<PAGE> 1
FILED PURSUANT TO RULE 424(B)(5)
REGISTRATION NOS. (33-62293 AND
33-59215)
PROSPECTUS SUPPLEMENT
(TO PROSPECTUSES DATED OCTOBER 13, 1995
AND JUNE 1, 1995)
8,000,000 SHARES
[MEDITRUST LOGO]
SHARES OF BENEFICIAL INTEREST
------------------------
Meditrust, a Massachusetts business trust (the "Company"), is the largest
dedicated health care real estate investment trust in the United States based on
its gross real estate investments of approximately $1.9 billion as of December
31, 1995. See "The Company."
The Company's shares of beneficial interest, without par value (the
"Shares"), are listed on the New York Stock Exchange ("NYSE") under the symbol
"MT." On February 14, 1996, the last reported sale price of the Shares as
reported by the NYSE was $34.00 per Share. It is anticipated that approximately
500,000 Shares will be offered outside the United States to non-United States
citizens or residents.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
<TABLE>
=============================================================================================
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO PUBLIC COMMISSIONS(1) COMPANY(2)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.................................... $34.00 $1.70 $32.30
- ---------------------------------------------------------------------------------------------
Total(3)..................................... $272,000,000 $13,600,000 $258,400,000
=============================================================================================
</TABLE>
(1) For information regarding indemnification, see "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $250,000.
(3) The Company has granted the Underwriters a 30-day option to purchase
1,200,000 additional Shares, solely to cover over-allotments, if any. If the
option is exercised in full, the total "Price to Public," "Underwriting
Discounts and Commissions" and "Proceeds to Company" will be $312,800,000,
$15,640,000 and $297,160,000, respectively. See "Underwriting."
------------------------
Of the Shares offered hereby, (i) 7,852,941 Shares are being sold under the
Prospectus dated October 13, 1995 included herein, and (ii) 147,059 Shares are
being sold under the Prospectus dated June 1, 1995 included herein. The
1,200,000 additional Shares subject to the Underwriters' over-allotment option
will, if exercised in whole or in part, be sold under the Prospectus dated June
1, 1995 included herein.
The Shares are offered by the Underwriters when, as and if delivered to and
accepted by the Underwriters and subject to various prior conditions, including
their right to reject orders in whole or in part. It is expected that delivery
of Share certificates will be made in New York, New York on or about February
21, 1996.
NATWEST SECURITIES LIMITED
ALEX. BROWN & SONS
INCORPORATED
DEAN WITTER REYNOLDS INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
PAINEWEBBER INCORPORATED
SMITH BARNEY INC.
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS FEBRUARY 15, 1996.
<PAGE> 2
- --------------------------------------------------------------------------------
- ------------------------------------- -----------------------------------
GROSS REAL ESTATE[1] TOTAL
INVESTMENTS RETURN
(in millions) 10 YEAR
ANNUAL [BAR CHART]
AVERAGE[2]
[BAR CHART] (For Meditrust shares, Dow Jones
Industrial Average and Standard
and Poors's 500)
-----------------------------------
(2) Average of the annual increase or
decrease in market value of the
shares over the previous year plus
year plus dividend income; for the
ten years ended December 31, 1995
- ---------------------------------------
(1) As of December 31, 1986 through
December 31, 1995
- ---------------------------------------
INVESTMENT BY OPERATOR (as of 12/31/95)
[PIE CHART] [BAR CHART]
- ---------------------------------------
MEDITRUST
DISTRIBUTION GROWTH
PER SHARE
(1986 through 1995)
- --------------------------------------------------------------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SHARES OF THE
COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NYSE. SUCH STABILIZING, IF COMMENCED,
MAY BE DISCONTINUED AT ANY TIME.
- --------------------------------------------------------------------------------
S-2
<PAGE> 3
THE COMPANY
Meditrust, established in 1985, is the largest dedicated health care real
estate investment trust in the United States based on its gross real estate
investments of approximately $1.9 billion as of December 31, 1995. The Company
invests in high quality health care facilities managed by experienced operators
and attempts to achieve diversity in its property portfolio by sector of the
health care industry, geographic location, operator and form of investment.
As of December 31, 1995, the Company had investments in 303 facilities,
consisting of 247 long-term care facilities, 24 rehabilitation hospitals, 14
medical office buildings, 10 alcohol and substance abuse and psychiatric
facilities, seven retirement and assisted living facilities, and one acute care
hospital campus. Included in the 303 facilities are 17 properties under
construction that are expected to be completed during the next three to 12
months. The properties are located in 35 states and are operated by 33 health
care companies. Of the 33 different operators, 11 are publicly-traded companies
(i.e., Sun Healthcare Group, Inc., Horizon/CMS Healthcare Corporation, Geriatric
and Medical Centers, Inc., OrNda Healthcorp., Integrated Health Services, Inc.,
Tenet Healthcare Corporation, Columbia/HCA Healthcare Corporation, HealthSouth
Rehabilitation Corporation, The Multicare Companies, Inc., Mariner Health Group,
Inc. and Youth Services International, Inc.), and constitute approximately 47%
of the Company's real estate investments.
During 1995, the Company committed approximately $450 million to new real
estate investments, of which approximately $358 million was funded. Of these
amounts, approximately $92 million was committed and funded during the quarter
ended December 31, 1995.
The Company's real estate investments are either owned by the Company or
secured by a mortgage lien. As of December 31, 1995, permanent mortgage loans
constituted approximately 53%, sale/leaseback transactions constituted
approximately 41% and development mortgage financing constituted approximately
6% of the Company's portfolio as measured by gross real estate investments. The
leases and mortgages provide for rental or interest rates which generally range
from approximately 9% to 13% per annum of the acquisition price or mortgage
amount. The leases and mortgages generally provide for an initial term of 10
years, with the leases having one or more five-year renewal options. The leases
and mortgages also provide for additional rent or interest which are generally
either based upon a percentage of increased revenues over specific base period
revenues of the related properties or a fixed rent or interest escalation
provision.
In addition, the Company usually obtains guarantees from the parent
corporation, if any, of the operator or affiliates or individual principals of
the operator. Many obligations are backed by letters of credit or pledges of
certificates of deposit which cover from three to 12 months of lease or mortgage
payments. In addition, the Company's permanent and development mortgage loans
and leases generally are cross-defaulted or where appropriate
cross-collateralized with other mortgage and development loans, leases or other
agreements between the Company and the same operator or any affiliated
operators. With respect to development mortgage loans, the Company generally
requires guaranteed maximum price construction contracts, performance completion
bonds or guarantees. The Company enters into a development mortgage loan when
the Company will also be the permanent owner or mortgage lender.
------------------------
For United Kingdom purchasers: The Shares offered hereby may not be offered
or sold in the United Kingdom other than to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments,
whether as principal or agent (except in circumstances that do not constitute an
offer to the public within the meaning of the Public Offers of Securities
Regulations 1995 or the Financial Services Act 1986), and this Prospectus
Supplement may only be issued or passed on to any person in the United Kingdom
if that person is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1995.
S-3
<PAGE> 4
In making its investment decisions, the Company reviews, among other
criteria, the operational viability of the facility, the experience and
competency of the operator and the financial strength of the guarantor. From
time to time, the Company enters into transactions with related parties. As of
December 31, 1995, the Company had total commitments of $160 million, $83
million of which was funded, to companies in which Abraham D. Gosman, the
Company's Chairman and Chief Executive Officer, owns a controlling equity
interest. The Company expects to enter into additional transactions with related
parties in the future. All of the terms and conditions of such transactions are
subject to approval by the independent Trustees of the Company. The Board of
Trustees believes that the terms of the transactions which the Company has
entered into with related parties are not less favorable to the Company than
those prevailing at the time for comparable transactions with unrelated persons.
The Company was organized to qualify, and intends to continue to operate,
as a real estate investment trust in accordance with Federal income 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.
In order to meet its ongoing capital requirements for additional
investments, the Company may raise additional capital through a variety of
sources, including the sale of Shares and debt securities and drawings against
its revolving bank lines of credit.
The Company is a self-administered real estate investment trust, with its
principal executive offices at 197 First Avenue, Needham Heights, Massachusetts
02194. Its telephone number is (617) 433-6000.
RECENT DEVELOPMENTS
During January 1996 through the date hereof, the Company committed and
funded approximately $90 million to new real estate investments with
unaffiliated operators, and committed approximately $7 million to a real estate
investment with a company in which Abraham D. Gosman owns an equity interest. Of
this commitment to Mr. Gosman, approximately $750,000 was funded.
On January 17, 1996, the Company entered into a $25 million unsecured
credit facility which expires on April 1, 1996. Loans under this credit facility
bear interest at LIBOR plus 1.25% per annum. See "Capitalization" and "Use of
Proceeds."
During January 1996 through the date hereof, the Company issued unsecured
notes in the aggregate principal amount of $40 million which mature between
January 1997 and January 2006 and bear interest at annual rates ranging from
6.35% to 7.3%.
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Shares
offered hereby (the "Offering"), which are expected to be $258,150,000, for the
repayment of short-term indebtedness which totaled $197 million as of the date
of this Prospectus Supplement. The proceeds of such indebtedness were used for
investments in health care facilities. Such indebtedness bears interest at the
lenders' respective prime rates or LIBOR plus 0.80% to 1.25% per annum; $25
million of such indebtedness matures on April 1, 1996 with the remainder
maturing on or before June 30, 1997. The remainder of the net proceeds from the
Offering will be used for general business purposes, including investments in
additional health care facilities. See "Underwriting." See also "Use of
Proceeds" in the accompanying Prospectuses.
S-4
<PAGE> 5
PRICE RANGE OF SHARES AND DISTRIBUTION HISTORY
The Shares have been traded on the NYSE under the symbol "MT" since 1987.
Prior to that, the Shares were traded on the NASDAQ National Market System. As
of January 23, 1996, there were 5,198 holders of record of the Shares. The
following table sets forth for the periods shown the high and low sale prices
for the Shares as reported on the NYSE composite tape and the distributions
declared by the Company during the periods shown. On February 14, 1996, the last
reported sale price of the Shares as reported by the NYSE was $34.00 per Share.
<TABLE>
<CAPTION>
PRICE OF SHARES
------------------- REGULAR DISTRIBUTIONS
HIGH LOW DECLARED PER SHARE
------- ------- ---------------------
<S> <C> <C> <C>
1993
First Quarter................................. $34.000 $29.125 $0.6275
Second Quarter................................ 33.750 30.250 0.6325
Third Quarter................................. 34.625 31.875 0.6375
Fourth Quarter................................ 34.250 31.250 0.6425
----------
Total.................................................... $2.54
==========
1994
First Quarter................................. $35.250 $31.375 $0.6475
Second Quarter................................ 35.875 32.125 0.6525
Third Quarter................................. 34.250 30.625 0.6575
Fourth Quarter................................ 32.625 28.750 0.6625
----------
Total.................................................... $2.62
==========
1995
First Quarter................................. $32.125 $29.500 $0.6675
Second Quarter................................ $34.125 $29.000 0.6725
Third Quarter................................. $35.500 $32.625 0.6775
Fourth Quarter................................ $35.500 $31.250 0.6825
----------
Total.................................................... $2.70
==========
1996
First Quarter (through February 14, 1996)..... $36.625 $33.375 $0.6875
</TABLE>
S-5
<PAGE> 6
DISTRIBUTIONS
The Company's policy is to make cash distributions on its Shares on a
quarterly basis. The Company has made regular and uninterrupted distributions
which have been increased in each of the 39 quarters since the Company's
inception in 1985.
The distributions of the Company are based upon cash flow (i.e., cash flow
from operating activities available for distribution). As a result of noncash
expenses, primarily depreciation and amortization, cash flow and cash
distributions have exceeded the Company's earnings and profits. Portions of the
distributions which were not attributable to earnings and profits represent a
return of capital and are not subject to federal income tax to the extent they
do not exceed the shareholder's basis in his shares. The Company made cash
distributions aggregating $2.70 per Share in 1995, 30.7% of which was considered
a nontaxable return of capital and 10.6% of which was considered a capital gain.
The Company made cash distributions aggregating $2.62 per Share in 1994 and
$2.54 per Share in 1993, of which 12.6% and 14.9% were considered nontaxable
returns of capital and 0% and 5.3% were considered capital gain, in 1994 and
1993, respectively.
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 Board of Trustees and will depend
on the earnings of the Company, its financial condition and such other factors
as the Board of Trustees deem relevant. In order to qualify for the beneficial
tax treatment afforded to REITs by Sections 856 to 860 of the Internal Revenue
Code, the Company is required to make distributions to holders of its Shares
which annually will be at least 95% of the Company's "real estate investment
trust taxable income."
The first distribution that purchasers of the Shares offered hereby are
expected to participate in will relate to the first quarter of 1996. In prior
years, the distribution relating to the first quarter has typically been paid in
May of such year.
S-6
<PAGE> 7
SELECTED FINANCIAL INFORMATION
<TABLE>
The following table presents selected financial information with respect to
the Company for the five years ended December 31, 1995. This financial
information has been derived from audited financial statements included in the
Company's Annual Reports on Form 10-K for the years ended December 31, 1991
through 1994 and the Company's Current Report on Form 8-K dated January 29,
1996, and should be read in conjunction with those financial statements and the
accompanying footnotes.
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues.............................. $ 209,369 $ 172,993 $ 150,375 $ 132,394 $112,910
-------- -------- -------- -------- --------
Expenses:
Interest expense.................... 64,163 67,479 62,193 58,159 56,886
Depreciation and amortization....... 18,176 17,171 16,277 14,032 13,185
General and administrative
expenses......................... 7,058 7,883 8,269 8,845 4,930
-------- -------- -------- -------- --------
Total expenses........................ 89,397 92,533 86,739 81,036 75,001
-------- -------- -------- -------- --------
Net income before extraordinary
item................................ 119,972 80,460 63,636 51,358 37,909
Loss on prepayment of debt............ 33,454 -- -- -- 3,684
-------- -------- -------- -------- --------
Net income............................ $ 86,518 $ 80,460 $ 63,636 $ 51,358 $ 34,225
======== ======== ======== ======== ========
OTHER DATA:
Shares of beneficial interest
(weighted average).................. 47,563 35,314 31,310 26,360 21,710
Cash flow from operating activities
available for distribution(1)....... $ 141,550 $ 100,513 $ 84,831 $ 67,942 $ 53,950
PER SHARE:
Net income before extraordinary
item................................ $ 2.52 $ 2.28 $ 2.03 $ 1.95 $ 1.75
Loss on prepayment of debt............ .70 -- -- -- .17
-------- -------- -------- -------- --------
Net income............................ $ 1.82 $ 2.28 $ 2.03 $ 1.95 $ 1.58
======== ======== ======== ======== ========
Distributions paid.................... $ 2.70 $ 2.62 $ 2.54 $ 2.46 $ 2.38
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Real estate investments, net.......... $1,777,798 $1,484,229 $1,214,308 $1,021,630 $842,518
Total assets.......................... 1,891,852 1,595,130 1,310,401 1,094,941 928,254
Indebtedness.......................... 762,291 765,752 658,245 606,585 463,695
Total liabilities..................... 830,097 824,983 724,606 663,458 500,736
Total shareholders' equity............ 1,061,755 770,147 585,795 431,483 427,518
<FN>
- ---------------
(1) Consists of net income plus (i) depreciation, amortization of debt issuance
costs, provision for losses, loss on prepayment of debt, partnership
distributions in excess of income and deferred income received in cash net
of amortization of deferred income and less (ii) any gain on sale of real
estate and mortgage prepayments.
