As filed with the Securities and Exchange Commission on January 11, 2002
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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SENIOR HOUSING PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
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Maryland 04-3445278
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
400 Centre Street
Newton, Massachusetts 02458
(617) 796-8350
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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For Co-Registrants, please see "Table of Co-Registrants" on the following page.
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David J. Hegarty, President
Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
(617) 796-8350
(Name, address, including zip code, telephone number,
including area code, of agent for service)
---------------------
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 Registrants.
If the only securities being registered on this form are being offered
pursuant to distribution or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
distribution or interest reinvestment plans, 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, please 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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CALCULATION OF REGISTRATION FEE
================================================================================================================================
Title of Each Class of Securities to be Amount to Proposed Maximum Proposed Maximum Amount of
be Registered Offering Price Aggregate Offering Registration
Registered(1) (1)(2) Per Unit (1)(2)(3) Price(1)(2)(3)(4) Fee
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Debt Securities of Senior Housing Properties
Trust (5) ........................................
Preferred Shares of Beneficial Interest, $.01 par
value per share, of Senior Housing Properties
Trust (6).........................................
Depositary Shares Representing Preferred Shares
of Senior Housing Properties Trust (7)............
Common Shares of Beneficial Interest, $.01 par
value per share, of Senior Housing Properties
Trust (8) ........................................
Warrants of Senior Housing Properties Trust (9)...
Trust Preferred Securities of SNH Capital Trust
II and SNH Capital Trust III (collectively, the
"SNH Capital Trusts") (10)........................
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Guarantees of Trust Preferred Securities of the
SNH Capital Trusts by Senior Housing Properties
Trust(11) ........................................
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Total $2,000,000,000(1) $2,000,000,000(1) $478,000
================================================================================================================================
(Footnotes on next page)
The Registrants hereby amend this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
(1) In no event will the aggregate initial offering price of the securities
issued from time to time under this Registration Statement exceed
$2,000,000,000 or the equivalent thereof in one or more foreign
currencies or currency units or composite currencies. The aggregate
amount of common shares of Senior Housing Properties Trust registered
hereunder is limited to that which is permissible under Rule 415(a)(4)
under the Securities Act of 1933, as amended. The securities registered
hereunder may be sold separately, together or as units with other
securities registered hereunder. There are also being registered
hereunder contracts that may be issued by the Registrants under which
the counterparty may be required to purchase or sell the other
securities registered hereunder. Such contracts would be issued
together with securities registered hereunder. There are also being
registered hereunder an indeterminate principal amount of each class of
securities registered hereunder (the "underlying securities") as may be
issuable, without separate consideration, (i) upon conversion, exercise
or exchange of any other class of securities registered hereunder, to
the extent such securities are by their terms convertible into or
exercisable or exchangeable for the underlying securities, or (ii)
pursuant to antidilution provisions of any other class of securities
registered hereunder.
(2) Not specified for each class pursuant to General Instruction II.D. to
Form S-3.
(3) The proposed maximum offering price per unit will be determined from
time to time by the Registrants in connection with the issuance by the
Registrants of the securities registered hereunder.
(4) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended.
(5) Subject to note (1) above, there is being registered hereunder an
indeterminate amount of debt securities of Senior Housing Properties
Trust as may be sold from time to time. If any debt securities are
issued at an original issue discount, then the offering price shall be
in such greater principal amount as shall not result in an aggregate
initial offering price exceeding $2,000,000,000 or the equivalent
thereof in one or more foreign currencies or currency units or
composite currencies.
(6) Subject to note (1) above, there is being registered hereunder an
indeterminate amount of preferred shares of Senior Housing Properties
Trust as may be sold from time to time.
(7) Subject to note (1) above, there is being registered hereunder an
indeterminate amount of depositary shares representing preferred shares
of Senior Housing Properties Trust as may be sold from time to time.
(8) Subject to note (1) above, there is being registered hereunder an
indeterminate amount of common shares of Senior Housing Properties
Trust as may be sold from time to time.
(9) Subject to note (1) above, there is being registered hereunder an
indeterminate amount of warrants of Senior Housing Properties Trust to
acquire other classes of securities of Senior Housing Properties Trust
registered hereunder as may be sold from time to time.
(10) Subject to note (1) above, there is being registered hereunder an
indeterminate amount of trust preferred securities of the SNH Capital
Trusts as may be sold from time to time.
(11) No separate consideration will be received for the guarantees by Senior
Housing Properties Trust of trust preferred securities. The guarantees
will include the right of the holders of guaranteed securities under
the guarantees and certain back-up undertakings, as described in this
Registration Statement.
TABLE OF CO-REGISTRANTS
IRS Employer
Name State of Formation Identification Number
SNH Capital Trust II Maryland 04-6943324
SNH Capital Trust III Maryland 04-6943325
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 such State.
Subject to Completion
Preliminary Prospectus Dated January 11, 2002
PRELIMINARY PROSPECTUS
$2,000,000,000
Senior Housing Properties Trust
Debt Securities, Preferred Shares of Beneficial Interest, Depositary Shares,
Common
Shares of Beneficial Interest and Warrants
SNH Capital Trusts
Trust Preferred Securities Fully and Unconditionally Guaranteed
----------------------
We may offer and sell, from time to time, in one or more offerings:
o common shares
o preferred shares
o debt securities
o warrants
o depositary shares
These securities may be offered and sold separately, together or as units with
other securities described in this prospectus. Our debt securities may be senior
or subordinated.
SNH Capital Trust II and III may offer and sell, from time to time, in one
or more offerings, trust preferred securities which will be fully and
unconditionally guaranteed by us. Our guarantees may be senior or subordinated.
The trust preferred securities may be offered and sold separately, together or
as units with other securities described in this prospectus.
The securities described in this prospectus offered by us or by SNH Capital
Trust II and III may be issued in one or more series or issuances. The total
offering price of these securities, in the aggregate, will not exceed
$2,000,000,000. We will provide the specific terms of any securities we actually
offer in supplements to this prospectus. You should carefully read this
prospectus and the supplements before you decide to invest in any of these
securities.
Risks associated with an investment in the securities will be described in
the applicable prospectus supplement, as described under "Risk Factors" on page
2.
The applicable prospectus supplement will also contain information, where
applicable, about United States federal income tax considerations and any
listing on a securities exchange. Our common shares are listed on the New York
Stock Exchange under the symbol "SNH."
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful and complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is January ___, 2002.
TABLE OF CONTENTS
Page Page
Senior Housing Properties Trust............ 1 Description of Warrants........................ 18
SNH Capital Trusts......................... 1 Description of Trust Preferred Securities
and Trust Guarantee.......................... 19
Risk Factors............................... 2 Description of Certain Provisions of
Maryland Law and our Declaration of Trust
and Bylaws................................... 23
Use of Proceeds............................ 2 Plan of Distribution........................... 30
Ratio of Earnings to Fixed Charges......... 2 Validity of the Offered Securities............. 32
Description of Debt Securities............. 2 Experts........................................ 32
Description of Common Shares............... 9 Where You Can Find More Information............ 33
Description of Preferred Shares............ 10 Documents Incorporated By Reference............ 33
Description of Depositary Shares........... 15
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we and the SNH Capital
Trusts filed with the Securities and Exchange Commission using a "shelf"
registration process. Under this shelf process, we may sell any combination of
the securities described in this prospectus from time to time in one of more
offerings up to a total amount of proceeds of $2,000,000,000.
This prospectus provides you only with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement containing specific information about the terms of that
offering. The prospectus supplement may also add to, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with additional information described
under the heading "Where You Can Find More Information" and "Documents
Incorporated By Reference."
No separate financial statements of the SNH Capital Trusts have been
included or incorporated by reference. Neither we nor the SNH Capital Trusts
consider financial statements of the SNH Capital Trusts material to holders of
the trust preferred securities because:
o all of the voting securities of the SNH Capital Trusts will be owned,
directly or indirectly, by us, a reporting company under the Securities
Exchange Act of 1934, as amended;
o each SNH Capital Trust has no independent operations and exists for the
purpose of issuing securities representing undivided beneficial interests in
the assets of the SNH Capital Trust and investing the proceeds in the debt
securities issued by us; and
o the obligations of each SNH Capital Trust under the trust preferred
securities issued by it will be fully and unconditionally guaranteed by us
to the extent described in this prospectus.
(ii)
You should rely only on the information incorporated by reference or
provided in this document. We have not authorized anyone to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely on it. We will not make an offer of these
securities in any jurisdiction where it is unlawful. You should assume that the
information in this prospectus, as well as the information we have previously
filed with the SEC and incorporated by reference in this prospectus, is accurate
only as of the date of the documents containing the information.
References in this prospectus to "we," "us," "our" or "SNH" mean Senior
Housing Properties Trust. References in this prospectus to the "SNH Capital
Trusts" mean SNH Capital Trust II and SNH Capital Trust III.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made and incorporated by reference statements in this document that
constitute "forward-looking statements" as that term is defined in the federal
securities laws. These forward-looking statements concern:
o our tenants' ability to operate successfully properties or pay rent to us;
o the possible expansion of our portfolio;
o the performance of our tenants and properties;
o our ability to pay debt service or make distributions;
o our policies and plans regarding investments, financings and other matters;
o our tax status as a real estate investment trust;
o our ability to balance appropriately the use of debt and equity; and
o our ability to access capital markets or other sources of funds.
When we use words such as "believes," "expects," "anticipates," "estimates" or
similar expressions, we are making forward-looking statements.
Forward-looking statements are not guarantees of future performance and
involve risks and uncertainties. Our expected results may not be achieved, and
actual results may differ materially from our expectations. This may be a result
of various factors, including:
o the status of the economy;
o the status of capital markets (including prevailing interest rates);
o compliance with and changes to regulations and payment policies within the
health care industry;
o changes in financing terms;
o competition within the health care and senior housing industries; and
o changes in federal, state and local legislation.
Other important factors are identified in our Annual Report on Form 10-K
which is incorporated into this prospectus, including under the headings
"Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." We assume no obligation to update or revise any
forward-looking statements or to update the reasons why actual results could
differ from those projected in any forward-looking statements.
(iii)
SENIOR HOUSING PROPERTIES TRUST
We are a real estate investment trust, and our primary business is to
acquire, own and lease senior apartments, congregate care communities, assisted
living properties and nursing homes. On January 11, 2002, we completed an
acquisition of 31 senior living communities for which we paid approximately $600
million. Giving effect to the completion of this acquisition, we own 112
properties located in 28 states, which have an undepreciated combined carrying
value of approximately $1.2 billion. As of December 31, 2001, we had 43,421,700
common shares outstanding, including 12,809,238 owned by HRPT Properties Trust,
our former parent company.
We are organized as a Maryland real estate investment trust under the
Maryland REIT Law. Our principal place of business is 400 Centre Street, Newton,
Massachusetts 02458, and our telephone number is (617) 796-8350.
SNH CAPITAL TRUSTS
Each SNH Capital Trust is a statutory business trust formed under Maryland
law pursuant to:
o a declaration of trust executed by us, as sponsor for the SNH Capital Trust
and the trustees of the SNH Capital Trust; and
o the filing of a certificate of trust with the State Department of
Assessments and Taxation of Maryland.
Unless an accompanying prospectus supplement provides otherwise, each SNH
Capital Trust exists for the sole purposes of:
o selling trust preferred securities and investing the proceeds in a specific
series of our debt securities;
o selling trust common securities to us or our subsidiaries in exchange for
cash and investing the proceeds in additional debt securities issued by us;
or
o engaging in other activities that are necessary, convenient or incidental to
the sale of trust preferred and common securities or the purchase of our
debt securities.
No SNH Capital Trust will borrow money, issue debt or reinvest proceeds
derived from investments, pledge any of its assets, or otherwise undertake, or
permit to be undertaken, any activity that would cause that SNH Capital Trust
not to be classified for United States federal income tax purposes as a grantor
trust. We will own directly or indirectly all of the trust common securities
issued by each SNH Capital Trust. The trust common securities will rank on
parity, and payments will be made thereon pro rata, with the trust preferred
securities, except that upon the occurrence and during continuance of an event
of default under the declaration of trust of a SNH Capital Trust, the rights of
the holders of the trust common securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the trust preferred securities. In
connection with the issuance of trust preferred securities by a SNH Capital
Trust, we or our subsidiaries will acquire trust common securities of such SNH
Capital Trust having an aggregate liquidation amount equal to a minimum of 3% of
the total capital of such SNH Capital Trust. Each SNH Capital Trust will have a
term of at least 20 but no more than 50 years, but may terminate earlier as
provided in its declaration of trust.
Each SNH Capital Trust's business and affairs will be conducted by its
trustees. The holders of the trust common securities will be entitled to
appoint, remove or replace any of, or increase or reduce the number of, the
trustees of each SNH Capital Trust. The duties and obligations of the trustees
will be governed by the SNH Capital Trust's declaration of trust. At least one
of the trustees of each SNH Capital Trust will be a person who is one of our
officers or trustees or who is affiliated with us (a "Regular Trustee"). One
trustee of each SNH Capital Trust will be a financial institution that is not
affiliated with us (the "Property Trustee"), which will act as property trustee
and as indenture trustee for the purposes of the Trust Indenture Act of 1939, as
amended, pursuant to the terms set forth in the applicable prospectus
supplement.
1
We will pay all fees and expenses related to each SNH Capital Trust and any
offering of the trust preferred securities. The principal place of business of
each SNH Capital Trust is c/o Senior Housing Properties Trust at 400 Centre
Street, Newton, Massachusetts 02458 (telephone: (617) 796-8350).
