e424b5
CALCULATION OF REGISTRATION FEE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title of Securities |
|
|
Amount to be Registered/Proposed Maximum Offering |
|
|
Amount of |
|
|
to be Registered |
|
|
Price Per Unit/Proposed Maximum Offering Price (1) |
|
|
Registration Fee (1) |
|
|
Convertible Senior Notes |
|
|
$ |
152,009,000 |
|
|
|
$ |
10,838 |
|
|
|
Common Stock, $1.00 par
value per share |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
There are also registered an indeterminate number of shares of common stock into which the
Convertible Senior Notes may be converted. Pursuant to Rule 457(i), no separate registration
fee is payable where securities and securities into which conversion is offered are registered
at the same time and no additional consideration is payable upon conversion. |
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-159040
PROSPECTUS
SUPPLEMENT
(To Prospectus dated
May 7, 2009)
$152,009,000
3.00% Convertible
Senior Notes due 2029
NOTES
|
|
Ø
|
We are offering $152,009,000
aggregate principal amount of our 3.00% convertible senior notes
due 2029.
|
Ø
|
We will pay 3.00% interest per
annum on the principal amount of the notes, payable
semi-annually in arrears on June 1 and December 1 of each year,
beginning on December 1, 2010. Interest will accrue on the
notes from and including June 1, 2010 or from and including
the last date in respect of which interest has been paid or
provided for, as the case may be, to, but excluding, the next
interest payment date or maturity date of the notes, as the case
may be.
|
Ø
|
The notes will mature on
December 1, 2029.
|
Ø
|
The notes will be a further
issuance of, will be fungible with and will form a single series
with our outstanding 3.00% convertible senior notes due
December 1, 2029, initially issued on March 15, 2010
in the principal amount of $342,394,000. The notes will have the
same CUSIP number and will trade interchangeably with the
previously issued notes in this series immediately upon
settlement. Upon completion of this offering, the aggregate
principal amount of outstanding notes of this series will be
$494,403,000.
|
CONVERSION
|
|
Ø
|
The notes will be convertible into
cash and, if applicable, shares of our common stock based on an
initial conversion rate, subject to adjustment, of
19.5064 shares per $1,000 principal amount of notes (which
represents an initial conversion price of approximately $51.27
per share), in certain circumstances.
|
Ø
|
Holders may convert their notes
into cash and, if applicable, shares of our common stock prior
to stated maturity only under the following circumstances:
(1) the notes will be convertible during any calendar
quarter after the calendar quarter ending June 30, 2010, if
the closing sale price of our common stock for each of 20 or
more trading days in a period of 30 consecutive trading days
ending on the last trading day of the immediately preceding
calendar quarter exceeds 120% of the conversion price in effect
on the last trading day of the immediately preceding calendar
quarter; (2) the notes will be convertible during the five
consecutive business days immediately after any five consecutive
trading day period (we refer to this five consecutive trading
day period as the note measurement period) in which
the average trading price per $1,000 principal amount of notes
was equal to or less than 97% of the average conversion value of
the notes during the note measurement period; (3) the notes
will be convertible upon the occurrence of specified corporate
transactions; (4) the notes will be convertible if we have
called the notes for redemption; and (5) the notes will be
convertible at any time from, and including, November 1,
2014 to, and including, December 1, 2014 and at any time
from, and including, November 1, 2029 until the close of
business on the business day immediately preceding
December 1, 2029 or earlier redemption or repurchase.
|
Ø
|
Upon conversion, holders of notes
will receive cash and, if applicable, shares of our common
stock, based on the sum of the daily settlement
amounts described in this prospectus supplement for the 20
consecutive trading days that begins on, and includes, the third
trading day after the day the notes are tendered for conversion,
subject to certain exceptions in connection with conversions
during a period immediately preceding the maturity date as
described in this prospectus supplement. We refer to the cash
due upon conversion as the principal return and the
shares, if any, due upon conversion as the net
shares.
|
Ø
|
A holder that surrenders notes for
conversion in connection with a make-whole fundamental
change that occurs before December 1, 2014 may
in certain circumstances be entitled to an increased conversion
rate.
|
REDEMPTION AND
REPURCHASE
|
|
Ø
|
Prior to December 1, 2014, we
cannot redeem the notes except to preserve our status as a REIT.
On or after December 1, 2014, we may from time to time at
our option redeem the notes, in whole or in part, for cash, at a
redemption price equal to 100% of the principal amount of the
notes we redeem, plus any accrued and unpaid interest to, but
excluding, the redemption date.
|
Ø
|
On each of December 1, 2014,
December 1, 2019 and December 1, 2024, holders may
require us to purchase all or a portion of their notes at a
purchase price in cash equal to 100% of the principal amount of
the notes to be purchased, plus any accrued and unpaid interest
to, but excluding, the purchase date.
|
Ø
|
Holders may require us to
repurchase all or a portion of their notes upon a fundamental
change, as described in this prospectus supplement, at a
repurchase price in cash equal to 100% of the principal amount
of the notes to be repurchased, plus any accrued and unpaid
interest to, but excluding, the fundamental change repurchase
date.
|
RANKING
|
|
Ø |
The notes will be our senior
unsecured obligations and will rank equally with all of our
existing and future senior unsecured indebtedness. The notes
will be effectively subordinated to all of our existing and
future secured indebtedness and structurally subordinated to all
existing and future liabilities of our subsidiaries, including
trade payables. As of March 31, 2010, our subsidiaries had
indebtedness and other obligations in the principal amount of
approximately $726 million. In addition, as of
June 15, 2010, there was $266 million outstanding
under our unsecured line of credit arrangement under which we
and certain of our subsidiaries are co-borrowers. These amounts
of indebtedness will structurally rank senior to the notes.
|
LISTING
|
|
Ø
|
The notes that we previously issued
currently trade in the over-the-counter market. We cannot assure
you that the notes will continue to trade after this offering.
We have not applied, and do not intend to apply, for the listing
of the notes on any securities exchange.
|
Ø
|
Our common stock is listed on the
New York Stock Exchange under the symbol HCN. On
June 15, 2010, the last reported sale price of our common stock
on the New York Stock Exchange was $44.82 per share.
|
Investing in the notes involves
significant risks. See Risk factors beginning on
page S-8.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the accuracy or adequacy of this
prospectus supplement or the accompanying prospectus. Any
representation to the contrary is a criminal offense.
|
|
|
|
|
|
|
|
|
|
|
Per
note
|
|
|
Total
|
|
|
|
Public offering
price(1)
|
|
|
100.75
|
%
|
|
$
|
153,149,068
|
|
|
|
Underwriting discounts and commissions
|
|
|
1.75
|
%
|
|
$
|
2,660,158
|
|
|
|
Proceeds, before expenses, to us
|
|
|
99.00
|
%
|
|
$
|
150,488,910
|
|
|
|
(1) The
public offering price set forth above does not include accrued
interest. Interest on the notes accrues from June 1, 2010,
and the accrued interest for the period from and including
June 1, 2010 to and excluding the settlement date must be
paid by the purchaser of the notes.
We expect that the notes will be ready for delivery in
book-entry-only form through The Depository Trust Company
on or about June 18, 2010.
Joint
Book-Running Managers
|
|
UBS
Investment Bank |
J.P. Morgan |
The
date of this prospectus supplement is June 15, 2010.
You should rely only on the information contained or
incorporated by reference in this prospectus supplement, the
accompanying prospectus and any free writing
prospectus we authorize to be delivered to you. We have
not, and the underwriters have not, authorized anyone to provide
you with additional information or information different from
that contained in this prospectus supplement, the accompanying
prospectus and any such free writing prospectus. We
are not making an offer to sell the notes in any jurisdiction
where the offer or sale of the notes is not permitted. You
should not assume that the information appearing in this
prospectus supplement, the accompanying prospectus, any such
free writing prospectus or the documents
incorporated therein by reference is accurate as of any date
other than their respective dates. Our business, financial
condition, results of operations and prospects may have changed
since those dates.
TABLE OF
CONTENTS
|
|
|
|
|
|
|
Page
|
|
|
Prospectus supplement
|
|
|
|
|
|
|
|
S-1
|
|
|
|
|
S-8
|
|
|
|
|
S-23
|
|
|
|
|
S-24
|
|
|
|
|
S-25
|
|
|
|
|
S-26
|
|
|
|
|
S-28
|
|
|
|
|
S-29
|
|
|
|
|
S-56
|
|
|
|
|
S-58
|
|
|
|
|
S-66
|
|
|
|
|
S-68
|
|
|
|
|
S-71
|
|
|
|
|
S-71
|
|
|
|
|
S-72
|
|
Base prospectus
|
|
|
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
|
5
|
|
|
|
|
5
|
|
|
|
|
11
|
|
|
|
|
12
|
|
|
|
|
16
|
|
|
|
|
19
|
|
|
|
|
20
|
|
|
|
|
20
|
|
|
|
|
21
|
|
|
|
|
22
|
|
|
|
|
24
|
|
|
|
|
24
|
|
This document is in two parts. The first part is the prospectus
supplement, which adds to and updates information contained in
the accompanying prospectus. The second part, the prospectus,
provides more general information, some of which may not apply
to this offering. Generally, when we refer to this prospectus,
we are referring to both parts of this document combined. To the
extent there is a conflict between the information contained in
this prospectus supplement, on the one hand, and the information
contained in the accompanying prospectus, on the other hand, you
should rely on the information in this prospectus supplement.
Before purchasing any securities, you should carefully read this
prospectus supplement, the accompanying prospectus and any
free writing prospectus we authorize to be delivered
to you, together with the additional information described under
the heading, Where you can find more information, in
this prospectus supplement.
S-i
Prospectus
supplement summary
This summary highlights selected information about us and
this offering. This information is not complete and does not
contain all of the information you should consider before
investing in our notes. You should read this entire prospectus
supplement and the accompanying prospectus carefully, including
the sections contained in this prospectus supplement entitled
Risk factors and Forward-looking
statements and the financial statements and the other
information incorporated by reference in this prospectus
supplement and the accompanying prospectus, before making an
investment decision. Unless we have specifically indicated
otherwise, references in this prospectus supplement to
we, us, our, the
Company, or similar terms are to Health Care REIT,
Inc. and its subsidiaries.
ABOUT OUR
COMPANY
We are a real estate investment trust that invests across the
full spectrum of senior housing and health care real estate. We
also provide an extensive array of property management and
development services. As of March 31, 2010, our broadly
diversified portfolio consisted of 608 properties in
39 states.
Our principal executive offices are located at One SeaGate,
Suite 1500, Toledo, Ohio, 43604, and our telephone number
is
(419) 247-2800.
Our website address is www.hcreit.com. The information on our
website is not part of this prospectus supplement or the
accompanying prospectus.
OUR
STRATEGY
Our primary objectives are to protect stockholder capital and
enhance stockholder value. We seek to pay consistent cash
dividends to stockholders and create opportunities to increase
dividend payments to stockholders as a result of annual
increases in rental and interest income and portfolio growth. To
meet these objectives, we invest across the full spectrum of
senior housing and health care real estate and diversify our
investment portfolio by property type, operator/tenant and
geographic location.
The
Portfolio
The following table summarizes our portfolio as of
March 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
Number of
|
|
|
# Beds/Units
|
|
|
Investment per
|
|
|
|
|
Type of
Property
|
|
Investments
|
|
|
Investments
|
|
|
Properties
|
|
|
or Sq.
Ft.
|
|
|
metric(1)
|
|
|
States
|
|
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior housing facilities
|
|
$
|
2,546,029
|
|
|
|
38.1
|
%
|
|
|
229
|
|
|
|
18,199 units
|
|
|
$
|
140,580 per unit
|
|
|
|
33
|
|
Skilled nursing facilities
|
|
|
1,457,083
|
|
|
|
21.9
|
%
|
|
|
207
|
|
|
|
27,923 beds
|
|
|
|
52,182 per bed
|
|
|
|
26
|
|
Hospitals
|
|
|
673,271
|
|
|
|
10.1
|
%
|
|
|
29
|
|
|
|
1,716 beds
|
|
|
|
460,437 per bed
|
|
|
|
13
|
|
Medical office buildings
|
|
|
1,663,877
|
|
|
|
25.0
|
%
|
|
|
137
|
|
|
|
7,028,449 sq. ft.
|
|
|
|
246 per sq. ft.
|
|
|
|
23
|
|
Life science
buildings(2)
|
|
|
325,925
|
|
|
|
4.9
|
%
|
|
|
6
|
|
|
|
|
|
|
|
n/a
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
6,666,185
|
|
|
|
100.0
|
%
|
|
|
608
|
|
|
|
|
|
|
|
|
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Investment per metric was computed by using the total
investment amount of $6,534,136,000, which includes net real
estate investments and unfunded construction commitments for
which initial funding has commenced which amounted to
$6,340,260,000 and $193,876,000, respectively. |
|
(2) |
|
Includes our share of unconsolidated joint venture
investments. Please see Note 7 to our unaudited financial
statements included in our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2010 for additional
information. |
S-1
We invest in senior housing and health care real estate. We
diversify our investment portfolio by property type,
operator/tenant and geographic location. In determining whether
to invest in a property, we focus on the following: (1) the
experience of the obligors management team; (2) the
historical and projected financial and operational performance
of the property; (3) the credit of the obligor;
(4) the security for the lease or loan; and (5) the
capital committed to the property by the obligor. We conduct
market research and analysis for all potential investments. In
addition, we review the value of all properties, the interest
rates and covenant requirements of any debt to be assumed and
the anticipated sources of repayment of any existing debt that
is not to be assumed.
We monitor our investments through a variety of methods
determined by the type of property. Our asset management process
for investment properties generally includes review of monthly
financial statements and other operating data for each property,
periodic review of obligor creditworthiness, periodic property
inspections and review of covenant compliance relating to
licensure, real estate taxes, letters of credit and other
collateral. Our internal property management division actively
manages and monitors the medical office building portfolio with
a comprehensive process including tenant relations, tenant lease
expirations, the mix of health service providers,
hospital/health system relationships, property performance,
capital improvement needs and market conditions among other
things. In monitoring our portfolio, our personnel use a
proprietary database to collect and analyze property-specific
data. Additionally, we conduct extensive research to ascertain
industry trends and risks.
Through asset management and research, we evaluate the operating
environment in each propertys market to determine whether
payment risk is likely to increase. When we identify
unacceptable levels of payment risk, we seek to mitigate,
eliminate or transfer the risk. We categorize the risk as
obligor, property or market risk. For obligor risk, we typically
find a substitute operator/tenant to run the property. For
property risk, we usually work with the operator/tenant to
institute property-level management changes to address the risk.
Finally, for market risk, we often encourage an obligor to
change its capital structure, including refinancing the property
or raising additional equity. Through these asset management and
research efforts, we are generally able to intervene at an early
stage to address payment risk, and in so doing, support both the
collectability of revenue and the value of our investment.
Recent
developments
In April 2010, we completed the previously announced acquisition
of a portfolio of five assisted living buildings located in
Nebraska and Iowa totaling 295 units. The companys
$49 million investment will include the assumption of
$10 million in secured debt at an average rate of 6.14%.
These assets are leased to Capital Senior Living Corporation
(NYSE: CSU) with an initial term of 15 years and an initial
yield of 8.25%.
We also completed a second portfolio acquisition with Capital
Senior Living for $36 million in April 2010 with the same
lease terms. The portfolio consists of three senior housing
facilities located in Indiana totaling 300 units.
In April and June 2010, we completed the sales of $300,000,000
and $150,000,000, respectively, of senior unsecured notes due
2020. The notes have a weighted average interest rate of 6.125%
and are part of the same series. The aggregate principal amount
of outstanding notes of this series is $450,000,000.
Other
information
The SEC maintains an Internet website at
http://www.sec.gov
that contains our annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K
and proxy statements, and all amendments thereto. All reports
that we file with the SEC may be read and copied at the
SECs Public Reference Room at 100 F Street,
N.E., Washington, DC 20549. Information about the operation of
the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330.
S-2
The offering
|
|
|
Issuer |
|
Health Care REIT, Inc. |
|
Notes |
|
$152,009,000 aggregate principal amount of 3.00% convertible
senior notes due 2029. The notes will be a further issuance of,
will be fungible with and will form a single series with our
outstanding 3.00% convertible senior notes due December 1,
2029, initially issued on March 15, 2010 in the principal
amount of $342,394,000. The notes will have the same CUSIP
number and will trade interchangeably with the previously issued
notes in this series immediately upon settlement. Upon
completion of this offering, the aggregate principal amount of
outstanding notes of this series will be $494,403,000. |
|
Maturity |
|
The notes will mature on December 1, 2029, unless earlier
redeemed, repurchased or converted. |
|
Interest payment dates |
|
We will pay 3.00% interest per annum on the principal amount of
the notes, payable semi-annually in arrears on June 1 and
December 1 of each year, starting on December 1, 2010,
to holders of record at the close of business on the preceding
May 15 and November 15, respectively. Interest will accrue
on the notes from and including June 1, 2010 or from and
including the last date in respect of which interest has been
paid or provided for, as the case may be, to, but excluding, the
next interest payment date or maturity date, as the case may be. |
|
Ranking |
|
The notes will be our senior unsecured obligations and will rank
equally with all of our existing and future senior unsecured
indebtedness. The notes will be effectively subordinated to all
of our existing and future secured indebtedness and structurally
subordinated to all existing and future liabilities of our
subsidiaries, including trade payables. As of March 31,
2010, our subsidiaries had indebtedness and other obligations in
the principal amount of approximately $726 million. In
addition, as of June 15, 2010, there was $266 million
outstanding under our unsecured line of credit arrangement under
which we and certain of our subsidiaries are co-borrowers. These
amounts of indebtedness will structurally rank senior to the
notes. |
|
Conversion rights |
|
The notes will be convertible into cash and, if applicable,
shares of our common stock, $1.00 par value per share,
based on an initial conversion rate, subject to adjustment, of
19.5064 shares per $1,000 principal amount of notes (which
represents an initial conversion price of approximately
$51.27 per share), only in the following circumstances and
to the following extent: |
|
|
|
Ø the
notes will be convertible during any calendar quarter after the
calendar quarter ending June 30, 2010, if the closing sale
price of our common stock for each of 20 or more trading days in
a period of 30 consecutive trading days ending on the last
trading day of the immediately preceding calendar quarter
exceeds 120% of the conversion price in
|
S-3
|
|
|
|
|
effect on the last trading day of the immediately preceding
calendar quarter; |
|
|
|
Ø the
notes will be convertible during the five consecutive business
days immediately after any five consecutive trading day period
(we refer to this five consecutive trading day period as the
note measurement period) in which the average
trading price per $1,000 principal amount of notes was equal to
or less than 97% of the average conversion value of the notes
during the note measurement period;
|
|
|
|
Ø the
notes will be convertible if we make certain distributions on
our common stock or engage in certain transactions;
|
|
|
|
Ø the
notes will be convertible if we call the notes for redemption;
and
|
|
|
|
Ø the
notes will be convertible at any time from, and including,
November 1, 2014 to, and including, December 1, 2014
and at any time from, and including, November 1, 2029 until
the close of business on the business day immediately preceding
December 1, 2029 or earlier redemption or repurchase.
|
|
|
|
Upon conversion, holders will receive, per $1,000 principal
amount being converted, a settlement amount that is
equal to the sum of the daily settlement amounts for
each of the 20 trading days during the cash settlement
averaging period. |
|
|
|
The cash settlement averaging period with respect to
any note means: |
|
|
|
Ø for
notes that are converted at any time on or after the 23rd
scheduled trading day prior to the maturity date of the
applicable notes, the 20 consecutive trading days beginning on,
and including, the 20th scheduled trading day prior to the
maturity date; and
|
|
|
|
Ø in
all other circumstances, the 20 consecutive trading days
beginning on, and including, the third trading day following the
conversion date.
|
|
|
|
The daily settlement amount for a given trading day
consists of: |
|
|
|
Ø cash
equal to the lesser of $50 and the daily conversion
value; and
|
|
|
|
Ø to
the extent the daily conversion value exceeds $50, a number of
shares equal to:
|
|
|
|
- the excess of the
daily conversion value over $50, divided by
|
|
|
|
- the volume-weighted
average price of our common stock on that trading day.
|
|
|
|
We refer to the cash due upon conversion as the principal
return, and we refer to the shares, if any, that are due
upon conversion as the net shares. The daily
conversion value on a given trading day generally means
one-twentieth of the product of |
S-4
|
|
|
|
|
the applicable conversion rate and the volume weighted average
price of our common stock on that trading day. |
|
|
|
A holder that surrenders notes for conversion in connection with
a make-whole fundamental change that occurs before
December 1, 2014 may in certain circumstances be
entitled to an increased conversion rate. |
|
|
|
See Description of notesConversion Rights. |
|
Sinking fund |
|
None. |
|
Redemption of notes at our option |
|
Prior to December 1, 2014, we cannot redeem the notes
except to preserve our status as a REIT for U.S. federal income
tax purposes. On or after December 1, 2014, we may from
time to time at our option redeem the notes, in whole or in
part. In either case, the notes shall be redeemed at a
redemption price in cash equal to 100% of the principal amount
of the notes we redeem, plus any accrued and unpaid interest to,
but excluding, the redemption date. See Description of
notesRedemption of Notes at Our Option. |
|
Purchase of notes by us at the option of the holder |
|
On each of December 1, 2014, December 1, 2019 and
December 1, 2024, holders may require us to purchase all or
a portion of their notes at a purchase price in cash equal to
100% of the principal amount of the notes to be purchased, plus
any accrued and unpaid interest to, but excluding, the purchase
date. See Description of notesPurchase of Notes by
Us at the Option of the Holder. |
|
Right of holder to require us to repurchase notes if a
fundamental change occurs |
|
If a fundamental change, as described in this prospectus
supplement, occurs, holders may require us to repurchase all or
a portion of their notes for cash at a repurchase price equal to
100% of the principal amount of the notes to be repurchased,
plus any accrued and unpaid interest to, but excluding, the
repurchase date. |
|
|
|
See Description of notesHolders May Require Us to
Repurchase Their Notes upon a Fundamental Change. |
|
Events of default |
|
If an event of default on the notes has occurred and is
continuing, the principal amount of the notes plus any premium
and accrued and unpaid interest may become immediately due and
payable. These amounts automatically become due and payable upon
certain events of default. See Description of
notesEvents of default. |
|
Use of proceeds |
|
We estimate that the net proceeds to us from this offering will
be approximately $150,372,000, after deducting underwriting
discounts and commissions and our estimated offering expenses.
We intend to use the net proceeds to repurchase $85,019,000
aggregate principal amount of our 4.75% convertible senior notes
due 2026 and $54,189,000 aggregate principal amount of our 4.75%
convertible senior notes due 2027. See Use of
Proceeds. |
S-5
|
|
|
Restrictions on ownership |
|
In order to assist us in maintaining our qualification as a REIT
for U.S. federal income tax purposes, no person may own, or be
deemed to own by virtue of the attribution rules of the Internal
Revenue Code of 1986, as amended (the Internal Revenue
Code or the Code), more than 9.8% of the value
of our outstanding capital stock, subject to certain exceptions.
Notwithstanding any other provision of the notes, no holder of
notes will be entitled to convert such notes for our common
stock to the extent that receipt of our common stock would cause
the holder (together with the holders affiliates) to
exceed the ownership limit contained in our by-laws (with
respect to our common stock and preferred stock) and our
certificates of designation (with respect to our preferred
stock). See Restrictions on transfer of securities
in the accompanying prospectus. |
|
DTC eligibility |
|
The notes will be issued in book-entry-only form and will be
represented by one or more global certificates, without interest
coupons, deposited with, or on behalf of, the Depository
Trust Company, or DTC, and registered in the name of a
nominee of DTC. Beneficial interests in the notes will be shown
on, and transfers will be effected only through, records
maintained by DTC and its direct and indirect participants.
Except in limited circumstances, holders may not exchange
interests in their notes for certificated securities. See
Description of notesForm, Denomination and
Registration of Notes. |
|
Listing and trading |
|
The notes that we previously issued currently trade in the
over-the-counter market. We cannot assure you that the notes
will continue to trade after this offering. We have not applied,
and do not intend to apply, for the listing of the notes on any
securities exchange. Our common stock is listed on the New York
Stock Exchange under the symbol HCN. |
|
Certain U.S. federal tax considerations |
|
For a discussion of certain U.S. federal tax considerations
relating to the purchase, ownership and disposition of the notes
and shares of common stock into which the notes are convertible,
see Certain federal income tax considerations. |
|
Risk factors |
|
In analyzing an investment in the notes we are offering pursuant
to this prospectus supplement, you should carefully consider,
along with other matters included or incorporated by reference
in this prospectus supplement, the information set forth under
Risk factors beginning on
page S-8
and Forward-looking statements beginning on
page S-23. |
For a more complete description of the terms of the notes, see
Description of notes. For a more complete
description of our common stock, see Description of our
common stock and Description of certain provisions
of our certificate of incorporation and by-laws in the
accompanying prospectus.
S-6
Summary financial
data
The summary selected historical consolidated financial data set
forth below should be read in conjunction with the sections of
this prospectus supplement entitled Capitalization
and Prospectus Supplement Summary, as well as the
other information that we have filed with the SEC and
incorporated by reference herein. The summary selected
historical consolidated financial data for each of the years in
the three-year period ended December 31, 2009 have been
derived from our audited consolidated financial statements.
These financial statements have been audited by
Ernst & Young LLP, our independent registered public
accounting firm. The summary historical consolidated financial
data as of and for the three months ended March 31, 2010
and 2009 have been derived from our unaudited interim
consolidated financial statements. In the opinion of our
management, the unaudited interim consolidated financial
statements have been prepared on the same basis as the audited
consolidated financial statements and include all adjustments,
consisting of normal recurring adjustments, necessary for a fair
presentation of the financial position and results of operations
as of such dates and for such periods. Results for the interim
periods are not necessarily indicative of the results to be
expected for the full year. This information is only a summary,
and should be read together with, and is qualified in its
entirety by reference to, our historical consolidated financial
statements and notes thereto and the section entitled
Managements Discussion and Analysis of Financial
Condition and Results of Operations included in our
Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2010 and our Annual Report on
Form 10-K
for the year ended December 31, 2009, as updated by our
Current Report on Form 8-K filed May 10, 2010, which
are incorporated by reference herein.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
Three Months
Ended
|
|
|
|
December 31,
|
|
|
March 31,
|
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
2010
|
|
|
|
|
|
Amounts are in
thousands,
|
|
|
|
|
|
|
|
|
|
except per share
data
|
|
|
|
|
|
|
|
|
Operating
Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
427,720
|
|
|
$
|
524,606
|
|
|
$
|
567,168
|
|
|
$
|
138,846
|
|
|
$
|
152,759
|
|
Income from continuing operations attributable to common
stockholders
|
|
|
77,925
|
|
|
|
115,219
|
|
|
|
138,932
|
|
|
|
41,521
|
|
|
|
19,297
|
|
Net income attributable to common stockholders
|
|
|
113,225
|
|
|
|
260,098
|
|
|
|
171,190
|
|
|
|
61,119
|
|
|
|
25,812
|
|
Per Share
Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations attributable to common
stockholders
|
|
$
|
0.99
|
|
|
$
|
1.23
|
|
|
$
|
1.22
|
|
|
$
|
0.38
|
|
|
$
|
0.16
|
|
Net income attributable to common stockholders
|
|
$
|
1.44
|
|
|
$
|
2.77
|
|
|
$
|
1.50
|
|
|
$
|
0.56
|
|
|
$
|
0.21
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations attributable to common
stockholders
|
|
$
|
0.98
|
|
|
$
|
1.22
|
|
|
$
|
1.21
|
|
|
$
|
0.38
|
|
|
$
|
0.16
|
|
Net income attributable to common stockholders
|
|
$
|
1.43
|
|
|
$
|
2.76
|
|
|
$
|
1.49
|
|
|
$
|
0.56
|
|
|
$
|
0.21
|
|
Dividends declared and paid per common share
|
|
$
|
2.2791
|
|
|
$
|
2.70
|
|
|
$
|
2.72
|
|
|
$
|
0.68
|
|
|
$
|
0.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
March 31,
|
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
2010
|
|
|
|
|
|
Amounts are in
thousands
|
|
|
Balance Sheet
Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net real estate investments
|
|
$
|
5,012,620
|
|
|
$
|
5,854,179
|
|
|
$
|
6,080,620
|
|
|
$
|
5,935,205
|
|
|
$
|
6,335,235
|
|
Total assets
|
|
|
5,219,240
|
|
|
|
6,215,031
|
|
|
|
6,367,186
|
|
|
|
6,164,994
|
|
|
|
6,774,378
|
|
Total long-term obligations
|
|
|
2,683,760
|
|
|
|
2,847,676
|
|
|
|
2,414,022
|
|
|
|
2,589,873
|
|
|
|
2,828,487
|
|
Total liabilities
|
|
|
2,784,289
|
|
|
|
2,976,746
|
|
|
|
2,559,735
|
|
|
|
2,714,387
|
|
|
|
3,014,462
|
|
Total redeemable preferred stock
|
|
|
330,243
|
|
|
|
289,929
|
|
|
|
288,683
|
|
|
|
288,728
|
|
|
|
287,974
|
|
Total equity
|
|
|
2,434,951
|
|
|
|
3,238,285
|
|
|
|
3,807,451
|
|
|
|
3,450,607
|
|
|
|
3,759,916
|
|
S-7
Risk factors
Investing in the notes involves a high degree of risk. In
addition to the other information included and incorporated by
reference in this prospectus supplement and the accompanying
prospectus, you should carefully consider the risks described
below before purchasing the notes. If any of the following risks
actually occurs, our business, results of operations and
financial condition will likely suffer. As a result, the trading
price of the notes and our common stock may decline, and you may
lose part or all of your investment.
RISKS RELATED TO
OUR BUSINESS
Our expected
results may not be achieved
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, but not limited to: the status of
the economy; the status of capital markets, including
availability and cost of capital; issues facing the health care
industry, including compliance with, and changes to, regulations
and payment policies, responding to government investigations
and punitive settlements and operators/tenants
difficulty in cost-effectively obtaining and maintaining
adequate liability and other insurance; changes in financing
terms; competition within the health care and senior housing
industries; negative developments in the operating results or
financial condition of operators/tenants, including, but not
limited to, their ability to pay rent and repay loans; our
ability to transition or sell facilities with profitable
results; the failure to make new investments as and when
anticipated; acts of God affecting our properties; our ability
to re-lease space at similar rates as vacancies occur; our
ability to timely reinvest sale proceeds at similar rates to
assets sold; operator/tenant bankruptcies or insolvencies;
government regulations affecting Medicare and Medicaid
reimbursement rates and operational requirements; liability or
contract claims by or against operators/tenants; unanticipated
difficulties
and/or
expenditures relating to future acquisitions; environmental laws
affecting our properties; changes in rules or practices
governing our financial reporting; and legal and operational
matters, including real estate investment trust qualification
and key management personnel recruitment and retention.
Risk factors
related to our operators revenues and expenses
Our investment property operators revenues are primarily
driven by occupancy, Medicare and Medicaid reimbursement, if
applicable, and private pay rates. Expenses for these facilities
are primarily driven by the costs of labor, food, utilities,
taxes, insurance and rent or debt service. Revenues from
government reimbursement have, and may continue to, come under
pressure due to reimbursement cuts and state budget shortfalls.
Liability insurance and staffing costs continue to increase for
our operators. To the extent that any decrease in revenues
and/or any
increase in operating expenses result in a property not
generating enough cash to make payments to us, the credit of our
operator and the value of other collateral would have to be
relied upon.
The ongoing credit and liquidity crisis, and the weakening
economy, may have an adverse effect on our operators and
tenants, including their ability to access credit or maintain
occupancy rates. If the operations, cash flows or financial
condition of our operators are materially adversely impacted by
the current economic conditions, our revenue and operations may
be adversely affected.
Increased
competition may affect our operators ability to meet their
obligations to us
The operators of our properties compete on a local and regional
basis with operators of properties and other health care
providers that provide comparable services. We cannot be certain
that the operators of all of our facilities will be able to
achieve and maintain occupancy and rate levels that will enable
them
S-8
Risk
factors
to meet all of their obligations to us. Our operators are
expected to encounter increased competition in the future that
could limit their ability to attract residents or expand their
businesses.
Risk factors
related to obligor bankruptcies
We are exposed to the risk that our obligors may not be able to
meet the rent, principal and interest or other payments due us,
which may result in an obligor bankruptcy or insolvency, or that
an obligor might become subject to bankruptcy or insolvency
proceedings for other reasons. Although our operating lease
agreements provide us with the right to evict a tenant, demand
immediate payment of rent and exercise other remedies, and our
loans provide us with the right to terminate any funding
obligation, demand immediate repayment of principal and unpaid
interest, foreclose on the collateral and exercise other
remedies, the bankruptcy and insolvency laws afford certain
rights to a party that has filed for bankruptcy or
reorganization. An obligor in bankruptcy or subject to
insolvency proceedings may be able to limit or delay our ability
to collect unpaid rent in the case of a lease or to receive
unpaid principal and interest in the case of a loan, and to
exercise other rights and remedies.
We may be required to fund certain expenses (e.g., real estate
taxes and maintenance) to preserve the value of an investment
property, avoid the imposition of liens on a property
and/or
transition a property to a new tenant. In some instances, we
have terminated our lease with a tenant and relet the property
to another tenant. In some of those situations, we have provided
working capital loans to and limited indemnification of the new
obligor. If we cannot transition a leased property to a new
tenant, we may take possession of that property, which may
expose us to certain successor liabilities. Should such events
occur, our revenue and operating cash flow may be adversely
affected.
