment by such successor Agent. At the time of its resignation or
removal, each of the Agents shall be entitled to the payment by the Company of
its compensation for the services rendered hereunder and to the reimbursement
of all reasonable out-of-pocket expenses incurred in connection with the
services rendered hereunder by such Agent.
(c) In case at any time any of the Agents shall resign, or shall be
removed, or shall be incapable of acting, or shall file a voluntary petition as
a debtor under Chapter 7 or 11 of Title 11 of the United States Code or have an
order for relief-entered against it as a debtor under Chapter 7 or 11 of Title
11 of the United States Code or make an assignment for the benefit of its
creditors or consent to the appointment of a receiver of all or any substantial
part of its property, or shall admit in writing its inability to pay or meet
its debts as they mature, or if an order of any court shall be entered
approving any petition filed by or against the Fiscal Agent under any
legislation similar to the provisions of Title 11 of the United States Code or
against any of the Agents under the provisions of any legislation similar to
the Provisions of Title 11 of the United States Code, or if a receiver of it or
of all or any substantial part of its property shall be appointed, or if any
public officer shall take charge or control of it or of its property or
affairs, for the purpose of rehabilitation, conservation or liquidation, a
successor Agent, qualified as aforesaid, shall be appointed by the Company by
an instrument in
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<PAGE> 21
writing. Upon the appointment as aforesaid of a successor Agent and acceptance
by it of such appointment, the Agent so superseded shall cease to be such Agent
hereunder. If no successor Agent shall have been so appointed by the Company
and shall have accepted appointment as hereinafter provided, any holder of a
Security, on behalf of itself and all others similarly situated, or any Agent
may petition any court of competent jurisdiction for the appointment of a
successor Agent and shall promptly notify the Company of such action.
(d) Any successor Fiscal Agent, Conversion Agent, Transfer Agent or
Paying Agent appointed hereunder shall execute, acknowledge and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder, and thereupon such successor Agent, without any further act, deed or
conveyance, shall become vested with all the authority, rights, powers, trusts,
immunities, duties and obligations of such predecessor with like effect as if
originally named as such Agent hereunder, and such predecessor, upon payment of
its charges and disbursements then unpaid, shall thereupon become obligated to
transfer, deliver and pay over, and such successor Agent shall be entitled to
receive, all monies, securities or other property on deposit with or held by
such predecessor, as such Agent hereunder.
(e) Any corporation or bank into which any of the Agents hereunder
may be merged or converted, or any corporation or bank with which such Agent
may be consolidated, or any corporation or bank resulting from any merger,
conversion or consolidation to which such Agent shall be a party, or any
corporation or bank to which such Agent shall sell or otherwise transfer all or
substantially all the assets and business of such Agent, or any corporation to
which the Fiscal Agent shall sell or otherwise transfer all or substantially
all of its corporate trust business, provided that it shall be qualified as
aforesaid, shall be the successor to such Agent under this Agreement without
the execution or filing of any document or any further act on the part of any
of the parties hereto.
(f) So long as there shall be a Fiscal Agent and Paying Agent
hereunder, the Company shall maintain agencies (i) where Registered Securities
(but not Bearer Securities or coupons) may be presented for surrender and
payment (and for the payment of Additional Amounts on the Registered
Securities, if any) and where Securities may be surrendered for conversion in
Providence, Rhode Island or the Borough of Manhattan, New York City, and (ii)
where Securities and coupons may be surrendered for payment (and for the
payment of Additional Amounts (pursuant to Section 2 of the Definitive
Securities) on Bearer Securities, if any) and where Securities may be
surrendered for conversion in at least one city in Western Europe, which shall
be Luxembourg so long as the Securities are listed on the Luxembourg Stock
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<PAGE> 22
Exchange. The Company now intends to maintain additional agencies (subject to
applicable laws and regulations) where Bearer Securities and coupons may be
surrendered for payment (and for the payment of Additional Amounts (pursuant to
Section 2 of the Definitive Securities) on Bearer Securities, if any), where
Registered Securities may be surrendered for payment and where Securities may
be surrendered for conversion in London, England and Luxembourg, and during
such period to keep the Agents advised of the names and locations of such
agencies. Unless the Company shall otherwise notify each of the Agents in
writing, the sole such paying agencies and conversion agencies shall be the
agencies specified in the Securities. The Company authorizes the Paying Agent
to pay to or to the order of the aforesaid agencies, upon demand by such
agencies, funds for the payment of the principal of and interest on (and
Additional Amounts pursuant to Section 2 of the Definitive Securities, if any,
on) the Securities. Except as otherwise arranged by the Company, the Fiscal
Agent shall arrange for the payment of the compensation of such paying agencies
for their services as such, and the Company shall pay to the Fiscal Agent from
time to time sufficient funds to make such payments.
(g) So long as there shall be a Fiscal Agent, Paying Agent and
Conversion Agent hereunder, the Company shall maintain a Security Registrar and
additional transfer agencies (the "Transfer Agents") (i) where Registered
Securities may be surrendered for exchange for Registered Securities and (ii)
in at least one city in Western Europe, where Bearer Securities may be
delivered in exchange for Bearer Securities or for Registered Securities.
Consistent with applicable laws and regulations, including the provisions of
the federal income tax laws of the United States, such agencies may be the same
agencies as or different agencies from those maintained by the Company pursuant
to Section 12(f).
The Company hereby appoints Banque Generale du Luxembourg ("Banque
Generale"), 27 Avenue Monterey, L-2951 Luxembourg, as Transfer Agent for such
exchanges. The transfer, exchange and registration of transfer or exchange of
Registered Securities shall be made by the Fiscal Agent in Providence, Rhode
Island or by Banque Generale, as agent for the Fiscal Agent, so long as the
Securities are registered on the Luxembourg Stock Exchange.
13. Taxes. The Company will pay all stamp taxes and other similar
duties, if any, that may be imposed by the United States of America or the
United Kingdom, or any state or political subdivision thereof or taxing
authority therein, with respect to the execution or delivery of this Agreement,
or the issuance of the Global Security, or the exchange from time to time of
the Global Security for Definitive Securities, or with respect to the issue or
delivery of Shares on conversion of
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<PAGE> 23
Securities; provided, however, that the Company shall not be required to pay
any tax or duty which may be payable in respect of any transfer involved in the
issue or delivery of Shares in a name other than that of the holder of the
Security or Securities to be converted, and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to the Company
the amount of any such tax or duty or has established to the satisfaction of
the Company that such tax or duty has been paid.
14. Meetings and Votes of Holders.
(a) A meeting of holders of Securities may be called at any
time and from time to time pursuant to this Section for any of the following
purposes: (i) to give any notice to the Company or to the Fiscal Agent, or to
give any directions to the Fiscal Agent, or to consent to the waiving of any
default hereunder or under the Definitive Securities and its consequences, or
to take any other action authorized to be taken by holders of Securities
pursuant to Section 9 of the Definitive Securities; or (ii) to take any other
action authorized to be taken by or on behalf of the holders of any specified
aggregate principal amount of the Securities under any other provision of this
Agreement, the Definitive Securities or under applicable law.
(b) Meetings of holders of Securities may be held at such place
or places in Providence, Rhode Island, The City of New York or London as the
Fiscal Agent or, in case of its failure to act, the Company or the holders
calling the meeting shall from time to time determine.
(c) The Fiscal Agent may at any time call a meeting of holders
of Securities to be held at such time and at such place in any of the locations
designated in Section 14(b) hereof as the Fiscal Agent shall determine. Notice
of every meeting of holders shall be made as specified in Section 19 hereof,
except that such notice shall set forth the time and the place of such meeting,
in general terms the action proposed to be taken at such meeting and a general
description of regulations applicable to such meeting and shall be published at
least three times in the publications specified in such Section 19, the first
publication to be not less than 21 nor more than 180 days prior to the date
fixed for the meeting.
(d) In case at any time the Company or the holders of at least
25% in aggregate principal amount of the Securities shall have requested the
Fiscal Agent to call a meeting of the holders, by written request setting forth
in reasonable detail the action proposed to be taken at the meeting, and the
Fiscal Agent shall not have given the first notice of such meeting within 21
days after receipt of such request or
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<PAGE> 24
shall not thereafter proceed to cause the meeting to be held as provided
herein, then the Company or the holders of Securities in the amount above
specified may determine the time and the place in either of the locations
designated in Section 14(b) hereof for such meeting and may call such meeting
to take any action authorized in Section 14(a) hereof by giving notice thereof
as provided in Section 14(c) hereof.
(e) To be entitled to vote at any meeting of holders of
Securities, a person shall be (i) a holder of one or more Securities, or (ii) a
person appointed by an instrument in writing as proxy for a holder or holders
of Securities by such holder or holders, which proxy need not be a holder of
Securities. The only persons who shall be entitled to be present or to speak
at any meeting of holders shall be the persons entitled to vote at such meeting
and their counsel and any representatives of the Fiscal Agent and its counsel
and any representatives of the Company and its counsel.
(f) The persons entitled to vote a majority in principal amount
of the outstanding Securities shall constitute a quorum for the transaction of
all business specified in Section 14(a) hereof. No business shall be
transacted in the absence of a quorum unless a quorum is represented when the
meeting is called to order. In the absence of a quorum within 30 minutes of
the time appointed for any such meeting, the meeting shall, if convened at the
request of the holders of Securities (as provided in Section 14(d) hereof), be
dissolved. In any other case the meeting shall be adjourned for a period of
not less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided in Section 14(c) hereof except
that such notice need be published only once but must be given not less than
five days prior to the date on which the meeting is scheduled to be reconvened.
Subject to the foregoing, at the reconvening of any meeting adjourned for a
lack of a quorum, the persons entitled to vote 25% in principal amount of the
Securities shall constitute a quorum for the taking of any action set forth in
the notice of the original meeting. Notice of the reconvening of an adjourned
meeting shall state expressly the percentage of the aggregate principal amount
of the Securities that shall constitute a quorum. At a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid, any
resolution and all matters (except as limited by Section 9 of the Definitive
Securities) shall be effectively passed and decided if passed or decided by the
persons entitled to vote a majority in principal amount of the Securities
represented and voting at such meeting, provided that such amount shall be not
less than 25% in principal amount of the Securities outstanding. Any holder of
a Security who has executed an instrument in writing appointing a person as his
proxy shall be deemed to be present for the purposes of
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<PAGE> 25
determining a quorum and be deemed to have voted; provided, however, that such
holder shall be considered as present or voting only with respect to the
matters covered by such instrument in writing. Any resolution effectively
passed or decision taken at any meeting of the holders of Securities duly held
in accordance with this Section 14 shall be binding on all the holders of
Securities whether or not present or represented at the meeting.
(g) Notwithstanding any other provision of this Agreement, the
Fiscal Agent may make such reasonable regulations as it may deem advisable for
any meeting of holders of Securities in regard to proof of the holding of
Securities and of the appointment of proxies and in regard to the appointment
and duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall deem appropriate. Except as
otherwise permitted or required by any such regulations, the holding of Bearer
Securities shall be proved by the production of the Bearer Securities or by a
certificate executed, as depositary, by, and the appointment of any proxy shall
be proved by having the signature of the person executing the proxy witnessed
or guaranteed by, in each case, any trust company, bank or banker satisfactory
to the Fiscal Agent. Such regulations may provide that written instruments
appointing proxies, regular on their face, may be presumed valid and genuine
without the proof specified herein or other proof. The holding of Registered
Securities shall be proved by the registry books maintained in accordance with
Section 2(d) hereof or by a certificate or certificates of the Fiscal Agent in
its capacity as the Company's agent for the maintenance of such books.
(h) The Fiscal Agent shall, by an instrument in writing,
appoint a temporary chairperson of the meeting, unless the meeting shall have
been called by the Company or by the holders of Securities as provided in
Section 14(d) hereof, in which case the Company or the holders calling the
meeting, as the case may be, shall in like manner appoint a temporary
chairperson. A permanent chairperson and a permanent secretary of the meeting
shall be elected by vote of the holders of a majority in principal amount of
the Securities represented at the meeting and entitled to vote.
(i) At any meeting each holder or proxy shall be entitled to
one vote for each U.S. $1,000 principal amount of Securities held or
represented by him; provided, however, that no vote shall be cast or counted at
any meeting in respect of any Securities challenged as not outstanding and
ruled by the chairperson of the meeting to be not outstanding. The chairperson
of the meeting shall have no right to vote, except as a holder or proxy.
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<PAGE> 26
(j) Any meeting of holders of Securities duly called pursuant
to Section 14(c) or 14(d) hereof at which a quorum is present may be adjourned
from time to time by vote of the holders (or proxies for the holders) of a
majority in principal amount of the Securities represented at the meeting and
entitled to vote; and the meeting may be held as so adjourned without further
notice.