</TABLE>
S-7
<PAGE> 8
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company (i) as of December 31, 1995 and (ii) as adjusted to reflect the sale of
the Shares offered hereby and the application of the net proceeds therefrom. The
capitalization table should be read in conjunction with the Company's financial
statements and related notes incorporated by reference in this Prospectus
Supplement and the accompanying Prospectuses.
<TABLE>
<CAPTION>
DECEMBER 31, 1995
--------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS, EXCEPT
SHARE DATA)
<S> <C> <C>
Indebtedness and other liabilities:
Bank notes payable(1)............................................. $ 114,000 $ 0
Notes payable..................................................... 303,500 303,500
Convertible debentures............................................ 300,318 300,318
Bonds and mortgages payable....................................... 52,646 52,646
Deferred income................................................... 9,222 9,222
Accrued expenses and other liabilities............................ 58,584 58,584
Shareholders' equity:
Shares of beneficial interest without par value: unlimited Shares
authorized, 51,176,788 Shares issued and outstanding at
December 31, 1995, and 59,176,788 Shares as adjusted, net of
distributions in excess of net income(2)....................... 1,061,755 1,319,905
---------- --------
Total capitalization...................................... $1,900,025 $ 2,044,175
========== ========
</TABLE>
- ---------------
(1) As of the date of this Prospectus Supplement, the Company had outstanding
bank borrowings in the aggregate principal amount of $197 million. See "Use
of Proceeds."
(2) Assuming 100% conversion of all convertible debt of the Company, there would
be 59,885,383 Shares issued and outstanding at December 31, 1995, and
67,885,383 Shares, as adjusted.
S-8
<PAGE> 9
MANAGEMENT AND BOARD OF TRUSTEES
<TABLE>
The Company's officers have significant experience in the health care
field, and a majority of them have been part of the Company's management team
for over eight years. The officers and trustees of the Company are:
MANAGEMENT
<CAPTION>
NAME AGE OFFICE
- ----------------------------------- --- -------------------------------------------------------
<S> <C> <C>
Abraham D. Gosman.................. 67 Chief Executive Officer
David F. Benson.................... 46 President
Michael F. Bushee.................. 38 Chief Operating Officer
Michael S. Benjamin................ 38 Senior Vice President, Secretary and Corporate Counsel
Lisa P. McAlister.................. 32 Chief Financial Officer and Treasurer
Stephen C. Mecke................... 33 Vice President
Debora A. Pfaff.................... 32 Vice President
Stephen H. Press................... 58 Vice President
John G. Demeritt................... 35 Controller
</TABLE>
<TABLE>
BOARD OF TRUSTEES
<CAPTION>
NAME AGE OCCUPATION
- ----------------------------------- --- -------------------------------------------------------
<S> <C> <C>
Abraham D. Gosman.................. 67 Chairman and Chief Executive Officer, Meditrust
David F. Benson.................... 46 President, Meditrust
Edward W. Brooke................... 76 Partner, O'Connor & Hannan, Washington, DC
Robert Cataldo..................... 71 President, Sheldon Corporation, Lexington, MA
Philip L. Lowe..................... 78 Principal, Philip L. Lowe and Associates, Boston, MA
Thomas J. Magovern................. 53 Regional Vice President, Real Estate Asset Management,
United Jersey Bank, Hackensack, NJ
Gerald Tsai, Jr.................... 66 Chairman, President and Chief Executive Officer, Delta
Life Corporation, Memphis, TN
Frederick W. Zuckerman............. 61 General Partner in the investment banking firm of
Zuckerman and Firstenberg; Director of eight public
companies; business consultant and retired officer of
Chrysler Corporation, RJR Nabisco and International
Business Machines Corporation
</TABLE>
S-9
<PAGE> 10
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain United States federal
income tax consequences of the ownership and disposition of the Shares by
individuals who are not residents of the United States and corporations not
organized under the laws of the United States or any State ("foreign holders").
The discussion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), regulations, proposed regulations, rulings and judicial decisions now
in effect, all of which are subject to change. Any such change could be
retroactive in effect. Under the Code, an individual may be treated as a
resident of the United States if the individual has been granted the privilege
of residing permanently in the U.S. or if the individual in fact spends a
certain amount of time in the U.S. Individuals who are uncertain whether they
are U.S. residents for U.S. tax purposes should consult their tax advisors.
No ruling from the Internal Revenue Service has been or will be requested
on any tax matter concerning the Offering. The discussion does not cover any
aspect of non-U.S. taxation nor any aspect of taxation by the various States
within the U.S., nor does it generally deal with the U.S. federal taxation of
partnerships, estates, trusts or other entities. Such taxpayers should consult
their own tax advisors as to the tax consequences to them of the ownership and
disposition of the Shares.
(a) Distributions of cash made by the Company to a foreign holder of Shares
are generally subject to United States withholding tax at a rate of 30 percent
unless a lower rate or exemption is provided by an applicable tax treaty. A
foreign holder receiving a distribution subject to such withholding tax will be
able to claim a refund to the extent the withholding has been imposed on a
portion of such distribution which does not constitute a "dividend" (i.e., a
distribution out of the Company's current or accumulated earnings and profits).
The basis which a foreign holder has in his Shares is reduced by the portion of
a distribution which does not constitute a dividend, and after basis has been
reduced to zero, such non-dividend distributions generally represent capital
gain from the sale or exchange of the Shares. The United States tax treatment of
such gain is described in (c) below. If a distribution is effectively connected
with a United States trade or business conducted by the foreign holder, the
portion of such distribution constituting a dividend is generally subject to
graduated United States federal income tax.
(b) Distributions attributable to gain from the Company's sale or exchange
of United States real property interests are subject to the same United States
graduated federal income tax which applies to U.S. persons unless a lower rate
or exemption is provided under an applicable tax treaty. Such distributions to a
foreign holder are subject to withholding at a 35 percent rate to the extent the
distributions are designated as capital gains dividends by the Company. If a
distribution is designated as a capital gain dividend after the time that the
distribution has been made, the 35 percent withholding rate will generally apply
to subsequent distributions in an amount equal to the previous distribution
designated as capital gain.
(c) The Company believes that it is currently a domestically-controlled
real estate investment trust (i.e., a real estate investment trust where less
than 50 percent in value of its shares is held directly or indirectly by foreign
persons at all times during the period in question). Accordingly, gain realized
by a foreign holder on the sale, exchange, redemption or other disposition of
Shares is not subject to United States federal income tax unless (1) the gain is
effectively connected with a United States trade or business of the foreign
holder, in which case the gain is generally subject to graduated United States
federal income tax, or (2) in the case of a non-resident alien individual, the
individual is present in the United States for 183 days or more during the year
of disposition, and either has a United States tax home or the gain is
attributable to an office or other fixed place of business maintained by the
individual within the United States, in which case the gain is subject to 30
percent United States federal income tax.
If the Company is not a domestically-controlled real estate investment
trust, the sale of Shares is treated as a disposition of a United States real
property interest, and consequently the gain is subject to graduated United
States income tax rates and withholding as described in Section (b) above.
(d) Shares held by an individual at the time of his death (or previously
transferred subject to certain rights or powers or certain transfers by gift
within three years of death) are subject to United States federal estate tax
unless otherwise provided by an applicable treaty.
S-10
<PAGE> 11
(e) Under current law, payments of the proceeds of the sale of Shares to or
through a broker are generally subject to information reporting and backup
withholding unless the holder certifies as to its non-United States status or
otherwise establishes an exemption from information reporting and backup
withholding.
(f) In addition to the taxes described above, holders of Shares may be
subject to the alternative minimum tax, and a holder of Shares which is a
foreign corporation may be subject to the United States branch profits tax (at
30 percent or a lower treaty rate) with respect to income from Shares which is
effectively connected with the conduct of a trade or business within the United
States.
Prospective holders of Shares should consult the Company's Current Report
on Form 8-K dated March 4, 1992, which is incorporated by reference herein, for
additional information concerning the United States federal income tax
provisions applicable to real estate investment trusts and their shareholders.
PROSPECTIVE SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO
THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF THE
SHARES, INCLUDING THE APPLICATION OF FOREIGN OR LOCAL TAX LAWS, AND THE
POSSIBILITY OF FUTURE CHANGES IN UNITED STATES FEDERAL INCOME TAX LAWS.
S-11
<PAGE> 12
UNDERWRITING
The underwriters named below (the "Underwriters") have severally agreed,
subject to the terms and conditions of the Underwriting Agreement, to purchase
from the Company the number of Shares set forth opposite their respective names:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- ---------------------------------------------------------------------------------- ---------
<S> <C>
NatWest Securities Limited........................................................ 1,142,858
Alex. Brown & Sons Incorporated................................................... 1,142,857
Dean Witter Reynolds Inc. ........................................................ 1,142,857
Goldman, Sachs & Co. ............................................................. 1,142,857
Merrill Lynch, Pierce, Fenner & Smith Incorporated................................ 1,142,857
PaineWebber Incorporated.......................................................... 1,142,857
Smith Barney Inc. ................................................................ 1,142,857
---------
TOTAL................................................................... 8,000,000
=========
</TABLE>
The Underwriters are committed to purchase all of the Shares offered
hereby, if any Shares are purchased.
The Underwriters propose to offer the Shares directly to the public at the
public offering price set forth on the cover page of this Prospectus Supplement
and to certain securities dealers at such price less a concession not in excess
of $1.00 per Share. The Underwriters may allow, and such selected dealers may
reallow, a concession not in excess of $0.10 per Share to certain brokers and
dealers.
The Company has granted the Underwriters an option for 30 days after the
date of this Prospectus Supplement to purchase at the public offering price,
less the underwriting discount, as set forth on the cover page of this
Prospectus Supplement, up to 1,200,000 additional Shares. If the Underwriters
exercise their option to purchase any of the additional Shares, each of the
Underwriters will have a firm commitment, subject to certain conditions, to
purchase approximately the same percentage thereof which the number of Shares to
be purchased by each of them as shown in the above table bears to the 8,000,000
Shares offered hereby. The Underwriters may exercise such option only to cover
over-allotments in connection with the sale of the 8,000,000 Shares offered
hereby.
The Underwriting Agreement provides that the Company will indemnify the
several Underwriters against certain liabilities, including civil liabilities
under the Securities Act of 1933, or will contribute to payments the
Underwriters may be required to make in respect thereof.
The Company has agreed that, until 90 days after the date of this
Prospectus Supplement, it will not, without the consent of NatWest Securities
Limited ("NatWest"), sell, offer to sell, issue, distribute or otherwise dispose
of in the United States any Shares or any securities or interests convertible
into, or exercisable or exchangeable for, Shares, other than (a) the Shares
offered hereby, (b) Shares issued in any structured equity program, (c) Shares
issuable upon the conversion of the Company's outstanding convertible debentures
and notes or upon the exercise of outstanding stock options or (d) grants to
employees for compensation purposes.
NatWest, a United Kingdom broker-dealer and a member of the Securities and
Futures Authority Limited, has agreed that, as part of the distribution of the
Shares offered hereby and subject to certain exceptions, it will not offer or
sell any Shares within the United States, its territories or possessions or to
persons who are citizens thereof or residents therein. The Underwriting
Agreement does not limit the sale of the Shares offered hereby outside of the
United States.
NatWest has further represented and agreed that (a) it has not offered or
sold and will not offer or sell in the United Kingdom by means of any document,
any Shares other than to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (whether as principal
or agent) or in circumstances which do not constitute an offer to the public
within the meaning of the Public Offers of
S-12
<PAGE> 13
Securities Regulations 1995 or the Financial Services Act 1986 (the "Act"); (b)
it has complied and will comply with all applicable provisions of the Act with
respect to anything done by it in relation to the Shares in, from or otherwise
involving the United Kingdom and (c) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document required or permitted
to be published by listing rules under Part IV of the Act to a person who is of
a kind described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or is a person to whom the document may
otherwise lawfully be issued or passed on.
National Westminster Bank U.S.A. ("NWB"), an affiliate of NatWest, is a
member of a syndicate of eight banks which are lenders to the Company under a
revolving credit facility. An aggregate of $155 million is available for
borrowing under the revolving credit facility. NWB's aggregate participation in
the facility is $25 million, of which approximately $18.4 million is currently
outstanding. The Company expects to use a portion of the net proceeds from the
Offering to repay amounts outstanding under the revolving credit facility. NWB
will receive its pro rata share of any net proceeds so applied. See "Use of
Proceeds."
Each of the Underwriters has provided, and expects in the future to
provide, investment banking services to the Company.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the
Company by Nutter, McClennen & Fish, LLP. In addition, Nutter, McClennen & Fish,
LLP has passed upon certain federal income tax matters relating to the Company.
Stroock & Stroock & Lavan will pass upon certain legal matters for the
Underwriters.
S-13
<PAGE> 14
PROSPECTUS
MEDITRUST
SHARES OF BENEFICIAL INTEREST,
DEBT SECURITIES AND/OR SECURITIES WARRANTS
---------------------
Meditrust, a Massachusetts business trust (together with its subsidiaries
unless the context otherwise requires, the "Company"), is a real estate
investment trust under the Internal Revenue Code of 1986, as amended, which may
offer from time to time, in one or more series, its debt securities (the "Debt
Securities"), warrants to purchase Debt Securities (the "Debt Securities
Warrants"), shares of beneficial interest, without par value (the "Shares"), and
warrants to purchase Shares (the "Share Warrants"). The Debt Securities Warrants
and the Share Warrants are collectively referred to herein as the "Securities
Warrants." The Debt Securities, Shares and Securities Warrants are collectively
referred to herein as the "Securities." The Securities will have an aggregate
offering price of $300,000,000 and will be offered in amounts, at prices and on
terms to be determined at the time of offering.
In the case of Debt Securities, the specific title, the aggregate principal
amount, the purchase price, the maturity, the rate and time of payment of any
interest, any redemption or sinking fund provisions, any conversion provisions
and any other specific term of the Debt Securities will be set forth in an
accompanying supplement to this Prospectus (the "Prospectus Supplement"). In the
case of Shares, the specific number of Shares and issuance price per Share will
be set forth in an accompanying Prospectus Supplement. In the case of Securities
Warrants, the duration, offering price, exercise price and detachability, if
applicable, will be set forth in an accompanying Prospectus Supplement. The
Prospectus Supplement will also disclose whether the Securities will be listed
on a national securities exchange and if they are not to be listed, the possible
effects thereof on their marketability.
The Securities may be sold: (i) directly by the Company; (ii) through
underwriting syndicates represented by one or more managing underwriters, or by
one or more underwriters without a syndicate; and (iii) through agents
designated from time to time. The names of any underwriters or agents of the
Company involved in the sale of the Securities in respect of which this
Prospectus is being delivered and any applicable commissions or discounts will
be set forth in an accompanying Prospectus Supplement. See "Plan of
Distribution." The net proceeds to the Company from such sale also will be set
forth in the Prospectus Supplement.
