-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Jxvj1PqUwkVGlkgydfiF1Vh10/N8+HUD0qWp5CjsTfOoQpsUmdVhi9/5cqidx7Zn oddNIKPtMfEwfbsq6sF4nw== 0000912057-00-003824.txt : 20000207 0000912057-00-003824.hdr.sgml : 20000207 ACCESSION NUMBER: 0000912057-00-003824 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20000204 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDITRUST CORP CENTRAL INDEX KEY: 0000314661 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 953520818 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-96123 FILM NUMBER: 523361 BUSINESS ADDRESS: STREET 1: MEDITRUST CORP STREET 2: 197 FIRST AVE STE 100 CITY: NEEDHAM STATE: MA ZIP: 02494 BUSINESS PHONE: 7814336000 MAIL ADDRESS: STREET 1: MEDITRUST CORP STREET 2: 197 FIRST AVENUE SUITE 100 CITY: NEEDHAM STATE: MA ZIP: 02494 FORMER COMPANY: FORMER CONFORMED NAME: SANTA ANITA REALTY ENTERPRISES INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDITRUST OPERATING CO CENTRAL INDEX KEY: 0000313749 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 953419438 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-96123-01 FILM NUMBER: 523362 BUSINESS ADDRESS: STREET 1: 197 FIRST AVE STREET 2: STE 100 CITY: NEEDHAM STATE: MA ZIP: 02494 BUSINESS PHONE: 7814336000 MAIL ADDRESS: STREET 1: MEDITRUST OPERATING CO STREET 2: 197 FIRST AVENUE SUITE 100 CITY: NEEDHAM STATE: MA ZIP: 02494 FORMER COMPANY: FORMER CONFORMED NAME: SANTA ANITA OPERATING CO DATE OF NAME CHANGE: 19920703 S-3 1 FORM S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 4, 2000 REGISTRATION STATEMENT NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------- FORM S-3 JOINT REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------------- MEDITRUST CORPORATION MEDITRUST OPERATING COMPANY (Exact name of registrant as specified (Exact name of registrant as specified in governing instruments) in governing instruments) DELAWARE DELAWARE (State or other jurisdiction (State or other jurisdiction of of incorporation or organization) incorporation or organization) 95-3520818 95-3419438 (I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.) 197 FIRST AVENUE, SUITE 300 197 FIRST AVENUE, SUITE 100 NEEDHAM HEIGHTS, MASSACHUSETTS 02494 NEEDHAM HEIGHTS, MASSACHUSETTS 02494 (781) 433-6000 (781) 453-8062 (Address, including zip code, and telephone number (Address, including zip code, and telephone number including area code, of Registrant's principal including area code, of Registrant's principal executive offices) executive offices) WILLIAM G. BYRNES WILLIAM C. BAKER transitional Chief Executive Officer President MEDITRUST CORPORATION MEDITRUST OPERATING COMPANY 197 FIRST AVENUE, SUITE 300 197 FIRST AVENUE, SUITE 100 NEEDHAM HEIGHTS, MASSACHUSETTS 02494 NEEDHAM HEIGHTS, MASSACHUSETTS 02494 (781) 433-6000 (781) 453-8062 (Name, address, including zip code, and telephone (Name, address, including zip code, and telephone number number including area code, of agent for service) including area code, of agent for service)
-------------------------- Copies of communications to: GILBERT G. MENNA, P.C. SCOTT F. DUGGAN, ESQ. GOODWIN, PROCTER & HOAR LLP EXCHANGE PLACE BOSTON, MASSACHUSETTS 02109-2881 (617) 570-1000 -------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this Registration Statement. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. /X/ If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF TITLE OF PAIRED SHARES BEING REGISTERED REGISTERED SHARE(1) PRICE REGISTRATION FEE Common Stock, par value $.10 per share, of Meditrust Corporation paired with Common Stock, par value $.10 per share of 10,907,971 $3.3125 $36,132,654 $9,540 Meditrust Operating Company
(1) Estimated solely for purposes of determining the registration fee pursuant to Rule 457(c) based on the average of the high and low prices of the paired shares of the common stock, par value $.10 per share, of each of Meditrust Corporation and Meditrust Operating Company, as reported on the New York Stock Exchange on February 1, 2000. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The information in this prospectus is not complete and may be changed. We may not sell these securities until the joint registration statement filed with the Securities and Exchange Commission is effective. 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. SUBJECT TO COMPLETION DATED FEBRUARY 4, 2000 PRELIMINARY PROSPECTUS 10,907,971 PAIRED SHARES THE MEDITRUST COMPANIES COMMON STOCK (PAR VALUE $.10 PER SHARE) ------------------------ The selling stockholders identified in this prospectus may offer to sell up to an aggregate of 10,907,971 shares of common stock, par value $.10 per share, of Meditrust Corporation, each of which is paired with common stock, par value $.10 per share, of Meditrust Operating Company. The paired shares may be offered and sold by the selling stockholders from time to time in transactions on the New York Stock Exchange, in privately-negotiated transactions or a combination of such methods of sale, at fixed prices that may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The paired shares may be sold directly or through broker-dealers, and such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the selling stockholders or the purchasers of paired shares for whom such broker-dealers may act as agent or to whom they sell as principal or both (which compensation to a particular broker-dealer might be in excess of customary commissions). We are filing this joint registration statement, of which this prospectus is a part, at this time to fulfill a contractual obligation to do so, which we undertook at the time of the original issuance of these paired shares. We will not receive any of the proceeds from the sale of the paired shares by the selling stockholders, but we have agreed to bear the expenses of registering such sale of the paired shares. Our common stock is listed on the New York Stock Exchange under the symbol "MT." ------------------------ INVESTING IN OUR PAIRED SHARES INVOLVES RISK. IN CONSIDERING WHETHER TO INVEST, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS. ------------------------ NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. IT IS ILLEGAL FOR ANY PERSON TO TELL YOU OTHERWISE. The date of this prospectus is February 4, 2000 PROSPECTUS SUMMARY THIS SUMMARY ONLY HIGHLIGHTS THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. BECAUSE THIS IS A SUMMARY, IT MAY NOT CONTAIN ALL INFORMATION THAT IS IMPORTANT TO YOU. YOU SHOULD READ THIS ENTIRE PROSPECTUS CAREFULLY BEFORE DECIDING WHETHER TO INVEST IN THE PAIRED SHARES. UNLESS THE CONTEXT OTHERWISE REQUIRES, ALL REFERENCES TO "WE," "US" OR "OUR" IN THIS PROSPECTUS REFER GENERALLY TO MEDITRUST CORPORATION AND MEDITRUST OPERATING COMPANY, COLLECTIVELY, THEIR SUBSIDIARIES AND RESPECTIVE PREDECESSOR ENTITIES FOR THE APPLICABLE PERIODS, ALTHOUGH THE CONTEXT MAY, IN CERTAIN SITUATIONS, REQUIRE THAT THESE WORDS REFER TO EITHER MEDITRUST CORPORATION OR MEDITRUST OPERATING COMPANY INDIVIDUALLY. ------------------------ THE MEDITRUST COMPANIES The Meditrust Companies consist of two separate companies, Meditrust Corporation and Meditrust Operating Company, whose paired shares of common stock trade as a single unit on the New York Stock Exchange pursuant to the terms of our Amended and Restated Certificates of Incorporation. Meditrust Corporation is a real estate investment trust and Meditrust Operating Company is a taxable corporation. Meditrust Corporation and Meditrust Operating Company were each incorporated in the State of Delaware in 1979. As used herein, references to "The Meditrust Companies" refer to Meditrust Corporation and Meditrust Operating Company collectively. We maintain an organizational structure called a "paired share structure" such that the paired shares of common stock of both companies trade and are transferable as a single unit. The paired share structure allows our stockholders to enjoy the economic benefits of owning both a company that owns and leases real estate and a company that operates businesses that use real estate. Currently, this structure generally permits the combined companies to reduce the amount of payments to third parties who traditionally would operate the businesses conducted on Meditrust Corporation's real estate for a fee because Meditrust Operating Company is permitted to operate such businesses and receive the operating and management fees that would otherwise be paid to the third party. Recent legislation, however, substantially limits our ability to use the paired share structure in the future. Meditrust Corporation's principal executive offices are located at 197 First Avenue, Suite 300, Needham Heights, Massachusetts 02494, and the telephone number is (781) 433-6000. Meditrust Operating Company's principal executive offices are located at 197 First Avenue, Suite 100, Needham Heights, Massachusetts 02494, and the telephone number is (781) 453-8062. THE OFFERING This prospectus relates to 10,907,971 paired shares of common stock of each of Meditrust Corporation and Meditrust Operating Company that the selling stockholders may offer for sale from time to time. These paired shares of common stock were issued to the selling stockholders in connection with our acquisition of La Quinta Inns, Inc. on July 17, 1998. Registration of the sale of the paired shares covered by this prospectus does not necessarily mean that all or any portion of the paired shares will be offered for sale by the selling stockholders. We have agreed to bear the expenses of the registration of the sale of the paired shares under federal and state securities laws, but we will not receive any proceeds from the sale of any paired shares offered under this prospectus. TAX STATUS OF MEDITRUST CORPORATION Meditrust Corporation qualifies as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. As long as Meditrust Corporation qualifies for 2 taxation as a real estate investment trust, it generally will not be subject to federal income tax on that portion of its ordinary income and capital gains that is currently distributed to our stockholders. Even if Meditrust Corporation qualifies for taxation as a real estate investment trust, we may be subject to state and local taxes on our income and property and to federal income and excise taxes on our undistributed income. RISK FACTORS Purchasers of paired shares should carefully consider the risk factors set forth under the caption "Risk Factors," beginning on page 4, and the other information included herein or incorporated by reference prior to making an investment decision. 3 RISK FACTORS PRESENTED BELOW ARE RISK FACTORS THAT YOU SHOULD CONSIDER WITH RESPECT TO AN INVESTMENT IN OUR SECURITIES. YOU SHOULD BE AWARE THAT THERE ARE VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW, WHICH MAY MATERIALLY IMPACT YOUR INVESTMENT IN OUR SECURITIES OR MAY IN THE FUTURE, AND, IN SOME CASES, ALREADY DO, MATERIALLY AFFECT US AND OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS. YOU SHOULD CAREFULLY CONSIDER THESE RISK FACTORS. THIS SECTION INCLUDES OR REFERS TO CERTAIN FORWARD-LOOKING STATEMENTS; YOU SHOULD READ THE EXPLANATION OF THE QUALIFICATIONS AND LIMITATIONS ON SUCH FORWARD-LOOKING STATEMENTS DISCUSSED ON PAGE 19. OUR STRATEGIC FOCUS ON LODGING RELATED PROPERTIES EXPOSES INVESTORS TO RISKS COMMON IN THAT INDUSTRY THAT MAY ADVERSELY AFFECT AN INVESTMENT IN OUR SECURITIES. We have made a significant investment in lodging related facilities through our acquisition of La Quinta Inns, Inc. La Quinta is operated by a subsidiary of Meditrust Operating Company and its real estate assets are owned by Meditrust Corporation or a subsidiary of Meditrust Corporation. The results of operations of La Quinta hotels are subject to many factors, including: - changes in the national, regional and local general economic climate; - competition from comparable hotels; - the desirability of particular locations; - the quality, philosophy and performance of the lodging facility managers; - changes in room rates and increases in operating costs due to inflation; - the need to periodically repair the lodging facilities; - increases in travel expenses that reduce business and leisure travel; and - the relationship between supply of and demand for hotel rooms (an oversupply of hotel properties or a reduction in demand for hotel rooms). LA QUINTA OPERATES IN A VERY COMPETITIVE MARKET. La Quinta hotels generally operate in markets that contain numerous competitors, including a wide range of lodging facilities offering full-service, limited-service and all-suite lodging options to the public. The continued success of our hotels will be dependent, in large part, upon our ability to compete in such areas as affordable and competitive room rates, quality of accommodations, name recognition, service level and convenience of locations. Additionally, an increasing supply of hotel rooms in La Quinta's market segment, and recent consolidations in the lodging industry generally, have resulted in the creation of several large, multi-branded hotel chains with diversified operations and may adversely impact our business, financial condition and results of operations. We cannot give assurances that demographic, geographic or other changes in markets will not adversely affect the convenience or desirability of the locations of our hotels. Furthermore, we cannot give assurances that competing hotels will not provide greater competition for guests than currently exists, in the markets in which our hotels operate, and that new hotels will not enter such markets. OUR LODGING RELATED PROPERTIES ARE GEOGRAPHICALLY CONCENTRATED. La Quinta's hotels are concentrated in the western and southern regions of the United States. As a result, our lodging properties are particularly sensitive to adverse economic and competitive conditions and trends in those regions and such conditions may specifically affect our cash available for distribution to stockholders. The concentration of properties in one region may expose us to risks of adverse economic developments which are greater than if our portfolio were more geographically diverse. 4 OUR LODGING RELATED BUSINESS AND OPERATIONS ARE SUBJECT TO EXTENSIVE EMPLOYMENT AND OTHER GOVERNMENTAL REGULATION. The lodging business is subject to extensive federal, state and local regulatory requirements, including building and zoning requirements, all of which can prevent, delay, make uneconomical or significantly increase the cost of developing additional lodging facilities. In addition, La Quinta's hotels and Meditrust Operating Company are subject to laws governing their relationship with employees, including minimum wage requirements, overtime, working conditions, work permit requirements and discrimination claims. An increase in the minimum wage rate, employee benefit costs or other costs associated with employees could adversely affect us. FLUCTUATIONS IN OPERATING RESULTS ARE COMMON IN THE LODGING INDUSTRY. The lodging industry may be adversely affected by, among other things: - changes in economic conditions, - changes in local market conditions, - oversupply of hotel rooms, - a reduction in demand for hotel space in specific areas, - changes in travel patterns, - weather conditions, - changes in governmental regulations that influence or determine wages, - prices or construction costs, - changes in interest rates, - the availability of financing for operating or capital needs and - changes in real estate tax rates and other operating expenses. Room supply and demand historically have been sensitive to shifts in gross domestic product growth, which has resulted in cyclical changes in average daily room and occupancy rates. Due in part to the strong correlation between the lodging industry's performance and economic conditions, the lodging industry is subject to cyclical changes in revenues. In that regard, we cannot give assurances that the recent strength in the lodging industry generally, or in the segment of the industry in which we operate, will not decline in the future. Furthermore, the lodging industry is seasonal in nature, with revenues typically higher in summer periods than in winter periods. FLUCTUATIONS IN AND DIFFICULTY WITH LODGING CONSTRUCTION MAY HAVE AN ADVERSE AFFECT ON US. If La Quinta resumes its historical strategy of growing through new construction, we may from time to time experience shortages of materials or qualified tradespeople or volatile increases in the cost of certain construction materials or labor, resulting in longer than normal construction and remodeling periods, loss of revenue and increased costs. We will rely heavily on local contractors, who may be inadequately capitalized or understaffed. The inability or failure of one or more local contractors to perform may result in construction or remodeling delays, increased cost and loss of revenue. The foregoing factors could adversely affect La Quinta's operations which, in turn, could materially adversely affect us and our ability to make distributions to stockholders and to pay amounts due on our indebtedness. 