As filed with the Securities and Exchange Commission on April 19, 1994
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________
HEALTH AND REHABILITATION PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
MARYLAND 04-6558834
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
400 CENTRE STREET, NEWTON, MASSACHUSETTS 02158
(617) 332-3990
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
MARK J. FINKELSTEIN
400 Centre Street
Newton, Massachusetts 02158
(617) 332-3990
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
____________________
Copies to:
LENA G. GOLDBERG, ESQ.
SULLIVAN & WORCESTER
One Post Office Square
Boston, Massachusetts 02109
_________________________
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration
Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or reinvestment plans, please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price Aggregate Offering Amount of
Securities to be Registered(1) Registered(2) Per Unit(3) Price(2)(3) Registration Fee
<S> <C> <C> <C> <C>
Debt Securities..............................
Preferred Shares of Beneficial
Interest, $.01 par value(4)................
Common Shares of Beneficial $345,000,000 (6) $345,000,000 $118,967(7)
Interest, $.01 par value(5)...............
Common Share Warrants.......................
</TABLE>
(Footnotes on next page)
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until this
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
(1) This Registration Statement also covers contracts which may be
issued by the Registrant under which the counterparty may be
required to purchase Debt Securities or Preferred Shares. Such
contracts would be issued with the Debt Securities or Preferred
Shares covered hereby. In addition, Offered Securities registered
hereunder may be sold separately, together or as units with other
Offered Securities registered hereunder.
(2) In U.S. Dollars or the equivalent thereof denominated in one or
more foreign currencies or units of two or more foreign currencies
or composite currencies (such as European Currency Units).
(3) Estimated solely for purposes of calculating the registration fee.
No separate consideration will be received for Common Shares or
Preferred Shares that are issued upon conversion of Debt Securities
or Preferred Shares registered hereunder or upon exercise of the
Common Share Warrants registered hereunder, as the case may be.
The aggregate maximum offering price of all Offered Securities
issued pursuant to this Registration Statement will not exceed
$345,000,000.
(4) Such indeterminate number of Preferred Shares as may from time to
time be issued at indeterminate prices or issuable upon conversion
of Debt Securities.
(5) Such indeterminate number of Common Shares as may from time to time
be issued at indeterminate prices or issuable upon conversion of
Debt Securities or Preferred Shares registered hereunder or upon
exercise of the Common Share Warrants registered hereunder, as the
case may be.
(6) Omitted pursuant to General Instruction II.D of Form S-3 under the
Securities Act of 1933, as amended.
(7) Calculated pursuant to Rule 457(o) of the rules and regulations
under the Securities Act of 1933, as amended.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be
sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor
shall there by any sale of these securities in any State in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS, DATED APRIL 18, 1994
PROSPECTUS
HEALTH AND REHABILITATION PROPERTIES TRUST
$345,000,000
Debt Securities, Preferred Shares of Beneficial Interest,
Common Shares of Beneficial Interest and Common Share Warrants
Health and Rehabilitation Properties Trust (the "Company" or "HRP")
may from time to time offer in one or more series (i) its unsecured debt
securities (the "Debt Securities"), (ii) its preferred shares of
beneficial interest, par value $.01 per share (the "Preferred Shares"),
(iii) its common shares of beneficial interest, par value $.01 per share
(the "Common Shares"), or (iv) warrants to purchase Common Shares (the
"Common Share Warrants"), with an aggregate public offering price of up
to $345,000,000 on terms to be determined at the time of offering. The
Debt Securities, Preferred Shares, Common Shares and Common Share
Warrants (collectively, the "Offered Securities") may be offered,
separately or together, in separate series in amounts, at prices and on
terms to be set forth in a supplement to this Prospectus (a "Prospectus
Supplement").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable
Prospectus Supplement and will include, where applicable: (i) in the
case of Debt Securities, the specific title, aggregate principal amount,
currency, form (which may be registered or bearer, or certificated or
global), authorized denominations, maturity, rate (or manner of
calculation thereof) and time of payment of interest, terms for
redemption at the option of the Company or repayment at the option of
the Holder, terms for sinking fund payments, terms for conversion into
Preferred Shares or Common Shares, terms for subordination to other
indebtedness of the Company, and any initial public offering price; (ii)
in the case of Preferred Shares, the specific title and stated value,
any dividend, liquidation, redemption, conversion, voting and other
rights, and any initial public offering price; (iii) in the case of
Common Shares, any initial public offering price; and (iv) in the case
of Common Share Warrants, the duration, offering price, exercise price
and detachability. In addition, such specific terms may include
limitations on direct or beneficial ownership and restrictions on
transfer of the Offered Securities, in each case as may be appropriate
to preserve the status of the Company as a real estate investment trust
("REIT") for federal income tax purposes.
The applicable Prospectus Supplement will also contain information,
where applicable, about certain United States federal income tax
considerations relating to, and any listing on a securities exchange of,
the Offered Securities covered by such Prospectus Supplement.
The Offered Securities may be offered directly, through agents
designated from time to time by the Company, or to or through
underwriters or dealers. If any agents or underwriters are involved in
the sale of any of the Offered Securities, their names, and any
applicable purchase price, fee, commission or discount arrangement
between or among them, will be set forth, or will be calculable from the
information set forth, in the applicable Prospectus Supplement. See
"Plan of Distribution". No Offered Securities may be sold without
delivery of the applicable Prospectus Supplement describing the method
and terms of the offering of such series of Offered Securities.<PAGE>
______________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
______________________
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
______________________
The date of this Prospectus is _____________, 1994.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C., a registration statement on Form S-3
(together with all exhibits, schedules and amendments thereto, the
"Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Offered Securities. This
Prospectus, which is a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement.
Statements in this Prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference and the exhibits and
schedules thereto. For further information concerning the Company and
the Offered Securities, reference is made to the Registration Statement.
Copies of the Registration Statement may be obtained from the Commission
at its principal office in Washington, D.C. upon payment of the
prescribed fee.
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 and other information with the
Commission. The Registration Statement, the exhibits and schedules
forming a part thereof and the reports, proxy statements and other
information filed by the Company with the Commission can be inspected
and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following regional offices of the
Commission: Chicago Regional Office, Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661-2511; and New York Regional Office,
Seven World Trade Center, New York, New York 10048. Copies of such
material can be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. In addition, reports, proxy material and
other information concerning the Company may be inspected at the offices
of The New York Stock Exchange ("NYSE"), 20 Broad Street, New York, New
York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed with the Commission
pursuant to the Exchange Act, are hereby incorporated in this Prospectus
and specifically made a part hereof by reference: (i) the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1993,
as amended; and (ii) the Company's Registration Statement on Form 8-A
dated November 8, 1986, as amended by Form 8 dated July 30, 1991. The
consolidated financial statements of Greenery Rehabilitation Group, Inc.
("Greenery") at and for the fiscal year ended September 30, 1993, are
incorporated herein by reference from Greenery's Annual Report on Form
10-K for the fiscal year ended September 30, 1993; the consolidated
financial statements of Horizon Healthcare Corporation ("Horizon") at
and for the periods ended May 31, 1993 and February 28, 1994, are
incorporated herein by reference from Horizon's Annual Report on Form
10-K/A - Amendment No. 3 for the fiscal year ended May 31, 1993, dated
October 5, 1993, and Quarterly Report on Form 10-Q for the nine months ended
February 28, 1994; the consolidated financial statements of GranCare,
Inc. ("GranCare") at and for the year ended December 31, 1993 are
incorporated herein by reference from GranCare's Annual Report on Form
10-K for the year ended December 31, 1993; and the consolidated
financial statements of Marriott International, Inc. ("Marriott") at and
for the fiscal year ended December 31, 1993 are incorporated herein by
reference from Marriott's Annual Report on Form 10-K for the year ended
December 31, 1993. All documents filed by the Company pursuant to
Section 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 Offered Securities shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the respective dates
of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated herein by reference
shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein (or in the
applicable Prospectus Statement), or in any other subsequently filed
document that also is or is deemed to be incorporated herein by
reference, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such
person, a copy of any and all of the information that has been
incorporated by reference in this Prospectus (excluding exhibits unless
such exhibits are specifically incorporated by reference into the
information that this Prospectus incorporates). Requests for such copies
should be made to the Company at its principal executive offices, 400
Centre Street, Newton, Massachusetts 02158, Attention: Investor
Relations, telephone (617) 332-3990.
THE COMPANY
The Company is a real estate investment trust ("REIT") which
invests primarily in retirement communities, assisted living centers,
nursing homes and other long term care facilities. The Company recently
agreed to acquire 14 retirement communities (the "Marriott Properties")
leased to and operated by a subsidiary of Marriott International, Inc.
(including its subsidiaries, "Marriott") for $320 million (the "Marriott
Transaction"). The Marriott Properties will be acquired subject to the
existing leases which are fully guaranteed by Marriott. The Marriott
Properties contain a total of 3,932 residences or beds and are located
in seven states. Upon completion of the Marriott Transaction: Marriott
will be the Company's largest single tenant and will operate 38% of the
Company's investment portfolio of properties; the Company will have
gross real estate investments totalling $834 million, in 154 properties,
located in 29 states and operated by 37 separate companies;
approximately 70% of the Company's total investments will be in
properties operated by seven NYSE listed companies; and 97% of the
Company's investments will be in retirement communities, assisted living
centers, nursing homes and other long term care facilities.
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement,
the Company intends to use the net proceeds from the sale of the Offered
Securities for general corporate purposes, which may include the
acquisition of, or other investments in, retirement communities,
assisted living centers, nursing homes, other long term care facilities
or other healthcare or healthcare related properties, and the repayment
of indebtedness outstanding at such time. If Offered Securities are
sold prior to the closing of the Marriott Transaction, all or a portion
of the net proceeds from the sale of Offered Securities will be used to
fund the Marriott Transaction. If the Marriott Transaction is
consummated prior to the sale of Offered Securities and the Company
utilizes borrowings to fund the Marriott Transaction, all or a portion
of the net proceeds from the sale of Offered Securities will be used to
repay amounts outstanding under such borrowings, and/or to reduce
amounts outstanding under the Company's credit facilities or for working
capital and other general corporate purposes. In the event that the
Marriott Transaction is not consummated by the Company, net proceeds
from the sale of Offered Securities will be used to reduce amounts
outstanding under the Company's revolving credit facility or for working
capital or other general corporate purposes. Pending utilization as set
forth above, the proceeds from the sale of the Offered Securities will
be invested in short term investments, including repurchase agreements.
