<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JANUARY 6, 1997)
FILED PURSUANT TO RULE 424(B)(5)
REGISTRATION NO. 333-17061
1,000,000 SHARES
[LOGO OF NATIONWIDE HEALTH PROPERTIES, INC.]
7.677% SERIES A CUMULATIVE PREFERRED STEP-UP REIT SECURITIES ("StREITs(SM)")
(LIQUIDATION PREFERENCE $100.00 PER SHARE)
------------
Dividends on the 7.677% Series A Cumulative Preferred Step-Up REIT
Securities, $1.00 par value per share (the "StREITs(SM)"), of Nationwide Health
Properties, Inc., a Maryland corporation (the "Company"), will be cumulative
from the date of original issue and will be payable quarterly in arrears on or
about the last day of March, June, September and December of each year,
commencing December 31, 1997, at the rate of 7.677% of the liquidation
preference per annum (equivalent to $7.677 per annum per share) through
September 30, 2012 and at a rate of 9.677% of the liquidation preference per
annum (equivalent to $9.677 per annum per share) thereafter. See "Description
of StREITs(SM)--Dividends."
The StREITs(SM) are not redeemable prior to September 30, 2007. On and after
September 30, 2007, the StREITs(SM) may be redeemed for cash at the option of
the Company, in whole or in part, at a redemption price of $100.00 per share,
plus accrued and unpaid dividends, if any, thereon. The redemption price
(other than the portion thereof consisting of accrued and unpaid dividends) is
payable solely out of the sale proceeds of other capital stock of the Company.
The StREITs(SM) have no stated maturity and will not be subject to any sinking
fund or mandatory redemption and will not be convertible into any other
securities of the Company. See "Description of StREITs(SM)--Redemption." No
person or persons acting as a group may beneficially own more than 9.9% of the
value of the outstanding capital stock of the Company, including the
StREITs(SM), with limited exceptions. See "Description of StREITs(SM)--
Restrictions on Ownership."
------------
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 SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Underwriters have agreed to purchase the StREITs(SM) from the Company for
$97.50 per share ($97,500,000 aggregate proceeds to the Company before
deducting expenses payable by the Company estimated at $250,000), subject to
the terms and conditions set forth in the Underwriting Agreement. The
Underwriters propose to offer the StREITs(SM) from time to time for sale in one
or more negotiated transactions, or otherwise, at a fixed offering price or at
varying prices determined at the time of each sale. For further information
with respect to the plan of distribution and any discounts, commissions or
profits on resales of StREITs(SM) that may be deemed underwriting discounts or
commissions, see "Underwriting."
------------
The StREITs(SM) are offered severally by the Underwriters, as specified
herein, subject to receipt and acceptance by them and subject to their right
to reject any order in whole or in part. It is expected that certificates for
the StREITs(SM) will be ready for delivery in New York, New York on or about
September 29, 1997 in book entry form through the facilities of The Depository
Trust Company against payment therefor in immediately available funds.
------------
SMITH BARNEY INC. MORGAN STANLEY DEAN WITTER
September 24, 1997
- --------
(SM) Service Mark of Smith Barney Inc.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT AFFECT THE PRICE OF THE StREITs(SM), INCLUDING OVERALLOTMENT, EFFECTING
COVERING TRANSACTIONS AND IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
CERTAIN INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS INCLUDES FORWARD-LOOKING STATEMENTS, WHICH CAN BE
IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY," "WILL,"
"EXPECT," "SHOULD" OR COMPARABLE TERMS OR THE NEGATIVE THEREOF. THESE
STATEMENTS INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE STATEMENTS. THESE RISKS AND
UNCERTAINTIES INCLUDE (WITHOUT LIMITATION) THE FOLLOWING: CHANGES IN THE HEALTH
CARE INDUSTRY, GOVERNMENT REGULATIONS, INCLUDING CHANGES IN MEDICARE AND
MEDICAID PAYMENT LEVELS, CHANGES IN THE RATINGS OF THE COMPANY'S SECURITIES,
THE AMOUNT OF ANY ADDITIONAL INVESTMENTS MADE BY THE COMPANY, ACCESS TO CAPITAL
MARKETS, THE EFFECT OF ECONOMIC AND MARKET CONDITIONS, CHANGES IN INTEREST
RATES AND CHANGES IN THE BUSINESS ENTITIES OPERATING THE COMPANY PROPERTIES.
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by the detailed
information appearing elsewhere in this Prospectus Supplement or the
accompanying Prospectus or incorporated herein or therein by reference.
Capitalized terms used in this Prospectus Supplement Summary have the meanings
set forth elsewhere in the Prospectus Supplement or the accompanying
Prospectus. The offering of the 7.677% Series A Cumulative Preferred Step-Up
REIT Securities ("StREITs(SM)"), $1.00 par value per share, offered hereby is
referred to as the "Offering."
THE COMPANY
Nationwide Health Properties, Inc., a Maryland corporation (the "Company"),
is a real estate investment trust ("REIT") which invests primarily in health
care related facilities and provides financing to health care providers. As of
June 30, 1997, the Company had investments in 254 facilities located in 30
states. The facilities include 191 long-term health care facilities, 61
assisted living facilities and two rehabilitation hospitals. The facilities are
operated by 59 different business entities. See "The Company" and "Recent
Developments."
THE OFFERING
For a more complete description of the terms of the StREITs(SM), see
"Description of StREITs(SM)."
Securities Offered.......... 1,000,000 StREITs(SM).
Ranking..................... With respect to the payment of dividends and
amounts upon liquidation, the StREITs(SM) will
rank senior to the Company's Common Stock and
equivalent to any other shares of the Company's
preferred stock which are not by their terms
subordinated to the StREITs(SM) with respect to
payment of dividends and amounts due upon
liquidation, dissolution or winding up. See
"Description of StREITs(SM)."
S-2
<PAGE>
Use of Proceeds............. The net proceeds to the Company from the Offering
will be used for the repayment of outstanding
debt under the Company's bank line of credit and
for general corporate purposes, including the
funding of additional investments. See "Use of
Proceeds."
Dividends................... Dividends on the StREITs(SM) will be cumulative
from the date of original issue and are payable
quarterly on or about the last day of March,
June, September and December of each year,
commencing December 31, 1997, at the rate of
7.677% of the liquidation preference per annum
(equivalent to $7.677 per share per annum)
through September 30, 2012 and at the rate of
9.677% of the liquidation preference per annum
(equivalent to $9.677 per share per annum)
thereafter. Dividends on the StREITs(SM) will
accrue whether or not the Company has earnings,
whether or not there are funds legally available
for the payment of such dividends and whether or
not such dividends are declared. If, for any
taxable year, the Company elects to designate as
"capital gain dividends" (as defined in Section
857 of the Internal Revenue Code of 1986, as
amended (the "Code")) any portion (the "Capital
Gains Amount") of the dividends (within the
meaning of the Code) paid or made available for
the year to holders of all classes of shares of
capital stock, including preferred shares (the
"Total Dividends"), then the portion of the
Capital Gains Amount that will be allocable to
the holders of StREITs(SM) will be the Capital
Gains Amount multiplied by a fraction, the
numerator of which will be the total dividends
(within the meaning of the Code) paid or made
available to the holders of the StREITs(SM) for
the year and the denominator of which will be the
Total Dividends. See "Description of StREITs(SM)--
Dividends."
Liquidation Rights.......... The liquidation preference for each StREITs(SM) is
$100.00, plus an amount equal to accrued and
unpaid dividends. See "Description of
StREITs(SM)--Liquidation Rights."
Redemption.................. On and after September 30, 2007, the StREITs(SM)
may be redeemed for cash at the option of the
Company, in whole or in part, at a redemption
price of $100.00 per share, plus accrued and
unpaid dividends, if any, thereon. The redemption
price (other than the portion thereof consisting
of accrued and unpaid dividends) is payable
solely out of the sale proceeds of other capital
stock of the Company, which may include Common
Stock, preferred stock, depositary shares,
participation or other ownership interests in the
Company, however designated, and any rights
(other than debt securities convertible into or
exchangeable for capital stock), warrants or
options to purchase any thereof. See "Description
of StREITs(SM)--Redemption." Certain StREITs(SM)
may be redeemed by the Company in order to
preserve the Company's status as a REIT for
federal income tax purposes if an individual's
beneficial ownership of the outstanding voting
shares of the Company's capital stock exceeds
9.9%. See "Description of Common Stock--Redemption
and Business Combination Provisions" in the
accompanying Prospectus.
S-3
<PAGE>
Voting Rights............... Except as described herein and in the
accompanying Prospectus, holders of StREITs(SM)
will not have any voting rights. However, if six
quarterly dividends (whether or not consecutive)
payable on the StREITs(SM) or any Parity Shares
are in arrears, whether or not earned or declared,
the holders of such shares (voting together as a
class with the holders of any other series of
Parity Shares) will have the right to elect two
additional directors to serve on the Company's
Board of Directors until all dividends accumulated
on such shares have been declared and paid or set
aside for payment. In any matter in which the
StREITs(SM) may vote (as expressly provided
herein, or as may be required by law), each
StREITs(SM) will be entitled to one vote. For
further information regarding the voting rights of
the holders of StREITs(SM), see "Description of
StREITs(SM)--Voting Rights."
Conversion.................. The StREITs(SM) are not convertible into or
exchangeable for any other property or securities
of the Company.
Ownership Limits............ Ownership of more than 9.9% of the value of the
outstanding voting shares of capital stock of the
Company, including the StREITs(SM), is restricted
in order to preserve the Company's status as a
REIT for federal income tax purposes. See
"Description of Common Stock--Redemption and
Business Combination Provisions" in the
accompanying Prospectus.
Trading..................... Prior to this Offering of StREITs(SM), there has
been no public market for the StREITs(SM) and
there can be no assurance that an active trading
market for the StREITs(SM) will develop following
the Offering or, if developed, that any such
market will be sustained. In the absence of a
public trading market, an investor may be unable
to liquidate its investment.
S-4
<PAGE>
THE COMPANY
Nationwide Health Properties, Inc., a Maryland corporation organized in
October 1985 (the "Company"), is a real estate investment trust ("REIT") which
invests primarily in health care related facilities and provides financing to
health care providers. As of June 30, 1997, the Company had investments in 254
facilities located in 30 states. The facilities include 191 long-term health
care facilities, 61 assisted living facilities and two rehabilitation
hospitals. The facilities are operated by 59 different business entities.
As of June 30, 1997, the Company had direct ownership of 141 long-term
health care facilities, 52 assisted living facilities and two rehabilitation
hospitals. All of the Company's owned facilities are leased under "net" leases
(the "Leases"), which are accounted for as operating leases, to 40 health care
providers (the "Lessees"), including Beverly Enterprises, Inc. ("Beverly"),
ARV Assisted Living, Inc., Alternative Living Services, Inc. ("ALS"), Sun
Healthcare Group, Inc., Horizon/CMS Healthcare Corporation, American
Retirement Corporation, Sterling House Corporation ("Sterling"), Living
Centers of America, Inc., Retirement Care Associates, Inc., Newcare Health
Corporation, Mariner Health Group, Integrated Health Services, Inc. and
HEALTHSOUTH Corporation. Of the Lessees, only Beverly accounts for more than
10% of the Company's revenues. ALS and Sterling have announced a proposed
merger between the two entities which they anticipate will close in the fourth
quarter of 1997. If this merger were to occur, the Company believes the
combined entity would account for more than 10% of the Company's revenues.
The Leases have initial terms ranging from 10 to 19 years, and the Leases
generally have two or more multiple-year renewal options. The Company earns
fixed monthly minimum rents and may earn periodic additional rents. The
additional rent payments are generally computed as a percentage of facility
net patient revenues in excess of base amounts. The base amounts, in most
cases, are net patient revenues for the first year of the lease. Most Leases
contain cross collateralization and cross default provisions tied to other
Leases with the same Lessee, as well as grouped lease renewals and grouped
purchase options. Obligations under the Leases have corporate guarantees, and
leases covering 114 facilities are backed by irrevocable letters of credit or
security deposits which cover 2 to 14 months of monthly minimum rents. Under
the terms of the Leases, the Lessee is responsible for all maintenance,
repairs, taxes and insurance on the leased properties.
As of June 30, 1997, the Company also held 33 mortgage loans secured by 50
long-term care facilities and nine assisted living facilities. Such loans had
an aggregate outstanding principal balance of approximately $209,916,000 and a
net book value of approximately $199,487,000 at June 30, 1997. The mortgage
loans have individual outstanding principal balances ranging from
approximately $690,000 to $19,650,000 and maturities ranging from 1998 to
2025.
The Company anticipates providing lease or mortgage financing for health
care facilities to qualified operators and acquiring additional health care
related facilities, including long-term health care facilities, assisted
living facilities, acute care hospitals and medical office buildings.
Financing for such future investments may be provided by borrowings under the
Company's bank line of credit, private placements or public offerings of debt
or equity, and the assumption of secured indebtedness.
The Company believes that it has operated in such a manner as to qualify for
taxation as a REIT under Sections 856 through 860 of the Internal Revenue Code
of 1986, as amended (the "Code"), commencing with its taxable year ending
December 31, 1985, and the Company intends to continue to operate in such a
manner. If the Company qualifies for taxation as a REIT, it will generally not
be subject to federal corporate income taxes on its net income that is
currently distributed to stockholders. This treatment substantially eliminates
the "double taxation" (e.g., at the corporate and stockholder levels) that
generally results from investment in stock of a corporation. Among the
requirements for taxation as a REIT, the Company is required to distribute
substantially all of its taxable income (determined without regard to capital
gains) each year. Failure to do so may cause the Company to fail to qualify
for taxation as a REIT.