Transfers of
health care facilities may require regulatory approvals and
these facilities may not have efficient alternative
uses
Transfers of health care facilities to successor operators
frequently are subject to regulatory approvals, including change
of ownership approvals under certificate of need
(CON) laws, state licensure laws and Medicare and
Medicaid provider arrangements, that are not required for
transfers of other types of real estate. The replacement of an
operator could be delayed by the approval process of any
federal, state or local agency necessary for the transfer of the
facility or the replacement of the operator licensed to manage
the facility. Alternatively, given the specialized nature of our
facilities, we may be required to spend substantial time and
funds to adapt these properties to other uses. If we are unable
to timely transfer properties to successor operators or find
efficient alternative uses, our revenue and operations may be
adversely affected.
Risk factors
related to government regulations
Our obligors businesses are affected by government
reimbursement and private payor rates. To the extent that an
operator/tenant receives a significant portion of its revenues
from governmental payors, primarily Medicare and Medicaid, such
revenues may be subject to statutory and regulatory changes,
retroactive rate adjustments, recovery of program overpayments
or set-offs, administrative rulings, policy interpretations,
payment or other delays by fiscal intermediaries or carriers,
government funding restrictions (at a program level or with
respect to specific facilities) and interruption or delays in
payments due to any ongoing governmental investigations and
audits at such property. In recent years, governmental payors
have frozen or reduced payments to health care providers due to
budgetary pressures. Health care reimbursement will likely
continue to be of paramount importance to federal and state
authorities. We cannot make any assessment as to the ultimate
timing or effect any future legislative reforms may have on the
financial condition of our obligors and properties. There can be
no assurance that adequate reimbursement levels will be
available for services provided by any property operator,
whether the property receives reimbursement from Medicare,
Medicaid or private payors. Significant limits on the scope of
services reimbursed and on reimbursement rates and fees could
have a
S-9
Risk
factors
material adverse effect on an obligors liquidity,
financial condition and results of operations, which could
adversely affect the ability of an obligor to meet its
obligations to us. See
Item 1BusinessCertain Government
RegulationsReimbursement included in our Annual
Report on
Form 10-K
for the year ended December 31, 2009, as updated by our
Current Report on
Form 8-K
filed May 10, 2010, and
Item 2Managements Discussion and Analysis
of Financial Condition and Results of OperationsExecutive
SummaryHealth Reform Laws and Medicare
Program Reimbursement Changes included in our Quarterly
Report on
Form 10-Q
for the quarter ended March 31, 2010.
Our operators and tenants generally are subject to extensive
federal, state and local licensure, certification and inspection
laws and regulations. Our operators or tenants
failure to comply with any of these laws could result in loss of
accreditation, denial of reimbursement, imposition of fines,
suspension or decertification from federal and state health care
programs, loss of license or closure of the facility. Such
actions may have an effect on our operators or
tenants ability to make lease payments to us and,
therefore, adversely impact us. See
Item 1BusinessCertain Government
RegulationsOther Related Laws included in our Annual
Report on
Form 10-K
for the year ended December 31, 2009, as updated by our
Current Report on
Form 8-K
filed May 10, 2010, and
Item 2Managements Discussion and Analysis
of Financial Condition and Results of OperationsExecutive
SummaryHealth Reform Laws and Medicare
Program Reimbursement Changes included in our Quarterly
Report on
Form 10-Q
for the quarter ended March 31, 2010.
Many of our properties may require a license
and/or CON
to operate. Failure to obtain a license or CON, or loss of a
required license or CON would prevent a facility from operating
in the manner intended by the operators or tenants. These events
could materially adversely affect our operators or
tenants ability to make rent payments to us. State and
local laws also may regulate expansion, including the addition
of new beds or services or acquisition of medical equipment, and
the construction of health care facilities, by requiring a CON
or other similar approval. See
Item 1BusinessCertain Government
RegulationsLicensing and Certification included in
our Annual Report on
Form 10-K
for the year ended December 31, 2009, as updated by our
Current Report on
Form 8-K
filed May 10, 2010, and
Item 2Managements Discussion and Analysis
of Financial Condition and Results of OperationsExecutive
SummaryHealth Reform Laws and Medicare
Program Reimbursement Changes included in our Quarterly
Report on
Form 10-Q
for the quarter ended March 31, 2010.
The American Reinvestment and Recovery Act of 2009, which was
signed into law on February 17, 2009, provides
$87 billion in additional federal Medicaid funding for
states Medicaid expenditures between October 1, 2008
and December 31, 2010. Under this Act, states meeting
certain eligibility requirements will temporarily receive
additional money in the form of an increase in the federal
medical assistance percentage. Thus, for a limited period of
time, the share of Medicaid costs that are paid for by the
federal government will go up, and each states share will
go down. We cannot predict whether states are, or will remain,
eligible to receive the additional federal Medicaid funding, or
whether the states will have sufficient funds for their Medicaid
programs. We also cannot predict the impact that this
broad-based, far-reaching legislation will have on the
U.S. economy or our business.
New health care
reform laws may have a significant impact on our
business
Recently enacted public laws reforming the health care system in
the United States may have a significant impact on our business.
In March 2010, the President signed into law the Patient
Protection and Affordable Care Act (PPACA) and The
Health Care and Education and Reconciliation Act of 2010, which
amends the PPACA (collectively, the Health Reform
Laws). The Health Reform Laws contain various provisions
that may impact us directly and that may impact the operators
and tenants of our properties. Some of the provisions of these
laws may have a positive impact on operators or
tenants revenues, by increasing coverage of uninsured
individuals for example, while others will have a negative
impact on the reimbursement of our operators or tenants, for
example, by altering the market basket adjustments for certain
types of health care facilities. The Health Reform Laws also
enhance
S-10
Risk
factors
certain fraud and abuse penalty provisions that could apply to
our operators and tenants in the event of one or more violations
of the federal health care laws. In addition, there are
provisions that impact the health coverage that we and our
operators and tenants provide to our respective employees. If
the operations, cash flows or financial condition of our
operators and tenants are materially adversely impacted by the
Health Reform Laws, our revenue and operations may be adversely
affected as well. See Item 2Managements
Discussion and Analysis of Financial Condition and Results of
OperationsExecutive SummaryHealth Reform Laws
and Medicare Program Reimbursement Changes
included in our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2010.
Risk factors
related to liability claims and insurance costs
In recent years, skilled nursing and seniors housing operators
have experienced substantial increases in both the number and
size of patient care liability claims. As a result, general and
professional liability costs have increased in some markets.
However, a recent report and state survey found that the
liability insurance market is beginning to stabilize in most
markets. In 2008, national average liability loss costs were
stable for the first time in nearly a decade. State-led tort
reform efforts have greatly contributed to decreasing costs. In
some markets general and professional liability insurance
coverage continues to be restricted or very costly, which may
adversely affect the property operators future operations,
cash flows and financial condition, and may have a material
adverse effect on the property operators ability to meet
their obligations to us.
Risk factors
related to acquisitions
We are exposed to the risk that some of our acquisitions may not
prove to be successful. We could encounter unanticipated
difficulties and expenditures relating to any acquired
properties, including contingent liabilities, and acquired
properties might require significant management attention that
would otherwise be devoted to our ongoing business. If we agree
to provide construction funding to an operator/tenant and the
project is not completed, we may need to take steps to ensure
completion of the project. Moreover, if we issue equity
securities or incur additional debt, or both, to finance future
acquisitions, it may reduce our per share financial results.
These costs may negatively affect our results of operations.
Risk factors
related to joint ventures
We have entered into, and may continue in the future to enter
into, partnerships or joint ventures with other persons or
entities. Joint venture investments involve risks, including the
possibility that our partner might become insolvent or otherwise
refuse to make capital contributions when due; that our partner
might at any time have investment goals which are inconsistent
with ours; that we could become engaged in a dispute with our
partner, which could require us to expend additional resources
to resolve such disputes; and that our partner may be in a
position to take action or withhold consent contrary to our
instructions or requests. In addition, our ability to transfer
our interest in a joint venture to a third party may be
restricted. In some instances, we and our partner may each have
the right to trigger a buy-sell arrangement, which could cause
us to sell our interest, or acquire our partners interest,
at a time when we otherwise would not have initiated such a
transaction. Joint ventures require us to share decision-making
authority with our partners, which limits our ability to control
the properties in the joint ventures. Even when we have a
controlling interest, certain major decisions may require
partner approval.
Risk factors
related to life sciences facilities
Our tenants in the life sciences industry face high levels of
regulation, expense and uncertainty that may adversely affect
their ability to make payments to us. Research, development and
clinical testing of products and technologies can be very
expensive and sources of funds may not be available to our life
S-11
Risk
factors
sciences tenants in the future. The products and technologies
that are developed and manufactured by our life sciences tenants
may require regulatory approval prior to being made, marketed,
sold and used. The regulatory process can be costly, long and
unpredictable. Even after a tenant gains regulatory approval and
market acceptance, the product still presents regulatory and
liability risks, such as safety concerns, competition from new
products and eventually the expiration of patent protection.
These factors may affect the ability of our life sciences
tenants to make timely payments to us, which may adversely
affect our revenue and operations.
Risk factors
related to indebtedness
Permanent financing for our investments is typically provided
through a combination of public and private offerings of debt
and equity securities and the incurrence or assumption of
secured debt. The incurrence or assumption of indebtedness may
cause us to become more leveraged, which could (1) require
us to dedicate a greater portion of our cash flow to the payment
of debt service, (2) make us more vulnerable to a downturn
in the economy, (3) limit our ability to obtain additional
financing or (4) negatively affect our credit ratings or
outlook by one or more of the noted rating agencies.
Our debt agreements contain various covenants, restrictions and
events of default. Among other things, these provisions require
us to maintain certain financial ratios and minimum net worth
and impose certain limits on our ability to incur indebtedness,
create liens and make investments or acquisitions. Breaches of
these covenants could result in defaults under the instruments
governing the applicable indebtedness, in addition to any other
indebtedness cross-defaulted against such instruments. These
defaults could have a material adverse impact on our business,
results of operations and financial condition.
Risk factors
related to our credit ratings
As of June 1, 2010, our senior unsecured notes were rated
Baa2 (stable), BBB- (positive) and BBB (stable) by Moodys
Investors Service, Standard & Poors Ratings
Services and Fitch Ratings, respectively. We plan to manage the
Company to maintain investment grade status with a capital
structure consistent with our current profile, but there can be
no assurance that we will be able to maintain our current credit
ratings. Any downgrades in terms of ratings or outlook by any or
all of the noted rating agencies could have a material adverse
impact on our cost and availability of capital, which could in
turn have a material adverse impact on our consolidated results
of operations, liquidity
and/or
financial condition.
Risk factors
related to interest rate swaps
We enter into interest rate swap agreements from time to time to
manage some of our exposure to interest rate volatility. These
swap agreements involve risks, such as the risk that
counterparties may fail to honor their obligations under these
arrangements. In addition, these arrangements may not be
effective in reducing our exposure to changes in interest rates.
When we use forward-starting interest rate swaps, there is a
risk that we will not complete the long-term borrowing against
which the swap is intended to hedge. If such events occur, our
results of operations may be adversely affected.
Risk factors
related to environmental laws
Under various federal and state laws, owners or operators of
real estate may be required to respond to the presence or
release of hazardous substances on the property and may be held
liable for property damage, personal injuries or penalties that
result from environmental contamination or exposure to hazardous
substances. We may become liable to reimburse the government for
damages and costs it incurs in connection with the
contamination. Generally, such liability attaches to a person
based on the persons relationship to the property. Our
tenants or borrowers are primarily responsible for the
S-12
Risk
factors
condition of the property. Moreover, we review environmental
site assessments of the properties that we own or encumber prior
to taking an interest in them. Those assessments are designed to
meet the all appropriate inquiry standard, which we
believe qualifies us for the innocent purchaser defense if
environmental liabilities arise. Based upon such assessments, we
do not believe that any of our properties are subject to
material environmental contamination. However, environmental
liabilities may be present in our properties and we may incur
costs to remediate contamination, which could have a material
adverse effect on our business or financial condition or the
business or financial condition of our obligors.
Risk factors
related to facilities that require entrance fees
Certain of our senior housing facilities require the payment of
an upfront entrance fee by the resident, a portion of which may
be refundable by the operator. Some of these facilities are
subject to substantial oversight by state regulators relating to
these funds. As a result of this oversight, residents of these
facilities may have a variety of rights, including, for example,
the right to cancel their contracts within a specified period of
time and certain lien rights. The oversight and rights of
residents within these facilities may have an effect on the
revenue or operations of the operators of such facilities and
therefore may negatively impact us.
Risk factors
related to facilities under construction or
development
At any given time, we may be in the process of constructing one
or more new facilities that ultimately will require a CON and
license before they can be utilized by the operator for their
intended use. The operator also may need to obtain Medicare and
Medicaid certification and enter into Medicare and Medicaid
provider agreements
and/or third
party payor contracts. In the event that the operator is unable
to obtain the necessary CON, licensure, certification, provider
agreements or contracts after the completion of construction,
there is a risk that we will not be able to earn any revenues on
the facility until either the initial operator obtains a license
or certification to operate the new facility and the necessary
provider agreements or contracts or we can find and contract
with a new operator that is able to obtain a license to operate
the facility for its intended use and the necessary provider
agreements or contracts.
In connection with our renovation, redevelopment, development
and related construction activities, we may be unable to obtain,
or suffer delays in obtaining, necessary zoning, land-use,
building, occupancy and other required governmental permits and
authorizations. These factors could result in increased costs or
our abandonment of these projects. In addition, we may not be
able to obtain financing on favorable terms, which may render us
unable to proceed with our development activities, and we may
not be able to complete construction and
lease-up of
a property on schedule, which could result in increased debt
service expense or construction costs.
Additionally, the time frame required for development,
construction and
lease-up of
these properties means that we may have to wait years for
significant cash returns. Because we are required to make cash
distributions to our stockholders, if the cash flow from
operations or refinancing is not sufficient, we may be forced to
borrow additional money to fund such distributions. Newly
developed and acquired properties may not produce the cash flow
that we expect, which could adversely affect our overall
financial performance.
In deciding whether to acquire or develop a particular property,
we make assumptions regarding the expected future performance of
that property. In particular, we estimate the return on our
investment based on expected occupancy and rental rates. If our
financial projections with respect to a new property are
inaccurate, and the property is unable to achieve the expected
occupancy and rental rates, it may fail to perform as we
expected in analyzing our investment. Our estimate of the costs
of repositioning or redeveloping an acquired property may prove
to be inaccurate, which may result in our
S-13
Risk
factors
failure to meet our profitability goals. Additionally, we may
acquire new properties that are not fully leased, and the cash
flow from existing operations may be insufficient to pay the
operating expenses and debt service associated with that
property.
We do not know if
our tenants will renew their existing leases, and if they do
not, we may be unable to lease the properties on as favorable
terms, or at all
We cannot predict whether our tenants will renew existing leases
at the end of their lease terms, which expire at various times
through 2079. If these leases are not renewed, we would be
required to find other tenants to occupy those properties or
sell them. There can be no assurance that we would be able to
identify suitable replacement tenants or enter into leases with
new tenants on terms as favorable to us as the current leases or
that we would be able to lease those properties at all.
Our ownership of
properties through ground leases exposes us to the loss of such
properties upon breach or termination of the ground
leases
We have acquired an interest in certain of our properties by
acquiring a leasehold interest in the property on which the
building is located, and we may acquire additional properties in
the future through the purchase of interests in ground leases.
As the lessee under a ground lease, we are exposed to the
possibility of losing the property upon termination of the
ground lease or an earlier breach of the ground lease by us.
Illiquidity of
real estate investments could significantly impede our ability
to respond to adverse changes in the performance of our
properties
Real estate investments are relatively illiquid. Our ability to
quickly sell or exchange any of our properties in response to
changes in economic and other conditions will be limited. No
assurances can be given that we will recognize full value for
any property that we are required to sell for liquidity reasons.
Our inability to respond rapidly to changes in the performance
of our investments could adversely affect our financial
condition and results of operations. In addition, we are exposed
to the risks inherent in concentrating investments in real
estate, and in particular, the seniors housing and health care
industries. A downturn in the real estate industry could
adversely affect the value of our properties and our ability to
sell properties for a price or on terms acceptable to us.
Risk factors
related to reinvestment of sale proceeds
From time to time, we will have cash available from (1) the
proceeds of sales of our securities, (2) principal payments
on our loans receivable and (3) the sale of properties,
including non-elective dispositions, under the terms of master
leases or similar financial support arrangements. In order to
maintain current revenues and continue generating attractive
returns, we expect to re-invest these proceeds in a timely
manner. We compete for real estate investments with a broad
variety of potential investors. This competition for attractive
investments may negatively affect our ability to make timely
investments on terms acceptable to us.
Failure to
properly manage our rapid growth could distract our management
or increase our expenses
We have experienced rapid growth and development in a relatively
short period of time and expect to continue this rapid growth in
the future. This growth has resulted in increased levels of
responsibility for our management. Future property acquisitions
could place significant additional demands on, and require us to
expand, our management, resources and personnel. Our failure to
manage any such rapid growth effectively could harm our business
and, in particular, our financial condition, results of
operations and cash flows, which could negatively affect our
ability to make distributions to
S-14
Risk
factors
stockholders. Our rapid growth could also increase our capital
requirements, which may require us to issue potentially dilutive
equity securities and incur additional debt.
We might fail to
qualify or remain qualified as a REIT
We intend to operate as a REIT under the Internal Revenue Code
and believe we have and will continue to operate in such a
manner. If we lose our status as a REIT, we will face serious
tax consequences that will substantially reduce the funds
available for satisfying our obligations and for distribution to
our stockholders for each of the years involved because:
|
|
Ø
|
we would not be allowed a deduction for distributions to
stockholders in computing our taxable income and would be
subject to federal income tax at regular corporate rates;
|
|
Ø
|
we could be subject to the federal alternative minimum tax and
possibly increased state and local taxes; and
|
|
Ø
|
unless we are entitled to relief under statutory provisions, we
could not elect to be subject to tax as a REIT for four taxable
years following the year during which we were disqualified.
|
Since REIT qualification requires us to meet a number of complex
requirements, it is possible that we may fail to fulfill them,
and if we do, our earnings will be reduced by the amount of
federal taxes owed. A reduction in our earnings would affect the
amount we could distribute to our stockholders. If we do not
qualify as a REIT, we would not be required to make
distributions to stockholders since a non-REIT is not required,
in order to maintain REIT status or avoid an excise tax, to pay
dividends to stockholders. See
Item 1BusinessTaxationFederal
Income Tax Considerations of our Annual Report on
Form 10-K
for the year ended December 31, 2009 for a discussion of
the provisions of the Internal Revenue Code that apply to us and
the effects of non-qualification.
In addition, if we fail to qualify as a REIT, all distributions
to stockholders would continue to be treated as dividends to the
extent of our current and accumulated earnings and profits,
although corporate stockholders may be eligible for the
dividends received deduction, and individual stockholders may be
eligible for taxation at the rates generally applicable to
long-term capital gains (currently at a maximum rate of 15%)
with respect to distributions.
As a result of all these factors, our failure to qualify as a
REIT also could impair our ability to implement our business
strategy and would adversely affect the value of our common
stock.
Qualification as a REIT involves the application of highly
technical and complex Internal Revenue Code provisions for which
there are only limited judicial and administrative
interpretations. The determination of various factual matters
and circumstances not entirely within our control may affect our
ability to remain qualified as a REIT. Although we believe that
we qualify as a REIT, we cannot assure you that we will continue
to qualify or remain qualified as a REIT for tax purposes. See
Item 1BusinessTaxationFederal
Income Tax Considerations of our Annual Report on
Form 10-K
for the year ended December 31, 2009.
The 90% annual
distribution requirement will decrease our liquidity and may
limit our ability to engage in otherwise beneficial
transactions
To comply with the 90% distribution requirement applicable to
REITs and to avoid the nondeductible excise tax, we must make
distributions to our stockholders. See
Item 1BusinessTaxationFederal
Income Tax ConsiderationsQualification as a
REITAnnual Distribution Requirements included in our
Annual Report on
Form 10-K
for the year ended December 31, 2009. Although we
anticipate that we generally will have sufficient cash or liquid
assets to enable us to satisfy the REIT distribution
requirement, it is possible that, from time to time, we may not
have sufficient cash or other liquid assets to meet the 90%
distribution requirement, or we may decide to retain cash or
distribute such greater amount as may be necessary to avoid
income and excise taxation. This may be due to timing
differences
S-15
Risk
factors
between the actual receipt of income and actual payment of
deductible expenses, on the one hand, and the inclusion of that
income and deduction of those expenses in arriving at our
taxable income, on the other hand. In addition, non-deductible
expenses such as principal amortization or repayments or capital
expenditures in excess of non-cash deductions may cause us to
fail to have sufficient cash or liquid assets to enable us to
satisfy the 90% distribution requirement. In the event that
timing differences occur, or we deem it appropriate to retain
cash, we may borrow funds, issue additional equity securities
(although we cannot assure you that we will be able to do so),
pay taxable stock dividends, if possible, distribute other
property or securities or engage in a transaction intended to
enable us to meet the REIT distribution requirements. This may
require us to raise additional capital to meet our obligations.
The amount of additional indebtedness we may incur is limited by
the terms of our line of credit arrangement and the indentures
governing our senior unsecured notes. In addition, adverse
economic conditions may impact the availability of additional
funds or could cause the terms on which we are able to borrow
additional funds to become unfavorable. In those circumstances,
we may be required to raise additional equity in the capital
markets. Our access to capital depends upon a number of factors
over which we have little or no control, including rising
interest rates, inflation and other general market conditions
and the markets perception of our growth potential and our
current and potential future earnings and cash distributions and
the market price of the shares of our capital stock. We cannot
assure you that we will be able to raise the capital necessary
to make future investments or to meet our obligations and
commitments as they mature.
Other risk
factors
We are also subject to other risks. Our Second Restated
Certificate of Incorporation and Second Amended and Restated
By-Laws contain anti-takeover provisions (staggered board
provisions, restrictions on share ownership and transfer and
super majority stockholder approval requirements for business
combinations) that could make it more difficult for or even
prevent a third party from acquiring us without the approval of
our incumbent Board of Directors. Provisions and agreements that
inhibit or discourage takeover attempts could reduce the market
value of our common stock.
Additionally, we are dependent on key personnel. Although we
have entered into employment agreements with our executive
officers, losing any one of them could, at least temporarily,
have an adverse impact on our operations. We believe that losing
more than one could have a material adverse impact on our
business.
RISKS RELATED TO
THE NOTES AND OUR COMMON STOCK
Our business
operations may not generate the cash needed to service our
indebtedness
We cannot assure you that our business will generate sufficient
cash flow from operations or that future borrowings will enable
us to pay our indebtedness, including the notes we are offering
in this prospectus supplement. As adjusted to include the
issuance of $450,000,000 of 6.125% notes due 2020 in April and
June 2010, the sale of these notes and the repurchase of
$85,019,000 aggregate principal amount of our 4.75% convertible
senior notes due 2026 and $54,189,000 aggregate principal amount
of our 4.75% convertible senior notes due 2027, our total
consolidated debt as of March 31, 2010 would have been
approximately $2.9 billion, which would have represented
approximately 43.3% of our total capitalization as of that date.
The indenture for the notes will not restrict our ability to
incur additional indebtedness.
The notes will be
effectively subordinated to our secured indebtedness and
subordinated to all liabilities of our subsidiaries from time to
time outstanding
The notes are obligations only of Health Care REIT, Inc. and
will not be guaranteed by our subsidiaries or secured by any of
our or their properties or assets. The notes will be effectively
subordinated to all of
S-16
Risk
factors
our existing and future secured indebtedness and structurally
subordinated to all existing and future liabilities of our
subsidiaries, including trade payables. Our subsidiaries, which
own approximately 66% of our real estate investments as of
March 31, 2010, are separate legal entities and have no
obligation to pay any amounts due pursuant to the notes. As of
March 31, 2010, our subsidiaries had indebtedness and other
obligations in the principal amount of approximately
$726 million. In addition, as of June 15, 2010, there
was $266 million outstanding under our unsecured line of
credit arrangement under which we and certain of our
subsidiaries are co-borrowers. These amounts of indebtedness
will structurally rank senior to the notes. See
Description of other indebtedness.
Volatility of the
market price of our common stock may depress the trading price
of the notes
Since January 1, 2007, the trading price of our common
stock on the New York Stock Exchange has ranged from a low of
$25.86 per share to a high of $53.98 per share. Because the
notes are convertible into shares of our common stock in certain
circumstances, volatility in the price of our common stock may
depress the trading price of the notes. The risk of volatility
and depressed prices of our common stock also applies to holders
who receive shares of common stock upon conversion of their
notes.
The share price of our common stock depends upon several
factors, including, but not limited to: our financial condition,
performance and prospects; general economic and financial market
conditions; changes in estimates by analysts; the market for
similar securities issued by real estate investment trusts; and
our ability to meet analysts estimates. In addition, the
market price of our common stock may be affected by future sales
of our securities, including additional issuances of common
stock and securities convertible into common stock. These
factors, among others, could significantly depress the trading
price of our common stock.
These factors, among others, could significantly depress the
trading price of the notes and the price of our common stock
issued upon conversion of the notes.
In addition, the price of our common stock could also be
affected by possible sales of our common stock by investors who
view the notes as a more attractive means of equity
participation in us and by hedging or arbitrage trading activity
that we expect to develop involving our common stock. The
hedging or arbitrage could, in turn, affect the trading price of
the notes, or any common stock that holders receive upon
conversion of the notes.
The net share
settlement feature of the notes may have adverse
consequences
The net share settlement feature of the notes, as described
under Description of notesConversion
RightsPayment upon conversion, may:
|
|
Ø
|
result in holders receiving no shares upon conversion or fewer
shares relative to the conversion value of the notes;
|
|
Ø
|
reduce our liquidity;
|
|
Ø
|
delay holders receipt of the consideration due upon
conversion; and
|
|
Ø
|
subject holders to market risk before receiving any shares upon
conversion.
|
If the notes are convertible, upon conversion, holders will
receive cash and, if applicable, shares of our common stock
based on the sum of the daily settlement amounts
described in this prospectus supplement for the 20 consecutive
trading days that begins on, and includes, the third trading day
after the day the notes are tendered for conversion, subject to
certain exceptions in connection with conversions during a
period immediately preceding the maturity date of the notes as
described in this prospectus supplement. We refer to this 20
trading day period as the cash settlement averaging
period.
S-17
Risk
factors
We will generally deliver the cash and, if applicable, shares of
common stock issuable upon conversion as soon as practicable,
but in no event more than three business days after the last
trading day in the cash settlement averaging period, which will
generally be at least 22 trading days after the date holders
tender their notes for conversion. In addition, because the
consideration due upon conversion is based in part on the
trading prices of our common stock during the cash settlement
averaging period, any decrease in the price of our common stock
after you tender your notes for conversion may significantly
decrease the value of the consideration you receive.
Furthermore, because we must settle at least a portion of our
conversion obligation in cash, the conversion of notes may
significantly reduce our liquidity.
The conversion
rate of the notes may not be adjusted for all dilutive events
that may occur
As described under Description of notesConversion
RightsAdjustments to the conversion rate, we will
adjust the conversion rate of the notes for certain events,
including, among others:
|
|
Ø
|
the issuance of stock dividends on our common stock;
|
|
Ø
|
the issuance of certain rights or warrants;
|
|
Ø
|
certain subdivisions and combinations of our capital stock;
|
|
Ø
|
certain cash dividends;
|
|
Ø
|
the distribution of capital stock, indebtedness or assets; and
|
|
Ø
|
certain tender or exchange offers.
|
We will not adjust the conversion rate for other events, such as
an issuance of common stock for cash or in connection with an
acquisition, that may adversely affect the trading price of the
notes or our common stock. If we engage in any of these types of
transactions, the value of the common stock into which your
notes may be convertible may be diluted. An event that adversely
affects the value of the notes, but does not result in an
adjustment to the conversion rate may occur.
The increase in
the conversion rate applicable to notes that holders convert in
connection with a make-whole fundamental change may not
adequately compensate you for the lost option time value of your
notes as a result of that fundamental change
If a make-whole fundamental change occurs before
December 1, 2014, we will under certain circumstances
increase the conversion rate applicable to holders who convert
their notes within a specified time frame. The amount of the
increase in the conversion rate depends on the date when the
fundamental change becomes effective and the applicable price
described in this prospectus supplement. See Description
of notesConversion RightsAdjustment to the
conversion rate upon the occurrence of a make-whole fundamental
change.
Although the increase in the conversion rate is designed to
compensate you for the lost option time value of your notes as a
result of the make-whole fundamental change, the increase in the
conversion rate is only an approximation of the lost value and
may not adequately compensate you for the loss. In addition, you
will not be entitled to an increased conversion rate if:
|
|
Ø
|
the make-whole fundamental change occurs on or after
December 1, 2014;
|
|
Ø
|
you surrender a note for conversion in connection with a
make-whole fundamental change we have announced, but the
make-whole fundamental change is not consummated; or
|
|
Ø
|
the applicable price is greater than $120.00 per share or less
than $43.63 per share (in each case, subject to adjustment).
|
Furthermore, a holder may not receive the additional
consideration payable as a result of the increase in the
conversion rate until the third business day after the effective
date of the make-whole fundamental
S-18
Risk
factors
change, or even later, which could be a significant period of
time after the date the holder has tendered its notes for
conversion. In addition, we will not increase the conversion
rate, with respect to a make-whole fundamental change, to an
amount (subject to adjustment) that exceeds 22.9200 shares
per $1,000 principal amount of notes. Our obligation to increase
the conversion rate as described above also could be considered
a penalty, in which case its enforceability would be subject to
general principles of reasonableness of economic remedies.
We may not have
the ability to purchase the notes on the purchase dates or upon
a fundamental change or to pay the cash payment due upon
conversion
On each of December 1, 2014, December 1, 2019 and
December 1, 2024, holders may require us to purchase, for
cash, all or a portion of their notes at 100% of their principal
amount, plus any accrued and unpaid interest to, but excluding,
that date. If a fundamental change occurs, holders of the notes
may require us to repurchase, for cash, all or a portion of
their notes at 100% of their principal amount, plus any accrued
and unpaid interest to, but excluding, that date. In addition,
upon conversion of the notes, we must pay the principal return
in cash. We may not have sufficient funds to pay the repurchase
price or principal return when due. In addition, the terms of
any borrowing agreements which we may enter into from time to
time may require early repayment of borrowings under
circumstances similar to those constituting a fundamental
change. These agreements may also make our repurchase of notes,
or the cash payment due upon conversion of the notes, an event
of default under the agreements. If we fail to repurchase the
notes or pay the cash payment due upon conversion when required,
we will be in default under the indenture governing the notes.
See Description of notesConversion Rights,
Description of notesPurchase of Notes by Us at the
Option of the Holder and Description of
notesHolders May Require Us to Repurchase Their Notes upon
a Fundamental Change.
You may not be
able to convert your notes into cash and, if applicable, shares
of our common stock before November 1, 2029, other than
during the period from November 1, 2014 to December 1,
2014, and the value of the notes could be less than the value of
the common stock into which your notes could otherwise be
converted
Prior to November 1, 2029, other than during the period
from November 1, 2014 to December 1, 2014, the notes
are convertible into cash and, if applicable, shares of our
common stock only if specified conditions are met. These
conditions may not be met. If these conditions for conversion
are not met, you will not be able to convert your notes (other
than during the periods specified above) and you may not be able
to receive the value of the common stock into which the notes
would otherwise be convertible. In addition, for these and other
reasons, the trading price of the notes could be substantially
less than the conversion value of the notes.
We have made only
limited covenants in the indenture for the notes, and these
limited covenants may not protect your investment
The indenture for the notes does not:
|
|
Ø
|
require us to maintain any financial ratios or specific levels
of net worth, revenues, income, cash flows or liquidity and,
accordingly, does not protect holders of the notes in the event
that we experience significant adverse changes in our financial
condition or results of operations;
|
|
Ø
|
limit our subsidiaries ability to incur indebtedness which
would effectively rank senior to the notes;
|
|
Ø
|
limit our ability to incur secured indebtedness or indebtedness
that is equal in right of payment to the notes;
|
|
Ø
|
restrict our subsidiaries ability to issue securities that
would be senior to the common stock of our subsidiaries held by
us;
|
S-19
Risk
factors
|
|
Ø
|
restrict our ability to repurchase our securities;
|
|
Ø
|
restrict our ability to pledge our assets or those of our
subsidiaries; or
|
|
Ø
|
restrict our ability to make investments or to pay dividends or
make other payments in respect of our common stock or other
securities ranking junior to the notes.
|
Furthermore, the indenture for the notes contains only limited
protections in the event of a change in control. We could engage
in many types of transactions, such as acquisitions,
refinancings or recapitalizations, that could substantially
affect our capital structure and the value of the notes and our
common stock but would not constitute a fundamental
change that permits holders to require us to repurchase
their notes. For these reasons, you should not consider the
covenants in the indenture or the repurchase feature of the
notes as a significant factor in evaluating whether to invest in
the notes.
In the absence of
an active and liquid trading market for the notes, the market
price of the notes may decline and you may be unable to sell
your notes
We do not intend to list the notes on any national securities
exchange. The notes currently trade in the over-the-counter
market. In the absence of an active trading market, you may be
unable to resell your notes or may only be able to sell them at
a substantial discount.
