As filed with the Securities and Exchange Commission on May 28,1997
Registration No. 333-26887
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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HEALTH AND RETIREMENT PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
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Maryland 04-6558834
(State or other jurisdiction of (I.R.S. Employer
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)
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David J. Hegarty, President
Health and Retirement Properties Trust
400 Centre Street
Newton, Massachusetts 02158
(617) 332-3990
(Name, address, including zip code, telephone number,
including area code, of agent for service)
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Copy to:
Alexander A. Notopoulos, Jr., Esq.
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
(617) 338-2800
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Approximate date of commencement of proposed sale to the public: From
time to time or at one time after the effective date of the Registration
Statement as determined by the Registrant. 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, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_| _____________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_| _____________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
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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.
THE PROSPECTUS CONTAINED HEREIN IS A COMBINED PROSPECTUS PURSUANT TO RULE 429(A)
OF THE RULES AND REGULATIONS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, WHICH
ALSO RELATES TO $129,903,125 IN DEBT SECURITIES, COMMON SHARES, PREFERRED
SHARES, DEPOSITORY SHARES AND WARRANTS INCLUDED IN THE COMPANY'S REGISTRATION
STATEMENT ON FORM S-3 (FILE NO. 333-02863).
<PAGE>
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 May __, 1997
PROSPECTUS
$1,000,000,000
Health and Retirement Properties Trust
Debt Securities, Preferred Shares of Beneficial Interest, Depositary Shares,
Common Shares of Beneficial Interest and Warrants
----------------------
Health and Retirement 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) fractional shares of the
Preferred Shares (the "Depositary Shares"), (iv) its common shares of beneficial
interest, par value $.01 per share (the "Common Shares"), or (v) warrants to
purchase any of the above securities (the "Warrants"), with an aggregate public
offering price of up to $1,000,000,000 on terms to be determined at the time of
offering. The Debt Securities, Preferred Shares, Depositary Shares, Common
Shares and 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, Depositary Shares or Common Shares, terms
for subordination to other indebtedness of the Company, any original issue
discount 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 Depositary Shares, the fractional shares of
Preferred Shares represented by each Depositary Share, (iv) in the case of
Common Shares, any offering price; and (v) in the case of Warrants, the
securities to which they relate, duration, offering price, exercise price and
detachability.
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.
----------------------
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 COM-
MISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------
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 an accompanying Prospectus
Supplement. See "Plan of Distribution." No Offered Securities may be sold
without delivery of a Prospectus Supplement describing the method and terms of
the offering of such Offered Securities.
----------------------
The date of this Prospectus is ______________, 1997.
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus in connection with the offer contained in this Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Company or any underwriters, agents or dealers.
This Prospectus does not constitute an offer to sell or solicitation of an offer
to buy securities in any jurisdiction to any person to whom it is unlawful to
make such offer or solicitation. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create an implication that
there has been no change in the affairs of the Company and its subsidiaries
since the date hereof or the information contained or incorporated by reference
herein is correct at any time subsequent to the date hereof.
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 documents 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 copies obtained 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. The
Commission maintains a World Wide Web site that contains reports, proxy and
information statements and other information regarding registrants, including
the Company, that file electronically with the Commission. The address of the
site is http://www.sec.gov. The Company's Common Shares are traded on the New
York Stock Exchange ("NYSE") under the symbol "HRP," and similar information
concerning the Company may be inspected at the office of the NYSE at 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, 1996 (the "Annual Report"), (ii) the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997,
(iii) the information in Item 5, Other Events, under the caption "Legal
Proceedings" contained in the Company's Current Report on Form 8-K dated
February 13, 1997, (iv) the Company's Current Reports on Form 8-K dated February
17, 1997 and March 14, 1997, (v) the consolidated financial statements of
Marriott International, Inc. ("MII"), at and for the fiscal year ended January
3, 1997, as contained in MII's Annual Report on Form 10-K for the year ended
(ii)
<PAGE>
January 3, 1997 (Commission File No. 1-12188), and (vi) the description of the
Company's Common Shares contained in the Company's Registration Statement on
Form 8-A dated November 8, 1986, as amended by Form 8 dated July 30,
1991. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act (i) subsequent to the date of this Prospectus and
prior to the termination of the offering of the Offered Securities and (ii)
subsequent to the date of the first pre-effective amendment to the registration
statement of which this Prospectus forms a part and prior to effectiveness of
such registration statement 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 Supplement), or in any 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 hereby undertakes to 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.
(iii)
<PAGE>
THE COMPANY
The Company is a real estate investment trust ("REIT") which invests
primarily in retirement communities, assisted living centers, long-term care
facilities and other income producing healthcare related real estate and in
office buildings leased to various agencies of the United States government. At
May 1, 1997, the Company had investments totaling (at cost) over $1.7 billion,
of which approximately 68% represented healthcare related properties, 26%
represented U.S. Government-leased office buildings and 6% represented an equity
investment in Hospitality Properties Trust ("HPT"), a New York Stock
Exchange-listed REIT founded by the Company which invests in hotels. The
Company's investments on such date were in over 200 properties located in 32
states. Additionally, on May 1, 1997, HPT owned and leased an aggregate of 92
hotels located in 29 states.
The Company is organized as a Maryland real estate investment trust. The
Company's principal place of business is 400 Centre Street, Newton,
Massachusetts 02158 and its telephone number is (617) 332-3990.
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 business purposes, which may include the acquisition of, or other
investments in, retirement communities, assisted living centers, long-term care
facilities or other health care related properties or government-leased or other
office buildings and the repayment of indebtedness outstanding at such time or
the reduction of amounts outstanding under the Company's credit facilities.
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.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges for the periods indicated:
<TABLE>
<CAPTION>
For the year ended December 31,
For the quarter ended ---------------------------------------------------------
March 31, 1997 1996 1995 1994 1993 1992
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges 3.4x 4.3x 3.4x 6.7x 6.8x 3.6x
</TABLE>
The ratios of earnings to fixed charges presented above were computed by
dividing the Company's earnings by fixed charges. For this purpose, earnings
have been calculated by adding fixed charges to income before income taxes,
extraordinary items and gain or loss on the disposition of real property. Fixed
charges consist of interest costs, whether expensed or capitalized, the interest
component of rental expense, if any, amortization of debt discounts and deferred
financing costs, whether expensed or capitalized. To date, the Company has not
issued any Preferred Shares; therefore, the ratio of earnings to combined fixed
charges and Preferred Shares distributions are the same as the ratios of
earnings to fixed charges presented above.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under one or more indentures (an
"Indenture") between the Company and a trustee (an "Indenture Trustee"). Any
Indenture will be subject to, and governed by, the Trust Indenture Act of 1939,
as amended (the "TIA"). The statements made hereunder relating to any Indentures
and the Debt Securities to be issued thereunder are summaries of certain
anticipated 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
Indentures and such Debt Securities.
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General
The Company has filed with its Registration Statement with respect to the
Offered Securities a form of Indenture (as supplemented from time to time, the
"Senior Indenture") relating to the Senior Securities (as defined) and a form of
Indenture (as supplemented from time to time, the "Subordinated Indenture")
relating to the Subordinated Securities (as defined). The Debt Securities will
be direct, unsecured obligations of the Company and, if issued under the Senior
Indenture, will rank equally and ratably with other unsecured and unsubordinated
indebtedness of the Company (the "Senior Securities"), or, if issued under the
Subordinated Indenture, will be subordinated in right of payment to the prior
payment in full of Senior Indebtedness (as defined in the applicable Prospectus
Supplement) ("Subordinated Securities"). See "--Subordination". 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 (the
"Trustees") or as established in one or more indentures supplemental to any
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.