S-5
<PAGE>
RECENT DEVELOPMENTS
Subsequent to June 30, 1997, the Company acquired six long-term health care
facilities, eight assisted living facilities and one medical clinic in 12
separate transactions for an aggregate purchase price of approximately
$55,896,000. The facilities were concurrently leased under terms generally
similar to the Company's existing Leases. Additionally, the Company provided
two mortgages on one long-term health care facility and one assisted living
facility in the aggregate amount of $9,000,000. The acquisitions and mortgages
were funded by bank borrowings on the Company's bank line of credit and by
cash on hand.
In August 1997, the Company sold one long-term health care facility to the
lessee of such facility pursuant to a purchase option in the lease for a
purchase price of approximately $4,829,000. The gain on such sale is
approximately $827,000. The proceeds of the sale were used to repay bank
borrowings on the Company's bank line of credit. In September 1997, the
Company acquired the long-term care retirement housing assets of a privately
held company located in Wisconsin at a purchase price of $96,000,000 (the
"Wisconsin Transaction"). The purchase price consisted of $39,739,488 of debt
assumption, $25,756,342 of cash and 1,315,686 shares of the Company's Common
Stock.
During the third quarter of 1997, the Company issued one of its Medium-Term
Notes, Series B, in the principal amount of $25,000,000, which note bears
interest at 6.65% and has a maturity of five years. The Company also issued
the first of its Medium-Term Notes, Series C, in the principal amount of
$55,000,000, which note bears interest at 6.90%, has a maturity of 40 years
and is redeemable at the option of the holder at various intervals after
October 1, 2004. The proceeds of both notes were used to repay borrowings on
the Company's bank line of credit.
USE OF PROCEEDS
The Company intends to use the net proceeds received by it from this
Offering (estimated at approximately $97,250,000) for the repayment of
indebtedness outstanding under the Company's bank line of credit and for
general corporate purposes, including the funding of additional investments.
As of September 24, 1997, the aggregate amount of such indebtedness was
approximately $70,700,000 having interest rates between 6.375% and 8.50% and a
maturity date of March 31, 2000. Such indebtedness was incurred for general
corporate purposes, including the acquisition of health care facilities and
mortgage loans secured by health care facilities.
S-6
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected consolidated financial information of the Company,
restated for the two-for-one stock split effective March 8, 1996, for each of
the five years ended December 31, 1996 is derived from the Company's audited
consolidated financial statements, which have been audited by Arthur Anderson
LLP, independent accountants. The selected consolidated financial information
for the six month periods ended June 30, 1997 and 1996 has been derived from
the unaudited interim consolidated financial statements of the Company and
includes, in the opinion of management, all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation of the financial
position and results of operations as of and for such periods. Such financial
information has been derived from financial information included in the
Company's Annual Reports on Form 10-K and the Company's Quarterly Reports on
Form 10-Q. The selected consolidated financial information set forth below
should be read in conjunction with the detailed information, consolidated
financial statements and related notes and applicable "Management's Discussion
and Analysis" included in the 1996, 1995, 1994, 1993 and 1992 Annual Reports
on Form 10-K.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
------------------- ----------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- -------- ------------ ------------ ------------ -------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Total revenues.......... $ 53,500 $ 46,231 $ 95,776 $ 81,039 $ 69,985 $ 60,385 $ 49,807
Income from operations.. 29,669 25,588 54,944 49,382 44,813 40,996 29,543
Gain on sale of
facilities............. -- -- -- 989 -- -- 138
Extraordinary
charge(1).............. -- -- -- -- -- (2,004) --
Net income.............. 29,669 25,588 54,944 50,371 44,813 38,992 29,681
Dividends paid.......... 32,607 28,662 59,581 53,182 47,751 42,883 33,349
PER SHARE DATA:
Income from operations.. $ .71 $ .66 $ 1.36 $ 1.31 $ 1.23 $ 1.17 $ .99
Net income.............. .71 .66 1.36 1.33 1.23 1.11 1.00
Dividends paid.......... .78 .74 1.48 1.41 1.31 1.21 1.11
BALANCE SHEET DATA:
Investments in real
estate, net............ $ 820,596 $669,289 $ 722,506 $ 652,231 $ 501,862 $428,473 $380,539
Total assets............ 843,939 688,780 744,984 670,111 513,809 440,165 396,664
Total debt.............. 395,209 239,582 296,449 223,764 168,410 100,456 86,521
Stockholders' equity.... 426,064 430,001 428,588 371,822 336,106 332,927 301,895
OTHER DATA:
Net cash provided by
operating activities... $ 39,562 $ 37,526 $ 74,129 $ 66,972 $ 56,756 $ 49,725 $ 38,207
Net cash used in
investing activities... (106,282) (24,348) (85,034) (151,476) (83,185) (56,261) (96,719)
Net cash provided (used)
by financing
activities............. 65,697 (10,665) 14,677 88,699 26,544 1,882 56,837
Funds from
operations(2).......... 38,921 33,844 71,667 63,267 57,057 51,111 38,762
Ratio of earnings/fixed
charges(3)............. 3.32 3.36 3.64 4.57 5.52 7.63 4.64
Weighted average shares
outstanding............ 41,802 38,948 40,373 37,808 36,356 35,188 29,734
</TABLE>
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(1) The Company incurred extraordinary charges representing the write-off of
unamortized deferred financing costs and fees in connection with the
prepayment of a substantial portion of the Company's secured debt.
(2) Industry analysts generally consider funds from operations to be an
alternative measure of the performance of an equity REIT. The Company
therefore discloses funds from operations, although it is a measurement
that is not defined by generally accepted accounting principles. The
Company uses the NAREIT measure of funds from operations, which is
generally defined as income before extraordinary items plus certain non-
cash items, primarily real estate depreciation, less gains on sales of
facilities. The NAREIT measure may not be comparable to similarly titled
measures used by other REITs. Consequently, the Company's funds from
operations may not provide a meaningful measure of the Company's
performance as compared to that of other REITs. Funds from operations does
not represent cash generated from operating activities as defined by
generally accepted accounting principles (funds from operations does not
include changes in operating assets and liabilities) and, therefore,
should not be considered as an alternative to net income as the primary
indicator of operating performance or to cash flow as a measure of
liquidity.
(3) Fixed charges consist of interest expense and the amortization of debt
issuance costs. For purposes of calculating the ratio of earnings to fixed
charges of the Company, "earnings" equals the sum of net income and fixed
charges.
S-7
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of June 30, 1997 and as adjusted to give effect to the sale of the
StREITs(SM) offered hereby and the application of the estimated net proceeds
therefrom. The capitalization table should be read in conjunction with the
Company's Consolidated Financial Statements and related Notes incorporated by
reference in the accompanying Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1997
---------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Debt:
Bank borrowings(1)..................................... $ 46,300 $ --
Senior notes due 2000-2015(2).......................... 275,000 275,000
Convertible debentures................................. 64,720 64,720
Notes and bonds payables(2)............................ 9,189 9,189
-------- --------
Total debt............................................. 395,209 348,909
-------- --------
Stockholders' equity:
Preferred stock, $1.00 par value; 5,000,000 shares
authorized; issued and outstanding: none actual;
1,000,000 7.677% Series A Cumulative Preferred Step-Up
REIT Securities (Liquidation Preference $100.00 per
share), as adjusted................................... -- 97,250
Common stock, $.10 par value; 100,000,000 shares
authorized; issued and outstanding: 41,803,924 actual
and as adjusted(2).................................... 4,181 4,181
Capital in excess of par value......................... 462,946 462,946
Cumulative net income.................................. 329,748 329,748
Cumulative dividends................................... (370,811) (370,811)
-------- --------
Total stockholders' equity............................. 426,064 523,314
-------- --------
Total capitalization..................................... $843,939 $872,223
======== ========
</TABLE>
- --------
(1) As of September 24, 1997, the aggregate amount of such borrowings was
approximately $70,700,000.
(2) In the third quarter of 1997, the Company issued an aggregate of
$80,000,000 in principal amount of its Medium-Term Notes for a total of
$355,000,000 in senior notes. In connection with the Wisconsin
Transaction, the Company issued 1,315,686 shares of the Company's Common
Stock and assumed $39,739,488 of indebtedness. See "Recent Developments."
S-8
<PAGE>
MANAGEMENT
The table below sets forth the name, position and age of each executive
officer and director of the Company. Each executive officer of the Company is
elected by the directors, serves at the pleasure of the Board and holds office
until a successor is elected or until the earliest of death, resignation or
removal. All information is given as of September 19, 1997.
<TABLE>
<CAPTION>
NAME POSITION AGE
- ---- -------- ---
<S> <C> <C>
Milton J. Brock, Jr. ... Chairman of the Board and Director 82
R. Bruce Andrews........ President, Chief Executive Officer and Director 57
Mark L. Desmond......... Senior Vice President and Chief Financial Officer 39
T. Andrew Stokes........ Senior Vice President of Corporate Development 49
Gary E. Stark........... Vice President and General Counsel 41
John J. Sheehan, Jr. ... Vice President of Corporate Development 39
David R. Banks.......... Director 60
Sam A. Brooks, Jr. ..... Director 58
Charles D. Miller....... Director 69
Jack D. Samuelson....... Director 72
</TABLE>
MILTON J. BROCK, JR. Chairman of the Board of the Company since September
1989 and a director of the Company since its inception. Mr. Brock served as
President and Chief Executive Officer of the Company from June 1988 to
September 1989. Mr. Brock began his career in 1940 with M.J. Brock & Sons,
Inc., a real estate contractor and developer, and was elected President in
1959, Chairman and Chief Executive Officer in 1973 and Chairman Emeritus in
1985 upon his retirement. Mr. Brock was a director of Bank of America REIT
(now BRE Properties, Inc.) from its inception until his retirement in 1985,
and had served for 26 years as a director of Hollywood Presbyterian Medical
Center.
R. BRUCE ANDREWS. President and Chief Executive Officer of the Company since
September 1989 and a director of the Company since October 1989. Mr. Andrews
had previously served as a director of American Medical International, Inc., a
hospital management company, and served as its Chief Financial Officer from
1970 to 1985 and its Chief Operating Officer in 1985 and 1986. From 1986
through 1989, Mr. Andrews was engaged in various private investments. Mr.
Andrews is also a director of Alexander Haagen Properties, Inc. and ARV
Assisted Living, Inc.
MARK L. DESMOND. Senior Vice President and Chief Financial Officer since
January 1996. Mr. Desmond was Vice President and Treasurer of the Company from
May 1990 to January 1996 and Controller, Chief Accounting Officer and
Assistant Treasurer of the Company from June 1988 to April 1990. From 1986
until joining the Company, Mr. Desmond held various accounting positions with
Beverly, an operator of nursing facilities, pharmacies and pharmacy related
outlets.
T. ANDREW STOKES. Senior Vice President of Corporate Development since
January 1996. Mr. Stokes was Vice President of Development of the Company from
August 1992 to December 1995. From 1984 to 1988, Mr. Stokes served as Vice
President, Corporate Development for American Medical International, Inc., a
hospital management company. From 1989 until joining the Company, Mr. Stokes
was Healthcare Group Director of Houlihan, Lokey, Howard & Zukin, a national
financial advisory firm.
GARY E. STARK. Vice President and General Counsel of the Company since
January 1993. From January 1988 to December 1989, Mr. Stark held the position
of General Counsel with Care Enterprises, Inc., an operator of nursing
facilities, pharmacies and other ancillary health care services, and served as
its Corporate Counsel from April 1985 through December 1987. From January 1990
through August 1991, Mr. Stark was
S-9
<PAGE>
engaged in the private practice of law. Mr. Stark served as Vice President of
Legal Services of Life Care Centers of America, Inc., an operator and manager
of nursing facilities and retirement centers, from July 1992 to December 1992,
and served as General Counsel from September 1991 to July 1992.
JOHN J. SHEEHAN, JR. Vice President of Corporate Development of the Company
since February 1996. From September 1987 through April 1990, Mr. Sheehan
served as Director of Asset Management for Southmark Corporation, a real
estate syndication company. From April 1990 until joining the Company, Mr.
Sheehan was Vice President, Mortgage Finance for Life Care Centers of America,
an operator and manager of nursing facilities.
DAVID R. BANKS. Director since 1985. Mr. Banks has served as Chairman and
Chief Executive Officer of Beverly, an operator of nursing facilities,
pharmacies and pharmacy related outlets, since October 1995. Mr. Banks joined
Beverly as President and Chief Operating Officer in October 1979, was elected
President and Chief Executive Officer in May 1989 and was elected Chairman,
President and Chief Executive Officer in March 1990. He has been a director of
Beverly since September 1979. Mr. Banks is also a director of Ralston Purina
Company and Wellpoint Health Networks Inc. Mr. Banks was Chairman of the Board
of the Company from its inception until June 1988.
SAM A. BROOKS, JR. Director since 1985. Mr. Brooks has been President and
Chief Executive Officer and director of Renal Care Group, Inc., an operator of
outpatient dialysis clinics, since February 1996 and has been President of
MedCare Investment Corporation, a health care investment company, since May
1991. Mr. Brooks is a director of Kinetic Concepts, Inc., PhyCor, Inc. and
Quorum Health Group, Inc. Mr. Brooks was Chairman of the Board of the Company
from June 1988 to September 1989. Mr. Brooks served as President and Chief
Executive Officer of the Company from its inception until June 1988. Mr.
Brooks was the Chief Financial Officer of Hospital Corporation of America, a
hospital management company, from 1970 to 1985.
CHARLES D. MILLER. Director since 1985. Mr. Miller has served as the
Chairman and Chief Executive Officer of Avery Dennison Corporation, a
manufacturer of self-adhesive materials, labels and office products, since
1983. Mr. Miller is also a director of Great Western Financial Corporation,
Edison International and Pacific Mutual Life Insurance Company.