Such investments may not be investment grade.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture, to be
dated as of ___________, 1994, as amended or supplemented from time to
time (the "Indenture"), between the Company and Shawmut Bank, N.A., as
Trustee (the "Trustee"). The Indenture has been filed as an exhibit to
the Registration Statement of which this Prospectus is a part and is
available for inspection at the corporate trust office of the Trustee at
One Federal Street, Boston, Massachusetts or as described above under
"Available Information". The Indenture is subject to, and governed by,
the Trust Indenture Act of 1939, as amended (the "TIA"). The statements
made hereunder relating to the Indenture and the Debt Securities to be
issued thereunder are summaries of certain provisions thereof and do not
purport to be complete and are subject to, and are qualified in their
entirety by reference to, all provisions of the Indenture and such Debt
Securities. All section references appearing herein are to section of
the Indenture, and capitalized terms used but not defined herein shall
have the respective meanings set forth in the Indenture.
GENERAL
The Debt Securities will be direct, unsecured obligations of the
Company. Except for any series of Debt Securities which is specifically
subordinated to other indebtedness of the Company, the Debt Securities
will rank equally with all other unsecured and unsubordinated
indebtedness of the Company. The Indenture provides that the Debt
Securities may be issued without limit as to aggregate principal amount,
in one or more series, in each case as established from time to time in
or pursuant to authority granted by a resolution of the Board of
Trustees of the Company or as established in one or more indentures
supplemental to the Indenture. All Debt Securities of one series need
not be issued at the same time and, unless otherwise provided, a series
may be reopened, without the consent of the Holders of the Debt
Securities of such series, for issuances of additional Debt Securities
of such series (Section 301).
The Indenture provides that there may be more than one Trustee
thereunder, each with respect to one or more series of Debt Securities.
Any Trustee under the Indenture may resign or be removed with respect to
one or more series of Debt Securities, and a successor Trustee may be
appointed to act with respect to such series (Section 608). In the
event that two or more persons are acting as Trustee with respect to
different series of Debt Securities, each such Trustee shall be a
trustee of a trust under the Indenture separate and apart from the trust
administered by any other Trustee (Section 609), and, except as
otherwise indicated herein, any action described herein to be taken by
the Trustee may be taken by each such Trustee with respect to, and only
with respect to, the one or more series of Debt Securities for which it
is Trustee under the Indenture.
Reference is made to the Prospectus Supplement relating to the
series of Debt Securities being offered for the specific terms thereof,
including:
(1) the title of such Debt Securities;
(2) the aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(3) the percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal
amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of the maturity
thereof, or (if applicable) the portion of the principal
amount of such Debt Securities which is convertible into
Common Shares or Preferred Shares, or the method by which any
such portion shall be determined;
(4) if convertible, in connection with the preservation of the
Company's status as a REIT, any applicable limitations on the
ownership or transferability of the Common Shares or Preferred
Shares into which such Debt Securities are convertible;
(5) the date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be
payable;
(6) the rate or rates (which may be fixed or variable), or the
method by which such rate or rates shall be determined, at
which such Debt Securities will bear interest, if any;
(7) the date or dates, or the method for determining such date or
dates, from which any such interest will accrue, the Interest
Payment Dates on which any such interest will be payable, the
Regular Record Dates for such Interest Payment Dates, or the
method by which such Dates shall be determined, the Person to
whom such interest shall be payable, and the basis upon which
interest shall be calculated if other than that of a 360-day
year of 12 30-day months;
(8) the place or places where the principal of (and premium, if
any) and interest, if any, on such Debt Securities will be
payable, such Debt Securities may be surrendered for
conversion or registration of transfer or exchange and notices
or demands to or upon the Company in respect of such Debt
Securities and the Indenture may be served.
(9) the period or periods within which, the price or prices at
which and the terms and conditions upon which such Debt
Securities may be redeemed, as a whole or in part, at the
option of the Company, if the Company is to have such an
option;
(10) the obligation, if any, of the Company to redeem, repay or
repurchase such Debt Securities pursuant to any sinking fund
or analogous provisions or at the option of a Holder thereof,
and the period or periods within which, the price or prices at
which and the terms and conditions upon which such Debt
Securities will be redeemed, repaid or purchased, as a whole
or in part, pursuant to such obligation;
(11) if other than U.S. dollars, the currency or currencies in
which such Debt Securities are denominated and payable, which
may be a foreign currency or units of two or more foreign
currencies or a composite currency or currencies, and the
terms and conditions relating thereto;
(12) whether the amount of payments of principal of (and premium,
if any) or interest, if any, on such Debt Securities may be
determined with reference to an index, formula or other method
(which index, formula or method may, but need not be, based on
a currency, currencies, currency unit or units or composite
currency or currencies) and the manner in which such amounts
shall be determined;
(13) any additions to, modifications of or deletions from the terms
of such Debt Securities with respect to the Events of Default
or covenants set forth in the Indenture;
(14) whether such Debt Securities will be issued in certificated or
book-entry form;
(15) whether such Debt Securities will be in registered or bearer
form and, if in registered form, the denominations thereof if
other than $1,000 and any integral multiple thereof and, if in
bearer form, the denominations thereof and terms and
conditions relating thereto;
(16) the applicability, if any, of the defeasance and covenant
defeasance provisions of Article XIV of the Indenture;
(17) if such Debt Securities are to be issued upon the exercise of
debt warrants, the time, manner and place for such Debt
Securities to be authenticated and delivered;
(18) the terms, if any, upon which such Debt Securities may be
convertible into Common Shares or Preferred Shares of the
Company and the terms and conditions upon which such
conversion will be effected, including, without limitation,
the initial conversion price or rate and the conversion
period;
(19) the terms and conditions, if any, upon which such Debt
Securities may be subordinated to other indebtedness of the
Company;
(20) whether and under what circumstances the Company will pay
Additional Amounts as contemplated in the Indenture on such
Debt Securities in respect of any tax, assessment or
governmental charge and, if so, whether the Company will have
the option to redeem such Debt Securities in lieu of making
such payment; and
(21) any other terms of such Debt Securities not inconsistent with
the provisions of the Indenture (Section 301).
The Debt Securities may provide for less than the entire principal
amount thereof to be payable upon declaration of acceleration of the
maturity thereof ("Original Issue Discount Securities"). Special U.S.
federal income tax, accounting and other considerations applicable to
the Original Issue Discount Securities will be described in the
applicable Prospectus Supplement.
The Indenture does not contain any provisions that would limit the
ability of the Company to incur indebtedness or that would afford
Holders of Debt Securities protection in the event of a highly leveraged
or similar transaction involving the Company or in the event of a change
of control. However, restrictions on ownership and transfers of the
Common Shares and Preferred Shares, designed to preserve its status as a
REIT, may prevent or hinder a change of control. Reference is made to
the applicable Prospectus Supplement for information with respect to any
deletions from, modifications of or additions to the Events of Default
or covenants of the Company that are described below, including any
addition of a covenant or other provision providing event risk or
similar protection.
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement,
the Debt Securities of any series will be issuable in denominations of
$1,000 and integral multiples thereof (Section 302).
Unless otherwise specified in the applicable Prospectus Supplement,
the principal of (and premium, if any) and interest on any series of
Debt Securities will be payable at the corporate trust office of the
Trustee, initially located at _______________________________
______________________________________________, provided that, at the
option of the Company, payment of interest may be made by check mailed
to the address of the Person entitled thereto as it appears in the
Security Register or by wire transfer of funds to such Person at an
account maintained within the United States (Sections 301, 305, 306, 307
and 1002).
Any interest not punctually paid or duly provided for on any
Interest Payment Date with respect to a Debt Security ("Defaulted
Interest") will forthwith cease to be payable to the Holder on the
applicable Regular Record Date and may either be paid to the person in
whose name such Debt Security is registered at the close of business on
a special record date (the "Special Record Date") for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall
be given to the Holder of such Debt Security not less than 10 days prior
to such Special Record Date, or may be paid at any time in any other
lawful manner, all as more completely described in the Indenture.
Subject to certain limitations imposed upon Debt Securities issued
in book-entry form, the Debt Securities of any series will be
exchangeable for other Debt Securities of the same series and of a like
aggregate principal amount and tenor of different authorized
denominations upon surrender of such Debt Securities at the corporate
trust office of the Trustee referred to above. In addition, subject to
certain limitations imposed upon Debt Securities issued in book-entry
form, the Debt Securities of any series may be surrendered for
conversion or registration of transfer thereof at the corporate trust
office of the Trustee referred to above. Every Debt Security
surrendered for conversion, registration of transfer or exchange shall
be duly endorsed or accompanied by a written instrument of transfer. No
service charge will be made for any registration of transfer or exchange
of any Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith (Section 305). If the applicable Prospectus
Supplement refers to any transfer agent (in addition to the Trustee)
initially designated by the Company with respect to any series of Debt
Securities, the Company may at any time rescind the designation of any
such transfer agent or approve a change in the location through which
any such transfer agent acts, except that the Company will be required
to maintain a transfer agent in each Place of Payment for such series.
The Company may at any time designate additional transfer agents with
respect to any series of Debt Securities (Section 1002).