RISK FACTORS
Certain of the securities to be offered hereby themselves may involve risks.
Such risks will be set forth in the prospectus supplement relating to such
offered securities.
USE OF PROCEEDS
Unless otherwise described in a prospectus supplement, we intend to use the
net proceeds from the sale of any securities under this prospectus for general
business purposes, which may include acquiring and investing in additional
properties and the repayment of borrowings under our revolving bank credit
facility or other debt. Unless otherwise described in a prospectus supplement,
each SNH Capital Trust will use the net proceeds from the sale of any securities
under this prospectus to purchase our debt securities. Until the proceeds from a
sale of securities by us or any SNH Capital Trust are applied to their intended
purposes, they may be invested in short-term investments, including repurchase
agreements, some or all of which may not be investment grade.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratios of earnings to fixed
charges for the periods indicated:
Nine Months Ended Fiscal Year Ended December 31,
September 30, 2001 2000 1999 1998 1997 1996
------------------ ---- ---- ---- ---- ----
Ratio of earnings to fixed charges........ 3.0x 4.8x 1.8x 3.4x 3.6x 3.5x
The ratios of earnings to fixed charges presented above were computed by
dividing our consolidated earnings by our consolidated fixed charges. For this
purpose, earnings have been calculated by adding fixed charges to net income.
Fixed charges consist of interest costs, whether expensed or capitalized, and
any interest component of capitalized lease expense, amortization of debt
discounts and deferred financing costs, whether expensed or capitalized, and
distributions on trust preferred securities. During the periods presented, we
had not issued any preferred shares, and so 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.
On October 12, 1999, HRPT Properties Trust, our former parent, distributed
50.7% of its ownership interest in us to its shareholders. The ratios presented
above have been calculated as if we were separate from HRPT Properties Trust for
all periods. For all periods prior to October 12, 1999, interest expense was
allocated based on HRPT Properties Trust's historical interest expense as a
percentage of its average historical costs of real estate investments.
DESCRIPTION OF DEBT SECURITIES
The debt securities sold under this prospectus will be our direct
obligations, which may be secured or unsecured, and which may be senior or
subordinated indebtedness. Our senior unsecured debt securities will be issued
under the indenture, dated as of December 20, 2001, between us and State Street
Bank and Trust Company, as it may be amended, supplemented or otherwise modified
from time to time, or under one or more other indentures between us and that
trust company or another trustee. Our other debt securities will be issued under
one or more indentures between us and a trustee. Any indenture will be subject
to and governed by the Trust Indenture Act of 1939, as amended. The statements
made in this prospectus relating to any indentures and the debt securities to be
issued under the indentures are summaries of certain anticipated provisions of
the indentures and are not complete.
2
The following is a summary of the material terms of our debt securities.
Because it is a summary, it does not contain all of the information that may be
important to you. If you want more information, you should read the forms of
indentures which we have filed as exhibits to the registration statement of
which this prospectus is part. We will file any indentures and supplemental
indentures if we issue debt securities. See "Where You Can Find More
Information." You may also review our December 20, 2001, senior debt indenture
at the corporate trust offices of State Street Bank and Trust Company, Two
International Place, Boston, Massachusetts 02110. This summary is also subject
to and qualified by reference to the descriptions of the particular terms of
securities described in the applicable prospectus supplement.
General
We may issue debt securities that rank "senior," "senior subordinated" or
"junior subordinated." The debt securities that we refer to as "senior" will be
our direct obligations and will rank equally and ratably in right of payment
with our other indebtedness not subordinated. We may issue debt securities that
will be subordinated in right of payment to the prior payment in full of senior
debt, as defined in the applicable prospectus supplement, and may rank equally
and ratably with the other senior subordinated indebtedness. We refer to these
as "senior subordinated" securities. We may also issue debt securities that may
be subordinated in right of payment to the senior subordinated securities. These
would be "junior subordinated" securities. We have filed with the registration
statement of which this prospectus is part three separate forms of indenture,
one for the senior securities, one for the senior subordinated securities and
one for the junior subordinated securities. We refer to senior subordinated and
junior subordinated securities as "subordinated. "
We may issue the debt securities without limit as to aggregate principal
amount, in one or more series, in each case as we establish in one or more
supplemental indentures. We need not issue all debt securities of one series at
the same time. Unless we otherwise provide, we may reopen a series, without the
consent of the holders of the series, for issuances of additional securities of
that series.
We anticipate that any indenture will provide that we may, but need not,
designate more than one trustee under an indenture, each with respect to one or
more series of debt securities. Any trustee under any indenture may resign or be
removed with respect to one or more series of debt securities, and we may
appoint a successor trustee to act with respect to that series.
The applicable prospectus supplement will describe the specific terms
relating to the series of debt securities we will offer, including, where
applicable, the following:
o the title and series designation and whether they are senior securities,
senior subordinated securities or junior subordinated securities;
o the aggregate principal amount of the securities;
o the percentage of the principal amount at which we will issue the debt
securities and, if other than the principal amount of the debt securities,
the portion of the principal amount of the debt securities payable upon
maturity of the debt securities;
o if convertible, the initial conversion price, the conversion period and any
other terms governing such conversion;
o the stated maturity date;
o any fixed or variable interest rate or rates per annum;
o the place where principal, premium, if any, and interest will be payable and
where the debt securities can be surrendered for transfer, exchange or
conversion;
3
o the date from which interest may accrue and any interest payment dates;
o any sinking fund requirements;
o any provisions for redemption, including the redemption price and any
remarketing arrangements;
o whether the securities are denominated or payable in United States dollars
or a foreign currency or units of two or more foreign currencies;
o the events of default and covenants of such securities, including the
required conditions to our ability to merge or consolidate or sell
substantially all of our assets, to the extent different from or in addition
to those described in this prospectus;
o whether we will issue the debt securities in certificated or book-entry
form;
o whether the debt securities will be in registered or bearer form and, if in
registered form, the denominations if other than in even multiples of $1,000
and, if in bearer form, the denominations and terms and conditions relating
thereto;
o whether we will issue any of the debt securities in permanent global form
and, if so, the terms and conditions, if any, upon which interests in the
global security may be exchanged, in whole or in part, for the individual
debt securities represented by the global security;
o the applicability, if any, of the defeasance and covenant defeasance
provisions described in this prospectus or any prospectus supplement;
o whether we will pay additional amounts on the securities in respect of any
tax, assessment or governmental charge and, if so, whether we will have the
option to redeem the debt securities instead of making this payment;
o the subordination provisions, if any, relating to the debt securities;
o if the debt securities are to be issued upon the exercise of debt warrants,
the time, manner and place for them to be authenticated and delivered;
o whether any of our subsidiaries will be bound by the terms of the indenture,
in particular any restrictive covenants;
o the provisions relating to any security provided for the debt securities;
and
o the provisions relating to any guarantee of the debt securities.
We may issue debt securities at less than the principal amount payable at
maturity. We refer to these securities as "original issue discount" securities.
If material or applicable, we will describe in the applicable prospectus
supplement special U.S. federal income tax, accounting and other considerations
applicable to original issue discount securities.
Except as may be described in any prospectus supplement, an indenture will
not contain any other provisions that would limit our ability to incur
indebtedness or that would afford holders of the debt securities protection in
the event of a highly leveraged or similar transaction involving us or in the
event of a change of control. You should review carefully the applicable
prospectus supplement for information with respect to events of default and
covenants applicable to the securities being offered.
4
Denominations, Interest, Registration and Transfer
Unless otherwise described in the applicable prospectus supplement, we will
issue the debt securities of any series that are registered securities in
denominations that are even multiples of $1,000, other than global securities,
which may be of any denomination.
Unless otherwise specified in the applicable prospectus supplement, we will
pay the interest, principal and any premium at the corporate trust office of the
trustee. At our option, however, we may make payment of interest by check mailed
to the address of the person entitled to the payment as it appears in the
applicable register or by wire transfer of funds to that person at an account
maintained within the United States.
If we do not punctually pay or otherwise provide for interest on any
interest payment date, the defaulted interest will be paid either:
o to the person in whose name the debt security is registered at the close of
business on a special record date the trustee will fix; or
o in any other lawful manner, all as the applicable indenture describes.
You may have your debt securities divided into more debt securities of
smaller denominations or combined into fewer debt securities of larger
denominations, as long as the total principal amount is not changed. We call
this an "exchange."
You may exchange or transfer debt securities at the office of the applicable
trustee. The trustee acts as our agent for registering debt securities in the
names of holders and transferring debt securities. We may change this
appointment to another entity or perform it ourselves. The entity performing the
role of maintaining the list of registered holders is called the "registrar." It
will also perform transfers.
You will not be required to pay a service charge to transfer or exchange
debt securities, but you may be required to pay for any tax or other
governmental charge associated with the exchange or transfer. The security
registrar will make the transfer or exchange only if it is satisfied with your
proof of ownership.
Merger, Consolidation or Sale of Assets
Under any indenture, we are generally permitted to consolidate or merge with
another company. We are also permitted to sell substantially all of our assets
to another company, or to buy substantially all of the assets of another
company. However, we may not take any of these actions unless the following
conditions are met:
o If we merge out of existence or sell our assets, the other company must be
an entity organized under the laws of a State or the District of Columbia or
under federal law and must agree to be legally responsible for our debt
securities; and
o Immediately after the merger, sale of assets or other transaction, we may
not be in default on the debt securities. A default for this purpose would
include any event that would be an event of default if the requirements for
giving us default notice or our default having to exist for a specific
period of time were disregarded.
Certain Covenants
Existence. Except as permitted as described above under "--Merger,
Consolidation or Sale of Assets," we will agree to do all things necessary to
preserve and keep our trust existence, rights and franchises provided that it is
in our best interests for the conduct of business.
5
Provisions of Financial Information. Whether or not we remain required to do
so under the Securities Exchange Act of 1934, as amended, to the extent
permitted by law, we will agree to file all annual, quarterly and other reports
and financial statements with the SEC and an indenture trustee on or before the
applicable SEC filing dates as if we were required to do so.
Events of Default and Related Matters
Events of Default. The term "event of default" for any series of debt
securities means any of the following:
o We do not pay the principal or any premium on a debt security of that series
within 30 days after its maturity date;
o We do not pay interest on a debt security of that series within 30 days
after its due date;
o We do not deposit any sinking fund payment for that series within 30 days
after its due date;
o We remain in breach of any other term of the applicable indenture (other
than a term added to the indenture solely for the benefit of other series)
for 60 days after we receive a notice of default stating we are in breach.
Either the trustee or holders of more than 50% in principal amount of debt
securities of the affected series may send the notice;
o We default under any of our other indebtedness in an aggregate principal
amount exceeding $25,000,000 after the expiration of any applicable grace
period, which default results in the acceleration of the maturity of such
indebtedness. Such default is not an event of default if the other
indebtedness is discharged, or the acceleration is rescinded or annulled,
within a period of 10 days after we receive notice specifying the default
and requiring that we discharge the other indebtedness or cause the
acceleration to be rescinded or annulled. Either the trustee or the holders
of more than 50% in principal amount of debt securities of the affected
series may send the notice;
o We or one of our "significant subsidiaries," if any, files for bankruptcy or
certain other events in bankruptcy, insolvency or reorganization occur; or
o Any other event of default described in the applicable prospectus supplement
occurs.
The term "significant subsidiary" means each of our significant
subsidiaries, if any, as defined in Regulation S-X under the Securities Act of
1933, as amended.
Remedies if an Event of Default Occurs. If an event of default has occurred
and has not been cured, the trustee or the holders of at least a majority in
principal amount of the debt securities of the affected series may declare the
entire principal amount of all the debt securities of that series to be due and
immediately payable. If an event of default occurs because of certain events in
bankruptcy, insolvency or reorganization, the principal amount of all the debt
securities of that series will be automatically accelerated, without any action
by the trustee or any holder. At any time after the trustee or the holders have
accelerated any series of debt securities, but before a judgment or decree for
payment of the money due has been obtained, the holders of at least a majority
in principal amount of the debt securities of the affected series may, under
certain circumstances, rescind and annul such acceleration.
The trustee will be required to give notice to the holders of debt
securities within 90 days after a default under the applicable indenture unless
the default has been cured or waived. The trustee may withhold notice to the
holders of any series of debt securities of any default with respect to that
series, except a default in the payment of the principal of or interest on any
debt security of that series, if specified responsible officers of the trustee
in good faith determine that withholding the notice is in the interest of the
holders.
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Except in cases of default, where the trustee has some special duties, the
trustee is not required to take any action under the applicable indenture at the
request of any holders unless the holders offer the trustee reasonable
protection from expenses and liability. We refer to this as an "indemnity." If
reasonable indemnity is provided, the holders of a majority in principal amount
of the outstanding securities of the relevant series may direct the time, method
and place of conducting any lawsuit or other formal legal action seeking any
remedy available to the trustee. These majority holders may also direct the
trustee in performing any other action under the applicable indenture, subject
to certain limitations.
Before you bypass the trustee and bring your own lawsuit or other formal
legal action or take other steps to enforce your rights or protect your
interests relating to the debt securities, the following must occur:
o You must give the trustee written notice that an event of default has
occurred and remains uncured;
o The holders of at least a majority in principal amount of all outstanding
securities of the relevant series must make a written request that the
trustee take action because of the default, and must offer reasonable
indemnity to the trustee against the cost and other liabilities of taking
that action; and
o The trustee must have not taken action for 60 days after receipt of the
notice and offer of indemnity.
However, you are entitled at any time to bring a lawsuit for the payment of
money due on your security after its due date.