(k) The vote upon any resolution submitted to any meeting of
holders of Securities shall be by written ballots on which shall be subscribed
the signatures of the holders of Securities or of their representatives by
proxy and the serial number or numbers of the Securities held or represented by
them. The permanent chairperson of the meeting shall appoint two inspectors of
votes who shall count all votes cast at the meeting for or against any
resolution and who shall make and file with the secretary of the meeting their
verified written reports in triplicate of all votes cast at the meeting. A
record, at least in triplicate, of the proceedings of each meeting of holders
of Securities shall be prepared by the secretary of the meeting and there shall
be attached to said record the original reports of the inspectors of votes on
any vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was published as provided in Section 14(c) or 14(d)
hereof and, if applicable, Section 14(f) hereof. Each copy shall be signed and
verified by the affidavits of the chairperson and secretary of the meeting, and
one such copy shall be delivered to the Company and another to the Fiscal Agent
to be preserved by the Fiscal Agent, the copy delivered to the Fiscal Agent to
have attached thereto the ballots voted at the meeting. Any record so signed
and verified shall be conclusive evidence of the matters therein stated.
15. Merger, Consolidation or Sale of Assets.
(a) If at any time there shall be a merger, consolidation,
sale or conveyance of assets or assumption of obligations to which any of the
covenants contained in Section 6 of the Definitive Securities pertains, then in
any such event the successor or assuming corporation referred to therein will
promptly deliver to the Fiscal Agent:
(i) A certificate signed by an executive officer of such
successor or assuming corporation stating that as of the time
immediately after the effective date of any such transaction the
covenants of the Company contained in the Definitive Securities have
been complied with and the successor or assuming corporation is not
in default under the provisions of this Agreement or the Securities,
as applicable; and
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<PAGE> 27
(ii) A written opinion of legal counsel (who may be an
employee of or counsel to the successor or assuming corporation)
stating that in such counsel's opinion such covenants have been
complied with and that any instrument or instruments executed in the
performance of such covenants comply with the requirements thereof.
In case of any such merger, consolidation, sale, conveyance or
assumption, such successor or assuming corporation shall succeed to and be
substituted for the Company with the same effect, subject to (in the case of a
merger to which the Company is a party) Section 6(b) of the Definitive
Securities, as if it had been named herein and in the Definitive Securities as
the Company; the Company shall thereupon be relieved of any further obligation
or liability hereunder or upon the Securities, and the Company, as the
predecessor corporation, may thereupon or at any time thereafter be dissolved,
wound up or liquidated. If applicable, such successor or assuming corporation
thereupon may cause to be signed, and may issue either in its own name or in
the name of the Company any or all of the Securities issuable hereunder which
theretofore shall not have been executed on behalf of the Company and delivered
to the Fiscal Agent; and, upon the order of such successor or assuming
corporation, instead of the Company, and subject to all the terms, conditions
and limitations in this Agreement prescribed, the Fiscal Agent shall
authenticate and shall deliver any Securities which previously shall have been
signed and delivered by the officers of the Company to the Fiscal Agent for
authentication, and any Securities which such successor or assuming corporation
thereafter shall cause to be signed and delivered to the Fiscal Agent for that
purpose. All the Securities so issued shall in all respects have the same
legal rank and benefit under this Agreement as the Securities theretofore or
thereafter issued in accordance with the terms of this Agreement as though all
of such Securities had been issued at the date of the execution hereof.
In case of any merger, consolidation, sale, conveyance or
assumption, such changes in phraseology and form (but not in substance) may be
made in the Securities thereafter to be issued as may be deemed by the Company
to be appropriate.
(b) The Fiscal Agent may rely on the documents delivered to it
pursuant to this Agreement by any successor or assuming corporation pursuant to
this Section 15 as conclusive evidence that any such merger, consolidation,
sale, conveyance or assumption complies with the provisions of this Section and
the Securities.
16. GOVERNING LAW. THIS AGREEMENT, THE SECURITIES AND ANY COUPONS
APPERTAINING THERETO SHALL BE GOVERNED BY AND
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<PAGE> 28
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS,
UNITED STATES OF AMERICA.
17. Amendments. This Agreement may be amended by the parties
hereto, and certain provisions hereof may be waived, in the manner provided in
Section 9 of the Definitive Securities. This Agreement may also be amended by
the parties hereto, without the consent of the holder of any Security, for the
purposes set forth in Section 9 of the Definitive Securities and for the
purpose of curing any ambiguity, or of curing, correcting or supplementing any
defective provision contained herein or in any manner that the parties may
mutually deem necessary or desirable, and that shall not adversely affect the
interests of the holders of the Securities.
18. Agent for Service of Process. As long as any of the Securities
or coupons appertaining thereto remain outstanding, the Company will at all
times have an authorized agent in the United States of America, upon whom
process may be served in any legal action or proceeding arising out of or
relating to this Agreement or any Security or any coupons appertaining thereto.
Service of process upon such agent and written notice of such service mailed or
delivered to the Company shall to the extent permitted by law be deemed in
every respect effective service of process upon the Company in any such legal
action or proceeding. The Company hereby appoints the Fiscal Agent as its
agent for such purpose, and covenants and agrees that service of process in any
legal action or proceeding may be made upon it at the office of such agent at
111 Westminster Street, Providence, Rhode Island 02903 Attention: Corporate
Trust Department (or such other address as may be the principal corporate trust
office of such agent, or such other address as may be the principal corporate
trust office of any successor fiscal agent located in the City of New York),
unless and until the Company shall designate another agent for such purpose by
written notice to the Fiscal Agent. If the Fiscal Agent receives any such
service of process, it shall promptly notify the Company of such service.
19. Notices.
All notices hereunder shall be deemed to have been given when
deposited in the mail as first class mail, registered or certified, return
receipt requested, postage prepaid, addressed to any party hereto as follows:
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<PAGE> 29
<TABLE>
<CAPTION>
Address
-------
<S> <C>
The Company 128 Technology Center
Waltham, Massachusetts 02154
Attn: President
The Fiscal Agent 111 Westminster Street
Providence, Rhode Island 02903
Attn: Vice President
Corporate Trust
The Paying Agent 111 Westminster Street
Providence, Rhode Island 02903
Attn: Vice President
Corporate Trust
</TABLE>
or at any other address of which any of the foregoing shall have notified the
others in writing.
Notices to holders of the Securities shall be given by
publication in an Authorized Newspaper. For purposes of this Agreement, the
term "Authorized Newspaper" means a newspaper customarily published on each
business day in morning editions, whether or not it shall be published in
Saturday, Sunday or holiday editions, such as The Wall Street Journal (Eastern
edition) in Providence, Rhode Island or The City of New York, the Financial
Times in London and, so long as the Securities are listed on the Luxembourg
Stock Exchange, the Luxemburger Wort in Luxembourg. If by reason of the
temporary or permanent suspension of publication of any newspaper or by reason
of any other cause it shall be impossible to make publication of such notice in
an Authorized Newspaper as herein provided, then such publication or other
notice in lieu thereof as shall be made by the Fiscal Agent shall constitute
sufficient publication of such notice, if such publication or other notice
shall, so far as may be possible approximate the terms and conditions of the
publication in lieu of which it is given. Notices will be mailed to registered
holders of Registered Securities at their registered address as the same shall
appear on the books of the Fiscal Agent on the day fifteen days prior to such
mailing. The Fiscal Agent shall promptly furnish to the Company and to each
other paying agency of the Company a copy of each notice so published or
mailed.
20. Counterparts. This Agreement may be executed in separate
counterparts, and by each party separately in a separate counterpart, each such
counterpart, when so executed and delivered, to be an original. Such
counterparts shall together constitute but one and the same instrument.
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<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
MEDITRUST
By:
Name:
Title:
Fleet National Bank, as Fiscal Agent
By:
Name:
Title:
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<PAGE> 31
EXHIBIT A
<PAGE> 32
(FORM OF FACE OF REGISTERED DEBENTURE)
THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO U.S. PERSONS EXCEPT IN A
TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
Each purchaser, by its purchase of this Security, represents, acknowledges
and agrees that: (1) it is purchasing "restricted" securities which have not
been registered under the Securities Act; (2) if it should decide to dispose of
any of such Securities, it will not offer, sell, transfer, pledge, hypothecate
or otherwise dispose of any of such Securities except (A) pursuant to Rule 144A
under the Securities Act, (B) pursuant to Regulation S under the Securities
Act, (C) to a sophisticated institutional investor approved as an "accredited
investor" (within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act by a broker or dealer registered under Section 15 of the
Securities Exchange Act of 1934, (D) pursuant to any other exemption from, or
otherwise in a transaction not subject to, the registration requirements of the
Securities Act as confirmed in an opinion of U.S. counsel or (E) pursuant to an
effective registration statement under the Securities Act, in each case in
accordance with any applicable state laws of the United States governing the
offer or sale of securities.
<PAGE> 33
MEDITRUST
(Organized in the Commonwealth of Massachusetts)
6-7/8% CONVERTIBLE DEBENTURE DUE 1998
No. R-_______________ U.S. $_______________
Meditrust, a business trust duly organized and existing under the laws of
the Commonwealth of Massachusetts (the "Company"), for value received, hereby
promises to pay to ________, or registered assigns, the principal sum of
__________ Thousand United States Dollars on November 15, 1998 and to pay
interest thereon, from November 15, 1993, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semiannually
in arrears on May 15 and November 15, in each year (each an "Interest Payment
Date"), commencing May 15, 1994, at the rate of 6-7/8% per annum until the
principal hereof is paid or made available for payment. Interest hereon shall
be calculated on the basis of a 360 day year comprised of twelve 30 day months.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Fiscal Agency Agreement, be paid
to the person in whose name this Security is registered at the close of
business on the Record Date for such interest, which shall be May 1 or November
1 (whether or not a Business Day) next preceding such Interest Payment Date.
Except as otherwise provided in the Fiscal Agency Agreement, any such interest
not so punctually paid or duly provided for will forthwith cease to be payable
to the holder on such Record Date and may be paid at any time in any lawful
manner, all as more fully provided in the Fiscal Agency Agreement. Payment of
interest on this Security shall be made by United States dollar check drawn on
a bank in The City of New York and mailed to the person entitled thereto at his
address as it shall appear in the Security Register, or (if arrangements
satisfactory to the Company and the Fiscal Agent are made) by wire transfer to
a United States dollar account maintained by the payee with a bank in the City
of New York; provided, however, that if such mailing is not possible and no
such application shall have been made, payment of interest shall be made at the
Corporate Trust Office of the Fiscal Agent, or such other office or agency of
the Company as may be designated for such purpose in Providence, Rhode Island
or The City of New York, in United States currency.
Reference is hereby made to the further provisions of this Security set
forth under Terms and Conditions of the Securities on the reverse hereof, which
further provisions shall for all purposes have the same effect as if set forth
at this place.
This Security shall not become valid or enforceable for any purpose unless
and until the certificate of authentication hereon shall have been manually
signed by a duly authorized signatory of the Fiscal Agent.
<PAGE> 34
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed in its name by the manual or facsimile signature of a duly authorized
signatory.
Dated: __________, 1993
MEDITRUST
By:
-------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE> 35
(FORM OF FACE OF BEARER DEBENTURE)
THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO U.S. PERSONS EXCEPT IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE
CODE.
MEDITRUST
(Organized in the Commonwealth of Massachusetts)
6-7/8% CONVERTIBLE DEBENTURE DUE 1998
No. B-________ U.S.$________
Meditrust, a business trust duly organized and existing under the laws of
the Commonwealth of Massachusetts (the "Company"), for value received, hereby
promises to pay to bearer upon presentation and surrender of this Security the
principal sum of ________________ United States Dollars on November 15, 1998,
and to pay interest thereon, from November 15, 1993 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semiannually in arrears on May 15 and November 15 in each year (each an
"Interest Payment Date"), commencing May 15, 1994 , at the rate of 6-7/8% per
annum, until the principal hereof is paid or made available for payment.