Ownership
limitations in our by-laws and certificates of designation may
impair the ability of holders to convert notes into our common
stock
In order to assist us in maintaining our qualification as a REIT
for U.S. federal income tax purposes, no person may own, or
be deemed to own by virtue of the attribution rules of the
Internal Revenue Code, more than 9.8% of the value of our
outstanding capital stock, subject to certain exceptions. For
this purpose, all options, warrants, convertible securities or
other rights to acquire our common stock will be treated as if
all such rights had been exercised. Notwithstanding any other
provision of the notes, no holder of notes will be entitled to
convert such notes for our common stock to the extent that
receipt of our common stock would cause the holder (together
with the holders affiliates) to exceed the ownership limit
contained in our by-laws (with respect to our common stock and
preferred stock) and our certificates of designation (with
respect to our preferred stock). See Restrictions on
transfer of securities in the accompanying prospectus.
Provisions in the
indenture for the notes, our certificate of incorporation and
by-laws and Delaware law could discourage an acquisition of us
by a third party, even if the acquisition would be favorable to
you
If a fundamental change (as defined in the
indenture) occurs, holders of the notes will have the right, at
their option, to require us to repurchase all or a portion of
their notes. In the event of a make-whole fundamental
change, we also may be required to increase the conversion
rate applicable to notes surrendered for conversion in
connection with such make-whole fundamental change. In addition,
the indenture for the notes prohibits us from engaging in
certain mergers or acquisitions unless, among other things, the
surviving entity assumes our obligations under the notes. These
and other provisions, including the provisions of our charter
documents and Delaware law described under Description of
certain provisions of our certificate of incorporation and
by-laws in the accompanying prospectus could prevent or
deter a third party from acquiring us even where the acquisition
could be beneficial to you.
S-20
Risk
factors
An adverse rating
of the notes may cause their trading price to fall
If a rating agency rates the notes, it may assign a rating that
is lower than the ratings assigned to our other debt. Ratings
agencies also may lower ratings on the notes in the future. If
rating agencies assign a lower-than-expected rating or reduce,
or indicate that they may reduce, their ratings in the future,
the trading price of the notes could significantly decline.
You may have to
pay U.S. taxes if we adjust the conversion rate in certain
circumstances, even if you do not receive any cash
We will adjust the conversion rate of the notes for stock splits
and combinations, stock dividends, certain cash dividends and
certain other events that affect our capital structure. See
Description of notesConversion
RightsAdjustments to the conversion rate. If we
adjust the conversion rate, or if we fail to make certain
adjustments, you may be treated as having received a
constructive distribution from us, resulting in taxable income
to you for U.S. federal income tax purposes, even though
you would not receive any cash in connection with the conversion
rate adjustment and even though you might not exercise your
conversion right. See Certain federal income tax
considerations.
We believe that
the notes do not constitute U.S. real property
interests and therefore we currently would not be required
to withhold on payments to
non-U.S.
holders under the Foreign Investment in Real Property Act, or
FIRPTA. There can be no assurance, however, that the notes will
not constitute U.S. real property interests in the
future
Although we are not currently aware of any facts that would
cause our conclusion to change, depending on the facts in
existence at the time of any sale, redemption, repurchase,
conversion, or retirement of notes, it is possible that the
notes could constitute U.S. real property interests. If so,
non-U.S. holders
of notes would be subject to withholding on payments in
connection with such a sale, redemption, repurchase, conversion,
or retirement regardless of whether such
non-U.S. holders
provide certification documenting their
non-U.S. status.
See Certain federal income tax
considerationsNon-U.S. Holders.
As a holder of
notes, you will not be entitled to any rights with respect to
our common stock, but you will be subject to all changes made
with respect to our common stock
If you hold notes, you will not be entitled to any rights with
respect to our common stock (including, without limitation,
voting rights and rights to receive any dividends or other
distributions on our common stock), but you will be subject to
all changes affecting our common stock. You will have the rights
with respect to our common stock only when we deliver shares of
common stock, if any, to you upon conversion of your notes. For
example, in the event that an amendment is proposed to our
certificate of incorporation or by-laws requiring stockholder
approval and the record date for determining the stockholders of
record entitled to vote on the amendment occurs prior to the
date you are deemed to have received common stock, if any, upon
conversion, you will not be entitled to vote on the amendment,
although you will nevertheless be subject to any changes in the
powers, preferences or special rights of our common stock. In
addition, because of the contingent conversion and net share
settlement features of the notes, you may not be able to convert
your notes other than during the period from November 1,
2014 to December 1, 2014 and the one month period
immediately preceding the maturity date, and you may not receive
any shares upon conversion.
Holders of our
outstanding shares of preferred stock have, and holders of any
future outstanding shares of preferred stock will have,
liquidation, dividend and other rights that are senior to the
rights of the holders of our common stock
Since our board of directors has the authority to designate and
issue preferred stock with liquidation, dividend and other
rights that are senior to those of our common stock, our issued
and outstanding
S-21
Risk
factors
shares of preferred stock, as well as any that may be issued in
the future, would receive, upon our voluntary or involuntary
liquidation, dissolution or winding up, before any payment is
made to holders of our common stock, their liquidation
preferences as well as any accrued and unpaid distributions.
These payments would reduce the remaining amount of our assets,
if any, available for distribution to holders of our common
stock.
Our ability to
pay dividends in the future is subject to many factors
Our ability to pay dividends may be impaired if any of the risks
described in this prospectus supplement and the accompanying
prospectus or incorporated by reference herein and in the
accompanying prospectus, were to occur. In addition, payment of
our dividends depends upon our earnings, our financial
condition, maintenance of our REIT status and other factors as
our board of directors may deem relevant from time to time.
Recent
developments in the convertible debt markets may adversely
affect the market value of the notes
Governmental actions that interfere with the ability of
convertible debt investors to effect short sales of the
underlying shares of our common stock could significantly affect
the market value of the notes. Such government actions would
make the convertible arbitrage strategy that many convertible
debt investors employ difficult to execute for outstanding
convertible debt of any company whose shares of common stock are
subject to such actions. The convertible debt markets have
experienced unprecedented disruptions resulting from, among
other things, the instability in the credit and capital markets
and the restrictions placed on short selling implemented by the
SEC in response to such instabilities. The SEC recently adopted
an alternative uptick rule, to be effective as of
May 10, 2010, designed to restrict short selling from
further driving down the price of a stock that has dropped more
than 10 percent in one day. Once this threshold has been
reached, the alternative uptick rule would apply to short sale
orders in that security for the remainder of the day as well as
the following day and would prohibit short sale orders in that
security until the price of the security at issue exceeded the
current national best bid. This new rule may make the
convertible arbitrage strategy that many convertible debt
investors employ more difficult to execute. These restrictions
and any additional restrictions that may be implemented by the
SEC or any other regulatory agencies could adversely affect the
market value of the notes.
The accounting
method for convertible debt securities that may be settled in
cash, such as the notes, is the subject of recent changes that
could have a material effect on our reported financial
results
U.S. generally accepted accounting principles
(U.S. GAAP) require that an entity separately
account for the liability and equity components of convertible
debt instruments (such as the notes) that may be settled
entirely or partially in cash upon conversion in a manner that
reflects the issuers economic interest cost. The effect on
the accounting for the notes is that the equity component would
be included in the additional paid-in capital section of
stockholders equity on our consolidated balance sheet and
the value of the equity component would be treated as original
issue discount for purposes of accounting for the debt component
of the notes. As a result, we will be required to record a
greater amount of non-cash interest expense in current periods
presented as a result of the amortization of the discounted
carrying value of the notes to their face amount over the term
of the notes. We will report lower net income in our financial
results because U.S. GAAP requires interest to include both
the current periods amortization of the debt discount and
the instruments coupon interest, which could adversely
affect our reported or future financial results, the trading
price of our common stock and the trading price of the notes.
S-22
Forward-looking
statements
This prospectus supplement, the accompanying prospectus and the
documents incorporated by reference contain
forward-looking statements as that term is defined
under federal securities laws. These forward-looking statements
include, but are not limited to, those regarding:
|
|
Ø
|
the possible expansion of our portfolio;
|
|
Ø
|
the sale of properties;
|
|
Ø
|
the performance of our operators/tenants and properties;
|
|
Ø
|
our ability to enter into agreements with new viable tenants for
vacant space or for properties that we take back from
financially troubled tenants, if any;
|
|
Ø
|
our occupancy rates;
|
|
Ø
|
our ability to acquire, develop
and/or
manage properties;
|
|
Ø
|
our ability to make distributions to stockholders;
|
|
Ø
|
our policies and plans regarding investments, financings and
other matters;
|
|
Ø
|
our tax status as a real estate investment trust;
|
|
Ø
|
our critical accounting policies;
|
|
Ø
|
our ability to appropriately balance the use of debt and equity;
|
|
Ø
|
our ability to access capital markets or other sources of
funds; and
|
|
Ø
|
our ability to meet our earnings guidance.
|
For example, when we use words such as may,
will, intend, should,
believe, expect, anticipate,
estimate 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, but not limited
to the risks discussed above and the risks discussed in the
sections captioned Risk factors in this prospectus
supplement and Cautionary statement concerning
forward-looking statements and risk factors in the
accompanying prospectus and the documents that are incorporated
herein by reference. 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.
S-23
Ratio of earnings to
fixed charges
The table below sets forth our ratio of earnings to fixed
charges for the periods indicated. The ratio of earnings to
fixed charges was computed by dividing earnings by our fixed
charges. For purposes of calculating this ratio,
earnings includes income from continuing operations
before extraordinary items, excluding the equity earnings in a
less than 50% owned subsidiary, plus fixed charges and reduced
by capitalized interest. Fixed charges consists of
interest on all indebtedness and the amortization of loan
expenses or interest expensed and capitalized and the amortized
premiums, discounts and capitalized expenses related to
indebtedness.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
|
Year ended
December 31,
|
|
|
Ended
March 31,
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
2010
|
|
|
|
|
Consolidated ratio of earnings to fixed charges (unaudited)
|
|
|
1.74
|
|
|
|
1.82
|
|
|
|
1.66
|
|
|
|
1.81
|
|
|
|
1.95
|
|
|
|
2.14
|
|
|
|
1.58
|
|
S-24
Use of proceeds
We estimate that the net proceeds from the sale of the notes
will be approximately $150,372,000, after deducting underwriting
discounts and commissions and our estimated offering expenses.
We intend to use the net proceeds to repurchase
$85,019,000 aggregate principal amount of our 4.75%
convertible senior notes due 2026 and $54,189,000 aggregate
principal amount of our 4.75% convertible senior notes due 2027.
Certain of the underwriters hold our 4.75% convertible senior
notes due 2026 and 2027. We may use a portion of the proceeds
from this offering to repurchase all or a portion of their
holdings of these notes.
S-25
Capitalization
The following table sets forth our capitalization as of
March 31, 2010, on a historical basis, on an as adjusted
basis to give effect to the issuance of $450,000,000 of 6.125%
notes due 2020 in April and June 2010, and on an as further
adjusted basis to give effect to (a) the sale of the notes
offered by this prospectus supplement (but not giving effect to
the conversion of the notes), (b) the repurchase of
$85,019,000 aggregate principal amount of our 4.75%
convertible senior notes due 2026 and (c) the repurchase of
$54,189,000 aggregate principal amount of our 4.75% convertible
senior notes due 2027.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2010
|
|
|
|
|
|
|
|
|
|
As further
|
|
|
|
Actual
|
|
|
As
adjusted
|
|
|
adjusted
|
|
|
|
|
|
(in
thousands)
|
|
|
Cash and cash equivalents
|
|
$
|
36,558
|
|
|
$
|
56,886
|
|
|
$
|
55,249
|
|
Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings under unsecured line of
credit(1)
|
|
|
425,000
|
|
|
|
0
|
|
|
|
0
|
|
Senior notes due 2012
|
|
|
76,853
|
|
|
|
76,853
|
|
|
|
76,853
|
|
Senior notes due 2013
|
|
|
300,000
|
|
|
|
300,000
|
|
|
|
300,000
|
|
Senior notes due 2015
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
250,000
|
|
Senior notes due 2016
|
|
|
300,000
|
|
|
|
300,000
|
|
|
|
300,000
|
|
Senior notes due 2020
|
|
|
0
|
|
|
|
450,000
|
|
|
|
450,000
|
|
4.75% convertible senior notes due
2026(2)
|
|
|
210,607
|
|
|
|
210,607
|
|
|
|
125,588
|
|
4.75% convertible senior notes due
2027(2)
|
|
|
222,275
|
|
|
|
222,275
|
|
|
|
168,086
|
|
3.00% convertible senior notes due
2029(2)
|
|
|
342,394
|
|
|
|
342,394
|
|
|
|
494,403
|
|
Secured debt
|
|
|
725,809
|
|
|
|
725,809
|
|
|
|
725,809
|
|
Unamortized premiums/discounts and fair value adjustments
|
|
|
(24,451
|
)
|
|
|
(25,198
|
)
|
|
|
(30,891
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
2,828,487
|
|
|
|
2,852,740
|
|
|
|
2,859,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, $1.00 par value;
authorized50,000,000 shares
|
|
|
|
|
|
|
|
|
|
|
|
|
Series D Cumulative Redeemable Preferred Stock;
4,000,000 shares issued and outstanding
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
100,000
|
|
Series E Cumulative Convertible and Redeemable Preferred
Stock; 74,380 shares issued and outstanding
|
|
|
1,860
|
|
|
|
1,860
|
|
|
|
1,860
|
|
Series F Cumulative Redeemable Preferred Stock;
7,000,000 shares issued and outstanding
|
|
|
175,000
|
|
|
|
175,000
|
|
|
|
175,000
|
|
Series G Cumulative Convertible Preferred Stock;
375,727 shares issued and outstanding
|
|
|
11,114
|
|
|
|
11,114
|
|
|
|
11,114
|
|
Common Stock, $1.00 par value;
authorized225,000,000 shares; 124,265,589 shares
issued and 123,982,913 shares
outstanding(3)
|
|
|
123,979
|
|
|
|
123,979
|
|
|
|
123,979
|
|
Capital in excess of par value
|
|
|
3,916,837
|
|
|
|
3,916,837
|
|
|
|
3,915,625
|
|
Treasury stock
|
|
|
(11,303
|
)
|
|
|
(11,303
|
)
|
|
|
(11,303
|
)
|
Cumulative net income
|
|
|
1,578,990
|
|
|
|
1,578,990
|
|
|
|
1,571,794
|
|
Cumulative dividends
|
|
|
(2,147,690
|
)
|
|
|
(2,147,690
|
)
|
|
|
(2,147,690
|
)
|
Accumulated other comprehensive income
|
|
|
(4,092
|
)
|
|
|
(4,092
|
)
|
|
|
(4,092
|
)
|
Other equity
|
|
|
5,539
|
|
|
|
5,539
|
|
|
|
5,539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Health Care REIT, Inc. stockholders equity
|
|
|
3,750,234
|
|
|
|
3,750,234
|
|
|
|
3,741,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests
|
|
|
9,682
|
|
|
|
9,682
|
|
|
|
9,682
|
|
Total equity
|
|
|
3,759,916
|
|
|
|
3,759,916
|
|
|
|
3,751,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
6,588,403
|
|
|
$
|
6,612,656
|
|
|
$
|
6,611,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
$266 million was outstanding under our unsecured line of
credit at June 15, 2010. |
(footnotes continued on
following page)
S-26
Capitalization
|
|
|
(2) |
|
The amounts shown do not reflect original issue discount
pursuant to FASB Staff Position No. APB
14-1,
Accounting for Convertible Debt Instruments That May Be Settled
in Cash Upon Conversion (Including Partial Cash Settlement).
Under FSP APB
14-1, an
entity must separately account for the liability and equity
components of the convertible debt instruments (such as the
notes) that may be settled entirely or partially in cash upon
conversion in a manner that reflects the issuers economic
interest cost. The effect of FSP APB
14-1 on the
accounting for the convertible senior notes is that the equity
component is included in the capital in excess of par value
section of stockholders equity on our consolidated balance
sheet and the value of the equity component is treated as
original issue discount for purposes of accounting for the debt
component of the notes. The original issue discount for the
notes is included in Unamortized premiums/discounts and
fair value adjustments. |
|
(3) |
|
Excludes: (i) 1,296,279 shares of common stock
reserved for issuance that relate to outstanding options under
the 1995 Stock Incentive Plan, Stock Plan for Non-Employee
Directors, 2005 Long-Term Incentive Plan and Windrose Medical
Properties Trust 2002 Stock Incentive Plan;
(ii) 6,140,922 shares of common stock reserved for
issuance under our dividend reinvestment and stock purchase plan
(which reserve was increased to 10,000,000 shares in May
2010); (iii) 56,935 shares of common stock reserved
for issuance that relate to the Series E Cumulative
Convertible and Redeemable Preferred Stock;
(iv) 268,970 shares of common stock reserved for
issuance that relate to the Series G Cumulative Convertible
Preferred Stock; (v) 4,440,164 shares of common stock reserved
for issuance that relate to the $210,607,000 aggregate principal
amount of 4.75% Convertible Senior Notes due 2026; (vi)
4,462,415 shares of common stock reserved for issuance that
relate to the $222,275,000 aggregate principal amount of
4.75% Convertible Senior Notes due 2027; and (vii)
6,678,875 shares of common stock reserved for issuance that
relate to the $342,394,000 aggregate principal amount of 3.00%
Convertible Senior Notes due 2029. |
You should read this table in conjunction with the
Managements Discussion and Analysis of Financial
Condition and Results of Operations contained in our
Annual Report on
Form 10-K
for the year ended December 31, 2009, as updated by our
Current Report on
Form 8-K
filed May 10, 2010, and our consolidated financial
statements, related notes and other financial information that
we have incorporated by reference into this prospectus
supplement and the accompanying prospectus.
S-27
Price range of
shares and dividend history
Our common stock is traded on the New York Stock Exchange under
the symbol HCN. As of December 31, 2009, there
were 5,060 holders of record of our common stock. The following
table sets forth, for the periods shown, the high and low sale
prices of our common stock as reported by the NYSE, for the
periods indicated, and cash dividends per share. On
June 15, 2010, the last reported sale price of our common
stock as reported by the NYSE was $44.82 per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price of
shares
|
|
|
Dividends
|
|
|
|
High
|
|
|
Low
|
|
|
per
share
|
|
|
|
|
Year Ended December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
46.45
|
|
|
$
|
39.26
|
|
|
$
|
0.6600
|
|
Second Quarter
|
|
|
50.49
|
|
|
|
44.00
|
|
|
|
0.6800
|
|
Third Quarter
|
|
|
53.98
|
|
|
|
42.54
|
|
|
|
0.6800
|
|
Fourth Quarter
|
|
|
53.50
|
|
|
|
30.14
|
|
|
|
0.6800
|
|
Year Ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
42.32
|
|
|
$
|
25.86
|
|
|
$
|
0.6800
|
|
Second Quarter
|
|
|
36.41
|
|
|
|
29.62
|
|
|
|
0.6800
|
|
Third Quarter
|
|
|
44.40
|
|
|
|
32.64
|
|
|
|
0.6800
|
|
Fourth Quarter
|
|
|
46.74
|
|
|
|
40.53
|
|
|
|
0.6800
|
|
Year Ending December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
46.79
|
|
|
$
|
39.82
|
|
|
$
|
0.6800
|
|
Second Quarter (through June 15, 2010)
|
|
|
46.44
|
|
|
|
38.42
|
|
|
|
0.6800
|
|
Under the real estate investment trust rules of the Internal
Revenue Code of 1986, as amended, in order to maintain our
status as a REIT, our deduction for dividends paid must be
generally equal to at least 90% of our taxable income for the
taxable year (determined without regard to the deduction for
dividends paid and excluding any net capital gain). The
declaration of dividends is at the discretion of our Board of
Directors and depends upon our distributable funds, financial
requirements, tax considerations and other factors. Decisions
with respect to the distribution of capital gains are made on a
case-by-case
basis. A portion of our dividends paid may be deemed either
capital gain income or a return of capital, or both, to our
stockholders. We provide our stockholders an annual statement
which designates the taxability of their dividends.
We have a dividend reinvestment and stock purchase plan under
which stockholders of record may invest all or a portion of
their dividends and up to an additional $5,000 per month to
purchase additional shares. Additionally, investors who are not
stockholders of the company may use this plan to make an initial
investment in the companys shares of up to $5,000. We have
the discretion to grant waivers for purchases in excess of
$5,000.
S-28
Description of notes
The notes will be a further issuance of, will be fungible with
and form a single series with our outstanding 3.00% convertible
senior notes due December 1, 2029, initially issued on
March 15, 2010 in the principal amount of $342,394,000. We
will issue the notes under the indenture, dated as of
March 15, 2010, between us and The Bank of New York Mellon
Trust Company, N.A., as trustee, as supplemented by a
supplemental indenture thereto, dated as of March 15, 2010,
as amended by an amendment to such supplemental indenture to be
dated June 18, 2010, relating to the notes. We refer to the
indenture as so supplemented as the indenture. The
notes will have the same CUSIP number and will trade
interchangeably with the previously issued notes in this series
immediately upon settlement. Upon completion of this offering,
the aggregate principal amount of outstanding notes of this
series will be $494,403,000. This series may be re-opened and we
may from time to time issue additional notes of the same series.
The following summary of the terms of the notes and the
indenture does not purport to be complete and is subject, and
qualified in its entirety by reference, to the detailed
provisions of the notes and the indenture. We will provide
copies of the indenture to you upon request. The indenture is
also available for inspection at the office of the trustee. The
notes and the indenture, and not this description, define your
legal rights as a holder of the notes.
The following description of the particular terms of the notes
supplements and, to the extent inconsistent therewith, replaces
the description of the general terms and provisions of the debt
securities set forth in the accompanying prospectus, to which
reference is hereby made. For purposes of this summary, the
terms Health Care REIT, we,
us and our refer only to Health Care
REIT, Inc. and not to any of its subsidiaries, unless we specify
otherwise.
GENERAL
The notes we are offering:
|
|
Ø
|
are initially limited to $494,403,000 aggregate principal amount
(including $342,394,000 of notes issued on March 15, 2010);
we may, without the consent of holders of the notes, increase
the principal amount of the notes by issuing additional notes in
the future on the same terms and conditions, except for any
difference in the issue price and interest accrued prior to the
issue date of the additional notes, and with the same CUSIP
number as the notes offered hereby, provided that such
additional notes constitute part of the same issue as the notes
offered hereby for U.S. federal income tax purposes; the
notes offered by this prospectus supplement and the accompanying
prospectus and any such additional notes would rank equally and
ratably and would be treated as a single series of debt
securities for all purposes under the indenture;
|
|
Ø
|
bear interest at a rate of 3.00% per annum, payable
semi-annually in arrears on June 1 and December 1 of each year,
beginning on December 1, 2010, to holders of record at the
close of business on the preceding May 15 and November 15,
respectively, except as described below;
|
|
Ø
|
will be issued in denominations of integral multiples of $1,000
principal amount;
|
|
Ø
|
are our unsecured indebtedness and are equal in right of payment
to our senior unsecured indebtedness as described under
Ranking;
|
|
Ø
|
are convertible into cash and, if applicable, shares of our
common stock based on an initial conversion rate of
19.5064 shares per $1,000 principal amount of notes (which
represents an initial
|
S-29
Description of
notes
|
|
|
conversion price of approximately $51.27 per share) under the
conditions and subject to such adjustments described under
Conversion Rights;
|
|
|
Ø
|
are redeemable, in whole or in part, by us at any time on or
after December 1, 2014, at a redemption price in cash equal
to 100% of the principal amount of the notes we redeem, plus
accrued and unpaid interest to, but excluding, the redemption
date, as described under Redemption of Notes at Our
Option; the notes are also redeemable at any time prior to
maturity to the extent necessary to preserve our status as a
REIT;
|
|
Ø
|
are subject to purchase by us at the option of the holder on
each of December 1, 2014, December 1, 2019, and
December 1, 2024, at a purchase price in cash equal to 100%
of the principal amount of the notes to be purchased, plus
accrued and unpaid interest to, but excluding, the purchase
date, as described under Purchase of Notes by Us at
the Option of the Holder;
|
|
Ø
|
are subject to repurchase by us at the option of the holder upon
a fundamental change, as described under Holders May
Require Us to Repurchase Their Notes upon a Fundamental
Change, at a repurchase price in cash equal to 100% of the
principal amount of the notes to be repurchased, plus accrued
and unpaid interest to, but excluding, the fundamental change
repurchase date; and
|
|
Ø
|
mature on December 1, 2029, unless previously redeemed,
repurchased or purchased by us or converted.
|
All cash payments on the notes will be made in U.S. dollars.
We will issue the notes in denominations of integral multiples
of $1,000 principal amount, without coupons. We will initially
issue the notes as global securities in book-entry form. We will
make payments in respect of notes represented by global
securities by wire transfer of immediately available funds to
DTC or its nominee as registered owner of the global securities.
We will make payments in respect of notes that are issued in
certificated form by wire transfer of immediately available
funds to the accounts specified by each holder of more than
$5.0 million aggregate principal amount of notes. However,
if a holder of a certificated note does not specify an account,
or holds $5.0 million or less in aggregate principal amount
of notes, then we will mail a check to that holders
registered address.
You may convert notes at the office of the conversion agent,
present notes for registration of transfer at the office of the
registrar for the notes and present notes for payment at
maturity at the office of the paying agent. We have appointed
the trustee as the initial conversion agent, registrar and
paying agent for the notes.
We will not provide a sinking fund for the notes. The indenture
does not contain any financial covenants and will not limit our
ability to incur additional indebtedness, including senior or
secured indebtedness, pay dividends or repurchase our
securities. In addition, the indenture does not provide any
protection to holders of notes in the event of a highly
leveraged transaction or a change in control, except as, and
only to the limited extent, described under Holders
May Require Us to Repurchase Their Notes upon a Fundamental
Change and Consolidation, Merger and Sale of
Assets.
If any payment date with respect to the notes falls on a day
that is not a business day, we will make the payment on the next
business day. The payment made on the next business day will be
treated as though it had been made on the original payment date,
and no interest will accrue on the payment for the additional
period of time.
INTEREST
PAYMENTS
We will pay interest on the notes at a rate of 3.00% per annum,
payable semi-annually in arrears on each June 1 and December 1
of each year, beginning on December 1, 2010. Except as
described below, we will pay interest that is due on an interest
payment date to holders of record at the close of business on
the preceding May 15 and November 15, respectively.
Interest will accrue on the notes from and
S-30
Description of
notes
including June 1, 2010 or from and including the last date
in respect of which interest has been paid or provided for, as
the case may be, to, but excluding, the next interest payment
date or maturity date, as the case may be. We will pay interest
on the notes on the basis of a
360-day year
consisting of twelve
30-day
months.
If notes are converted after a record date but prior to the next
interest payment date, holders of such notes at the close of
business on the record date will, on the corresponding interest
payment date, receive the interest payable on such notes on that
interest payment date notwithstanding the conversion. However, a
holder who surrenders a note for conversion after a record date
but prior to the next interest payment date must pay to the
conversion agent, upon surrender, an amount equal to the amount
of interest payable on the corresponding interest payment date
on the note being converted, provided that no such interest
payment need be made to us:
|
|
Ø
|
if the note is surrendered for conversion after the record date
immediately preceding the final maturity date of that note;
|
|
Ø
|
if we have called the note for redemption;
|
|
Ø
|
if we have specified a repurchase date following a fundamental
change that is after a record date but on or prior to the next
interest payment date, and the note is tendered for conversion
after such record date and on or before such interest payment
date; or
|
|
Ø
|
to the extent of any overdue interest, if any overdue interest
exists at the time of conversion with respect to such note.
|
CONVERSION
RIGHTS
If the conditions for conversion of the notes described below,
including those described under Conditions for
conversion and Conversion procedures,
are satisfied, holders of notes may, subject to prior maturity,
redemption or repurchase, convert their notes in integral
multiples of $1,000 principal amount into cash in an amount
described below and, if applicable, shares of our common stock,
based on an initial conversion rate of 19.5064 shares of
our common stock per $1,000 principal amount of notes, subject
to adjustment as described below. This rate results in an
initial conversion price of approximately $51.27 per share. We
will not issue fractional shares of common stock upon conversion
of the notes and instead will pay a cash adjustment for
fractional shares based on the volume-weighted average price per
share of our common stock on the last trading day of the cash
settlement averaging period. Except as described above, we will
not make any payment or other adjustment on conversion with
respect to any accrued interest on the notes, and we will not
adjust the conversion rate to account for accrued and unpaid
interest.
On conversion, the holders of notes will, to the extent they
receive any shares of our common stock upon conversion, receive,
in addition to the consideration that is otherwise due upon
conversion, the rights under any future stockholder rights plan
(i.e., a poison pill) that we may establish, unless the
rights have separated from our common stock at the time of
conversion, in which case the conversion rate will be adjusted
at the time of separation as if we had distributed to all
holders of our common stock shares of our capital stock,
evidences of indebtedness, other assets or certain rights or
warrants as described in the fourth bullet point under
Adjustments to the conversion rate below,
subject to readjustment in the event of the expiration,
termination or redemption of such rights.
In certain circumstances, a holder must pay interest if the
conversion occurs between a record date and an interest payment
date. See Interest Payments above.
The conversion right with respect to any notes we have called
for redemption will expire at the close of business on the last
business day immediately preceding the redemption date, unless
we default in the payment of the redemption price. A note for
which a holder has delivered a purchase notice or a fundamental
change repurchase notice, as described below, requiring us to
purchase the note may be
S-31
Description of
notes
surrendered for conversion only if the holder withdraws the
notice in accordance with the indenture, unless we default in
the payment of the purchase price or fundamental change
repurchase price. In all cases, the right to convert the notes
will terminate at the close of business on the business day
immediately preceding the maturity date.
Conversion
procedures
To convert a certificated note, the holder must complete the
conversion notice on the back of the note and deliver it,
together with the note and any required interest payment, to the
office of the conversion agent for the notes, which will
initially be the office of the trustee. In addition, the holder
must pay any tax or duty payable as a result of any transfer
involving the issuance or delivery of the shares of common stock
in a name other than that of the registered holder of the note.
The note will be deemed to be converted on the date on which the
holder has satisfied all of these requirements. We refer to this
date as the conversion date. To convert interests in
a global note, the holder must comply with DTCs then
applicable conversion program procedures.
A holder that has delivered a purchase notice or repurchase
notice with respect to a note, as described below, may convert
that note only if the holder withdraws the notice in accordance
with the indenture. See Purchase of Notes by Us at
the Option of the Holder and Holders May
Require Us to Repurchase Their Notes upon a Fundamental
Change.
We will deliver, through the conversion agent, the cash and, if
applicable, through our transfer agent, shares of common stock
issuable upon conversion as soon as practicable, but in no event
more than three business days after the last trading day in the
cash settlement averaging period described below.
However, if a holder surrenders a note for conversion in
connection with a make-whole fundamental change
under circumstances where we must increase the conversion rate
applicable to that note, then we will deliver, through the
conversion agent, the consideration that is payable on account
of the increase in the conversion rate as soon as practicable,
but in no event after the third business day after the later of:
|
|
Ø
|
the date the holder surrenders the note for conversion;
|
|
Ø
|
the last trading day in the applicable cash settlement averaging
period; and
|
|
Ø
|
the effective date of the make-whole fundamental change.
|
See Adjustment to the conversion rate upon the
occurrence of a make-whole fundamental change.
For a discussion of certain tax consequences to a holder that
converts notes, see Certain federal income tax
considerationsConversion of the notes.
Payment upon
conversion
Holders that tender their notes for conversion will receive cash
and, if applicable, shares of our common stock as follows. Upon
conversion, holders will receive, per $1,000 principal amount
being converted, a settlement amount that is equal
to the sum of the daily settlement amounts (as
described below) for each of the 20 trading days during the
cash settlement averaging period (as described
below).
The cash settlement averaging period with respect to
any note means:
|
|
Ø
|
if the note is converted during the period beginning on the
23rd scheduled trading day prior to the maturity date, the
20 consecutive trading days beginning on, and including, the
20th scheduled trading day prior to the maturity
date; and
|
|
Ø
|
in all other circumstances, the 20 consecutive trading days
beginning on, and including, the third trading day following the
conversion date.
|
S-32
Description of
notes
The daily settlement amount, for each of the 20
trading days during the cash settlement averaging period,
consists of:
|
|
Ø
|
cash equal to the lesser of $50 and the daily conversion
value (as described below); and
|
|
Ø
|
to the extent the daily conversion value exceeds $50, a number
of shares equal to:
|
|
|
|
|
-
|
the excess of the daily conversion value over $50, divided by
|
|
|
-
|
the volume-weighted average price per share of our
common stock on that trading day.
|
We will deliver cash in lieu of any fractional shares of common
stock based on the volume-weighted average price per share of
our common stock on the last trading day of the cash settlement
averaging period.
We refer to the cash due upon conversion as the principal
return, and we refer to the shares, if any, that are due
upon conversion as the net shares. The daily
conversion value on a given trading day generally means
one-twentieth of the product of:
|
|
Ø
|
the applicable conversion rate; and
|
|
Ø
|
the volume-weighted average price per share of our common stock
on that trading day.
|
The volume-weighted average price per share of our
common stock on a trading day is the volume-weighted average
price per share of our common stock on the New York Stock
Exchange or, if our common stock is not listed on the New York
Stock Exchange, on the principal exchange or over-the-counter
market on which our common stock is then listed or traded, from
9:30 a.m. to 4:00 p.m., New York City time, on
that trading day, as displayed on Bloomberg (or any successor
service). If such price is not available, the volume weighted
average price means the market value per share of our common
stock on such day as determined by a nationally recognized
investment banking firm retained for this purpose by us.