Neither the Company nor the Trustee shall be required to (i) issue,
register the transfer of or exchange Debt Securities of any series
during a period beginning at the opening of business 15 days before any
selection of Debt Securities of that series to be redeemed and ending at
the close of business of the day of mailing of the relevant notice of
redemption; (ii) register the transfer of or exchange any Debt Security,
or portion thereof, called for redemption, except the unredeemed portion
of any Debt Security being redeemed in part; or (iii) issue, register
the transfer of or exchange any Debt Security which has been surrendered
for repayment at the option of the Holder, except the portion, if any,
of such Debt Security not to be so repaid (Section 305).
MERGER, CONSOLIDATION OR SALE
The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any other
trust or corporation, provided that (a) either the Company shall be the
continuing entity, or the successor (if other than the Company) formed
by or resulting from any such consolidation or merger or which shall
have received the transfer of such assets shall expressly assume payment
of the principal of (and premium, if any) and interest on all of the
Debt Securities and the due and punctual performance and observance of
all of the covenants and conditions contained in the Indenture; (b)
immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Company or any
Subsidiary as a result thereof as having been incurred by the Company or
such Subsidiary at the time of such transaction, no Event of Default
under the Indenture, and no event which, after notice or the lapse of
time, or both, would become such an Event of Default, shall have
occurred and be continuing; and (c) an officer's certificate and legal
opinion covering such conditions shall be delivered to the Trustee
(Sections 801 and 803).
CERTAIN COVENANTS
Existence. Except as permitted under "Merger, Consolidation or
Sale," the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence, rights
(declaration and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any right or franchise if it
determines that the preservation thereof is no longer desirable in the
conduct of its business and that the loss thereof is not disadvantageous
in any material respect to the Holders of the Debt Securities.
Provision of Financial Information. Whether or not the Company is
subject to Section 13 or 15(d) of the Exchange Act, the Company will, to
the extent permitted under the Exchange Act, file with the Commission
the annual reports, quarterly reports and other documents which the
Company would have been required to file with the Commission pursuant to
such Section 13 or 15(d) (the "Financial Statements") if the Company
were so subject, such documents to be filed with the Commission on or
prior to the respective dates (the "Required Filing Dates") by which the
Company would have been required so to file such documents if the
Company were so subject. The Company will also in any event (x) file
with the Trustee copies of the annual reports, quarterly reports and
other documents which the Company would have been required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act if
the Company were subject to such Sections and (y) if filing such
documents by the Company with the Commission is not permitted under the
Exchange Act, promptly upon written request and payment of the
reasonable cost of duplication and delivery, supply copies of such
documents to any prospective Holder.
Other. Reference is made to the applicable Prospectus Supplement
for information with respect to any additional covenants specific to a
particular series of Debt Securities.
EVENT OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of
Default" with respect to any series of Debt Securities issued
thereunder: (a) default for 30 days in the payment of any installment of
interest on any Debt Security of such series; (b) default in the payment
of the principal of (or premium, if any, on) any Debt Security of such
series at its Maturity; (c) default in making any sinking fund payment
as required for any Debt Security of such series; (d) default in the
performance of any other covenant of the Company contained in the
Indenture (other than a covenant, added to the Indenture solely for the
benefit of a series of Debt Securities issued thereunder other than such
series), continued for 60 days after written notice as provided in the
Indenture; (e) default in the payment of an aggregate principal amount
exceeding $10,000,000 of any evidence of indebtedness of the Company or
any mortgage, indenture or other instrument under which such
indebtedness is issued or by which such indebtedness is secured, such
default having occurred after the expiration of any applicable grace
period and having resulted in the acceleration of the maturity of such
indebtedness, but only if such indebtedness is not discharged or such
acceleration is not rescinded or annulled; (f) certain events of
bankruptcy, insolvency or reorganization, or court appointment of a
receiver, liquidator or trustee of the Company or any Significant
Subsidiary or the property of either; and (g) any other Event of Default
provided with respect to a particular series of Debt Securities (Section
501). The term "Significant Subsidiary" means each significant
subsidiary (as defined in Regulation S-X promulgated under the
Securities Act) of the Company.
If an Event of Default under the Indenture with respect to Debt
Securities of any series at the time Outstanding occurs and is
continuing, then in every such case the Trustee or the Holders of not
less than a majority in 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 Securities or
Indexed Securities, such portion of the principal amount as may be
specified in the terms thereof) of all of the Debt Securities of that
series to be due and payable immediately by written notice thereof to
the Company (and to the Trustee if given by the Holders). However, any
time after such a declaration of acceleration with respect to Debt
Securities of such series (or of all Debt Securities then Outstanding
under the Indenture, as the case may be) has been made, but before a
judgment or decree for payment of the money due has been obtained by the
Trustee, the Holders of not less than a majority in principal amount of
Outstanding Debt Securities of such series (or of all Debt Securities
then Outstanding under the Indenture, as the case may be) may rescind
and annul such declaration and its consequences if (a) the Company shall
have deposited with the Trustee all required payments of the principal
of (and premium, if any) and interest on the Debt Securities of such
series (or of all Debt Securities then outstanding under the Indenture,
as the case may be), plus certain fees, expenses, disbursements and
advances of the Trustee and (b) all Events of Default, other than the
non-payment of accelerated principal (or specified portion thereof),
with respect to Debt Securities of such series (or of all Debt
Securities then Outstanding under the Indenture, as the case may be)
have been cured or waived as provided in the Indenture (Section 502).
The Indenture also provides that the Holders of not less than a majority
in principal amount of the Outstanding Debt Securities of any series (or
of all Debt Securities then Outstanding under the Indenture, as the case
may be) may waive any past default with respect to such series and its
consequences, except a default (x) in the payment of the principal of
(or premium, if any) or interest on any Debt Security of such series or
(y) in respect of a covenant or provision contained in the Indenture
that cannot be modified or amended without the consent of the Holder of
each Outstanding Debt Security affected thereby (Section 513).
The Trustee is required to give notice to the Holders of Debt
Securities within 90 days of a default under the Indenture; provided,
however, that the Trustee may withhold notice to the Holders of any
series of Debt Securities of any default with respect to such series
(except a default in the payment of the principal of (or premium, if
any) or interest on any Debt Security of such series or in the payment
of any sinking fund installment in respect of any Debt Security of such
series) if the Responsible Officers of the Trustee consider such
withholding to be in the interest of such Holders (Section 601).
The Indenture provides that no Holders of Debt Securities of any
series may institute any proceedings, judicial or otherwise, with
respect to the Indenture or for any remedy thereunder, except in the
case of failure of the Trustee, for 60 days, to act after it has
received a written request to institute proceedings in respect of an
Event of Default from the Holders of not less than a majority in
principal amount of the Outstanding Debt Securities of any series, as
well as an offer of reasonable indemnity (Section 507). This provision
will not prevent, however, any Holder of Debt Securities from
instituting suit for the enforcement of payment of the principal of (and
premium, if any) and interest on such Debt Securities at the respective
due dates thereof (Section 508).
Subject to provisions in the Indenture relating to its duties in
case of default, the Trustee is under no obligation to exercise any of
its rights or powers under the Indenture at the request or direction of
any Holders of any series of Debt Securities then Outstanding under the
Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity (Section 602). The Holders of not less
than a majority in principal amount of the Outstanding Debt Securities
of any series (or of all Debt Securities then Outstanding under the
Indenture, as the case may be) shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available
to the Trustee, or of exercising any trust or power conferred upon the
Trustee. However, the Trustee may refuse to follow any direction which
is in conflict with any law or the Indenture, which may involve the
Trustee in personal liability or which may be unduly prejudicial to the
Holders of Debt Securities of such series not joining therein (Section
512).
Within 120 days after the close of each fiscal year, the Company
must deliver to the Trustee a certificate, signed by one of several
specified officers, stating whether or not such officer has knowledge of
any default under the Indenture and, if so, specifying each such default
and the nature and status thereof (Section 1011).
MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture may be made only with
the consent of the Holders of not less than a majority in principal
amount of all Outstanding Debt Securities which are affected by such
modification or amendment; provided, however, that no such modification
or amendment may, without the consent of the Holder of each such Debt
Security affected thereby, (a) change the Stated Maturity of the
principal of, or any installment of interest (or premium, if any) on,
any such Debt Security; (b) reduce the principal amount of, or the rate
or amount of interest on, or any premium payable on redemption of, any
such Debt Security, or reduce the amount of principal of an Original
Issue Discount Security that would be due and payable upon declaration
of acceleration of the maturity thereof or would be provable in
bankruptcy, or adversely affect any right of repayment of the Holder of
any such Debt Security; (c) change the Place of Payment, or the coin or
currency, for payment of principal of, premium, if any, or interest on
any such Debt Security; (d) impair the right to institute suit for the
enforcement of any payment on or with respect to any such Debt Security;
(e) reduce the above-stated percentage of Outstanding Debt Securities of
any series necessary to modify or amend the Indenture, to waive
compliance with certain provisions thereof or certain defaults and
consequences thereunder or to reduce the quorum or voting requirements
set forth in the Indenture; or (f) modify any of the foregoing
provisions or any of the provisions relating to the waiver of certain
past defaults or certain covenants, except to increase the required
percentage to effect such action or to provide that certain other
provisions may not be modified or waived without the consent of the
Holder of such Debt Security (Section 902).
The Holders of not less than a majority in principal amount of
Outstanding Debt Securities have the right to waive compliance by the
Company with certain covenants in the Indenture (Section 1013).