Interest hereon shall be calculated on the basis of a 360 day year comprised of
twelve 30 day months. Such payments shall be made in such coin or currency of
the United States of America as at the time of payment shall be legal tender
for the payment of public and private debts, subject to any laws or regulations
applicable thereto and to the right of the Company (limited as provided in the
Fiscal Agency Agreement) to terminate the appointment of any paying agency, at
the main offices of Fleet National Bank or Banque Generale du Luxembourg, 27
Avenue Monterey, L-2951 Luxembourg or at such other offices or agencies outside
the United States of America, its territories or possessions as the Company may
designate, by United States dollar check drawn on a bank in the City of New
York, or (if arrangements satisfactory to the Company and the Fiscal Agent are
made) by wire transfer to a United States dollar account maintained by the
holder at a bank outside the United States, its territories and its
possessions. Interest on this Security shall be paid only at an office or
agency located outside the United States, its territories or possessions and,
in the case of interest due on or before maturity, only upon presentation and
<PAGE> 36
surrender at such an office or agency of the interest coupons hereto attached
as they severally mature. No payment on this Security or any coupon will be
made at the Corporate Trust Office of the Fiscal Agent or any other paying
agency maintained by the Company in the United States, nor will any payment be
made by transfer to an account in, or by mail to an address in, the United
States, except as may be permitted by United States tax laws and regulations in
effect at the time of such payment without detriment to the Company.
Notwithstanding the foregoing, payment of this Security and coupons may be made
at the office of the Fiscal Agent in Providence, Rhode Island or The City of
New York if full payment at all paying agencies outside the United States is
illegal or effectively precluded by exchange controls or other similar
restrictions.
Reference is hereby made to the further provisions of this Security set
forth under Terms and Conditions of the Securities on the reverse hereof, which
further provisions shall for all purposes have the same effect as if set forth
at this place.
Neither this Security nor any of the coupons attached hereto shall become
valid or enforceable for any purpose unless and until the certificate of
authentication hereon shall have been manually signed by a duly authorized
signatory of the Fiscal Agent.
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed in its name by the manual or facsimile signature of a duly authorized
officer and coupons bearing the facsimile signature of a duly authorized
signatory to be annexed hereto.
Dated: __________, 1993
MEDITRUST
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
<PAGE> 37
(FORM OF FACE OF COUPON ON BEARER DEBENTURES)
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE
CODE.
MEDITRUST
6-7/8% CONVERTIBLE DEBENTURE DUE 1998
U.S.$_____________
Due 1998
Unless the Security to which this coupon appertains shall have been called
for redemption prior to the due date hereof and payment thereof duly provided
for or converted or exchanged, on the date set forth hereon, Meditrust (herein
called the "Company") will pay to bearer, upon surrender hereof, the amount
shown hereon (together with any Additional Amount in respect thereof which the
Company may be required to pay according to the terms of said Security) at the
paying agencies set out on the reverse hereof or at such other places outside
the United States of America, its territories and possessions as the Company
may determine from time to time, by United States dollar check drawn on a bank
in The City of New York, or (if arrangements satisfactory to the Company and
the Fiscal Agent referred to in the Security to which this coupon appertains
are made) wire transfer to a United States dollar account maintained by the
payee at a bank outside the United States of America, its territories and
possessions, being one-half year's interest then payable on said Security.
MEDITRUST
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
<PAGE> 38
[Reverse of Coupon]
Fleet Bank of Massachusetts, N.A. Banque Generale du Luxembourg
40-41 St. Andrews Hill 27 Avenue Monterey
London EC4V 5DE L-2951 Luxembourg
England
<PAGE> 39
CERTIFICATE OF AUTHENTICATION
This is one of the Securities described in the within-mentioned Fiscal
Agency Agreement.
Fleet National Bank, as Fiscal Agent
By:
-------------------------------
Authorized Signatory
<PAGE> 40
Terms and Conditions of the Securities
1. General.
(a) This Security is one of a duly authorized issue of Securities of the
Company designated as its 6-7/8% Convertible Debentures due 1998 (herein called
the "Securities"), limited in aggregate principal amount to U.S.$86,250,000.
The Company, for the benefit of the holders from time to time of the
Securities, has entered into a Fiscal Agency Agreement dated as of November 15,
1993 (the "Fiscal Agency Agreement"), between the Company and Fleet National
Bank, as Fiscal Agent, Paying Agent, Security Registrar and Conversion Agent
(the "Fiscal Agent"), to which Fiscal Agency Agreement reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Fiscal Agent, and the holders of
Securities and any coupons appertaining thereto and of the terms upon which the
Securities are, and are to be, authenticated and delivered. The holders of the
Securities will be entitled to the benefits of, be bound by, and be deemed to
have notice of, all of the provisions of the Fiscal Agency Agreement. A copy
of the Fiscal Agency Agreement is on file and may be inspected at the offices
of paying agencies appointed by the Company.
(b) The Securities are issuable as bearer Securities (the "Bearer
Securities"), with interest coupons attached, in the denominations of U.S.
$1,000 and U.S. $10,000, and as registered Securities (the "Registered
Securities"), without coupons, in denominations of U.S. $1,000 and integral
multiples thereof. The Registered Securities, and transfers thereof, shall be
registered as provided in Section 8 hereof and in the Fiscal Agency Agreement.
The holder of any Bearer Security or any coupon and the registered holder of a
Registered Security shall (to the fullest extent permitted by applicable law)
be treated at all times, by all persons and for all purposes as the absolute
owner of such Security or coupon, as the case may be, regardless of any notice
of ownership, theft or loss or of any writing thereon.
(c) The Securities are direct and unsecured obligations of the Company.
There are no restrictions herein on other indebtedness or securities which may
be incurred or issued by the Company.
2. Additional Amounts.
The Company will pay, as additional interest ("Additional Amounts"), to
the holder of this Security or of any coupon appertaining hereto who is a
United States Alien (as defined below) such amounts as may be necessary in
order that every net
<PAGE> 41
payment of the principal of (and premium, if any) and interest on this
Security, after withholding for or on account of any present or future tax,
assessment or other governmental charge imposed upon or as a result of such
payment by the United States or any political subdivision or taxing authority
thereof or therein, will not be less than the interest provided herein or any
coupon appertaining hereto to be then due and payable; provided, however, that
the foregoing obligation to pay Additional Amounts shall not apply to:
(a) any tax, assessment or other governmental charge which would not
have been so imposed but for (i) the existence of any present or former
connection between such holder (or between a fiduciary, settlor or
beneficiary of, or a person holding a power over, such holder, if such
holder is an estate or trust, or a member of such holder, if such holder
is a partnership) and the United States, including, without limitation,
such holder (or such fiduciary, settlor, beneficiary, person holding a
power or member) being or having been a citizen or resident or treated as
a resident thereof or being or having been engaged in a trade or business
therein or being or having been present therein or having or having had a
permanent establishment therein, (ii) such holder's present or former
status as a personal holding company, foreign personal holding company,
passive foreign investment company, foreign private foundation or other
foreign tax-exempt entity or controlled foreign corporation for United
States tax purposes or a corporation which accumulates earnings to avoid
United States Federal income tax, or (iii) such holder's status as a bank
extending credit pursuant to a loan agreement entered into in the ordinary
course of business;
(b) any tax, assessment or other governmental charge which would not
have been so imposed but for the presentation by the holder of this
Security or any coupon appertaining hereto for payment on a date more than
10 days after the date on which such payment became due and payable or on
the date on which payment thereof is duly provided, whichever occurs
later;
(c) any estate, inheritance, gift, sales, transfer or personal
property tax or any similar tax, assessment or other governmental charge;
(d) any tax, assessment or other governmental charge which would not
have been imposed but for the failure to comply with certification,
information, documentation or other reporting requirements concerning the
nationality, residence, identity or present or former connection with the
United States of the holder or beneficial owner of such Security or any
related coupon if such compliance is required by statute, regulation or
ruling of the United
<PAGE> 42
States or any political subdivision or taxing authority thereof or therein
as a precondition to relief or exemption from such tax, assessment or
other governmental charge;
(e) any tax, assessment or other governmental charge which is
payable otherwise than by withholding from payments of principal of and
premium, if any, or interest on this Security;
(f) any tax, assessment or other governmental charge imposed on
interest received by a person holding, actually or constructively, 10
percent or more of the total combined voting power of all classes of stock
of the Company entitled to vote; or
(g) any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of principal of and premium,
if any, or interest on any Security or interest on any coupon appertaining
thereto if such payment can be made without such withholding by any other
paying agent;
nor shall Additional Amounts be paid with respect to any payment of the
principal of and premium, if any, or interest on this Security to a person
other than the sole beneficial owner of such payment to the extent such
beneficial owner would not have been entitled to the Additional Amounts had
such beneficial owner been the holder of this Security or any coupon
appertaining hereto.
The term "United States Alien" means any person who, for United States
Federal income tax purposes, is a foreign corporation, a non-resident alien
individual, a non-resident alien fiduciary of a foreign estate or trust, or a
foreign partnership to the extent one or more of the members of which is, for
United States Federal income tax purposes, a foreign corporation, a
non-resident alien individual or a non-resident alien fiduciary of a foreign
estate or trust, and the term "United States" means the United States of
America, its territories and possessions.
Except as specifically provided herein and in the Fiscal Agency Agreement,
the Company shall not be required to make any payment with respect to any tax,
assessment or other governmental charge imposed by any government or any
political subdivision or taxing authority thereof or therein.
3. Redemption.
(a) The Securities are subject to redemption as necessary for the Company
to continue to qualify for United States Federal tax treatment as a real estate
investment trust under section 856(a)(6) of the Internal Revenue Code of the
United States of America at a redemption price equal to 100% of the principal
amount, together with accrued interest to the date fixed for
<PAGE> 43
redemption. Provisions of this Security that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Company shall notify the Fiscal Agent promptly of specific outstanding
Securities to be called for redemption. Notwithstanding any other provision of
this Section 3, with respect to redemptions, this Security will be immediately
redeemable, at the option of and upon notice by the Company to the extent
deemed sufficient in the opinion of the Company's Board of Trustees to prevent
the holder hereof or any other person having an interest herein if this
Security were thereupon converted from being deemed to own shares of beneficial
interest of the Company ("Shares") in excess of the limits prescribed in
Article VI, Section 6.15 of the Company's Restated Declaration of Trust, as
amended.
(b) If, at any time, the Company shall determine that as a result of any
change in or amendment to the laws (or any regulations or rulings promulgated
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein affecting taxation, or any amendment to or change
in an official application or interpretation of such laws, regulations or
rulings which change or amendment becomes effective on or after November 15,
1993 the Company has or will become obligated to pay to the holder of any
Security or coupon Additional Amounts and such obligation cannot be avoided by
the Company taking reasonable measures available to it, then the Company may,
at its election exercised at any time when such conditions continue to exist,
redeem the Securities as a whole at a redemption price equal to 100% of the
principal amount, together with accrued interest, if any, to the date fixed for
redemption; provided that no such notice of redemption shall be given earlier
than 90 days prior to the earliest date on which the Company would be obliged
to pay such Additional Amounts were a payment in respect of this Security then
due; and provided further, that at the time such notice is given, such
obligation to pay such Additional Amounts remains in effect.
Prior to any redemption of the Securities pursuant to the preceding
paragraph, the Company shall provide the Fiscal Agent with one or more
certificates (signed by the President or any Vice President and the Treasurer
or the Secretary) of the Company on which the Fiscal Agent may conclusively
rely to the effect that the Company is entitled to redeem the Securities
pursuant to such paragraph and that the conditions precedent to the right of
the Company to redeem the Securities pursuant to such paragraph have occurred
and a written opinion of counsel (who may be an employee of the Company)
stating that all legal conditions precedent to the right of the Company to
redeem the Securities pursuant to such paragraph have occurred.
(c) The Company shall, except as set forth in the succeeding paragraph,
redeem the Securities as a whole but not in part, at 100% of their principal
amount, together with interest accrued to the date fixed for redemption, after
determining,
<PAGE> 44
based on a written opinion of counsel, that any certification, identification
or information reporting requirement of United States law or regulation with
regard to the nationality, residence or identity of a beneficial owner of a
Bearer Security or a coupon appertaining thereto who is a United States Alien
(as defined in Section 2 hereof) would be applicable to a payment of principal
of, premium, if any, or interest on a Bearer Security or a coupon appertaining
thereto made outside the United States by the Company or a paying agent (other
than a requirement (a) which would not be applicable to a payment made (i)
directly to the beneficial owner or (ii) to a custodian, nominee or other agent
of the beneficial owner, or (b) which could be satisfied by the holder,
custodian, nominee or other agent certifying that the beneficial owner is a
United States Alien, provided, however, in each case referred to in clauses
(a)(ii) and (b) payment by such custodian, nominee or agent to the beneficial
owner is not otherwise subject to any requirement referred to in this
sentence). The Company shall make such determination and will notify the
Fiscal Agent thereof in writing as soon as practicable, stating in the notice
the effective date of such certification, identification, or information
reporting requirement and the dates within which the redemption shall occur,
and the Fiscal Agent shall give prompt notice of such redemption in accordance
with the Fiscal Agency Agreement. The Company shall determine the redemption
date by notice to the Fiscal Agent at least 75 days before the redemption date,
unless shorter notice is acceptable to the Fiscal Agent. Such redemption of
the Securities must take place on such date, not later than one year after the
publication of the initial notice of the Company's determination of the
existence of such certification, identification or information reporting
requirement. The Company shall not so redeem the securities, however, if the
Company shall, based on a subsequent event, determine, based on a written
opinion of counsel, not less than 30 days prior to the date fixed for
redemption, that no payment would be subject to any requirement described
above, in which case the Company shall notify the Fiscal Agent, which shall
give prompt notice of that determination in accordance with the Fiscal Agency
Agreement, and any earlier redemption notice shall thereupon be revoked and of
no further effect and the Fiscal Agent shall have no liability whatsoever to
the Company or to the holders of Securities with respect thereto.
