<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
MEDITRUST
(Name of Registrant as Specified In Its Charter)
MEDITRUST
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11:
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
PRELIMINARY COPY
MEDITRUST
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 26, 1994
The annual meeting of shareholders of Meditrust will be held at Fleet Bank,
N.A., 75 State Street, 30th Floor, Boston, Massachusetts, on Thursday, May 26,
1994 at 4:00 o'clock in the afternoon for the following purposes:
1. To fix the number of trustees and elect a Board of Trustees for the
ensuing year.
2. To consider and act upon proposed amendments to Meditrust's Declaration
of Trust to authorize Meditrust to issue shares of one or more
additional classes and/or series of shares of beneficial interest.
3. To consider and act upon a shareholder proposal relating to executive
compensation, if presented at said meeting or any adjournment or
adjournments thereof (the "Meeting").
4. To consider and act upon such other business, matters or proposals as
may properly come before the Meeting.
The Board of Trustees has fixed the close of business on April 8, 1994 as
the record date for determining the shareholders having the right to receive
notice of and to vote at the Meeting.
By Order of the Board of Trustees
MICHAEL S. BENJAMIN
Senior Vice President and Secretary
Needham, Massachusetts
April 22, 1994
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN, DATE
AND MAIL PROMPTLY THE ENCLOSED PROXY WHICH IS BEING SOLICITED ON BEHALF OF THE
BOARD OF TRUSTEES. A RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES IS ENCLOSED FOR THAT PURPOSE. RETURNING THE ENCLOSED PROXY WILL
NOT AFFECT YOUR RIGHT TO ATTEND THE MEETING AND VOTE YOUR SHARES IN PERSON.
<PAGE> 3
PRELIMINARY COPY
MEDITRUST
197 FIRST AVENUE
NEEDHAM, MASSACHUSETTS 02194
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 26, 1994
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by
and on behalf of the Board of Trustees of Meditrust, a Massachusetts business
trust (the "Company"), of proxies for use at the annual meeting of shareholders
of the Company and at any adjournment or adjournments thereof (the "Meeting") to
be held, pursuant to the accompanying Notice of Annual Meeting, at 4:00 p.m. on
May 26, 1994 at Fleet Bank, N.A., 75 State Street, 30th Floor, Boston,
Massachusetts. The Company expects to mail this Proxy Statement and the
accompanying form of proxy to shareholders on or about April 22, 1994.
VOTING AND REVOCATION OF PROXIES
Valid proxies will be voted as specified thereon at the Meeting. Any
shareholder giving a proxy in the accompanying form retains the power to revoke
it at any time prior to the exercise of the powers conferred thereby by (a)
delivering written notice of such revocation to Michael S. Benjamin, Esquire,
Senior Vice President and Secretary, Meditrust, 197 First Avenue, Needham,
Massachusetts 02194; (b) delivering a duly executed proxy bearing a later date
to the Secretary of the Company; or (c) appearing at the Meeting and requesting
the return of his proxy. Any shareholder who attends the Meeting in person will
not be deemed thereby to revoke the proxy unless such shareholder affirmatively
indicates thereat his intention to vote the shares in person.
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended December 31,
1993, including financial statements, audited and reported upon by Coopers &
Lybrand, independent accountants, is being mailed herewith to each of the
Company's shareholders of record at the close of business on April 8, 1994.
VOTING SECURITIES, PRINCIPAL HOLDERS THEREOF AND HOLDINGS BY CERTAIN EXECUTIVE
OFFICERS
The holders of record of shares of beneficial interest of the Company
("Shares") at the close of business on April 8, 1994 are entitled to vote at the
Meeting. On that date there were outstanding and entitled to vote
Shares. Each shareholder has one vote for each Share held by such shareholder of
record on the matters listed in the Notice of Annual Meeting.
<PAGE> 4
No one was known by the Company to own beneficially more than 5% of the
Company's outstanding Shares on April 8, 1994 except as shown in the following
table:
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENTAGE
NAME AND ADDRESS OWNED(1) OF SHARES
---------------- ------------ ----------
<S> <C> <C>
Scudder, Stevens & Clark, Inc......................................... 2,092,035(2) 6.4%
345 Park Avenue
New York, NY 10154
</TABLE>
- ---------------
(1) None of such Shares are known to be Shares with respect to which the holders
have the right to acquire beneficial ownership.
(2) Based on information concerning beneficial ownership of Shares as of
December 31, 1993 as set forth in the Schedule 13G of Scudder, Stevens &
Clark, Inc. ("Scudder") dated February 4, 1994. Scudder has sole voting
power with respect to 333,200 Shares and sole dispositive power with respect
to 2,092,035 Shares, some of which Shares are held of record by various
subsidiaries or affiliates of Scudder, including Scudder, Stevens & Clark of
Canada Ltd., Scudder, Stevens & Clark Du Canada Ltd. and Asia Management
Corporation.
The following table sets forth information concerning ownership of Shares
by certain executive officers of the Company:
<TABLE>
<CAPTION>
SHARES SUBJECT
TO OPTIONS
SHARES EXERCISABLE PERCENTAGE
BENEFICIALLY WITHIN OF SHARES
OWNED AS OF 60 DAYS OF OUTSTANDING
NAME 4/8/94(1) 4/8/94 AS OF 4/8/94
---- ------------ -------------- ------------
<S> <C> <C> <C>
Abraham D. Gosman..................................... 819,696(2) 121,235 %
David F. Benson....................................... 12,103 8,353 (3)
Michael S. Benjamin................................... 2,750 750 (3)
Michael F. Bushee..................................... 4,123 0 (3)
Keith E. Grant........................................ 11,133 9,733 (3)
</TABLE>
- ---------------
(1) Unless otherwise indicated, the number of Shares stated as being owned
beneficially includes (i) Shares beneficially owned by spouses, minor
children and/or other relatives in which the executive officer may share
voting or investment power and (ii) any Shares listed as being subject to
options exercisable within 60 days of April 8, 1994.
(2) Includes 162,000 Shares owned by A.M.A. Financial Corporation, of which Mr.
Gosman is President and a 98% shareholder.
(3) Less than 1%.
EXECUTIVE COMPENSATION
REPORT OF THE PERSONNEL AND COMPENSATION COMMITTEE
In determining the compensation to be paid to the Company's executive
officers, the Personnel and Compensation Committee (the "Compensation
Committee") strives to (i) reward executives for achievement of the Company's
strategic goals and the enhancement of shareholder value, (ii) recognize
superior Company performance as compared to that of competing businesses and
(iii) attract, motivate and retain highly-trained and talented executives who
are vital to the Company's long-term success. Individual
2
<PAGE> 5
compensation packages are generally set at levels believed by the Compensation
Committee to be substantially equal to those of comparable positions at other
real estate investment trusts with publicly-traded securities. At present, the
Company's compensation package is comprised of salary, an annual cash bonus,
long-term incentives in the form of stock options and stock grants (which are
awarded by the Stock Option Committee) and other benefits typically offered to
executives by major corporations.