The Company's shares are traded on the New York Stock Exchange under the
symbol "MT." On October 12, 1995, the closing sale price of the Shares on the
New York Stock Exchange was $34.75.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
---------------------
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
---------------------
The date of this Prospectus is October 13, 1995.
<PAGE> 15
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024 of the offices of
the Commission, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
or at the regional offices of the Commission located at Seven World Trade
Center, 13th Floor, New York, New York 10048 and Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material can be obtained from the principal offices of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549, at prescribed
rates. Reports, proxy materials and other information concerning the Company can
also be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, Room 1102, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus and any accompanying Prospectus Supplement do not contain all
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission. For
further information, reference is made to the Registration Statement, copies of
which may be obtained upon payment of a fee prescribed by the Commission, or may
be examined free of charge at the principal office of the Commission in
Washington, D.C.
Statements made in this Prospectus and any accompanying Prospectus
Supplement as to the contents of any contract or other document referred to are
not necessarily complete, and reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference into this Prospectus its
Annual Report on Form 10-K for the fiscal year ended December 31, 1994, its
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 1995 and
June 30, 1995 and its Current Reports on Form 8-K dated August 8, 1995, July 27,
1995, July 13, 1995 and March 8, 1995, which shall be deemed to be a part
hereof. The discussion of Federal income tax treatment of the Company and its
shareholders which is contained in the Company's Current Report on Form 8-K
dated March 4, 1992, including any amendment or report filed for the purpose of
updating such discussion, is hereby incorporated by reference into this
Prospectus and shall be deemed to be a part hereof.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the termination of the offering of the Securities offered hereby shall
be deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing such documents. Any statement contained herein or
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in a subsequently filed
document, as the case may be, which also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
(without exhibits) of any or all documents incorporated by reference into this
Prospectus. Requests for such copies should be directed to Lisa P. McAlister,
Vice President and Treasurer, Meditrust, 197 First Avenue, Needham Heights,
Massachusetts 02194, telephone (617) 433-6000.
---------------------
THE DECLARATION OF TRUST ESTABLISHING THE COMPANY, 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.
A-2
<PAGE> 16
THE COMPANY
Meditrust is the largest dedicated health care real estate investment trust
in the United States, based on its gross real estate investments of $1.7 billion
as of June 30, 1995. 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 cash flows to be distributed to shareholders. In meeting
this objective, the Company invests in high quality facilities that are managed
by experienced operators and attempts to achieve diversity in its property
portfolio by sector of the health care industry, geographic location, operator
and form of investment.
As of June 30, 1995, the Company had investments in 285 facilities,
consisting of 240 long-term care facilities, 23 rehabilitation hospitals, six
psychiatric hospitals, five retirement living facilities, two alcohol and
substance abuse facilities, eight medical office buildings and one acute care
hospital. The properties are located in 34 different states and are operated by
33 health care companies. Of the 33 different operators, seven are, or are owned
by, publicly-traded companies (i.e., Sun Healthcare Group, Inc., Continental
Medical Systems, Inc. (a subsidiary of Horizon/CMS Healthcare Corporation),
Geriatric and Medical Centers, Inc., OrNda Healthcorp., Integrated Health
Services, Inc., HealthSouth Rehabilitation Corporation and Mariner Health Group,
Inc.), and constitute 44% of the Company's gross real estate investments.
During the first six months of 1995, the Company committed $243 million to
new real estate investments, of which $172 million was funded. Of these amounts,
$126 million was committed and $55 million was funded during the quarter ended
June 30, 1995.
The Company's real estate investments are either owned by the Company or
secured by a mortgage lien. As of June 30, 1995 permanent mortgage loans
constituted 56%, sale/leaseback transactions constituted 40%, and development
mortgage financing constituted 4% of the Company's portfolio as measured by
gross real estate investments. The leases and mortgages provide for rental or
interest rates which generally range from 9.5% to 13.5% per annum of the
acquisition price or mortgage amount. The leases and mortgages generally provide
for an initial term of 10 years, with the leases having one or more five-year
renewal options. The leases and mortgages also provide for additional rent and
interest which are generally based upon a percentage of increased revenues over
specific base period revenues of the related properties. For the year ended
December 31, 1994, the aggregate amount of additional rent and interest was
approximately $8.2 million compared to $8.7 million for the year ended December
31, 1993.
In addition, the Company usually obtains guarantees from the parent
corporation, if any, of the operator or affiliates or individual principals of
the operator. Most obligations are backed by letters of credit or pledges of
certificates of deposit which cover from three to twelve months of lease or
mortgage payments. In addition, permanent mortgage and development mortgage
loans generally are cross-collateralized with any other mortgage and development
loans, leases or other agreements between the Company and the same operator or
any affiliated operators. Leases and mortgage loans generally are
cross-defaulted with any other leases or mortgages between the Company and the
same operator or any affiliated operators. With respect to development mortgage
loans, the Company generally requires guaranteed maximum price construction
contracts, performance completion bonds or guarantees and cost overrun
guarantees. The Company enters into a development mortgage loan when the Company
will also be the permanent owner or mortgage lender. In making its investment
decisions, the Company reviews, among other criteria, the operational viability
of the facility, the experience and competency of the operator and the financial
strength of the guarantor.
From time to time, the Company enters into transactions with related
parties. As of June 30, 1995, the Company had total commitments of $101 million,
of which $37 million was funded, to companies in which Abraham D. Gosman, the
Company's Chief Executive Officer, has an ownership interest. The Company
expects to enter into additional transactions with related parties in the
future. All of the terms and conditions of such transactions are subject to
approval by the independent Trustees of the Company. The Board of Trustees
believes that the terms of the transactions which the Company has entered into
with related parties are not less favorable to the Company than those prevailing
at the time for comparable transactions with unrelated persons.
A-3
<PAGE> 17
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.
In order to meet its ongoing capital requirements for additional
investments, the Company may raise additional equity capital through the sale of
Shares, Debt Securities, Share Warrants or Debt Securities Warrants or draw
against its revolving bank lines of credit.
The Company is a self-administered real estate investment trust, with its
principal executive offices at 197 First Avenue, Needham Heights, Massachusetts
02194. Its telephone number is (617) 433-6000.
HEALTH CARE REFORM AND REGULATION
Many of the operators with which the Company does business rely on
government reimbursement, primarily Medicare and Medicaid, for a significant
portion of their operating revenues. During a recent session of the United
States Congress, there was active consideration of various proposals for
national health care reform, including the administration's proposal to cap
national health care spending and the future growth of Medicare and Medicaid
funding. No such legislation was passed during the 1994 session of Congress.
Such legislation may be reintroduced during current or future sessions of
Congress, although it is not possible to predict whether and when health care
reform legislation will be passed by Congress and, if passed, what features such
legislation will contain or the effect it may have on the nursing home, assisted
living or rehabilitation care industries, the reimbursements levels available to
health care providers or on the health care industry in general.
From time to time, Medicaid, Medicare and other governmental payers have
reviewed the billing practices of many health care facilities operators
including certain of the operators with which the Company does business. It is
unclear what impact such reviews may have on these operators. The Company does
not believe, however, that any adverse findings against these operators would
materially affect the Company's financial position.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX-MONTH
YEAR ENDED DECEMBER 31, PERIOD ENDED
-------------------------------- JUNE 30,
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ------------
<S> <C> <C> <C> <C> <C> <C>
Ratio............................. 1.67 l.60 1.88 2.02 2.19 2.63
</TABLE>
For the purpose of calculating the ratio of earnings to fixed charges for
the years ended December 31, 1990, 1991, 1992, 1993 and 1994 and for the
six-month period ended June 30, 1995, net income has been added to interest
expense and that sum has been divided by such interest expense.
A-4
<PAGE> 18
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement which accompanies
this Prospectus, the net proceeds from the sale of the Securities offered from
time to time hereby will be used for general business purposes, including the
repayment of bank lines of credit, if any, outstanding, and investments in
health care facilities. As of August 14, 1995, $75,000,000 was outstanding under
the Company's bank lines of credit. All currently outstanding loans under the
Company's bank lines of credit mature prior to July 1, 1997 and accrue interest
at the lenders' respective prime rates or the London Interbank Offering Rate
plus 1.00%. Pending such uses, the net proceeds will be invested in short-term,
interest-bearing, direct obligations issued or guaranteed by the United States,
certificates of deposit or accounts, or investment grade commercial paper,
consistent with the Company's qualification as a real estate investment trust,
the Company's Restated Declaration of Trust, as amended (the "Declaration"), and
the Company's agreements with its lenders.
DESCRIPTION OF SHARES
There is no limit on the number of Shares the Company is authorized to
issue. Shares may be issued by the Board of Trustees without any vote of the
shareholders. The outstanding Shares are of one class and without par value. The
following description is qualified in all respects by reference to the
Declaration and the By-laws of the Company, copies of which are incorporated by
reference as exhibits to the Registration Statement of which this Prospectus is
a part.
Shares of Beneficial Interest. All Shares participate equally in dividends
and in net assets available for distribution to shareholders on liquidation or
termination of the Company, have one vote per Share on all matters submitted to
a vote of the shareholders and do not have cumulative voting rights in the
election of Trustees. The Shares offered hereby will be validly issued, fully
paid and nonassessable by the Company upon issuance.
Redemption. For the Company to qualify as a real estate investment trust
under the Internal Revenue Code of 1986, as amended (the "Code"), in any taxable
year, not more than 50% of its outstanding Shares may be owned by five or fewer
individuals and Shares must be owned by 100 or more persons during at least 335
days of a taxable year of 12 months or during a proportionate part of a shorter
taxable year. In order to meet these requirements, the Trustees have the power
to redeem or prohibit the transfer of a sufficient number of Shares selected in
a manner deemed appropriate to maintain or bring the ownership of the Shares
into conformity with such requirements. In connection with the foregoing, if the
Trustees shall, at any time and in good faith, be of the opinion that direct or
indirect ownership of at least 9.9% or more of the Shares has or may become
concentrated in the hands of one beneficial owner, the Trustees shall have the
power (i) by lot or other means deemed equitable by them to call for the
purchase from any shareholder of the Company of a number of Shares sufficient,
in the opinion of the Trustees, to maintain or bring the direct or indirect
ownership of Shares of such owner to a level of no more than 9.9% of the
outstanding Shares, and (ii) to refuse to transfer or issue Shares to any person
whose acquisition of such Shares would cause a beneficial holder to hold in
excess of 9.9% of the outstanding Shares. Further, any transfer of Shares that
would create a beneficial owner of more than 9.9% of the outstanding Shares
shall be deemed void and the intended transferee shall be deemed never to have
had an interest therein. The purchase price for any Shares so redeemed shall be
equal to the fair market value of the Shares reflected in the closing sales
price for the Shares, if then listed on a national securities exchange, or the
average of the closing sales price for the Shares if then listed on more than
one national securities exchange, or if the Shares are not then listed on a
national securities exchange, the latest bid quotation for the Shares if then
traded over-the-counter, on the last business day immediately preceding the day
on which notices of such acquisition are sent by the Company. From and after the
date fixed for purchase by the Trustees, the holder of any Shares so called for
purchase shall cease to be entitled to distributions, voting rights and other
benefits with respect to such Shares, except the right to payment of the
purchase price for the Shares.
The foregoing provisions may have the effect of discouraging unilateral
tender offers or other takeover proposals which certain shareholders might deem
in their interest or in which they might receive a substantial premium. The
provisions could also have the effect of insulating current management against
the possibility of
A-5
<PAGE> 19
removal and could, by possibly reducing temporary fluctuations in market price
caused by accumulations of Shares, deprive shareholders of opportunities to sell
at a temporarily higher market price.
Additional Provisions. The Declaration provides that annual meetings of
shareholders are to be held within six months after the end of each fiscal year
and special meetings of the shareholders may be called by the President of the
Company, a majority of the Trustees or a majority of the Independent Trustees
(defined in the Declaration) and shall be called upon the written request of the
holders of 10% or more of the outstanding Shares.
Whenever any action is to be taken by the shareholders, it shall, except as
otherwise clearly indicated in the Declaration of Trust, be authorized by
holders of a majority of the Shares then outstanding and entitled to vote
thereon. Notwithstanding the foregoing, at all elections of Trustees, voting by
shareholders shall be conducted under the non-cumulative method and the election
of Trustees shall be by the affirmative vote of the holders of Shares
representing a plurality of the Shares then outstanding which are present in
person or by proxy at a meeting in which a quorum is present.
Whenever shareholders are required or permitted to take any action (unless
a vote at a meeting is specifically required, as with respect to termination or
amendment of the Declaration), such action may be taken without a meeting by
written consents setting forth the action so taken, signed by the holders of a
majority (or such higher percentage as may be specified) of the outstanding
Shares that would be entitled to vote thereon at a meeting.
Except with respect to matters on which a shareholders' vote is
specifically required by the Declaration, no action taken by the shareholders at
any meeting shall in any way bind the Trustees.
The Shares have no preemptive, conversion, exchange, sinking fund or
appraisal rights.
The Declaration 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 claims are not satisfied by the Company. However, the Declaration
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. For example, almost all of the real estate and all
of the mortgages included in the assets of the Company are held by corporate
subsidiaries. The Trustees do not intend to provide insurance covering such
risks to shareholders.
Transfer Agent and Registrar. Fleet National Bank, Providence, Rhode
Island, acts as transfer agent and registrar of the Shares.
DESCRIPTION OF DEBT SECURITIES
The Prospectus Supplement will describe certain terms of any Debt
Securities offered hereby, including (i) the title of such Debt Securities; (ii)
any limit on the aggregate principal amount of such Debt Securities and their
purchase price; (iii) the date or dates on which such Debt Securities will
mature; (iv) the rate or rates per annum (or manner in which interest is to be
determined) at which such Debt Securities will bear interest, if any, and the
date from which such interest, if any, will accrue; (v) the dates on which such
interest, if any, on such Debt Securities will be payable and the regular record
dates for such interest payment dates; (vi) any mandatory or optional sinking
fund or analogous provisions; (vii) additional provisions, if any, for the
defeasance of such Debt Securities; (viii) the date, if any, after which and the
price or prices at which such Debt Securities may, pursuant to any optional or
mandatory redemption or repayment provisions, be redeemed and the other detailed
terms and provisions of any such optional or mandatory redemption or repayment
A-6
<PAGE> 20
provisions; (ix) whether such Debt Securities are to be issued in whole or in
part in registered form represented by one or more registered global securities
(a "Registered Global Security") and, if so, the identity of the depository for
such Registered Global Security or Securities; (x) certain applicable United
States Federal income tax consequences; (xi) any provisions relating to security
for payments due under such Debt Securities; (xii) any provisions relating to
the conversion or exchange of such Debt Securities into or for Shares or Debt
Securities of another series; (xiii) any provisions relating to the ranking of
such Debt Securities in right of payment as compared to other obligations of the
Company; (xiv) the denominations in which such Debt Securities are authorized to
be issued; (xv) the place or places where principal of, premium, if any, and
interest, if any, on such Debt Securities will be payable; (xvi) whether such
Debt Securities are to be issued pursuant to an indenture of trust; and (xvii)
any other specific term of such Debt Securities, including any additional events
of default or covenants provided for with respect to such Debt Securities, and
any terms that may be required by or advisable under applicable laws or
regulations.