Notwithstanding the preceding paragraph, if and so long as the
certification, identification or information reporting requirement referred to
in the preceding paragraph would be fully satisfied by payment of United States
withholding, backup withholding or similar taxes, the Company may elect, prior
to the giving of the notice of redemption, to have the provisions of this
paragraph apply in lieu of the provisions of the preceding paragraph. In that
event, the Company will pay such Additional Amounts (without regard to Section
2 hereof) as are necessary in order that, following the effective date of such
requirements, every net payment made outside the United States by the Company
<PAGE> 45
or a paying agent of the principal of, premium, if any, and interest on a
Bearer Security or a coupon appertaining thereto to a holder who is a United
States Alien (without regard to a certification, identification or information
reporting requirement as to the nationality, residence or identity of such
holder), after deduction for United States withholding, backup withholding or
similar taxes (other than withholding, backup withholding or similar taxes (i)
which would not be applicable in the circumstances referred to in the
parenthetical clauses of the first sentence of the next preceding paragraph or
(ii) are imposed as a result of presentation of such Bearer Security or coupon
for payment more than 10 days after the date on which such payment becomes due
and payable or on which payment thereof is duly provided for, whichever is
later), will not be less than the amount provided in the Bearer Security or the
coupon to be then due and payable. If the Company elects to pay such
Additional Amounts and as long as it is obligated to pay such Additional
Amounts, the Company may subsequently redeem the Securities, at any time, in
whole but not in part, upon not more than 60 days nor less than 30 days notice,
at 100% of their principal amount, plus accrued interest to the date fixed for
redemption and Additional Amounts, if any.
(d) Notice of redemption will be given by publication in Authorized
Newspapers (as defined in the Fiscal Agency Agreement) in The City of New York
and in London, and, so long as the Securities are listed on the Luxembourg
Stock Exchange, in Luxembourg, and by mail to holders of Registered Securities,
in each case in the English language, all as provided in the Fiscal Agency
Agreement. In the case of a redemption in whole at the option of the Company,
notice will be given once not more than 60 nor less than 30 days prior to the
date fixed for redemption. In the case of a partial redemption at the option
of the Company, notice will be given twice, the first such notice to be given
not more than 75 or less than 60 days prior to the date fixed for redemption
and the second such notice to be given not more than 60 or less than 30 days
prior to the date fixed for redemption. Neither the failure to give notice nor
any defect in any notice given to any particular holder of a Security shall
affect the sufficiency of any notice with respect to other Securities.
Notices relating to the redemption of Securities whether at the option of
the Company or the holder thereof shall specify: the date fixed for redemption
or the Holder Redemption Date, as the case may be; the redemption price; the
place or places of payment; that payment will be made upon presentation and
surrender of the Securities to be redeemed, together, in the case of a Bearer
Security, with all appurtenant coupons, if any, maturing subsequent to the date
fixed for redemption; that interest accrued to the date fixed for redemption
(unless the redemption date is an interest payment date) will be paid as
specified in said notice; and that on and after said date interest thereon will
cease to accrue. In the case of a redemption in part at the option of the
Company, notices shall
<PAGE> 46
specify the aggregate principal amount of Securities to be redeemed and the
aggregate principal amount of Securities outstanding after such partial
redemption. The first notice shall specify the last date on which exchanges or
transfers of Securities may be made, and the second notice shall specify the
serial numbers of the Securities and the portions thereof called for
redemption. In the case of a redemption in whole or in part by the Company,
notices shall specify the date the conversion privilege expires in accordance
with Section 4(a) hereof. Such notices shall also state that the conditions
precedent, if any, to such redemption have occurred (and the Company shall so
certify to the Fiscal Agent) and the last day for surrender of the Securities
being redeemed.
(e) If notice of redemption has been given in the manner set forth in
Section 3(d) hereof with respect to Securities to be redeemed at the option of
the Company, the Securities so to be redeemed shall become due and payable on
the applicable redemption date specified in such notice and upon presentation
and surrender of the Securities at the place or places specified in the notice
given by the Fiscal Agent on behalf of the Company with respect to such
redemption, together in the case of Bearer Securities with all appurtenant
coupons, if any, maturing subsequent to the redemption date, the Securities
shall be paid and redeemed by the Company, at the places and in the manner and
currency herein specified and at the redemption price together with accrued
interest, if any, to the redemption date; provided, however, that interest due
in respect of coupons maturing on or prior to the redemption date shall be
payable only upon the presentation and surrender of such coupons (at an office
or agency located outside of the United States of America). If any Bearer
Security surrendered for redemption shall not be accompanied by all appurtenant
coupons maturing after the redemption date, such Security may be paid after
deducting from the amount otherwise payable an amount equal to the face amount
of all such missing coupons, or the surrender of such missing coupon or coupons
may be waived by the Company and the Fiscal Agent if they are furnished with
such security or indemnity as they may require to save each of them and each
other paying agency of the Company harmless. From and after the redemption
date, if monies for the redemption of Securities shall have been available at
the principal corporate trust office of the Fiscal Agent for redemption on the
redemption date, the Securities shall cease to bear interest, the coupons for
interest appertaining to Bearer Securities maturing subsequent to the
redemption date shall be void, and the only right of the holders of such
Securities shall be to receive payment of the redemption price together with
accrued interest to the redemption date if the redemption date is an interest
payment date. If monies for the redemption of the Securities are not made
available for payment until after the redemption date, the Securities shall not
cease to bear interest until such monies have been so made available.
<PAGE> 47
4. Conversion.
(a) Subject to and upon compliance with the provisions of the Fiscal
Agency Agreement, a holder of Securities is entitled, at his option, at any
time on or after the Exchange Date (as defined in the Fiscal Agency Agreement)
and on or before the close of business on November 15, 1998, or in case a
Security or a portion thereof is called for redemption by the Company, or the
holder thereof elects to have such Security or a portion thereof redeemed by
the Company pursuant to Section 3(d) hereof, then in respect of such Security
or such portion thereof until and including, but (unless the Company defaults
in making the payment due upon redemption) not after, the close of business on
the date fixed for redemption, to convert such Security (or any portion of the
principal amount thereof which is U.S. $1,000 or an integral multiple thereof),
at the principal amount thereof, or of such portion, into fully paid and
nonassessable Shares (calculated as to each conversion to the nearest 1/1000 of
a Share) at a Conversion Price equal to U.S. $37.125 aggregate principal amount
of Securities for each Share (the "Conversion Price") (or at the current
adjusted Conversion Price if an adjustment has been made as provided herein) by
surrender of the Security, or in the case of a Security submitted for
redemption pursuant to Section 3(d) hereof, satisfactory evidence of such
submission, together with (i) if a Bearer Security, all unmatured coupons and
any matured coupons in default appertaining thereto, and if a Registered
Security (if so required by the Company or the Fiscal Agent), instruments of
transfer in form satisfactory to the Company and the Fiscal Agent, duly
executed by the registered holder or by his duly authorized attorney and (ii)
the conversion notice hereon duly executed (a) at the Corporate Trust Office of
the Fiscal Agent, or at such other office or agency of the Company as may be
designated by it for such purpose in the City of New York, or (b) subject to
any laws or regulations applicable thereto and subject to the right of the
Company to terminate the appointment of any such conversion agency, at the
offices of Fleet National Bank, and Banque Generale du Luxembourg, 27 Avenue
Monterey, L-2951 Luxembourg, or at such other offices or agencies as the
Company may designate. Notwithstanding the foregoing, a holder may not convert
any Security, and such Security shall not be convertible by any holder, if as a
result of such conversion any person would then be deemed to own Shares in
excess of the limits prescribed in Article VI, Section 6.15 of the Company's
Restated Declaration of Trust, as amended, provided that the Company shall
notify the Fiscal Agent from time to time with respect to the number of Shares
that would exceed such limits.
(b) In the case of any Registered Security which is converted after any
Record Date and on or prior to the next succeeding Interest Payment Date (other
than any Registered Security whose maturity is prior to such Interest Payment
Date), interest that is payable on such Interest Payment Date shall be payable
on such Interest Payment Date notwithstanding such conversion, and such
interest shall be paid to the person in
<PAGE> 48
whose name that Registered Security is registered at the close of business on
such Record Date. Except as otherwise provided in the immediately preceding
sentence, no payment or adjustment shall be made upon any conversion on account
of any interest accrued on the Securities surrendered for conversion or on
account of any dividends on the Shares issued upon conversion. Registered
Securities surrendered for conversion during the period after the close of
business on any Record Date next preceding any Interest Payment Date to the
close of business on such Interest Payment Date shall (except in the case of
Registered Securities or portions thereof which are called for redemption on a
redemption date within such period) be accompanied by payment of any amount
equal to interest payable on such Interest Payment Date on the principal amount
being surrendered for conversion. No fractions of shares or scrip representing
fractions of shares will be issued or delivered on conversion, but instead of
any fractional interest the Company shall pay a cash adjustment as provided in
the Fiscal Agency Agreement.
(c) (i) In case at any time the Company shall pay or make a stock
dividend or other distribution (payable otherwise than in cash out of its
retained earnings) on any class of equity securities of the Company in Shares,
the Conversion Price in effect at the opening of business on the day following
the date fixed for the determination of stockholders entitled to receive such
dividend or other distribution shall be reduced so that the same shall equal
the price determined by multiplying such Conversion Price by a fraction of
which the numerator shall be the number of Shares outstanding at the close of
business on the date fixed for such determination and the denominator shall be
the sum of such number of shares and the total number of shares constituting
such dividend or other distribution, such adjustment to become effective
immediately after the opening of business on the day following the date fixed
for such determination.
(ii) In case at any time the Company shall (A) subdivide its
outstanding Shares, (B) combine its outstanding Shares into a smaller number of
shares, or (C) issue by reclassification of its Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation) any shares, the Conversion Price in
effect at the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the holder of any
Security surrendered for conversion after such time shall be entitled to
receive the aggregate number and kind of shares which, if such Security had
been converted immediately prior to such time, he would have owned upon such
conversion and been entitled to receive upon such subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any
event listed above shall occur.
<PAGE> 49
(iii) In case at any time the Company shall fix a record date for
the issuance of rights or warrants to all holders of its Shares entitling them
to subscribe for or purchase Shares at a price per share less than the current
market price per Share (determined as provided in paragraph (v) of this
subsection (c)) on such record date, the Conversion Price in effect at the
opening of business on the day following such record date, shall be reduced so
that the same shall equal the price determined by multiplying such Conversion
Price by a fraction of which the numerator shall be the number of Shares
outstanding at the close of business on such record date plus the number of
Shares which the aggregate of the offering price of the total number of Shares
so offered for subscription or purchase would purchase at such current market
price and the denominator shall be the number of Shares outstanding at the
close of business on such record date plus the number of Shares so offered for
subscription or purchase, such reduction to become effective immediately after
the opening of business on the day following such record date. Such reduction
shall be made successively whenever such a record date is fixed; and in the
event that such rights or warrants are not so issued, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in
effect if such record date had not been fixed.
(iv) In case at any time the Company shall fix a record date for the
making of a distribution, by dividend or otherwise, to all holders of its
Shares, or evidences of its indebtedness or assets (including securities, but
excluding (x) any dividend or distribution referred to in paragraph (i) of this
subsection (c), any rights or warrants referred to in paragraph (iii) of this
subsection (c), and (y) any dividend, return of capital or distribution paid in
cash out of the retained earnings of the Company), then in each such case the
Conversion Price in effect after such record date shall be determined by
multiplying the Conversion Price in effect immediately prior to such record
date by a fraction, of which the numerator shall be the total number of
outstanding Shares multiplied by the current market price per Share (as defined
in paragraph (v) of this subsection (c) on such record date, less the fair
market value (as determined by the Board of Directors of the Company, whose
determination shall be conclusive and described in a statement filed with the
Fiscal Agent) of the portion of the assets or evidences of indebtedness so to
be distributed, and of which the denominator shall be the total number of
outstanding Shares multiplied by such current market price per Share. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such record date has not been fixed.