SALARIES
During 1993, the Board of Trustees, on the recommendation of the
Compensation Committee, increased the salaries paid to each of the four most
highly compensated executive officers of the Company other than Mr. Gosman
(collectively, the "Senior Executives"). These salary increases, as well as
those of other Company executives, were based on cost-of-living adjustments,
competitive data, position tenure, subjective assessments of individual
performance and comparability considerations. Competitive data and performance
assessments were given greater weight in the Compensation Committee's
determinations relative to the other factors.
Mr. Gosman's 1993 base salary was paid pursuant to the provisions of his
employment agreement (the "Agreement") with the Company which was entered into
on January 1, 1993. The terms of the Agreement, including salary terms, were
determined through negotiations between Mr. Gosman and the Compensation
Committee. Factors considered by the Compensation Committee in the course of
those negotiations included Mr. Gosman's unique insight and experience in the
health care industry, his leadership abilities, his past contributions to the
success of the Company, his perceived importance to the continued success of the
Company and his four-year commitment to lead the Company.
Under certain circumstances, Section 162(m) of the Internal Revenue Code
denies a deduction for compensation in excess of $1 million paid to an
individual who is the chief executive officer or one of the four next most
highly paid officers of a corporation. In general, compensation from all sources
is taken into account, including salary, bonus and income realized from the
exercise of non-qualified stock options. Because it is a real estate investment
trust, and based on the advice of counsel, the Company believes that the denial
of deductions by Section 162(m) would have no adverse impact on the Company. A
real estate investment trust is subject to tax on its "real estate investment
trust taxable income", which is taxable income subject to adjustments and
reduced by a deduction for dividends paid. The Company expects to pay sufficient
dividends that it would have no real estate investment trust taxable income even
if Section 162(m) were to be applicable to compensation paid to one or more of
its officers.
BONUS AWARDS
Executive officers of the Company were awarded cash bonuses based on the
Compensation Committee's assessment of the Company's performance in 1993. The
performance measures reviewed by the Compensation Committee included the
Company's asset growth, revenue growth and cash flow growth compared to that of
its competitors. These measures were assigned approximately equal weight in the
Compensation Committee's determinations.
Pursuant to the Agreement, Mr. Gosman received bonus compensation in 1993
which consisted solely of Shares. In its 1992 negotiations regarding the amount
of bonus compensation to be paid to Mr. Gosman each year during the four-year
term of the Agreement, the Board of Trustees considered the performance measures
listed above, Mr. Gosman's unique abilities and experience and his perceived
contributions to the Company's financial performance in 1991 and 1992, including
the approximately 57% and 10% total returns (comprised of stock price
appreciation and dividend yield) on Shares in 1991 and 1992, respectively. Mr.
Gosman's annual
3
<PAGE> 6
bonus under the Agreement is paid in Shares in order to further align his
interests with those of the Company's shareholders.
OTHER COMPENSATION PLANS
The Company maintains certain broad-based employee benefit plans in which
Mr. Gosman and the Senior Executives participated. These plans include a 401(k)
savings plan, life and health insurance plans and allowances for automobile use.
These plans are not directly or indirectly tied to Company performance.
Submitted by,
Thomas J. Magovern, Chairman
Hugh L. Carey
Robert Cataldo
Philip L. Lowe
REPORT OF THE STOCK OPTION COMMITTEE
The Board's Stock Option Committee, consisting of Messrs. Magovern and
Zuckerman, administers the Company's 1988 Stock Option Plan (the "1988 Plan")
and 1992 Equity Incentive Plan. Stock options are granted under these plans in
order to provide incentives to trustees, officers and key employees of the
Company to maximize their efforts on behalf of the Company and to attract and
retain those highly competent individuals upon whose judgment, initiative and
leadership the Company's continuing success largely depends. The size of
individual option grants is determined by the Stock Option Committee based on
its comparison of option grants to executives with similar responsibilities in
other companies and the executive's level of responsibility and relative
importance to the operations of the Company. The Stock Option Committee granted
stock options in 1991 to the Senior Executives, as reflected in certain of the
tables appearing hereinafter.
Under the terms of the Company's 1988 Plan and in accordance with rules
adopted by the Securities and Exchange Commission to ensure disinterested
administration of equity incentive plans, stock options were awarded in 1991 on
a non-discretionary basis to Messrs. Gosman and Benson, who were then the sole
members of the Stock Option Committee, pursuant to the formula award provisions
of the 1988 Plan. The size of each award was determined pursuant to a pre-set
formula which was based on a percentage of each Stock Option Committee member's
annual salary and the price of the Company's Shares at the time of the award. By
tying the size of the formula awards to each committee member's salary and the
Company's share price, the Company intends to further motivate the Stock Option
Committee members to put forth their best efforts on behalf of the Company and
its shareholders.
It is the present policy of the Stock Option Committee to review every
three years the Company's stock option award levels and the over-all
effectiveness of the Company's equity incentive plans in achieving the
objectives of the Company. Since stock option awards were made in 1991, no
awards were made to Mr. Gosman and the Senior Executives in 1992 and 1993. It is
the present policy of the Company to grant stock options to new key employees
shortly after the commencement of their employment with the Company.
Accordingly, several new employees received stock options in 1992 and 1993.
Submitted by,
Thomas J. Magovern, Chairman
Frederick W. Zuckerman
4
<PAGE> 7
The following table sets forth the compensation paid to the Company's Chief
Executive Officer (the "CEO") and four most highly compensated executive
officers other than the CEO for services rendered in all capacities to the
Company and its subsidiaries during the fiscal year ended December 31, 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
NUMBER OF
SECURITIES ALL OTHER
ANNUAL COMPENSATION UNDERLYING COMPENSATION
NAME AND ------------------- OPTIONS ------------
PRINCIPAL POSITION YEAR(1) SALARY($) BONUS($) GRANTED(#)(2) ($)(3)
------------------ ------ -------- ------- ------------ ------
<S> <C> <C> <C> <C> <C>
Abraham D. Gosman.............. 1993 900,000 821,875(4) 0 5,174
Chairman and CEO 1992 900,000 1,220,000(5) 0 5,125
1991 751,119 0 150,353
David F. Benson................ 1993 210,000 30,000 0 5,188
President 1992 160,000 30,000 0 5,082
1991 103,196 12,000 25,059
Michael S. Benjamin............ 1993 130,000 20,000 0 4,972
Senior Vice President 1992 110,000 20,000 0 3,279
and Secretary 1991 96,792 9,000 19,000
Michael F. Bushee.............. 1993 130,000 20,000 0 4,929
Senior Vice President 1992 110,000 20,000 0 4,850
1991 78,570 9,000 19,000
Keith E. Grant................. 1993 110,000 10,000 0 5,021
Controller 1992 100,000 10,000 0 4,888
1991 83,333 4,000 14,000
</TABLE>
- ---------------
(1) The Company commenced paying cash compensation to its executive officers
after February 26, 1991, the date that the Company's former advisor, A.M.A.
Advisory Corp., ceased providing management and administrative services to
the Company and was merged into a wholly-owned subsidiary of the Company.
(2) The Company has not granted stock appreciation rights to date.
(3) Includes 401(k) plan contribution of $4,497, $4,497, $4,497, $4,497 and
$4,427 in 1993 and $4,364, $4,304, $2,750, $4,364 and $4,364 in 1992 and
term life insurance premium payments of $677, $691, $475, $432 and $524 in
1993 and $761, $778, $529, $486 and $524 in 1992 on behalf of Messrs.