Every year we will furnish to the trustee a written statement by certain of
our officers certifying that to their knowledge we are in compliance with the
applicable indenture and the debt securities, or else specifying any default.
Modification of an Indenture
There are three types of changes we can make to the indentures and the debt
securities:
Changes Requiring Your Approval. First, there are changes we cannot make to
your debt securities without your specific approval. The following is a list of
those types of changes:
o change the stated maturity of the principal or interest on a debt security;
o reduce any amounts due on a debt security;
o reduce the amount of principal payable upon acceleration of the maturity of
a debt security following a default;
o change the currency of payment on a debt security;
o impair your right to sue for payment;
o modify the subordination provisions, if any, in a manner that is adverse to
you;
o reduce the percentage of holders of debt securities whose consent is needed
to modify or amend an indenture or to waive compliance with certain
provisions of an indenture;
o reduce the percentage of holders of debt securities whose consent is needed
to waive past defaults or change certain provisions of the indenture
relating to waivers of default;
o waive a default or event of default in the payment of principal of or
premium, if any, or interest on the debt securities; or
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o modify any of the foregoing provisions.
Changes Requiring a Majority Vote. The second type of change to an indenture
and the debt securities is the kind that requires a vote in favor by holders of
debt securities owning a majority of the principal amount of the particular
series affected. Most changes fall into this category, except for clarifying
changes and certain other changes that would not materially adversely affect
holders of the debt securities. We require the same vote to obtain a waiver of a
past default. However, we cannot obtain a waiver of a payment default or any
other aspect of an indenture or the debt securities listed in the first category
described above under "--Changes Requiring Your Approval" unless we obtain your
individual consent to the waiver.
Changes Not Requiring Approval. The third type of change does not require
any vote by holders of debt securities. This type is limited to clarifications
and certain other changes that would not materially adversely affect holders of
the debt securities.
Further Details Concerning Voting. Debt securities are not considered
outstanding, and holders of debt securities may not be able to vote, if we have
deposited or set aside in trust for you money for their payment or redemption or
if we or one of our affiliates own them. The holders of debt securities are also
not eligible to vote if the securities have been fully defeased as described
immediately below under "--Discharge, Defeasance and Covenant Defeasance--Full
Defeasance." For original issue discount securities, we will use the principal
amount that would be due and payable on the voting date if the maturity of the
debt securities were accelerated to that date because of a default.
Discharge, Defeasance and Covenant Defeasance
Discharge. We may discharge some obligations to holders of any series of
debt securities that either have become due and payable or will become due and
payable within one year, or scheduled for redemption within one year, by
irrevocably depositing with the trustee, in trust, funds in the applicable
currency in an amount sufficient to pay the debt securities, including any
premium and interest.
Full Defeasance. We can, under particular circumstances, effect a full
defeasance of your series of debt securities. By this we mean we can legally
release ourselves from any payment or other obligations on the debt securities
if, among other things, we put in place the arrangements described below to
repay you and deliver certain certificates and opinions to the trustee:
o We must deposit in trust for your benefit and the benefit of all other
direct holders of the debt securities a combination of money or U.S.
government or U.S. government agency notes or bonds (or, in some
circumstances, depositary receipts representing these notes or bonds) that
will generate enough cash to make interest, principal and any other payments
on the debt securities on their various due dates;
o The current federal tax law must be changed or an IRS ruling must be issued
permitting the above deposit without causing you to be taxed on the debt
securities any differently than if we did not make the deposit and just
repaid the debt securities ourselves. Under current federal income tax law,
the deposit and our legal release from the debt securities would be treated
as though we took back your debt securities and gave you your share of the
cash and notes or bonds deposited in trust. In that event, you could
recognize gain or loss on the debt securities you give back to us; and
o We must deliver to the trustee a legal opinion confirming the tax law change
described above.
If we did accomplish full defeasance, you would have to rely solely on the
trust deposit for repayment on the debt securities. You could not look to us for
repayment in the unlikely event of any shortfall. Conversely, the trust deposit
would most likely be protected from claims of our lenders and other creditors if
we ever became bankrupt or insolvent. You would also be released from any
subordination provisions.
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Covenant Defeasance. Under current federal income tax law, we can make the
same type of deposit described above and be released from some of the
restrictive covenants in the debt securities. This is called "covenant
defeasance." In that event, you would lose the protection of those restrictive
covenants but would gain the protection of having money and securities set aside
in trust to repay the securities and you would be released from any
subordination provisions.
If we accomplish covenant defeasance, the following provisions of an
indenture and the debt securities would no longer apply:
o any covenants applicable to the series of debt securities and described in
the applicable prospectus supplement;
o any subordination provisions; and
o certain events of default relating to breach of covenants and acceleration
of the maturity of other debt set forth in any prospectus supplement.
If we accomplish covenant defeasance, you can still look to us for repayment
of the debt securities if a shortfall in the trust deposit occurred. If one of
the remaining events of default occurs, for example, our bankruptcy, and the
debt securities become immediately due and payable, there may be a shortfall.
Depending on the event causing the default, you may not be able to obtain
payment of the shortfall.
Subordination
We will describe in the applicable prospectus supplement the terms and
conditions, if any, upon which any series of senior subordinated securities or
subordinated securities is subordinated to debt securities of another series or
to our other indebtedness. The terms will include a description of:
o the indebtedness ranking senior to the debt securities being offered;
o the restrictions, if any, on payments to the holders of the debt securities
being offered while a default with respect to the senior indebtedness is
continuing;
o the restrictions, if any, on payments to the holders of the debt securities
being offered following an event of default; and
o provisions requiring holders of the debt securities being offered to remit
some payments to holders of senior indebtedness.
Global Securities
If so set forth in the applicable prospectus supplement, we may issue the
debt securities of a series in whole or in part in the form of one or more
global securities that will be deposited with a depositary identified in the
prospectus supplement. We may issue global securities in either registered or
bearer form and in either temporary or permanent form. The specific terms of the
depositary arrangement with respect to any series of debt securities will be
described in the prospectus supplement.
DESCRIPTION OF COMMON SHARES
Our declaration of trust authorizes us to issue up to an aggregate of
50,000,000 shares of beneficial interest, all of which we have initially
designated as common shares of beneficial interest. As of December 31, 2001, we
had 43,421,700 common shares issued and outstanding. As permitted by the
Maryland REIT Law, our declaration of trust contains a provision permitting our
board of trustees, without any action by our shareholders, to amend the
declaration of trust to increase or decrease the total number of shares of
beneficial interest, to issue new and
9
different classes of shares in any amount or to reclassify any unissued shares
into other classes or series of classes that we choose. We believe that giving
these powers to our board of trustees will provide us with increased flexibility
in structuring possible future financings and acquisitions and in meeting other
business needs which might arise. Although our board of trustees has no
intention at the present time of doing so, it could authorize us to issue a
class or series that could, depending upon the terms of the class or series,
delay or prevent a change in control.
The following is a summary description of the material terms of our common
shares of beneficial interest. Because it is a summary, it does not contain all
of the information that may be important to you. If you want more information,
you should read our declaration of trust and bylaws, copies of which have been
filed with the SEC. See "Where You Can Find More Information." This summary is
also subject to and qualified by reference to the description of the particular
terms of your securities described in the applicable prospectus supplement.
Except as otherwise described in the applicable prospectus supplement, all
of our common shares are entitled to the following, subject to the preferential
rights of any other class or series of shares which may be issued and to the
provisions of our declaration of trust regarding the restriction of the
ownership of shares of beneficial interest:
o to receive distributions on their shares if, as and when authorized and
declared by our board of trustees out of assets legally available for
distribution; and
o to share ratably in our assets legally available for distribution to our
shareholders in the event of our liquidation, dissolution or winding up
after payment of or adequate provision for all of our known debts and
liabilities.
Subject to the provisions of our declaration of trust regarding the
restriction on the transfer of shares of beneficial interest, each outstanding
common share entitles the holder to one vote on all matters submitted to a vote
of shareholders, including the election of trustees.
Holders of common shares have no preference, conversion, exchange, sinking
fund, redemption or appraisal rights.
Shareholders will have no preemptive rights to subscribe for any of our
securities. Subject to the provisions of our declaration of trust regarding the
restriction on ownership of shares of beneficial interest, common shares will
have equal distribution, liquidation and other rights.
For other information with respect to our shares, including effects that
provisions in our declaration of trust and bylaws may have in delaying or
deterring a change in our control, see "Description of Certain Provisions of
Maryland Law and Our Declaration of Trust and Bylaws" below.
DESCRIPTION OF PREFERRED SHARES
Preferred Shares
The following is a summary description of the material terms of our
preferred shares of beneficial interest. Because it is a summary, it does not
contain all of the information that may be important to you. If you want more
information, you should read our declaration of trust and bylaws, copies of
which have been filed with the SEC. See "Where You Can Find More Information."
This summary is also subject to and qualified by reference to the description of
the particular terms of securities described in the applicable prospectus
supplement.
General. Our board of trustees will determine the designations, preferences,
limitations and relative rights of our authorized and unissued preferred shares.
These may include:
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o the distinctive designation of each series and the number of shares that
will constitute the series;
o the voting rights, if any, of shares of the series;
o the distribution rate on the shares of the series, any restriction,
limitation or condition upon the payment of the distribution, whether
distributions will be cumulative, and the dates on which distributions are
payable;
o the prices at which, and the terms and conditions on which, the shares of
the series may be redeemed, if the shares are redeemable;
o the purchase or sinking fund provisions, if any, for the purchase or
redemption of shares of the series;
o any preferential amount payable upon shares of the series upon our
liquidation or the distribution of our assets;
o if the shares are convertible, the price or rates of conversion at which,
and the terms and conditions on which, the shares of the series may be
converted into other securities; and
o whether the series can be exchanged, at our option, into debt securities,
and the terms and conditions of any permitted exchange.
The issuance of preferred shares, or the issuance of rights to purchase
preferred shares, could discourage an unsolicited acquisition proposal. In
addition, the rights of holders of common shares will be subject to, and may be
adversely affected by, the rights of holders of any preferred shares that we may
issue in the future.
The following describes some general terms and provisions of the preferred
shares to which a prospectus supplement may relate. The statements below
describing the preferred shares are in all respects subject to and qualified in
their entirety by reference to the applicable provisions of our declaration of
trust, including any applicable articles supplementary, and our bylaws.
The prospectus supplement will describe the specific terms as to each
issuance of preferred shares, including:
o the description of the preferred shares;
o the number of the preferred shares offered;
o the voting rights, if any, of the holders of the preferred shares;
o the offering price of the preferred shares;
o the distribution rate, when distributions will be paid, or the method of
determining the distribution rate if it is based on a formula or not
otherwise fixed;
o the date from which distributions on the preferred shares shall accumulate;
o the provisions for any auctioning or remarketing, if any, of the preferred
shares;
o the provision, if any, for redemption or a sinking fund;
o the liquidation preference per share;
o any listing of the preferred shares on a securities exchange;
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o whether the preferred shares will be convertible and, if so, the security
into which they are convertible and the terms and conditions of conversion,
including the conversion price or the manner of determining it;
o whether interests in the preferred shares will be represented by depositary
shares as more fully described below under "Description of Depositary
Shares;"
o a discussion of federal income tax considerations;
o the relative ranking and preferences of the preferred shares as to
distribution and liquidation rights;
o any limitations on issuance of any preferred shares ranking senior to or on
a parity with the series of preferred shares being offered as to
distribution and liquidation rights;
o any limitations on direct or beneficial ownership and restrictions on
transfer, in each case as may be appropriate to preserve our status as a
real estate investment trust; and
o any other specific terms, preferences, rights, limitations or restrictions
of the preferred shares.
As described under "Description of Depositary Shares," we may, at our
option, elect to offer depositary shares evidenced by depositary receipts. If we
elect to do this, each depositary receipt will represent a fractional interest
in a share of the particular series of the preferred shares issued and deposited
with a depositary. The applicable prospectus supplement will specify that
fractional interest.
Rank
Unless our board of trustees otherwise determines and we so specify in the
applicable prospectus supplement, we expect that the preferred shares will, with
respect to distribution rights and rights upon liquidation or dissolution, rank
senior to all our common shares.
Distributions
Holders of preferred shares of each series will be entitled to receive cash
and/or share distributions at the rates and on the dates shown in the applicable
prospectus supplement. Even though the preferred shares may specify a fixed rate
of distribution, our board of trustees must authorize and declare those
distributions and they may be paid only out of assets legally available for
payment. We will pay each distribution to holders of record as they appear on
our share transfer books on the record dates fixed by our board of trustees. In
the case of preferred shares represented by depositary receipts, the records of
the depositary referred to under "Description of Depositary Shares" will
determine the persons to whom distributions are payable.
Distributions on any series of preferred shares may be cumulative or
noncumulative, as provided in the applicable prospectus supplement. We refer to
each particular series, for ease of reference, as the applicable series.
Cumulative distributions will be cumulative from and after the date shown in the
applicable prospectus supplement. If our board of trustees fails to authorize a
distribution on any applicable series that is noncumulative, the holders will
have no right to receive, and we will have no obligation to pay, a distribution
in respect of the applicable distribution period, whether or not distributions
on that series are declared payable in the future.