Modifications and amendments of the Indenture may be made by the
Company and the Trustee without the consent of any Holder of Debt
Securities for any of the following purposes: (i) to evidence the
succession of another Person to the Company as obligor under the
Indenture; (ii) to add to the covenants of the Company for the benefit
of the Holders of all or any series of Debt Securities or to surrender
any right or power conferred upon the Company in the Indenture; (iii) to
add Events of Default for the benefit of the Holders of all or any
series of Debt Securities; (iv) to add or change any provisions of the
Indenture to facilitate the issuance of, or to liberalize certain terms
of, Debt Securities in bearer form, or to permit or facilitate the
issuance of Debt Securities in uncertified form, provided that such
action shall not adversely affect the interests of the Holders of the
Debt Securities of any series in any material respect; (v) to change or
eliminate any provisions of the Indenture, provided that any such change
or elimination shall become effective only when there are no Debt
Securities Outstanding of any series created prior thereto which are
entitled to the benefit of such provision; (vi) to secure the Debt
Securities; (vii) to establish the form or terms of Debt Securities of
any series, including the provision and procedures, if applicable, for
the conversion of such Debt Securities into Common Shares or Preferred
Shares; (viii) to provide for the acceptance of appointment by a
successor Trustee or facilitate the administration of the trusts under
the Indenture by more than one Trustee; (ix) to cure any ambiguity,
defect or inconsistency in the Indenture, provided that such action
shall not adversely affect the interests of Holders of Debt Securities
of any series in any material respect; or (x) to supplement any or the
provisions of the Indenture to the extent necessary to permit or
facilitate defeasance and discharge of any series of such Debt
Securities, provided that such action shall not adversely affect the
interests of the Holders of the Debt Securities of any series in any
material respect (Section 901).
The Indenture provides that in determining whether the Holders of
the requisite principal amount of Outstanding Debt Securities of a
series have given any request, demand, authorization, direction, notice,
consent or waiver thereunder or whether a quorum is present at a meeting
of Holders of Debt Securities, (i) the principal amount of an Original
Issue Discount Security that shall be deemed to be outstanding shall be
the amount of the principal thereof that would be due and payable as of
the date of such determination upon declaration of acceleration of the
maturity thereof, (ii) the principal amount of a Debt Security
denominated in a Foreign Currency that shall be deemed outstanding shall
be the U.S. dollar equivalent, determined on the issue date for such
Debt Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the issue date of
such Debt Security of the amount determined as provided in (i) above),
(iii) the principal amount of an Indexed Security that shall be deemed
outstanding shall be the principal face amount of such Indexed Security
at original issuance, unless otherwise provided with respect to such
Indexed Security pursuant to Section 301 of the Indenture, and (iv) Debt
Securities owned by the Company or any other obligor upon the Debt
Securities or any Affiliate of the Company or of such other obligor
shall be disregarded (Section 101).
The Indenture contains provisions for convening meetings of the
Holders of Debt Securities of a series (Section 1501). A meeting may be
called at any time by the Trustee, and also, upon request, by the
Company or the Holders of at least 25% in principal amount of the
Outstanding Debt Securities of such series, in any such case upon notice
given as provided in the Indenture (Section 1502). Except for any
consent that must be given by the Holder of each Debt Security affected
by certain modifications and amendments of the Indenture, any resolution
presented at a meeting or adjourned meeting duly reconvened at which a
quorum is present may be adopted by the affirmative vote of the Holders
of a majority in principal amount of the Outstanding Debt Securities of
that series; provided, however, that, except as referred to above, any
resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action that may be made,
given or taken by the Holders of a specified percentage, which is less
than a majority, in principal amount of the Outstanding Debt Securities
of a series may be adopted at a meeting or adjourned meeting duly
reconvened at which a quorum is present by the affirmative vote of the
Holders of such Debt Securities of that series. Any resolution passed
or decision taken at any meeting of Holders of Debt Securities of any
series duly held in accordance with the Indenture will be binding on all
Holders of Debt Securities of that series. The quorum at any meeting
called to adopt a resolution, and at any reconvened meeting, will be
Persons holding or representing a majority in principal amount of the
Outstanding Debt Securities of a series; provided, however, that if any
action is to be taken at such meeting with respect to a consent or
waiver which may be given by the Holders of not less than a specified
percentage in principal amount of the Outstanding Debt Securities of a
series, the Persons holding or representing such specified percentage in
principal amount of the Outstanding Debt Securities of such series will
constitute a quorum (Section 1504).
Notwithstanding the foregoing provisions, if any action is to be
taken at a meeting of Holders of Debt Securities of any series with
respect to any request, demand, authorization, direction, notice,
consent, waiver or other action that the Indenture expressly provides
may be made, given or taken by the Holders of a specified percentage in
principal amount of all Outstanding Debt Securities affected thereby, or
of the Holders of such series and one or more additional series: (i)
there shall be no minimum quorum requirement for such meeting and (ii)
the principal amount of the Outstanding Debt Securities of such series
that vote in favor of such request, demand, authorization, direction,
notice, consent, waiver or other action shall be taken into account in
determining whether such request, demand, authorization, direction,
notice, consent, waiver or other action has been made, given or taken
under the Indenture (Section 1504).
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge certain obligations to Holders of any
series of Debt Securities that have not already been delivered to the
Trustee for cancellation and that either have become due and payable or
will become due and payable within one year (or scheduled for redemption
within one year) by irrevocably depositing with the Trustee, in trust,
funds in such currency or currencies, currency unit or units or
composite currency or currencies in which such Debt Securities are
payable in an amount sufficient to pay the entire indebtedness on such
Debt Securities in respect of principal (and premium, if any) and
interest to the date of such deposit (if such Debt Securities have
become due and payable) or to the Stated Maturity or Redemption Date, as
the case may be (Section 401).
The Indenture provides that, if the provisions of Article Fourteen
are made applicable to the Debt Securities of or within any series
pursuant to Section 301 of the Indenture, the Company may elect either
(a) to defease and be discharged from any and all obligations with
respect to such Debt Securities (except for the obligation to pay
Additional Amounts, if any, upon the occurrence of certain events of
tax, assessment or governmental charge with respect to payments on such
Debt Securities and the obligations to register the transfer or exchange
of such Debt Securities, to replace temporary or mutilated, destroyed,
lost or stolen Debt Securities, to maintain an office or agency in
respect of such Debt Securities and to hold moneys for payment in trust)
("defeasance") (Section 1402) or (b) to be released from its obligations
with respect to such Debt Securities under Sections ____ to ____,
inclusive, of the Indenture (being the restrictions described under
"Certain Covenants") or, if provided pursuant to Section 301 of the
Indenture, its obligations with respect to any other covenant, and any
omission to comply with such obligations shall not constitute a default
or an Event of Default with respect to such Debt Securities ("covenant
defeasance") (Section 1403), in either case upon the irrevocable deposit
by the Company with the Trustee, in trust, of an amount, in such
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable at Stated Maturity,
or Government Obligations (as defined below), or both, applicable to
such Debt Securities which through the scheduled payment of principal
and interest in accordance with their terms will provide money in an
amount sufficient to pay the principal of (and premium, if any) and
interest on such Debt Securities, and any mandatory sinking fund or
analogous payments thereon, on the scheduled due dates therefor.
Such a trust may only be established if, among other things, the
Company has delivered to the Trustee an Opinion of Counsel (as specified
in the Indenture) to the effect that the Holders of such Debt Securities
will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of such defeasance or covenant defeasance and will
be subject to U.S. federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred, and such Opinion of
Counsel, in the case of defeasance, must refer to and be based upon a
ruling of the Internal Revenue Service or a change in applicable United
States federal income tax law occurring after the date of the Indenture
(Section 1404).
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the government which
issued the Foreign Currency in which the Debt Securities of a particular
series are payable, for the payment of which its full faith and credit
is pledged or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of
America or such government which issued the Foreign Currency in which
the Debt Securities of such series are payable, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either
case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or
trust company as custodian with respect to any such Government
Obligation or a specific payment of interest on or principal of any such
Government Obligation held by such custodian for the account of the
holder of a depository receipt, provided that (except as required by
law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the Government Obligation or the
specific payment of interest on or principal of the Government
Obligation evidenced by such depository receipt (Section 101).
Unless otherwise provided in the applicable Prospectus Supplement,
if after the Company has deposited funds and/or Government Obligations
to effect defeasance or covenant defeasance with respect to Debt
Securities of any series, (a) the Holder of a Debt Security of such
series is entitled to, and does, elect pursuant to Section 301 of the
Indenture or the terms of such Debt Security to receive payment in a
currency, currency unit or composite currency other than that in which
such deposit has been made in respect of such Debt Security, or (b) a
Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made,
the indebtedness represented by such Debt Security shall be deemed to
have been, and will be, fully discharged and satisfied through the
payment of the principal of (and premium, if any) and interest on such
Debt Security as they become due out of the proceeds yielded by
converting the amount so deposited in respect of such Debt Security into
the currency, currency unit or composite currency in which such Debt
Security becomes payable as a result of such election or such cessation
of usage based on the applicable market exchange rate (Section 1405).
"Conversion Event" means the cessation of use of (i) a currency,
currency unit or composite currency both by the government of the
country which issued such currency and for the settlement of
transactions by a central bank or other public institutions or within
the international banking community, (ii) the ECU both within the
European Monetary System and for the settlement of transactions by
public institutions of or within the European Communities or (iii) any
currency unit or composite currency other than the ECU for the purposes
for which it was established. Unless otherwise provided in the
applicable Prospectus Supplement, all payments of principal of (and
premium, if any) and interest on any Debt Security that is payable in a
Foreign Currency that cease to be used by its government of issuance
shall be made in U.S. dollars (Section 101).
In the event the Company effects covenant defeasance with respect
to any Debt Securities and such Debt Securities are declared due and
payable because of the occurrence of any Event of Default other than the
Event of Default described in clause (d) under "Events of Default,
Notice and Waiver" with respect to Sections ____ to ____, inclusive, of
the Indenture (which Sections would no longer be applicable to such Debt
Securities) or described in clause (g) under "Events of Default, Notice
and Waiver" with respect to any other covenant as to which there has
been covenant defeasance, the amount in such currency, currency unit or
composite currency in which such Debt Securities are payable, and
Government Obligations on deposit with the Trustee, will be sufficient
to pay amounts due on such Debt Securities at the time of their Stated
Maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such Event of
Default. However, the Company would remain liable to make payment of
such amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the
provisions, if any, permitting such defeasance or covenant defeasance,
including any modifications to the provisions described above, with
respect to the Debt Securities of or within a particular series.