Trading day generally means any day during which:
|
|
Ø
|
trading in our common stock generally occurs;
|
|
Ø
|
there is no market disruption event (a described
below); and
|
|
Ø
|
a closing sale price for our common stock is provided on the New
York Stock Exchange or, if our common stock is not then listed
on the New York Stock Exchange, on the principal other
U.S. national or regional securities exchange on which our
common stock is then listed or, if our common stock is not then
listed on a U.S. national or regional securities exchange,
on the principal other market on which our common stock is then
traded. If shares of our common stock are not listed for trading
or quotation on any exchange, bureau or other organization,
trading day will mean any business day.
|
Market disruption event generally means either:
|
|
Ø
|
a failure by the primary United States national securities
exchange or market on which our common stock is listed or
admitted to trading to open for trading during its regular
trading session; or
|
|
Ø
|
the occurrence or existence prior to 1:00 p.m. on any
trading day for our common stock for an aggregate of at least 30
minutes of any suspension or limitation imposed on trading (by
reason of movements in price exceeding limits permitted by the
stock exchange or otherwise) in our common stock or in any
options, contracts or future contracts relating to our common
stock.
|
Scheduled trading day means, with respect to shares
of our common stock or any other security, a day that is
scheduled to be a trading day on the primary United States
national securities exchange or market on which the shares of
our common stock or the relevant securities are listed or
admitted for trading. If our shares are not listed or admitted
for trading, scheduled trading day means any
business day.
S-33
Description of
notes
We may not have the financial resources, and we may not be able
to arrange for financing, to pay the cash due upon conversion.
Furthermore, payment of cash upon conversion may violate the
terms of our then existing indebtedness. See Risk
factorsRisks related to the notes and our common
stockWe may not have the ability to purchase the notes on
the purchase dates or upon a fundamental change or to pay the
cash payment due upon conversion. Our failure to pay cash
on the notes when converted would result in an event of default
with respect to the notes.
Conditions for
conversion
The notes will become convertible only in certain circumstances,
which we describe below. If the notes become convertible, we
will provide written notice to each holder, at its address
appearing in the security register, and we will publicly
announce, through a reputable national newswire service, and
publish on our website, that the notes have become convertible,
stating, among other things:
|
|
Ø
|
the event causing the notes to become convertible;
|
|
Ø
|
the time during which the notes will be convertible as a result
of that event;
|
|
Ø
|
if that event is a transaction described under
Conversion upon the occurrence of certain corporate
transactions, the anticipated effective date of the
transaction; and
|
|
Ø
|
the procedures holders must follow to convert their notes,
including the name and address of the conversion agent.
|
We will mail the notice, and make the public announcement and
publication, as soon as practicable, but in no event later than
the open of business on the first date the notes become
convertible as a result of the event. If we fail to mail the
notice or make the public announcement or publication by that
time, then the notes will remain convertible for an additional
business day for each business day, on or after the first date
the notes become convertible that we fail to mail such notice or
make such public announcement or publication. In addition, if
the event causing the notes to become convertible is a
make-whole fundamental change for which we must increase the
conversion rate applicable to holders that convert their notes
in connection with that make-whole fundamental change, as
described under Adjustment to the conversion rate
upon the occurrence of a make-whole fundamental change,
then the increased conversion rate will continue to apply to
holders that convert their notes during any period that the
convertibility of the notes pursuant to that make-whole
fundamental change is so extended.
Holders may surrender their notes for conversion only in the
circumstances described below. In all cases, the right to
convert the notes will terminate at the close of business on the
business day immediately preceding the maturity date.
Conversion based
on price of common stock
Prior to maturity or earlier redemption or repurchase, holders
may surrender their notes for conversion during any calendar
quarter after the calendar quarter ending June 30, 2010, if
the closing sale price (as defined in the indenture)
of our common stock for each of 20 or more trading days in a
period of 30 consecutive trading days ending on the last trading
day of the immediately preceding calendar quarter exceeds 120%
of the conversion price in effect on the last trading day of the
immediately preceding calendar quarter as determined by us. Our
board of directors will make appropriate adjustments, in its
good faith determination, to account for any adjustment to the
conversion rate that becomes effective, or any event requiring
an adjustment to the conversion rate where the ex
date (as defined in the indenture) of the event occurs,
during that 30 consecutive trading day period.
The closing sale price of our common stock on any
trading day generally means the closing sale price per share of
our common stock (or, if no closing sale price per share is
reported, the average of the bid and ask prices per share or, if
more than one in either case, the average of the average bid and
the
S-34
Description of
notes
average ask prices per share) on such trading day on the
U.S. principal national securities exchange on which our
common stock is listed or, if our common stock is not listed on
a U.S. national securities exchange, as otherwise provided
in the indenture.
Conversion upon
satisfaction of the trading price condition
Prior to maturity or earlier redemption or repurchase, holders
may surrender their notes for conversion during the five
consecutive business days immediately after any five consecutive
trading day period (we refer to this five consecutive trading
day period as the note measurement period) in which
the average trading price per $1,000 principal amount of notes,
as determined by us following a request by a holder of notes in
accordance with the procedures described below, was equal to or
less than 97% of the average conversion value of the notes
during the note measurement period. We refer to this condition
as the trading price condition.
For purposes of the trading price condition, the
conversion value per $1,000 principal amount of
notes on a trading day is the product of the closing sale price
per share of our common stock and the conversion rate of the
notes in effect on that trading day.
Except as described below, the trading price of the
notes on any day generally means the average secondary market
bid quotations obtained by the bid solicitation agent for
$5.0 million principal amount of notes at approximately
4:00 p.m., New York City time, on such day from three
independent nationally recognized securities dealers we select.
However, if the bid solicitation agent can reasonably obtain
only two such bids, then the average of the two bids will
instead be used, and if the bid solicitation agent can
reasonably obtain only one such bid, then that one bid will be
used. Even still, if on a given day:
|
|
Ø
|
the bid solicitation agent cannot reasonably obtain at least one
bid for $5.0 million principal amount of notes from an
independent nationally recognized securities dealer; or
|
|
Ø
|
in the reasonable, good faith judgment of our board of
directors, the bid quotation or quotations that the bid
solicitation agent has obtained are not indicative of the
secondary market value of the notes,
|
then the trading price per $1,000 principal amount of notes will
be deemed to be equal to 97% of the product of the closing sale
price of our common stock on that day and the conversion rate in
effect on that day.
The bid solicitation agent will have no obligation to determine
the trading price of the notes unless we have requested it to do
so, and we will have no obligation to make such request unless a
holder of at least $1.0 million in aggregate principal
amount of notes provides us with reasonable evidence that the
trading price per $1,000 principal amount of notes would be
equal to or less than 97% of the conversion value of the notes.
At such time, we will instruct the bid solicitation agent to
determine the trading price of the notes for each of the next
five trading days and on each following trading day until the
trading price condition is no longer satisfied.
Conversion based
on redemption
If we call a note for redemption, the holder of that note may
surrender the note for conversion at any time before the close
of business on the business day immediately preceding the
redemption date.
Conversion upon
the occurrence of certain corporate transactions
If:
|
|
Ø |
a fundamental change, as described under
Holders May Require Us to Repurchase Their Notes
upon a Fundamental Change, or a make-whole
fundamental change, as described under
|
S-35
Description of
notes
|
|
|
Adjustment to the conversion rate upon the
occurrence of a make-whole fundamental change
occurs; or
|
|
|
Ø |
we are party to a consolidation, amalgamation, statutory
arrangement, merger or binding share exchange pursuant to which
our common stock would be converted into or exchanged for, or
would constitute solely the right to receive, cash, securities
or other property,
|
then a holder may surrender its notes for conversion at any time
during the period that begins on, and includes, the
30th day before the date we originally announce as the
anticipated effective date of the transaction and ends on, and
includes, the 30th day after the actual effective date of
the transaction. In addition, if the transaction is a
make-whole fundamental change, then the notes may
also be surrendered for conversion at any time during the
make-whole conversion period described under
Adjustment to the conversion rate upon the
occurrence of a make-whole fundamental change, and if the
transaction is a fundamental change, then the notes
may also be surrendered for conversion at any time until, and
including, the fundamental change repurchase date for that
fundamental change. Holders that convert their notes in
connection with a make-whole fundamental change may
in some circumstances also be entitled to an increased
conversion rate. See Adjustment to the conversion
rate upon the occurrence of a make-whole fundamental
change.
In addition, if we take any action, or become aware of any
event, that would require an adjustment to the conversion rate
as described in the third, fourth, fifth (other than the
distribution of regular quarterly cash dividends) or sixth
bullet point under Adjustments to the conversion
rate below, then we must mail to holders written notice of
the action or event at least 20 days before the record,
effective or expiration date, as the case may be, of the
transaction. Holders may surrender their notes for conversion
beginning on the date we mail the notice (or, if earlier, the
date the indenture requires us to mail the notice) until the
close of business on the business day immediately preceding the
ex date (as defined in the indenture) of the
transaction or the expiration date for such transaction or until
we announce that the transaction will not take place.
Conversion during
specified periods
The notes may be surrendered for conversion at any time from,
and including, November 1, 2014 to, and including,
December 1, 2014 and at any time from, and including,
November 1, 2029 until the close of business of the
business day immediately preceding December 1, 2029 or
earlier redemption or repurchase.
Change in the
conversion right upon certain reclassifications, business
combinations and asset sales
Except as provided in the indenture and as described below, if
we reclassify our common stock or are party to a consolidation,
amalgamation, statutory arrangement, merger or binding share
exchange, or if there occurs a sale, transfer, lease, conveyance
or other disposition of all or substantially all of our property
or assets, in each case pursuant to which our common stock would
be converted into or exchanged for, or would constitute solely
the right to receive, cash, securities or other property, then,
at the effective time of the transaction, the right to convert a
note will be changed into a right to convert it into the kind
and amount of cash, securities or other property (the
reference property), which a holder of such note
would have received (assuming, if applicable, that the holder
would have made the applicable election referred to in the
immediately following paragraph) if the holder had converted the
note and, upon such conversion, received, immediately before the
transaction, a number of shares of our common stock equal to the
conversion rate then applicable multiplied by the principal
amount (expressed in thousands) of the note. However, at and
after the effective time of the transaction, the principal
return payable upon conversion of the notes will continue to be
payable in cash (instead of reference property), but the daily
conversion value will be calculated based on the fair value of
the
S-36
Description of
notes
reference property. A change in the conversion right such as
this could substantially lessen or eliminate the value of the
conversion right. For example, if a third party acquires us in a
cash merger, each note would be convertible solely into cash and
would no longer be potentially convertible into securities whose
value could increase depending on our future financial
performance, prospects and other factors. There is no precise,
established definition of the phrase all or substantially
all under applicable law. Accordingly, there may be
uncertainty as to whether the provisions above would apply to a
sale, transfer, lease, conveyance or other disposition of less
than all of our property or assets.
If a transaction described above occurs and holders of our
common stock have the opportunity to elect the form of
consideration to receive in that transaction, then we will make
adequate provision to give holders of the notes, treated as a
single class, a reasonable opportunity to elect the form of such
consideration for purposes of determining the composition of the
reference property described above. Once the
election is made, it will apply to all holders of our notes
after the effective time of the transaction. We will agree in
the indenture not to become a party to such a transaction unless
its terms are consistent with these provisions.
Adjustments to
the conversion rate
Subject to the terms of the indenture, we will adjust the
conversion rate for:
|
|
Ø
|
dividends or distributions on our common stock payable in shares
of our common stock to all holders of our common stock;
|
|
Ø
|
subdivisions, combinations or certain reclassifications of our
common stock;
|
|
Ø
|
distributions to all or substantially all holders of our common
stock of certain rights or warrants (other than, as described
below, rights distributed pursuant to a stockholder rights plan)
entitling them, for a period expiring not more than 60 days
immediately following the record date for the distribution, to
purchase or subscribe for shares of our common stock, or
securities convertible into or exchangeable or exercisable for
shares of our common stock, at a price per share that is less
than the current market price (as defined in the
indenture) per share of our common stock on the record date for
the distribution;
|
|
Ø
|
dividends or other distributions to all or substantially all
holders of our common stock of shares of our or any of our
existing or future subsidiaries capital stock (other than
our common stock), evidences of indebtedness or other assets
(other than dividends or distributions covered by the bullet
points below) or the dividend or distribution to all or
substantially all holders of our common stock of certain rights
or warrants (other than those covered in the immediately
preceding bullet point or, as described below, certain rights or
warrants distributed pursuant to a stockholder rights plan) to
purchase or subscribe for our securities;
|
|
Ø
|
cash dividends or other cash distributions to all or
substantially all holders of our common stock, other than:
|
|
|
|
|
-
|
distributions in respect of tender or exchange offers described
in the bullet point below; and
|
|
|
-
|
regular quarterly cash dividends, to the extent the aggregate
amount of such dividends in any quarterly period does not exceed
$0.68 per share of our common stock ($0.68 being the
Reference Dividend Amount); and
|
|
|
Ø |
distributions of cash or other consideration by us or any of our
subsidiaries in respect of a tender offer or exchange offer for
our common stock, to the extent that such cash and the value of
any such other consideration per share of our common stock
validly tendered or exchanged exceeds the closing sale price per
share of our common stock on the first trading day after the
last date on which tenders or exchanges may be made pursuant to
the tender or exchange offer.
|
S-37
Description of
notes
Subject to the provisions of the indenture, if we distribute
cash in accordance with the fifth bullet point above, then we
will generally increase the conversion rate based on the
following formula:
CR1 = CR0 × MP0 / (MP0 − C)
where
CR0 = the conversion rate in effect immediately prior to the
ex-dividend date for such distribution;
CR1 = the new conversion rate immediately on and after the
ex-dividend date for such distribution;
MP0 = current market price (as defined in the
indenture) per share of our common stock on the record date for
the distribution; and
C = the amount in cash per share that we distribute to holders
of our common stock that exceeds the Reference Dividend Amount.
The Reference Dividend Amount is subject to adjustment in a
manner inversely proportional to adjustments to the conversion
rate; provided that no adjustment will be made to the Reference
Dividend Amount for any adjustment made to the conversion rate
under the fifth bullet point. Notwithstanding the foregoing, if
an adjustment is required to be made under the fifth bullet
point as result of a distribution that is not a regular
quarterly dividend, the Reference Dividend Amount will be deemed
to be zero.
We will not adjust the conversion rate for such cash dividends
or other cash distributions pursuant to this provision to the
extent that the adjustment would reduce the conversion price
below the par value per share of our common stock ($1.00),
subject to adjustment for stock splits and combinations, stock
dividends, reclassifications and similar events.
Current market price per share of our common stock
on a date generally means the average of the closing sale prices
of our common stock for the 10 consecutive trading days ending
on, but excluding, the earlier of that date or the ex date with
respect to the distribution requiring such computation. We will
make adjustments to the current market price in accordance with
the indenture to account for the occurrence of certain events
during the 10 consecutive trading day period.
To the extent any of the rights, options or warrants described
in the bullet points above are not exercised before they expire,
we will readjust the conversion rate to the conversion rate that
would then be in effect if such rights, options or warrants had
not been distributed. If we issue rights, options or warrants
that are only exercisable upon the occurrence of certain
triggering events, then we will not adjust the conversion rate
pursuant to the bullet points above until the earliest of these
triggering events occurs.
The indenture does not require us to adjust the conversion rate
for any of the transactions described in the bullet points above
if we make provision for each holder of the notes to participate
in the transaction without conversion as if such holder held a
number of shares equal to the conversion rate in effect on the
ex date or effective date, as the case may be, for
such transaction multiplied by the principal amount (expressed
in thousands) of the applicable notes held by such holder.
We will not adjust the conversion rate pursuant to the bullet
points above unless the adjustment would result in a change of
at least 1% in the then effective conversion rate. However, we
will carry forward any adjustment that we would otherwise have
to make and take that adjustment into account in any subsequent
adjustment. In addition, at the end of each fiscal year,
beginning with the fiscal year ending on December 31, 2010,
we will give effect to any adjustments that we have otherwise
deferred pursuant to this provision, and those adjustments, if
any, will no longer be carried forward and taken into account in
any subsequent adjustment. Furthermore, if we mail a notice of
redemption or a fundamental change or make-whole fundamental
change, or any transaction described under
S-38
Description of
notes
Conversion upon the occurrence of certain corporate
transactions above, occurs, then we will give effect to
all adjustments that we have otherwise deferred pursuant to this
provision.
To the extent permitted by law and the continued listing
requirements of the NYSE, we may, from time to time, increase
the conversion rate by any amount for a period of at least
20 days or any longer period required by law, so long as
the increase is irrevocable during that period and our board of
directors determines that the increase is in our best interests.
We will mail a notice of the increase to holders at least
15 days before the day the increase commences. However, we
cannot decrease the conversion price below the par value per
share of our common stock ($1.00), subject to adjustment for
stock splits and combinations, stock dividends,
reclassifications and similar events. In addition, we may also
increase the conversion rate as we determine to be advisable in
order to avoid taxes to recipients of certain distributions.
On conversion, the holders of notes will, to the extent they
receive any shares of our common stock upon conversion, receive,
in addition to the consideration that is otherwise due upon
conversion, the rights under any future stockholder rights plan
(i.e., a poison pill) that we may establish, unless the
rights have separated from our common stock at the time of
conversion, in which case the conversion rate will be adjusted
at the time of separation as if we had distributed to all
holders of our common stock shares of our capital stock,
evidences of indebtedness, other assets or certain rights or
warrants as described in the fourth bullet point under
Adjustments to the conversion rate above,
subject to readjustment in the event of the expiration,
termination or redemption of such rights.
In the event of:
|
|
Ø
|
a taxable distribution to holders of common stock which results
in an adjustment to the conversion rate; or
|
|
Ø
|
an increase in the conversion rate at our discretion,
|
the holders of the notes may, in certain circumstances, be
deemed to have received a distribution subject to
U.S. federal income tax as a dividend. This generally would
occur, for example, if we adjust the conversion rate to
compensate holders for cash dividends on our common stock and
could also occur if we make other distributions of cash or
property to our stockholders. See Certain federal income
tax considerationsConversion of the notes.
Adjustment to the
conversion rate upon the occurrence of a make-whole fundamental
change
If, prior to December 1, 2014:
|
|
Ø
|
there occurs a sale, transfer, lease, conveyance or other
disposition of all or substantially all of our property or
assets to any person or group (as those
terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934), including any group acting for
the purpose of acquiring, holding, voting or disposing of
securities within the meaning of
Rule 13d-5(b)(1)
under the Securities Exchange Act of 1934 (we refer to such a
transaction as an asset sale make-whole fundamental
change); or
|
|
Ø
|
there occurs any transaction or series of related transactions
(other than a listed stock business combination as
described under Holders May Require Us to Repurchase
Their Notes upon a Fundamental Change), in connection with
which (whether by means of an exchange offer, liquidation,
tender offer, consolidation, amalgamation, statutory
arrangement, merger, combination, reclassification,
recapitalization, asset sale, lease of assets or otherwise) our
common stock is exchanged for, converted into, acquired for or
constitutes solely the right to receive other securities, other
property, assets or cash (we refer to such any transaction
described in this or the immediately preceding bullet point as a
make-whole fundamental change),
|
S-39
Description of
notes
then we will increase the conversion rate applicable to notes
that are surrendered for conversion at any time from, and
including, the effective date of the make-whole fundamental
change to, and including, the 40th business day after the
effective date of the make-whole fundamental change (or, if the
make-whole fundamental change also constitutes a
fundamental change, as described under
Holders May Require Us to Repurchase Their Notes
upon a Fundamental Change, to, and including, the
fundamental change repurchase date for that fundamental change).
We refer to this period as the make-whole conversion
period.
We will mail to holders, at their addresses appearing in the
security register, notice of, and we will publicly announce,
through a reputable national newswire service, and publish on
our website, the anticipated effective date of any proposed
make-whole fundamental change. We must make this mailing,
announcement and publication at least 30 days before the
anticipated effective date of the make-whole fundamental change.
In addition, no later than the third business day after the
completion of the make-whole fundamental change, we must make an
additional notice, announcement and publication announcing such
completion.
If a holder surrenders a note for conversion in connection with
a make-whole fundamental change we have announced, but the
make-whole fundamental change is not consummated, then the
holder will not be entitled to the increased conversion rate
referred to above in connection with the conversion.
The increase in
the conversion rate
In connection with the make-whole fundamental change, we will
increase the conversion rate by reference to the table below,
based on the date when the make-whole fundamental change becomes
effective, which we refer to as the effective date,
and the applicable price. If holders of our common
stock receive only cash in the make-whole fundamental change,
then the applicable price will be the cash amount
paid per share of our common stock in the make-whole fundamental
change. In all other cases, the applicable price
will be the average of the closing sale prices (as
defined in the indenture) per share of our common stock for the
five consecutive trading days immediately preceding the
effective date. Our board of directors will make appropriate
adjustments, in its good faith determination, to account for any
adjustment to the conversion rate that becomes effective, or any
event requiring an adjustment to the conversion rate where the
ex date of the event occurs, at any time during those five
consecutive trading days.
The following table sets forth the number of additional shares
per $1,000 principal amount of notes that will be added to the
conversion rate applicable to notes that are converted during
the make-whole conversion period. The increased conversion rate
will be used to determine the amount of cash and, if applicable,
shares that are due upon conversion, as described under
Payment upon conversion above. If an event
occurs that requires an adjustment to the conversion rate, we
will, on the date we must adjust the conversion rate, adjust
each applicable price set forth in the first column of the table
below by multiplying the applicable price in effect immediately
before the adjustment by a fraction:
|
|
Ø
|
whose numerator is the conversion rate in effect immediately
before the adjustment; and
|
|
Ø
|
whose denominator is the adjusted conversion rate.
|
In addition, we will adjust the number of additional shares in
the table below in the same manner in which, and for the same
events for which, we must adjust the conversion rate as
described under Adjustments to the conversion
rate.
S-40
Description of
notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
additional shares
|
|
(per $1,000
principal amount of notes)
|
|
|
|
Effective
date
|
|
|
|
March 15,
|
|
|
December 1,
|
|
|
December 1,
|
|
|
December 1,
|
|
|
December 1,
|
|
|
December 1,
|
|
Applicable
price
|
|
2010
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
|
|
$43.63
|
|
|
3.4136
|
|
|
|
3.4136
|
|
|
|
3.4136
|
|
|
|
3.4136
|
|
|
|
3.4136
|
|
|
|
3.4136
|
|
$45.00
|
|
|
3.4136
|
|
|
|
3.4020
|
|
|
|
3.2095
|
|
|
|
3.0997
|
|
|
|
2.9517
|
|
|
|
2.7158
|
|
$50.00
|
|
|
2.3196
|
|
|
|
2.1759
|
|
|
|
1.9871
|
|
|
|
1.8338
|
|
|
|
1.5819
|
|
|
|
0.4936
|
|
$55.00
|
|
|
1.4613
|
|
|
|
1.3443
|
|
|
|
1.1766
|
|
|
|
1.0208
|
|
|
|
0.7619
|
|
|
|
0.0000
|
|
$60.00
|
|
|
0.8781
|
|
|
|
0.7886
|
|
|
|
0.6517
|
|
|
|
0.5193
|
|
|
|
0.3158
|
|
|
|
0.0000
|
|
$65.00
|
|
|
0.4908
|
|
|
|
0.4276
|
|
|
|
0.3263
|
|
|
|
0.2313
|
|
|
|
0.1063
|
|
|
|
0.0000
|
|
$70.00
|
|
|
0.2450
|
|
|
|
0.2064
|
|
|
|
0.1410
|
|
|
|
0.0854
|
|
|
|
0.0261
|
|
|
|
0.0000
|
|
$75.00
|
|
|
0.1036
|
|
|
|
0.0844
|
|
|
|
0.0494
|
|
|
|
0.0236
|
|
|
|
0.0030
|
|
|
|
0.0000
|
|
$80.00
|
|
|
0.0338
|
|
|
|
0.0269
|
|
|
|
0.0121
|
|
|
|
0.0032
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
$85.00
|
|
|
0.0068
|
|
|
|
0.0052
|
|
|
|
0.0008
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
$90.00
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
$95.00
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
$100.00
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
$105.00
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
$110.00
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
$115.00
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
$120.00
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
The numbers of additional shares set forth in the table above
are based on a closing sale price per share of our common stock
of $43.63 on March 9, 2010, a conversion rate of 19.5064
shares per $1,000 principal amount of notes and certain other
assumptions.
The exact applicable price and effective date may not be as set
forth in the table above, in which case:
|
|
Ø
|
if the actual applicable price is between two applicable prices
listed in the table above, or the actual effective date is
between two dates listed in the table above, we will determine
the number of additional shares by linear interpolation between
the numbers of additional shares set forth for the two
applicable prices, or for the two dates based on a
365-day
year, as applicable;
|
|
Ø
|
if the actual applicable price is greater than $120.00 per share
(subject to adjustment), we will not increase the conversion
rate; and
|
|
Ø
|
if the actual applicable price is less than $43.63 per share
(subject to adjustment), we will not increase the conversion
rate.
|
However, we will not increase the conversion rate as described
above to the extent the increase will cause the conversion rate
to exceed 22.9200 shares per $1,000 principal amount. We will
adjust this maximum conversion rate in the same manner in which,
and for the same events for which, we must adjust the conversion
rate as described under Adjustments to the
conversion rate.
Because we may not deliver the consideration due solely as a
result of the increase in the conversion rate described above
until after the effective date of the make-whole fundamental
change, such consideration may not consist of shares of our
common stock as a result of the provisions described above under
the caption Change in the conversion right upon
certain reclassifications, business combinations and asset
sales. Accordingly, the shares, if any, due as a result of
such increase may be paid in reference property.
S-41
Description of
notes
Our obligation to increase the conversion rate as described
above could be considered a penalty, in which case its
enforceability would be subject to general principles of
reasonableness of economic remedies.
REDEMPTION OF
NOTES AT OUR OPTION
Prior to December 1, 2014, we cannot redeem the notes
except to preserve our status as a REIT. If, at any time, we
determine it is necessary to redeem the notes in order to
preserve our status as a REIT, we may redeem the notes, in whole
or in part, for cash equal to 100% of the principal amount of
the notes to be redeemed plus any accrued and unpaid interest
to, but excluding, the redemption date. In addition, we may
redeem the notes at our option, in whole or in part, at any
time, and from time to time, on or after December 1, 2014,
on a date not less than 30 nor more than 60 days after the
day we mail a redemption notice to each holder of notes to be
redeemed at the address of the holder appearing in the security
register, at a redemption price, payable in cash, equal to 100%
of the principal amount of the notes we redeem plus any accrued
and unpaid interest to, but excluding, the redemption date.
However, if a redemption date is after a record date for the
payment of an installment of interest and on or before the
related interest payment date, then the payment of interest
becoming due on that interest payment date will be payable, on
that interest payment date, to the holder of record at the close
of business on the record date, and the redemption price will
not include any accrued and unpaid interest. The redemption date
must be a business day. We will make at least 10 semi-annual
interest payments on the notes before we may redeem the notes at
our option, unless we redeem the notes to preserve our status as
a REIT.
For a discussion of certain tax consequences to a holder upon a
redemption of notes, see Certain federal income tax
considerationsDisposition.
If the paying agent holds money sufficient to pay the redemption
price due on a note on the redemption date in accordance with
the terms of the indenture, then, on and after the redemption
date, the note will cease to be outstanding and interest on the
note will cease to accrue, whether or not the holder delivers
the note to the paying agent. Thereafter, all other rights of
the holder terminate, other than the right to receive the
redemption price upon delivery of the note.
The conversion right with respect to any notes we have called
for redemption will expire at the close of business on the last
business day immediately preceding the redemption date, unless
we default in the payment of the redemption price.
If we redeem less than all of the outstanding notes, the trustee
will select the notes to be redeemed in integral multiples of
$1,000 principal amount by lot, on a pro rata basis or in
accordance with any other method the trustee considers fair and
appropriate. However, we may redeem the notes only in integral
multiples of $1,000 principal amount. If a portion of a
holders notes is selected for partial redemption and the
holder converts a portion of the notes, the principal amount of
the note that is subject to redemption will be reduced by the
principal amount that the holder converted.
We will not redeem any notes at our option if the principal
amount of the notes has been accelerated and the acceleration
has not been rescinded on or before the redemption date.
PURCHASE OF
NOTES BY US AT THE OPTION OF THE HOLDER
On each of December 1, 2014, December 1, 2019 and
December 1, 2024 (each, a purchase date), a
holder may require us to purchase all or a portion of the
holders outstanding notes, at a price in cash equal to
100% of the principal amount of the notes to be purchased, plus
any accrued and unpaid interest to, but excluding, the purchase
date, subject to certain additional conditions. However, we
will, on the purchase date, pay the accrued and unpaid interest
to, but excluding, the purchase date to the holder of record at
the close of business on the immediately preceding record date.
Accordingly, the
S-42
Description of
notes
holder submitting the note for purchase will not receive this
accrued and unpaid interest unless that holder was also the
holder of record at the close of business on the immediately
preceding record date.
On each purchase date, we will purchase all notes for which the
holder has delivered and not withdrawn a written purchase
notice. Holders may submit their written purchase notice to the
paying agent at any time from the opening of business on the
date that is 20 business days before the purchase date until the
close of business on the business day immediately preceding the
purchase date.
For a discussion of certain tax consequences to a holder
receiving cash upon a purchase of the notes at the holders
option, see Certain federal income tax
considerationsDisposition.
We will give notice on a date that is at least 20 business days
before each purchase date to all holders at their addresses
shown on the register of the registrar, and to beneficial owners
as required by applicable law, stating, among other things:
|
|
Ø
|
the amount of the purchase price;
|
|
Ø
|
that notes with respect to which the holder has delivered a
purchase notice may be converted, if otherwise convertible, only
if the holder withdraws the purchase notice in accordance with
the terms of the indenture; and
|
|
Ø
|
the procedures that holders must follow to require us to
purchase their notes, including the name and address of the
paying agent.
|
To require us to purchase its notes, the holder must deliver a
purchase notice that states:
|
|
Ø
|
the certificate numbers of the holders notes to be
delivered for purchase, if they are in certificated form;
|
|
Ø
|
the principal amount of the notes to be purchased, which must be
an integral multiple of $1,000; and
|
|
Ø
|
that the notes are to be purchased by us pursuant to the
applicable provisions of the indenture.
|
A holder that has delivered a purchase notice may withdraw the
purchase notice by delivering a written notice of withdrawal to
the paying agent before the close of business on the business
day before the purchase date. The notice of withdrawal must
state:
|
|
Ø
|
the name of the holder;
|
|
Ø
|
a statement that the holder is withdrawing its election to
require us to purchase its notes;
|
|
Ø
|
the certificate numbers of the notes being withdrawn, if they
are in certificated form;
|
|
Ø
|
the principal amount being withdrawn, which must be an integral
multiple of $1,000; and
|
|
Ø
|
the principal amount, if any, of the notes that remain subject
to the purchase notice, which must be an integral multiple of
$1,000.
|
If the notes are not in certificated form, the above notices
must comply with appropriate DTC procedures.
To receive payment of the purchase price for a note for which
the holder has delivered and not withdrawn a purchase notice,
the holder must deliver the note, together with necessary
endorsements, to the paying agent at any time after delivery of
the purchase notice. We will pay the purchase price for the note
on the later of the purchase date and the time of delivery of
the note, together with necessary endorsements.
If the paying agent holds on a purchase date money sufficient to
pay the purchase price due on a note in accordance with the
terms of the indenture, then, on and after that purchase date,
the note will cease to be outstanding and interest on the note
will cease to accrue, whether or not the holder delivers the
S-43
Description of
notes
note to the paying agent. Thereafter, all other rights of the
holder terminate, other than the right to receive the purchase
price upon delivery of the note.
We may not have the financial resources, and we may not be able
to arrange for financing, to pay the purchase price for all
notes holders have elected to have us purchase. Furthermore, the
terms of our then existing indebtedness may prohibit our payment
of the purchase price. See Risk factorsRisks related
to the notes and our common stockWe may not have the
ability to purchase the notes on the purchase dates or upon a
fundamental change or to pay the cash payment due upon
conversion. Our failure to purchase the notes when
required would result in an event of default with respect to the
notes.
We will not purchase any notes at the option of holders if the
principal amount of the notes has been accelerated, and such
acceleration has not been rescinded, on or prior to such date.
In connection with any purchase offer, we will, to the extent
applicable:
|
|
Ø
|
comply with the provisions of
Rule 13e-4
and Regulation 14E and all other applicable laws; and
|
|
Ø
|
file a Schedule TO or any other required schedule under the
Securities Exchange Act of 1934 or other applicable laws.
|
HOLDERS MAY
REQUIRE US TO REPURCHASE THEIR NOTES UPON A FUNDAMENTAL
CHANGE
If a fundamental change, as described below, occurs,
each holder will have the right, at its option, subject to the
terms and conditions of the indenture, to require us to
repurchase for cash all or any portion of the holders
notes in integral multiples of $1,000 principal amount, at a
price equal to 100% of the principal amount of the notes to be
repurchased, plus, except as described below, any accrued and
unpaid interest to, but excluding, the fundamental change
repurchase date, as described below.