Gosman, Benson, Benjamin, Bushee and Grant, respectively. In accordance with
the transitional provisions applicable to the disclosure required in this
table, the amount of 401(k) plan contributions and term life insurance
premiums paid by the Company in 1991 are excluded.
(4) 25,000 Shares in four quarterly installments valued at $33, $33, $33.375 and
$32.125 per Share, which were the closing prices for Shares on the New York
Stock Exchange on the respective dates of issuance (April 5, 1993, July 6,
1993, October 5, 1993 and January 6, 1994).
(5) 40,000 Shares valued at $30.50 per Share, which was the closing price for
Shares on the New York Stock Exchange on the date of issuance (January 10,
1992).
5
<PAGE> 8
The following table sets forth information concerning exercises of stock
options by the following persons during the fiscal year ended December 31, 1993
and the number and value of their stock options at December 31, 1993.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT OPTIONS AT
ON VALUE 12/31/93(#) 12/31/93($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(1) UNEXERCISABLE UNEXERCISABLE(2)
---- -------- -------- ------------- ----------------
<S> <C> <C> <C> <C>
Abraham D. Gosman............................ 0 0 121,235/ 903,691/
50,118 306,973
David F. Benson.............................. 8,353 58,649 8,353/ 51,162/
8,353 51,162
Michael S. Benjamin.......................... 3,750 41,760 11,666/ 69,996/
6,334 38,004
Michael F. Bushee............................ 1,000 7,625 11,666/ 69,996/
6,334 38,004
Keith E. Grant............................... 2,400 41,459 9,733 61,648
4,667 28,002
</TABLE>
- ---------------
(1) Market value of underlying securities at exercise, less the exercise price.
(2) Market value of $32.375 as of December 31, 1993, less the exercise price.
6
<PAGE> 9
PERFORMANCE GRAPH (1)
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Shares against the
cumulative market-weighted return of the Standard & Poor's Composite 500 Stock
Index and the National Association of Real Estate Investment Trusts ("NAREIT")
All REIT Total Return Index (which is comprised of all tax-qualified real estate
investment trusts, without regard to investment focus, listed on the New York
Stock Exchange, American Stock Exchange and NASDAQ National Market System) for
the period of five fiscal years commencing January 1, 1989 and ending December
31, 1993.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Meditrust S&P 500 NAREIT
-------------------- --------- ------- ------
<S> <C> <C> <C>
12/31/88 100.00 100.00 100.00
1989 129.61 131.49 98.19
1990 150.75 127.32 81.16
1991 235.05 166.21 110.11
1992 255.45 178.96 123.52
1993 288.61 196.84 146.43
</TABLE>
- ---------------
(1) Assumes that the value of an investment in Meditrust Shares and each index
was $100 on December 31, 1988 and that all dividends were reinvested on a
monthly basis.
ITEM I
ELECTION OF TRUSTEES
It is the intention of the persons named as proxies in the accompanying
form of proxy (unless otherwise indicated) to vote such proxies (a) to fix the
number of trustees for the ensuing year at nine and (b) to elect the nominees
for trustee named in the following table, all of whom are currently members of
the Board of Trustees. If elected, the nominees will serve as trustees until the
next scheduled annual meeting and until their successors are chosen and
qualified. In the event that any of the nominees becomes unavailable (which is
not now anticipated by the Company), the persons named as proxies have
discretionary authority to vote for a substitute or to reduce the number of
trustees to be fixed and elected. The Board of Trustees, which currently
consists of nine persons, has no reason to believe that any of said persons will
be unwilling or unable to serve if elected. The trustees will be elected by a
plurality of the votes cast at the Meeting by the holders of Shares entitled to
vote at the Meeting. The affirmative vote of the holders of a majority of the
outstanding Shares of the Company present or represented at the Meeting and
entitled to vote thereat is required to fix the number
7
<PAGE> 10
of trustees for the ensuing year, provided that such majority is at least a
majority of the outstanding Shares entitled to vote at the Meeting. Abstentions
and broker non-votes with regard to any item being acted upon at the Meeting
will not be treated as votes cast.
<TABLE>
<CAPTION>
SHARES SHARES
SUBJECT TO BENEFICIALLY
OPTIONS OWNED AS A
SHARES EXERCISABLE PERCENTAGE OF
BENEFICIALLY WITHIN 60 SHARES
TRUSTEE OWNED AS OF DAYS OF OUTSTANDING
NAME AND PRINCIPAL OCCUPATION OR EMPLOYMENT AGE SINCE 4/8/94(1) 4/8/94 AS OF 4/8/94
- --------------------------------------------- --- ------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
ABRAHAM D. GOSMAN............................ 65 1985 819,696(2) 121,235 %
Chairman and Chief Executive Officer of the
Company
DAVID F. BENSON.............................. 44 1991 12,103 8,353 (3)
President of the Company
EDWARD W. BROOKE............................. 74 1985 69,126(4) 20,000 (3)
Partner in the law firm of O'Connor & Hannan
HUGH L. CAREY................................ 74 1985 22,000 0 (3)
Executive Vice President of W.R. Grace &
Company, a manufacturer of specialty
chemicals and materials, and Of Counsel to
the law firm of Whitman & Ransom
ROBERT CATALDO............................... 69 1985 17,000 0 (3)
President of Sheldon Corporation, a health
care and real estate consulting firm
PHILIP L. LOWE............................... 76 1987 21,500(5) 20,000 (3)
Principal of Philip L. Lowe and Associates, a
consulting firm
THOMAS J. MAGOVERN........................... 51 1985 6,250 0 (3)
Principal of Nationwide Financial Corp., a
real estate consulting firm
GERALD TSAI, JR.............................. 65 1992 30,666 22,666 (3)
Chairman, Chief Executive Officer and
President of Delta Life Corporation, an
annuity company
FREDERICK W. ZUCKERMAN....................... 58 1990 23,500 20,000 (3)
Vice President and Treasurer of IBM
Corporation, a computer manufacturer
All trustees and officers as a group......... -- -- 1,039,947(6) 222,737 %
(16 in number)
<FN>
- ---------------
(1) Unless otherwise indicated, the number of Shares stated as being owned
beneficially includes (i) Shares beneficially owned by spouses, minor
children and/or other relatives in which the trustee may share voting or
investment power and (ii) any Shares listed as being subject to options
exercisable within 60 days of April 8, 1994.
(2) Includes 162,000 Shares owned by A.M.A. Financial Corporation, of which Mr.
Gosman is President and a 98% shareholder.
(3) Less than 1%.
(4) Does not include 817 Shares owned by Mr. Brooke's wife, 2,271 Shares owned
of record by Mr. Brooke as custodian for his son and 2,100 Shares owned of
record by Mr. Brooke as trustee for certain of his grandchildren, as to
which Shares Mr. Brooke disclaims any beneficial interest.
</TABLE>
8
<PAGE> 11
(5) Does not include 1,500 Shares owned by Mr. Lowe's wife, as to which Shares
Mr. Lowe disclaims any beneficial interest.
(6) Does not include an aggregate of 6,688 Shares owned by or for parents,
spouses or children, as to which Shares the trustees or officers disclaim
any beneficial interest.