CONVERSION RIGHTS
The terms and conditions, if any, upon which the Debt Securities
are convertible into Common Shares or Preferred Shares will be set forth
in the applicable Prospectus Supplement relating thereto. Such terms
will include whether such Debt Securities are convertible into Common
Shares or Preferred Shares, the conversion price (or manner of
calculation thereof), the conversion period, provisions as to whether
conversion will be at the option of the Holders or the Company, the
events requiring an adjustment of the conversion price and provisions
affecting conversion in the event of the redemption of such Debt
Securities.
SUBORDINATION
The terms and conditions, if any, upon which the Debt Securities
are subordinated to other indebtedness of the Company will be set forth
in the applicable Prospectus Supplement relating thereto. Such terms
will include a description of the indebtedness ranking senior to the
Debt Securities, the restrictions on payments to the Holders of such
Debt Securities while a default with respect to such senior indebtedness
in continuing, the restrictions, if any, on payments to the Holders of
such Debt Securities following an Event of Default, and provisions
requiring Holders of such Debt Securities to remit certain payments to
holders of senior indebtedness.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part
in the form of one or more global securities (the "Global Securities")
that will be deposited with, or on behalf of, a depositary (the
"Depositary") identified in the applicable Prospectus Supplement
relating to such series. Global Securities may be issued in either
registered or bearer form and in either temporary or permanent form.
The specific terms of the depositary arrangement with respect to a
series of Debt Securities will be described in the applicable Prospectus
Supplement relating to such series.
DESCRIPTION OF SHARES
The following description of the Shares does not purport to be
complete but contains a summary of certain portion of the Declaration of
Trust (the "Declaration") and By-Laws of the Company.
The Company is authorized to issue an aggregate of 150,000,000
shares ("Shares") in two classes: 100,000,000 Common Shares and
50,000,000 Preferred Shares, par value $.01 per share. All the shares
presently outstanding are Common Shares. The Trustees are authorized to
cause the issuance, without shareholder approval, of classes or series
of Preferred Shares from time to time and to set (or change, if the
class or series has previously been established) the preferences,
conversion or other rights, voting powers, restrictions, limitations as
to dividends, qualifications or terms and conditions of redemption of
such Preferred Shares.
Except as otherwise determined by the Trustees with respect to any
class or series of Preferred Shares, all shares: (i) will participate
equally in dividends payable to shareholders when, as and if declared by
the Trustees and ratably in net assets available for distribution to
shareholders on liquidation or dissolution; (ii) will have one vote per
share on all matters submitted to a vote of the shareholders; (iii) will
not have cumulative voting rights in the election of Trustees; (iv) will
have no preference, conversion, exchange, sinking fund, redemption or
preemptive rights; and (v) will be validly issued, fully paid and
nonassessable by the Company upon issuance.
DESCRIPTION OF PREFERRED SHARES
The Company is authorized to issue 50,000,000 preferred shares of
beneficial interest, par value $.01 per share.
Under the Company's Declaration, the Board of Trustees may from
time to time establish and issue one or more series of preferred shares
of beneficial interest and fix the designations, powers, preferences and
rights of the shares of such series and the qualifications, limitations
or restrictions thereon, including, but not limited to, the fixing of
the dividend rights, dividend rate or rates, conversion rights, voting
rights, rights and terms of redemption (including sinking fund
provisions), the redemption price or prices, and the liquidation
preferences.
The following description of the preferred shares of beneficial
interest sets forth certain general terms and provisions of the
Preferred Shares to which any Prospectus Supplement may relate. The
statements below describing the Preferred Shares are in all respects
subject to and qualified in their entirety by reference to the
applicable provisions of the Company's Declaration (including any
applicable certificate of designations) and Bylaws.
GENERAL
Subject to limitations prescribed by Maryland law and the
Declaration, the Board of Trustees is authorized to fix the number of
shares constituting each series of preferred shares and the designations
and powers, preferences and relative, participating, optional or other
specific rights and qualifications, limitations or restrictions thereof,
including such provisions as may be desired concerning voting,
redemption, dividends, dissolution or the distribution of assets,
conversion or exchange, and such other subjects or matters as may be
fixed by resolutions of the Board of Trustees. The Preferred Shares
will, when issued, be fully paid and nonassessable and will have no
preemptive rights.
Reference is made to the Prospectus Supplement relating to the
Preferred Shares offered thereby for specific terms, including:
(1) the title and stated value of such Preferred Shares;
(2) the number of shares of such Preferred Shares offered, the
liquidation preference per share and the offering price of
such Preferred Shares;
(3) the dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred
Shares;
(4) the date from which dividends on such Preferred Shares shall
accumulate, if applicable;
(5) the procedures, if any, for any auction and remarketing for
such Preferred Shares;
(6) the provision for a sinking fund, if any, for such Preferred
Shares;
(7) the provision for redemption, if applicable, of such Preferred
Shares;
(8) any listing of such Preferred Shares on any securities
exchange;
(9) the terms and conditions, if applicable, upon which such
Preferred Shares will be convertible into Common Shares of the
Company, including the conversion price (or manner of
calculation thereof);
(10) any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Shares;
(11) a discussion of federal income tax considerations applicable
to such Preferred Shares;
(12) the relative ranking and preferences of such Preferred Shares
as to dividend rights and rights upon liquidation, dissolution
or winding up of the affairs of the Company;
(13) any limitations on issuance of any series of preferred shares
ranking senior to or on a parity with such series of Preferred
Shares as to dividend rights and rights upon liquidation,
dissolution or winding up of the affairs of the Company; and
(14) any limitations on direct or beneficial ownership and
restrictions on transfer, in each case as may be appropriate
to preserve the status of the Company as a REIT.
RANK
Unless otherwise specified in the Prospectus Supplement, the
Preferred Shares will, with respect to dividend rights and rights upon
liquidation, dissolution or winding up of the Company, rank (i) senior
to all Common Shares, and to all equity securities ranking junior to
such Preferred Shares; (ii) on a parity with all equity securities
issued by the Company the terms of which specifically provide that such
equity securities rank on a parity with the Preferred Shares; and (iii)
junior to all equity securities issued by the Company the terms of which
specifically provide that such equity securities rank senior to the
Preferred Shares.
DIVIDENDS
Holders of Preferred Shares of each series shall be entitled to
receive, when, as and if declared by the Board of Trustees of the
Company, out of assets of the Company legally available for payment,
cash dividends at such rates and on such dates as will be set forth in
the applicable Prospectus Supplement. Each such dividend shall be
payable to holders of record as they appear on the stock transfer books
of the Company on such record dates as shall be fixed by the Board of
Trustees of the Company.
Dividends on any series of the Preferred Shares may be cumulative
or non-cumulative, as provided in the applicable Prospectus Supplement.
Dividends, if cumulative, will be cumulative from and after the date set
forth in the applicable Prospectus Supplement. If the Board of Trustees
of the Company fails to declare a dividend payable on a dividend payment
date on any series of the Preferred Shares for which dividends are
noncumulative, then the holders of such series of the Preferred Shares
will have no right to receive a dividend in respect of the dividend
period ending on such dividend payment date, and the Company will 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 date.
If Preferred Shares of any series are outstanding, no full
dividends shall be declared or paid or set apart for payment on the
preferred shares of the Company of any other series ranking, as to
dividends, on a parity with or junior to the Preferred Shares of such
series for any period unless (i) if such series of Preferred Shares has
a cumulative dividend, full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for such payment on the Preferred
Shares of such series for all past dividend periods and the then current
dividend period or (ii) if such series of Preferred Shares does not have
a cumulative dividend, full dividends for the then current dividend
period have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for such payment
on the Preferred Shares of such series. When dividends are not paid in
full (or a sum sufficient for such full payment is not so set apart)
upon the Preferred Shares of any series and the shares of any other
series of preferred shares ranking on a parity as to dividends with the
Preferred Shares of such series, all dividends declared upon Preferred
Shares of such series and any other series of preferred shares shall in
all cases bear to each other the same ratio that accrued dividends per
share on the Preferred Shares of such series (which shall not include
any accumulation in respect of unpaid dividends for prior dividend
periods if such Preferred Shares do not have a cumulative dividend)
and such other series of preferred shares bear to each other. No
interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on Preferred Shares of such
series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless
(i) if such series of Preferred Shares has a cumulative dividend, full
cumulative dividends on the Preferred Shares of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient
for the repayment thereof set apart for payment for all past dividend
periods and the then current dividend period and (ii) if such series of
Preferred Shares does not have a cumulative dividend, full dividends on
the Preferred Shares of such series have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment
thereof set apart for payment for the then current dividend period, no
dividends (other than in Common Shares or other capital stock ranking
junior to the Preferred Shares of such series as to dividends and upon
liquidation) shall be declared or paid or set aside for payment or other
distribution shall be declared or made upon the Common Shares or any
other capital stock of the Company ranking junior to or on a parity with
the Preferred Shares of such series as to dividends or upon liquidation,
nor shall any Common Shares or any other capital stock of the Company
ranking junior to or on a parity with the Preferred Shares of such
series as to dividends or 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 shares of
any such stock) by the Company (except by conversion into or exchange
for other capital stock of the Company ranking junior to the Preferred
Shares of such series as to dividends and upon liquidation).
Any dividend payment made on shares of a series of Preferred Shares
shall first be credited against the earliest accrued but unpaid dividend
due with respect to shares of such series which remains payable.
REDEMPTION
If so provided in the applicable Prospectus Supplement, the
Preferred Shares will be subject to mandatory redemption or redemption
at the option of the Company, as a whole or in part, in each case upon
the terms, at the times and at the redemption prices set forth in such
Prospectus Supplement.
The Prospectus Supplement relating to a series of Preferred Shares
that is subject to mandatory redemption will specify the number of such
Preferred Shares that shall be redeemed by the Company in each year
commencing after a date to be specified, at a redemption price per share
to be specified, together with an amount equal to all accrued and unpaid
dividends thereon (which shall not, if such Preferred Shares does not
have a cumulative dividend, include any accumulation in respect of
unpaid dividends for prior dividend periods) to the date of redemption.