JACK D. SAMUELSON. Director since 1994. Mr. Samuelson co-founded Samuelson
Brothers, a real estate contractor and developer, in 1946 and has served as
President and Chairman of the Board since 1957. Mr. Samuelson is also a
director of Western Staff Services.
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DESCRIPTION OF StREITS(SM)
The following summary sets forth the material terms and provisions of the
StREITs(SM), and is qualified in its entirety by reference to the terms and
provisions of the Articles Supplementary relating to the StREITs(SM) and the
Company's Articles of Incorporation, as amended, which are incorporated by
reference herein. The following description of the particular terms of the
StREITs(SM) supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Preferred Stock set
forth in the accompanying Prospectus, to which description reference is hereby
made.
GENERAL
Under the Articles of Incorporation, the Board of Directors of the Company
is authorized without further stockholder action to provide for the issuance
of up to 5,000,000 shares of preferred stock of the Company, in one or more
series, with such voting, dividend, conversion or liquidation rights,
designations, preferences, powers and relative participating, optional or
other special rights and qualifications, limitations or restrictions of shares
of such series as shall be stated in the resolution providing for the issue of
a series of such stock, adopted, at any time or from time to time, by the
Board of Directors of the Company. The Company currently has no outstanding
shares of preferred stock. The Board of Directors has authorized the Company
to classify and issue the StREITs(SM).
The StREITs(SM) will, when issued, be fully paid and nonassessable and will
have no preemptive rights. The StREITs(SM) will not be subject to any sinking
fund or other obligation of the Company to redeem or retire the StREITs(SM). The
rights of the holders of the StREITs(SM) will be subordinate to those of the
Company's general creditors.
The transfer agent, registrar and distribution disbursing agent for the
StREITs(SM) will be The Bank of New York.
DIVIDENDS
Holders of the StREITs(SM) shall be entitled to receive, when and as declared
by the Board of Directors, out of funds legally available for the payment of
dividends, cumulative preferential cash dividends at the rate of 7.677% of the
liquidation preference per annum (equivalent to $7.677 per share per annum)
through September 30, 2012 and at the rate of 9.677% of the liquidation
preference per annum (equivalent to $9.677 per share per annum) thereafter.
Such dividends shall be cumulative from the date of original issue and shall
be payable quarterly in arrears on the last day of March, June, September and
December or, if not a business day, the next succeeding business day (each, a
"Dividend Payment Date"). The first dividend will be due on December 31, 1997.
Such first dividend and any dividend distribution payable on the StREITs(SM) for
any partial distribution period will be computed on the basis of a 360-day
year consisting of twelve 30-day months. Dividends will be payable to holders
of record as they appear in the records of the Company at the close of
business on the applicable record date, which shall be on such date designated
by the Board of Directors of the Company for the payment of dividends that is
not more than 30 nor less than 10 days prior to such Dividend Payment Date
(each, a "Dividend Record Date").
No dividends on the StREITs(SM) will be authorized by the Board of Directors
of the Company or paid or set apart for payment by the Company at such time as
the terms and provisions of any agreement of the Company, including any
agreement relating to its indebtedness, prohibits such authorization, payment
or setting apart for payment or provides that such authorization, payment or
setting apart for payment would constitute a breach thereof or a default
thereunder, or if such authorization or payment shall be restricted or
prohibited by law. Covenants in the Company's bank credit agreement provide
generally that the Company may not pay dividends in excess of 95% of Cash
Flow, as defined in the bank credit agreement, but such covenant permits the
Company, upon certain circumstances, to pay distributions in an amount
necessary to maintain its qualification as a REIT. The Company does not
believe that this provision has had or will have any adverse impact on the
Company's
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ability to pay dividends in respect of the StREITs(SM) or in the normal course
of business to its stockholders in amounts necessary to maintain its
qualification as a REIT.
Notwithstanding the foregoing, dividends on the StREITs(SM) will accrue
whether or not the Company has earnings, whether or not there are funds
legally available for the payment of such dividends and whether or not such
dividends are declared. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on the
StREITs(SM) which may be in arrears. Holders of the StREITs(SM) will not be
entitled to any dividends in excess of the full cumulative dividends as
described above.
If, for any taxable year, the Company elects to designate as "capital gain
dividends" (as defined in Section 857 of the Code) any portion (the "Capital
Gains Amount") of the dividends (within the meaning of the Code) paid or made
available for the year to holders of all classes of shares of capital stock,
including preferred shares (the "Total Dividends"), then the portion of the
Capital Gains Amount that will be allocable to the holders of StREITs(SM) will
be the Capital Gains Amount multiplied by a fraction, the numerator of which
will be the total dividends (within the meaning of the Code) paid or made
available to the holders of the StREITs(SM) for the year and the denominator of
which will be the Total Dividends.
If any StREITs(SM) are outstanding and except if the Company determines it is
necessary to maintain its status as a REIT, no dividends shall be declared or
paid or set apart for payment on any series of capital stock of the Company
ranking, as to dividends, on a parity with or junior to the StREITs(SM) for any
period unless full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for such payments on the StREITs(SM) for all past dividend periods and the
then current dividend period. When dividends are not paid in full (or a sum
sufficient for such full payment is not set apart) upon the StREITs(SM) and the
shares of any other series of capital stock ranking on parity as to dividends
with the StREITs(SM), all dividends declared upon the StREITs(SM) and any other
series of capital stock ranking on a parity as to dividends with the StREITs(SM)
shall be declared pro rata so that the amount of dividends declared per share
on the StREITs(SM) and such other series of capital stock shall in all cases
bear to each other the same ratio that accrued dividends per share on the
StREITs(SM) and such other series of capital stock bear to each other.
Except as provided in the immediately preceding paragraph or if the Company
determines it is necessary to maintain its status as a REIT, unless full
cumulative dividends on the StREITs(SM) have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for payment for all past dividend periods and the then current dividend
period, no dividends (other than in Common Stock or other capital stock
ranking junior to the StREITs(SM) as to dividends and upon liquidation) shall be
declared or paid or set aside for payment or other dividend shall be declared
or made upon the Common Stock or any other capital stock of the Company
ranking junior to or on a parity with the StREITs(SM) as to dividends or amounts
upon liquidation, nor shall any Common Stock or any other capital stock of the
Company ranking junior to or on a parity with the StREITs(SM) as to dividends or
amounts upon liquidation be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund
for the redemption of any such stock) by the Company (except by conversion
into or exchange for other capital stock of the Company ranking junior to the
StREITs(SM) as to dividends and amounts upon liquidation).
Any dividend payment made on the StREITs(SM) shall first be credited against
the earliest accrued but unpaid dividend due with respect to the StREITs(SM)
which remains payable.
LIQUIDATION RIGHTS
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, then, before any distribution or payment shall be
made to the holders of any Common Stock or any other class or series of
capital stock of the Company ranking junior to the StREITs(SM) in the
distribution of assets upon any liquidation, dissolution or winding up of the
affairs of the Company, the holders of StREITs(SM) shall be entitled to receive
out of assets of the Company legally available for distribution to
stockholders, liquidation distributions in the amount of the liquidation
preference of $100.00 per share, plus an amount equal to all distributions
accrued
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and unpaid thereon. After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of StREITs(SM) will have
no right or claim to any of the remaining assets of the Company. In the event
that, upon any such voluntary or involuntary liquidation, dissolution or
winding up, the available assets of the Company are insufficient to pay the
amount of the liquidation distributions on all outstanding StREITs(SM) and the
corresponding amounts payable on all shares of other classes or series of
capital stock of the Company ranking on a parity with the StREITs(SM) in the
distribution of assets upon any liquidation, dissolution or winding up of the
affairs of the corporation ("Parity Stock"), then the holders of the StREITs(SM)
and all other Parity Stock shall share ratably in any such distribution of
assets in proportion to the full liquidating distributions to which they would
otherwise be respectively entitled.
For such purposes, the consolidation or merger of the Company with or into
any other entity, or the sale, lease or conveyance of all or substantially all
of the property or business of the Company, shall not be deemed to constitute
a liquidation, dissolution or winding up of the affairs of the Company.
REDEMPTION
The StREITs(SM) are not redeemable prior to September 30, 2007. On and after
September 30, 2007, the Company at its option upon not less than 30 nor more
than 60 days' written notice, may redeem the StREITs(SM), in whole or in part,
at any time or from time to time, for cash at a redemption price of $100.00
per share, plus an amount equal to all dividends accrued and unpaid thereon to
the date fixed for redemption, without interest. The redemption price of the
StREITs(SM) (other than the portion thereof consisting of accrued and unpaid
dividends) is payable solely out of proceeds from the sale of other capital
stock of the Company, which may include Common Stock, preferred stock,
depositary shares, participation or other ownership interests in the Company,
however designated, and any rights (other than debt securities convertible
into or exchangeable for capital stock), warrants or options to purchase any
thereof. Holders of StREITs(SM) to be redeemed shall surrender such StREITs(SM)
at the place designated in such notice and shall be entitled to the redemption
price and any accrued and unpaid dividends payable upon such redemption
following such surrender. If fewer than all of the outstanding StREITs(SM) are
to be redeemed, the number of shares to be redeemed will be determined by the
Company, and such shares may be redeemed pro rata from the holders of record of
such shares in proportion to the number of such shares held by such holders
(with adjustments to avoid redemption of fractional shares) or by lot in a
manner determined by the Company.
Unless full cumulative dividends on all StREITs(SM) and all Parity Stock shall
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for all past dividend
periods and the then current dividend period, no StREITs(SM) or Parity Shares
shall be redeemed unless all outstanding StREITs(SM) and Parity Shares are
simultaneously redeemed; provided, however, that the foregoing shall not
prevent the purchase or acquisition of StREITs(SM) pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding StREITs(SM)
or Parity Shares, as the case may be. Furthermore, unless full cumulative
dividends on all outstanding StREITs(SM) and Parity Shares have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for payment for all past dividend periods and
the then current dividend period, the Company shall not purchase or otherwise
acquire directly or indirectly any StREITs(SM) or Parity Shares (except by
conversion into or exchange for shares of capital stock of the Company ranking
junior to the StREITs(SM) and Parity Shares as to dividends and amounts upon
liquidation).
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of StREITs(SM) at the
address shown on the share transfer books of the Company. Each notice shall
state: (i) the redemption date; (ii) the number of StREITs(SM) to be redeemed;
(iii) the redemption price; (iv) the place or places where certificates for
StREITs(SM) are to be surrendered for payment of the redemption price; and (v)
that dividends on the StREITs(SM) will cease to accrue on such redemption date.
If fewer than all StREITs(SM) are to be redeemed, the notice mailed to each such
holder thereof shall also specify the number of StREITs(SM) to be redeemed from
each such holder. If notice of redemption of any StREITs(SM) has been given and
if the funds necessary for such redemption have been set aside by the Company
in trust for the benefit of the holders of the StREITs(SM) so called for
redemption, then from and after the redemption date, dividends
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will cease to accrue on the StREITs(SM), such StREITs(SM) shall no longer be
deemed outstanding and all rights of the holders of such shares will
terminate, except the right to receive the redemption price.
The holders of StREITs(SM) at the close of business on a Dividend Record Date
will be entitled to receive the dividends payable with respect to such
StREITs(SM) on the corresponding Dividend Payment Date notwithstanding the
redemption thereof between such Dividend Record Date and the corresponding
Dividend Payment Date or the Company's default in the payment of the dividend
due. Except as provided above, the Company will make no payment or allowance
for unpaid dividends, whether or not in arrears, on StREITs(SM) which have been
called for redemption.
The StREITs(SM) will not be subject to any sinking fund or mandatory
redemption. However, in order to preserve the Company's status as a REIT as
defined in the Code, the StREITs(SM) may be subject to purchase by the Company
as described in the accompanying Prospectus under "Description of Common
Stock--Redemption and Business Combination Provisions."
VOTING RIGHTS
Except as indicated below, or except as otherwise from time to time required
by applicable law, the holders of StREITs(SM) will have no voting rights.
If six quarterly dividends (whether or not consecutive) payable on the
StREITs(SM) or any Parity Shares are in arrears, whether or not earned or
declared, the number of directors then constituting the Board of Directors of
the Company will be increased by two, and the holders of StREITs(SM), voting
together as a class with the holders of any other series of Parity Shares with
like voting rights, will have the right to elect two additional directors to
serve on the Company's Board of Directors at any annual meeting of
stockholders or a properly called special meeting of the holders of StREITs(SM)
and such other Parity Shares until all dividends accumulated on such StREITs(SM)
and Parity Shares have been declared and paid or set aside for payment. The
term of office of all directors so elected will terminate with the termination
of such voting rights.
The approval of two-thirds of the outstanding StREITs(SM), voting separately
as a class, is required in order to (i) amend the Company's Articles
Supplementary or Articles of Incorporation to affect materially and adversely
the rights, preferences or voting power of the holders of the StREITs(SM), (ii)
enter into a share exchange that affects the StREITs(SM), or consolidate with or
merge the Company with or into any other corporation, unless in each such case
each StREITs(SM) remains outstanding without a material adverse change to its
terms and rights or is converted into or exchanged for preferred stock of the
surviving entity having preferences and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms or
conditions of redemption thereof identical to that of the StREITs(SM) or (iii)
authorize, reclassify, create or increase the authorized amount of any class
of capital stock having rights senior to the StREITs(SM) with respect to the
payment of dividends or amounts upon liquidation, dissolution or winding up of
the affairs of the Company. However, the Company may create additional classes
of Parity Shares and shares ranking junior to the StREITs(SM) as to
distributions or amounts upon liquidation, dissolution or winding up of the
affairs of the Company ("Junior Shares"), increase the authorized number of
Parity Shares and Junior Shares and issue additional series of Parity Shares
and Junior Shares without the consent of any holder of StREITs(SM) or Parity
Shares.