It is anticipated that any Indenture will provide that the Company may, but
need not, designate more than one Indenture Trustee thereunder, each with
respect to one or more series of Debt Securities. Any Indenture Trustee under
any Indenture may resign or be removed with respect to one or more series of
Debt Securities, and a successor Indenture Trustee may be appointed to act with
respect to such series. In the event that two or more persons are acting as
Indenture Trustee with respect to different series of Debt Securities, each such
Indenture Trustee shall be a trustee of a trust under the applicable Indenture
separate and apart from the trust administered by any other Indenture Trustee,
and, except as otherwise indicated herein, any action described herein to be
taken by the Indenture Trustee may be taken by each such Indenture Trustee with
respect to, and only with respect to, the one or more series of Debt Securities
for which it is Indenture Trustee under the applicable Indenture.
Reference is made to the Prospectus Supplement relating to the series of
Debt Securities being offered for the specific terms thereof, including, where
applicable, the following:
(1) the title of such Debt Securities and whether such Debt Securities are
Senior Securities or Subordinated 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,
or the method by which any such portion shall be determined;
(4) if convertible, the terms on which such Debt Securities are
convertible, including the initial conversion price or rate and the
conversion period and any applicable limitations on the ownership or
transferability of the securities 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 interest will accrue, the dates on which any such
interest will be payable, the record dates for such interest payment
dates, or the method by which any such date 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 months consisting of 30 days each;
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<PAGE>
(8) the place or places where the principal of, any premium and interest
on, and any additional amounts payable in respect of 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 applicable 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 purchase
such Debt Securities pursuant to any sinking fund or analogous
provision 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) if the principal of or premium, if any, or interest on such Debt
Securities is to be payable, at the election of the Company or a
holder thereof, in one or more currencies or currency units other than
that or those in which such Debt Securities are stated to be payable,
the currency, currencies or currency units in which payment of the
principal of and premium, if any, and interest on Debt Securities of
such series as to which such election is made shall be payable, and
the periods within which and the terms and conditions upon which such
election is to be made;
(13) 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;
(14) the events of default or covenants of such Debt Securities, to the
extent different from or in addition to those described herein, and
any provisions granting special rights to the holders of such Debt
Securities upon the occurrence of events specified in such Prospectus
Supplement;
(15) whether such Debt Securities will be issued in certificated and/or
book-entry form;
(16) 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;
(17) whether any of such Debt Securities are to be issuable in permanent
global form (a "Global Security") and, if so, the terms and
conditions, if any, upon which interests in such Debt Securities in
global form may be exchanged, in whole or in part, for the individual
Debt Securities represented thereby;
(18) the applicability, if any, of the defeasance and covenant defeasance
provisions described herein or any modification thereof;
(19) 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;
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<PAGE>
(20) whether and under what circumstances the Company will pay additional
amounts 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.
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"). If material or applicable, special U.S.
federal income tax, accounting and other considerations applicable to Original
Issue Discount Securities will be described in the applicable Prospectus
Supplement.
Except as described under "--Merger, Consolidation or Sale" or as may be
set forth in any Prospectus Supplement, an Indenture will not contain any other
provisions that would limit the ability of the Company to incur indebtedness or
that would afford holders of the Debt Securities protection in the event of a
highly leveraged or similar transaction involving the Company. However,
restrictions on ownership and transfers of the Company's capital stock, designed
to preserve its status as a REIT, may act to prevent or hinder a change of
control. See "Redemption; Business Combinations and Control Share Acquisitions."
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 that are described below, including any addition of a
covenant or other provisions 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 which are registered securities, other than
registered securities issued in global form (which may be of any denomination),
shall be issuable in denominations of $1,000 and any integral multiple thereof.
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 Indenture Trustee,
initially at the address which will be set forth in the applicable Prospectus
Supplement; 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 applicable register or by wire transfer of funds to such person
at an account maintained within the United States.
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
applicable Indenture 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 applicable 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 applicable Indenture
Trustee. 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 applicable Indenture Trustee. 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 Indenture Trustee or the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith. If the applicable Prospectus Supplement refers to any
transfer agent (in addition to the Indenture 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
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<PAGE>
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.
Neither the Company nor any Indenture 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 on (a) if such Debt Securities are issuable only as registered
securities, the day of the mailing of the relevant notice of redemption and (b)
if such Debt Securities are issuable as bearer securities, the day of the first
publication of the relevant notice of redemption or, if such Debt Securities are
also issuable as registered securities and there is no publication, the mailing
of the relevant notice of redemption, or (ii) to register the transfer of or
exchange any registered security so selected for redemption in whole or in part,
except, in the case of any registered security to be redeemed in part, the
portion thereof not to be redeemed, or (iii) to exchange any bearer security so
selected for redemption except that such a bearer security may be exchanged for
a registered security of that series and like tenor; provided that such
registered security shall be simultaneously surrendered for redemption, or (iv)
to 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.
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 entity;
provided that (i) either the Company shall be the continuing entity or the
successor entity (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 any
Indenture; (ii) 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 any 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 (iii) an officer's
certificate and legal opinion covering such conditions shall be delivered to the
Indenture Trustee.
Certain Covenants
Existence. Except as permitted under "--Merger, Consolidation or Sale," the
Company will be required to do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, rights
(charter 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.
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 (i) within 15 days
of each Required Filing Date (a) transmit by mail to all holders of Debt
Securities, as their names and addresses appear in the Company's security
register, without cost to such holders, copies of the annual reports and
quarterly reports 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 (b) file with the applicable Indenture
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 (ii) 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 of Debt Securities.
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Additional Covenants. Any additional or different covenants of the Company
with respect to any series of Debt Securities will be set forth in the
applicable Prospectus Supplement.
Events of Default, Notice and Waiver
Each Indenture will provide 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 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 payments as required for any Debt Security of such series; (d)
default in the performance of any other covenant of the Company contained in the
applicable Indenture (other than a covenant added to such Indenture solely for
the benefit of a series of Debt Securities issued thereunder other than such
series), such default having continued for 60 days after written notice as
provided in such Indenture; (e) default in the payment of an aggregate principal
amount exceeding a specified dollar amount 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 (as hereinafter defined) or any of their respective
property; and (g) any other event of default provided with respect to a
particular series of Debt Securities. 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 (other than an Event of Default described in clause
(f) above) under any Indenture with respect to Debt Securities of any series at
the time outstanding occurs and is continuing, then in every such case the
applicable Indenture 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 applicable Indenture Trustee if given by the holders).
If an Event of Default described in clause (f) above with respect to the Debt
Securities of any series at the time outstanding shall occur, the principal
amount of all the Debt Securities of that series (or, in the case of any such
Original Issue Discount Security or other Debt Security, such specified amount)
will automatically, and without any action by the Indenture Trustee or any
holder of such series of Debt Securities, become immediately due and payable.
However, at 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 applicable 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
applicable Indenture 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 applicable Indenture, as the case may be)
may rescind and annul such declaration and its consequences if (i) the Company
shall have deposited with the applicable Indenture 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 applicable
Indenture, as the case may be), plus certain fees, expenses, disbursements and
advances of the applicable Indenture Trustee, and (ii) all Events of Default,
other than the non-payment of accelerated principal (or specified portion
thereof), or premium, if any, or interest on the Debt Securities of such series
(or of all Debt Securities then outstanding under the applicable Indenture, as
the case may be) have been cured or waived as provided in the applicable
Indenture. Each of the Indentures will also provide 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 applicable
Indenture, as the case may be) may waive any past default with respect to such
series and its consequences, except a default (i) in the payment of the
principal of (or premium, if any) or interest on any Debt Security of such
series or (ii) in respect of a covenant or provision contained in the applicable
Indenture that cannot be modified or amended without the consent of the holder
of each outstanding Debt Security affected thereby.
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The Indenture Trustee will be required to give notice to the holders of
Debt Securities within 90 days of a default under the applicable Indenture
unless such default has been cured or waived; provided, however, that such
Indenture 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 specified responsible officers
of such Indenture Trustee consider such withholding to be in the interest of
such holders.
Each Indenture will provide 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
Indenture 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 such series, as well as an offer of reasonable indemnity. 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.