However, if the fundamental change repurchase date is after a
record date for the payment of an installment of interest and on
or before the related interest payment date, then the payment of
interest becoming due on that interest payment date will be
payable, on that interest payment date, to the holder of record
at the close of business on the record date, and the repurchase
price will not include any accrued and unpaid interest.
We must repurchase the notes on a date of our choosing, which we
refer to as the fundamental change repurchase date.
However, the fundamental change repurchase date must be no later
than 35 days, and no earlier than 20 days, after the
date we have mailed a notice of the fundamental change, as
described below.
Within 20 business days after the occurrence of a fundamental
change, we must mail to all holders of notes at their addresses
shown on the register of the registrar, and to beneficial owners
as required by applicable law, a notice regarding the
fundamental change. We must also publish the notice in The New
York Times, The Wall Street Journal or another newspaper of
national circulation. The notice must state, among other things:
|
|
Ø
|
the events causing the fundamental change;
|
|
Ø
|
the date of the fundamental change;
|
|
Ø
|
the fundamental change repurchase date;
|
|
Ø
|
the last date on which a holder may exercise the repurchase
right;
|
|
Ø
|
the fundamental change repurchase price;
|
|
Ø
|
the names and addresses of the paying agent and the conversion
agent;
|
|
Ø
|
the procedures that holders must follow to exercise their
repurchase right;
|
S-44
Description of
notes
|
|
Ø
|
the conversion rate and any adjustments to the conversion rate
that will result from the fundamental change; and
|
|
Ø
|
that notes with respect to which a holder has delivered a
fundamental change repurchase notice may be converted, if
otherwise convertible, only if the holder withdraws the
fundamental change repurchase notice in accordance with the
terms of the indenture.
|
To exercise the repurchase right, a holder must deliver a
written fundamental change repurchase notice to the paying agent
no later than the close of business on the business day
immediately preceding the fundamental change repurchase date.
This written notice must state:
|
|
Ø
|
the certificate numbers of the notes that the holder will
deliver for repurchase, if they are in certificated form;
|
|
Ø
|
the principal amount of the notes to be repurchased, which must
be an integral multiple of $1,000; and
|
|
Ø
|
that the notes are to be repurchased by us pursuant to the
fundamental change provisions of the indenture.
|
A holder may withdraw any fundamental change repurchase notice
by delivering to the paying agent a written notice of withdrawal
prior to the close of business on the business day immediately
preceding the fundamental change repurchase date. The notice of
withdrawal must state:
|
|
Ø
|
the name of the holder;
|
|
Ø
|
a statement that the holder is withdrawing its election to
require us to repurchase its notes;
|
|
Ø
|
the certificate numbers of the notes being withdrawn, if they
are in certificated form;
|
|
Ø
|
the principal amount of notes being withdrawn, which must be an
integral multiple of $1,000; and
|
|
Ø
|
the principal amount, if any, of the notes that remain subject
to the fundamental change repurchase notice, which must be an
integral multiple of $1,000.
|
If the notes are not in certificated form, the above notices
must comply with appropriate DTC procedures.
To receive payment of the fundamental change repurchase price
for a note for which the holder has delivered and not withdrawn
a fundamental change repurchase notice, the holder must deliver
the note, together with necessary endorsements, to the paying
agent at any time after delivery of the fundamental change
repurchase notice. We will pay the fundamental change repurchase
price for the note on the later of the fundamental change
repurchase date and the time of delivery of the note, together
with necessary endorsements.
For a discussion of certain tax consequences to a holder upon
the exercise of the repurchase right, see Certain federal
income tax considerationsDisposition.
If the paying agent holds on the fundamental change repurchase
date money sufficient to pay the fundamental change repurchase
price due on a note in accordance with the terms of the
indenture, then, on and after the fundamental change repurchase
date, the note will cease to be outstanding and interest on such
note will cease to accrue, whether or not the holder delivers
the note to the paying agent. Thereafter, all other rights of
the holder terminate, other than the right to receive the
fundamental change repurchase price upon delivery of the note.
A fundamental change generally will be deemed to
occur upon the occurrence of a change in control or
a termination of trading.
A change in control generally will be deemed to
occur at such time as:
|
|
Ø |
any person or group (as those terms are
used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934) is or becomes the beneficial owner
(as that term is used in
Rule 13d-3
|
S-45
Description of
notes
|
|
|
under the Securities Exchange Act of 1934), directly or
indirectly, of 50% or more of the total outstanding voting power
of all classes of our capital stock entitled to vote generally
in the election of directors (voting stock);
|
|
|
Ø
|
there occurs a sale, transfer, lease, conveyance or other
disposition of all or substantially all of our property or
assets to any person or group (as those
terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934), including any group acting for
the purpose of acquiring, holding, voting or disposing of
securities within the meaning of Rule
13d-5(b)(1)
under the Securities Exchange Act of 1934;
|
|
Ø
|
we consolidate with, or merge with or into, another person or
any person consolidates with, or merges with or into, us, unless
either:
|
|
|
|
|
Ø
|
the persons that beneficially owned, directly or
indirectly, the shares of our voting stock immediately prior to
such consolidation or merger beneficially own,
directly or indirectly, immediately after such consolidation or
merger, shares of the surviving or continuing corporations
voting stock representing at least a majority of the total
outstanding voting power of all outstanding classes of voting
stock of the surviving or continuing corporation in
substantially the same proportion as such ownership immediately
prior to such consolidation or merger; or
|
|
|
Ø
|
both of the following conditions are satisfied (we refer to such
a transaction as a listed stock business
combination):
|
|
|
|
|
-
|
at least 90% of the consideration (other than cash payments for
fractional shares or pursuant to statutory appraisal rights) in
such consolidation or merger consists of common stock and any
associated rights traded on a U.S. national securities
exchange (or which will be so traded when issued or exchanged in
connection with such consolidation or merger); and
|
|
|
-
|
as a result of such consolidation or merger, the notes, upon
conversion, will become convertible into cash and, if
applicable, solely such common stock and associated rights;
|
|
|
Ø |
the following persons cease for any reason to constitute a
majority of our board of directors:
|
|
|
|
|
Ø
|
individuals who on the first issue date of the notes constituted
our board of directors; and
|
|
|
Ø
|
any new directors whose election to our board of directors or
whose nomination for election by our stockholders was approved
by at least a majority of our directors then still in office
either who were directors on such first issue date of the notes
or whose election or nomination for election was previously so
approved; or
|
|
|
Ø |
we are liquidated or dissolved or holders of our capital stock
approve any plan or proposal for our liquidation or dissolution.
|
There is no precise, established definition of the phrase
all or substantially all under applicable law.
Accordingly, there may be uncertainty as to whether a sale,
transfer, lease, conveyance or other disposition of less than
all of our property or assets would permit a holder to exercise
its right to have us repurchase its notes in accordance with the
fundamental change provisions described above.
A termination of trading is deemed to occur if our
common stock (or other common stock into which the notes are
then convertible) is no longer listed for trading on a
U.S. national securities exchange.
We may not have the financial resources, and we may not be able
to arrange for financing, to pay the fundamental change
repurchase price for all notes holders have elected to have us
repurchase. Furthermore, the terms of our then existing
indebtedness may prohibit our payment of the fundamental change
repurchase price. See Risk factorsRisks related to
the notes and our common stockWe may not have the ability
to purchase the notes on the purchase dates or upon a
fundamental change or to pay the cash payment due upon
conversion. Our failure to repurchase the notes when
required would result in an event of default with respect to the
notes.
S-46
Description of
notes
We may in the future enter into transactions, including
recapitalizations, that would not constitute a fundamental
change but that would increase our debt or otherwise adversely
affect holders. The indenture for the notes does not restrict
our or our subsidiaries ability to incur indebtedness,
including additional senior or secured indebtedness. Our
incurrence of additional indebtedness could adversely affect our
ability to service our indebtedness, including the notes.
In addition, the fundamental change repurchase feature of the
notes would not necessarily afford holders of the notes
protection in the event of highly leveraged or other
transactions involving us that may adversely affect holders of
the notes. Furthermore, the fundamental change repurchase
feature of the notes may in certain circumstances deter or
discourage a third party from acquiring us, even if the
acquisition may be beneficial to you.
We will not repurchase any notes at the option of holders upon a
fundamental change if the principal amount of the notes has been
accelerated, and such acceleration has not been rescinded, on or
prior to such date.
In connection with any fundamental change offer, we will, to the
extent applicable:
|
|
Ø
|
comply with the provisions of
Rule 13e-4
and Regulation 14E and all other applicable laws; and
|
|
Ø
|
file a Schedule TO or any other required schedule under the
Securities Exchange Act of 1934 or other applicable laws.
|
RANKING
The notes will be our unsecured senior obligations and will rank
equally with all our other unsecured senior indebtedness.
However, the notes will be effectively subordinated to any of
our existing and future secured indebtedness to the extent of
the assets securing such indebtedness. The notes will also be
structurally subordinated to all liabilities, including trade
payables and lease obligations, if any, of our subsidiaries. Any
right by us to receive the assets of any of our subsidiaries
upon its liquidation or reorganization, and the consequent right
of the holders of the notes to participate in these assets, will
be structurally subordinated to the claims of that
subsidiarys creditors, except to the extent that we are
recognized as a creditor of such subsidiary, in which case our
claims would still be subordinated to any security interests in
the assets of such subsidiary and any indebtedness of such
subsidiary that is senior to that held by us.
As of March 31, 2010, approximately 66% of our real estate
investments were owned by our subsidiaries. However, the notes
are exclusively our obligations. Our subsidiaries are separate
and distinct legal entities and have no obligation, contingent
or otherwise, to pay any amounts due on the notes or to make any
funds available for payment on the notes, whether by dividends,
loans or other payments. In addition, the payment of dividends
and the making of loans and advances to us by our subsidiaries
may be subject to statutory, contractual or other restrictions,
may depend on the earnings or financial condition of those
subsidiaries and are subject to various business considerations.
As a result, we may be unable to gain access to the cash flow or
assets of our subsidiaries.
The indenture does not limit the amount of additional
indebtedness, including senior or secured indebtedness, which we
can create, incur, assume or guarantee, nor does the indenture
limit the amount of indebtedness or other liabilities that our
subsidiaries can create, incur, assume or guarantee.
For a description of our existing indebtedness and that of our
subsidiaries, see Description of other indebtedness.
CONSOLIDATION,
MERGER AND SALE OF ASSETS
The indenture prohibits us from consolidating with or merging
with or into, or selling, transferring, leasing, conveying or
otherwise disposing of all or substantially all of our property
or assets to another
S-47
Description of
notes
person (including pursuant to a statutory arrangement), whether
in a single transaction or series of related transactions,
unless, among other things:
|
|
Ø
|
such person assumes all of our obligations under the notes and
the indenture;
|
|
Ø
|
no default or event of default exists immediately after giving
effect to the transaction or series of transactions; and
|
|
Ø
|
the person formed by such consolidation, the person with or into
which we are merged or the person which leases or acquires, by
sale, transfer, conveyance or otherwise, all or substantially
all of our property or assets, is an entity organized and
existing under the laws of the United States, any state of the
United States or the District of Columbia.
|
When the successor assumes all of our obligations under the
indenture, except in the case of a lease, our obligations under
the indenture will terminate.
Some of the transactions described above could constitute a
fundamental change that permits holders to require us to
repurchase their notes, as described under Holders
May Require Us to Repurchase Their Notes upon a Fundamental
Change.
There is no precise, established definition of the phrase
all or substantially all under applicable law.
Accordingly, there may be uncertainty as to whether the
provisions above would apply to a sale, transfer, lease,
conveyance or other disposition of less than all of our property
or assets.
EVENTS OF
DEFAULT
The following are events of default under the indenture for the
notes:
|
|
Ø
|
our failure to pay the principal of or premium, if any, on any
note when due, whether at maturity, upon redemption, on the
purchase date with respect to a purchase at the option of the
holder, on a fundamental change repurchase date with respect to
a fundamental change or otherwise;
|
|
Ø
|
our failure to pay an installment of interest on any note when
due, if the failure continues for 30 days after the date
when due;
|
|
Ø
|
our failure to satisfy our conversion obligations upon the
exercise of a holders conversion right;
|
|
Ø
|
our failure to timely provide notice as described under
Adjustment to the conversion rate upon the
occurrence of a make-whole fundamental change,
Purchase of notes by us at the option of the
holder or Holders May Require Us to Repurchase
Their Notes upon a Fundamental Change;
|
|
Ø
|
our failure to comply with any other term, covenant or agreement
contained in the notes or the indenture, if the failure is not
cured within 60 days after notice to us by the trustee or
to the trustee and us by holders of at least 25% in aggregate
principal amount of the notes then outstanding, in accordance
with the indenture;
|
|
Ø
|
a default by us or any of our subsidiaries in the payment when
due, after the expiration of any applicable grace period, of
principal of, or premium, if any, or interest on, indebtedness
for money borrowed in the aggregate principal amount then
outstanding of $10.0 million or more, which default results
in the acceleration of our or our subsidiaries
indebtedness for money borrowed in such aggregate principal
amount or more so that it becomes due and payable before the
date on which it would otherwise have become due and payable, if
such default is not cured or waived, or such acceleration is not
rescinded, within 10 days after notice to us by the trustee
or to us and the trustee by holders of at least 25% in aggregate
principal amount of notes then outstanding, in accordance with
the indenture;
|
|
Ø
|
failure by us or any of our subsidiaries to pay final judgments,
the aggregate uninsured portion of which is at least
$10.0 million, if the judgments are not paid or discharged
within 30 days; and
|
S-48
Description of
notes
|
|
Ø |
certain events of bankruptcy, insolvency or reorganization with
respect to us or any of our subsidiaries that is a
significant subsidiary (as defined in
Regulation S-X
under the Securities Exchange Act of 1934).
|
If an event of default, other than an event of default referred
to in the last bullet point above with respect to us (but
including an event of default referred to in that bullet point
solely with respect to a significant subsidiary of ours), has
occurred and is continuing, either the trustee, by written
notice to us, or the holders of at least 25% in aggregate
principal amount of the notes then outstanding, by written
notice to us and the trustee, may declare the principal of, and
any accrued and unpaid interest, and any premium on, all notes
to be immediately due and payable. In the case of an event of
default referred to in the last bullet point above with respect
to us (and not solely with respect to a significant subsidiary
of ours), the principal of, and accrued and unpaid interest, and
any premium on, all notes will automatically become immediately
due and payable.
After any such acceleration, the holders of a majority in
aggregate principal amount of the notes, by written notice to
the trustee, may rescind or annul such acceleration in certain
circumstances, if:
|
|
Ø
|
the rescission would not conflict with any order or decree;
|
|
Ø
|
all events of default, other than the non-payment of accelerated
principal, premium or interest, have been cured or
waived; and
|
|
Ø
|
certain amounts due to the trustee are paid.
|
The indenture does not obligate the trustee to exercise any of
its rights or powers at the request or demand of the holders,
unless the holders have offered to the trustee security or
indemnity that is reasonably satisfactory to the trustee against
the costs, expenses and liabilities that the trustee may incur
to comply with the request or demand. Subject to the indenture,
applicable law and the trustees rights to indemnification,
the holders of a majority in aggregate principal amount of the
outstanding notes will have the right to direct the time, method
and place of conducting any proceeding for any remedy available
to the trustee or exercising any trust or power conferred on the
trustee.
No holder will have any right to institute any proceeding under
the indenture, or for the appointment of a receiver or a
trustee, or for any other remedy under the indenture, unless:
|
|
Ø
|
the holder gives the trustee written notice of a continuing
event of default;
|
|
Ø
|
the holders of at least 25% in aggregate principal amount of the
notes then outstanding make a written request to the trustee to
pursue the remedy;
|
|
Ø
|
the holder or holders offer and, if requested, provide the
trustee indemnity reasonably satisfactory to the trustee against
any loss, liability or expense; and
|
|
Ø
|
the trustee fails to comply with the request within 60 days
after the trustee receives the notice, request and offer of
indemnity and does not receive, during those 60 days, from
holders of a majority in aggregate principal amount of the notes
then outstanding, a direction that is inconsistent with the
request.
|
However, the above limitations do not apply to a suit by a
holder to enforce:
|
|
Ø
|
the payment of any amounts due on that holders notes after
the applicable due date; or
|
|
Ø
|
the right to convert that holders notes in accordance with
the indenture.
|
Except as provided in the indenture, the holders of a majority
of the aggregate principal amount of outstanding notes may, by
notice to the trustee, waive any past default or event of
default and its consequences, other than a default or event of
default:
|
|
Ø |
in the payment of principal of, or premium, if any, or interest
on, any note or in the payment of the redemption price, purchase
price or fundamental change repurchase price;
|
S-49
Description of
notes
|
|
Ø
|
arising from our failure to convert any note in accordance with
the indenture; or
|
|
Ø
|
in respect of any provision under the indenture that cannot be
modified or amended without the consent of the holders of each
outstanding note affected.
|
We will promptly notify the trustee if a default or event of
default occurs. In addition, the indenture requires us to
furnish to the trustee, on an annual basis, a statement by our
officers stating whether they are aware of any default or event
of default by us in performing any of our obligations under the
indenture or the notes and describing any such default or event
of default. If a default or event of default has occurred and
the trustee has received notice of the default or event of
default in accordance with the indenture, the trustee must mail
to each holder a notice of the default or event of default
within 30 days after receipt of such notice. However, the
trustee need not mail the notice if the default or event of
default:
|
|
Ø
|
has been cured or waived; or
|
|
Ø
|
is not in the payment of any amounts due with respect to any
note and the trustee in good faith determines that withholding
the notice is in the best interests of holders.
|
MODIFICATION AND
WAIVER
We may amend or supplement the indenture or the notes with the
consent of the trustee and holders of at least a majority in
aggregate principal amount of the outstanding notes. In
addition, subject to certain exceptions, the holders of a
majority in aggregate principal amount of the outstanding notes
may waive our compliance with any provision of the indenture or
notes. However, without the consent of the holders of each
outstanding note affected, no amendment, supplement or waiver
may:
|
|
Ø
|
change the stated maturity of the principal of, or the payment
date of any installment of interest or any premium on, any note;
|
|
Ø
|
reduce the principal amount of, or any premium or interest on,
any note;
|
|
Ø
|
change the place, manner or currency of payment of principal of,
or any premium or interest on, any note;
|
|
Ø
|
impair the right to institute a suit for the enforcement of any
payment on, or with respect to, or of the conversion of, any
note;
|
|
Ø
|
modify, in a manner adverse to the holders of the notes, the
provisions of the indenture relating to the right of the holders
to require us to purchase notes at their option or upon a
fundamental change;
|
|
Ø
|
modify the ranking provisions of the indenture in a manner
adverse to the holders of notes;
|
|
Ø
|
adversely affect the right of the holders of the notes to
convert their notes in accordance with the indenture;
|
|
Ø
|
reduce the percentage in aggregate principal amount of
outstanding notes whose holders must consent to a modification
or amendment of the indenture or the notes;
|
|
Ø
|
reduce the percentage in aggregate principal amount of
outstanding notes whose holders must consent to a waiver of
compliance with any provision of the indenture or the notes or a
waiver of any default or event of default; or
|
|
Ø
|
modify the provisions of the indenture with respect to
modification and waiver (including waiver of a default or event
of default), except to increase the percentage required for
modification or waiver or to provide for the consent of each
affected holder.
|
S-50
Description of
notes
We may, with the trustees consent, amend or supplement the
indenture or the notes without notice to or the consent of any
holder of the notes to:
|
|
Ø
|
evidence the assumption of our obligations under the indenture
and the notes by a successor upon our consolidation or merger or
the sale, transfer, lease, conveyance or other disposition of
all or substantially all of our property or assets in accordance
with the indenture;
|
|
Ø
|
make adjustments in accordance with the indenture to the right
to convert the notes upon certain reclassifications or changes
in our common stock and certain consolidations, mergers and
binding share exchanges and upon the sale, transfer, lease,
conveyance or other disposition of all or substantially all of
our property or assets;
|
|
Ø
|
secure our obligations in respect of the notes;
|
|
Ø
|
add to our covenants for the benefit of the holders of the notes
or to surrender any right or power conferred upon us; or
|
|
Ø
|
make provision with respect to adjustments to the conversion
rate as required by the indenture or to increase the conversion
rate in accordance with the indenture.
|
In addition, we and the trustee may enter into a supplemental
indenture without the consent of holders of the notes in order
to cure any ambiguity, defect, omission or inconsistency in the
indenture in a manner that does not, individually or in the
aggregate with all other changes, adversely affect the rights of
any holder.
Except as provided in the indenture, the holders of a majority
in aggregate principal amount of the outstanding notes, by
notice to the trustee, generally may:
|
|
Ø
|
waive compliance by us with any provision of the indenture or
the notes, as detailed in the indenture; and
|
|
Ø
|
waive any past default or event of default and its consequences,
except a default or event of default:
|
|
|
|
|
-
|
in the payment of principal of, or premium, if any, or interest
on, any note or in the payment of the redemption price, purchase
price or fundamental change repurchase price;
|
|
|
-
|
arising from our failure to convert any note in accordance with
the indenture; or
|
|
|
-
|
in respect of any provision under the indenture that cannot be
modified or amended without the consent of the holders of each
outstanding note affected.
|
DISCHARGE
We may generally satisfy and discharge our obligations under the
indenture by:
|
|
Ø
|
delivering all outstanding notes to the trustee for
cancellation; or
|
|
Ø
|
depositing with the trustee or the paying agent after the notes
have become due and payable, whether at stated maturity or any
redemption date, purchase date or fundamental change repurchase
date, cash, and, if applicable as provided in the indenture,
other consideration, sufficient to pay all amounts due on all
outstanding notes and paying all other sums payable under the
indenture.
|
In addition, in the case of a deposit, there must not exist a
default or event of default on the date we make the deposit, and
the deposit must not result in a breach or violation of, or
constitute a default under, the indenture or any other agreement
or instrument to which we are a party or by which we are bound.
The notes will not be subject to either the full defeasance or
covenant defeasance provisions of the indenture.
S-51
Description of
notes
OWNERSHIP
LIMIT
In order to assist us in maintaining our qualification as a REIT
for U.S. federal income tax purposes, no person may own, or
be deemed to own by virtue of the attribution rules of the
Internal Revenue Code, more than 9.8% of the value of our
outstanding capital stock, subject to certain exceptions. For
this purpose, all options, warrants, convertible securities or
other rights to acquire our common stock will be treated as if
all such rights had been exercised. Notwithstanding any other
provision of the notes, no holder of notes will be entitled to
convert such notes for our common stock to the extent that
receipt of our common stock would cause the holder (together
with the holders affiliates) to exceed the ownership limit
contained in our by-laws (with respect to our common stock and
preferred stock) and our certificates of designation (with
respect to our preferred stock). See Restrictions on
transfer of securities in the accompanying prospectus.
CALCULATIONS IN
RESPECT OF NOTES
We and our agents are responsible for making all calculations
called for under the indenture and notes. These calculations
include, but are not limited to, the determination of the
trading price of the notes, the current market price of our
common stock, the number of shares, if any, issuable upon
conversion of the notes and amounts of interest payable on the
notes and adjustments to the conversion rate. We and our agents
will make all of these calculations in good faith, and, absent
manifest error, these calculations will be final and binding on
all holders of notes. We will provide a copy of these
calculations to the trustee, as required, and, absent manifest
error, the trustee is entitled to rely on the accuracy of our
calculations without independent verification.
SEC
REPORTING
We must provide the trustee with a copy of the reports required
pursuant to Section 13 or 15(d) of the Exchange Act no
later than the time those reports are required to be filed with
the SEC, whether or not we are then subject to the reporting
requirements of the Exchange Act.
REPORTS TO
TRUSTEE
We will regularly furnish to the trustee copies of our annual
report to stockholders, containing audited financial statements,
and any other financial reports which we furnish to our
stockholders.
UNCLAIMED
MONEY
If money deposited with the trustee or paying agent for the
payment of principal of, premium, if any, or accrued and unpaid
interest on, the notes remains unclaimed for two years, the
trustee and paying agent will pay the money back to us upon our
written request. However, the trustee and paying agent have the
right to withhold paying the money back to us until they publish
in a newspaper of general circulation in the City of New York,
or mail to each holder, a notice stating that the money will be
paid back to us if unclaimed after a date no less than
30 days from the publication or mailing. After the trustee
or paying agent pays the money back to us, holders of notes
entitled to the money must look to us for payment as general
creditors, subject to applicable law, and all liability of the
trustee and the paying agent with respect to the money will
cease.
PURCHASE AND
CANCELLATION
The registrar, paying agent and conversion agent will forward to
the trustee any notes surrendered to them for transfer,
exchange, payment or conversion, and the trustee will promptly
cancel those notes in accordance with its customary procedures.
S-52
Description of
notes
We may, to the extent permitted by law, purchase notes in the
open market or by tender offer at any price or by private
agreement. We may, at our option and to the extent permitted by
law, reissue, resell or surrender to the trustee for
cancellation any notes we purchase in this manner. Notes
surrendered to the trustee for cancellation may not be reissued
or resold and will be promptly cancelled.
REPLACEMENT OF
NOTES
We will replace mutilated, lost, destroyed or stolen notes at
the holders expense upon delivery to the trustee of the
mutilated notes or evidence of the loss, destruction or theft of
the notes satisfactory to the trustee and us. In the case of a
lost, destroyed or stolen note, we or the trustee may require,
at the expense of the holder, indemnity reasonably satisfactory
to us and the trustee.
TRUSTEE AND
TRANSFER AGENT
The trustee for the notes is The Bank of New York Mellon
Trust Company, N.A., and we have appointed the trustee as
the paying agent, bid solicitation agent, registrar, conversion
agent and custodian with regard to the notes. The indenture
permits the trustee to deal with us and any of our affiliates
with the same rights the trustee would have if it were not
trustee. However, under the Trust Indenture Act of 1939, if
the trustee acquires any conflicting interest and there exists a
default with respect to the notes, the trustee must eliminate
the conflict or resign. The Bank of New York Mellon
Trust Company, N.A. and its affiliates have in the past
provided and may from time to time in the future provide banking
and other services to us in the ordinary course of their
business.
The holders of a majority in aggregate principal amount of the
notes then outstanding have the right to direct the time, method
and place of conducting any proceeding for any remedy available
to the trustee, subject to certain exceptions. If an event of
default occurs and is continuing, the trustee must exercise its
rights and powers under the indenture using the same degree of
care and skill as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs. The
indenture does not obligate the trustee to exercise any of its
rights or powers at the request or demand of the holders, unless
the holders have offered to the trustee security or indemnity
that is reasonably satisfactory to the trustee against the
costs, expenses and liabilities that the trustee may incur to
comply with the request or demand.
The transfer agent for our common stock is Mellon Investor
Services LLC.
LISTING AND
TRADING
The notes will be a further issuance of, will be fungible with
and form a single series with our outstanding 3.00% convertible
senior notes due December 1, 2029, initially issued on March 15,
2010 in the principal amount of $342,394,000. The notes that we
previously issued currently trade in the over-the-counter
market. We cannot assure you that the notes will continue to
trade after this offering. We have not applied, and do not
intend to apply, for the listing of the notes on any securities
exchange. Our common stock is listed on the New York Stock
Exchange under the ticker symbol HCN.
FORM,
DENOMINATION AND REGISTRATION OF NOTES
General
The notes will be issued in registered form, without interest
coupons, in denominations of integral multiples of $1,000
principal amount, in the form of global securities, as further
provided below. See Global securities below
for more information. The trustee need not:
|
|
Ø |
register the transfer of or exchange any note for a period of
15 days before selecting notes to be redeemed;
|
S-53
Description of
notes
|
|
Ø
|
register the transfer of or exchange any note during the period
beginning at the opening of business 15 days before the
mailing of a notice of redemption of notes selected for
redemption and ending at the close of business on the day of the
mailing; or
|
|
Ø
|
register the transfer of or exchange any note that has been
selected for redemption or for which the holder has delivered,
and not validly withdrawn, a purchase notice or fundamental
change repurchase notice, except, in the case of a partial
redemption, purchase or repurchase, that portion of the notes
not being redeemed, purchased or repurchased.
|
See Global securities,
Certificated securities and Ownership
limit in this prospectus supplement and Restrictions
on transfer of securities in the accompanying prospectus
for a description of additional transfer restrictions that apply
to the notes.
We will not impose a service charge in connection with any
transfer or exchange of any note, but we may in general require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge imposed in connection with the transfer or
exchange.
Global
securities
Global securities will be deposited with the trustee as
custodian for The Depository Trust Company, or DTC, and
registered in the name of DTC or a nominee of DTC.
Investors may hold their interests in a global security directly
through DTC, if they are DTC participants, or indirectly through
organizations that are DTC participants.
Except in the limited circumstances described below and in
Certificated securities, holders of notes will
not be entitled to receive notes in certificated form. Unless
and until it is exchanged in whole or in part for certificated
securities, each global security may not be transferred except
as a whole by DTC to a nominee of DTC or by a nominee of DTC to
DTC or another nominee of DTC.
We will apply to DTC for acceptance of the global securities in
its book-entry settlement system. The custodian and DTC will
electronically record the principal amount of notes represented
by global securities held within DTC. Beneficial interests in
the global securities will be shown on records maintained by DTC
and its direct and indirect participants. So long as DTC or its
nominee is the registered owner or holder of a global security,
DTC or such nominee will be considered the sole owner or holder
of the notes represented by such global security for all
purposes under the indenture and the notes. No owner of a
beneficial interest in a global security will be able to
transfer such interest except in accordance with DTCs
applicable procedures and the applicable procedures of its
direct and indirect participants. The laws of some jurisdictions
may require that certain purchasers of securities take physical
delivery of such securities in definitive form. These
limitations and requirements may impair the ability to transfer
or pledge beneficial interests in a global security.
Payments of principal, premium, if any, and interest under each
global security will be made to DTC or its nominee as the
registered owner of such global security. We expect that DTC or
its nominee, upon receipt of any such payment, will immediately
credit DTC participants accounts with payments
proportional to their respective beneficial interests in the
principal amount of the relevant global security as shown on the
records of DTC. We also expect that payments by DTC participants
to owners of beneficial interests will be governed by standing
instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in the
names of nominees for such customers. Such payments will be the
responsibility of such participants, and none of us, the
trustee, the custodian or any paying agent or registrar will
have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial
interests in any global security or for maintaining or reviewing
any records relating to such beneficial interests.
DTC has advised us that it is a limited-purpose trust company
organized under the New York Banking Law, a banking
organization within the meaning of the New York Banking
Law, a member of the
S-54
Description of
notes
Federal Reserve System, a clearing corporation
within the meaning of the New York Uniform Commercial Code and a
clearing agency registered under the Securities
Exchange Act of 1934. DTC was created to hold the securities of
its participants and to facilitate the clearance and settlement
of securities transactions among its participants in such
securities through electronic book-entry changes in accounts of
the participants, which eliminates the need for physical
movement of securities certificates. DTCs participants
include securities brokers and dealers (including the
underwriters), banks, trust companies, clearing corporations and
certain other organizations, some of whom (and/or their
representatives) own the depository. Access to DTCs
book-entry system is also available to others, such as banks,
brokers, dealers and trust companies, that clear through or
maintain a custodial relationship with a participant, either
directly or indirectly. The ownership interest and transfer of
ownership interests of each beneficial owner or purchaser of
each security held by or on behalf of DTC are recorded on the
records of the direct and indirect participants.
Certificated
securities
The trustee will exchange each beneficial interest in a global
security for one or more certificated securities registered in
the name of the owner of the beneficial interest, as identified
by DTC, only if:
|
|
Ø
|
DTC notifies us that it is unwilling or unable to continue as
depositary for that global security or ceases to be a clearing
agency registered under the Securities Exchange Act of 1934 and,
in either case, we do not appoint a successor depositary within
90 days of such notice or cessation; or
|
|
Ø
|
an event of default has occurred and is continuing and the
trustee has received a request from DTC to issue certificated
securities.
|
Same-day
settlement and payment
We will make payments in respect of notes represented by global
securities by wire transfer of immediately available funds to
DTC or its nominee as registered owner of the global securities.
We will make payments in respect of notes that are issued in
certificated form by wire transfer of immediately available
funds to the accounts specified by each holder of more than
$5.0 million aggregate principal amount of notes. However,
if a holder of a certificated note does not specify an account,
or holds $5.0 million or less in aggregate principal amount
of notes, then we will mail a check to that holders
registered address.
We expect the notes will trade in DTCs
Same-Day
Funds Settlement System, and DTC will require all permitted
secondary market trading activity in the notes to be settled in
immediately available funds. We expect that secondary trading in
any certificated securities will also be settled in immediately
available funds.
Transfers between participants in DTC will be effected in the
ordinary way in accordance with DTC rules and will be settled in
same-day
funds.
Although DTC has agreed to the above procedures to facilitate
transfers of interests in the global securities among DTC
participants, DTC is under no obligation to perform or to
continue those procedures, and those procedures may be
discontinued at any time. None of us, the underwriters or the
trustee will have any responsibility for the performance by DTC
or its direct or indirect participants of their respective
obligations under the rules and procedures governing their
operations.
We have obtained the information we describe in this prospectus
supplement concerning DTC and its book-entry system from sources
that we believe to be reliable, but neither we nor the
underwriters take any responsibility for the accuracy of this
information.