If the applicable series is entitled to a cumulative distribution, we may
not declare, or pay or set aside for payment, any full distributions on any
other series of preferred shares ranking, as to distributions, on a parity with
or junior to the applicable series, unless we declare, and either pay or set
aside for payment, full cumulative distributions on the applicable series for
all past distribution periods and the then current distribution period. If the
applicable series does not have a cumulative distribution, we must declare, and
pay or set aside for payment, full distributions for the then current
distribution period only. When distributions are not paid, or set aside for
payment, in full upon any applicable series and the shares of any other series
ranking on a parity as to distributions with the
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applicable series, we must declare, and pay or set aside for payment, all
distributions upon the applicable series and any other parity series
proportionately, in accordance with accrued and unpaid distributions of the
several series. For these purposes, accrued and unpaid distributions do not
include unpaid distribution periods on noncumulative preferred shares. No
interest will be payable in respect of any distribution payment that may be in
arrears.
Except as provided in the immediately preceding paragraph, unless we
declare, and pay or set aside for payment, full cumulative distributions,
including for the then current period, on any cumulative applicable series, we
may not declare, or pay or set aside for payment, any distributions upon common
shares or any other equity securities ranking junior to or on a parity with the
applicable series as to distributions or upon liquidation. The foregoing
restriction does not apply to distributions paid in common shares or other
equity securities ranking junior to the applicable series as to distributions
and upon liquidation. If the applicable series is noncumulative, we need only
declare, and pay or set aside for payment, the distribution for the then current
period, before declaring distributions on common shares or junior or parity
securities. In addition, under the circumstances that we could not declare a
distribution, we may not redeem, purchase or otherwise acquire for any
consideration any common shares or other parity or junior equity securities,
except upon conversion into or exchange for common shares or other junior equity
securities. We may, however, make purchases and redemptions otherwise prohibited
pursuant to certain redemptions or pro rata offers to purchase the outstanding
shares of the applicable series and any other parity series of preferred shares.
We will credit any distribution payment made on an applicable series first
against the earliest accrued but unpaid distribution due with respect to the
series.
Redemption
We may have the right or may be required to redeem one or more series of
preferred shares, as a whole or in part, in each case upon the terms, if any,
and at the times and at the redemption prices shown in the applicable prospectus
supplement.
If a series of preferred shares is subject to mandatory redemption, we will
specify in the applicable prospectus supplement the number of shares we are
required to redeem, when those redemptions start, the redemption price, and any
other terms and conditions affecting the redemption. The redemption price will
include all accrued and unpaid distributions, except in the case of
noncumulative preferred shares. 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 our issuance of shares of beneficial interest, the terms of the
preferred shares may provide that, if no shares of beneficial interest 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, the
preferred shares will automatically and mandatorily be converted into shares of
beneficial interest pursuant to conversion provisions specified in the
applicable prospectus supplement.
Liquidation Preference
The applicable prospectus supplement will show the liquidation preference of
the applicable series. Upon our voluntary or involuntary liquidation, before any
distribution may be made to the holders of our common shares or any other shares
of beneficial interest ranking junior in the distribution of assets upon any
liquidation to the applicable series, the holders of that series will be
entitled to receive, out of our assets legally available for distribution to
shareholders, liquidating distributions in the amount of the liquidation
preference, plus an amount equal to all distributions accrued and unpaid. In the
case of a noncumulative applicable series, accrued and unpaid distributions
include only the then current distribution period. 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 our remaining assets.
If liquidating distributions shall have been made in full to all holders of
preferred shares, our remaining assets will be distributed among the holders of
any other shares of beneficial interest ranking junior to the preferred shares
upon liquidation, according to their rights and preferences and in each case
according to their number of shares.
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If, upon any voluntary or involuntary liquidation, our available assets are
insufficient to pay the amount of the liquidating distributions on all
outstanding shares of that series and the corresponding amounts payable on all
shares of beneficial interest ranking on a parity in the distribution of assets
with that series, then the holders of that series and all other equally ranking
shares of beneficial interest shall share ratably in the distribution in
proportion to the full liquidating distributions to which they would otherwise
be entitled.
For these purposes, our consolidation or merger with or into any other trust
or corporation or other entity, or the sale, lease or conveyance of all or
substantially all of our property or business, will not be a liquidation.
Voting Rights
Holders of the preferred shares will not have any voting rights, except as
shown below or as otherwise from time to time required by law or as specified in
the applicable prospectus supplement.
Unless otherwise specified in the applicable prospectus supplement, holders
of our preferred shares will be entitled to elect two additional trustees to our
board of trustees at our next annual meeting of shareholders and at each
subsequent annual meeting if at any time distributions on the applicable series
are in arrears for six consecutive quarterly periods. If the applicable series
has a cumulative distribution, the right to elect additional trustees described
in the preceding sentence shall remain in effect until we declare or pay and set
aside for payment all distributions accrued and unpaid on the applicable series.
If the applicable series does not have a cumulative distribution, the right to
elect additional trustees described above shall remain in effect until we
declare or pay and set aside for payment distributions accrued and unpaid on
four consecutive quarterly periods on the applicable series.
Unless otherwise provided for in an applicable series, so long as any
preferred shares are outstanding, we may not, without the affirmative vote or
consent of a majority of the shares of each series of preferred shares
outstanding at that time:
o authorize, create or increase the authorized or issued amount of any class
or series of shares of beneficial interest ranking senior to that series of
preferred shares with respect to distribution and liquidation rights;
o reclassify any authorized shares of beneficial interest into a series of
shares of beneficial interest ranking senior to that series of preferred
shares with respect to distribution and liquidation rights;
o create, authorize or issue any security or obligation convertible into or
evidencing the right to purchase any shares of beneficial interest ranking
senior to that series of preferred shares with respect to distribution and
liquidation rights; and
o amend, alter or repeal the provisions of our declaration of trust or any
articles supplementary relating to that series of preferred shares that
materially and adversely affects the series of preferred shares.
The authorization, creation or increase of the authorized or issued amount
of any class or series of shares of beneficial interest ranking on parity or
junior to a series of preferred shares with respect to distribution and
liquidation rights will not be deemed to materially and adversely affect that
series.
As more fully described under "Description of Depositary Shares" below, if
we elect to issue depositary shares, each representing a fraction of a share of
a series, each depositary will in effect be entitled to a fraction of a vote per
depositary share.
Conversion Rights
We will describe in the applicable prospectus supplement the terms and
conditions, if any, upon which you may, or we may require you to, convert shares
of any series of preferred shares into common shares or any other class or
14
series of shares of beneficial interest. The terms will include the number of
common shares or other securities into which the preferred shares are
convertible, the conversion price (or the manner of determining it), the
conversion period, provisions as to whether conversion will be at the option of
the holders of the series or at our option, the events requiring an adjustment
of the conversion price, and provisions affecting conversion upon the redemption
of shares of the series.
Our Exchange Rights
We will describe in the applicable prospectus supplement the terms and
conditions, if any, upon which we can require you to exchange shares of any
series of preferred shares for debt securities. If an exchange is required, you
will receive debt securities with a principal amount equal to the liquidation
preference of the applicable series of preferred shares. The other terms and
provisions of the debt securities will not be materially less favorable to you
than those of the series of preferred shares being exchanged.
DESCRIPTION OF DEPOSITARY SHARES
General
The following is a summary of the material provisions of any deposit
agreement and of the depositary shares and depositary receipts representing
depositary shares. Because it is a summary, it does not contain all of the
information that may be important to you. If you want more information, you
should read the form of deposit agreement and depositary receipts which we will
filed as exhibits to the registration statement of which this prospectus is part
prior to an offering of depositary shares. See "Where You Can Find More
Information." This summary is also subject to and qualified by reference to the
descriptions of the particular terms of your securities described in the
applicable prospectus supplement.
We may, at our option, elect to offer fractional interests in shares of
preferred shares, rather than shares of preferred shares. If we exercise this
option, we will appoint a depositary to issue depositary receipts representing
those fractional interests. Preferred shares of each series represented by
depositary shares will be deposited under a separate deposit agreement between
us and the depositary. The prospectus supplement relating to a series of
depositary shares will show the name and address of the depositary. Subject to
the terms of the applicable deposit agreement, each owner of depositary shares
will be entitled to all of the distribution, voting, conversion, redemption,
liquidation and other rights and preferences of the preferred shares represented
by those depositary shares.
Depositary receipts issued pursuant to the applicable deposit agreement will
evidence ownership of depositary shares. Upon surrender of depositary receipts
at the office of the depositary, and upon payment of the charges provided in and
subject to the terms of the deposit agreement, a holder of depositary shares
will be entitled to receive the preferred shares underlying the surrendered
depositary receipts.
Distributions
A depositary will be required to distribute all 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 depositary receipts owned by the holders. Fractions will be
rounded down to the nearest whole cent.
If the distribution is other than in cash, a depositary will be required to
distribute property received by it to the record holders of depositary receipts
entitled thereto, unless the depositary determines that it is not feasible to
make the distribution. In that case, the depositary may, with our approval, sell
the property and distribute the net proceeds from the sale to the holders.
Depositary shares that represent preferred shares converted or exchanged
will not be entitled to distributions. The deposit agreement will also contain
provisions relating to the manner in which any subscription or similar rights
15
we offer to holders of the preferred shares will be made available to holders of
depositary shares. All distributions will be subject to obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to the depositary.
Withdrawal of Preferred Shares
You may receive the number of whole shares of your series of preferred
shares and any money or other property represented by those depositary receipts
after surrendering the depositary receipts at the corporate trust office of the
depositary. Partial shares of preferred shares will not be issued. If the
depositary shares that you surrender exceed the number of depositary shares that
represent the number of whole preferred shares you wish to withdraw, then the
depositary will deliver to you at the same time a new depositary receipt
evidencing the excess number of depositary shares. Once you have withdrawn your
preferred shares, you will not be entitled to re-deposit those preferred shares
under the deposit agreement in order to receive depositary shares. We do not
expect that there will be any public trading market for withdrawn preferred
shares.
Redemption of Depositary Shares
If we redeem a series of the preferred shares underlying the depositary
shares, the depositary will redeem those shares from the proceeds received by
it. The depositary will mail notice of redemption not less than 30 and not more
than 60 days before the date fixed for redemption to the record holders of the
depositary receipts evidencing the depositary shares we are redeeming at their
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 the series of the preferred shares. The
redemption date for depositary shares will be the same as that of the preferred
shares. If we are redeeming less than all of the depositary shares, the
depositary will select the depositary shares we are redeeming by lot or pro rata
as the depositary may determine.
After the date fixed for redemption, the depositary shares called for
redemption will no longer be deemed outstanding. All rights of the holders of
the depositary shares and the related depositary receipts will cease at that
time, except the right to receive the money or other property to which the
holders of depositary shares were entitled upon redemption. Receipt of the money
or other property is subject to surrender to the depositary of the depositary
receipts evidencing the redeemed 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 the notice of meeting to the record holders of the
applicable depositary receipts. Each record holder of depositary receipts on the
record date, which will be the same date as the record date, will be entitled to
instruct the depositary as to the exercise of the voting rights pertaining to
the amount of preferred shares represented by the holder's depositary shares.
The depositary will try, as practical, to vote the shares as you instruct. We
will agree to take all reasonable action that the depositary deems necessary in
order to enable it to do so. If you do not instruct the depositary how to vote
your shares, the depositary will abstain from voting those shares.
Liquidation Preference
Upon our liquidation, whether voluntary or involuntary, each holder of
depositary shares will be entitled to the fraction of the liquidation preference
accorded each preferred share represented by the depositary shares, as shown in
the applicable prospectus supplement.
Conversion or Exchange of Preferred Shares
The depositary shares will not themselves be convertible into or
exchangeable for common shares, preferred shares or any of our other securities
or property. Nevertheless, if so specified in the applicable prospectus
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supplement, the depositary receipts may be surrendered by holders to the
applicable depositary with written instructions to it to instruct us to cause
conversion of the preferred shares represented by the depositary shares.
Similarly, if so specified in the applicable prospectus supplement, we may
require you to surrender all of your depositary receipts to the applicable
depositary upon our requiring the conversion or exchange of the preferred shares
represented by the depositary shares into our debt securities. We will agree
that, upon receipt of the instruction and any amounts payable in connection with
the conversion or exchange, we will cause the conversion or exchange using the
same procedures as those provided for delivery of preferred shares to effect the
conversion or exchange. If you are converting only a part of the depositary
shares, the depositary will issue you a new depositary receipt for any
unconverted depositary shares.
Taxation
As owner of depositary shares, you will be treated for U.S. federal income
tax purposes as if you were an owner of the series of preferred shares
represented by the depositary shares. Therefore, you will be required to take
into account for U.S. federal income tax purposes income and deductions to which
you would be entitled if you were a holder of the underlying series of preferred
shares. In addition:
o no gain or loss will be recognized for U.S. federal income tax purposes upon
the withdrawal of preferred shares in exchange for depositary shares
provided in the deposit agreement;
o the tax basis of each preferred share to you as exchanging owner of
depositary shares will, upon exchange, be the same as the aggregate tax
basis of the depositary shares exchanged for the preferred shares; and
o if you held the depositary shares as a capital asset at the time of the
exchange for preferred shares, the holding period for the preferred shares
will include the period during which you owned the depositary shares.
Amendment and Termination of a Deposit Agreement
We and the applicable depositary are permitted to amend the provisions of
the depositary receipts and the deposit agreement. However, the holders of at
least a majority of the applicable depositary shares then outstanding must
approve any amendment that adds or increases fees or charges or prejudices an
important right of holders. Every holder of an outstanding depositary receipt at
the time any amendment becomes effective, by continuing to hold the receipt,
will be bound by the applicable deposit agreement, as amended.