(v) For the purpose of any computation under paragraphs (iii) and
(iv) of this subsection (c), the current market price per Share on any date
shall be deemed to be the
<PAGE> 50
average of the Closing Prices for the 15 consecutive days upon which the
principal trading market for the Shares is open selected by the Company
commencing not less than 20 nor more than 30 days before the day in question.
The Closing Price for any day shall be the last reported sales prices regular
way or, in case no such reported sale takes place on such day, the average of
the reported closing bid and asked prices regular way, in either case on the
New York Stock Exchange or, if the Shares are not listed or admitted to trading
on such Exchange, on the principal national securities exchange on which the
Shares are listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, the closing sale price quoted on
the NASDAQ National Market System, or if not so quoted, as determined by the
Company.
(vi) The Company may make such adjustments in the Conversion Price,
in addition to those required by paragraphs (i), (ii) and (iii) of this
section, as it considers to be advisable in order that any event treated for
United States Federal income tax purposes as a dividend of stock or stock
rights shall not be taxable to the recipients.
(vii) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least twenty-five
cents (U.S. $0.25) in such Conversion Price; provided, however, that any
adjustment which by reason of this paragraph (vii) is not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this subsection (c) shall be made to the nearest cent or
to the nearest 1/1000 of a Share, as the case may be.
(d) Whenever the Conversion Price is adjusted and in the event of certain
other corporate actions, as herein provided, the Company shall notify the
Fiscal Agent and the Fiscal Agent shall notify the holders of Securities, all
as provided in Sections 7(f) and 19 of the Fiscal Agency Agreement.
(e) The Company shall, at all times from and after the date on which the
Securities are convertible into Shares, have reserved and available, free from
preemptive rights, out of its authorized but unissued Shares, for the purpose
of effecting the conversion of Securities, the full number of Shares then
issuable upon the conversion of all Securities. The Company covenants that all
Shares which may be issued or delivered upon conversion of Securities will upon
issuance be fully paid and nonassessable.
(f) In case of any consolidation with, or merger of the Company into, any
other corporation, or in case of any merger of another corporation into the
Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding Shares of the Company), or
in case of any sale or transfer of all or substantially all of the assets of
the Company, the corporation formed by such consolidation or
<PAGE> 51
resulting from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Fiscal Agent an amendment to the Fiscal Agency
Agreement providing that the holder of each Security shall have the right
during the period such Security shall be convertible as specified in section
(a) hereof to convert such Security only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer by a holder of the number of Shares of the Company into which
such Security might have been converted immediately prior to such
consolidation, merger, sale or transfer assuming, if such consolidation,
merger, sale or transfer is prior to the period such Security shall be
convertible as specified in subsection (a) hereof, that the Securities were
convertible at such time at the initial Conversion Price as adjusted from
November 15, 1993 to such time pursuant to paragraphs (i), (ii), (iii), (iv)
and (vi) of subsection (c) hereof. Such amendment shall provide for adjustments
which, for events subsequent to the effective date of such amendment, shall be
as nearly equivalent as may be practicable to the adjustments provided for
herein. The above provisions of this subsection shall similarly apply to
successive consolidations, mergers, sales or transfers.
5. Events of Default.
In the event that any of the following ("Events of Default") shall occur
and be continuing:
(a) the Company shall fail to pay when due the principal amount of any of
the Securities whether at maturity or upon redemption or otherwise; or
(b) the Company shall fail to pay any installment of interest or
Additional Amounts (as described in Section 2 hereof) on any of the Securities
for a period of 30 days after the date when due; or
(c) the Company shall fail duly to perform or observe any other term,
covenant or agreement contained in any of the Securities or in the Fiscal
Agency Agreement for a period of 60 days after the date on which written notice
of such failure, requiring the Company to remedy the same, shall first have
been given to the Company and the Fiscal Agent by the holders of at least 25%
in aggregate principal amount of the Securities at the time outstanding;
provided, however, that in the event the Company shall within the aforesaid
period of 60 days commence legal action in a court of competent jurisdiction
seeking a determination that the Company had not failed to duly perform or
observe the term or terms, covenant or covenants or agreement or agreements
specified in the aforesaid notice, such failure shall not be an Event of
Default unless the same continues for a period of 10 days after the date of any
final determination by such court to the effect that the Company had failed to
duly perform or observe one or more of such terms, covenants or agreements; or
<PAGE> 52
(d) a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of the Company in an involuntary case or proceeding
under any applicable bankruptcy, insolvency, reorganization or other similar
law now or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Company or for
any substantial part of the property of it or ordering the winding-up or
liquidation of the affairs of it and such decree or order shall remain unstayed
and in effect for a period of 20 consecutive days; or
(e) the Company shall commence a voluntary case or proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or similar official) of the Company or for any substantial part
of its property, or shall make any general assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts as they
become due or shall take any corporate action in furtherance of any of the
foregoing; or
(f) an event of default, as defined in any indenture or instrument
evidencing or under which the Company shall have outstanding at least
$10,000,000 (or its equivalent in another currency), in aggregate principal
amount of indebtedness for borrowed money, shall happen and be continuing and
such default shall involve the failure to pay the principal of such
indebtedness (or any part thereof), when due and payable after the expiration
of any applicable grace period with respect thereto, or such indebtedness shall
have been accelerated so that the same shall be or become due and payable prior
to the date on which the same would otherwise have become due and payable, and
failure to pay shall not have been cured by the Company within 30 days after
such failure or such acceleration shall not be rescinded or annulled within 30
days after notice thereof shall have first been given to the Company; provided
that if such event of default under such indenture or instrument shall be
remedied or cured by the Company or waived by the holders of such indebtedness,
then the Event of Default hereunder by reason thereof shall be deemed likewise
to have been thereupon remedied, cured or waived without further action upon
the part of any of the holders of Securities;
then the holder of this Security may, at such holder's option, declare the
principal of this Security and the interest accrued hereon (and Additional
Amounts under Section 2 hereof, if any, thereon) to be due and payable
immediately by written notice to the Company and the Fiscal Agent, and if any
such Event of Default shall continue at the time of receipt of such written
notice, the principal of this Security and the interest accrued hereon (and
Additional Amounts, if any, hereon) shall become
<PAGE> 53
immediately due and payable, subject to the proviso of subsection (c) of this
Section 5. Upon payment of such amount of principal and interest (and
Additional Amounts pursuant to Section 2 hereof, if any), all of the Company's
obligations in respect of payment of principal of and interest on (and
Additional Amounts, if any, on) this Security shall terminate. Interest on
overdue principal and interest (and Additional Amounts, if any) shall accrue
from the date on which such principal and interest (and Additional Amounts, if
any) were due and payable to the date such principal and interest (and
Additional Amounts, if any) are paid or duly provided for, at the rate borne by
the Securities (to the extent payment of such interest shall be legally
enforceable).
If an Event of Default, as defined in this Section 5, with respect to the
Securities, or an event which would, with the passing of time or the giving of
notice, or both be an Event of Default, shall occur and be continuing, the
Company shall within two business days of becoming aware thereof notify the
Fiscal Agent in writing, of such Event of Default and the Fiscal Agent shall
thereupon promptly notify all of the holders of the Securities of such Event of
Default.
The Company shall provide to the Fiscal Agent on each anniversary of the
date hereof, a certificate to the effect that there is then existing no default
with respect to the Securities, as defined in this Section.
6. Merger, Consolidation, Sale, Conveyance or Assumption.
(a) The Company will not merge or consolidate with, or sell or convey all
or substantially all of its assets to, any other corporation (for purposes
hereof "corporation" shall include business trusts, limited partnerships,
business corporations and other business entities), unless (i) either (A) the
Company shall be the surviving corporation in the case of a merger or (B) (I)
the surviving, resulting or transferee corporation shall expressly assume the
due and punctual payment (including Additional Amounts pursuant to Section 2
hereof, if any) of all the Securities, according to their tenor, and the due
and punctual performance of all of the covenants and obligations of the Company
under the Securities, the coupons and the Fiscal Agency Agreement, by
supplemental agreement reasonably satisfactory to the Fiscal Agent, (II)
immediately after such merger, consolidation, sale or conveyance, the
Securities will not be subject to United States Federal estate tax as a result
thereof, if held by a person who at the time of death is not a citizen or
resident of the United States unless such successor corporation shall have
agreed, by supplemental agreement, to indemnify the persons liable therefor for
the amount of United States Federal estate tax attributable and paid in respect
of any Securities includable in the gross estate of a person who at the time of
death is not a citizen or resident of the United States or unless the
Securities would be subject to United States Federal estate tax immediately
prior to such merger,
<PAGE> 54
consolidation, sale or conveyance if held by a person who at the time of death
is not a citizen or resident of the United States, and (III) the Fiscal Agent
shall have received the documentation required under Section 15(a) of the
Fiscal Agency Agreement, (ii) the surviving, resulting or transferee
corporation, if not organized and validly existing under the laws of the United
States, shall expressly agree to make payments under the Securities free of any
deduction or withholding for or on account of taxes, levies, imposts and
charges whatsoever imposed by or for the account of the jurisdiction where such
successor corporation is generally subject to taxation (or any political
subdivision or taxing authority thereof or therein) in a manner equivalent to
that set forth herein, subject to the exceptions contained in such forms of the
Securities, and (iii) the Company or such successor corporation, as the case
may be, shall not, immediately after such merger, consolidation, sale or
conveyance, be in default in the performance of any covenants or obligations of
the Company under the Securities or the Fiscal Agency Agreement. In
calculating the amount of tax attributable to any Securities for purposes of
sub-clause (II) above in accordance with the provisions of the Internal Revenue
Code of 1986, as amended, the gross estate of the decedent shall be deemed to
include only Securities issued under the Fiscal Agency Agreement.
(b) Upon any merger, consolidation, sale, conveyance or assumption as
provided in Section 6(a), the successor or assuming corporation shall succeed
to and be substituted for, and may exercise every right and power of and be
subject to all the obligations of, the Company under the Securities and Fiscal
Agency Agreement, with the same effect as if such successor or assuming
corporation had been named as the Company therein and herein and the Company
shall be released from its liability as obligor under the Securities and Fiscal
Agency Agreement.
7. INTENTIONALLY OMITTED.
8. Replacement, Transfer and Exchange of Securities.
(a) In case any Security shall at any time become mutilated, destroyed,
stolen or lost and such Security or evidence of the loss, theft or destruction
thereof (together with the indemnity hereinafter referred to and such other
documents or proof as may be required) shall be delivered to the Fiscal Agent,
a new Security of like tenor and date with appropriate interest coupons, if
any, will be issued by the Company in exchange for the Security so mutilated,
or in lieu of the Security so destroyed, stolen or lost, but, in the case of a
destroyed, stolen or lost Security only upon receipt of evidence satisfactory
to the Fiscal Agent and the Company that such Security was destroyed, stolen or
lost, and if required by the Fiscal Agent or the Company, upon receipt also of
indemnity satisfactory to the Fiscal Agent and the Company. All expenses and
reasonable charges associated with procuring such indemnity and with the
preparation, authentication and delivery of a new
<PAGE> 55
Security shall be borne by the owner of the Security so mutilated, destroyed,
stolen or lost.
(b) As provided in the Fiscal Agency Agreement and subject to certain
limitations therein set forth, Bearer Securities (with all unmatured coupons
appertaining thereto) are exchangeable at, subject to applicable laws and
regulations, the offices of the paying agencies in London and Luxembourg or as
designated by the Company for such purpose pursuant to the Fiscal Agency
Agreement, for an equal aggregate principal amount of Registered Securities
and/or Bearer Securities of authorized denominations, and Registered Securities
are exchangeable at the Corporate Trust Office of the Fiscal Agent in
Providence, Rhode Island or The City of New York or, subject to applicable laws
and regulations, the offices of the paying agencies in London and Luxembourg or
as designated by the Company for such purpose pursuant to the Fiscal Agency
Agreement, for an equal aggregate principal amount of Registered Securities of
authorized denominations as requested by the holder surrendering the same.
Registered Securities will not be exchangeable for Bearer Securities. The
Company shall not be required (a) to exchange Bearer Securities for Registered
Securities during the period between the close of business on any May 15 or
November 15 and the opening of business on the next succeeding interest payment
date, or (b) in the event of a redemption in part, (i) to register the transfer
of Registered Securities or to exchange Bearer Securities for Registered
Securities during a period of 15 days immediately preceding the date notice is
given identifying the serial numbers of the Securities called for such
redemption; (ii) to register the transfer of or exchange any such Registered
Securities, or portion thereof, called for redemption; or (iii) to exchange any
such Bearer Securities called for redemption; provided, however, that a Bearer
Security called for redemption may be exchanged for a Registered Security which
is simultaneously surrendered, with written instruction for payment on the date
fixed for redemption, unless the date fixed for redemption is during the period
between the close of business on any May 1 or November 1 and the close of
business on the next succeeding interest payment date, in which case such
exchange may only be made prior to the close of business on May 1 or November 1
immediately preceding the date fixed for redemption. The Company also shall
not be required to exchange Securities if, as a result thereof, the Company
would incur adverse consequences under United States Federal income tax laws in
effect at the time of such exchange. In the event of redemption or conversion
of a Registered Security in part only, a new Security or Securities for the
unredeemed or unconverted portion hereof will be issued in the name of the
holder thereof.