GOVERNING
LAW
The indenture and the notes will be governed by and construed in
accordance with the laws of the State of New York, without
giving effect to such states conflicts of laws principles.
S-55
Description of other
indebtedness
CREDIT
FACILITIES
We have a $1,150,000,000 unsecured revolving credit facility
(the Credit Facility) with KeyBank National
Association, as Administrative Agent, Deutsche Bank Securities
Inc., as Syndication Agent, and UBS Securities LLC, Bank of
America, N.A., JPMorgan Chase Bank, N.A., Barclays Bank PLC,
Calyon New York Branch and Fifth Third Bank, as documentation
agents, which matures in August 2011. Borrowings under the
Credit Facility are subject to interest payable in periods no
longer than three months at either the agent banks prime
rate of interest or the applicable margin over LIBOR interest
rate, at our option (0.85% at March 31, 2010). The
applicable margin is based on our ratings with Moodys
Investors Service and Standard & Poors Ratings
Services and was 0.6% at March 31, 2010. In addition, we
pay a facility fee annually to each bank based on the
banks commitment amount. The facility fee depends on our
ratings with Moodys Investors Service and
Standard & Poors Ratings Services and was 0.15%
at March 31, 2010. We also pay an annual agents fee
of $50,000.
The Credit Facility contains customary affirmative and
restrictive covenants that, among other things, limit us and
certain of our subsidiaries with respect to indebtedness,
liabilities, liens, dividends, loans, investments, purchases and
fundamental changes to the corporate structure and line of
business. We also are required to maintain a minimum tangible
net worth of $1,700,000,000 plus 85% of net issuance proceeds
received by us in connection with equity issuances (other than
equity issuances in connection with any dividend reinvestment
programs), a fixed charge coverage ratio of not less than 175%,
a leverage ratio of not more than 0.60 to 1.00, and a ratio of
unencumbered assets to unsecured indebtedness of not less than
1.67 to 1.00, all as defined in the Credit Facility.
The Credit Facility contains customary events of default,
including, among other things, and subject to applicable grace
periods, other indebtedness payment defaults, material
misrepresentations, covenant defaults, certain bankruptcy events
and judgment defaults. We and certain of our subsidiaries are
co-borrowers under the Credit Facility.
As of March 31, 2010, we
and/or
certain of our subsidiaries had secured indebtedness in the
aggregate principal amount of approximately $726 million,
collateralized by owned properties, with annual interest rates
ranging from 4.89% to 7.98%, payable monthly.
SENIOR
NOTES
In June 2010, we completed the sale of $150,000,000 of senior
unsecured notes due 2020. The notes have a weighted average
interest rate of 6.125%. The notes are part of the same series
as the senior unsecured notes sold in April 2010. The aggregate
principal amount of outstanding notes of this series is
$450,000,000.
In April 2010, we completed the sale of $300,000,000 of senior
unsecured notes due 2020. The notes have a weighted average
interest rate of 6.125%. The notes are part of the same series
as the senior unsecured notes sold in June 2010. The aggregate
principal amount of outstanding notes of this series is
$450,000,000.
In December 2005, we completed the sale of $300,000,000 of
senior unsecured notes due 2016. The notes have a weighted
average interest rate of 6.20%.
In April 2005, we completed the sale of $250,000,000 of senior
unsecured notes due 2015. The notes have a weighted average
interest rate of 5.875%.
S-56
Description of
other indebtedness
In November 2003 and September 2004, we completed the sale of
$250,000,000 and $50,000,000, respectively, of senior unsecured
notes due 2013. The notes have a weighted average interest rate
of 6.0%.
In September 2002 and March 2003, we completed the sale of
$150,000,000 and $100,000,000, respectively, of senior unsecured
notes due 2012. In March 2009, we extinguished $11,723,000 of
these notes, leaving $238,277,000 outstanding. In September
2009, we repurchased $161,424,000 of these notes pursuant to a
tender offer, leaving $76,853,000 outstanding. The notes have a
weighted average interest rate of 8.0%.
CONVERTIBLE
SENIOR NOTES
In March 2010, we completed the sale of $342,394,000 of
convertible senior unsecured notes due 2029. The notes have a
weighted average interest rate of 3.00%. The notes offered
hereby are part of the same series. Upon completion of this
offering, the aggregate principal amount of outstanding notes of
this series will be $494,403,000.
In July 2007, we completed the sale of $400,000,000 of
convertible senior unsecured notes due 2027. In March 2009, we
extinguished $5,000,000 of these notes, leaving $395,000,000
outstanding. In March 2010, we repurchased $172,725,000
aggregate principal amount of these notes, leaving $222,275,000
outstanding. The notes have a weighted average interest rate of
4.75%.
In November 2006 and December 2006, we completed the sale of
$345,000,000 of convertible senior unsecured notes due 2026. In
March 2009, we extinguished $5,000,000 of these notes, leaving
$340,000,000 outstanding. In March 2010, we repurchased
$129,393,000 aggregate principal amount of these notes, leaving
$210,607,000 outstanding. The notes have a weighted average
interest rate of 4.75%.
S-57
Certain federal
income tax considerations
GENERAL
The following is a general discussion of material
U.S. federal income tax considerations applicable to
initial holders of the notes (holders that purchased the notes
in the initial offering for the original issue price as defined
in section 1273 of the Code) who hold the notes, or common
shares received on conversion of a note, as capital assets. This
discussion is based on the Internal Revenue Code, income tax
regulations promulgated thereunder, judicial positions,
published positions of the Internal Revenue Service
(IRS) and other applicable authorities, all as in
effect as of the date hereof and all of which are subject to
change, possibly with retroactive effect. This discussion does
not address all of the tax consequences that may be relevant to
a particular holder or to holders subject to special treatment
under the Code, such as financial institutions, brokers,
dealers, insurance companies, former U.S. citizens or
long-term residents, tax-exempt organizations, persons that are,
or that hold their notes, or common shares received on
conversion of a note, through, partnerships or other passthrough
entities, U.S. holders (as defined below) whose functional
currency is not the U.S. dollar, or persons that hold
notes, or common shares received on conversion of a note, as
part of a straddle, hedge, conversion, synthetic security or
constructive sale transaction for U.S. federal income tax
purposes. Except as specifically provided below with respect to
non-U.S. holders
(as described below), the discussion is limited to holders of
notes, or common shares received on conversion of a note, that
are U.S. holders.
We have not sought any rulings from the IRS with respect to the
U.S. federal income tax consequences discussed below. The
discussion below is not binding on the IRS or the courts.
Accordingly, there can be no assurance that the IRS will not
take, or that a court will not sustain, a position concerning
the tax consequences of the purchase, ownership or disposition
of the notes, the qualification and taxation of the Company as a
REIT or the ownership or disposition of shares of the
Companys common stock for which the notes may be exchanged
that is different from that discussed below. You are encouraged
to consult your own tax advisor before you purchase any notes
regarding the particular U.S. federal, state and local and
non-U.S. income
and other tax consequences of purchasing, owning, and disposing
of the notes and the common shares that may be applicable to you
in light of your particular circumstances. Holders that purchase
the notes from the initial holders should consult their own tax
advisors regarding any special tax rules that may be applicable
to them, in particular those rules relating to the treatment of
market discount, acquisition premium, purchased interest
and/or
amortizable bond premium with respect to the notes.
For purposes of this discussion, a U.S. holder means a
beneficial owner of notes that for U.S. federal income tax
purposes is: a citizen or resident of the United States; a
corporation (including an entity treated as a corporation for
U.S. federal income tax purposes) created or organized in
or under the laws of the United States, any of its states or the
District of Columbia; an estate whose income is subject to
U.S. federal income tax regardless of its source; or any
trust (i) with respect to which a U.S. court is able
to exercise primary supervision over the administration of such
trust; and one or more U.S. persons have authority to
control all substantial decisions of the trust or (ii) that
has a valid election in effect under applicable Treasury
regulations to be treated as a U.S. person.
If a partnership, including an entity or arrangement that is
treated as a partnership for U.S. federal income tax
purposes, is a beneficial owner of the notes, or common shares
received on conversion of a note, the U.S. federal income
tax consequences to such partnership and the partners in such
partnership will generally depend on the status of the partner
and the activities of the partnership and such partners and
partnerships should consult their own tax advisor regarding the
U.S. federal income and estate tax consequences of
purchasing, owning and disposing of the notes.
A
non-U.S. holder
means any beneficial owner of a note that is not a
U.S. holder.
S-58
Certain federal
income tax considerations
QUALIFIED
REOPENING
In part due to the fact that the notes offered hereby were sold
at a premium, for U.S. federal income tax purposes, the
notes will be treated as having been issued in a qualified
reopening of our 3.00% convertible senior notes due
December 1, 2029 that we previously issued on
March 15, 2010 (the existing notes). As a
result, under applicable Treasury regulations, the notes will be
treated as having the same issue date and the same issue price
as the existing notes.
INTEREST
A U.S. holder of the notes generally will be required to
report interest earned on the notes as ordinary income in
accordance with the U.S. holders regular method of
tax accounting.
PRE-ISSUANCE
ACCRUED INTEREST ON THE NOTES
The purchase price of the notes includes an amount attributable
to interest accrued prior to the issue date of the notes. We
believe that a portion of the first interest payment equal to
such amount should be treated as a return of the pre-issuance
accrued interest, rather than as interest payable on the notes.
If this position is respected, as will be assumed for purposes
of this summary, our payment of such amount would not be treated
as taxable income to you. You should consult your own tax
advisor concerning the tax treatment of the pre-issuance accrued
interest.
AMORTIZABLE BOND
PREMIUM ON THE NOTES
In general, if a U.S. holder purchases a debt instrument
for an amount (excluding any amount attributable to any
pre-issuance accrued interest with respect to such debt
instrument) in excess of all amounts payable on the debt
instrument after the holders acquisition date (other than
stated interest payable on the debt instrument at least annually
in cash), the U.S. holder will be treated as purchasing the
debt instrument with bond premium in an amount equal to such
excess. Such U.S. holder generally would be permitted to
make an election to amortize such bond premium over the term on
the debt instrument on a constant yield method as an offset to
interest on the debt instrument includible in income under the
holders regular method of accounting.
The notes may be issued at a premium. However, because the
amount and timing of any payments pursuant to optional
redemption of the notes may not be known at the time of their
issuance, the method for determining the amount of any bond
premium on the notes and the amortization of any such bond
premium is unclear. You should consult your own tax advisor
concerning the amount and amortization of any bond premium on
the notes. An election to amortize premium on a constant yield
method will apply to all debt obligations held or subsequently
acquired by you on or after the first day of the first taxable
year to which the election applies. You may not revoke the
election without the consent of the IRS. You should consult your
own tax advisor before making this election. If you do not elect
to amortize bond premium, the premium will decrease the gain or
increase the loss you otherwise would recognize on a disposition
of your notes.
CONSTANT YIELD
ELECTION ON THE NOTES
As an alternative to the above-described rules for including
interest payments in income and amortizing bond premium, you may
elect to include in gross income all interest that accrues on
notes held by you, including stated interest and adjustment for
bond premium, on the constant yield method. If such an election
were made, you would be deemed to have made an election to
amortize bond premium, which as discussed above applies to all
debt instruments held or subsequently acquired by you.
Particularly for U.S. holders who are on the cash method of
accounting, a constant yield election may have the effect of
causing you to include interest in income earlier than would be
the case if no such election were made,
S-59
Certain federal
income tax considerations
and the election may not be revoked without the consent of the
IRS. You should consult your own tax advisor before making this
election.
DISPOSITION
Upon the sale, exchange, redemption, retirement, repurchase or
other taxable disposition of a note (other than a conversion
into a combination of cash and common shares), a
U.S. holder who acquired the note upon its issuance will
generally recognize capital gain or loss equal to the difference
(if any) between the amount realized (other than amounts
attributable to accrued but unpaid stated interest which will be
taxable as ordinary income if not previously included in such
holders income) and such U.S. holders tax basis
in the note. The U.S. holders tax basis for a note
generally will be the purchase price paid by the
U.S. holder for the note. Such gain or loss shall be
treated as long-term capital gain or loss if the note was held
by the U.S. holder for more than one year. Long-term
capital gain recognized by certain non-corporate
U.S. holders generally will be subject to a reduced tax
rate. Subject to limited exceptions, capital losses cannot be
used to offset a U.S. holders ordinary income. If you
sell a note at a loss that exceeds certain thresholds, you may
be required to file a disclosure statement with the IRS under
the Treasury regulations.
CONVERSION OF THE
NOTES
Upon conversion of a note into common shares, a holder generally
will not recognize any gain or loss (except with respect to cash
received in lieu of a fractional share of common stock and cash
received attributable to accrued and unpaid interest), subject
to the possibility discussed below that an adjustment to the
conversion rate of a note converted in connection with a
fundamental change or mandatory conversion may be treated as a
taxable constructive distribution. A holders basis in the
common shares acquired upon the conversion (including any
fractional share for which cash is paid, but excluding shares
attributable to accrued interest) will equal the holders
adjusted tax basis in the notes surrendered upon conversion. A
holders holding period for the common shares acquired upon
conversion (other than shares attributable to accrued interest)
will include the period for which the holder held the notes that
are surrendered upon conversion.
The tax treatment of a conversion of a note into cash and common
shares is uncertain and U.S. holders should consult their
tax advisors regarding the consequences of such a conversion. If
we satisfy the conversion obligation in part cash and part
common shares, we intend to take the position that the notes are
securities for U.S. federal income tax purposes and that,
as a result, the exchange would be treated as a recapitalization
(although we cannot guarantee that the IRS will not challenge
this conclusion). In such case, the holder will recognize as
taxable income any gain realized in the conversion to the extent
of the cash received (excluding cash received in lieu of a
fractional common share), but no loss will be recognized on such
conversion. The holders adjusted tax basis in the common
shares permitted to be received tax-free will equal the
holders tax basis in the corresponding note (reduced by
any tax basis allocable to a fractional common share), less the
amount of cash received (excluding cash received in lieu of a
fractional common share), plus the amount of taxable gain
recognized on the conversion. The holders holding period
for the common shares received will include the holding period
for the corresponding note that is surrendered upon conversion.
Cash received in lieu of a fractional common share upon
conversion of the notes will generally be treated as a payment
in exchange for the fractional share. Accordingly, the receipt
of cash in lieu of a fractional common share generally will
result in capital gain or loss measured by the difference
between the cash received for the fractional share and the
holders adjusted tax basis allocable to the fractional
share.
If the conversion of a note into cash and common shares were not
treated as a recapitalization, the cash payment received
generally would be treated as proceeds from the sale of a
portion of the note and taxed in the manner described above in
Disposition (or, in the case of cash received in
lieu of a fractional share, taxed as a disposition of a
fractional share), and the common shares received would be
S-60
Certain federal
income tax considerations
treated as having been received upon a conversion of the note,
which generally would not be taxable to a U.S. holder. In
such case, the U.S. holders tax basis in the note
would generally be allocated pro rata among the common shares
received, the fractional share that is treated as sold for cash
and the portion of the note that is treated as sold for cash.
The holding period for the common shares received in the
conversion would include the holding period for the notes
surrendered upon conversion.
The value of any common shares received attributable to accrued
and unpaid interest on a converted note not previously included
in the holders income will be taxed as ordinary income of
the holder. The holders tax basis in any common shares
attributable to accrued and unpaid interest will equal the fair
market value of such shares when received. The holders
holding period in any common shares attributable to accrued and
unpaid interest generally will begin on the day after the date
of conversion.
The tax treatment of any interest forfeited based on the
conversion of a note into cash and common shares after the
record date but prior to the next interest payment date is not
clear. There is authority for excluding such forfeited interest
from the taxable income of a U.S. holder. However,
U.S. holders should consult their tax advisors regarding
the tax treatment of such forfeited interest.
In the event that a U.S. holder receives solely cash upon
conversion of the holders note, the holder will recognize
gain or loss equal to the difference between the proceeds
received by such holder and the holders adjusted tax basis
in the note. See Disposition above.
The receipt of reference property upon conversion of a note may
be taxable, and we encourage you to consult your tax advisor as
to the consequences of the receipt of any reference property
upon conversion.
Any common shares received upon conversion of a note would be
subject to the rules described in the accompanying prospectus
regarding taxation and backup withholding of U.S. federal
income tax on distributions on, or sales or other dispositions
of, our common shares. See Federal Income Tax
ConsiderationsFederal Income Taxation of Holders of Our
Stock in our Annual Report on
Form 10-K
for the year ended December 31, 2009.
The conversion rate of the notes is subject to adjustment under
certain circumstances. See Description of
notesConversion RightsAdjustments to the conversion
rate. Certain adjustments to (or the failure to make such
adjustments to) the conversion rate of the notes that increase a
U.S. note holders proportionate interest in our
assets or earnings and profits may result in a taxable
constructive distribution to the holder, whether or not the
holder ever converts the notes. This would occur, for example,
for an adjustment to the conversion rate to compensate holders
of notes for distributions of cash or property to our
stockholders. Any such constructive distribution will be treated
as a dividend for tax purposes, resulting in ordinary income, to
the extent of our current or accumulated earnings and profits.
As a result, U.S. holders of notes could have taxable
income as a result of an event pursuant to which they receive no
cash or property. Generally, a U.S. holders tax basis
in a note will be increased to the extent any such constructive
distribution is treated as a dividend. Moreover, if there is an
adjustment (or a failure to make an adjustment) to the
conversion rate of the notes that increases the proportionate
interest of the holders of outstanding common shares in our
assets or earnings and profits, then such increase in the
proportionate interest of the holders of the common shares
generally will be treated as a constructive distribution to such
holders of common shares, taxable as described above. It is not
clear whether a constructive dividend deemed paid to a
U.S. holder would be eligible for the preferential rates of
federal income tax applicable in respect of certain dividends
received. It is also unclear whether corporate holders would be
entitled to claim the dividends received deduction with respect
to any such constructive dividends. The receipt of property by a
U.S. holder in lieu of a conversion rate adjustment may be
taxable, and we encourage you to consult your tax advisor as to
the consequences of the receipt of any such property.
S-61
Certain federal
income tax considerations
NON-U.S.
HOLDERS
The rules governing the U.S. federal income taxation of
non-U.S. holders
are complex, and no attempt will be made herein to provide more
than a summary of certain of such rules. Prospective
non-U.S. holders
should consult with their own tax advisors to determine the
impact of federal, state, local, and
non-U.S. laws
with regard to the notes.
A
non-U.S. holder
generally will not be subject to U.S. federal income or
withholding tax on payments of interest on a note under the
portfolio interest exception of the Internal Revenue
Code, provided that: the
non-U.S. holder
is not a direct, indirect or constructive owner of 10% or more
of the total voting power of all our voting stock, a controlled
foreign corporation related (directly or indirectly) to us
through stock ownership, or a bank whose receipt of interest on
a note is pursuant to a loan agreement entered into in the
ordinary course of business; such interest payments are not
effectively connected with the conduct by the
non-U.S. holder
of a trade or business within the United States; and we or our
paying agent receives certain information from the
non-U.S. holder
(or a financial institution that holds the notes in the ordinary
course of its trade or business), including certification that
such holder is a
non-U.S. holder.
A
non-U.S. holder
that is not exempt from tax under these rules generally will be
subject to U.S. federal income tax withholding at a rate of
30% unless: the income is effectively connected with the conduct
of a U.S. trade or business; or an applicable income tax
treaty provides for a lower rate of, or exemption from,
withholding tax.
Except to the extent provided by an applicable tax treaty,
interest on a note that is effectively connected with the
conduct by a
non-U.S. holder
of a trade or business in the U.S. generally will be
subject to U.S. federal income tax on a net basis at the
rates applicable to U.S. persons generally and general
U.S. federal income tax return filing requirements will
apply (and, if such interest is realized by corporate holders,
the holders may also be subject to a 30% branch profits tax,
which is generally imposed on a foreign corporation on the
actual or deemed repatriation from the United States of earnings
and profits attributable to a United States trade or business).
If interest is subject to U.S. federal income tax on a net
basis in accordance with the rules described in the preceding
sentence, payments of such interest or of the disposition
proceeds will not be subject to U.S. withholding tax so
long as the
non-U.S. holder
timely provides us or the paying agent with a properly executed
IRS
Form W-8ECI.
To claim the benefit of an income tax treaty, the
non-U.S. holder
must timely provide the appropriate, properly executed IRS forms.
A
non-U.S. holder
generally will not be subject to U.S. federal income or
withholding tax to the extent the note is converted into our
common shares.
To the extent a
non-U.S. holder
recognizes any gain as a result of the receipt of cash in the
conversion (including the receipt of cash in lieu of a
fractional common share upon conversion), such gain would be
subject to the rules described below with respect to the sale or
exchange of a note.
Any common shares received upon a conversion of a note would be
subject to the rules described in the accompanying prospectus
regarding taxation and withholding of U.S. federal income
tax on distributions on, or sales or other dispositions of, our
common shares held by a
non-U.S. holder.
See Federal Income Tax ConsiderationsFederal Income
Taxation of Holders of Our StockTaxation of Foreign
Stockholders in our Annual Report on
Form 10-K
for the year ended December 31, 2009.
The conversion rate of the notes is subject to adjustment in
certain circumstances. Any such adjustment (or failure to make
such adjustment) could, in certain circumstances, give rise to a
deemed distribution to
non-U.S. holders
of the notes. See Description of notesConversion
RightsAdjustments to the conversion rate above. In
such case, the deemed distribution would be subject to the rules
described in the accompanying prospectus regarding taxation and
withholding of U.S. federal income tax on dividends in
respect of common shares. See Federal Income Tax
ConsiderationsFederal Income
S-62
Certain federal
income tax considerations
Taxation of Holders of Our StockTaxation of Foreign
Stockholders in our Annual Report on
Form 10-K
for the year ended December 31, 2009. Any resulting
withholding tax attributable to deemed dividends would be
collected from interest payments made on the notes.
Generally, but subject to the rules described below under
Information Reporting and Backup Withholding, a
non-U.S. holder
will not be subject to U.S. federal income or withholding
tax on gains from the sale or other taxable disposition of a
note unless: such gains are effectively connected with the
conduct by the
non-U.S. holder
of a trade or business within the U.S. and, if the
non-U.S. holder
is entitled to the benefits under an applicable tax treaty,
attributable to a permanent establishment or a fixed base in the
U.S.; such
non-U.S. holder
is an individual who is present in the U.S. for
183 days or more in the taxable year of disposition and
meets certain other requirements; or the notes constitute a
U.S. real property interest within the meaning of the
Foreign Investment in Real Property Tax Act, which is referred
to as FIRPTA.
Except to the extent provided by an applicable tax treaty, a
non-U.S. holder
generally will be subject to U.S. federal income tax with
respect to gain from the sale or disposition of a note that is
effectively connected with the conduct by the
non-U.S. holder
of a trade or business in the United States (and
non-U.S. holders
that are corporations may also be subject to a 30% branch
profits tax, which is generally imposed on a foreign corporation
on the actual or deemed repatriation from the United States of
earnings and profits attributable to a United States trade or
business). If gains from the sale or disposition of a note,
other than those effectively connected with the conduct of a
trade or business in the United States by a
non-U.S. holder,
are realized by a
non-U.S. holder
who is a non-resident alien individual present in the United
States for 183 days or more in the taxable year, then such
individual generally will be subject to U.S. federal income
tax at a rate of 30% (or at a reduced rate under an applicable
income tax treaty) on the amount by which capital gains from
U.S. sources (including gains from the sale or other
disposition of the notes) exceed capital losses allocable to
U.S. sources for such taxable year. To claim the benefit of
an income tax treaty, the
non-U.S. holder
must timely provide the appropriate, properly executed IRS
forms. If the notes were to constitute a U.S. real property
interest under FIRPTA, a sale or exchange of a note would
generally be subject to the rules described in the accompanying
prospectus regarding taxation and withholding of
U.S. federal income tax on sales of common shares under
FIRPTA. The notes will not constitute a U.S. real property
interest for purposes of FIRPTA if we are a
domestically-controlled REIT. We believe that currently we are,
and expect to continue to be, a domestically-controlled REIT
and, therefore, that a sale of the notes would not be subject to
taxation under FIRPTA. See Federal Income Tax
ConsiderationsFederal Income Taxation of Holders of Our
StockTaxation of Foreign Stockholders in our Annual
Report on
Form 10-K
for the year ended December 31, 2009.
INFORMATION
REPORTING AND BACKUP WITHHOLDING
In general, information reporting will apply to a
U.S. holder (other than an exempt recipient,
including a corporation and certain other persons who, when
required, demonstrate their exempt status) with respect to: any
payments made of principal of and interest on the notes,
dividends, and payment of the proceeds of a sale or other
disposition of the notes before maturity.
In addition, backup withholding at the applicable
statutory rate may apply to such amounts if a non-corporate
U.S. holder fails to provide a correct taxpayer
identification number or otherwise comply with applicable
requirements of the backup withholding rules. As described in
Description of notesConversion
RightsAdjustments to the conversion rate above,
certain adjustments to (or failures to make an adjustment to)
the conversion rate of the notes may result in a deemed dividend
to the holder of a note. Any backup withholding obligation
attributable to such deemed dividends would be collected from
interest payments made on the notes.
S-63
Certain federal
income tax considerations
Payments to a
non-U.S. holder
of interest on a note generally will be reported to the IRS and
to the
non-U.S. holder.
Copies of applicable IRS information returns may be made
available, under the provisions of a specific tax treaty or
agreement, to the tax authorities of the country in which the
non-U.S. holder
resides.
As a general matter, backup withholding and information
reporting will not apply to a payment of the proceeds of a sale
of a note effected at a foreign office of a foreign broker.
Information reporting (but not backup withholding) will apply,
however, to a payment of the proceeds of a sale of a note by a
foreign office of a broker that: is a U.S. person; derives
50% or more of its gross income for a specified three-year
period from the conduct of a trade or business in the U.S.; is a
controlled foreign corporation (a foreign
corporation controlled by certain U.S. stockholders) for
U.S. tax purposes; or is a foreign partnership, if at any
time during its tax year more than 50% of its income or capital
interest are held by U.S. persons or if it is engaged in
the conduct of a trade or business in the U.S., unless the
broker has documentary evidence in its records that the holder
or beneficial owner is a
non-U.S. holder
and certain other conditions are met, or the holder otherwise
establishes an exemption.
Payment of the proceeds of a sale of a note effected at a
U.S. office of a broker is subject to both backup
withholding and information reporting unless the holder
certifies under penalty of perjury that the holder is a
non-U.S. holder,
or otherwise establishes an exemption; provided that, in either
case, neither we nor any withholding agent knows or has reason
to know that the holder is a United States person or that the
conditions of any other exemptions are in fact not satisfied.
Upon surrender of a note for conversion, we may deduct and
withhold from the consideration otherwise deliverable to such
holder any amount required to be deducted and withheld under the
backup withholding rules. Any backup withholding is not an
additional tax and may be refunded or credited against the
holders U.S. federal income tax liability, provided
that the required information is provided to the IRS on a timely
basis.
RECENT
LEGISLATION
Recent legislation (the Hiring Incentives to Restore Employment
(HIRE) Act) generally will impose U.S. withholding tax at a
30% rate on payments of interest (including original issue
discount) and proceeds of sale in respect of debt instruments to
certain
non-U.S. holders
if certain additional disclosure requirements related to
U.S. ownership of such
non-U.S. holders
or U.S. accounts maintained by such
non-U.S. holders
are not satisfied. However, the withholding tax will not be
imposed on payments pursuant to debt or other obligations
outstanding as of March 18, 2012. Once effective, the
legislation will impose U.S. withholding tax at a 30% rate
on distributions and proceeds of sale in respect of any common
shares received by certain
non-U.S. holders
upon conversion of a note if such additional disclosure
requirements are not satisfied. If payment of withholding taxes
is required,
non-U.S. holders
that are otherwise eligible for an exemption from, or reduction
of, U.S. withholding taxes with respect to such
distributions and proceeds of a sale of such shares will be
entitled to seek a refund from the IRS to obtain the benefit of
such exemption or reduction. We will not pay any additional
amounts to
non-U.S. holders
in respect of any amounts withheld. These new withholding rules
are generally effective for payments made after
December 31, 2012.
TAXATION OF THE
COMPANY AS A REIT
We have elected to be treated as a REIT under Sections 856
through 860 of the Code for federal income tax purposes
commencing with our taxable year ended December 31, 1970.
We believe that we have been organized and have operated in a
manner that qualifies for taxation as a REIT under the Code. We
also believe that we will continue to operate in a manner that
will preserve our status as a REIT. We cannot however, assure
you that such requirements will be met in the future.
S-64
Certain federal
income tax considerations
We have received an opinion from Arnold & Porter LLP,
our legal counsel, to the effect that we qualified as a REIT
under the Code commencing with our taxable year ended
December 31, 2003, we have been organized and have operated
in conformity with the requirements for qualification and
taxation as a REIT under the Code and that our proposed manner
of operation will enable us to continue to satisfy the
requirements for qualification as a REIT under the Code for the
calendar year 2010, and thereafter, based upon the
representations made by us in a factual representation letter.
However, you should be aware that opinions of counsel are not
binding on the IRS or on the courts, and, if the IRS were to
challenge these conclusions, no assurance can be given that
these conclusions would be sustained in court. The opinion of
Arnold & Porter LLP is based on various assumptions as
well as on certain representations made by us as to factual
matters. The rules governing REITs are highly technical and
require ongoing compliance with a variety of tests that depend,
among other things, on future operating results, asset
diversification, distribution levels and diversity of share
ownership.
Arnold & Porter LLP will not monitor our compliance
with these requirements. While we expect to satisfy these tests,
and will use our best efforts to do so, no assurance can be
given that we will qualify as a REIT for any particular year, or
that the applicable law will not change and adversely affect us
and our stockholders.
For a more detailed discussion of the federal income taxation of
holders of our notes and the federal income taxation of REITs,
which includes a variety of complex requirements relating to
share ownership, income, assets and distributions, please see
our Annual Report on
Form 10-K
for the year ended December 31, 2009 under the heading
Federal Income Tax Considerations.
THE PRECEDING DISCUSSION OF CERTAIN FEDERAL INCOME TAX
CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX
ADVICE AND THE COMPANY MAKES NO REPRESENTATION AS TO THE TAX
CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF THE
NOTES AND COMMON STOCK RECEIVED UPON CONVERSION OF THE
NOTES. THE PROPER TAX TREATMENT OF A HOLDER OF NOTES IS
UNCERTAIN IN VARIOUS RESPECTS. ACCORDINGLY, EACH PROSPECTIVE
PURCHASER SHOULD CONSULT ITS OWN TAX ADVISOR AS TO PARTICULAR
TAX CONSEQUENCES TO IT OF PURCHASING, HOLDING AND DISPOSING OF
THE NOTES AND SHARES OF OUR COMMON STOCK ACQUIRED UPON
CONVERSION OF THE NOTES, INCLUDING THE APPLICABILITY AND EFFECT
OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY PROPOSED
CHANGES IN APPLICABLE LAWS.
S-65
Underwriting
UBS Securities LLC and J.P. Morgan Securities Inc. are
acting as joint book-running managers of the offering. Subject
to the terms and conditions of the underwriting agreement, UBS
Securities LLC and J.P. Morgan Securities Inc. have
severally agreed to purchase from us the following respective
principal amounts of notes listed opposite their names below at
the price set forth on the cover page of this prospectus
supplement:
|
|
|
|
|
|
|
Principal
|
|
|
|
amount
|
|
Underwriter
|
|
of
notes
|
|
|
|
|
UBS Securities LLC
|
|
$
|
114,007,000
|
|
J.P. Morgan Securities Inc.
|
|
|
38,002,000
|
|
|
|
|
|
|
Total
|
|
$
|
152,009,000
|
|
|
|
|
|
|
The underwriting agreement provides that the obligations of the
several underwriters to purchase the notes offered hereby are
subject to certain conditions precedent and that the
underwriters will purchase all of the notes offered by this
prospectus supplement if any of these notes are purchased.
The underwriters propose to offer the notes for sale in
negotiated transactions at a price to be determined at the time
of sale. In connection with the sale of the notes, the
underwriters may be deemed to have received compensation from us
in the form of underwriting discounts. Sales of notes made
outside the United States may be made by affiliates of the
underwriters.
If all the notes are not sold at the public offering price, the
underwriters may change the offering price and the other selling
terms.
We estimate that our share of the total expenses of this
offering will be approximately $500,000. The underwriters have
agreed to reimburse us for certain of our expenses in connection
with the offering of the notes.
We have agreed to indemnify the underwriters against some
specified types of liabilities, including liabilities under the
Securities Act, and to contribute to payments the underwriters
may be required to make in respect of any of these liabilities.
The notes will be a further issuance of, will be fungible with
and will form a single series with our outstanding 3.00%
convertible senior notes due December 1, 2029, initially
issued on March 15, 2010 in the principal amount of
$342,394,000. The notes will have the same CUSIP number and will
trade interchangeably with the previously issued notes in this
series immediately upon settlement.
We and each of our executive officers have agreed not to offer,
sell or otherwise dispose of any notes, shares of our common
stock, securities of ours that are substantially similar to the
notes or our common stock, or any securities that the executive
officers have, or will have, the right to acquire through the
exercise of options, warrants, subscription or other rights for
a period of 30 days after the date of this prospectus
supplement without the prior written consent of UBS Securities
LLC, subject to limited exceptions. This consent may be given at
any time without public notice.
Our common stock is traded on the New York Stock Exchange under
the symbol HCN.