The redemption price may be payable in cash or other property, as
specified in the applicable Prospectus Supplement. If the redemption
price for Preferred Shares of any series is payable only from the net
proceeds of the issuance of capital stock of the Company, the terms of
such Preferred Shares may provide that, if no such capital stock shall
have been issued or to the extent the net proceeds from any issuance are
insufficient to pay in full the aggregate redemption price then due,
such Preferred Shares shall automatically and mandatorily be converted
into shares of the applicable capital stock of the Company pursuant to
conversion provisions specified in the applicable Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if such series of
Preferred Shares has a cumulative dividend, full cumulative dividends on
all shares of any series of Preferred Shares 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 and (ii) if such series of
Preferred Shares does not have a cumulative dividend, full dividends on
the Preferred Shares of any series have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment
thereof set apart for payment for the then current dividend period, no
shares of any series of Preferred Shares shall be redeemed unless all
outstanding Preferred Shares of such series are simultaneously redeemed;
provided however, that the foregoing shall not prevent the purchase or
acquisition of Preferred Shares of such series pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding
Preferred Shares of such series, and, unless (i) if such series of
Preferred Shares has a cumulative dividend, full cumulative dividends on
all outstanding shares of any series of Preferred 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 and (ii) if such series of
Preferred Shares does not have a cumulative dividend, full dividends on
the Preferred Shares of any series have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment
thereof set apart for payment for the then current dividend period, the
Company shall not purchase or otherwise acquire directly or indirectly
any Preferred Shares of such series (except by conversion into or
exchange for capital stock of the Company ranking, junior to the
Preferred Shares of such series as to dividends and upon liquidation).
If fewer than all of the outstanding Preferred Shares of any series
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 manner determined by the Company.
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 a
Preferred Share of any series to be redeemed at the address shown on the
stock transfer books of the Company. Each notice shall state: (i) the
redemption date; (ii) the number of shares and series of the Preferred
Shares to be redeemed; (iii) the redemption price; (iv) the place or
places where certificates for such Preferred Shares are to be
surrendered for payment of the redemption price; (v) that dividends on
the shares to be redeemed will cease to accrue on such redemption date;
and (vi) the date upon which the holder's conversion rights, if any, as
to such shares shall terminate. If fewer than all the Preferred Shares
of any series are to be redeemed, the notice mailed to each such
holder thereof shall also specify the number of Preferred Shares to be
redeemed from each such holder. If notice of redemption of any
Preferred Shares 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 any of the Preferred Shares so called for redemption,
then from and after the redemption date dividends will cease to accrue
on such Preferred Shares, and all rights of the holders of such shares
will terminate, except the right to receive the redemption price.
LIQUIDATION PREFERENCE
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 Shares or any
other class or series of capital stock of the Company ranking junior to
the Preferred Shares in the distribution of assets upon any liquidation,
dissolution or winding up of the Company, the holders of each series of
Preferred Shares shall be entitled to receive out of assets of the
Company legally available for distribution to shareholders liquidating
distributions in the amount of the liquidation preference per share (set
forth in the applicable Prospectus Supplement), plus an amount equal to
all dividends accrued and unpaid thereon (which shall not include any
accumulation in respect of unpaid dividends for prior dividend periods
if such Preferred Shares do not have a cumulative dividend). After
payment of the full amount of the liquidating distributions to which
they are entitled, the holders of Preferred Shares 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 liquidating distributions on all outstanding Preferred
Shares 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 Preferred Shares in the distribution of assets, then the
holders of the Preferred Shares and all other such classes or series of
capital 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.
If liquidating distributions shall have been made in full to all
holders of Preferred Shares, the remaining assets of the Company shall
be distributed among the holders of any other classes or series of
capital stock ranking junior to the Preferred Shares upon liquidation,
dissolution or winding up, according to their respective rights and
preferences and in each case according to their respective number of
shares. For such purposes, the consolidation or merger of the Company
with or into any other trust or corporation, 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 Company.
VOTING RIGHTS
Holders of the Preferred Shares will not have any voting rights,
except as set forth below or as otherwise from time to time required by
law or as indicated in the applicable Prospectus Supplement.
Whenever dividends on any Preferred Shares shall be in arrears for
six consecutive quarterly periods, the holders of such Preferred Shares
(voting separately as a class with all other series of preferred shares
upon which like voting rights have been conferred and are exercisable)
will be entitled to vote for the election of two additional trustees of
the Company at the next annual meeting of shareholders and at each
subsequent meeting until (i) if such series of Preferred Shares has a
cumulative dividend, all dividends accumulated on such Preferred Shares
for the past dividend periods and the then current dividend period shall
have been fully paid or declared and a sum sufficient for the payment
thereof set aside for payment or (ii) if such series of Preferred Shares
does not have a cumulative dividend, four consecutive quarterly
dividends shall have been fully paid or declared and a sum sufficient
for the payment thereof set aside for payment. In such case, the entire
Board of Trustees of the Company will be increased by two trustees.
Unless provided otherwise for any series of Preferred Shares, so
long as any Preferred Shares remain outstanding, the Company shall not,
without the affirmative vote or consent of the holders of a majority of
the shares of each series of Preferred Shares outstanding at the time,
given in person or by proxy, either in writing or at a meeting (such
series voting separately as a class), (i) authorize or create, or
increase the authorized or issued amount of, any class or series of
capital stock ranking prior to such series of Preferred Shares with
respect to payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up, or reclassify any authorized
capital stock of the Company into any such shares, or create, authorize
or issue any obligation or security convertible into or evidencing the
right to purchase any such shares; or (ii) amend, alter or repeal the
provisions of the Company's Declaration of Trust or the certificate of
designations for such series of Preferred Shares, whether by merger,
consolidation or otherwise, so as to materially and adversely affect any
right, preference, privilege or voting power of such series of Preferred
Shares or the holders thereof; provided, however, that any increase in
the amount of the authorized preferred shares or the creation or
issuance of any other series of preferred shares, or any increase in the
amount of authorized shares of such series or any other series of
Preferred Shares, in each case ranking on a parity with or junior to the
Preferred Shares of such series with respect to payment of dividends or
the distribution of assets upon liquidation, dissolution or winding up,
shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to
the time when the act with respect to which such vote would otherwise be
required shall be effected, all outstanding shares of such series of
Preferred Shares shall have been redeemed or called for redemption and
sufficient funds shall have been deposited in trust to effect such
redemption.
Under Maryland law, holders of each series of Preferred Shares will
be entitled to vote as a class upon a proposed amendment to the
Declaration of Trust, whether or not entitled to vote thereon by the
Declaration of Trust, if the amendment would increase or decrease the
aggregate number of authorized shares of such series, increase or
decrease the par value of the shares of such series, or alter or change
the powers, preferences or special rights of the shares of such series
so as to affect them adversely.
CONVERSION RIGHTS
The terms and conditions, if any, upon which shares of any series
of Preferred Shares are convertible into Common Shares will be set forth
in the applicable Prospectus Supplement relating thereto. Such terms
will include the number of Common Shares into which the Preferred Share
is convertible, the conversion price (or manner of calculation thereof),
the conversion period, provisions as to whether conversion will be at
the option of the holders of the Preferred Shares or the Company, the
events requiring an adjustment of the conversion price and provisions
affecting conversion in the event of the redemption such Preferred
Shares.
LIMITATION OF LIABILITY; SHAREHOLDER LIABILITY
Maryland law permits a REIT to provide, and the Declaration
provides, that no Trustee, officer, shareholder, employee or agent of
the Company shall be held to any personal liability, jointly or
severally, for any obligation of or claim against the Company, and that,
as far as practicable, each written agreement of the Company is to
contain a provision to that effect. Despite these facts counsel has
advised the Company that in some jurisdictions the possibility exists
that shareholders of a non-corporate entity such as the Company may be
held liable for acts or obligations of the Company. Counsel has advised
the Company that the State of Texas may not give effect to the
limitation of shareholder liability afforded by Maryland law, but that
Texas law would likely recognize contractual limitations of liability
such as those discussed above. The Company intends to conduct its
business in a manner designed to minimize potential shareholder
liability by, among other things, inserting appropriate provisions in
written agreements of the Company; however, no assurance can be given
that shareholders can avoid liability in all instances in all
jurisdictions.
The Declaration provides that, upon payment by a shareholder of any
such liability, the shareholder will be entitled to indemnification by
the Company. There can be no assurance that, at the time any such
liability arises, there will be assets of the Company sufficient to
satisfy the Company's indemnification obligation. The Trustees intend
to conduct the operations of the Company, with the advice of counsel, in
such a way as to minimize or avoid, as far as practicable, the ultimate
liability of the shareholders of the Company. The Trustees do not
intend to provide insurance covering such risks to the shareholders.