Abraham D. Gosman has been the Chairman of the Company since its
organization in 1985 and became Chief Executive Officer in February 1991. He was
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 owned and operated alcohol treatment facilities. On April 12, 1991,
involuntary proceedings under Chapter 11 of the Federal Bankruptcy Code were
filed with respect to 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. In August 1991,
Mediplex completed an initial public offering of its stock. Mr. Gosman currently
owns approximately 27% of the outstanding stock 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.
Edward W. Brooke has been a partner of O'Connor & Hannan, a Washington,
D.C. law firm, since 1979. From 1979 until October 1990 he was Of Counsel to
Csaplar & Bok, a Boston law firm. He was United States Senator from
Massachusetts from January 1967 to January 1979 and the Massachusetts Attorney
General from 1963 to 1967. He is a director of Grumman Corporation.
Hugh L. Carey is an Executive Vice President and the Director of the Office
of Environmental Policy of W. R. Grace & Company, a manufacturer of specialty
chemicals and materials, and Of Counsel to the law firm of Whitman & Ransom. He
was a partner in the law firm of Finley, Kumble, Wagner, Underberg, Manley,
Myerson & Casey from 1982 through 1987. He was Governor of the State of New York
from January 1974 to January 1982. He is a director of First Albany Companies,
Inc. and China Trust Bank.
Robert Cataldo has been President of Sheldon Corporation, a health care and
real estate consulting firm, since July 1983. He is a director of Mediplex.
Philip L. Lowe has been a principal of Philip L. Lowe and Associates, a
consulting firm, and its predecessors for more than five years. Mr. Lowe is a
director of Analog Devices, Inc.
Thomas J. Magovern has been a principal of Nationwide Financial Corp., a
real estate consulting firm, since September 1993. Mr. Magovern was Executive
Vice President of Northeast Savings, F.A. from January 1991 until February 1993.
Prior to that time he had been Senior Vice President of City Savings Bank,
F.S.B. from April 1989 until January 1991 and a Vice President of that bank for
more than five years. On December 8, 1989, City Savings Bank, F.S.B. was taken
over by the Resolution Trust Corporation.
Gerald Tsai, Jr. has been the Chairman, Chief Executive Officer and
President of Delta Life Corporation, an annuity company, since February 1993.
Mr. Tsai retired in 1991 as Chairman of the Executive Committee of the Board of
Directors of Primerica Corporation (a diversified financial services company),
which position
9
<PAGE> 12
he held since December 1988. From January 1987 to December 1988, Mr. Tsai was
Chairman, and from June 1986 to December 1988, he was Chief Executive Officer of
Primerica Corporation. He is a director of Rite Aid Corporation, Sequa
Corporation, Triarc Companies, Inc., Proffitt's, Inc. and Zenith National
Insurance Corp. Mr. Tsai is also a Trustee of Boston University and New York
University Medical Center.
Frederick W. Zuckerman has been Vice President and Treasurer of IBM
Corporation, a computer manufacturer, since September 1993. He was Senior Vice
President and Treasurer of RJR Nabisco, Inc., a consumer food and tobacco
producer, from February 1991 until August 1993. Mr. Zuckerman was Vice President
and Treasurer of Chrysler Corporation, a motor vehicle manufacturer, from
December 1981 until September 1990. Mr. Zuckerman is a director of The Singapore
Fund, Northeast Federal Corp., The Turner Corporation, Anacomp, Inc., The Japan
Equity Fund, Northeast Savings Bank, F.A. and NVR, Inc.
FURTHER INFORMATION REGARDING THE BOARD OF TRUSTEES AND EXECUTIVE OFFICERS
The Board of Trustees of the Company met 21 times in 1993. Each trustee
attended at least 75% of the meetings of the Board of Trustees and all
committees on which he served in 1993.
The Executive Committee, consisting of Messrs. Gosman, Brooke and
Zuckerman, exercises all the powers of the Board of Trustees between meetings of
the Board of Trustees, except such powers as are reserved to the Board of
Trustees by law. The Executive Committee met 11 times in 1993.
The Audit Committee, consisting of Messrs. Lowe, Magovern and Tsai, confers
with Coopers & Lybrand, independent accountants, regarding the plans, scope and
results of their audits and any recommendations they may have with respect to
internal accounting controls and other matters relating to accounting procedures
and the books and records of the Company. The Audit Committee met four times in
1993.
The Nominating Committee, consisting of Messrs. Gosman, Brooke and Cataldo,
makes recommendations to the Board of Trustees concerning the Board's size and
composition and suggests prospective candidates for trustee. The Nominating
Committee met once during 1993. The Nominating Committee will consider
shareholder recommendations for nominees for trustee. Shareholders of the
Company wishing to make recommendations should write to the Nominating Committee
c/o Michael S. Benjamin, Esquire, Senior Vice President and Secretary,
Meditrust, 197 First Avenue, Needham, Massachusetts 02194.
The Personnel and Compensation Committee, consisting of Messrs. Carey,
Cataldo, Lowe and Magovern, reviews the compensation of and other employment
matters relating to the Company's officers and administrative employees. The
Personnel and Compensation Committee met four times in 1993.
The Stock Option Committee, consisting of Messrs. Magovern and Zuckerman,
administers the Company's 1988 Stock Option Plan and 1992 Equity Incentive Plan.
The Stock Option Committee did not hold any formal meeting in 1993.
The Finance Committee, consisting of Messrs. Benson, Carey, Tsai and
Zuckerman, reviews and recommends to the Board debt and equity financing
opportunities available to the Company. The Finance Committee did not meet
during 1993.
The Company pays each trustee who is not otherwise an employee of the
Company a fee of $21,000 per year for services as a trustee plus $1,000 per day
for attendance at each meeting of the full Board of Trustees. In addition, the
Chairman and each member of a committee of the Board of Trustees are paid $1,250
and $1,000, respectively, for attendance at a committee meeting. The Company
reimburses the trustees for travel expenses incurred in connection with their
duties as trustees of the Company. In addition, the Company from time to time
pays trustees additional fees in connection with various special projects. In
1993, the Company paid $200,000 to Mr. Cataldo for his services to the Company
as a special negotiator for selected loans, and
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paid $15,000 to Mr. Lowe, $10,000 to Mr. Tsai and $10,000 to Mr. Zuckerman, for
their services to the Company in connection with the examination of certain
acquisition opportunities.
The Company has adopted a Deferred Compensation Plan for trustees of the
Company pursuant to which the trustees may defer receipt of fees. Currently, no
trustee participates in such plan.
There are no family relationships among any of the trustees or executive
officers of the Company.