The notes that we previously issued currently trade in the
over-the-counter market. We cannot assure you that the notes
will continue to trade after this offering. We do not intend to
apply for listing of the notes on a national securities exchange
or on any automated dealer quotation system. We have been
advised by the underwriters that they intend to make a market in
the notes, but the underwriters are not obligated to do so and
may discontinue market-making at any time without notice. We can
provide no assurances as to the development or liquidity of any
trading market for the notes. If an active public
S-66
Underwriting
trading market for the notes does not develop, the market price
and liquidity of the notes may be adversely affected.
In connection with the offering, the underwriters may engage in
activities that stabilize, maintain or otherwise affect the
price of the notes and our common stock. These transactions may
include short sales, purchases to cover positions created by
short sales and stabilizing transactions. Short sales involve
the sale by the underwriters of a greater principal amount of
notes than they are required to purchase in the offering.
Stabilizing transactions consist of various bids for or
purchases of the notes made by the underwriters in the open
market prior to the completion of the offering.
The underwriters may impose a penalty bid. This occurs when a
particular underwriter repays to the other underwriters a
portion of the underwriting discount received by it because the
underwriters have repurchased notes sold by or for the account
of that underwriter in stabilizing or short covering
transactions.
Purchases to cover a short position and stabilizing transactions
may have the effect of preventing or slowing a decline in the
market price of the notes. Additionally, these purchases, along
with the imposition of a penalty bid, may stabilize, maintain or
otherwise affect the market price of the notes. As a result, the
price of the notes may be higher than the price that might
otherwise exist in the open market. These transactions may be
effected on the over-the-counter market or otherwise and may be
discontinued at any time.
A prospectus supplement in electronic format may be made
available on Internet websites maintained by one or more of the
underwriters of this offering. Other than the prospectus
supplement in electronic format, the information on any
underwriters website and any information contained in any
other website maintained by an underwriter is not part of the
prospectus supplement or the registration statement of which the
prospectus supplement forms a part.
Certain of the underwriters have, from time to time, provided
investment banking and other financial advisory services to us,
for which they have received customary fees. Affiliates of UBS
Securities LLC and J.P. Morgan Securities Inc. are lenders
under our Fourth Amended and Restated Loan Agreement dated
August 6, 2007. Also, UBS Securities LLC and
J.P. Morgan Securities Inc. are documentation agents under
such agreement. In addition, we and UBS Securities LLC have
entered into an Equity Distribution Agreement, dated as of
November 6, 2008, as amended on May 8, 2009, relating
to the offer and sale from time to time of up to $250,000,000
aggregate amount of our common stock.
In addition, certain of the underwriters hold our 4.75%
convertible senior notes due 2026 and 2027. We may use a portion
of the proceeds from this offering to repurchase all or a
portion of their holdings of these notes.
S-67
Notice to investors
Notice to
Prospective Investors in the European Economic Area
In relation to each Member State of the European Economic Area,
or EEA, which has implemented the Prospectus Directive (each, a
Relevant Member State), with effect from, and
including, the date on which the Prospectus Directive is
implemented in that Relevant Member State (the Relevant
Implementation Date), an offer to the public of our
securities which are the subject of the offering contemplated by
this prospectus supplement and the accompanying prospectus may
not be made in that Relevant Member State, except that, with
effect from, and including, the Relevant Implementation Date, an
offer to the public in that Relevant Member State of our
securities may be made at any time under the following
exemptions under the Prospectus Directive, if they have been
implemented in that Relevant Member State:
(a) to legal entities which are authorized or
regulated to operate in the financial markets, or, if not so
authorized or regulated, whose corporate purpose is solely to
invest in our securities;
(b) to any legal entity which has two or more of:
(1) an average of at least 250 employees during the
last financial year; (2) a total balance sheet of more than
43,000,000 and (3) an annual net turnover of more
than 50,000,000, as shown in its last annual or
consolidated accounts; or
(c) to fewer than 100 natural or legal persons (other
than qualified investors as defined in the Prospectus Directive)
subject to obtaining the prior consent of the representative for
any such offer; or
(d) in any other circumstances falling within
Article 3(2) of the Prospectus Directive provided that no
such offer of our securities shall result in a requirement for
the publication by us or any underwriter or agent of a
prospectus pursuant to Article 3 of the Prospectus
Directive.
As used above, the expression offered to the public
in relation to any of our securities in any Relevant Member
State means the communication in any form and by any means of
sufficient information on the terms of the offer and our
securities to be offered so as to enable an investor to decide
to purchase or subscribe for our securities, as the same may be
varied in that Relevant Member State by any measure implementing
the Prospectus Directive in that Relevant Member State and the
expression Prospectus Directive means Directive
2003/71/EC and includes any relevant implementing measure in
each Relevant Member State.
The EEA selling restriction is in addition to any other selling
restrictions set out in this prospectus supplement and the
accompanying prospectus.
Notice to
Prospective Investors in the United Kingdom
This prospectus supplement and the accompanying prospectus is
only being distributed to and is only directed at:
(1) persons who are outside the United Kingdom;
(2) investment professionals falling within
Article 19(5) of the Financial Services and Markets Act
2000 (Financial Promotion) Order 2005 (the Order);
or (3) high net worth companies, and other persons to whom
it may lawfully be communicated, falling within
Article 49(2)(a) to (d) of the Order (all such persons
falling within (1)-(3) together being referred to as
relevant persons). The securities are only available
to, and any invitation, offer or agreement to subscribe,
purchase or otherwise acquire such securities will be engaged in
only with, relevant persons. Any person who is not a relevant
person should not act or rely on this prospectus supplement and
the accompanying prospectus or any of its contents.
Notice to
Prospective Investors in Switzerland
The prospectus supplement and the accompanying prospectus does
not constitute an issue prospectus pursuant to Article 652a
or Article 1156 of the Swiss Code of Obligations
(CO) and the securities
S-68
Notice to
investors
will not be listed on the SIX Swiss Exchange. Therefore, this
prospectus supplement and the accompanying prospectus may not
comply with the disclosure standards of the CO
and/or the
listing rules (including any prospectus schemes) of the SIX
Swiss Exchange. Accordingly, the securities may not be offered
to the public in or from Switzerland, but only to a selected and
limited circle of investors, which do not subscribe to the
securities with a view to distribution.
Notice to
Prospective Investors in Australia
This prospectus supplement and the accompanying prospectus is
not a formal disclosure document and has not been, nor will be,
lodged with the Australian Securities and Investments
Commission. It does not purport to contain all information that
an investor or its professional advisers would expect to find in
a prospectus or other disclosure document (as defined in the
Corporations Act 2001 (Australia)) for the purposes of
Part 6D.2 of the Corporations Act 2001 (Australia) or in a
product disclosure statement for the purposes of Part 7.9
of the Corporations Act 2001 (Australia), in either case, in
relation to the securities.
The securities are not being offered in Australia to
retail clients as defined in sections 761G and
761GA of the Corporations Act 2001 (Australia). This offering is
being made in Australia solely to wholesale clients
for the purposes of section 761G of the Corporations Act
2001 (Australia) and, as such, no prospectus, product disclosure
statement or other disclosure document in relation to the
securities has been, or will be, prepared.
This prospectus supplement and the accompanying prospectus does
not constitute an offer in Australia other than to wholesale
clients. By submitting an application for our securities, you
represent and warrant to us that you are a wholesale client for
the purposes of section 761G of the Corporations Act 2001
(Australia). If any recipient of this prospectus supplement and
the accompanying prospectus is not a wholesale client, no offer
of, or invitation to apply for, our securities shall be deemed
to be made to such recipient and no applications for our
securities will be accepted from such recipient. Any offer to a
recipient in Australia, and any agreement arising from
acceptance of such offer, is personal and may only be accepted
by the recipient. In addition, by applying for our securities
you undertake to us that, for a period of 12 months from
the date of issue of the securities, you will not transfer any
interest in the securities to any person in Australia other than
to a wholesale client.
Notice to
Prospective Investors in Hong Kong
Our securities may not be offered or sold in Hong Kong, by means
of this prospectus supplement and the accompanying prospectus or
any document other than (i) to professional
investors within the meaning of the Securities and Futures
Ordinance (Cap.571, Laws of Hong Kong) and any rules made
thereunder, or (ii) in circumstances which do not
constitute an offer to the public within the meaning of the
Companies Ordinance (Cap.32, Laws of Hong Kong), or
(iii) in other circumstances which do not result in the
document being a prospectus within the meaning of
the Companies Ordinance (Cap.32, Laws of Hong Kong). No
advertisement, invitation or document relating to our securities
may be issued or may be in the possession of any person for the
purpose of issue (in each case whether in Hong Kong or
elsewhere) which is directed at, or the contents of which are
likely to be accessed or read by, the public in Hong Kong
(except if permitted to do so under the securities laws of Hong
Kong) other than with respect to the securities which are or are
intended to be disposed of only to persons outside Hong Kong or
only to professional investors within the meaning of
the Securities and Futures Ordinance (Cap. 571, Laws of Hong
Kong) and any rules made thereunder.
Notice to
Prospective Investors in Japan
Our securities have not been and will not be registered under
the Financial Instruments and Exchange Law of Japan (the
Financial Instruments and Exchange Law) and our
securities will not be offered or sold, directly or indirectly,
in Japan, or to, or for the benefit of, any resident of Japan
(which term as
S-69
Notice to
investors
used herein means any person resident in Japan, including any
corporation or other entity organized under the laws of Japan),
or to others for re-offering or resale, directly or indirectly,
in Japan, or to a resident of Japan, except pursuant to an
exemption from the registration requirements of, and otherwise
in compliance with, the Financial Instruments and Exchange Law
and any other applicable laws, regulations and ministerial
guidelines of Japan.
Notice to
Prospective Investors in Singapore
This prospectus supplement and the accompanying prospectus has
not been registered as a prospectus with the Monetary Authority
of Singapore and in Singapore, the offer and sale of our
securities is made pursuant to exemptions provided in
sections 274 and 275 of the Securities and Futures Act,
Chapter 289 of Singapore (SFA). Accordingly,
this prospectus supplement and the accompanying prospectus and
any other document or material in connection with the offer or
sale, or invitation for subscription or purchase, of our
securities may not be circulated or distributed, nor may our
securities be offered or sold, or be made the subject of an
invitation for subscription or purchase, whether directly or
indirectly, to persons in Singapore other than (i) to an
institutional investor as defined in Section 4A of the SFA
pursuant to Section 274 of the SFA, (ii) to a relevant
person as defined in section 275(2) of the SFA pursuant to
Section 275(1) of the SFA, or any person pursuant to
Section 275(1A) of the SFA, and in accordance with the
conditions specified in Section 275 of the SFA or
(iii) otherwise pursuant to, and in accordance with the
conditions of, any other applicable provision of the SFA, in
each case subject to compliance with the conditions (if any) set
forth in the SFA. Moreover, this prospectus supplement and the
accompanying prospectus is not a prospectus as defined in the
SFA. Accordingly, statutory liability under the SFA in relation
to the content of prospectuses would not apply. Prospective
investors in Singapore should consider carefully whether an
investment in our securities is suitable for them.
Where our securities are subscribed or purchased under
Section 275 of the SFA by a relevant person which is:
(a) by a corporation (which is not an accredited
investor as defined in Section 4A of the SFA) the sole
business of which is to hold investments and the entire share
capital of which is owned by one or more individuals, each of
whom is an accredited investor; or
(b) for a trust (where the trustee is not an
accredited investor) whose sole purpose is to hold investments
and each beneficiary of the trust is an individual who is an
accredited investor,
shares of that corporation or the beneficiaries rights and
interest (howsoever described) in that trust shall not be
transferable for six months after that corporation or that trust
has acquired the shares under Section 275 of the SFA,
except:
(1) to an institutional investor (for corporations
under Section 274 of the SFA) or to a relevant person
defined in Section 275(2) of the SFA, or any person
pursuant to an offer that is made on terms that such shares of
that corporation or such rights and interest in that trust are
acquired at a consideration of not less than S$200,000 (or its
equivalent in a foreign currency) for each transaction, whether
such amount is to be paid for in cash or by exchange of
securities or other assets, and further for corporations, in
accordance with the conditions specified in Section 275 of
the SFA;
(2) where no consideration is given for the
transfer; or
(3) where the transfer is by operation of law.
In addition, investors in Singapore should note that the
securities acquired by them are subject to resale and transfer
restrictions specified under Section 276 of the SFA, and
they, therefore, should seek their own legal advice before
effecting any resale or transfer of their securities.
S-70
Legal matters
The validity of the issuance of the notes offered hereby will be
passed upon for us by Shumaker, Loop & Kendrick, LLP,
Toledo, Ohio. Arnold & Porter LLP will pass upon
certain federal income tax matters relating to us.
Dewey & LeBoeuf LLP, New York, New York is counsel for
the underwriters in connection with this offering.
Experts
Ernst & Young LLP, independent registered public
accounting firm, has audited our consolidated financial
statements and schedules included in our Current Report on
Form 8-K
dated May 10, 2010, and the effectiveness of our internal
control over financial reporting as of December 31, 2009,
included in our Annual Report on
Form 10-K
for the year ended December 31, 2009, as set forth in their
reports, which are incorporated by reference in this prospectus
supplement and the accompanying prospectus. Our financial
statements and schedules are incorporated by reference in
reliance upon Ernst & Young LLPs reports, given
on their authority as experts in accounting and auditing.
S-71
Where you can find
more information
The prospectus supplement and the accompanying prospectus are
part of a registration statement that we filed with the SEC
covering the securities that may be offered under this
prospectus supplement. The registration statement, including the
attached exhibits and schedules, contain additional relevant
information about the securities.
Additionally, we file annual, quarterly and current reports,
proxy statements and other information with the SEC, all of
which are made available, free of charge, on our Internet
website at
http://
www.hcreit.com as soon as reasonably practicable after they are
filed with, or furnished to, the SEC. The information on or
connected to our Internet website is not, and shall not be
deemed to be, a part of, or incorporated into this prospectus
supplement. You can review these SEC filings and the
registration statement by accessing the SECs Internet
website at
http://www.sec.gov.
You also may read and copy the registration statement and any
reports, statements or other information on file at the
SECs public reference room at 100 F Street,
N.E., Washington, DC 20549. You can request copies of those
documents upon payment of a duplicating fee to the SEC. Please
call the SEC at
1-800-SEC-0330
for further information on the operation of the public reference
room. These filings with the SEC are also available through the
New York Stock Exchange, 20 Broad Street, New York, New
York 10005.
INCORPORATION OF
INFORMATION FILED WITH THE SEC
General
The SEC allows us to incorporate by reference the
information we file with the SEC, which means:
|
|
Ø
|
we consider incorporated documents to be part of this prospectus
supplement;
|
|
Ø
|
we may disclose important information to you by referring you to
those documents; and
|
|
Ø
|
information we subsequently file with the SEC will automatically
update and supersede the information in this prospectus
supplement.
|
DOCUMENTS
INCORPORATED BY REFERENCE
This prospectus supplement incorporates by reference the
following documents we filed with the SEC:
|
|
Ø
|
Annual Report on
Form 10-K
for the year ended December 31, 2009;
|
|
Ø
|
Quarterly Report on Form 10-Q for the quarter ended
March 31, 2010;
|
|
Ø
|
Current Report on Form 8-K filed on March 15, 2010,
April 5, 2010, April 7, 2010, May 10, 2010 and
June 8, 2010;
|
|
Ø
|
The description of our common stock as set forth in our
registration statement filed under the Exchange Act on
Form 8-A
on June 17, 1985, including any amendment or report for the
purpose of updating such description;
|
|
Ø
|
The description of the rights to purchase our Series A
Junior Participating Preferred Stock, par value $1.00 per share,
associated with our common stock, as set forth in our
registration statement filed under the Exchange Act on
Form 8-A
on August 3, 1994, including any amendment or report for
the purpose of updating such description;
|
|
Ø
|
The description of our
77/8%
Series D Cumulative Redeemable Preferred Stock as set forth
in the registration statement filed under the Exchange Act on
Form 8-A/A
on July 8, 2003, including any amendment or report for the
purpose of updating such description;
|
|
Ø
|
The description of our
75/8%
Series F Cumulative Redeemable Preferred Stock as set forth
in the registration statement filed under the Exchange Act on
Form 8-A
on September 10, 2004, including any amendment or report
for the purpose of updating such description;
|
S-72
Where you can
find more information
|
|
Ø
|
The description of our 7.5% Series G Cumulative Convertible
Preferred Stock as set forth in the registration statement filed
under the Exchange Act on
Form 8-A
on December 18, 2006, including any amendment or report for
the purpose of updating such description; and
|
|
Ø
|
All subsequent documents filed by us under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act of 1934 after the date of
this prospectus supplement and before the date this offering is
terminated;
|
other than the portions of such documents that by statute or
rule, by designation in such document or otherwise, are not
deemed to be filed with the SEC or are not required to be
incorporated herein by reference.
This prospectus supplement summarizes material provisions of
contracts and other documents to which we refer. Since this
prospectus supplement may not contain all the information that
you may find important, you should review the full text of those
documents. Upon request, we will provide each person receiving
this prospectus supplement a free copy, without exhibits, of any
or all documents incorporated by reference into this prospectus
supplement. You may direct such requests to:
Erin C. Ibele
Senior Vice PresidentAdministration and Corporate
Secretary
Health Care REIT, Inc.
One SeaGate, Suite 1500
Toledo, Ohio 43604
(419) 247-2800
S-73
HEALTH CARE REIT,
INC.
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
DEPOSITARY SHARES
WARRANTS
UNITS
We may periodically offer and sell, in one or more offerings:
|
|
|
|
|
debt securities
|
|
|
|
shares of common stock
|
|
|
|
shares of preferred stock
|
|
|
|
depositary shares
|
|
|
|
warrants to purchase debt securities, preferred stock,
depositary shares or common stock
|
|
|
|
units consisting of one or more debt securities or other
securities
|
We may offer these securities from time to time on terms we will
determine at the time of offering. We will provide the specific
terms of the securities being offered in supplements to this
prospectus prepared in connection with each offering. You should
read this prospectus and the supplement for the specific
security being offered carefully before you invest.
We may offer these securities directly, through agents we
designate periodically, or to or through underwriters or
dealers. If designated agents or underwriters are involved in
the sale of any of the securities, we will disclose in the
prospectus supplement their names, any applicable purchase
price, fee, compensation arrangement between or among them, and
our net proceeds from such sale. See Plan of
Distribution. No securities may be sold without the
delivery of the applicable prospectus supplement describing the
securities and the method and terms of their offering.
Our shares of common stock are listed on the New York Stock
Exchange under the symbol HCN. Our executive offices
are located at One SeaGate, Suite 1500, Toledo, Ohio 43604,
telephone number:
419-247-2800,
facsimile:
419-247-2826,
and website: www.hcreit.com. Unless specifically noted
otherwise in this prospectus, all references to we,
us, our, or the Company
refer to Health Care REIT, Inc. and its subsidiaries.
Investing in our securities involves risk. See
Cautionary Statement Concerning Forward-Looking Statements
and Risk Factors beginning on page 1 of this
prospectus.
The information in this prospectus is not complete and may be
changed. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these
securities, or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is May 7, 2009.
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
|
5
|
|
|
|
|
5
|
|
|
|
|
6
|
|
|
|
|
7
|
|
|
|
|
8
|
|
|
|
|
8
|
|
|
|
|
8
|
|
|
|
|
9
|
|
|
|
|
10
|
|
|
|
|
11
|
|
|
|
|
11
|
|
|
|
|
11
|
|
|
|
|
11
|
|
|
|
|
12
|
|
|
|
|
12
|
|
|
|
|
13
|
|
|
|
|
13
|
|
|
|
|
14
|
|
|
|
|
14
|
|
|
|
|
15
|
|
|
|
|
15
|
|
|
|
|
15
|
|
|
|
|
16
|
|
|
|
|
16
|
|
|
|
|
16
|
|
|
|
|
16
|
|
|
|
|
17
|
|
|
|
|
17
|
|
|
|
|
17
|
|
|
|
|
17
|
|
|
|
|
17
|
|
|
|
|
18
|
|
|
|
|
18
|
|
|
|
|
18
|
|
|
|
|
19
|
|
|
|
|
20
|
|
|
|
|
20
|
|
|
|
|
21
|
|
|
|
|
21
|
|
|
|
|
21
|
|
|
|
|
22
|
|
|
|
|
24
|
|
|
|
|
24
|
|
i
ABOUT
THIS PROSPECTUS
This prospectus is part of a registration statement we filed
with the SEC 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
or more offerings. 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 Additional Information and Documents
Incorporated By Reference.
You should rely only on the information contained and
incorporated by reference in this prospectus. Neither we nor the
underwriters have authorized any other person to provide you
with different or inconsistent information from that contained
in this prospectus and the applicable prospectus supplement. If
anyone provides you with different or inconsistent information,
you should not rely on it. You should assume that the
information in this prospectus and the applicable prospectus
supplement, as well as information we previously filed with the
SEC and incorporated by reference, is accurate only as of the
date on the front cover of this prospectus and the applicable
prospectus supplement. Our business, financial condition,
results of operations and prospects may have changed since those
dates.
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
AND RISK FACTORS
This prospectus and the documents incorporated by reference in
this prospectus contain forward-looking statements
as that term is defined under federal securities laws. These
forward-looking statements include, but are not limited to,
those regarding:
|
|
|
|
|
the possible expansion of our portfolio;
|
|
|
|
the sale of properties;
|
|
|
|
the performance of our operators/tenants and properties;
|
|
|
|
our ability to enter into agreements with new viable tenants for
vacant space or for properties that we take back from
financially troubled tenants, if any;
|
|
|
|
our occupancy rates;
|
|
|
|
our ability to acquire, develop
and/or
manage properties;
|
|
|
|
our ability to make distributions to stockholders;
|
|
|
|
our policies and plans regarding investments, financings and
other matters;
|
|
|
|
our tax status as a real estate investment trust;
|
|
|
|
our critical accounting policies;
|
|
|
|
our ability to appropriately balance the use of debt and equity;
|
|
|
|
our ability to access capital markets or other sources of
funds; and
|
|
|
|
our ability to meet earnings guidance.
|
When we use words such as may, will,
intend, should, believe,
expect, anticipate, project,
estimate 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, but not limited
to:
|
|
|
|
|
the status of the economy;
|
|
|
|
the status of capital markets, including availability and cost
of capital;
|
1
|
|
|
|
|
issues facing the health care industry, including compliance
with, and changes to, regulations and payment policies,
responding to government investigations and punitive settlements
and operators/tenants difficulty in cost-effectively
obtaining and maintaining adequate liability and other insurance;
|
|
|
|
changes in financing terms;
|
|
|
|
competition within the health care and senior housing industries;
|
|
|
|
negative developments in the operating results or financial
condition of operators/tenants, including, but not limited to,
their ability to pay rent and repay loans;
|
|
|
|
our ability to transition or sell facilities with profitable
results;
|
|
|
|
the failure to make new investments as and when anticipated;
|
|
|
|
acts of God affecting our properties;
|
|
|
|
our ability to re-lease space at similar rates as vacancies
occur;
|
|
|
|
our ability to timely reinvest sale proceeds at similar rates to
assets sold;
|
|
|
|
operator/tenant bankruptcies or insolvencies;
|
|
|
|
government regulations affecting Medicare and Medicaid
reimbursement rates and operational requirements;
|
|
|
|
liability or contract claims by or against operators/tenants;
|
|
|
|
unanticipated difficulties
and/or
expenditures relating to future acquisitions;
|
|
|
|
environmental laws affecting our properties;
|
|
|
|
changes in rules or practices governing our financial
reporting; and
|
|
|
|
legal and operational matters, including real estate investment
trust qualification and key management personnel recruitment and
retention.
|
Our business is subject to certain risks, which are discussed in
our most recent Annual Report on
Form 10-K,
as amended or updated, under the headings Business,
Risk Factors and Managements Discussion
and Analysis of Financial Condition and Results of
Operations. Updated information relating to such risks, as
well as additional risks specific to the securities to be
offered hereby, will be set forth in the prospectus supplement
relating to such offered securities. 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.
WHERE YOU
CAN FIND ADDITIONAL INFORMATION
This prospectus is part of a registration statement that we have
filed with the SEC covering the securities that may be offered
under this prospectus. The registration statement, including the
attached exhibits and schedules, contains additional relevant
information about the securities.
Additionally, we file annual, quarterly and current reports,
proxy statements and other information with the SEC, all of
which are made available, free of charge, on our Internet
website at www.hcreit.com as soon as reasonably
practicable after they are filed with, or furnished to, the SEC.
You can review our SEC filings and the registration statement by
accessing the SECs Internet site at
http://www.sec.gov.
You also may read and copy the registration statement and any
reports, statements or other information on file at the
SECs public reference room at 100 F Street,
N.E., Washington, D.C. 20549. You can request copies of
those documents upon payment of a duplicating fee to the SEC.
Please call the SEC at
1-800-SEC-0330
for further information on the operation of the public reference
room. Our filings with the SEC are also available through the
New York Stock Exchange, 20 Broad Street, New York,
New York 10005.
This prospectus does not contain all the information set forth
in the registration statement. We have omitted certain parts
consistent with SEC rules. For further information, please see
the registration statement.
2
DOCUMENTS
INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference the
information we file with the SEC, which means:
|
|
|
|
|
we consider incorporated documents to be part of the prospectus;
|
|
|
|
we may disclose important information to you by referring you to
those documents; and
|
|
|
|
information we subsequently file with the SEC will automatically
update and supersede the information in this prospectus.
|
This prospectus incorporates by reference the following
documents we filed with the SEC; provided, however, that we are
not incorporating any documents or information deemed to have
been furnished and not filed in accordance with SEC rules:
|
|
|
|
|
Annual Report on
Form 10-K
for the year ended December 31, 2008;
|
|
|
|
Quarterly Report on
Form 10-Q
for the quarterly period ended March 31, 2009;
|
|
|
|
Current Reports on
Form 8-K
filed on January 5, 2009, January 29, 2009 (except
that the information furnished pursuant to Items 2.02 and
7.01 of
Form 8-K
and the exhibits relating to such information are not
incorporated into this prospectus), January 30, 2009
(except that the information furnished pursuant to
Item 7.01 of
Form 8-K
and the exhibit relating to such information are not
incorporated into this prospectus) and May 7, 2009;
|
|
|
|
The description of our common stock as set forth in our
registration statement filed under the Exchange Act on
Form 8-A
on June 17, 1985, including any amendment or report for the
purpose of updating such description;
|
|
|
|
The description of the rights to purchase our Series A
Junior Participating Preferred Stock, par value $1.00 per share,
associated with our common stock, as set forth in our
registration statement filed under the Exchange Act on
Form 8-A
on August 3, 1994, including any amendment or report for
the purpose of updating such description;
|
|
|
|
The description of our
77/8%
Series D Cumulative Redeemable Preferred Stock as set forth
in our registration statement filed under the Exchange Act on
Form 8-A/A
on July 8, 2003, including any amendment or report for the
purpose of updating such description;
|
|
|
|
The description of our
75/8%
Series F Cumulative Redeemable Preferred Stock as set forth
in our registration statement filed under the Exchange Act on
Form 8-A
on September 10, 2004, including any amendment or report
for the purpose of updating such description;
|
|
|
|
The description of our 7.5% Series G Cumulative Convertible
Preferred Stock as set forth in the registration statement filed
under the Exchange Act on
Form 8-A
on December 18, 2006, including any amendment or report for
the purpose of updating such description; and
|
|
|
|
All subsequent documents filed by us under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act of 1934 after the date of
this prospectus and before the termination of the offering.
|
other than the portions of such documents that by statute or
rule, by designation in such document or otherwise, are not
deemed to be filed with the SEC or are not required to be
incorporated herein by reference.
This prospectus summarizes material provisions of contracts and
other documents to which we refer. Since this prospectus may not
contain all the information that you may find important, you
should review the full text of those documents. Upon request, we
will provide each person receiving this prospectus a free copy
of any or all documents incorporated by reference into this
prospectus. You may direct such requests to:
Erin C. Ibele
Senior Vice President-Administration and Corporate Secretary
Health Care REIT, Inc.
One SeaGate, Suite 1500
Toledo, Ohio 43604
(419) 247-2800
3
THE
COMPANY
We are a real estate investment trust that invests in senior
housing and health care real estate. We also provide an
extensive array of property management and development services.
Our principal executive offices are located at One SeaGate,
Suite 1500, Toledo, Ohio, 43604, and our telephone number
is
(419) 247-2800.
Our website address is www.hcreit.com. The information on
our website is not part of this prospectus.
Our primary objectives are to protect stockholder capital and
enhance stockholder value. We seek to pay consistent cash
dividends to stockholders and create opportunities to increase
dividend payments to stockholders as a result of annual
increases in rental and interest income and portfolio growth. To
meet these objectives, we invest in the full spectrum of senior
housing and health care real estate and diversify our investment
portfolio by property type, operator/tenant and geographic
location.
For additional information regarding our business, please see
the information under the heading Business in our
most recent Annual Report on
Form 10-K,
which is incorporated by reference in this prospectus.
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
acquisition of and investment in additional health care and
senior housing properties and the repayment of borrowings under
our credit facilities or other debt. Until the proceeds from a
sale of securities by us are applied to their intended purposes,
they may be invested in short-term, investment grade,
interest-bearing securities, certificates of deposit or direct
or guaranteed obligations of the United States.
RATIOS OF
EARNINGS TO FIXED CHARGES AND
EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth our ratios of earnings to fixed
charges and earnings to combined fixed charges and preferred
stock dividends for the periods indicated. The ratio of earnings
to fixed charges was computed by dividing earnings by our fixed
charges. The ratio of earnings to combined fixed charges and
preferred stock dividends was computed by dividing earnings by
our combined fixed charges and preferred stock dividends. For
purposes of calculating these ratios, earnings
includes income from continuing operations, excluding the equity
earnings in a less than 50% owned subsidiary, plus fixed charges
and reduced by capitalized interest. Fixed charges
consists of interest expensed and capitalized and the amortized
premiums, discounts and capitalized expenses related to
indebtedness.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
Three Months Ended March 31,
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
|
Consolidated ratio of earnings to fixed charges
|
|
|
1.89
|
|
|
|
1.77
|
|
|
|
1.87
|
|
|
|
1.71
|
|
|
|
1.85
|
|
|
|
1.78
|
|
|
|
2.18
|
|
Consolidated ratio of earnings to combined fixed charges and
preferred stock dividends
|
|
|
1.62
|
|
|
|
1.41
|
|
|
|
1.54
|
|
|
|
1.47
|
|
|
|
1.61
|
|
|
|
1.54
|
|
|
|
1.89
|
|
We issued 4,000,000 shares of
77/8%
Series D Cumulative Redeemable Preferred Stock in July
2003. We issued 1,060,000 shares of 6% Series E
Cumulative Convertible and Redeemable Preferred Stock in
September 2003. During the year ended December 31, 2004,
certain holders of our Series E Preferred Stock converted
480,399 shares into 367,724 shares of our common
stock, leaving 350,045 of such shares outstanding at
December 31, 2004. During the year ended December 31,
2005, certain holders of our Series E Preferred Stock
converted 275,056 shares into 210,541 shares of our
common stock, leaving 74,989 of such shares outstanding at
December 31, 2005, 2006, 2007 and 2008 and March 31,
2009. We issued 7,000,000 shares of
75/8%
Series F Cumulative Redeemable Preferred Stock in September
2004. We issued 2,100,000 shares of 7.5% Series G
Cumulative Convertible Preferred Stock in December 2006. During
the year ended December 31, 2007, certain holders of our
Series G Preferred Stock converted 295,000 shares into
211,702 shares of our common stock, leaving 1,804,200 of
such shares outstanding at
4
December 31, 2007. During the year ended December 31,
2008, certain holders of our Series G Preferred Stock
converted 1,362,887 shares into 975,397 shares of our
common stock, leaving 441,313 of such shares outstanding at
December 31, 2008. During the quarterly period ended
March 31, 2009, certain holders of our Series G
Preferred Stock converted 40,600 shares into
29,056 shares of our common stock, leaving 400,713 of such
shares outstanding at March 31, 2009.
GENERAL
DESCRIPTION OF THE OFFERED SECURITIES
We may offer under this prospectus one or more of the following
categories of our securities:
|
|
|
|
|
debt securities, in one or more series;
|
|
|
|
shares of our common stock, par value $1.00 per share;
|
|
|
|
shares of our preferred stock, par value $1.00 per share, in one
or more series;
|
|
|
|
depositary shares, representing interests in our preferred
stock, in one or more series;
|
|
|
|
warrants to purchase any of the foregoing securities; and
|
|
|
|
units consisting of any combination of the foregoing securities.
|
The terms of any specific offering of securities, including the
terms of any units offered, will be set forth in a prospectus
supplement relating to such offering.
Our certificate of incorporation authorizes us to issue
225,000,000 shares of common stock and
50,000,000 shares of preferred stock. Of our preferred
stock:
|
|
|
|
|
13,000 shares have been designated as Junior Participating
Preferred Stock, Series A;
|
|
|
|
4,000,000 shares have been designated as
77/8%
Series D Cumulative Redeemable Preferred Stock;
|
|
|
|
1,060,000 shares have been designated as 6% Series E
Cumulative Convertible and Redeemable Preferred Stock;
|
|
|
|
7,000,000 shares have been designated as
75/8%
Series F Cumulative Redeemable Preferred Stock; and
|
|
|
|
2,100,000 shares have been designated as 7.5% Series G
Cumulative Convertible Preferred Stock.
|
As of March 31, 2009, we had outstanding
111,013,261 shares of common stock, 4,000,000 shares
of Series D Preferred Stock, 74,989 shares of
Series E Preferred Stock, 7,000,000 shares of
Series F Preferred Stock and 400,713 shares of
Series G Preferred Stock.