Any deposit agreement may be terminated by us upon not less than 30 days'
prior written notice to the applicable depositary if (1) the termination is
necessary to preserve our status as a Maryland real estate investment trust or
(2) a majority of each series of preferred shares affected by the termination
consents to the termination. When either event occurs, the depositary will be
required to deliver or make available to each holder of depositary receipts,
upon surrender of the depositary receipts held by the holder, the number of
whole or fractional shares of preferred shares as are represented by the
depositary shares evidenced by the depositary receipts, together with any other
property held by the depositary with respect to the depositary receipts. In
addition, a deposit agreement will automatically terminate if:
o all depositary shares have been redeemed;
o there shall have been a final distribution in respect of the related
preferred shares in connection with our liquidation and the distribution has
been made to the holders of depositary receipts evidencing the depositary
shares underlying the preferred shares; or
o each related preferred share shall have been converted or exchanged into
securities not represented by depositary shares.
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Charges of a Depositary
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of a deposit agreement. In addition, we 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 the holders request to be
performed that 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 us notice of its
election to do so. In addition, we may at any time remove a depositary. Any
resignation or removal will take effect when we appoint a successor depositary
and it accepts the appointment. We must appoint a successor depositary within 60
days after delivery of the notice of resignation or removal. A depositary must
be a bank or trust company having its principal office in the United States that
has a combined capital and surplus of at least $50 million.
Miscellaneous
A depositary will be required to forward to holders of depositary receipts
any reports and communications from us that it receives with respect to the
related preferred shares. Holders of depository receipts will be able to inspect
the transfer books of the depository and the list of holders of receipts upon
reasonable notice.
Neither a depositary nor our company will be liable if it is prevented from
or delayed in performing its obligations under a deposit agreement by law or any
circumstances beyond its control. Our obligations and those of the depositary
under a deposit agreement will be limited to performing duties in good faith and
without gross negligence or willful misconduct. Neither we nor any depositary
will be obligated to prosecute or defend any legal proceeding in respect of any
depositary receipts, depositary shares or related preferred shares unless
satisfactory indemnity is furnished. We and each depositary will be permitted to
rely on written advice of counsel or accountants, on information provided by
persons presenting preferred shares for deposit, by holders of depositary
receipts, or by other persons believed in good faith to be competent to give the
information, and on documents believed in good faith to be genuine and signed by
a proper party.
If a depositary receives conflicting claims, requests or instructions from
any holders of depositary receipts, on the one hand, and us, on the other hand,
the depositary shall be entitled to act on the claims, requests or instructions
received from us.
DESCRIPTION OF WARRANTS
We may issue, together with any other securities being offered or
separately, warrants entitling the holder to purchase from or sell to us, or to
receive from us the cash value of the right to purchase or sell, debt
securities, preferred shares, depositary shares, common shares or trust
preferred shares. We and a warrant agent will enter a warrant agreement pursuant
to which the warrants will be issued. The warrant agent will act solely as our
agent in connection with the warrants and will not assume any obligation or
relationship of agency or trust for or with any holders or beneficial owners of
warrants. We will file a copy of the form of warrants and the warrant agreement
with the SEC at or before the time of the offering of the applicable series of
warrants.
The following is a summary of the material terms of our warrants and the
warrant agreement. Because it is a summary, it does not contain all of the
information that may be important to you. If you want more information, you
should read the forms of copy of the warrants and the warrant agreement which we
will file as exhibits to the registration statement of which this prospectus is
part. See "Where You Can Find More Information." This summary is also subject to
and qualified by reference to the descriptions of the particular terms of your
securities described in the applicable prospectus supplement.
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In the case of each series of warrants, the applicable prospectus supplement
will describe the terms of the warrants being offered thereby. These include the
following, if applicable:
o the offering price;
o the number of warrants offered;
o the securities underlying the warrants;
o the exercise price, the procedures for exercise of the warrants and the
circumstances, if any, that will cause the warrants to be automatically
exercised;
o the date on which the warrants will expire;
o federal income tax consequences;
o the rights, if any, we have to redeem the warrant;
o the name of the warrant agent; and
o the 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. Before the
exercise of warrants, holders will not have any of the rights of holders of the
securities purchasable upon exercise and will not be entitled to payments made
to holders of those securities.
The warrant agreements may be amended or supplemented without the consent of
the holders of the warrants to which the amendment or supplement applies 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.
However, any amendment that materially and adversely alters the rights of the
holders of warrants will not be effective unless the holders of at least a
majority of the applicable warrants then outstanding approve the amendment.
Every holder of an outstanding warrant at the time any amendment becomes
effective, by continuing to hold the warrant, will be bound by the applicable
warrant agreement as amended thereby. The prospectus supplement applicable to a
particular series of warrants may provide that certain provisions of the
warrants, including the securities for which they may be exercisable, the
exercise price, and the expiration date may not be altered without the consent
of the holder of each warrant.
DESCRIPTION OF TRUST PREFERRED SECURITIES AND TRUST GUARANTEE
Trust Preferred Securities
If and when trust preferred securities are issued by a SNH Capital Trust,
its declaration of trust will be replaced by an amended and restated trust
agreement which will authorize its trustees to issue one series of trust
preferred securities and one series of trust common securities. The form of
amended and restated trust agreement is filed with the SEC as an exhibit to the
registration statement of which this prospectus is a part.
The following is a summary of the material terms of the trust preferred
securities and the trust agreement of each SNH Capital Trust. Because it is a
summary, it does not contain all of the information that may be important to
you. If you want more information, you should read the form of amended and
restated trust agreement which we have filed as an exhibit to the registration
statement of which this prospectus is part. Each SNH Capital Trust will file any
final amended and restated trust agreement if it issues trust preferred
securities. See "Where You Can Find
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More Information." This summary is also subject to and qualified by reference to
the descriptions of the particular terms of your securities described in the
applicable prospectus supplement.
The trust agreement of each SNH Capital Trust will be subject to, and
governed by, the Trust Indenture Act of 1939, as amended. The trust preferred
securities will be issued to the public under the registration statement of
which this prospectus is a part. The trust common securities will be issued
directly or indirectly to us.
The trust preferred securities will have the terms, including distributions,
redemption, voting, conversion, liquidation rights and such other preferred,
deferred or other special rights or such restrictions as set forth in the trust
agreement or made part of the trust agreement by the Trust Indenture Act of
1939, as amended. A prospectus supplement will describe the specific terms of
the trust preferred securities that a SNH Capital Trust is offering, including:
o the distinctive designation of trust preferred securities;
o the number of trust preferred securities issued by the SNH Capital Trust;
o the annual distribution rate, or method of determining the rate, for trust
preferred securities and the date(s) upon which distributions will be
payable;
o whether distributions on trust preferred securities will be cumulative, and,
in the case of trust preferred securities having cumulative distribution
rights, the date or dates or method of determining the date(s) from which
distributions on trust preferred securities will be cumulative;
o the amount or amounts that will be paid out of the assets of the SNH Capital
Trust to the holders of trust preferred securities upon voluntary or
involuntary dissolution, winding up or termination of that SNH Capital
Trust;
o any terms and conditions under which trust preferred securities may be
converted into our shares of beneficial interest, including the conversion
price per share and any circumstances under which the conversion right will
expire;
o any terms and conditions upon which the related series of our debt
securities may be distributed to holders of trust preferred securities;
o any obligation of the SNH Capital Trust to purchase or redeem trust
preferred securities and the price(s) at which, the period(s) within which
and the terms and conditions upon which trust preferred securities will be
purchased or redeemed, in whole or in part, under that obligation;
o any voting rights of trust preferred securities in addition to those
required by law, including the number of votes per trust preferred security
and any requirement for the approval by the holders of trust preferred
securities, as a condition to specified action or amendments to the trust
agreement; and
o any other relevant rights, preferences, privileges, limitations or
restrictions of trust preferred securities consistent with the trust
agreement or with applicable law.
Under the trust agreement, the Property Trustee will own a series of our
debt securities purchased by the SNH Capital Trust for the benefit of the
holders of its trust preferred securities and the trust common securities. The
payment of distributions out of money held by the SNH Capital Trusts, and
payments upon redemption of trust preferred securities or liquidation of the SNH
Capital Trusts, will be guaranteed by us to the extent described under "Trust
Guarantee." The debt securities purchased by a SNH Capital Trust may be senior
or subordinated and may be convertible, as described in the applicable
prospectus supplement.
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Certain United States federal income tax considerations applicable to an
investment in trust preferred securities will be described in the applicable
prospectus supplement.
In connection with the issuance of trust preferred securities, each SNH
Capital Trust will also issue one series of trust common securities. The trust
agreement will authorize the trustees, other than the Property Trustee, of the
SNH Capital Trust to issue on behalf of the SNH Capital Trust one series of
trust common securities having such terms as will be set forth in the trust
agreement. These terms will include distributions, conversion, redemption,
voting, liquidation rights and any restrictions as may be contained in the trust
agreement.
Except as otherwise provided in the prospectus supplement, the terms of the
trust common securities will be substantially identical to the terms of the
trust preferred securities. The trust common securities will rank on parity
with, and payments will be made on the trust common securities pro rata with the
trust preferred securities, except that, upon an event of default under the
trust agreement, the rights of the holders of the trust common securities to
payment in respect of distributions and payments upon liquidation, redemption
and otherwise will be subordinated to the rights of the holders of the trust
preferred securities. Except in limited circumstances, the holders of the trust
common securities will also have the right to vote and appoint, remove or
replace any of the trustees of the SNH Capital Trust. All of the trust common
securities of each SNH Capital Trust will be directly or indirectly owned by us.
Trust Guarantee
We will execute and deliver a guarantee concurrently with the issuance by
each SNH Capital Trust of its trust preferred securities, for the benefit of the
holders from time to time of the trust preferred securities. The applicable
prospectus supplement will describe any significant differences between the
actual terms of our guarantee and the summary below. The following summary of
our guarantee is not complete. For more information, you should refer to the
full text of our guarantee, including the definitions of the terms used and not
defined in this prospectus or the related prospectus supplement and those terms
made a part of the guarantee by the Trust Indenture Act of 1939, as amended. The
form of trust guarantee is filed as an exhibit to this registration statement of
which this prospectus is a part.
General. We will irrevocably and unconditionally agree, to the extent set
forth in the trust guarantee, to pay in full to the holders of trust preferred
securities the guaranteed payments, except to the extent paid by the SNH Capital
Trust, as and when due, regardless of any defense, right of set-off or
counterclaim that the SNH Capital Trust may have or assert. The following
payments, to the extent not paid by the SNH Capital Trust, will be subject to
our guarantee:
o any accrued and unpaid distributions that are required to be paid on the
trust preferred securities, to the extent the SNH Capital Trust has funds
legally available therefor;
o the redemption price, including all accrued and unpaid distributions,
payable out of funds legally available therefor, with respect to any trust
preferred securities called for redemption by the SNH Capital Trust; and
o upon a liquidation of a SNH Capital Trust, other than in connection with the
distribution of our subordinated debt securities to the holders of the trust
preferred securities or the redemption of all of the trust preferred
securities issued by that SNH Capital Trust, the lesser of:
(1) the aggregate of the liquidation amount and all accrued and unpaid
distributions on the trust preferred securities to the date of payment; and
(2) the amount of assets of the SNH Capital Trust remaining available for
distribution to holders of trust preferred securities in liquidation of that
SNH Capital Trust.
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Our obligation to make a guarantee payment may be satisfied by the SNH Capital
Trust's direct payment of the required amounts to the holders of trust preferred
securities or by causing the SNH Capital Trust to pay the amount to the holders.
Amendment and Assignment. Except with respect to any changes that do not
adversely affect the rights of holders of trust preferred securities, in which
case no vote will be required, a trust guarantee may be amended only with the
prior approval of the holders of not less than a majority in liquidation amount
of the outstanding affected trust preferred securities. The manner of obtaining
any approval of the holders will be described in our prospectus supplement. All
guarantees and agreements contained in our guarantee will bind our successors
and assigns and will inure to the benefit of the holders of the related trust
preferred securities then outstanding.
Termination. Our guarantee will terminate:
o upon full payment of the redemption price of all related trust preferred
securities;
o upon distribution of our debt securities held by the SNH Capital Trust to
the holders of the trust preferred securities; or
o upon full payment of the amounts payable in accordance with the trust
agreement upon liquidation of the SNH Capital Trust.
Our guarantee will continue to be effective or will be reinstated, as the case
may be, if at any time any holder of trust preferred securities must restore
payment of any sums paid under those trust preferred securities or the
guarantee. If the debt securities purchased by the SNH Capital Trust or our
guarantee are subordinated, the applicable subordination provisions will provide
that in the event payment is made on the subordinated debt securities or the
subordinated guarantee in contravention of the subordination provisions, such
payments will be paid over to the holders of our senior debt securities.
Ranking of Our Guarantee. Each guarantee may be our secured or unsecured
obligation and may be senior or subordinated, as described in the applicable
prospectus supplement. The trust agreement will provide that each holder of
trust preferred securities by acceptance of those securities agrees to the
subordination provisions, if any, and other terms of the guarantee.
Our guarantee will constitute a guarantee of payment and not of collection.
The guarantee will be deposited with the Property Trustee to be held for the
benefit of the trust preferred securities. The Property Trustee will have the
right to enforce our guarantee on behalf of the holders of the trust preferred
securities. The holders of not less than a majority in aggregate liquidation
amount of the affected trust preferred securities will have the right to direct
the time, method and place of conducting any proceeding for any remedy available
in respect of our guarantee, including the giving of directions to the Property
Trustee. Any holder of trust preferred securities may institute a legal
proceeding directly against us to enforce its rights under our guarantee,
without first instituting a legal proceeding against the related SNH Capital
Trust, or any other person or entity. Our guarantee will not be discharged
except by payment of the guarantee payments in full to the extent not paid by
the SNH Capital Trust, and by complete performance of all obligations under the
guarantee.