Subject to provisions in the applicable Indenture relating to its duties in
case of default, no Indenture Trustee will be under any obligation to exercise
any of its rights or powers under such Indenture at the request or direction of
any holders of any series of Debt Securities then outstanding under such
Indenture, unless such holders shall have offered to the Indenture Trustee
reasonable security or indemnity. 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 applicable 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 applicable Indenture Trustee, or of
exercising any trust or power conferred upon such Indenture Trustee. However, a
Indenture Trustee may refuse to follow any direction which is in conflict with
any law or the Indenture, which may involve such Indenture Trustee in personal
liability or which may be unduly prejudicial to the holders of Debt Securities
of such series not joining therein.
The Company will be required to deliver to each Indenture Trustee annually
a certificate, signed by one of several specified officers of the Company,
stating whether or not such officer has knowledge of any default under the
applicable Indenture and, if so, specifying each such default and the nature and
status thereof.
Modification of the Indenture
Modifications and amendments of an Indenture will be permitted to be made
only with the consent of the holders of not less than a majority in principal
amount of all outstanding Debt Securities or series of 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, (i) change the stated
maturity of the principal of, or any installment of interest (or premium, if
any) on any such Debt Security; (ii) 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; (iii) 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; (iv) impair the right to
institute suit for the enforcement of any payment on or with respect to any such
Debt Security; (v) 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 such
Indenture; or (vi) 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.
Each Indenture will provide that the holders of not less than a majority in
principal amount of a series of outstanding Debt Securities have the right to
waive compliance by the Company with certain covenants relating to such series
of Debt Securities in such Indenture.
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Modifications and amendments of an Indenture will be permitted to be made
by the Company and the applicable Indenture Trustee thereunder 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
such 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 such 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 uncertificated form;
provided that such action shall not adversely affect the interests of the
holders of the Debt Securities 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
provisions 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 Indenture Trustee or facilitate the
administration of the trusts under an Indenture by more than one Indenture
Trustee; (ix) to cure any ambiguity, defect or inconsistency in an 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
of the provisions of an 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.
Each Indenture will provide 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 in the
applicable 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.
Each Indenture will contain provisions for convening meetings of the
holders of Debt Securities of a series. A meeting may be called at any time by
an Indenture 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 such Indenture.
Except for any consent that must be given by the holder of each Debt Security
affected by certain modifications and amendments of an 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 specified percentage in principal amount of the outstanding
Debt Securities for 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 applicable 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,
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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.
Notwithstanding the foregoing provisions, each Indenture will provide that
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 such Indenture expressly provides may be
made, given or taken by 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 such Indenture.
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 applicable Indenture
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 such Indenture 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.
An Indenture may provide that, if certain provisions thereof are made
applicable to the Debt Securities of or within a series pursuant to the
Indenture, the Company may elect either (i) 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") or (ii) to be
released from its obligations with respect to such Debt Securities under certain
sections of such Indenture (including the restrictions described under
"--Certain Covenants") and, if provided pursuant to such 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"), in either case upon the
irrevocable deposit by the Company with the applicable Indenture Trustee, in
trust, of an amount, in such currency or currencies, currency unit or units of
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 dates therefor.
Such a trust may be established only if, among other things, the Company
has delivered to the applicable Indenture Trustee an opinion of counsel (as
specified in the applicable 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.
"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
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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 a particular 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 Obligations or
the specific payment of interest on or principal of the Government Obligations
evidenced by such depository receipt.
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,
(i) the holder of a Debt Security of such series is entitled to, and does, elect
pursuant to the applicable 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
(ii) 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. "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 of 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 ceases to be used by its
government of issuance shall be made in U.S. dollars.
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
certain sections of the applicable 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.
Notwithstanding the description set forth under "--Subordination" below, in
the event that the Company deposits money or Government Obligations in
compliance with the applicable Indenture in order to defease all or certain of
its obligations with respect to any Subordinated Securities, the moneys or
Government Obligations so deposited will not be subject to the subordination
provisions of such Indenture and the indebtedness evidenced by such Subordinated
Securities will not be subordinated in right of payment to the holders of senior
indebtedness to the extent of the moneys or Government Obligations so deposited.
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.
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Conversion Rights
The terms and conditions, if any, upon which the Debt Securities are
convertible into Common or Preferred Shares will be set forth in the Prospectus
Supplement relating thereto. Such terms will include whether such Debt
Securities are convertible into Common 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 of 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 and any
restrictions on conversion, including restrictions directed at maintaining the
Company's REIT status.
Subordination
The terms and conditions, if any, upon which Subordinated Securities of a
series are subordinated to Debt Securities of other series or to other
indebtedness of the Company will be set forth in the applicable Prospectus
Supplement. Such terms will include a description of the indebtedness ranking
senior to such Subordinated Securities, the restrictions on payments to the
holders of such Subordinated Securities while a default with respect to such
senior indebtedness is continuing, the restrictions, if any, on payments to the
holders of such Subordinated Securities following an Event of Default, and
provisions requiring holders of such Subordinated Securities to remit certain
payments to holders of senior indebtedness.
Global Securities
If so set forth in the applicable Prospectus Supplement, the Debt
Securities of a series may be issued in whole or in part in the form of one or
more Global Securities that will be deposited with, or on behalf of, a
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 any such series of Debt Securities will be described
in the applicable Prospectus Supplement.
DESCRIPTION OF SHARES
The Declaration of Trust ("Declaration") authorizes the Company to
issue an aggregate of 175,000,000 shares of beneficial interest ("Shares") in
the Company, including (i) 125,000,000 Common Shares, par value $.01 per share,
and (ii) 50,000,000 Preferred Shares, par value $.01 per share. The Declaration
permits the Trustees to amend the Declaration to increase or decrease the
authorized Shares of the Company without the requirement of shareholder
approval.
The Declaration authorizes the Trustees, without shareholder approval, from
time to time to divide the Preferred Shares into classes or series and to set
(or change, if the class or series has been previously established) the par
value, if any, preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications or terms and
conditions of redemption of such Preferred Shares as are not prohibited by the
Declaration or applicable law. In connection with the adoption of the Company's
shareholders rights plan (see "Redemption; Business Combinations and Control
Share Acquisitions -- Rights Plan," below), the Trustees established an
authorized but unissued class of 1,250,000 Preferred Shares, par value $.01 per
share (the "Junior Participating Preferred Shares"), described more fully below
under "Description of Preferred Shares -- Junior Participating Preferred
Shares," and as of May 1, 1997 no other class or series of Preferred Shares had
been established.
As of May 1, 1997 there were 98,703,918 Shares outstanding, all of which
were Common Shares. The Company also had outstanding as of such date $211.7
million aggregate principal amount convertible subordinated debentures of
various series, all of which are convertible into Common Shares at an exercise
price equal on such date to $18 per share. See "Description of Convertible
Subordinated Debentures."
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The following descriptions do not purport to be complete and are subject
to, and qualified in their entirety by reference to, the more complete
descriptions thereof set forth in the Declaration. Capitalized terms not defined
herein are as defined in the Declaration.
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; and (iv) will have no preference, conversion, exchange,
sinking fund, redemption rights or preemptive or similar rights.
Upon issuance in accordance with the Declaration, applicable law and the
terms and conditions described in the related Prospectus Supplement, the Shares
will be fully paid and nonassessable. The holders of Shares do not have
preemptive rights with respect to the issuance of additional Shares or other
securities of the Company.
The authorized but unissued Shares will be available for issuance from time
to time by the Company at the sole discretion of the Trustees for any proper
trust purpose, which could include raising capital, providing compensation or
benefits to employees and others, paying stock dividends or acquiring companies,
businesses or properties. The issuance of such unissued Shares could have the
effect of diluting the earnings per share and book value per share of currently
outstanding Shares.
For certain other information with respect to the Shares, see "Limitation
of Liabilities; Shareholder Liability" and "Redemption; Business Combinations
and Control Share Acquisitions" below.