Effective January 1, 1993, Abraham D. Gosman entered into an Employment
Agreement with the Company pursuant to which he will serve as Chief Executive
Officer of the Company. The Employment Agreement has an initial term of four
years which may be renewed for additional terms by mutual agreement of the
Company and Mr. Gosman. Mr. Gosman's base compensation is $900,000 per year. In
addition, Mr. Gosman will receive annually 25,000 Shares during the term of the
Employment Agreement pursuant to the Company's 1992 Equity Incentive Plan. In
the event of a "Change of Control" (which is defined as the acquisition by any
person or group of 20% or more of the Shares, but only if a majority of the
"Continuing Trustees" (defined in the Employment Agreement generally as the
current trustees and any trustee nominated or elected by the current trustees)
disapprove of such acquisition), Mr. Gosman shall be paid his base salary
through the remaining term of the Employment Agreement, less the amount of
salary and benefits payable to Mr. Gosman by a new employer. Mr. Gosman may upon
30 days' prior written notice to the Company demand the present value of such
amount in a lump sum. Mr. Gosman shall also be entitled to participate in
benefit plans of the Company until he is employed by a new employer. In the
event of a termination resulting from a cause other than death, disability or a
"Termination For Cause" (defined in the Employment Agreement as a termination
due to a material breach of the Employment Agreement or the commission of
certain other wrongful acts), Mr. Gosman shall be paid his base salary for one
year, less the amount of compensation payable to Mr. Gosman by a new employer.
In the event of a Termination for Cause or termination after such annual review
of the Board of Trustees, Mr. Gosman is not entitled to receive any severance
payments.
ITEM II
AMENDMENTS TO THE COMPANY'S DECLARATION OF TRUST
TO AUTHORIZE ADDITIONAL CLASSES AND SERIES OF SHARES
DESCRIPTION OF PROPOSED AMENDMENTS
The Company's Board of Trustees has proposed amendments to the Company's
Declaration of Trust which would authorize the Company to issue shares of one or
more additional classes and/or series of shares of beneficial interest without
par value. These shares, which would likely take the form of preferred stock,
are hereinafter referred to as the "Preferred Shares". If the proposed
amendments are approved, the Board of Trustees would be empowered, without the
necessity of further action or authorization by the Company's shareholders
(unless required in a specific case by applicable laws or regulations or stock
exchange rules), to authorize the issuance of the Preferred Shares from time to
time in one or more classes and/or series, and to fix by resolution or
resolutions, designations, preferences, limitations and relative rights of each
such class or series. Each class and/or series of Preferred Shares could, as
determined by the Board of Trustees at the time of issuance, rank, with respect
to dividends and redemption and liquidation rights, senior to the Company's
issued and outstanding Shares. No such shares are presently authorized by the
Company's Declaration of Trust and the Company does not, at present, have any
agreements, understandings or arrangements concerning the issuance of any such
shares.
The amendments would authorize the Board of Trustees to determine, among
other things, with respect to each class or series of Preferred Shares which may
be issued: (a) the distinctive designation and number of shares constituting
such class or series; (b) the dividend rates, if any, on the shares of that
class or series and
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whether dividends would be payable in cash, property, rights or securities; (c)
whether dividends would be non-cumulative, cumulative to the extent earned,
partially cumulative or cumulative and, if cumulative, the date from which
dividends on the series would accumulate; (d) whether, and upon what terms and
conditions, the shares of that class or series would be convertible into or
exchangeable for other securities or cash or other property or rights; (e)
whether, and upon what terms and conditions, the shares of that class or series
would be redeemable; (f) the rights and the preferences, if any, to which the
shares of that class or series would be entitled in the event of voluntary or
involuntary dissolution or liquidation of the Company; (g) whether a sinking
fund would be provided for the redemption of the class or series and, if so, the
terms of and amounts payable into such sinking fund; (h) whether the holders of
such securities would have voting rights and the extent of those voting rights;
and (i) any other preferences, privileges and relative rights of such class or
series as the Board of Trustees may deem advisable. Holders of the Company's
Shares have no preemptive right to purchase or otherwise acquire any Preferred
Shares that may be issued in the future.
The text of the proposed amendments is attached hereto as Exhibit A and the
foregoing summary is qualified in its entirety by reference to such text.
Provisions of the Declaration of Trust that are to be deleted by the proposed
amendments are indicated by lineation in Exhibit A. Provisions that are to be
added to the Declaration of Trust by the proposed amendments are indicated by
underlined, bold-faced type in Exhibit A.
If the proposed amendments are approved, any technical modifications to the
Declaration of Trust necessary or appropriate to effect the proposed amendments,
including modifications to the index, will also be deemed to be authorized.
REASONS FOR AND POSSIBLE EFFECTS OF PROPOSED AMENDMENTS
The Board of Trustees recommends the authorization of the Preferred Shares
to increase the Company's financial flexibility. The Board believes that the
complexity of modern business financing and acquisition transactions requires
greater flexibility in the Company's capital structure than now exists. The
Board believes that the Preferred Shares would be an attractive investment and
would provide the Company with a significant new source of capital, which will
enhance the continued growth and success of the Company. The Preferred Shares
would be available for issuance from time to time as determined by the Board of
Trustees for any proper corporate purpose. Such purposes might include, without
limitation, issuance in public or private sales for cash as a means of obtaining
additional capital for use in the Company's business and operations, and
issuance as part or all of the consideration required to be paid by the Company
for acquisitions of other businesses or properties. The Company does not, at
present, have any agreements, understandings or arrangements which would result
in the issuance of any Preferred Shares.
It is not possible to state the precise effect of the authorization of the
Preferred Shares upon the rights of holders of Shares until the Board of
Trustees determines the respective preferences, limitations and relative rights
of the holders of one or more classes or series of the Preferred Shares.
However, such effect might include: (a) reduction of the amount otherwise
available for payment of dividends on Shares, to the extent dividends are
payable on any issued Preferred Shares, and restrictions on dividends on Shares
if dividends on the Preferred Shares are in arrears; (b) dilution of the voting
power of the Shares to the extent that the Preferred Shares have voting rights;
and (c) the holders of Shares not being entitled to share in the Company's
assets upon liquidation until satisfaction of any liquidation preference granted
to the Preferred Shares.
The amendments may be viewed as having the effect of discouraging an
unsolicited attempt by another person or entity to acquire control of the
Company. Issuances of authorized Preferred Shares can be implemented, and have
been implemented by some companies in the past, with voting or conversion
privileges intended to make acquisition of a company more difficult or more
costly. Such an issuance could discourage or
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limit the shareholders' participation in certain types of transactions that
might be proposed (such as a tender offer), whether or not such transactions
were favored by the majority of the shareholders, and could enhance the ability
of officers and trustees to retain their positions. It is noted, however, that
the Board currently has the power under the Declaration of Trust to redeem
Shares of any person or entity which acquires more than 9.9% of the outstanding
Shares in order to protect the Company's status as a real estate investment
trust under the Internal Revenue Code. Consequently, the approval of the
proposed amendments should have little incremental effect in discouraging
unsolicited take-over attempts.
The affirmative vote of the holders of a majority of the outstanding Shares
of the Company entitled to vote at the Meeting is required to authorize the
proposed amendments to the Declaration of Trust. The proposed amendments will
require, and are conditioned on receiving, the consent of certain of the
Company's lenders.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENTS TO THE
DECLARATION OF TRUST. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY A CONTRARY CHOICE ON THE PROXY CARD.
ITEM III
SHAREHOLDER PROPOSAL
The approval of the following shareholder proposal, if presented at the
Meeting, requires the affirmative vote of holders of Shares representing a
majority of the votes cast on the proposal at the Meeting.