Governing Law. Our guarantee will be governed by and construed in accordance
with the laws of the State of New York.
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DESCRIPTION OF CERTAIN PROVISIONS OF MARYLAND LAW AND OF
OUR DECLARATION OF TRUST AND BYLAWS
We are organized as a Maryland real estate investment trust. The following
is a summary of our declaration of trust and bylaws and several provisions of
Maryland law. Because it is a summary, it does not contain all the information
that may be important to you. If you want more information, you should read our
entire declaration of trust and bylaws, copies of which we have previously filed
with the SEC, or refer to the provisions of Maryland law.
Trustees
Our declaration of trust and bylaws provide that our board of trustees will
establish the number of trustees. The number of trustees constituting our entire
board of trustees may be increased or decreased from time to time only by a vote
of the trustees, provided however that the tenure of office of a trustee will
not be affected by any decrease in the number of trustees. Any vacancy on the
board of trustees may be filled only by a majority of the remaining trustees,
even if the remaining trustees do not constitute a quorum. Any trustee elected
to fill a vacancy will hold office for the remainder of the full term of the
class of trustees in which the vacancy occurred and until a successor is elected
and qualifies. Our bylaws require that a majority of our trustees be independent
trustees except for temporary periods due to vacancies.
Our declaration of trust divides our board of trustees into three classes.
Shareholders elect our trustees of each class for three-year terms upon the
expiration of their current terms. Shareholders elect only one class of trustees
each year. We believe that classification of our board helps to assure the
continuity of our business strategies and policies. There is no cumulative
voting in the election of trustees. Consequently, at each annual meeting of
shareholders, the holders of a majority of our shares are able to elect all of
the successors of the class of trustees whose terms expire at that meeting.
The classified board provision could have the effect of making the
replacement of our incumbent trustees more time consuming and difficult. At
least two annual meetings of shareholders are generally required to effect a
change in a majority of our board of trustees.
Our declaration of trust provides that a trustee may be removed with or
without cause by the affirmative vote of at least two-thirds of our shares
entitled to be cast in the election of trustees. This provision precludes
shareholders from removing our incumbent trustees unless they can obtain a
substantial affirmative vote of shares.
Advance Notice of Trustee Nominations and New Business
Our bylaws provide that nominations of persons for election to our board of
trustees and business to be transacted at shareholder meetings may be properly
brought pursuant to our notice of the meeting, by our board of trustees, or by a
shareholder who is (i) a shareholder of record at the time of giving the advance
notice and at the time of the meeting, (ii) entitled to vote at the meeting and
(iii) has complied with the advance notice and other applicable terms and
provisions set forth in our bylaws.
Under our bylaws, a shareholder's notice of nominations for trustee or
business to be transacted at an annual meeting of shareholders must be delivered
to our secretary at our principal office not later than the close of business on
the 90th day and not earlier than the close of business on the 120th day prior
to the first anniversary of the date of mailing of our notice for the preceding
year's annual meeting. In the event that the date of mailing of our notice of
the annual meeting is advanced or delayed by more than 30 days from the
anniversary date of the mailing of our notice for the preceding year's annual
meeting, a shareholder's notice must be delivered to us not earlier than the
close of business on the 120th day prior to the mailing of notice of such annual
meeting and not later than the close of business on the later of: (i) the 90th
day prior to the date of mailing of the notice for such annual meeting, or (ii)
the 10th day following the day on which we first make a public announcement of
the date of mailing of our notice for such meeting. The public announcement of a
postponement of the mailing of the notice for such annual meeting or of an
adjournment or postponement of an annual meeting to a later date or time will
not commence a
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new time period for the giving of a shareholder's notice. If the
number of trustees to be elected to our board of trustees is increased and we
make no public announcement of such action or do not specify the size of the
increased board of trustees at least one hundred (100) days prior to the first
anniversary of the date of mailing of notice for our preceding year's annual
meeting, a shareholder's notice also will be considered timely, but only with
respect to nominees for any new positions created by such increase, if the
notice is delivered to our secretary at our principal office not later than the
close of business on the 10th day immediately following the day on which such
public announcement is made.
For special meetings of shareholders, our bylaws require a shareholder who
is nominating a person for election to our board of trustees at a special
meeting at which trustees are to be elected to give notice of such nomination to
our secretary at our principal office not earlier than the close of business on
the 120th day prior to such special meeting and not later than the close of
business on the later of: (1) the 90th day prior to such special meeting or (2)
the 10th day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the trustees to be
elected at such meeting. The public announcement of a postponement or
adjournment of a special meeting to a later date or time will not commence a new
time period for the giving of a shareholder's notice as described above.
Any notice from a shareholder of nominations for trustee or business to be
transacted at a shareholder meeting must be in writing and include the
following:
o as to each person nominated for election or reelection as a trustee, (i) the
nominee's name, age, business and residence addresses, (ii) the class and
number of shares beneficially owned or owned of record by the nominee and
(iii) all information relating to the person that is required to be
disclosed in solicitations of proxies for election of trustees or otherwise
required by Regulation 14A under the Securities Exchange Act of 1934, as
amended, together with the nominee's written consent to being named in the
proxy statement as a nominee and to serving as a trustee if elected;
o as to other business that the shareholder proposes to bring before the
meeting, a brief description of the business, the reasons for conducting the
business and any material interest in the business of the shareholder and of
the beneficial owner, if any, on whose behalf the proposal is made; and
o as to the shareholder giving the notice and the beneficial owner, if any, on
whose behalf the nomination or proposal is made, the name and address of the
shareholder and beneficial owner and the number of our shares which (s)he or
they own beneficially and of record.
Meetings of Shareholders
Under our bylaws, our annual meeting of shareholders will take place within
six months after the end of each fiscal year, unless a different date is set by
the board of trustees. Meetings of shareholders may be called only by our board
of trustees.
Liability and Indemnification of Trustees and Officers
To the maximum extent permitted by Maryland Law, our declaration of trust
and bylaws include provisions limiting the liability of our present and former
trustees, officers and shareholders for damages and obligating us to indemnify
them against any claim or liability to which they may become subject by reason
of their status or actions as our present or former trustees, officers or
shareholders. Our bylaws also obligate us to pay or reimburse the people
described above for reasonable expenses in advance of final disposition of a
proceeding.
The Maryland REIT Law permits a real estate investment trust to indemnify
and advance expenses to its trustees, officers, employees and agents to the same
extent permitted by the Maryland General Corporation Law for directors and
officers of Maryland corporations. The Maryland corporation statute permits a
corporation to indemnify its present and former directors and officers against
judgments, penalties, fines, settlements and
24
reasonable expenses incurred in connection with any proceeding to which they may
be made a party by reason of their service in those capacities. However, a
Maryland corporation is not permitted to provide this type of indemnification if
the following is established:
o the act or omission of the director or officer was material to the matter
giving rise to the proceeding and was committed in bad faith or was the
result of active and deliberate dishonesty;
o the director or officer actually received an improper personal benefit in
money, property or services; or
o in the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful.
The Maryland corporation statute permits a corporation to advance reasonable
expenses to a director or officer upon the corporation's receipt of the
following:
o a written affirmation by the director or officer of his good faith belief
that he has met the standard of conduct necessary for indemnification by the
corporation; and
o a written undertaking by him or on his behalf to repay the amount paid or
reimbursed by the corporation if it is ultimately determined that this
standard of conduct was not met.
The SEC has expressed the opinion that indemnification of trustees, officers
or persons otherwise controlling a company for liabilities arising under the
Securities Act of 1933, as amended, is against public policy and is therefore
unenforceable.
Shareholder Liability
Under the Maryland REIT Law, a shareholder is not personally liable for the
obligations of a real estate investment trust solely as a result of his status
as a shareholder. Our declaration of trust provides that no shareholder will be
liable for any debt, claim, demand, judgment or obligation of any kind of,
against or with respect to us by reason of being a shareholder. Despite these
facts, our legal counsel has advised us that in some jurisdictions the
possibility exists that shareholders of a trust entity such as ours may be held
liable for acts or obligations of the trust. While we intend to conduct our
business in a manner designed to minimize potential shareholder liability, we
can give no assurance that you can avoid liability in all instances in all
jurisdictions. Our trustees have not provided in the past and do not intend to
provide insurance covering these risks to our shareholders.
Transactions with Affiliates
Our declaration of trust allows us to enter into contracts and transactions
of any kind with any person, including any of our trustees, officers, employees
or agents or any person affiliated with them. Other than general legal
principles applicable to self-dealing by fiduciaries, there are no prohibitions
in our declaration of trust or bylaws which would prohibit dealings between us
and our affiliates.
Voting by Shareholders
Whenever shareholders are required or permitted to take any action by a
vote, the action may only be taken by a vote at a shareholders meeting. Under
our declaration of trust and bylaws shareholders do not have the right to take
any action by written consents instead of a vote.
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Restrictions on Transfer of Shares
Our declaration of trust restricts the amount of shares that individual
shareholders may own. These restrictions are intended to assist with REIT
compliance under the Internal Revenue Code of 1986, as amended, and otherwise to
promote our orderly governance. These restrictions do not apply to HRPT
Properties Trust, REIT Management & Research LLC or their affiliates. All
certificates evidencing our shares will bear a legend referring to these
restrictions.
Our declaration of trust provides that no person may own, or be deemed to
own by virtue of the attribution provisions of the Internal Revenue Code of
1986, as amended, more than 9.8% of the number or value of our outstanding
shares. Our declaration of trust also prohibits any person from beneficially or
constructively owning shares if that ownership would result in us being closely
held under Section 856(h) of the Internal Revenue Code of 1986, as amended, or
would otherwise cause us to fail to qualify as a REIT.
Our board of trustees, in its discretion, may exempt a proposed transferee
from the share ownership limitation. So long as our board of trustees determines
that it is in our best interest to qualify as a REIT, the board may not grant an
exemption if the exemption would result in us failing to qualify as a REIT. In
determining whether to grant an exemption, our board of trustees may consider,
among other factors, the following:
o the general reputation and moral character of the person requesting an
exemption;
o whether the person's ownership of shares would be direct or through
ownership attribution;
o whether the person's ownership of shares would adversely affect our ability
to acquire additional properties; and
o whether granting an exemption would adversely affect any of our existing
contractual arrangements or business policies.
In addition, our board of trustees may require rulings from the Internal Revenue
Service, opinions of counsel, affidavits, undertakings or agreements it deems
advisable in order to make the foregoing decisions.
If a person attempts a transfer of our shares in violation of the ownership
limitations described above, then that number of shares which would cause the
violation will be automatically transferred to a trust for the exclusive benefit
of one or more charitable beneficiaries designated by us. The prohibited owner
will not acquire any rights in these excess shares, will not benefit
economically from ownership of any excess shares, will have no rights to
distributions and will not possess any rights to vote. This automatic transfer
will be deemed to be effective as of the close of business on the business day
prior to the date of the violative transfer.
Within 20 days after receiving notice from us that its shares have been
transferred to an excess share trust, the excess share trustee will sell the
shares held in the excess share trust to a person designated by the excess share
trustee whose ownership of the shares will not violate the ownership limitations
set forth in our declaration of trust. Upon this sale, the interest of the
charitable beneficiary in the shares sold will terminate and the excess share
trustee will distribute the net proceeds of the sale to the prohibited owner and
to the charitable beneficiary as follows:
o The prohibited owner will receive the lesser of:
(1) the price paid by the prohibited owner for the shares or, if the
prohibited owner did not give value for the shares in connection
with the event causing the shares to be held in the excess share
trust, e.g., a gift, devise or other similar transaction, the market
price of the shares on the day of the event causing the shares to be
transferred to the excess share trust; and
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(2) the net price received by the excess share trustee from the sale of
the shares held in the excess share trust.
o Any net sale proceeds in excess of the amount payable to the prohibited
owner shall be paid to the charitable beneficiary.
If, prior to our discovery that shares of beneficial interest have been
transferred to the excess share trust, a prohibited owner sells those shares,
then:
(1) those shares will be deemed to have been sold on behalf of the
excess share trust; and
(2) to the extent that the prohibited owner received an amount for those
shares that exceeds the amount that the prohibited owner was
entitled to receive from a sale by an excess share trustee, the
prohibited owner must pay the excess to the excess share trustee
upon demand.
Also, shares of beneficial interest held in the excess share trust will be
offered for sale to us, or our designee, at a price per share equal to the
lesser of:
(1) the price per share in the transaction that resulted in the transfer
to the excess share trust or, in the case of a devise or gift, the
market price at the time of the devise or gift; and
(2) the market price on the date we or our designee accepts the offer.
We will have the right to accept the offer until the excess share trustee
has sold the shares held in the excess share trust. The net proceeds of the sale
to us will be distributed similar to any other sale by an excess share trustee.
Every owner of 5% or more of all classes or series of our shares is required
to give written notice to us within 30 days after the end of each taxable year
stating the name and address of the owner, the number of shares of each class
and series of our shares which the owner beneficially owns, and a description of
the manner in which those shares are held. If the Internal Revenue Code of 1986,
as amended, or applicable tax regulations specify a threshold below 5%, this
notice provision will apply to those persons who own our shares of beneficial
interest at the lower percentage. In addition, each shareholder is required to
provide us upon demand with any additional information that we may request in
order to determine our status as a REIT, to determine our compliance with the
requirements of any taxing authority or government and to determine and ensure
compliance with the foregoing share ownership limitations.