DESCRIPTION OF PREFERRED SHARES
The Declaration authorizes the Trustees, without shareholder approval, from
time to time to divide the Preferred Shares into classes or series and to set
(or change, if the class or series has been previously established) the par
value, if any, preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications or terms and
conditions of redemption of such Preferred Shares that are not prohibited by the
Declaration or applicable law.
The following description of the Preferred Shares sets forth certain
general terms and provisions of the Preferred Shares to which any Prospectus
Supplement may relate and a brief summary of certain terms of the Company's
Junior Participating Preferred Shares. 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 Declaration (including any
applicable articles supplementary) and By-Laws.
General
Subject to limitations prescribed by Maryland law and the Declaration, the
Trustees are 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 Trustees.
Reference is made to the Prospectus Supplement relating to the Preferred
Shares offered thereby for specific terms, including:
(1) the title of such Preferred Shares;
(2) the number of shares of such Preferred Shares offered, the par value,
the liquidation preference per share and the offering price of such
Preferred Shares;
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(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 for any auction and remarketing, if any, 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 or
another series of Offered Securities, including the conversion price
(or manner of calculation thereof);
(10) whether interests in such Preferred Shares will be represented by
Depositary Shares as more fully described below under "Description of
Depositary Shares";
(11) any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Shares;
(12) a discussion of federal income tax considerations applicable to such
Preferred Shares;
(13) 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;
(14) 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
(15) any limitations on direct or beneficial ownership and restrictions on
transfer.
As described under "Description of Depositary Shares," the Company may, at
its option, elect to offer Depositary Shares evidenced by depositary receipts
("Depositary Receipts"), each representing a fractional interest (to be
specified in the Prospectus Supplement relating to the particular series of the
Preferred Shares) in a share of the particular series of the Preferred Shares
issued and deposited with a Depositary (as defined below).
Rank
Unless otherwise determined by the Trustees and specified in the applicable
Prospectus Supplement, it is expected that 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 Trustees, out of assets of the Company legally
available for payment, cash dividends at such rates and on such dates as will be
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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 (or, if applicable, on the records of the Depositary referred to below
under "Description of Depositary Shares") on such record dates as shall be fixed
by the Trustees.
Dividends on any series of the Preferred Shares may be cumulative or
noncumulative, 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 Trustees fail 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 and except
pursuant to certain pro rata offers to purchase or a concurrent redemption of
all, or a pro rata portion of, the outstanding shares of the Preferred Shares of
such series and any other series of Preferred Shares ranking on a parity with
such series as to dividends and liquidation).
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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 do 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 Preferred 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 Preferred Shares 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
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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 any 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.
Unless otherwise specified in the related Prospectus Supplement, at any
time 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 Trustees of the Company will be
increased by two trustees.
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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 Declaration 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.
As more fully described under "Description of Depositary Shares" below, if
the Company elects to issue Depositary Shares, each representing a fraction of
share of a series of the Preferred Shares, each such Depositary will, in effect
be entitled to such fraction of a vote per Depositary Share. Conversion Rights
The terms and conditions, if any, upon which shares of any series of
Preferred Shares may be converted into or exchanged for Common Shares or another
series of Preferred Shares or other series of Offered Securities will be set
forth in the Prospectus Supplement relating thereto. Such terms will include the
number of Common Shares or other securities into which the Preferred Share is
convertible or exchangeable, conversion or exchange price (or manner of
calculation thereof), the conversion or exchange period, provisions as to
whether conversion or exchange will be at the option of the holders of the
Preferred Shares or the Company, the events requiring an adjustment of the
conversion or exchange price and provisions affecting conversion or exchange in
the event of the redemption such Preferred Shares.
Junior Participating Preferred Shares
In connection with the adoption of the Company's shareholders rights plan,
the Trustees established an authorized but unissued class of 1,250,000 Preferred
Shares. See "Redemption; Business Combinations and Control Share Acquisitions"
below. Certain powers, preferences and rights and certain qualifications,
limitations and restrictions of the Junior Participating Preferred Shares, when
and if issued, are as follows. The statements below with respect to the Junior
Participating Preferred Shares are in all respects subject to and qualified in
their entirety by reference to the applicable provisions of the Declaration
(including the applicable articles supplementary) and By-Laws.
The holder of each Junior Participating Preferred Share is entitled to
quarterly dividends in the greater amount of $5.00 or 100 times the quarterly
per share dividend, whether cash or otherwise, declared upon the Common Shares.
Dividends on the Junior Participating Preferred Shares are cumulative. Whenever
dividends on the Junior Participating Preferred Shares are in arrears, the
Company, among other things, is prohibited from declaring or paying dividends,
making other distributions on, or redeeming or repurchasing Common Shares or
other Shares ranking junior to the Junior Participating Preferred Shares, and
upon failure of the Company to pay such dividends for six quarters, the holders
of the Junior Participating Preferred Shares will be entitled to elect two
Trustees. The holder of each Junior Participating Preferred Share is entitled to
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100 votes on all matters submitted to a vote of the shareholders, voting (unless
otherwise provided in the Declaration or by law) together with holders of Common
Shares as one class. Upon liquidation, dissolution or winding up of the Company,
the holders of Junior Participating Preferred Shares are entitled to a
liquidation preference of $100 per share plus the amount of any accrued and
unpaid dividends and distributions thereon (the "Liquidation Preference"), prior
to payment of any distribution in respect of the Common Shares or any other
Shares ranking junior to the Junior Participating Preferred Shares. Following
payment of the Liquidation Preference, the holders of Junior Participating
Preferred Shares are not entitled to further distributions until the holders of
Common Shares shall have received an amount per share (the "Common Share
Adjustment") equal to the Liquidation Preference divided by 100 (adjusted to
reflect events such as stock splits, stock dividends and recapitalizations
affected the Common Shares) (the "Adjustment Number"). Following the payment of
the full amount of the Liquidation Preference and the Common Share Adjustment,
holders of Junior Participating Preferred Shares are entitled to participate
proportionately on a per share basis with holders of Common Shares in the
distribution of the remaining assets to be distributed in respect of Shares in
the ratio of the Adjustment Number to one, respectively. The powers, preferences
and rights of the Junior Participating Preferred Shares are subject to the
superior powers, preferences and rights of any senior series or class of
Preferred Shares which the Trustees shall, from time to time, authorize and
issue.
DESCRIPTION OF DEPOSITARY SHARES
General
The description set forth below and in any applicable Prospectus Supplement
of certain provisions of any Deposit Agreement (as defined below) and of the
Depositary Shares and depositary receipts representing Depositary Shares
("Depositary Receipts") does not purport to be complete and is subject to and
qualified in its entirety by reference to the forms of Deposit Agreement and
Depositary Receipts relating to each series of the Preferred Shares which have
been or will be filed with the Commission at or prior to the time of the
offering of such series of the Preferred Shares.
The Company may, at its option, elect to offer fractional interests in
shares of Preferred Shares, rather than shares of Preferred Shares. In the event
such option is exercised, the Company will provide for the issuance by a
Depositary (as defined below) to the public of receipts for Depositary Shares,
each of which will represent a fractional interest to be set forth in the
Prospectus Supplement relating to a particular series of the Preferred Shares
which will be filed with the Commission at or prior to the time of the offering
of such series of the Preferred Shares as described below. Preferred Shares of
each series represented by Depositary Shares will be deposited under a separate
deposit agreement (each, a "Deposit Agreement") among the Company and the
depositary named therein (a "Depositary"). The Prospectus Supplement relating to
a series of Depositary Shares will set forth the name and address of the
Depositary. Subject to the terms of the applicable Deposit Agreement, each owner
of a Depositary Share will be entitled, in proportion to the fractional interest
of a share of a particular series of Preferred Shares represented by such
Depositary Share to all the rights and preferences of the Preferred Shares
represented by such Depositary Shares (including dividend, voting, conversion,
redemption and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Upon surrender of Depositary
Receipts at the office of the Depositary and upon payment of the charges
provided in the Deposit Agreement and subject to the terms thereof, a holder of
Depositary Shares is entitled to have the Depositary deliver to such holder the
whole shares of Preferred Shares underlying the Depositary Shares evidenced by
the surrendered Depositary Receipts.