(c) The costs and expenses of effecting any exchange or registration of
transfer pursuant to the foregoing provisions, except for the expenses of
delivery by other than regular mail (if any) and except, if the Company shall
so require, the payment of a sum sufficient to cover any tax or other
governmental charge
<PAGE> 56
or insurance charges that may be imposed in relation thereto, will be borne by
the Company.
(d) The Company has initially appointed as registrar and transfer agent
the Fiscal Agent acting through its principal corporate trust office in
Providence, Rhode Island. The Company has also initially appointed Banque
Generale du Luxembourg as a transfer agent. The Company may at any time
terminate the appointment of the registrar and transfer agent and appoint
additional or other registrars and transfer agents or approve any change in an
office through which the registrar or transfer agent acts; provided that, until
all of the Securities have been delivered to the Fiscal Agent for cancellation,
or monies sufficient to pay the Securities have been made available for payment
and either paid or returned to the Company as provided in the Securities, the
Company will maintain a registrar and a transfer agent in The City of New York
in the United States and in Luxembourg, so long as the Securities are
registered on the Luxembourg Stock Exchange.
(e) For purposes of the provisions of this Security and the Fiscal Agency
Agreement, any Security authenticated and delivered pursuant to the Fiscal
Agency Agreement shall, as of any date of determination, be deemed to be
"outstanding", except for:
(i) Securities previously converted, or canceled by the Fiscal Agent
or delivered to the Fiscal Agent for cancellation;
(ii) Securities which have been called for redemption by the Company
in accordance with Section 3 hereof or which have become due and payable at
maturity or otherwise and with respect to which monies sufficient to pay the
principal thereof and interest thereon shall have been made available to the
Fiscal Agent; or
(iii) Securities in lieu of or in substitution for which other
Securities have been authenticated and delivered pursuant to the Fiscal Agency
Agreement; provided, however, that in determining whether the holders of the
requisite principal amount of outstanding Securities are present at a meeting
of holders of Securities for quorum purposes or have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any subsidiary thereof shall be disregarded and deemed not to
be outstanding.
9. Modifications and Amendments.
(a) Without the consent of any holders of Securities or coupons,
modifications of or amendments to the Fiscal Agency Agreement may be made for
any of the following purposes:
<PAGE> 57
(i) to evidence the succession of another corporation to the
Company in accordance with Section 6 hereof and the assumption by any such
successor of the covenants of the Company in the Fiscal Agency Agreement or the
Securities;
(ii) to add to the covenants of the Company for the benefit of the
holders of Securities or coupons, or to surrender any right or power herein
conferred upon the Company;
(iii) to permit payment of principal and interest on Bearer
Securities in the United States, provided that such payment is permitted by
United States tax laws and regulations then in effect;
(iv) to make provision with respect to the conversion rights of
holders of Securities pursuant to Section 4(f) hereof;
(v) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein; and
(vi) to make any other provisions with respect to matters or
questions arising under this Security or the Fiscal Agency Agreement, provided
such action pursuant to this clause (vi) shall not adversely affect the
interests of the holders of Securities or coupons.
(b) Modifications and amendments to the Fiscal Agency Agreement or to
these Securities may be made, and future compliance with or past default by the
Company under any of the provisions thereof may be waived, with the consent of
the holders of at least a majority in aggregate principal amount of the
Securities at the time outstanding, or of such lesser percentage as may act at
a meeting of holders of Securities held in accordance with the provisions set
forth herein; provided, that no such modification, amendment or waiver may,
without the consent of the holder of each such Security affected thereby:
(i) waive a default in the payment of the principal of or interest
on any Security;
(ii) change the stated maturity of the principal of or any
installment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or change the obligation of the Company
to pay Additional Amounts pursuant to Section 2 hereof (except as permitted by
subsection (a) of this Section 9), or change the coin or currency in which any
Security or the interest thereon is payable, or convert any Securities as
provided in Sections 3 and 4, respectively.
(iii) reduce the requirements of Section 10 hereof for quorum or
voting, or reduce the percentage in principal amount of the outstanding
Securities the consent of whose holders is required for any amendment or
modification of the Fiscal Agency
<PAGE> 58
Agreement or the Terms and Conditions of the Securities or the consent of whose
holders is required for any waiver (of compliance with certain provisions of
the Fiscal Agency Agreement or the Securities or certain defaults hereunder and
thereunder and their consequences) provided for in these Terms and Conditions;
(iv) change the obligation of the Company to maintain an office or
agency in the City of New York and outside the United States; or
(v) modify any of the provisions of this Section except to increase
any such percentage or to provide that certain other provisions of the Fiscal
Agency Agreement or the Securities cannot be modified or waived without the
consent of the holder of each outstanding Security affected thereby.
It shall not be necessary for any act of holders of Securities under this
Section to approve the particular form of any proposed amendment, modification
or waiver, but it shall be sufficient if such act shall approve the substance
thereof. Any modifications, amendments or waivers to the Fiscal Agency
Agreement or to these Terms and Conditions will be conclusive and binding on
all holders of the Securities, whether or not they have given such consent or,
were present at such meeting, and on all holders of coupons, whether or not
notation of such modifications, amendments or waivers is made upon the
Securities or coupons, and on all future holders of Securities and coupons.
Any instrument given by or on behalf of any holder of a Security in connection
with any consent to any such modification, amendment or waiver will be
irrevocable once given and will be conclusive and binding on all subsequent
holders of such Security.
10. Meetings and Votes of Holders.
(a) A meeting of holders of Securities may be called at any time and from
time to time pursuant to this Section for any of the following purposes: (i)
to give any notice to the Company or to the Fiscal Agent, or to give any
directions to the Fiscal Agent, or to consent to the waiving of any default
hereunder and its consequences, or to take any other action authorized to be
taken by holders of Securities pursuant to these Terms and Conditions; or (ii)
to take any other action authorized to be taken by or on behalf of the holders
of any specified aggregate principal amount of the Securities under any other
provision of the Fiscal Agency Agreement, under applicable law or under these
Terms and Conditions.
(b) Meetings of holders of Securities may be held at such place or places
in Providence, Rhode Island or The City of New York or London as the Fiscal
Agent or, in case of its failure to act, the Company or the holders calling the
meeting shall from time to time determine.
<PAGE> 59
The Fiscal Agent may at any time call a meeting of holders of the
Securities to be held at such time and at such place in any of such designated
locations as the Fiscal Agent shall determine. Notice of every meeting of
holders shall be made as specified in the Fiscal Agency Agreement.
In case at any time the Company or the holders of at least 25% in
aggregate principal amount of the Securities outstanding shall have requested
the Fiscal Agent to call a meeting of the holders, by written request setting
forth in reasonable detail the action proposed to be taken at the meeting, and
the Fiscal Agent shall not have given the first notice of such meeting within
21 days after receipt of such request or shall not thereafter proceed to cause
the meeting to be held as provided herein, then the Company or the holders of
Securities in the amount above specified may determine the time and the place
in such designated locations for such meeting and may call such meeting to take
any action authorized herein by giving notice thereof as provided in the Fiscal
Agency Agreement.
(c) To be entitled to vote at any meeting of holders of Securities, a
person shall be (i) a holder of one or more Securities, or (ii) a person
appointed by an instrument in writing as proxy for a holder or holders of
Securities by such holder or holders, which proxy need not be a holder of
Securities. The only persons who shall be entitled to be present or to speak
at any meeting of holders shall be the persons entitled to vote at such meeting
and their counsel and any representatives of the Fiscal Agent and its counsel
and any representatives of the Company and its counsel. The persons entitled
to vote a majority in principal amount of the Securities shall constitute a
quorum for the transaction of all business specified in subsection (a) hereof.
No business shall be transacted in the absence of a quorum unless a quorum is
represented when the meeting is called to order. In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting
shall, if convened at the request of the holders of Securities, be dissolved.
In any other case the meeting shall be adjourned for a period of not less than
10 days as determined by the chairman of the meeting prior to the adjournment
of such adjourned meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided in the Fiscal Agency Agreement. Subject to the
foregoing, at the reconvening of any meeting adjourned for a lack of a quorum
the persons entitled to vote 25% in principal amount of the Securities
outstanding shall constitute a quorum for the taking of any action set forth in
the notice of the original meeting. Notice of the reconvening of an adjourned
meeting shall state expressly the percentage of the aggregate principal amount
of the Securities that shall constitute a quorum. At a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid, any
resolution and all matters (except as limited by Section 9 of these Terms and
Conditions) shall be effectively passed and decided if passed or decided by the
<PAGE> 60
persons entitled to vote a majority in principal amount of the Securities
represented and voting at such meeting, provided that such amount shall be not
less than 25% in principal amount of the Securities outstanding. Any holder of
a Security who has executed an instrument in writing appointing a person as his
proxy shall be deemed to be present for the purposes of determining a quorum
and be deemed to have voted; provided, however, that such holder shall be
considered as present or voting only with respect to the matters covered by
such instrument in writing. Any resolution effectively passed or decision
taken at any meeting of the holders of Securities duly held in accordance with
this Section 10 shall be binding on all the holders of Securities whether or
not present or represented at the meeting.
(d) The Fiscal Agent may make such reasonable regulations as it may deem
advisable for any meeting of holders of Securities in regard to proof of the
holding of Securities and of the appointment of proxies and in regard to the
appointment and duties of inspectors of votes, the submission and examination
of proxies, certificates and other evidence of the right to vote, and such
other matters concerning the conduct of the meeting as it shall deem
appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Bearer Securities shall be proved by the production
of the Bearer Securities or by a certificate executed, as depositary, by, and
the appointment of any proxy shall be proved by having the signature of the
person executing the proxy witnessed or guaranteed by, in each case, any trust
company, bank or banker satisfactory to the Fiscal Agent. Such regulations may
provide that written instruments appointing proxies, regular on their face, may
be presumed valid and genuine without the proof specified herein or other
proof. The holding of Registered Securities shall be proved by the registry
books maintained in accordance with the Fiscal Agency Agreement or by a
certificate or certificates of the Fiscal Agent in its capacity as the
Company's agent for the maintenance of such books.
(e) The Fiscal Agent shall, by an instrument in writing, appoint a
temporary chairperson and a temporary secretary of the meeting, unless the
meeting shall have been called by the Company or by the holders of Securities
as provided herein and in the Fiscal Agency Agreement, in which case the
Company or the holders calling the meeting, as the case may be, shall in like
manner appoint a temporary chairperson and a temporary secretary. A permanent
chairperson and a permanent secretary of the meeting shall be elected by vote
of the holders of a majority in principal amount of the Securities represented
at the meeting and entitled to vote. At any meeting each holder or proxy shall
be entitled to one vote for each U.S. $1,000 principal amount of Securities
held or represented by him; provided, however, that no vote shall be cast or
counted at any meeting in respect of any Securities challenged as not
outstanding and ruled by the chairperson of the meeting to be not outstanding.
The
<PAGE> 61
chairperson of the meeting shall have no right to vote, except as a holder or
proxy. Any meeting of holders of Securities duly called at which a quorum is
present may be adjourned from time to time by vote of the holders (or proxies
for the holders) of a majority in principal amount of the Securities
represented at the meeting and entitled to vote; and the meeting may be held as
so adjourned without further notice.
(f) The vote upon any resolution submitted to any meeting of holders of
Securities shall be written ballots on which shall be subscribed the signatures
of the holders of Securities or of their representatives by proxy and the
serial number or numbers of the Securities held or represented by them. The
permanent chairperson of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record, at least in
triplicate, of the proceedings of each meeting of holders of Securities shall
be prepared by the secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having knowledge of the
facts setting forth a copy of the notice of the meeting and showing that said
notice was published as provided in the Fiscal Agency Agreement. Each copy
shall be signed and verified by the affidavits of the chairperson and secretary
of the meeting, and one of such copy shall be delivered to the Company and
another to the Fiscal Agent to be preserved by the Fiscal Agent, the copy
delivered to the Fiscal Agent to have attached thereto the ballots voted at the
meeting. Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
11. Non-Business Days.
In any case where the date of maturity of the principal of or interest on
(or Additional Amounts, if any) the Securities or the date fixed for redemption
of any Security shall be at any place of payment a Saturday, Sunday, a legal
holiday or a day on which banking institutions in such place of payment are
authorized or obligated by law to close, then payment of principal or interest
(or Additional Amounts, if any) need not be made on such date at such place but
may be made on the next succeeding day at such place of payment which is not a
Saturday, Sunday, a legal holiday or a day on which banking institutions are
authorized or obligated by law to close, with the same force and effect as if
made on the date of maturity or the date fixed for redemption, and no interest
shall accrue for the period after such date.