The Debt Securities may be issued in one or more series under an Indenture
to be executed by the Company and a trustee (the "Trustee"), a form of which is
included as an exhibit to the Registration Statement of which this Prospectus is
a part (the "Indenture"). The terms of the Debt Securities may include those
stated in the Indenture and those made a part of the Indenture (before any
supplements) by reference to the Trust Indenture Act of 1939, as amended.
The following is a summary of certain provisions of the Indenture and does
not purport to be complete and is qualified in its entirety by reference to the
detailed provisions of the Indenture, including the definitions of certain terms
therein to which reference is hereby made, for a complete statement of such
provisions. Wherever particular provisions or sections of the Indenture or terms
defined therein are referred to herein, such provisions or definitions are
incorporated herein by reference.
General. The Indenture does not limit the aggregate principal amount of
Debt Securities that may be issued thereunder and provides that Debt Securities
may be issued from time to time in one or more series.
Conversion Rights. The terms, if any, on which Debt Securities of any
series may be converted into Shares or Debt Securities of another series will be
set forth in the Prospectus Supplement relating thereto. To protect the
Company's status as a real estate investment trust ("REIT"), the holders of Debt
Securities of any series ("Holders") may not convert any Debt Security, and such
Debt Security shall not be convertible by any Holder, if as a result of such
conversion any person would then be deemed to beneficially own, directly or
indirectly, 9.9% or more of the then outstanding Shares.
The conversion price will be subject to adjustment under certain
conditions, including (i) the payment of dividends (and other distributions) in
Shares on any class of shares of the Company; (ii) subdivisions, combinations
and reclassifications of Shares; (iii) the issuance to all or substantially all
holders of Shares of rights or warrants entitling them to subscribe for or
purchase Shares at a price per Share (or having a conversion price per Share)
less than the then current market price; and (iv) distributions to all or
substantially all holders of Shares or shares of any other class, or evidences
of indebtedness or assets (including securities, but excluding those rights,
warrants, dividends and distributions referred to above and dividends and
distributions not prohibited under the terms of the Indenture) of the Company,
subject to the limitation that all adjustments by reason of any of the foregoing
would not be made until they result in a cumulative change in the conversion
price of at least 1%. In the event the Company shall effect any capital
reorganization or reclassification of its Shares or shall consolidate or merge
with or into any trust or corporation (other than a consolidation or merger in
which the Company is the surviving entity) or shall sell or transfer
substantially all its assets to any other trust or corporation, the Holders
shall, if entitled to convert such Debt Securities at any time after such
transaction, receive upon conversion thereof, in lieu of each Share into which
the Debt Securities of such series would have been convertible prior to such
transaction, the same kind and amount of stock and other securities, cash or
property as shall have been issuable or distributable in connection with such
transaction with respect to each Share.
A conversion price adjustment made according to the provisions of the Debt
Securities of any series (or the absence of provision for such an adjustment)
might result in a constructive distribution to the Holders of Debt Securities of
such series or holders of Shares that would be subject to taxation as a
dividend. The
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Company may, at its option, make such reductions in the conversion price, in
addition to those set forth above, as the Board of Trustees of the Company deems
advisable to avoid or diminish any income tax to holders of Shares resulting
from any dividend or distribution of Shares (or rights to acquire Shares) or
from any event treated as such for income tax purposes or for any other reason.
The Board of Trustees will also have the power to resolve any ambiguity or
correct any error in the provisions relating to the adjustment of the conversion
price of the Debt Securities of such series and its actions in so doing shall be
final and conclusive.
Fractional Shares will not be issued upon conversion, but, in lieu thereof,
the Company will pay a cash adjustment based upon market price.
The Holders of Debt Securities of any series at the close of business on an
interest payment record date shall be entitled to receive the interest payable
on such Debt Securities on the corresponding interest payment date
notwithstanding the conversion thereof. However, Debt Securities surrendered for
conversion during the period from the close of business on any record date for
the payment of interest to the opening of business on the corresponding interest
payment date must be accompanied by payment of an amount equal to the interest
payable on such interest payment date. Holders of Debt Securities of any series
who convert Debt Securities of such series on an interest payment date will
receive the interest payable by the Company on such date and need not include
payment in the amount of such interest upon surrender of such Debt Securities
for conversion. Except as aforesaid, no payment or adjustment is to be made on
conversion for interest accrued on the Debt Securities of any series or for
dividends on Shares.
Optional Redemption. The Debt Securities of any series that are convertible
into Shares will be subject to redemption, in whole or from time to time in
part, at any time for certain reasons intended to protect the Company's status
as a REIT at the option of the Company on at least 30 days' prior notice by mail
at a redemption price equal to 100% of the principal amount, plus interest
accrued to the date of redemption. Except as otherwise set forth in the
accompanying Prospectus Supplement, the Company may exercise its redemption
powers solely with respect to the securities of the security holder or holders
which pose a threat to the Company's REIT status and only to the extent deemed
necessary by the Company's Board of Trustees to preserve such status. (See
"Redemption" under "Description of Shares".)
Dividends, Distributions and Acquisitions of Shares of Beneficial Interest.
The Indenture provides that the Company will not (i) declare or pay any dividend
or make any distribution on its Shares or to holders of its Shares (other than
dividends or distributions payable in its Shares or other than as the Company
determines is necessary to maintain its status as a REIT) or (ii) purchase,
redeem or otherwise acquire or retire for value any of its Shares or permit any
subsidiary to do so, if at the time of such action an Event of Default (as
defined in the Indenture) has occurred and is continuing or would exist
immediately after giving effect to such action.
Additional Covenants. Any additional covenants of the Company with respect
to a series of the Debt Securities will be set forth in the Prospectus
Supplement relative thereto.
Modification of the Indenture. Under the Indenture, with certain
exceptions, the rights and obligations of the Company with respect to any series
of Debt Securities and the rights of Holders of such series may only be modified
by the Company and the Trustee with the consent of the Holders of at least a
majority in principal amount of the outstanding Debt Securities of such series.
However, without the consent of each Holder of any Debt Securities affected, an
amendment, waiver or supplement may not (i) reduce the principal of, or rate of
interest on, any Debt Securities; (ii) change the stated maturity date of the
principal of, or any installment of interest on, any Debt Securities; (iii)
waive a default in the payment of the principal amount of, or the interest on,
or any premium payable on redemption of, any Debt Securities; (iv) change the
currency for payment of the principal of, or premium or interest on, any Debt
Securities; (v) impair the right to institute suit for the enforcement of any
such payment when due; (vi) adversely affect any right to convert any Debt
Securities; (vii) reduce the amount of outstanding Debt Securities necessary to
consent to an amendment, supplement or waiver provided for in the Indenture; or
(viii) modify any provisions of the Indenture relating to the modification and
amendment of the Indenture or waivers of past defaults, except as otherwise
specified.
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Events of Default, Notice and Waiver. Except as otherwise set forth in the
accompanying Prospectus Supplement, the following is a summary of certain
provisions of the Indenture relating to events of default, notice and waiver.
The following are Events of Default under the Indenture with respect to any
series of Debt Securities: (i) default in the payment of interest on the Debt
Securities of such series when due and payable, which continues for 30 days;
(ii) default in the payment of principal of (and premium, if any) on the Debt
Securities when due, at maturity, upon redemption or otherwise, which continues
for five Business Days; (iii) failure to perform any other covenant of the
Company contained in the Indenture or the Debt Securities of such series which
continues for 60 days after written notice as provided in the Indenture; (iv)
default under any bond, debenture or other Indebtedness (as defined in the
Indenture) of the Company or any subsidiary if (a) either (x) such event of
default results from the failure to pay any such Indebtedness at maturity or (y)
as a result of such event of default, the maturity of such Indebtedness has been
accelerated prior to its expressed maturity and such acceleration shall not be
rescinded or annulled or the accelerated amount paid within ten days after
notice to the Company of such acceleration, or such Indebtedness having been
discharged, and (b) the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness in default for failure to pay
principal or interest thereon, or the maturity of which has been so accelerated,
aggregates $10,000,000 or more; (v) certain events of bankruptcy, insolvency or
reorganization relating to the Company; and (vi) any other Event of Default
provided with respect to the Debt Securities of that series.
If an Event of Default occurs and is continuing with respect to the Debt
Securities of any series, either the Trustee or the Holders of a majority in
aggregate principal amount of the outstanding Debt Securities of such series may
declare the Debt Securities due and payable immediately.
The Indenture provides that the Trustee will, within 90 days after the
occurrence of any Default or Event of Default with respect to the Debt
Securities of any series, give to the Holders of Debt Securities notice of all
uncured Defaults and Events of Default known to it, but the Trustee will be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interest of such Holders, except in the
case of a default in the payment of the principal of (or premium, if any) or
interest on any of the Debt Securities of such series.
The Indenture provides that the Holders of a majority in aggregate
principal amount of the Debt Securities of any series then outstanding may
direct the time, method and place of conducting any proceedings for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee with respect to the Debt Securities of such series. The right of a
Holder to institute a proceeding with respect to the Indenture is subject to
certain conditions precedent including notice and indemnity to the Trustee, but
the Holder has an absolute right to receipt of principal of (and premium, if
any) and interest on such Holder's Debt Securities on or after the respective
due dates expressed in the Debt Securities, and to institute suit for the
enforcement of any such payments.
The Holders of a majority in principal amount of the outstanding Debt
Securities of any series then outstanding may on behalf of the Holders of all
Debt Securities of such series waive certain past defaults, except a default in
payment of the principal of (or premium, if any) or interest on any Debt
Securities of such series or in respect of certain provisions of the Indenture
which cannot be modified or amended without the consent of the Holder of each
outstanding Debt Securities of such series affected thereby.
The Company will be required to furnish to the Trustee annually a statement
of certain officers of the Company stating whether or not they know of any
Default or Events of Default (as defined in the Indenture) and, if they have
knowledge of a Default or Event of Default, a description of the efforts to
remedy the same.
Consolidation, Merger, Sale or Conveyance. The Indenture provides that the
Company may merge or consolidate with, or sell or convey all or substantially
all of its assets to, any other trust or corporation, provided that (i) either
the Company shall be the continuing entity, or the successor entity (if other
than the Company) shall be an entity organized and existing under the laws of
the United States or a state thereof or the District of Columbia (although it
may, in turn, be owned by a foreign entity) and such entity shall expressly
assume by supplemental indenture all of the obligations of the Company under the
Debt Securities
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of any series and the Indenture, (ii) immediately after giving effect to such
transactions no Default or Event of Default shall have occurred and be
continuing, and (iii) the Company shall have delivered to the Trustee an
Officers' Certificate and opinion of counsel, stating that the transaction and
supplemental indenture comply with the Indenture. The Indenture does not contain
any provision requiring the Company to repurchase the Debt Securities of any
series at the option of the Holders thereof in the event of a leveraged buyout,
recapitalization or similar restructuring of the Company, even though the
Company's creditworthiness and the market value of the Debt Securities may
decline significantly as a result of such transaction. The Indenture does not
protect Holders of the Debt Securities of any series against any decline in
credit quality, whether resulting from any such transaction or from any other
cause.
Global Securities. The Debt Securities of a series may be issued in whole
or in part in global form (the "Global Securities"). The Global Securities will
be deposited with a depository (the "Depository"), or with a nominee for a
Depository, identified in the Prospectus Supplement. In such case, one or more
Global Securities will be issued in a denomination or aggregate denominations
equal to the portion of the aggregate principal amount of outstanding Debt
Securities of the series to be represented by such Global Security or
Securities. Unless and until it is exchanged in whole or in part for Debt
Securities in definitive form, a Global Security may not be transferred except
as a whole by the Depository for such Global Security to a nominee of such
Depository or by a nominee of such Depository to such Depository or another
nominee of such Depository or by such Depository or any such nominee to a
successor for such Depository or a nominee of such successor.
The specific material terms of the depository arrangement with respect to
any portion of a series of Debt Securities to be represented by a Global
Security will be described in the Prospectus Supplement. The Company anticipates
that the following provisions will apply to all depository arrangements.
Upon the issuance of a Global Security, the Depository for such Global
Security will credit, on its book entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such Global
Security to the accounts of persons that have accounts with such Depository
("participants"). The accounts to be credited shall be designated by any
underwriters or agents participating in the distribution of such Debt
Securities. Ownership of beneficial interests in a Global Security will be
limited to participants or persons that may hold interests through participants.
Ownership of beneficial interests in such Global Security will be shown on, and
the transfer of that ownership will be effected only through records maintained
by the Depository for such Global Security (with respect to interests of
participants) or by participants or persons that hold through participants (with
respect to interests of persons other than participants). So long as the
Depository for a Global Security, or its nominee, is the registered owner of
such Global Security, such Depository or such nominee as the case may be, will
be considered the sole owner or Holder of the Debt Securities represented by
such Global Security for all purposes under the Indenture; provided, however,
that for purposes of obtaining any consents or directions required to be given
by the Holders of the Debt Securities, the Company, the Trustee and its agents
will treat a person as the holder of such principal amount of Debt Securities as
specified in a written statement of the Depository.
Principal, premium, if any, and interest payments, if any, on Debt
Securities represented by a Global Security registered in the name of a
Depository or its nominee will be made to such Depository or its nominee, as the
case may be, as the registered owner of such Global Security. None of the
Company, the Trustee or any Paying Agent for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in such Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Company expects that the Depository for any Debt Securities represented
by a Global Security, upon receipt of any payment of principal, premium, if any,
or interest will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of such Depository. The
Company also expects that payments by participants will be governed by standing
instructions and customary practices, as is now the case with the securities
held for the accounts of customers registered in "street names," and will be the
responsibility of such participants.
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If the Depository for any Debt Securities represented by a Global Security
is at any time unwilling or unable to continue as Depository and a successor
Depository is not appointed by the Company within 90 days, the Company will
issue each Debt Security in definitive form to the beneficial owners thereof in
exchange for such Global Security. In addition, the Company may at any time and
in its sole discretion determine not to have any of the Debt Securities of a
series represented by one or more Global Securities and, in such event, will
issue Debt Securities of such series in definitive form in exchange for all of
the Global Security or Securities representing such Debt Securities.
The laws of some states require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in Debt Securities represented by
Global Securities.
Governing Law. The Indenture and the Debt Securities will be governed by
and construed in accordance with the laws of the Commonwealth of Massachusetts.
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Debt
Securities or Shares. Securities Warrants may be issued independently or
together with Debt Securities or Shares offered by any Prospectus Supplement and
may be attached to or separate from such Debt Securities or Shares. Each series
of Securities Warrants will be issued under a separate warrant agreement (a
"Securities Warrant Agreement") to be entered into between the Company and a
bank or trust company, as Securities Warrant agent, all as set forth in the
Prospectus Supplement relating to the particular issue of offered Securities
Warrants. The Securities Warrant agent will act solely as an agent of the
Company in connection with the Securities Warrant certificates relating to the
Securities Warrants and will not assume any obligation or relationship of agency
or trust for or with any holders of Securities Warrant certificates or
beneficial owners of Securities Warrants. The following summaries of certain
provisions of the Securities Warrant Agreement and Securities Warrants do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Securities Warrant Agreement and the
Securities Warrant certificates relating to each series of Security Warrants
which will be filed with the Commission and incorporated by reference as an
exhibit to the Registration Statement of which this Prospectus is a part at or
prior to the time of the issuance of such series of Security Warrants.