Except as provided above and as required by law, the holders of StREITs(SM)
are not entitled to vote on any merger or consolidation involving the Company
or a sale of all or substantially all of the assets of the Company.
CONVERSION
The StREITs(SM) are not convertible into or exchangeable for any other
property or securities of the Company at the option of the holder.
RESTRICTIONS ON OWNERSHIP
For information regarding restrictions on ownership of the StREITs(SM), see
"Description of Common Stock--Redemption and Business Combination Provisions"
in the accompanying Prospectus.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain federal income tax considerations is based
on current law, is for general information only and is not tax advice. This
discussion does not purport to deal with all aspects of taxation that may be
relevant to particular stockholders in light of their personal investment or
tax circumstances, or to certain types of stockholders (including insurance
companies, tax-exempt organizations, financial institutions or broker dealers,
foreign corporations, partnerships, trusts or estates for United States tax
purposes and individuals who are not citizens or residents of the United
States) subject to special treatment under the federal income tax laws. In
addition, this section does not discuss foreign, state or local taxation.
This Prospectus Supplement does not address the taxation of the Company or
the impact on the Company of its election to be taxed as a REIT. Prospective
investors should consult, and must depend on, their own tax advisors regarding
the state, local, foreign and other tax consequences of holding and disposing
of the StREITs(SM).
Dividends and Other Distributions. As long as the Company qualifies as a
REIT, distributions made to the Company's taxable domestic stockholders out of
current or accumulated earnings and profits (and not designated as capital
gain dividends) will be taken into account by them as ordinary income.
Stockholders that are corporations will not be entitled to a dividends
received deduction. For purposes of determining whether distributions are out
of earnings and profits, the earnings and profits of the Company will be
allocated first to the StREITs(SM) and then to the Company's Common Stock.
Dividends that are designated as capital gain dividends will be taxed as a
gain from the sale or exchange of a capital asset held for more than one year
(to the extent such gain does not exceed the Company's actual net capital gain
for the taxable year) without regard to the period for which the stockholder
has held its stock. Corporate stockholders, however, may be required to treat
up to 20% of certain capital gain dividends as ordinary income. To the extent
the Company makes distributions in excess of current and accumulated earnings
and profits, these distributions are treated first as a tax-free return of
capital to the stockholder, reducing a stockholder's tax basis in its
StREITs(SM) by the amount of such distribution (but not below zero), with
distributions in excess of the stockholder's tax basis taxable as capital
gains (provided the StREITs(SM) are held as capital assets). In addition, any
dividend declared by the Company in October, November or December of any year
and payable to a stockholder of record on a specific date in any such month
shall be treated as both paid by the Company and received by the stockholder
on December 31 of such year, provided that the dividend is actually paid by
the Company during January of the following calendar year. Stockholders may
not include in their individual tax returns any net operating losses or
capital losses of the Company.
Undistributed Capital Gains. Under the recently enacted Taxpayer Relief Act
of 1997 and generally effective for tax years beginning after August 5, 1997,
a REIT may elect to retain, rather than distribute, its net long-term capital
gains and pay the tax on such gains. If such an election is made, the Company
will specifically designate in respect of each stockholder's shares an amount
of such undistributed capital gains, such amount shall not exceed the amount
such stockholder would have received if the capital gains had been distributed
as dividends. Stockholders must include, in computing their long-term capital
gains for their tax year, the amount the Company designates as undistributed
capital gains in respect of such stockholder's shares. Every stockholder shall
be deemed to have paid the tax imposed on the Company for the stockholder's
designated amount of undistributed capital gains. Such stockholders shall be
allowed credit or refund, as the case may be, for the tax so deemed to have
been paid by it. The stockholder's adjusted tax basis will be increased by the
amount of its designated undistributed capital gains, if any, and reduced by
the amount of tax deemed paid by the stockholder with respect to such gains.
Backup Withholding. The Company will report to its domestic stockholders and
to the Internal Revenue Service (the "Service") the amount of dividends during
each calendar year, and the amount of tax withheld, if any, with respect
thereto. Under the backup withholding rules, a stockholder may be subject to
backup withholding at the rate of 31% with respect to reportable payments
unless such stockholder (a) is a corporation or comes within certain other
exempt categories and, when required, demonstrates this fact, or (b) provides
a taxpayer identification number; certifies, under penalty of perjury, that it
is not subject to backup withholding; and otherwise complies with applicable
requirements of the backup withholding rules. A stockholder that does
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not provide the Company with its correct taxpayer identification number may
also be subject to penalties imposed by the Service. Any amount paid as backup
withholding will be allowed as a credit against the stockholder's income tax
liability.
Sale or Exchange of StREITs(SM). Upon the sale or exchange of StREITs(SM) to a
party other than the Company, a holder of StREITs(SM) will realize a capital
gain or loss measured by the difference between the amount realized on the
sale or other disposition and the holder's adjusted tax basis in the StREITs(SM)
(provided the StREITs(SM) are held as capital assets). Such capital gain will
generally be taxed at a maximum individual income tax rate of 20% if the
holder's holding period with respect to the StREITs(SM) is more than eighteen
months at the time of the sale or exchange and may qualify for a lower
individual income tax rate for tax years beginning after December 31, 2000 in
certain circumstances. Further, any capital loss on a sale of StREITs(SM) which
were held by the holder for six months or less and with respect to which a
capital gain dividend was received or designated as received will be treated
as a long-term capital loss, up to the amount of the capital gain dividend
received or deemed received with respect to such shares.
Redemption of StREITs(SM). The treatment to be accorded to any redemption by
the Company of StREITs(SM) can only be determined on the basis of particular
facts as to each holder of StREITs(SM) at the time of redemption. In general, a
holder of StREITs(SM) will recognize capital gain or loss measured by the
difference between the amount realized by the holder upon the redemption and
such holder's adjusted tax basis in the StREITs(SM) redeemed (provided the
StREITs(SM) are held as capital assets) if such redemption (i) results in a
"complete termination" of the holder's interest in all classes of shares of
the Company under Code Section 302(b)(3), (ii) is "substantially
disproportionate" with respect to the holder's interest in the Company under
Code Section 302(b)(2) (which will not be the case if only StREITs(SM) are
redeemed, since they generally do not have voting rights) or (iii) is "not
essentially equivalent to a dividend" with respect to the holder of StREITs(SM)
under Code Section 302(b)(1). In determining whether any of these tests have
been met, shares considered to be owned by the holder by reason of certain
constructive ownership rules set forth in the Code, as well as shares actually
owned, must generally be taken into account. Because the determination as to
whether any of the alternative tests of Section 302(b) of the Code will be
satisfied with respect to any particular holder of StREITs(SM) depends upon the
facts and circumstances at the time when the determination must be made,
prospective investors are advised to consult their own tax advisors to
determine such tax treatment.
Section 305(c) of the Code and the regulations thereunder provide in certain
cases for the continuing economic accrual of a "redemption premium" on
preferred stock on a constant yield-to-maturity basis, and for the treatment
of such accrual as a distribution with respect to such preferred stock. The
term "redemption premium" is not defined in the Code or regulations. A
"redemption premium" may include distributions payable at a rate other than a
constant rate, although the law is not clear. If such distributions are
treated as "redemption premiums," the annual taxable distributions to holders
of an increasing rate preferred stock may in the early years be greater than
the distributions actually received, due to the accrual on a constant-yield
basis to amounts payable in later years. For such treatment to apply, a
determination of a "maturity date" would be required, i.e., a date (occurring
on or after September 30, 2012) at which it is considered, as of the issuance
of the StREITs(SM), to be more likely than not that the Company will exercise
its redemption option. Based upon certain representations of the Company, it
cannot be determined at this time that any such date exists. Further, there
appears to be an indication in the regulations that, all other things being
equal, a redemption would more likely occur before rather than after an
increase in the distribution rate. Based on the foregoing, the above-described
treatment of increasing rate distributions as being taxable before received on
an economic accrual basis should not apply to distributions made on the
StREITs(SM). In addition, since the amount payable for a StREITs(SM) on
redemption is equal to the amount for which such share will be issued, no
"redemption premium" should arise by reason of the amount of the redemption
price.
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UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to Smith Barney Inc. and Morgan Stanley & Co.
Incorporated (the "Underwriters"), and each of the Underwriters has severally
agreed to purchase from the Company, 500,000 StREITs(SM). Under the terms and
conditions of the Underwriting Agreement, the Underwriters are committed to
take all of the StREITs(SM), if any are taken.
The Underwriters propose to offer the StREITs(SM) from time to time for sale
in one or more negotiated transactions or otherwise at a fixed offering price
or at varying prices determined at the time of sale. The Underwriters may
effect such transactions by selling the StREITs(SM) to or through dealers, and
such dealers may receive compensation in the form of concessions or
commissions not in excess of $1.50 per share from the Underwriters and/or the
purchasers of the StREITs(SM) for whom they may act as agent in connection with
the sales of the StREITs(SM). The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $1.25 per share to certain brokers and
dealers. The Underwriters may be deemed to have received compensation from the
Company in the form of underwriters' discounts, and the Underwriters may also
receive commissions from purchasers of the StREITs(SM) for whom they may act as
agent. The Underwriters and any dealers that participate with the Underwriters
in the distribution of the StREITs(SM) may be deemed to be underwriters, and any
discounts or commissions received by them and any profit on the resale of the
StREITs(SM) by them may be deemed to be underwriters' discounts or commissions
under the Securities Act of 1933.
The StREITs(SM) are a new issue of securities with no established trading
market. The Company has been advised by the Underwriters that they intend to
make a market in the StREITs(SM) but are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the StREITs(SM).
In connection with this Offering and in compliance with applicable law, the
Underwriters may over-allot (i.e., sell more StREITs(SM) than the total amount
shown on the cover page of this Prospectus Supplement) and may effect
transactions which otherwise affect the market price of the StREITs(SM). Such
transactions may include placing bids for the StREITs(SM) or effecting purchases
of the StREITs(SM) for the purpose of reducing a short position created in
connection with the Offering. A short position may be covered by open market
purchases. If an Underwriter purchases StREITs(SM) in the open market and the
securities purchased can be traced to a particular member of the selling
group, the Underwriters may require the selling group member in question to
purchase the StREITs(SM) in question at the cost price to the Underwriters or
may recover from (or decline to pay to) the selling group member in question
the selling concession applicable to the securities in question. The
Underwriters are not required to engage in any of these activities and any
such activities, if commenced, may be discontinued at any time.
The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
LEGAL MATTERS
The validity of the issuance of the StREITs(SM) offered hereby will be passed
upon for the Company by O'Melveny & Myers LLP, Newport Beach, California, and
for the Underwriters by Brown & Wood LLP, San Francisco, California. O'Melveny
& Myers LLP and Brown & Wood LLP will rely upon Venable, Baetjer & Howard, LLP
Baltimore, Maryland as to certain matters of Maryland law. Paul C. Pringle, a
partner of Brown & Wood LLP, owns 5,000 shares of Common Stock of the Company.
S-17
<PAGE>
PROSPECTUS
NATIONWIDE HEALTH PROPERTIES, INC.
SECURITIES
Nationwide Health Properties, Inc. (the "Company") may offer from time to
time, in one or more series, its unsecured debt securities (the "Debt
Securities"), warrants to purchase Debt Securities (the "Debt Securities
Warrants"), shares of its Preferred Stock, par value $1.00 per share (the
"Preferred Stock"), warrants to purchase Preferred Stock (the "Preferred Stock
Warrants"), warrants to purchase Depositary Shares (as defined below) (the
"Depositary Shares Warrants"), shares of its Common Stock, par value $0.10 per
share (the "Common Stock") and warrants to purchase Common Stock (the "Common
Stock Warrants," and with the Debt Securities Warrants, the Preferred Stock
Warrants and the Depositary Shares Warrants, being collectively referred to
herein as the "Securities Warrants"). The Debt Securities, the Preferred
Stock, the Common Stock and the 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 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 the
accompanying supplement to this Prospectus (the "Prospectus Supplement"). In
the case of Preferred Stock, the specific number of shares, designation,
stated value per share, liquidation preference per share, issuance price,
dividend rate (or method of calculation), dividend payment dates, any
redemption or sinking fund provisions, any conversion rights and other
specific terms of the series of Preferred Stock will be set forth in the
accompanying Prospectus Supplement. In addition, the Prospectus Supplement
will describe whether interests in the Preferred Stock will be represented by
depositary shares (the "Depositary Shares") evidenced by depositary receipts.
In the case of Common Stock, the specific number of shares and issuance price
per share will be set forth in the accompanying Prospectus Supplement. In the
case of Securities Warrants, the duration, offering price, exercise price and
detachability, if applicable, will be set forth in the 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.
Securities may be sold directly, through agents from time to time or through
underwriters or dealers. If any agent of the Company or any underwriter is
involved in the sale of the Securities, the name of such agent or underwriter
and any applicable commission or discount will be set forth in the
accompanying Prospectus Supplement. See "Plan of Distribution." The net
proceeds to the Company from such sale also will be set forth in the
applicable Prospectus Supplement.
The Debt Securities, if issued, may rank on parity with all other unsecured
and unsubordinated indebtedness of the Company or may be subordinated to
certain other indebtedness of the Company. See "Description of Debt
Securities."
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
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 January 6, 1997
<PAGE>
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 Room of the Commission, Room 1024, at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices at 7 World
Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material can be obtained by mail from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 at
prescribed rates. In addition, such materials may also be inspected at the
offices of the New York Stock Exchange, 20 Broad Street, 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 of 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, which may be examined without charge at the public
reference facilities maintained by the Commission at the Public Reference Room
of the Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies thereof may be obtained from the Commission upon payment of the
prescribed fees.