REDEMPTION AND BUSINESS COMBINATIONS
For the Company to qualify as a REIT under the Code, in any taxable
year, not more than 50% in value of its outstanding Shares may be owned,
directly or indirectly, by five or fewer individuals during the last six
months of such year, and the Shares must be owned by 100 or more persons
during at least 335 days of a taxable year or a proportionate part of a
taxable year less than 12 months. In order to meet these and other
requirements, the Trustees have the power to redeem or prohibit the
transfer of a sufficient number of Shares to maintain or bring the
ownership of the Shares into conformity with such requirements. In
connection with the foregoing, if the Trustees shall, at any time and in
good faith, be of the opinion that direct or indirect ownership of
Shares representing more than 8.5% in value of the total Shares
outstanding (the "Excess Shares") has or may become concentrated in the
hands of one beneficial owner, other than "Excepted Persons" (as defined
in the Declaration), the Trustees shall have the power (i) to purchase
from any shareholder of the Company such Excess Shares, and (ii) to
refuse to transfer or issue Shares to any person whose acquisition of
such Shares would, in the opinion of the Trustees, result in the direct
or indirect beneficial ownership by any person of Shares representing
more than 8.5% in value of the outstanding Shares. Any transfer of
Shares, options, or other securities convertible into Shares that would
create a beneficial owner (other than any of the Excepted Persons) of
Shares representing more than 8.5% in value of the total shares
outstanding shall be deemed void ab initio and the intended transferee
shall be deemed never to have had an interest therein. Further, the
Declaration provides that transfers or purported acquisitions, directly,
indirectly or by attribution, of Shares, or securities convertible into
Shares, that could result in disqualification of the Company as a REIT
are null and void and permits the Trustees to repurchase Shares or other
securities to the extent necessary to maintain the Company's status as a
REIT. The purchase price for any Shares so purchased shall be
determined by the price of the Shares on the principal exchange on which
they are then traded, or, if no such price is available, then the
purchase price shall be equal to the net asset value of such Shares as
determined by the Trustees in accordance with applicable law. From and
after the date fixed for purchase by the Trustees, and so long as
payment of the purchase price for the Shares to be so redeemed shall
have been made or duly provided for, the holder of any Excess 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 Declaration also requires that "Business Combinations" (as
defined therein) between the Company and a beneficial holder of 10% or
more of the outstanding Shares be approved by the affirmative vote of the
holders of at least 75% of the Shares unless: (1) the Trustees by
unanimous vote or written consent shall have expressly approved in
advance the acquisition of the outstanding Shares that caused the
Related Person (as defined in the Declaration) to become a Related
Person or shall have approved the Business Combination prior to the
Related Person involved in the Business Combination having become a
Related Person; or (2) the Business Combination is solely between the
Company and a 100% owned affiliate of the Company.
Under the Declaration the number of Trustees may be fixed from time
to time by two-thirds of the Trustees or by amendment of the Declaration
by the shareholders of the Company, with a minimum of three and a
maximum of 12 Trustees, a majority of whom must be Independent Trustees.
The Declaration fixes the current number of Trustees of the Company at
five and divides the Trustees into three groups. Trustees in each group
are elected to three-year terms. As the Trustees' terms expire,
replacements are elected by a majority of the outstanding Shares. The
classified nature of the Trustees may make it more difficult for the
shareholders to remove the management of the Company than if all
Trustees were elected on an annual basis. Vacancies may be filled by a
majority of the remaining Trustees, except that a vacancy among the
Independent Trustees must be filled by a majority of the remaining
Independent Trustees or by majority vote of the Company's shareholders.
Any Trustee may be removed for cause by all the remaining Trustees, or
with or without cause by vote of two-thirds of the Shares then
outstanding and entitled to vote thereon.
The provisions regarding business combinations and the classified
nature of the Trustees and certain other matters may not be repealed or
amended without the affirmative vote of at least 75% of the shareholders
of the Company, provided that the Trustees, by two-thirds vote, may,
without the approval or consent of the shareholders adopt any amendment
that they in good faith determine to be necessary to permit the Company
to qualify as a REIT under the Code.
The foregoing provisions may have the effect of discouraging
unilateral tender offers or other takeover proposals which certain
shareholders might deem in their interests or pursuant to which they
might receive a substantial premium for their Shares. The provisions
could also have the effect of insulating current management against the
possibility of removal and could, by possibly reducing temporary
fluctuations in market price caused by accumulations of shares, deprive
shareholders of opportunities to sell at a temporarily higher market
price. However, the Trustees believe that inclusion of the business
combination provisions in the Declaration may help assure fair treatment
of shareholders and preserve the assets of the Company.
CONTROL SHARE ACQUISITION
Maryland law provides for a limitation of voting rights in a
"control share acquisition". The Maryland statute defines a "control
share acquisition" at the 20%, 33-1/3% and 50% acquisition levels, and
requires a two-thirds vote (excluding shares owned by the acquiring
person and certain members of management) to accord voting rights to
stock acquired in a control share acquisition. The statute would
require the target to hold a special meeting at the request of an actual
or proposed control share acquiror subject to compliance with certain
conditions by such acquiror. In addition, unless the charter,
declaration of trust or by-laws provide otherwise, the statute gives the
Company, within certain time limitations, various redemption rights if
there is a stockholder vote on the issue and the grant of voting rights
is not approved, or if an "acquiring person statement" is not delivered
to the target within 10 days following a control share acquisition.
Moreover, unless the charter, declaration of trust or by-laws
provide otherwise, the statute provides that if, before a control share
acquisition occurs, voting rights are accorded to control shares which
result in the acquiring person having majority voting power, then
minority stockholders have appraisal rights. An acquisition of shares
may be exempted from the control share statute provided that a charter,
declaration of trust or by-law provision is adopted for such purpose
prior to the control share acquisition. There are no such provisions in
the Declaration or by-laws of the Company.
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue Common Share Warrants for the purchase of
Common Shares. Common Share Warrants may be issued independently or
together with any other Offered Securities offered by any Prospectus
Supplement and may be attached to or separate from such Offered
Securities. Each series of Common Share Warrants will be issued under a
separate warrant agreement (each, a "Warrant Agreement") to be entered
into between the Company and a warrant agent specified in the applicable
Prospectus Supplement (the "Warrant Agent"). The Warrant Agent will act
solely as an agent of the Company in connection with the Common Share
Warrants of such series and will not assume any obligation or
relationship of agency or trust for or with any holders or beneficial
owners of Common Share Warrants. The following sets forth certain
general terms and provisions of the Common Share Warrants offered
hereby. Further terms of the Common Share Warrants and the applicable
Warrant Agreements will be set forth in the applicable Prospectus
Supplement.
The applicable Prospectus Supplement will describe the terms of the
Common Share Warrants in respect of which this Prospectus is being
delivered, including, where applicable, the following:
(1) the title of such Common Share Warrants;
(2) the aggregate number of such Common Share Warrants;
(3) the price or prices at which such Common Share Warrants will
be issued;
(4) the designation, number and terms of Common Shares purchasable
upon exercise of such Common Share Warrants;
(5) the designation and terms of the other Offered Securities with
which such Common Share Warrants are issued and the number of
such Common Share Warrants issued with each such Offered
Security;
(6) the date, if any, on and after which such Common Share
Warrants and the related Common Shares will be separately
transferable;
(7) the price at which each Common Share purchaseable upon
exercise of such Common Share Warrants may be purchased;
(8) the date on which the right to exercise such Common Share
Warrants shall commence and the date on which such right shall
expire;
(9) the minimum or maximum amount of such Common Share Warrants
which may be exercised at any one time;
(10) information with respect to book-entry procedures, if any;
(11) a discussion of certain federal income tax considerations; and
(12) any other terms of such Common Share Warrants, including
terms, procedures and limitations relating to the exchange and
exercise of such Common Share Warrants.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for the years
ended December 31, 1989, 1990, 1991, 1992 and 1993 was 1.8x, 2.4x, 2.8x,
3.6x, and 6.8x, respectively. To date, the Company has not issued any
preferred shares; therefore, the ratios of earnings to combined fixed
charges and preferred share dividends are unchanged from the ratios
presented in this section.
For purposes of computing these ratios, earnings have been
calculated by adding fixed charges (excluding capitalized interest) to
income (loss) before income taxes and extraordinary items. Fixed
charges consist of interest costs, whether expensed or capitalized, the
interest component of rental expense, and amortization of debt discounts
and issue costs, whether expensed or capitalized.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities to one or more
underwriters for public offering and sale by them or may sell the
Offered Securities to investors directly or through agents. Any such
underwriter or agent involved in the offer and sale of the Offered
Securities will be named in the applicable Prospectus Supplement.
Underwriters may offer and sell the Offered Securities at a fixed
price or prices, which may be changed, at prices related to the
prevailing market prices at the time of sale or at negotiated prices.
The Company also may offer and sell the Offered Securities in exchange
for one or more of its then outstanding issues of debt or convertible
debt securities. The Company also may, from time to time, authorize
underwriters acting as the Company's agents to offer and sell the
Offered Securities upon the terms and conditions as are set forth in the
applicable Prospectus Supplement. In connection with the sale of
Offered Securities, underwriters may be deemed to have received
compensation from the Company in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of Offered
Securities for whom they may act as agent. Underwriters may sell
Offered Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, 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 Offered Securities, and any
discounts, concessions or commissions allowed by underwriters to
participating dealers, are set forth in the applicable Prospectus
Supplement. Underwriters, dealers and agents participating in the
distribution of the Offered 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 Offered Securities may be deemed to be
underwriting discounts and commissions, under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements
entered into with the Company, to indemnification against and
contribution toward certain civil liabilities, including liabilities
under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the
Company will authorize dealers acting as the Company's agents to solicit
offers by certain institutions to purchase Offered Securities from the
Company at the public offering price set forth in such 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 Offered Securities sold
pursuant to Contracts shall be not less than, and the aggregate
principal amount of Offered Securities sold pursuant to Contracts shall
not be 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 shall not be
subject to any conditions except (i) the purchase by an institution of
the Offered Securities covered by its Contracts shall not at the time of
delivery be prohibited under the law of any jurisdiction in the United
States to which such institution is subject, and (ii) if the Offered
Securities are being sold to underwriters, the Company shall have sold
to such underwriters the total principal amount of the Offered
Securities less the principal amount thereof covered by Contracts.
Certain of the underwriters and their affiliates may be customers
of, engage in transactions with and perform services for the Company and
its subsidiaries in the ordinary course of business.
LEGAL MATTERS
Certain legal matters with respect to the Shares offered by the
Company will be passed upon for the Company by Sullivan & Worcester,
Boston, Massachusetts and for any underwriters, dealers or agents by
counsel named in the applicable Prospectus Supplement. Sullivan &
Worcester and such counsel will rely, as to all matters of Maryland law,
upon the opinion of Piper & Marbury, Baltimore, Maryland. Barry M.