If Debt Securities Warrants are offered, the applicable Prospectus
Supplement will describe the terms of such Securities Warrants, including the
following where applicable: (i) the offering price, (ii) the denominations and
terms of the series of Debt Securities purchasable upon exercise of such
Securities Warrants, (iii) the designation and terms of any series of Debt
Securities with which such Securities Warrants are being offered and the number
of such Securities Warrants being offered with each such Debt Security, (iv) the
date, if any, on and after which such Securities Warrants and the related series
of Debt Securities will be transferable separately, (v) the principal amount of
the series of Debt Securities purchasable upon exercise of each such Securities
Warrant and the price at which such principal amount of Debt Securities of such
series may be purchased upon such exercise, (vi) the date on which the right to
exercise such Securities Warrants shall commence and the date (the "Expiration
Date") on which such right shall expire, (vii) whether the Securities Warrants
will be issued in registered or bearer form, (viii) any special United States
Federal income tax consequences, (ix) the terms, if any, on which the Company
may accelerate the Expiration Date and (x) any other terms of such Securities
Warrants.
In the case of Share Warrants, the applicable Prospectus Supplement will
describe the terms of such Securities Warrants, including the following where
applicable: (i) the offering price, (ii) the aggregate number of Shares
purchasable upon exercise of such Securities Warrants and the exercise price,
(iii) the designation and terms of the Securities with which such Securities
Warrants are being offered, if any, and the number of such Securities Warrants
being offered with each such Security, (iv) the date, if any, on and after which
such Securities Warrants and the related series of Debt Securities or Shares
will be transferable separately, (v) the date on which the right to exercise
such Securities Warrants shall commence and the
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<PAGE> 25
Expiration Date, (vi) any special United States Federal income tax consequences
and (vii) any other terms of such Securities Warrants.
Securities Warrant certificates may be exchanged for new Securities Warrant
certificates of different denominations, may (if in registered form) be
presented for registration of transfer, and may be exercised at the corporate
trust office of the Securities Warrant agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of any Debt
Securities Warrants, holders of such Securities Warrants will not have any of
the rights of holders of the Debt Securities purchasable upon such exercise,
including the right to receive payments of principal of, premium, if any, or
interest, if any, on such Debt Securities or to enforce covenants in the
applicable indenture. Prior to the exercise of any Share Warrants, holders of
such Securities Warrants will not have any rights of holders of such Shares,
including the right to receive payments of dividends, if any, on such Shares, or
to exercise any applicable right to vote.
Certain Risk Considerations. Any Securities Warrants issued by the Company
will involve a certain degree of risk, including risks arising from the
fluctuations in the price of the underlying securities and general risks
applicable to the stock market (or markets) on which the underlying securities
are traded.
Prospective purchasers of the Securities Warrants should recognize that the
Securities Warrants may expire worthless and, thus, purchasers should be
prepared to sustain a total loss of the purchase price of their Securities
Warrants. This risk reflects the nature of a Securities Warrant as an asset
which, other factors held constant, tends to decline in value over time and
which may, depending on the price of the underlying securities, become worthless
when it expires. The trading price of a Securities Warrant at any time is
expected to increase as the price, or, if applicable, dividend rate on the
underlying securities increases. Conversely, the trading price of a Securities
Warrant is expected to decrease as the time remaining to expiration of the
Securities Warrant decreases and as the price or, if applicable, dividend rate
on the underlying securities, decreases. Assuming all other factors are held
constant, the more a Securities Warrant is "out of the money" (i.e., the more
the exercise price exceeds the price of the underlying securities and the
shorter its remaining term to expiration), the greater the risk that a purchaser
of the Securities Warrant will lose all or part of his or her investment. If the
price of the underlying securities does not rise before the Securities Warrant
expires to an extent sufficient to cover a purchaser's cost of the Securities
Warrant, the purchaser will lose all or part of his or her investment in such
Securities Warrant upon expiration.
In addition, prospective purchasers of the Securities Warrants should be
experienced with respect to options and option transactions and understand the
risks associated with options and should reach an investment decision only after
careful consideration, with their financial advisers, of the suitability of the
Securities Warrants in light of their particular financial circumstances and the
information discussed herein and, if applicable, the Prospectus Supplement.
Before purchasing, exercising or selling any Securities Warrants, prospective
purchasers and holders of Securities Warrants should carefully consider, among
other things, (i) the trading price of the Securities Warrants, (ii) the price
of the underlying securities at such time, (iii) the time remaining to
expiration and (iv) any related transaction costs. Some of the factors referred
to above are in turn influenced by various political, economic and other factors
that can affect the trading prices of the underlying securities and should be
carefully considered prior to making any investment decisions.
Purchasers of the Securities Warrants should further consider that the
initial offering price of the Securities Warrants may be in excess of the price
that a purchaser of options might pay for a comparable option in a private, less
liquid transaction. In addition it is not possible to predict the price at which
the Securities Warrants will trade in the secondary market or whether any such
market will be liquid. The Company may, but is not obligated to, file an
application to list any Securities Warrants issued on a United States national
securities exchange. To the extent that any Securities Warrants are exercised,
the number of Securities Warrants outstanding will decrease, which may result in
a lessening of the liquidity of the Securities Warrants. Finally, the Securities
Warrants will constitute direct, unconditional and unsecured obligations of the
Company and as such will be subject to any changes in the perceived
creditworthiness of the Company.
Exercise of Securities Warrants. Each Securities Warrant will entitle the
holder thereof to purchase such principal amount of Debt Securities or number of
Shares, as the case may be, at such exercise price as shall in
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each case be set forth in, or calculable from, the Prospectus Supplement
relating to the offered Securities Warrants. After the close of business on the
Expiration Date (or such later date to which such Expiration Date may be
extended by the Company), unexercised Securities Warrants will become void.
Securities Warrants may be exercised by delivering to the Securities
Warrant agent payment as provided in the applicable Prospectus Supplement of the
amount required to purchase the Debt Securities or Shares, as the case may be,
purchasable upon such exercise together with certain information set forth on
the reverse side of the Securities Warrant certificate. Securities Warrants will
be deemed to have been exercised upon receipt of payment of the exercise price,
subject to the receipt within five Business Days of the Securities Warrant
certificate evidencing such Securities Warrants. Upon receipt of such payment
and the Securities Warrant certificate properly completed and duly executed at
the corporate trust office of the Securities Warrant agent or any other office
indicated in the applicable Prospectus Supplement, the Company will, as soon as
practicable, issue and deliver the Debt Securities or Shares, as the case may
be, purchasable upon such exercise. If fewer than all of the Securities Warrants
represented by such Securities Warrant certificate are exercised, a new
Securities Warrant certificate will be issued for the remaining amount of
Securities Warrants.
Amendments and Supplements to Securities Warrant Agreement. The Securities
Warrant Agreements may be amended or supplemented without the consent of the
holders of the Securities Warrants issued thereunder, to effect changes that are
not inconsistent with the provisions of the Securities Warrants and that do not
adversely affect the interest of the holders of the Securities Warrants.
Share Warrant Adjustments. Unless otherwise indicated in the applicable
Prospectus Supplement, the exercise price of and the number of Shares covered by
a Share Warrant are subject to adjustment in certain events, including (i)
payment of a dividend on the Shares payable in Shares and Share splits,
combinations or reclassification of Shares, (ii) issuance to all holders of
Shares of rights or warrants to subscribe for or purchase Shares at less than
their current market price (as defined in the Securities Warrant Agreement for
such series of Share Warrants) and (iii) certain distributions of evidences of
indebtedness or assets (including securities but excluding cash, dividends or
distributions paid out of consolidated earnings or retained earnings or
dividends payable in Shares or of subscription rights and warrants excluding
those referred to above).
No adjustments in the exercise price of and the number of Shares covered by
a Share Warrant will be made for regular quarterly or other periodic or
recurring cash dividends or distributions or for cash dividends or distributions
to the extent paid from consolidated earnings or retained earnings. No
adjustment will be required unless such adjustment would require a change of at
least 1% in the exercise price then in effect. Except as stated above, the
exercise price of and the number of Shares covered by a Share Warrant will not
be adjusted for the issuance of Shares or any securities convertible into or
exchangeable for Shares or carrying the right or option to purchase or otherwise
acquire the foregoing in exchange for cash, other property or services.
In the event of any (i) consolidation or merger of the Company with or into
any entity (other than consolidation or a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding Shares),
(ii) sale, transfer, lease or conveyance of all or substantially all of the
assets of the Company or (iii) reclassification, capital reorganization or
change of the Shares (other than solely a change in par value), then any holder
of a Share Warrant will be entitled, on or after the occurrence of any such
event, to receive on exercise of such Share Warrant the kind and amount of
Shares or other securities, cash or other property (or any combination thereof)
that the holder would have received had such holder exercised such holder's
Share Warrant immediately prior to the occurrence of such event. If the
consideration to be received upon exercise of the Share Warrant following any
such event consists of common stock (or its equivalent) of the surviving entity,
then from and after the occurrence of such event, the exercise price of such
Share Warrant will be subject to the same anti-dilution and other adjustments
described in the second preceding paragraph, applied as if such common stock
were Shares.
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PLAN OF DISTRIBUTION
GENERAL
The Company may sell the Securities in any of three ways: (i) through
underwriting syndicates represented by one or more managing underwriters, or by
one or more underwriters without a syndicate; (ii) through agents designated
from time to time; and (iii) directly to investors. The names of any
underwriters or agents of the Company involved in the sale of the Securities in
respect of which this Prospectus is being delivered and any applicable
commissions or discounts will be set forth in the Prospectus Supplement. The net
proceeds to the Company from such sale will also be set forth in the Prospectus
Supplement.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices (which may be changed from time
to time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. The Prospectus Supplement
will describe the method of distribution of the Securities.
In connection with the sale of Securities, underwriters or agents acting on
the Company's behalf may receive compensation from the Company or from
purchasers of Securities for whom they may act as agents, in the form of
discounts, concessions or commissions. The underwriter, dealers and agents that
participate in the distribution of Securities may be deemed to be underwriters
under the Securities Act and any discounts or commissions received by them and
any profit on the resale of Securities by them may be deemed to be underwriting
discounts and commissions under the Securities Act. Any such underwriter will be
identified and any such compensation will be described in the Prospectus
Supplement.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may engage in transactions with or perform
services for the Company in the ordinary course of business.
As of October 13, 1995, the Company was engaged in preliminary discussions
with NatWest Securities Limited, Goldman Sachs International and Morgan Grenfell
& Co., Limited with respect to a European offering of the Company's shares of
beneficial interest.
STRUCTURED EQUITY PROGRAM
The Company may also issue and sell Shares from time to time through one or
more sales agents (to be named in a prospectus supplement hereto, the "Agent")
in ordinary brokers' transactions on the New York Stock Exchange (the "NYSE").
Such sales, if any, will be effected during a series of one or more pricing
periods (each, a "Pricing Period"), each consisting of five consecutive calendar
days in duration, unless a shorter period has otherwise been agreed to by the
Company and the Agent. For each Pricing Period, an Average Market Price (as
hereinafter defined) will be computed. With respect to any Pricing Period,
"Average Market Price" shall equal the average of the arithmetic mean of the
high and low sales prices of the Shares of the Company reported on the NYSE for
each trading day of such Pricing Period.
The net proceeds to the Company with respect to sales of Shares in any
Pricing Period up to a maximum amount agreed to in advance with the Agent (the
"Average Market Price Shares") will equal a percentage (the "Company's
Percentage") of the Average Market Price for each Share sold during the Pricing
Period (subject to adjustment in certain circumstances), plus Excess Proceeds
(as defined below), if any. The compensation to the Agent for sales of Average
Market Price Shares in any Pricing Period will equal the difference between the
aggregate gross sales price at which such sales are actually effected and the
net proceeds to the Company for such sales, but in no event will exceed 10% of
the aggregate gross sales prices of the Average Market Price Shares during any
Pricing Period (the "Maximum Commission"). To the extent that such aggregate
gross sales prices are less than the Average Market Price, the compensation to
the Agent will be correspondingly reduced; to the extent that such aggregate
gross sales prices are greater than the
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<PAGE> 28
Average Market Price, the compensation to the Agent will be correspondingly
increased (but in no event will exceed the Maximum Commission). In the event
that the average aggregate gross sales price in any Pricing Period equals the
Company's Percentage of the Average Market Price (or less) for such Pricing
Period, all of the proceeds from such sales will be for the account of the
Company and no compensation will be payable to the Agent. To the extent that the
Agent's compensation under the foregoing formula would otherwise exceed the
Maximum Commission in any Pricing Period, the excess will constitute additional
net proceeds to the Company (the "Excess Proceeds").
Any Shares sold by the Agent during the Pricing Period on behalf of the
Company other than Average Market Price Shares ("Additional Shares") will be at
a fixed commission rate based on a percentage of the Share price per Share. In
no event will the compensation to the Agent be in excess of any applicable
requirements of the National Association of Securities Dealers, Inc.
Settlements of sales of Additional Shares and Average Market Price Shares
will occur on the third business day following the date on which any such sales
are made. Purchases of Shares from the Agent, as sales agent for the Company,
will settle the regular way on the NYSE. Compensation to the Agent with respect
to sales of Average Market Price Shares will be paid out of the proceeds of such
settlements. There is no arrangement for funds to be received in an escrow,
trust or similar arrangement.
At the end of each Pricing Period, the Company will file a Prospectus
Supplement under the applicable paragraph of Rule 424(b) promulgated under the
Act, which Prospectus Supplement will set forth the name of the Agent, dates
included in such Pricing Period, the number of such Shares sold through the
Agent as sales agent (identifying separately the number of Average Market Shares
and any Additional Shares), the high and low prices at which Average Market
Shares were sold during such Pricing Period, the net proceeds to the Company,
the compensation payable by the Company to the Agent with respect to such sales
pursuant to the formula set forth above and other relevant information. Unless
otherwise indicated in a Prospectus Supplement, the Agent will act as sales
agent on a best efforts basis.
In connection with the sale of the Shares on behalf of the Company, the
Agent may be deemed to be an "underwriter" within the meaning of the Securities
Act, and the compensation of the Agent may be deemed to be underwriting
commissions or discounts. The Company intends to provide indemnification and
contribution to the Agent against certain civil liabilities, including
liabilities under the Securities Act. The Agent may engage in transactions with,
or perform services for, the Company in the ordinary course of business.
In August and September of 1995, the Company engaged in preliminary
discussions and negotiations with PaineWebber Incorporated with respect to a
structured equity program. As of October 13, 1995, the Company was not committed
to implement such a program and does not expect to implement such a program
until after the completion of the European offering described above, if at all.
LEGAL MATTERS
The validity of the Securities offered hereby will be passed upon for the
Company by Nutter, McClennen & Fish, LLP, Boston, Massachusetts. In addition,
Nutter, McClennen & Fish, LLP will pass upon certain Federal income tax matters
relating to the Company. The name of any legal counsel that passes on the
validity of the other Securities offered hereby for any underwriter or agent
will be set forth in the applicable Prospectus Supplement.