------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995 and its Quarterly Reports on Form 10-Q for the quarters ended March
31, 1996, June 30, 1996 and September 30, 1996 are incorporated in and made a
part of this Prospectus. 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 of this Prospectus and prior to the termination of the
offering of the Securities shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing such documents. A
statement contained herein, in a Prospectus Supplement 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, in a Prospectus Supplement or in any
subsequently filed document which is incorporated by reference herein,
modifies or supersedes such statement. Any such statements 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, on the request of any such person, a copy of any or
all the documents incorporated herein by reference (other than exhibits to
such documents, unless such exhibits are specifically incorporated by
reference into the documents that this Prospectus incorporates). Requests for
such copies should be directed to Nationwide Health Properties, Inc., 610
Newport Center Drive, Suite 1150, Newport Beach, California 92660, Attention:
Mark L. Desmond (telephone number (714) 718-4400).
2
<PAGE>
THE COMPANY
Nationwide Health Properties, Inc., a Maryland corporation organized in
October 1985 (the "Company"), is a real estate investment trust ("REIT") which
invests primarily in health care related facilities and provides financing to
health care providers. As of September 30, 1996, the Company had investments
in 224 facilities located in 30 states. The facilities include 182 long-term
health care facilities, 40 assisted living facilities and two rehabilitation
hospitals.
As of September 30, 1996, the Company had direct ownership of 139 long-term
health care facilities, 35 assisted living facilities and two rehabilitation
hospitals. All of the Company's owned facilities are leased under "net" leases
(the "Leases"), which are accounted for as operating leases, to 35 health care
providers (the "Lessees") including Beverly Enterprises, Inc. ("Beverly"), ARV
Assisted Living, Inc., Sun Healthcare Group, Inc., Horizon/CMS Healthcare
Corporation, Living Centers of America, Inc., GranCare Inc., Integrated Health
Services, Inc., HEALTHSOUTH Corporation, Alternative Living Services, Inc.,
Mariner Health Group, and Retirement Care Associates, Inc. Of the Lessees,
only Beverly and ARV Assisted Living, Inc. account for more than 10% of the
Company's revenue.
The Leases have initial terms ranging from 10 to 19 years, and generally the
Leases have two or more multi-year renewal options. The Company earns fixed
monthly minimum rents and may earn periodic additional rents. The additional
rent payments are generally computed as a percentage of facility net patient
revenues in excess of base amounts. The base amounts, in most cases, are net
patient revenues for the first year of the lease. Most Leases contain cross
collateralization and cross default provisions tied to other Leases with the
same Lessee, as well as grouped lease renewals and grouped purchase options.
Obligations under the Leases have corporate guarantees, and Leases covering 94
facilities are backed by irrevocable letters of credit or security deposits
which cover one to 12 months of monthly minimum rents. Under the terms of the
Leases, the Lessee is responsible for all maintenance, repairs, taxes and
insurance on the leased properties.
As of September 30, 1996, the Company held 29 mortgage loans secured by 43
long-term health care facilities and 5 assisted living facilities. As of
September 30, 1996, the mortgage loans had a net book value of approximately
$155,507,000 with individual outstanding balances ranging from approximately
$754,000 to $17,250,000 and maturities ranging from 1998 to 2031.
As of September 30, 1996, 45 of the Company's 176 owned facilities were
being leased to and operated by subsidiaries of Beverly. Beverly has
guaranteed certain obligations of its subsidiaries and of certain parties
unaffiliated with Beverly in connection with 24 properties operated by such
parties. Rental and interest income from Beverly accounted for 40%, 34% and
27% of the Company's total revenues for the years ended December 31, 1993,
1994 and 1995, respectively, and for 23% of the Company's total revenues for
the nine months ended September 30, 1996.
The Company anticipates providing lease or mortgage financing for health
care facilities to qualified operators and acquiring additional health care
related facilities, including long-term health care facilities, assisted
living facilities, acute care hospitals and medical office buildings.
Financing for such future investment may be provided by borrowings under the
Company's bank line of credit, private placements or public offerings of debt
or equity, and the assumption of indebtedness.
The Company operates so as to qualify as a REIT under Sections 856 through
860 of the Internal Revenue Code of 1986, as amended (the "Code"). As a REIT,
the Company distributes to its stockholders substantially all of its cash flow
from operations and, in any event, at least 95% of its taxable income. If the
Company qualifies for taxation as a REIT, it will generally not be subject to
federal corporate income taxes on its net income that is currently distributed
to stockholders. This treatment substantially eliminates the "double taxation"
(e.g., at the corporate and stockholder levels) that generally results from
investment in stock of a corporation.
The Company's principal executive offices are located at 610 Newport Center
Drive, Suite 1150, Newport Beach, California 92660 and its telephone number is
(714) 718-4400.
3
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected consolidated financial information of the Company,
restated for the two-for-one stock split effective March 8, 1996, for each of
the five years ended December 31, 1995 is derived from the Company's audited
consolidated financial statements, which have been audited by Arthur Andersen
LLP, independent accountants. The selected consolidated financial information
for the nine month periods ended September 30, 1996 and 1995 has been derived
from the unaudited interim consolidated financial statements of the Company
and includes, in the opinion of management, all adjustments (consisting only
of normal recurring adjustments) necessary for a fair presentation of the
financial position and results of operations as of and for such periods. Such
financial information has been derived from financial information included in
the Company's Annual Reports on Form 10-K and the Company's Quarterly Reports
on Form 10-Q. The selected consolidated financial information set forth below
should be read in conjunction with the detailed information, consolidated
financial statements and related notes and applicable "Management's Discussion
and Analysis" included in the 1995, 1994, 1993, 1992 and 1991 Annual Reports
on Form 10-K.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ ------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues:
Minimum rent........... $ 49,431 $ 39,947 $ 54,504 $ 47,805 $ 40,758 $ 38,062 $ 31,439
Additional rent and
additional interest... 8,862 8,909 11,776 9,767 8,417 6,241 4,063
Interest and other
income................ 12,242 10,826 14,759 12,413 11,210 5,504 876
-------- -------- -------- -------- -------- -------- --------
70,535 59,682 81,039 69,985 60,385 49,807 36,378
Expenses:
Depreciation and non-
cash charges.......... 12,454 10,246 13,885 12,244 10,115 9,219 7,585
Interest and
amortization of
deferred financing
costs................. 15,539 10,525 14,628 9,921 6,186 8,162 4,849
General and
administrative........ 2,499 2,356 3,144 3,007 3,088 2,883 2,403
-------- -------- -------- -------- -------- -------- --------
30,492 23,127 31,657 25,172 19,389 20,264 14,837
-------- -------- -------- -------- -------- -------- --------
Income from operations.. 40,043 36,555 49,382 44,813 40,996 29,543 21,541
Gain on sale of
facilities............. -- 989 989 -- -- 138 --
Extraordinary charge
(1).................... -- -- -- -- (2,004) -- (3,460)
-------- -------- -------- -------- -------- -------- --------
Net income.............. $ 40,043 $ 37,544 $ 50,371 $ 44,813 $ 38,992 $ 29,681 $ 18,081
======== ======== ======== ======== ======== ======== ========
Dividends paid.......... $ 44,121 $ 39,145 $ 53,182 $ 47,751 $ 42,883 $ 33,349 $ 26,245
PER SHARE DATA:
Income from operations.. $ 1.00 $ .97 $ 1.31 $ 1.23 $ 1.17 $ .99 $ .84
Net income.............. 1.00 1.00 1.33 1.23 1.11 1.00 .70
Dividends paid.......... 1.11 1.05 1.41 1.31 1.21 1.11 1.03
BALANCE SHEET DATA:
Investments in real
estate, net............ $700,490 $557,375 $652,231 $501,862 $428,473 $380,539 $289,761
Total assets............ 723,661 572,094 670,111 513,809 440,165 396,664 305,837
Senior unsecured notes
due 2000-2015.......... 150,000 56,000 100,000 -- -- -- --
Bank borrowings......... 48,200 48,700 93,900 80,200 3,800 9,950 --
Convertible debentures.. 65,000 65,000 65,000 67,690 73,609 44,455 50,000
Notes and bonds
payable................ 9,249 14,190 23,364 20,520 23,047 32,116 33,124
Stockholders' equity.... 428,963 372,903 371,822 336,106 332,927 301,895 218,772
OTHER DATA:
Net cash provided by
operating activities... $ 54,960 $ 51,066 $ 66,972 $ 56,756 $ 49,725 $ 38,207 $ 30,217
Net cash used in
investing activities... (59,252) (62,820) (151,476) (83,185) (56,261) (96,719) (55,899)
Net cash provided by
financing activities... 6,429 14,051 88,699 26,544 1,882 56,837 32,365
Funds from operations
(2).................... 52,497 46,801 63,267 57,057 51,111 38,762 29,126
Weighted average shares
outstanding............ 39,899 37,500 37,808 36,356 35,188 29,734 25,674
</TABLE>
- -------
(1) The Company incurred extraordinary charges representing the write-off of
unamortized deferred financing costs and fees in connection with the
prepayment of substantial portions of the Company's secured debt.
(2) Industry analysts generally consider funds from operations to be an
alternative measure of the performance of an equity REIT. The Company
therefore discloses funds from operations, although it is a measurement
that is not defined by generally accepted accounting principles. The
Company uses the NAREIT measure of funds from operations, which is
generally defined as income before extraordinary items plus certain non-
cash items, primarily depreciation, less gains on sales of facilities. The
NAREIT measure may not be comparable to similarly titled measures used by
other REITs. Consequently, the Company's funds from operations may not
provide a meaningful measure of the Company's performance as compared to
that of other REITs. Funds from operations does not represent cash
generated from operating activities as defined by generally accepted
accounting principles (funds from operations does not include changes in
operating assets and liabilities) and, therefore, should not be considered
as an alternative to net income as the primary indicator of operating
performance or to cash flow as a measure of liquidity.
4
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------ SEPTEMBER 30,
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Ratio.................................... 5.44 4.64 7.63 5.52 4.57 3.58
</TABLE>
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 corporate purposes, including the
repayment of bank lines of credit and investments in health care related
properties. The Company uses its existing revolving bank credit facility
primarily to provide financing for the acquisitions of health care related
facilities. To the extent that the Company has amounts outstanding under the
credit facility at the time it issues Securities, it is currently required to
use the proceeds of such issuance to repay amounts outstanding under the
credit facility.
DESCRIPTION OF DEBT SECURITIES
Debt Securities may be issued from time to time in series under an Indenture
(the "Indenture") to be entered into between the Company and The Bank of New
York, as Trustee (the "Trustee"). As used under this caption, unless the
context otherwise requires, Offered Debt Securities shall mean the Debt
Securities offered by this Prospectus and the accompanying Prospectus
Supplement. The statements under this caption are brief summaries of certain
provisions contained in the Indenture, do not purport to be complete and are
qualified in their entirety by reference to the Indenture, including the
definition therein of certain terms, a copy of which is filed as an exhibit to
the Registration Statement of which this Prospectus is a part. The following
sets forth certain general terms and provisions of the Debt Securities.
Further terms of the Offered Debt Securities will be set forth in the
Prospectus Supplement.
GENERAL
The Indenture provides for the issuance of Debt Securities in series, and
does not limit the principal amount of Debt Securities which may be issued
thereunder.
Reference is made to the Prospectus Supplement for the following terms of
the Offered Debt Securities: (1) the specific title of the Offered Debt
Securities; (2) the aggregate principal amount of the Offered Debt Securities;
(3) the percentage of their principal amount at which the Offered Debt
Securities will be issued; (4) the date on which the Offered Debt Securities
will mature; (5) the rate or rates per annum or the method for determining
such rate or rates, if any, at which the Offered Debt Securities will bear
interest; (6) the times at which any such interest will be payable; (7) any
provisions relating to optional or mandatory redemption of the Offered Debt
Securities at the option of the Company or pursuant to sinking fund or
analogous provisions; (8) the denominations in which the Offered Debt
Securities are authorized to be issued; (9) any provisions relating to the
conversion or exchange of the Offered Debt Securities into Common Stock,
Preferred Stock or into Debt Securities of another series; (10) whether the
Offered Debt Securities are to be issued in fully registered form without
coupons or in bearer form with interest coupons or both; (11) the place or
places at which the Company will make payments of principal (and premium, if
any) and interest, if any, and the method of payment; (12) whether the Offered
Debt Securities will be issued in whole or in part in global form; (13) any
additional covenants and Events of Default and the remedies with respect
thereto not currently set forth in the Indenture; (13) whether the Offered
Debt Securities will be subordinated to other indebtedness of the Company; and
(14) any other specific terms of the Offered Debt Securities.
5
<PAGE>
One or more series of the Debt Securities may be issued as discounted Debt
Securities (bearing no interest or bearing interest at a rate which at the
time of issuance is below market rates) to be sold at a substantial discount
below their stated principal amount. Tax and other special considerations
applicable to any such discounted Debt Securities will be described in the
Prospectus Supplement relating thereto.
STATUS OF DEBT SECURITIES
The Debt Securities will be unsecured obligations of the Company and may be
ranking on a parity with all other unsecured and unsubordinated indebtedness
or may be subordinated to certain other indebtedness of the Company.
CONVERSION RIGHTS
The terms, if any, on which Debt Securities of a series may be exchanged for
or converted into shares of Common Stock, Preferred Stock or Debt Securities
of another series will be set forth in the Prospectus Supplement relating
thereto. To protect the Company's status as a REIT, a Holder 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 Company's shares
of Common Stock.