Portnoy, a partner in the firm of Sullivan & Worcester, is a Trustee of
the Company, a director and 50% shareholder of each of HRPT Advisors,
Inc., the Company's investment advisor (the "Advisor"), Connecticut
Subacute Corporation ("CSC"), and Connecticut Subacute Corporation II
("CSCII") and a director of Horizon. Sullivan & Worcester represents
the Advisor, CSC, CSCII and certain affiliates of each of the foregoing
on various matters. CSC, CSCII and Horizon are tenants of the Company.
EXPERTS
The financial statements of the Company appearing in the Company's
Annual Report (Form 10-K) for the year ended December 31, 1993; the
consolidated financial statements of Greenery appearing in the Greenery
Annual Report (Form 10-K) for the year ended September 30, 1993; and the
consolidated financial statements of GranCare appearing in the GranCare
Annual Report (Form 10-K) for the year ended December 31, 1993, have
been audited by Ernst & Young, independent auditors, as set forth in
their reports thereon included therein and incorporated herein by
reference. Such financial statements are incorporated herein by
reference in reliance upon such reports given upon the authority of such
firm as experts in accounting and auditing.
The audited consolidated financial statements and schedules of
Horizon incorporated by reference in this Prospectus and elsewhere in
the registration statement to the extent and for the periods indicated
in their reports, have been audited by Arthur Andersen & Co. and KPMG
Peat Marwick, independent public accountants, and are included herein in
reliance upon the authority of said firms as experts in giving said
reports.
The consolidated financial statements and schedules of Marriott
incorporated by reference in this Prospectus and elsewhere in the
registration statement have been audited by Arthur Andersen & Co.,
independent public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority
of said firm as experts in giving said reports. Reference is made to
said report, which includes an explanatory paragraph with respect to the
change in the method of accounting for income taxes as discussed in
"Income Taxes" in the notes to the consolidated financial statements.
THE DECLARATION OF TRUST ESTABLISHING THE COMPANY, DATED OCTOBER 9,
1986, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED IN THE OFFICE OF THE DEPARTMENT OF
ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE
NAME "HEALTH AND REHABILITATION PROPERTIES TRUST" REFERS TO THE TRUSTEES
UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR
PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT
OF THE COMPANY SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR
SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE COMPANY. ALL
PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL LOOK ONLY TO THE
ASSETS OF THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF
ANY OBLIGATION.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
Set forth below is an estimate of the amount of fees and expenses
to be incurred in connection with the issuance and distribution of the
Offered Securities registered hereby, other than underwriting discounts
and commissions.
<TABLE>
<CAPTION>
<S> <C>
Registration Fee Under Securities Act . $118,967
Blue Sky Fees and Expenses . . . . . .
Legal Fees . . . . . . . . . . . . . .
Accounting Fees . . . . . . . . . . . .
Printing and Engraving . . . . . . . .
Rating Agencies Fees . . . . . . . . .
Trustee Fees (including counsel fees) .
Miscellaneous Fees . . . . . . . . . .
Total . . . . . . . . . . . . . . . $
</TABLE>
---------------
* All expenses are estimated except the SEC registration fee.
ITEM 15. INDEMNIFICATION OF TRUSTEES AND OFFICERS.
Section 7.4 of the Company's Declaration of Trust, filed as Exhibit
3.1 to this Registration Statement, which provides for indemnification
of Trustees and officers of the Company, is hereby incorporated by
reference.
Reference is made to Section 7 of the Underwriting Agreements
(Exhibits 1.1 and 1.2 hereto) with respect to certain provisions for
indemnification by the Underwriters of the Company, Trustees, officers
and controlling persons under certain circumstances.
ITEM 16. EXHIBITS.
1.1 - Underwriting Agreement for Debt Securities(1)
1.2 - Underwriting Agreement for Equity Securities(1)
4.1 - Indenture, to be dated as of ___________, 1994*
4.2 - Form of Debt Security*
4.3 - Form of Common Shares Warrant Agreement(1)
4.4 - Form of certificate of designations for the Preferred
Shares(1)
4.5 - Form of Preferred Shares Certificate(1)
5.1 - Opinion of Sullivan & Worcester*
5.2 - Opinion of Piper & Marbury*
8 - Opinion of Sullivan & Worcester re: tax matters*
12 - Calculation of Ratios of Earnings to Fixed Charges*
23.1 - Consent of Ernst & Young
23.2 - Consents of Arthur Andersen & Co.
23.3 - Consent of KPMG Peat Marwick
23.4 - Consent of Sullivan & Worcester (included in Exhibits 5.1
and 8)
23.5 - Consent of Piper & Marbury (included in Exhibit 5.2)
25 - Statement of Eligibility of Trustee on Form T-1 (to be
filed under separate cover)
_____________
(1) To be filed by amendment or incorporated by reference in connection
with the offering of Offered Securities.
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this registration
statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this
registration statement or any material change to such
information in this registration statement;
provided, however, that subparagraphs (i) and (ii) do not apply if
the information required to be included in a post-effective
amendment by those paragraphs is contained in the periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of
the Securities and Exchange Act of 1934 that are incorporated by
reference in this registration statement.
(2) That for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
Securities offered herein, and the offering of such Securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the Securities being registered which remain
unsold at the termination of the offering.
The undersigned Registrant hereby further undertakes that, for the
purposes of determining any liability under the Securities Act of 1933,
each filing of the Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange of 1934 that is incorporated
by reference in this registration statement shall be deemed to be a new
registration statement relating to the Securities offered herein, and
the offering of such Securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the provisions
described under Item 15 of this registration statement, or otherwise
(other than insurance), the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in such Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding)
is asserted by such trustee, officer or controlling person in connection
with the Securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is public policy as expressed in such
Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly
caused this to registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston,
Commonwealth of Massachusetts on April 18, 1994.
HEALTH AND REHABILITATION PROPERTIES TRUST
BY: DAVID J. HEGARTY
DAVID J. HEGARTY,
EXECUTIVE VICE PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
____MARK J. FINKELSTEIN_________ President and Chief April 18, 1994
Mark J. Finkelstein Executive Officer
____DAVID J. HEGARTY____________ Executive Vice President April 18, 1994
David J. Hegarty and Chief Financial and
Accounting Officer
___JOHN L. HARRINGTON___________ Trustee April 9, 1994
John L. Harrington
___ARTHUR G. KOUMANTZELIS______ Trustee April 18, 1994
Arthur G. Koumantzelis
___REV. JUSTINIAN MANNING, C.P.__ Trustee April 18, 1994
Rev. Justinian Manning, C.P.
____BARRY M. PORTNOY__________ Trustee April 18, 1994
Barry M. Portnoy
____GERARD M. MARTIN___________ Trustee April 18, 1994
Gerard M. Martin
</TABLE>
POWER OF ATTORNEY
The undersigned Officers and Trustees of Health and Rehabilitation
Properties Trust hereby severally constitute Mark J. Finkelstein, David
J. Hegarty, Gerard M. Martin and Barry M. Portnoy, and each of them, to
sign for us and in our names in the capacities indicated below, the
Registration Statement on Form S-3 herewith filed with the Securities
and Exchange Commission, and any and all amendments thereto, hereby
ratifying and confirming our signatures as they may be signed by our
said attorneys to the Registration Statement and any and all amendments
to the Registration Statement.
Witness our hands and seals on the dates set forth below.
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
____MARK J. FINKELSTEIN________ President and Chief April 18, 1994
Mark J. Finkelstein Executive Officer
____DAVID J. HEGARTY___________ Executive Vice President April 18, 1994
David J. Hegarty and Chief Financial
and Accounting Officer
___JOHN L. HARRINGTON__________ Trustee April 9, 1994
John L. Harrington
___ARTHUR G. KOUMANTZELIS______ Trustee April 18, 1994
Arthur G. Koumantzelis
___REV. JUSTINIAN MANNING, C.P.__ Trustee April 18, 1994
Rev. Justinian Manning, C.P.
____BARRY M. PORTNOY__________ Trustee April 18, 1994
Barry M. Portnoy
____GERARD M. MARTIN___________ Trustee April 18, 1994
Gerard M. Martin
</TABLE>
CONSENT OF ERNST & YOUNG, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" in the Registration Statement (Form S-3) and related
Prospectus of Health and Rehabilitation Properties Trust for the
registration of $345,000,000 of debt securities, preferred shares
of beneficial interest, common shares of beneficial interest and
common share warrants and to the incorporation by reference
therein of (a) our report dated February 11, 1994 with respect to
the financial statements and schedules of Health and
Rehabilitation Properties Trust included in its Annual Report
(Form 10-K) for the year ended December 31, 1993, (b) our report
dated December 30, 1993 with respect to the consolidated
financial statements and schedules of Greenery Rehabilitation
Group, Inc. included in Greenery's Annual Report (Form 10-K) for
the year ended September 30, 1993, and (c) our report dated March
4, 1994 with respect to the consolidated financial statements and
schedules of GranCare, Inc. including in GranCare's Annual Report
(Form 10-K) for the year ended December 31, 1993, all filed with
the Securities and Exchange Commission.
Ernst & Young
Boston, Massachusetts
April 15, 1994
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our
report dated July 23, 1993 (except with respect to the matters
discussed in Note 15, as to which the date is August 2, 1993),
included in Horizon Healthcare Corporation's Form 10-K/A-
Amendment No. 3 for the year ended May 31, 1993, dated October 5,
1993, and to all references to our Firm included in this
registration statement.
Arthur Andersen & Co.
Albuquerque, New Mexico
April 15, 1994
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement (filed
April 18, 1994) of our report dated January 28, 1994 included in
the Marriott International, Inc. Form 10-K for the year ended
December 31, 1993 and to all references to our Firm included in
this registration statement.
Arthur Andersen & Co.
Washington, D.C.
April 15, 1994
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Stockholders
Horizon Healthcare Corporation
We consent to the use of our report incorporated herein by
reference and to the reference to our firm under the heading
"Experts" in the prospectus.
KPMG Peat Marwick
Albuquerque, New Mexico
April 15, 1994