12. Fiscal and Paying Agent.
(a) In acting under the Fiscal Agency Agreement and in connection with
the Securities, the Fiscal Agent is acting solely
<PAGE> 62
as agent of the Company and does not assume any obligation towards or
relationship of agency or trust for or with the owner or holder of this
Security or any interest coupon appertaining hereto, except that any funds held
by the Fiscal Agent for payment on this Security shall be held in trust by it
and applied as set forth herein, but need not be segregated from other funds
held by it, except as required by law. For a description of the duties and the
immunities and rights of the Fiscal Agent under the Fiscal Agency Agreement,
reference is made to the Fiscal Agency Agreement, and the obligations of the
Fiscal Agent to the holder hereof are subject to such immunities and rights.
(b) Any monies paid by the Company to any paying agency for payment of
principal of or interest on any Security (including Additional Amounts, if any,
in respect thereof) and remaining unclaimed for two years after such payment
has been made shall be repaid to the Company and to the extent permitted by law
the holder of any Security shall thereafter look only to the Company for any
payment thereof as a general unsecured obligation thereof and all liability of
the Fiscal Agent with respect thereto shall cease.
(c) No reference herein to the Fiscal Agency Agreement and no provision
of this Security or of the Fiscal Agency Agreement shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest (including Additional Amounts, as described above) on
this Security at the times, places and rate, and in the coin or currency,
herein prescribed or to convert or redeem (at the request of a holder) this
Security as provided herein or in the Fiscal Agency Agreement.
Title to Bearer Securities and coupons shall pass by delivery. As
provided in the Fiscal Agency Agreement and subject to certain limitations
therein set forth, the transfer of Registered Securities is registrable on the
Security Register upon surrender of a Registered Security for registration of
transfer at the office or agency of the Company in Providence, Rhode Island or
The City of New York, or, subject to applicable laws and regulations, at the
offices of the paying agency in Luxembourg, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the holder thereof or his attorney duly
authorized in writing, and thereupon one or more new Registered Securities, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
13. Notices.
All notices to the holders of Securities will be published in an
Authorized Newspaper (as defined in the Fiscal Agency Agreement) in Providence,
Rhode Island, The City of New York and in London, and, as long as the
Securities are listed on the
<PAGE> 63
Luxembourg Stock Exchange, in Luxembourg. It is expected that publication in
Providence, Rhode Island and The City of New York will be made in The Wall
Street Journal (Eastern edition), in London in the Financial Times and in
Luxembourg in the Luxemburger Wort. Notices shall be deemed to have been given
on the date of publication as aforesaid or, if published on different dates, on
the date of the first such publication. Notices will be mailed to registered
holders of Registered Securities at their registered addresses as the same
shall appear on the books of the Fiscal Agent on the day fifteen days prior to
such mailing.
14. GOVERNING LAW.
(a) THE FISCAL AGENCY AGREEMENT, THE SECURITIES AND ANY COUPONS
APPERTAINING THERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
(b) THE COMPANY HAS APPOINTED FLEET NATIONAL BANK, 111 WESTMINSTER
STREET, PROVIDENCE, RHODE ISLAND 02903 (ATTENTION: CORPORATE TRUST
ADMINISTRATOR) AS ITS AGENT UPON WHOM PROCESS MAY BE SERVED IN ANY SUIT, ACTION
OR PROCEEDING RELATING TO OR ARISING OUT OF THIS SECURITY, THE FISCAL AGENCY
AGREEMENT OR ANY COUPON APPERTAINING HERETO, WITH A COPY TO THE COMPANY AT 128
TECHNOLOGY CENTER, WALTHAM, MASSACHUSETTS 02154 (ATTENTION: PRESIDENT).
15. Authentication.
This Security and any coupon appertaining thereto shall not become valid
or obligatory for any purpose until the certificate of authentication hereon
shall have been duly signed by the Fiscal Agent acting under the Fiscal Agency
Agreement.
16. Warranty of the Issuer.
Subject to Section 15 hereof, the Company hereby certifies and warrants
that all acts, conditions and things required to be done and performed and to
have happened precedent to the creation and issuance of this Security and any
coupons appertaining thereto, and to constitute the same legal, valid and
binding obligations of the Company enforceable in accordance with their terms,
have been done and performed and have happened in due and strict compliance
with all applicable laws.
17. Accounting Terms.
All accounting terms not otherwise defined herein shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
applied in the United States.
<PAGE> 64
18. Descriptive Headings.
The descriptive headings appearing herein are for convenience of reference
only and shall not alter, limit or define the provisions hereof.
<PAGE> 65
TRANSFER NOTICE
Only if a Registered Security or Shares issued upon conversion of any
Security is transferred (if no registration statement covering such Shares is
effective):
FOR VALUE RECEIVED, the undersigned Holder hereby sell(s), assign(s) and
transfer(s) unto _____________________________ _______________________________
whose taxpayer identification number is ________________ and whose address
including postal/zip code is __________________________________________________
___________________________________________________________ the within Security
and all rights thereunder, hereby irrevocably constituting and appointing
__________________________ attorney-in-fact to transfer said Security on the
books of the Company with full power of substitution in the premises.
In connection with the transfer of this Security, the undersigned Holder
certifies that:
[Check one)
[ ] (a) This Security is being transferred to a
"qualified institutional buyer" (as defined in
Rule 144A under the Securities Act of 1933) in
compliance with the exemption from registration
under the Securities Act of 1933 provided by Rule
144A.
[ ] (b) This Security is being transferred in an Offshore
Transaction (as defined in Regulation S under the
Securities Act of 1933) in compliance with the
exemption from registration under the Securities Act
of 1933 provided by Regulation S.
[ ] (c) This Security is being transferred to a sophisticated
institutional investor which is an "accredited investor"
(within the meaning of Rule 501(a)(l), (2), (3) or (7)
under the Securities Act of 1933) in a transaction not
involving any general solicitation or advertising.
Dated: Name:
------------- ----------------------------------
By:
------------------------------------
<PAGE> 66
Title:
---------------------------------
NOTICE: The signature of the Holder to this
assignment must correspond with the name as
written upon the face of the within
instrument in every particular, without
enlargement or any change whatsoever.
SIGNATURE GUARANTEED
--------------------------------------
TO BE COMPLETED BY A BROKER OR DEALER IF (c) ABOVE IS CHECKED:
The undersigned represents and warrants that (i) it is a broker or dealer
registered under Section 15 of the Securities Exchange Act of 1934, (ii) each
person which will become a beneficial owner of this Security upon transfer is a
sophisticated institutional investor which is an "accredited investor" (within
the meaning of Rule 501(a)(l), (2), (3) or (7) under the Securities Act of
1933); (iii) no general solicitation or advertising was made or used by it in
connection with the offer and sale of this Security to such person(s); and (iv)
each such person has been notified that this Security has not been registered
under the Securities Act of 1933 and is subject to the restrictions on transfer
of the Security set forth herein and in the Fiscal Agency Agreement.
Dated:
------------- ---------------------------------------
By:
------------------------------------
IF NONE OF THE FOREGOING BOXES IS CHECKED, THE FISCAL AGENT SHALL NOT BE
OBLIGATED TO REGISTER THE TRANSFER OF THIS SECURITY UNLESS AND UNTIL THE
CONDITIONS TO ANY SUCH TRANSFER OF REGISTRATION SET FORTH HEREIN, ON THE FACE
HEREOF AND IN THE FISCAL AGENCY AGREEMENT SHALL HAVE BEEN SATISFIED.
<PAGE> 67
CONVERSION NOTICE
If or Bearer Security of denomination U.S. $1,000:
The undersigned holder of this Security hereby irrevocably exercises the
option to convert this Security into Shares of Meditrust in accordance with the
terms of this Security and directs that such shares be registered in the name
of and delivered, together with a check in payment for any fractional share, to
the undersigned unless a different name has been indicated below. If shares
are to be registered in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto.
Dated:
-------------
----------------------------
Signature
[MUST BE GUARANTEED]
If shares are to be registered
in the name of and delivered to
a person other than the holder,
please print such person's name
and address:
- -----------------------------
- -----------------------------
- -----------------------------
HOLDER
Please print name and address of
holder:
------------------------------
------------------------------
------------------------------
<PAGE> 68
CONVERSION NOTICE
If Registered Security or Bearer Security of denomination U.S. $10,000:
The undersigned holder of this Security hereby irrevocably exercises the
option to convert this Security, or portion hereof (which is U.S. $1,000 or an
integral multiple thereof) below designated, into Shares of Meditrust in
accordance with the terms of this Security, and directs that such Shares,
together with a check in payment for any fractional share and any Securities
representing any unconverted principal amount hereof, be delivered to and be
registered (if a Registered Security) in the name of the undersigned unless a
different name has been indicated below. If shares or Securities are to be
registered in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto.
Dated: ----------------------------
-------------- Signature
[MUST BE GUARANTEED]
If shares or Securities are to If only a portion of the registered
Person other than the holder, in the name of a Securities is to be
please print such person's name converted please indicate:
and address: l. Principal Amount to be con-
verted: U.S.$
- ----------------------------- ---------
2. Kind, amount and denomina-
- ----------------------------- tion of Securities repre-
senting unconverted prin-
- ----------------------------- cipal amount to be issued:
Bearer-U.S.$______________
Denominations: U.S.$______
(U.S. $1,000 or $10,000)
Registered-U.S.$__________
Denominations: U.S.$______
(U.S. $1,000 or an integral
multiple thereof)
REGISTERED SECURITIES ARE NOT
EXCHANGEABLE FOR BEARER SECURITIES.
<PAGE> 69
EXHIBIT B
<PAGE> 70
(FORM OF GLOBAL SECURITY)
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). NEITHER THIS SECURITY NOR ANY
PORTION HEREOF MAY BE OFFERED OR SOLD DIRECTLY OR INDIRECTLY IN THE UNITED
STATES OF AMERICA, ITS TERRITORIES OR POSSESSIONS ("UNITED STATES") OR TO
CITIZENS, NATIONALS OR RESIDENTS THEREOF OR TO ANY CORPORATION, PARTNERSHIP OR
OTHER ENTITY CREATED OR ORGANIZED IN OR UNDER THE LAWS OF THE UNITED STATES OR
ANY POLITICAL SUBDIVISION THEREOF OR TO ANY ESTATE" OR TRUST WHICH IS SUBJECT
TO UNITED STATES FEDERAL INCOME TAXATION REGARDLESS OF THE SOURCE OF ITS INCOME
OR TO ANY OTHER PERSON DEEMED A U.S. PERSON UNDER REGULATION S UNDER THE
SECURITIES ACT, EXCEPT BRANCHES OR AGENCIES OF UNITED STATES BANKS OR INSURANCE
COMPANIES THAT OPERATE OUTSIDE THE UNITED STATES FOR VALID BUSINESS REASONS AS
LOCALLY REGULATED BRANCHES OR AGENCIES ENGAGED IN THE BANKING OR INSURANCE
BUSINESS AND NOT SOLELY FOR THE PURPOSE OF INVESTING IN SECURITIES NOT
REGISTERED UNDER THE SECURITIES ACT ("UNITED STATES PERSONS") OTHER THAN ANY
PORTION OF THIS SECURITY SOLD, SUBJECT TO CERTAIN RESTRICTIONS, PURSUANT TO
REGULATION S UNDER THE SECURITIES ACT.
ANY UNITED STATES PERSON WHO HOLDS THIS SECURITY WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE
CODE.
MEDITRUST
(Originated in the Commonwealth of Massachusetts)
6-7/8% CONVERTIBLE DEBENTURES DUE 1998
TEMPORARY GLOBAL DEBENTURE
Meditrust, a corporation duly organized and existing under the laws of the
Commonwealth of Massachusetts (the "Company") for value received, hereby
promises to pay to bearer upon presentation and surrender of this Global
Security the Principal sum of EIGHTY-SIX MILLION AND TWO HUNDRED AND FIFTY
THOUSAND United States Dollars (U.S.$86,250,000) on November 15, 1998, and to
pay interest thereon, from the date hereof, semiannually in arrears on May 15
and November 15 in each year, commencing May 15, 1994, at the rate of 6-7/8%
per annum, until the principal hereof is paid or made available for payment,
provided, however, that interest on this Global Security shall be payable only
after the issuance of the Definitive Securities for which this Global Security
is exchangeable and, in the case of Definitive Securities in bearer form, only
upon presentation and
<PAGE> 71
surrender of the interest coupons thereto attached as they severally mature.