ABSENCE OF RESTRICTIVE COVENANTS
Except as noted below under "Dividends, Distributions and Acquisitions of
Capital Stock," the Company is not restricted by the Indenture from paying
dividends or from incurring, assuming or becoming liable for any type of debt
or other obligations or from creating liens on its property for any purpose.
The Indenture does not require the maintenance of any financial ratios or
specified levels of net worth or liquidity. Except as may be set forth in the
Prospectus Supplement, there are no provisions of the Indenture which afford
holders of the Debt Securities protection in the event of a highly leveraged
transaction involving the Company.
OPTIONAL REDEMPTION
The Debt Securities 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 in the manner
specified in the Indenture at a redemption price equal to 100% of the
principal amount, plus interest accrued to the date of redemption. The
Indenture does not contain any provision requiring the Company to repurchase
the Debt Securities 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 against any decline
in credit quality, whether resulting from any such transaction or from any
other cause.
DIVIDENDS, DISTRIBUTIONS AND ACQUISITIONS OF CAPITAL STOCK
The Indenture provides that the Company will not (i) declare or pay any
dividend or make any distribution on its capital stock or to holders of its
capital stock (other than dividends or distributions payable in its capital
stock 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 capital stock, or any warrants, rights or options or other
securities to purchase or acquire any shares of its capital stock (other than
the Debt Securities) 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.
EVENTS OF DEFAULT
An Event of Default with respect to Debt Securities of any series is defined
in the Indenture as being: (a) failure to pay principal of or any premium on
any Debt Security of that series when due; (b) failure to pay
6
<PAGE>
any interest on any Debt Security of that series when due, continued for 30
days; (c) failure to deposit any sinking fund payment when due, in respect of
any Debt Security of that series; (d) failure to perform any other covenant of
the Company in the Indenture (other than a covenant included in the Indenture
solely for the benefit of one or more series of Debt Securities other than
that series), continued for 60 days after written notice as provided in the
Indenture; (e) certain events of bankruptcy, insolvency, conservatorship,
receivership or reorganization; (f) a default under any mortgage, indenture or
instrument evidencing any indebtedness for borrowed money by the Company
(including the Indenture) resulting in an aggregate principal amount exceeding
$10,000,000 becoming or being declared due and payable prior to its maturity
date or constituting a failure to pay at maturity an aggregate principal
amount exceeding $10,000,000, unless such acceleration has been rescinded or
annulled or such indebtedness has been discharged within 10 days after written
notice to the Company by the Trustee or Holders of at least 25% in aggregate
principal amount of the outstanding Debt Securities declaring a default or the
Company is contesting the validity of such default in good faith by
appropriate proceedings; and (g) any other Event of Default provided with
respect to the Debt Securities of that series.
If an Event of Default with respect to the outstanding Debt Securities of
any series occurs and is continuing, either the Trustee or the Holders of at
least 25% in aggregate principal amount of the outstanding Debt Securities of
that series may declare the principal amount (or, if the Debt Securities of
that series are original issue discount Debt Securities, such portion of the
principal amount as may be specified in the terms of that series) of all the
outstanding Debt Securities of that series to be due and payable immediately.
At any time after the declaration of acceleration with respect to the Debt
Securities of any series has been made, but before a judgment or decree based
on acceleration has been obtained, the Holders of a majority in aggregate
principal amount of the outstanding Debt Securities of that series may, under
certain circumstances, rescind and annul such acceleration.
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under
no obligation to exercise any of its rights or powers under the Indenture at
the request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnity. Subject to such provisions for
the indemnification of the Trustee and subject to certain limitations, the
Holders of a majority in aggregate principal amount of the outstanding Debt
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Debt Securities of that series.
The Company is required to furnish to the Trustee annually a statement as to
the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and
the Trustee without the consent of any Holders to, among other things, (a)
evidence the succession of another corporation to the Company, (b) add to the
covenants of the Company or surrender any right or power conferred upon the
Company, (c) cure any ambiguity, correct or supplement any provision which may
be defective or inconsistent or make any other provisions with respect to
matters or questions arising under the Indenture, provided that such action
does not adversely affect the interests of the Holders of Debt Securities of
any series in any material respect, or (d) evidence and provide for a
successor Trustee.
Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the outstanding Debt Securities of each series affected by
such modification or amendment; provided, however, that no such modification
or amendment may, without the consent of the Holder of each outstanding Debt
Security affected thereby, (a) change the stated maturity date of the
principal of, or any installment of principal of or interest, if any, on any
Debt Security, (b) reduce the principal amount of, or premium or interest if
any, on any Debt Security, (c) reduce the amount of principal of an original
issue discount Debt Security payable upon acceleration of the maturity
thereof, (d) change the currency of payment of the principal of, or premium or
interest, if any, on any Debt Security, (e) impair the
7
<PAGE>
right to institute suit for the enforcement of any payment on or with respect
to any Debt Security, (f) modify the conversion provisions, if any, of any
Debt Security in a manner adverse to the Holder of that Debt Security, or (g)
reduce the percentage in principal amount of the outstanding Debt Security of
any series, the consent of whose Holders is required for modification or
amendment of that Indenture or for waiver of compliance with certain
provisions of that Indenture or for waiver of certain defaults.
The Holders of a majority in aggregate principal amount of the outstanding
Debt Securities of each series may, on behalf of all Holders of the Debt
Securities of that series, waive, insofar as that series is concerned,
compliance by the Company with certain restrictive provisions of the
Indenture. The Holders of a majority in aggregate principal amount of the
outstanding Debt Securities of each series may, on behalf of all Holders of
the Debt Securities of that series, waive any past default under the Indenture
with respect to the Debt Securities of that series, except a default in the
payment of principal or premium or interest, if any, or a default in respect
of a covenant or provision which under the terms of the Indenture cannot be
modified or amended without the consent of the Holder of each outstanding Debt
Security of the series affected.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture provides that the Company, without the consent of the Holders
of any of the Debt Securities, may consolidate or merge with or into, or
transfer its assets substantially as an entirety to, any corporation organized
under the laws of the United States or any state, provided that the successor
corporation assumes the Company's obligations under the Indenture, that after
giving effect to the transaction no Event of Default, and no event which,
after notice or lapse of time, would become an Event of Default, shall have
occurred and be continuing, and that certain other conditions are met.
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
depositary (the "Depositary"), or with a nominee for a Depositary, 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 Depositary for such
Global Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor of such Depositary or a nominee
of such successor.
The specific material terms of the depositary 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 depositary
arrangements.
Upon the issuance of a Global Security, the Depositary 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 Depositary
("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 Depositary 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 Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary 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
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its agents will treat a person as the holder of such principal amount of Debt
Securities as specified in a written statement of the Depositary. Except as
set forth herein or otherwise provided in the Prospectus Supplement, owners of
beneficial interests in a Global Security will not be entitled to have the
Debt Securities represented by such Global Security registered in their names,
will not receive physical delivery of such Debt Securities in definitive form
and will not be considered the owners or Holders thereof under the Indenture.
Principal, premium, if any, and interest payments on Debt Securities
represented by a Global Security registered in the name of a Depositary or its
nominee will be made to such Depositary 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 Depositary 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
Depositary. 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 Depositary for any Debt Securities represented by a Global Security
is at any time unwilling or unable to continue as Depositary and a successor
Depositary is not appointed by the Company within 90 days, the Company will
issue such Debt Securities in definitive form 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 State of New York.
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DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Stock offered by any Prospectus Supplement will be described in such
Prospectus Supplement. The description of certain provisions of the Preferred
Stock set forth below and in any Prospectus Supplement does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Company's Amended and Restated Articles of Incorporation (the "Articles of
Incorporation"), and the articles supplementary (the "Articles Supplementary")
relating to each series of the Preferred Stock 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 the Preferred Stock.
GENERAL
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, $0.10 par value per share, and 5,000,000 shares of preferred
stock, $1.00 par value per share ("preferred stock of the Company," which
term, as used herein, includes the Preferred Stock offered hereby). See
"Description of Common Stock."
Under the Articles of Incorporation, the Board of Directors of the Company
is authorized without further stockholder action to provide for the issuance
of up to 5,000,000 shares of preferred stock of the Company, in one or more
series, with such voting, dividend, conversion or liquidation rights,
designations, preferences, powers and relative participating, optional or
other special rights and qualifications, limitations or restrictions of shares
of such series as shall be stated in the resolution providing for the issue of
a series of such stock, adopted, at any time or from time to time, by the
Board of Directors of the Company.
As described under "Description of Depositary Shares," the Company may, at
its option, elect to offer Depositary Shares evidenced by depositary receipts
(the "Depositary Receipts"), each representing a fraction (to be specified in
the Prospectus Supplement relating to the particular series of the Preferred
Stock) of a share of the particular series of the Preferred Stock issued and
deposited with a depositary, in lieu of offering full shares of such series of
the Preferred Stock.
The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in a Prospectus
Supplement relating to a particular series of the Preferred Stock. Reference
is made to the Prospectus Supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including: (i) the
designation and stated value per share of such Preferred Stock and the number
of shares offered; (ii) the amount of liquidation preference per share; (iii)
the initial public offering price at which such Preferred Stock will be
issued; (iv) the dividend rate (or method of calculation), the dates on which
dividends shall be payable and the dates from which dividends shall commence
to cumulate, if any; (v) any redemption or sinking fund provisions; (vi) any
conversion rights; (vii) whether the Company has elected to offer Depositary
Shares as described below under "Description of Depositary Shares;" and (viii)
any additional voting, dividend, liquidation, redemption, sinking fund and
other rights, preferences, privileges, limitations and restrictions.
The Preferred Stock will, when issued, be fully paid and nonassessable and
will have no preemptive rights. Unless otherwise stated in a Prospectus
Supplement relating to a particular series of the Preferred Stock, each series
of the Preferred Stock will rank on a parity as to dividends and distributions
of assets with each other series of the Preferred Stock. The rights of the
holders of each series of the Preferred Stock will be subordinate to those of
the Company's general creditors.
CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION
See "Description of Common Stock--Redemption and Business Combination
Provisions" for a description of certain provisions of the Articles of
Incorporation, including provisions relating to redemption rights and
provisions which may have certain anti-takeover effects.
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DIVIDEND RIGHTS
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of the Company, out of
funds of the Company legally available therefor, cash dividends on such dates
and at such rates as are set forth in, or as are determined by the method
described in, the Prospectus Supplement relating to such series of the
Preferred Stock. Such rate may be fixed or variable or both. Each such
dividend will be payable to the holders of record as they appear on the stock
books of the Company (or, if applicable, the records of the Depositary (as
hereinafter defined) referred to under "Description of Depositary Shares") on
such record dates, fixed by the Board of Directors of the Company, as
specified in the Prospectus Supplement relating to such series of Preferred
Stock.
Such dividends may be cumulative or noncumulative, as provided in the
Prospectus Supplement relating to such series of Preferred Stock. If the Board
of Directors of the Company fails to declare a dividend payable on a dividend
payment date on any series of Preferred Stock for which dividends are
noncumulative, then the right to receive a dividend in respect of the dividend
period ending on such dividend payment date will be lost, and the Company
shall have no obligation to pay the dividend accrued for such period, whether
or not dividends on such series are declared payable on any future dividend
payment dates. Dividends on the shares of each series of Preferred Stock for
which dividends are cumulative will accrue from the date on which the Company
initially issues shares of such series.
So long as the shares of any series of the Preferred Stock shall be
outstanding, unless (i) full dividends (including if such Preferred Stock is
cumulative, dividends for prior dividend periods) shall have been paid or
declared and set apart for payment on all outstanding shares of the Preferred
Stock of such series and all other classes and series of preferred stock of
the Company (other than Junior Stock, as defined below) and (ii) the Company
is not in default or in arrears with respect to the mandatory or optional
redemption or mandatory repurchase or other mandatory retirement of, or with
respect to any sinking or other analogous fund for, any shares of Preferred
Stock of such series or any shares of any other preferred stock of the Company
of any class or series (other than Junior Stock), the Company may not, other
than as the Company determines is necessary to maintain its status as a REIT,
declare any dividends on any shares of Common Stock of the Company or any
other stock of the Company ranking as to dividends or distributions of assets
junior to such series of Preferred Stock (the Common Stock and any such other
stock ranking junior to such series of Preferred Stock being herein referred
to as "Junior Stock"), or make any payment on account of, or set apart money
for, the purchase, redemption or other retirement of, or for a sinking or
other analogous fund for, any shares of Junior Stock or make any distribution
in respect thereof, whether in cash or property or in obligations or stock of
the Company, other than Junior Stock which is neither convertible into, nor
exchangeable or exercisable for, any securities of the Company other than
Junior Stock.
LIQUIDATION PREFERENCE
In the event of any liquidation, dissolution or winding up of the Company,
voluntary or involuntary, the holders of each series of the Preferred Stock
will be entitled to receive out of the assets of the Company available for
distribution to stockholders, before any distribution of assets is made to the
holders of Common Stock or any other shares of stock of the Company ranking
junior as to such distribution to such series of Preferred Stock, the amount
set forth in the Prospectus Supplement relating to such series of the
Preferred Stock. If, upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the amounts payable with respect to
the Preferred Stock of any series and any other shares of preferred stock of
the Company (including any other series of the Preferred Stock) ranking as to
any such distribution on a parity with such series of the Preferred Stock are
not paid in full, the holders of the Preferred Stock of such series and of
such other shares of preferred stock of the Company will share ratably in any
such distribution of assets of the Company in proportion to the full
respective preferential amounts to which they are entitled. After payment to
the holders of the Preferred Stock of each series of the full preferential
amounts of the liquidating distribution to which they are entitled, the
holders of each such series of the Preferred Stock will be entitled to no
further participation in any distribution of assets by the Company.