A-15
<PAGE> 29
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1994 and
1993 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, 1994, and the financial statement schedules incorporated by reference in
this Prospectus and elsewhere in the Registration Statement, have been audited
by Coopers & Lybrand L.L.P., independent accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing.
Any financial statements and schedules hereafter incorporated by reference in
the registration statement of which this Prospectus is a part that have been
audited and are the subject of a report by independent accountants will be so
incorporated by reference in reliance upon such reports and upon the authority
of such firms as experts in accounting and auditing to the extent covered by
consents filed with the Commission.
A-16
<PAGE> 30
PROSPECTUS
MEDITRUST
SHARES OF BENEFICIAL INTEREST,
DEBT SECURITIES AND/OR SECURITIES WARRANTS
------------------------
Meditrust, a Massachusetts business trust (together with its subsidiaries
unless the context otherwise requires, the "Company"), is a real estate
investment trust under the Internal Revenue Code of 1986, as amended, which may
offer from time to time, in one or more series, its debt securities (the "Debt
Securities"), warrants to purchase Debt Securities (the "Debt Securities
Warrants"), shares of beneficial interest, without par value (the "Shares"), and
warrants to purchase Shares (the "Share Warrants"). The Debt Securities Warrants
and the Share Warrants are collectively referred to herein as the "Securities
Warrants." The Debt Securities, Shares and Securities Warrants are collectively
referred to herein as the "Securities." The Securities will have an aggregate
offering price of $565,652,767.50 and will be offered in amounts, at prices and
on terms to be determined at the time of offering.
In the case of Debt Securities, the specific title, the aggregate principal
amount, the purchase price, the maturity, the rate and time of payment of any
interest, any redemption or sinking fund provisions, any conversion provisions
and any other specific term of the Debt Securities will be set forth in an
accompanying supplement to this Prospectus (the "Prospectus Supplement"). In the
case of Shares, the specific number of Shares and issuance price per Share will
be set forth in an accompanying Prospectus Supplement. In the case of Securities
Warrants, the duration, offering price, exercise price and detachability, if
applicable, will be set forth in an accompanying Prospectus Supplement. The
Prospectus Supplement will also disclose whether the Securities will be listed
on a national securities exchange and if they are not to be listed, the possible
effects thereof on their marketability.
The Securities may be sold: (i) directly by the Company; (ii) through
underwriting syndicates represented by one or more managing underwriters, or by
one or more underwriters without a syndicate; and (iii) through agents
designated from time to time. The names of any underwriters or agents of the
Company involved in the sale of the Securities in respect of which this
Prospectus is being delivered and any applicable commissions or discounts will
be set forth in an accompanying Prospectus Supplement. See "Plan of
Distribution." The net proceeds to the Company from such sale also will be set
forth in the Prospectus Supplement.
The Company's shares are traded on the New York Stock Exchange under the
symbol "MT." On May 31, 1995, the closing sale price of the shares on the New
York Stock Exchange was $31.875.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
------------------------
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
------------------------
THE DATE OF THIS PROSPECTUS IS JUNE 1, 1995.
<PAGE> 31
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024 of the offices of
the Commission, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
or at the regional offices of the Commission located at Seven World Trade
Center, 13th Floor, New York, New York 10048 and Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material can be obtained from the principal offices of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549, at prescribed
rates. Reports, proxy materials and other information concerning the Company can
also be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, Room 1102, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1993, as amended (the "Securities Act").
This Prospectus and any accompanying Prospectus Supplement do not contain all
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission. For
further information, reference is made to the Registration Statement, copies of
which may be obtained upon payment of a fee prescribed by the Commission, or may
be examined free of charge at the principal office of the Commission in
Washington, D.C.
Statements made in this Prospectus and any accompanying Prospectus
Supplement as to the contents of any contract or other document referred to are
not necessarily complete, and reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference into this Prospectus its
Annual Report on Form 10-K for the fiscal year ended December 31, 1994, its
Current Report on Form 8-K dated March 8, 1995 and its Quarterly Report on Form
10-Q for the fiscal quarter ended March 13, 1995, which shall be deemed to be a
part hereof. The discussion of Federal income tax treatment of the Company and
its shareholders which is contained in the Company's Current Report on Form 8-K
dated March 4, 1992, including any amendment or report filed for the purpose of
updating such discussion, is hereby incorporated by reference into this
Prospectus and shall be deemed to be a part hereof.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the termination of the offering of the Securities offered hereby shall
be deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing such documents. Any statement contained herein or
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in a subsequently filed
document, as the case may be, which also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
(without exhibits) of any or all documents incorporated by reference into this
Prospectus. Requests for such copies should be directed to
Lisa P. McAlister, Vice President and Treasurer, Meditrust, 197 First Avenue,
Needham Heights, Massachusetts 02194, telephone (617) 433-6000.
B-2
<PAGE> 32
THE DECLARATION OF TRUST ESTABLISHING THE COMPANY, 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.
THE COMPANY
Meditrust is the largest dedicated health care real estate investment trust
in the United States, based on its gross real estate investments of $1.66
billion as of March 31, 1995. 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 cash flows to be distributed to
shareholders. In meeting this objective, the Company invests in high quality
facilities that are managed by experienced operators and attempts to achieve
diversity in its property portfolio by sector of the health care industry,
geographic location, operator and form of investment.
As of March 31, 1995, the Company had investments in 282 facilities,
consisting of 238 long-term care facilities, 23 rehabilitation hospitals, six
psychiatric hospitals, six retirement living facilities, two alcohol and
substance abuse facilities, six medical office buildings and one acute care
hospital. The properties are located in 34 different states and are operated by
32 health care companies. Of the 32 different operators, seven are
publicly-traded companies (i.e., Sun Healthcare Group, Inc., Continental Medical
Systems, Inc., Geriatric and Medical Centers, Inc., OrNda Healthcorp.,
Integrated Health Services, Inc., NovaCare, Inc. and Mariner Health Group,
Inc.), and constitute approximately 45% of the Company's real estate
investments.
The Company's real estate investments are either owned by the Company or
secured by a mortgage lien. As of March 31, 1995 permanent mortgage loans
constituted 54%, sale/leaseback transactions constituted 41%, and development
mortgage financing constituted 5% of the Company's portfolio as measured by
gross real estate investments. The leases and mortgages provide for rental or
interest rates which generally range from 9.5% to 13.5% per annum of the
acquisition price or mortgage amount. The leases and mortgages generally provide
for an initial term of 10 years, with the leases having one or more five-year
renewal options. The leases and mortgages also provide for additional rent and
interest which are generally based upon a percentage of increased revenues over
specific base period revenues of the related properties. For the year ended
December 31, 1994, the aggregate amount of additional rent and interest was
approximately $8.2 million compared to $8.7 million for the year ended December
31, 1993.
In addition, the Company usually obtains guarantees from the parent
corporation, if any, of the operator or affiliates or individual principals of
the operator. Most obligations are backed by letters of credit, security
deposits or pledges of certificates of deposit which cover from three to twelve
months of lease or mortgage payments. In addition, permanent mortgage and
development mortgage loans generally are cross-collateralized with any other
mortgage and development loans, leases or other agreements between the Company
and the same operator or any affiliated operators. Leases and mortgage loans
generally are cross-defaulted with any other leases or mortgages between the
Company and the same operator or any affiliated operators. With respect to
development mortgage loans, the Company generally requires guaranteed maximum
price construction contracts, performance completion bonds or guarantees and
cost overrun guarantees. The Company enters into a development mortgage loan
when the Company will also be the permanent owner or mortgage lender. In making
its investment decisions, the Company reviews, among other criteria, the
operational viability of the facility, the experience and competency of the
operator and the financial strength of the guarantor.
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.
B-3
<PAGE> 33
In order to meet its ongoing capital requirements for additional
investments, the Company may raise additional equity capital through the sale of
Shares, Debt Securities, Share Warrants or Debt Securities Warrants or through a
securitization transaction.
The Company's principal executive offices are located at 197 First Avenue,
Needham Heights, Massachusetts 02194, and its telephone number is (617)
433-6000.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
THREE-MONTH
PERIOD
YEAR ENDED DECEMBER 31, ENDED
-------------------------------------------------------- MARCH
1990 1991 1992 1993 1994 31,1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio................... 1.67 1.60 1.88 2.02 2.19 2.31
</TABLE>
For the purpose of calculating the ratio of earnings to fixed charges for
the years ended December 31, 1990, 1991, 1992, 1993 and 1994 and for the
three-month period ended March 31, 1995, net income has been added to interest
expense and that sum has been divided by such interest expense.
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement which accompanies
this Prospectus, the net proceeds from the sale of the Securities offered from
time to time hereby will be used for general business purposes, including the
repayment of bank lines of credit, if any, outstanding, and investments in
health care facilities. As of March 31, 1995, $50,000,000 was outstanding under
the Company's bank lines of credit. All currently outstanding loans under the
Company's bank lines of credit mature prior to July 1, 1997 and accrue interest
at the lenders' respective prime rates or the London Interbank Offering Rate
plus 1.00 to 1.50%. Pending such uses, the net proceeds will be invested in
short-term, interest-bearing, direct obligations issued or guaranteed by the
United States, certificates of deposit or accounts, or investment grade
commercial paper, consistent with the Company's qualification as a real estate
investment trust, the Company's Restated Declaration of Trust, as amended (the
"Declaration"), and the Company's agreements with its lenders.
DESCRIPTION OF SHARES
There is no limit on the number of Shares the Company is authorized to
issue. Shares may be issued by the Board of Trustees without any vote of the
shareholders. The outstanding Shares are of one class and without par value. The
following description is qualified in all respects by reference to the
Declaration and the By-laws of the Company, copies of which are incorporated by
reference as exhibits to the Registration Statement of which this Prospectus is
a part.
SHARES OF BENEFICIAL INTEREST. All Shares participate equally in dividends
and in net assets available for distribution to shareholders on liquidation or
termination of the Company, have one vote per Share on all matters submitted to
a vote of the shareholders and do not have cumulative voting rights in the
election of Trustees. The Shares offered hereby will be validly issued, fully
paid and nonassessable by the Company upon issuance.
REDEMPTION. For the Company to qualify as a real estate investment trust
under the Internal Revenue Code of 1986, as amended (the "Code"), in any taxable
year, not more than 50% of its outstanding Shares may be owned by five or fewer
individuals and Shares must be owned by 100 or more persons during at least 335
days of a taxable year of 12 months or during a proportionate part of a shorter
taxable year. In order to meet these requirements, the Trustees have the power
to redeem or prohibit the transfer of a sufficient number of Shares selected in
a manner deemed appropriate to maintain or bring the ownership of the Shares
into conformity with such requirements. In connection with the foregoing, if the
Trustees shall, at any time and in good faith, be of the opinion that direct or
indirect ownership of at least 9.9% or more of the Shares has or may become
concentrated in the hands of one beneficial owner, the Trustees shall have the
power (i) by lot or other means deemed equitable by them to call for the
purchase from any shareholder of the Company of a number of Shares sufficient,
in the opinion of the Trustees, to maintain or bring the direct or indirect
ownership of Shares of such owner to a level of no more than 9.9% of the
outstanding Shares, and (ii) to refuse to transfer or issue Shares to any person
whose acquisition of such Shares would cause a beneficial holder to hold in
excess of 9.9% of the outstanding Shares. Further, any transfer of Shares that
would create a beneficial owner of more than 9.9% of the outstanding Shares
shall be deemed void and the intended
B-4
<PAGE> 34
transferee shall be deemed never to have had an interest therein. The purchase
price for any Shares so redeemed shall be equal to the fair market value of the
Shares reflected in the closing sales price for the Shares, if then listed on a
national securities exchange, or the average of the closing sales price for the
Shares if then listed on more than one national securities exchange, or if the
Shares are not then listed on a national securities exchange, the latest bid
quotation for the Shares if then traded over-the-counter, on the last business
day immediately preceding the day on which notices of such acquisition are sent
by the Company. From and after the date fixed for purchase by the Trustees, the
holder of any Shares so called for purchase shall cease to be entitled to
distributions, voting rights and other benefits with respect to such Shares,
except the right to payment of the purchase price for the Shares.
The foregoing provisions may have the effect of discouraging unilateral
tender offers or other takeover proposals which certain shareholders might deem
in their interest or in which they might receive a substantial premium. The
provisions could also have the effect of insulating current management against
the possibility of removal and could, by possibly reducing temporary
fluctuations in market price caused by accumulations of Shares, deprive
shareholders of opportunities to sell at a temporarily higher market price.
ADDITIONAL PROVISIONS. The Declaration provides that annual meetings of
shareholders are to be held within six months after the end of each fiscal year
and special meetings of the shareholders may be called by the President of the
Company, a majority of the Trustees or a majority of the Independent Trustees
(defined in the Declaration) and shall be called upon the written request of the
holders of 10% or more of the outstanding Shares.
Whenever any action is to be taken by the shareholders, it shall, except as
otherwise clearly indicated in the Declaration of Trust, be authorized by
holders of a majority of the Shares then outstanding and entitled to vote
thereon. Notwithstanding the foregoing, at all elections of Trustees, voting by
shareholders shall be conducted under the non-cumulative method and the election
of Trustees shall be by the affirmative vote of the holders of Shares
representing a plurality of the Shares then outstanding which are present in
person or by proxy at a meeting in which a quorum is present.
Whenever shareholders are required or permitted to take any action (unless
a vote at a meeting is specifically required, as with respect to termination or
amendment of the Declaration), such action may be taken without a meeting by
written consents setting forth the action so taken, signed by the holders of a
majority (or such higher percentage as may be specified) of the outstanding
Shares that would be entitled to vote thereon at a meeting.
Except with respect to matters on which a shareholders' vote is
specifically required by the Declaration, no action taken by the shareholders at
any meeting shall in any way bind the Trustees.
The Shares have no preemptive, conversion, exchange, sinking fund or
appraisal rights.
The Declaration 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 claims are not satisfied by the Company. However, the Declaration
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. For example, almost all of the real estate and all
of the mortgages included in the assets of the Company are held by corporate
subsidiaries. The Trustees do not intend to provide insurance covering such
risks to shareholders.
TRANSFER AGENT AND REGISTRAR. Fleet National Bank, Providence, Rhode
Island, acts as transfer agent and registrar of the Shares.
B-5
<PAGE> 35
DESCRIPTION OF DEBT SECURITIES
The Prospectus Supplement will describe certain terms of any Debt
Securities offered hereby, including (i) the title of such Debt Securities; (ii)
any limit on the aggregate principal amount of such Debt Securities and their
purchase price; (iii) the date or dates on which such Debt Securities will
mature; (iv) the rate or rates per annum (or manner in which interest is to be
determined) at which such Debt Securities will bear interest, if any, and the
date from which such interest, if any, will accrue; (v) the dates on which such
interest, if any, on such Debt Securities will be payable and the regular record
dates for such interest payment dates; (vi) any mandatory or optional sinking
fund or analogous provisions; (vii) additional provisions, if any, for the
defeasance of such Debt Securities; (viii) the date, if any, after which and the
price or prices at which such Debt Securities may, pursuant to any optional or
mandatory redemption or repayment provisions, be redeemed and the other detailed
terms and provisions of any such optional or mandatory redemption or repayment
provisions; (ix) whether such Debt Securities are to be issued in whole or in
part in registered form represented by one or more registered global securities
(a "Registered Global Security") and, if so, the identity of the depository for
such Registered Global Security or Securities; (x) certain applicable United
States Federal income tax consequences; (xi) any provisions relating to security
for payments due under such Debt Securities; (xii) any provisions relating to
the conversion or exchange of such Debt Securities into or for Shares or Debt
Securities of another series; (xiii) any provisions relating to the ranking of
such Debt Securities in right of payment as compared to other obligations of the
Company; (xiv) the denominations in which such Debt Securities are authorized to
be issued; (xv) the place or places where principal of, premium, if any, and
interest, if any, on such Debt Securities will be payable; (xvi) whether such
debt Securities are to be issued pursuant to an indenture of trust; and (xvii)
any other specific term of such Debt Securities, including any additional events
of default or covenants provided for with respect to such Debt Securities, and
any terms that may be required by or advisable under applicable laws or
regulations.