Dividends and Other Distributions
A Depositary will be required to distribute all cash dividends or other
cash distributions received in respect of the applicable Preferred Shares to the
record holders of Depositary Receipts evidencing the related Depositary Shares
in proportion to the number of such Depositary Receipts owned by such holders,
subject to certain obligations of holders to file proofs, certificates and other
information and to pay certain charges and expenses to such Depositary.
Fractions will be rounded down to the market whole cent.
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In the event of a distribution other than in cash, a Depositary will be
required to distribute property received by it to the record holders of
Depositary Receipts entitled thereto, subject to certain obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to such Depositary, unless such Depositary determines that it is
not feasible to make such distribution, in which case such Depositary may, with
the approval of the Company, sell such property and distribute the net proceeds
from such sale to such holders.
No distributions will be made in respect of any Depositary Share to the
extent that it represents any Preferred Shares which have been converted or
exchanged. The Deposit Agreement will also contain provisions relating to the
manner in which any subscription or similar rights offered by the Company to
holders of the Preferred Shares shall be made available to holders of Depositary
Shares.
Redemption of Depositary Shares
If a series of the Preferred Shares underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of such series of the Preferred Shares held by the Depositary. The Depositary
shall mail notice of redemption not less than 30 and not more than 60 days prior
to the date fixed for redemption to the record holders of the Depositary
Receipts evidencing the Depositary Shares to be so redeemed at their respective
addresses appearing in the Depositary's books. The redemption price per
Depositary Share will be equal to the applicable fraction of the redemption
price per share payable with respect to such series of the Preferred Shares.
Whenever the Company redeems shares of Preferred Shares held by the Depositary,
the Depositary will redeem as of the same redemption date the number of
Depositary Shares relating to shares of Preferred Shares so redeemed. If less
than all of the Depositary Shares are to be redeemed, the Depositary Shares to
be redeemed will be selected by lot or pro rata as may be determined by the
Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares and the related Depositary Receipts will cease,
except the right to receive the moneys payable upon such redemption and any
money or other property to which the holders of such Depositary Shares were
entitled upon such redemption upon surrender to the Depositary of the Depositary
Receipts evidencing such Depositary Shares.
Voting of the Preferred Shares
Upon receipt of notice of any meeting at which the holders of the
applicable Preferred Shares are entitled to vote, a Depositary will be required
to mail the information contained in such notice of meeting to the record
holders of the Depositary Receipts evidencing the Depositary Shares which
represent such Preferred Shares. Each record holder of Depositary Receipts
evidencing Depositary Shares on the record date (which will be the same date as
the record date for the Preferred Shares) will be entitled to instruct such
Depositary as to the exercise of the voting rights pertaining to the amount of
Preferred Shares represented by such holder's Depositary Shares. Such Depositary
will endeavor, insofar as practical, to vote the amount of Preferred Shares
represented by such Depositary Shares in accordance with such instructions, and
the Company will agree to take all reasonable action which may be deemed
necessary by such Depositary in order to enable such Depositary to do so. Such
Depositary will be required to abstain from voting the amount of Preferred
Shares represented by such Depositary Shares to the extent it does not receive
specific instructions from the holders of Depositary Receipts evidencing such
Depositary Shares. The Depositary will not be responsible for any failure to
carry out any instruction to vote, or for the manner or effect of any such vote
made, as long as such action or non-action is in good faith and does not result
from gross negligence or willful misconduct of such Depositary.
Liquidation Preference
In the event of the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of each Depositary Share will be
entitled to the fraction of the liquidation preference accorded each Preferred
Share represented by such Depositary Share, as set forth in the applicable
Prospectus Supplement.
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Conversion of Preferred Shares
The Depositary Shares, as such, will not be convertible into or
exchangeable for Common Shares, Preferred Shares or any other securities or
property of the Company. Nevertheless, if so specified in the applicable
Prospectus Supplement relating to an offering of Depositary Shares, the
Depositary Receipts may be surrendered by holders thereof to the applicable
Depositary with written instructions to such Depositary to instruct the company
to cause conversion or exchange of the Preferred Shares represented by the
Depositary Share evidenced by such Depositary Receipts into Common Shares, other
shares of Preferred Shares of the Company or such other securities as shall be
provided therein, and the Company will agree that upon receipt of such
instruction and any amounts payable in respect thereof, it will cause the
conversion or exchange thereof utilizing the same procedures as those provided
for delivery of Preferred Shares to effect such conversion or exchange. If the
Depositary Shares evidenced by a Depositary Receipt are to be converted in part
only, a new Depositary Receipt or Depositary Receipts will be issued for any
Depositary Shares not to be converted.
Amendment and Termination of a Deposit Agreement
Any form of Depositary Receipt evidencing Depositary Shares and any
provision of a Deposit Agreement will be permitted at any time to be amended by
agreement between the Company and the applicable Depositary. However, any
amendment that materially and adversely alters the rights of the holders of
Depositary Shares will not be effective unless such amendment has been approved
by the existing holders of at least a majority of the applicable Depositary
Shares then outstanding. Every holder of an outstanding Depositary Receipt at
the time any such amendment becomes effective shall be deemed, by continuing to
hold such Depositary Receipt, to consent and agree to such amendment and to be
bound by the applicable Deposit Agreement as amended thereby.
Any Deposit Agreement may be terminated by the Company upon not less than
30 days' prior written notice to the applicable Depositary if (i) such
termination is necessary to preserve the Company's status as a REIT or (ii) a
majority of each series of Preferred Shares affected by such termination
consents to such termination, whereupon such Depositary will be required to
deliver or make available to each holder of Depositary Receipts, upon surrender
of the Depositary Receipts held by such holder, such number of whole or
fractional Preferred Shares as are represented by the Depositary Shares
evidenced by such Depositary Receipts together with any other property held by
such Depositary with receipts to such Depositary Receipts. The Company will
agree in each Depositary Agreement that if such Deposit Agreement is terminated
to preserve the Company's status as a REIT, then the Company will use its best
efforts to list the Preferred Shares issued upon surrender of the related
Depositary Shares on a national securities exchange. In addition, a Deposit
Agreement will automatically terminate if (i) all outstanding Depositary Shares
thereunder shall have been redeemed; (ii) there shall have been a final
distribution in respect of the related Preferred Shares in connection with any
liquidation, dissolution or winding up of the Company and such distribution
shall have been distributed to the holders of Depositary Receipts evidencing the
Depositary Shares underlying such Preferred Shares; or (iii) each of the related
Preferred Shares shall have been converted or exchanged into securities not so
represented by Depositary Shares.
Charges of a Depositary
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of a Deposit Agreement. In addition, the
Company will pay the fees and expenses of a Depositary in connection with the
initial deposit of the Preferred Shares and any redemption of Preferred Shares.
However, holders of Depositary Receipts will pay any transfer or other
governmental charges and the fees and expenses of a Depositary for any duties
requested by such holders to be performed which are outside of those expressly
provided for in the applicable Deposit Agreement.
Resignation and Removal of Depositary
A Depositary may resign at any time by delivering to the Company notice of
its election to do so, and the Company may at any time remove a Depositary, any
such resignation or removal to take effect upon the appointment of a successor
Depositary. A successor Depositary will be required to be appointed within 60
days after delivery of the notice of resignation or removal and will be required
to be a bank or trust company having its principal office in the United States
and having a combined capital and surplus of at least $50 million.
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Miscellaneous
A Depositary will be required to forward to holders of Depositary Receipts
any reports and communications from the Company which are received by such
Depositary with respect to the related Preferred Shares.