Our common stock is listed on the New York Stock Exchange under
the symbol HCN. We intend to apply to list any
additional shares of common stock that are issued and sold
hereunder. Our Series D Preferred Stock, Series F
Preferred Stock and Series G Preferred Stock are listed on
the New York Stock Exchange under the symbols HCN
PrD, HCN PrF and HCN PrG,
respectively. We may apply to list shares of any series of
preferred stock or any depositary shares which are offered and
sold hereunder, as described in the applicable prospectus
supplement relating to such preferred stock or depositary shares.
For a discussion of the taxation of the Company and the material
federal tax consequences to you as a holder of our common stock
and debt securities offered under this prospectus, see
Item 1 Business
Taxation Federal Income Tax Considerations
included in our most recent Annual Report on
Form 10-K.
The applicable prospectus supplement delivered with this
prospectus will provide any necessary information about
additional federal income tax considerations, if any, related to
the particular securities being offered.
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. The debt securities
may be guaranteed on a secured or unsecured, senior or
subordinated basis, by one or more of our subsidiaries. The debt
securities will be issued under one or more indentures between
us and a specified 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.
5
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 form of indenture for senior
debt securities and the forms of indentures for senior
subordinated and junior subordinated debt securities which we
have filed as exhibits to the registration statement of which
this prospectus is a part. We will file any final indentures for
senior subordinated and junior subordinated debt securities and
supplemental indentures if we issue debt securities of this
type. See Where You Can Find Additional Information.
This summary is also subject to and qualified by reference to
the descriptions of the particular terms of the 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 a part, a
form of indenture for senior debt securities and two separate
forms of indenture, 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:
|
|
|
|
|
the title and series designation and whether they are senior
securities, senior subordinated securities or subordinated
securities;
|
|
|
|
the aggregate principal amount of the securities;
|
|
|
|
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;
|
|
|
|
if convertible, the securities into which they are convertible,
the initial conversion price, the conversion period and any
other terms governing such conversion;
|
|
|
|
the stated maturity date;
|
|
|
|
any fixed or variable interest rate or rates per annum;
|
|
|
|
if other than at the corporate trust office of the trustee, 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;
|
|
|
|
the date from which interest may accrue and any interest payment
dates;
|
|
|
|
any sinking fund requirements;
|
|
|
|
any provisions for redemption, including the redemption price
and any remarketing arrangements;
|
|
|
|
any provisions for denomination or payment of the securities in
a foreign currency or units of two or more foreign currencies;
|
6
|
|
|
|
|
the events of default and covenants of such securities, to the
extent different from or in addition to those described in this
prospectus;
|
|
|
|
whether we will issue the debt securities in certificated or
book-entry form;
|
|
|
|
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;
|
|
|
|
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;
|
|
|
|
the applicability, if any, of the defeasance and covenant
defeasance provisions described in this prospectus or any
prospectus supplement;
|
|
|
|
any provisions for payment of additional amounts on the
securities in respect of any tax, assessment or governmental
charge and rights for us to redeem the debt securities instead
of making this payment;
|
|
|
|
the subordination provisions, if any, relating to the debt
securities;
|
|
|
|
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;
|
|
|
|
whether any of our subsidiaries will be bound by the terms of
the indenture, in particular any restrictive covenants;
|
|
|
|
the provisions relating to any security provided for the debt
securities; and
|
|
|
|
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 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.
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:
|
|
|
|
|
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
|
|
|
|
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
7
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 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:
|
|
|
|
|
if we merge out of existence or sell our assets, the other
company must be an entity organized under the laws of one of the
states of the United States or the District of Columbia or under
United States federal law and must agree to be legally
responsible for our debt securities; and
|
|
|
|
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 regarding notice of
default or continuing default for a specific period of time were
disregarded.
|
Certain
Covenants
Existence. Except as permitted and described
above under Merger, Consolidation or Sale of
Assets, we will agree to do all things necessary to
preserve and keep our existence, rights and franchises, provided
that it is in our best interests for the conduct of business.
Provisions of Financial Information. To the
extent permitted by law, we will agree to file all annual,
quarterly and other reports and financial statements with the
SEC and the trustee on or before the applicable SEC filing dates
whether or not we remain required to do so under the Exchange
Act.
Additional Covenants. Any additional or
different covenants or modifications to the foregoing covenants
with respect to any series of debt securities will be described
in the applicable prospectus supplement.
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:
|
|
|
|
|
We do not pay the principal or any premium on a debt security of
that series within 30 days after its maturity date.
|
|
|
|
We do not pay interest on a debt security of that series within
30 days after its due date.
|
|
|
|
We do not deposit any sinking fund payment for that series
within 30 days after its due date.
|
|
|
|
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 another series) for 60 days after we receive
a written notice of default from the trustee or holders of at
least a majority in principal amount of debt securities of the
affected series specifying the breach and requiring it to be
remedied.
|
|
|
|
We default under any of our other indebtedness in specified
amounts 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 a written notice from the trustee or holders of at least
a majority in principal amount of debt securities of the
affected series specifying the default and requiring that we
discharge the other indebtedness or cause the acceleration to be
rescinded or annulled.
|
|
|
|
We or one of our significant subsidiaries, if any,
files for bankruptcy or certain other events in bankruptcy,
insolvency or reorganization occur. The term significant
subsidiary means each of our significant subsidiaries, if
any, as defined in
Regulation S-X
under the Securities Act.
|
|
|
|
Any other event of default described in the applicable
prospectus supplement occurs.
|
8
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.
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 satisfactory to it 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:
|
|
|
|
|
you must give the trustee written notice that an event of
default has occurred and remains uncured;
|
|
|
|
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
|
|
|
|
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, 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:
|
|
|
|
|
change the stated maturity of the principal or interest on a
debt security;
|
|
|
|
reduce any amounts due on a debt security;
|
|
|
|
reduce the amount of principal payable upon acceleration of the
maturity of a debt security following a default;
|
|
|
|
change the currency of payment on a debt security;
|
|
|
|
impair your right to sue for payment;
|
|
|
|
modify the subordination provisions, if any, in a manner that is
adverse to you;
|
|
|
|
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;
|
9
|
|
|
|
|
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; or
|
|
|
|
waive a default or event of default in the payment of principal,
interest, or premium, if any, on the debt securities.
|
Changes Requiring A Majority Vote. The second
type of change is the kind that requires the vote of 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 therefore the
holders of debt securities are not eligible to vote on matters
relating thereto, if we have deposited or set aside in trust for
such holders money for payment or redemption of debt securities
or if we or one of our affiliates own the debt securities. The
holders of debt securities are also not eligible to vote if the
debt securities have been fully defeased as described below
under Discharge, Defeasance and Covenant
Defeasance Full Defeasance.
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:
|
|
|
|
|
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;
|
|
|
|
under current federal income tax law, the deposit and our legal
release from the debt securities would be treated as though we
redeemed your debt securities in exchange for your share of the
cash and notes or bonds deposited in trust. This treatment would
result in sale or exchange treatment of your notes, which would
cause you to recognize gain or loss equal to the amount
described in Item 1 Business
Taxation U.S. Federal Income Tax
Considerations U.S. Federal Income and Estate
Taxation of Holders of Our Debt Securities
U.S. Holders Sale, Exchange or Other
Disposition of Notes included in our most recent Annual
Report on
Form 10-K; and
|
|
|
|
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.
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.
10
If we did accomplish covenant defeasance, the following
provisions of an indenture and the debt securities would no
longer apply:
|
|
|
|
|
any covenants applicable to the series of debt securities and
described in the applicable prospectus supplement;
|
|
|
|
any subordination provisions; and
|
|
|
|
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 did accomplish covenant defeasance, you could 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 occurred, for example, our bankruptcy, and the debt
securities became 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 junior subordinated securities is
subordinated to debt securities of another series or to our
other indebtedness. The terms will include a description of:
|
|
|
|
|
the indebtedness ranking senior to the debt securities being
offered;
|
|
|
|
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;
|
|
|
|
the restrictions, if any, on payments to the holders of the debt
securities being offered following an event of default; and
|
|
|
|
provisions requiring holders of the debt securities being
offered to remit some payments to holders of senior indebtedness.
|
Guarantees
Our payment obligations under any series of our debt securities
may be guaranteed by some or all of our subsidiaries. The
guarantees may be secured or unsecured and may be senior or
subordinated obligations. The guarantors will be identified and
the terms of the guarantees will be described in the applicable
prospectus supplement.
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 OUR COMMON STOCK
The following is a summary of certain terms of our common stock.
Because this summary is not complete, you should refer to our
certificate of incorporation and by-laws, which documents
provide additional information regarding our common stock. See
also Description of Certain Provisions of Our Certificate
of Incorporation and By-Laws below. Copies of our
certificate of incorporation and by-laws, as amended, are
incorporated by reference as exhibits to the registration
statement of which this prospectus is a part. This summary is
also subject to and qualified by reference to the description of
the particular terms of the securities described in the
applicable prospectus supplement.
Common stockholders are entitled to receive dividends when
declared by the board of directors and after payment of, or
provision for, full cumulative dividends on and any required
redemptions of shares of preferred stock then outstanding.
Common stockholders have one vote per share, and there are no
cumulative voting rights. If we are voluntarily or involuntarily
liquidated or dissolved, common stockholders are to share
ratably in our distributable assets remaining after the
satisfaction of all of our debts and liabilities and the
preferred
11
stockholders prior preferential rights. Common
stockholders do not have preemptive rights. The common stock
will be, when issued, fully paid and nonassessable. The common
stock is subject to restrictions on transfer under certain
circumstances described under Restrictions on Transfer of
Securities below. The transfer agent for our common stock
is BNY Mellon Shareowner Services.
The rights, preferences and privileges of holders of our common
stock are subject to, and may be adversely affected by, the
rights of the holders of shares of any series of our preferred
stock which are outstanding or which we may designate and issue
in the future. See Description of Our Preferred
Stock below.
DESCRIPTION
OF OUR PREFERRED STOCK
The following is a summary description of the material terms of
our shares of preferred stock. 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 certificate of
incorporation and by-laws, copies of which are incorporated by
reference as exhibits to the registration statement of which
this prospectus is a part. This summary is also subject to and
qualified by reference to the description of the particular
terms of the securities described in the applicable prospectus
supplement.
General
Our board of directors or a duly authorized committee thereof
will determine the designations, preferences, limitations and
relative rights of our authorized and unissued preferred shares.
These may include:
|
|
|
|
|
the distinctive designation of each series and the number of
shares that will constitute the series;
|
|
|
|
the voting rights, if any, of shares of the series;
|
|
|
|
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;
|
|
|
|
if the shares are redeemable, the prices at which, and the terms
and conditions on which, the shares of the series may be
redeemed;
|
|
|
|
the purchase or sinking fund provisions, if any, for the
purchase or redemption of shares of the series;
|
|
|
|
any preferential amount payable upon shares of the series upon
our liquidation or the distribution of our assets;
|
|
|
|
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
|
|
|
|
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 certificate of
incorporation, including any applicable certificate of
designation, and our by-laws.
The prospectus supplement will describe the specific terms as to
each issuance of preferred shares, including:
|
|
|
|
|
the description of the preferred shares;
|
|
|
|
the number of preferred shares offered;
|
|
|
|
the offering price of the preferred shares;
|
|
|
|
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;
|
|
|
|
the date from which distributions on the preferred shares shall
accumulate;
|
|
|
|
the voting rights, if any, of the holders of the preferred
shares;
|
12
|
|
|
|
|
the provisions for any auctioning or remarketing, if any, of the
preferred shares;
|
|
|
|
the provision, if any, for redemption or a sinking fund;
|
|
|
|
the liquidation preference per share;
|
|
|
|
any listing of the preferred shares on a securities exchange;
|
|
|
|
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;
|
|
|
|
whether interests in the shares of preferred stock will be
represented by depositary shares as more fully described below
under Description of Depositary Shares;
|
|
|
|
a discussion of federal income tax considerations;
|
|
|
|
the relative ranking and preferences of the preferred shares as
to distribution and liquidation rights;
|
|
|
|
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;
|
|
|
|
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
|
|
|
|
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 preferred stock issued and
deposited with a depositary. The applicable prospectus
supplement will specify that fractional interest.
Rank
Unless our board of directors 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
of 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
directors 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 directors. In the case of shares of
preferred stock represented by depositary receipts, the records
of the depositary referred to under Description of
Depositary Shares will determine the persons to whom
dividends 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
directors 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 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,
13
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 capital stock, the terms
of the preferred shares may provide that, if no shares of such
capital stock shall have been issued or to the extent the net
proceeds from any issuance are insufficient to pay in full the
aggregate redemption price then due, the preferred shares will
automatically and mandatorily be converted into shares of the
applicable capital stock 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 capital
stock 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 stockholders, 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.
Unless otherwise provided in the applicable prospectus
supplement, 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 capital stock ranking junior to the preferred shares upon
liquidation, according to their rights and preferences and in
each case according to their number of shares.
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 capital stock
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 capital stock 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
14
with or into any other corporation or other entity, or the sale,
lease or conveyance of all or substantially all of our property
or business, shall not be deemed to constitute a liquidation.
Voting
Rights
Holders of the preferred shares will not have any voting rights,
except as described below or as otherwise from time to time
required by law or as specified in the applicable prospectus
supplement. 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 of
preferred stock, each holder thereof will in effect be entitled
to a fraction of a vote per depositary share.
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 the holders of a majority of the
shares (or such greater vote or consent as is required by the
then current rules of any stock exchange or trading market on
which we shall have listed the applicable series of preferred
stock for trading or as otherwise provided in our organizational
documents) of each series of preferred shares outstanding at
that time:
|
|
|
|
|
authorize, create or increase the authorized or issued amount of
any class or series of shares of capital stock ranking senior to
that series of preferred shares with respect to distribution and
liquidation rights;
|
|
|
|
reclassify any authorized shares of capital stock into a series
of shares of capital stock ranking senior to that series of
preferred shares with respect to distribution and liquidation
rights;
|
|
|
|
create, authorize or issue any security or obligation
convertible into or evidencing the right to purchase any shares
of capital stock ranking senior to that series of preferred
shares with respect to distribution and liquidation
rights; and
|
|
|
|
amend, alter or repeal the provisions of our certificate of
incorporation 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 capital stock
ranking on parity with 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.
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 series of shares of
capital stock. The terms will include the number of common
shares or other capital stock into which the preferred shares
are convertible, the conversion price or 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.
15
DESCRIPTION
OF DEPOSITARY SHARES
This section describes the general terms and provisions of
shares of preferred stock represented by depositary shares. The
applicable prospectus supplement will describe the specific
terms of the depositary shares offered through that prospectus
supplement and any general terms outlined in this section that
will not apply to those depositary shares.
We have summarized in this section certain terms and provisions
of the deposit agreement, the depositary shares and the receipts
representing depositary shares. The summary is not complete. You
should read the forms of deposit agreement and depositary
receipt that we will file with the SEC at or before the time of
the offering of the depositary shares for additional information
before you buy any depositary shares.
General
We may, at our option, elect to offer fractional interests in
shares of preferred stock, rather than shares of preferred
stock. If we exercise this option, we will appoint a depositary
to issue depositary receipts representing those fractional
interests. Shares of preferred stock 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
provide 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 dividend,
voting, conversion, redemption, liquidation and other rights and
preferences of the shares of preferred stock 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 shares of
preferred stock underlying the surrendered depositary receipts.
Distributions
A depositary will be required to distribute all dividends or
other cash distributions received in respect of the applicable
shares of preferred stock 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 of depositary shares.
Depositary shares that represent shares of preferred stock
converted or exchanged will not be entitled to distributions.
The deposit agreement also will contain provisions relating to
the manner in which any subscription or similar rights we offer
to holders of shares of preferred stock 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 Shares of Preferred Stock
You may receive the number of whole shares of your series of
preferred stock and any money or other property represented by
your depositary receipts after surrendering your depositary
receipts at the corporate trust office of the depositary.
Partial shares of preferred stock will not be issued. If the
depositary shares that you surrender exceed the number of
depositary shares that represent the number of whole shares of
preferred stock 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 shares of preferred stock, you will not be
entitled to re-deposit those shares of preferred stock under the
deposit agreement in order to receive depositary shares. We do
not expect that there will be any public trading market for
withdrawn shares of preferred stock.
16
Redemption
of Depositary Shares
If we redeem a series of the preferred stock underlying the
depositary shares, the depositary will redeem those shares from
the proceeds it receives. 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 stock. The redemption date for depositary shares will
be the same as that of the preferred stock. 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 Underlying Shares of Preferred Stock
Upon receipt of notice of any meeting at which the holders of
the preferred stock 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 depositary shares
representing such preferred stock. Each record holder of
depositary receipts on the record date will be entitled to
instruct the depositary as to how the holders depositary
shares will be voted. The record date for the depositary shares
will be the same as the record date for the preferred stock. The
depositary will 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 vote the preferred stock in
that manner. If you do not instruct the depositary how to vote
your shares, the depositary will abstain from voting those
shares. The depositary will not be responsible for any failure
to carry out any voting instruction, or for the manner or effect
of any vote, as long as its action or inaction is in good faith
and does not result from its negligence or willful misconduct.
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 share of preferred
stock represented by the depositary shares, as described in the
applicable prospectus supplement.
Conversion
or Exchange of Shares of Preferred Stock
The depositary shares will not themselves be convertible into or
exchangeable for shares of common stock or preferred stock or
any of our other securities or property. Nevertheless, if so
specified in the applicable prospectus supplement, the
depositary receipts may be surrendered by holders to the
applicable depositary with written instructions to it to
instruct us to cause the conversion of the preferred stock
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 stock 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
shares of preferred stock 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.
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 (or such greater approval as
is required by the then current rules of any stock exchange or
trading market on which we shall have listed the applicable
underlying series of preferred stock for trading or as otherwise
provided in our organizational documents) must approve any
amendment that adds or increases fees or charges or prejudices
an
17
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 REIT or (2) a majority of each series of
preferred stock 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 stock 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:
|
|
|
|
|
all depositary shares have been redeemed;
|
|
|
|
there shall have been a final distribution in respect of the
related preferred stock in connection with our liquidation and
the distribution has been made to the holders of depositary
receipts evidencing the depositary shares underlying the
preferred stock; or
|
|
|
|
each related share of preferred stock shall have been converted
or exchanged into securities not represented by depositary
shares.
|
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 stock and any redemption of preferred stock. 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 a Depositary
A depositary may resign at any time by providing us notice of
its election to resign. 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 that has its principal office in
the United States and 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 shares of preferred
stock. 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 we nor any depositary
will be liable if either party 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 shares of preferred stock
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 shares of preferred stock 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 holder 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.
18
DESCRIPTION
OF WARRANTS
This section describes the general terms and provisions of the
warrants. The applicable prospectus supplement will describe the
specific terms of the warrants offered through that prospectus
supplement and any general terms outlined in this section that
will not apply to those warrants.
We have summarized in this section certain terms and provisions
of the warrant agreement and the warrants. The summary is not
complete. You should read the forms of warrant and warrant
agreement that we will file with the SEC at or before the time
of the offering of the applicable series of warrants for
additional information before you buy any 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 stock, depositary
shares or common stock. We and a warrant agent will enter into 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.
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:
|
|
|
|
|
the offering price;
|
|
|
|
the number of warrants offered;
|
|
|
|
the securities underlying the warrants;
|
|
|
|
the exercise price, the procedures for exercise of the warrants
and the circumstances, if any, that will cause the warrants to
be automatically exercised;
|
|
|
|
the date on which the warrants will expire;
|
|
|
|
federal income tax consequences;
|
|
|
|
the rights, if any, we have to redeem the warrants;
|
|
|
|
the name of the warrant agent; and
|
|
|
|
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
underlying the warrants 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 (or such greater approval as is required by the
then current rules of any stock exchange or trading market on
which we shall have listed the applicable underlying shares of
capital stock for trading or as otherwise provided in our
organizational documents) 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. 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.
19
DESCRIPTION
OF UNITS
We may, from time to time, issue units comprised of one or more
of the other securities that may be offered under this
prospectus, in any combination. Each unit will be issued so that
the holder of the unit is also the holder of each security
included in the unit. Thus, the holder of a unit will have the
rights and obligations of a holder of each included security.
The unit agreement under which a unit is issued may provide that
the securities included in the unit may not be held or
transferred separately at any time, or at any time before a
specified date.
Any applicable prospectus supplement will describe:
|
|
|
|
|
the material terms of the units and of the securities comprising
the units, including whether and under what circumstances those
securities may be held or transferred separately;
|
|
|
|
any material provisions relating to the issuance, payment,
settlement, transfer or exchange of the units or of the
securities comprising the units;
|
|
|
|
any special federal income tax considerations applicable to the
units; and
|
|
|
|
any material provisions of the governing unit agreement that
differ from those described above.
|
RESTRICTIONS
ON TRANSFER OF SECURITIES
For us to qualify as a real estate investment trust, not more
than 50% in value of our outstanding capital stock may be owned,
directly or indirectly, by five or fewer individuals at any time
during the last half of our taxable year. In order to ensure
that this requirement is satisfied, our by-laws (with respect to
our common stock and preferred stock) and our certificates of
designation (for our preferred stock) provide that no person may
acquire securities that would result in the direct or indirect
beneficial ownership of more than 9.8% of our common stock or
more than 9.8% in value of our outstanding capital stock by such
person. For purposes of application of such limitations to any
person, all options, warrants, convertible securities or other
rights to acquire our common stock held directly or indirectly
by such person will be treated as if all such rights had been
exercised. If any securities in excess of this limit are issued
or transferred to any person, such issuance or transfer shall be
valid only with respect to such amount of securities as does not
exceed this limit, and such issuance or transfer will be void
with respect to the excess. The board of directors may grant
limited exemptions from the ownership restrictions set forth in
the by-laws to specified persons if the board determines that
each such limited exemption is in the best interests of us and
our stockholders.
Our by-laws and certificates of designation further provide
that, if the foregoing stock ownership limitations are
determined to be invalid by virtue of any legal decision,
statute, rule or regulation, then the transferee of the shares
or other securities will be deemed to have acted as our agent in
acquiring the shares or other securities that are in excess of
the limit, and will be deemed to hold such excess shares or
securities on our behalf. As the equivalent of treasury
securities for such purposes, the excess securities will not be
entitled to any voting rights, will not be considered to be
outstanding for quorum or voting purposes, and will not be
entitled to receive dividends, interest or any other
distribution with respect to such securities. Any person who
receives dividends, interest or any other distribution in
respect of the excess securities will hold the same as our agent
and for the transferee of the excess securities following a
permitted transfer.
In addition, under our by-laws and certificates of designation,
we may refuse to transfer any shares, passing either by
voluntary transfer, by operation of law, or under the last will
and testament of any stockholder, if such transfer would or
might, in the opinion of our board of directors or counsel,
disqualify us as a real estate investment trust.
20
DESCRIPTION
OF CERTAIN PROVISIONS OF OUR CERTIFICATE OF
INCORPORATION AND BY-LAWS
Anti-Takeover
Provisions
Our certificate of incorporation and by-laws contain provisions
that may have the effect of discouraging persons from acquiring
large blocks of our stock or delaying or preventing a change in
our control. The material provisions that may have such an
effect are:
|
|
|
|
|
Classification of our board of directors into three classes with
the term of only one class expiring each year.
|
|
|
|
A provision permitting our board of directors to make, amend or
repeal our by-laws.
|
|
|
|
Authorization for our board of directors to issue preferred
stock in series and to fix the rights and preferences of the
series, including, among other things, whether and to what
extent the shares of any series will have voting rights and the
extent of the preferences of the shares of any series with
respect to dividends and other matters (see Description of
Our Preferred Stock above).
|
|
|
|
A prohibition on stockholders taking action by written consent
in lieu of a meeting.
|
|
|
|
Advance notice procedures with respect to nominations of
directors by stockholders and proposals by stockholders of
business at an annual meeting.
|
|
|
|
The grant only to our board of directors of the right to call
special meetings of stockholders.
|
|
|
|
Limitations on the number of shares of our capital stock that
may be beneficially owned, directly or indirectly, by any one
stockholder (see Restrictions on Transfer of
Securities above).
|
|
|
|
Limitations on transactions that involve us and any stockholder
who beneficially owns 5% or more of our voting stock (see
Limitations on Transactions Involving Us and Our
Stockholders below).
|
|
|
|
A provision permitting amendment by the stockholders of certain
of the provisions listed above only by an affirmative vote of
the holders of at least three-quarters of all of the outstanding
shares of our voting stock, voting together as a single class.
|
Limitations
on Transactions Involving Us and Our Stockholders
Under our by-laws, in addition to any vote otherwise required by
law, our certificate of incorporation or our by-laws, the
following transactions will require the affirmative vote of the
holders of at least 75% of the voting power of our then
outstanding shares of capital stock entitled to vote generally
in the election of directors, voting together as a single class:
|
|
|
|
|
Our merger or consolidation with or into
|
|
|
|
|
|
any stockholder that owns 5% or more of our voting stock; or
|
|
|
|
any other corporation or entity which is, or after such merger
or consolidation would be, an affiliate of a stockholder that
owns 5% or more of our voting stock.
|
|
|
|
|
|
Any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of substantially all of our assets, in one
transaction or a series of transactions, to or with any
stockholder that owns 5% or more of our voting stock or an
affiliate of any such stockholder.
|
|
|
|
Any reclassification of our securities, including any reverse
stock split, or recapitalization or any other transaction that
has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of
our equity securities that is directly or indirectly owned by
any stockholder that owns 5% or more of our voting stock or any
affiliate of such a stockholder, whether or not the transaction
involves such a stockholder.
|
|
|
|
The adoption of any plan or proposal for our liquidation or
dissolution proposed by or on behalf of a stockholder that owns
5% or more of our voting stock or any affiliate of such a
stockholder.
|
21
These provisions will not apply to any of the transactions
described above if:
|
|
|
|
|
We are at the time of the consummation of the transaction, and
at all times throughout the preceding twelve months have been,
directly or indirectly, the owner of a majority of each class of
the outstanding equity securities of the 5% stockholder that is
a party to the transaction; or
|
|
|
|
The transaction has been approved by a majority of the members
of our board of directors who, at the time such approval is
given, were not affiliates or nominees of the 5%
stockholder; or
|
|
|
|
Both of the following conditions have been met:
|
|
|
|
|
|
the aggregate amount of the cash and the fair market value, as
determined in good faith by our board of directors, of the
consideration other than cash to be received per share by
holders of our voting stock in such transaction shall be at
least equal to the highest per share price paid by the 5%
stockholder for any shares of voting stock acquired by it:
|
|
|
|
|
|
within the two-year period immediately prior to the first public
announcement of the proposal of the transaction, or
|
|
|
|
in the transaction in which it became a 5% stockholder,
whichever is higher; and
|
|
|
|
|
|
the consideration to be received by holders of a particular
class of outstanding voting stock shall be in cash or in the
same form as the 5% stockholder previously paid for shares of
such voting stock. If the 5% stockholder paid for shares of any
class of voting stock with varying forms of consideration, the
form of consideration to be paid by the 5% stockholder for such
class of voting stock shall be either cash or the form used to
acquire the largest number of shares of such class of voting
stock previously acquired by the stockholder.
|
The foregoing summary of certain provisions of our certificate
of incorporation and by-laws does not purport to be complete or
to give effect to provisions of statutory or common law. The
foregoing summary is subject to, and qualified in its entirety
by reference to, the provisions of applicable law and our
certificate of incorporation and by-laws, copies of which are
incorporated by reference as exhibits to the registration
statement of which this prospectus is a part.
PLAN OF
DISTRIBUTION
We may sell the securities:
|
|
|
|
|
through underwriters or dealers;
|
|
|
|
through agents;
|
|
|
|
directly to purchasers; or
|
|
|
|
through a combination of any of these methods of sale.
|
The applicable prospectus supplement will describe the plan of
distribution of the securities and the terms of the offering and
will name any underwriter or agent involved in the offer and
sale of the securities. Direct sales to investors or our
stockholders may be accomplished through subscription offerings
or through stockholder purchase rights distributed to
stockholders. In connection with subscription offerings or the
distribution of stockholder purchase rights to stockholders, if
all of the underlying securities are not subscribed for, we may
sell any unsubscribed securities to third parties directly or
through underwriters or agents. In addition, whether or not all
of the underlying securities are subscribed for, we may
concurrently offer additional securities to third parties
directly or through underwriters or agents. If securities are to
be sold through stockholder purchase rights, the stockholder
purchase rights will be distributed as a dividend to the
stockholders for which they will pay no separate consideration.
The prospectus supplement with respect to the offer of
securities under stockholder purchase rights will set forth the
relevant terms of the stockholder purchase rights, including:
|
|
|
|
|
whether common stock, preferred stock or some other type of
capital stock, or warrants for those securities, will be offered
under the stockholder purchase rights;
|
22
|
|
|
|
|
the number of those securities or warrants that will be offered
under the stockholder purchase rights;
|
|
|
|
the period during which and the price at which the stockholder
purchase rights will be exercisable;
|
|
|
|
the number of stockholder purchase rights then outstanding;
|
|
|
|
any provisions for changes to or adjustments in the exercise
price of the stockholder purchase rights; and
|
|
|
|
any other material terms of the stockholder purchase rights.
|
Underwriters and our agents may offer and sell the securities at:
|
|
|
|
|
fixed prices, which may be changed;
|
|
|
|
prices related to the prevailing market prices at the time of
sale; or
|
|
|
|
negotiated prices.
|
We also may, from time to time, authorize underwriters and our
agents to offer and sell the securities upon the terms and
conditions as are set forth in the applicable prospectus
supplement. In connection with the sale of securities,
underwriters may be deemed to have received compensation from us
in the form of underwriting discounts, commissions or fees and
may also receive commissions from purchasers of securities for
whom they may act as agent. Underwriters may sell securities to
or through dealers, and these dealers may receive compensation
in the form of discounts, concessions or commissions from the
underwriters or commissions from the purchasers for whom they
may act as agent, or both. The applicable prospectus supplement
will disclose:
|
|
|
|
|
any underwriting compensation we pay to underwriters or agents
in connection with the offering of securities; and
|
|
|
|
any discounts, concessions or commissions allowed by
underwriters to participating dealers.
|
Under the Securities Act, underwriters, dealers and agents
participating in the distribution of the securities may be
deemed to be underwriters and any discounts, commissions and
fees received by them and any profit realized by them on resale
of the securities may be deemed to be underwriting compensation,
discounts and commissions. We may agree to indemnify
underwriters, dealers and agents against civil liabilities,
including liabilities under the Securities Act, and to make
contribution to them in connection with those liabilities.
If indicated in the applicable prospectus supplement, we may
also offer and sell securities through one or more firms that
will remarket the securities. These firms may act as principals
for their own account or as our agents. These firms may be
deemed to be underwriters in connection with the securities
being remarketed. We may agree to indemnify these firms against
liabilities, including liabilities under the Securities Act.
If indicated in the applicable prospectus supplement, we may
authorize underwriters, agents or dealers to solicit offers by
institutions to purchase securities at the offering price set
forth in that prospectus supplement under delayed delivery
contracts providing for payment and delivery on the dates stated
in the prospectus supplement. Each contract will be for an
amount not less than, and the aggregate principal amount of
securities sold under contracts will be not less nor more than,
the respective amounts stated in the applicable prospectus
supplement. Institutions with whom contracts, when authorized,
may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and
charitable institutions, and other institutions but will in all
cases be subject to our approval. Contracts will not be subject
to any conditions except:
|
|
|
|
|
the purchase by an institution of the securities covered by its
contracts will not at the time of delivery be prohibited under
the laws of any jurisdiction in the United States to which the
institution is subject; and
|
|
|
|
if the securities are also being sold to underwriters, we will
have sold to them the total principal amount of the securities
less the principal amount of the securities covered by contracts.
|
Underwriters and agents will have no responsibility in respect
of the delivery or performance of contracts.
Some of the underwriters and their affiliates may engage in
transactions with or perform services for us in the ordinary
course of business.
23
LEGAL
OPINIONS
Certain legal matters regarding the securities offered hereby
will be passed upon for us by Shumaker, Loop &
Kendrick, LLP, Toledo, Ohio. As of May 7, 2009, the attorneys of
Shumaker, Loop & Kendrick, LLP participating in the
preparation of this prospectus, the registration statement and
the required legal opinions beneficially held, in the aggregate,
approximately 2,500 shares of our common stock and
1,000 shares of our preferred stock. Arnold &
Porter LLP will pass upon certain federal income tax matters
relating to us. Any underwriters or agents will be represented
by their own legal counsel.
EXPERTS
Ernst & Young LLP, independent registered public
accounting firm, has audited our consolidated financial
statements and schedules included in our Current Report on
Form 8-K
dated May 7, 2009, and the effectiveness of our internal
control over financial reporting as of December 31, 2008,
included in our Annual Report on
Form 10-K
for the year ended December 31, 2008, as set forth in their
reports, which are incorporated by reference in this prospectus
and elsewhere in the registration statement. Our financial
statements and schedules are incorporated by reference in
reliance upon Ernst & Young LLPs reports, given
on their authority as experts in accounting and auditing.
24