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REDEMPTION
A series of the Preferred Stock may be redeemable, in whole or from time to
time in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms,
at the times and at the redemption prices set forth in the Prospectus
Supplement relating to such series. Shares of the Preferred Stock redeemed by
the Company will be restored to the status of authorized but unissued shares
of preferred stock of the Company.
In the event that fewer than all of the outstanding shares of a series of
the Preferred Stock are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or
pro rata (subject to rounding to avoid fractional shares) as may be determined
by the Company or by any other method as may be determined by the Company in
its sole discretion to be equitable. From and after the redemption date
(unless default shall be made by the Company in providing for the payment of
the redemption price plus accumulated and unpaid dividends, if any), dividends
shall cease to accumulate on the shares of the Preferred Stock called for
redemption and all rights of the holders thereof (except the right to receive
the redemption price plus accumulated and unpaid dividends, if any) shall
cease.
So long as any dividends on shares of any series of the Preferred Stock or
any other series of preferred stock of the Company ranking on a parity as to
dividends and distribution of assets with such series of the Preferred Stock
are in arrears, no shares of any such series of the Preferred Stock or such
other series of preferred stock of the Company will be redeemed (whether by
mandatory or optional redemption) unless all such shares are simultaneously
redeemed, and the Company will not purchase or otherwise acquire any such
shares; provided, however, that the foregoing will not prevent the purchase or
acquisition of such shares pursuant to a purchase or exchange offer made on
the same terms to holders of all such shares outstanding.
CONVERSION RIGHTS
The terms, if any, on which shares of Preferred Stock of any series may be
exchanged for or converted (mandatorily or otherwise) into shares of Common
Stock or another series of Preferred Stock will be set forth in the Prospectus
Supplement relating thereto. See "Description of Common Stock."
VOTING RIGHTS
Except as indicated below or in a Prospectus Supplement relating to a
particular series of the Preferred Stock, or except as required by applicable
law, the holders of the Preferred Stock will not be entitled to vote for any
purpose.
So long as any shares of the Preferred Stock of a series remain outstanding,
the consent or the affirmative vote of the holders of at least 66-2/3% of the
votes entitled to be cast with respect to the then outstanding shares of such
series of the Preferred Stock together with any Other Preferred Stock (as
defined below), voting as one class, either expressed in writing or at a
meeting called for that purpose, will be necessary (i) to permit, effect or
validate the authorization, or any increase in the authorized amount, of any
class or series of shares of the Company ranking prior to the Preferred Stock
of such series as to dividends, voting or upon distribution of assets and (ii)
to repeal, amend or otherwise change any of the provisions applicable to the
Preferred Stock of such series in any manner which adversely affects the
powers, preferences, voting power or other rights or privileges
qualifications, limitations and other characteristics of such series of the
Preferred Stock. In case any series of the Preferred Stock would be so
affected by any such action referred to in clause (ii) above in a different
manner than one or more series of the Other Preferred Stock then outstanding,
the holders of shares of the Preferred Stock of such series, together with any
series of the Other Preferred Stock which will be similarly affected, will be
entitled to vote as a class, and the Company will not take such action without
the consent or affirmative vote, as above provided, of at least 66-2/3% of the
total number of votes entitled to be cast with respect to each such series of
the Preferred Stock and the Other Preferred Stock similarly affected, then
outstanding, in lieu of the consent or affirmative vote hereinabove otherwise
required.
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With respect to any matter as to which the Preferred Stock of any series is
entitled to vote, holders of the Preferred Stock of such series and any other
series of preferred stock of the Company ranking on a parity with such series
of the Preferred Stock as to dividends and distributions of assets and which
by its terms provides for similar voting rights (the "Other Preferred Stock")
will be entitled to cast the number of votes set forth in the Prospectus
Supplement with respect to that series of Preferred Stock. As a result of the
provisions described in the preceding paragraph requiring the holders of
shares of a series of the Preferred Stock to vote together as a class with the
holders of shares of one or more series of Other Preferred Stock, it is
possible that the holders of such shares of Other Preferred Stock could
approve action that would adversely affect such series of Preferred Stock,
including the creation of a class of capital stock ranking prior to such
series of Preferred Stock as to dividends, voting or distributions of assets.
As more fully described below under "Description of Depositary Shares," if
the Company elects to issue Depositary Shares, each representing a fraction of
a share of a series of the Preferred Stock, each such Depositary Share will,
in effect, be entitled to such fraction of a vote per Depositary Share.
TRANSFER AGENT AND REGISTRAR
Unless otherwise indicated in a Prospectus Supplement relating thereto,
ChaseMellon Shareholder Services LLC will be the transfer agent, dividend and
redemption price disbursement agent and registrar for shares of each series of
the Preferred Stock.
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DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in the Prospectus Supplement of certain
provisions of the Deposit Agreement (as defined below) and of the Depositary
Shares and Depositary Receipts do not purport to be complete and are subject
to and qualified in their entirety by reference to the Deposit Agreement and
Depositary Receipts relating to each series of the Preferred Stock 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 the Preferred Stock. The forms of
Deposit Agreement and Depositary Receipt are filed as exhibits to the
Registration Statement of which this Prospectus is a part.
GENERAL
The Company may, at its option, elect to offer fractional shares of
Preferred Stock rather than full shares of Preferred Stock. In the event such
option is exercised, the Company will issue to the public receipts for
Depositary Shares, each of which will represent a fraction (to be set forth in
the Prospectus Supplement relating to a particular series of the Preferred
Stock) of a share of a particular series of the Preferred Stock as described
below.
The shares of any series of the Preferred Stock represented by Depositary
Shares will be deposited under a separate deposit agreement (the "Deposit
Agreement") among the Company, a bank or trust company selected by the Company
(the "Depositary") and the holders from time to time of the Depositary
Receipts. Subject to the terms of the Deposit Agreement, each owner of a
Depositary Share will in general be entitled, in proportion to the applicable
fraction of a share of Preferred Stock represented by such Depositary Share,
to all the rights and preferences of the Preferred Stock represented thereby
(including dividend, voting, redemption and liquidation rights).
The Depositary Shares relating to any series of the Preferred Stock will be
evidenced by Depositary Receipts issued pursuant to the related Deposit
Agreement. Depositary Receipts will be distributed to those persons purchasing
such Depositary Shares in accordance with the terms of the offering made by
the related Prospectus Supplement.
Upon surrender of Depositary Receipts at the office of the Depositary equal
to one or more whole Depositary Shares and upon payment of the charges
provided in the Deposit Agreement and subject to the terms thereof, a holder
of Depositary Receipts is entitled to have the Depositary deliver to such
holder certificates representing the whole shares of Preferred Stock
underlying the Depositary Shares evidenced by the surrendered Depositary
Receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Receipts relating to such Preferred Stock in proportion, insofar
as practicable, to the respective numbers of Depositary Shares evidenced by
such Depositary Receipts held by such holders on the relevant record date. The
Depositary shall distribute only such amount, however, as can be distributed
without attributing to any holder of Depositary Receipts a fraction of one
cent, and any balance not so distributed shall be added to and treated as part
of the next sum received by the Depositary (without liability for the interest
thereon), for distribution to record holders of Depositary Receipts then
outstanding.
In the event of a distribution other than in cash, the Depositary will
distribute such amounts of the securities or property received by it as are,
as nearly as practicable, in proportion to the respective numbers of
Depositary Shares evidenced by the Depositary Receipts held by such holders on
the relevant record date, unless the Depositary determines that it is not
feasible to make such distribution, in which case the Depositary may, with the
approval of the Company, adopt such method as it deems equitable and
practicable for the purpose of effecting such distribution, including the sale
of such securities or property.
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The Deposit Agreement will also contain provisions relating to the manner in
which any subscription or similar rights offered by the Company to holders of
the Preferred Stock shall be made available to holders of Depositary Receipts.
The amount distributed in all of the foregoing cases will be reduced by any
amounts required to be withheld by the Company or the Depositary on account of
taxes and governmental charges.
REDEMPTION OF DEPOSITARY SHARES
If a series of the Preferred Stock represented by Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the
proceeds received by the Depositary resulting from the redemption, in whole or
in part, of such series of the Preferred Stock held by the Depositary. The
Depositary shall mail notice of redemption not less than 30 and not more than
60 days prior to the date fixed for redemption to the record holders of the
Depositary Receipts evidencing the Depositary Shares to be so redeemed at
their respective addresses appearing in the Depositary's books. The redemption
price per Depositary Share will be equal to the applicable fraction of the
redemption price per share payable with respect to such series of the
Preferred Stock plus all money and other property, if any, payable with
respect to such Depositary Share, including all amounts payable by the Company
in respect of any accumulated but unpaid dividends; provided, however, the
Depositary may deduct such fees and charges as are expressly provided in the
Deposit Agreement for the account of the holders of Depositary Receipts.
Whenever the Company redeems shares of Preferred Stock held by the Depositary,
the Depositary will redeem as of the same redemption date the number of
Depositary Shares representing shares of Preferred Stock so redeemed. If less
than all the Depositary Shares are to be redeemed, the Depositary Shares to be
redeemed will be selected by lot or pro rata (subject to rounding to avoid
fractions of Depositary Shares) as may be determined by the Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of Depositary Receipts evidencing such Depositary Shares will cease,
except the right to receive without interest the moneys payable upon such
redemption and any money or other property to which such holders were entitled
upon such redemption upon surrender to the Depositary of the Depositary
Receipts evidencing such Depositary Shares.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting or action to be taken by written
consent at or as to which the holders of the Preferred Stock are entitled to
vote or consent, the Depositary will mail the information contained in such
notice of meeting or action to the record holders of the Depositary Receipts
evidencing the Depositary Shares relating to such Preferred Stock. Each record
holder of such Depositary Receipts on the record date (which will be the same
date as the record date for the Preferred Stock) will be entitled to instruct
the Depositary as to the exercise of the voting rights or the giving or
refusal of consent, as the case may be, pertaining to the number of shares of
the Preferred Stock represented by the Depositary Shares evidenced by such
holder's Depositary Receipts. The Depositary will endeavor, insofar as
practicable, to vote, or give or withhold consent with respect to, the maximum
number of whole shares of the Preferred Stock represented by all Depositary
Shares as to which any particular voting or consent instructions are received,
and the Company will agree to take all action which may be deemed necessary by
the Depositary in order to enable the Depositary to do so. The Depositary will
abstain from voting, or giving consents with respect to, shares of the
Preferred Stock to the extent it does not receive specific instructions from
the holders of Depositary Receipts evidencing Depositary Shares representing
such Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares relating to
any series of Preferred Stock and any provision of the related Deposit
Agreement may at any time and from time to time be amended by agreement
between the Company and the Depositary in any respect which they may deem
necessary or desirable. However, any amendment which imposes or increases any
fees, taxes or charges upon holders of Depositary
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Shares or Depositary Receipts relating to any series of Preferred Stock or
which materially and adversely alters the existing rights of such holders will
not be effective unless such amendment has been approved by the record holders
of Depositary Receipts evidencing at least a majority of such Depositary
Shares then outstanding. Notwithstanding the foregoing, no such amendment may
impair the right of any holder of Depositary Shares or Depositary Receipts to
receive any moneys or other property to which such holder may be entitled
under the terms of such Depositary Receipts or the Deposit Agreement at the
times and in the manner and amount provided for therein. A Deposit Agreement
may be terminated by the Company or the Depositary only after (i) all
outstanding Depositary Shares relating thereto have been redeemed and any
accumulated and unpaid dividends on the Preferred Stock represented by the
Depositary Shares, together with all other moneys and property, if any, to
which holders of the related Depositary Receipts are entitled under the terms
of such Depositary Receipts or the related Deposit Agreement, have been paid
or distributed as provided in the Deposit Agreement or provision therefor has
been duly made, (ii) there has been a final distribution in respect of the
Preferred Stock of the relevant series in connection with any liquidation,
dissolution or winding up of the Company and such distribution has been
distributed to the holders of the related Depositary Receipts, or (iii) in the
event the Depositary Shares relate to a series of Preferred Stock which is
convertible into shares of Common Stock, all outstanding Depositary Shares
have been converted into shares of Common Stock; provided, however, that
resignation and removal of the Depositary, and appointment of a successor
Depositary shall not constitute a termination of a Deposit Agreement.
MISCELLANEOUS
The Depositary will forward to record holders of Depositary Receipts, at
their respective addresses appearing in the Depositary's books, all reports
and communications from the Company which are delivered to the Depositary and
which the Company is required to furnish to the holders of the Preferred Stock
or Depositary Receipts.
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay charges of the Depositary in connection with the initial deposit of
the Preferred Stock and the initial issuance of the Depositary Receipts
evidencing the Depositary Shares, any redemption of the Preferred Stock and
any withdrawals of Preferred Stock by the holders of Depositary Shares.
Holders of Depositary Shares will pay other transfer and other taxes and
governmental charges and such other charges as are expressly provided in the
Deposit Agreement to be for their accounts which may be deducted from payments
otherwise due to such holders with respect to their Depositary Receipts.
The Deposit Agreement will contain provisions relating to adjustments in the
fraction of a share of Preferred Stock represented by a Depositary Share in
the event of a change in par or stated value, split-up, combination or other
reclassification of the Preferred Stock or upon any recapitalization, merger
or sale of substantially all of the assets of the Company.
Neither the Depositary nor any of its agents nor any registrar nor the
Company will be (i) liable if it is prevented or delayed by law or any
circumstance beyond its control in performing its obligations under the
Deposit Agreement, (ii) subject to any liability under the Deposit Agreement
to holders of Depositary Receipts other than for the relevant party's gross
negligence or willful misconduct or (iii) obligated to prosecute or defend any
legal proceeding in respect of any Depositary Receipts, Depositary Shares or
the Preferred Stock unless satisfactory indemnity is furnished. They may rely
upon written advice of counsel or accountants, or information provided by
holders of Depositary Receipts or other persons in good faith believed to be
competent and on documents reasonably believed to be genuine.