5 THE SEASONALITY OF THE LODGING INDUSTRY MAY AFFECT THE ABILITY OF MEDITRUST CORPORATION'S LESSEES AND OPERATORS TO MAKE TIMELY RENT PAYMENTS. The seasonality of the lodging industry causes fluctuations in hotel revenues and may, from time to time, affect either the amount of rent that accrues under Meditrust Corporation's hotel leases or the ability of Meditrust Corporation's lessees and operators to make timely rent payments under the leases. A lessee's or operator's inability to make timely rent payments to Meditrust Corporation could adversely affect our financial condition and ability to service debt and make distributions to our stockholders. MEDITRUST CORPORATION'S OWNERSHIP OF HEALTH CARE RELATED PROPERTIES EXPOSES INVESTORS TO RISKS COMMON IN THAT INDUSTRY THAT MAY ADVERSELY AFFECT AN INVESTMENT IN OUR SECURITIES. THERE ARE A NUMBER OF OPERATING RISKS THAT COULD HAVE AN ADVERSE AFFECT ON MEDITRUST CORPORATION'S HEALTH CARE RELATED BUSINESS. One of Meditrust Corporation's primary businesses is that of buying, selling, financing and leasing health care related properties. Operating risks in this business include, among other things: - competition for tenants; - competition from other health care financing providers, a number of which may have greater marketing, financial and other resources and experience than us; - changes in government regulation of health care; - changes in the availability and cost of insurance coverage; - increases in operating costs due to inflation and other factors; - changes in interest rates; - the availability of financing; and - adverse effects on general and local economic conditions. EXTENSIVE FEDERAL, STATE AND LOCAL REGULATION OF THE SKILLED NURSING INDUSTRY MAY ADVERSELY AFFECT THE ABILITY OF THIRD-PARTY OPERATORS OF MEDITRUST CORPORATION'S HEALTH CARE PROPERTIES TO MAKE THEIR PAYMENTS. The skilled nursing businesses of the third-party operators of Meditrust Corporation's health care related real estate, and the health care industry generally, are subject to extensive federal, state and local regulation governing the licensing and conduct of operations at health care facilities, certain capital expenditures, the quality of services provided, the manner in which the services are provided, financial and other arrangements between health care providers and reimbursement for services rendered. The failure of any third-party operator to comply with such laws, requirements and regulations could adversely affect its effectiveness in operating the facility or facilities. Any such ineffectiveness could impair such operator's ability to make payments to Meditrust Corporation and thereby adversely affect us. A HIGH CONCENTRATION OF INVESTMENT IN THE SKILLED NURSING INDUSTRY COMPOUNDS THE RISKS ASSOCIATED WITH THIS INDUSTRY. As of September 30, 1999, skilled nursing facilities comprised 28.8% of Meditrust Corporation's real estate investments. For the reasons mentioned in the risk factor above, such a concentration in this type of facility could have a material adverse effect on us. WE RELY HEAVILY ON THIRD-PARTY OPERATORS ASSOCIATED WITH MANY OF OUR PROPERTIES. Third-party operators manage skilled nursing facilities on each of our properties. Our financial position may be adversely affected by financial difficulties experienced by any such operators, including the bankruptcy, insolvency or general downturn in the business of any such operator, or in the event 6 any such operator does not renew its leases as they expire and Meditrust Corporation cannot lease these facilities to other operators on comparable terms. In particular, Meditrust Corporation's investments in the facilities operated by its two largest health care operators at September 30, 1999 amounts to approximately 20% of its total real estate investments. Such a concentration in these operators could have a material adverse effect on us. WE HAVE NO CONTROL OVER INCREASED GOVERNMENT REGULATION IN THE HEALTH CARE INDUSTRY GENERALLY. The health care industry is subject to changing political, economic, regulatory and demographic influences that may affect the operations of health care facilities and providers. During the past several years, the health care industry has been subject to changes in government regulation of many aspects of the industry (for example, reimbursement rates and certain capital expenditures). Some elected officials have announced that they intend to examine certain aspects of the United States health care system, including proposals which may further increase governmental involvement in health care. For example, the President and Congress have in the past, and may in the future, propose health care reforms which could impose additional regulations on Meditrust Corporation and its operators or limit the amounts that operators may charge for services. Meditrust Corporation's health care facility operators are, and will continue to be, subject to varying degrees of regulation and licensing by health or social service agencies and other regulatory authorities in the various states and localities in which they operate or in which they will operate. RECENT SIGNIFICANT HEALTH CARE REFORM HAS, AND LIKELY WILL CONTINUE TO, ADVERSELY AFFECT OUR OPERATIONS IN THE HEALTH CARE INDUSTRY. The Balanced Budget Act of 1997, which was signed by the President on August 5, 1997, enacted significant changes to the Medicare and Medicaid programs designed to modernize payment and health care delivery systems while achieving substantial budgetary savings. In seeking to limit Medicare reimbursement for skilled nursing services, the Balanced Budget Act of 1997 mandated the establishment of a prospective payment system for skilled nursing facilities to replace the current cost-based reimbursement system. The cost-based system reimburses skilled nursing facilities for reasonable direct and indirect allowable costs incurred in providing "routine services" as well as capital costs and ancillary costs, subject to limits fixed for the particular geographic area served by the skilled nursing facility. Under the prospective payment system, skilled nursing facilities will be paid a federal per diem rate for covered services. The per diem payment will cover routine service, ancillary, and capital-related costs. The prospective payment system is being phased in over a four-year period beginning on or after July 1, 1998. Under provisions of the Balanced Budget Act of 1997, states will be provided additional flexibility in managing their Medicaid program. Among other things, the Balanced Budget Act of 1997 repealed a federal payment standard, which had required states to pay "reasonable and adequate" payments to cover the costs of efficiently and economically operated hospitals, nursing facilities and certain intermediate care facilities. We have no control over these federal reimbursement rates, which may change periodically. Additionally, these health care reforms may reduce reimbursement to levels that are insufficient to cover the cost of providing patient care, which could adversely affect the revenues of Meditrust Corporation's third-party borrowers and lessees. Such adverse effects on Meditrust Corporation's third party borrowers may negatively impact those borrowers' and lessees' abilities to make their loan or lease payments to Meditrust Corporation. In fact, three of Meditrust Corporation's third party operators have cited these health care reforms as the precipitating factor in filing for bankruptcy protection. Failure of the borrowers or lessees to make their loan or lease payments would have a direct and material adverse effect on us. WE CANNOT GIVE ASSURANCES THAT THIRD-PARTY REIMBURSEMENT FOR MEDITRUST CORPORATION'S OPERATORS WILL CONTINUE TO BE AVAILABLE. The cost of many of the services offered by the current operators of Meditrust Corporation's health care facilities are reimbursed or paid for by third-party payers such as Medicare and Medicaid 7 programs for elderly, low income and disabled patients and state Medicaid programs for managed care organizations. No assurance can be given that such third-party reimbursement to Meditrust Corporation's operators will continue to be available or when reimbursement will be offered or that reimbursement rates will not be reduced. The increase in the number of providers contracting to provide per person fixed cost health care to a patient population has increased pressure on third-party payers to lower costs. A significant portion of the revenue from the third-party operators who lease or receive financing from Meditrust Corporation is derived from governmentally funded reimbursement programs, such as Medicare and Medicaid. These programs are highly regulated and subject to frequent and substantial changes resulting from legislation, adoption of rules and regulations, and administrative and judicial interpretations of existing law. In recent years, there have been fundamental changes in the Medicare program which have resulted in reduced levels of payment for a substantial portion of health care services, which Meditrust Corporation has no control over. Moreover, health care facilities have experienced increasing pressures from private payers such as health maintenance organizations attempting to control health care costs. Reimbursement from private payers has in many cases effectively been reduced to levels approaching those of government payers. Concern regarding health care costs may result in significant reductions in payment to health care facilities, and there can be no assurance that future payment rates from either governmental or private health care plans will be sufficient to cover cost increases in providing services to patients. In many instances, revenues from Medicaid programs are already insufficient to cover the actual costs incurred in providing care to those patients. Any changes in reimbursement policies which reduce reimbursement to levels that are insufficient to cover the cost of providing patient care could adversely affect revenues from the third-party operators who lease or receive financing from Meditrust Corporation and thereby adversely affect those entities' ability to make their lease or loan payments to Meditrust Corporation. Failure of these entities to make their lease or loan payments would have a direct and material adverse impact on us. A FAILURE TO COMPLY WITH THE MORE PREVALENT FRAUD AND ABUSE LAWS AND GOVERNMENTAL PROGRAM INTEGRITY REGULATIONS MAY HAVE A MATERIAL ADVERSE EFFECT ON US. In the past several years, due to rising health care costs, there has been an increased emphasis on detecting and eliminating fraud and abuse in the Medicare and Medicaid programs. Federal and state statutes generally prohibit payment of any remuneration to induce the referral of Medicare and Medicaid patients. Both federal and state self-referral statutes severely restrict the ability of physicians to refer patients to entities in which they have a financial interest. The Balanced Budget Act of 1997 provided the federal government with expanded enforcement powers to combat waste, fraud and abuse in the delivery of health care services. In addition, the Office of Inspector General and the Health Care Financing Administration have increased investigation and enforcement activity of fraud and abuse, specifically targeting nursing homes, home health providers and medical equipment suppliers. Failure to comply with the foregoing fraud and abuse laws or government program integrity regulations may result in sanctions, including the loss of licensure or eligibility to participate in reimbursement programs (including Medicare and Medicaid), asset forfeitures and civil and criminal penalties. It is anticipated that the trend toward increased investigation and informant activity in the area of fraud and abuse, as well as self-referral, will continue in future years. In the event that any borrower or lessee of Meditrust Corporation were to be found in violation of the applicable laws regarding fraud, abuse or self-referral, that borrower's or lessee's license or certification to participate in government reimbursement programs could be jeopardized, or that borrower or lessee could be subject to civil and criminal fines and penalties. Either of these occurrences could have a material adverse affect on us by adversely affecting the borrower's or lessee's ability to make debt or lease payments to Meditrust Corporation. The foregoing factors could adversely affect the ability of the operators of Meditrust Corporation's health care facilities to generate revenues and make payments to it. This, in turn, could materially 8 adversely affect us and our ability to make distributions to stockholders and to pay amounts due on our indebtedness. IT IS DIFFICULT TO BE CONTINUOUSLY UP-TO-DATE WITH CURRENT INFORMATION REGARDING THIRD-PARTY OPERATORS OF MEDITRUST CORPORATION'S HEALTH CARE PROPERTIES. As of September 30, 1999, our health care portfolio comprised approximately 49% of Meditrust Corporation's total real estate investments. A private health care company and Sun Healthcare currently operate approximately 20% of the total real estate investments and 40% of the health care portfolio. Approximately 30% of Meditrust Corporation's total real estate investments (approximately 58% of the health care portfolio) are operated by companies in the skilled nursing sector of the health care industry and 10% of Meditrust Corporation's total real estate investments (approximately 22% of the health care portfolio) are operated by companies in the assisted living sector of the health care industry. Meditrust Corporation monitors credit risk for our health care portfolio by evaluating a combination of publicly available financial information, information provided by the operators themselves and information otherwise available to us. The financial condition and ability of these health care operators to meet their rental and other obligations will, among other things, have an impact on Meditrust Corporation's revenues, net income or loss, funds available from operations and on our ability to make distributions to our stockholders. The operations of the skilled nursing companies have been negatively impacted by changes in Medicare reimbursement rates, increases in labor costs, increases in their leverage and various other factors. In addition, any failure by these operators to effectively conduct their operations could have a material adverse effect on their business reputation or on their ability to enlist and maintain patients in their facilities. Operators of assisted living and skilled nursing facilities are experiencing fill-up periods of a longer duration, and are being impacted by concerns regarding the potential of over-building, increased regulation and the use of certain accounting practices. Accordingly, many of these operators have pre-announced anticipated earnings shortfalls and have experienced a significant decline in their stock prices. These factors have had a detrimental impact on the liquidity of some assisted living operators, which has caused their growth plans to decelerate and may have a negative effect on their operating cash flows. THREE OF MEDITRUST CORPORATION'S HEALTH CARE FACILITY OPERATORS HAVE FILED FOR BANKRUPTCY. Citing the effects of changes in government regulation relating to Medicare reimbursement as the precipitating factor, Sun Healthcare filed for protection under Chapter 11 of the U.S. Bankruptcy Code on October 14, 1999. As of September 30, 1999, Meditrust Corporation had a portfolio of 42 properties operated by Sun Healthcare, which consisted of 38 owned properties with net assets of approximately $318 million and 4 mortgages with net assets of approximately $31 million. During the nine months ended September 30, 1999, income derived from these properties included rental income of $38 million from owned properties and interest income of $3 million from mortgages. Sun Healthcare has not formally indicated whether it will accept or reject any of Meditrust Corporation's leases. Sun Healthcare has indicated, however, that they will continue to make lease payments to Meditrust Corporation unless and until such leases are rejected. If necessary, Meditrust Corporation has a plan in place to transition and to continue operating any of such rejected Sun Healthcare properties. Since October 1999, Meditrust Corporation has not received interest payments related to the mortgages. Accordingly, such mortgages have been put on non-accrual status. Should Sun Healthcare reject certain leases and revise lease terms for the respective facilities, Meditrust Corporation's cash flows, revenues and results of operations may be impacted and these amounts may be material. Management is not currently able to predict the outcome of the Sun Healthcare bankruptcy or the related impact on Meditrust Corporation's cash flows, revenues or results of operations. 9 Citing reasons similar to Sun Healthcare, Mariner Health Group, Inc. and Integrated Health Services, Inc. also filed for protection under Chapter 11 of the U.S. Bankruptcy Code on January 18, 2000 and February 2, 2000, respectively. As of September 30, 1999, Meditrust Corporation had a portfolio of two properties operated by Mariner, which consisted of one owned property with net assets of approximately $8 million and one mortgage with net assets of approximately $7 million. During the nine months ended September 30, 1999, we derived interest and rental income from the Mariner properties of approximately $1.5 million. As of September 30, 1999, Integrated Health Services operated 10 of Meditrust Corporation's owned properties that had a book value of approximately $39 million in the aggregate. During the nine months ended September 30, 1999, we derived approximately $6.6 million in rental income from the Integrated Health Services properties. OUR SUBSTANTIAL DEBT, AS WELL AS THE VARIOUS OTHER RISKS ASSOCIATED WITH DEBT AND PREFERRED STOCK FINANCING, COULD RESULT IN ADVERSE CONSEQUENCES FOR US. WE ARE DEPENDENT ON EXTERNAL SOURCES OF CAPITAL. To qualify as a real estate investment trust, Meditrust Corporation must distribute to its stockholders each year at least 95% of Meditrust Corporation's net taxable income (90% commencing in 2001), excluding any net capital gain. Because of these distribution requirements, it is not likely that Meditrust Corporation will be able to fund all future capital needs, including capital required for potential acquisitions, from income from operations. Meditrust Corporation, therefore, will have to rely on third-party sources of capital, which may or may not be available on favorable terms or at all. Meditrust Corporation's access to third-party sources of capital depends upon a number of factors, including general market conditions, the market's perception of Meditrust Corporation's growth potential, Meditrust Corporation's current and potential future earnings and cash distributions and the market price of Meditrust Corporation's common stock. Moreover, additional equity offerings may result in substantial dilution of stockholders' interests, and additional debt financing may substantially further leverage Meditrust Corporation. MEDITRUST CORPORATION IS SUBSTANTIALLY LEVERAGED. Meditrust Corporation's debt-to-total market capitalization ratio was approximately 49% as of September 30, 1999. Meditrust Operating Company, as a guarantor under Meditrust Corporation's credit facility, is also substantially leveraged. This degree of debt could have important consequences for investors and for us, some of which include: - our ability to obtain additional financing may be impaired, both currently and in the future; - a substantial portion of our cash flow from operations must be dedicated to the payment of principal and interest on this indebtedness, thereby reducing the funds available for other purposes; - our cash flow may be insufficient to meet required payments of principal, interest or dividends; - we may be substantially more leveraged than our competitors, putting us at a competitive disadvantage; and - our flexibility to adjust to market conditions is limited, leaving us vulnerable in a downturn in general economic conditions or in our business. Despite our plan to decrease the amount of our debt as announced on January 28, 2000 in our plan of reorganization, we cannot make assurances that we will be able to repay enough debt to successfully deleverage. 10 MEDITRUST CORPORATION MAY NOT BE ABLE TO RENEW, REPAY OR REFINANCE WHEN DUE THE INDEBTEDNESS ON OUR PROPERTIES OR UNSECURED INDEBTEDNESS OR THE TERMS OF ANY RENEWAL OR REFINANCING WILL NOT BE AS FAVORABLE AS THE TERMS OF SUCH ORIGINAL INDEBTEDNESS. If Meditrust Corporation were unable to refinance the indebtedness on acceptable terms, or at all, we may be forced to dispose of one or more of our properties on disadvantageous terms, which might result in losses, which losses could have a material adverse effect on us and our ability to make distributions to stockholders and to pay amounts due on such indebtedness. Meditrust Corporation has $207 million in term debt that will mature in July 2000 and an additional $1.4 billion in debt that matures in 2001. If a property is mortgaged to secure payment of indebtedness and Meditrust Corporation is unable to meet mortgage payments, the mortgagee could foreclose upon the property, appoint a receiver and receive an assignment of rents and leases or pursue other remedies, all with a consequent loss of revenues and asset value to us. Foreclosures could also create taxable income without accompanying cash proceeds, thereby hindering Meditrust Corporation's ability to meet the real estate investment trust distribution requirements of the Internal Revenue Code. WE ARE SUBJECT TO THE RISKS ASSOCIATED WITH INDEBTEDNESS THAT BEARS INTEREST AT VARIABLE RATES. We have incurred, and expect in the future to incur, indebtedness which bears interest at variable rates. Accordingly, increases in interest rates would increase our interest costs (to the extent that the related indebtedness was not protected by interest rate protection arrangements), which could have a material adverse effect on us and our ability to make distributions to stockholders and to pay amounts due on our indebtedness or cause us to be in default under certain debt instruments. In addition, an increase in market interest rates may lead our stockholders to demand a higher yield on their paired shares from our distributions, which could adversely affect the market price for the paired shares and could also adversely affect the market price of any preferred stock issued by either or both of The Meditrust Companies. MEDITRUST CORPORATION'S REAL PROPERTY INVESTMENTS ARE SUBJECT TO THE MANY VARYING TYPES AND DEGREES OF RISK INHERENT IN OWNING REAL ESTATE AND THAT MAY AFFECT THE VALUE OF OUR ASSETS AND OUR ABILITY TO GENERATE REVENUE, NET INCOME AND CASH AVAILABLE FOR DISTRIBUTION TO OUR STOCKHOLDERS. THE ILLIQUIDITY OF REAL ESTATE AS AN INVESTMENT LIMITS MEDITRUST CORPORATION'S ABILITY TO SELL PROPERTIES QUICKLY IN RESPONSE TO MARKET CONDITIONS. Real estate investments are relatively illiquid and therefore cannot be purchased or sold rapidly in response to changes in economic or other conditions. Buyers may not be identified quickly or such buyers may not be able to secure suitable financing to consummate a transaction. In addition, the Internal Revenue Code limits Meditrust Corporation's ability as a real estate investment trust to make sales of properties held for fewer than four years. Furthermore, sales of certain appreciated property could generate material adverse tax consequences, which may affect Meditrust Corporation's ability to sell properties in response to market conditions and adversely affect returns to stockholders. Consequently, there can be no assurances that we will be able to accomplish an orderly disposition of a significant portion of the health care assets as announced on January 28, 2000. MEDITRUST CORPORATION DEPENDS AND RELIES ON THE ABILITY AND SUCCESS OF THOSE WHO OPERATE, MANAGE, LEASE AND MAINTAIN OUR PROPERTIES. Federal income tax law restricts real estate investment trusts from deriving revenues directly from operating their properties. Thus, the underlying value of Meditrust Corporation's real estate investments, results of operations and ability to make distributions to stockholders and pay amounts due on indebtedness depends on the ability of the operators, managers, lessees and Meditrust Operating Company to operate Meditrust Corporation's properties in a manner sufficient to maintain or increase revenues and to generate sufficient revenues in excess of operating expenses to make rent payments under their leases or loan payments in respect of their loans from Meditrust Corporation. 