The Debt Securities may be issued in one or more series under an Indenture
to be executed by the Company and a trustee (the "Trustee"), a form of which is
included as an exhibit to the Registration Statement of which this Prospectus is
a part (the "Indenture"). The terms of the Debt Securities may include those
stated in the Indenture and those made a part of the Indenture (before any
supplements) by reference to the Trust Indenture Act of 1939, as amended.
The following is a summary of certain provisions of the Indenture and does
not purport to be complete and is qualified in its entirety by reference to the
detailed provisions of the Indenture, including the definitions of certain terms
therein to which reference is hereby made, for a complete statement of such
provisions. Wherever particular provisions or sections of the Indenture or terms
defined therein are referred to herein, such provisions or definitions are
incorporated herein by reference.
GENERAL. The Indenture does not limit the aggregate principal amount of
Debt Securities that may be issued thereunder and provides that Debt Securities
may be issued from time to time in one or more series.
CONVERSION RIGHTS. The terms, if any, on which Debt Securities of any
series may be converted into Shares or Debt Securities of another series will be
set forth in the Prospectus Supplement relating thereto. To protect the
Company's status as a real estate investment trust ("REIT"), the holders of Debt
Securities of any series ("Holders") may not convert any Debt Security, and such
Debt Security shall not be convertible by any Holder, if as a result of such
conversion any person would then be deemed to beneficially own, directly or
indirectly, 9.9% or more of the then outstanding Shares.
The conversion price will be subject to adjustment under certain
conditions, including (i) the payment of dividends (and other distributions) in
Shares on any class of shares of the Company; (ii) subdivisions, combinations
and reclassifications of Shares; (iii) the issuance to all or substantially all
holders of Shares of rights or warrants entitling them to subscribe for or
purchase Shares at a price per Share (or having a conversion price per Share)
less than the then current market price; and (iv) distributions to all or
substantially all holders of Shares or shares of any other class, or evidences
of indebtedness or assets (including securities, but excluding those rights,
warrants, dividends and distributions referred to above and dividends and
distributions not prohibited under the terms of the Indenture) of the Company,
subject to the limitation that all adjustments by reason of any of the foregoing
would not be made until they result in a cumulative change in the conversion
price of at least 1%. In the event the Company shall effect any capital
reorganization or reclassification of its Shares or shall consolidate or merge
with or into any trust or corporation (other than a consolidation or merger in
which the Company is the surviving entity) or shall sell or transfer
substantially all its assets to any other trust or corporation, the Holders
shall, if entitled to convert such Debt Securities at any time after such
transaction, receive upon conversion thereof, in lieu of each Share
B-6
<PAGE> 36
into which the Debt Securities of such series would have been convertible prior
to such transaction, the same kind and amount of stock and other securities,
cash or property as shall have been issuable or distributable in connection with
such transaction with respect to each Share.
A conversion price adjustment made according to the provisions of the Debt
Securities of any series (or the absence of provision for such an adjustment)
might result in a constructive distribution to the Holders of Debt Securities of
such series or holders of Shares that would be subject to taxation as a
dividend. The Company may, at its option, make such reductions in the conversion
price, in addition to those set forth above, as the Board of Trustees of the
Company deems advisable to avoid or diminish any income tax to holders of Shares
resulting from any dividend or distribution of Shares (or rights to acquire
Shares) or from any event treated as such for income tax purposes or for any
other reason. The Board of Trustees will also have the power to resolve any
ambiguity or correct any error in the provisions relating to the adjustment of
the conversion price of the Debt Securities of such series and its actions in so
doing shall be final and conclusive.
Fractional Shares will not be issued upon conversion, but, in lieu thereof,
the Company will pay a cash adjustment based upon market price.
The Holders of Debt Securities of any series at the close of business on an
interest payment record date shall be entitled to receive the interest payable
on such Debt Securities on the corresponding interest payment date
notwithstanding the conversion thereof. However, Debt Securities surrendered for
conversion during the period from the close of business on any record date for
the payment of interest to the opening of business on the corresponding interest
payment date must be accompanied by payment of an amount equal to the interest
payable on such interest payment date. Holders of Debt Securities of any series
who convert Debt Securities of such series on an interest payment date will
receive the interest payable by the Company on such date and need not include
payment in the amount of such interest upon surrender of such Debt Securities
for conversion. Except as aforesaid, no payment or adjustment is to be made on
conversion for interest accrued on the Debt Securities of any series or for
dividends on Shares.
OPTIONAL REDEMPTION. The Debt Securities of any series that are
convertible into Shares will be subject to redemption, in whole or from time to
time in part, at any time for certain reasons intended to protect the Company's
status as a REIT at the option of the Company on at least 30 days' prior notice
by mail at a redemption price equal to 100% of the principal amount, plus
interest accrued to the date of redemption. Except as otherwise set forth in the
accompanying Prospectus Supplement, the Company may exercise its redemption
powers solely with respect to the securities of the security holder or holders
which pose a threat to the Company's REIT status and only to the extent deemed
necessary by the Company's Board of Trustees to preserve such status. (See
"Redemption" under "Description of Shares".)
DIVIDENDS, DISTRIBUTIONS AND ACQUISITIONS OF SHARES OF BENEFICIAL
INTEREST. The Indenture provides that the Company will not (i) declare or pay
any dividend or make any distribution on its Shares or to holders of its Shares
(other than dividends or distributions payable in its Shares or other than as
the Company determines is necessary to maintain its status as a REIT) or (ii)
purchase, redeem or otherwise acquire or retire for value any of its Shares or
permit any subsidiary to do so, if at the time of such action an Event of
Default (as defined in the Indenture) has occurred and is continuing or would
exist immediately after giving effect to such action.
ADDITIONAL COVENANTS. Any additional covenants of the Company with respect
to a series of the Debt Securities will be set forth in the Prospectus
Supplement relative thereto.
MODIFICATION OF THE INDENTURE. Under the Indenture, with certain
exceptions, the rights and obligations of the Company with respect to any series
of Debt Securities and the rights of Holders of such series may only be modified
by the Company and the Trustee with the consent of the Holders of at least a
majority in principal amount of the outstanding Debt Securities of such series.
However, without the consent of each Holder of any Debt Securities affected, an
amendment, waiver or supplement may not (i) reduce the principal of, or rate of
interest on, any Debt Securities; (ii) change the stated maturity date of the
principal of, or any installment of interest on, any Debt Securities; (iii)
waive a default in the payment of the principal amount of, or the interest on,
or any premium payable on redemption of, any Debt Securities; (iv) change the
currency for payment of the principal of, or premium or interest on, any Debt
Securities; (v) impair the right to institute suit for the enforcement of any
such payment when due; (vi) adversely affect any right to convert any Debt
Securities; (vii) reduce the amount of outstanding Debt Securities necessary to
consent to an amendment, supplement or waiver provided for in the Indenture; or
(viii) modify any provisions of the Indenture relating to the modification and
amendment of the Indenture or waivers of past defaults, except as otherwise
specified.
B-7
<PAGE> 37
EVENTS OF DEFAULT, NOTICE AND WAIVER. Except as otherwise set forth in the
accompanying Prospectus Supplement, the following is a summary of certain
provisions of the Indenture relating to events of default, notice and waiver.
The following are Events of Default under the Indenture with respect to any
series of Debt Securities: (i) default in the payment of interest on the Debt
Securities of such series when due and payable, which continues for 30 days;
(ii) default in the payment of principal of (and premium, if any) on the Debt
Securities when due, at maturity, upon redemption or otherwise, which continues
for five Business Days; (iii) failure to perform any other covenant of the
Company contained in the Indenture or the Debt Securities of such series which
continues for 60 days after written notice as provided in the Indenture; (iv)
default under any bond, debenture or other Indebtedness (as defined in the
Indenture) of the Company or any subsidiary if (a) either (x) such event of
default results from the failure to pay any such Indebtedness at maturity or (y)
as a result of such event of default, the maturity of such Indebtedness has been
accelerated prior to its expressed maturity and such acceleration shall not be
rescinded or annulled or the accelerated amount paid within ten days after
notice to the Company of such acceleration, or such Indebtedness having been
discharged, and (b) the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness in default for failure to pay
principal or interest thereon, or the maturity of which has been so accelerated,
aggregates $10,000,000 or more; (v) certain events of bankruptcy, insolvency or
reorganization relating to the Company; and (vi) any other Event of Default
provided with respect to the Debt Securities of that series.
If an Event of Default occurs and is continuing with respect to the Debt
Securities of any series, either the Trustee or the Holders of a majority in
aggregate principal amount of the outstanding Debt Securities of such series may
declare the Debt Securities due and payable immediately.
The Indenture provides that the Trustee will, within 90 days after the
occurrence of any Default or Event of Default with respect to the Debt
Securities of any series, give to the Holders of Debt Securities notice of all
uncured Defaults and Events of Default known to it, but the Trustee will be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interest of such Holders, except in the
case of a default in the payment of the principal of (or premium, if any) or
interest on any of the Debt Securities of such series.
The Indenture provides that the Holders of a majority in aggregate
principal amount of the Debt Securities of any series then outstanding may
direct the time, method and place of conducting any proceedings for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee with respect to the Debt Securities of such series. The right of a
Holder to institute a proceeding with respect to the Indenture is subject to
certain conditions precedent including notice and indemnity to the Trustee, but
the Holder has an absolute right to receipt of principal of (and premium, if
any) and interest on such Holder's Debt Securities on or after the respective
due dates expressed in the Debt Securities, and to institute suit for the
enforcement of any such payments.
The Holders of a majority in principal amount of the outstanding Debt
Securities of any series then outstanding may on behalf of the Holders of all
Debt Securities of such series waive certain past defaults, except a default in
payment of the principal of (or premium, if any) or interest on any Debt
Securities of such series or in respect of certain provisions of the Indenture
which cannot be modified or amended without the consent of the Holder of each
outstanding Debt Securities of such series affected thereby.
The Company will be required to furnish to the Trustee annually a statement
of certain officers of the Company stating whether or not they know of any
Default or Events of Default (as defined in the Indenture) and, if they have
knowledge of a Default or Event of Default, a description of the efforts to
remedy the same.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE. The Indenture provides that the
Company may merge or consolidate with, or sell or convey all or substantially
all of its assets to, any other trust or corporation, provided that (i) either
the Company shall be the continuing entity, or the successor entity (if other
than the Company) shall be an entity organized and existing under the laws of
the United States or a state thereof or the District of Columbia (although it
may, in turn, be owned by a foreign entity) and such entity shall expressly
assume by supplemental indenture all of the obligations of the Company under the
Debt Securities of any series and the Indenture, (ii) immediately after giving
effect to such transactions no Default or Event of Default shall have occurred
and be continuing, and (iii) the Company shall have delivered to the Trustee an
Officers' Certificate and opinion of counsel, stating that the transaction and
supplemental indenture comply with the Indenture. The Indenture does not contain
any provision requiring the Company to repurchase the Debt Securities of any
series at the option of the Holders thereof in the event of a leveraged buyout,
B-8
<PAGE> 38
recapitalization or similar restructuring of the Company, even though the
Company's creditworthiness and the market value of the Debt Securities may
decline significantly as a result of such transaction. The Indenture does not
protect Holders of the Debt Securities of any series against any decline in
credit quality, whether resulting from any such transaction or from any other
cause.
GLOBAL SECURITIES. The Debt Securities of a series may be issued in whole
or in part in global form (the "Global Securities"). The Global Securities will
be deposited with a depository (the "Depository"), or with a nominee for a
Depository, identified in the Prospectus Supplement. In such case, one or more
Global Securities will be issued in a denomination or aggregate denominations
equal to the portion of the aggregate principal amount of outstanding Debt
Securities of the series to be represented by such Global Security or
Securities. Unless and until it is exchanged in whole or in part for Debt
Securities in definitive form, a Global Security may not be transferred except
as a whole by the Depository for such Global Security to a nominee of such
Depository or by a nominee of such Depository to such Depository or another
nominee of such Depository or by such Depository or any such nominee to a
successor for such Depository or a nominee of such successor.
The specific material terms of the depository arrangement with respect to
any portion of a series of Debt Securities to be represented by a Global
Security will be described in the Prospectus Supplement. The Company anticipates
that the following provisions will apply to all depository arrangements.
Upon the issuance of a Global Security, the Depository for such Global
Security will credit, on its book entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such Global
Security to the accounts of persons that have accounts with such Depository
("participants"). The accounts to be credited shall be designated by any
underwriters or agents participating in the distribution of such Debt
Securities. Ownership of beneficial interests in a Global Security will be
limited to participants or persons that may hold interests through participants.
Ownership of beneficial interests in such Global Security will be shown on, and
the transfer of that ownership will be effected only through records maintained
by the Depository for such Global Security (with respect to interests of
participants) or by participants or persons that hold through participants (with
respect to interests of persons other than participants). So long as the
Depository for a Global Security, or its nominee, is the registered owner of
such Global Security, such Depository or such nominee as the case may be, will
be considered the sole owner or Holder of the Debt Securities represented by
such Global Security for all purposes under the Indenture; provided, however,
that for purposes of obtaining any consents or directions required to be given
by the Holders of the Debt Securities, the Company, the Trustee and its agents
will treat a person as the holder of such principal amount of Debt Securities as
specified in a written statement of the Depository.
Principal, premium, if any, and interest payments, if any, on Debt
Securities represented by a Global Security registered in the name of a
Depository or its nominee will be made to such Depository or its nominee, as the
case may be, as the registered owner of such Global Security. None of the
Company, the Trustee or any Paying Agent for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in such Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Company expects that the Depository for any Debt Securities represented
by a Global Security, upon receipt of any payment of principal, premium, if any,
or interest will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of such Depository. The
Company also expects that payments by participants will be governed by standing
instructions and customary practices, as is now the case with the securities
held for the accounts of customers registered in "street names," and will be the
responsibility of such participants.
If the Depository for any Debt Securities represented by a Global Security
is at any time unwilling or unable to continue as Depository and a successor
Depository is not appointed by the Company within 90 days, the Company will
issue each Debt Security in definitive form to the beneficial owners thereof in
exchange for such Global Security. In addition, the Company may at any time and
in its sole discretion determine not to have any of the Debt Securities of a
series represented by one or more Global Securities and, in such event, will
issue Debt Securities of such series in definitive form in exchange for all of
the Global Security or Securities representing such Debt Securities.
B-9
<PAGE> 39
The laws of some states require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in Debt Securities represented by
Global Securities.