PROPOSAL: Mr. & Mrs. Jerome R. Mikulski (the "Proponents"), 4715 Caviou Place,
Colorado Springs, Colorado 80918, owners of 100 Shares, have advised the Company
that they intend to submit the following proposal for action at the Meeting. The
Board of Trustees disclaims any responsibility for the content of the proposal
and for the statement made in support thereof, which are presented as received
from the Proponents:
RESOLVED: That the shareholders of Meditrust recommend that the Board of
Directors take the necessary steps to institute a salary ceiling such that no
senior executive officer or director or consultant acting in the capacity of an
executive officer or director of the Company receive a combined salary and other
compensation which is more than one hundred and fifty (150%) of the salary
provided to the President of the United States.
REASONS: There is no corporation which exceeds the size or has the complexity of
the government of the United States run by the President of the United States.
Even most government agencies far exceed the size, as measured by personnel and
budget, of any private corporation. The President of the United States receives
a salary of $200,000, while the heads of agencies and even members of Congress
are paid somewhat in excess of $100,000.
In order to overcome even the appearance that officers of public
corporations run the corporations for their benefit rather than for the benefit
of the shareholders, the salary and compensation should not exceed that set
forth above. Usually, there is no direct correlation between the profitability
of a corporation and the compensation to officers. In fact, in many
corporations, the compensation increases even as profits fall. Thus, it is clear
that compensation does not usually serve as an incentive for a better run or
more profitable corporation. Any officer who believes he can better his
corporation should be sufficiently motivated by stock options or by his purchase
of stock on the open market.
There is a general consensus in the United States that corporate officials
are grossly overpaid and that this state of affairs is promulgated by the "hands
off " policy of Boards of Directors. Many qualified people would gladly step in
and do as good a job as the incumbent officers of the Corporation and they would
have no hesitation to serve under the aforementioned ceiling on compensation.
If you agree, please mark your proxy FOR this resolution.
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BOARD OF TRUSTEES' OBJECTIONS TO THE PROPOSAL
The Proponents request that the Company voluntarily cap the total pay and
other compensation of its senior executive officers and trustees at no more than
150% of the pay of the President of the United States of America. Adoption of
the Proponents' proposal would apply a rigid standard to determining
managements' salaries, removing the flexibility needed to establish appropriate
levels of compensation.
Decisions on the appropriate level of compensation for management must be
able to be made on a case by case basis by the Company's Board of Trustees. It
is generally accepted that compensation must attract, motivate and retain
qualified executives. Without flexibility in establishing appropriate levels of
compensation such goals cannot be achieved. Only after thoughtful and extensive
consideration of relevant data are salaries and other benefits recommended to
the Board of Trustees by the Compensation Committee. Adoption of this proposal
would restrict the ability of the Company's Board of Trustees to establish
appropriate compensation for each individual member of management by taking into
consideration factors specific to each such person. To replace such flexibility
with a rigid compensation scheme would defeat the purpose of compensation for
retaining and motivating qualified executives. Moreover, if limitations, such as
those presented, were to be placed on the Company, they would remove the
flexibility needed to compete for executive talent, particularly because other
companies would not be so limited.
The proposal's comparison to salaries for government service is misplaced
and inappropriate. The government does not strive for profitability and does not
use compensation to attract qualified office holders and employees. A desire for
public service and other considerations motivate candidates for elective office.
Further, certain elected officials, especially the President of the United
States, enjoy perquisites having a value far in excess of their salary. The true
compensation of these officials thus greatly exceeds the pay ceiling suggested
by the proposal.
For the above reasons, the Board believes adoption of the limitations urged
by the proposal would be detrimental to the Company and its shareholders.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE AGAINST THIS PROPOSAL. PROXIES
SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY A CONTRARY
CHOICE ON THE PROXY CARD.
CERTAIN TRANSACTIONS
On January 27, 1994, the Company entered into a Consent Agreement (the
"Consent Agreement") with Sun Healthcare Group, Inc., a Delaware corporation
("Sun"), pursuant to which the Company agreed to consent to a proposed merger
(the "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 and/or their respective subsidiaries or affiliates (the
"Mediplex Financing Documents").
As a condition to Meditrust's consent to the Merger, Sun and Mediplex have
agreed to (i) certain modifications to the existing Mediplex Financing Documents
and (ii) certain terms which will govern the ongoing relationship and future
transactions among the Company, Mediplex and Sun.
During 1993, Mediplex guaranteed the lessees' and borrowers' obligations or
provided working capital assurances for 28 of the Company's facilities. In
addition, the Company is negotiating with Mediplex to lease additional
facilities. Of these 28 facilities, 27 are leased to or mortgaged by affiliates
of Mediplex. The Company's revenue from these facilities was approximately
$34,516,000 for the year ended December 31,
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1993, which reflects a rent concession of $3,000,000 which the Company granted
to Mediplex as an inducement to its entry into seven new leases with the Company
in 1993. A Mediplex affiliate is a subordinated participant in six of the
Company's permanent mortgage loans. The remaining lease for which a working
capital assurance is provided by Mediplex relates to the Holliswood, Queens, New
York facility.
Since New York regulations prohibit the operation of certain health care
facilities by corporations with stockholders other than natural persons, the
land and facility owned by one of the Company's subsidiaries is leased to a
corporation wholly-owned by Mr. Gosman. Mediplex provides consulting services to
the licensed operator. Total revenues earned by the Company from this lease
arrangement during 1993 were $3,421,000.
Until January 31, 1993, the Company subleased office space at its principal
executive offices to Continuum Care Corp. ("CCC"), a wholly-owned subsidiary of
Mediplex. Prior to December 31, 1992, CCC was owned principally by two adult
sons of Mr. Gosman. CCC paid annual rent to the Company under the sublease of
$76,243 plus 42.5% of annual common area expenses. The sublease expired on
January 31, 1993.
The Company currently leases its principal executive offices from Mediplex
pursuant to a letter of intent. The letter of intent provides for an average
annual rental fee of $181,776 over the proposed initial five-year term of the
lease, which expires on March 31, 1999. The proposed lease term may be extended
for an additional term of one year and ten months. The proposed lease, if
executed by the Company, will be assigned to Mr. Gosman or his nominee upon the
consummation of the Merger.
The Company has provided financing to affiliates of Life Care Centers of
America, Inc. ("Life Care") for the construction of three health care facilities
to be located in Auburn, Plymouth and Raynham, Massachusetts. Life Care has
retained CCC to construct the facilities pursuant to turnkey development
agreements with CCC in the amounts of $10,431,900, $10,953,585, and $11,912,824
for the Auburn, Plymouth and Raynham facilities, respectively.
All of the terms and conditions of the above transactions and arrangements
were approved by the Company's Independent Trustees. The Board of Trustees
believes that the Company entered into the above transactions in the ordinary
course of its business, and the terms of these transactions and arrangements are
fair as to the Company and were made on terms not less favorable to the Company
than those prevailing at the time for comparable transactions and arrangements
with other persons.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand were the independent accountants of the Company for
fiscal 1993. The Board of Trustees intends to select the independent accountants
of the Company for fiscal 1994 at its annual meeting on May 26, 1994.
Representatives of Coopers & Lybrand will be present at the Meeting and will be
afforded an opportunity to make a statement if they desire to do so. Such
representatives of Coopers & Lybrand will also be available at that time to
respond to appropriate questions addressed to the officer presiding at the
Meeting.