Neither Depositary nor the Company will be liable if it is prevented from
or delayed in, by law or any circumstances beyond its control, performing its
obligations under a Deposit Agreement. The obligations of the Company and a
Depositary under a Deposit Agreement will be limited to performing their duties
thereunder in good faith and without gross negligence or willful misconduct, and
neither the Company nor any applicable Depositary will be obligated to prosecute
or defend any legal proceeding in respect of any Depositary Receipts, Depositary
Shares or Preferred Shares represented thereby unless satisfactory indemnity is
furnished. The Company and any Depositary will be permitted to rely on written
advice of counsel or accountants, on information provided by persons presenting
Preferred Shares represented thereby for deposit, holders of Depositary Receipts
or other persons believed in good faith to be competent to give such
information, and on documents believed in good faith to be genuine and signed by
a proper party.
In the event a Depositary shall receive conflicting claims, requests or
instructions from any holders of Depositary Receipts, on the one hand, and the
Company, on the other hand, such Depositary shall be entitled to act on such
claims, requests or instructions received from the Company.
DESCRIPTION OF WARRANTS
The Company may issue, together with any other series of Offered Securities
or separately, Warrants entitling the holder to purchase from or sell to the
Company, or to receive from the Company the cash value of the right to purchase
or sell, Debt Securities, Preferred Shares, Depositary Shares or Common Shares.
The Warrants are to be issued under Warrant Agreements (each a "Warrant
Agreement") to be entered into between the Company and a warrant agent (the
"Warrant Agent"), all as set forth in the applicable Prospectus Supplement
relating to the particular issue of Warrants.
In the case of each series of Warrants, the applicable Prospectus
Supplement will describe the terms of the Warrants being offered thereby,
including the following, if applicable: (i) the offering price; (ii) the
currencies in which such Warrants are being offered; (iii) the number of
Warrants offered; (iv) the securities underlying the Warrants; (v) the exercise
price, the procedures for exercise of the Warrants and the circumstances, if
any, that will cause the Warrants to be deemed to be automatically exercised;
(vi) the date on which the right shall expire; (vii) U.S. federal income tax
consequences; and (viii) other terms of the Warrants.
Warrants may be exercised at the appropriate office of the Warrant Agent or
any other office indicated in the applicable Prospectus Supplement. Prior to the
exercise of Warrants entitling the holder to purchase any securities, holders of
such Warrants will not have any of the rights of holders of the securities
purchasable upon such exercise and will not be entitled to payments made to
holders of such securities.
The Warrant Agreements may be amended or supplemented without the consent
of the holders of the Warrants issued thereunder to effect changes that are not
inconsistent with the provisions of the Warrants and that do not adversely
affect the interests of the holders of the Warrants.
DESCRIPTION OF CONVERTIBLE SUBORDINATED DEBENTURES
In October 1996 the Company issued $240 million aggregate principal amount
of convertible subordinated debentures (the "Convertible Subordinated
Debentures"), consisting of $70 million aggregate principal amount of 7.5%
Convertible Subordinated Debentures due 2003, Series A (the "Series A
Debentures"), $130 million aggregate principal amount of 7.5% Convertible
Subordinated Debentures due 2003, Series B (the "Series B Debentures"), and $40
million aggregate principal amount of 7.25% Convertible Subordinated Debentures
due 2001 (the "7.25% Debentures"). The Series A Debentures and the 7.25%
Debentures were sold in offerings registered under the Securities Act, and the
Series B Debentures were sold in an offering outside of the United States
pursuant to Regulation S promulgated under the Securities Act.
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The Convertible Subordinated Debentures are convertible into Common Shares,
initially at a conversion price of $18 per Common Share, at any time prior to
maturity or earlier redemption. Such conversion price is subject to adjustment
in certain events, including the payment of dividends or distributions on the
Company's Shares in Common Shares or certain other securities issued by the
Company, the issuance to all holders of Common Shares of rights, options or
warrants entitling them to subscribe for Common Shares (or securities
convertible into Common Shares), subdivisions or combinations of the Common
Shares into a greater or smaller number of shares, reclassification of Common
Shares resulting in an issuance of any of the Company's Shares and certain
mergers or combination or sales of substantially all assets of the Company.
As of May 1, 1997 $28.3 million in principal amount of the Series A
Debentures had been converted into an aggregate of 1,573,879 Common Shares, and
none of the 7.25% Debentures or Series B Debentures had been converted.
The indebtedness evidenced by the Convertible Subordinated Debentures is
subordinated and junior in right of payment, to the extent set forth in the
trust indenture applicable thereto, to the prior payment in full of amounts then
due in respect of all indebtedness of the Company for borrowed money and certain
other indebtedness, excluding (i) indebtedness of the Company to a subsidiary or
an officer, director, trustee or employee of the Company or a subsidiary, (ii)
indebtedness of the Company which, pursuant to the terms of the instrument
creating or evidencing such indebtedness, is expressly made pari passu with or
subordinate in right of payment to the Convertible Subordinated Debentures and
(iii) any liability of the Company for taxes.
The preceding discussion of certain terms of the Convertible Subordinated
Debentures is a summary of certain provisions of the Convertible Subordinated
Debentures and the related trust indenture. Such discussion does not purport to
be complete and is in all respects subject to and qualified in its entirety by
reference to the complete terms thereof and of such trust indenture.
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; BUSINESS COMBINATIONS AND CONTROL SHARE ACQUISITIONS
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
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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, 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 any and all 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 between the
Company and a beneficial holder of 10% or more of the outstanding Shares (a
"Related Person") 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 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. As permitted by law, the Company has elected to be governed by such
provisions rather than the provisions of Subtitle 6 of Title 3 of the
Corporations and Associations Article of the Annotated Code of Maryland
regarding business combinations.
Under the Declaration the number of trustees may be fixed from time to time
by two-thirds of the Trustees or by an 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 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 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
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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 shares acquired in a control share
acquisition. The statute would require the target company 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 shareholder 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
company 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 for
control shares are approved at a shareholders' meeting and the acquiror becomes
entitled to vote a majority of the shares entitled to vote, then all other
shareholders may exercise appraisal rights. The statute does not apply to shares
acquired in a merger, consolidation or share exchange if the company is a party
to the transaction. 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.
Rights Plan
In October 1994 the trustees adopted a shareholder rights plan (the "Rights
Plan") . The Rights Plans provides for the distribution of one Junior
Participating Preferred Share purchase right (a "Right") for each Common Share .
Each Right entitles the holder to buy 1/100th of a Junior Participating
Preferred Share (or, in certain circumstances, to receive cash, property, Common
Shares or other securities of the Company) at an exercise price of $50 per
1/100th of a Junior Participating Preferred Share. Certain powers, preferences
and rights and certain qualifications, limitations and restrictions of the
Junior Participating Preferred Shares are summarized above under "Description of
Preferred Shares--Junior Participating Shares."
Initially, the Rights are attached to certificates representing Common
Shares. The Rights will separate from such Common Shares and a "Distribution
Date" will occur upon earlier of (1) 10 business days (or such later date as the
Trustees may determine before a Distribution Date occurs) following a public
announcement by the Company that a person or group affiliated or associated
persons, with certain exceptions (an "Acquiring Person"), has acquired, or has
obtained the right to acquire, beneficial ownership of 10% or more of the
outstanding Common Shares (the date of such announcement being a "Share
Acquisition Date") or (ii) 10 business days (or such later date as the Trustees
may determine before a Distribution Date occurs) following the commencement of a
tender offer or exchange offer that would result in a person becoming an
Acquiring Person.
Until the Distribution Date, (i) the Rights will be evidenced by the
certificates for Common Shares and will be transferred with and only with such
Common Share certificates, (ii) Common Share certificates will contain a
notation incorporating the rights agreement pursuant to which the Rights were
issued (the "Rights Agreement") by reference and (iii) the surrender for
transfer of any certificates for Common Shares outstanding will also constitute
the transfer of the Rights associated with the Common Shares represented by such
certificates.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on October 17, 2004, unless earlier redeemed or
exchanged by the Company as described below. Until a Right is exercised, the
holder thereof, as such, has no rights as a shareholder of the Company,
including, without limitation, the right to vote or to receive dividends.