RESIGNATION OR REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to the Company notice of
its election to do so, and the Company may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary must be appointed within 60 days after delivery of the notice of
resignation or removal.
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<PAGE>
DESCRIPTION OF COMMON STOCK
COMMON STOCK
All shares of Common Stock participate equally in dividends payable to
stockholders of Common Stock when and as declared by the Board of Directors
and in net assets available for distribution to stockholders of Common Stock
on liquidation or dissolution, have one vote per share on all matters
submitted to a vote of the stockholders and do not have cumulative voting
rights in the election of directors. All issued and outstanding shares of
Common Stock are, and the Common Stock offered hereby will be upon issuance,
validly issued, fully paid and nonassessable. Holders of the Common Stock do
not have preference, conversion, exchange or preemptive rights. The Common
Stock is listed on the New York Stock Exchange (NYSE Symbol: NHP).
REDEMPTION AND BUSINESS COMBINATION PROVISIONS
If the Board of Directors 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
voting shares of capital stock has or may become concentrated in the hands of
one beneficial owner, the Board of Directors shall have the power (i) by lot
or other means deemed equitable by it to call for the purchase from any
stockholder of the Company a number of voting shares sufficient, in the
opinion of the Board of Directors, to maintain or bring the direct or indirect
ownership of voting shares of capital stock of such beneficial owner to a
level of no more than 9.9% of the outstanding voting shares of the Company's
capital stock, and (ii) to refuse to transfer or issue voting shares of
capital stock to any person whose acquisition of such voting shares would, in
the opinion of the Board of Directors, result in the direct or indirect
ownership by that person of more than 9.9% of the outstanding voting shares of
capital stock of the Company. Further, any transfer of shares, options,
warrants or other securities convertible into voting shares that would create
a beneficial owner of more than 9.9% of the outstanding voting shares shall be
deemed void ab initio and the intended transferee shall be deemed never to
have had an interest therein. The purchase price for any voting shares of
capital stock 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 prices 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
acquisitions are sent by the Company, or, if no such closing sales prices or
quotations are available, then the purchase price shall be equal to the net
asset value of such stock as determined by the Board of Directors in
accordance with the provisions of applicable law. From and after the date
fixed for purchase by the Board of Directors, 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 Articles of Incorporation require that, except in certain circumstances,
Business Combinations (as defined) between the Company and a beneficial holder
of 10% or more of the Company's outstanding voting stock (a "Related Person")
be approved by the affirmative vote of at least 90% of the outstanding voting
shares of the Company.
A Business Combination is defined in the Articles of Incorporation as (a)
any merger or consolidation of the Company with or into a Related Person, (b)
any sale, lease, exchange, transfer or other disposition, including without
limitation a mortgage or any other security device, of all or any "Substantial
Part" (as defined below) of the assets of the Company (including without
limitation any voting securities of a subsidiary) to a Related Person, (c) any
merger or consolidation of a Related Person with or into the Company, (d) any
sale, lease, exchange, transfer or other disposition of all or any Substantial
Part of the assets of a Related Person to the Company, (e) the issuance of any
securities (other than by way of pro rata distribution to all stockholders) of
the Company to a Related Person, and (f) any agreement, contract or other
arrangement providing for any of the transactions described in the definition
of Business Combination. The term "Substantial Part" shall mean more than 10%
of the book value of the total assets of the Company as of the end of its most
recent fiscal year ending prior to the time the determination is being made.
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<PAGE>
Pursuant to the Articles of Incorporation, the Company's Board of Directors
is classified into three classes. Each class of directors serves for a term of
three years, with one class being elected each year. As of the date of this
Prospectus, there are six directors, divided into three classes consisting of
one, two and three directors, respectively.
The foregoing provisions of the Articles of Incorporation and certain other
matters may not be amended without the affirmative vote of at least 90% of the
outstanding voting shares of the Company.
The foregoing provisions may have the effect of discouraging unilateral
tender offers or other takeover proposals which certain stockholders might
deem in their interests or in which they might receive a substantial premium.
The Board of Directors' authority to issue and establish the terms of
currently authorized Preferred Stock, without stockholder approval, may also
have the effect of discouraging takeover attempts. See "Description of
Preferred Stock." 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 stockholders of opportunities to sell at a temporarily higher
market price. However, the Board of Directors believes that inclusion of the
Business Combination provisions in the Articles of Incorporation may help
assure fair treatment of stockholders and preserve the assets of the Company.
The foregoing summary of certain provisions of the Articles of Incorporation
does not purport to be complete or to give effect to provisions of statutory
or common law. The foregoing summary is subject to, and qualified in its
entirety by reference to, the provisions of applicable law and the Articles of
Incorporation, a copy of which is incorporated by reference as an exhibit to
the Registration Statement of which this Prospectus is a part.
TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder Services LLC is the transfer agent and registrar of
the Common Stock.
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<PAGE>
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Debt
Securities, Preferred Stock, Depositary Shares or Common Stock. Securities
Warrants may be issued independently or together with Debt Securities,
Preferred Stock, Depositary Shares or Common Stock offered by any Prospectus
Supplement and may be attached to or separate from such Debt Securities,
Preferred Stock, Depositary Shares or Common Stock. 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 Securities Warrants.
If Securities Warrants are offered, the applicable Prospectus Supplement
will describe the terms of such Securities Warrants, including, in the case of
Securities Warrants for the purchase of Debt Securities, 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,
Preferred Stock or Depositary Shares with which such Securities Warrants are
being offered and the number of such Securities Warrants being offered with
each such Debt Security, Preferred Stock or Depositary Share; (iv) the date,
if any, on and after which such Securities Warrants and the related series of
Debt Securities, Preferred Stock or Depositary Shares 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 date by which the Securities Warrants must be exercised; and
(x) any other terms of such Securities Warrants.
In the case of Securities Warrants for the purchase of Preferred Stock,
Depositary Shares or Common Stock, 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, the exercise price, and
in the case of Securities Warrants for Preferred Stock or Depositary Shares,
the designation, aggregate number and terms of the series of Preferred Stock
purchasable upon exercise of such Securities Warrants or underlying the
Depositary Shares purchasable upon exercise of such Securities Warrants; (iii)
the designation and terms of the series of Debt Securities, Preferred Stock or
Depositary Shares with which such Securities Warrants are being offered and
the number of such Securities Warrants being offered with each such Debt
Security, Preferred Stock or Depositary Share; (iv) the date, if any, on and
after which such Securities Warrants and the related series of Debt
Securities, Preferred Stock, Depositary Shares or Common Stock 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
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<PAGE>
Supplement. Prior to the exercise of any Securities Warrant to purchase Debt
Securities, 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 Securities Warrants to
purchase Preferred Stock, Depositary Shares or Common Stock, holders of such
Securities Warrants will not have any rights of holders of such Preferred
Stock, Depositary Shares or Common Stock, including the right to receive
payments of dividends, if any, on such Preferred Stock or Common Stock, 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 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 if 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 price 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.
20
<PAGE>
EXERCISE OF SECURITIES WARRANTS
Each Securities Warrant will entitle the holder thereof to purchase such
principal amount of Debt Securities or number of shares of Preferred Stock,
Depositary Shares or Common Stock, 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, Preferred Stock, Depositary
Shares or Common Stock, 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 (5) 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, Preferred Stock,
Depositary Shares or Common Stock, 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 interests of the holders of the
Securities Warrants.
COMMON STOCK WARRANT ADJUSTMENTS
Unless otherwise indicated in the applicable Prospectus Supplement, the
exercise price of, and the number of shares of Common Stock covered by, a
Common Stock Warrant are subject to adjustment in certain events, including
(i) payment of a dividend on the Common Stock payable in capital stock and
stock splits, combinations or reclassifications of the Common Stock, (ii)
issuance to all holders of Common Stock of rights or warrants to subscribe for
or purchase shares of Common Stock at less than their current market price (as
defined in the Securities Warrant Agreement for such series of Common Stock
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
Common Stock) or of subscription rights and warrants (excluding those referred
to above).
No adjustment in the exercise price of, and the number of shares of Common
Stock covered by, a Common Stock 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 of Common
Stock covered by, a Common Stock Warrant will not be adjusted for the issuance
of Common Stock or any securities convertible into or exchangeable for Common
Stock, 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 a consolidation or a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares
of Common Stock), (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 Common Stock (other than solely a
change in par value or from par value to no par value), then any holder of a
Common Stock Warrant
21
<PAGE>
will be entitled, on or after the occurrence of any such event, to receive on
exercise of such Common Stock Warrant the kind and amount of shares of stock
or other securities, cash or other property (or any combination thereof) that
the holder would have received had such holder exercised such holder's Common
Stock Warrant immediately prior to the occurrence of such event. If the
consideration to be received upon exercise of the Common Stock Warrant
following any such event consists of common stock of the surviving entity,
then from and after the occurrence of such event, the exercise price of such
Common Stock 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 Common Stock.
PLAN OF DISTRIBUTION
The Company may sell the Securities to one or more underwriters for public
offering and sale by them or may sell the Securities to investors directory or
through agents. Any such underwriter or agent involved in the offer and sale
of Securities will be named in the applicable Prospectus Supplement. The
Company has reserved the right to sell Securities directly to investors on its
own behalf in those jurisdictions where and in such manner as it is authorized
to do so.
Underwriters may offer and sell Securities at a fixed price or prices, which
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The Company
also may offer and sell Securities in exchange for one or more of its
outstanding issues of the Securities or other securities. The Company also
may, from time to time, authorize dealers, acting as the Company's agents, to
offer and sell Securities upon the terms and conditions as are set forth in
the applicable Prospectus Supplement. In connection with the sale of
Securities, underwriters may receive compensation from the Company in the form
of underwriting discounts or commissions and may also receive commissions from
purchasers of the Securities for whom they may act as agent. Underwriters may
sell Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Securities, and any discounts, concessions
or commissions allowed by underwriters to participating dealers, will be set
forth in the applicable Prospectus Supplement. Dealers and agents
participating in the distribution of Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any
profit realized by them on resale of the Securities may be deemed to be
underwriting discounts and commissions. Underwriters, dealers and agents may
be entitled, under agreements entered into with the Company, to
indemnification against and contribution toward certain civil liabilities.
If so indicated in the Prospectus Supplement, the Company will authorize
dealers acting as the Company's agents to solicit offers by certain
institutions to purchase the Securities from the Company at the public
offering price set forth in the applicable Prospectus Supplement pursuant to
delayed delivery contracts ("Contracts") providing for payment and delivery on
the date or dates stated in such Prospectus Supplement. Each Contract will be
for an amount not less than, and the aggregate principal amount of the
Securities sold pursuant to Contracts shall be not less nor more than, the
respective amounts stated in the applicable Prospectus Supplement.
Institutions with whom Contracts, when authorized, may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions, and other institutions but
will in all cases be subject to the approval of the Company. Contracts will
not be subject to any conditions except (i) the purchase by an institution of
the Securities covered by its Contracts shall not at the time of delivery be
prohibited under the laws of any jurisdiction in the United States to which
such institution is subject, and (ii) if the Securities are being sold to
underwriters, the Company shall have sold to such underwriters the total
principal amount of such Securities less the principal amount thereof covered
by Contracts.
The net proceeds to the Company from the sale of the Securities will be the
purchase price of the Securities less any such discounts or commissions and
the other attributable expenses of issuance and distribution.
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<PAGE>
LEGAL MATTERS
The validity of the Securities offered hereby will be passed upon for the
Company by O'Melveny & Myers LLP. In addition, O'Melveny & Myers LLP has
passed upon certain federal income tax matters relating to the Company.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1995,
1994, 1993, 1992, and 1991 and the consolidated statements of operations,
stockholders' equity and cash flows for each of the five years in the period
ended December 31, 1995, incorporated by reference in this Prospectus and
elsewhere in the Registration Statement, have been audited by Arthur Andersen
LLP, independent public 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 in giving said
reports.
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRE-
SENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR
ANY UNDERWRITER, DEALER OR AGENT. NEITHER THE DELIVERY OF THIS PROSPECTUS SUP-
PLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UN-
DER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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PROSPECTUS SUPPLEMENT
<S> <C>
Prospectus Supplement Summary.............................................. S-2
The Company................................................................ S-5
Recent Developments........................................................ S-6
Use of Proceeds............................................................ S-6
Selected Consolidated Financial Information................................ S-7
Capitalization............................................................. S-8
Management................................................................. S-9
Description of StREITsSM................................................... S-11
Certain Federal Income Tax Considerations.................................. S-15
Underwriting............................................................... S-17
Legal Matters.............................................................. S-17
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Selected Consolidated Financial Information................................ 4
Ratio of Earnings to Fixed Charges......................................... 5
Use of Proceeds............................................................ 5
Description of Debt Securities............................................. 5
Description of Preferred Stock............................................. 10
Description of Depositary Shares........................................... 14
Description of Common Stock................................................ 17
Description of Securities Warrants......................................... 19
Plan of Distribution....................................................... 22
Legal Matters.............................................................. 23
Experts.................................................................... 23
</TABLE>
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1,000,000 SHARES
[LOGO OF NATIONWIDE HEALTH PROPERTIES, INC.]
7.677% SERIES A CUMULATIVE PREFERRED STEP-UP REIT SECURITIES
(LIQUIDATION PREFERENCE $100.00 PER SHARE)
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PROSPECTUS SUPPLEMENT
SEPTEMBER 24, 1997
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SMITH BARNEY INC.
MORGAN STANLEY DEAN WITTER
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