PROPOSALS BY SHAREHOLDERS
If any shareholder intends to present a proposal at the Company's next
Annual Meeting of Shareholders and wishes to request that the same be included
in the proxy statement and form of proxy to be furnished on behalf of the Board
of Trustees with respect to such meeting, a copy of such proposal, meeting the
eligibility standards promulgated by the Securities and Exchange Commission,
must be received by the Company at its principal executive offices, 197 First
Avenue, Needham, Massachusetts 02194 Attention: Michael S. Benjamin, Esquire,
Senior Vice President and Secretary on or before December 23, 1994.
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OTHER MATTERS
The Board of Trustees knows of no business, matters or proposals which will
be presented for consideration at the Meeting other than as discussed above.
However, if any such business, matters or proposals should come before the
Meeting, it is the intention of the persons named in the enclosed form of proxy
to vote the proxies with respect to any such business, matters or proposals in
accordance with their best judgment.
The cost of preparing, assembling and mailing the proxy material will be
borne by the Company. The Company will request persons, firms and corporations
holding Shares in their names, or in the name of their nominees, which Shares
are beneficially owned by others, to send proxy material to and obtain proxies
from such beneficial owners. The Company will reimburse such holders for their
reasonable expenses in so doing. The Company has retained D.F. King & Co., Inc.
("King") to assist with the solicitation of proxies on behalf of the Board of
Trustees of the Company. King will solicit proxies by means of mailings and
telegraphic and telephonic communications. The estimated cost of King's proxy
solicitation services is $8,000, which will be borne by the Company. Employees
of the Company may also solicit proxies by use of telegraphic and telephonic
communications, in addition to the use of the mails.
By Order of the Board of Trustees
Michael S. Benjamin
Senior Vice President and Secretary
April 22, 1994
THE DECLARATION OF TRUST ESTABLISHING MEDITRUST, DATED AUGUST 6, 1985, AS
AMENDED (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.
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EXHIBIT A
ITEM II
PROPOSED AMENDMENTS TO THE DECLARATION
OF TRUST TO AUTHORIZE ADDITIONAL
CLASSES AND SERIES OF SHARES
6.1 Description of Shares. The interest of the Shareholders shall be
divided into shares of beneficial interest which shall be known collectively as
"Shares," all of which shall be validly issued, fully paid and nonassessable by
the Trust upon receipt of full consideration for which they have been issued or
without additional consideration if issued by way of share dividend or share
split. Each holder of Shares shall as a result thereof be deemed to have agreed
to and be bound by the terms of this Declaration. The Shares may be issued for
such consideration as the Trustees shall deem advisable. There THE SHARES shall
be one class of Shares without par value. The number of Shares which the Trust
shall have authority to issue is unlimited. The Trustees are hereby expressly
authorized at any time, and from time to time, to provide for the issuance of
Shares upon such terms and conditions and pursuant to such agreements as the
Trustees may determine.
THE SHARES MAY CONSIST OF ONE OR MORE CLASSES OR SERIES. THE TRUSTEES MAY,
FROM TIME TO TIME, ESTABLISH AND DESIGNATE THE DIFFERENT CLASSES AND SERIES AND
DESIGNATE VARIATIONS IN THE RELATIVE RIGHTS AND PREFERENCES BETWEEN THE
DIFFERENT CLASSES AND SERIES AS PROVIDED BELOW, BUT IN ALL OTHER RESPECTS ALL
SHARES SHALL BE IDENTICAL.
SUBJECT TO THE PROVISIONS HEREOF, THE TRUSTEES ARE AUTHORIZED TO ESTABLISH
ONE OR MORE CLASSES OR SERIES OF SHARES AND, TO THE EXTENT NOW OR HEREAFTER
PERMITTED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, TO FIX AND DETERMINE
THE PREFERENCES, VOTING POWERS, QUALIFICATIONS AND SPECIAL OR RELATIVE RIGHTS OR
PRIVILEGES OF EACH CLASS OR SERIES INCLUDING, BUT NOT LIMITED TO:
(A) THE NUMBER OF SHARES TO CONSTITUTE SUCH CLASS OR SERIES AND THE
DISTINGUISHING DESIGNATION THEREOF;
(B) THE DIVIDEND RATE ON THE SHARES OF SUCH CLASS OR SERIES AND THE
PREFERENCES, IF ANY, AND THE SPECIAL AND RELATIVE RIGHTS OF SUCH SHARES OF
SUCH SERIES AS TO DIVIDENDS;
(C) WHETHER OR NOT THE SHARES OF SUCH CLASS OR SERIES SHALL BE
REDEEMABLE, AND, IF REDEEMABLE, THE PRICE, TERMS AND MANNER OF REDEMPTION;
(D) THE PREFERENCES, IF ANY, AND THE SPECIAL AND RELATIVE RIGHTS OF
THE SHARES OF SUCH CLASS OR SERIES UPON THE VOLUNTARY OR INVOLUNTARY
DISSOLUTION OR LIQUIDATION OF THE COMPANY;
(E) WHETHER OR NOT THE SHARES OF SUCH CLASS OR SERIES SHALL BE SUBJECT
TO THE OPERATION OF A SINKING OR PURCHASE FUND AND, IF SO, THE TERMS AND
PROVISIONS OF SUCH FUND;
(F) WHETHER OR NOT THE SHARES OF SUCH CLASS OR SERIES SHALL BE
CONVERTIBLE INTO ANY OTHER CLASS OR SERIES OF SHARES AND, IF SO, THE
CONVERSION PRICE OR RATIO AND OTHER CONVERSION RIGHTS;
(G) THE CONDITIONS UNDER WHICH THE SHARES OF SUCH CLASS OR SERIES
SHALL HAVE SEPARATE VOTING RIGHTS OR NO VOTING RIGHTS; AND
(H) SUCH OTHER DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH CLASS OR SERIES TO THE FULL EXTENT NOW OR HEREAFTER
PERMITTED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
NOTWITHSTANDING THE FIXING OF THE NUMBER OF SHARES CONSTITUTING A
PARTICULAR CLASS OR SERIES, THE TRUSTEES MAY AT ANY TIME AUTHORIZE THE ISSUANCE
OF ADDITIONAL SHARES OF THE SAME CLASS OR SERIES.
BEFORE THE TRUST SHALL ISSUE ANY SHARES OF ANY NEWLY DESIGNATED CLASS OR
SERIES, A CERTIFICATE SETTING FORTH THE RESOLUTION OR RESOLUTIONS OF THE
TRUSTEES FIXING THE VOTING POWERS, DESIGNATIONS, PREFERENCES AND RIGHTS OF
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SUCH CLASS OR SERIES, THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF,
AND THE NUMBER OF SHARES OF SUCH CLASS OR SERIES AUTHORIZED BY THE TRUSTEES,
SHALL BE EXECUTED BY A MAJORITY OF THE TRUSTEES AND FILED WITH THE SECRETARY OF
STATE OF THE COMMONWEALTH OF MASSACHUSETTS IN ACCORDANCE WITH SECTION 8.4
HEREOF.