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In the event (a "Flip-In Event") a Person becomes an Acquiring Person
(except pursuant to a tender or exchange offer for all outstanding Common Shares
at a price and on terms which a majority of the Company's Outside Trustees (as
defined in the Rights Agreement) determines to be fair to and otherwise in the
best interests of the Company and its shareholders (a "fair offer")), each
holder of a Right will thereafter have the right to receive, upon exercise of
such Right, Common Shares (or, in certain circumstances, cash, property or other
securities of the Company) having a Current Market Price (as defined in the
Rights Agreement) equal to two times the exercise price of the Right.
Notwithstanding the foregoing, following the occurrence of any Flip-In Event,
all Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person (or by certain
related parties) will be null and void in the circumstances set forth in the
Rights Agreement. However, Rights will not be exercisable following the
occurrence of any Flip-In Event until such time as the Rights are no longer
redeemable by the Company as set forth below.
In the event (a "Flip-Over Event") that, at any time on or after the Share
Acquisition Date, (i) the Company shall take part in a merger or other business
combination transaction (other than certain mergers that follow a fair offer)
and the Company shall not be the surviving entity or (ii) the Company shall take
part in a merger or other business combination transaction in which the Common
Shares are changed or exchanged (other than certain mergers that follow a fair
offer) or (iii) 50% or more of the Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights which previously have been
voided, as set forth above) shall thereafter have the right to receive, upon
exercise, a number of shares of common stock of the acquiring company having a
Current Market Price equal to two times the exercise price of the Right. Flip-In
Events and Flip-Over Events are collectively referred to as "Triggering Events."
The Purchase Price payable and the number of Junior Participating Preferred
Shares (or the amount of cash, property or other securities) issuable upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a share dividend on, or a subdivision, combination
or reclassification of, the Junior Participating Preferred Shares, (ii) if
holders of the Junior Participating Preferred Shares are granted certain rights
or warrants to subscribe for Junior Participating Preferred Shares or
convertible securities at less than the Current Market Price of the Junior
Participating Preferred Shares or (iii) upon the distribution to holders of the
Junior Participating Preferred Shares of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above). With certain exceptions, no
adjustment in the Purchase Price will be required until cumulative adjustments
amount to at least 1% of the Purchase Price. The Company is not required to
issue fractional Shares upon the exercise of any Right, and in lieu thereof, a
cash payment will be made.
At any time until 10 business days following the Share Acquisition Date,
the Company may redeem the Rights in whole, but not in part, at a price of $.01
per Right, payable, at the option of the Company, in cash, Common Shares or
other consideration as the Trustees may determine. Immediately upon the
effectiveness of the action of the Trustees ordering redemption of the Rights,
the Rights will terminate and the only right of the holders of Rights will be to
receive the $.01 per Right redemption price.
The term of the Rights, other than key financial terms and the date on
which the Rights expire, may be amended by the Trustees prior to the
Distribution Date. Thereafter, the provisions of the Rights Agreement may be
amended by the Trustees only in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person and certain
other related parties) or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to lengthen the time
period governing redemption is permitted to be made at such time as the Rights
are not redeemable.
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.
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The distribution of Offered Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such market
prices or at negotiated prices. In connection with the sale of Offered
Securities, underwriters or agents may receive or be deemed to have received
compensation from the Company or from purchasers in the form of underwriting
discounts, concessions or commissions. Underwriters may sell Offered Securities
to or through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters or from purchasers.
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,
will be 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, concessions 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 underwriters or other persons 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 contracts providing for payment and delivery on a future date or
dates. Institutions with whom such 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.
Any such contracts will be subject to the condition that 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, if a portion of the Offered
Securities is being sold to underwriters, may be subject to the condition that
the Company shall have sold to such underwriters the Offered Securities not sold
for delayed delivery. The underwriters and such other persons will not have any
responsibility in respect of the validity or performance of such contracts.
Unless otherwise specified in the related Prospectus Supplement, each
series of Offered Securities will be a new issue with no established trading
market, other than Common Shares which are listed on the New York Stock
Exchange. Any Common Shares sold pursuant to a Prospectus Supplement will be
listed on such Exchange. The Company may elect to list any other series of
Offered Securities on an exchange, but is not obligated to do so. Any
underwriters to whom Offered Securities are sold by the Company for public
offering and sale may make a market in such Offered Securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of or the trading markets for any Offered Securities.
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.
The specific terms and manner of sale of the Offered Securities will be set
forth or summarized in the applicable Prospectus Supplement.
LEGAL MATTERS
Certain legal matters with respect to the Offered Securities offered by the
Company will be passed upon for the Company by Sullivan & Worcester LLP, Boston,
Massachusetts. Sullivan & Worcester LLP, will rely, as to all matters of
Maryland law, upon one or more opinions of Piper & Marbury L.L.P., Baltimore,
Maryland. Barry M. Portnoy, a retired partner of the firm of Sullivan &
Worcester LLP, is a Managing Trustee of the Company and HPT, a director and 50%
shareholder of the HRPT Advisors, Inc., the advisor to the Company ("Advisors"),
and a director and/or significant shareholder of certain lessees and mortgagors
of the Company. Sullivan & Worcester LLP represents Advisors, HPT, certain of
such lessees and mortgagors and certain affiliates of each of the foregoing on
various matters.
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EXPERTS
The consolidated financial statements of the Company incorporated in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 have
been audited by Ernst & Young LLP, independent auditors as set forth in their
report thereon incorporated by reference therein and incorporated herein by
reference which, as to the year 1996, is based in part on the report of Arthur
Andersen LLP, independent public accountants. Such financial statements are
incorporated herein by reference in reliance upon such reports given upon the
authority of such firms as experts in accounting and auditing.
The consolidated financial statements of Marriott International, Inc.
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 LLP, independent public accountants, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
-----------------
THE AMENDED AND RESTATED DECLARATION OF TRUST OF THE COMPANY, DATED JULY 1,
1994, 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 RETIREMENT 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.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Set forth below is an estimate (except in the case of the registration fee)
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.
Registration Fee Under Securities Act $ 263,666
Blue Sky Fees and Expenses 10,000
Legal Fees and Expenses 700,000
Accounting Fees and Expenses 300,000
Printing and Engraving 200,000
Rating Agencies Fees 75,000
Trustee Fees (including counsel fees) 35,000
Miscellaneous Fees and Expenses 166,334
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Total: $1,750,000
Item 15. Indemnification of Directors and Officers
Section 7.4 of the Company's Amended and Restated Declaration of Trust,
filed as an Exhibit to the Company's Current Report on Form 8-K dated July 10,
1996, which provides for indemnification of Trustees and officers of the
Company, is hereby incorporated by reference.
Reference is made to the Underwriting Agreements (Exhibits 1.1 through 1.5
hereto) which may contain certain provisions for indemnification by the
Underwriters of the Company, Trustees, officers and controlling persons under
certain circumstances.