11 THE RESULTS OF OPERATIONS OF MEDITRUST CORPORATION'S PROPERTIES MAY BE ADVERSELY AFFECTED BY MANY FACTORS OUTSIDE OF MEDITRUST CORPORATION'S CONTROL. Results of operations of Meditrust Corporation's properties may also be adversely affected by, among other things: - changes in national economic conditions, changes in local market conditions due to changes in general or local economic conditions and neighborhood characteristics; - changes in interest rates and in the availability, cost and terms of financing; - the impact of present or future environmental legislation and compliance with environmental laws and other regulatory requirements; - the ongoing need for capital improvements, particularly in older structures; - changes in real estate tax rates and assessments and other operating expenses; - adverse changes in governmental rules and fiscal policies; - adverse changes in zoning and other land use laws; and - civil unrest, earthquakes and other natural disasters (which may result in uninsured losses) and other factors which are beyond our control. MEDITRUST CORPORATION DEPENDS ON THE RENTAL INCOME FROM OUR REAL PROPERTY. Meditrust Corporation's cash flow, results of operations and the value of our assets would be adversely affected if a significant number of third-party operators of our properties failed to meet their lease obligations. These lease payments are one of Meditrust Corporation's principal sources of revenue. The bankruptcy or insolvency of a major operator may have an adverse effect on a property. At any time, an operator also may seek protection under the bankruptcy laws, which could result in rejection and termination of such operator's lease and thereby cause a reduction in the cash flow from the property. We have no control over such reduction and cannot assure investors that any of our third-party operators will have sufficient assets, income, and access to financing to enable them to satisfy their obligations under any such lease. If an operator rejects its lease, the owner's claim for breach of the lease would (absent collateral securing the claim) be treated as a general unsecured claim. Generally, the amount of the claim would be capped at the amount owed for unpaid pre-petition lease payments unrelated to the rejection, plus the greater of one year's lease payments or 150% of the remaining lease payments payable under the lease (but not to exceed the amount of three years' lease payments). MEDITRUST CORPORATION'S OPERATING COSTS MAY BE AFFECTED BY THE OBLIGATION TO PAY FOR THE COST OF COMPLYING WITH EXISTING ENVIRONMENTAL LAWS, ORDINANCES AND REGULATIONS, AS WELL AS THE COST OF COMPLYING WITH FUTURE LEGISLATION. Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on or under the property. Environmental laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances and whether or not such substances originated from the property. In addition, the presence of hazardous or toxic substances, or the failure to remediate such property properly, may adversely affect our ability to use such real property as collateral in borrowing. Persons who arrange for the transportation, disposal or treatment of hazardous or toxic substances may also be liable for the costs of removal or remediation of such substances at the disposal or treatment facility, whether or not such facility is or ever was owned or operated by such person. 12 Certain environmental laws and common law principles could be used to impose liability for releases of hazardous materials, including asbestos-containing materials, into the environment. In addition, third parties may seek recovery from owners or operators of real properties for personal injury associated with exposure to released asbestos-containing materials or other hazardous materials. Environmental laws may also impose restrictions on the use or transfer of property, and these restrictions may require various expenditures by Meditrust Corporation. In connection with the ownership and operation of any of Meditrust Corporation's properties, we (and the other lessees or operators of these properties) may be liable for any such costs. The cost of defending against claims of liability or remediating contaminated property and the cost of complying with environmental laws could materially adversely affect us and our ability to make distributions to stockholders and to pay amounts due on our indebtedness. OUR FAILURE TO COMPLY WITH THE REQUIREMENTS OF THE AMERICANS WITH DISABILITIES ACT OF 1990 WOULD HAVE A MATERIAL ADVERSE EFFECT ON US AND OUR ABILITY TO MAKE DISTRIBUTIONS TO OUR STOCKHOLDERS AND TO PAY AMOUNTS DUE ON OUR INDEBTEDNESS, OUR BUSINESS AND OUR RESULTS OF OPERATIONS. Under the Americans with Disabilities Act of 1990, all public accommodations are required to meet certain federal requirements related to access and use by disabled persons. A determination that we are not in compliance with the Americans with Disabilities Act could result in the imposition of fines and/or an award of damages to private litigants. If we were required to make modifications to comply with the Americans with Disabilities Act, there could be a material adverse effect on us and our ability to make distributions to stockholders and to pay amounts due on our indebtedness. MEDITRUST CORPORATION'S FAILURE TO OBTAIN AND MAINTAIN PROPER INSURANCE ON OUR PROPERTIES WOULD HAVE A MATERIAL ADVERSE EFFECT ON US. Meditrust Corporation is directly responsible for insuring our lodging related properties. Additionally, each of Meditrust Corporation's leases and mortgage loans typically specifies that comprehensive insurance is to be maintained on each of the applicable properties, including liability, fire and extended coverage. Leases and loan documents for new investments (including those leased to Meditrust Operating Company) typically contain similar provisions. There are certain types of losses, generally of a catastrophic nature, such as earthquakes and floods, that may be uninsurable or not economically insurable. We will use our discretion in determining amounts, coverage limits and deductibility provisions of insurance, with a view to maintaining appropriate insurance coverage on our investments at a reasonable cost and on suitable terms. This may result in insurance coverage that, in the event of a substantial loss, would not be sufficient to pay the full current market value or current replacement cost of the lost investment and also may result in certain losses being totally uninsured. Inflation, changes in building codes, zoning or other land use ordinances, environmental considerations, lender imposed restrictions and other factors also might make it infeasible to use insurance proceeds to replace the property after such property has been damaged or destroyed. Under such circumstances, the insurance proceeds, if any, received by Meditrust Corporation might not be adequate to restore our economic position with respect to such property. AN INVESTMENT IN OUR SECURITIES MAY HAVE ADVERSE TAX CONSEQUENCES TO THE INVESTOR. MEDITRUST CORPORATION'S FAILURE TO QUALIFY AS A REAL ESTATE INVESTMENT TRUST COULD HAVE SERIOUS ADVERSE FINANCIAL CONSEQUENCES. Meditrust Corporation operates, and intends to continue to operate in the future, so as to qualify as a real estate investment trust for federal income tax purposes. Meditrust Corporation believes that it has operated in a manner that permits it to qualify as a real estate investment trust under the Internal Revenue Code. Qualification as a real estate investment trust, however, involves the application of highly technical and complex provisions of the Internal Revenue Code for which there are only limited judicial or administrative interpretations. The complexity of these provisions is greater in the case of a paired share real estate investment trust. In addition, real estate investment trust qualification involves 13 the determination of factual matters and circumstances not entirely within our control. For example, in order to qualify as a real estate investment trust, Meditrust Corporation must derive at least 95% of its gross income in any year from qualifying sources and Meditrust Corporation must distribute annually to stockholders 95% (90% commencing in 2001) of its real estate investment trust taxable income, excluding net taxable gains. As a result, although we believe Meditrust Corporation is organized and operating in a manner that permits it to remain qualified as a real estate investment trust, we cannot guarantee that Meditrust Corporation will be able to continue to operate in such a manner. In addition, if we are ever audited by the Internal Revenue Service with respect to any past year, the Internal Revenue Service may challenge Meditrust Corporation's qualification as a real estate investment trust for such year. If Meditrust Corporation were to fail to qualify as a real estate investment trust, it would be subject to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate rates. Such failure to qualify as a real estate investment trust would result in additional tax liability for the year or years involved. This additional tax could significantly reduce, or possibly eliminate, the amount of cash Meditrust Corporation would have available for investment or distribution to stockholders. In addition, the failure to qualify as a real estate investment trust would also: - constitute a default under certain of our debt obligations, which would generally allow the holders thereof to demand the immediate repayment of such indebtedness, and - significantly reduce the market value of our stock. Each of these possible outcomes could have a material adverse effect on us. RECENT LEGISLATION HAS CURBED THE USE OF THE PAIRED SHARE STRUCTURE. Meditrust Corporation's ability to qualify as a real estate investment trust is further dependent upon its continued exemption from the anti-pairing rules of Section 269B(a)(3) of the Code, which would ordinarily prevent it from qualifying as a real estate investment trust. Subject to the discussion below regarding recent legislation, the "grandfathering" rules governing Section 269B generally provide that Section 269B(a)(3) does not apply to a paired share real estate investment trust if the real estate investment trust and its paired operating company were paired on June 30, 1983. On June 30, 1983, Meditrust Corporation (then known as Santa Anita Enterprises, Inc.) was paired with the Meditrust Operating Company (which was then known as Santa Anita Operating Company). There are, however, no judicial or administrative authorities interpreting this "grandfathering" rule. Moreover, if for any reason Meditrust Corporation failed to qualify as a real estate investment trust in 1983, the benefit of the "grandfathering" rule would not be available to it, in which case Meditrust Corporation would not qualify as a real estate investment trust for any taxable year from and after 1983. Such failure to qualify as a real estate investment trust would have a material adverse effect on us and our ability to make distributions to our stockholders and to pay amounts due on our indebtedness. On July 22, 1998, the President signed into law the Internal Revenue Service Restructuring and Reform Act of 1998. Included in the Reform Act is a freeze on the grandfathered status of paired share real estate investment trusts. Under this legislation, the anti-pairing rules provided in the Internal Revenue Code apply to real property interests we acquired after March 26, 1998, or acquired by a subsidiary or partnership in which a 10% or greater interest we own, unless: - the real property interests are acquired pursuant to a written agreement that was binding on March 26, 1998 and at all times thereafter, or - the acquisition of such real property interests was described in a public announcement or in a filing with the Securities and Exchange Commission on or before March 26, 1998. 14 These restrictions on the activities of a grandfathered paired share real estate investment trust provided for in the Reform Act may in the future make it impractical or undesirable for us to continue to maintain our paired share structure. Restructuring our operations to comply with the rules provided by the Reform Act could cause us to incur tax liabilities, to recognize an impairment loss on their goodwill assets, or otherwise materially adversely affect us and our ability to make distributions to stockholders and to pay amounts due on our indebtedness. WE HAVE NO CONTROL OVER CHANGES IN LEGISLATION, REGULATIONS, ADMINISTRATIVE INTERPRETATIONS OR COURT DECISIONS. We can give no assurances that new legislation, regulations, administrative interpretations or court decisions will not change the tax law with respect to qualification as a real estate investment trust and the federal income tax consequence of such qualification. Such legislation, regulations, administrative interpretations or court decisions could have a material adverse effect on us and our ability to make distributions to stockholders and to pay amounts due on our indebtedness. In addition, this type of legislation could prevent us from growing as originally intended. MEDITRUST CORPORATION IS SUBJECT TO SOME TAXES EVEN IF IT QUALIFIES AS A REAL ESTATE INVESTMENT TRUST. Even if Meditrust Corporation qualifies as a real estate investment trust, it is subject to some federal, state and local taxes on its income and property. For example, Meditrust Corporation pays taxes on certain income it does not distribute. Also, Meditrust Corporation's income derived from properties located in some states are subject to local taxes and, if Meditrust Corporation enters into transactions which the Internal Revenue Code labels as "prohibited transactions," Meditrust Corporation's net income from such transactions would be subject to a 100% tax. THE REAL ESTATE INVESTMENT TRUST MINIMUM DISTRIBUTION REQUIREMENTS MAY RESULT IN ADVERSE CONSEQUENCES TO INVESTORS. MEDITRUST CORPORATION MAY BE SUBJECT TO TAXES IN CONNECTION WITH THE DISTRIBUTION OF ASSETS ACQUIRED IN ACQUISITIONS. In order to qualify as a real estate investment trust, Meditrust Corporation is generally required each year to distribute to its stockholders at least 95% (90% commencing in 2001) of its taxable income, excluding any net capital gain. In addition, if Meditrust Corporation was to dispose of assets acquired in certain acquisitions during the ten-year period following the acquisition, it would be required to distribute at least 95% (90% commencing in 2001) of the amount of any "built-in gain" attributable to such assets that Meditrust Corporation recognizes in the disposition, less the amount of any tax paid with respect to such recognized built-in gain. Meditrust Corporation generally is subject to a 4% nondeductible excise tax on the amount, if any, by which certain distributions paid by Meditrust Corporation with respect to any calendar year are less than the sum of: - 85% of Meditrust Corporation's ordinary income for that year, - 95% of Meditrust Corporation's capital gain net income for that year, and - 100% of Meditrust Corporation's undistributed income from prior years. MEDITRUST CORPORATION MAY NEED TO BORROW MONEY TO MEET ITS MINIMUM DISTRIBUTION REQUIREMENTS AND TO CONTINUE TO QUALIFY AS A REAL ESTATE INVESTMENT TRUST. Meditrust Corporation's ability to make distributions to stockholders could be adversely affected by increased debt service obligations if it needs to borrow money in order to maintain its real estate investment trust qualification. For example, differences in timing between when Meditrust Corporation receives income and when it has to pay expenses could require Meditrust Corporation to borrow money to meet the requirement that Meditrust Corporation distributes to its stockholders at least 95% (90% commencing in 2001) of its net taxable income each year excluding net capital gains. The incurrence of 15 large expenses also could cause Meditrust Corporation to need to borrow money to meet this requirement. Meditrust Corporation might need to borrow money for these purposes even if we believe that market conditions are not favorable for such borrowings and, therefore, we may borrow money on unfavorable terms. MEDITRUST CORPORATION'S FUNDS FROM OPERATIONS AND CASH DISTRIBUTIONS MAY AFFECT THE MARKET PRICE OF OUR PUBLICLY TRADED SECURITIES. We believe that the market value of a real estate investment trust's equity securities is based primarily upon the market's perception of the real estate investment trust's growth potential, including its prospects for accretive acquisitions and development and its current and potential future cash distributions, and is secondarily based upon the real estate market value of the underlying assets. For that reason, our common stock may trade at prices that are higher or lower than the net asset value per share. To the extent Meditrust Corporation retains operating cash flow for investment purposes, working capital reserves or other purposes, these retained funds, while increasing the value of our underlying assets, may not correspondingly increase the market price of our common stock. Meditrust Corporation's failure to meet the market's expectations with regard to future funds from operations and cash distributions would likely adversely affect the market price of our publicly traded securities. MARKET INTEREST RATES MAY HAVE AN EFFECT ON THE VALUE OF OUR PUBLICLY TRADED SECURITIES. One of the factors that investors consider important in deciding whether to buy or sell shares of a real estate investment trust is the distribution rate on such shares, as a percentage of the price of such shares relative to market interest rates. If market interest rates go up, prospective purchasers of our equity securities may expect a higher dividend yield. Higher interest rates would not, however, result in more funds for Meditrust Corporation to distribute and, in fact, would likely increase our borrowing costs and potentially decrease cash available for distribution to the extent that our indebtedness has floating interest rates. Thus, higher market interest rates could cause the market price of our publicly traded securities to go down. PROVISIONS OF OUR CHARTERS AND BYLAWS COULD INHIBIT CHANGES IN CONTROL THAT COULD BE BENEFICIAL TO OUR STOCKHOLDERS. Certain provisions of our charters and bylaws may delay or prevent a change in control or other transaction that could provide our stockholders with a premium over the then-prevailing market price of their paired shares or which might otherwise be in their best interests. These include a staggered Board of Directors as well as the ownership limitations in each of our respective Amended and Restated Certificates of Incorporation. WE DEPEND ON OUR KEY PERSONNEL. We depend on the efforts of our executive officers and other key personnel. While we believe that we could find replacements for these key personnel, the loss of their services could have a significant adverse effect on our operations. WE CANNOT GIVE ASSURANCES THAT NO FURTHER RISKS REMAIN WITH RESPECT TO THE YEAR 2000. Although at this point we have not identified any specific business functions that have suffered any material disruptions as a result of Year 2000 events, We cannot give assurances that there is not risk of Year 2000 related disruptions in the future, which could have a material adverse effect on us. 16 ABOUT THIS PROSPECTUS This prospectus is part of a joint registration statement on Form S-3 that we filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended. This prospectus and any accompanying prospectus supplement do not contain all of the information included in the joint registration statement. For further information, we refer you to the joint registration statement, including its exhibits. Statements contained in this prospectus and any accompanying prospectus supplement about the provisions or contents of any agreement or other document are not necessarily complete. If the Securities and Exchange Commission's rules and regulations require that such agreement or document be filed as an exhibit to the joint registration statement, please see such agreement or document for a complete description of these matters. This prospectus provides you with a general description of the offered paired shares. Each time a selling stockholder sells any of the offered paired shares, the selling stockholder will provide you with this prospectus and a prospectus supplement, if applicable, that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change any information contained in this prospectus. You should read both this prospectus and any prospectus supplement, together with the additional information described under the heading "Where You Can Find More Information." WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any document we file at the Securities and Exchange Commission's public reference rooms in Washington, D.C., Chicago, Illinois, and New York, New York. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information about the public reference rooms. Our Securities and Exchange Commission filings are also available to the public from the Securities and Exchange Commission's Web site at http://www.sec.gov. In addition, you may look at our Securities and Exchange Commission filings at the offices of the New York Stock Exchange, which is located at 20 Broad Street, New York, New York 10005. Our Securities and Exchange Commission filings are available at the New York Stock Exchange because our common stock is listed and traded on the New York Stock Exchange. The Securities and Exchange Commission allows us to incorporate by reference the information we file with them, which means that we can disclose important information to you by referring you to these documents. The information incorporated by reference is an important part of this prospectus, and information that we file later with the Securities and Exchange Commission will automatically update and supersede the information already incorporated by reference in this prospectus. We are incorporating by reference the documents listed below, which we have already filed with the Securities and Exchange Commission, and any future filings we make with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until the selling stockholders sell all of the securities. THE MEDITRUST COMPANIES JOINT SECURITIES AND EXCHANGE COMMISSION FILINGS (FILE NOS. 001-08131 AND 001-08132) - Our Joint Annual Reports on Form 10-K for the year ended December 31, 1998 (filed March 31, 1999) and on Form 10-K/A (filed April 30, 1999); - Our Joint Quarterly Reports on Form 10-Q for the three months ended March 31, 1999 (filed May 13, 1999), the six months ended June 30, 1999 (filed July 29, 1999), and the nine months ended September 30, 1999 (filed November 12, 1999); and 17 - Our Joint Current Reports on Form 8-K, filed with the Securities and Exchange Commission on April 15, 1999, May 12, 1999, May 26, 1999, and February 1, 2000. In addition, we are incorporating by reference the descriptions of our paired shares from a registration statement we have previously filed under Section 12 of the Securities Exchange Act, including any amendments or reports filed for the purpose of updating these descriptions. YOU MAY REQUEST A COPY OF THESE FILINGS, AND ANY EXHIBITS THAT WE HAVE SPECIFICALLY INCORPORATED BY REFERENCE AS AN EXHIBIT IN THIS PROSPECTUS, AT NO COST BY WRITING OR TELEPHONING US. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED, WITH RESPECT TO MEDITRUST CORPORATION, TO 197 FIRST AVENUE, SUITE 300, NEEDHAM HEIGHTS, MASSACHUSETTS 02494, ATTENTION: SECRETARY, OR BY TELEPHONE TO (781) 433-6000; AND WITH RESPECT TO MEDITRUST OPERATING COMPANY, TO 197 FIRST AVENUE, SUITE 100, NEEDHAM HEIGHTS, MASSACHUSETTS 02494, ATTENTION: SECRETARY, OR BY TELEPHONE TO (781) 453-8062. You should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement. Neither we nor the selling stockholders have authorized anyone else to provide you with different information. The selling stockholders are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information in this prospectus or the documents incorporated by reference in this prospectus is accurate as of any date other than the date on the front of this prospectus or those documents. 18 FORWARD-LOOKING STATEMENTS This prospectus, including the information incorporated by reference in this prospectus, contains statements that are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify forward-looking statements by the use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume" and other similar expressions which predict or indicate future events and trends and which do not relate to historical matters. These statements include, among other things, statements regarding our intent, belief or expectations with respect to: - our implementation of our strategic reorganization plan announced January 28, 2000; - our declaration, payment or suspension of distributions; - our potential developments or acquisitions or dispositions of properties, assets or other public or private companies; - the anticipated operating performance of our facilities; - our policies regarding investments, indebtedness, acquisitions, dispositions, financings, conflicts of interest and other matters; - our qualification as a real estate investment trust under the Internal Revenue Code; - the real estate markets in the Southeast, Southwest, Mid-Atlantic and Midwest regions of the United States and in general; - the availability of debt and equity financing; - interest rates; - general economic conditions; - trends affecting our financial condition or results of operations; and - the implementation of our plan to address Year 2000 issues. You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, some of which are beyond our control. These risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements. Some of the factors that might cause these differences include, but are not limited to, the following: - we may not be able to sufficiently reduce our level of indebtedness; - we may fail to secure or may abandon development opportunities; - we may be unable to implement an orderly disposition of our health care assets as announced on January 28, 2000; - we may be unable to find buyers for our health care assets or such buyers may be unable to secure suitable financing; - construction and lease-up may not be completed on schedule due to weather conditions, unavailability of materials or other delays, resulting in increased debt service expense and construction costs and reduced rental revenues; - occupancy rates and market rents may be adversely affected by local economic and market conditions which are beyond our control, including competition; 19 - financing may not be available to us, or may not be available on favorable terms; - our cash flow may be insufficient to meet required payments of principal and interest; - our existing indebtedness may mature in an unfavorable credit environment, preventing such indebtedness from being refinanced, or, if refinanced, causing such refinancing to occur on terms that are not as favorable as the terms of the existing indebtedness; - legislative or regulatory changes, including changes to laws governing the taxation of real estate investment trusts; - material adverse effects to the business and financial condition, such as bankruptcy, of third-party operators of our properties may negatively impact our cash flow and financial condition; - we may experience unanticipated difficulties and interruptions due to failures regarding Year 2000 compliance; - our business partners, including our primary bank and payroll processor, vendors of our computer information systems or third party service providers, may experience unanticipated difficulties and interruptions due to failures regarding Year 2000 compliance; and - generally accepted accounting principles, policies and guidelines applicable to real estate investment trusts. In addition, the factors described under "Risk Factors" in this prospectus may result in these differences. You should carefully review all of these factors, and you should be aware that there may be other factors that could cause these differences. We caution you that, while forward-looking statements reflect our estimates and beliefs, they are not guarantees of future performance. These forward-looking statements were based on information, plans and estimates at the date of this prospectus, and we do not promise to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes. 20 THE MEDITRUST COMPANIES GENERAL The Meditrust Companies consist of two separate companies, Meditrust Corporation and Meditrust Operating Company, whose paired shares of common stock trade as a single unit (symbol: MT) on the New York Stock Exchange pursuant to the terms of their respective Amended and Restated Certificates of Incorporation. Meditrust Corporation is a real estate investment trust and Meditrust Operating Company is a taxable corporation. Meditrust Corporation and Meditrust Operating Company were each incorporated in the State of Delaware in 1979. As used herein, the terms "Meditrust Corporation" and "Meditrust Operating Company" include wholly owned subsidiaries of Meditrust Corporation and Meditrust Operating Company unless the context requires otherwise. The Meditrust Companies maintain an organizational structure called a "paired share structure" such that the paired shares of common stock of both companies trade and are transferable as a single unit. A predecessor of Meditrust Corporation ("Meditrust's Predecessor"), which was organized as a Massachusetts business trust and was known as "Meditrust", acquired the paired share structure in 1997 by acquiring, together with an affiliate of Meditrust's Predecessor, Santa Anita Realty Enterprises Inc. and Santa Anita Operating Company (collectively, the "Santa Anita Companies"). The Santa Anita Companies had operated under the paired share structure since 1979. The paired share structure permits our stockholders to enjoy the economic benefits of owning a company that owns and leases real estate, namely Meditrust Corporation, and a company that operates a business that uses real estate, namely Meditrust Operating Company. The benefits attributable to the future use of the paired share structure have been limited, however, by federal legislation adopted in July 1998. MEDITRUST CORPORATION Meditrust Corporation invests in real estate in two principal areas: health care related real property and lodging facilities. As a real estate investment trust, Meditrust Corporation is not permitted to operate the businesses conducted at or on the real estate that it owns. Rather, Meditrust Corporation must lease its properties to the operators of the businesses. In the case of its health care related real properties, Meditrust Corporation either leases facilities that it owns or invests in, or provides financing to, third-party operators principally of long-term care, retirement and assisted living facilities and medical office buildings. In the case of its lodging facilities, Meditrust Corporation owns, maintains leasehold interest in or invests in real estate that it leases to Meditrust Operating Company. As more fully described below, Meditrust Operating Company operates the lodging business conducted on the real estate that it leases from Meditrust Corporation. MEDITRUST OPERATING COMPANY Meditrust Operating Company operates the lodging related real estate owned by Meditrust Corporation. Meditrust Operating Company does not conduct any activities related to Meditrust Corporation's health care related real estate. The lodging portion of Meditrust Operating Company's business is conducted under the La Quinta brand name and is presently headquartered in Dallas, Texas. As more fully described below, we acquired the La Quinta brand name, lodging facilities and operations in July 1998. DIVISIONS We conduct our businesses and make our investments through two principal divisions: health care related real estate and lodging. As described above, Meditrust Operating Company does not conduct any operations in the health care related real estate business. Rather, this segment, which is headquartered in Needham Heights, Massachusetts at our headquarters, is conducted solely through Meditrust Corporation. The lodging business, which is conducted through the La Quinta division, 21 consists of real estate assets owned by Meditrust Corporation and lodging operations performed by Meditrust Operating Company. As of September 30, 1999, Meditrust Corporation owned, invested in and provided financing for 387 geographically dispersed health care facilities operated by 27 different third-party operators. As of September 30, 1999, Meditrust Corporation managed 43 medical office buildings, including all the medical office buildings owned by Meditrust Corporation. As described below, since 1998, we have been selling our interests in certain health care properties. The Meditrust Companies' lodging business is conducted under the La Quinta brand name. As of January 31, 2000, the La Quinta division owned and operated an aggregate of 232 La Quinta Inns and 70 La Quinta Inns & Suites in 28 states with over 39,000 hotel rooms. La Quinta is a recognized brand name in the mid-priced lodging segment that appeals to many business travelers. Meditrust Corporation acquired La Quinta Inns, Inc. and its subsidiaries and its unincorporated partnership and joint venture entities (collectively, "La Quinta") on July 17, 1998 by merging La Quinta Inns, Inc. into Meditrust Corporation (the "La Quinta Merger"). Immediately prior to the La Quinta Merger, La Quinta transferred all of its assets other than its real estate and brand name assets to Meditrust Operating Company to enable Meditrust Operating Company to conduct the operating portion of La Quinta's business. La Quinta, which is a fully-integrated lodging company that focuses on the ownership, operation and development of mid-priced hotels in the western and southern regions of the Untied States, has continued to operate as an independent division from its headquarters in Dallas, Texas. RECENT DEVELOPMENTS On January 28, 2000, we announced a five-point plan of reorganization to improve our overall financial condition by substantially deleveraging The Meditrust Companies. Under the announced plan, we will generate funds from an orderly sale of our health care assets and suspension of our common share dividend in order to repay debt and strengthen our balance sheet. Such assets sales will also reposition us to focus on our lodging business to benefit from the improving trends in this industry and minimize the impact on us of negative trends in the assisted living and nursing home industries. MEDITRUST CORPORATION INTENDS TO IMPLEMENT AN ORDERLY DISPOSITION OF A SIGNIFICANT PORTION OF ITS HEALTH CARE ASSETS. The long-term care and assisted living sectors of the health care industry have experienced a significant decline in growth due to negative factors such as: - the federal government's shift to a Medicare prospective payment system in the skilled nursing industry, - increased labor costs, - fill-up periods of longer duration for assisted living facilities, - increased federal, state and local governmental regulation, and - tighter and more costly capital markets for both health care operators and companies financing such operators. Given our demonstrated ability to sell health care assets, we intend to implement an orderly disposition of a significant number of the approximately $2.2 billion of health care assets in our portfolio to repay debt and deleverage our balance sheet. 