The holders of Shares shall be entitled to receive, when and as declared
from time to time by the Trustees out of any funds legally available for the
purpose, such dividends or distributions as may be declared from time to time by
the Trustees. In the event of the termination of the Trust pursuant to Section
8.1 or otherwise, or upon the distribution of its assets, the assets of the
Trust available for payment and distribution to Shareholders shall be
distributed ratably among the holders of Shares at the time outstanding in
accordance with Section 8.2. All EXCEPT AS OTHERWISE AUTHORIZED BY THE TRUSTEES
WITH RESPECT TO ANY PARTICULAR CLASS OR SERIES, ALL Shares shall have equal
noncumulative voting rights at the rate of one vote per share and equal
dividend, distribution, liquidation and other rights, and shall have no
preference, conversion, exchange, sinking fund or redemption rights. No holder
of Shares shall be entitled as a matter of right to subscribe for or purchase
any part of any new or additional issue of Shares of any class whatsoever of the
Trust, or of securities convertible into any shares of any class whatsoever of
the Trust, whether now or hereafter authorized and whether issued for cash or
other consideration or by way of dividend.
8.3 Amendment Procedure. This Declaration may be amended (except as to the
limitations of personal liability of the Shareholders, Trustees, officers,
employees and agents of the Trust and the prohibition of assessments upon
Shareholders set forth in Section 7.2) at a meeting of Shareholders by holders
of Shares representing a majority (or, with respect to (i) amendments to Article
V, (ii) amendments to the proviso to Section 8.1, and (iii) amendments to this
Section 8.3 that would reduce the percentage vote required to approve any
amendments to this Declaration, three quarters) of the total number of votes
authorized to be cast by Shares, then outstanding and entitled to vote thereon,
PROVIDED THAT THE TRUSTEES MAY AUTHORIZE ONE OR MORE CLASSES OR SERIES OF SHARES
TO VOTE SEPARATELY AS A CLASS OR SERIES WITH RESPECT TO CERTAIN OR ALL
AMENDMENTS TO THE DECLARATION AS DETERMINED BY THE TRUSTEES. Two-thirds of the
Trustees may, after fifteen (15) days written notice to the Shareholders, also
amend this Declaration without the vote or consent of Shareholders if they deem
it necessary to conform this Declaration to the requirements of (i) the REIT
Provisions of the Internal Revenue Code, (ii) other applicable federal laws or
regulations or (iii) any state securities or "blue sky" laws or requirements of
administrative agencies thereunder in connection with any public offering of
Shares, but the Trustees shall not be liable for failing so to do. Actions by
the Trustees pursuant to Section 6.1 or Section 9.6(a) that result in amending
this Declaration shall be effected without vote or consent of Shareholders.
8.4 Amendments Effective. Any amendment pursuant to any Section of this
Declaration of Trust (INCLUDING ANY RESOLUTION ADOPTED PURSUANT TO SECTION 6.1
HEREOF) shall not become effective until a certification in recordable form
signed by a majority of the Trustees setting forth an amendment and reciting
that it was duly adopted as aforesaid or a copy of this Declaration, as amended,
in recordable form, and executed by a majority of the Trustees, is filed with
the Secretary of State of the Commonwealth of Massachusetts.
8.6 Sale of Assets, Merger. The Trustees, with the approval of a majority
of the Trustees (and, in the case of a merger, a majority of the Independent
Trustees) and the affirmative vote or written consent of the holders of Shares
representing (i) a majority of the total number of votes authorized to be cast
by Shares then outstanding and entitled to vote thereon AND (II) SUCH PERCENTAGE
AS DETERMINED BY THE TRUSTEES OF THE TOTAL NUMBER OF VOTES AUTHORIZED TO BE CAST
BY ANY CLASS AND/OR SERIES OF SHARES AS SHALL HAVE BEEN AUTHORIZED BY THE
TRUSTEES TO VOTE SEPARATELY AS A CLASS OR SERIES ON SUCH MATTERS, may: (a) sell,
lease or exchange all or substantially all of the property and assets of the
Trust or (b) merge the Trust into any corporation, association, trust or
organization.
18
<PAGE> 21
PRELIMINARY COPY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 26, 1994
MEDITRUST
The undersigned, having received the Notice of Annual Meeting and the Board
of Trustees' Proxy Statement, hereby appoint(s) Abraham D. Gosman, Edward W.
Brooke and David F. Benson, and each of them, Proxies of the undersigned (with
full power of substitution) to attend the above Annual Meeting of Shareholders
of Meditrust to be held May 26, 1994, and all adjournments thereof (the
"Meeting"), and there to vote all shares of beneficial interest of Meditrust
that the undersigned would be entitled to vote, if personally present, in regard
to all matters which may come before the Meeting.
The undersigned hereby confer(s) upon the Proxies, and each of them,
discretionary authority (i) to consider and act upon such business, matters or
proposals other than the proposals set forth below as may properly come before
the Meeting and (ii) with respect to the election of trustees in the event that
any of the nominees is unable or unwilling to serve if elected. THIS PROXY WHEN
PROPERLY EXECUTED WILL BE VOTED IN THE MANNER SPECIFIED HEREIN. IF NO
SPECIFICATION IS MADE, THE PROXIES INTEND (I) TO VOTE TO FIX THE NUMBER OF
TRUSTEES AT 9, (II) TO VOTE FOR ALL OF THE NOMINEES, (III) TO VOTE FOR PROPOSAL
2 AND (IV) TO VOTE AGAINST PROPOSAL 3.
/X/ Please mark votes as in this example
<TABLE>
<S> <C> <C>
1. To fix the number of trustees at 9 and to vote for the / / FOR all / / WITHHELD from all nominees
election of all nominees listed below (except as otherwise nominees
indicated).
</TABLE>
NOMINEES: Abraham D. Gosman, David F. Benson, Edward W. Brooke, Hugh
L. Carey, Robert Cataldo,
Philip L. Lowe, Thomas J. Magovern, Gerald Tsai,
Jr. and Frederick W. Zuckerman
- --------------------------------------------------------------------------------
FOR, EXCEPT VOTE WITHHELD FROM THE NOMINEE(S) LISTED ABOVE
CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE (SEE REVERSE SIDE)
2. To approve the amendments to the Declaration of Trust described in Item II
of the Board of Trustees' Proxy Statement.
FOR / / AGAINST / / ABSTAIN / /
3. To approve the shareholder proposal relating to executive compensation
described in Item III of the Board of Trustees' Proxy Statement.
FOR / / AGAINST / / ABSTAIN / /
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
MARK HERE FOR
ADDRESS CHANGE
AND NOTE AT LEFT / /
<TABLE>
<S> <C>
IN SIGNING, PLEASE WRITE NAME(S) EXACTLY AS APPEARING IN THE
IMPRINT ON THIS CARD. FOR SHARES HELD JOINTLY, EACH JOINT
OWNER SHOULD SIGN. IF SIGNING AS EXECUTOR, OR IN ANY OTHER
REPRESENTATIVE CAPACITY, OR AS AN OFFICER OF A CORPORATION,
PLEASE INDICATE YOUR FULL TITLE AS SUCH.
DATE:
----------------------------- ------------------------------------------
SIGNATURE
DATE:
----------------------------- ------------------------------------------
SIGNATURE
</TABLE>