GOVERNING LAW. The Indenture and the Debt Securities will be governed by
and construed in accordance with the laws of the Commonwealth of Massachusetts.
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Debt
Securities or Shares. Securities Warrants may be issued independently or
together with Debt Securities or Shares offered by any Prospectus Supplement and
may be attached to or separate from such Debt Securities or Shares. Each series
of Securities Warrants will be issued under a separate warrant agreement (a
"Securities Warrant Agreement") to be entered into between the Company and a
bank or trust company, as Securities Warrant agent, all as set forth in the
Prospectus Supplement relating to the particular issue of offered Securities
Warrants. The Securities Warrant agent will act solely as an agent of the
Company in connection with the Securities Warrant certificates relating to the
Securities Warrants and will not assume any obligation or relationship of agency
or trust for or with any holders of Securities Warrant certificates or
beneficial owners of Securities Warrants. The following summaries of certain
provisions of the Securities Warrant Agreement and Securities Warrants do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Securities Warrant Agreement and the
Securities Warrant certificates relating to each series of Security Warrants
which will be filed with the Commission and incorporated by reference as an
exhibit to the Registration Statement of which this Prospectus is a part at or
prior to the time of the issuance of such series of Security Warrants.
If Debt Securities Warrants are offered, the applicable Prospectus
Supplement will describe the terms of such Securities Warrants, including the
following where applicable: (i) the offering price, (ii) the denominations and
terms of the series of Debt Securities purchasable upon exercise of such
Securities Warrants, (iii) the designation and terms of any series of Debt
Securities with which such Securities Warrants are being offered and the number
of such Securities Warrants being offered with each such Debt Security, (iv) the
date, if any, on and after which such Securities Warrants and the related series
of Debt Securities will be transferable separately, (v) the principal amount of
the series of Debt Securities purchasable upon exercise of each such Securities
Warrant and the price at which such principal amount of Debt Securities of such
series may be purchased upon such exercise, (vi) the date on which the right to
exercise such Securities Warrants shall commence and the date (the "Expiration
Date") on which such right shall expire, (vii) whether the Securities Warrants
will be issued in registered or bearer form, (viii) any special United States
Federal income tax consequences, (ix) the terms, if any, on which the Company
may accelerate the Expiration Date and (x) any other terms of such Securities
Warrants.
In the case of Share Warrants, the applicable Prospectus Supplement will
describe the terms of such Securities Warrants, including the following where
applicable: (i) the offering price, (ii) the aggregate number of Shares
purchasable upon exercise of such Securities Warrants and the exercise price,
(iii) the designation and terms of the Securities with which such Securities
Warrants are being offered, if any, and the number of such Securities Warrants
being offered with each such Security, (iv) the date, if any, on and after which
such Securities Warrants and the related series of Debt Securities or Shares
will be transferable separately, (v) the date on which the right to exercise
such Securities Warrants shall commence and the Expiration Date, (vi) any
special United States Federal income tax consequences and (vii) any other terms
of such Securities Warrants.
Securities Warrant certificates may be exchanged for new Securities Warrant
certificates of different denominations, may (if in registered form) be
presented for registration of transfer, and may be exercised at the corporate
trust office of the Securities Warrant agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of any Debt
Securities Warrants, holders of such Securities Warrants will not have any of
the rights of holders of the Debt Securities purchasable upon such exercise,
including the right to receive payments of principal of, premium, if any, or
interest, if any, on such Debt Securities or to enforce covenants in the
applicable indenture. Prior to the exercise of any Share Warrants, holders of
such Securities Warrants will not have any rights of holders of such Shares,
including the right to receive payments of dividends, if any, on such Shares, or
to exercise any applicable right to vote.
B-10
<PAGE> 40
CERTAIN RISK CONSIDERATIONS. Any Securities Warrants issued by the Company
will involve a certain degree of risk, including risks arising from the
fluctuations in the price of the underlying securities and general risks
applicable to the stock market (or markets) on which the underlying securities
are traded.
Prospective purchasers of the Securities Warrants should recognize that the
Securities Warrants may expire worthless and, thus, purchasers should be
prepared to sustain a total loss of the purchase price of their Securities
Warrants. This risk reflects the nature of a Securities Warrant as an asset
which, other factors held constant, tends to decline in value over time and
which may, depending on the price of the underlying securities, become worthless
when it expires. The trading price of a Securities Warrant at any time is
expected to increase as the price, or, if applicable, dividend rate on the
underlying securities increases. Conversely, the trading price of a Securities
Warrant is expected to decrease as the time remaining to expiration of the
Securities Warrant decreases and as the price or, if applicable, dividend rate
on the underlying securities, decreases. Assuming all other factors are held
constant, the more a Securities Warrant is "out of the money" (i.e., the more
the exercise price exceeds the price of the underlying securities and the
shorter its remaining term to expiration), the greater the risk that a purchaser
of the Securities Warrant will lose all or part of his or her investment. If the
price of the underlying securities does not rise before the Securities Warrant
expires to an extent sufficient to cover a purchaser's cost of the Securities
Warrant, the purchaser will lose all or part of his or her investment in such
Securities Warrant upon expiration.
In addition, prospective purchasers of the Securities Warrants should be
experienced with respect to options and option transactions and understand the
risks associated with options and should reach an investment decision only after
careful consideration, with their financial advisers, of the suitability of the
Securities Warrants in light of their particular financial circumstances and the
information discussed herein and, if applicable, the Prospectus Supplement.
Before purchasing, exercising or selling any Securities Warrants, prospective
purchasers and holders of Securities Warrants should carefully consider, among
other things, (i) the trading price of the Securities Warrants, (ii) the price
of the underlying securities at such time, (iii) the time remaining to
expiration and (iv) any related transaction costs. Some of the factors referred
to above are in turn influenced by various political, economic and other factors
that can affect the trading prices of the underlying securities and should be
carefully considered prior to making any investment decisions.
Purchasers of the Securities Warrants should further consider that the
initial offering price of the Securities Warrants may be in excess of the price
that a purchaser of options might pay for a comparable option in a private, less
liquid transaction. In addition it is not possible to predict the price at which
the Securities Warrants will trade in the secondary market or whether any such
market will be liquid. The Company may, but is not obligated to, file an
application to list any Securities Warrants issued on a United States national
securities exchange. To the extent that any Securities Warrants are exercised,
the number of Securities Warrants outstanding will decrease, which may result in
a lessening of the liquidity of the Securities Warrants. Finally, the Securities
Warrants will constitute direct, unconditional and unsecured obligations of the
Company and as such will be subject to any changes in the perceived
creditworthiness of the Company.
EXERCISE OF SECURITIES WARRANTS. Each Securities Warrant will entitle the
holder thereof to purchase such principal amount of Debt Securities or number of
Shares, as the case may be, at such exercise price as shall in each case be set
forth in, or calculable from, the Prospectus Supplement relating to the offered
Securities Warrants. After the close of business on the Expiration Date (or such
later date to which such Expiration Date may be extended by the Company),
unexercised Securities Warrants will become void.
Securities Warrants may be exercised by delivering to the Securities
Warrant agent payment as provided in the applicable Prospectus Supplement of the
amount required to purchase the Debt Securities or Shares, as the case may be,
purchasable upon such exercise together with certain information set forth on
the reverse side of the Securities Warrant certificate. Securities Warrants will
be deemed to have been exercised upon receipt of payment of the exercise price,
subject to the receipt within five Business Days of the Securities Warrant
certificate evidencing such Securities Warrants. Upon receipt of such payment
and the Securities Warrant certificate properly completed and duly executed at
the corporate trust office of the Securities Warrant agent or any other office
indicated in the applicable Prospectus Supplement, the Company will, as soon as
practicable, issue and deliver the Debt Securities or Shares, as the case may
be, purchasable upon such exercise. If fewer than all of the Securities Warrants
represented by such Securities Warrant certificate are exercised, a new
Securities Warrant certificate will be issued for the remaining amount of
Securities Warrants.
AMENDMENTS AND SUPPLEMENTS TO SECURITIES WARRANT AGREEMENT. The Securities
Warrant Agreements may be amended or supplemented without the consent of the
holders of the Securities Warrants issued
B-11
<PAGE> 41
thereunder, to effect changes that are not inconsistent with the provisions of
the Securities Warrants and that do not adversely affect the interest of the
holders of the Securities Warrants.
SHARE WARRANT ADJUSTMENTS. Unless otherwise indicated in the applicable
Prospectus Supplement, the exercise price of and the number of Shares covered by
a Share Warrant are subject to adjustment in certain events, including (i)
payment of a dividend on the Shares payable in Shares and Share splits,
combinations or reclassification of Shares, (ii) issuance to all holders of
Shares of rights or warrants to subscribe for or purchase Shares at less than
their current market price (as defined in the Securities Warrant Agreement for
such series of Share Warrants) and (iii) certain distributions of evidences of
indebtedness or assets (including securities but excluding cash, dividends or
distributions paid out of consolidated earnings or retained earnings or
dividends payable in Shares or of subscription rights and warrants excluding
those referred to above).
No adjustments in the exercise price of and the number of Shares covered by
a Share Warrant will be made for regular quarterly or other periodic or
recurring cash dividends or distributions or for cash dividends or distributions
to the extent paid from consolidated earnings or retained earnings. No
adjustment will be required unless such adjustment would require a change of at
least 1% in the exercise price then in effect. Except as stated above, the
exercise price of and the number of Shares covered by a Share Warrant will not
be adjusted for the issuance of Shares or any securities convertible into or
exchangeable for Shares or carrying the right or option to purchase or otherwise
acquire the foregoing in exchange for cash, other property or services.
In the event of any (i) consolidation or merger of the Company with or into
any entity (other than consolidation or a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding Shares),
(ii) sale, transfer, lease or conveyance of all or substantially all of the
assets of the Company or (iii) reclassification, capital reorganization or
change of the Shares (other than solely a change in par value), then any holder
of a Share Warrant will be entitled, on or after the occurrence of any such
event, to receive on exercise of such Share Warrant the kind and amount of
Shares or other securities, cash or other property (or any combination thereof)
that the holder would have received had such holder exercised such holder's
Share Warrant immediately prior to the occurrence of such event. If the
consideration to be received upon exercise of the Share Warrant following any
such event consists of common stock (or its equivalent) of the surviving entity,
then from and after the occurrence of such event, the exercise price of such
Share Warrant will be subject to the same anti-dilution and other adjustments
described in the second preceding paragraph, applied as if such common stock
were Shares.
PLAN OF DISTRIBUTION
The Company may sell the Securities in any of three ways: (i) through
underwriting syndicates represented by one or more managing underwriters, or by
one or more underwriters without a syndicate; (ii) through agents designated
from time to time; and (iii) directly to investors. The names of any
underwriters or agents of the Company involved in the sale of the Securities in
respect of which this Prospectus is being delivered and any applicable
commissions or discounts will be set forth in the Prospectus Supplement. The net
proceeds to the Company from such sale will also be set forth in the Prospectus
Supplement.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices (which may be changed from time
to time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. The Prospectus Supplement
will describe the method of distribution of the Securities.
In connection with the sale of Securities, underwriters or agents acting on
the Company's behalf may receive compensation from the Company or from
purchasers of Securities for whom they may act as agents, in the form of
discounts, concessions or commissions. The underwriter, dealers and agents that
participate in the distribution of Securities may be deemed to be underwriters
under the Securities Act and any discounts or commissions received by them and
any profit on the resale of Securities by them may be deemed to be underwriting
discounts and commissions under the Securities Act. Any such underwriter will be
identified and any such compensation will be described in the Prospectus
Supplement.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may engage in transactions with or perform
services for the Company in the ordinary course of business.
B-12
<PAGE> 42
LEGAL MATTERS
The validity of the Securities offered hereby will be passed upon for the
Company by Nutter, McClennen & Fish, LLP. In addition, Nutter, McClennen & Fish,
LLP will pass upon certain Federal income tax matters relating to the Company.
The name of any legal counsel that passes on the validity of the Securities
offered hereby for any underwriter or agent will be set forth in the applicable
Prospectus Supplement.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1994 and
1993 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, 1994, and the financial statement schedules incorporated by reference in
this Prospectus and elsewhere in the Registration Statement, have been audited
by Coopers & Lybrand L.L.P., independent accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing.
Any financial statements and schedules hereafter incorporated by reference in
the registration statement of which this Prospectus is a part that have been
audited and are the subject of a report by independent accountants will be so
incorporated by reference in reliance upon such reports and upon the authority
of such firms as experts in accounting and auditing to the extent covered by
consents filed with the Commission.
B-13
<PAGE> 43
- --------------------------------------------------------------------------------
MEDITRUST PROPERTY LOCATIONS[1]
[UNITED STATES MAP]
- -------------------------
INVESTMENT
DIVERSIFICATION
[PIE CHART]
------------------------------
[COLOR LOGO] Facilty Locations
(Shows percentages of Meditrust's Numbers in shaded areas
gross real estate investments denote the number of Meditrust
as of December 31, 1995 in properties in that state.
different types of facilities) ------------------------------
------------------------------
(1) As of December 31, 1995
- --------------------------------- ------------------------------
- --------------------------------------------------------------------------------
<PAGE> 44
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE HEREIN, IN
CONNECTION WITH THIS OFFERING AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR
SOLICITATION OF AN OFFER TO BUY, ANY OF THESE SECURITIES IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT
THE INFORMATION IN THE PROSPECTUS IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
The Company.......................... S-3
Recent Developments.................. S-4
Use of Proceeds...................... S-4
Price Range of Shares and
Distribution History............... S-5
Distributions........................ S-6
Selected Financial Information....... S-7
Capitalization....................... S-8
Management and Board of Trustees..... S-9
Certain United States Federal Income
Tax Considerations................. S-10
Underwriting......................... S-12
Legal Matters........................ S-13
PROSPECTUS DATED OCTOBER 13, 1995
Available Information................ A-2
Incorporation of Certain Documents by
Reference.......................... A-2
The Company.......................... A-3
Health Care Reform and Regulation.... A-4
Ratio of Earnings to Fixed Charges... A-4
Use of Proceeds...................... A-5
Description of Shares................ A-5
Description of Debt Securities....... A-6
Description of Securities Warrants... A-11
Plan of Distribution................. A-14
Legal Matters........................ A-15
Experts.............................. A-16
PROSPECTUS DATED JUNE 1, 1995
Available Information................ B-2
Incorporation of Certain Documents by
Reference.......................... B-2
The Company.......................... B-3
Ratio of Earnings to Fixed Charges... B-4
Use of Proceeds...................... B-4
Description of Shares................ B-4
Description of Debt Securities....... B-6
Description of Securities Warrants... B-10
Plan of Distribution................. B-12
Legal Matters........................ B-13
Experts.............................. B-13
</TABLE>
===============================================================================
===============================================================================
8,000,000 SHARES
[MEDITRUST LOGO]
SHARES OF BENEFICIAL INTEREST
---------------------------
NATWEST SECURITIES LIMITED
ALEX. BROWN & SONS
INCORPORATED
DEAN WITTER REYNOLDS INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
PAINEWEBBER INCORPORATED
SMITH BARNEY INC.
PROSPECTUS SUPPLEMENT
FEBRUARY 15, 1996
================================================================================