22 THE BOARD OF DIRECTORS OF MEDITRUST CORPORATION HAS SUSPENDED PAYMENT OF ITS COMMON SHARE DIVIDEND TO PROVIDE ADDITIONAL LIQUIDITY. The Board of Directors noted that suspending the dividend on our common stock will provide approximately $65 million in additional liquidity per quarter. The Board of Directors expects in December 2000 to declare the minimum dividend necessary for Meditrust Corporation to maintain its real estate investment trust status. The timing and amount of sales of the health care assets will impact the amount of such minimum dividend. The dividend for the issued and outstanding preferred stock of Meditrust Corporation remains at nine percent (9%) and will continue to be declared and paid quarterly. WE INTEND TO REPAY A SIGNIFICANT AMOUNT OF OUR DEBT TO SUBSTANTIALLY DELEVERAGE OUR BALANCE SHEET. We intend to use the proceeds generated from the sale of our health care assets and the suspension of our common share dividend, as well as funds available under our credit facility to repay a significant amount of our term debt. In connection with the restructuring plan announced in November 1998, we have already repaid over $625 million in term debt. We have an additional $210 million of term debt that matures in July 2000 and $1.4 billion of term debt that matures in 2001. MEDITRUST INTENDS TO FOCUS ON ENHANCING THE LONG-TERM GROWTH POTENTIAL OF ITS LODGING DIVISION. Although the lodging division continues to feel the negative impact of the current imbalance between supply and demand in the industry, we believe that by focusing on our internal growth and improving the efficiency of our operations, we will be positioned to benefit from improving industry trends when the supply imbalance begins to moderate. Some of the liquidity generated under the reorganization plan will be targeted for disciplined investment in the lodging division. WE HAVE ANNOUNCED CHANGES IN MANAGEMENT CONSISTENT WITH OUR PLAN TO REDUCE OUR EMPHASIS ON THE HEALTH CARE ASSETS. Clive Bode will remain the Chairman of our Boards of Directors; however, consistent with the reduction in emphasis of our health care segment, David F. Benson has left as Chief Executive Officer, President and Treasurer of Meditrust Corporation and is no longer a director on either of our Boards of Directors. Mr. Benson will continue to assist us in a consulting capacity as we move forward in implementing our reorganization plan. William G. Byrnes, a member of the Board of Directors of Meditrust Operating Company, will serve as the Transitional Chief Executive Officer of Meditrust Corporation while the Board of Directors of Meditrust Corporation seeks to fill the position permanently. WE HAVE SOLD SIGNIFICANT PORTIONS OF OUR HEALTH CARE RELATED ASSETS. We announced on December 30, 1999 that we generated approximately $146 million in gross proceeds from the sale of health care assets and from the early repayment of mortgage note receivables. We used such proceeds, in addition to funds from our credit facility, to repay $250 million of our debt that would have otherwise matured on January 17, 2000. In addition, on February 2, 2000 we announced sales of 35 owned properties and the partial and/or full repayment of 4 mortgage loans, which generated gross proceeds of $236 million. We anticipate such proceeds will be used to repay additional term debt. 23 DESCRIPTION OF COMMON STOCK The following is a description of the material terms and provisions of our common stock. It may not contain all the information that is important to you and is qualified by reference to our articles of incorporation and by-laws, as in effect on the date hereof. You should read our articles of incorporation and by-laws before you purchase any paired shares of our common stock. Our Amended and Restated Certificates of Incorporation and By-laws contain certain provisions that could make it more difficult for a third party to gain control of The Meditrust Companies. These provisions are summarized under the heading "Important Provisions of Delaware Corporate Law and Our Charters and By-Laws" found on page 28 of this prospectus. THE PAIRING Pursuant to certain provisions of our Amended and Restated Certificates of Incorporation, the paired shares of capital stock of Meditrust Corporation and Meditrust Operating Company are transferable and tradeable only in combination as units, each unit consisting of one share of Meditrust Corporation stock and one share of Meditrust Operating Company stock. These restrictions on the transfer of paired shares of Meditrust Corporation stock and Meditrust Operating Company stock are imposed by our respective Amended and Restated Certificates of Incorporation and By-laws. The pairing is evidenced by "back-to-back" stock certificates; that is, certificates evidencing paired shares of Meditrust Operating Company stock are printed on the reverse side of certificates evidencing paired shares of Meditrust Corporation stock. The certificates bear a legend referring to the restrictions on transfer imposed by our respective Amended and Restated Certificates of Incorporation and By-laws. To permit proper allocation of the consideration received in connection with the sale of paired shares, the pairing agreement provides that Meditrust Corporation and Meditrust Operating Company shall, as decided from time to time but not less than once a year, jointly make arrangements to determine the relative value of the stock of each company. AUTHORIZED CAPITAL STOCK The authorized capital stock of each of Meditrust Corporation and Meditrust Operating Company, respectively, consists of 500,000,000 shares of common stock, par value $.10 per share, 30,000,000 shares of Series Common Stock, par value $.10 per share, 6,000,000 shares of Preferred Stock, par value $.10 per share and 25,000,000 shares of Excess Stock, par value $.10 per share. The board of directors of each company is authorized, without further stockholder approval, to issue the Preferred Stock from time to time in one or more series, and to determine the provisions applicable to each series, including the number of shares, dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price or prices, stockholder liquidation preferences and whether such issuances will be paired with the capital stock of the other company. The Meditrust Companies paired shares are traded on the New York Stock Exchange under the ticker symbol "MT." As of January 14, 2000, 141,215,611 shares of common stock of Meditrust Corporation and 142,520,988 shares of common stock of Meditrust Operating Company (described below) were issued and outstanding, 700,000 shares of Series A Preferred Stock of Meditrust Corporation were issued and outstanding and 1,000 shares of Series B Cumulative Redeemable Convertible Preferred Stock of Meditrust Corporation were issued and outstanding. COMMON STOCK Subject to provisions of law and the preferences of any series of Preferred Stock which may be issued, holders of the paired shares are entitled to receive dividends at times and in amounts as are declared from time to time by the Meditrust Corporation Board of Directors or the Meditrust 24 Operating Company Board of Directors out of funds legally available for dividends. To maintain eligibility as a real estate investment trust, Meditrust Corporation must in general distribute to its stockholders at least 95% (90% commencing in 2001) of its "real estate investment trust taxable income" before deduction of dividends paid (less any net long-term capital gain and certain other adjustments). Holders of paired shares are entitled to one vote for each share held on each matter submitted to a stockholder vote. Except as otherwise provided by law, or by our Amended and Restated Certificates of Incorporation or by resolutions of our Boards of Directors providing for the issuance of any series of Preferred Stock, the holders of the paired shares have sole voting power. EXCESS STOCK The paired shares of Excess Stock in each of The Meditrust Companies' are issuable by conversion when a stockholder of either common stock or preferred stock (collectively referred to as "Equity Stock") of The Meditrust Companies' owns, as determined under the provisions of the Internal Revenue Code, such an amount of Equity Stock as would cause Meditrust Corporation not to be in conformance with the requirements of the Internal Revenue Code. The real estate investment trust qualification requirements of the Internal Revenue Code and the conversion of Equity Stock to Excess Stock are discussed in greater detail under "Limits on Ownership of Capital Stock." Each share of Excess Stock is entitled to the same dividends and distributions as paired shares of the class or series of Equity Stock from which such Excess Stock was converted. In the event of a liquidation or distribution of assets of Meditrust Corporation or Meditrust Operating Company, each share of Excess Stock entitles the holder to receive, ratably with each other holder of Equity Stock of the same class or series from which such Excess Stock was converted, that portion of the assets of Meditrust Corporation or Meditrust Operating Company, as appropriate, that is available for distribution to the holders of such class or series of Equity Stock. Each share of Excess Stock entitles the holder to the number of votes the holder would have if such share of Excess Stock was a share of Equity Stock of the same class or series from which such Excess Stock was converted. REGISTRAR AND TRANSFER AGENT Our Registrar and Transfer Agent is State Street Bank and Trust Company, through its agent Boston EquiServe. 25 LIMITS ON OWNERSHIP OF CAPITAL STOCK OWNERSHIP LIMITS Among the requirements that Meditrust Corporation must meet to qualify as a real estate investment trust under the Internal Revenue Code is that not more than 50% of the value of Meditrust Corporation's outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals during the last half of a taxable year. Additionally, such paired shares of capital stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year. The Internal Revenue Code also provides that Meditrust Corporation may not own, directly or indirectly, after application of the attribution rules of the Internal Revenue Code, 10% or more of the outstanding shares of any tenant of Meditrust Corporation, if Meditrust Corporation is to qualify as a real estate investment trust. To ensure compliance with these requirements, the respective Amended and Restated Certificates of Incorporation and By-laws of each of The Meditrust Companies provide for certain restrictions on the transfer and ownership of The Meditrust Companies capital stock. To protect us against the risk of losing our status as a real estate investment trust due to a concentration of ownership among our stockholders, our Amended and Restated Certificates of Incorporation provide that no holder who is an individual may own, or be deemed to own by virtue of the attribution provisions of the Internal Revenue Code, more than 9.25% of our capital stock. Notwithstanding the preceding sentence, the Boards of Directors at their option and in their discretion may approve a waiver of such ownership limitation for selected persons. In fact, the Boards of Directors waived such ownership limitation for the selling stockholders as a group in August 1999. Our Boards of Directors, however, do not expect that they would waive the 9.25% ownership limit in the absence of evidence satisfactory to the Boards of Directors that the waiver of the limit will not jeopardize Meditrust Corporation's status as a real estate investment trust and the Boards of Directors otherwise decide that such action is in our best interests. Any transfer of shares of capital stock including any security convertible into shares of capital stock that would create a direct or indirect ownership of shares of capital stock in excess of the 9.25% ownership limit or that would result in Meditrust Corporation's disqualification as a real estate investment trust, including any transfer that results in the shares of beneficial interest being owned by fewer than 100 persons or that results in us being "closely held" within the meaning of Section 856(h) of the Internal Revenue Code, shall be void and have no effect. The intended transferee will acquire no rights to the shares of capital stock. The foregoing restrictions will not apply if Meditrust Corporation's Board of Directors determine that it is no longer in Meditrust Corporation's best interests to attempt to qualify, or to continue to qualify, as a real estate investment trust. Pursuant to the Internal Revenue Code, some types of entities, such as pension plans described in Section 401(a) of the Internal Revenue Code and mutual funds registered under the Investment Company Act of 1940, will be looked-through for purposes of the five or fewer test described above. Our articles of incorporation preclude these entities from holding in excess of 9.8% of the total value of our shares of capital stock. SHARES OWNED IN EXCESS OF THE OWNERSHIP LIMIT Capital stock owned, or deemed to be owned, or transferred to a stockholder in excess of the applicable ownership limit will be automatically converted into shares of excess stock that will be transferred, by operation of law, to a trust for the exclusive benefit of the transferees to whom such capital stock may be ultimately transferred without violating the applicable ownership limit. While the shares of excess stock are held in trust: - they will not be entitled to vote; 26 - they will not be considered for purposes of any stockholder vote or the determination of a quorum for such vote; and - except upon liquidation, they will not be entitled to participate in dividends or other distributions. Any dividend or distribution paid on excess stock prior to discovery by us that capital stock has been transferred in violation of the applicable ownership limit shall be repaid to us on demand. Shares of excess stock are not treasury stock, but rather constitute a separate class of issued and outstanding stock. The trustee of such trust may, at any time the shares of excess stock are held in trust, transfer the interest in the trust representing the excess stock to any individual whose ownership of the capital stock converted into such excess stock would be permitted under the applicable ownership limit, for valuable consideration. Immediately upon the transfer to the permitted transferee, the excess stock will automatically be converted into capital stock of the class from which it was converted. If these transfer restrictions are determined to be void or invalid by virtue of any legal decision, statute, rule or regulation, then the intended transferee of any excess stock may be deemed, at our opinion, to have acted as an agent on our behalf in acquiring the excess stock and to hold the excess stock on behalf of us. RIGHT TO PURCHASE EXCESS STOCK In addition to the foregoing transfer restrictions, we have the right, for a period of 90 days during the time any shares of excess stock are held by us in trust, to purchase all or any portion of the excess stock from the original transferee-stockholder for a price per share equal to the lesser of: - the price per share initially paid for the capital stock by the original transferee-stockholder, or if the original transferee-stockholder received the shares through a gift, devise or other transaction in which such stockholder did not give value, the average of the closing price per share for the class of shares from which the shares of excess stock were converted for the 5 days immediately preceding the transfer; and - the average closing price per share for the class of shares from which the shares of excess stock were converted for the 5 days immediately preceding the date we elect to purchase the shares. The 90-day period begins on the date of the purported transfer that violated the applicable ownership limit if the original transferee-stockholder gives notice to us of the transfer or, if no notice is given, the date our Boards of Directors determine that such a transfer has been made. Our stockholders are required upon demand to disclose to us in writing any information with respect to their direct, indirect and constructive ownership of capital stock as our Board of Directors deem necessary to comply with the provisions of the Internal Revenue Code applicable to real estate investment trusts, to comply with the requirements of any taxing authority or governmental agency or to determine any such compliance. This ownership limitation may have the effect of delaying or precluding the acquisition of control of either or both of The Meditrust Companies. 27 IMPORTANT PROVISIONS OF DELAWARE LAW AND OUR CHARTER AND BY-LAWS The following is a summary of important provisions of Delaware General Corporation Law which affect us and our stockholders. Certain provisions of the Delaware General Corporation Law and our Amended and Restated Certificates of Incorporation and By-laws may have the effect of delaying, deferring or preventing a change of control of either or both of The Meditrust Companies. The description below is intended only as a summary. You can access complete information by referring to the Delaware General Corporation Law. BUSINESS COMBINATION PROVISIONS Section 203 of the Delaware General Corporation Law prevents a publicly held corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an interested stockholder, unless: - before the date on which the person became an interested stockholder, the Board of Directors of the corporation approved either the business combination or the transaction in which the person became an interested stockholder; - the interested stockholder owned at least 85% of the outstanding voting stock of the corporation at the beginning of the transaction in which it became an interested stockholder, excluding stock held by directors who are also officers of the corporation and by employee stock plans that do not provide participants with the rights to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or - after the date on which the interested stockholder became an interested stockholder, the business combination is approved by the Board of Directors and the holders of two-thirds of the outstanding voting stock of the corporation voting at a meeting, excluding the voting stock owned by the interested stockholder. As defined in Section 203, an "interested stockholder" is generally a person owning 15% or more of the outstanding voting stock of the corporation. As defined in Section 203, a "business combination" includes mergers, consolidations, stock and assets sales and other transactions with the interested stockholder. In addition each of our Amended and Restated Certificates of Incorporation restrict certain "business combinations" (as defined below) with interested stockholders (the "business combinations" (as defined below) with interested stockholders (the "Business Combination Provisions"). An interested stockholder for the purposes of the Business Combination Provision includes any person or entity who is, together with its affiliates and associates, the beneficial owner of more than 10% of the voting stock of the corporation. This Business Combination Provision provides that business combinations with interested stockholders (without regard to the length of time a stockholder has been an interested stockholder) may NOT be consummated without: - the affirmative vote of the holders of 80% of all issued and outstanding shares entitled to vote in the election of directors; - if less than 90% of the shares approve the business combination, affirmative approval by a majority of the combined voting power of the then outstanding shares entitled to vote held by persons who are not interested stockholders. The Business Combination Provision does not apply to business combinations approved by a majority of the directors unaffiliated with the interested stockholder and elected prior to such an 28 interested stockholder becoming an interested stockholder or if certain price and procedural requirements are met. A "business combination" includes: - a merger or consolidation; - the sale or disposition of assets by either of The Meditrust Companies having an aggregate fair market value of $5,000,000 or more; - the issuance of stock by either of The Meditrust Companies having a fair market value of $5,000,000 or more; - the adoption of a plan of liquidation or dissolution proposed by or on behalf of an interested stockholder; and - any merger, consolidation, reclassification or recapitalization which increases the proportionate shareholdings of an interested stockholder. The provisions of our Amended and Restated Certificates of Incorporation and our By-laws as described in "Limits on Ownership of Capital Stock" beginning on page 26 may also have the effect of delaying, deferring or preventing a change of control of either or both of The Meditrust Companies. 