Item 16. Exhibits
1.1 - Form of Underwriting Agreement (for Debt Securities)*
1.2 - Form of Underwriting Agreement (for Preferred Shares)*
1.3 - Form of Underwriting Agreement (for Depositary Shares)*
1.4 - Form of Underwriting Agreement (for Common Shares)*
1.5 - Form of Underwriting Agreement (for Warrants)*
3.1 - Amended and Restated Declaration of Trust as amended by the amendment
approved by the shareholders June 28, 1996 and filed with the Maryland
Department of Assessments and Taxation on July 9, 1996 (Incorporated by
reference to the Company's Current Report on Form 8-K, dated July 10,
1996)
3.2 - Amendment, effective March 3, 1997, to Health and Retirement Properties
Trust's Amended and Restated Declaration of Trust providing for an
increase in the authorized common shares of beneficial interest, $.01
par value per share, from 100,000,000 to 125,000,000. (Incorporated by
reference to the Company's Current Report on Form 8-K, dated March 3,
1997)
3.3 - Amendment, effective May 14, 1997, to the Articles Supplementary to
Health and Retirement Properties Trust's Amended and Restated
Declaration of Trust providing for an increase in the authorized Junior
Participating Preferred Shares, from 100,000 to 125,000. (Incorporated
by reference to the Company's Quarterly Report on Form 10-Q, dated May
15, 1997)
3.4 - Amended and Restated Bylaws (Incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31, 1995)
4.1 - Form of Senior Indenture**
4.2 Form of Subordinated Indenture**
4.3 - Form of Senior Debt Security*
4.4 - Form of Subordinated Debt Security*
4.5 - Form of Articles Supplementary for the Preferred Shares*
4.6 - Form of Deposit Agreement, including form of Depositary Receipt for
Depositary Shares*
4.7 - Form of Preferred Shares Certificate*
4.8 - Form of Debt Warrant Agreement, including form of Debt Warrant*
4.9 - Form of Preferred Share Warrant Agreement, including form of Preferred
Share Warrant*
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<PAGE>
4.10 - Form of Common Share Warrant Agreement, including form of Common Share
Warrant*
4.11 - Rights Agreement dated October 17, 1994 between the Company and State
Street Bank and Trust Company, as Rights Agent (including the form of
Articles Supplementary relating to the Junior Participating Preferred
Shares annexed as an exhibit thereto) (Incorporated by reference to the
Company's Registration Statement on Form 8-A dated October 24, 1994)
4.12 - Indenture dated September 20, 1996 between the Company and Fleet
National Bank ("Fleet"), as trustee (Incorporated by reference to the
form of Indenture filed as Exhibit 4.1 to the Company's Registration
Statement on Form S-3, No. 333-02863, as modified by the Company's
Registration Statement on Form 8-A dated October 1, 1996)
4.13 - First Supplemental Indenture between the Company and Fleet, as trustee,
relating to the Company's 7.5% Senior Subordinated Debentures due 2003,
Series A (including form of debenture) (Incorporated by reference to
the Company's Current Report on Form 8-K dated October 7, 1996)
4.14 - Second Supplemental Indenture between the Company and Fleet, as
trustee, relating to the Company's 7.5% Senior Subordinated Debentures
due 2003, Series B (including form of debenture) (Incorporated by
reference to the Company's Current Report on Form 8-K dated October 7,
1996)
4.15 - Third Supplemental Indenture between the Company and Fleet, as trustee,
relating to the Company's 7.25% Senior Subordinated Debentures due 2001
(including form of debenture) (Incorporated by reference to the
Company's Current Report on Form 8-K dated October 7, 1996)
5.1 Opinion of Sullivan & Worcester LLP**
5.2 - Opinion of Piper & Marbury L.L.P.**
8 - Opinion of Sullivan & Worcester LLP re: tax matters *
12 - Statement Regarding Computation of Ratios of Earnings to Fixed Charges
23.1 - Consent of Ernst & Young LLP
23.2 - Consents of Arthur Andersen LLP
23.3 - Consent of Sullivan & Worcester LLP**
23.4 - Consent of Piper & Marbury L.L.P.**
24 - Powers of Attorney** 25.1 - Statement of Eligibility of Trustee on Form
T-1*
- -------------
* To be filed by amendment or incorporated by reference in connection with the
offering of Offered Securities, as appropriate.
** Previously filed with this Registration Statement on May 12, 1997.
Item 17. Undertakings
(a) 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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) (Section
230.424(b) of 17 C.F.R.) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
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<PAGE>
(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.
(b) 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.
(c) 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 against
public policy as expressed in such Act and will be governed by the final
adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective; and
(2) For purposes of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(e) The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of each Indenture Trustee to act
under subsection (a) of Section 310 of the Trust Indenture Act in
accordance with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Trust Indenture Act.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Newton,
Commonwealth of Massachusetts, on May 29, 1997.
HEALTH AND RETIREMENT PROPERTIES TRUST
By:/s/David J. Hegarty
David J. Hegarty
President and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form S-3 relating to Debt Securities, Preferred
Shares, Depositary Shares, Common Shares and Warrants has been signed below on
May 29, 1997 by the following persons in the capacities and on the dates
indicated; and each of the undersigned officers and trustees of Health and
Retirement Properties Trust, hereby severally constitute and appoint David J.
Hegarty, Ajay Saini, Gerard M. Martin, Barry M. Portnoy and Alexander A.
Notopoulos, Jr., and each of them, to sign for him, and in his name in the
capacity indicated below, this Registration Statement for the purpose of
registering such securities under the Securities Act of 1933, as amended, and
any and all amendments thereto, and any other Registration Statement filed by
Health and Retirement Properties Trust pursuant to Rule 462(b) which registers
additional amounts of such securities for the offering or offerings contemplated
by this Registration Statement (a "462(b) Registration Statement") hereby
ratifying and confirming our signatures as they may be signed by our attorneys
to this Registration Statement, any 462(b) Registration Statement and any and
all amendments to either thereof.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/David J. Hegarty President and Chief Operating May 29, 1997
David J. Hegarty Officer (principal executive officer)
/s/Ajay Saini Treasurer and Chief Financial May 29, 1997
Ajay Saini Officer
/s/ Bruce M. Gans, M.D.* Trustee May 29, 1997
Bruce M. Gans, M.D.
/s/Rev. Justinian Manning, C.P.* Trustee May 29, 1997
Rev. Justinian Manning, C.P.
/s/Gerard M. Martin* Managing Trustee May 29, 1997
Gerard M. Martin
/s/ Barry M. Portnoy* Managing Trustee May 29, 1997
Barry M. Portnoy
/s/ Ralph J. Watts* Trustee May 29, 1997
Ralph J. Watts
* By /s/ David J. Hegarty
David J. Hegarty, as attorney-in-fact
</TABLE>
II-4
<TABLE>
<CAPTION>
HEALTH AND RETIREMENT PROPERTIES TRUST
Exhibit 12.1
Computation of Earnings to Fixed Charges
(dollars in thousands)
YEARS ENDED DECEMBER 31, Qtr. Ended
---------------------------------------------------------------- March 31,
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
EARNINGS:
INCOME BEFORE GAIN ON SALE OF
PROPERTIES AND
EXTRAORDINARY ITEMS $ 27,243 $ 37,738 $ 57,578 $ 61,760 $ 77,164 $ 19,399
ADJUSTMENT FOR FIXED CHARGES 10,419 66,529 10,096 26,218 23,279 8,167
-------- -------- -------- -------- -------- --------
TOTAL EARNINGS $ 37,662 $ 44,267 $ 67,974 $ 87,978 $100,443 $ 27,566
FIXED CHARGES:
INTEREST EXPENSE $ 9,466 $ 6,217 $ 8,965 $ 24,274 $ 22,545 $ 7,848
AMORTIZATION 953 312 1,131 1,944 734 319
-------- -------- -------- -------- -------- --------
TOTAL FIXED CHARGES $ 10,419 $ 6,529 $ 10,096 $ 26,218 $ 23,279 $ 8,167
RATIO OF EARNINGS TO FIXED
CHARGES 3.6 6.8 6.7 3.4 4.3 3.4
</TABLE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-3 No 333-26887) and related
Prospectus of Health and Retirement Properties Trust for the registration of
$1,000,000,000 of "Offered Securities" and to the incorporation by reference
therein of our report dated February 6, 1997, with respect to the consolidated
financial statements of Health and Retirement Properties Trust incorporated by
reference in its Annual Report (Form 10-K) for the year ended December 31, 1996
and the related financial statement schedules included therein filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
May 27, 1997
Exhibit 23.2
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
January 10, 1997, included in Health and Retirement Properties Trust's Form 10-K
for the year ended December 31, 1996 and to all references to our firm included
in this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Washington, D.C.
May 28, 1997
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in Health and Retirement Properties Trust's registration statement
(File No. 333-26887) of our report dated February 24, 1997 included in Marriott
International, Inc.'s Form 10-K for the year ended January 3, 1997 (File No.
1-12188) and to all references to our Firm included in this registration
statement.
/s/ Arthur Andersen LLP
Washington, D.C.
May 28, 1997