The restrictions described above will not preclude the settlement of any
transaction entered into through the facilities of the NYSE or any other
national securities exchange or automated inter-dealer quotation system. Our
declaration of trust provides, however, that the fact that the settlement of any
transaction occurs will not negate the effect of any of the foregoing
limitations and any transferee in this kind of transaction will be subject to
all of the provisions and limitations described above.
Business Combinations
The Maryland corporation statute contains a provision which regulates
business combinations with interested shareholders. This provision applies to
Maryland real estate investment trusts like us. Under the Maryland corporation
statute, business combinations such as mergers, consolidations, share exchanges
and the like between a Maryland real estate investment trust and an interested
shareholder are prohibited for five years after the most recent date on which
the shareholder becomes an interested shareholder. Under the statute the
following persons are deemed to be interested shareholders:
o any person who beneficially owns 10% or more of the voting power of the
trust's shares;
27
o an affiliate or associate of the trust who, at any time within the two-year
period prior to the date in question, was the beneficial owner of 10% or
more of the voting power of the then outstanding voting shares of the
trust; or
o an affiliate of an interested shareholder.
After the five-year prohibition period has ended, a business combination
between a trust and an interested shareholder must be recommended by the board
of trustees of the trust and must receive the following shareholder approvals:
o the affirmative vote of at least 80% of the votes entitled to be cast; and
o the affirmative vote of at least two-thirds of the votes entitled to be cast
by holders of shares other than shares held by the interested shareholder
with whom or with whose affiliate or associate the business combination is
to be effected.
The shareholder approvals discussed above are not required if the trust's
shareholders receive the minimum price set forth in the Maryland corporation
statute for their shares and the consideration is received in cash or in the
same form as previously paid by the interested shareholder for its shares.
The foregoing provisions of the Maryland corporation statute do not apply,
however, to business combinations that are approved or exempted by the board of
trustees of the trust prior to the time that the interested shareholder becomes
an interested shareholder. A person is not an interested shareholder under the
statute if the board of trustees approved in advance the transaction by which
the person otherwise would have become an interested shareholder. The board of
trustees may provide that its approval is subject to compliance with any terms
and conditions determined by the board. Our board of trustees has adopted a
resolution that any business combination between us and any other person is
exempted from the provisions of the Maryland corporation statute described in
the preceding paragraphs, provided that the business combination is first
approved by the board of trustees, including the approval of a majority of the
members of the board of trustees who are not affiliates or associates of the
acquiring person. This resolution, however, may be altered or repealed in whole
or in part at any time.
Control Share Acquisitions
The Maryland corporation statute contains a provision which regulates
control share acquisitions. This provision also applies to Maryland real estate
investment trusts. The Maryland corporation statute provides that control shares
of a Maryland real estate investment trust acquired in a control share
acquisition have no voting rights except to the extent that the acquisition is
approved by a vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares of beneficial interest owned by the acquiror, by officers or by
trustees who are employees of the trust. Control shares are voting shares of
beneficial interest which, if aggregated with all other shares of beneficial
interest previously acquired by the acquiror, or in respect of which the
acquiror is able to exercise or direct the exercise of voting power, would
entitle the acquiror to exercise voting power in electing trustees within one of
the following ranges of voting power:
o one-tenth or more but less than one-third;
o one-third or more but less than a majority; or
o a majority or more of all voting power.
An acquiror must obtain the necessary shareholder approval each time he acquires
control shares in an amount sufficient to cross one of the thresholds noted
above.
28
Control shares do not include shares which the acquiring person is entitled
to vote as a result of having previously obtained shareholder approval by virtue
of a revocable proxy. The Maryland corporation statute provides a list of
exceptions from the definition of control share acquisition.
A person who has made or proposes to make a control share acquisition, upon
satisfaction of the conditions set forth in the statute, including an
undertaking to pay expenses, may compel the board of trustees of the trust to
call a special meeting of shareholders to be held within 50 days after demand to
consider the voting rights of the shares. If no request for a meeting is made,
the trust may itself present the matter at any shareholders meeting.
If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute, then
the trust may redeem any or all of the control shares for fair value determined
as of the date of the last control share acquisition by the acquiror or of any
meeting of shareholders at which the voting rights of those shares are
considered and not approved. The right of the trust to redeem any or all of the
control shares is subject to conditions and limitations listed in the statute.
The trust may not redeem shares for which voting rights have previously been
approved. Fair value is determined without regard to the absence of voting
rights for the control shares. If 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, all other shareholders may exercise appraisal
rights. The fair value of the shares as determined for purposes of these
appraisal rights may not be less than the highest price per share paid by the
acquiror in the control share acquisition.
The control share acquisition statute does not apply to the following:
o shares acquired in a merger, consolidation or share exchange if the trust is
a party to the transaction; or
o acquisitions approved or exempted by a provision in the declaration of trust
or bylaws of the trust adopted before the acquisition of shares.
Our bylaws contain a provision exempting any and all acquisitions by any
person of our shares of beneficial interest from the control share acquisition
statute. This provision may be amended or eliminated at any time in the future.
Amendment to our Declaration of Trust, Dissolution and Mergers
Under the Maryland REIT Law, a real estate investment trust generally cannot
dissolve, amend its declaration of trust or merge, unless these actions are
approved by at least two-thirds of all shares entitled to be cast on the matter.
The statute allows a trust's declaration of trust to set a lower percentage, so
long as the percentage is not less than a majority. Our declaration of trust
provides for approval of any of the foregoing actions by a majority of shares
entitled to vote on these actions provided the action in question has been
approved by our board of trustees. Our declaration of trust further provides
that if permitted in the future by Maryland law, the majority required to
approve any of the foregoing actions will be the majority of shares voted. Under
the Maryland REIT Law, a declaration of trust may permit the trustees by a
two-thirds vote to amend the declaration of trust from time to time to qualify
as a real estate investment trust under the Internal Revenue Code of 1986, as
amended, or the Maryland REIT Law without the affirmative vote or written
consent of the shareholders. Our declaration of trust permits this type of
action by our board of trustees. Our declaration of trust also permits our board
of trustees to effect changes in our unissued shares, as described more fully
above, and to change our name without shareholder approval, and provides that,
to the extent permitted in the future by Maryland law, our board of trustees may
amend any other provision of our declaration of trust without shareholder
approval. The Maryland REIT Law provides that a majority of our entire board of
trustees, without action by the shareholders, may amend our declaration of trust
to change our name or to change the name or other designation or the par value
of any class or series of our shares and the aggregate par value of our shares.
29
Anti-Takeover Effect of Maryland Law and of our Declaration of Trust and Bylaws
The following provisions in our declaration of trust and bylaws and in
Maryland law could delay or prevent a change in our control:
o the limitation on ownership and acquisition of more than 9.8% of our shares;
o the classification of our board of trustees into classes and the election of
each class for three-year staggered terms;
o the requirement of a two-thirds majority vote of shareholders for removal of
our trustees;
o the facts that the number of our trustees may be fixed only by vote of our
board of trustees, that a vacancy on our board of trustees may be filled
only by the affirmative vote of a majority of our remaining trustees and
that our shareholders are not entitled to act without a meeting;
o the provision that only our board of trustees may call meetings of
shareholders;
o the advance notice requirements for shareholder nominations for trustees and
other proposals;
o the control share acquisitions provisions of Maryland law, if the applicable
provisions in our bylaws are rescinded;
o the business combination provisions of Maryland law, if the applicable
resolution of our board of trustees is rescinded or if our board of
trustees' approval of a combination is not obtained; and
o the ability of our board of trustees to authorize and issue additional
shares, including additional classes of shares with rights defined at the
time of issuance, without shareholder approval.
PLAN OF DISTRIBUTION
We and/or the SNH Capital Trusts may sell the offered securities (a) through
underwriters or dealers, (b) directly to purchasers, including our affiliates,
(c) through agents or (d) through a combination of any of these methods. The
prospectus supplement will include the following information:
o the terms of the offering;
o the names of any underwriters or agents;
o the name or names of any managing underwriter or underwriters;
o the purchase price of the securities;
o the net proceeds from the sale of the securities;
o any delayed delivery arrangements;
o any underwriting discounts, commissions and other items constituting
underwriters' compensation;
o any initial public offering price; and
o any discounts or concessions allowed or reallowed or paid to dealers; and
any commissions paid to agents.
30
Sale Through Underwriters or Dealers
If underwriters are used in the sale, the underwriters will acquire the
securities for their own account. The underwriters may resell the securities
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Underwriters may offer securities to the public either
through underwriting syndicates represented by one or more managing underwriters
or directly by one or more firms acting as underwriters. Unless we inform you
otherwise in the prospectus supplement, the obligations of the underwriters to
purchase the securities will be subject to certain conditions, and the
underwriters will be obligated to purchase all the offered securities if they
purchase any of them. The underwriters may change from time to time any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers.
In order to facilitate the offering of securities, the underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the securities. Specifically, the underwriters may over-allot in connection with
the offering, creating a short position in the securities for their account. In
addition, to cover over-allotments or to stabilize the price of the shares, the
underwriters may bid for, and purchase, shares in the open market. Finally, an
underwriting syndicate may reclaim selling concessions allowed to an underwriter
or a dealer for distributing the securities in the offering if the syndicate
repurchases previously distributed shares in transactions to cover syndicate
short positions, in stabilization transactions, or otherwise. Any of these
activities may stabilize or maintain the market price of the offered securities
above independent market levels. The underwriters are not required to engage in
these activities, and may end any of these activities at any time.
Some or all of the securities that we and/or the SNH Capital Trusts offer
though this prospectus may be new issues of securities with no established
trading market. Any underwriters to whom we and/or the SNH Capital Trusts sell
securities for public offering and sale may make a market in those securities,
but they will not be obligated to and they may discontinue any market making at
any time without notice. Accordingly, we cannot assure you of the liquidity of,
or continued trading markets for, any securities offered pursuant to this
prospectus.
If dealers are used in the sale of securities, we and/or the SNH Capital
Trusts will sell the securities to them as principals. They may then resell
those securities to the public at varying prices determined by the dealers at
the time of resale. We will include in the prospectus supplement the names of
the dealers and the terms of the transaction.
Direct Sales and Sales Through Agents
We and/or the SNH Capital Trusts may sell the securities directly. In this
case, no underwriters or agents would be involved. We and/or the SNH Capital
Trusts may also sell the securities through agents designated from time to time.
In the prospectus supplement, we will name any agent involved in the offer or
sale of the offered securities, and we will describe any commissions payable to
the agent. Unless we inform you otherwise in the prospectus supplement, any
agent will agree to use its reasonable best efforts to solicit purchases for the
period of its appointment.
We and/or the SNH Capital Trusts may sell the securities directly to
institutional investors or others who may be deemed to be underwriters within
the meaning of the Securities Act of 1933 with respect to any sale of those
securities. We will describe the terms of any such sales in the prospectus
supplement.
Delayed Delivery Contracts
If we so indicate in the prospectus supplement, we and/or the SNH Capital
Trusts may authorize agents, underwriters or dealers to solicit offers from
certain types of institutions to purchase securities at the public offering
price under delayed delivery contracts. These contracts would provide for
payment and delivery on a specified date in the future. The contracts would be
subject only to those conditions described in the prospectus supplement. The
prospectus supplement will describe the commission payable for solicitation of
those contracts.
31
General Information
We and/or the SNH Capital Trusts may have agreements with the agents,
dealers and underwriters to indemnify them against certain civil liabilities,
including liabilities under the Securities Act of 1933, or to contribute with
respect to payments that the agents, dealers or underwriters may be required to
make. Agents, dealers and underwriters may be customers of, engage in
transactions with or perform services for us in the ordinary course of their
businesses.
Each underwriter, dealer and agent participating in the distribution of any
of the securities that are issuable in bearer form will agree that it will not
offer, sell or deliver, directly or indirectly, securities in bearer form in the
United States or to United States persons, other than qualifying financial
institutions, during the restricted period, as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7).
VALIDITY OF THE OFFERED SECURITIES
Sullivan & Worcester LLP, as to certain matters of New York law, and Ballard
Spahr Andrews & Ingersoll, LLP, as to certain matters of Maryland law, will pass
upon the validity of the offered securities for us. Barry M. Portnoy, a former
partner of the firm of Sullivan & Worcester LLP, is one of our managing
trustees, and he is a managing trustee of HRPT Properties Trust and Hospitality
Properties Trust and a managing director of Five Star Quality Care, Inc. Mr.
Portnoy is also a director and 50% owner of REIT Management & Research LLC, our
investment manager, and a director of certain of our subsidiaries. Sullivan &
Worcester LLP represents HRPT Properties Trust, Hospitality Properties Trust,
Five Star Quality Care, Inc., REIT Management & Research LLC and certain of
their affiliates. Ballard Spahr Andrews & Ingersoll, LLP is special Maryland
counsel to HRPT Properties Trust, Hospitality Properties Trust and Five Star
Quality Care, Inc.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedules included in our Annual Report on Form 10-K
for the year ended December 31, 2000, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Ernst & Young LLP, independent auditors, have also audited the
combined financial statements of Certain Mariner Post-Acute Network Facilities
(Operated by AMS Properties, Inc. and GCI Health Care Centers, Inc.,
wholly-owned subsidiaries of Mariner Post-Acute Network, Inc.) included in our
Current Report on Form 8-K dated January 30, 2001, as amended, as set forth in
their report, which is incorporated by reference in this prospectus and
elsewhere in the registration statement. Our financial statements and schedules
and the combined financial statements of Certain Mariner Post-Acute Network
Facilities (Operated by AMS Properties, Inc. and GCI Health Care Centers, Inc.,
wholly-owned subsidiaries of Mariner Post-Acute Network, Inc.), are incorporated
by reference in reliance on Ernst & Young LLP's reports, given on their
authority as experts in accounting and auditing.