29 FEDERAL INCOME TAX CONSIDERATIONS AND CONSEQUENCES OF YOUR INVESTMENT The following is a general summary of the most important federal income tax considerations and consequences associated with an investment in our common stock. The following discussion does not exhaust all possible tax considerations and is not tax advice. Moreover, this summary does not deal with all tax aspects or consequences that might be relevant to you in light of your personal circumstances; nor does it deal with particular types of stockholders that are subject to special treatment under the Internal Revenue Code, such as insurance companies, financial institutions and broker-dealers. The Internal Revenue Code provisions governing the federal income tax treatment of real estate investment trusts are highly technical and complex, and this summary is qualified in its entirety by the applicable Internal Revenue Code provisions, rules and regulations promulgated thereunder, and administrative and judicial interpretations thereof. The following discussion is based on current law and on representations from us concerning our compliance with the requirements for qualification as a real estate investment trust. WE URGE YOU, AS A PROSPECTIVE STOCKHOLDER, TO CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE SPECIFIC FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES TO YOU OF THE PURCHASE, HOLDING AND SALE OF PAIRED SHARES OF OUR COMMON STOCK. FEDERAL INCOME TAXATION We believe that Meditrust Corporation has been organized in conformity with the requirements for qualification as a real estate investment trust under the Internal Revenue Code and its method of operation will enable it to continue to meet the requirements for qualification and taxation as a real estate investment trust under the Internal Revenue Code. Meditrust Corporation may not, however, have met or continue to meet such requirements. Qualification as a real estate investment trust depends upon it having met and continuing to meet the various requirements imposed under the Internal Revenue Code through actual operating results. No assurance can be given that actual operating results have met or will meet these requirements. If Meditrust Corporation has qualified and continue to qualify for taxation as a real estate investment trust, it generally will not be subject to federal corporate income taxes on that portion of its ordinary income or capital gain that is currently distributed to stockholders. The real estate investment trust provisions of the Internal Revenue Code generally allow a real estate investment trust to deduct dividends paid to its stockholders. This deduction for dividends paid to stockholders substantially eliminates the federal double taxation on earnings that usually results from investments in a corporation. "Double taxation" refers to taxation of income once at the corporate level when earned and once again at the stockholder level when distributed. Additionally, a real estate investment trust may elect to retain and pay taxes on a designated amount of its net long-term capital gains, in which case the stockholders of the real estate investment trust will include their proportionate share of the undistributed long-term capital gains in income and receive a credit or refund for their share of the tax paid by the real estate investment trust. Meditrust Operating Company, as a taxable corporation, is subject to taxation at regular corporate rates on its taxable income and is not permitted a deduction for dividends paid to shareholders. Meditrust Operating Company currently does not pay a dividend on its common stock. FAILURE TO QUALIFY AS A REAL ESTATE INVESTMENT TRUST If Meditrust Corporation fails to qualify for taxation as a real estate investment trust in any taxable year and the relief provisions do not apply, it will be subject to tax on its taxable income at regular corporate rates, including any applicable alternative minimum tax. Distributions to stockholders in any year in which it fails to qualify will not be deductible by Meditrust Corporation nor will they be 30 required to be made. In such event, to the extent of current or accumulated earnings and profits, all distributions to stockholders will be dividends, taxable as ordinary income, and subject to limitations of the Internal Revenue Code, corporate distributees may be eligible for the dividends-received deduction. Unless Meditrust Corporation is entitled to relief under specific statutory provisions, it also will be disqualified from taxation as a real estate investment trust for the four taxable years following the year during which qualification was lost. It is not possible to state whether in all circumstances Meditrust Corporation would be entitled to such statutory relief. For example, Meditrust Corporation must derive a minimum percent of its gross income from specified sources in order to qualify as a real estate investment trust. If Meditrust Corporation fails to satisfy these gross income tests because nonqualifying income that it intentionally incurs exceeds the limit on such income, the Internal Revenue Service could conclude that its failure to satisfy the tests was not due to reasonable cause, which is a condition to qualification for relief from the four-year disqualification rule. TAXATION OF UNITED STATES STOCKHOLDERS AND POTENTIAL TAX CONSEQUENCES OF THEIR INVESTMENT IN PAIRED SHARES OF COMMON STOCK When we refer to a United States stockholder, we mean a holder of paired shares of common stock that is for federal income tax purposes: - an individual who is a citizen or resident of the United States; - a corporation created or organized in or under the laws of the United States, any state thereof or the District of Columbia; or - a partnership, trust or estate treated as a domestic partnership, trust or estate. For any taxable year for which Meditrust Corporation qualifies for taxation as a real estate investment trust, amounts distributed by Meditrust Corporation to taxable United States stockholders will be taxed as follows. DISTRIBUTIONS GENERALLY. Distributions other than capital gain dividends to United States stockholders will be taxable as dividends to the extent of the current or accumulated earnings and profits of Meditrust Corporation as determined for federal income tax purposes. Such dividends will be taxable to the stockholders as ordinary income and will not be eligible for the dividends-received deduction for corporations. To the extent that Meditrust Corporation makes a distribution to a United States stockholder in excess of current or accumulated earnings and profits, the distribution will be treated first as a tax-free return of capital with respect to the Meditrust Corporation shares, reducing the United States stockholder's tax basis in the Meditrust Corporation shares, and the distribution in excess of a United States stockholder's tax basis in the Meditrust Corporation shares will be taxable as gain realized from the sale of the Meditrust Corporation shares. Dividends declared by Meditrust Corporation in October, November or December of any year payable to a stockholder of record on a specified date in any such month shall be treated as both paid by Meditrust Corporation and received by the stockholder on December 31 of the year, provided that the dividend is actually paid by Meditrust Corporation during January of the following calendar year. United States stockholders may not include on their own federal income tax returns any of our tax losses. CAPITAL GAIN DIVIDENDS. Dividends to United States stockholders that are properly designated by Meditrust Corporation as capital gain dividends will be treated as long-term capital gains, to the extent they do not exceed the actual net capital gains of Meditrust Corporation, for the taxable year without regard to the period for which the stockholder has held his paired shares of common stock. However, corporate stockholders may be required to treat up to 20% of particular capital gain dividends as ordinary income. Capital gain dividends are not eligible for the dividends-received deduction for corporations. 31 RETAINED CAPITAL GAINS. A real estate investment trust may elect to retain, rather than distribute, its net long-term capital gains received during the year. To the extent designated by the real estate investment trust in a notice to its stockholders, the real estate investment trust will pay the income tax on such gains and the real estate investment trust stockholders must include their proportionate share of the undistributed long-term capital gains so designated in income. Each real estate investment trust stockholder will be deemed to have paid his share of the tax paid by the real estate investment trust, which will be credited or refunded to the stockholder. The basis of each stockholder's real estate investment trust shares will be increased by his proportionate amount of the undistributed long-term capital gains, net of the tax paid by the real estate investment trust, included in such stockholder's long-term capital gains. PASSIVE ACTIVITY LOSS AND INVESTMENT INTEREST LIMITATIONS. Distributions, including deemed distributions of undistributed long-term capital gains, from us and gain from the disposition of paired shares of common stock will not be treated as passive activity income, and therefore stockholders may not be able to apply any passive losses against such income. Dividends from us, to the extent they do not constitute a return of capital, will generally be treated as investment income for purposes of the investment income limitation on the deductibility of investment interest. However, net capital gain from the disposition of paired shares of common stock or capital gain dividends, including deemed distributions of undistributed long-term capital gains, generally will be excluded from investment income. SALE OF PAIRED SHARES OF COMMON STOCK. Upon the sale or exchange of paired shares of common stock, a United States stockholder will generally recognize gain or loss equal to the difference between the amount realized on such sale and the tax basis of the paired shares of common stock sold or exchanged. Assuming such paired shares are held as a capital asset, such gain or loss will be a long-term capital gain or loss if the paired shares have been held for more than one year. However, any loss recognized by a United States stockholder on the sale of paired shares of common stock held for not more than six months and with respect to which capital gains were required to be included in such stockholder's income will be treated as a long-term capital loss to the extent of the amount of such capital gains so included and to the extent such loss is allocable to such stockholder's shares of Meditrust Corporation common stock. TREATMENT OF TAX-EXEMPT STOCKHOLDERS. Distributions, including deemed distributions of undistributed long-term capital gains, from us to a tax-exempt employee pension trust or other domestic tax-exempt stockholder generally will not constitute unrelated business taxable income unless the stockholder has borrowed to acquire or carry his paired shares of common stock. However, some qualified trusts that hold more than 10% by value of the paired shares of a particular real estate investment trust may be required to treat a specified percentage of these distributions, including deemed distributions of undistributed long-term capital gains, as unrelated business taxable income. BACKUP WITHHOLDING Under the backup withholding rules, a United States stockholder may be subject to backup withholding at the rate of 31% with respect to dividends paid on, and gross proceeds from the sale of, paired shares of common stock unless such stockholder: - is a corporation or comes within other specific exempt categories and, when required, demonstrates this fact or - provides a correct taxpayer identification number, certifies as to no loss of exemption from backup withholding and otherwise complies with applicable requirements of the backup withholding rules. 32 A United States stockholder who does not provide us with his current taxpayer identification number may be subject to penalties imposed by the Commissioner of the Internal Revenue Service. Any amount paid as backup withholding will be creditable against the stockholder's income tax liability. We will report to stockholders and the Internal Revenue Service the amount of any reportable payments, including any dividends paid, and any amount withheld with respect to paired shares of common stock during the calendar year. STATE AND LOCAL TAX The Meditrust Companies and our stockholders may be subject to state and local tax in various states and localities, including those in which we or our stockholders transact business, own property or reside. The tax treatment of us and our stockholders in such jurisdictions may differ from the federal income tax treatment described above. CONSEQUENTLY, AS A PROSPECTIVE INVESTOR, YOU SHOULD CONSULT YOUR OWN TAX ADVISORS REGARDING THE EFFECT OF STATE AND LOCAL TAX LAWS ON AN INVESTMENT IN OUR COMMON STOCK. 33 THE SELLING STOCKHOLDERS The following table sets forth the number of paired shares beneficially owned by the selling stockholders as of January 14, 2000. The paired shares offered by this prospectus will be offered from time to time by the selling stockholders named below. The amounts set forth below are based upon information provided to us by representatives of the selling stockholders, or on our records, as of January 14, 2000 and are accurate to the best of our knowledge. It is possible, however, that the selling stockholders may acquire or dispose of additional paired shares from time to time after the date of this prospectus.
PAIRED SHARES PERCENTAGE PAIRED SHARES TO BE OF PAIRED BENEFICIALLY BENEFICIALLY SHARES TO BE OWNED AS OF PAIRED SHARES OWNED AFTER OWNED AFTER SELLING STOCKHOLDERS JANUARY 14, 2000 OFFERED HEREBY OFFERING(1) OFFERING(2) - -------------------- ---------------- -------------- ------------- ------------ Sid R. Bass, Inc......................... 2,294,211(3) 2,294,211 0 * Lee M. Bass, Inc......................... 2,294,211(4) 2,294,211 0 * The Bass Management Trust................ 2,549,762(5) 2,549,762 0 * The Airlie Group, L.P.................... 269,633(6)(7) 269,633 0 * William P. Hallman, Jr................... 140,002(8) 140,002 0 * Annie R. Bass Grandson's Trust for Lee M. Bass................................... 445,962(9) 445,962 0 * Annie R. Bass Grandson's Trust for Sid R. Bass................................... 445,962(10) 445,962 0 * Peter Sterling........................... 187,600(11) 187,600 0 * Hyatt Anne Bass Successor Trust.......... 857,701(12) 857,701 0 * Samantha Sims Bass Successor Trust....... 857,701(13) 857,701 0 * TF Investors, L.P........................ 32,783(14) 32,783 0 * FW Trinity Limited Investors, L.P........ 419,398(15)(16) 419,398 0 * National Bancorp of Alaska............... 113,045(17) 113,045 0 * ---------- ---------- TOTAL.................................... 10,907,971 10,907,971 ========== ==========
- ------------------------ * Less than 1%. (1) Assumes that all paired shares offered by this prospectus will be sold by the selling stockholders. (2) The total number of paired shares outstanding on January 14, 2000 was used to calculate such percentage. (3) Mr. Sid R. Bass, solely in his capacity as President of Sid R. Bass, Inc., may also be deemed a beneficial owner of such paired shares. (4) Mr. Lee M. Bass, solely in his capacity as President of Lee M. Bass, Inc., may also be deemed a beneficial owner of such paired shares. (5) Mr. Perry R. Bass, solely in his capacity as sole Trustee and as one of two trustors of the Bass Management Trust, may also be deemed a beneficial owner of such paired shares. (6) Mr. Dort A. Cameron, III, solely in his capacity as one of two general partners of EBD L.P., which is the sole general partner of The Airlie Group, L.P., may also be deemed a beneficial owner of such paired shares. (7) Mr. William P. Hallman, Jr., solely in his capacity as President and sole stockholder of TMT-FW, Inc., which is one of two general partners of EBD L.P., which is the sole general partner of The Airlie Group, L.P., may also be deemed a beneficial owner of such paired shares. 34 (8) This amount does not include (a) 445,962 paired shares held by Annie R. Bass Grandson's Trust for Sid R. Bass of which Mr. Hallman is the trustee (b) 445,962 paired shares held by Annie R. Bass Grandson's Trust for Lee M. Bass of which Mr. Hallman is the trustee, (c) 32,783 paired shares held by TF Investors, L.P. which is indirectly controlled by Trinity Capital Management, Inc., of which Mr. Hallman is the President and sole stockholder, (d) 269,633 paired shares held by the Airlie Group which is indirectly controlled by TMT-FW, Inc. of which Mr. Hallman is the President and sole stockholder, and (e) 419,398 paired shares held by FW Trinity Limited Investors, L.P. which is indirectly controlled by TF-FW Investors, Inc. of which Mr. Hallman is President and one of two stockholders. (9) Mr. Hallman, solely in his capacity as Trustee of the Annie R. Bass Grandson's Trust for Lee M. Bass, may also be deemed a beneficial owner of such paired shares. (10) Mr. Hallman, solely in his capacity as Trustee of the Annie R. Bass Grandson's Trust for Sid R. Bass, may also be deemed a beneficial owner of such paired shares. (11) This amount does not include 419,398 paired shares held by FW Trinity Limited Investors, L.P., whose sole general partner is TF-TW Investors, Inc., of which Mr. Sterling is one of two stockholders. (12) Panther City Production Company, solely in its capacity as sole shareholder of Panther City Investment Company, the Trustee of the Hyatt Anne Bass Successor Trust, may also be deemed a beneficial owner of such paired shares. (13) Panther City Production Company, solely in its capacity as sole shareholder of Panther City Investment Company, the Trustee of Samantha Sims Bass Successor Trust, may also be deemed a beneficial owner of such paired shares. (14) Mr. Hallman, solely in his capacity as President and sole stockholder of Trinity Capital Management, Inc., the sole general partner of TF Investors, L.P., may also be deemed a beneficial owner of such paired shares. (15) Mr. Hallman, solely in his capacity as President and one of two stockholders of TF-FW Investors, Inc., which is the sole general partner of FW Trinity Limited Investors, L.P., may also be deemed a beneficial owner of such paired shares. (16) Mr. Sterling, solely in his capacity as one of two stockholders of TF-TW Investors, Inc., which is the sole general partner of FW Trinity Limited Investors, L.P., may also be deemed a beneficial owner of such paired shares. (17) Mr. Richard Strutz, solely in his capacity as President of National Bancorp of Alaska, Inc., may also be deemed a beneficial owner of such paired shares. 