This Global Security is one of a duly authorized issue of Securities of
the Company designated as specified in the title hereof (the "Securities").
This Global Security and the Definitive Securities for which it is
exchangeable, as described below, are limited to the aggregate principal amount
of U.S.$86,250,000 and are entitled to the benefits of a Fiscal Agency
Agreement of even date herewith (the "Fiscal Agency Agreement") among the
Company and Fleet National Bank, as Fiscal Agent, Paying Agent, Security
Registrar, and Conversion Agent (the "Fiscal Agent"). It is a temporary
security and is exchangeable in whole or from time to time in part without
charge upon request of the holder hereof for Definitive Securities in bearer
form, with interest coupons attached, (a) not earlier than 40 days after the
date hereof and (b) as promptly as practicable following presentation of
certification, in the form set forth as Exhibits C and D of the Fiscal Agency
Agreement for such purpose, that the beneficial owner or owners of this Global
Security (or, if such exchange is only for a part of this Global Security, of
such part) are not United States Persons. Upon any exchange of a part of this
Global Security for Definitive Securities, the portion of the principal amount
hereof so exchanged shall be endorsed by the Fiscal Agent on the Schedule of
Exchanges hereto, and the principal amount hereof shall be reduced for all
purposes by the amount so exchanged.
Until exchanged in full for Definitive Securities, this Global Security
shall in all respects be entitled to the same benefits under, and subject to
the same terms and conditions of, the Fiscal Agency Agreement as Definitive
Securities authenticated and delivered thereunder, except that neither the
holder hereof nor the beneficial owners of this Global Security shall be
entitled to receive payment of interest hereon, except as provided above, or to
convert this Global Security into Shares of the Company or any other security,
cash or other property.
This Global Security shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
All terms used in this Global Security which are defined in the Fiscal
Agency Agreement shall have the meanings assigned to them in the Fiscal Agency
Agreement.
Unless the certificate of authentication hereon has been executed by an
authorized signatory of the Fiscal Agent, this Global Security shall not be
valid or obligatory for any purpose.
<PAGE> 72
IN WITNESS WHEREOF, the Company has caused this Global Security to be duly
executed in its corporate name by its duly authorized signatory.
Dated as of November 15, 1993
MEDITRUST
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
CERTIFICATE OF AUTHENTICATION
This is the Global Security described in the within-mentioned Fiscal Agency
Agreement.
Fleet National Bank, as Fiscal Agent
By:
-----------------------------------
Authorized Signatory
<PAGE> 73
EXHIBIT C
<PAGE> 74
Form of Certificate to be Given by
The Euroclear Operator and CEDEL S.A.
CERTIFICATION
U.S. $______________
6-7/8% Convertible Debentures
due 1998
(the "Securities")
This is to certify that, based solely on certifications we have
received in writing, by tested telex or by electronic transmission from member
organizations appearing in our records as persons being entitled to a portion
of the principal amount set forth below (our "Member Organizations")
substantially to the effect set forth in the Fiscal Agency Agreement, as of the
date hereof, U.S.$__________ is owned by persons that are not citizens or
residents of the United States, domestic partnerships, domestic corporations or
any estate or trust the income of which is subject to United States Federal
income taxation regardless of its source or any other person deemed a "U.S.
person" under Regulation S under the U.S. Securities Act of 1933, as amended
("United States persons").
As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its territories and
possessions, including Puerto Rico, the U.S. Virgin Islands, Guam, American
Samoa, Wake Island and the Northern Mariana Islands.
We further certify (i) that we are not making available herewith for
exchange any portion of the Global Security excepted in such certifications and
(ii) that as of the date hereof we have not received any notification from any
of our Member Organizations to the effect that the statements made by such
Member Organization with respect to any portion of the part submitted herewith
for exchange are no longer true and cannot be relied upon as the date hereof.
We understand that this certification is required in connection with
certain tax laws and, if applicable, certain securities laws of the United
States. In connection therewith, if administrative or legal proceedings are
commenced or
<PAGE> 75
threatened in connection with which this certification is or would be relevant,
we irrevocably authorize you to produce this certification to any interested
party in such proceedings.
Dated: ______________, 1993
*
Yours faithfully,
[--------------------------------
(---------------------- Office)
as Operator of the Euroclear
System]
[CEDEL S.A.]**
By:
---------------------------
- ----------------------------------
* To be dated no earlier than the date which is 40 days after
_____________, 1993.
** Delete as appropriate.
<PAGE> 76
EXHIBIT D
<PAGE> 77
Form of Certificate of Beneficial Ownership for
Bearer Securities to be Provided to the
Euroclear Operator or to CEDEL S.A.
CERTIFICATION
U.S. $________________
6-7/8% Convertible Debentures
due November 15, 1998
(the "Securities")
This is to certify that as of the date hereof, and except as set forth
below, the above-captioned Securities held by you for our account are owned by
persons that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to the United States Federal income taxation regardless of its
source or any other person deemed a "U.S. person" under Regulation S under the
United States Securities Act of 1933, as amended ("United States persons").
As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its territories and
possessions, including Puerto Rico, the U.S. Virgin Islands, Guam, American
Samoa, Wake Island and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or prior to the
date on which you intend to submit your certification relating to the
Securities held by you for our account in accordance with your operating
procedures if any applicable statement herein is not correct on such date, and
in the absence of any such notification it may be assumed that this
certification applies as of such date.
This certification excepts and does not relate to $____________ of such
interest in the above Securities in respect of which we are not able to certify
and as to which we understand exchange and delivery of Definitive Securities
cannot be made until we do so certify.
We understand that this certification is required in connection with
certain tax laws and, if applicable, certain securities laws of the United
States. In connection therewith, if administrative or legal proceedings are
commenced or threatened in connection with which this certification is or
<PAGE> 78
would be relevant, we irrevocably authorize you to produce this certification
to any interested party in such proceedings.
Dated: ______________, 199_*
[Name]
By:
--------------------------
Signature
As, or as agent for, the
beneficial owner(s) of the
Securities to which this
certificate relates.
- ----------------------
* Not earlier than 15 days prior to the date which is 40 days after
November 15, 1993.
<PAGE> 79
EXHIBIT E
<PAGE> 80
Form of Certificate of Beneficial Ownership
for Registered Securities to be Provided to the
Euroclear Operator or to CEDEL S.A.
Please issue $_________ of the U.S.$____________ 6-7/8% Convertible
Debentures due 1998 (the "Securities"), of Meditrust held by you for our
account in registered form. We hereby certify to you that we are not a U.S.
person as defined in Regulation S under the United States Securities Act of
1933, as amended. The exact name of the beneficial holder that the Securities
are to be registered in is as follows:
We hereby certify that we have provided such certifications on Form W-8 or
its equivalent as may be necessary to avoid imposition of withholding and/or
back-up withholding under U.S. federal tax law with respect to any payments of
interest on the Securities.
We irrevocably authorize you to produce this certificate or a copy hereof
to any interested party in any administrative or proceedings with respect to
the matters covered by this certificate.
Dated: ______________, 1993*
[NAME]
By:
---------------------------
Signature
[to be completed by the account holder
as, or as agent for, the beneficial
owner(s) of the Securities to which
this certificate relates.]
- ---------------------
* To be dated not earlier than the date which is 40 days after November 15,
1993.
<PAGE> 1
Meditrust Exhibit 11
Statement Regarding Computation of Earnings Per Share
(In thousands except per Share amounts)
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------
Primary 1993 1992 1991
======= ---- ----- -----
<S> <C> <C> <C>
Weighted average shares 31,310 26,360 21,710
Dilutive effect of:
Stock options 119 173 83
Warrants 62 99 165
------- ------- --------
Weighted average number of shares and
equivalent shares outstanding 31,491 26,632 21,958
======= ======= ========
Net income before extraordinary item $63,636 $51,358 $37,909
Loss on prepayment of debt (3,684)
------- ------- -------
Net income $63,636 $51,358 $34,225
======= ======= =======
Per Share amounts:
Net income before extraordinary item $2.02 $1.93 $1.73
Loss on prepayment of debt (0.17)
----- ------ ------
Net income (A) $2.02 $1.93 $1.56
===== ===== =====
</TABLE>
(A) This calculation is submitted in accordance with Regulation S-K item 601
(b) (11) although not required by footnote 2 to paragraph 14 of APB Opinion
No. 15 because it results in dilution of less than 3%.
<TABLE>
<CAPTION>
Fully Diluted
=============
<S> <C> <C> <C>
Weighted average number of shares used
in primary calculation 31,491 26,632 21,958
Assumed conversion of convertible debentures 5,246 2,491
------- ------- ------
Fully diluted weighted average shares
and equivalent shares outstanding 36,737 29,123 21,958
======= ======= =======
Net income before extraordinary item $63,636 $51,358 $37,909
Interest and debt issuance costs
on convertible debentures 12,352 6,277
------- ------- -------
Adjusted net income for fully diluted
calculation 75,988 57,635 37,909
Loss on prepayment of debt (3,684)
------- ------- -------
Net income $75,988 $57,635 $34,225
======= ======= =======
Per Share amounts:
Net income before extraordinary item $2.07 $1.98 $1.73
Loss on prepayment of debt (0.17)
----- ----- -----
Net income (B) $2.07 $1.98 $1.56
===== ===== =====
</TABLE>
(B) This calculation is submitted in accordance with Regulation S-K item
601(b) (11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces an anti-dilutive result.
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
MEDITRUST SUBSIDIARY CORPORATIONS
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
State of
Name Incorporation
- ---- -------------
<S> <C>
Meditrust Acquisition Corporation Massachusetts
Meditrust of Alabama, Inc. Alabama
Meditrust at Alpine, Inc. Pennsylvania
Meditrust of Arizona, Inc. Delaware
Meditrust of Arkansas, Inc. Arkansas
Meditrust of Arlington, Texas, Inc. Massachusetts
Meditrust of Bakersfield, California, Inc. Delaware
Meditrust of Baton Rouge, Inc. Louisiana
Meditrust of Benton, Inc. Delaware
Meditrust of California, Inc. Delaware
Meditrust of College Station, Inc. Delaware
Meditrust of Colorado, Inc. Delaware
Meditrust of Connecticut, Inc. Delaware
Meditrust Finance Corporation Delaware
Meditrust Financial Services Corporation Delaware
Meditrust Holding V, Inc. Delaware
Meditrust Holding VI, Inc. Delaware
Meditrust Holding VII, Inc. Delaware
Meditrust of Houston, Inc. Massachusetts
Meditrust of Illinois, Inc. Illinois
Meditrust of Kansas, Inc. Kansas
Meditrust of Los Angeles, Inc. Delaware
Meditrust of Louisiana, Inc. Louisiana
Meditrust of Lynn, Inc. Delaware
Meditrust Management Corp. Delaware
Meditrust of Maryland, Inc. Delaware
Meditrust of Massachusetts, Inc. Delaware
Meditrust at Mountainview, Inc. Pennsylvania
</TABLE>
<PAGE> 2
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
MEDITRUST SUBSIDIARY CORPORATIONS (Continued)
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
State of
Name Incorporation
- ---- -------------
<S> <C>
Meditrust of Michigan, Inc. Delaware
Meditrust of Missouri, Inc. Delaware
Meditrust Mortgage Investments, Inc. Delaware
Meditrust of New Hampshire, Inc. Delaware
Meditrust of New York, Inc. Delaware
Meditrust of Ohio, Inc. Delaware
Meditrust Tri-States, Inc. Delaware
New England Finance Corporation Delaware
Pacific Finance Corporation Delaware
Mediplex of Queens, Inc. New York
Meditrust of San Antonio, Inc. Delaware
Meditrust of Texas, Inc. Delaware
Meditrust of Washington, Inc. Delaware
Meditrust of Wyoming, Inc. Delaware
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EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Meditrust on Form S-8 (File No. 33-25072) and on Form S-3 (File Nos. 33-40005,
33-40926, 33-42596, 33-43931, 33-45979, 33-48695, and 33-55386) of our reports
dated March 10, 1994 on our audits of the consolidated financial statements and
financial statement schedules of Meditrust as of December 31, 1993 and 1992,
and for the years ended December 31, 1993, 1992, and 1991, which reports are
included in this Annual Report on Form 10-K.
Coopers & Lybrand
Boston, Massachusetts
March 21, 1994