KPMG LLP, independent auditors, have audited the combined financial
statements of forty-two facilities acquired by us from Integrated Health
Services, Inc. included in our Form 8-K dated January 30, 2001, as amended, as
set forth in their report, which is incorporated by reference in this prospectus
and elsewhere in the registration statement. These combined financial statements
are incorporated by reference in reliance on KPMG LLP's report, given on their
authority as experts in accounting and auditing.
Arthur Andersen LLP, independent public accountants, have audited the
consolidated financial statements of CSL Group, Inc. and subsidiaries (a
business unit wholly owned by Crestline Capital Corporation) as partitioned for
sale to SNH/CSL Properties Trust included in our Current Report on Form 8-K
dated September 21, 2001, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. These
consolidated financial statements are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving their report.
32
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information on file at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549. You can request copies of those documents upon
payment of a duplicating fee to the SEC. This prospectus is part of a
registration statement and does not contain all of the information set forth in
the registration statement. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference room. You can review our
SEC filings and the registration statement by accessing the SEC's Internet site
at http://www.sec.gov.
Our common shares are traded on the New York Stock Exchange under the symbol
"SNH," and you can review similar information concerning us at the office of the
NYSE at 20 Broad Street, New York, New York 10005.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus. Statements in this prospectus regarding the
contents of any contract or other document may not be complete. You should refer
to the copy of the contract or other document filed as an exhibit to the
registration statement. Later information filed with the SEC will update and
supersede information we have included or incorporated by reference in this
prospectus.
We incorporate by reference the documents listed below and any filings made
after the date of the initial filing of the registration statement, including
filings made prior to the effectiveness of the registration statement, of which
this prospectus is a part made with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, until the offering of
the securities made by this prospectus is completed or terminated:
o our Annual Report on Form 10-K for the fiscal year ended December 31, 2000;
o our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
2001, June 30, 2001 and September 30, 2001;
o our Current Reports on Form 8-K dated January 30, 2001, as amended, May 16,
2001, June 11, 2001, June 18, 2001, July 27, 2001, August 9, 2001, September
21, 2001, October 3, 2001, as amended, November 5, 2001, December 6, 2001,
December 13, 2001, December 18, 2001, and December 20, 2001; and
o the description of our common shares contained in our registration statement
on Form 8-A (File No. 001-15319), filed on September 22, 1999.
We will provide you with a copy of the information we have incorporated by
reference, excluding exhibits other than those which we specifically incorporate
by reference in this prospectus. You may obtain this information at no cost by
writing or telephoning us at: 400 Centre Street, Newton, Massachusetts, 02458,
(617) 796-8350, Attention: Investor Relations.
-----------------
THE ARTICLES OF AMENDMENT AND RESTATEMENT ESTABLISHING SENIOR HOUSING
PROPERTIES TRUST, DATED SEPTEMBER 20, 1999, A COPY OF WHICH, TOGETHER WITH ALL
AMENDMENTS THERETO, IS DULY FILED IN THE OFFICE OF THE STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT THE NAME "SENIOR HOUSING
PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION OF TRUST AS
TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE,
33
OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SENIOR HOUSING PROPERTIES TRUST SHALL
BE HELD TO ANY PERSONAL LIABILITY FOR ANY OBLIGATION OF, OR CLAIM AGAINST,
SENIOR HOUSING PROPERTIES TRUST. ALL PERSONS DEALING WITH SENIOR HOUSING
PROPERTIES TRUST SHALL LOOK ONLY TO THE ASSETS OF SENIOR HOUSING PROPERTIES
TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
34
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, other than underwriting
discounts and commissions.
Registration Fee Under Securities Act of 1933........ $ 478,000
Blue Sky Fees and Expenses........................... 60,000
Legal Fees and Expenses.............................. 2,000,000
Accounting Fees and Expenses......................... 1,200,000
Printing and Engraving............................... 1,000,000
Rating Agencies Fees................................. 800,000
Trustee Fees (including counsel fees)................ 300,000
Miscellaneous Fees and Expenses...................... 162,000
----------
Total: $6,000,000
Item 15. Indemnification of Directors and Officers
To the maximum extent permitted by Maryland Law, our declaration of trust
and bylaws include provisions limiting the liability of our present and former
trustees, officers and shareholders for damages and obligating us to indemnify
them against any claim or liability to which they may become subject by reason
of their status or actions as our present or former trustees, officers or
shareholders. Our bylaws also obligate us to pay or reimburse the people
described above for reasonable expenses in advance of final disposition of a
proceeding.
The Maryland REIT Law permits a real estate investment trust to indemnify
and advance expenses to its trustees, officers, employees and agents to the same
extent permitted by the Maryland General Corporation Law for directors and
officers of Maryland corporations. The Maryland corporation statute permits a
corporation to indemnify its present and former directors and officers against
judgments, penalties, fines, settlements and reasonable expenses incurred in
connection with any proceeding to which they may be made a party by reason of
their service in those capacities. However, a Maryland corporation is not
permitted to provide this type of indemnification if the following is
established:
o the act or omission of the director or officer was material to the matter
giving rise to the proceeding and was committed in bad faith or was the
result of active and deliberate dishonesty;
o the director or officer actually received an improper personal benefit in
money, property or services; or
o in the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful.
The Maryland corporation statute permits a corporation to advance reasonable
expenses to a director or officer upon the corporation's receipt of the
following:
II-1
o a written affirmation by the director or officer of his good faith belief
that he has met the standard of conduct necessary for indemnification by
the corporation; and
o a written undertaking by him or on his behalf to repay the amount paid or
reimbursed by the corporation if it is ultimately determined that this
standard of conduct was not met.
The SEC has expressed the opinion that indemnification of trustees, officers
or persons otherwise controlling a company for liabilities arising under the
Securities Act of 1933, as amended, is against public policy and is therefore
unenforceable.
Reference is made to our bylaws filed as Exhibit 3.2 to our Quarterly Report
on Form 10-Q for the quarter ended March 31, 2000. Reference is also made to our
declaration of trust filed as Exhibit 3.1 to our Annual Report on Form 10-K for
the year ended December 31, 1999.
Reference is made to the underwriting agreements (Exhibits 1.1 through 1.6)
which may be filed by amendment or incorporated by reference. These underwriting
agreements may contain certain provisions for indemnification by the
underwriters of our officers, trustees and controlling persons.
The charter documents of the Co-Registrants contain provisions similar to
those detailed above.
Item 16. Exhibits
Exhibit No. Description
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)*
1.6 Form of Underwriting Agreement (for Trust Preferred
Securities)*
4.1 Indenture, dated as of December 20, 2001, between Senior
Housing Properties Trust and State Street Bank and Trust
Company**
4.2 Form of Senior Indenture**
4.3 Form of Senior Subordinated Indenture+
4.4 Form of Junior Subordinated Indenture+
4.5 Form of Senior Debt Security*
4.6 Form of Senior Subordinated Debt Security*
4.7 Form of Junior Subordinated Debt Security*
4.8 Form of Articles Supplementary for Preferred Shares*
4.9 Form of Deposit Agreement, including form of Depositary
Receipt for Depositary Shares*
4.10 Form of Preferred Shares Certificate*
4.11 Form of Common Shares Certificate++
4.12 Form of Warrant Agreement, including form of Warrant*
4.13 Certificate of Trust of SNH Capital Trust II+
4.14 Declaration of Trust of SNH Capital Trust II+
4.15 Certificate of Trust of SNH Capital Trust III+
4.16 Declaration of Trust of SNH Capital Trust III+
4.17 Form of Amended and Restated Trust Agreement of the SNH
Capital Trusts+
4.18 Form of Guarantee Agreement+
5.1 Opinion of Sullivan & Worcester LLP**
5.2 Opinion of Ballard Spahr Andrews & Ingersoll, LLP**
8.1 Opinion of Sullivan & Worcester LLP re: tax matters*
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12.1 Statement Regarding Computation of Ratios of Earnings to Fixed
Charges**
23.1 Consent of Ernst & Young LLP**
23.2 Consent of KPMG LLP**
23.3 Consent of Arthur Andersen LLP**
23.4 Consent of Sullivan & Worcester LLP (included in Exhibit
5.1)**
23.5 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in
Exhibit 5.2)**
24.1 Powers of Attorney of certain officers, trustees and directors
(included on signature pages)**
25.1 Statement of Eligibility of Trustee on Form T-1 under the
Trust Indenture Act of 1939, as amended, of the trustee under
December 20, 2001 Indenture**
25.2 Statement of Eligibility of Trustee on Form T-1 under the
Trust Indenture Act of 1939, as amended, of the trustee under
the Senior Indenture*
25.3 Statement of Eligibility of Trustee on Form T-1 under the
Trust Indenture Act of 1939, as amended, of the trustee under
the Senior Subordinated Indenture*
25.4 Statement of Eligibility of Trustee on Form T-1 under the
Trust Indenture Act of 1939, as amended, of the trustee under
the Junior Subordinated Indenture*
25.5 Statement of Eligibility of Trustee on Form T-1 under the
Trust Indenture Act of 1939, as amended, of the trustee under
the Amended and Restated Declaration of Trust of the SNH
Capital Trust II*
25.6 Statement of Eligibility of Trustee on Form T-1 under the
Trust Indenture Act of 1939, as amended, of the trustee under
the Amended and Restated Declaration of Trust of the SNH
Capital Trust III*
25.7 Statement of Eligibility of Trustee on Form T-1 under the
Trust Indenture Act of 1939, as amended, of the trustee under
the Guarantee Agreement for SNH Capital Trust II*
25.8 Statement of Eligibility of Trustee on Form T-1 under the
Trust Indenture Act of 1939, as amended, of the trustee under
the Guarantee Agreement for SNH Capital
Trust III*
-------------
* To be filed by amendment or incorporated by reference in connection with
the offering of any securities, as appropriate.
** Filed herewith.
+ Incorporated by reference to Senior Housing Properties Trust's Registration
Statement on Form S-3, File No. 333-60392.
++ Incorporated by reference to Senior Housing Properties Trust's Registration
Statement on Form S-11, File No. 333-69703.
Item 17. Undertakings
(a) The undersigned Registrants hereby undertake:
(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
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form of prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent no
more than a 20 percent change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(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 Registrants hereby further undertake that, for the
purposes of determining any liability under the Securities Act of 1933, each
filing of the annual reports of Senior Housing Properties Trust pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange of 1934 that are
incorporated by reference in this registration statement, if any, 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, directors, officers and controlling
persons of the Registrants pursuant to the provisions described under Item 15 of
this registration statement, or otherwise (other than insurance), the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrants of expenses incurred or paid by a trustee, director, officer or
controlling person of the Registrants in the successful defense of any action,
suit or proceeding) is asserted by such trustee, director, officer or
controlling person in connection with the securities being registered, the
Registrants 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 or them is against public policy
as expressed in such the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
(d) The undersigned Registrants hereby undertake 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 Registrants 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.
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(e) The undersigned Registrants hereby undertake to file an application for
the purpose of determining the eligibility of the 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.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Newton, Commonwealth of Massachusetts, on January 11,
2002.
SENIOR HOUSING 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, this
registration statement on Form S-3 has been signed below by the following
persons in the capacities and on the dates indicated; and each of the
undersigned officers and trustees of Senior Housing Properties Trust, hereby
severally constitute and appoint David J. Hegarty, Gerard M. Martin and Barry M.
Portnoy 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, and any and all amendments thereto, and any other
registration statement filed by Senior Housing 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.
Signature Title Date
--------- ----- ----
/s/ David J. Hegarty President and Chief January 11, 2002
David J. Hegarty Operating Officer
/s/ John R. Hoadley Treasurer and Chief January 11, 2002
John R. Hoadley Financial Officer
/s/ Frank J. Bailey Trustee January 11, 2002
Frank J. Bailey
/s/ Arthur G. Koumantzelis Trustee January 11, 2002
Arthur G. Koumantzelis
/s/ John L. Harrington Trustee January 11, 2002
John L. Harrington
/s/ Gerard M. Martin Trustee January 11, 2002
Gerard M. Martin
/s/ Barry M. Portnoy Trustee January 11, 2002
Barry M. Portnoy
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Pursuant to the requirements of the Securities Act of 1933, the registrants
certify that they have reasonable grounds to believe that they meet all of the
requirements for filing on Form S-3 and have duly caused this registration
statement to be signed on their behalf by the undersigned, thereunto duly
authorized, in the City of Newton, Commonwealth of Massachusetts, on January 11,
2002.
SNH CAPITAL TRUST II
SNH CAPITAL TRUST III
By: /s/Barry M. Portnoy
Barry M. Portnoy, as trustee
and not individually
Pursuant to the requirements of the Securities Act of 1933, this
registration statement on Form S-3 has been signed below by the following
persons in the capacities and on the dates indicated; and each of the
undersigned trustees of SNH Capital Trust II and SNH Capital Trust III, hereby
severally constitute and appoint David J. Hegarty, Gerard M. Martin and Barry M.
Portnoy 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, and any and all amendments thereto, and any other
registration statement filed 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.
Signature Title Date
--------- ----- ----
/s/ Gerard M. Martin Trustee January 11, 2002
Gerard M. Martin
/s/ Barry M. Portnoy Trustee January 11, 2002
Barry M. Portnoy
II-7