35 USE OF PROCEEDS We will not receive any of the proceeds of the sale by the selling stockholders of the paired shares of common stock offered by this prospectus. We are paying the fees and expenses associated with registering the sale of the paired shares of common stock. PLAN OF DISTRIBUTION This prospectus relates to the possible sale from time to time of up to an aggregate of 10,907,971 paired shares by the selling stockholders. The registration of the sale of the paired shares does not necessarily mean that any of the paired shares will be offered or sold by the selling stockholders. The distribution of the paired shares may be effected from time to time in one or more underwritten transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. Any underwritten offering may be on a "best efforts" or a "firm commitment" basis. In connection with any underwritten offering, underwriters or agents may receive compensation in the form of discounts, concessions or commissions from the selling stockholders. Underwriters may sell the paired shares to or through dealers, and such dealers may receive compensation in the form of discounts, concessions from the underwriters and/or commissions from the purchasers for whom they may act as agents. The selling stockholders and any underwriters, dealers or agents that participate in the distribution of the paired shares may be deemed to be underwriters under the Securities Act of 1933, and any profit on the sale of the paired shares by them and any discounts, commissions or concessions received by any underwriters, dealers or agents might be deemed to be underwriting discounts and commissions under the Securities Act of 1933. When the selling stockholders make a particular offer of the paired shares, a prospectus supplement will be distributed if required. A prospectus supplement will, where applicable: - identify any underwriter, dealer or agent; - describe any compensation in the form of discounts, concessions, commissions or otherwise received by each underwriter, dealer or agent and in the aggregate to all underwriters, dealers and agents; - identify the amounts underwritten; - identify the nature of the underwriter's obligation to take the paired shares; and - provide any other required information. The sale of the paired shares by the selling stockholders may also be effected by selling paired shares directly to purchasers or to or through broker-dealers. In connection with any such sale, any such broker-dealer may act as agent for the selling stockholders or may purchase from the selling stockholders all or a portion of the paired shares as principal, and such sale may be made pursuant to any of the methods described below. Such sales may be made on the New York Stock Exchange or other exchanges on which the paired shares are then traded, in the over-the-counter market, in negotiated transactions or otherwise at prices and at terms then prevailing or at prices related to the then current market prices or at prices otherwise negotiated. Paired shares may also be sold in one or more of the following transactions: - block transactions in which a broker-dealer may sell all or a portion of such paired shares as agent but may position and resell all or a portion of the block as principal to facilitate the transaction; - purchases by any such broker-dealer as principal and resale by such broker-dealer for its own account pursuant to any supplement to this prospectus; 36 - a special offering, an exchange distribution or a secondary distribution in accordance with applicable New York Stock Exchange or other stock exchange rules; - ordinary brokerage transactions and transactions in which any such broker-dealer solicits purchasers; - sales "at the market" to or through a market maker or into an existing trading market, on an exchange or otherwise, for such paired shares; and - sales in other ways not involving market makers or established trading markets, including direct sales to purchasers. In effecting sales, broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate. Broker-dealers will receive commissions or other compensation from the selling stockholders in amounts to be negotiated immediately prior to the sale that will not exceed those customary in the types of transactions involved. Broker-dealers may also receive compensation from purchasers of the paired shares which is not expected to exceed that customary in the types of transactions involved. To comply with applicable state securities laws, the paired shares will be sold, if necessary, in such jurisdictions only through registered or licensed brokers or dealers. In addition, paired shares may not be sold in some states unless they have been registered or qualified for sale in the state or an exemption from such registration or qualification requirement is available and is complied with. All expenses relating to the offering and sale of the paired shares will be paid by us, with the exception of commissions, discounts and fees of underwriters, broker-dealers or agents, taxes of any kind and any legal, accounting and other expenses incurred by the selling stockholders. 37 LEGAL MATTERS Particular legal matters, including the validity of the paired shares of common stock offered by this prospectus, will be passed upon for us by Goodwin, Procter & Hoar LLP, Boston, Massachusetts. EXPERTS The financial statements and the related financial statement schedules incorporated in this Prospectus by reference to the Joint Annual Report on Form 10-K of Meditrust Corporation and Meditrust Operating Company for the year ended December 31, 1998 have been so incorporated in reliance on the report(s) of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in accounting and auditing. 38 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS, INCORPORATED HEREIN BY REFERENCE OR CONTAINED IN A PROSPECTUS SUPPLEMENT. NEITHER WE NOR THE SELLING STOCKHOLDERS HAVE AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT OR ADDITIONAL INFORMATION. THE SELLING STOCKHOLDERS ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS, OR INCORPORATED HEREIN BY REFERENCE, OR IN ANY PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS. ------------------------ TABLE OF CONTENTS
PAGE -------- Prospectus Summary............................. 2 Risk Factors You Should Consider............... 4 Our strategic focus on lodging related properties exposes investors to risks common in that industry that may adversely affect an investment in our securities................. 4 Meditrust Corporation's ownership of health care related properties exposes investors to risks common to that industry that may adversely affect an investment in our securities................................... 6 Our substantial debt, as well as various other risks associated with debt and preferred stock financing, could result in adverse consequences for us.................. 10 Meditrust Corporation's real property investments are subject to the many varying types and degrees of risk inherent in owning real estate and that may affect the value of our assets and our ability to generate revenue, net income and cash available for distribution to our stockholders............. 11 An investment in our securities may have adverse tax consequences to the investor..... 13 The real estate investment trust minimum distribution requirements may result in adverse consequences to investors............ 15 Provisions of our charters and by-laws could inhibit changes in control that could be beneficial to our stockholders............... 16 We depend on key personnel................... 16 We cannot give assurances that no further risks remain with respect to the Year 2000... 16 About This Prospectus.......................... 17 Where You Can Find More Information............ 17 Forward-Looking Statements..................... 19 The Meditrust Companies........................ 21 Description of Common Stock.................... 24 Limits on Ownership of Capital Stock........... 26 Important Provisions of Delaware Law and Our Charters and By-laws......................... 28 Federal Income Tax Considerations and Consequences of Your Investment.............. 30 The Selling Stockholders....................... 34 Use of Proceeds................................ 36 Plan of Distribution........................... 36 Legal Matters.................................. 38 Experts........................................ 38
10,907,971 PAIRED SHARES THE MEDITRUST COMPANIES COMMON STOCK --------------------- PROSPECTUS --------------------- FEBRUARY 4, 2000 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the estimated fees and expenses payable by us in connection with the distribution of the securities registered hereby: Registration Fee............................................ $ 9,540 Legal fees and expenses..................................... 30,000 Accounting fees and expenses................................ 10,000 Printing and duplicating expenses........................... 28,000 Miscellaneous............................................... 12,460 ------- Total....................................................... $90,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Our Amended and Restated Certificates of Incorporation and By-laws provide that we shall indemnify any person made or threatened to be made a party to an action or proceeding by reason of the fact that such person is or was a director or officer of ours, to the fullest extent permitted by the laws of Delaware, including for breaches of fiduciary duty. The Delaware General Corporation Law allows indemnification for expenses incurred in actions brought by or in the right of the corporation (commonly referred to as derivative actions), upon a determination by the corporation that such person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, except that a corporation may not indemnify such person if he or she was adjudged to be liable to the corporation. However, the Court of Chancery or the court in which the derivative action was brought may determine that despite such adjudication of liability, such person is entitled to indemnity by the corporation for such expenses as the court deems proper. In non-derivative actions, the Delaware General Corporation Law permits, in addition to indemnification against expenses, indemnification against judgments, fines and amounts paid in settlement, upon a determination that such person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal proceeding, that such person had no reasonable cause to believe the person's conduct was unlawful. The determination as to whether to indemnify a person who is a director or officer at the time of such determination, shall be made by a majority of the disinterested directors, by a committee of disinterested directors, by independent legal counsel in a written opinion, or by the stockholders. ITEM 16. EXHIBITS.
EXHIBIT NO. DESCRIPTION METHOD OF FILING --------------------- ----------- ---------------- 4.1 Amended and Restated Certificate of Incorporated by reference to Annex A of Incorporation of Meditrust Corporation the Joint Proxy Statement on Schedule filed with the Secretary of State of 14A filed on April 22, 1999. Delaware on June 21, 1999.
II-1
EXHIBIT NO. DESCRIPTION METHOD OF FILING --------------------- ----------- ---------------- 4.2 Amended and Restated Certificate of Incorporated by reference to Annex B of Incorporation of Meditrust Operating the Joint Proxy Statement on Schedule Company filed with the Secretary of 14A filed on April 22, 1999. State of Delaware on June 21, 1999. 4.3 By-Laws of Meditrust Corporation, as Incorporated by reference to Exhibit 3.5 amended and restated on February 27, to the Joint Registration Statement on 1998. Form S-4 of Meditrust Corporation and Meditrust Operating Company filed March 27, 1998. 4.4 By-Laws of Meditrust Operating Company, Incorporated by reference to Exhibit 3.6 as amended and restated on February 27, to the Joint Registration Statement on 1998. Form S-4 of Meditrust Corporation and Meditrust Operating Company filed March 27, 1998. 4.5 Registration Rights Agreement, dated as Incorporated by reference to Exhibit of January 3, 1998, by and between 10.3 to the Joint Current Report on Form Meditrust Corporation, Meditrust 8-K for Meditrust Corporation and Operating Company and the selling Meditrust Operating Company filed stockholders. January 8, 1998. 4.6 Letter dated April 30, 1998 by Meditrust Filed herewith. Corporation and Meditrust Operating Company agreeing to amend the Registration Rights Agreement dated as of January 3, 1998, by and between Meditrust Corporation, Meditrust Operating Company and the selling stockholders. 4.7 Amendment dated September 15, 1999 to Filed herewith. the Registration Rights Agreement, by and between Meditrust Corporation, Meditrust Operating Company and the selling stockholders. 4.8 Stockholders Agreement dated as of Incorporated by reference to Exhibit January 3, 1998, among Meditrust 10.2 to the Joint Current Report on Form Corporation, Meditrust Operating 8-K for Meditrust Corporation and Company, certain stockholders of La Meditrust Operating Company filed Quinta Inns, Inc. and, solely for the January 8, 1998. purposes of Section 3.6 thereof, La Quinta Inns, Inc. 4.9 First Amendment to Shareholders Incorporated by reference to Annex D-1 Agreement, dated as of April 30, 1998, to the Joint Proxy Statement/Prospectus by and among Meditrust Corporation, on Form S-4/A of Meditrust Corporation Meditrust Operating Company, certain and Meditrust Operating Company filed stockholders of La Quinta Inns, Inc. May 18, 1998. and, solely for the purposes of Section 3.6 thereof, La Quinta Inns, Inc. 5.1 Opinion of Goodwin, Procter & Hoar LLP Filed herewith. as to the legality of the securities being registered 8.1 Opinion of Goodwin, Procter & Hoar LLP Filed herewith. as to certain tax matters.
II-2
EXHIBIT NO. DESCRIPTION METHOD OF FILING --------------------- ----------- ---------------- 23.1 Consent of Goodwin, Procter & Hoar LLP. (Included as part of Exhibits 5.1 and 8.1 hereto.) 23.2 Consent of PricewaterhouseCoopers LLP Filed herewith. 24.1 Power of Attorney for Meditrust Corporation (included on signature page of this joint registration statement) 24.2 Power of Attorney for Meditrust Operating Company (included on signature page of this joint registration statement) 99.1 Letter Agreement by and among David F. Incorporated by reference to Exhibit Benson, Meditrust Corporation and 99.2 to the Joint Current Report on Form Meditrust Operating Company, dated 8-K for Meditrust Corporation and January 28, 2000 Meditrust Operating Company filed February 1, 2000
ITEM 17. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this joint registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any acts or events arising after the effective date of the joint registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the joint registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective joint registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the joint registration statement or any material change to such information in the registration statement; PROVIDED HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the joint registration statement; (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new joint registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof; and II-3 (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrants hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrants' annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. (c) The undersigned registrants hereby undertake to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report, to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information. (d) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, the registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrants of expenses incurred or paid by a director, officer or controlling person of the registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrants will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (e) The undersigned registrants hereby undertake that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. II-4 MEDITRUST CORPORATION SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Meditrust Corporation certifies that it has reasonable grounds to believe that it meets all of the requirements for filing of Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Needham, Commonwealth of Massachusetts, as of February 3, 2000. MEDITRUST CORPORATION BY: /S/ WILLIAM BYRNES ----------------------------------------- William Byrnes TRANSITIONAL CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears below hereby severally constitutes and appoints William G. Byrnes, Laurie T. Gerber and Michael S. Benjamin as such person's true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for such person and in such person's name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this joint registration statement, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that any said attorney-in-fact and agent, or any substitute or substitutes of them, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ CLIVE D. BODE Chairman of the Board of ------------------------------------------- Directors February 3, 2000 Clive D. Bode /s/ WILLIAM G. BYRNES Transitional Chief Executive ------------------------------------------- Officer (Principal Executive February 3, 2000 William G. Byrnes Officer) Chief Financial Officer /s/ LAURIE T. GERBER (Principal Financial and ------------------------------------------- Principal Accounting February 3, 2000 Laurie T. Gerber Officer) /s/ STEPHEN E. MERRILL Director ------------------------------------------- February 2, 2000 Stephen E. Merrill /s/ EDWARD W. BROOKE Director ------------------------------------------- February 3, 2000 Edward W. Brooke /s/ JOHN C. CUSHMAN, III Director ------------------------------------------- February 3, 2000 John C. Cushman, III /s/ JAMES P. CONN Director ------------------------------------------- February 3, 2000 James P. Conn
II-5 MEDITRUST OPERATING COMPANY SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Meditrust Operating Company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing of Form S-3 and has duly caused this joint registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Needham, Commonwealth of Massachusetts, as of February 3, 2000. MEDITRUST OPERATING COMPANY BY: /S/ WILLIAM C. BAKER ----------------------------------------- William C. Baker PRESIDENT
POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears below hereby severally constitutes and appoints William C. Baker, Laurie T. Gerber and Michael S. Benjamin as such person's true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for such person and in such person's name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this joint registration statement, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that any said attorney-in-fact and agent, or any substitute or substitutes of them, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this joint registration statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ CLIVE D. BODE Chairman of the Board of ------------------------------------------- Directors February 3, 2000 Clive D. Bode /s/ WILLIAM C. BAKER President and Director ------------------------------------------- (Principal Executive Officer) February 3, 2000 William C. Baker /s/ LAURIE T. GERBER Chief Financial Officer ------------------------------------------- (Principal Financial and February 3, 2000 Laurie T. Gerber Principal Accounting Officer) /s/ STEPHEN E. MERRILL Director ------------------------------------------- February 2, 2000 Stephen E. Merrill /s/ EDWARD W. BROOKE Director ------------------------------------------- February 3, 2000 Edward W. Brooke /s/ WILLIAM G. BYRNES Director ------------------------------------------- February 3, 2000 William G. Byrnes
II-6 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION METHOD OF FILING --------------------- ----------- ---------------- 4.1 Amended and Restated Certificate of Incorporated by reference to Annex A of Incorporation of Meditrust Corporation the Joint Proxy Statement on Schedule filed with the Secretary of State of 14A filed on April 22, 1999. Delaware on June 21, 1999. 4.2 Amended and Restated Certificate of Incorporated by reference to Annex B of Incorporation of Meditrust Operating the Joint Proxy Statement on Schedule Company filed with the Secretary of 14A filed on April 22, 1999. State of Delaware on June 21, 1999. 4.3 By-Laws of Meditrust Corporation, as Incorporated by reference to Exhibit 3.5 amended and restated on February 27, to the Joint Registration Statement on 1998. Form S-4 of Meditrust Corporation and Meditrust Operating Company filed March 27, 1998. 4.4 By-Laws of Meditrust Operating Company, Incorporated by reference to Exhibit 3.6 as amended and restated on February 27, to the Joint Registration Statement on 1998. Form S-4 of Meditrust Corporation and Meditrust Operating Company filed March 27, 1998. 4.5 Registration Rights Agreement, dated as Incorporated by reference to Exhibit of January 3, 1998, by and between 10.3 to the Joint Current Report on Form Meditrust Corporation, Meditrust 8-K for Meditrust Corporation and Operating Company and the selling Meditrust Operating Company filed stockholders. January 8, 1998. 4.6 Letter dated April 30, 1998 by Meditrust Filed herewith. Corporation and Meditrust Operating Company agreeing to amend the Registration Rights Agreement dated as of January 3, 1998, by and between Meditrust Corporation, Meditrust Operating Company and the selling stockholders. 4.7 Amendment dated September 15, 1999 to Filed herewith. the Registration Rights Agreement, by and between Meditrust Corporation, Meditrust Operating Company and the selling stockholders. 4.8 Stockholders Agreement dated as of Incorporated by reference to Exhibit January 3, 1998, among Meditrust 10.2 to the Joint Current Report on Form Corporation, Meditrust Operating 8-K for Meditrust Corporation and Company, certain stockholders of La Meditrust Operating Company filed Quinta Inns, Inc. and, solely for the January 8, 1998. purposes of Section 3.6 thereof, La Quinta Inns, Inc.
II-7
EXHIBIT NO. DESCRIPTION METHOD OF FILING --------------------- ----------- ---------------- 4.9 First Amendment to Shareholders Incorporated by reference to Annex D-1 Agreement, dated as of April 30, 1998, to the Joint Proxy Statement/Prospectus by and among Meditrust Corporation, on Form S-4/A of Meditrust Corporation Meditrust Operating Company, certain and Meditrust Operating Company filed stockholders of La Quinta Inns, Inc. May 18, 1998. and, solely for the purposes of Section 3.6 thereof, La Quinta Inns, Inc. 5.1 Opinion of Goodwin, Procter & Hoar LLP Filed herewith. as to the legality of the securities being registered 8.1 Opinion of Goodwin, Procter & Hoar LLP Filed herewith. as to certain tax matters. 23.1 Consent of Goodwin, Procter & Hoar LLP. (Included as part of Exhibits 5.1 and 8.1 hereto.) 23.2 Consent of PricewaterhouseCoopers LLP Filed herewith. 24.1 Power of Attorney for Meditrust Corporation (included on signature page of this joint registration statement) 24.2 Power of Attorney for Meditrust Operating Company (included on signature page of this joint registration statement) 99.1 Letter Agreement by and among David F. Incorporated by reference to Exhibit Benson, Meditrust Corporation and 99.2 to the Joint Current Report on Form Meditrust Operating Company, dated 8-K for Meditrust Corporation and January 28, 2000 Meditrust Operating Company filed February 1, 2000
II-8 EX-4.6 2 EXHIBIT 4.6 Exhibit 4.6 [Letterhead of The Meditrust Companies] April 30, 1998 The Holders who are parties to that certain Registration Rights Agreement dated January 3, 1998 c/o William P. Hallman Suite 3200 Texas Commerce Bank Tower 201 Main Street Fort Worth, TX 76102 RE: REGISTRATION RIGHTS AGREEMENT DATED JANUARY 3, 1998 Dear Mr. Hallman: Reference is made to that certain Registration Rights Agreement dated January 3, 1998 (the "Registration Rights Agreement") by and between Meditrust Corporation (the "Company"), Meditrust Operating Company ("OPCO") and each of the signatories thereto (collectively, the "Holders"). All capitalized terms used in this letter without definition shall have the meanings ascribed to them in the Registration Rights Agreement. In consideration of the Holders entering into Amendment No. 1 dated of even date herewith to the Shareholders Agreement dated January 3, 1998 by and among the Company, OPCO and the Holders, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and OPCO agree that the third sentence of Section 2(a) of the Registration Rights Agreement shall be amended to read as follows: "The Company and OPCO agree to use reasonable efforts to keep the Shelf Registration Statement (or any amendment thereto or replacement or successor thereto) continuously effective until the earlier of (a) five (5) years from the Effective Date or the date on which the applicable Holders (or Distributee or other Holder Transferees) no longer hold any Registrable Securities. Mr. William P. Hallman April 30, 1998 Page 2 The Company and OPCO also further acknowledge that the remaining terms and conditions of the Registration Rights Agreement not specifically addressed by this letter agreement remain in full force and effect. Very truly yours, /S/DAVID F. BENSON --------------------------- David F. Benson President Meditrust Corporation /S/MICHAEL J. BOHNEN --------------------------- Michael J. Bohnen Secretary Meditrust Operating Company EX-4.7 3 EXHIBIT 4.7 Exhibit 4.7 September 15, 1999 Meditrust Corporation Meditrust Operating Company 197 First Avenue 197 First Avenue Suite 300 Suite 100 Needham, MA 02194 Needham, MA 02194 Ladies and Gentlemen: We refer to that certain Registration Rights Agreement dated as of January 3, 1998 by and among the undersigned and you, as amended and extended (as so amended and extended, the "Registration Rights Agreement"). Each of the undersigned hereby agrees that the time periods for filing the Shelf Registration Statement (as defined in the Registration Rights Agreement) and causing such Shelf Registration Statement to be declared effective by the Securities and Exchange Commission are hereby reinstated and extended to February 1, 2000 and March 1, 2000, respectively. Except for the foregoing extensions, all other terms of the Registration Rights Agreement remain in full force and effect. THOMAS M. TAYLOR & CO. By: /S/W.P. HALLMAN, JR. ---------------------------- Name: W.P. Hallman, Jr. Title: Vice President SID R. BASS, INC. By: /S/W.P. HALLMAN, JR. ---------------------------- Name: W.P. Hallman, Jr. Title: Vice President EXECUTION COPY LEE M. BASS, INC. By: /S/W.P. HALLMAN, JR. ------------------------------------ Name: W.P. Hallman, Jr. Title: Vice President THE BASS MANAGEMENT TRUST By: /S/W.P. HALLMAN ------------------------------------ Perry R. Bass, Trustee, by W.P. Hallman, Attorney-in-fact THE AIRLIE GROUP, L.P. By: EBD, L.P., General Partner, ------------------------------------ By: TMT-FW Inc., By: /S/W.P. HALLMAN, JR. --------------------- W.P. Hallman, Jr. Vice President /S/WILLIAM P. HALLMAN, JR. ---------------------------------------- WILLIAM P. HALLMAN, JR. ANNIE R. BASS GRANDSON'S TRUST FOR LEE M. BASS By: /S/WILLIAM P. HALLMAN, JR. ---------------------------------------- William P. Hallman, Jr., Trustee EXECUTION COPY 2 ANNIE R. BASS GRANDSON'S TRUST FOR SID R. BASS By: /S/WILLIAM P. HALLMAN, JR. --------------------------------------- William P. Hallman, Jr., Trustee /S/PETER STERLING ------------------------------------------- PETER STERLING /S/ GARY L. MEAD ------------------------------------------- GARY L. MEAD HYATT ANNE BASS SUCCESSOR TRUST By: Panther City Investment Co., Trustee By: /S/W.P. HALLMAN, JR. -------------------------------- W.P. Hallman Jr., Vice President SAMANTHA SIMS BASS SUCCESSOR TRUST By: Panther City Investment Co., Trustee By: /S/W. P. HALLMAN, JR. -------------------------------- W.P. Hallman Jr., Vice President EXECUTION COPY 3 PORTFOLIO C INVESTORS, L.P. By: Portfolio Associates, Inc., General Partner By: /S/W.P. HALLMAN, JR. ------------------------------- W.P. Hallman Jr., Vice President Accepted and agreed to as of this 15th day of September, 1999. MEDITRUST CORPORATION By: /S/MICHAEL S. BENJAMIN -------------------------------------- Name: Michael S. Benjamin, Esq. Title: Senior Vice President MEDITRUST OPERATING COMPANY By: /S/MICHAEL S. BENJAMIN -------------------------------------- Name: Michael S. Benjamin, Esq. Title: Authorized Agent EXECUTION COPY 4 EX-5.1 4 EXHIBIT 5.1 EXHIBIT 5.1 [LETTERHEAD OF GOODWIN, PROCTER & HOAR LLP] February 3, 2000 Meditrust Corporation 197 First Avenue, Suite 300 Needham Heights, MA 02494 Meditrust Operating Company 197 First Avenue, Suite 100 Needham Heights, MA 02494 Re: Legality of Securities to be Registered Under Registration Statement on Form S-3 ---------------------------------------- Ladies and Gentlemen: We have acted as counsel for Meditrust Corporation, a Delaware corporation ("Meditrust"), and Meditrust Operating Company, a Delaware corporation ("Operating Company" and, together with Meditrust, the "Companies"), in connection with the preparation of a Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission on or about February 3, 2000 (the "Registration Statement"). The shares of Meditrust common stock, par value $.10 per share, and the shares of Operating Company common stock, par value $.10 per share, are paired and trade as a single unit (the "Paired Shares"). The Registration Statement relates to the sale by certain selling shareholders of up to 10,907,971 Paired Shares (the "Shares"). In connection with rendering this opinion, we have examined the Companies' Amended and Restated Certificates of Incorporation as on file with the Secretary of State of the State of Delaware, copies of the Companies' Amended and Restated By-laws, such records of the corporate proceedings of the Companies as were deemed material, the Registration Statement and the exhibits thereto, and such other certificates, receipts, records and documents as we considered necessary for the purposes of this opinion. In our examination, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of telephonic confirmations of public officials and others. As to facts material to our opinion, we have relied upon certificates or telephonic confirmations of public officials and certificates, documents, statements and other information of the Companies or representatives or officers thereof. We are attorneys admitted to the practice in the Commonwealth of Massachusetts. We express no opinion concerning the laws of any jurisdictions other than the laws of the United States of America and the Delaware General Corporation Law, and also express no opinion with respect to the blue sky or securities laws of any state, including Delaware. Based upon the foregoing, we are of the opinion that under the Delaware General Corporate Law, pursuant to which the Companies were incorporated, when the Shares are sold by the Selling Stockholders as described in the Registration Statement, the Shares will be duly and validly authorized, fully paid and nonassessable. We hereby consent to the filling of this opinion as an exhibit to the Registration Statement. Very truly yours, /s/ Goodwin, Procter & Hoar LLP Goodwin, Procter & Hoar LLP EX-8.1 5 EXHIBIT 8.1 EXHIBIT 8.1 February 3, 2000 Meditrust Corporation 197 First Avenue Needham, Massachusetts 02494 Re: CERTAIN FEDERAL INCOME TAX MATTERS Ladies and Gentlemen: We have acted as counsel to Meditrust Corporation, a Delaware corporation ("the Company"), in connection with the registration statement on Form S-3 (the "Registration Statement") pursuant to the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration of 10,907,971 shares of common stock, par value $.10 per share, of the Company, paired with 10,907,971 shares of common stock, par value $.10 per share, of Meditrust Operating Company, a Delaware corporation ("OpCo" and, together with the Company, the "Companies"). On November 5, 1997, the Company, then known as Santa Anita Realty Enterprises, Inc. ("Santa Anita Realty"), merged (the "Santa Anita Merger") with Meditrust, a Massachusetts business trust ("Meditrust's Predecessor"), with the Company as the surviving corporation. In connection with the Santa Anita Merger, Santa Anita Realty changed its name to Meditrust Corporation, and OpCo, formerly known as Santa Anita Operating Company and the stock of which was paired with the stock of Santa Anita Realty, changed its name to Meditrust Operating Company. This opinion relates to the qualification of the Company as a real estate investment trust (a "REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), and related matters. In rendering the following opinions, we have reviewed the Registration Statement and the descriptions set forth therein of the Company and its current and proposed investments and activities. We also have examined (i) the Certificate of Incorporation and the Bylaws of the Company, each amended and restated, (ii) the Pairing Agreement dated as of December 20, Meditrust Corporation February 3, 2000 Page 2 1979, as amended, by and between the Company and OpCo, (iii) the Company's federal income tax returns for each of its taxable years ended December 31, 1994, 1995, 1996, 1997, and 1998 as filed on Forms 1120-REIT, and (iv) such other records, certificates and documents as we have deemed necessary or appropriate for purposes of rendering the opinions set forth herein. The foregoing documents, including the Registration Statement, are referred to herein as the "Documents." In rendering our opinions, we have relied upon certain factual representations of the Company set forth in a representation letter (the "Officer's Certificate") delivered to us in connection with our rendering of this opinion regarding (i) the manner in which the Company has been owned and operated and will be owned and operated and (ii) the manner in which Meditrust's Predecessor was owned and operated for periods ending on and including the effective time of the Santa Anita Merger. We also have relied on the statements contained in the Documents regarding the operation and ownership of the Company, Meditrust's Predecessor and their affiliates. We have neither independently investigated nor verified such representations or statements, and we assume that such representations and statements are true, correct and complete and that all representations and statements made "to the best of the knowledge and belief" of any person(s) or party(ies) or with similar qualification are and will be true, correct and complete as if made without such qualification. However, we are not aware of any facts or circumstances contrary to or inconsistent with such representations and statements. In rendering the opinions set forth herein, we have assumed (i) the genuineness of all signatures on documents we have examined, (ii) the authenticity of all documents submitted to us as originals, (iii) the conformity to the original documents of all documents submitted to us as copies, (iv) the conformity of final documents to all documents submitted to us as drafts, (v) the authority and capacity of the individual or individuals who executed any such documents on behalf of any person, (vi) the accuracy and completeness of all records made available to us, (vii) the factual accuracy of all representations, warranties and other statements made by all parties, and (viii) the continued accuracy of all documents, certificates, warranties and covenants on which we have relied in rendering the opinions set forth below and that were given or dated earlier than the date of this letter, insofar as relevant to the opinions set forth herein, from such earlier date through and including the date of this letter. In addition, we have assumed the accuracy of the opinions of counsel of the Company and of Meditrust's Meditrust Corporation February 3, 2000 Page 3 Predecessor, each dated November 5, 1997, regarding the qualification of the Company and of Meditrust's Predecessor as a REIT and related matters. * * * * Based upon and subject to the foregoing, we are of the opinion that: (i) The Company since November 5, 1997 has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and the Company's form of organization and proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code (including for periods following the Merger). (ii) The Company is exempt from the application of Section 269B(a)(3) of the Code pursuant to Section 136(c)(3) of the Deficit Reduction Act of 1984 (except to the extent such exemption is limited by the Internal Revenue Service Restructuring and Reform Act of 1998, Public Law No. 105-206). (iii) The statements in the Registration Statement under caption "Federal Income Tax Considerations and Consequences of Your Investment," to the extent that such information constitutes matters of law, summaries of legal matters, or legal conclusions, have been reviewed by us and are accurate in all material respects. * * * * We will not review on a continuing basis the Company's compliance with the Documents or assumptions set forth above, or the representations set forth in the Officer's Certificate. Accordingly, no assurance can be given that the actual results of the Company's operations for any given taxable year will satisfy the requirements for qualification and taxation as a real estate investment trust under the Code. The ability of the Company to continue to meet the requirements for qualification and taxation as a real estate investment trust will be dependent upon the Company's ability to continue to meet in each year the applicable asset composition, source of income, shareholder diversification, distribution, and other requirements of the Code necessary for a corporation to qualify as a real estate investment Meditrust Corporation February 3, 2000 Page 4 trust. The foregoing opinions are limited to the federal income tax matters addressed herein, and no other opinion is rendered with respect to other federal tax matters or to any issues arising out of the tax laws of any state or locality. You should recognize that our opinions are not binding on a court or the Internal Revenue Service and that a court or the Internal Revenue Service may disagree with the opinions contained herein. Although we believe that our opinions would be sustained if challenged, there can be no assurance that this will be the case. The discussion and conclusions set forth above are based upon current provisions of the Code and the Income Tax Regulations and Procedure and Administration Regulations promulgated thereunder and existing administrative and judicial interpretations thereof, all of which are subject to change. Changes in applicable law could adversely affect our opinions. This opinion is being provided to you in connection with the filing of the Registration Statement and may not be relied upon by any other person or used for any other purpose without our prior written consent. We consent to being named as Counsel to the Company in the Registration Statement, to the references in the Registration Statement to our firm and to the inclusion of a copy of this opinion letter as an exhibit to the Registration Statement. Very truly yours, /s/ GOODWIN, PROCTER & HOAR LLP GOODWIN, PROCTER & HOAR LLP EX-23.2 6 EXHIBIT 23.2 EXHIBIT 23.2 [LETTERHEAD OF PRICEWATERHOUSECOOPERS LLP] CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated February 8, 1999 except for Note 21, as to which the date is March 10, 1999, relating to the financial statements and our report dated February 8, 1999 relating to the financial statement schedules, which appear in Meditrust Corporation's and Meditrust Operating Company's Joint Annual report on Form 10-K for the year ended December 31, 1998. We also consent to the reference to us under the heading "Experts" in such Registration Statement. PricewaterhouseCoopers LLP /s/ PricewaterhouseCoopers LLP January 31, 2000 -----END PRIVACY-ENHANCED MESSAGE-----